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TMI Blog2024 (7) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... lottees pending consideration - non- commitment of payment of assured amount by the SRA - denial to Cimco Project equal opportunity to submit a Resolution Plan vitiating the approval of the Resolution Plan submitted by SRA - no opportunity of hearing without passing the order - sufficient material irregularities committed by the Resolution Professional in conduct of the CIRP to justify by interference with the decision of the CoC to approve the Resolution Plan or not. Whether the different eligibility criteria fixed for association of allottees as compared to other Resolution Applicant is unsustainable and violates the provisions of CIRP Regulations 2016? - HELD THAT:- The different eligibility criteria fixed for Association of Allottees as compared to other Resolution Applicants, does not violate the provisions of CIRP Regulations 2016 and is sustainable. Whether the eligibility criteria for allottees association being registered prior to 03.01.2020 has no rational basis and was choosen only to oust the Crown Business Park Tower A Association, hence, deserves to be set aside? - HELD THAT:- The eligibility criteria for allottees of Association to be registered prior to 03.01.2020 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the basis of source of funds as mentioned in the Plan - on the ground that Plan mentions 1,00,000 sq. ft as unsold area, which is not in accord with 83,940 sq. ft area mentioned in addendum, the Plan neither fails nor can be interfered with - the Adjudicating Authority took a conscious decision to consider the various IAs filed for acceptance of their claims, after approval of Resolution Plan, there was no certainty of saleable area, even on the date when Adjudicating Authority approved the Resolution Plan. Hence, no fault can be found with there being no certainty of the saleable area of which the SRA was well aware and took a risk to proceed with the Resolution Plan and implemented the same. Whether there is no certainty with regard to saleable area available to the Resolution Applicant for raising fund in view of the pendency of the large number of applications filed by the allottees before the Adjudicating Authority? - Whether the Resolution Plan ought to have provided receivables from allottee of Rs. 62.95 Cr. as mentioned in the Information memorandum and the figures of Rs.36.66 Cr. only mentioned in Resolution Plan is incorrect figures? - HELD THAT:- It is true that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of payment of assured amount of Rs.52.50 Cr. by the SRA is modification of the Resolution Plan? - HELD THAT:- The SRA has clearly contemplated under Clause 8.18.10, if there is any deficit/ shortfall, with regard to amount proposed in the Resolution Plan towards assured returns shall stand modified accordingly. Thus, payment of assured returns of Rs.52.50 crores was itself contemplated in the Plan to be modified in event of any deficit or shortfall. Thus, in event, in the implementation of Plan, the SRA is not able to pay the assured return of Rs.52.50 crores, due to any deficit or shortfall, there can be no modification of the Plan, rather to cover the deficit and shortfall from assured returns payable to the allottees, is part of the Resolution Plan - Non-commitment of payment of assured returns of Rs.52.50 crores by the SRA is not a modification of Resolution Plan. Whether Cimco Project was denied equal opportunity to submit a Resolution Plan vitiating the approval of the Resolution Plan submitted by SRA? - HELD THAT:- Cimco Projects was well aware about refusal of its request for extension of time. Cimco Projects has filed the Writ Petition in Delhi High Court, which was ul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Resolution Plan can be interfered with by the Adjudicating Authority - approval of Resolution Plan by the CoC, being compliant of Section 30, sub-section (2), has rightly been approved by the Adjudicating Authority and no grounds have been made out in these Appeal(s) to interfere with the approval of Resolution Plan. Whether, the Applicants who filed IAs in Company Appeal (AT) (Insolvency) NO.431 of 2023 are entitled for any relief in their Applications? - HELD THAT:- No reliefs can be granted in the IAs, which have been filed by the Applicant(s) as noted above except to pursue the Applications before the Adjudicating Authority. Appeal disposed off. - [ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Abhijeet Sinha, Sr. Advocate with Mr. Honey Khanna, Mr. Akash Chatterjee, Mr. Kaushal Bansal and Ms. Nikita Mishra, Advocates. Mr. Sudhir K Makkar, Sr. Advocate with Mr. Saumya Gupta and Ms. Aadhya Shrotriya, Advocates in I.A. 247/2024. Mr. Abhijeet Sinha, Sr. Advocate with Mr. Sougat Sinha and Ms. Akanksha Chug, Advocates in I.A. No.5789/2023 For the Respondents : Mr. Arvind Nayyar and Mr. Sunil Fernandes, Sr. Advocates with Ms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Interests for intending Prospective Resolution Applicant for the Corporate Debtor. On 11.06.2020, the Resolution Professional issued Information Memorandum. In the 3rd CoC meeting held on 20.06.2020 eligibility criteria for PRA was reduced. Resolution Professional also issued addendum to Information Memorandum on 20.08.2020. In pursuance of Form-G issued by the Resolution Professional, Expression of Interest was received from four Resolution Applicants including Cimco Projects Limited as well as the Respondent- Crown Abacus IT Park Association. Last date for submitting Resolution Plan was as 25.08.2020. On a request received from PRA, the time for submission of the Resolution Plan was extended till 30.09.2020. Only Resolution Plan which was received was Resolution Plan submitted by Crown Abacus IT Park Association which was submitted on 30.09.2020. 6th meeting of the CoC was held on 10.10.2020 in Agenda Item No.5 outcome of issuance of request for the Resolution Plan was noticed. Resolution Professional apprised CoC that till 30.09.2020, he has received only one Resolution Plan from Crown Abacus IT Park Association. It was also noticed that the Resolution Professional furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority further by the same order observed that IA No.3787 of 2021 and IA No.254 of 2022 will be heard and decided. With regard to seven other IAs, Adjudicating Authority by the impugned order has observed that these applications be decided on merits in due course keeping in view paragraph 11.2 of the order and clause 8.6(iii) and clause 8.18.10 of the Resolution Plan. Aggrieved by the order dated 21.02.2023, the above appeals have been filed respectively by Crown Business Park Tower A Buyers Association, Cimco Projects Ltd. as well as Amarjit Singh, Suspended Director. 3. In the Appeals, notices were issued. All the above appeals came for consideration before this Tribunal on 12.04.2023 on which date following order was passed: 12.04.2023: Learned Counsel for the Appellants submit that various objections to the Resolution Plan which has been approved by the Impugned Order has remained undecided and those applications have been listed subsequently after delivery of the Order. 2. Issue notice to the Respondents through Speed Post as well as Email. Requisites along with process fee, if not filed, be filed within two days. Appellant may also serve the Respondents personally withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional for verification and further directed the Resolution Professional to file a report with respect to the same. Several IAs are still pending before the Adjudicating Authority, it is not known as to what actual area shall be available for the SRA for implementation of the plan. On account of huge mismatch in the unsold inventory the plan is deficit and SRA will never raise funds amounting to Rs.50,00,00,000/- by the selling the unsold inventory as was mentioned in the Resolution Plan. The Resolution Plan had left number of claims under discrepancy list dated 02.12.2020. It is further submitted that there is discrepancy in amount receivable. In the Resolution Plan, amount receivables is mentioned as Rs.34,63,62,487/- from the allottees for the Tower B1 and Tower B2. However, the actual receivable would be Rs.25 Cr. Reference of one allottee Brijesh Goyal is mentioned whose receivables shown as Rs.6,72,09,000/- whereas Brijesh Goyal intimated the Resolution Professional that he is only liable to pay Rs.5,00,000/-. Resolution Professional admitted the said request and rectified the records. The plan receivables and received amounts are contrary to the Books of the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to Information Memorandum is replete with discrepancies regarding the actual unsold area, units. In the absence of a clear and unequivocal figure regarding the unsold area and receivables of the corporate debtor, the Appellant was unable to prepare a Resolution Plan for the revival of the corporate debtor. It is the duty of the Resolution Professional to prepare the Information Memorandum containing all relevant information. The list of PRAs circulated on 21.07.2020 included the name of the Appellant. Appellant on 21.08.2020 requested the Resolution Professional to extend last date of submission of the plan as the final list of claimants and Information Memorandum were not provided to the Appellant. On 22.08.2020, Appellant was sent the addendum to Information Memorandum. On 24.08.2020, Appellant again requested the Resolution Professional to extend the submission of the plan. Last date for submission of the Resolution Plan was extended till 30.09.2020. Appellant on 30.09.2020 again sent an e-mail to Resolution Professional that the Information Memorandum received is not exhaustive, needs confirmations, corroborations and collating of amounts, receivable, booked in balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation and the SRA. The criteria was so fixed that only SRA became eligible and the Crown Business Park Tower A Buyers Association was not able to participate in the CIRP which criteria is clearly discriminatory and cannot be approved. There are multiple discrepancies in the list of members. Appellant since very beginning of the CIRP has raised objection to the conduct of the Resolution Professional and the SRA. Resolution Professional in the minutes also recorded his objections to the Resolution Plan. Resolution Professional has published an incomplete and defective IM resulting two out of four PRAs to withdraw and only other PRAs became ineligible. There are several material irregularities in the Information Memorandum. The Information Memorandum was kept discriminate. Information Memorandum disclosed inventories totaling 83,947 sq. ft. whereas units claimed by six unsecured creditors was also approved by the Resolution Professional but their names were not included in the list of allottees and the area was not deducted. Resolution Plan wrongly projects that it shall raise Rs.50 Cr. from sale of 1,00,000/- sq. ft. unsold inventories whereas area of 1,00,000/- sq. ft. was not avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest including the SRA and Cimco Projects Ltd. 24.08.2020 was last date for submission of Resolution Plan. On request received from Cimco Projects Ltd., time for filing plan was extended till 30.09.2020. Cimco Projects Ltd. did not file any Resolution Plan and further made a request by e-mail dated 30.09.2020 for grant of further time. The request of Cimco Projects Ltd. was placed before the CoC on 10.10.2020 which was declined which information was communicated to Cimco Projects Ltd. The Resolution Plan submitted by SRA was opened on 10.10.2020 and thereafter discussed and put to vote on 8th CoC meeting held on 05.12.2020. In the CoC, homebuyers constitute the large number and approved the Resolution Plan. It is submitted that the Appellant Association claims to have 130 members out of which 65 members are the part of the COC, majority of which members have voted in favour of the Resolution Plan. Challenge on behalf of the Crown Business Park Tower A Buyers Association is not maintainable. Homebuyers in majority having approved the Resolution Plan, minority homebuyers cannot be allowed to challenge the Resolution Plan. It is submitted that apart from 65 members of the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Further discriminatory eligibility criteria were fixed for different Resolution Applicants. Area of 1,00,000 sq. ft. as proposed in the Resolution Plan is not available and balance amount as mentioned in the Information Memorandum is incorrect and Resolution Plan provides for only Rs.34.63 Cr. instead of 62.95 Cr. 12. Arguments have also been raised with regard to Car parking. Counsel for the Resolution Professional submits that the criteria for Association was fixed on the valid ground and classification as noted above which needs no repetition. With regard to receivables, the Resolution Professional has explained in its Affidavit that receivables have been computed on the basis of claim received by the homebuyers. Those homebuyers have not filed the claim no receivables can be imputed to them, hence, the amount of Rs.34.63 Cr. is correct in accordance with law. Explaining the car parking, it is submitted that only 80% of available car parking have to be allocated in accordance with the area allotted to the allottees. It is submitted that only intention of suspended director is to delay the Resolution Process of the corporate debtor. It is the default of the suspended directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the appeals are more or less the same. IA No.5301 of 2022 filed by Crown Business Park Tower A Buyers Association was filed before the Adjudicating Authority in October, 2022 i.e. more than two years after its registration. Application for approval of the Resolution Plan was filed by the Resolution Professional on 11.12.2020 almost two years thereafter objection is sought to be raised by Crown Business Park Tower A Buyers Association which is nothing but an afterthought. It is submitted that with regard to claim of the allottees which are not yet been verified and pending consideration, Resolution Plan itself contemplates a provision for consideration of the said claim on supporting documents. Impugned order dated 21.02.2023 itself takes care of all pending IAs and belated claims of the allottees in paragraph 12.2 and 13.12 of the impugned order. Resolution Plan in clause 8.6(iii) made provision for claim which has not been filed till date of approval of the Resolution Plan. It is submitted that the arguments that assured return of Rs.52.50 Cr. has been modified is not correct. The plan itself mentioned that there is any surplus amount it may go towards payment of assured retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and since homebuyers who have to come forward to submit a Resolution Plan and construct the flats, relaxed criteria was approved by the CoC. In the 2nd CoC meeting relaxing the criteria for association of allottees was discussed and which agenda was approved with 96.66% vote share. It is submitted that the total available area is only 2,49,171 which figure can be found out after deducting the area for which claim of allottees has been received and with regard to available area of 2,49,171 only 1,00,000 sq. ft. i.e. atleast 50% was treated to be available unsold area for sale. It is submitted that the SRA has already spent more than Rs.15 Cr. towards payment of CIRP cost, operational creditors and statutory authority. Several works have been awarded. It is submitted that the SRA has full capacity to implement the plan. The claim with regard to which applications are pending before the Adjudicating Authority and even the claims which are submitted before the SRA, SRA has undertaken to take all liabilities which is also recorded by the Adjudicating Authority in paragraph 12.2 of the impugned order. Thus, on the ground that several applications by different applicants claiming differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has paid Rs.5,022,50,000/- between 01.04.2014 to 31.03.2015 to the Corporate Debtor as loan and after gap of more than 5 years allotment letters were issued. Resolution Professional rejected the claim on the ground that it is preferential transaction and claim is filed after seven months from the date of CIRP. Resolution Professional has opposed the application. Resolution Professional submits that against the order dated 29.11.2022, the Appellant has remedy to file an appeal which grievance cannot be raised by filing the IA in the appeal. Resolution Professional further submits that the transaction claimed by the applicant fall as preferential transaction under Section 43 for which IA No.110 of 2021 has been filed by the Resolution Professional which is pending before the Adjudicating Authority. 19. We have considered the submissions of the counsel for the parties and perused the record. From submissions of the counsel for the parties and the materials on record, following issues arise for consideration in these appeals: (I) Whether the different eligibility criteria fixed for association of allottees as compared to other Resolution Applicant is unsustainable and violates the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these appeals sufficient grounds have been made out to interfere with the approval of the Resolution Plan? (XV) Whether, the Applicants who filed IAs in Company Appeal (AT) (Insolvency) NO.431 of 2023 are entitled for any relief in their Applications. 20. All the above Appeal(s) have been filed challenging the order dated 21.02.2023, approving the Resolution Plan submitted by the SRA. The CoC of the Corporate Debtor was constituted by RP and Report of constitution was filed on 03.01.2023 before the Adjudicating Authority. The Report contained a List of Financial Creditors in a class and the Financial Creditors. Even after the constitution of the CoC, the claims were filed by the Financial Creditor during the process of CIRP and the RP has collated the claims and admitted various claims and reconstituted the CoC, which is clearly reflected in Minutes of the Meeting of the CoC. The Resolution Plan submitted by SRA was discussed by the CoC and was taken for consideration and voting in the 8th Meeting of CoC held on 05.12.2020. The CoC, which approved the Resolution Plan consist of homebuyers of real estate allottees project in majority. The vote share of the CoC as on 05.12.2023 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enge. That is not the scope of jurisdiction vested in the adjudicating authority under Section 31 of the I B Code dealing with approval of the resolution plan. 67. Next judgment relied by learned Counsel for the Appellant is Pratap Technocrats Pvt. Ltd. vs. Monitoring Committee of Reliance (2021) 10 SCC 623, wherein the Hon ble Supreme Court in paragraph 44 laid down following: 44. These decisions have laid down that the jurisdiction of the adjudicating authority and the appellate authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Nor is there a residual equity based jurisdiction in the adjudicating authority or the appellate authority to interfere in this decision, so long as it is otherwise in conformity with the provisions of IBC and the Regulations under the enactment. 68. Next judgment relied on is Jaypee Kensington Boulevard Apartments Welfare Association and Ors. Vs. NBCC (India) Limited Ors. (2022) 1 SCC 401, wherein in paragraph 107.1, following has been laid down: 107.1. Such limitations on judicial review have been duly underscored by this Court in the decisions above referred, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction, the adjudicating authority finds any shortcoming in the resolution plan vis- -vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this Court. (emphasis supplied) 70. In Kalparaj Dharamshi v. Kotak Investment Advisors Ltd. (2021) SCC OnLine SC 204, again the same proposition has been reiterated by the Hon ble Supreme Court, which is as follows: 172. No doubt, it is sought to be urged, that since there has been a material irregularity in exercise of the powers by RP, NCLAT was justified in view of the provisions of clause (ii) of sub-section (3) of Section 61 of the I B Code to interfere with the exercise of power by RP. However, it could be seen, that all actions of RP have the seal of approval of CoC. No doubt, it was possible for RP to have issued another Form G , in the event he found, that the proposals received by it prior to the date specified in last Form G could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP, including acceptance of resolution plans of Kalpraj after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited vs. Deepak Maini and Ors. Company Appeal (AT) (Insolvency) No.143 of 2020, where this Tribunal held that there is no mechanism under the Code that gives right to the Unsuccessful Resolution Applicant to challenge the decision of CoC, unless the Plan is in contravention of any law being in force or there is material irregularity in the powers exercised by the RP. In paragraph 39, following has been held: 39. Further, there is no such mechanism under the Code that gives the right to the Unsuccessful Resolution Applicant to challenge the score granted as per the evaluation matrix prepared by the CoC and the Resolution Professional as per the provisions of CIRP Regulations. Though, Section 61 of the Code provides Appeals against the orders of the Adjudicating Authority and Sub-section (3) thereof provides an Appeal against an order approving a Resolution Plan under Section 31 which may be filed on the following grounds namely: (i) The approval resolution plan is in contravention of the provisions of any law for the time being enforce. (ii) There has been material irregularity in exercise of the powers by the Resolution Professional during the Corporate Insolvency Resolution Perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court under heading Point D1 Revision of resolution plan after approval by CoC . In the case before the Hon ble Supreme Court, after approval of the Plan by the CoC, the Plan was modified without it being placed before the CoC for fresh approval, which was one of the grounds taken by the Appellate Tribunal in interfering with the order of the Adjudicating Authority approving the Resolution Plan. The Hon ble Supreme Court in the above context in paragraph 159, 160, 162 and 168 laid down following : 159. Even when the findings of the Appellate Tribunal as regards valuation process and noncompliance of other procedural requirements have not been approved by us, a material factor which otherwise may appear to be of another procedural requirement, has its significant bearing and cannot be ignored as mere technicality. It is concerning want of presentation of finally revised plan to the Committee of Creditors before being presented to the adjudicating authority. 160. As noticed hereinbefore, commercial wisdom of CoC is given such a status of primacy that the same is considered rather a matter non-justiciable in any adjudicatory process, be it by the adjudicating authority or even by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wisdom of CoC is assigned primacy, it presupposes a considered decision on the resolution plan in its final form. 25. Further, in reference to judgment of M.K. Rajagopal, this Tribunal in paragraph 76, held: 76. .. In the facts of the aforesaid case, the Hon ble Supreme Court held that CoC Meeting was resolution applicant was approved, however, approval came with a significant condition that in view of the dissent by some of the Financial Creditor, the Plan would be sent back to the creditors for further revision, so as to make it compliant with Section 30, sub-section (2), which provides that amount paid to the dissenting Financial Creditor will not be less than the amount to be paid to such creditors in accordance with sub-section (1) of Section 53 of the Code. The revised Resolution Plan was submitted incorporating the changes, however, the revised Plan was not put before the CoC for approval, which ground was taken by the Appellate Tribunal in interfering with the order of the Adjudicating Authority. The Hon ble Supreme Court affirmed the decision of the Appellate Tribunal. In paragraph 168, as noted above, the Hon ble Supreme Court noted that in event the Plan, which was modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EoI and decision was taken to reissue the invitation of EoI with revised criteria. The eligibility criteria, which was earlier approved in the 2nd CoC meeting was revised along with approved Form-G. It is useful to extract following from Agenda Item No.6, which is as follows: CROWN REAL TECH PRIVATE LIMITED (Company Undergoing Corporate Insolvency Resolution Process) Eligibility criteria as defined under Section 25(2)(h) of me, 2016 with the approval of Committee of Creditors having regard to the complexity and scale of operations of the business of Corporate debtor to submit a Resolution Plan Eligibility Criteria S.- No. PARAMETERS EXISTING ELIGIBILITY CRITERIA PROPOSED REVISED ELIGIBILITY CRITERIA 1. Refundable Earnest Money Deposit (Non interest bearing along with Expression of Interest Refundable Earnest Money Deposits (non interest bearing) along with Resolution Plan Rs.15,00,000 (Through Demand Draft in the name of corporate debtor) Rs.35,00,000 (Through Demand Draft in the name of corporate debtor) Demand Draft in the name of corporate debtor) Rs.15,00,000 (Through Rs.35,00,000 (Through Demand Draft in the name of corporate debtor) 2. Constitution of Resolution Applicant Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 36A(1), which deals with invitation of Expression of Interest, subregulation (4), sub-clause (a) provides as follows: (4) The detailed invitation referred to in sub-regulation (3) shall - (a) specify the criteria for prospective resolution applicants, as approved by the committee in accordance with clause (h) of sub-section (2) of section 25; 32. The expression specify the criteria for prospective resolution applicants , cannot be read to mean that criteria for all prospective Resolution Applicants has to be same. When the CoC is to specify the criteria for prospective Resolution Applicants, it can exercise it discretion in finalizing the criteria and criteria for different categories of Resolution Applicants need not be same. Criteria cannot be discriminatory but reasonable rational classification is not prohibited. In the present case, as noted above real estate allottees consist of 95.82% of the CoC and their claim worth Rs.155.97 Crores have been admitted in the CIRP. The CoC decided to invite Association of Allottees to submit the Resolution Plan and has fixed eligibility for Association of Allottees to submit EoI. The distinction in Performance Bank Guarantee ( PBG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m creditors in pursuant to Public Announcement dated 11th day of December. 2019. The Composition of COC may change subsequently as we receive more claims or on the basis of any additional information from books of accounts maintained by the Company. Following member, being Financial Creditors of M/s. Crown Realtech Private Limited shall constitute the CoC. The first meeting of the COC shall be held within seven days from the date of filing this report. The details of the members of the CoC are as below : S. No. Name of the Members Amount Voting% 1. M/s Edge Motion Controls Pvt. Ltd. As per Annexure 2. M/s. International Travel Line Attached through Mr. Pritam Singh Taneja 3. M/s. Richa Fashion Pvt. Ltd. 4. M/s. Satya Deposits and Advances Pvt. Ltd. 5. Class of Financial Creditors (Real Estate Allottees) Total 100 The details of the members of the Committee of Creditors alongwith their voting rights are mentioned in the ANNEXURE-I attached with this report certifying the constitution of committee of creditors. *Claim provisionally accepted subject to the information/ documents received from the Corporate Debtor. Thanking You, Yours Truly Sd/- (AMTI AGRAWAL) INTEIM RESOLUTION PROFESS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the approval of the Resolution Plan by the CoC. Question No.(III) 37. The locus of Crown Business Park Tower A Buyers Association, who filed the Appeal challenging the order approving the Resolution Plan has been questioned both by SRA and learned Counsel for the RP. The submission advanced by learned Counsel for the SRA is that Association of the Appellant consist of 140 Members, out of which 65 Members are Members of the SRA Association. Now, out of 65 Members of the Appellant, who are Members of SRA Association, majority has approved the Resolution Plan, hence the minority of homebuyers cannot be allowed to challenge the Resolution Plan. Reliance is placed on judgment of the Hon ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. vs. NBCC (India) Ltd. Ors. (2022) 1 SCC 401, where the Hon ble Supreme Court in paragraphs 108 and 198.4 has laid down following: 108. To put in a nutshell, the adjudicating authority has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions abovereferred. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the objection raised by the Respondents to the locus of Crown Business Park Tower A Buyers Association, answer the Question No.(II) in following manner: Ans. (III) : Crown Business Park Tower A Buyers Association has locus to file Company Appeal (AT) (Insolvency) No.431 of 2023. Question Nos.(IV) and (V) 39. Learned Counsel for the Appellant has referred to addendum dated 20.08.2020, which was issued after the Information Memorandum was issued on 10.06.2020. In their addendum to Information Memorandum, unsold area is shown as 83944 sq. ft. The submission is that in the Resolution Plan area which has been shown to be available for Resolution Applicant was shown as 1,00,000 sq. ft. The Resolution Plan in Clause 7.1 dealt with Funding Plan and Proposed Funding Plan, which is as follows: PROPOSED FUNDING PLAN S. No. PARTICULARS AMOUNT (RS.) 1. Up front infusion by the Resolution Applicant 10,00,00,000 2. Up front infusion by the Resolution Applicant in the form of Equity 7,50,000 3. Receivables from allottees of the Tower-B1 and B2 as per the information provided by the Resolution Professional 34,63,62,487 4. Sale of unsold inventory of the Corporate Debtor admeasuring 1,00,000 sq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucting with regard to claims of the areas of allottees, the total saleable area of 2,49,171 sq. ft. remains balance and 1,00,000 sq. ft. taken as unsold inventory and rest of the area are kept for unforeseen claims. It is also relevant to notice that the Resolution Applicant was well aware that several applications before the Adjudicating Authority filed by the allottees are pending consideration and Adjudicating Authority itself has categorized the Applications in different categories, which is reflected from order passed on 30.08.2022, where large number of applications, which were categorized in category A, B, C (C3, C4, C5 and C6), D, E and F. In the impugned order, we have noticed that Adjudicating Authority itself has directed for listing the applications while approving the Resolution Plan on subsequent dates. In paragraph 13.12, the Adjudicating Authority directed as follows: 13.12. To summarise: a. IA-5687/2020 which is for approval of Resolution Plan is allowed. b. IA-5006/2021 which is an objection to the Resolution Plan filed by a member of the suspended Board of Directors is dismissed. Pending IA s: c. IA-3787/2021, IA-254/2022, these applications fall under the C6 Cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at paragraph-3: 3. Change in constitution of CoC and inclusion of further claims received:- Resolution professional stated that he has received 9 more claim after 5 th October 2020 and same have been verified. Pursuant to that, CoC has been reconstituted and intimation regarding the same has been circulated to all CoC members. Further, updated status of admission of claims and list of CoC members has been circulated to all the members of COC. He further apprised that, on the basis of inputs received from CoC members, final list of COC constitution shall be circulated with Minutes of the meeting and same shall be hosted on website also. 44. Thus, nine more claims which were received after 05.10.2020 were taken into consideration and CoC was reconstituted. Thus, the SRA was fully aware that claims are being filed and are being entertained by the RP. Hence, the SRA was well aware that liabilities of admission of any claim as directed by Adjudicating Authority or admitted by RP as contemplated in the Resolution Plan has to be borne by the SRA. The submission of the SRA that only 1,00,000 sq. ft. was taken as saleable area, although available area was 2,49,171 sq. ft. is fully support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time shall be provided to them to furnish their amended resolution plan. After ensuring, that resolution plan meets the requirements of Insolvency Bankruptcy Code and regulations made thereunder, resolution plan shall be placed before the CoC for voting. RP further apprised that, one prospective resolution applicant named 'Cimco Projects consortium' has approached through email for extension of timelines for submission of Resolution Plan. In order to maintain -confidentiality in process Resolution Plan shall be circulated to COC only once the last date for submission of resolution plans have expired. In case resolution for extension of timeline for submission of Resolution Plan get passed, then resolution plan received till now shall only be circulated only after expiry of extended time to submission of Resolution Plan in order to maintain confidentiality of the Plan/s. CoC took the note of the same. 45. The SRA being only Resolution Applicant, who has filed the Resolution Plan, no complaint can be made by the Appellant(s) regarding any mismatch of the saleable area available as mentioned in the addendum to the Information Memorandum and as mentioned in the Resolution Plan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble area in view of the facts of the present case, where large number of applications, where the allottees as well as creditors have made claims to different areas, were pending and Adjudicating Authority consciously decided to hear the applications, subsequent to the approval of Resolution Plan. We, thus, do not find any error with the approval of Resolution Plan on this ground. Questions Nos.(VI) and (VII) 46. As noted above, the amount of Rs.50 crores was mentioned in the Resolution Plan in the Clause dealing with Funding Plan, which was to be raised from sale of 1,00,000 sq. ft available saleable area. As noted above, it is admitted fact that total saleable area in the Project was 6,95,411 and the claims were received from allottees for area of 4,46,240. Hence, there was still available area of 2,49,171 and SRA took only 1,00,000 sq. ft for raising the funds, leaving balance area to meet future claims and contingencies. The Funding Plan as extracted above, indicate that in the Funding Plan inclusion of Rs.50 crores for saleable area of 1,00,000 sq. ft was as per assessment of the SRA and under the heading of Clause 7.1 Proposed Funding Plan indicate that there was proposal by S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated from total area of Project, i.e. 6,11,436 sq. ft, cannot be accepted. In any view of the matter, the fact that receivable from the allottees may increase as mentioned in the Resolution Plan, is a decision of SRA, who has to take pros and cons of various factors and bear the financial burden. As noted above, the Resolution Plan of the SRA is the only Plan, which was received in the CIRP and the finances as provided in the Resolution Applicant in the Resolution Plan and the fact that as per the Appellant, there should be more receivable, i.e., Rs.62.95 crores, cannot be a ground to find fault with the Resolution Plan, which has confined the receivable qua, the area with regard to which claims have been admitted. 50. In view of the foregoing discussions, we answer Question Nos.(VI) and (VII) in following manner: Ans. (VI) : It is true that there was no certainty with regard to saleable area available to the Resolution Applicant, in view of large number of applications filed by the allottees before the Adjudicating Authority, but that itself is not any ground to find fault with the Resolution Plan, specially, when the Adjudicating Authority itself has decided to decide the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property including accommodation for watch and ward staffs or for the lodging of community service personnel; (v) installations of central services such as electricity, gas, water and sanitation, air-conditioning and incinerating, system for water conservation and renewable energy; (vi) the water tanks, sumps, motors, fans, compressors, ducts and all apparatus connected with installations for common use; (vii) all community and commercial facilities as provided in the real estate project; (viii) all other portion of the project necessary or convenient for its maintenance, safety, etc., and in common use; 53. When we look into Section 2(n) (iii), it is clear that it is open parking area, which is covered under common area . In the Information Memorandum dated 11.06.2020 under heading Additional Information (page 1962 of Company Appeal (AT) (Insolvency) No.432-433 of 2023) estimated expenditure planner for covered parking was mentioned as Rs.40.00 crores and open parking was mentioned a Zero ( 0 ). The Additional Information in the Information Memorandum is as follows : Particulars Estimated expenditure planned to be incurred as per service plan estimates or the project report. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed above, the RERA Act, 2016 covers under common areas, only the open parking area and in the present case, the SRA was dealing with covered parking, which is on different levels, was constructed on the expenditure of Rs.40 crores and Information Memorandum, clearly mentioned that open parking area was Zero. 56. We need to notice judgment of Hon ble Supreme Court in (2020) 16 SCC 512 Wing Commander Ariful Rahman Khan and Aleya sultana and Ors. Vs. DLF Southern Homes Pvt. Ltd. (Now known as Begur OMR Homes Pvt. Ltd. and Ors. In which case, the Hon ble Supreme Court have occasion to deal with parking in context of Consumer Protection Act, 1986. In the above judgment, the Hon ble Supreme Court held that parking charges for exclusive use of earmarked parking spaces can be included in the break-up. The judgment of Nahalchand Laloochand (supra) was also noticed and distinguished in paragraph 66 to 68, wherein following was held: 66. The appellants seek a refund of an amount of Rs 2.25 lakhs collected from each buyer towards car parking. The submission is that under Section 3(f) of the Karnataka Apartment Ownership Act, 1972 ( the KAO Act ), common areas and facilities include parkin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the Resolution Plan and thereafter considering the various applications filed by the allottees for accepting their claims. The course, which was adopted by the Adjudicating Authority was known to allottees, SRA, as well as RP. The Adjudicating Authority consciously directed the applications to be listed after the approval of the Resolution Plan with clear undertaking by the SRA that SRA shall abide by all liabilities and claims, which are accepted by the Adjudicating Authority and bear the consequences. The course adopted by the Adjudicating Authority in the present case, looking into the enormous number of applications, cannot be said to be impermissible. When the SRA came forward with an undertaking that in event the Plan is approved, it shall abide by all subsequent orders, accepting any claim of the allottees, we do not find any error in approving the Resolution Plan and direction for listing of the applications subsequently. Question No.(IX) is answered accordingly. Question No.(X) 60. The Resolution Plan provides for an amount of Rs.52.50 crores towards the assured returns. In Clause 7.1, which deals with the Proposed Funding Plan, under the heading Budgeted Expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ➢ 2 (Two) car parking slots shall be allocated to the claimants/ allotteees having area upto 1250 sq. ft. ➢ 3 (Three) car parking slots shall be allocated to the claimants/ allottees having area upto 1750 sq. ft. ➢ The cost of each car parking slot shall be charged @ Rs.4,50,000/- at Level 1, Rs.4,00,000/- at Level 2, Rs.3,50,000/- at Level 3 and Rs.3,00,000/- at Level 4. However, the allotment shall be first cum first basis. Also any pre allotted car parking shall be ear marked on Level 3. II. Secondly, the assured returns shall be adjusted towards advance maintenance expenses for the next 12 months from the date of possession of the unit, or; III. Lastly, against the remaining amount, if any, the option shall be given to the respective claimants/ allottees to purchase the unsold inventory on first come first serve basis at the prescribed rate of Rs.6000/-psf in Tower B1 and Rs.5000/- psf in Tower B2, however the value of retail space available on ground floors of Tower B1 is Rs.8,500/- and Tower B2 is Rs.7,500/- of the Corporate Debtor and in case, the allottees exercise this option, the remaining unadjusted assured returns shall be adjusted against the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP apprised that as Committee of creditors is already aware that Resolution Professional had issued request for resolution plans (RFRP) to the following eligible prospective resolution applicants advising them to submit their resolution plans by 24th August 2020:- 1. Pioneer Consortium (Consortium of Pioneer Factor IT Infradevelopers Private Limited and Haldiram Products Private Limited One City Infrastructures Private Limited 2. Cimco Consortium ( Consortium of Cimco Projects Limited, RAS Development Private Limited and Sadhna Broadcast Limited) 3. Crown Abacus IT Park Association 4. Amolik Housing Private Limited Resolution Professional has circulated final list of prospective resolution applicants on 28th July 2020 to all CoC members. Same is also available at www.crownrealtech.com. RP further apprised that, as per RFRP (request for resolution plan), 24th August 2020 is the last date to submit resolution plans and resolution professional has not received resolution plan from any of the above named persons till the last date of submission of resolution plan. Now, Resolution Professional has received emails from Pioneer Consortium, Cimco Consortium and Crown Abacus IT Park Associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was passed to extend the submission of Resolution Plan till 30.09.2020. The Cimco Projects again sent an email on 30.09.2020 to the RP for extension of further time for filing the Resolution Plan. The RP has placed the request of the Cimco Projects before the CoC in its 6th Meeting held on 10.10.2020. The CoC noted the request received from Cimco Projects and has also noted that only Resolution Plan received till 30.09.2020 is of Crown Abacus IT Park Association. At Agenda Item No.5, seeking extension of time was noted and it was declined by the CoC. The RP has also sent an email dated 15.10.2020 TO Cimco Projects, informing that CoC on 10.10.2020 has by e-voting has opted not to extend timelines. The email dated 15.10.2020 is as follows: Dear Sir In pursuance of email received from one of the prospective resolution applicants ,a resolution for extension of timelines for submission Resolution Plan was placed in the 6th meeting of COC held on 10th October and evoting held further after the circulation of minutes of the meeting. As per result of the e-voting , We hereby inform you that COC has opted not to extend timelines for submission of Resolution Plan further with majority. E-vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing: 11.9 Be that as it may, at this juncture, we rely upon the Judgement passed by Hon ble Supreme Court in the matter of Vallal RCK versus M/s Siva Industries and Holdings Limited and Others, Civil Appeal Nos. 18111812 of 2022 whereby the Hon ble Apex Court has answered the question as to whether the adjudicating authority (NCLT) or the appellate authority (NCLAT) can sit in an appeal over the commercial wisdom of the Committee of Creditors (hereinafter referred to as the CoC ) or not . We rely upon the following paragraphs: 21. This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. It has been held that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. A reference in this respect could be made to the judgments of this Court in the cases of K. Sashidhar v. Indian Overs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n following manner: Ans. (XII) : The Appellant Amarjit Singh, Suspended Director was given opportunity before passing the order dated 21.02.2023 and his objections (through IA No.5006/2021) were rejected after hearing the Appellant and after considering his objections. Question Nos.(XIII) and (XIV) 73. The RP has conducted the CIRP in accordance with the procedure as prescribed under the CIRP Regulations. The CoC was constituted, claims were collated, verified and admitted. Certain claims were also rejected. Claims which were received even during CIRP, were verified and collated and CoC was reconstituted. The grounds, which have been canvased by the Appellant regarding certain incomplete information in the Information Memorandum and certain discrepancy with the saleable area in the addendum dated 20.08.2020 and the Resolution Plan. We have already noticed about the details of saleable area as provided in the Resolution Plan. We have also noticed that on account of pendency of various applications in different category, as categorized by the Adjudicating Authority itself, there was no certainty regarding availability of saleable area. However, the SRA having undertaken before the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the RP in conduct of the CIRP, which may justify interference with the decision of the CoC in approving the Resolution Plan Ans.(XIV) : No sufficient grounds have been made out in the Appeal to interfere with the decision of the CoC in approving the Resolution Plan. The Adjudicating Authority did not commit any error in approving the Resolution Plan. Question No.(XV) 74. Now we come to the IAs as noticed above. 75. IA No.247 of 2024 - This IA has been filed by Abhay Agarwal (HUF) Anr. Vs. Atul Kumar Kansal Anr. The learned Counsel for the Applicants in support of the Application contends that the Applicants have filed their claim and in the List of Financial Creditors at Sl. No.178 and 179, the name of the Applicants were mentioned. However, the RP belatedly vide email dated 15.12.2022 rejected the claim. The Applicants have already filed an Application being IA No.1805 of 2023, in which notices were issued by Adjudicating Authority on 15.05.2023. 76. Learned Counsel for the RP has also filed a reply to the Application stating common/ combined reply to 4 IAs filed on 08.05.2024. The RP in the reply has given various facts on the merits of the Application. We, however, have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant has also filed an IA No.3787 of 2021, which has been put in Category F and is pending consideration. 81. The RP has filed combined reply to the IA and raised various grounds to support his submission of rejection of the claim. However, IAs being pending before the Adjudicating Authority, we see no reason to enter into respective submissions raised by the parties. Ends of justice will be served in disposing of the IA 5789 of 2023 granting liberty to the Appellant to pursue his Application before the Adjudicating Authority, which may be heard and decided by the Adjudicating Authority in accordance with law. IA No.5789 of 2023 is disposed of accordingly. 82. IA No. 3763 of 2023 This IA has been filed by Mars Infra Engineering Pvt. Ltd. The Applicant has filed its claim before the RP, which was not admitted by the RP. IA No.4976 of 2021 was filed by the Applicant, which was disposed of by the Adjudicating Authority on 21.09.2022. The RP in its reply has further submitted that the Applicant has also compromised with the Suspended Directors and the CD before the Ld. District Court in proceedings under Section 138 of the Negotiable Instruments Act. It is submitted by RP that no pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to meet the future contingencies, as the claims, which were to be accepted by the Adjudicating Authority in pending applications or accepted by SRA. Ans. (V) : The Resolution Plan could have very well been approved by the Adjudicating Authority without there being any certainty regarding saleable area in view of the facts of the present case, where large number of applications, where the allottees as well as creditors have made claims to different areas, were pending and Adjudicating Authority consciously decided to hear the applications, subsequent to the approval of Resolution Plan. We, thus, do not find any error with the approval of Resolution Plan on this ground. Ans. (VI) : It is true that there was no certainty with regard to saleable area available to the Resolution Applicant, in view of large number of applications filed by the allottees before the Adjudicating Authority, but that itself is not a ground to find fault with the Resolution Plan, specially, when the Adjudicating Authority itself has decided to decide the applications after approval of Resolution Plan. Ans. (VII) : The Resolution Applicant providing for receivables of Rs.36.66 crores, cannot be said to be incor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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