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TMI Blog2024 (11) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... erstwhile management of the Corporate Debtor, the Resolution Plan had provided treatment to the said cancelled allottees. And this Resolution Plan was approved by the CoC with 100% majority in their 12th CoC meeting held on 03.08.2023 - Resolution Plan was prepared and filed by the Resolution Applicant in compliance with Section 30 of the Code and later it has been duly approved by the CoC in its commercial wisdom. It is well settled position of law that the Resolution Plan, duly approved by the COC as per their commercial wisdom has a very limited scope of judicial review and which is circumscribed by the provisions contained in Section 31 of the Code. In the instant case, the Appellants had already approached UPRERA, seeking refund of their entire amount, along with the interest which was decreed in their favour. The Applicant had accepted partial amount paid to them from the erstwhile management. The conduct of the allottees in accepting the refund towards their allotment, indicates that allottees have accepted the cancellation of the allotments. In this conspectus, the submissions of the Respondent that the refund, which was initiated by the erstwhile management at the instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Ins) No. 1974 of 2024 3 of 20 Appellants. As per the Agreements, the Appellants had paid their respective consideration amount. The details of Agreement along with payments are herein below : Sl. No. Name of the Allottee Date of the Flat Buyer Agreement/Endorsement Consideration (Amount paid to builder till date)(INR) 1. Shilpi Sharma 13.10.2007 35,62,609.00 2. Supriya Singh 21.06.2013 22,93,145.09 3. Namrata Singh 21.06.2013 23,40,852.94 4. Prabin Kumar 03.08.2012 39,24,156 5. Sandeep Singh Gill 20.09.2007 19,56,995 6. Anjali Dabral 05.09.2007 22,91,533.00 3. As per the aforesaid flat buyer Agreement, the Corporate Debtor had promised to deliver the possession of the flats within a prescribed timeline. However, the possession of the respective units was never delivered to the Appellants. Aggrieved by the acts of the Corporate Debtor, the Appellants filed different complaints before the Uttar Pradesh Real Estate Regulatory Authority (hereinafter referred to as UPRERA), seeking refund of the amount paid by them. The Hon ble UPRERA passed decree in favour of the complainants (Appellants herein), the details of which are herein below: Sl. No. Name of the Applicants Date of issuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of receipt of the partial refunds by these recipients, their units were cancelled without informing the unit holders about the same and allotted to someone else in some cases. As a result, the said recipients are no longer allotees of the said units. The Members of the Committee of Creditors with regard to determination of the status of recipients of refund either from RERA or Consumer Dispute Resolution forum(s), whose units were cancelled without informing the unit holders at the time of receipt of refund by them and in some cases the units were allotted to others, were of the opinion that the unilateral cancellation of the units by the Corporate Debtor on part refund of the claim amount does not stand have a legal standing and the transaction can be contested to be null and void by the unit holder as the entire claim of the buyer unit holder has not been refunded, and the claimant of the partial refund cannot prima- facie be losing the status of home buyers. The RP enquired from the Members of the Committee of Creditors that whether the said unit holders be classified as unsecured Financial Creditors or any Other Creditors but the Members of the Committee of Creditors were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Letter. 12. Appellant contends that the AA has wrongly relied on the judgment of this Appellate Tribunal in Sunil Chauhan vs. Rabindra Kumar Mintri Company Appeal No. (Ins) 407 of 2023, to say that they could not have been treated at par with the other creditors in class. In the said judgment, the cancellation was made effective by informing the allottees. Moreover, in that case the allottees were at fault by not paying the balance amount to the Corporate Debtor. In the instant case of the Appellants, they were never informed about the cancellation. In fact, the Appellants were treated as the Financial Creditor in class, till the time the Resolution Plan was received and were also exercising their right of voting to the agendas. 13. Appellant contends that the AA has wrongly relied on the judgment of the K. Sashidhar vs. Indian Overseas Bank Ors. in Civil Appeal No. 10673 of 2018, to say that the commercial wisdom of CoC is given paramount status, when the Information Memorandum which was incorrect, basis which the Resolution Plan was approved. Had the CoC been provided with correct facts, the CoC would not have voted incorrectly. The AA has not only dismissed the Application by n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had come to know about the cancellation of units through the Information Memorandum only on 02.01.2023. RP contends that Appellants could have very well obtained this information even earlier from the RP. 21. The Resolution Plan submitted by Respondent No. 2/SRA was being discussed by the homebuyers and the Financial Creditors in various CoC meetings starting from the 7th CoC meeting on 23.12.2022, till its approval in the 12th CoC meeting, which was held on 03.08.2023. The CoC approved the Resolution Plan of Respondent No. 2/SRA after thorough discussion and application of their commercial wisdom. It was approved with 100% voting share including the approval from 285 homebuyers on 09.08.2023. 22. The Resolution Plan also provides for the treatment of such allottees/ Appellants whose units have been cancelled as per Clause 3.9 (11) (C) of the approved Resolution Plan. 23. It is to be noted that the units were cancelled pre-CIRP and the Appellants had full knowledge for about 10 months but they did not raise their grievance. They waited till the time the Resolution Plan provided specific treatment as dismissed in earlier paragraphs for the categories of allottees whose units were ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) (C) of the Resolution Plan. 29. The Resolution Plan was approved by the CoC with 100% majority in their 12th CoC meeting held on 03.08.2023. It is contended by the SRA that the Resolution Plan has been prepared and filed by the Resolution Applicant in compliance with Section 30 of the Code, only after looking into the claims collated and provided by the Resolution Professional in the Information Memorandum. Even though the allotments were cancelled by the erstwhile management of the Corporate Debtor, the Respondent has provided treatment to the said cancelled allottees. 30. The Resolution Plan has been duly approved by the CoC in their commercial wisdom and it is trite law that commercial wisdom of the CoC is paramount in nature and once the Resolution Plan is approved by the CoC in its commercial wisdom it is deemed to be feasible and viable. 31. It is also submitted that Section 19 of the RERA provides that an allottee can either claim the possession of unit or refund of the amount paid at the time of the booking, along with interest in the event the promoter fails to handover the possession of the units in terms of the builder buyer Agreement. 32. In the present case, the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose of the Appellants, the Resolution Professional carried out their verification as per the records of the Corporate Debtor. It was found by the RP that the units allotted to the Applicants were cancelled by the Corporate Debtor, much prior to the initiation of CIRP against it, which becomes quite apparent from the details as reproduced below: S. No Name of the Allottees Date of the Flat Buyer Agreement Date of issuance of RERA Order Date of Cancellation of Units by CD Date of admission of CIRP of the CD Date of Submission of Claim with RP 1. Shilpi Sharma 13.10.2007 24.07.2018 15.11.2019 10.03.2022 19.04.2022 2. Supriya Singh 21.06.2013 14.03.2019 04.01.2021 29.03.2022 3. Namrata Singh 21.06.2013 12.04.2019 04.01.2021 29.03.2022 4. Prabin Kumar 03.08.2012 07.02.2019 04.01.2021 31.03.2022 5. Sandeep Singh Gill 20.09.2007 20.09.2007 20.01.2022 31.03.2022 6. Anjali Dabral 05.09.2007 11.12.2018 31.08.2021 08.04.2022 36. It is to be noted that it is the duty of the RP to collate all the claims filed before him and verify the same from the books of the Corporate Debtor. We agree with the submission of the RP that it lacks adjudicatory powers on the claims filed before him. The RP coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and later it has been duly approved by the CoC in its commercial wisdom. It is well settled position of law that the Resolution Plan, duly approved by the COC as per their commercial wisdom has a very limited scope of judicial review and which is circumscribed by the provisions contained in Section 31 of the Code. 40. It is factual position that the Appellants had approached UPRERA, which in turn had ordered for refund of their amounts. As per Order of UPRERA, some amounts were also paid to the Appellants by the erstwhile management as contained in their own submissions at page 14 of the appeal paper book. 41. For better appreciation of claims of the Appellants, it would be appropriate to look into the provisions of Section 19 of the RERA Act, which are extracted as follows: 19 (4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic treatment to these categories of allottees, which was approved by the CoC with 100% majority on 09.08.2023. If they were aggrieved of the cancellation, as noted earlier they could have challenged immediately. 44. It is also contended by the Appellants that there is a violation of the UPRERA Decree. The Appellants contend that as per UPRERA Decree, only partial payment was made and therefore the Corporate Debtor has not complied with the Orders of the UPRERA. On the contrary, it is to be noted that the Respondent had acknowledged that a Decree was passed under UPRERA in favour of the Appellants. However, we agree with their argument that Decree did not specifically override the cancellation of the units or prevent the Corporate Debtor from taking action under the Insolvency and Bankruptcy Code, 2016. In fact, this Decree was prior to institution of insolvency and part payment was also made by the erstwhile management. The CoC, RP could not have revoked the cancellation as it was beyond their jurisdiction. In fact, they had gone ahead as per the information collated from the records of the Corporate Debtor. Therefore, the contention of the Appellant that there is a failure to com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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