2024 (11) TMI 1082 - AT - IBC

Exclusion of commercial spaces from the assets of the Corporate Debtor - owners of the units allotted on the basis of allotment of commercial spaces by the CD - dissenting Financial Creditors - entitlement for the amount as per Section 30 sub-section (2)(b) of IBC - sufficient grounds to interfere with the order passed by the Adjudicating Authority approving the Resolution Plan. Whether the units allotted to commercial space buyers (the Appellant(s) herein) required to be excluded from the assets of the Corporate Debtor? - Whether the Appellant(s) on the basis of allotment of commercial spaces by the CD by virtue of Lease Deed dated 24.12.2014 in respect to Appellant the Appellant(s) are owners of the units allotted to them? - HELD THAT - The Hon ble Supreme Court had occasion to consider a homebuyer s project in Jaypee Kensingston Boulevard Apartment Welfare Association ors. Vs. NBCC (India) Ltd. Ors. 2021 (3) TMI 1143 - SUPREME COURT where Hon ble Supreme Court has held that Resolution Plan has to comprehensively deals with all the assets and liabilities of the Corporate Debtor and no housing project could be segregated for the reason that the same has been completed or is nearing completion. Thus by virtue of allotment of commercial space in favour of the Appellant(s) including the Lease Deed dated 24.12.2014 the Appellant(s) cannot claim to have become owners of the commercial spaces. The CD continues to own the assets and the plea of the Appellant(s) that assets be excluded from CIRP of the CD or the Appellant(s) are owners of the commercial space/ units allotted to them cannot be accepted. Whether the Appellant(s) being dissenting Financial Creditors entitled for the amount as per Section 30 sub-section (2)(b)? - Whether the Appellant(s) had made sufficient grounds to interfere with the order dated 30.10.2023 passed by the Adjudicating Authority approving the Resolution Plan submitting by the SRA? - HELD THAT - As per Resolution Plan and the order passed by the Adjudicating Authority the commercial space buyer are entitled for 100% of their principal amount with alternate option for commercial space buyers. Thus as per the Resolution Plan the Appellant(s) are entitled either to opt for 100% refund of the principal amount within 90 days or to opt for an alternate option for commercial space which is part of Resolution Plan. Thus the Appellant(s) under Section 30 sub-section (2)(b) were entitled for only liquidation value which according to the Resolution Plan is zero . However the SRA having offered 100% refund of the principal amount with alternative proposal for commercial space the entitlement of Appellant(s) as per the Resolution Plan is of 100% refund of the principal amount or the option for alternate commercial space. The law with regard to interference with the commercial wisdom of the CoC approving the Resolution Plan is well settled. The limited ground on which the Adjudicating Authority or the Appellate Tribunal can interfere with the approval of the Resolution Plan is only to examine as to whether the Resolution Plan is in compliance of Section 30 sub-section (2) of the IBC. The present is not a case that Appellant(s) have pleaded or proved any ground that Resolution Plan is in violation of provisions of Section 30 sub-section (2) (b) - the payment offered to the Appellant(s) in the Resolution Plan does not violate the provisions of Section 30 sub-section (2) (b) - there are no ground to interfere with the order dated 30.10.2023 passed by Adjudicating Authority approving the Resolution Plan. The question is answered accordingly. Whether rejection of IA 3524 of 2020 filed by the Appellant of Company Appeal (AT) (Ins.) No.61 of 2024 and the rejection of IA No.4369 of 2022 and 5253 of 2023 filed by the Appellant(s) of Company Appeal (AT) (Ins.) No.45 of 2024 deserve to be interfered with? - HELD THAT - The prayer of the Appellant to exclude the commercial space from the Resolution Plan could not have been accepted nor any direction could have been issued for registration of Sale Deed. The claim which was submitted by the Appellant was admitted in the CIRP. In the Appeal filed by Nupur Garg at Annexure A-10 the list of financial creditors in the class of commercial space buyers has been annexed at page 175 which include the amount of claim submitted and amount of claim admitted by the RP - There has been no consideration of the claim of the rent by the Appellant from July 2019 which was one of the prayers made in the application we are of the view that ends of justice will be served in granting liberty to the Appellant to file an appropriate application for claim of rent subsequent to commencement of CIRP. It shall also be open for the Appellant to claim the said rent as CIRP cost. However no concluded opinion expressed for the said claim and it is for the Adjudicating Authority to consider and take appropriate decision. The order of the Adjudicating Authority upheld - appeal dismissed.

Summary

Issues Involved:

1. Exclusion of commercial spaces from the assets of the Corporate Debtor.
2. Ownership of the units allotted to commercial space buyers based on allotment and Lease Deed.
3. Entitlement of dissenting Financial Creditors under Section 30(2)(b) of the Insolvency and Bankruptcy Code (IBC).
4. Validity of the order approving the Resolution Plan.
5. Justification for the rejection of certain Interim Applications (IAs) by the Adjudicating Authority.

Issue-wise Detailed Analysis:

Issue I & II: Exclusion of Commercial Spaces and Ownership Claims

The Appellants, who are commercial space buyers, sought exclusion of their allotted spaces from the assets of the Corporate Debtor and claimed ownership based on allotment and Lease Deed. The Tribunal found that the allotment letters and Lease Deed were unregistered documents, which do not transfer ownership as per established legal principles. The Tribunal referenced the Supreme Court's rulings that a sale of immovable property requires a registered deed of conveyance. The Appellants' prayers for execution of a Sale Deed themselves acknowledged that ownership had not been transferred. The Tribunal concluded that the Corporate Debtor retained ownership of the spaces, and the Appellants' claims of ownership or exclusion from the CIRP were not valid.

Issue III: Entitlement of Dissenting Financial Creditors

The Appellants, as dissenting Financial Creditors, were entitled to the liquidation value as per Section 30(2)(b) of the IBC. The Tribunal noted that the liquidation value for the unsecured Financial Creditors in the class of commercial space buyers was 'zero'. However, the Successful Resolution Applicant (SRA) offered 100% refund of the principal amount or an alternative option for commercial space, which was more favorable than the liquidation value. The Tribunal held that the Appellants were entitled to this offer as per the Resolution Plan.

Issue IV: Approval of the Resolution Plan

The Tribunal emphasized that interference with the commercial wisdom of the Committee of Creditors (CoC) is limited to ensuring compliance with Section 30(2) of the IBC. The Appellants did not demonstrate any violation of this provision. The Resolution Plan, approved by an 87.49% majority, was found to be binding on all stakeholders, including dissenting creditors. The Tribunal upheld the Adjudicating Authority's order approving the Resolution Plan, as it complied with the legal requirements.

Issue V: Rejection of Interim Applications

The Tribunal addressed the rejection of IA No.3524 of 2020 filed by Appellant Nupur Garg, which sought exclusion of commercial space SF-05 and execution of a Sale Deed. The Tribunal found no merit in these requests but granted liberty to file an application for rent claims post-CIRP commencement. Regarding IA No.4369 of 2022 and IA No.5253 of 2023, the Tribunal found no grounds to interfere with their rejection, as the claims had already been admitted, and the applications were dismissed due to non-prosecution and procedural progress.

Conclusion:

The Tribunal dismissed Company Appeal (AT) (Ins.) Nos. 40 and 45 of 2024, upholding the approval of the Resolution Plan. Company Appeal (AT) (Ins.) No.61 of 2024 was disposed of with liberty for the Appellant to pursue rent claims from July 2019. The Tribunal's decision reinforced the binding nature of the Resolution Plan and clarified the rights of dissenting creditors under the IBC framework.