TaxTMI 
TaxTMI 
2023 (11) TMI 173
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....af, Ms. Neha Agarwal, Advocates for R3. JUDGMENT ASHOK BHUSHAN , J. These three Appeals between the same parties' challenges order dated 19.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court -5. Order under challenge in these three Appeals although of the same date are different orders passed in different applications in CP (IB) - 3169/MB/2019. Company Appeal (AT) (Insolvency) No.1179 of 2023 has been filed against order dated 19.07.2023 passed in I.A. No. 933 of 2022 which was filed by the Appellant (Applicant) praying for rejection of the Resolution Plan submitted by M/s Kabra Estate & Investment Consultants (Successful Resolution Applicant), the Respondent No.2 herein. Company Appeal (AT) (Insolvency) No.1178 of 2023 has been filed against order dated 19.07.2023 passed in I.A. No. 533 of 2022 by which application the Applicant has sought rectification of the Register of Member of the Corporate Debtor which application was dismissed by the Adjudicating Authority by the impugned order. Company Appeal (AT) (Insolvency) No.1162 of 2023 has been filed against order dated 19.07.2023 by which I.A. No. 2981 of 2021 filed by the Resoluti....
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....Supreme Court on 06.08.2018 directed the parties i.e. Vira Group and SHIPL to go to the mediation centre of the Bombay High Court to settle the pending disputes. A Memorandum of Settlement dated 31.10.2018 was entered between the Vira Group and SHIPL where the shareholders of the Corporate Debtor including the Appellant as part of a larger settlement agreed to transfer their entire shareholding in favour of the Vira Group. To give effect to the Memorandum of Settlement, a Share Purchase Agreement dated 31.10.2018 was entered between the Appellant, Jayesh Shantilal Vira, father of Respondent No.3 and the Corporate Debtor. A joint application was also preferred before the Hon'ble Supreme Court, the Hon'ble Supreme Court by order dated 03.12.2018 disposed of the Appeal in terms of the settlement arrived between the parties. On 16.10.2019, Appellant issued a notice to Vira Group alleging failure to issue Allotment letter and failure to pay Share Purchase consideration. The legal notice was replied by Vira Group on 28.11.2019. On 11.08.2020 CIRP was initiated against the Corporate Debtor on an application filed by 'Spartan Engineering Industries Pvt. Ltd.'. Mr. Manish Jaju (Respondent N....
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....f Register of the Corporate Debtor. Resolution Professional filed I.A. No. 2981 of 2021 for approval of the Resolution Plan immediately after voting result was declared. The Adjudicating Authority by order dated 19.07.2023 allowed I.A. No. 3981 of 2023 approving the Resolution Plan. By separate order dated 19.07.2023, I.A. No. 933 of 2022 filed by the Applicant has been rejected and by order of the same date I.A. No. 533 of 2022 has also been rejected. Challenging the aforesaid three order, these three appeals have been filed. 3. We have heard Shri P. Nagesh, learned senior counsel appearing for the Appellant, Shri Abhijeet Sinha, learned counsel appearing for the Resolution Professional and Shri Arun Kathapalia, learned senior counsel appearing for the Successful Resolution Applicant. Shri Krishnendu Datta, learned senior counsel has appeared for the Respondent No.3 - Kalpatru Advisory Services Pvt. Ltd. in Company Appeal (AT) (Ins.) No. 1179 of 2023. 4. Shri P. Nagesh, learned senior counsel for the Appellant challenging the impugned order submits that Appellant was not related party of the Corporate Debtor. There being already settlement agreement entered between the parties f....
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....hall be referred to while considering submissions of the parties. 5. Learned counsel for the Resolution Professional refuting the submission of learned counsel for the Appellant submits that the Appellant has filed its claim as a related party which admittedly alongwith its sister concern - 'Sabari Developers LLP' holds 36.69% shareholding in the Corporate Debtor. As per Memorandum of Settlement dated 31.10.2018, Appellant alongwith its sister concern was to transfer their entire shareholding in favour of the Vira Group, which transfer never took place neither was recorded in the books of the Corporate Debtor. Appellant has not taken any steps by filing any application under Section 59 of the Companies Act, 2013. The Appellant is reflected as the shareholder in the books of accounts of the Corporate Debtor as on the date of commencement of CIRP. The Resolution Professional has rightly classified the Appellant as related party. The Registrar of Companies has not recorded a transfer of shareholding as per the Share Purchase Agreement, indicating incomplete transfer and/or documentary non-compliances. The share transfer itself is incomplete on account of Appellant not receiving the c....
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....ut Share Purchase Documents having never being executed, Respondent No.3 never became shareholder. 6. Learned counsel appearing for the Successful Resolution Applicant submits that the Resolution Plan submitted by the Successful Resolution Applicant does not violate any provisions of the Code. It is submitted that the Appellant has no locus to challenge the Resolution Plan which was approved by overwhelming majority of 99.96% of the CoC. When by a vote of more than 50% of the voting share of Financial Creditors within a class a decision is taken, all others within that class, are bound by that decision. Appellant who is part of class of creditors who had already voted for resolution plan, Appellant cannot be allowed to challenge the majority decision. Reliance has been placed on judgment of Hon'ble Supreme Court in "Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Versus NBCC (India) Ltd. & Ors., (2022) 1 SCC 401". Voting and approval of CoC cannot be set at naught on the basis of any purported dissatisfaction of a miniscule minority of a single homebuyer and such minority has to sail alongwith the view of majority in terms of the scheme of IBC. Under the Code, th....
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.... the categorization of the homebuyers in class as 'Affected' and 'Unaffected' homebuyers is violative of Section 30(2)(e) and the Resolution Plan deserve to be set aside on this ground alone? Issue No.1 10. The Appellant has questioned non-inclusion of the Appellant in the Committee of Creditors. It is undisputed fact that the Appellant holds 11.31% shareholding of the Corporate Debtor and in the CIRP of Corporate Debtor Appellant filed its claim vide Form CA dated 08.01.2021. In the declaration which was filed alongwith the claim form in Para 5 following has been declared: "5. We are a related party of the corporate debtor, as defined under section 5(24) of the Code." 11. In the financial statement of the Corporate Debtor, Appellant has been reflected as shareholder on the date of commencement of the CIRP. The Registrar of Companies has not recorded transfer of shares as per the Share Purchase Agreement. Share Purchase Agreement dated 31.10.2018 after the Settlement Agreement between the parties could not be implemented, which is a fact on record. The Appellant itself has filed application for contempt against the Vira Group before the Hon'ble Supreme Court alleging the viola....
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....6% shareholding of KASPL, learned counsel for the Respondent No.3 has submitted that to attract Section 5(24)(j), the KASPL had to control more than 20% of voting rights in the corporate debtor on account of ownership or a voting agreement. It has only 16% shareholding in the Corporate Debtor, hence, cannot be held as related party as per Section 5(24)(j). The submission of the Appellant objecting participation of KASPL on the basis of its shareholding which in view of the definition clause 5(24)(j) does not fulfils it to be related party, hence, participation of KASPL in voting cannot be faulted. As noted above, transfer of shareholding in favour of the Vira Group could not materialise. Issue No. 3 13. The Adjudicating Authority by the impugned order has rejected the objection filed by the Appellant challenging the Resolution Plan on the ground that Appellant being a part of the class of creditors i.e. homebuyer who has voted for Resolution Plan cannot be allowed to challenge the Resolution Plan. The Adjudicating Authority in holding that Appellant as an individual cannot oppose the Resolution Plan has relied on judgment of Hon'ble Supreme Court in "Jaypee Kensington Boulevard A....
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.... of the Resolution Plan. Clause 7.1.10 deals with proposal for 'Affected Homebuyers' and Clause 7.1.11 deals with proposal for 'Unaffected Homebuyers'. It is useful to extract clause 7.1.10 of the Resolution Plan: "7.1.10 Proposal for affected home buyers. 7.1.10.1 The affected allottees have been allotted a total area of approx. 83,000 sq. ft. for a total consideration of Rs. 132 crores. Out of this, they have paid against their units a total sum of approx. Rs. 93 crores and amount of Rs. 39 crore is payable by them. LIC HFL has raised objection to allotment / sale of such units since NOC of LIC HFL was not obtained towards their allotment / sale. It is also noticed that some of the affected parties are shareholders of the Company and they have been classified as a related party by the RP and the RA has proposed the same treatment for them as other affected parties. 7.1.10.2 In order to resolve the Corporate Debtor, it is proposed that allotment of such units where NOC was not obtained, their allotments / sale shall stand cancelled vide this resolution plan. The affected homebuyers will have to execute cancellation agreements within 30 days of the trigger date. In case they ....
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....mbership fees of the society, etc. as are applicable to all other unit buyers. 7.1.10.6 The affected allottees of phase 1 shall also be liable to pay an escalation charge of Rs. 2850 per sq.ft. of Rera carpet area in the manner provided here in below: a) 30% within 60 days of the trigger date. b) 30% within 6 months of the trigger date. c) 20% within 9 months of the trigger date. d) 20% within 12 months of the trigger date. Such escalation charges are at par with the escalation charges provided for unaffected allottees. The affected allottees of phase 2 shall also be liable to pay an escalation charge of Rs. 8500 per sq.ft. of Rera carpet area in the manner provided hereinbelow. a. 30% within 60 days of the CC of phase 2. b. 15% within 6 months of the CC of phase 2. c. 15% within 12 months of the CC of phase 2. d. 15% within 18 months of the CC of phase 2. e. 15% within 24 months of the CC of phase 2. f. 10% within 30 months of the CC of phase 2." 16. We have noticed above that Project-II was mortgaged to LIC Housing Finance Ltd. by Mortgage Deed dated 15.09.2017. The Mortgage Deed provided that the Corporate Debtor was required to take prior consent of L....
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....ision to satisfy the claim of class of creditors in a reasonable and fair manner. 18. Learned counsel for the Appellant has placed reliance on judgment of this Tribunal in "Company Appeal (AT) (Ins.) No. 700 of 2021, Amit Goel vs. Piyush Shelters India Pvt. Ltd." to support his submission that there cannot be differentiation in treatment of homebuyers. In the case of Amit Goel Resolution Plan was approved which provided for allotment of unit to those homebuyers whose claim was filed within time and admitted and with regard to those homebuyers who did not file their claim within time were proposed to get 10% of their booked amount after verification. The Resolution Plan was challenged on various grounds. The ground to challenge the Resolution Plan has been noticed in Para 6 of the judgment, which is to the following effect: "6. The Appellants in the three appeals have assailed the Impugned Order on the following grounds: - (i) The Learned Adjudicating Authority has passed the Impugned Order in CA No. 371/2019 while an earlier CA No. 282/2019 filed by the Resolution Applicant for consideration of his resolution plan was pending before the Adjudicating Authority. Since no orders ....
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....he registered office of the corporate debtor or the principal place of business at Faridabad since both were closed. Moreover, without the meeting/getting together by the homebuyers/allottees, it was not easy for them to discuss and convey their views to the Authorized Representative who would then represent their views in the CoC. When we see that out of a total of 473 home buyers/allottees only 222 allottees could file claims in time before the Resolution Professional and 251 allottees could either not do so or did so belatedly, we feel that exclusion of more than 251 i.e. about 53% of total homebuyers/allottees cannot lead to a fair and just resolution of the Corporate Debtor. We also feel that the providing 10% of the claimed amounts to homebuyers/allottees who could not file their claims in the circumstances of this case is an unfair and inadequate treatment of the financial creditors." 19. However, when we look into the entire judgment of this Tribunal, the reason which found favour with this Tribunal was that voting as required under Section 25A was not correctly done. In Para 34 of the judgment this Tribunal itself has noted the distinguishing feature of the case i.e. ques....
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....or the Appellant is judgment of this Appellate Tribunal in "Company Appeal (AT) (Ins.) No. 708 of 2019, Jaypee Greens Krescent Home Buyers Welfare Association & Ors. vs. Jaypee Infratech Ltd. Through Anuj Jain, Interim Resolution Professinal". In the above judgment of this Tribunal delivered on 30.07.2019 we do not find any preposition of law which may support the Appellant in the present case. 23. We, thus, are of the view that different treatment of two sets of homebuyers in view of the allotment to the homebuyer with/without NOC of the Mortgagee has rational for separate treatment and the submission of the Appellant cannot be accepted that all homebuyers should be treated in the same manner in the Resolution Plan. We may further notice that present is not a case where there is distribution of any amount as per the Resolution Plan to a class of creditors. Learned counsel for the Appellant has also relied on judgment of this Tribunal in "Company Appeal (AT) (Ins.) No. 1148 of 2022, Akashganga Processors Pvt. Ltd. vs. Shri Ravindra Goyal, decided on 13.07.2023". In the above case this Tribunal took the view that distribution to the Operational Creditor has to be in the same propor....
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....to be implemented with modification as directed above." 24. The above judgment does not help the Appellant in the present case since in the above case the question was distribution of amount under the Resolution Plan to the Operational Creditors inter se and this Tribunal directed payment of amount to the Operational Creditors in the same proportion to uphold the Resolution Plan. The present is not a case of distribution of any amount rather Resolution Plan provides for ways and manner to complete the project and handover units to the allottees. Allottees have been classified in two groups - 'Affected' and 'Unaffected', as noted above, and we have found the classification justified in the treatment of claims. Learned counsel for the Appellant has failed to point out any violation of any provision of law by aforesaid classification of 'Affected' and 'Unaffected' homebuyers. We, thus, are of the view that the Resolution Plan does not violate any provision of law. 25. We are conscious that the Hon'ble Supreme Court in "Committee of Creditors of Essar Steel India Limited Through Authorised Signatory vs. Satish Kumar Gupta & Ors., (2020) 8 SCC 531" has laid down that there can be diff....
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.... Hon'ble Supreme Court in the said judgment has held that commercial wisdom of the Committee of Creditors cannot be substituted. In Para 144 and 147 following has been held: "144. What is important to note is that when one reads the abovementioned judgment, it is a majority of 66% of the Committee of Creditors who has exercised the discretion vested in it under the Code in this particular manner, which has then correctly not been disturbed by the NCLT and NCLAT. Far from helping Shri Sibal's client, the principle that is applied in such a case is that ultimately it is the commercial wisdom of the requisite majority of the Committee of Creditors that must prevail on the facts of any given case, which would include distribution in the manner suggested in Orissa Manganese (supra). It is, therefore, not possible to accept the argument that the Adjudicatory Authority and consequently the Appellate Authority would be vested with the discretion to apply what was applied by the Committee of Creditors in the Orissa Manganese case (supra). This submission is also devoid of merit and is, therefore, rejected." "147. The NCLAT judgment which substitutes its wisdom for the commercial wisdom ....