TMI Blog2023 (11) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... lder 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the Hon ble Supreme Court alleging the violation of order of Hon ble Supreme Court which contempt was permitted to be withdrawn with liberty to the Appellant to take such proceedings as may be advised. Filing of contempt itself recognises that Memorandum of Settlement dated 31.10.2018 was breached - The Resolution Professional proceeded to classify the Appellant as related party on account of declaration of the Appellant itself in the claim form that it is a related party. The shareholding of the Appellant still continues in the Corporate Debtor which is not yet been transferred as per the Settlement Agreement - there are no error in the decision of the Resolution Professional classifying the Appellant as related party and not giving the Appellant a seat and voting share in the Committee of Creditors. Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve to be set aside on this ground alone? - HELD THAT:- The 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 - This Tribunal noticing that there was discrimination in payment to the Operational Creditors inter se, has directed that Operational Creditors be paid the same amount. In the above case, the Adjudicating Authority has rejected the Resolution Plan on the ground that there is differentiation in payment of Operational Creditors inter se. The commercial wisdom of the Committee of Creditors, which has approved the Resolution Plan under which different treatment has been given to Affected Homebuyers and Unaffected Homebuyers , cannot be faulted - there are no grounds made out to challenge the approval of the Resolution Plan. Thus, no error has been committed by the Adjudicating Authority in rejecting the application - Register of the Corporate Debtor cannot be rectified on application filed by the Appellant and Appellant in fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appeals. 2. We now proceed to note the facts and sequence of events giving rise to these three Appeals. The Corporate Debtor earlier known as Sunshine Housing Private Ltd. is a real estate company which owned two projects namely Samriddhi Garden , (Phase-1 project) and Sunshine Oakwood , comprising of Wing A and B (Phase-2 project). In the year 2008, Appellant alongwith its sister concern Sabari Developers LLP acquired 11.31% and 26.38% share of the Corporate Debtor, respectively. Appellant also advanced a loan of Rs.7 Crores to the Corporate Debtor. A mortgage deed was executed on 15.09.2017 between the Corporate Debtor and the LIC Housing Finance Limited. The Corporate Debtor mortgaged Wing C and D of the Phase-I and project Phase-II in its entirety in favour of LIC Housing Finance Ltd. As per the mortgage deed, the Corporate Debtor was required to take prior written permission of LIC before sale or creation of any third-party rights over the aforesaid mortgaged properties. In the year 2017, certain disputes arose between the minority shareholders namely Vira Group and Sunshine Housing and Infrastructure Pvt. Ltd. who was the majority shareholder of the Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.A. No. 1485 of 2021 was filed by the Appellant seeking direction against the Resolution Professional for acceptance of the claim. The Resolution Professional by email dated 06.07.2021 admitted the Appellant s claim as Homebuyers/Allottees/ Financial Creditors in a class in respect of 25 flats. Objections were raised by LIC Housing Finance Ltd. as well as Forensic Auditor appointed by the Resolution Professional regarding admission of the claim. LIC objected to the claim of the Appellant on the ground that LIC has mortgage over the property and for any allotment consent of the LIC was required, which was not taken in regard to allotment in favour of the Appellant. Authorised Representative of the Homebuyers also informed the Appellant that in view of the mortgage deed, NOC of LIC was required for effecting any sale/allotment to flats in the project. A Request was made by the Appellant seeking documents pertaining to CIRP and requesting permission to participate in the voting in the CIRP. Vira Group sent an email dated 03.08.2021 informing that Memorandum of Settlement dated 31.10.2018 has been revoked and cancelled in view of the fact that there was neither any transfer of conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholding in the Corporate Debtor could not be member of the CoC. The Resolution Professional allowed the related party of the Corporate Debtor i.e. Kalpatru Advisory Services Pvt. Ltd. (KASPL). KASPL holding 16% shareholding of the Corporate Debtor was also classified as related party in the Transaction Audit Report dated 08.10.2021, hence, KASPL was not entitled to participate in the CoC or to vote. The Resolution Professional has not allowed the Appellant to be member of the CoC on the ground that it holds 11.31% shareholding whereas KASPL despite holding 16% shareholding was allowed to vote as the member of the CoC. It is submitted that the Resolution Plan could not have been provided for cancellation of the allotment of Affected Allottees. Clause 7.1.10.2 of the Resolution Plan stipulates that allotment of the allottees who had not obtained NOC from LIC Housing Finance Ltd. will stand cancelled by the Resolution Plan and their allotted area will be reduced by 80% from the existing allotted area. The classification of class of creditors in Affected and Unaffected is against the provision of the Code. There can be no differential treatment between same class of creditors i.e Hom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as Affected Allottees were those whose allotments were made without taking NOC from the LIC Housing Finance Ltd. to whom the project was mortgaged. Allotment in favour of the Appellant without NOC of LIC was no allotment and rightly been treated as void in the plan, however, fresh allotments have been made in favour of the Affected Parties on the basis of sum received by the Affected Parties. The Resolution Plan has been approved by the homebuyers as creditors in a class. Even homebuyers in Affected group has also by majority has approved the Resolution Plan. The Appellant who is a homebuyer could not be allowed to challenge the approval of the Resolution Plan when creditors in a class by majority has approved the Resolution Plan. The learned Adjudicating Authority has rightly relying on the judgment of Hon ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association Ors. Versus NBCC (India) Ltd. Ors., (2022) 1 SCC 401 has dismissed the objection raised by the Appellant to the Resolution Plan. It is submitted that the commercial wisdom of the CoC could not be allowed to be challenged. The CoC in its commercial wisdom has classified the allottees in two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% complete, here escalation charges are Rs.2850 per sq. ft. whereas Phase-II project is still at ground level and escalation charges are Rs.8500 per sq. ft. It is submitted that feasibility and viability of the plan has been examined by the CoC. 7. Learned counsel for Respondent No.3 submits that Appellant cannot initiate proceedings for rectification in register after commencement of CIRP. The Appellant had by its notice dated 16.10.2019 held the proposed share transfer to be null and void. Appellant himself has abandoned the Settlement Agreement and Share Purchase Agreement. In the books of accounts and financial statements of the Corporate Debtor Appellant is shown as a shareholder of the Corporate Debtor. Share transfer form was never submitted to the ROC and transfer of shares never took place. Appellant is bound by the commercial wisdom of the CoC. The Respondent No.3 had 16% share of the company through his subsidiary Kalpataru Advisory Services Pvt. Ltd. The Respondent No.3 is not a related party of the Corporate Debtor. Share of the Respondent No.3 in the Corporate Debtor is less than 20%, hence, it is not a related party whereas Appellant is related party by its own a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion as to who is responsible for breach of settlement. Suffice it to say that settlement could not be implemented resulting in non-implementation of Share Purchase Agreement and shares of Appellant and others could not be transferred in favour of Vira Group. The Resolution Professional proceeded to classify the Appellant as related party on account of declaration of the Appellant itself in the claim form that it is a related party. The shareholding of the Appellant still continues in the Corporate Debtor which is not yet been transferred as per the Settlement Agreement. We do not find any error in the decision of the Resolution Professional classifying the Appellant as related party and not giving the Appellant a seat and voting share in the Committee of Creditors. Issue No.1 is answered accordingly. Issue No. 2 : 12. The case of the Appellant is that Kalpatru Advisory Services Pvt. Ltd. (KASPL) is a voting member of the Committee of Creditors. His submission is that KASPL holds 16% shareholding of the Corporate Debtor and Mr. Pratik Jayesh Vira was Director of Corporate Debtor from 01.01.2010 to 19.02.2019 and is also Director of KASPL. Learned counsel for the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the judgment following has been laid down: 218. To sum up this part of discussion, in our view, after approval of the resolution plan of NBCC by CoC, where homebuyers as a class assented to the plan, any individual homebuyer or association cannot maintain any challenge to the resolution plan nor could be treated as carrying any legal grievance. 226. For what has been discussed above, we hold that the homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the Real Estate (Regulation and Development) Act, 2016 does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project could be segregated merely for the reason that the same has been completed or is nearing completion. 14. From the facts which have been brought on the record, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir allotment or the amounts paid to the corporate debtor by such unit holders or the amounts credited to their account as paid by the corporate debtor against the aforesaid units. Accordingly, such units shall no longer be liable to pay the balance consideration of Rs. 39 crores as mentioned above and LIC HFL will be deemed to have given its NOC in respect of such allotment to these affected allottees and these units shall be released from the mortgage on approval of the resolution plan by the Adjudicating Authority. The details of such allotment is given in Annexure I J hereto. Such unit holders who have executed the cancellation agreement will be given fresh allotment letters showing the revised area allotted to them and the consideration adjusted against the same. 7.1.10.4 The number of units coming to the share of each affected homebuyer is given in Annexure I hereto and if the same is not possible to be allotted due to the RERA carpet area of the units being higher or lower, then for the difference in area the concerned homebuyer shall either make payment or be entitled to a refund calculated at the rate of Rs.24,500 per sq. ft . The payment of the said additional consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Ltd. The allotment in favour of the Appellant was made by the Corporate Debtor and Allotment Letter indicate that consideration for the allotment was substantial part of the amount of the loan which was taken from the Appellant and rest of the amount was to be paid at the time of handing over of possession. The Resolution Plan states that such allotment for which no NOC was obtained shall be considered cancelled and Affected party has to execute cancellation agreement and by the same plan the Resolution Plan proposes to allot fully paid-up units as full and final settlement against allotment and the amount paid to the Corporate Debtor by such unit holders or the amounts credited. There is a clear demarcation line between Affected and Unaffected homebuyers. The distinction has been made between allottees with NOC from the Mortgagee and allottees without NOC of the Mortgagee. When the Mortgage Deed especially provide for NOC by the Mortgagee, any allotment made in breach of such mortgage condition could not have been ignored by the Resolution Professional and the Committee of Creditors in its commercial wisdom has decided to deal with homebuyers who had allotment with NOC of LIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances under which the earlier resolution plan of the Maya Group was withdrawn and revised resolution plan was being considered (iii) Section 25 A of the IBC clearly stipulates that the authorized representative of the financial creditors in class (in this case homebuyers) shall attend the meeting of CoC on their behalf and vote in accordance with prior instructions of the financial creditors in class. In the present case the e voting of the financial creditors in class took place along with e-voting on the resolution plan by the CoC which is evident from the results of e-voting. Thus, no prior voting by the financial creditors in class was organized by the authorized representative, thereby contravening provisions of Section 25A of the IBC. (iv) The Resolution Professional should have considered maximization of value of the assets of the Corporate Debtor which was not done and the liquidation value is not sufficient to cover the amounts owed to financial creditors and other creditors. (v) Only 222 homebuyers/allottees, out of a total of 473 homebuyers/allottees, have filed claims before the RP and claims of remaining 251 allottees have been almost extinguished wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 25A. In Para 37 of the judgment following has been observed: 37. The Maharashtra Seamless judgment (supra) is distinguished on the basis that there were flaws in operationalizing the provision of Section 25Awhich is for the benefit of financial creditors in class when the Authorized Representative did not do prior consultation with the homebuyers/allottees who he sought to represent. Thereafter, the RP allowed e-voting on the final resolution plan wherein all the homebuyers participated, not as a class represented by the Authorized Representative alongwith the other members of CoC. All this means that section 30(2)(e) of the IBC was infringed and the resolution plan is therefore liable to be rejected on such a ground. 20. Ultimately in Para 39 following directions were issued: 39. In light of the aforementioned discussion, we set aside the impugned order dated 14.7.2021 and direct that the process be started afresh with claims of homebuyers/allottees accepted by the Resolution Professional by giving them realistic time limit for submission of claims, in keeping with the order of the Adjudicating Authority in CA 12/2020, leading to a revised information memor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Creditors be paid the same amount. In the above case, the Adjudicating Authority has rejected the Resolution Plan on the ground that there is differentiation in payment of Operational Creditors inter se. The Appeal was allowed by this Tribunal and Resolution Plan was upheld subject to direction that Operational Creditors be made payment to the equal effect. In Para 8, 9 and 10 following has been held: 8. As far as the submission that payment was made to Gujarat Industrial Development Corporation and Surat Municipal Corporation to keep the Corporate Debtor as a going concern, the said payment can very well be made by the Corporate Debtor but not in the manner as adopted in the Resolution Plan. In the present case, the Resolution Plan was approved by the CoC on 06.08.2021 with 99.84% vote share, however, the Adjudicating Authority rejected the plan by the impugned order. It is also to be noticed that none of the Operational Creditors i.e. State Tax, Government of Gujrat and Central Excise, Government of India have come up in appeal. 9. The Punjab National Bank (Financial Creditor) has also filed an Additional Affidavit in pursuance of order dated 31.03.2023 indicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the Appellate Tribunal has fallen into grave error. Paragraph 76 clearly refers to the UNCITRAL Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in paragraph 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, paragraph 77 itself makes it clear that there is a difference in payment of the debts of financial and operational creditors, operational creditors having to receive a minimum payment, being not less than liquidation value, which does not apply to financial creditors. The amended Regulation 38 set out in paragraph 77 again does not lead to the conclusion that financial and operational creditors, or secured and unsecured creditors, must be paid the same amounts, percentage wise, under the resolution plan before it can pass muster. Fair and equitable dealing of operational creditors rights under the said Regulation involves the resolution plan stating as to how it has dealt with the interests of operational creditors, which is not the same thing as saying that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid judgment, must therefore be set aside. 27. We, thus, are of the view that commercial wisdom of the Committee of Creditors, which has approved the Resolution Plan under which different treatment has been given to Affected Homebuyers and Unaffected Homebuyers , cannot be faulted. We, thus, are of the view that there are no grounds made out to challenge the approval of the Resolution Plan. Further, the Adjudicating Authority has also rightly rejected the objections filed by the Appellant by I.A. No. 933 of 2022. 28. Coming to the order passed by the Adjudicating Authority in I.A. No. 533 of 2022 by which Appellant prayed for rectification of Register of Corporate Debtor. In support of I.A. No. 533 of 2022, the Appellant has relied on settlement dated 30.10.2018 as referred in its order dated 03.12.2021 by the Hon ble Supreme Court. The Adjudicating Authority has observed that no steps are shown to have been taken by the Applicant Company in terms of the Memorandum of Settlement and Share Purchase Agreement. In Para 34 of the order following has been observed by the Adjudicating Authority: 34. Strangely enough, the applicant Company has not impleaded in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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