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TMI Blog2025 (1) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... challenging the Order dated 24.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench, Court - II) in I.A. No.1158/2024 filed by the Appellant by which Appellant sought replacement of Authorised Representative of the Homebuyers. By the Impugned Order, the Application filed by the Appellant has been rejected. Aggrieved by the Order rejecting I.A. No.1158/2024, this Appeal has been filed. 2. I.A. No. 7124/2024 has been filed seeking condonation of 1 day delay in filing the Appeal. 3. We need to first consider the I.A. No.7124/2024, seeking condonation of 1 day delay in filing the Appeal. 4. This Appeal has been e-filed on 24.08.2024 against the Order impugned dated 24.07.2024 passed in I.A. No.1158/2024. 30 days period for filing the Appeal came to an end on 23.08.2024. There being delay of 1 day, an Application for condonation of delay has been filed. 5. Time was granted to file the Reply to the delay condonation Application. Reply has been filed by the Respondent No. 1 opposing the Application for condonation of delay. 6. Learned Counsel for the Applicant in support of the delay condonation Application contends that the ground taken in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.10.2024, mentions that I.A. for condonation of delay filed. Thus, in the Report submitted on 14.10.2024, Application dated 05.10.2024 was noticed. 12. The submission which has been much pressed by Learned Counsel Mr. Sumant Batra is that in the Memo of Appeal and Affidavit, which is part of the refiled Appeal indicates that Affidavit is dated 09.09.2024, whereas, date 09.09.2024 which was typed in verification has been cut from 09.09.2024 to 24.08.2024. Vakalatnama is also signed on 09.09.2024. 13. Learned Counsel for the Appellant, explaining the above situation submits that after defect being marked by the Registry, Appeal was refiled on 09.09.2024, and at the time of refiling, the date mentioned was 09.09.2024, in the refiled Appeal, however, when it was pointed out by the Registry that Appeal having been e-filed on 24.08.2024, the date of the Appeal has to be same date, the date 09.09.2024 was corrected as 24.08.2024. Learned Counsel Mr. Sumant Batra sought to contend that when the Appeal was e-filed, there was neither any Affidavit nor Vakalatnama, hence the Appeal was clear as non-est filing. When we have checked the records of e-filing of Appeal as on 24.08.2014 it reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 28.08.2023, the Appeal cannot be held to be barred by time and the submission advanced by Shri Sanjeev Sen, the Appeal when it was refiled after curing the defects, i.e., 16.01.2024, may be treated as date of filing, cannot be accepted. The date of refiling and date of filing are two different concepts, which are clear from statutory scheme." 15. We, thus are of the view that for purposes of computation of limitation, the date of e-filing of the Appeal which is 24.08.2024 has to be treated the date for purposes of computing the limitation. 30 days period after 24.07.2024, having expired on 23.08.2024, there is a delay of only 1 day in filing of the Appeal. 16. Thus, we find sufficient cause in the grounds taken in the Application for condonation of 1 day delay. The delay of 1 day in filing the Appeal is condoned. 17. Now we proceed to notice the background facts, giving rise to this Appeal for deciding the issues raised in the present Appeal: i. The Appellant was allotted residential Apartment No. 2502 on 25th Floor of Tower - 19 in Lotus Panache Project of M/s. Granite Gate Properties Private Limited, the Corporate Debtor. ii. By an Order dated 10.01.2019, Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed Representative on account of various acts of commission/omission by the Authorised Representative. Adjudicating Authority also committed an error in observing that Application on behalf of single homebuyer for replacement of Authorised Representative is not maintainable. It is contended that Authorised Representative ought to have analysed the Settlement Agreement dated 30.05.2023 entered into between Devendra Singh RP and Shomit Finance Limited and ought to have raised issue regarding appropriation of the consideration offered by M/s. Shomit Finance Limited, qua the I-Ring Project. It is submitted that Adjudicating Authority after having considered the submissions and allegations made by the Applicant has decided to remove the RP, the same course ought to have been taken by the Adjudicating Authority for replacing the Authorised Representative also. 19. Learned Counsel appearing for the RP refuting the submissions of the Appellant contends that the main purpose for the Authorised Representative is to participate in the Meeting of CoC on behalf of the Financial Creditors in accordance with the prior voting instructions of such creditors. It is submitted that Authorised Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that no grounds have been made out to interfere with the Impugned Order. 21. We have considered the submissions of the Counsel for the Parties and perused the record. 22. Section 25A has been inserted in the IBC Code by Act 26 of 2018, with effect from 06.06.2018. Section 25A provides as follows: "25A. Rights and duties of authorised representative of financial creditors.- (1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means. (2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents. (3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions: Provided that if the authorised representative represents several financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o act as an authorised representative by a financial creditor in a class in Form CA shall not be considered, if the Form CA is received after the time stipulated in the public announcement.] (2) The interim resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representatives selected under sub-regulation (1) within two days of the verification of claims received under sub-regulation (1) of [regulation 12:] [Provided that till the application for appointment of the authorised representative for a class of creditors is under consideration before the Adjudicating Authority, the insolvency professional selected under sub-regulation (1) shall act as an interim representative for such class of creditors, and shall be entitled to attend the meetings of the committee and shall have such rights and duties as that of an authorised representative.] (3) Any delay in appointment of the authorised representative for any class of creditors shall not affect the validity of any decision taken by the committee. (3A) The financial creditors in the class, representing not less than ten per cent. voting share may seek replacement of the authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions received from Financial Creditors. As noted above, the Resolution Plan of the Corporate Debtor came to be approved in July 2020, with vote shares of 80.13% and the Application was immediately filed by the RP for approval of the Resolution Plan on 13.08.2020, which could ultimately be decided by the Impugned Order dated 24.07.2024. 27. Learned Counsel for the Appellant has contended that Order of the Adjudicating Authority is based only on Regulation 16(3A) of the CIRP Regulations, whereas, even if Application for replacement is not filed in accordance with the Regulation 16(3A) of the CIRP Regulations, Adjudicating Authority has ample jurisdiction under the inherent powers to remove the Authorised Representatives. Learned Counsel submits that RP can also be removed by the Adjudicating Authority in its inherent power, which is a law well settled. Adjudicating Authority in the Impugned Order has noticed the Judgment of this Appellate Tribunal where this Tribunal has held that Adjudicating Authority who appoints RP cannot be said to lack jurisdiction to take a decision to replace him. It is useful to notice Paragraphs 65 & 66 of the Judgment of the Adjudicating Authority, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant/RP which was observed by the Adjudicating Authority and reflected so in the impugned order is sufficient enough to direct IBBI to conduct an inquiry regarding the role played by the RP in this matter." 66. Similarly, in Union Bank of India vs. M/s Rajdeep Clothing & Advisory Pvt. Ltd. & Ors. (Company Appeal (AT)(Insolvency) N0. 399 of 2021), it could be ruled by Hon'ble Appellate Tribunal that where the RP commit illegalities, the Adjudicating Authority may not remain only as a spectator and it is entitled to exercise its inherent jurisdiction under Rule 11 of NCLT Rules to do the needful. The relevant excerpt of the judgment reads thus:- "We are of the opinion that if IRP/RP proceeds contrary to the established principles of conducting CoC Meeting and commits several illegalities the Adjudicating Authority may not act only as a spectator or he may shut his eyes. In such situation the Adjudicating Authority is entitled to exercise inherent jurisdiction under Rule 11 of NCLT Rules, 2016. Moreover, the said exercise by the Adjudicating Authority has already been approved in a case by this Appellate Tribunal in Company Appeal (AT)(Ins) No.786 of 2020 in Anil Kumar Vs Alla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than 3-1/2 years when Plan was approved could not be entertained. ii. The Authorised Representative of Homebuyers i.e., Financial Creditors in a class has to cast his vote in accordance with the prior instructions of Authorised Representative of the class. All Authorised Representative in a class are bound by the voting by majority of votes as reflected by the voting by the AR. A lone Homebuyer cannot be allowed to question the voting by Authorised Representatives on behalf of majority of Financial Creditor in a class. 31. When a procedure for replacement of the Authorised Representatives have been introduced in the Regulations by 16A(3A) inserted on 18.09.2023, the said statutory provision has to be followed for replacement of Authorised Representatives. Adjudicating Authority did not commit any error in relying on the Regulation 16A(3A) of the CIRP Regulations for not accepting the Application of the Appellant. 32. Looking to the limited role of Authorised Representative, i.e., only being confined to the voting in the Meeting of the CoC, no such grounds or facts were brought on the record, on basis of which Adjudicating Authority could have exercised its inherent jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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