Chintan Jhunjhunwala vs Avani Towers Private Limited on 29 August, 2025

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National Company Law Appellate Tribunal

Chintan Jhunjhunwala vs Avani Towers Private Limited on 29 August, 2025

This Appeal has been filed by the Appellant challenging the order dated 03.01.2025 passed by National Company Law Tribunal, Division Bench, Court No.II, Kolkata in IA (IB) No.1332/KB/2024 filed by the Appellant. By the impugned order, IA (IB) No.1332/KB/2024 has been dismissed by the Adjudicating Authority. Aggrieved by which order, this Appeal has been filed.

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2. Brief facts of the case necessary to be noticed for deciding the Appeal are:

(i) The Appellant - Chintan Jhunjhunwala is Suspended Director of Energy Properties Private Limited (hereinafter referred to as the "Energy") and a shareholder of Corporate Debtor ("CD") - Avani Towers Private Limited (hereinafter referred to as the "Avani").

(ii) Energy entered into a Memorandum of Understanding ("MoU") with Avani for acquisition of subject land comprising 10.19 acres situated at Ramrajatalla, Near Ramrajatalla Station Road, District - Howrah from UCO Bank in a sale under Section 13, sub-section (4) of the SARFAESI Act, 2002.

Under the MoU, the Avani was to give accommodation amount of Rs.2.7 crores to the Energy for buying the land from UCO Bank for acquiring the property. On 24.01.2008, A Shareholders' Agreement was executed between Energy and Avani, where 40% shareholding of Energy was transferred to Avani - CD. On 29.01.2008, Sale Certificate was issued by UCO Bank in favour of Energy for consideration of Rs.2,97,03,484.

(iii) MoU dated 24.01.2008, contemplated a Joint Development Agreement ("JDA") to be executed between Energy and Avani, Energy as owner and Avani as Developer for developing the Company Appeal (AT) (Ins.) No.326 of 2025 2 land of 10.19 acres. The JDA dated 16.06.2008 was entered between Energy (as owner) and Avani (as developer), where Avani - CD was offered exclusive development rights on the subject land. Under the JDA, Avani had to pay security deposit of Rs.12 crores, which was not to carry interest, any amount in addition to Rs.12 crores, subject to maximum of Rs.3 crores was to carry 18% interest per annum. The JDA provided for allocation of 60% constructed area to the developer and 40% to the owner - Energy. The JDA also contemplated for return of security deposit paid by Avani. One Victory Iron Works Ltd. ("Victory") was given a Leave and License on 10000 sq. ft. on 19.08.2011 for a period of 11 months

(iv) On Section 7 application filed by one - Sesa International Ltd., the Corporate Insolvency Resolution Process ("CIRP") commenced against the Avani vide order dated 15.10.2019. The Resolution Professional ("RP") of the CD filed an application before the Adjudicating Authority for taking possession of land of CD (in which the CD has development rights), which was allowed by the 12.02.2020 by the Adjudicating Authority.

(v) Both Energy and Victory filed Appeals before this Tribunal, which was dismissed on 08.04.2021. Victory and Energy filed Civil Appeals before the Hon'ble Supreme Court, which Company Appeal (AT) (Ins.) No.326 of 2025 3 Appeals were dismissed by Hon'ble Supreme Court on 14.03.2023, upholding the order of the RP for taking possession of the land. The Hon'ble Supreme Court held that by virtue of MoU dated 24.01.2008, Shareholder Agreement dated 24.01.2008 and JDA dated 16.06.2008, Avani has the development rights in 10.19 acres of land owned by Energy.

(vi) In the CIRP of the CD, Energy filed various IAs seeking several directions including participation in the Committee of Creditors ("CoC") of the Avani. There was certain issues regarding the constitution of the CoC, which are not relevant for deciding this Appeal.

(vii) The CoC of the CD passed a resolution on 31.10.2023 approving the Resolution Plan submitted by Respondent No.3

- Cheminare Tradecomm Pvt. Ltd. The RP filed an application before the Adjudicating Authority for approval of the Resolution Plan being IA No.1892/KB/2023. The Appellant filed an application - IA No.200 of 2024 seeking dismissal of IA No.1892 of 2023 filed by the RP for approval of Resolution Plan.

(viii) CIRP against Energy commenced by an order dated 20.03.2024 on an Application filed by Avani, through RP, claiming to be a Financial Creditor, in which proceedings, Respondent No.4 - Mahesh Chand Gupta was appointed as the RP of Energy.

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(ix) The RP of Energy on the basis of Minutes of the CoC, decided to withdraw IA No.200 of 2024, which was filed by Energy, objecting to the Resolution Plan. On 25.06.2024, the RP of Energy withdrew IA No.200 of 2024.

(x) The Appellant on 27.06.2024 filed an IA No.1332 of 2024 objection to the Resolution Plan as Member of Suspended Board of Energy and shareholder of the Avani. The Adjudicating Authority heard IA No.1332 of 2024 filed by the Appellant along with other applications, including IA No.1892 of 2023 filed by the RP for approval of the Resolution Plan. The Adjudicating Authority by the impugned order dated 03.01.2025, rejected IA No.1332 of 2024 filed by the Appellant. The Adjudicating Authority while rejecting the IA No.1332 of 2024 has held that the Appellant (Applicant) neither has locus nor has succeeded to make out a case meriting interference with the Plan submitted by the Successful Resolution Applicant ("SRA"). The Adjudicating Authority by the same order has also allowed application - IA No.1892 of 2023 approving the Resolution Plan. The Appellant in the Appeal has challenged the order passed by Adjudicating Authority dated 03.01.2025 in IA No.1332 of 2024 filed in CP(IB) No.372/KB/2019

3. We have heard Shri Krishnendu Datta, learned Senior Counsel appearing for the Appellant; Shri Abhijeet Sinha, learned Senior Counsel Company Appeal (AT) (Ins.) No.326 of 2025 5 has appeared for the RP/ Respondent No.1; Shri Nirmalya Dasgupta, learned Counsel appearing for the CoC; Shri K.K. Modi, learned Counsel has appeared for Respondent No.4 - RP of the Energy; and Shri Sandeep Bajaj, learned Counsel appearing for SRA.

4. Shri Krishnendu Datta, learned Senior Counsel appearing for the Appellant challenging the impugned order submits that the Appellant had locus to file the IA No.1332 of 2024, objecting to the Resolution Plan approved by the CoC of the CD on 31.10.2023. It is submitted that Energy, who is the owner of the land, of which the Appellant is shareholder, had filed IA No.200 of 2024 objecting to the application filed by the RP for approval of Resolution Plan. Various grounds were raised in IA No.200 of 2024, objecting to the Resolution Plan approved by the CoC of the Avani. It is submitted that the said application - IA No.200 of 2024 was withdrawn by the RP of the Energy after Energy was put into CIRP, vide order dated 20.03.2024. It is submitted that RP of Energy has joined hands with RP of Avani to get the Resolution Plan of Avani passed by Adjudicating Authority and he withdrew IA No.200 of 2024. It is submitted that it was thereafter the Appellant has filed IA No.1332 of 2024 objecting to the Resolution Plan. It is submitted that Appellant who was shareholder of the Energy, the owner of the land as well as the Suspended Director of the Energy had every locus to object to the Resolution Plan of the CD, who was developer of the land. The Adjudicating Authority committed error in observing that Appellant has no locus to file IA No.1332 of 2024. It is submitted that in the Resolution Company Appeal (AT) (Ins.) No.326 of 2025 6 Plan, which has been filed by Respondent No.3 in the CIRP of the CD - Avani, the ownership rights of Energy, who is owner of the land are being taken away. The Resolution Plan by its various Clauses, specially Clause 5(c), 5(h), 5(j) and 5(l), takes away valuable right of the Energy, the owner of land as protected in the MoU dated 24.01.2008 as well as JDA dated 16.06.2008. It is submitted that the impugned Clause 5(c) seeks to alter the order of repayment provided in Part II of the Third Schedule of the JDA, instead of rendering the security deposit repayable upon various milestones up to and including completion of the Project, the said clause seeks to appropriate the same upon approval of the Resolution Plan by acquiring the owner's allocation of the constructed area @ of Rs.1400 per sq. ft. Such Clause renders the entire security deposit to be due and payable immediately upon approval of the Resolution Plan, which is in complete departure of Part II of the Third Schedule of the JDA. Similarly, under Clause 5(h) the SRA with the approval of Resolution Plan is entitled without any involvement of the landowner to raise finance by encumbering the land, which is clear departure from the obligation of the parties under Clause 20.8 of the JDA. Similarly, it is contended that by Clause 5(l), SRA is permitted to bring in new investors by creating an SPV to hold the shares of Energy. Further, Clause 5(j) envisages the RP of Avani to be appointed as an independent Director/ Chairman of the Energy by giving the entire control of the Board of Energy. Resolution Plan is nothing but a oblique and purported effort towards usurpation of the subject land and denude Energy from all ownership rights over the Company Appeal (AT) (Ins.) No.326 of 2025 7 subject land. Alteration of terms of the contract is impermissible under the Resolution Plan. Shri Datta further submits that Avani does not become owner of the land, nor the judgment of Supreme Court dated 14.03.2023 holds the Avani as owner of the land. What was held by the Supreme Court by judgment dated 14.03.2023 is that Avani by JDA has development rights. The JDA clearly contemplates that owner of the land is Energy, who shall continue to be the owner. The submission of the Respondent that alteration of terms of the contract is permissible under the IBC and there is nothing illegal in the Resolution Plan, is incorrect. It is submitted that while alteration of terms of contract is permitted under Regulation 37 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), alteration and dilution of the owner's rights or interests in the subject land is not permissible and it is distinct from mere alteration of contractual terms. Learned Counsel for the Appellant referring to the judgment of this Tribunal dated 30.01.2023 in Greater Noida Industrial Development Authority vs. Roma Unicon Designex Consortium - Company Appeal (AT) (Ins.) No.180 of 2022 - submits that this Tribunal has held that without the consent of owner of the land, the property can never be subject matter of the CIRP, since the land is not the asset of the CD, who has only development rights. It is further submitted that Resolution Plan is a conditional Resolution Plan. The implementation of the Resolution Plan is uncertain. The Resolution Plan contemplates that infusion of Rs.17,94,27,647/- is entirely conditional and uncertain, it being Company Appeal (AT) (Ins.) No.326 of 2025 8 contingent upon obtaining of certain approvals and permissions, including conversion of land usage, which makes the Plan unworkable and in contravention of Regulation 38(2)(a) and 38(3)(d) of the CIRP Regulations. The RP of Energy and the CD have joined hands to harm the interest of Energy, who is the owner of land.

5. Learned Counsel for the RP refuting the submission of learned Counsel for the Appellant submits that the Appellant has not challenged the order allowing IA No.1892 of 2023 approving the Resolution Plan. It is submitted that although the Adjudicating Authority has taken the view that Appellant has no locus to file the application, being IA No.1332 of 2024, but the RP proceeds to counter the submissions raised by the Appellant on merits, accepting, for arguments sake, that Appellant has locus to file the application. The submission of the Appellant that Resolution Plan seeks to completely depart from the terms and conditions of JDA, is incorrect. The submission is also incorrect that Resolution Plan is attempting to dilute the rights of Energy contained in the JDA. The submission of the Appellant that Resolution Plan is contrary to Section 30(2)(e), is not correct. It is submitted that some of the Clauses in the Resolution Plan specially Clause 5(c), (h), (i), (g) and (l) as relied by learned Counsel for the Appellant in no manner alter the Clauses of JDA. Referring to Clause 5(c), it is submitted that repayment of Rs.12 crores as envisaged in the Resolution Plan is identical with the JDA and amount is to be refunded in the phased manner as contemplated in Part-II, Third Schedule of the JDA without any deviation. Learned Counsel for the Company Appeal (AT) (Ins.) No.326 of 2025 9 Respondent has referred to Clause 5(m), which categorically provides for Resolution Plan to comply with MoU dated 24.01.2008, Shareholding Agreement dated 24.01.2008 and JDA dated 16.06.2008. It is submitted that Clauses of Resolution Plan neither prejudice any of the Clauses of the JDA, nor any of the rights of the Appellant have been diluted. Regarding appropriation of owners' allocation @ 14000 sq. ft. as contemplated in the JDA and the Clauses provided for such appropriation, it is in accordance with the JDA. So far as, the Project's finance is concerned, the JDA itself provided to create a charge or mortgage, hence, no further consent is required from the Energy. The right is given to Avani to create charge on the land to secure its interest. The Plan rightly provided the name of the attorney holder to substitute with the name of Directors of the Applicant as per the JDA. Under shareholding, the Applicant - Avani has right to nominate its Director in the Board of Energy. The Resolution Plan only contemplates to continue with the aforesaid understanding. The Resolution Plan clearly states that SRA envisages to implement the terms of JDA and Clauses as submitted by the Appellant, which is not in contravention of any law or any Agreement. The allegation that RP of Avani and RP of Energy has hands in glove, is wholly incorrect.

6. Learned Counsel for the SRA submits that SRA was fully eligible to submit the Resolution Plan. The Clauses of the Resolution Plan in no manner contravene any Clauses of the JDA and MoU. It is submitted that Resolution Plan has been approved with 100% vote share of the CoC. Company Appeal (AT) (Ins.) No.326 of 2025 10 In reply to the submission that the Plan is conditional, it is submitted that Resolution Plan adopts the various Clauses of JDA. The Resolution Plan nowhere provides for the exit route/ option to withdraw the Resolution Plan. The Resolution Plan is binding upon all the stakeholders, including Respondent No.3. The submission that Resolution Plan is contingent is incorrect.

7. Learned Counsel appearing for Respondent No.4 submits that allegation that Respondent No.4 has colluded with RP of Avani is incorrect and baseless. After the CIRP of the Energy commenced, the RP of Energy convened the 4th CoC Meeting and RP has independently looked into the Resolution Plan and found that Resolution Plan in no manner harm the interest of Energy. Hence, a decision was taken to withdraw IA No.200 of 2024 in the interest of Energy and said was bonafide decision taken by the RP of Energy. Respondent No.4 has acted in the interest of Energy.

8. Learned Counsel for the parties have placed reliance on judgment of the Hon'ble Supreme Court and this Tribunal, which we shall refer to while considering submissions in detail.

9. From the submissions of learned Counsel for the parties, following are the questions, which arose for consideration in this Appeal:

(I) Whether Resolution Plan submitted by Respondent No.3, specially Clauses 5(c), (h), (i), (j) and (l), take away ownership rights of the Energy and the aforesaid Clauses contravene the provisions of MoU dated 24.01.2008 and JDA dated 16.06.2008?

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(II) Whether ownership rights of the Energy in the land of 10.19 acres are being taken away by the Resolution Applicant, under the approved Resolution Plan?

(III) Whether Resolution Plan submitted by SRA is contingent and conditional Resolution Plan, which could not have been approved?

(IV) Whether the SRA has not fulfilled necessary eligibility.

10. Before we proceed to consider the above submissions, it is relevant to notice certain Clauses of MoU dated 24.01.2008; JDA dated 16.06.2008 and the judgment of the Hon'ble Supreme Court, which was delivered in respect of CIRP of the CD dated 14.03.2023, where nature of rights possessed by Avani has been considered and decided.

11. The facts on the record reveal that land of 10.19 acres of land was owned by M/s Shree Gobinddeo Glass Works Ltd. There being default committed in payment of facilities extended by UCO Bank, proceedings under Section 13 of the SARFAESI Act were initiated by the UCO Bank, in which proceedings the said land was sold for consideration of Rs.2,97,03,484/- in favour of Energy. A MoU dated 24.01.2008 was entered between Energy and Avani, where Avani agreed to provide accommodation amount of Rs.2.7 crores to the Energy. The said accommodation amount was to be paid by Avani to UCO bank directly on behalf of the Energy for obtaining the sale and transfer of property. Clause 14.1 of the MoU provides as follows:

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"14.1. The said Accommodation Amount agreed to be disbursed and/or made available by Avani, a sum of Rs. 2.7 Crores will be paid to the said Bank directly by Avani for and on behalf of Energy for obtaining the sale and transfer of the said property in favour of the Company and further sum of Rs. 9.3 Crores will be disbursed before and after the Definitive Agreement being entered into detailing out all the terms and conditions agreed upon being the subject of development of the said Property to enable Avani undertake Development of the said."

12. The MoU further contemplates that the amount of Rs.9.3 crores will be disbursed by the Avani after Definitive Agreement is entered into, detailing terms and conditions for development of the property. Clause 14.2 provides as follows:

"14.2. The said balance sum of Rs. 9.3 Crores will be utilized by the Company for liquidation of all liabilities and for obtaining vacant possession of the portions of the property presently in occupation of the said workmen and/or staff and/or occupants."

13. One more Clause, which is relevant to notice is Clause 15.3, which provides that Avani shall be entitled to create a charge and mortgage in respect of the premises by deposit of the original title deeds for the purpose of obtaining construction loan. Clause 15.3 is as follows:

"15.3 It is hereby expressly agreed and declared that Avani shall be entitled to create a charge and/or mortgage over and in respect of the said Premises and/or. Avani's Area by deposit of the original title deeds for the purpose of obtaining construction loan for undertaking development of the said Premises after sanction of the Plan for which Energy with join as co applicant/co-borrower."

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14. The MoU further provides that for protecting the interest of Avani including repayment of Rs.12 crores, it was agreed that Jhunjhunwala Group Shareholders shall transfer 40% of the shares in favour of the Avani. Clause 16.2 provides as follows:

"16.2 For the purpose of protecting the interest of Avani including repayment of the said sum of Rs. 12,00,00,000/- (Rupees twelve crores only) it has been agreed that the Jhunjhunwala Group Shareholders out of the shares presently held by them will transfer 40% of the shares at face value unto and in favour of Avani of Avani or affiliated and/or nominees."

15. Clause 18 of the MoU provides for 'Essential terms of the Development Agreement', which included allocation of 60% to the developer and 40% to the Energy.

16. A Shareholder Agreement was also executed on 24.01.2008 transferring 40% of the shares to the Avani and further 20% shares were transferred to one Mr. R.L. Gaggar.

17. After the aforesaid MoU, Avani paid the amount to the UCO Bank and a Sale Certificate dated 29.01.2008 was issued by the UCO Bank in favour of the Energy. After issuance of Sale Certificate on 29.01.2008, Joint Development Agreement was entered on 16.06.2008. The JDA, clearly provided that Energy is the owner of land in possession. Clause 6.1 provides for appointment of developer, who has to make construction and to cause marketing/ sale of both developers allocation and owners allocation. Clause 6.1 provides as follows:

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"6.1 Appointment and Acceptance: The Owner hereby appoints the Developer as the developer of the Said Land and the Developer hereby accepts such appointment. By virtue of such-appointment, the Owner hereby grants and assigns exclusive right to the Developer to build upon and exploit commercially the Said Land by (1) demolishing the existing structures, if any (2) constructing the Housing Complex and (3) causing marketing/sale of both Developers Allocation and Owners Allocation."

18. Clause 7 provides for 'Allocation in the Project'. Clause 7.1 is as follows:

"7. Allocation: 60% of the total constructed area together with the undivided proportionate share in all common parts portions areas, roof, can parks and facilities and together with the undivided proportionate share in the land comprised in the said property attributable thereto shall belong to the Developer (hereinafter referred to as the Developer's Allocation) and the remaining 40% of the total constructed area together with the undivided proportionate share in all common parts portions areas, roof, can parks and facilities and together with the undivided proportionate share in the land comprised in the said property attributable thereto shall belong to Owner (hereinafter referred to as the Owner's Allocation).

19. Clause 8 provides for 'Security Deposit and Refund'. Clauses 8.1, 8.2 and 8.3, which are relevant, are as follows:

"8.1 Refundable Deposit The Developer will keep in deposit with Owner a sum of Rs.12,00,00,000/- (Rupees twelve crore) (hereinafter referred to as the Security Deposit) which will not carry interest and will be payable & refundable in the manner as would appear from the Fart-1 of the Third Schedule hereunder written. The 'Developer as on date has Company Appeal (AT) (Ins.) No.326 of 2025 15 already paid Rs.7,86,83,108/- (Rupees seven crores eighty six lác eighty three thousand one hundred eight). The said sum of Rs.12,00,00,000/-1 (Rupees twelve crore) agreed to be paid by the Developer will be treated as the Security Deposit. However any further sum, subject: to a maximum of Rs.3,00,00,000/- (Rupees three crore), if advanced by.

Developer to Owner, shall form part of Security Deposit and shall carry interest at agreed rate of 18% per annum compounded and payable quarterly.

8.2 Refund of Refundable Deposit: The Security. Deposit shall be refunded by the Owner to the Developer in the manner provided in the Part-II of the Third Schedule, The Owner agrees to ensure timely repayment of the said Refundable Deposit in the manner as hereinbefore stated and in the event of failure to refund an interest 18%ipa. compounded quarterly shall become payable calculated from the due date of refund.

8.3 Recovery of Security Deposit: In event the Owner fails to refund the said Security Deposit within 7 (seven) days of the same becoming due then and in that event Developer shall be entitled to acquire arid/or buy back such portion of the Owner's Allocation for repayment of the said Security Deposit at a agreed rate of Rs.1,400/- (Rupees fourteen hundred) per sq. ft. The Owner's Allocation shall stand reduced by such square feet as may be derived by dividing the outstanding refund amount with the rate of 1,400/- (Rupees fourteen hundred) per square feet."

20. Clause 10 deals with 'Powers and Authorities'. General Power of Attorney was to be granted to the Developer and/or its nominees. Clause 10.1 provides as follows:

"10.1 General Power of Attorney: The Owner shall grant to the Developer and/ or its nominees a General Power of Company Appeal (AT) (Ins.) No.326 of 2025 16 Attorney for causing construction of the Housing Complex further a separate power of Attorney for Sale shall be executed in favour of the Developer and the Owner shall also execute a separate Power of Attorney in favour of the Developer for the purpose of sanction."

21. The Development Agreement captures the Owners Obligation. Clause 16.1 deals with Owners Obligation, which is as follows:

"16.1 To fulfill all Conditions Precedents: The Owner shall obtain all clearances/ permissions as provided in the Fourth Schedule before the Developer proceeds to perform its part of obligations: Out of the aforesaid Conditions Precedents upon failure by the Owner, which ever is carried out by the Developer on behalf of the Owner and any amount which may be incurred on such account by Developer shall be reimbursed by Owner and/or adjusted and appropriated by sale of the Owner's Allocation as hereinafter appearing at best market rate achievable and the Owner shall sign and execute all affidavits papers deeds documents and Instruments as may be necessary and/or required."

22. Clause 17 deals with 'Developer's Obligations'. Clause 17.1 is as follows:

"7.1 Time of Completion: The Developer hereby agrees and covenants with the Owner that subject to the Owner meeting all its obligations and those provided, in Fourth Schedule including those mentioned in the various sub-clauses of Clause 16 above and subject further to Force Majeure (defined in, Clause 22 below): and reasons beyond the control of the Developer, the Developer shall complete. the construction of the Housing Complex within the Stipulated Period mentioned in Clause 11:5 above."

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23. Third Schedule of the Part-II deal with 'Manner of Refund of Deposit'. Third Schedule Part-II is as follows:

"Part-II (Manner of Refund of Deposit)

1. The said Refundable Deposit shall become refundable in the following manner:

a) Rs.3,00,00,000/- (Rupees three crore) simultaneously upon completion of foundation of the blocks and certified so by the Architect.

b) Rs.3,00,00,000/- (Rupees three crore) simultaneously upon completion of 50% of the super structure and certified so by the Architect

c) Rs.3,00,00,000/- (Rupees three crore), simultaneously upon completion of the total super structure and brickwork as certified by the Architect.

d) Balance sum of Rs.3,00,00,000/- (Rupees three crore) upon completion of the project and certified so by the Architect."

24. The MoU dated 24.01.2008 and JDA dated 16.06.2008 created development rights in favour of the Avani - the CD in the present proceedings. After initiation of CIRP against the Avani by order dated 15.10.2019, the RP had filed an application for taking possession of the subject land, which was allowed by the Adjudicating Authority on 12.02.2020, which order was challenged both by Energy as well as Victory, who was granted Leave and License for 10000 sq. ft. in the subject land. The Appeal filed by Energy as well as Victory were dismissed by this Tribunal on 08.04.2021 against which a Civil Appeal No.1782 of 2021 by the Energy and Civil Appeal No.1743 of 2021 by the Company Appeal (AT) (Ins.) No.326 of 2025 18 Victory, were filed before the Hon'ble Supreme Court. Both the Appeals came for consideration before the Hon'ble Supreme Court and the Hon'ble Supreme Court vide its judgment dated 14.03.2023 dismissed both the Appeals and in the said judgment the Hon'ble Supreme Court noticed in detail the MoU dated 24.01.2008, JDA dated 16.06.2008 and after noticing the MoU as well as JDA and Sale Certificate, held that bundle of rights and interests were created in favour of the CD - Avani, over the immovable property in question. It was held that development rights created in favour of the CD constitute "property" within the meaning of the expression under Section 3(27) of the IBC, which are "asset" within the meaning of Section 18(f) and Section 25(2)(a) of the IBC. Following was held by Hon'ble Supreme Court in paragraph 35 of the judgment:

"35. From the sequence of events narrated above and the terms and conditions contained in the Agreements entered into by the parties, it is more clear than a crystal that a bundle of rights and interests were created in favour of the Corporate Debtor, over the immovable property in question. The creation of these bundle of rights and interests was actually for a valid consideration. But for the payment of such consideration, Energy Properties would not even have become the owner of the property in dispute. Therefore, the development rights created in favour of the Corporate Debtor constitute "property" within the meaning of the expression under Section 3(27) of IBC. At the cost of repetition, it must be recapitulated that the definition of the expression "property" under Section 3(27) includes "every description of interest, including present or future or vested or contingent interest arising out of or incidental to property". Since the expression "asset" in common parlance denotes "property of any kind", the bundle Company Appeal (AT) (Ins.) No.326 of 2025 19 of rights that the Corporate Debtor has over the property in question would constitute "asset" within the meaning of Section 18(f) and Section 25(2)(a) of IBC"

25. In IA No.1332 of 2024, which was filed by the Appellant before the Adjudicating Authority, following prayers were made:

"a. Direction to be passed for dismissal of the lA (IBC) 1892 of 2023 filed by the RP before this Hon'ble Tribunal for approval of the Resolution Plan of the SRA.

b. Direction to be passed for rejection of the Resolution Plan of the SRA which was approved on October 31, 2023 at the 29th meeting of the CoC by the CoC, since the CIRP of the CD culminating into the approval of the Resolution Plan is vitiated with fraud and non- joinder of the EPPL being the necessary party;

c. Direction to be passed declaring the approval of the Resolution Plan of the SRA by the CoC as bad in law;

d. Such further or other order or orders as to this Hon'ble Tribunal may deem fit and proper;

              e.     Interim order in terms of prayer (a) and (b);

              f.     Ad interim orders in terms of prayer (a) and (b);

              g.     Receiver.

              h.     Costs."

Question Nos.(I) and (II)

Both the above questions being inter-related are being taken together.

26. We have already noticed the relevant Clauses of JDA. Learned Counsel for the Appellant has relied on various Clauses of the Resolution Company Appeal (AT) (Ins.) No.326 of 2025 20 Plan to contend that the above Clauses take away the ownership rights of the Energy and contravene the rights of the Energy, which are protected under the JDA. Various Clauses of the Resolution Plan have been referred to and challenged by the Appellant in support of its submission.

27. We now proceed to notice the relevant Clauses, which according to the Appellant take away the ownership rights of the Energy. The first Clause which has been attacked by the Appellant is Clause 5(c) of the Resolution Plan. The copy of the Resolution Plan is brought on the record as Annexure-P to the Appeal. The Resolution Plan dated 20.10.2023 Clause 5(c) provides as follows:

"5(c) JDA further envisages repayment of Security Deposit of Rs. 12 Crores which is to be paid back to the CD in phases after commencement of the project, as detailed under third schedule in the JDA.

Further in terms of the clause 8.1 and as per the information made available to the RA, additional loan advances were given to EPPL for Rs.3.50 Crores, which would also form part of the Security Deposits, and as such the entire amount of Rs.3.50 Crores in terms of the JDA would become payable in the manner as provided under Third Schedule, Part II. Being the additional advance, it is envisaged that the entire amount would become payable upon completion of foundation of the block and certified so by the architect.

As per the clause 8 (Security Deposits & Refunds) on failure of such payments (Rs.12 Crores & Rs.3.5 Crores) and within the due dates, developer shall automatically with approval of this plan & in terms of the JDA, be entitled to appropriate the outstanding amount relating to such security deposits becoming due by acquiring the owners allocation of the Company Appeal (AT) (Ins.) No.326 of 2025 21 constructed area @1400/- per sqft, derived by dividing the outstanding refund amount with the rate of Rs 1400/- per Sqft, as per clause 8.3 of the JDA."

28. The submission of the Appellant is that Resolution Plan by virtue of Clause (c), seeks to alter the order of repayment provided in Part-II Third Schedule of JDA. Instead of rendering the security deposit repayable upon various milestones up to and including completion of the Project, the said Clause seeks to appropriate the same upon approval of the Resolution Plan by acquiring the owner's allocation of the constructed area @ Rs.1400 per sq. ft. Learned Counsel for the RP has submitted that submission of the Appellant questioning Clause 5(c), is not correct. Clause 5(c) captures the terms of JDA and repayment as provided in Part- II of Third Schedule. The said appropriation is on failure of payment within the due dates. Learned Counsel for the RP submitted that the said Clause 5(c) does not contemplate that Plan does not deviate from the JDA nor does it state that the adjustment would be made immediately after approval of the Plan. The amount to be refunded in the manner as contemplated in Part-II of Third Schedule is without any deviation. Learned Counsel for the RP has relied on Clause 5(m), which clearly provides that the Resolution Plan envisages to carry out all the terms of the MoU, Shareholding Agreement and JDA on approval of Resolution Plan by the Adjudicating Authority subject to fulfillment of the pre- condition in terms of Fourt Schedule of the JDA. Clause 5(m) of the Plan is as follows:

Company Appeal (AT) (Ins.) No.326 of 2025 22

"5(m) Resolution Applicant envisages to carry out all the terms of the Memorandum of Understanding, Shareholding Agreement and Joint Development. Agreement on approval of the Resolution Plan by the Adjudicating Authority, subject to fulfillment of the pre-condition in terms of Fourth Schedule of the Joint Development Agreement by EPPL for commencement of construction, including obligation by the owner for making the clear marketable title, permission & clearances, owners indemnity and other obligation by the owner as contained in the JDA including but not limited to as more fully mentioned in the clauses, 16.7, 16.8, 21.2, 18.1 and in the fourth schedule of the JDA."

29. We, thus, find that apprehension of Appellant is misplaced that on approval of Resolution Plan, immediately the owner's shares shall be appropriated towards the repayment of the security deposit. The submission of the Appellant that ownership rights of the Energy is being taken away by the above Clause, also cannot be accepted. Appropriation @ Rs.1400/- per sq. ft. on account of non-refund of the amount by Energy was contemplated in the JDA, relevant Clause of the JDA 8.3 has been noted above, which provided for agreed rate of Rs.1400/- per sq. ft. Hence, neither the ownership right of the Energy was taken away by the aforesaid Clause nor Clause 5(c) contravenes the provisions of JDA. More so, in view of the clear stipulation in Clause 5(m), the Resolution Applicant is obliged to act in accordance with the various Clauses of JDA and Clauses of Resolution Plan are to be implemented, subject to fulfillment of pre-condition as contemplated in the JDA.

30. Shri Krishnendu Datta, Learned Senior Counsel has placed reliance on the judgment of this Tribunal in "Greater Noida Industrial Company Appeal (AT) (Ins.) No.326 of 2025 23 Development Authority (GNIDA) vs. Roma Unicon Designex Consortium- Company Appeal (AT) (Insolvency) No.180 of 2022"

decided on 30.01.2023 to support his submission that the assessment of a third party cannot be made subject matter of the Resolution Plan. In the above case, Greater Noida Industrial Development Authority was owner of the land which was allotted to one M/s. Earth Towne Infrastructures Pvt.

Ltd. which gave development rights to Earth Infrastructures Limited.

Roma Unicon Designex Consortium has submitted a Resolution Plan. One of the questions framed was as to whether assets of the subsidiary i.e. lease land could have been dealt with in the Resolution Plan and could have contained a clause for transfer of lease hold rights. This Tribunal found the Resolution Plan does not confine to the development rights which were granted by the land owing company but also contemplates transfer of title of land in favour of the Successful Resolution Applicant.

Following was observed in paragraph 51 of the judgment:-

"51. The Resolution Plan does not confine itself to the development rights, which were granted by the land owning company in favour of the Corporate Debtor on an unregistered Agreement, but also contemplates transfer of title of land in favour of Successful Resolution Applicant/ Special Purpose Company as contemplated in the Resolution Plan, which is an impermissible. The Development Agreement, which was unregistered document, could not have dealt with any right in the Project land and the lease hold right as per Development Agreement continued with the Lessee. Hence, the Resolution Plan could not have provided for transfer of the lease land in favour of Successful Resolution Applicant/ Special Purpose Company.

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Admittedly, the Appellant was not party to the Development Agreement, which was executed between land holding Company of the Corporate Debtor. The Appellant not being the creditor of the Corporate Debtor nor stakeholder in the CIRP Resolution Plan could not bind the Appellant in any manner. It is also relevant to notice that development agreement dated 09.09.2010 being an unregistered agreement could not have transferred any right in the lease land in favour of the developer. The Appellant not being party to such development agreement, the same is not binding on Appellant."

31. The judgment of this Tribunal in Roma Unicon Designex (supra) was thus on its own facts. Present is a case where the Resolution Plan and its clauses are in accord with the Development Agreement between the parties dated 16.06.2008 and present is not a case where any ownership is being transferred to the Corporate Debtor. We thus, are of the view that the said judgment does not help the Appellant in the present case.

32. The next Clause, which is questioned by the Appellant is Clause 5(h). Clause 5(h) is as follows:

"5h) JDA further envisages under clause 20.8, project finance that can be availed by the developer, it is hereby clarified that on approval of the resolution plan, the developer may avail such project finance facility and create such charge or equitable mortgage on the property owned by EEPL or on the proposed contracted area, without requiring any further clearances or no-objection certificate from the owners. Any such mortgage or charge created, shall be valid and subsist, till the project is completed. All the stakeholders including owners & escrow agent shall on approval of the resolution plan provide all the necessary co-

operation or assistance, including handover of such original title deeds, documents etc, as may be required towards such loans."

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33. In response to Clause 5(h), the RP has contended that right to create charge/ mortgage by Avani was recognized in the JDA. Clause 20.8 of the JDA has been referred to by the Appellant, which deals with Project finance. We, further notice that even the MoU dated 24.01.2008, Clause 15.3 provides that Avani shall be entitled to create a charge and/ or mortgage over and in respect of the premises by deposit of the original title deeds for obtaining construction loan. Thus, Clause 5(h) of the Resolution Plan in no manner contravenes the provisions of JDA or MoU.

34. Next Clause which has been questioned by the Appellant is Clause 5(i), which provides as follows:

"i) As per the information made available, the owner has executed two (2) power of attorney in the name of directors of the suspended board, dated 16.06.2008 & 23.06.2008 towards development including sale, sanction and all such action that may be required in completion of the project. It is envisaged that on approval of the resolution plan, the name of such power of attorney holder would deemed to be substituted with the new directors of the resolution applicant, for which no further registration or agreement would be required.

In terms of the said Power of Attorney, executed pursuant to the Joint Development Agreement (JDA) and as contained in clause 12.3 of the said JDA, the developer shall have all the exclusive rights to receive advances including for the purpose of raising finance, sale, transfer or execute all deeds & agreements in terms of the JDA and that the owner shall have no rights to claim in the proceeds or advance money, except for in the manner as contained in the resolution plan and/or JDA."

35. The above Clause itself indicates that owner had executed two Power of Attorney in the name of Directors of the Suspended Board towards development including sale, sanction and all actions, which are required for completion of the Project. On approval of Plan, it was envisaged that name of such Power of Attorney holders would be deemed Company Appeal (AT) (Ins.) No.326 of 2025 26 to be substituted with the new Directors of the Resolution Applicant. The JDA has contemplated for execution of the Power of Attorney by the owner. Clause 10.1 provided for grant of power of attorney. Clause 10.1 is as follows:

"10.1 General Power of Attorney: the Owner shall grant to the Developer and/ or its nominees a General Power of Attorney for causing construction of the Housing Complex further a separate power of Attorney for Sale shall be executed in favour of the Developer and the Owner shall also execute a separate Power of Attorney in favour of the Developer for the purpose of sanction."

36. Learned Counsel for the Respondent in support of his submission has relied on judgment of this Tribunal in Dharmesh Jain vs. Jayesh Sanghrajka & Ors. - Company Appeal (AT) (Ins.) No.825 of 2024 decided on 29.10.2024. In the above case, the Appellant who was given power of attorney under the registered Development Agreement had questioned the Clause of the Resolution Plan, which contemplated that the said power of attorney shall stand cancelled. The challenge was made by filing an application by the Appellant, which was rejected by the Adjudicating Authority. The Appeal filed against the said order was dismissed by this Tribunal. This Tribunal in paragraphs 17, 20 and 21 laid down following:

"17. We having noticed the relevant clauses of the Development Agreement and the Power of Attorney executed in favour of the Appellant, it is amply clear that the Appellant in the PoA was nothing but nominee of the corporate debtor and Appellant being suspended director of the corporate debtor was treated as nominee of the corporate debtor for the purpose of facilitating the developers. The developers being corporate debtor, PoA was not executed in an individual capacity of the appellant nor gave any right to the subject land. When the Resolution Plan submitted by the SRA is approved and the corporate debtor is being taken over by the SRA, the development of property and all other Company Appeal (AT) (Ins.) No.326 of 2025 27 steps as per the Resolution Plan has to be taken by the SRA. The PoA dated 06.08.2005 which was executed in favour of the Appellant served its purpose and cannot be relied for any right which can be claimed by the Appellant in the process. Appellant who was contemplated to extend its co-operation as nominee of the corporate debtor in developing the property is now taken a stand to create obstacles in revival of the corporate debtor to carry out function by the SRA who now takes over the corporate debtor after approval of the Resolution Plan.

20. When PoA which was given for a particular purpose to the Appellant as nominee of the corporate debtor and Resolution Plan is approved by the CoC of the corporate debtor, the approval of the Resolution Plan is in commercial wisdom of the CoC and in event, the Resolution Plan declare the PoA which was given in favour of the Appellant as nominee of the corporate debtor as cancelled, the said clause of the Resolution Plan cannot be allowed to be challenged by the Appellant nor Appellant was given any rights in the subject property so as to assert any right. The endeavour of the Appellant is nothing but creating obstacles in revival of the corporate debtor in which he was suspended director. We also affirm the findings and imposition of cost of Rs.1 lakh that application was filed by the Appellant is nothing but a vexatious and dishonest attempt.

21. Counsel for the Appellant has also relied on the judgment of the Hon'ble Supreme Court in "Suraj Lamp and Industries Pvt. Ltd. vs. State of Haryana and Anr.- (2012) 1 SCC 656" for the proposition that mere execution of the Development Agreement could not have the effect of divesting Ralliwolf of all title, rights and interest in the subject property. There can be no dispute to the proposition laid down by the Hon'ble Supreme Court in the above case.

Corporate Debtor had development rights to develop the property on consideration of Rs.7 Crores. It is no more resintegra that the development rights can be claimed by the corporate debtor. The basis of the application filed by the Appellant was PoA dated 06.08.2005 and whether on the basis of the said PoA, clause of the Resolution Plan can be impugned by the Appellant was the question to be answered. As held by us, the PoA was executed in favour of the Appellant who was a nominee of the corporate debtor, only to facilitate the developers in carrying out the development and no rights were given to the Appellant in their individual capacity on the property. None of the rights of the Appellant, thus, can be said to be affected by approval of the Resolution Plan. PoA has out lived its purpose and has rightly held to be cancelled in the clause 7.33. We thus, do not find any error in the order of the Adjudicating Authority rejecting IA No.3689 of 2022.

Company Appeal (AT) (Ins.) No.326 of 2025 28

37. The above judgment fully supports the submission of the Respondent that the Resolution Plan providing for execution of Power of Attorney in favour of Resolution Applicant is correct. Further, with regard to Developer's right to receive finances, the said was contemplated in Clause 12.3. We, thus, do not find any contravention of the JDA by Clause 5(i) of the Resolution Plan.

38. Next Clause 5(j) has been questioned by the Appellant, which is as follows:

"5j) That on approval of the Resolution Plan by the Adjudicating Authority, CD shall continue to hold the shares/ directorship in EPPL in terms of various agreement executed with the CD, as on the CIRP commencement date.

The share of 20% however held by the Mr. Gaggar shall be kept in an escrow account and remain so till the completion of the project. It is further envisaged that the Resolution Professional shall be appointed as the Independent Director/ Chairman of EPPL and monitor the implementation of the Resolution Plan.

After the approval of the Resolution Plan, the said terms and conditions would continue to be governed strictly as per the executed documents between the Corporate Debtor and Energy Properties Pvt. Ltd or any other party. Upon approval of the Resolution Plan the said parties are required to comply with the said terms: For any breach on the part of any party, the Resolution Applicant shall have the right to seek for additional compensation, damages, loss for delay in the project, etc."

39. The MoU dated 24.01.2008 as well as Share Purchase Agreement dated 24.01.2008 had clearly provided for transfer of 40% of shares to Avani and 20% shares to Mr. R.L. Gaggar. Under the Share Purchase Agreement, the Avani was entitled to nominate Director in the Energy and nominating RP of the Avani as Independent Director was only for the implementation of the Resolution Plan. Hence, we do not find Clause 5(j), to be violative of any provision of the JDG.

Company Appeal (AT) (Ins.) No.326 of 2025 29

40. Last Clause, which has been questioned is Clause 5(l), which is as follows:

"5(l) On approval of the Resolution Plan, the Corporate Debtor shall have the sole & exclusive right to bring in Joint Venture partner, raise funds or bring in investors by creating an SPV, which would hold the share of EEPL or the Corporate Debtor, as may be required towards implementation of the Resolution Plan and/or completion of the project."

41. The above Clause is also in accordance with the rights given to the Developer in MoU and JDA. The above Clause in no manner contravenes the provisions of JDA.

42. In view of the foregoing discussions, we answer Question Nos.(I) and (II) in following manner:

Answer to Question No.(I) Clause 5(c), (h), (i), (j) and (l) of the Resolution Plan neither take away ownership right of the Energy, nor contravene any provisions of MoU dated 24.01.2008 and JDA dated 16.06.2008.

Answer to Question No.(II) Ownership of the Energy in the land of 10.19 acres, is not taken away under the approved Resolution Plan.

Question No.(III)

43. The submission of the Appellant is that payment as envisaged in the Resolution Plan indicates that Resolution Plan is a contingent Plan. Learned Counsel for the Appellant submits that significant part of the Resolution Plan viz. Rs.17,94,27,647/- out of the proposed amount of Company Appeal (AT) (Ins.) No.326 of 2025 30 Rs.25,11,70,194/-, are conditional and contingent upon obtaining approvals under Fourth Schedule of the JDA, which have not been obtained for last 17 years of the subsistence of the JDA, such contingency in infusion of the significant funds, renders the Resolution Plan as uncertain and does not give any concrete timeline for the implementation of the Resolution Plan. The Resolution Plan provides for details of amount to be provided to each stakeholders. Schedule-A of the letter dated 20.10.2023 at page 834 of the paper book, which provides for payment, the payment of Rs.5,24,67,647 and Rs.12,69,60,000/- have been referred to at Item Nos.3 and 4 of the Schedule-A. The timeline for payment is clearly mentioned. The above timeline for payments cannot be said to be contingent or conditional. Further, in the Resolution Plan, there is no Clause, which provides for exit of the Resolution Applicant. The Resolution Applicant and all stakeholders are fully bound to implement the Resolution Plan by taking substantial steps. We, thus, do not find any such contingency in the Resolution Plan, which makes the Plan violative of any provisions of Section 30, sub-section (2) (e) of the IBC. No fault can be found with the Resolution Plan. Question No.(III) is answered accordingly.

Question No.(IV)

44. With regard to eligibility of SRA, learned Counsel for the Appellant has submitted that SRA did not fulfill the criteria of net worth, which was necessary pre-condition to be fulfilled by a Resolution Applicant. It is submitted that Financial Statements of the SRA for the Financial Year Company Appeal (AT) (Ins.) No.326 of 2025 31 ended on 31.03.2023, the funds deployed by the Company was meagre Rs.25,38,800/-. Neither, does the SRA had available cash and cash equivalent nor it has Rs.5 crores, on its book available for deployment for investment. Both RP and SRA have refuted the above submission and contend that SRA fulfills the eligibility. It is submitted by Respondent No.3 that in the Appeal, the relevant Financial Statements are there, which were filed along with the affidavit of RP, where the RP has referred to the eligibility criteria. It is useful to notice paragraphs 4, 5 and 6 of the affidavit, which are as follows:

"4. I state that as per the Invitation for Expression of Interest a 'corporate applicant' having a Net Worth of Rs. 3 crores (Rupees Three Crores Only) or above can participate in the bidding process. Moreso, for a corporate applicant being an NBFC would also be eligible as per the additional criterion that had also been laid in the Invitation of EOI, which ahs been stated below:

For Financial Institutions/ Investment Companies/ Fund Houses/ PE Investors/NBFCs/ ARC or any other applicant: Minimum Asset Under Management (AUM) or funds deployed of Rs.5 Crores in the immediately preceding completed financial year or Committed funds available for investment/ deployment in Indian companies or Indian assets of Rs.5 Crore in the immediately preceding completed financial year.

A copy of the Invitation for expression of interest has already been annexed to the Rejoinder filed by the Applicant at pages14-39 marked as Annexure A.

5. It will be evident from the audited financial statement of Chiminare Tradecomm Private Limited for the financial year ended at 31st March, 2023 that the Net Worth of Chiminare as on 31st March.2022 is Rs.4,64,64,176/- and as on 31st Company Appeal (AT) (Ins.) No.326 of 2025 32 March, 2023 is Rs. 4,74,56,200/-, which is over and above the minimum criteria of Rs. 3 crores stipulated for a 'corporate applicant.' A copy of the financial statement of Chiminare has already been annexed to the Rejoinder filed by the Applicant at pages 40-61 marked as Annexure B and the Balance Sheet is annexed at page 46 of the Rejoinder.

6. Moreover, considering that Chiminare is a Non-banking Financial Institution, it also fulfils the additional criteria of having committed funds available for investment/ deployment in Indian companies or Indian assets of Rs. 5 Crore in the immediately preceding completed financial year."

45. The affidavit was filed by the RP, justifying the eligibility criteria, where referring to the balance sheet, the RP has stated that SRA meet the criteria of funds deployed of Rs.5 crores in the immediately preceding completed financial year. In paragraph-7 of the affidavit, following has been stated:

"7. Additionally, Chiminare also meets the criteria of funds deployed of Rs.5 Crores in the immediately completed financial year and the same would be evident from the Balance Sheet of Chimmare for the financial-year 2022-23 [@ pg. 46 of the Rejoinder Affidavit] wherein the funds deployed (only considering current assets) is Rs.11,17,570,00 for the Financial year ending 31.03.2022 and Rs.11,47,923,00/- for the Financial year ending 31.03.2023."

46. The Financial Statements of the SRA were on the record before the Adjudicating Authority and RP referring to the Financial Statements has filed the affidavit, giving relevant figures to support the contention that the SRA fulfilled the eligibility criteria.

Company Appeal (AT) (Ins.) No.326 of 2025 33

47. In view of the foregoing discussions, we answer Question No.(IV) holding that SRA has fulfilled the eligibility criteria for a Resolution Applicant.

48. In view of our foregoing discussions and conclusions, we do not find any error in the order of the Adjudicating Authority dated 03.01.2025 rejecting I.A. (IB) No.1332/KB/2024, which was filed by the Appellant. There is no merit in the Appeal. The Appeal is dismissed. There shall be no order as to costs.

[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) NEW DELHI 29th August, 2025 Ashwani Company Appeal (AT) (Ins.) No.326 of 2025 34

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