National Company Law Appellate Tribunal
Innova Home Buyers Neyveli Association vs P And G Construction Pvt Ltd on 13 December, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
CHENNAI BENCH
TA No. 50 of 2021
Company Appeal (AT) (Ins.) No. 215 of 2020
[Arising out of Order dated 13.12.2019 passed by the Adjudicating
Authority /National Company Law Tribunal, Division Bench-I, Chennai
Bench in MA/554/2019 in CP/193/IB/2018]
IN THE MATTER OF:
Innova Home Buyers Neyveli Association
(Registered vide No.
SRG/Cuddalore/24/2019)
Through its Vice-President,
T. Thamizhmaran,
S/o. P. Thambusamy,
R/o E-163, Anna Road, Block 17
Neyveli Ts, Kurinjipadi, Cuddalore,
Tamil Nadu - 607801. ...Appellant
Versus
1. P Dot G Construction Pvt. Ltd.
Having Registered Office at
No. 26, 8 Square,
Porur, Tamil Nadu - 600116
Through its Resolution Professional
Mr. Sundaresan Nagarajan
Aa 60/3, 4th Street,
Anna Nagar (west), Chennai,
Tamil Nadu - 600040 ...Respondent No.1
2. Mr. Sundaresan Nagarajan,
Resolution Professional of Respondent
No. 1
Aa 60/3, 4th Street,
Anna Nagar (west), Chennai, ...Respondent No.2
Tamil Nadu - 600040
3. DMI Finance Private Limited
Through its director
Express Building, 3rd Floor,
No. 9-10, Bahadur Shah Zafar
Marg, New Delhi - 110002. ...Respondent No.3
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4. RCC E-Construct Private Limited,
Resolution Applicant,
C-74, Sushant Lok, Phase 1, Gurgaon,
Haryana 122002. ...Respondent No.4
Email: [email protected]
Present:
For Appellant : Ms. Shabnam Banu, Advocate
Ms. Sushil Sarayu, Advocate.
For Respondents : Mr. Ayush Gupta, Advocate for R-1.
Mr. Ashish Dholakia, Senior Advocate for R-2.
Mr. Kinshuk Chatterjee, Advocate & Amicus
Advocates & Solicitor for R-3
Ms. Anannya Gosh &
Mr. Dushyant Manocha , Advocates for R4.
J U D G M E N T
(Virtual Mode) (13.12.2022) NARESH SALECHA, MEMBER (TECHNICAL) The Present `Appeal' has been filed against the 'impugned order' dated 13.12.2019, passed in MA/ 554/ 2019 in CP/ 193/ IB/ 2018 by the 'Adjudicating Authority' (National Company Law Tribunal, Chennai Bench), whereby, the 'Adjudicating Authority' had dismissed the `Miscellaneous Applications', filed under Insolvency & Bankruptcy Code, 2016 (in short 'I & B Code, 2016') Brief Facts:
2. 'Innova Homebuyer Neyveli Association' is the 'Appellant' herein, is an Association of the 'Homebuyers'.
TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 2 of 22 'P Dot G Construction Pvt. Ltd.' is the 1st Respondent herein, who is the 'Corporate Debtor' undergoing the 'Corporate Insolvency Resolution Process'.
'Mr. Sundaresan Nagarajan' is the 2nd Respondent herein, who is the 'Resolution Professional' of the 1st Respondent.
'DMI Finance Private Limited' is the 3rd Respondent herein, who is the 'Financial Creditor'.
'RCC e-Construct Private Limited' is the 4th Respondent herein, who is the 'Successful Resolution Applicant' on 13.12.2019.
3. The 'Corporate Insolvency Resolution Process' was initiated against the 1st Respondent - 'M/s P Dot G Constructions Pvt. Ltd. & Anr.' on 13.07.2018 and based on the recommendations of 'Committee of Creditors', the 'Adjudicating Authority' approved the 'Resolution Plan' of 'Successful Resolution Applicant' viz. M/s RCC e-Construction Pvt. Ltd.
4. Aggrieved by above 'Resolution Plan', the appeal before this 'Appellate Tribunal', has been filed. Several issues have been raised by the 'Appellant' which, inter-alia, include issues regarding fairness of 'Resolution Plan', the 'Resolution Plan' amount being lower than the `Liquidation Value', `exorbitant interest charges' by the 'Financial Creditors' in their claims, denial of claims of the 'Appellant' etc.
5. The `Petitioner /Appellant / Association' earlier in IA 576 of 2020 (TA No. 50 of 2021 in Comp. App (AT) (Ins.) No. 215 of 2020), had prayed for condoning the delay of around 15 days, in preferring the `Appeal'.
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6. According to the `Petitioner / Appellant / Association', the `Certified' copy of the `impugned order' dated 13.12.2019 in MA / 554 / 2019 in CP/193/IB/2018, was communicated to the `Appellant' on the same day and that the `Limitation Period' of 30 days for preferring the instant `Appeal'', expired on 12.01.2020 and hence the instant `Appeal', was filed with a minor delay of 15 days. The IA 576 of 2020 (Condone Delay Application), filed by the `Applicant / Appellant', was allowed by this `Appellate Tribunal', as early as on 12.08.2021. Hence, the main `Company Appeal (AT) (Ins.) No. 215 of 2020, is being dealt in following parts.
Appellant's Submissions:
7. The Learned Counsel for the Appellant summarised the history of the case and events which led to the present appeal. The Learned Counsel for the Appellant stated that the members of the association ('Homebuyers') (the Appellant herein) have purchased flats in 'Innova Real Estate' from 1st Respondent and association comprises of 73 Members. The Learned Counsel for the Appellant submitted that the members of the association had entered into agreement during 2011-13 and had paid entire sale consideration for purchase of flats @ Rs. 1300 to Rs. 1700 per sq. ft. However, the 1st Respondent failed to deliver the flats to the 'Homebuyers' and also defaulted in payment to its 'Creditors', which led to 'Corporate Insolvency Resolution Process' of the 1st Respondent.
8. The Learned Counsel for the Appellant alleged that the 3rd Respondent and the 2nd Respondent in collusion have taken actions against interest of TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 4 of 22 the 'Appellant' which undermine the 'Appellant's' claims in order to artificially and illegally increased the 3rd Respondent voting shares in 'Committee of Creditors'. The Learned Counsel for the Appellant also assailed the conduct of 2nd Respondent who awarded exorbitant interest charges @ ranging from 18% to 36% on principal amount outstanding of the 3rd Respondent and in contrast has awarded, only 8% interest to the 'Homebuyers'.
9. The Learned Counsel for the Appellant stated that the 2nd Respondent in collusion with the 3rd Respondent through wrong forensic audit undermined the value of no dues certificates and consolidated receipts which resulted into denials of claims of the 'Appellant' in the 'Resolution Plan'. The Learned Counsel for the Appellant stated that to add to their injuries, demand for additional payment of 70% to 100% of initial amount was asked for possession of their flats within the period of 60 days from the date of the 'impugned order' with threat to cancel flats otherwise. In contrast, the 'Homebuyers' who entered in the scenario at much later stage were asked to be pay only 15% to 25% of booking amount causing undue discrimination, vis-à-vis members of the association.
10. The Learned Counsel for the Appellant emphasised that the 'Resolution Plan' is illegal and unethical which does not provide even the minimum liquidation value of assets of the 1st Respondent in violation of Section 30(2)(b) of I & B Code, 2016. The Learned Counsel for the Appellant assailed the 'impugned order' dated 13.12.2019 which approved such a TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 5 of 22 'Resolution Plan' on pretext that additional capital is required for additional construction.
11. The Learned Counsel for the Appellant faulted the conduct of the 2nd Respondent who disallowed large claims of the 'Homebuyers' which were substantiated by consolidated single receipt on the letterhead of the Corporate Debtor and/ or accompanied with the 'No Dues Certificates'. The Learned Counsel for the Appellant stated this denial was done only due to fact that such payments could not be tallied with the Books of Accounts of the Corporate Debtor as maintained in Tally which is not fault of the 'Appellant'.
12. The Learned Counsel for the Appellant mentioned that the 4th Respondent is closely related to the 1st Respondent and in collusion submitted discriminatory 'Resolution Plan' which is prejudicial against the 'Appellant'.
The Learned Counsel for the Appellant further mentioned that against various relief sought against the 'Homebuyers' who are members of the association without making them as a party, the 'Appellant' filed the Miscellaneous Application bearing MA/451/2019 in MA/230/2019 in CP/193/IB/2018 to allow the claims of the 'Appellant' on the basis of the 'No Dues Certificate' issued by the 1st Respondent. However, the said Miscellaneous Application was dismissed by the 'Adjudicating Authority' by way of order dated 21.10.2019. The Learned Counsel for the Appellant further submitted that the 'Appellant' filed CA (AT) (Ins.) No. 1444 of 2019 TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 6 of 22 before this 'Appellate Tribunal' which was also dismissed vide order dated 13.12.2019 with a liberty to the 'Appellant' to bring out the grievances before the 4th Respondent who is 'Successful Resolution Applicant'. The Learned Counsel for the Appellant submitted that however after approval of the 'Resolution Plan', the members of Appellant were asked to pay additional sum of Rs. 1 lakhs to Rs. 15 lakhs despite having paid the entire amount long back.
13. The Learned Counsel for the Appellant also challenged the under valued amount of the 'Resolution Plan', being lower than the amount of `Liquidation Value' and stated that the liquidation value of the 1st Respondent is Rs. 44.25 crores whereas the 4th Respondent has proposed to infuse only Rs. 30.48 crores in discharge against the dues of the 3rd Respondent including the 'Appellant' claims.
14. The Learned Counsel for the Appellant concluded his pleadings with a request to set aside the 'impugned order' and give stay on the 'Resolution Plan'.
Respondent's Submission:-
15. The Learned Counsel for the Respondents opposed the admission of the appeal, which according to them devoid of any merit and need to be dismissed with costs. The Learned Counsel for the Respondents submitted that the 'impugned order' has been passed after factoring into account all the facts and relevant laws on the subject. The Learned Counsel for the TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 7 of 22 Respondents also pointed out that while approving the 'Resolution Plan', all applicable regulations and procedures were fully met with and since then the 4th Respondent has already started implementation of the 'Resolution Plan' and any interference or order affecting the 'Respondents' will adversely affect revival of the 'Corporate Debtor'.
16. The Learned Counsel for the Respondent No. 1 submitted that the 'Counter Affidavit' filed by the 2nd Respondent in the present appeal is being endorsed by the 1st Respondent in toto. The Learned Counsel for the Respondent No. 1 requested this 'Appellate Tribunal' to reject and dismiss the appeal.
17. The Learned Counsel for the Respondent No. 2 assailed that the accusation of the 'Appellant' wherein it has been alleged that the 2nd Respondent has reduced the shares of the 'Homebuyers' by accepting higher interest rate for financial institution in contrast to the 'Homebuyers'. The Learned Counsel for the Respondent No. 2 further clarified that the interest rates were accepted based on the already existing agreements with the 'Creditors' and where it was not stipulated interest rate was provided @8% in line with the Regulation 16A of the IBBI (Resolution Process for Corporate Person, Regulation 2016).
18. The Learned Counsel for the Respondent No. 2 also countered the 'Appellant' allegations regarding denial of the Appellant's claims and not taking into the account the 'No Dues Certificate' issued by the 'Corporate Debtor' along with cash payment made to the 'Corporate Debtor'. The TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 8 of 22 Learned Counsel for the Respondent No. 2 further assailed that the acceptance of such claims based on 'No Dues Certificates' which apparently had been issued on alleged cash payments were not in accordance with law and violation of provisions of the 'Income Tax Act, 1961'. In any case, there was no documentary evidence in favour of the 'Appellant's' claims and admittedly such claims could not be found and could not be verified in the accounts of the 'Corporate Debtor', hence the 2nd Respondent as 'Resolution Professional' strictly acted as per law.
19. The Learned Counsel for the Respondent No. 3 submitted that the perception has been created as if, 3rd Respondent was having majority voting shares in 'Committee of Creditors' and therefore influenced decisions in the 'Resolution Plan' in his favour whereas in reality the 3rd Respondent had only 39.5% of the voting shares. In fact, during the 'Corporate Insolvency Resolution Process' voting share of the 3rd Respondent was reduced from 39.5% to 36.68% due to partial rejection of the claims of the 3rd Respondent.
20. The Learned Counsel for the Respondent No. 3 maintained that the composition of the 'Committee of Creditors' was done in terms of Regulation 16A(7) of the IBBI (Resolution Process for Corporate Person, Regulation 2016).
The Learned Counsel for the Respondent No. 3 further submitted that interest of 18% to 22% were based on binding loan agreement executed between the 3rd Respondent and the 1st Respondent ('Corporate Debtor').
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21. The Learned Counsel for the Respondent No. 3 also supported reply submitted by the Learned Counsel for the Respondent No. 2 regarding denial of the unauthorised and unproved claims of the 'Appellant'. The Learned Counsel for the Respondent No. 3 refuted the allegations and stated that the so-called 'No Dues Certificates' were not accompanied with official receipt, registered sale deed in favour of the 'Appellant' and the same could not be identified in the Tally Books of the 'Corporate Debtor' as such the 2nd Respondent rightly rejected wrong claims. The Learned Counsel for the Respondent No. 3 stated that in any case majority of the 'Homebuyers' were actively participating in the 'Committee of Creditors' who voted in favour of the 'Resolution Plan' and it is only few 'Homebuyers' who are raising this issue as after thought to derail the whole process of revival.
22. The Learned Counsel for the Respondent No. 3 further denied of the 'Appellant' allegation regarding scope and outcome of the forensic audit. The Learned Counsel for the Respondent No. 3 clarified that scope was discussed and approved in 'Committee of Creditors' and outcomes as drawn was conducted by a professional 'Chartered Accountants Firm' and accepted by the 'Resolution Professional', which also inter-alia, commented on 'No Dues Certificates' authenticity.
23. The Learned Counsel for the Respondent No. 3 concluded his arguments and stated that the intention of the 'Appellant' is to make unwarranted gains by obtaining flats without making required payments as per 'Resolution Plan' duly approved by the 'Adjudicating Authority'.
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24. The Learned Counsel for the Respondent No. 4 pointed out that the decision of the 'Adjudicating Authority' in rejecting the claims of the 'Appellant' which have now again been raised which have already reached finality in view of dismissal of Appellant's appeal before this 'Appellate Tribunal' passed vide order dated 13.12.019 in CA (AT) (Ins.) No. 1444 of 2019 which was not challenged by the 'Appellant'. The Learned Counsel for the Respondent No. 4 further pointed out that this cannot be pleaded now as barred by res judicata.
25. The Learned Counsel for the Respondent No. 4 cited the judgment of the Hon'ble Supreme Court of India in Jaypee Kensington Boulevard Apartments Welfare Assn. vs. NBCC (India) Ltd. Reported in (2022) 1 SCC 401 in favour of his argument.
26. The Learned Counsel for the Respondent No. 4 also countered the allegation that the amount of the 'Resolution Plan' is lower than the 'Liquidation Value'. The Learned Counsel for the Respondent No. 4 stated that against the 'Liquidation Value' of around Rs. 44 crores, the 'Resolution Plan' provides the value of around Rs. 91 crores.
27. The Learned Counsel for the Respondent No. 4 also countered that the allegation of the 'Appellant' that the 4th Respondent is closely associated with the 3rd Respondent. The Learned Counsel for the Respondent No. 4 stated that the 4th Respondent has entered into the arrangement with the 3rd Respondent for financial support to fund the 'Resolution Plan' which is TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 11 of 22 legally permissible and no embargo has been put on such arrangement anywhere.
Findings:
28. Heard Learned Counsel for the 'Appellant' and the 'Respondents' and also perused record made available to us. Several issues have been raised in the Appeal which are required to be deliberated upon before coming to final conclusion.
(I) (a) Whether there was an error in refusal to admit claims of the 'Homebuyers' members of the Appellant's Association while dealing with the 'Resolution Plan' based on 'No Dues Certificates' and cash payments made by them to the 1st Respondent as sale consideration.
(b) Whether the percentage recovery available to members of the association lower than 'Financial Creditor' is permissible.
(c) Whether approved 'Resolution Plan' can provide for differential treatments to the different class of 'Homebuyers' by way of charging different premium rates.
(II) Whether the amount under the 'Resolution Plan' can be less than the 'Liquidation Value' ?
(III) Whether the 4th Respondent who is 'Successful Resolution Applicant' is close associate of 3rd Respondent who is 'Financial Creditor' of the 1st TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 12 of 22 Respondent (Corporate Debtor) and whether the 4th Respondent as such can be barred by I &B Code, 2016 for submission of the 'Resolution Plan'.
29. Issue No. (I) (a) Whether there was an error in refusal to admit claims of the 'Homebuyers' members of the Appellant's Association while dealing with the 'Resolution Plan' based on 'No Dues Certificates' and cash payments made by them to the 1st Respondent as sale consideration.
(b) Whether the percentage recovery available to members of the association lower than 'Financial Creditor' is permissible.
(c) Whether approved 'Resolution Plan' can provide for differential treatments to the different class of 'Homebuyers' by way of charging different premium rates.
• The challenge of the 'Appellant' with regards to denial of the claims and asking of additional payment for handing over flats are the main issues of this appeal. The I & B Code, 2016 and many judgments of Hon'ble Supreme Court of India has established that distribution of proceeds of the 'Resolution Plan' is subject to the wisdom of 'Committee of Creditors' and it cannot be challenged, even by way of an appeal.
• The I & B Code, 2016 under Section 30(4), obligates the 'Committee of Creditors' to assess the viability and feasibility of the Resolution Plan. In respect of the same, the Code prescribes for the manner in which TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 13 of 22 the 'Resolution Plan' will be evaluated as per Evaluation Matrix. On the basis of the score of the different resolution applicants, the 'Committee of Creditors' if approves the 'Resolution Plan' by a vote of not less than prescribed percentage then the same is required to be placed before the 'Adjudicating Authority' under Section 31 of the I & B Code, 2016.
• Once the 'Adjudicating Authority' approves the 'Resolution Plan', the same binds the corporate debtor, its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan.
• In K. Sashidhar v. Indian Overseas Bank and Ors. Reported in (2019) 4 SCC (Civ.) 222 the Hon'ble Supreme Court of India conclusively held that the legislature, while enacting the Code, has consciously ensured that no ground is available to question the 'commercial wisdom' of the individual financial creditors or the collective decision of the 'Committee of Creditors' before the Adjudicating Authority, in approving or rejecting a resolution plan and such commercial considerations are outside the scope of judicial review.
"55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020]
14 of 22 to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 15 of 22 resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code."
• Thereafter, the Hon'ble Supreme Court of India reaffirmed this view in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. Reported in (2020) 8 SCC 531 holding that, it is clear that the scope of judicial review while approving resolution plans was required to be within ambit of the I & B Code, 2016 and in no circumstance either the 'Adjudicating Authority' or the 'Appellate Tribunal' could trespass upon a business decision of the majority of the 'Committee of Creditors'. The Apex Court further observed that the 'Adjudicating Authority' cannot interfere on merits with the commercial decision taken by the 'Committee of Creditors'. The scope of interference of the 'Adjudicating Authority' on approving resolution plan has been described by Section 61(3) of the I & B Code, 2016. • This 'Appellate Tribunal' also observes that there is time values of money and rights as well as obligations of the 'Homebuyers', who entered into scenario at different time periods can be treated separately. It can't be expected that the 'Homebuyers' who purchased flats at later time horizon and assumably paid more, can be equitable TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 16 of 22 with 'Homebuyers' who agreed to buy flats at earlier dates presumably at lower rates. It is for the 'Resolution Plan' to propose treatment and if the 'Committee of Creditors' consider favorably then recommend to the 'Adjudicating Authority' who approve then no fault can be attributed for such differential premium demands. It is also noted that the 'Committee of Creditors' comprised of members of 'Homebuyers' and the constituted 53% of voting shares of the 'Committee of Creditors'.
• This 'Appellate Tribunal' that the 'Resolution Plan' was approved by overwhelming majority and 81% of the members of the 'Committee of Creditors' approved the 'Resolution Plan' including the majority 'Homebuyers' and that the 'Homebuyers' constitute majority of the 'Committee of Creditors' voting shares with 53.26% of the total voting shares whereas the 3rd Respondent i.e. 'Financial Creditor' is having only 37.68% voting shares and remaining 8% voting shares are being held by other 'Financial Creditors' along with the 3rd Respondent, majority of 'Homebuyers' represented in the 'Committee of Creditors' voted in favour of the 'Resolution Plan'. This clearly denotes that the 'Resolution Plan' was equitable and fair to all with the sole objective for revival of the 'Corporate Debtor' and handing over the flats to the 'Homebuyers'.
• In the appeal before this 'Appellate Tribunal', it has been brought and the 'Resolution Plan' was approved by the 'Committee of Creditors' including majority of the votes from 'Homebuyers' in favor of approval TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 17 of 22 of the 'Resolution Plan'. The contention of the 'Appellant' with regards to equitable treatment with the financial creditor and not being treated at par with them does not seems to hold ground as the Hon'ble Supreme Court of India had established in case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. Hence the challenge to the 'impugned order' on ground that percentage recovery available to members of the association is lower than 'Financial Creditor' is not palatable. Therefore, this 'Appellate Tribunal' do not find any error in the 'impugned order' on this ground.
30. Issue No. (II) Whether the amount under the 'Resolution Plan' can be less than the 'Liquidation Value' ?
• The apex court in the case of Maharashtra Seamless Ltd Vs Padmanabhan Venkatesh & Ors. Reported in (2020) 11 SCC 467.
"26. No provision in the code or regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016....
27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 18 of 22 Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. We, per se, do not find any breach of the said provisions in the order of the Adjudicating Authority in approving the resolution plan.
28. The Appellate Authority has, in our opinion, proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. Such is the scheme of the Code."
[emphasis supplied] • The 'Appellant' has alleged that purportedly the Resolution Plan is less than the 'Liquidation Value'.
• The Resolution professional in its submissions has said that the liquidation value was strictly according to the regulations of the I & B Code, 2016 and were valued by two independent registered valuers. It has also been said that the 'Resolution Plan' amount was approved by 'Committee of Creditors' including, majority of the of the 'Homebuyers'. All apartments forming part of pending projects of the 'Corporate Debtor' had been included and made part of the information memorandum, which was approved by the 'Committee of Creditors'.
TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 19 of 22 • As regard, the contention of the 'Appellant' with regards to the 'Resolution Plan' value being lower than 'Liquidation Value', no fault can be found in view of judgment of the apex court in the case of Maharashtra Seamless Ltd Vs Padmanabhan Venkatesh & Ors. (Supra) and therefore the 'Adjudicating Authority' rightly held that the resolution plan amount need not match the Liquidation value.
31. Issue No. (III) Whether the 4th Respondent who is 'Successful Resolution Applicant' is close associate of 3rd Respondent who is 'Financial Creditor' of the 1st Respondent (Corporate Debtor) and whether the 4th Respondent as such can be barred by I &B Code, 2016 for submission of the 'Resolution Plan'.
• The 'Appellant' has contended that there has been collusion between the 4th Respondent as 'Successful Resolution Applicant' and the 3rd Respondent DMI Finance (P) Limited as the 'Financial Creditor' of the 1st Respondent ('Corporate Debtor'). However, the 'Respondent' has denied that 'Resolution Applicant' is 'Special Purpose Vehicle' of DMI Finance Limited. It has been said that the 4th Respondent had entered into formal financial support arrangement with the 3rd Respondent to fund partly the 'Resolution Applicant' and nowhere does the I & B Code, 2016 opposes such relation and this cannot be termed as collusion.
TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 20 of 22 • This 'Appellate Tribunal' tends to agree to contention of the 'Respondent' on this part, looking to provisions of the I & B Code, 2016.
• Hence, it can be said that as the I & B Code, 2016 places no embargo upon a financial creditor from voting upon a 'Resolution Plan' which is fully funded by it or partly funded by the 'Successful Resolution Applicant'.
• The judgment of the Hon'ble Supreme Court of India in Jaypee Kensington Boulevard Apartments Welfare Assn. vs. NBCC (India) Ltd. Reported in (2022) 1 SCC 401 gives following ratio :-
"...The homebuyers as a class shall be deemed to have voted in favour of approval of the resolution plan of NBCC; and once having voted so, any particular constituent of that class cannot be heard in opposition to the plan by way of objection or appeal. The statue, that is IBC, has itself provided for estoppel against any such attempted opposition to the plan by a constituent of the class that had voted in favour of approval".
[emphasis supplied]
32. Thus, this 'Appellate Tribunal', does not find `any material irregularity' or `patent illegality', in the `impugned order' dated 13.12.2019, passed by the `Tribunal' (`National Company Law Tribunal', Division Bench-I, Chennai Bench) in MA/554/2019 in CP/193/IB/2018.
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33. The `Appeal' is, `devoid of any merits' and the same is dismissed. No costs. The connected pending `Interlocutory Application(s)', if any, are Closed.
[Justice M. Venugopal] Member (Judicial) [Naresh Salecha] Member (Technical) Simran TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 22 of 22