National Company Law Appellate Tribunal
Ariisto Alert Residents Association vs M/S. Prestige Estates Projects Limited ... on 23 December, 2022
1
National Company Law Appellate Tribunal,
Principal Bench, New Delhi
Company Appeal (AT) (Ins) No. 355 of 2021
IN THE MATTER OF:
Ariisto Alert Residents Association,
Office At:
2505, Monte Vista, M.M.M. Road, ...Appellant
Mulund (West), Mumbai - 400080
Versus
1. M/s. Prestige Estates Projects Ltd.,
Having its office at
Falcon House No. 1, Main Guard Cross Road,
Bangalore - 560001
2. Mr. Jayesh Sangrajhka,
Resolution Professional
Having its office at
405-408, Hind Rajasthan Centre,
D.S. Phalke Road, Dadar (East),
Mumbai - 400014
3. Dipco Pvt. Ltd.,
Having its office at
Radhasagar, Ground Floor 8,
Moira Street, Kolkata WB 700017 ...Respondents
Present:
For Appellant: Mr. Rajesh V Sipahimalani, Mr. RiteshKhare, Mr.
Akhilesh, Ms. Nikita Anand, Ms. Namrata Vijay
Chandorkar, Advocates.
For Respondents: Mr. Arun Kathpalia, Sr. Advocate with Mr. Abhijeet
Sinha, Mr. Nitin Mishra, Mr. Viraj Parikh, Advocates
for R-1.
Mr. Tishampati Sen, Ms. Riddhi Sancheti, Mr. G.
Karthikeyan, Mr. Anurag Anand, Mr. Ashish Parwani,
Company Appeal (AT) (Ins) No. 355 of 2021
2
Mr. Chintan Gundhi, Mr. Devesh Juvekar, Advocates
for RP.
JUDGMENT
Dr. Ashok Kumar Mishra, Technical Member The Appeal has been filed under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 against the final order dated 23.03.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) in M.A. 4061 of 2019 in C.P. (IB) No. 2714 (MB) of 2018.
2. The Appellant has sought the following relief:
(a) Set aside the Impugned order dated 23.03.2021 passed by the National Company Law Tribunal, Mumbai Bench in I.A. 3714 of 2019 in C.P. (IB)- 2714 (MB) of 2018 thereby dismissing M.A. 4061 of 2019 preferred by Appellant Association;
(b) Leave be granted to file the present Appeal in the Impugned Order dated 23.03.2021, passed by the National Company Law Tribunal, Mumbai Bench in I.A. No. 3714 of 2019 in C.P. (IB)- 2714 (MB) of 2018 thereby dismissing M.A. 4061 of 2019 preferred by Appellant Association;
(c) Issue appropriate directions to Respondent No.2/Resolution Professional for reconsideration of the Resolution Plan by CoC as regards issues and grievances of Home Buyers/Members of Appellant Association; etc. Company Appeal (AT) (Ins) No. 355 of 2021 3
3. The Appellant is a registered Association of homebuyers who have invested in the project of the Corporate Debtor for last 16-17 years. The Appellant is aggrieved by the disposal of M.A. 4061 of 2019 preferred by the Appellant association in C.P. (IB) No. 2714 of 2018 titled as Dipco Pvt. Ltd. vs. Ariisto Developers Pvt. Ltd. without granting an opportunity of hearing to the Appellant Association. The Ld. Counsel for the Appellant Association has also submitted that the Adjudicating Authority has proceeded to dispose of the M.A. of Appellant as infructuous in the absence of their advocates and solely on the basis of oral statement made by the Respondent No.2/ Resolution Professional pointing out to the Adjudicating Authority that the grievances of Homebuyer had been amicably resolved.
4. The Ld. Counsel for the Appellant has also stated that the RP has categorically preferred an application before Adjudicating Authority seeking correction/rectification of the impugned order to the above extent.
5. It was also stated by him that they have ignored the order of this tribunal passed on 04.11.2020 directing the Adjudicating Authority to afford opportunity of hearing to the Homebuyers and the Appellant Association of Homebuyers and accord consideration to their grievance.
6. It is the submission of the Ld. Counsel of the Appellant that the Appellant Association is a registered Association of more than 100 Homebuyers who have in the year 2005-2006 purchased flats in the buildings Fantasia & Celestia proposed to be constructed by the Corporate Debtor on a specific plot Company Appeal (AT) (Ins) No. 355 of 2021 4 and parcel of land bearing CTS No.19/11 demarcated as Sector-III in its huge project at Mulund, Mumbai.
7. The list of dates and events projected by Ld. Counsel for the Appellant are enumerated hereunder:
Company Appeal (AT) (Ins) No. 355 of 2021 5 Company Appeal (AT) (Ins) No. 355 of 2021 6 Company Appeal (AT) (Ins) No. 355 of 2021 7 Company Appeal (AT) (Ins) No. 355 of 2021 8 Company Appeal (AT) (Ins) No. 355 of 2021 9 Company Appeal (AT) (Ins) No. 355 of 2021 10 Company Appeal (AT) (Ins) No. 355 of 2021 11 Company Appeal (AT) (Ins) No. 355 of 2021 12 Company Appeal (AT) (Ins) No. 355 of 2021 13 Company Appeal (AT) (Ins) No. 355 of 2021 14 Company Appeal (AT) (Ins) No. 355 of 2021 15 Company Appeal (AT) (Ins) No. 355 of 2021 16 Company Appeal (AT) (Ins) No. 355 of 2021 17 Company Appeal (AT) (Ins) No. 355 of 2021 18 Company Appeal (AT) (Ins) No. 355 of 2021 19 Company Appeal (AT) (Ins) No. 355 of 2021 20 Company Appeal (AT) (Ins) No. 355 of 2021 21 Company Appeal (AT) (Ins) No. 355 of 2021 22 Company Appeal (AT) (Ins) No. 355 of 2021 23 Company Appeal (AT) (Ins) No. 355 of 2021 24 Company Appeal (AT) (Ins) No. 355 of 2021 25 Company Appeal (AT) (Ins) No. 355 of 2021 26 Company Appeal (AT) (Ins) No. 355 of 2021 27 Company Appeal (AT) (Ins) No. 355 of 2021 28 Company Appeal (AT) (Ins) No. 355 of 2021 29 Company Appeal (AT) (Ins) No. 355 of 2021 30 Company Appeal (AT) (Ins) No. 355 of 2021 31 Company Appeal (AT) (Ins) No. 355 of 2021 32 Company Appeal (AT) (Ins) No. 355 of 2021 33 Company Appeal (AT) (Ins) No. 355 of 2021 34 Company Appeal (AT) (Ins) No. 355 of 2021 35 Company Appeal (AT) (Ins) No. 355 of 2021 36 Company Appeal (AT) (Ins) No. 355 of 2021 37 Company Appeal (AT) (Ins) No. 355 of 2021 38 Company Appeal (AT) (Ins) No. 355 of 2021 39 Company Appeal (AT) (Ins) No. 355 of 2021 40 Company Appeal (AT) (Ins) No. 355 of 2021 41 Company Appeal (AT) (Ins) No. 355 of 2021 42 Company Appeal (AT) (Ins) No. 355 of 2021 43 Company Appeal (AT) (Ins) No. 355 of 2021 44 Company Appeal (AT) (Ins) No. 355 of 2021 45 Company Appeal (AT) (Ins) No. 355 of 2021 46
8. The Ld. Counsel for the Appellant submitted the followings:
(a) That surprisingly, after being served with the above Appeal and having realized that he will be caught and exposed, the RP took a complete U-turn and stated on oath in his Reply to the present Appeal that he had never made any oral statement before the Adjudicating Authority that issues of Homebuyers had been settled. Impliedly, the RP blamed Adjudicating Authority for recording an incorrect statement in the impugned order. The RP also stated that he had filed an Application for rectification & correction of Impugned order.
(b) The said Application of Respondent No. 2/RP came to be numbered as MA No. 1022 of 2021.
(c) The said Application MA No. 1022 of 2021 of RP for correction of Impugned Order was rejected by Adjudicating Authority vide its order dated 06.06.2022 and it is now concluded that the RP had in fact, made an absolutely false statement with a view to mislead the Adjudicating Authority Company Appeal (AT) (Ins) No. 355 of 2021 47 into passing the impugned order without hearing application MA No. 4061 of 2019 of Appellants as directed by this Tribunal and thereby frustrating and defeating the legal rights of Homebuyers/members of Appellant Association.
(d) That the above Appeal was finally listed before this Tribunal on 05.08.2022, but the hearing could not be proceeded with as it transpired that the reply filed by RA was not traceable in the record and the matter was adjourned to 12.09.2022.
(e) In the meantime, it transpired that the RA was dealing arbitrarily with Homebuyers/Members of Appellant Association. It was confirmed from the E- mails dated 01.08.2022 addressed by the RA to certain members that it was offering flats to them at the original agreed price. However, the RA was illegally demanding amounts to the extent of more than 200% of the originally agreed price from Homebuyers/Members of the Appellant Association. It was thus clear that the RA was adopting a revengeful and partial approach for Homebuyers who were similarly placed. The above is in blatant violation of the law.
(f) On 12.09.2022 the counsel for Appellant Association proceeded to briefly point out glaring illegalities, violations as well as disobedience of Orders of this Tribunal. RA was suggested to consider the situation and explore possibility of a via-media to resolve the grievances of Homebuyers. That surprisingly, the Ld. Counsel for RA simply narrated figures to demonstrate that Homebuyers of Appellant Association constituted a miniscule minority of CoC and that they should concede and accede to the proposed changes by Respondent No. 1/RA. Company Appeal (AT) (Ins) No. 355 of 2021 48 Neither the Appeal Book nor M.A. No. 2593/2022 of Appellant Association nor any other pleadings or relevant judgments were even looked into or considered for adjudication of the present Appeal. Thus, the valuable statutory rights of Homebuyers are being summarily decided in the afore stated manner.
(g) It is absolutely necessary to note that while RP categorically denies having made any oral statement as recorded by the Adjudicating Authority in the impugned order, the Adjudicating Authority has held otherwise. Looking at it from any angle, fact remains that the Appellant Association of Homebuyers has never been heard in the matter despite an order passed by this Appellate Tribunal in that regard.
(h) It is evident on bare appreciation of facts that the RP has played a systematic fraud upon the Homebuyers as well as Adjudicating Authority and his actions and inactions in the matter have resulted in grave loss, injury and prejudice to hundreds of Homebuyers.
(i) The Respondent No.1/RA is not only demanding exorbitant amounts to the extent of 200% of the originally agreed price but also demanding signatures on various Forms and documents which run contrary to agreed terms.
(j) It was also mentioned that the Impugned Order deserves to be set aside as the same has resulted in gross violation of principles of Natural Justice and frustration of Constitutional and Fundamental rights of hundreds of Homebuyers/Members of Appellant Association; Company Appeal (AT) (Ins) No. 355 of 2021 49
(k) The Impugned Order deserves to be set aside as the same is passed without affording an opportunity to Appellant Association to deal with Affidavits of Respondents;
(l) The Impugned Order deserves to be set aside as the same has resulted in summary disposal of the Application of Appellant Association without hearing and on the basis of an ex-facie false statement of RP;
(m) The Impugned Order is vague, ambiguous, unclear and likely of being misread and misinterpreted cannot be sustained;
(n) The Impugned Order cannot be sustained as the same is in contravention of the settled legal position as laid down by Hon'ble Supreme Court in the matter of Ebix Singapore vs. CoC of Educom Solutions Ltd.
(o) The Adjudicating Authority has lost sight of the fact and failed to appreciate that changes proposed by Respondents will lead to frustration of various criminal and other proceedings initiated by Homebuyers against the Corporate Debtor and its directors as also nullify the orders passed therein;
(p) The Impugned order fails to deprecate the illegal proposal of RA to impose drastic changes in the Resolution Plan in utter contravention of its earlier commitments;
(q) It is an admitted position that changes proposed by RA by way of Affidavit do not find place in the Original Resolution Plan approved by the CoC;
(r) Consequently, the drastic changes now proposed by RA do not find any mention in the plan submitted by RP along with his Application MA 3714 of 2019 u/s. 30 of IBC before the Adjudicating Authority. Company Appeal (AT) (Ins) No. 355 of 2021 50
(s) The Impugned order has not only resulted in deprivation of the legal rights and entitlements of Homebuyers but is also capable of being misinterpreted by RA to exploit Homebuyers who have remained invested in the project of CD since last 16/17 years and are living in the hope of finally getting possession of their flats after more than 20 years;
(t) The impugned order also deserves to be set aside as it fails to consider apparent violation of mandatory timelines provided u/s. 25 and Rules and Regulations. Admittedly, Resolution Plan of RA was submitted on 24.10.2019, taken up for discussion and finally approved with minor improvements on 13.11.2019;
(u) The Adjudicating Authority has failed to consider that though MA No. 3714 of 2019 was filed by RP before the Adjudicating Authority for seeking approval of the Resolution Plan approved by CoC on 13.11.2019, the RP had by his affidavits mischievously and motivatedly attempted to introduce novel facts and figures without the approval of CoC;
(v) The impugned order even otherwise completely frustrates the legal rights and interests of Homebuyers and cannot be sustained. (w) Civil Appeal 3224 of 2020 titled as "Ebix Singapore vs. Committee of Creditors of Educom Solutions Ltd." passed by the Hon'ble Supreme Court of India, Para 167, 187.
9. Ld. Sr. Counsel for the Respondent No.1 has submitted the following:
(a) The main real estate project of the Corporate Debtor (Ariisto Developers Pvt. Ltd.) is situated at land bearing CTS Nos. 19/1 to 19/13, Village: Mulund Company Appeal (AT) (Ins) No. 355 of 2021 51 (West), Taluka Mulund, District: Mumbai Suburban, having an area of approximately 1,32,383 sq. meters, known as Ariisto Heaven.
(b) After floating two invitations for 'Expression of Interest (EOI), and considering seven resolution plans from prospective bidders, on 13.11.2019 (1 day before expiry of CIRP) Respondent No.1's Resolution Plan dated 24.10.2019 ('Resolution Plan') was approved by the Committee of Creditors with 85.48% of the voting share, which subsequently increased to 90.68%. By way of its order dated 23.03.2021 (Impugned order) the NCLT approved and allowed Respondent No.1's Resolution Plan.
(c) Initially, the authorised representative of the homebuyers (n=517) voted against the Resolution Plan in the CoC meeting. There are two main groups of homebuyers depending on the building in which they agreed to purchase apartments viz, "Siesta" (n=182) and "Celestia" (n=335). Today, all the Siesta buyers support the Resolution Plan. Further, 233 Celestia Buyers have either suo motu given written consent to the Resolution Plan or nor expressed any objection to it.
(d) The present Appeal against the impugned order is filed by Ariisto Alert Residents Association, which claims to be an association of 102 homebuyers.
For the reasons stated in greater detail herein below, Respondent No.1 submits that the Resolution Plan is legal, and the impugned order deserves no interference whatsoever.
(e) The Appellant represents a miniscule minority within a minority. Company Appeal (AT) (Ins) No. 355 of 2021 52
(f) 99% of the CoC and 80% of the Home-Buyers are not opposing the Resolution Plan.
(g) The Resolution Plan received the support of an overwhelming majority of 90% of the CoC voting share.
(h) At the time when the Resolution Plan was put to vote, the authorised representative of the homebuyers rejected the Resolution Plan. The Code does not privilege the views of home buyers or grant them any veto/special rights when a Resolution Plan is put to vote. Homebuyers only constitute approximately 8.5% of the voting share of the Corporate Debtor's CoC. Therefore, their dissent vote does not take away from the legitimacy of the Resolution Plan.
(i) Pursuant to the approval of the Resolution Plan, Respondent No.1 has engaged in an outreach exercise. As a result, Respondent No.1, has managed to secure the support of 151 Siesta Buyers, led by ASH Mulund Residents Welfare Association. Respondent No. 1 has also secured written consent for the Resolution Plan from 46 Celestia buyers. As of today, more than 80% of homebuyers have either expressly consented to/support/have not objected Respondent No.1's Resolution Plan.
(j) In such circumstances, the Appellant who-claims to represent 102 home buyers- (which claim is not backed by any documents), at best, represents only 20% of the homebuyers. In effect, the Appellant represents less than 1% of the total CoC voting share. They are a miniscule minority within a minority. Company Appeal (AT) (Ins) No. 355 of 2021 53
(k) The Appellant's objections to the Resolution Plan cannot be decided in a vaccum, they must be compared with the only alternative i.e., liquidation
(l) Respondent No. 1's Resolution Plan was approved after two rounds of invitations for EOI. It was selected by the CoC, after examining 6 other bids. It was finally voted upon 358 days after the CIRP commencement date with only 1 day left in the CIRP period. Respondent No. 1's Resolution Plan has clearly been selected after a competitive and time-consuming process. Further, the desirability of the Resolution Plan must be judged, not in a vacuum, but in comparison to the alternative, i.e. liquidation. From this perspective, the Resolution Plan presents the best possible outcome for homebuyers.
(m) Total admitted claims of the Corporate Debtor are Rs. 2,485 crores. Of these, secured creditors have admitted claims of more than Rs. 1365 crores. Against this, the liquidation value of the assets of the Corporate Debtor is only Rs. 750 crores. If Respondent No.1's Resolution Plan is not approved, the Corporate Debtor is likely to go into liquidation. A lion's share of the proceeds will go to the secured creditors (who enjoy priority under Section 53 of the Code) and unsecured creditors like homebuyers, will be left with 'nil' value.
(n) In contrast, the Resolution Plan provides for a radically better outcome. The total outlay under the Resolution Plan is Rs. 1,650 crores and it also treats the homebuyers in a fair manner.
(o) Respondent No.1 submits that homebuyers have voted against the Resolution Plan and are therefore, dissenting financial creditors. Under the Company Appeal (AT) (Ins) No. 355 of 2021 54 Resolution Plan, dissenting financial creditors are only entitled to liquidation value. This is specifically recorded in Clause 2 of the Plan as follows:
"As per the requirement of Section 30 (2) (b) of the IBC, all the Financial Creditors who do not vote in favour of the Resolution Plan shall be paid such amount which shall be equal to the amount to be paid to such Financial Creditors in accordance with Sub-Section (1) of Section 53 of the IBC in the event of liquidation of the Corporate Debtor. The said payment shall be paid from the amounts available as per paragraph 1 to 2 above. Such Financial Creditors will not be entitled to any other amount".
(p) Therefore, as per the Resolution Plan, homebuyers, being dissenting financial creditors, are only entitled to the liquidation value. As already explained hereinabove, the entitlement of home buyers in liquidation is 'nil'.
(q) Therefore, having voted against the Resolution Plan, homebuyers did not have any entitlement whatsoever to any money or flats. Despite this, as directed orally by the NCLT, Respondent No.1 has conducted a massive outreach exercise and brought clarity for the homebuyers. Therefore, Respondent No.1 has gone above and beyond its legal obligations under the Code to protect the interests of homebuyers. There is no question of the Resolution Plan being illegal.
(r) Violation of RERA The only grievance raised by the Appellant to the contents of the Resolution Plan is that the treatment given to the Celestia/Fantasia homebuyers in the Resolution Plan is contrary to the provisions of RERA. However, this objection is now moot as it is settled law that the Code is a special statute, and its provisions will supersede and prevail over RERA. [Jaypee Kensington Boulevard Company Appeal (AT) (Ins) No. 355 of 2021 55 Apartments Welfare Association and Ors. v. NBCC and Ors. 2021 SCC Online SC 253, para. 437-438] Therefore, the objections raised by the Appellant with reference to provisions to RERA have no basis whatsoever. Changes made subsequent to approval of the Resolution Plan.
(s) The Appellant has also raised an objection that changes have been made to the Resolution Plan after its approval by the CoC. In this regard, Respondent No. 1 submits that the Appellant's submission is self-defeating. As explained hereinabove, if the Resolution Plan is to be implemented as is, as dissenting financial creditors, homebuyers are entitled to 'nil' value. Respondent No.1 has no objection to providing homebuyers with 'nil' value. Respondent No.1 prays that other 80% homebuyers who are not opposing the Resolution Plan should not be made to suffer from the Appellant's short-sighted and arbitrary demand.
10. In any event, without prejudice to the aforesaid, Ld. Sr. Counsel for the Respondent No.1 further submits that changes have not been made to the Resolution Plan, but greater clarity has been provided to homebuyers after the approval of the Resolution Plan by the CoC. In this regard, the following facts are to be noted:
(a) When the Resolution Plan was put to vote, the homebuyers voted against the Resolution Plan.
(b) At the oral direction of the NCLT in the hearing dated 10.12.2019, Respondent No.1 started a massive outreach exercise to communicate with homebuyers to win their support for the Resolution Plan. Meetings were held, e-mails were exchanged.
Company Appeal (AT) (Ins) No. 355 of 2021 56
(c) Various e-mails dated 24.01.2020, 26.01.2020, 13.02.2020 and 25.02.2020 were exchanged with the Siesta buyers. As a result, Siesta buyers now do not oppose the Resolution Plan.
(d) Various e-mails dated 24.01.2020 and 15.02.2020 were exchanged with the Celestia/ Fantasia buyers. As a result, save and except the Appellant, Celestia/Fantasia buyers are not opposing the Resolution Plan.
(e) These e-mails were placed on record before the NCLT by way of the Affidavit dated 26.10.2020. The NCLT has noted in the impugned order that this Affidavit clarified the treatment to be given to homebuyers.
11. Therefore, clearly, the entire exercise that has been conducted after the approval of the Resolution Plan was for the benefit of homebuyers. Most homebuyers have realized the same and accepted the fair and equitable treatment being given to them by Respondent No.1. It is only the Appellant which continues to obstruct the Resolution Plan. The objections are baseless and devoid of merit.
12. The objections raised by the Appellant in the final hearing to the contents of the Resolution Plan were two-fold, i.e, (a) the Resolution Applicant is changing the location of the building of the Celestia buyers from Sector III to Section II and (b) the Resolution Applicant is demanding a higher price than what was originally agreed.
13. It was also submitted that issues such as the terms of the agreement that are to be entered into with Celestia buyers, are all issues that fall within the commercial wisdom of the Committee of Creditors and cannot be subjected Company Appeal (AT) (Ins) No. 355 of 2021 57 to judicial review. In fact, as held in Jaypee Kensington (supra), para. 438, "the question as to what kind of agreement should be entered into with financial creditors like homebuyers is essentially a matter falling within the arena of commercial decision; and needless to repeat that in the process of approval of a resolution plan, the factors related with commerce are left to the wisdom of the Committee of Creditors".
14. Change in Plot: The change in plot is unavoidable and necessary consequence of the requirement of providing commercial area to the other financial creditors of the Corporate Debtor in order to satisfy their claim. It is actually beneficial to the Celestia Buyers. They are being shifted to a plot that is almost three time the size of their original plot. This implies more amenities and larger open spaces.
15. Additional rate: Admittedly, the Celestia Buyers are required to pay an additional rate of Rs. 3,300/- per sq. ft. However, this is only to partially offset the increase in the cost of construction in the city by more than 4 times in the last 15 years. A brunt of the increased cost of construction will still be borne by Respondent No.1. The Celestia Buyers will still be receiving apartments currently valued and sold at Rs. 24,000/- per sq. ft. carpet at a throwaway price of approximately Rs. 12,000/- per square feet carpet (after the increase in rates).
16. The Appellant is adopting double standards. The resolution plan submitted by L&T contemplated (a) change in the plot for the Celestia Buyers and (b) change in the layout of plans. Despite this, the Appellant expressed its Company Appeal (AT) (Ins) No. 355 of 2021 58 support for L&T's resolution plan and wanted it to be given first preference by the COC. Such a contradictory and hypocritical stance is wholly impermissible. Having expressed no objection to the changes when proposed by L&T, the Appellant is now estopped from raising objections to the same changes simply because they are proposed by Respondent No. 1.
17. In fact, whereas on the one hand, the Appellant seeks to challenge the legality of the Resolution Plan, on the other hand, the Appellant has filed an application seeking implementation of the Resolution Plan. The Appellant wants to have its cake and eat it too. This is impermissible and a gross abuse of the judicial process. It is undisputed that the Appellant has filed Application No. 1587 of 2022 before the NCLT inter alia seeking implementation of the Resolution Plan. In the above circumstances, the Appellant has elected to seek implementation of the Resolution Plan and therefore, is no longer entitled to challenge the Resolution Plan at the same time. The doctrine of election is applicable in Indian law. Union of India v. Murugesan 2022 (2) SCC 25, paras. 26 to 29.
"Approbate and reprobate
26. These phrases are borrowed from the Scott's law. They would only mean that no party can be allowed to accept and reject the same thing, and thus one cannot blow hot and cold. The principle behind the doctrine of election is inbuilt in the concept of approbate and reprobate. Once again, it is a principle of equity coming under the contours of common law. Therefore, he who knows that if he objects to an instrument, he will not get the benefit he wants cannot be allowed to do so while enjoying the fruits. One cannot take advantage of one part while rejecting the rest. A person cannot be allowed to have the benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. This principle has to be applied with more vigour as a common law principle, if such a Company Appeal (AT) (Ins) No. 355 of 2021 59 party actually enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. An element of fair play is inbuilt in this principle. It is also a species of estoppel dealing with the conduct of a party. We have already dealt with the provisions of the Contract Act concerning the conduct of a party, and his presumption of knowledge while confirming an offer through his acceptance unconditionally.
27. We would like to quote the following judgments for better appreciation and understanding of the said principle:
27.1 Nagubai Ammal v. B. Shama Rao: (AIR pp.601-02, para 23) "23. But it is argued by Sri Krishnaswami Ayyangar that as the proceedings in OS. No. 92 of 1938-39 are relied on as barring the plea that the decree and sale in OS. No. 100 of 1919-20 are not collusive, not on the ground of res judicata or estoppel but on the principle that a person cannot both approbate and reprobate, it is immaterial that the present appellants were not parties thereto, and the decision in Verschures Creameries Ltd. v. Hull and Netherlands Steamship Company Ltd., and in particular, the observations of Scrutton, LJ, at page 611 were quoted in support of this position. There, the facts were that an agent delivered goods to the customer contrary to the instructions of the principal, who thereafter filed a suit against the purchaser for price of goods and obtained a decree.
Not having obtained satisfaction, the principal next filed a suit against the agent for damages on the ground of negligence and breach of duty. It was held that such an action was barred. The ground of the decision is that when on the same facts, a person has the right to claim one of two reliefs and with full knowledge he elects to claim one and obtains it, it is not open to him thereafter to go back on his election and claim the alternative relief. The principle was thus stated by Bankes, L.J.:
"Having elected to treat the delivery to him as an authorised delivery they cannot treat the same act as a misdelivery. To do so would be to approbate and reprobate the same act".
Company Appeal (AT) (Ins) No. 355 of 2021 60 The observations of Scrutton, LJ on which the appellants rely are as follows:
"A plaintiff is not permitted to 'approbate and reprobate'. The phrase is apparently borrowed from the Scotch law, where it is used to express the principle embodied in our doctrine of election -- namely, that no party can accept and reject the same instrument: Ker v.
Wauchope: Douglas-Menzies v. Umphelby. The doctrine of election is not however confined to instruments. A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. That is to approbate and reprobate the transaction".
It is clear from the above observations that the maxim that a person cannot 'approbate and reprobate' is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto. The law is thus stated in Halsbury's Laws of England, Vol. XIII, p.
464, para 512:
"On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here. Thus a party cannot, after taking advantage under an order (e.g. payment of costs), be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it".
27.2 State of Punjab v. Dhanjit Singh Sandhu, (SCC pp. 153-54, paras 22-23 & 25-26):
Company Appeal (AT) (Ins) No. 355 of 2021 61 "22. The doctrine of "approbate and reprobate" is only a species of estoppel, it implies only to the conduct of parties. As in the case of estoppel it cannot operate against the provisions of a statute. (Vide CIT v. V. MR. P. Firm Muar [CIT v. V. MR. P. Firm Muar,].
23. It is settled proposition of law that once an order has been passed, it is complied with, accepted by the other party and derived the benefit out of it, he cannot challenge it on any ground. (Vide Maharashtra SRTC v. Balwant Regular Motor Service [Maharashtra SRTC v.
Balwant Regular Motor Service, In R.N. Gosain v. Yashpal Dhir [R.N. Gosain v. Yashpal Dhir, (1992) 4 SCC 683] this Court has observed as under: (SCC pp. 687-88, para 10) "10. Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that 'a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage'."
25. The Supreme Court in Rajasthan State Industrial Development and Investment Corpn. v. Diamond and Gem Development Corpn. Ltd.
[Rajasthan State Industrial Development and Investment Corpn. v. Diamond and Gem Development Corpn. Ltd., made an observation that a party cannot be permitted to "blow hot and cold", "fast and loose" or "approbate and reprobate". Where one knowingly accepts the benefits of a contract or conveyance or an order, is estopped to deny the validity or binding effect on him of such contract or conveyance or order. This rule is applied to do equity, however, it must not be applied in a manner as to violate the principles of right and good conscience.
Company Appeal (AT) (Ins) No. 355 of 2021 62
26. It is evident that the doctrine of election is based on the rule of estoppel, the principle that one cannot approbate and reprobate is inherent in it. The doctrine of estoppel by election is one among the species of estoppel in pais (or equitable estoppel), which is a rule of equity. By this law, a person may be precluded, by way of his actions, or conduct, or silence when he has to speak, from asserting a right which he would have otherwise had."
27.3 Rajasthan State Industrial Development & Investment Corpn. v. Diamond & Gem Development Corpn. Ltd., SCC pp 480-81, para 15-16) "I. Approbate and reprobate
15. A party cannot be permitted to "blow hot-blow cold", "fast and loose" or "approbate and reprobate". Where one knowingly accepts the benefits of a contract, or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself. This rule is applied to ensure equity, however, it must not be applied in such a manner so as to violate the principles of what is right and of good conscience. [Vide Nagubai Ammal v. B. Shama Rao, CIT v. V. MR. P. Firm Muar, Ramesh Chandra Sankla v. Vikram Cement, Pradeep Oil Corpn. v. MCD, Cauvery Coffee Traders v. Hornor Resources (International) Co. Ltd. and V. Chandrasekaran v. Administrative Officer]
16. Thus, it is evident that the doctrine of election is based on the rule of estoppel--the principle that one cannot approbate and reprobate is inherent in it. The doctrine of estoppel by election is one among the species of estoppel in pais (or equitable estoppel), which is a rule of equity. By this law, a person may be precluded, by way of his actions, or conduct, or silence when it is his duty to speak, from asserting a right which he would have otherwise had."
ARTICE 226 OF THE CONSTITUTION OF INDIA:
28. We would not dwell deep into the extraordinary and discretionary nature of relief under Article 226 of the Constitution Company Appeal (AT) (Ins) No. 355 of 2021 63 of India. This principle is to be extended much more when an element of undue delay, laches and acquiescence is involved. The following decisions of this Court would suffice:
28.1 UP Jal Nigam v. Jaswant Singh, (SCC pp. 469-70, paras 8-11) "8. Our attention was also invited to a decision of this Court in State of Karnataka v. S.M. Kotrayya [(1996) 6 SCC 267: 1996 SCC (L&S) 1488]. In that case the respondents woke up to claim the relief which was granted to their colleagues by the Tribunal with an application to condone the delay.
The Tribunal condoned the delay. Therefore, the state approached this Court and this Court after considering the matter observed as under: (SCC p.
268) "Although it is not necessary to give an explanation for the delay which occurred within the period mentioned in subsections (1) or (2) of Section 21, explanation should be given for the delay which occasioned after the expiry of the aforesaid respective period applicable to the appropriate case and the Tribunal should satisfy itself whether the explanation offered was proper. In the instant case, the explanation offered was that they came to know of the relief granted by the Tribunal in August 1989 and that they filed the petition immediately thereafter. That is not a proper explanation at all. What was required of them to explain under sub- sections (1) and (2) was as to why they could not avail of the remedy of redressal of their grievances before the expiry of the period prescribed under sub- section (1) or (2). That was not the explanation given. Therefore, the Tribunal was wholly unjustified in condoning the delay."
9. Similarly in Jagdish Lal v. State of Haryana, this Court reaffirmed the rule that if a person chose to sit over the matter and then woke up after the decision of the Court, then such person cannot stand to benefit. In that case it was observed as follows:
(SCC p. 542) "The delay disentitles a party to discretionary relief under Article 226 or Article 32 of the Constitution. The appellants kept sleeping over their rights for long and woke up when they had the impetus from Virpal Singh Chauhan case [Union of India v. Virpal Singh Company Appeal (AT) (Ins) No. 355 of 2021 64 Chauhan, (1995) 6 SCC 684 : 1996 SCC (L&S) 1 :
(1995) 31 ATC 813] . The appellants desperate attempt to redo the seniority is not amenable to judicial review at this belated stage."
10. In Union of India v. C.K. Dharagupta, it was observed as follows: (SCC p. 398, para 9) "9. We, however, clarify that in view of our finding that the judgment of the Tribunal in R.P. Joshi [R.P. Joshi v. Union of India, OA No. 497 of 1986 decided on 17-3-1987] gives relief only to Joshi, the benefit of the said judgment of the Tribunal cannot be extended to any other person. The respondent C.K. Dharagupta (since retired) is seeking benefit of Joshi case [R.P. Joshi v. Union of India, OA No. 497 of 1986 decided on 17-3-1987]. In view of our finding that the benefit of the judgment of the Tribunal dated 17-3- 1987 could only be given to Joshi and nobody else, even Dharagupta is not entitled to any relief."
11. In State of WB v. Tarun K. Roy, their Lordships considered delay as serious factor and have not granted relief. Therein it was observed as follows:
(SCC pp. 359-60, para 34) "34. The respondents furthermore are not even entitled to any relief on the ground of gross delay and laches on their part in filing the writ petition.
The first two writ petitions were filed in the year 1976 wherein the respondents herein approached the High Court in 1992. In between 1976 and 1992 not only two writ petitions had been decided, but one way or the other, even the matter had been considered by this Court in Debdas Kumar [State of WB v. Debdas Kumar. The plea of delay, which Mr Krishnamani states, should be a ground for denying the relief to the other persons similarly situated would operate against the respondents.
Furthermore, the other employees not being before this Court although they are ventilating their grievances before appropriate courts of law, no order should be passed which would prejudice their use. In such a situation, we are not prepared to make any observation only for the purpose of grant of some relief to the respondents to which they are not legally entitled to so as to deprive others therefrom who may be found to be entitled thereto by a court of law."
Company Appeal (AT) (Ins) No. 355 of 2021 65 28.2 Eastern Coalfields Ltd. v. Dugal Kumar, (SCC pp. 302-04, paras 24-28):
"24. As to delay and laches on the part of the writ petitioner, there is substance in the argument of learned counsel for the appellant Company. It is well settled that under Article 226 of the Constitution, the power of a High Court to issue an appropriate writ, order or direction is discretionary. One of the grounds to refuse relief by a writ court is that the petitioner is guilty of delay and laches. It is imperative, where the petitioner invokes extraordinary remedy under Article 226 of the Constitution, that he should come to the court at the earliest reasonably possible opportunity. Inordinate delay in making the motion for a writ is indeed an adequate ground for refusing to exercise discretion in favour of the applicant.
25. Under the English law, an application for leave for judicial review should be made "promptly". If it is made tardily, it may be rejected. The fact that there is breach of public law duty does not necessarily make it irrelevant to consider delay or laches on the part of the applicant. Even if leave is granted, the question can be considered at the time of final hearing whether relief should be granted in favour of such applicant or not. (Vide R. v. Essex County Council)
26. In R. v. Dairy Produce Quota Tribunal, ex p Caswell: the House of Lords stated [Ed.: Quoting from O'Reilly v. Mackman "The public interest in good administration requires that public authorities and third parties should not be kept in suspense as to the legal validity of a decision the authority has reached in purported exercise of decision-making powers for any longer period than is absolutely necessary in fairness to the person affected by the decision."
27. The underlying object of refusing to issue a writ has been succinctly explained by Sir Barnes Peacock in Lindsay Petroleum Co. v. Prosper Armstrong Hurd, thus: (LR pp. 239-40) Company Appeal (AT) (Ins) No. 355 of 2021 66 "Now the doctrine of laches in courts of equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation, in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as it relates to the remedy."
28. This Court has accepted the above principles of English law. In Tilokchand Motichand v. H.B. Munshi 110 : and Rabindranath Bose v. Union of India: this Court ruled that even in cases of violation or infringement of fundamental rights, a writ court may take into account delay and laches on the part of the petitioner in approaching the court. And if there is gross or unexplained delay, the court may refuse to grant relief in favour of such petitioner."
(emphasis supplied) 28.3 State of J&K v. R.K. Zalpuri, SCC pp. 608-11, paras 20-24:
"20. Having stated thus, it is useful to refer to a passage from City and Industrial Development Corpn. v. Dosu Aardeshir Bhiwandiwala [City and Industrial Development Corpn. v. Dosu Aardeshir Bhiwandiwala, wherein this Court while dwelling upon jurisdiction under Article 226 of the Constitution, has expressed thus: (SCC p. 175, para 30) Company Appeal (AT) (Ins) No. 355 of 2021 67 "30. The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether:
(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or
effective remedy for the resolution of the
dispute;
(d) person invoking the jurisdiction is guilty
of q unexplained delay and laches;
(e) ex facie barred by any laws of
limitation;
(f) grant of relief is against public policy or
barred by any valid law; and host of other
factors."
21. In this regard reference to a passage from Karnataka Power Corpn. Ltd. v. K. Thangappan [Karnataka Power Corpn. Ltd. v. K. Thangappan, would be apposite: (SCC p. 325, para 6) "6. Delay or laches is one of the factors which is to be borne in mind by the High Court when they exercise their discretionary powers under Article 226 of the Constitution. In an appropriate case the High Court may refuse to invoke its extraordinary powers if there is such negligence or omission on the part of the applicant to assert his right as taken in conjunction with the lapse of time and other circumstances, causes prejudice to the opposite party."
After so stating the Court after referring to the authority in State of M.P. v. Nandlal Jaiswal [State of M.P. v. Nandlal Jaiswal, (1986) 4 SCC 566] restated the principle articulated in earlier pronouncements, which is to the following effect: (SCC p. 326, para 9) "9. ... the High Court in exercise of its discretion does not ordinarily assist the tardy and the indolent or the acquiescent and the lethargic. If there is inordinate Company Appeal (AT) (Ins) No. 355 of 2021 68 delay on the part of the petitioner and such delay is not satisfactorily explained, the High Court may decline to intervene and grant relief in exercise of its writ jurisdiction. It was stated that this rule is premised on a number of factors. The High Court does not ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause confusion and public inconvenience and bring, in its train new injustices, and if writ jurisdiction is exercised after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. It was pointed out that when writ jurisdiction is invoked, unexplained delay coupled with the creation of third-party rights in the meantime is an important factor which also weighs with the High Court in deciding whether or not to exercise such jurisdiction."
22. In State of Maharashtra v. Digambar [State of Maharashtra v. Digambar, a three-Judge Bench laid down that: (SCC p. 692, para 19) "19. Power of the High Court to be exercised under Article 226 of the Constitution, if is discretionary, its exercise must be judicious and reasonable, admits of no controversy. It is for that reason, a person's entitlement for relief from a High Court under Article 226 of the Constitution, be it against the State or anybody else, even if is founded on the allegation of infringement of his legal right, has to necessarily depend upon unblameworthy conduct of the person seeking relief, and the court refuses to grant the discretionary relief to such person in exercise of such power, when he approaches it with unclean hands or blameworthy conduct."
23. Recently in Chennai Metropolitan Water Supply and Sewerage Board v. T.T. Murali Babu [Chennai Metropolitan Water Supply and Sewerage Board v. T.T. Murali Babu, it has been ruled thus:
(SCC p. 117, para 16) "16. Thus, the doctrine of delay and laches should not be lightly brushed aside. A writ Company Appeal (AT) (Ins) No. 355 of 2021 69 court is required to weigh the explanation offered and the acceptability of the same. The court should bear in mind that it is exercising an extraordinary and equitable jurisdiction. As a constitutional court it has a duty to protect the rights of the citizens but simultaneously it is to keep itself alive to the primary principle that when an aggrieved person, without adequate reason, approaches the court at his own leisure or pleasure, the court would be under legal obligation to scrutinise whether the lis at a belated stage should be entertained or not. Be it noted, delay comes in the way of equity. In certain circumstances delay and laches may not be fatal but in most circumstances inordinate delay would only invite disaster for the litigant who knocks at the doors of the court. Delay reflects inactivity and inaction on the part of a litigant--a litigant who has forgotten the basic norms, namely, 'procrastination is the greatest thief of time' and second, law does not permit one to sleep and rise like a phoenix. Delay does bring in hazard and causes injury to the lis."
24. At this juncture, we are obliged to state that the question of delay and laches in all kinds of cases would not curb or curtail the power of the writ court to exercise the discretion. In Tukaram Kana Joshi v. Maharashtra Industrial Development Corpn. [Tukaram Kana Joshi v. Maharashtra Industrial Development Corpn., it has been ruled that: (SCC pp. 359-60, para 12) "12. ... Delay and laches is adopted as a mode of discretion to decline exercise of jurisdiction to grant relief. There is another facet. The Court is required to exercise judicial discretion. The said discretion is dependent on facts and circumstances of the cases. Delay and laches is one of the facets to deny exercise of discretion. It is not an absolute impediment. There can be mitigating factors, continuity of cause of action, etc. That apart, if the whole thing shocks the judicial conscience, then the Court should exercise the discretion Company Appeal (AT) (Ins) No. 355 of 2021 70 more so, when no third-party interest is involved. Thus analysed, the petition is not hit by the doctrine of delay and laches as the same is not a constitutional limitation, the cause of action is continuous and further the situation certainly shocks judicial conscience." And again: (SCC p. 360, para 14) "14. No hard-and-fast rule can be laid down as to when the High Court should refuse to exercise its jurisdiction in favour of a party who moves it after considerable delay and is otherwise guilty of laches. Discretion must be exercised judiciously and reasonably. In the event that the claim made by the applicant is legally sustainable, delay should be condoned. In other words, where circumstances justifying the conduct exist, the illegality which is manifest, cannot be sustained on the sole ground of laches. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in the injustice being done, because of a non- deliberate delay. The court should not harm innocent parties if their rights have in fact emerged by delay on the part of the petitioners. (Vide Durga Prashad v.
Controller of Imports and Exports [Durga Prashad v. Controller of Imports and Exports, LAO v. Katiji] , Dehri Rohtas Light Railway Co. Ltd. v. District Board, Bhojpur, [Dehri Rohtas Light Railway Co. Ltd. v. District Board, Bhojpur, , Dayal Singh v. Union of India [Dayal Singh v. Union of India, and Shankara Coop.
Housing Society Ltd. v. M. Prabhakar [Shankara Coop. Housing Society Ltd. v. M. Prabhakar)"
(emphasis supplied) 29 The aforesaid principle is also required to be adopted while considering a case involving approbation and reprobation".
Company Appeal (AT) (Ins) No. 355 of 2021 71
18. The Appellant has also sought to allege that somehow, the entire process of approval of the Resolution Plan by the NCLT was contrary to the principles of natural justice as the Appellant was not heard subsequent to this Hon'ble Tribunal's order dated 4th November 2020.
19. It submits that the objections raised by the Appellant do not fall within the scope of judicial scrutiny as circumscribed in Section 61 (3) of the Code. The Appellant has failed to point out any clause of Section 61 (3) of the Code that these grievances fall under.
20. In any event, without prejudice to the aforesaid, it is pertinent to note that the Appellant's M.A. No. 4061 of 2019 filed to oppose the approval of the Resolution Plan was heard by the NCLT on 13th October 2020 and reserved finally for orders on 27th October 2020.
21. Therefore, clearly, the Appellant was heard and its M.A. No. 4061 of 2019 was reserved for orders. Despite this, one day thereafter, on 28th October 2020, the Appellant filed Appeal No. 953 of 2020 before this Hon'ble Tribunal wherein the fact that M.A. No. 4061 of 2019 had been reserved for order was completely suppressed.
22. In fact, the matter was circulated before this Hon'ble Tribunal on 4th November 2020 ex-parte, and on the basis of the Order passed, it is clear that this Hon'ble Tribunal was never informed about M.A. NO. 4061 of 2019 being reserved for orders on 27th October 2020. In any event, the direction of this Hon'ble Tribunal was already complied with as the NCLT had substantially heard the Appellant on 13th October 2020 and 27th October 2020. Company Appeal (AT) (Ins) No. 355 of 2021 72
23. Considering all that is stated hereinabove, the Appellant submits that the present Appeal is completely devoid of any merit and deserves to be dismissed in limine. If the present Appeal is allowed, it will not only prejudice the interests of 80% homebuyers who are not opposing the Resolution Plan but also 99% of the COC who also stand to benefit from the Resolution Plan.
24. Further, the Resolution Plan is now approved in March 2021. For the last 1.5 years, Respondent No. 1 has implemented the Resolution Plan. It has made payments of Rs. 370 crores to the financial creditors and additional amount of Rs. 270 crores have been paid for premium etc. and Rs. 100 crores for construction activity and other expenses on the project. It has started construction on site. It has constructed upon 24 slabs of the Siesta Building. The project has also been mortgaged to Catalyst Trusteeship Limited vide an Indenture of Mortgage dated May 2, 2022.
25. Without prejudice, it submits that is it willing to refund the entire principal amount paid by the members of the Appellant (if they are genuine allottees, who have the relevant supporting documents) and subject to such allottees relinquishing their rights with respect to the Project.
26. We have carefully gone through the pleadings of the parties and have also heard the parties on 12.09.2022, the law laid down on the subject and our observations are as follows:
(a) The Appellant is a registered association viz, Ariisto Alert Resident Association of about 100 homebuyers out of total homebuyers involved in the Resolution Plan namely "Siesta" (n=182) and "Celestia" (n=335). These Company Appeal (AT) (Ins) No. 355 of 2021 73 homebuyers are opposing the Resolution Plan dated 24.10.2019 given hereunder is the detail constituting the voting percentage of various creditors of the Corporate Debtor. From the look at the following table, it reflects that the homebuyers constitute 8.5% of the total voting percentage.
Company Appeal (AT) (Ins) No. 355 of 2021 74 Company Appeal (AT) (Ins) No. 355 of 2021 75 Company Appeal (AT) (Ins) No. 355 of 2021 76
(b) Twenty CoC meetings have been convened from 24.12.2018 after commencement of CIRP on 20.11.2018. In the 15.04.2019 CoC meeting, CoC Company Appeal (AT) (Ins) No. 355 of 2021 77 approved the provisional list of Prospective Resolution Applicants. In the 10th CoC meeting, CoC formed a sub-committee of a CoC to negotiate the terms and conditions of Resolution Plan. CoC has also asked in the 14th meeting, to revise their respective financial proposals in accordance with the suggested parameters to ensure maximization of value to all stakeholder of the Corporate Debtor. CoC in its 20th meeting held on 12th and 13th November, 2019 voted on the Resolution Plan to the Resolution Applicants and finally the RP in the presence of CoC Members scrutinized the Ballot papers and based on ballot papers received RP declared to the Members of CoC that the Resolution Plan submitted by Prestige Estates Projects Ltd. has been approved by 85.48%. The sub-committee of Resolution Applicant were comprising of HDFC Ltd., Vistra ITCL India Ltd. Aasan Corporate Solutions Pvt. Ltd. and IIFL Trustee Ltd.
(c) All the "Siesta" buyers support the Resolution Plan and over 200 Celestia buyers have also supported in one way or the other the Resolution Plan as approved by the Committee of Creditors.
(d) As it looks that the CoC had gone into full analysis of its commercial wisdom and has thereafter approved the Plan.
(e) The Appellants are miniscule minority and out of that approximately 80% of the homebuyers are not opposing the Resolution Plan. Hence, on a broad framework it is difficult to consider otherwise what has been approved by the CoC.
(f) It has also been brought to our notice by the Respondents that the Resolution Plan was approved in March, 2021 and during the intervening Company Appeal (AT) (Ins) No. 355 of 2021 78 period of 1.5 years the Resolution Applicant has implemented the Resolution Plan and has made payments of Rs. 372 Crores to the Financial Creditors and balance Rs. 370 Crores for other activities of the project subject to verification.
(g) It has been brought to our notice by the Resolution Applicant that 24 slabs of Siesta buildings have been constructed and the project has also been mortgaged to Catalyst Trusteeship Ltd. by an indenture of mortgage during 2022.
(h) The Resolution Applicant has also stated that it is willing to refund the entire principal amount paid by the Members of the Appellant subject to verification as also subject to such allotees relinquishing their rights with respect to the project.
(i) The grievance of the Appellant Association is the change of plot and charging additional rate of Rs. 3,300 per. sq. feet for meeting the increased cost of construction. However, the Respondent No. 1/Resolution Applicant has submitted that they are being shifted to a plot that is almost three times the size of the original plot which implies more amenities and larger open spaces. Respondent No. 1 has also stated that the Appellants will be receiving apartments currently valued and sold at Rs. 24,000 per. sq. feet of the carpet area.
27. The Adjudicating Authority vide elaborate order has approved the Resolution Plan with the following observations:
"(a) The Resolution Applicant in its Resolution Plan, has dealt with interests of all stakeholders of the Corporate Debtor, including the Financial Creditors, the Operational Creditors and the CIRP cost.
Company Appeal (AT) (Ins) No. 355 of 2021 79
(b) Any relief sought for in the Resolution Plan, where the contract/agreement/understanding/proceedings/actions/ notice etc. is not specifically identified or is for future and contingent liability, is at this moment rejected.
(c) The resolution applicant, on taking control of the corporate debtor, shall ensure compliance under all applicable law for the time being in force. The resolution applicant shall obtain the necessary approval required under any law for the time being in force within one year from the date of this order or within such period as provided for in such law, whichever is later.
(d) We shall clarify here that any resolution applicant shall take over the corporate debtor with all its assets and liabilities as per terms of the approved resolution plan. If any relief concerning any identified liability of the corporate debtor is required, then that needs to be specifically mentioned and sought for in the Resolution Plan. This bench cannot allow any general power to any resolution applicant absolving him of liability of the corporate debtor company without knowing about the liability against which such exemption is sought. In other words, reliefs/exemptions from only existing liabilities which are specifically identified can be sought and allowed in the resolution plan.
(e) On perusal of the resolution plan, we find that the resolution plan has necessary provisions for its effective implementation and it has been approved by the CoC with a majority of 85.52%.
(f) The resolution applicant shall obtain the necessary approval required under any law for the time being in force within one year from the date of this order or within such period as provided for in such law, whichever is late.
(g) Given the above observations, we approve the resolution plan with modifications, as mentioned above, which shall be binding on the corporate debtor and its employees, members, creditors, guarantors, resolution applicant and other stakeholders involved in the resolution plan.
(h) The resolution professional shall forward all records relating to the conduct of the corporate insolvency Company Appeal (AT) (Ins) No. 355 of 2021 80 resolution process and the resolution plan to the IBBI to be recorded on its database. The RP is hereby discharged of his duties after handing over the documents to the Resolution Applicant and he taking charge.
(i) It is seen that the Resolution Plan seeks several Dispensations, concessions and waivers. Approval of Resolution Plan does not mean automatic waivers. The Resolution Applicant on approval of the plan may approach those competent authorities/courts/legal forms/office(s) Government or Semi-Government/State or Central Government for appropriate relief(s) sought in the plan.
(j) The Resolution Plan is at the moment approved, under Section 31 (1) of IBC with observations above. The MA 3714/2019 is accordingly allowed and disposed of. There are other pending applications in this Company Petition, the summary of which is as follows:
M.A. No. Brief Description 3785 of 2019 Filed by ASH Mulund Welfare Association (Homebuyers
Association) against the R.P. Challenging the approval of the Resolution Plan submitted by Prestige and the conduct of CIRP.
4022 of 2019 Filed by Ashok Commercial (Unsecure Financial Creditor) against the RP challenging the partial rejection of the claim by RP.
4061 of 2019 Filed by Ariisto Alert Residents Association (Homebuyers Association) against the Resolution Applicant and RP challenging the approval of the Resolution Plan submitted by Prestige and the conduct of CIRP.
In view of approving the Resolution Plan and in view of the oral statement made by the Resolution Professional before this Bench that all the grievances of all the applicants abovementioned have been settled, these above Applications become infructuous and hence are disposed of. Also, other two pending M.A.s bearing Nos. 391/2020 and 1893/2019 (Under Section 66 of the Code) are dismissed vide separate orders. And in view of approving the Resolution Plan and disposing of all the pending applications, the Company Petition itself stands disposed of".
Company Appeal (AT) (Ins) No. 355 of 2021 81
28. This reflects that the Adjudicating Authority has considered all the relevant aspects and law laid down on the subject and thereafter has approved the plan.
29. The Judicial review of the Resolution Plan is not permitted for the areas which falls within the domain of commercial wisdom of committee of creditors. This is now a settled law and the following Judgments may be referred to:
(a) K. Sasidhar v. Union of India, 2019 (12) SCC 150, paras. 51 to 65.
(b) Committee of Creditors of Essar Steel v. Satish Kumar Gupta, 2020 (8) SCC 531, paras. 54 to 67.
(c) Jaypee Kensington v. NBCC, 2021 SCC Online SC 204, paras. 183, 203-
210.
30. Even Principles of equity cannot be applied while considering the provisions of the code. This is also a well settled law and the following Judgments may be referred to:
(a) Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh 2020 (11) SCC 467, para. 30, "30.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. Section 31(1) of the Code lays down in clear terms that for final approval of a resolution plan, the Adjudicating Authority has to be satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on Company Appeal (AT) (Ins) No. 355 of 2021 82 which an Adjudicating Authority has to be satisfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the Adjudicating Authority in limited judicial review has been laid down in the case of Essar Steel (supra), the relevant passage (para 54) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the Appellate Authority ought to have interfered with the order of the Adjudicating Authority in directing the successful Resolution Applicant to enhance their fund inflow upfront".
(b) Pratap Technocrat Ltd. v. Monitoring Committee of Reliance Infratel Ltd. (2021) 10 SCC 623, para. 29.
"29.The jurisdiction which has been conferred upon the Adjudicating Authority in regard to the approval of a resolution plan is statutorily structured by sub-Section (1) of Section 31. The jurisdiction is limited to determining whether the requirements which are specified in sub- Section (2) of Section 30 have been fulfilled. This is a jurisdiction which is statutorily-defined, recognised and conferred, and hence cannot be equated with a jurisdiction in equity,that operates independently of the provisions PART F of the statute. The Adjudicating Authority as a body owing its existence to the statute, must abide by the nature and extent of its jurisdiction as defined in the statute itself".
31. The order of Adjudicating Authority also resolves the issue that the Resolution Applicant may approach competent authorities/courts/legal forms/office of the Government or Semi-Government/State or Central Government for appropriate relief if it comes in the way of implementation of the Resolution Plan and the Resolution Applicant on taking control of the Corporate Debtor shall ensure compliance under all applicable law for the time being in force. This is open for any Applicant to approach competent Company Appeal (AT) (Ins) No. 355 of 2021 83 authorities if so, advised within the framework of the code or available law to the competent courts/Government.
32. In view of above observations, law laid down on the subject, commercial wisdom applied by the committee of creditors, elaborate order passed by the Adjudicating Authority, we do not find any inconformity in the order and are constrained to agree with the Adjudicating Authority.
33. The Appeal, therefore, is disposed of with the above observations.
34. Interim order, if any, stands vacated. No order as to costs.
[Justice Rakesh Kumar] Member (Judicial) [Dr. Ashok Kumar Mishra] Member (Technical) New Delhi 23.12.2022 sr Company Appeal (AT) (Ins) No. 355 of 2021