2022 (9) TMI 1289 - Tri - Insolvency and Bankruptcy

Tribunal upholds Resolution Plan, rejects Homebuyers' claim for liquidation value.

The Tribunal dismissed the application, upholding the validity of the Resolution Plan and the e-voting process. It found that individual Homebuyers cannot ... Misconduct in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - mistreatment of the Homebuyers as a class of creditors - 368 Homebuyers (applicants) purchased properties from the Corporate Debtor against the Resolution Plan of the Corporate Debtor - whether liquidation value is required to be provided to every individual Home buyer under Section 30(2)(b)(ii) in the capacity of a dissenting Financial Creditor? - HELD THAT:- Individual Homebuyers may have divergent views but ultimately, they vote as a class and individuals therein cannot claim to be ‘dissenting financial creditors’ if they vote against the Resolution Plan - since Individual Homebuyers cannot be called as dissenting Financial Creditors, the question of providing separate liquidation values to each Homebuyer under Section 30 of the Code does not arise. Whether the e-voting conducted by the RP for approval of the Resolution Plan was carried out following due procedure? - HELD THAT:- In case the Homebuyers are not satisfied with the conduct of the AR, they have the option of replacing him. Since no such steps were taken in the present case, the AR proceeded to vote in favour of the Plan according to the majority votes of the Homebuyers and since he did not change his vote after receiving the communication regarding extension of the voting lines, it is deemed that the AR voted according to the instructions he received from the Homebuyers he represents - this is a belated stage for the Homebuyers to raise allegations against the AR especially after the CoC has voted in favour of the Resolution Plan with an overwhelming majority of 96.14% voting share. Moreover, the AR has already voted in favour of the Plan and a change in this decision would not influence the results in a substantial manner given that the Homebuyers hold 7.45% voting share in the CoC. Environment Clearances - HELD THAT:- It is noted that the Applicants’ apprehensions related to extension of the EC are legitimate and the EC is a mandatory compliance for the revival of the Corporate Debtor. The RP is cognizant of this fact and has taken several steps to procure the EC as expeditiously as possible. He has approached relevant authorities such as the State Environment Impact Assessment Authority (SEIAA), State Level Expert Appraisal Committee (SEAC), Principal Secretary of the Environment Department (Government of Maharashtra) and has also filed appropriate applications before authorities such as the National Green Tribunal. It is evident from these steps that the RP comprehends the importance of the EC and the gravity of the consequences of its non-procurement. These applications are pending adjudication before the respective authorities and it is clear that the RP has not acted adversely to the interests of the members of the CoC including the Homebuyers. There ate no merit in the present Application - application dismissed. Issues Involved:1. Liquidation value disclosure to individual Homebuyers.2. Validity of the e-voting process for the Resolution Plan.3. Impact of Environmental Clearances (EC) on the Resolution Plan.Detailed Analysis:1. Liquidation value disclosure to individual Homebuyers:The Applicants argued that the Homebuyers were promised liquidation value if they voted against the Plan, but the liquidation value was never calculated or disclosed. They contended that dissenting financial creditors are entitled to receive liquidation value under Section 30 of the Insolvency and Bankruptcy Code (the Code). However, the Tribunal found that Homebuyers constitute a different class of creditors and cannot claim to be 'dissenting financial creditors' if they vote against the Resolution Plan. This interpretation aligns with the judgment in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. vs. NBCC (India), which states that individual Homebuyers cannot be considered dissenting financial creditors merely because they were not in the majority within their class. Therefore, the Tribunal concluded that the question of providing separate liquidation values to each Homebuyer does not arise.2. Validity of the e-voting process for the Resolution Plan:The Applicants claimed that they were not given due notice of modifications and addenda to the Resolution Plan and thus could not vote on the final plan. The Tribunal reviewed the minutes of the 18th CoC Meeting and found that the Authorized Representative (AR) of the Homebuyers actively participated and was informed about the addenda and extension of voting lines via email. The Tribunal noted that once communication is made to the AR, it is deemed communicated to all creditors of that class. Since the AR voted in favor of the Plan based on the majority decision of the Homebuyers, the Tribunal found no procedural irregularity in the voting process. Additionally, the Tribunal clarified that the 50% majority mark under Section 25A(3A) of the Code pertains to those creditors who actually cast their vote, and in this case, the required majority was achieved.3. Impact of Environmental Clearances (EC) on the Resolution Plan:The Applicants expressed concerns about the non-procurement of EC, which is crucial for the revival of the Corporate Debtor. The Tribunal acknowledged the legitimacy of these concerns but noted that the Resolution Professional (RP) had taken several steps to secure the EC, including approaching relevant authorities and filing applications before the National Green Tribunal. The Tribunal found that the RP had acted in the best interests of the CoC members, including the Homebuyers, and was making efforts to expedite the procurement of the EC.Conclusion:The Tribunal dismissed the application, finding no merit in the Applicants' arguments. The Tribunal upheld the validity of the Resolution Plan and the e-voting process, and recognized the efforts made by the RP to secure the necessary Environmental Clearances.