Tribunal Affirms Directions, Dismisses Appeal, CoC Bound by Valuation, No Relief Granted

The Tribunal affirmed the directions in paragraph 49 of the impugned order but deleted paragraph 50. The appeal was dismissed, and the reliefs claimed by the Appellants were not granted. The CoC cannot alter the liquidation value determined by Registered Valuers, as it serves a specific purpose in the resolution process.

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Issues Involved:
1. Liquidation value of security interest in the Universal Business Park project.
2. Directions issued by the Adjudicating Authority in paragraphs 49 and 50 of the impugned order.

Summary:

Issue 1: Liquidation Value of Security Interest in Universal Business Park Project

The Corporate Debtor, Universal Buildwell Pvt. Ltd., was admitted into insolvency on 03.07.2018. The Appellants submitted claims which were admitted, and voting shares were allocated to them in the Committee of Creditors (CoC). The Resolution Professional (RP) appointed two valuers who shared the Valuation Report with the Appellants. The Resolution Plan for the Corporate Debtor, approved by the CoC, earmarked Rs. 3 crores for the Appellants concerning Universal Business Park, assigning a NIL liquidation value to their security interest in the project.

The Appellants objected, arguing that the liquidation value assessed by the Registered Valuers for Universal Business Park was INR 51,32,34,718/-, and their security interest should be valued at INR 23.09 crores. They asserted that the RP and Resolution Applicant wrongly treated their liquidation value as NIL, contrary to the Insolvency and Bankruptcy Code (IBC) and the Insolvency Resolution Process for Corporate Persons Regulations (CIRP Regulations).

The RP and Respondents countered that the entire super area of Universal Business Park was sold through Conveyance Deeds and Builder Buyer Agreements (BBA) before the mortgage was created, leaving no unsold inventory to be monetized. The Appellants' claim that execution of BBAs does not amount to transfer/sale under the Transfer of Property Act was rejected, as the rights of homebuyers under BBAs are recognized by law, and the project had no remaining assets for liquidation.

Issue 2: Directions Issued in Paragraphs 49 and 50

The Adjudicating Authority, in paragraphs 49 and 50, directed the CoC to re-examine the significant differences between the liquidation values submitted by the two valuers. The Appellants contended that the CoC does not have the power to alter the liquidation value determined by Registered Valuers.

The Tribunal concurred with the Adjudicating Authority's observation that since the units sold are no longer assets of the Corporate Debtor, their liquidation value is NIL. However, it held that the CoC cannot change the liquidation value determined by Registered Valuers, as it serves a specific purpose in the resolution process. Thus, the direction to the CoC to re-examine the liquidation value differences was deemed uncalled for and deleted.

Conclusion:

The Tribunal affirmed the observations and directions in paragraph 49 of the impugned order but deleted paragraph 50. The appeal was dismissed, and the reliefs claimed by the Appellants were not granted.

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