Resolution Professional holds exclusive statutory responsibility for filing avoidance applications under IBC Sections 43, 45, 50, 66

NCLAT Principal Bench dismissed appeals challenging CoC constitution and resolution plan approval in CIRP proceedings. Tribunal held that statutory responsibility for filing avoidance applications under IBC Sections 43, 45, 50, and 66 lies exclusively with Resolution Professional, not home buyers or unsuccessful resolution applicants. Court distinguished previous precedent where RP failed to verify claims and conduct proper valuation. Appellants failed to demonstrate grounds warranting interference with adjudicating authority's orders. Resolution plan provision granting CoC exclusive rights over avoidance recoveries was upheld.

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Issues Involved:
1. Constitution of the Committee of Creditors (CoC).
2. Approval of the resolution plan by the Adjudicating Authority.
3. Pendency of avoidance applications and their impact on the resolution plan.

Summary:

1. Constitution of the Committee of Creditors (CoC):
The appellants challenged the constitution of the CoC, alleging that certain home buyers involved in fraudulent transactions were illegitimately included. The Adjudicating Authority dismissed these challenges, noting that the appellants had not impleaded the alleged fraudulent home buyers or the Resolution Professional (RP) in their application, thereby failing to provide an opportunity for these parties to be heard. The Tribunal upheld this decision, emphasizing that any decision to remove home buyers from the CoC without hearing them would be prejudicial and violate principles of natural justice. The Tribunal also noted that the appellants had not raised objections to the CoC's constitution before the 8th CoC meeting, indicating their challenge was an afterthought following the rejection of their preferred resolution plan.

2. Approval of the resolution plan by the Adjudicating Authority:
The appellants contended that the resolution plan approved by the CoC was invalid as the CoC was allegedly tainted by the inclusion of fraudulent home buyers. The Adjudicating Authority, however, found that the resolution plan met all statutory requirements and was approved by the requisite majority of home buyers. The Tribunal supported this view, citing the Supreme Court's ruling in the Jaypee case, which held that individual home buyers cannot challenge a resolution plan approved by the majority of their class. The Tribunal concluded that the resolution plan's approval was in line with the IBC's democratic principles and statutory requirements.

3. Pendency of avoidance applications and their impact on the resolution plan:
The appellants argued that the resolution plan should not have been approved while avoidance applications under Sections 43, 44, and 66 of the IBC were pending. The Tribunal disagreed, stating that the IBC allows for the continuation of avoidance applications independently of the resolution process. Section 26 of the IBC explicitly provides that the pendency of avoidance applications does not affect the approval of the resolution plan. The Tribunal cited the Delhi High Court's decision in Tata Steel BSL Limited v. Venus Recruiter Private Limited and Others, which affirmed that avoidance applications can proceed irrespective of the resolution plan's finalization.

Conclusion:
The Tribunal dismissed both appeals, affirming the Adjudicating Authority's orders. It held that the appellants failed to present cogent grounds for interfering with the CoC's constitution or the resolution plan's approval and reiterated that avoidance applications do not impede the resolution process.

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