Resolution Professional can appeal when voting summary rejected in Section 12A withdrawal application

NCLAT Principal Bench set aside the Adjudicating Authority's order that rejected the Resolution Professional's voting summary on a Section 12A withdrawal application. The court held that the Resolution Professional, as CoC Chairman, was an aggrieved party when their decision that the 12A proposal lacked required 90% approval was overturned. The court distinguished the Regen Powertech SC judgment, finding the Resolution Professional's appeal maintainable as they were duty-bound to compute votes per statute. CIRP was revived for Estella Project only, excluding NCR Green Project, with fresh Form G to be issued within 90 days.

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Issues Involved:

1. Approval of Withdrawal Proposal under Section 12A.
2. Computation of Voting Shares for Homebuyers.
3. Maintainability of Appeal by Resolution Professional.
4. Revival and Scope of CIRP for Corporate Debtor.

Summary:

Issue 1: Approval of Withdrawal Proposal under Section 12A

The primary issue was whether the withdrawal proposal under Section 12A, submitted by the promoter/director, was validly approved. The Adjudicating Authority approved the proposal, interpreting that the votes of homebuyers, as a class, should be considered as 100% in favor if more than 50% of them voted 'Yes'. However, the Appellate Tribunal found this interpretation incorrect, emphasizing that Section 12A requires a 90% vote share for approval. The Tribunal concluded that the proposal had only received 52.57% and thus was not approved.

Issue 2: Computation of Voting Shares for Homebuyers

The Adjudicating Authority's method of calculating homebuyers' votes as a single block based on the majority was challenged. The Tribunal clarified that according to the proviso to Section 25A(3A), each homebuyer's vote should be counted individually in proportion to their voting share, especially for Section 12A applications. The Tribunal found that the Adjudicating Authority erred in its computation, leading to the incorrect approval of the withdrawal proposal.

Issue 3: Maintainability of Appeal by Resolution Professional

The maintainability of the appeal by the Resolution Professional was questioned. The Tribunal held that the Resolution Professional was an aggrieved party since the Adjudicating Authority's decision directly overturned his computation of the voting results. The Tribunal distinguished this case from the Supreme Court's decision in "Regen Powertech Private Limited vs. Giriraj Enterprises & Anr.," where the Resolution Professional was expected to remain neutral.

Issue 4: Revival and Scope of CIRP for Corporate Debtor

The Tribunal decided that the CIRP should be revived but confined to the Estella Project, excluding the NCR Green Project, which was almost complete. The promoter/director was held responsible for completing and handing over all units in the NCR Green Project. The Tribunal directed the Resolution Professional to issue a fresh Form G for the Estella Project and complete the CIRP within 90 days, forming a new CoC for the Estella Project.

Conclusion:

The Tribunal allowed the appeals, set aside the Adjudicating Authority's order approving the Section 12A proposal, and revived the CIRP for the Estella Project while keeping the NCR Green Project out of CIRP. The Resolution Professional was instructed to proceed with the CIRP as per the Tribunal's directions.

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