Homebuyers cannot override creditors' commercial wisdom in approving resolution plan despite minority dissent

The NCLAT dismissed an appeal by 77 homebuyers challenging the approval of a resolution plan. The homebuyers contested the Committee of Creditors' (CoC) constitution, alleging related party status between the financial creditor and corporate debtor, but failed to provide adequate evidence. The tribunal found no irregularities in the Resolution Professional's conduct or CoC constitution with 89.05% vote share approval. The successful resolution applicant revised their offer to pay 100% of homebuyers' principal amount, which was accepted by all 77 homebuyers. The NCLAT held that dissatisfied minority homebuyers cannot override the CoC's commercial wisdom, emphasizing the IBC's objective of time-bound insolvency resolution.

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Issues Involved:
1. Related Party Status of Financial Creditor.
2. Vote Share Assignment to Financial Creditor.
3. Handling of TMC Reservation Issue by Resolution Professional.
4. Approval of the Resolution Plan.

Summary:

1. Related Party Status of Financial Creditor:
The Appellant contended that the Financial Creditor (Respondent No. 2) and Corporate Debtor were "related parties" under \u/s\ 5(24)(h) and 5(24)(m) of the IBC, which should invalidate the CoC's constitution. However, the Tribunal found no categorical material or proof indicating that the Corporate Debtor acted on the advice, direction, or instruction of the Financial Creditor. The Appellant failed to substantiate claims of participation in policy-making or managerial control by the Financial Creditor. The Tribunal concluded that the related party status was not adequately demonstrated, and the CoC was validly constituted.

2. Vote Share Assignment to Financial Creditor:
The Appellant argued that the Financial Creditor's claim was inflated by adding penal interest, thus wrongly giving it a majority vote share. The Adjudicating Authority had already addressed this issue, noting that even without penal interest, the Financial Creditor's vote share exceeded the required threshold. The Tribunal found no irregularity in the RP's assignment of vote shares, which had been diligently updated and verified.

3. Handling of TMC Reservation Issue by Resolution Professional:
The Appellant claimed that the RP mishandled the TMC reservation issue, leading to the withdrawal of potential resolution applicants. The Tribunal noted that the RP had taken multiple steps to address the TMC reservation, including legal consultations and RTI applications. The RP's actions were transparent and regularly communicated to the CoC. The Tribunal found no merit in the Appellant's contention that the RP's conduct was biased or negligent.

4. Approval of the Resolution Plan:
The Appellant sought to reject the CoC-approved resolution plan or send it back for modifications. The Tribunal emphasized that the resolution plan had been approved by the CoC with an 88.95% vote share and subsequently by the Adjudicating Authority. The Appellant, representing a minority, could not override the majority's commercial wisdom. The Tribunal cited the Supreme Court's decision in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. vs NBCC (India) and Ors., affirming that individual dissenting homebuyers must "sail along" with the majority. The Tribunal found no material irregularity or contravention of law in the resolution plan's approval and dismissed the appeal.

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