2024 (6) TMI 630 - AT - Insolvency and Bankruptcy

NCLAT upholds Resolution Plan protecting homebuyers from price escalation despite Financial Creditors' challenge under Section 30(2)

Beacon Trusteeship Ltd. Versus Jayesh Sanghrajka, Adani Goodhomes Pvt. Ltd., HDFC Bank Limited, Ten BKC Flat Owners AOP Trust, Dev Rishi Ventures LLP, ICICI Bank Ltd., Mr. Rajesh Sureshchandra Sheth,. Yes Bank Ltd., Infinite Buildcon Pvt. Ltd., Piramal Capital & Housing Finance Ltd. And Dev Rishi Ventures LLP Versus Jayesh Sanghrajka, Adani Goodhomes Pvt. Ltd., HDFC Bank Limited, Ten BKC Flat Owners AOP Trust, Beacon Trusteeship Ltd., ICICI Bank Ltd., Mr. Rajesh Sureshchandra Sheth, Yes Bank Ltd., Infinite Buildcon Pvt. Ltd., Piramal Capital & Housing Finance Ltd.

NCLAT dismissed appeal by two dissenting Financial Creditors challenging a Resolution Plan. The Tribunal held that homebuyers who already paid ... Approval of Resolution Plan - Appeal filed by two dissenting Financial Creditors objecting to the Resolution Plan - giving of the flats to the Homebuyers under the Resolution Plan, without escalation of price - HELD THAT:- The Homebuyers, who have been allotted the house and amount of consideration has already been fixed in the allotment and it was undertaken by the Corporate Debtor to handover the units on payment of consideration, no exception can be taken to handing over of the units to the Homebuyers on consideration, already paid. The Resolution Plan was approved treating them in two different categories, which was challenged before this Tribunal, on the ground that the treatment of Homebuyers, cannot be discriminated - Present is not a case, where any violation of Section 30, sub-section (2) has been proved by the Appellant. Appellant(s) being dissenting Financial Creditors are entitled to receive their payment as per Section 30, sub-section (2) (b) (ii) and the amounts, which have been offered to dissenting Financial Creditors, is in accordance with the said provision. The Appellants are not entitled to claim payment as per the security interest in the asset of the Corporate Debtor. Appeal dismissed. Issues involved:1. Challenge to the rejection of objections to the Resolution Plan.2. Challenge to the approval of the Resolution Plan.3. Entitlement of dissenting Financial Creditors to payment based on security interest.Summary:1. Challenge to the rejection of objections to the Resolution Plan:The appeals were filed by dissenting Financial Creditors challenging the order dated 02.12.2022, which rejected objections to the Resolution Plan. The Appellants argued that the Resolution Plan was in contravention of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) and was unfair and inequitable as it provided a 93% haircut to the Appellant's claims while ensuring 100% recovery to Homebuyers. The Appellants also contended that the Valuation Reports were prepared without complete information, leading to undervaluation. The Tribunal found that the Resolution Professional (RP) conducted the CIRP in accordance with the prescribed procedure and that the Valuation Reports were prepared by experts and shared with all Financial Creditors. The Tribunal upheld the Adjudicating Authority's decision, stating that the valuation of immovable property is not an exact science and cannot be second-guessed by the Tribunal.2. Challenge to the approval of the Resolution Plan:The Appellants challenged the order dated 09.01.2023, which approved the Resolution Plan submitted by the Successful Resolution Applicant (SRA). The Tribunal noted that the CoC had approved the Resolution Plan with 83.93% vote shares, and the SRA had infused Rs. 450 Crores as interim finance, which was used for payment of dues and commencement of construction. The Tribunal found no procedural violation by the RP and held that the commercial wisdom of the CoC in approving the Resolution Plan cannot be questioned. The Tribunal also noted that the Resolution Plan provided for the completion of the project and handover of units to Homebuyers, which was in the interest of the Corporate Debtor and its stakeholders.3. Entitlement of dissenting Financial Creditors to payment based on security interest:The Appellants argued that they were entitled to receive payment based on their security interest in the assets of the Corporate Debtor. The Tribunal referred to the judgment of the Hon'ble Supreme Court in `India Resurgence ARC Pvt. Ltd. Vs. Amit Metaliks Ltd. & Anr.', which held that dissenting Financial Creditors are entitled to receive the amount as per Section 30(2)(b) of the IBC and not based on their security interest. The Tribunal also referred to its judgment in `Edelweiss Asset Reconstruction Ltd. Vs. Mr. Anuj Jain, Resolution Professional of Ballarpur Industries Ltd. & Ors.', which held that Financial Creditors with security interest can be dealt with in the Resolution Plan as per the commercial wisdom of the CoC. The Tribunal concluded that the Appellants are not entitled to claim payment based on their security interest.Conclusion:The Tribunal dismissed all the appeals, upholding the orders dated 02.12.2022 and 09.01.2023, and confirmed that the Resolution Plan was in compliance with the IBC and the commercial wisdom of the CoC. The Tribunal also allowed the substitution of parties as requested in the IAs.