Commercial space buyers cannot claim ownership or exclude assets from resolution plan despite allotment and lease deeds

The NCLAT Delhi dismissed appeals by commercial space buyers challenging exclusion from corporate debtor's assets and resolution plan approval. The tribunal held that commercial spaces cannot be segregated from CIRP assets, citing SC precedent that resolution plans must comprehensively address all assets and liabilities. Appellants could not claim ownership despite allotment and lease deed execution. The resolution plan offering 100% principal refund or alternate commercial space complied with Section 30(2)(b) IBC requirements, exceeding liquidation value entitlements. The tribunal found no grounds to interfere with the adjudicating authority's commercial wisdom in approving the resolution plan, though granted liberty to claim post-CIRP commencement rent.

---

---

Issues Involved:

1. Exclusion of commercial spaces from the assets of the Corporate Debtor.
2. Ownership of the units allotted to commercial space buyers based on allotment and Lease Deed.
3. Entitlement of dissenting Financial Creditors under Section 30(2)(b) of the Insolvency and Bankruptcy Code (IBC).
4. Validity of the order approving the Resolution Plan.
5. Justification for the rejection of certain Interim Applications (IAs) by the Adjudicating Authority.

Issue-wise Detailed Analysis:

Issue I & II: Exclusion of Commercial Spaces and Ownership Claims

The Appellants, who are commercial space buyers, sought exclusion of their allotted spaces from the assets of the Corporate Debtor and claimed ownership based on allotment and Lease Deed. The Tribunal found that the allotment letters and Lease Deed were unregistered documents, which do not transfer ownership as per established legal principles. The Tribunal referenced the Supreme Court's rulings that a sale of immovable property requires a registered deed of conveyance. The Appellants' prayers for execution of a Sale Deed themselves acknowledged that ownership had not been transferred. The Tribunal concluded that the Corporate Debtor retained ownership of the spaces, and the Appellants' claims of ownership or exclusion from the CIRP were not valid.

Issue III: Entitlement of Dissenting Financial Creditors

The Appellants, as dissenting Financial Creditors, were entitled to the liquidation value as per Section 30(2)(b) of the IBC. The Tribunal noted that the liquidation value for the unsecured Financial Creditors in the class of commercial space buyers was 'zero'. However, the Successful Resolution Applicant (SRA) offered 100% refund of the principal amount or an alternative option for commercial space, which was more favorable than the liquidation value. The Tribunal held that the Appellants were entitled to this offer as per the Resolution Plan.

Issue IV: Approval of the Resolution Plan

The Tribunal emphasized that interference with the commercial wisdom of the Committee of Creditors (CoC) is limited to ensuring compliance with Section 30(2) of the IBC. The Appellants did not demonstrate any violation of this provision. The Resolution Plan, approved by an 87.49% majority, was found to be binding on all stakeholders, including dissenting creditors. The Tribunal upheld the Adjudicating Authority's order approving the Resolution Plan, as it complied with the legal requirements.

Issue V: Rejection of Interim Applications

The Tribunal addressed the rejection of IA No.3524 of 2020 filed by Appellant Nupur Garg, which sought exclusion of commercial space SF-05 and execution of a Sale Deed. The Tribunal found no merit in these requests but granted liberty to file an application for rent claims post-CIRP commencement. Regarding IA No.4369 of 2022 and IA No.5253 of 2023, the Tribunal found no grounds to interfere with their rejection, as the claims had already been admitted, and the applications were dismissed due to non-prosecution and procedural progress.

Conclusion:

The Tribunal dismissed Company Appeal (AT) (Ins.) Nos. 40 and 45 of 2024, upholding the approval of the Resolution Plan. Company Appeal (AT) (Ins.) No.61 of 2024 was disposed of with liberty for the Appellant to pursue rent claims from July 2019. The Tribunal's decision reinforced the binding nature of the Resolution Plan and clarified the rights of dissenting creditors under the IBC framework.

---