Pre-CIRP cancellation of allotments cannot be reversed in insolvency where resolution plan separately treats cancelled allottees.
A pre-CIRP cancellation of allotments reflected in the corporate debtor's records could not be reversed by the resolution professional, whose role was limited to collation and verification of claims. Where the appellants had already pursued RERA refunds and accepted part payments, their conduct was treated as consistent with cancellation, and the RERA decrees did not displace the insolvency process. The resolution plan validly dealt with cancelled allottees, and the CoC's commercial wisdom in approving differentiated treatment was not interfered with.
Issues: (i) Whether the pre-CIRP cancellation of the appellants' units could be reversed or the Information Memorandum amended to restore their allotments; (ii) whether the appellants, having obtained RERA decrees and accepted part refunds, were entitled to restoration of the original units or to be treated at par with other allottees in the resolution process.
Issue (i): Whether the pre-CIRP cancellation of the appellants' units could be reversed or the Information Memorandum amended to restore their allotments.
Analysis: The units were found to have been cancelled by the corporate debtor before commencement of CIRP, and the RP prepared the Information Memorandum on the basis of the corporate debtor's records. The RP's role was confined to collation and verification of claims, and it had no adjudicatory power to undo a cancellation already effected before CIRP. The cancellation, therefore, could not be reversed by the RP or interfered with in the insolvency process on the facts presented.
Conclusion: The request to restore the cancelled units and amend the Information Memorandum was not sustainable.
Issue (ii): Whether the appellants, having obtained RERA decrees and accepted part refunds, were entitled to restoration of the original units or to be treated at par with other allottees in the resolution process.
Analysis: The appellants had themselves pursued refund under the RERA regime and had accepted part payments against the decrees. Their conduct was treated as consistent with acceptance of cancellation, and the RERA decree did not displace the pre-CIRP cancellation or fetter the insolvency process. The Resolution Plan specifically dealt with cancelled allottees, and the CoC approved the plan in the exercise of its commercial wisdom. In such circumstances, no infirmity was found in the differentiated treatment provided under the plan, and no violation of natural justice was made out.
Conclusion: The appellants were not entitled to restoration of the original units or to the relief of being placed identically with allottees whose units had not been cancelled.
Final Conclusion: The appeal failed because the cancellation had occurred before CIRP, the insolvency records reflected that position, and the Resolution Plan validly addressed the cancelled allotments within the CoC-approved framework.
Ratio Decidendi: A pre-CIRP cancellation reflected in the corporate debtor's records cannot be reversed by the RP or NCLT in the absence of a challenge to that cancellation, and the CoC's commercial wisdom in approving a resolution plan that separately treats cancelled allottees is not ordinarily open to interference.
TaxTMI 
AI Drafter ✕
TaxTMI 
