TaxTMI 
TaxTMI 
2022 (1) TMI 1257
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.... JUDGMENT Dr. Alok Srivastava, Member (T) 1. This judgment relates to three appeals, namely Company Appeal (AT)(Ins) No. 700/2021, Company Appeal (AT)(Ins) No. 761/2021 and Company Appeal (AT)(Ins) No. 925/2021, which have been filed under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (hereafter called "IBC") assailing the judgment dated 14.7.2021 passed in CA No. 371/2019 in Company Petition No. 322/ALD/2018 (hereafter referred to as "Impugned Order") by the Adjudicating Authority (National Company Law Tribunal, Allahabad Bench). All the three appeals have been filed against and assailing the common Impugned Order. Therefore, these appeals are being disposed off through this common judgment. 2. By the Impugned Order dated 14.7.2021, the Adjudicating Authority has approved the resolution plan submitted by Mr. Naveen Kumar Gupta as lead member of the consortium of Maya Buildcon Private Ltd., Geotech Homz Private Ltd. and Naveen Kumar Gupta, which is the successful resolution applicant. 3. The brief facts of the case as presented and argued by the appellants is that CIRP was initiated with respect to the corporate debtor Piyush Shelters India Pvt. Ltd. vide order of A....
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....l creditors in class did not seek the views of the allottees prior to CoC meeting as is required in Section 25A, but the voting by allottees took place alongside the e-voting on the resolution plan in CoC thereby flouting the provision of section 25A in letter and spirit and as a result, the interests of the majority of homebuyers/allottees have been compromised. 6. The Appellants in the three appeals have assailed the Impugned Order on the following grounds:- (i) The Learned Adjudicating Authority has passed the Impugned Order in CA No. 371/2019 while an earlier CA No. 282/2019 filed by the Resolution Applicant for consideration of his resolution plan was pending before the Adjudicating Authority. Since no orders have been passed in CA No. 282/2019, the Committee of Creditors (CoC) could not have considered the resolution plan submitted by the consortium. (ii) In the ninth meeting of CoC held on 1.11.2019, the CoC failed to consider the circumstances under which the earlier resolution plan of the Maya Group was withdrawn and revised resolution plan was being considered (iii) Section 25-A of the IBC clearly stipulates tha....
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....perty, whether paid in full or part. However, resolution applicant make an offer for them to take 10% of the verified amount within a period of one month and thereafter their claim shall be treated as abandoned." 9. The Learned Counsels for Appellants in all the appeals have argued that the authorized representative of financial creditors in class did not follow the provision of Section 25A of the IBC in letter and spirit and so he held the e-voting for financial creditors in class alongwith e-voting on the resolution plan in the CoC, which did not allow the homebuyers/allottees to consider and discuss between themselves various aspects of the proposed resolution plan as a class of financial creditors. They have also argued that CoC, in the ninth meeting, while considering the revised resolution plan submitted by the resolution applicant, issued notice on 5thNovember 2019 for e-voting to take place on 6th and 7th November 2019, and thus there was insufficient time provided to the financial creditors in class for giving due consideration to various aspects of the resolution plan. He has also argued that the resolution plan is based on liquidation value of Rs. 40 Crores, which is ap....
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....er question was being developed) and therefore, more than 50% of the homebuyers/allottees could not file their claims before the Resolution Professional in time. While clarifying, he has further stated that out of 473 number of allottees, only 222 have filed their claims before the RP while the claims of 251 allottees could not be filed in time leading to the extinguishing of their claims in the resolution plan. He has also claimed that the e-voting of the financial creditors in class has taken place along with e-voting on the resolution plan on 6th and 7th of November 2019, which is not in accordance with the requirement of Section 25-A of the IBC, where financial creditors in class have to be consulted 'prior' to the actual voting in the CoC, where the Authorized Representative has to present the views of the financial creditors in class. Since all the financial creditors voted alongside the CoC members, a legal fiction was created which was against the spirit of Section 25A. Therefore, grave injustice will be caused to the large number of homebuyers/allottees, who have more than 79% vote share in the CoC, and hence the Impugned Order should be set aside. 13. In argument....
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....9, decided on 13.4.2021). She has further clarified that the resolution plan, which was earlier withdrawn, was actually submitted by a consortium of "One City Infrastructure Private Limited" and "APM Infrastructure Private Limited" and not submitted by the Maya Group as has been alleged by the Appellant, and hence no special favour is being shown to the Maya Group. 16. The Learned Counsel for the Resolution Professional has with regard to appeals CA Nos. 761 of 2021 and 925 of 2021, stated that the CoC, which includes real estate allottees being creditors in class has approved the resolution plan by giving more than 50% votes in e-voting held on 6/7th November 2019, and so the creditors in class do not now have any locus to challenge the approved plan as has been held by Hon'ble Supreme Court in the matter of JP Kensington Boulevard Apartments Welfare Association and Others versus NBCC (India) Limited and Others (Civil appeal no. 3395 of 2020). Moreover, the Learned Counsel has urged that the real issue before the Resolution Professional was to avoid liquidation of the Corporate Debtor as that would mean certain corporate death of the Corporate Debtor, and therefore the Resolu....
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....the Adjudicating Authority. Thus, it is quite clear that having once refused to allow the consortium, of which Maya Buildcon was a partner, to participate in the resolution process, and on which Maya Buildcon filed CA282/2019 to seek Adjudicating Authority's order for permission to participate in the resolution process, the Resolution Professional decided on his own to obtain resolution plan from a consortium which had not through the EOI route in time and place it before the CoC for consideration. This plan was later approved by the CoC vide voting on 6th and 7th November 2019. Thus we do not think that the way this entire process was carried out was in accordance with legal provisions. We feel that a new round of Expressions of Interest should have been invited, which should have been done after wide publicity with sufficient time for resolution applicants to apply. Short-circuiting the process to include an applicant who did not apply in the EOI stage is not in accordance with legal provisions. 20. We also consider the objections raised by the Learned Counsel for Resolution Professional regarding there being no locus or entitlement of the suspended director Amit Goel, who i....
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....in the resolution plan wherein claimants have been given their properties subject to certain conditions and MoU holders have been made non-claimants with just no requests to the properties booked by them. 22. We now examine the allegation of the Appellants that the provisions of Section 25A were not complied with in letter and spirit of the IBC. Section 25A of the IBC is as hereunder- "Section 25A: Rights and duties of authorized representative of financial creditors. 25A. (1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means. (2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents. (3) The authorised representative shall not act against the interest of the financial c....
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....n updated list of creditors in each class to the respective authorized representative as and when the list is updated. Clarification: The authorized representative shall have no role in receipt or verification of claim of creditors of the class he represents. xxx xxxxxx (9) The authorized representative shall circulate the agenda to creditors in a class and announce the voting window at least twenty hours before the window opens for voting instructions and keep the voting window open for at least twelve hours. 19. (1) Subject to this Regulation, a meeting of the committee shall be called by giving not less than five days' notice in writing to every participant, at the address it has provided to the resolution professional and such notice may be sent by hand delivery, or by post, but in any event, be served on every participant by electronic means in accordance with Regulation 20." 24. As the provision under sub-section 3 of section 25A clearly lays down, the Authorized Representative shall always act with the 'prior instructions' of the financial creditors he represents. Furthermore, sub-se....
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....editors in class was not organized by the authorized representative. Thus the provisions laid down for organizing voting among financial creditors in class of homebuyers/allottees were not followed. We thus find that neither the RP organized the CoC meeting in the manner laid down in Insolvency Process Regulations and the Authorized Representative also failed to organize prior consultation with the homebuyers/allottees as is required under Section 25A. 26. We find that on the contrary the e-voting on the proposed resolution plan by the financial creditors in class was held simultaneously with the e-voting on the resolution plan by the members of the CoC, as is clear from pp. 238 - 240 of the Appeal paperbook in Company Appeal of 700/2021. The e-voting among homebuyers/allottees was thus carried out but not in accordance with the provisions of Insolvency Process Regulations, in a fashion which can be called vitiated and against the letter and spirit of law. It did not provide sufficient time to the financial creditors to consider the various aspects of the proposed resolution plan, meet together to discuss and vote upon it and thereafter for the Authorized Representative to present....
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.... more than 251 i.e. about 53% of total homebuyers/allottees cannot lead to a fair and just resolution of the Corporate Debtor. We also feel that the providing 10% of the claimed amounts to homebuyers/allottees who could not file their claims in the circumstances of this case is an unfair and inadequate treatment of the financial creditors. 29. The Learned Counsel for Appellant in Company Appeal No. 761 of 2021 has stated that the Adjudicating Authority had through an order dated 3.2.2020 in CA No. 12/2020 in CPIB 322/ALD/2018 directed the Resolution Professional to accept the claim of the Applicants and consider them on merits subject to proper verification. He has further claimed that since this order was not appealed against, it has become final, and therefore it was incumbent upon the Resolution Professional to admit claims which had been submitted with delay for consideration. The Learned Counsel has also contended that the approved resolution plan considers such financial creditors in class who have filed claim within the prescribed time limit and those financial creditors in class who could not, for various reasons, file their claims inside as "claimants and non-claimants" a....
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....ses, whereas non-claimants have been given only 10% of their total amount deposited, that too after due verification and within one month of the approval of the resolution plan. 32. The order of the Adjudicating Authority dated 3.2.2020 (supra) and the treatment meted out to the claimants and non-claimants among financial creditors in class of homebuyers/allottees, we find that the order of 3.2.2020 has not been complied with by the Resolution Professional in an appropriate manner. The claims that were filed belatedly were admitted and considered but thereafter the 'claimants' and 'non-claimants' have been accorded different treatment under the resolution plan. If the claims filed with delay had been admitted and considered in the spirit of order dated 32.2020 in CA No. 12/2020, different treatment of two different categories i.e. claimants and non-claimants in the approved resolution plan would not have resulted. The judgment of this Hon'ble Tribunal in the matter of Rajputana Properties Pvt. Limited (supra) also lays down that there should be no discrimination between financial creditors belonging to the same class. Hence, once the question of filing claims e....
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....ot questioning the payments to be made in the approved resolution plan to various creditors but the question raised in these appeals is about Section 25A and how it was put in operation. We have found lacunae in the way the provision of Section 25A was operationalized. Therefore, what has resulted from the erroneous operation of Section 25A has been found to be erroneous. Thus we have found the actions of the RP and Authorized Representative of Financial Creditors in Class falling foul of law and we are not questioning the commercial decision of the CoC. 35. We also note the judgment of Hon'ble Supreme Court in Ghanshyam Mishra and Sons Private Limited (supra)cited by the Ld. Counsel for RP wherein it is held that all statutory dues etc. would stand extinguished once the resolution plan is approved. In the present case since we are looking at the way that the Section 25A was operationalized and submission of claims by financial creditors took place, leading to simultaneous e-voting on the final resolution by the financial creditors in class and the members of CoC, we feel that due procedure was not followed. Thus the process was vitiated and what has resulted out of such vitia....