TaxTMI 
TaxTMI 
2024 (7) TMI 118
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.... Advocates with Ms. Rajshree Chaudhary, Ms. Diksha Dadu, Mr. A. Mishra, Mr. Sahil, Mr. Akshay and Mr. Nidish Gupta, Advocates for R-3 (SRA). Mr. Abhijeet Sinha, Sr. Advocate with Mr. Kaushal Bansal, Advocates in I.A. 3763/2023 for Intervenor Mr. Mansumyer Singh, Advocate for applicant in I.A. No.2173 of 2023. Mr. R. K. Gupta, Mr. Swarlipi Deb Roy, Advocates for IRP For the Appellant: Mr. Saket Sikri, Mr. Viplav Acharya, Advocate For the Respondents: Mr. R. K. Gupta, Mr. Swarlipi Deb Roy, Advocates for IRP. Mr. Arvind Nayyar and Mr. Sunil Fernandes, Sr. Advocates with Ms. Rajshree Chaudhary, Ms. Diksha Dadu, Mr. A. Mishra, Mr. Sahil, Mr. Akshay and Mr. Nidish Gupta, Advocates for (SRA) JUDGMENT Ashok Bhushan , J. These Appeals have been filed against the same order dated 21.02.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi allowing IA No.5687 of 2020 filed by the Resolution Professional for approving the Resolution Plan submitted by Crown Abacus IT Park Association, Respondent herein. Company Appeal (AT) (Insolvency) No. 431 of 2023 has been filed by 'Crown Business Park Tower A Buyers Association claiming to be registered....
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....esolution Professional further apprised the CoC that one PRA namely- Cimco Projects Ltd. has approached through e-mail for extension of timeline for submission of the Resolution Plan. The CoC took a decision on the request received from Cimco Projects Consortium not to grant extension. CoC held its meeting on 10.10.2020 did not grant any further extension to PRA for submission of the Resolution Plan. In the 7th CoC meeting, it was noticed that the Resolution Plan of Crown Abacus IT Park Association which was opened in the meeting held on 10.10.2020 was considered along with the observations of the Resolution Professional. The Suspended Director Amarjit Singh stated that he has certain serious objection in the plan. In 8th meeting of the CoC, the Resolution Plan came for consideration in the CoC meeting held on 05.12.2020, on the basis of voting conducted the Resolution Plan of the Respondent- Crown Abacus IT Park Association (hereinafter referred to as SRA) approved with 96.38% vote share. After approval of the Resolution Plan, the Resolution Professional filed an IA No. 5687 of 2020 before the Adjudicating Authority for approval of the Resolution Plan. On 16.01.2020, Cimco Project....
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....o serve the Respondents personally within a week. List these Appeals on 26th April, 2023. Successful Resolution Applicant shall not transfer any unit till the next date." 4. The interim order dated 12.04.2023 has been extended from time to time, an application for vacating the interim order was also filed by SRA. 5. We have heard Shri Abhijeet Sinha, Learned Senior Counsel appearing for the Appellant in Company Appeal (AT) (Insolvency) No. 431 of 2023, Shri Saket Sikri and Shri Biplov, Learned Counsel for the Appellant in Company Appeal (AT) (Insolvency) No. 433 of 2023, Shri K. Dutta, Learned Senior Counsel appearing for the Appellant in Company Appeal (AT) (Insolvency) No. 432 & 433 of 2023, Shri R.K. Gupta, Learned Counsel appearing for the Resolution Professional, Shri Arvind Nayar and Shri Sunil Fernandes, Learned Senior Counsel appearing for the SRA. We have also heard Counsel who have filed different IAs in Company Appeal (AT) (Insolvency) No. 431 of 2023, details of which IA shall be noticed while considering the submissions in IAs hereinafter in detail. 6. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant in support of the appeal submits that there was disc....
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....s are contrary to the Books of the Corporate Debtor and against the Information Memorandum which indicates that the Resolution Professional has failed to discharge his duty. The parking slots cannot be sold and Resolution Plan states by sale of 1700 car parking slots @ Rs.4,00,000/-, there will be a funding of Rs.54,40,00,000/- which cannot be approved. Parking slots cannot be sold which are covered in the definition of common area under RERA Act. It is further contended that the discriminatory criteria was made by the CoC/ Resolution Professional with regard to Resolution Applicants. It is submitted that the conditions were designed as approved in the 2nd CoC meeting to suit the eligibility of SRA. The Appellant- 'Crown Business Park Tower A Buyers Association' who was also registered association on 24.02.2020 was not permitted to participate in the CIRP. Genuine claims of several allottees have not yet been decided. It is submitted that the reply filed by the SRA makes it clear that the SRA is suggesting modification of the Resolution Plan. Assured returns component of Rs.52.5 Crores is now sought to be denied to be paid to the allottees. The payments of assured returns have been....
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....g of amounts, receivable, booked in balance sheet and filed and some more time be given to file a plan. On 10.10.2020, in 6th CoC meeting without taking a decision of extension of timelines, the plan of SRA was directed to be vet by the CoC. Appellant received information on 15.10.2020 that the request of Appellant for extension of timeline has been rejected. It is submitted that in the above circumstances, Appellant was not given due opportunity by extending the time to submit Resolution Plan. The sole agenda of the Resolution Professional was to oust all other Applicants so that plan submitted by SRA be approved. Adjudicating Authority failed to discuss the material irregularities committed by the Resolution Professional in the conduct of CIRP. Appellant was also not granted any effective hearing by the Adjudicating Authority in his IA No.375 of 2021. Appellant has also filed Writ Petition in Delhi High Court. Delhi High Court has directed that the decision in the CIRP shall abide by the result of the order of the High Court. No delay was caused by the Appellant in approaching the Adjudicating Authority. Present is not a case where Appellant participated in the Resolution Process....
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....entories whereas area of 1,00,000/- sq. ft. was not available for resolution of SRA. Information Memorandum has captured the unsold parking slots 1700 as against sanctioned parking of 1460 cars only. Plan proceeds on alienating 1360 car parks. The receivables as shown in the plan are not correct. As per the receivables provided by suspended management, the receivables were Rs. 66.4 Crores approximately from the allottees but Resolution Professional provided a list of receivables from allottees totaling to Rs.34.6 Crores only. In Rs.34.6 crores, a sum of Rs.9.6 Crores is wrongly mentioned, hence, the actual receivables is only Rs. 25.01 Crores. There are surplus shown in the plan filed by the SRA. Plan has deficiency of several crores and become unimplementable. Car parks cannot be sold as per the provisions of RERA Act, 2016. It is further submitted that the SRA is modifying the plan post approval while making the payment of Rs.52.5 Crores towards assured returns as contingent. Amount of Rs.52.5 Crores was earmarked for the payment of assured return which cannot be allowed to be modified or cancelled subsequent to the approval of the Resolution Plan. Resolution Professional and SRA....
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..... It is submitted that apart from 65 members of the Appellant Association who are part of the CoC and who have voted in the Resolution Plan, other members are not member of the CoC nor their claims were accepted. Respondent No.3- Association consists of 225 members. It is submitted that the Appellant who claim to have formed on 24.02.2020 did not raise any objection before the Resolution Professional or before the Adjudicating Authority for several years. Appellant Association has been set up by the Suspended Directors who create hurdles in CIRP. It is submitted that the criteria finalized by the CoC for making only those association eligible who are formed prior to 03.01.2022 has rational nexus. 03.01.2020 was the date when CoC was constituted, thus, any association which was in existence prior to constitution of the CoC was only made eligible to submit a Resolution Plan. The Appellant- 'Crown Business Park Tower A Buyers Association' was not eligible as they were not in existence on the date of constitution of the CoC of the Corporate Debtor. It is submitted that insofar as reduction of amount of EMD from Rs.5 Cr. to Rs.5 Lakhs, their claim having already been accepted for more t....
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....the corporate debtor. It is the default of the suspended directors who are responsible for corporate debtor not being carrying out the construction and handing over the units of the allottees even after taking huge amount from the allottees. 13. Counsel for the SRA refuting the submissions in Company Appeal (AT) (Insolvency) No.431 of 2023 submits that the Appellant who claim to be 140 in numbers, 65 numbers of the appellants are members of the CoC out of whom 25 members voted in favour of the plan and 33 members abstained. Thus, majority of number of the appellants who are members of the CoC has approved the Resolution Plan in view of the law laid down by the Hon'ble Supreme Court in "Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd.- (2022) 1 SCC 401", Appellants who are minority homebuyers have no locus to challenge the Resolution Plan which received approval from the majority of the homebuyers. It is submitted that out of 7 office bearers of the Appellant' Association, 6 office bearers have already resigned and communicated the same. Since the registration, the Appellant' Association have not filed any documents regarding number of members except ....
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....that there is any surplus amount it may go towards payment of assured returns and if there is a deficit/ shortfall proposed assured return will be modified accordingly. Counsel for the SRA has referred to Clause 8.18.10 of the plan. 14. Replying to the submissions made on behalf of Appellant- 'Crown Business Park Tower A Buyers Association', it is submitted that 'Crown Business Park Tower A Buyers Association' has not submitted any plan in the CIRP has no right to question the approval of the Resolution Plan. Ample opportunity was given to Cimco Projects Ltd. to file the Resolution Plan by extending the time which was not availed. Cimco Projects Ltd. has no locus to challenge the approved Resolution Plan. Cimco Projects Ltd. is estopped from challenging the plan since it did not participate in the CIRP by submitting a Resolution Plan. It is submitted that Appellant- Cimco Projects Ltd. has not come with clean hands and it concealed several relevant facts. Transaction/audit report found that the preferential transaction to the tune of Rs.15 Lakhs took place between the Appellant, Cimco Projects Ltd. and the ex-director of the corporate debtor. In any view of the matter, Appellant h....
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.... the ground that several applications by different applicants claiming different areas of allotment is pending, no ground to interfere with approval of the Resolution Plan. SRA has specifically undertaken to take responsibility all liability which falls on the SRA consequent to any admission of the claim by the Adjudicating Authority on the pending application. It is submitted that it is the Adjudicating Authority, itself has taken a decision to hear several applications which were pending after approval of the Resolution Plan on the condition that SRA has undertaken to bear the liabilities, if any. 16. Now we come to the different IAs. IA No.247 of 2024 has been filed by Abhay Aggarwal (HUF) and Anr. who claim to be Real Estate Allottee of the Corporate Debtor. It is submitted that the claim was filed on 10.01.2020. Resolution Professional rejected the claim on 15.12.2022 after orders were reserved on the application seeking approval of the plan. Aggrieved by said rejection, the applicants approached the Adjudicating Authority by filing IA No.1805 of 2023 before the Adjudicating Authority on which notices have also been issued but the said application is still pending. However, n....
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....lottees as compared to other Resolution Applicant is unsustainable and violates the provisions of CIRP Regulations 2016? (II) Whether the eligibility criteria for allottees association being registered prior to 03.01.2020 has no rational basis and was choosen only to oust the Crown Business Park Tower A Association, hence, deserves to be set aside? (III) Whether Crown Business Park Tower A Association has locus to file Company Appeal (AT) (Ins.) No. 434 of 2023? (IV) Whether the Resolution Plan which mentions 1 Lakh sq. ft. as unsold area depicts an incorrect figure since the addendum to Resolution Plan only mentions 83,940 sq. ft. as available area? (V) Whether no Resolution Plan could have been approved by the Adjudicating Authority without their being certainty regarding saleable area available to the Resolution Applicant which figure not being final the entire resolution plan deserves to be rejected? (VI) Whether there is no certainty with regard to saleable area available to the Resolution Applicant for raising fund in view of the pendency of the large number of applications filed by the allottees before the Adjudicating Authority. (VII) Whether the Resolution Plan o....
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....consist of homebuyers of real estate allottees project in majority. The vote share of the CoC as on 05.12.2023 was as follows: (1) The CoC in class represented by authorized representative : 95.82% (2) Financial Creditors : 4.18% Total : 100% 21. The challenge in the Appeal(s) being challenge to the approval of Resolution Plan by the CoC, which consist of Association of Homebuyers. The SRA is an Association of Homebuyers, who qualify as Resolution Applicant. 22. Before proceeding further we need to notice the grounds on which approval of Resolution Plan by CoC can be interfered with by the Adjudicating Authority or this Tribunal while exercising the jurisdiction conferred under the IB. The extent of jurisdiction, which can be exercised by the Adjudicating Authority or this Tribunal to interfere with the approval of Resolution Plan by the CoC, has been clearly laid down and settled by judgments of the Hon'ble Supreme Court and this Tribunal. The law is well settled that interference in the Resolution Plan by the Adjudicating Authority is permissible when the Resolution Plan violated the provisions of Section 30 sub-section (2) and the Plan does not conform to requireme....
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....inancial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable. 64. Suffice it to observe that in the I&B Code and the regulations framed thereunder as applicable in October 2017, there was no need for the dissenting financial creditors to record reasons for disapproving or rejecting a resolution plan. Further, as aforementioned, there is no provision in the I&B Code which empowers the adjudicating authority (NCLT) to oversee the justness of the approach of the dissenting financial creditors in rejecting the proposed resolution plan or to engage in judicial review thereof. Concededly, the inquiry by the res....
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....ragraph 107.1, following has been laid down: "107.1. Such limitations on judicial review have been duly underscored by this Court in the decisions above referred, where it has been laid down in explicit terms that the powers of the adjudicating authority dealing with the resolution plan do not extend to examine the correctness or otherwise of the commercial wisdom exercised by the CoC. The limited judicial review available to adjudicating authority lies within the four corners of Section 30(2) of the Code, which would essentially be to examine that the resolution plan does not contravene any of the provisions of law for the time being in force, it conforms to such other requirements as may be specified by the Board, and it provides for : (a) payment of insolvency resolution process costs in priority; (b) payment of debts of operational creditors; (c) payment of debts of dissenting financial creditors; (d) for management of affairs of corporate debtor after approval of the resolution plan; and (e) implementation and supervision of the resolution plan." 69. The Hon'ble Supreme Court further in Ramkrishna Forgings Limited vs. Ravindra Loonkar, Resolution Profession of ACIL Limit....
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....to the date specified in last Form 'G' could not be accepted. However, it has been the consistent stand of RP as well as CoC, that all actions of RP, including acceptance of resolution plans of Kalpraj after the due date, albeit before the expiry of timeline specified by the I&B Code for completion of the process, have been consciously approved by CoC. It is to be noted, that the decision of CoC is taken by a thumping majority of 84.36%. The only creditor voted in favour of KIAL is Kotak Bank, which is a holding company of KIAL, having voting rights of 0.97%. We are of the considered view, that in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of "commercial wisdom", NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36%." 71. Judgment of this Tribunal in Express Resorts and Hotels Ltd. v. Amit Jain, Resolution Professional of Neesa Leisure Limited - Company Appeal (AT) (Insolvency) No.1158 of 2022 has been relied, where in paragraph 25, following has been laid down: "25. The present is not a case where in the process, which was completed by approval of the Resolu....
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....tion plan is in contravention of the provisions of any law for the time being enforce. (ii) There has been material irregularity in exercise of the powers by the Resolution Professional during the Corporate Insolvency Resolution Period. (iii) ........ (iv) ...... It is unequivocal, in preferring the Appeal by the aggrieved person under the above provision more particularly sub-section (3)(i) of Section 31 thereof which specifically provides that the approved Resolution Plan can be questioned / challenged on the ground that the plan is in contravention of the provisions. This Tribunal in clear terms observes and holds that there is no contravention in approving the Resolution Plan either by the CoC or by the Adjudicating Authority. The plan approved is in accordance with law and there is no material irregularity and cannot go into the technical issues with regard to evaluation and score matrix which is in the exclusive domain of the CoC." 73. The judgments of the Hon'ble Supreme Court and this Tribunal as noted above, thus, clearly lays down jurisdiction of the Adjudicating Authority under Section 31, sub-section (1). The Adjudicating Authority in event when the Resol....
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....f Creditors before being presented to the adjudicating authority. 160. As noticed hereinbefore, commercial wisdom of CoC is given such a status of primacy that the same is considered rather a matter non-justiciable in any adjudicatory process, be it by the adjudicating authority or even by this Court. However, the commercial wisdom of CoC means a considered decision taken by CoC with reference to the commercial interests and the interest of revival of the corporate debtor and maximisation of value of its assets. This wisdom is not a matter of rhetoric but is denoting a well-considered decision by the protagonist of CIRP i.e. CoC. As observed by this Court in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] , the financial creditors forming CoC "act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subjectmatter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision." This Court also observed in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (....
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....e the CoC for approval, which ground was taken by the Appellate Tribunal in interfering with the order of the Adjudicating Authority. The Hon'ble Supreme Court affirmed the decision of the Appellate Tribunal. In paragraph 168, as noted above, the Hon'ble Supreme Court noted that in event the Plan, which was modified was not put before the CoC, there will be breach of requirement of placing the Plan in its final form before the CoC. The Hon'ble Supreme Court further observed that if the process adopted in the present matter is approved, the very scheme of the CIRP would be left open-ended and would be capable of inviting arbitrariness at any level. The above judgment, does support the submission of Shri Kapil Sibal that there can be a ground on which Plan approval can be interfered with by the Adjudicating Authority. The judgment in M.K. Rajagopalan was instance of one such cases, where Plan after being modified by the Resolution Applicant, was not placed for final approval before the CoC. ..." 26. The question, thus, which is up for consideration in these Appeal(s), whether there are any such grounds raised in the Appeal(s), on which Resolution Plan approved by the CoC in its com....
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....ring) along with Resolution Plan * Rs.15,00,000 (Through Demand Draft in the name of corporate debtor) * Rs.35,00,000 (Through Demand Draft in the name of corporate debtor) Demand Draft in the name of corporate debtor) * Rs.15,00,000 (Through * Rs.35,00,000 (Through Demand Draft in the name of corporate debtor) 2. Constitution of Resolution Applicant * Private Limited Company * Public Limited Company * Limited liability Partnership * Association of allottees under the project of corporate debtor * Private Limited Company * Public Limited Company * Limited liability Partnership * Association of allottees under the project of corporate debtor 3. Tangible Net Worth * Rs.25 Crores (Rs. Twenty Five Crores on the ae of submission of EOI) --In case of Individual Entity * Rs.50 Crores (Rs. Fifty Crores on the date of submission of EOI) - in case of Consortium or Joint Venture * Rs.20 Crores (Rs. Twenty crores on the date of submission of EOI) - In case of Individual Entity or consortium basis 4. Other Conditions * Average turnover for the last three financial years - Rs.100 Crores * Permanent Establishment in Delhi & NCR * Should have delivered at least 10 Lakhs S....
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.... not be same. Criteria cannot be discriminatory but reasonable rational classification is not prohibited. In the present case, as noted above real estate allottees consist of 95.82% of the CoC and their claim worth Rs.155.97 Crores have been admitted in the CIRP. The CoC decided to invite Association of Allottees to submit the Resolution Plan and has fixed eligibility for Association of Allottees to submit EoI. The distinction in Performance Bank Guarantee ("PBG") of Rs.5 crores for other Applicants and Rs.5 lakhs for Association of Allottees is fully justified, since homebuyers have already given their monies to the Corporate Debtor to the extent of Rs.155 crores, which is an admitted claim and CoC in its commercial wisdom decided not to ask for PBG of Rs.5 crores. The criteria to fix the PBG by the CoC, is also a decision entrusted to the CoC and has to be a business decision with the object of resolution of Corporate Debtor and maximization of value of the Corporate Debtor. We, thus, found rational basis for providing different amount of PBG. 33. With regard to Association, there were two other relevant conditions put in eligibility, i.e., Association should have been formed pr....
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..... M/s. Richa Fashion Pvt. Ltd. 4. M/s. Satya Deposits and Advances Pvt. Ltd. 5. Class of Financial Creditors (Real Estate Allottees) Total 100 The details of the members of the Committee of Creditors alongwith their voting rights are mentioned in the ANNEXURE-I attached with this report certifying the constitution of committee of creditors. *Claim provisionally accepted subject to the information/ documents received from the Corporate Debtor. Thanking You, Yours Truly Sd/- (AMTI AGRAWAL) INTEIM RESOLUTION PROFESSIONAL" 34. Along with the Report, List of Creditors along with voting share provisionally admitted claim was provided. Thus, the CoC was constituted on 03.01.2019 of the Corporate Debtor and when criteria adopts 03.01.2019 as cut-off date for providing Association of Allottees to participate, we do not find any infirmity of unreasonableness in fixing cut-off date as 03.01.2019. 35. One of the conditions in eligibility criteria was that at least 51% of the allottees, who are Member of the CoC, should be part of the Association. The date on which CoC was constituted and Report is submitted, thus based on a rationale, permitting only ....
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....nge the Resolution Plan. Reliance is placed on judgment of the Hon'ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. vs. NBCC (India) Ltd. & Ors. - (2022) 1 SCC 401, where the Hon'ble Supreme Court in paragraphs 108 and 198.4 has laid down following: "108. To put in a nutshell, the adjudicating authority has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions abovereferred. The jurisdiction of the appellate authority is also circumscribed by the limited grounds of appeal provided in Section 61 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the CoC. Within its limited jurisdiction, if the adjudicating authority or the appellate authority, as the case may be, would find any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send t....
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.... which has been shown to be available for Resolution Applicant was shown as 1,00,000 sq. ft. The Resolution Plan in Clause 7.1 dealt with Funding Plan and Proposed Funding Plan, which is as follows: "PROPOSED FUNDING PLAN S. No. PARTICULARS AMOUNT (RS.) 1. Up front infusion by the Resolution Applicant 10,00,00,000 2. Up front infusion by the Resolution Applicant in the form of Equity 7,50,000 3. Receivables from allottees of the Tower-B1 and B2 as per the information provided by the Resolution Professional 34,63,62,487 4. Sale of unsold inventory of the Corporate Debtor admeasuring 1,00,000 sq. ft. @ Rs.5,000/- per sq. ft. 50,00,00,000 5. Allocation of 80% of the total 1700 car parking slots @ avg. price of Rs.4,00,000/- per parking 54,50,00,000 6. Branding 6,00,00,000 TOTAL 155,11,12,487" 40. The above paragraph indicate that sale of unsold inventory of the Corporate Debtor has been treated as 1,00,000 sq. ft, whereas as per the learned Counsel for the Appellant in the addendum to Resolution Plan, the unsold area was mentioned as only 83,000 and odd sq. ft. The SRA has explained the aforesaid discrepancy by stating that total....
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....r passed on 30.08.2022, where large number of applications, which were categorized in category A, B, C (C3, C4, C5 and C6), D, E and F. In the impugned order, we have noticed that Adjudicating Authority itself has directed for listing the applications while approving the Resolution Plan on subsequent dates. In paragraph 13.12, the Adjudicating Authority directed as follows: "13.12. To summarise: a. IA-5687/2020 which is for approval of Resolution Plan is allowed. b. IA-5006/2021 which is an objection to the Resolution Plan filed by a member of the suspended Board of Directors is dismissed. Pending IA's: c. IA-3787/2021, IA-254/2022, these applications fall under the 'C6 Category - Real Estate Allottee Related Party'. This Bench, on 29.11.2022, passed an order stating that these applications will be taken up, after deciding the Resolution Plan application. Hence, these applications IA-3787/2021, 254/2022 will be heard and decided accordingly. 42. The Adjudicating Authority itself has chosen the course of hearing of the applications, subsequent to approval of Resolution Plan. The statement made on behalf of SRA was recorded by the Adjudicating Authority in paragraph 1....
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....ts received from CoC members, final list of COC constitution shall be circulated with Minutes of the meeting and same shall be hosted on website also." 44. Thus, nine more claims which were received after 05.10.2020 were taken into consideration and CoC was reconstituted. Thus, the SRA was fully aware that claims are being filed and are being entertained by the RP. Hence, the SRA was well aware that liabilities of admission of any claim as directed by Adjudicating Authority or admitted by RP as contemplated in the Resolution Plan has to be borne by the SRA. The submission of the SRA that only 1,00,000 sq. ft. was taken as saleable area, although available area was 2,49,171 sq. ft. is fully supported by the record. The Resolution Plan submitted by the SRA, is its business decision with all its risks and benefits. The SRA in the present case was no one else, but allottees of Association, who were well aware of all ground facts. We, thus, are of the view that mention of 1,00,000 sq. ft as saleable area in the Resolution Plan, was as per the understanding and business calculations of the SRA and on the ground that Plan mentions about 1,00,000 sq. ft and addendum mentions only 83,000 ....
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....order to maintain -confidentiality in process Resolution Plan shall be circulated to COC only once the last date for submission of resolution plans have expired. In case resolution for extension of timeline for submission of Resolution Plan get passed, then resolution plan received till now shall only be circulated only after expiry of extended time to submission of Resolution Plan in order to maintain confidentiality of the Plan/s. CoC took the note of the same." 45. The SRA being only Resolution Applicant, who has filed the Resolution Plan, no complaint can be made by the Appellant(s) regarding any mismatch of the saleable area available as mentioned in the addendum to the Information Memorandum and as mentioned in the Resolution Plan. The SRA being well aware of all facts, including the claims admitted, units available for sale, pending applications, adjudication of which yet to be made, it has come forward to submit a Plan. It is SRA, who is responsible to take all loss and gain in the Project. We, thus, are of the view that present is a case where in view of the pending applications before the Adjudicating Authority, the Adjudicating Authority itself has directed the appl....
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....unt of Rs.50 crores was mentioned in the Resolution Plan in the Clause dealing with Funding Plan, which was to be raised from sale of 1,00,000 sq. ft available saleable area. As noted above, it is admitted fact that total saleable area in the Project was 6,95,411 and the claims were received from allottees for area of 4,46,240. Hence, there was still available area of 2,49,171 and SRA took only 1,00,000 sq. ft for raising the funds, leaving balance area to meet future claims and contingencies. The Funding Plan as extracted above, indicate that in the Funding Plan inclusion of Rs.50 crores for saleable area of 1,00,000 sq. ft was as per assessment of the SRA and under the heading of Clause 7.1 "Proposed Funding Plan" indicate that there was proposal by SRA to fund the Project. Any shortfall in the funding is again the responsibility of the SRA and the fact that with regard to fund for saleable area as proposed, is less, does not make the Plan violating any provisions of IBC or CIRP Regulations. 47. One more Clause of the Resolution Plan need to be noticed, i.e. with regard to funding of the Plan. The SRA was conscious that there may be shortfall in the funding of Plan as given in p....
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....provided in the Resolution Applicant in the Resolution Plan and the fact that as per the Appellant, there should be more receivable, i.e., Rs.62.95 crores, cannot be a ground to find fault with the Resolution Plan, which has confined the receivable qua, the area with regard to which claims have been admitted. 50. In view of the foregoing discussions, we answer Question Nos.(VI) and (VII) in following manner: Ans. (VI) : It is true that there was no certainty with regard to saleable area available to the Resolution Applicant, in view of large number of applications filed by the allottees before the Adjudicating Authority, but that itself is not any ground to find fault with the Resolution Plan, specially, when the Adjudicating Authority itself has decided to decide the applications after approval of Resolution Plan. Ans. (VII) : The Resolution Applicant providing for receivables of Rs.36.66 crores, cannot be said to be incorrect figure, it being calculated on the basis of area for which claims were accepted, i.e. area 4,26,240 sq. ft. Question No.(VIII) 51. The arguments advanced by the Appellant is that the amount of Rs.54.50 crores, which was proposed on the basis of all....
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.... apparatus connected with installations for common use; (vii) all community and commercial facilities as provided in the real estate project; (viii) all other portion of the project necessary or convenient for its maintenance, safety, etc., and in common use;" 53. When we look into Section 2(n) (iii), it is clear that it is open parking area, which is covered under 'common area'. In the Information Memorandum dated 11.06.2020 under heading "Additional Information (page 1962 of Company Appeal (AT) (Insolvency) No.432-433 of 2023) estimated expenditure planner for covered parking was mentioned as Rs.40.00 crores and open parking was mentioned a Zero ('0'). The Additional Information in the Information Memorandum is as follows : "Particulars Estimated expenditure planned to be incurred as per service plan estimates or the project report. (in Lakhs) Actual expenditure incurred upto the date of application, (In Lakhs) I. Internal roads and pavements 185.90 182.90 II. Water supply system 254.48 249.48 III Storm water drainage 58.92 50 IV. Electricity supply system 1050 200 62 V. Sewage treatment & garbage disposal 106.65 100 VI. Club house/ com....
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.... of Rs.40 crores and Information Memorandum, clearly mentioned that open parking area was Zero. 56. We need to notice judgment of Hon'ble Supreme Court in (2020) 16 SCC 512 - Wing Commander Ariful Rahman Khan and Aleya sultana and Ors. Vs. DLF Southern Homes Pvt. Ltd. (Now known as Begur OMR Homes Pvt. Ltd. and Ors. In which case, the Hon'ble Supreme Court have occasion to deal with parking in context of Consumer Protection Act, 1986. In the above judgment, the Hon'ble Supreme Court held that parking charges for exclusive use of earmarked parking spaces can be included in the break-up. The judgment of Nahalchand Laloochand (supra) was also noticed and distinguished in paragraph 66 to 68, wherein following was held: "66. The appellants seek a refund of an amount of Rs 2.25 lakhs collected from each buyer towards car parking. The submission is that under Section 3(f) of the Karnataka Apartment Ownership Act, 1972 ("the KAO Act"), common areas and facilities include parking areas. According to the appellants, the flat buyers had already paid for the super area in terms of Clause 1.6 of ABA including common areas and facilities which would be deemed to include car parking under the ....
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....hority was known to allottees, SRA, as well as RP. The Adjudicating Authority consciously directed the applications to be listed after the approval of the Resolution Plan with clear undertaking by the SRA that SRA shall abide by all liabilities and claims, which are accepted by the Adjudicating Authority and bear the consequences. The course adopted by the Adjudicating Authority in the present case, looking into the enormous number of applications, cannot be said to be impermissible. When the SRA came forward with an undertaking that in event the Plan is approved, it shall abide by all subsequent orders, accepting any claim of the allottees, we do not find any error in approving the Resolution Plan and direction for listing of the applications subsequently. Question No.(IX) is answered accordingly. Question No.(X) 60. The Resolution Plan provides for an amount of Rs.52.50 crores towards the assured returns. In Clause 7.1, which deals with the Proposed Funding Plan, under the heading 'Budgeted Expenditure', provision for Rs.52.50 crores was made for assured returns to be paid to the allottees. Clause 7.1, is as follows: "S. NO. PARTICULARS AMOUNT (RS.) 1. Expected expend....
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....nts/ allotteees having area upto 1250 sq. ft. ➢ 3 (Three) car parking slots shall be allocated to the claimants/ allottees having area upto 1750 sq. ft. ➢ The cost of each car parking slot shall be charged @ Rs.4,50,000/- at Level 1, Rs.4,00,000/- at Level 2, Rs.3,50,000/- at Level 3 and Rs.3,00,000/- at Level 4. However, the allotment shall be first cum first basis. Also any pre allotted car parking shall be ear marked on Level 3." II. Secondly, the assured returns shall be adjusted towards advance maintenance expenses for the next 12 months from the date of possession of the unit, or; III. Lastly, against the remaining amount, if any, the option shall be given to the respective claimants/ allottees to purchase the unsold inventory on first come first serve basis at the prescribed rate of Rs.6000/-psf in Tower B1 and Rs.5000/- psf in Tower B2, however the value of retail space available on ground floors of Tower B1 is Rs.8,500/- and Tower B2 is Rs.7,500/- of the Corporate Debtor and in case, the allottees exercise this option, the remaining unadjusted assured returns shall be adjusted against the total sale consideration of the said unsold inventory after....
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....mittee of creditors is already aware that Resolution Professional had issued request for resolution plans (RFRP) to the following eligible prospective resolution applicants advising them to submit their resolution plans by 24th August 2020:- 1. Pioneer Consortium (Consortium of Pioneer Factor IT Infradevelopers Private Limited and Haldiram Products Private Limited One City Infrastructures Private Limited 2. Cimco Consortium ( Consortium of Cimco Projects Limited, RAS Development Private Limited and Sadhna Broadcast Limited) 3. Crown Abacus IT Park Association 4. Amolik Housing Private Limited Resolution Professional has circulated final list of prospective resolution applicants on 28th July 2020 to all CoC members. Same is also available at www.crownrealtech.com. RP further apprised that, as per RFRP (request for resolution plan), 24th August 2020 is the last date to submit resolution plans and resolution professional has not received resolution plan from any of the above named persons till the last date of submission of resolution plan. Now, Resolution Professional has received emails from Pioneer Consortium, Cimco Consortium and Crown Abacus IT Park Associati....
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....oC took note of the request and a resolution was passed to extend the submission of Resolution Plan till 30.09.2020. The Cimco Projects again sent an email on 30.09.2020 to the RP for extension of further time for filing the Resolution Plan. The RP has placed the request of the Cimco Projects before the CoC in its 6th Meeting held on 10.10.2020. The CoC noted the request received from Cimco Projects and has also noted that only Resolution Plan received till 30.09.2020 is of Crown Abacus IT Park Association. At Agenda Item No.5, seeking extension of time was noted and it was declined by the CoC. The RP has also sent an email dated 15.10.2020 TO Cimco Projects, informing that CoC on 10.10.2020 has by e-voting has opted not to extend timelines. The email dated 15.10.2020 is as follows: "Dear Sir In pursuance of email received from one of the prospective resolution applicants ,a resolution for extension of timelines for submission Resolution Plan was placed in the 6th meeting of COC held on 10th October and evoting held further after the circulation of minutes of the meeting. As per result of the e-voting , We hereby inform you that COC has opted not to extend timelines for sub....
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....6, 11.7 and 11.8. The Adjudicating Authority in paragraph 11.9, 11.10, 11.11 and 11.12 has held following: "11.9 Be that as it may, at this juncture, we rely upon the Judgement passed by Hon'ble Supreme Court in the matter of "Vallal RCK versus M/s Siva Industries and Holdings Limited and Others, Civil Appeal Nos. 18111812 of 2022" whereby the Hon'ble Apex Court has answered the question as to whether 'the adjudicating authority (NCLT) or the appellate authority (NCLAT) can sit in an appeal over the commercial wisdom of the Committee of Creditors (hereinafter referred to as the "CoC") or not'. We rely upon the following paragraphs: "21. This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. It has been held that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. A re....
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.... that he was not given any opportunity/hearing or that his objections were not considered, cannot be accepted. 72. We answer Question No.(XII) in following manner: Ans. (XII) : The Appellant - Amarjit Singh, Suspended Director was given opportunity before passing the order dated 21.02.2023 and his objections (through IA No.5006/2021) were rejected after hearing the Appellant and after considering his objections. Question Nos.(XIII) and (XIV) 73. The RP has conducted the CIRP in accordance with the procedure as prescribed under the CIRP Regulations. The CoC was constituted, claims were collated, verified and admitted. Certain claims were also rejected. Claims which were received even during CIRP, were verified and collated and CoC was reconstituted. The grounds, which have been canvased by the Appellant regarding certain incomplete information in the Information Memorandum and certain discrepancy with the saleable area in the addendum dated 20.08.2020 and the Resolution Plan. We have already noticed about the details of saleable area as provided in the Resolution Plan. We have also noticed that on account of pendency of various applications in different category, as categoriz....
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....re with the approval of Resolution Plan. Question Nos.(XIII) and (XIV) are answered in following manner: Ans. (XIII) : There was no such irregularity committed by the RP in conduct of the CIRP, which may justify interference with the decision of the CoC in approving the Resolution Plan Ans.(XIV) : No sufficient grounds have been made out in the Appeal to interfere with the decision of the CoC in approving the Resolution Plan. The Adjudicating Authority did not commit any error in approving the Resolution Plan. Question No.(XV) 74. Now we come to the IAs as noticed above. 75. IA No.247 of 2024 - This IA has been filed by Abhay Agarwal (HUF) & Anr. Vs. Atul Kumar Kansal & Anr. The learned Counsel for the Applicants in support of the Application contends that the Applicants have filed their claim and in the List of Financial Creditors at Sl. No.178 and 179, the name of the Applicants were mentioned. However, the RP belatedly vide email dated 15.12.2022 rejected the claim. The Applicants have already filed an Application being IA No.1805 of 2023, in which notices were issued by Adjudicating Authority on 15.05.2023. 76. Learned Counsel for the RP has also filed a reply to the....
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....0 by email. The claim of the Applicant was rejected on 26.07.2020 by RP. The RP has also filed an IA No.110 of 2021 for avoidance transactions, which Application is still pending. Applicant has also filed an IA No.3787 of 2021, which has been put in Category F and is pending consideration. 81. The RP has filed combined reply to the IA and raised various grounds to support his submission of rejection of the claim. However, IAs being pending before the Adjudicating Authority, we see no reason to enter into respective submissions raised by the parties. Ends of justice will be served in disposing of the IA 5789 of 2023 granting liberty to the Appellant to pursue his Application before the Adjudicating Authority, which may be heard and decided by the Adjudicating Authority in accordance with law. IA No.5789 of 2023 is disposed of accordingly. 82. IA No. 3763 of 2023 - This IA has been filed by Mars Infra Engineering Pvt. Ltd. The Applicant has filed its claim before the RP, which was not admitted by the RP. IA No.4976 of 2021 was filed by the Applicant, which was disposed of by the Adjudicating Authority on 21.09.2022. The RP in its reply has further submitted that the Applicant has....
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.... of the calculations as noted above. After deducting the area for which Plan was admitted, there was saleable area of 2,49,171 sq. ft area, half of which was taken by SRA as saleable area, rest being left to meet the future contingencies, as the claims, which were to be accepted by the Adjudicating Authority in pending applications or accepted by SRA. Ans. (V) : The Resolution Plan could have very well been approved by the Adjudicating Authority without there being any certainty regarding saleable area in view of the facts of the present case, where large number of applications, where the allottees as well as creditors have made claims to different areas, were pending and Adjudicating Authority consciously decided to hear the applications, subsequent to the approval of Resolution Plan. We, thus, do not find any error with the approval of Resolution Plan on this ground. Ans. (VI) : It is true that there was no certainty with regard to saleable area available to the Resolution Applicant, in view of large number of applications filed by the allottees before the Adjudicating Authority, but that itself is not a ground to find fault with the Resolution Plan, specially, when the Adj....