Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Online)(NCLAT) 1271

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
NARESH SALECHA, MEMBER (TECHNICAL)
Everlike Real Estate & Developers Pvt. Ltd. – Appellant
Versus
Mr. Mohit Goyal, CA, Resolution Professional of Aadi Best Consortium Private Limited – Respondent
I.A. No. 114 of 2023 in C.P No. (IB) – 708/ND/2021

Advocates:
For the Appellants/Petitioners: Ms. Pooja M. Saigal, Mr. Arpit Dwivedi, Ms. Sakshi Kapoor & Mr. Ishank Jha
For the Respondents:Mr. Krishnendu Datta, Sr. Advocate, Mr. Arjun Maheshwari, Ms. Niharki Sharma, Mr. Adish Srivastava, for R-1, Mr. Preetesh Kapur, Sr. Advocate, for R-2

The classification of creditors in a Resolution Plan under the Insolvency & Bankruptcy Code is valid based on the existence of formal agreements, and individual homebuyers cannot challenge the plan if over 50% support it.

Headnote:(A) Insolvency & Bankruptcy Code, 2016 - Section 61, 60(5) r/w Section 18(b) & Regulation 13 of IBBI (Insolvency Resolution Process for the Corporate Person) Regulation, 2016 - Appeal challenging categorization in Resolution Plan - Appellant classified under category for units without valid BBA - No valid BBA existed as per the Adjudicating Authority's finding (Para 21).

(B) Legal status of Memorandum of Understanding (MOU) - Found insufficient to equate with a Builder Buyer Agreement (BBA) (Para 57).

(C) Differentiation between genuine homebuyers and speculative investors outlined (Para 42).

(D) Commercial wisdom of Committee of Creditors in approving the Resolution Plan upheld, making individual appeals without merit (Para 66). (E) No locus standi for the individual homebuyer to contest the approved Resolution Plan if over 50% of homebuyers agree (Para 70).

Facts of the case:
Appellant sought reclassification from category 4 to category 2 within a Resolution Plan, claiming MOU equated to valid BBA, while contending that the Adjudicating Authority's rejection lacked merit.

Findings of Court:
Adjudicating Authority's ruling upheld due to absence of specific unit allocation in MOU, affirming the classification as legally valid.

Issues: Main issues included the legal status of MOU in relation to BBA, classification of appellant within Resolution Plan categories, and locus standi on appeal.

Ratio Decidendi: The court reasoned that the MOU lacked the necessary elements to be classified as a valid BBA, thus affirming the lower court's classification of the appellant in category 4 of the Resolution Plan.

Result: Appeal dismissed.

Table of Content
1. appeal filed under ibc regarding corporate insolvency. (Para 1 , 2 , 3 , 4 , 5)
2. classification discrepancies in the resolution plan. (Para 6 , 8 , 9)
3. appellant's claims and mou implications. (Para 10 , 11 , 12 , 14 , 18)
4. legal standards for determination of financial creditor status. (Para 19 , 21 , 40 , 49 , 50)
5. majority vote binding on individual creditors. (Para 66 , 68 , 70)
6. final dismissal of appeal. (Para 71)

JUDGEMENT

(02.07.2024)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present Appeal has been filed by Everlike Real Estate & Developers Pvt. Ltd. (in short Appellant) under Section 61 of the Insolvency & Bankruptcy Code, 2016 (in short ‘Code’) against the Impugned Order dated 05.04.2024 passed by the National Company Law Tribunal, New Delhi Bench (Court - II) (in short ‘Adjudicating Authority’) in I.A. No. 114 of 2023 in C.P No. (IB)- 708/ND/ 2021, whereby the Adjudicating Authority dismissed the application filed by the Appellant under 60(5) r/w Section 18(b) of the Code r/w Regulation 13 of the IBBI (Insolvency Resolution Process for the Corporate Person) Regulation, 2016.

2. Mr. Mohit Goyal is the Resolution Professional of the Aadi Best Consortium Private Limited (in short ‘Corporate Debtor’) and Skael Enterprises Private Limited is the Respondent No. 2 who is the Successful Resolution Applicant of the Corporate Debtor.

3. The background of the case is that the Mr. Yogesh Gupta, Sole Proprietor of Rapid Constructions filed an application under section 9 of the Code before the Adjudicating Authority which was admitted vide order dated 31.03.2022 and Corporate Insolvency Resolution Process (in short ‘CIRP’) commenced with appointment of Mr. Mohit Goyal as the Interim Resolution Professional (in short ‘IRP’) who was later confirmed as Resolution Professional (in short ‘RP’)

4. The IRP/RP issued a public announcement inviting claims from various creditors within the last date for submission of claims i.e., 15.04.2022. In 8^th Committee of Creditors (in short ‘CoC’) Meeting held on 16.08.2023 and continued on 18.08.2023, the Resolution Plan of Respondent No. 2 was placed before the CoC which approved the Resolution Plan with 100% voting. The Resolution Plan was submitted by Resolution Professional for approval of the Adjudicating Authority in I.A. No. 6676 of 2023 under Section 30(6) of the Code. Vide Para 46 of the Impugned Order dated 05.04.2024 the Resolution Plan was approved by the Adjudicating Authority. The relevant portion of the aforesaid para reads as under :-

“46. In the sequel to the above, we are inclined to approve the Resolution Plan as approved/ recommended by the CoC as placed by the Applicant before this Adjudicating Authority…”

5. In the same Impugned Order several I.A’s were also discussed and disposed off.

6. The Appellant had filed I.A. No. 144 of 2023 which was also discussed in the Impugned Order from Para 15 to 21 and after discussing various issues and recording the submissions of the Appellant and Respondent No. 1, the I.A. No. 114 of 2023 of the Appellant was rejected. The relevant para 21 of the Impugned Order is read as under :-

“21. A perusal of the aforementioned provision of RERA, 2016 and MOU clearly reveal that there was no valid BBA in existence in favour of the Applicant, thus there was no infirmity in its classification as the one who did not hold any valid BBA. In the wake, we do not find any ground to interfere with the plan, in terms of the provisions of Section 30(2)(e) of IBC, 2016 and the objection to the resolution Plan, raised in terms of IA-114/2024 is nixed and the IA is rejected.” (SIC.)

(Emphasis Supplied)

7. We note that the I.A. No. 114 of 2023 was filed by the Appellant in C.P No. (IB)- 708/ND/ 2021 on 03.11.2023 (Reference : Annexure A-17 of the Appeal Paper Book, Volume -II) and the appeal also mention the aforesaid I.A as I.A. No. 114 of 2023, whereas the Impugned Order mentions I.A. No. 114 of 2024 both in the first page as well as in Para 15 of th