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2024 Supreme(Online)(NCLAT) 891
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Arun Baroka (Member (Technical)) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
Dharmesh Jain – Appellant
Versus
Mr. Jayesh Sanghrajka & Anr – Respondent
825/ND/2024 COMPANY APPEAL(AT)(INS)
The Adjudicating Authority has jurisdiction to approve clauses in a Resolution Plan that involve cancellation of registered instruments, provided it complies with the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 7 and 60(5) - Corporate Insolvency Resolution Process (CIRP) - Appeals challenging orders of the Adjudicating Authority regarding the cancellation of a Power of Attorney and approval of a Resolution Plan - The Appellant contended that the Power of Attorney could not be cancelled by the Resolution Plan and that the Adjudicating Authority lacked jurisdiction to do so. The court found that the Power of Attorney was executed solely to facilitate development and did not confer individual rights to the Appellant. The court upheld the Adjudicating Authority's decision, stating that the Resolution Plan was valid and did not violate any provisions of the Code. (Paras 1, 5.7, 5.8, 5.9, 28)
(B) Jurisdiction of Adjudicating Authority - The court reiterated that the Adjudicating Authority has the jurisdiction to approve clauses in a Resolution Plan that may involve cancellation of registered instruments, provided it is in compliance with the Insolvency and Bankruptcy Code. (Paras 18, 20)
(C) Conditional Resolution Plans - The court clarified that a Resolution Plan cannot be deemed conditional merely because it requires approvals from third parties, as long as it complies with the provisions of the Code. (Paras 22, 24)
JUDGMENT
(29th October, 2024)
Ashok Bhushan, J.
These two Appeals have been filed by the same Appellant challenging two orders passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor- ‘Nirmal Lifestyle Realty Private Limited’. Company Appeal (AT) (Insolvency) No.825 of 2024 has been filed challenging the order dated 07.03.2024 passed in IA No.3689 of 2022 filed by the Appellant/ Applicant by which the IA No.3689 of 2022 has been rejected. Company Appeal (AT) (Insolvency) No. 1821 of 2024 has been filed by the Appellant challenging the order dated 09.08.2024 by which order Adjudicating Authority has allowed IA No.2455 of 2022 filed by the Resolution Professional for approval of the Resolution Plan.
2. Brief facts of the case necessary to be noticed for deciding these Appeals are:-
2.1. The Corporate Debtor- ‘Nirmal Lifestyle Realty Private Limited’ entered into MoU with Ralliwolf Limited on 01.10.2004 in terms whereof Ralliwolf agreed to sell land admeasuring 20262 sq. mtrs. situated at LBS Marg, Mulund (West), Village Nahur, Taluka and Registration Sub-District Kurla, District Mumbai along with all the structures thereon to the corporate debtor for consideration of Rs.7 Crores on as is where is basis. The amount of Rs.7 Crore was paid by the corporate debtor to Ralliwolf. A registered Development Agreement dated 04.08.2005 was entered between the Ralliwolf Ltd. and the Corporate Debtor stating that under MOU dated 01.10.2004 owner had agreed to sell the property to the developers on as is where is basis. Pending sale of the said property, developers have requested the owner to permit the developers to develop the said property by constructing new buildings and structures thereon. The development agreement provided that in consideration of MOU and in further consideration of an amount of Rs.7 Crores paid by the developers to the owner, the owner gives license authorises and permits the developers to enter upon all that piece and parcel of the land for the purpose of commencing and carrying out the work of development and construction, pending the transfer of the said property by the owner to the developers or their nominees. The Development Agreement contained the terms and conditions for rights and obligations of the developers. Several clauses of the Development Agreement shall be noticed hereinafter. Clause 6 (ii) of the Development Agreement also contemplated execution and handing over to the developers a Power of Attorney in favour of the nominee/s of the developers with a view to enable the developers to expeditiously make and submit the applications, plan etc. In pursuance of clause 6(ii) of the Development Agreement, a General Power of Attorney dated 06.08.2005 was executed in favour of Mr. Dharmesh Jain and his wife Mrs. Anju Jain by Ralliwolf Limited to enable the Corporate Debtor to undertake the development activities with respect to the property. Corporate Debtor had taken certain deposits and loans and on account of default committed by the corporate debtor proceedings under Section 7 against the corporate debtor commenced vide order dated 06.12.2021 of the Adjudicating Authority, Respondent No.1- Mr. Jayesh Sanghrajka was appointed as Resolution Professional in the CIRP of the corporate debtor. Respondent No.2- Oberoi Constructions Limited submitted a Resolution Plan on 15.07.2022. After negotiations and deliberations between the CoC and the SRA, a revised Resolution Plan was submitted where SRA sought that the Power of Attorney executed in favour of the Appellant and his wife shall stand cancelled. On 01.09.2022, the Committee of Creditors (CoC) approved the Resolution Plan submitted by the SRA. Waiver sought by the SRA in clause 7.33 of the Resolution Plan was accepted by the Adjudicating Authority. After approval of the Resolution Plan, the Resolution Professional filed an IA No.2455 of 2022 on 01.09.2022 before
