Ashmeet Singh Bhatia vs Rakesh Verma

[Arising out of order dated 24.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench, Court II), in IA- 1158/2024 in C.P. (IB) No.1248(PB)/2018]

IN THE MATTER OF: Ashmeet Singh Bhatia S/o Sh. Gurdeep Singh Bhatia R/o H. No. 12A, Savitri Sahani Enclave, New Hyderabad, Lucknow, Uttar Pradesh-226007 ...Appellant

Versus

1. Rakesh Verma Authorized Representative of Home buyers, Flat No. 1099, Vikas Kunj, Vikas Puri, New Delhi - 110018 Email: arpanachegranite@gmail.com ...Respondent No. 1

2. M/s. Granite Gate Properties Pvt. Ltd. (Corporate Debtor) CIN: U45200DL2007PTC202952 Through its Resolution Professional, C-23, Greater Kailash Enclave, Part - I, New Delhi - 110048 Email: irpgranite@gmail.com ...Respondent No. 2

Present: For Appellant : Mr. Ridhima Verma, Mr. Shashwat Tripathi and Ms. Madhu Ayachit, Advocates.

For Respondents : Mr. Sumant Batra, Mr. Sanyam Saxena, Mr. Nubair Alvi, Ms. Nidhi Yadav, Mr. Sarthak Bhandari, Ms. Ayat Khusheed, Mr. Shivam Sharma, Mr. Sahil Sethi, Advocates for RP.

Mr. Abhijeet Sinha, Sr. Advocate with Mr. Arijit Mazumdar, Ms. Akanksha Kaushik, Ms. Heena Kochar, Advocates for SRA. Mr. Ravinder Singh and Ms. R. Gupta, Advocates for RA.

ORDER

ASHOK BHUSHAN, J.

This Appeal has been filed by the Appellant, a Homebuyer of Tower -

19 in the Lotus Panache Project of M/s. Granite Gate Properties Private

Limited, the Corporate Debtor. This Appeal has been filed challenging the

Order dated 24.07.2024 passed by the Adjudicating Authority (National

Company Law Tribunal, New Delhi Bench, Court - II) in I.A. No.1158/2024

filed by the Appellant by which Appellant sought replacement of Authorised

Representative of the Homebuyers. By the Impugned Order, the Application

filed by the Appellant has been rejected. Aggrieved by the Order rejecting I.A.

No.1158/2024, this Appeal has been filed.

2. I.A. No. 7124/2024 has been filed seeking condonation of 1 day delay

in filing the Appeal.

3. We need to first consider the I.A. No.7124/2024, seeking condonation

of 1 day delay in filing the Appeal.

4. This Appeal has been e-filed on 24.08.2024 against the Order impugned

dated 24.07.2024 passed in I.A. No.1158/2024. 30 days period for filing the

Appeal came to an end on 23.08.2024. There being delay of 1 day, an

Application for condonation of delay has been filed.

5. Time was granted to file the Reply to the delay condonation Application.

Reply has been filed by the Respondent No. 1 opposing the Application for

condonation of delay.

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 2 of 19

6. Learned Counsel for the Applicant in support of the delay condonation

Application contends that the ground taken in the Application is that due to

bulky and voluminous nature of documents delay was caused.

7. Learned Counsel for the Respondent Mr. Sumant Batra opposing the

Application contends that the Application for delay condonation need to be

rejected. It is submitted that although the Appeal is claimed to be e-filed on

24.08.2024, the Affidavit filed in support of the Appeal contains the date

09.09.2024, and the Memo of Appeal including the verification contained

typed date 09.09.2024, which was cut by hand by changing the date from

09.09.2024 to 24.08.2024. It is submitted that Vakalatnama which has been

filed in support of the Appeal is also signed on 09.09.2024. It is submitted

that Appeal instituted by the Appellant is the non-est filing. Dates mentioned

in the Appeal, Affidavit and Vakalatnama uniformly being 09.09.2024

unequally indicates that Appellant initially submitted a filing solely to obtain

Diary No. and refiling of the Appeal took place on 09.09.2024. The filing by

the Appellant, thus procedurally defective and legally untenable. It is

submitted that Appeal be dismissed in limine being in violation of limitation

prescribed under Section 61. It is submitted that there were other Appeals

filed against the same Order Comp. App. (AT) (Ins.) Nos. 1474, 1477 &

1479/2024, which were considered by this Tribunal on 31.07.2024, whereas,

in which proceeding, Counsel for the Appellant was present, but he did not

mention about the filing.

8. Learned Counsel for the Appellant has referred to the Order dated

31.07.2024 passed in the aforesaid Appeals. Another Appeal by New Okhla

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 3 of 19 Industrial Development Authority was also listed on 02.09.2024, where

Counsel for the present Appellant was also present.

9. It is further submitted by Learned Counsel for the Respondent No. 1

that delay condonation Application is dated 05.10.2024, whereas Appellant

took liberty to file delay condonation Application on 08.11.2024. It is not

explained as to when the Application was filed on 05.10.2024, why the liberty

was taken to file delay condonation on 18.11.2024.

10. We have considered the submissions of Counsel for the Parties on the

I.A. No.7124/2024.

11. From the Report of Registry, it is clear that date of e-filing is 24.08.2024,

date of scrutiny is 02.09.2024, and date of refiling is 17.09.2024. The Report

after refiling submitted by Registry is dated 14.10.2024. The Report dated

14.10.2024, mentions that I.A. for condonation of delay filed. Thus, in the

Report submitted on 14.10.2024, Application dated 05.10.2024 was noticed.

12. The submission which has been much pressed by Learned Counsel Mr.

Sumant Batra is that in the Memo of Appeal and Affidavit, which is part of

the refiled Appeal indicates that Affidavit is dated 09.09.2024, whereas, date

09.09.2024 which was typed in verification has been cut from 09.09.2024 to

24.08.2024. Vakalatnama is also signed on 09.09.2024.

13. Learned Counsel for the Appellant, explaining the above situation

submits that after defect being marked by the Registry, Appeal was refiled on

09.09.2024, and at the time of refiling, the date mentioned was 09.09.2024,

in the refiled Appeal, however, when it was pointed out by the Registry that

Appeal having been e-filed on 24.08.2024, the date of the Appeal has to be

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 4 of 19 same date, the date 09.09.2024 was corrected as 24.08.2024. Learned

Counsel Mr. Sumant Batra sought to contend that when the Appeal was e-

filed, there was neither any Affidavit nor Vakalatnama, hence the Appeal was

clear as non-est filing. When we have checked the records of e-filing of Appeal

as on 24.08.2014 it reveals that Appeal which was e-filed was supported by

way of an Affidavit dated 12.08.2024, thus, Appeal was duly supported by an

Affidavit when it was duly filed on 24.08.2024. It was for the refiling of the

Appeal that fresh Affidavit dated 09.09.2024 was filed. We, thus do not accept

the submission of the Respondent No. 1 that Appeal filed on 24.08.2024 was

non-est filing Appeal which was e-filed on 24.08.2024 supported by an

Affidavit dated 12.08.2024, hence the submission that filing dated

24.08.2024 was non-est filing cannot be accepted.

14. The issue which is sought to be raised in the present Appeal by Learned

Counsel for the Respondent was considered by this Tribunal in the matter of

'Innovators Cleantech Pvt. Ltd.' Vs. 'Pasari Multi Projects Pvt. Ltd.' in

I.A.1622 & 1623/2024 in Comp. App. (AT) (Ins.) No.115/2024, decided on

24.07.2024. This Tribunal in the aforesaid Judgment has held that as per

Rule 22 of National Company Law Appellate Tribunal Rules, 2016 and Orders

issued by this Tribunal on 21.10.2022 and 24.12.2022, the date of e-filing

has to be treated as date for calculation of the limitation. It was further

noticed that the date of refiling after curing the defects cannot be treated to

be date of filing of the Appeal for purposes of computation of limitation and

date of e-filing cannot be treated to be fresh date of filing of the Appeal. In

Paragraph 24 of the Judgment, following was held:

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 5 of 19 "24. The NCLAT Rules 2016 itself contemplates communication of defects and the removal of the defects in the Appeal. Rule 26, sub-rule (4) further empowers the Registrar in appropriate case, to decline to register the Appeal or filing of any documents. Thus, power is vested with the Registrar to decline to register Appeal when defects are not cured. The procedure for clearing the defects, empowers the Registrar to grant further time for clearing the defects, itself contemplate that defective Appeal filed by the Appellant is permitted to be cured and in event the defects are not cured, the Appeal can be refused to be registered. But when defects are cured and the Appeal is registered, the date of refiling of the Appeal after curing the defects, cannot be treated to be the fresh date of filing of the Appeal for computation of limitation. In the present case, the Appeal having been e-filed on 25.09.2023, i.e. within 30 days from passing of the impugned order dated 28.08.2023, the Appeal cannot be held to be barred by time and the submission advanced by Shri Sanjeev Sen, the Appeal when it was refiled after curing the defects, i.e., 16.01.2024, may be treated as date of filing, cannot be accepted. The date of refiling and date of filing are two different concepts, which are clear from statutory scheme."

15. We, thus are of the view that for purposes of computation of limitation,

the date of e-filing of the Appeal which is 24.08.2024 has to be treated the

date for purposes of computing the limitation. 30 days period after

24.07.2024, having expired on 23.08.2024, there is a delay of only 1 day in

filing of the Appeal.

16. Thus, we find sufficient cause in the grounds taken in the Application

for condonation of 1 day delay. The delay of 1 day in filing the Appeal is

condoned.

17. Now we proceed to notice the background facts, giving rise to this

Appeal for deciding the issues raised in the present Appeal:

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 6 of 19 i. The Appellant was allotted residential Apartment No. 2502 on 25th Floor

of Tower - 19 in Lotus Panache Project of M/s. Granite Gate Properties

Private Limited, the Corporate Debtor.

ii. By an Order dated 10.01.2019, Corporate Debtor was admitted into

Corporate Insolvency Resolution Process (CIRP) by the Adjudicating

Authority.

iii. In pursuance of Form-G' issued by the Resolution Professional (RP),

M/s. SMV Agencies Private Limited submitted a Resolution Plan dated

06.07.2020 in respect of the Corporate Debtor.

iv. The Resolution Plan submitted by SMV Agencies Private Limited came

to be approved by the Committee of Creditors (CoC) in its 19th CoC

Meeting with 80.13%, vote shares.

v. The RP filed an I.A. No.3255/2020 on 13.08.2020 for approval of

Resolution Plan.

vi. Appellant filed an I.A. No.3588/2023 opposing the Application for

approval of the Resolution Plan. Another I.A. No.3017/2024 was filed

by the Appellant raising additional objections to the Resolution Plan.

There were other Applications filed by different Stakeholders objecting

to the approval of the Resolution Plan.

vii. One I.A. 3926/2023 has also been preferred by the RP and M/s. Shomit

Finance Limited seeking certain directions in terms of the Settlement

on 04.03.2024.

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 7 of 19 viii. I.A. No.1158/2024 was filed by the Appellant praying for replacement

of the Authorised Representatives of the Homebuyers, in which

Application, Reply was filed by the Authorised Representative of the

Homebuyers objecting to the Application, to which the Rejoinder

Affidavit was also filed by the Appellant.

ix. Adjudicating Authority, vide Impugned Order dated 24.07.2024 has

rejected the Application. Challenging the said Order, this Appeal has

been filed.

18. Learned Counsel for the Appellant challenging the Order of the

Adjudicating Authority rejecting the Application for replacement of the

Authorised Representative contends that the Order of the Adjudicating

Authority is based only on Regulation 16A(3A) of Insolvency and Bankruptcy

Board of India (Insolvency Resolution Process for Corporate Persons)

Regulations, 2016 (CIRP Regulations). It is well settled that Adjudicating

Authority has inherent power to replace the RP and in the present case

allegations were made by the Appellant against the RP as well as Authorised

Representative alleging that RP and Authorised Representative have colluded

with the promoters of the Corporate Debtor and various illegalities have been

committed by the RP and the Authorised Representative. It is submitted that

Adjudicating Authority ought to have exercised its jurisdiction to replace the

Authorised Representative on account of various acts of

commission/omission by the Authorised Representative. Adjudicating

Authority also committed an error in observing that Application on behalf of

single homebuyer for replacement of Authorised Representative is not

maintainable. It is contended that Authorised Representative ought to have

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 8 of 19 analysed the Settlement Agreement dated 30.05.2023 entered into between

Devendra Singh RP and Shomit Finance Limited and ought to have raised

issue regarding appropriation of the consideration offered by M/s. Shomit

Finance Limited, qua the I-Ring Project. It is submitted that Adjudicating

Authority after having considered the submissions and allegations made by

the Applicant has decided to remove the RP, the same course ought to have

been taken by the Adjudicating Authority for replacing the Authorised

Representative also.

19. Learned Counsel appearing for the RP refuting the submissions of the

Appellant contends that the main purpose for the Authorised Representative

is to participate in the Meeting of CoC on behalf of the Financial Creditors in

accordance with the prior voting instructions of such creditors. It is

submitted that Authorised Representative has not to play any other role in

the CIRP. It is submitted that Authorised Representative has duly voted on

basis of instructions of the Financial Creditors and majority of Financial

Creditors in a class have approved the Resolution Plan as early as in July

2020, and Application for approving the Plan was filed by the RP on

13.08.2020 itself. After approval of the Plan, no individual homebuyer can be

given right to file any Application for removal of Authorised Representative in

the present case after about 4 years from the approval of the Resolution Plan

with a CoC Appellant has filed the Application for replacement of the

Authorised Representative. The statutory scheme as delineated by Regulation

16(3A) of the CIRP Regulations provides a threshold for entertaining any

Application for replacement i.e., 10% of the Creditors in class. There being

number of Creditors in class being several thousand, entertainment of the

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 9 of 19 Application or at behest of one homebuyer is against the interest of majority

of Homebuyers having never been aggrieved by the action of the Authorised

Representative has filed any complaint or any Application for replacement.

Application filed by the Appellant has rightly been rejected by the Adjudicating

Authority.

20. Learned Counsel for the Respondent No. 1 defended all actions taken

by the Authorised Representative of the Homebuyers and submits that

Authorised Representative acted in the interest of the Homebuyers and

Application filed by the single homebuyer is not maintainable. It is submitted

that the Appellant has filed large number of Applications and Appeals in the

CIRP of the Corporate Debtor with intent to create obstacles and delay in

completion of the CIRP. Authorised Representative has cast his vote on the

basis of prior instructions by Financial Creditors in a class. As a Financial

Creditor in class having approved the Plan with majority of more than 80%

vote shares, it is not open for a lone Homebuyer to file the Application for

replacement of the Authorised Representative. It is contended that Appellant

has also filed an Application for challenging the approval of the Resolution

Plan which was all considered and decided by the Impugned Order.

Adjudicating Authority has also approved Resolution Plan by the impugned

Order. All allegations made by the Appellant challenging the Resolution Plan

has been considered. It is submitted that no grounds have been made out to

interfere with the Impugned Order.

21. We have considered the submissions of the Counsel for the Parties and

perused the record.

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 10 of 19

22. Section 25A has been inserted in the IBC Code by Act 26 of 2018, with

effect from 06.06.2018. Section 25A provides as follows:

"25A. Rights and duties of authorised representative of financial creditors.-

(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 creditor he represents and shall always act in accordance with their prior instructions:

Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share:

Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor. (3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under sub-section (6A) of section 21 shall cast his vote on behalf of all the financial creditors he represents in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote:

Provided that for a vote to be cast in respect of an application under section 12A, the authorised representative shall cast his vote in accordance with the provisions of sub-section (3).

(4) The authorised representative shall file with the committee of creditors any instructions received by way of physical or electronic means, from the financial

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 11 of 19 creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case may be.

Explanation.-- For the purposes of this section, the "electronic means" shall be such as may be specified."

23. The duty of the Authorised Representative of the Financial Creditors as

enumerated Section 25A is essentially to participate and vote in the Meeting

of the CoC and to cast vote on behalf of the Financial Creditor in accordance

with the instructions received from each Financial Creditors to the extent of

the voting share. Another provision which needs to be noticed is Regulation

16A, which was also inserted in CIRP Regulations by notification dated

03.07.2018. Regulation 16A is as follows:

"16A. Authorised representative.

(1) The interim resolution professional shall select the insolvency professional, who is the choice of the highest number of financial creditors in the class in Form CA received under sub-regulation (1) of regulation 12, to act as the authorised representative of the creditors of the respective class:

3[Provided that the choice of an insolvency professional

to act as an authorised representative by a financial creditor in a class in Form CA shall not be considered, if the Form CA is received after the time stipulated in the public announcement.] (2) The interim resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representatives selected under sub-

regulation (1) within two days of the verification of claims received under sub-regulation (1) of [regulation 12:] [Provided that till the application for appointment of the authorised representative for a class of creditors is under consideration before the Adjudicating Authority, the insolvency professional selected under sub-

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 12 of 19 regulation (1) shall act as an interim representative for such class of creditors, and shall be entitled to attend the meetings of the committee and shall have such rights and duties as that of an authorised representative.] (3) Any delay in appointment of the authorised representative for any class of creditors shall not affect the validity of any decision taken by the committee. (3A) The financial creditors in the class, representing not less than ten per cent. voting share may seek replacement of the authorised representative with an insolvency professional of their choice by making a request to the interim resolution professional or resolution professional who shall circulate such request to the creditors in that class and announce a voting window open for at least twenty-four hours..."

24. Authorised Representative is selected as per the choice of the highest

number of Financial Creditors. Sub-Regulation (3A) was subsequently

inserted only on 18.09.2023, which now provides a mechanism for

replacement of the Authorised Representatives at the time when Application

was filed by the Appellant, i.e., in March 2024, Regulation 16A(3A) was

already enforced.

25. Section 25A came for consideration before the Hon'ble Supreme Court

in the matter of 'Pioneer Urban Land and Infrastructure Ltd. & Anr.' Vs.

'Union of India & Ors.' reported in (2019) 8 SCC 416, where Hon'ble

Supreme Court laid down that if a decision is taken by vote of more than 50%

of the voting shares of the Financial Creditors who are represented by

Authorised Representative, all others have to be bound by the said decision.

In Paragraph 63 of the Judgment following has been laid down:

"63. Given the fact that allottees may not be a homogeneous group, yet there are only two ways in which they can vote on the Committee of Creditors-- either to approve or to disapprove of a proposed

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 13 of 19 resolution plan. Sub-section (3-A) goes a long way to ironing out any creases that may have been felt in the working of Section 25-A in that the authorised representative now casts his vote on behalf of all financial creditors that he represents. If a decision taken by a vote of more than 50% of the voting share of the financial creditors that he represents is that a particular plan be either accepted or rejected, it is clear that the minority of those who vote, and all others, will now be bound by this decision. As has been stated by us in Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] , the legislature must be given free play in the joints to experiment. Minor hiccups that may arise in implementation can always be sorted out later. Thus, any challenge to the machinery provisions contained in Sections 21(6-A) and 25-A of the Code must be repelled."

26. As per the statutory scheme, all voting which has to be done by the

Authorised Representative in the Meeting of the CoC is on the basis of prior

instructions received from Financial Creditors. As noted above, the

Resolution Plan of the Corporate Debtor came to be approved in July 2020,

with vote shares of 80.13% and the Application was immediately filed by the

RP for approval of the Resolution Plan on 13.08.2020, which could ultimately

be decided by the Impugned Order dated 24.07.2024.

27. Learned Counsel for the Appellant has contended that Order of the

Adjudicating Authority is based only on Regulation 16(3A) of the CIRP

Regulations, whereas, even if Application for replacement is not filed in

accordance with the Regulation 16(3A) of the CIRP Regulations, Adjudicating

Authority has ample jurisdiction under the inherent powers to remove the

Authorised Representatives. Learned Counsel submits that RP can also be

removed by the Adjudicating Authority in its inherent power, which is a law

well settled. Adjudicating Authority in the Impugned Order has noticed the

Judgment of this Appellate Tribunal where this Tribunal has held that

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 14 of 19 Adjudicating Authority who appoints RP cannot be said to lack jurisdiction to

take a decision to replace him. It is useful to notice Paragraphs 65 & 66 of

the Judgment of the Adjudicating Authority, which is as follows:

"65. In Stressed Assets Stabilization Fund (SASF) vs. Piyush Periwal & Ors. (Company Appeal (AT)(Insolvency) No. 947 of 2021), Hon'ble NCLAT viewed that the Adjudicating Authority which appoint the RP cannot be said to lack jurisdiction to take a decision to replace him. Para 61 of the judgment reads thus:-

"61. The learned Counsel for the RP has emphatically submitted that Adjudicating Authority had no jurisdiction to pass an order replacing the RP. He submits that RP can be replaced only in accordance with Section 27 of the Code, when a Resolution is passed by the CoC for such replacement. There can be no doubt to the scheme of the Code for removal of the RP by the CoC which has to pass a Resolution. The Adjudicating Authority, who has appointed the RP cannot be said to lack jurisdiction to take a decision to replace the RP, when the facts and circumstances of a particular case warrants. In the present case, where serious allegations were made against the RP, regarding not conducting the CIRP transparently, the Adjudicating Authority did not lack jurisdiction to pass an order for replacement of the RP. The jurisdiction of Adjudicating Authority to pass an order replacing the RP has also been accepted by this Tribunal in Company Appeal (AT) (INS.) No.1443 of 2022

- Srigopal Choudary vs. SREI Equipment Finance Ltd., wherein in paragraph 14 and 16, this Tribunal held following:

"14. We are of the opinion that the Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of the RP particularly in a situation where the RP had not taken any steps to convene a meeting of the CoC for the purposes of removal of RP.

16. After going through the material available on record we are satisfied that the

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024

15 of 19 Adjudicating Authority with an object to implement the provisions of IBC in its letter and spirit has rightly exercised its inherent jurisdiction by way of passing order of removing the appellant as RP of the CD. This fact which is reflected on record is sufficient to draw an inference that the Appellant was proceeding contrary to the statutory provisions as contained in the IBC and also delaying the smooth conclusion of CIRP. We are of the considered opinion that there is no defect in the impugned order warranting interference by this Tribunal. On the contrary the conduct of the appellant/RP which was observed by the Adjudicating Authority and reflected so in the impugned order is sufficient enough to direct IBBI to conduct an inquiry regarding the role played by the RP in this matter."

66. Similarly, in Union Bank of India vs. M/s Rajdeep Clothing & Advisory Pvt. Ltd. & Ors.

(Company Appeal (AT)(Insolvency) N0. 399 of 2021), it could be ruled by Hon'ble Appellate Tribunal that where the RP commit illegalities, the Adjudicating Authority may not remain only as a spectator and it is entitled to exercise its inherent jurisdiction under Rule 11 of NCLT Rules to do the needful. The relevant excerpt of the judgment reads thus:-

"We are of the opinion that if IRP/RP proceeds contrary to the established principles of conducting CoC Meeting and commits several illegalities the Adjudicating Authority may not act only as a spectator or he may shut his eyes. In such situation the Adjudicating Authority is entitled to exercise inherent jurisdiction under Rule 11 of NCLT Rules, 2016. Moreover, the said exercise by the Adjudicating Authority has already been approved in a case by this Appellate Tribunal in Company Appeal (AT)(Ins) No.786 of 2020 in Anil Kumar Vs Allahabad Bank and others."

28. The submission which has been pressed by the Counsel for the

Appellant is that when allegations were made by the Appellant both against

the RP and the Authorised Representative of the Homebuyer, Adjudicating

Authority having accepted those allegations directed for removal of the RP,

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 16 of 19 the same course ought to have been followed for the Authorised

Representative also. In the above context, we may notice that Adjudicating

Authority itself has clarified in the Order that replacement of the RP is not

being made on the plea of the Applicant, rather Adjudicating Authority has

directed for replacement since he remained oblivious about his duties as RP

on vital aspects mentioned in Paragraphs 63 & 64 of the Order. In Paragraph

67 of the Judgment, Adjudicating Authority has made following observations:

"67. Thus, we are of the view that for the purpose of discharging the statutory function of RP in terms of IBC, 2016, qua the CD, we need to appoint a responsible IPE (Insolvency Professional Entity), as provided in Regulation 12 of IBBI (Insolvency Professional) Regulations. However, it is made clear that the RP is not replaced on the plea of Applicant Homebuyer, but is replaced because he remained oblivious about his duties as RP on vital aspects mentioned in Paras 63 and 64 (ibid)."

29. From the observations of the Adjudicating Authority in Paragraph 67,

it is clear that the RP was replaced not on the pleas made by the Appellant

but was for the reasons as mentioned, hence the submission of the Appellant

cannot be accepted that in the same way, RP was replaced Authorised

Representative was also required to be replaced.

30. There are more than one reasons for upholding the Order of the

Adjudicating Authority, rejecting the IA filed by the Appellant being I.A.

No.1158/2024:

i. The Resolution Plan of the Corporate Debtor was approved by the CoC

as early as on 15.07.2020 with 80.13% votes on behalf of the Financial

Creditors in a class where the Authorised Representative voted in the

Meeting of the CoC. The Application for approval of the Resolution Plan

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 17 of 19 was filed by the RP on 13.08.2020, which remain under consideration

till passing of the impugned Order dated 24.07.2024.

The Application for replacement of the Authorised Representative has

been filed by the Appellant only on 04.03.2024. Filing of the Application

for replacement after more than 3-1/2 years when Plan was approved

could not be entertained.

ii. The Authorised Representative of Homebuyers i.e., Financial Creditors

in a class has to cast his vote in accordance with the prior instructions

of Authorised Representative of the class. All Authorised

Representative in a class are bound by the voting by majority of votes

as reflected by the voting by the AR. A lone Homebuyer cannot be

allowed to question the voting by Authorised Representatives on behalf

of majority of Financial Creditor in a class.

31. When a procedure for replacement of the Authorised Representatives

have been introduced in the Regulations by 16A(3A) inserted on 18.09.2023,

the said statutory provision has to be followed for replacement of Authorised

Representatives. Adjudicating Authority did not commit any error in relying

on the Regulation 16A(3A) of the CIRP Regulations for not accepting the

Application of the Appellant.

32. Looking to the limited role of Authorised Representative, i.e., only being

confined to the voting in the Meeting of the CoC, no such grounds or facts

were brought on the record, on basis of which Adjudicating Authority could

have exercised its inherent jurisdiction in directing for replacement of

Authorised Representative of the Homebuyers.

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 18 of 19

33. In view of the foregoing discussions and conclusions, we are of the view

that no case has been made out to interfere with the impugned Order dated

24.07.2024, rejecting I.A. No.1158/2024 filed by the Appellant.

There is no merit in the Appeal. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI

16th January, 2025

himanshu

Comp. App. (AT) (Ins.) No. 1924 of 2024 & I.A. No. 7124 of 2024 19 of 19