Everlike Real Estate & Developers Pvt. ... vs Mr. Mohit Goyal Ca Rp Of Aadi Best ...

(Arising out of the Order dated 05.04.2024 passed by the National Company Law Tribunal, New Delhi Bench (Court- II) in I.A. No. 114 of 2023 in C.P No. (IB) - 708/ND/2021 )

IN THE MATTER OF:

Everlike Real Estate & Developers Pvt. Ltd. A company registered under the Companies Act, 1956, Having its registered office at C-74, Front Portion, Ground Floor, Inderpuri, New Delhi - 110012 Email: everlikereal@gmail.com ...Appellant

Versus

1. Mr. Mohit Goyal, CA, Resolution Professional of Aadi Best Consortium Private Limited, RC 1/2, Sector - 1, Vaishali, Ghaziabad - 201010. Uttar Pradesh, Email: irpaadibest@gmail.com ...Respondent No. 1

2. Skael Enterprises Private Limited Registerd Office at S-503 First Floor, School Block, Shakarpur, Delhi - 110092 Email: skaelenterprise@gmail.com ...Respondent No. 2

Present

For Appellant: Ms. Pooja M. Saigal, Mr. Arpit Dwivedi, Ms. Sakshi Kapoor & Mr. Ishank Jha, Advocates. -2- Comp. App. (AT) (Ins.) No. 978 of 2024

For Respondent: Mr. Krishnendu Datta, Sr. Advocate along with Mr. Arjun Maheshwari, Ms. Niharki Sharma & Mr. Adish Srivastava, for R-1. Mr. Preetesh Kapur, Sr. Advocate, for R-2.

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 -3- Comp. App. (AT) (Ins.) No. 978 of 2024

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 -4- Comp. App. (AT) (Ins.) No. 978 of 2024

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 the Impugned Order.

For our discussion purpose in subsequent paragraphs, we shall mention I.A. No.

114 of 2023 as filed by the Appellant on 03.11.2023. Vide I.A. No. 114 of 2023,

the Appellant sought issuance of directions to the Respondents to include the

claim of the Appellant in the 2nd category of the Resolution rather than in the 4 th

category of the Resolution Plan.

-5- Comp. App. (AT) (Ins.) No. 978 of 2024

8. At this stage, it would be desirable to look into the various categories

mentioned in the approved Resolution Plan. The Impugned Order captures such

details contained in the Resolution Plan which read as under :-

-6- Comp. App. (AT) (Ins.) No. 978 of 2024 -7- Comp. App. (AT) (Ins.) No. 978 of 2024

9. It is the case of the Appellant that he has been categorised under category

4 i.e., "Cancelled Units (not having valid BBA)", whereas he should have been

categorised under the category 2 i.e., "Whose Possession of Flats to Flat Owners

is pending as on CIRP date". It is the case of the Appellant that this is based on

Memorandum of Understanding (in short 'MOU') dated 24.05.2016. The

Appellant submitted that the Impugned Order is perverse in not treating the MOU

at par with BBA and approving the Resolution Plan treating him in category 4

instead of category 2 of the Resolution Plan.

10. It is the case of the Appellant that the Appellant is a registered company

under Companies Act, 1956 and submitted that in the year 2014 the Corporate

Debtor approached the Appellant with the proposal to sale commercial area/

shops/ units in the commercial project being developed in Plot No. RC 1/2, -8- Comp. App. (AT) (Ins.) No. 978 of 2024

Vaishali - 1, Ghaziabad, Uttar Pradesh (in short 'Project'). The Appellant

submitted that after several round of discussions and negotiation, the Appellant

agreed to purchase shops/ commercial units in the project aggregating to an area

of 25,000 sq. ft. for total consideration of Rs. 12.50 Crores and out of which the

Appellant paid Rs. 10 Crores by cheques between 2014-2016.

11. The Appellant submitted that the Corporate Debtor and the Appellant

entered into a MOU dated 24.05.2016 which contained the various terms and

conditions of allotment and obligations of the parties. The Appellant drawn

attention in this Appellate Tribunal to clause 1.1, 1,2, 1.3, 2.1, 2.2, 2.5, 3.1 and

argued that perusal of these clauses makes it clear that MOU was in nature of

Builders Buyers Agreement (in short 'BBA'). We take note of the MOU which

was filed in the Appeal Paper Book as Annexure A-3 from Pg 126 to 134.

12. The Appellant submitted that based on public announcement inviting

claims by creditors by Respondent No. 1, the Appellant submitted its claim before

Respondent No. 1 in the capacity of Financial Creditor in Clause-A under Form

CA along with supporting documents including the MOU and proof of payments

on 20.04.2022.

13. The Appellant submitted that aggrieved by the conduct of the Corporate

Debtor in its failure to handover the units, simultaneously the Appellant filed an

FIR dated 04.06.2022 against the Corporate Debtor and its directors for criminal

breach of trust, cheating and dishonestly.

-9-

Comp. App. (AT) (Ins.) No. 978 of 2024

14. It has been brought out that the Respondent No. 1 admitted the entire claims

of the Appellant as allottee. In the meanwhile, the Respondent No. 2 submitted

its Resolution Plan against the Expression of Interest invited by the Respondent

No. 1 and on coming to know these developments, the Appellant requested the

Respondent No. 1 and authorised representative of class of creditors with a query

sent vide e-mail dated 16.08.2023, which reads as under :-

"Kindly discuss with RA and let us know as we fall in category "Whose Possession of flats to Flat Owners in pending as on CIRP date", how will possession of commercial units on Upper Ground Floor of the Project aggregating to approximately 25,000 sq. ft be handed over to us? Also explain how the registry will take place of these units?"

15. The same was clarified by the Respondent No. 1 in a statement to

authorised of representative of class of creditors which reads as under :-

"It has already been provisioned under Chapter - 8 of the Resolution Plan."

16. The Appellant pleaded that since the MOU dated 24.05.2016 is at par with

BBA, he should have been classified and put in category 2nd instead of category

4th which is for allottees not having valid BBA. The Appellant pleaded that

instead of getting 40% of his claims, due to the Impugned Order, he shall be

getting only 5% of his claims.

-10-

Comp. App. (AT) (Ins.) No. 978 of 2024

17. The Appellant submitted that vide e-mail dated 19.08.2023 to the

Respondent No. 1 the Appellant protested for inclusion of his name in category 4

and requested Respondent No. 1 for several information followed by few

reminders, e-mails and finally he got reply from the Respondent No. 1 vide e-

mail dated 13.09.2023 and relevant portion reads as under :-

In relation with your email dated 29th August, 2023, we would like to apprise you that we are unable to understand your queries as you have not mentioned the specific unit numbers of the shops in the commercial area. Please clarify the unit numbers of the shops as referred in your previous email.

Further, The Resolution Applicant has put you in the fourth category. We cannot force or compel the respective applicant to change your category.

18. Aggrieved by the same, the Appellant filed an I.A. No. 114 of 2023 in C.P.

(IB)- 708/ND/2021 before the Adjudicating Authority, seeking directions to the

Respondents to classify him in 2nd category, however, the same was rejected by

the Adjudicating Authority vide Impugned Order dated 05.04.2024 mainly on the

ground that the MOU cannot be equated with BBA.

19. In this connection, we have already noted the relevant para 21 of the

Impugned Order rejecting I.A. No. 114 of 2023 in our earlier discussion. -11-

Comp. App. (AT) (Ins.) No. 978 of 2024

20. It is the case of the Appellant that the Real Estate Regulatory Authority

Act, 2016 (in short 'RERA Act') does not define the term BBA and referred to

Section 2(c) of RERA Act which only defines 'Agreement for sale' and Section

2(d) of RERA Act which defines 'Allottees' along with Section 2(e) which

defines 'Apartment'. The Appellant argued that these definitions are vide enough

to cover MOU to be treated as agreement to sale or BBA.

21. The Appellant pleaded that the nomenclature of the documents is not

relevant and decisive factor in determining the true nature and legal effect of any

document ie., MOU Vs. BBA, the Adjudicating Authority should have gone into

the various clauses of MOU to establish that his claim to be classified in category

2.

22. The Appellant submitted that it is undisputed fact that he has paid Rs. 10

Crores to the Corporate Debtor and the MOU mentions 25,000 sq. ft. as an area

to allotted to him. It is the case of the Appellant that since he was awaiting the

possession on the date of CIRP, he was eligible to be classified in category 2.

23. In support of his claims to be treated as BBA holder based on his MOU,

the Appellant cited few orders of Haryana Real Estate Regulatory Authority and

Maharashtra Real Estate Appellate Tribunal.

24. Similarly, the Appellant also referred to the Judgement of the Hon'ble

Supreme Court of India passed in the matter of B.K. Muniraju Vs. State of

Karnataka and Ors. [(2008) INSC 208] along with another judgement of Hon'ble -12- Comp. App. (AT) (Ins.) No. 978 of 2024

High Court of Madhya Pradesh in the matter of Laxminarayan and Others Vs.

Diwan Singh and Another [(2019) SCC OnLine MP 2673] and judgement of

Hon'ble High Court of Kerala in the matter of Ponnu and Ors. Vs. Taluk Land

Board, Chittur and Ors. [AIR 1982 Ker 330] to support his case that the

Adjudicating Authority should not have placed too much emphasis on the title of

the document and rather should have examined the intent of the documents based

on various clauses.

25. Concluding his remarks, the Appellant requested this Appellate Tribunal to

allow his appeal and set aside the Impugned Order.

26. Per-contra, both the Respondents denied all the averments of the Appellant

treating these as misleading, mischievous and without any merit.

27. The Respondent No. 1 gave the background of the case and drew attention

towards relevant dates of the case.

28. The Respondent No. 1 submitted that the Appellant has no locus

challenging the Resolution Plan approved by the CoC as the Appellant is an

individual member of Financial Creditor in a class who challenged the appeal of

the Resolution Plan in I.A. No. 114 of 2023 which is impermissible as held in the

judgement of Hon'ble Supreme Court of India in the matter of Jaypee Kensington

Vs. NBCC [(2022) 1 SCC 401].

29. The Respondent No. 1 also refuted the plea of the Appellant that the

Respondent No. 1 accepted the claims of the Appellant as the Financial Creditor -13- Comp. App. (AT) (Ins.) No. 978 of 2024

in class and therefore, there cannot be any different categorisation of such

homebuyers. In this connection, the Respondent No. 1 cited one judgment passed

by this Appellate Tribunal in the matter of Fervent Synergies Ltd. v. Manish Jaju

[(2023) ibclaw.in 774 NCLAT].

30. Concluding his arguments, the Respondent No. 1 submitted that there is no

merit in the appeal.

31. Opposing the appeal, the Respondent No. 2 stated that the Appeal is

without any merit. The Respondent No. 2 refuted the pleadings of the Appellant

that the MOU is equivalent agreement to sale or BBA and highlighted that recital

'C' of MOU does not specify any area or earmarked units, whereas the

homebuyers agreement/ BBA provides specifies unit members and the area

therein.

32. The Respondent No. 2 also stated that the Appellant never produced

alleged Annexures 'I' mentions in the said recital C of the MOU and neither filed

the same before the Resolution Professional or the Adjudicating Authority.

33. The Respondent No. 2 submitted that Clauses 4 and 5 of MOU makes it

clear that the Appellant is basically concerned with the return on investment and

has further been given special right of termination in clause C of MOU which has

not been given to any other homebuyers. The Respondent No. 2 submitted that

all these features of the MOU make it abundantly clear that the Appellant is not -14- Comp. App. (AT) (Ins.) No. 978 of 2024

genuine homebuyer and at the best the Appellant may be treated speculative

investor.

34. The Respondent No. 2 also refuted the claims of the Appellant that in terms

of RERA Act, the Appellant is be treated as homebuyers and submitted that

Section 2(e) of the RERA Act i.e., definition of 'apartment', although quite wide,

but is qualified by the words 'means a separate and self-contained part of

immovable property'. It is the case of the Respondent No. 2 that since, no

property has been defined in MOU, the Appellant is not covered in the definition

as stipulated in RERA Act.

35. The Respondent No. 2 submitted that there are several judgments of this

Appellate Tribunal and Hon'ble Supreme Court of India which permit to

differentiate between a genuine homebuyers and a speculative investors and cited

judgement of Nidhi Rekhan V. Samyak Projects Pvt. Ltd. [(2022) ibclaw.in 109

NCLAT], where this Appellate Tribunal held that speculative investors are only

interested in return and not possession of flats. Similarly, this Appellate Tribunal

in case of Sabari Reality Vs. Sivana Reality [(2023) ibclaw.in 775 NCLAT] also

laid down distinction in between affected and not affected persons.

36. The Respondent No. 2 also brought out that the Hon'ble Supreme Court in

"Committee of Creditors of Essar Steel India Limited Through Authorised

Signatory vs. Satish Kumar Gupta & Ors., [(2020) 8 SCC 531]" has laid down

that there can be difference in payment of the different category of creditors. -15-

Comp. App. (AT) (Ins.) No. 978 of 2024

37. The Respondent No. 2 submitted that the commercial wisdom of

Committee of Creditors which approved the Resolution Plan cannot be

challenged.

38. The Respondent No. 2 elaborated the details of various categories of

homebuyers and justified that based on clear description, the Appellant has been

correctly placed in category 4 and submitted that the Appellant could not produce

any valid homebuyers agreement not could indicate specific units allotted to him

by the Corporate Debtor. The Respondent No. 2 submitted that admittedly even

the Appellant has agreed that no particular units were ever allotted to the

Appellant and only area was mentioned without any description of the property

or the apartments and as such the Appellant at best can be classified under

category 4 that cancel units not having valid BBA.

39. Concluding his arguments, the Respondent No. 2 submitted that the

Resolution Plan was approved with 100% voting by CoC and was finally

approved by the Adjudicating Authority vide Impugned Order based on all facts

and correct law and the appeal therefore deserves to be dismissed with cost.

Findings

40. The Respondent No. 2 has pleaded that the Appellant is not genuine

homebuyer and at the best is speculative investor. Hence, it would be desirable

to go into aspects of genuine homebuyers vis-à-vis speculative investors to see

whether this adversely affect the rights of the Appellant in this case. Both the -16- Comp. App. (AT) (Ins.) No. 978 of 2024

Appellant and the Respondents have also referred to various definitions and

provisions stipulated in RERA Act. Hence, it would also be desirable to look into

the relevant definitions and provisions of RERA Act.

41. We would also like to take into account the definition of "Allottee" and the

"Real Estate Project" which as per Section 5(8)(f) of the Code has been assigned

the same meaning as contained in Real Estate (Regulation and Development) Act,

2016 (in short RERA Act, 2016) and relevant clause on the RERA Act, 2016

reads as under:-

"2. Definitions.-In this Act, unless the context otherwise requires,--

(d) "allottee" in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent;

(zn) "real estate project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all -17- Comp. App. (AT) (Ins.) No. 978 of 2024

improvements and structures thereon, and all easement, rights and appurtenances belonging thereto;"

(Emphasis Supplied)

42. The issue regarding speculative investors has been discussed in the

judgment of Hon'ble Supreme Court of India in the case of Pioneer Urban Land

Infrastructure Limited & Ors. Vs. Union of India (UOI) & Ors. [AIR 2019 SC

4055] the relevant portion of the judgment as reads as under :-

" ..the real estate developer can also point out that the insolvency resolution process under the Code has been invoked fraudulently, with malicious intent, or for any purpose other than the resolution of insolvency. This the real estate developer may do by pointing out, for example, that the allottee who has knocked at the doors of the NCLT is a speculative investor and not a person who is genuinely interested in purchasing a flat/apartment. They can also point out that in a real estate market which is falling, the allottee does not, in fact, want to go ahead with its obligation to take possession of the flat/apartment under RERA, but wants to jump ship and really get back, by way of this coercive measure, monies already paid by it. Given the above, it is clear that it is very difficult to accede to the Petitioners' contention that a wholly one-sided and futile hearing will take place before the NCLT by trigger-happy allottees who would be able to ignite the process of removal -18- Comp. App. (AT) (Ins.) No. 978 of 2024

of the management of the real estate project and/or lead the corporate debtor to its death..."

(Emphasis Supplied)

43. From the definition of the Code of Homebuyers as Financial Creditors as

contained in Section 5(8)(f) along with two explanation along with definition of

'Allottees' and 'Real Estate Projects' as contained in Section 2(d) and 2 (zn) of

the RERA Act, 2016, it is clear that any allotee who has paid the amount in the

Real Estate Project shall be deemed to be Financial Creditor and the said amount

paid to Real Estate Developers will be treated having commercial effect of the

borrowing.

44. The definition of the allottee as contained in Section 2(d) of RERA Act,

2016 defines as the person to whom plot, apartment, or the building as the case

may be has been allotted or sold, whether free hold or lease hold or otherwise

transferred by the Promoters including person who acquired the said allotment

through sale, transfer or otherwise but does not include a person to whom some

plot or apartment or building as the case may be is given on rent.

45. Since, 2(d) also mentioned about apartment which is defined in Section

2(e) of the RERA Act, 2016, we will take into consideration the definition of

'Apartment' which reads as under :-

"2(e) "apartment" whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one -19- Comp. App. (AT) (Ins.) No. 978 of 2024

or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified;"

(Emphasis Supplied)

46. The definition of the 'Apartment' amplifies the scope of the word 'allottee'

which may includes block, chamber, dwelling unit, flat, office, showroom, shop,

godown, premises, suit, tenement, unit of by any other name. It is significant to

note that this also prescribe that it has to be separate self contained part of any

immovable property.

47. The word 'allottee' as contained in explanation 1 of Section 5(8)(f) of the

Code is by nature is quite exhaustive and illustrative and may include Homebuyer

or unit owner or any commercial property owner.

48. The Code or the RERA Act, 2016 do not differentiate anywhere between

the Homebuyers who purchase units for his own consumption or the Homebuyers

or unit purchaser who purchase the multiple units for commercial purposes.

49. The Hon'ble Supreme Court of India in Pioneer Urban Land (Supra) held

that the allottee, who has given advance or paid money to the Real Estate

Developers is a Financial Creditor. We find that the issue regarding the genuine

Homebuyers v/s Speculative Homebuyers is relevant only at the stage for the -20- Comp. App. (AT) (Ins.) No. 978 of 2024

admission of CIRP under Section 7 of the Code and in this connection we will

reiterate that the Hon'ble Supreme Court of India narrating as under :-

"...the real estate developer can also point out that the insolvency resolution process under the Code has been invoked fraudulently, with malicious intent, or for any purpose other than the resolution of insolvency. This the real estate developer may do by pointing out, for example that the allottee who has knocked at the doors of the NCLT is a speculative investor and not a person who is genuinely interested in purchasing a flat/apartment.

(Emphasis Supplied)

Thus, it becomes clear that the Hon'ble Supreme Court of India held the

position of speculative investors only for seeking unnecessary insolvency of the

Corporate Debtor. The Hon'ble Supreme Court of India held that any allottee

who paid for purchasing units will be treated as having effect of commercial

borrowing and consequently such unit purchaser will be treated as Financial

Creditors.

50. Thus, it becomes clear that whether the homebuyer/ allottee is genuine

homebuyer or genuine allottee or speculative homebuyers/ allottee but if he has

paid the money for acquisition of such properties or given the advance, such

allottee/ homebuyer shall be treated as Financial Creditor in terms of Section

5(8)(f) of the Code . Hence, the pleadings of the Respondent No. 2 in this regard -21- Comp. App. (AT) (Ins.) No. 978 of 2024

that the Appellant is speculative investor will not affect the rights of the Appellant

to be treated as the Financial Creditors.

51. Now, we shall take up the main contentious issue which is root cause of the

present appeal i.e., regarding categorisation of the Appellant in Category 4 rather

than in Category 2 of the Resolution Plan. We shall deal this issue along with

other related issues in the subsequent discussions.

52. We note that under Chapter 8 of the Resolution Plan, the Respondent No.

2 bifurcated claims of homebuyers into following four categories:-

(i) Whose Possession has been handed over to Flat Owners.

(ii) Whose Possession of Flats to Flat Owners is pending as on CIRP

date.

(iii) Cancelled Units (having valid Builder Buyer Agreement/ BBA).

(iv) Cancelled Units (not having valid BBA).

53. We note that homebuyers in the second category of homebuyers i.e., whose

possession of flats are pending on the CIRP date, have an option either to cancel

the units or to pay the balance amount and take possession after completion of the

units. Further, in case if any homebuyer opts for cancellation of its units then the

homebuyer is entitled to get a refund of 40% of the principal amount within 15

months from the effective date or within 6 months from the re-sale of the flats

surrendered/cancelled by the Respondent No. 2, whichever is earlier.

-22- Comp. App. (AT) (Ins.) No. 978 of 2024

54. We note that on the other hand, if the homebuyers fall in 4th category i.e.,

i.e., Cancelled Units (not having valid BBA), the homebuyers are entitled to

receive only 5% of the principal amount and the payment to be made within 6

months from the Effective date.

55. We have noted that the Appellant has entered into agreement by way of

MOU dated 24.05.2016 with the Corporate Debtor, whereby the Appellant agreed

to purchase 25,000 sq. ft. area in the project. We note that no units were specified

in the said MOU. The other salient feature of the MOU includes the consideration

of Rs. 12.50 Crores for 25,000 sq. ft. area and further note that Rs. 10 Crores has

already been paid by the Appellant. The MOU also mentioned that the Corporate

Debtor shall arrange rent of the said area on behalf of the Appellant and the

Corporate Debtor will ensure of rent of Rs. 15 Lakhs per month for the said area.

MOU further provide that till such time 25,000 sq. ft. area is leased out, the

Corporate Debtor shall pay an interest @ 18% per annum on the amount paid by

the Appellant. MOU also provides the rights to the Appellant to terminate the

MOU in case possession of the said area is not handed over to the Appellant by

the date of possession and the amount would be refunded by the Corporate Debtor

along with the interest @ 18% per annum.

Rest of the Clauses are standard legal clauses including representative,

confidentiality, indemnification, waiver, notice, tax, dispute resolution,

applicable laws, specific performance, etc., -23- Comp. App. (AT) (Ins.) No. 978 of 2024

56. The relevant clauses of MOU which give more details and the intention of

the parties, can be looked into and is reproduced as under :-

RECITALS -24- Comp. App. (AT) (Ins.) No. 978 of 2024 -25- Comp. App. (AT) (Ins.) No. 978 of 2024

57. By reading both MOU and various definitions and provisions of RERA

Act, it is seen that there has to be agreement to sale between the parties which is

not found in the present case. We note that there is only an MOU dated

24.05.2016 which give description of 25,000 sq. ft. without any further

elaboration regarding unit no., floors or any other details. Technically since the

definition of allottee under Section 2(d) of the RERA Act is quite wide which

include person to whom "apartments" has been allotted and definition of

apartment is given in Section 2(e) of the RERA Act which is again very vide

definition but which clearly indicate "means of separate and self contained part

of any immovable property." Such 'separate and self contained' unit details is

again not found in the present case as there is no separate or self contained part

on any immovable property mentioned in the MOU.

58. We have already noted that recital 'C' clearly mention that "the said area

more specifically describe in Annexure - I of this MOU" however, no Annexure-

I has been produced by the Appellant. In this respect during pleadings, this

Appellate Tribunal specifically asked the Appellant to link and produce the said

Annexure I as mentioned in Recital C of the MOU, however, the Appellant could

not do so and we therefore conclude that no specific units were mentioned by the -26- Comp. App. (AT) (Ins.) No. 978 of 2024

Corporate Debtor. The contention of the Appellant that the MOU should be

treated at par with BBA or agreement to sale is therefore not found to be tenable.

59. We have already noted that Hon'ble Supreme Court of India in the

judgments have laid down the ratio that the title or the nomenclature of the

document may not be enough and the intention of the document is required to be

looked into wile deciding the nature of the agreement. Here we have gone through

the MOU carefully and also quoted the relevant portion in earlier discussion. We

do not find any rational to treat the MOU at par with agreement to sale or BBA.

Whenever, any unit, whether commercial or residential, is sold to allottee or

homebuyers, the details of such property for which agreement to sale is executed

is specified and may include, inter-alia, the name of allottee, payment details, unit

details, area, rate, the adjacent unit directions, etc., to make it specific and

distinguished unit. In contrast, in the present MOU there is no such details made

available and only area of 25,000 sq. ft. @ 5000 per sq. i.e., Rs. 12.50 Crores is

mentioned.

60. It is interesting to note that there is clause for rental of the properties by the

Corporate Debtor @ 15 Lakhs per month failing which interest payment on the

amount paid by the Corporate Debtor @ 18% per annum to the Appellant. Such

clauses are not normal clauses in BBA or agreement of sale.

61. Normally and generally speaking, the typical BBA do not mention such

financial rate of return or interest portion to be paid by the Corporate Debtor to -27- Comp. App. (AT) (Ins.) No. 978 of 2024

allottee. Even assuming that mention of rent and payment of interest in absence

of finding suitable lease out of properties will not make the agreement to sale void

or illegal, the other elements to establish that there were specific units sold to the

Appellant are absent in the MOU.

62. The Appellant is also aggrieved by the fact that there are different

categories of homebuyers who have been given different treatment in the

approved Resolution Plan of Respondent No. 2. Although the Appellant

submitted during pleadings that he is not challenging the approval of the

Resolution Plan but merely challenging the fact that he has been placed in the 4th

category i.e., "Cancelled Units (not having valid BBA)" and not in category 2 nd

i.e., "Whose Possession of Flats to Flat Owners is pending as on CIRP date". It

has been brought out that if the Appellant would have been placed in category 2nd

i.e., "Whose Possession of Flats to Flat Owners is pending as on CIRP date" he

would have recieved 40% of amount paid whereas by finding himself in category

4 the Appellant will be merely getting 5% of the amount paid. We appreciate the

grievances of the Appellant.

However, we note that the Appellant itself is a registered company under

Companies Act, 1956 and itself Real Estate and Developer Company who knows

the implications of buying and selling of properties and also understand the

implications of legal documents and proper title deeds by way of document like -28- Comp. App. (AT) (Ins.) No. 978 of 2024

agreement to sale or BBA. Hence, the arguments of Appellant that the MOU

should be treated at par with BBA or agreement to sale is not justifiable.

63. We note that there is suitable logic and rational in classification of

homebuyers in 4 categories. The 1st category is applicable to those unit holders

whose possession has been handed over. Next category is the unit holders whose

possession of units is pending on CIRP dates. The 3rd category is for the unit

holders having cancelled units but having valid BBA and last residual category is

for all unit holders having cancelled units without any valid BBA. Thus, first three

categories are having valid BBA whereas the last category does not as the valid

BBA.

64. In Chapter 8th of the Resolution Plan, treatment of all these four categories

of allottees, who are financial creditors as homebuyer as a class, have been

detailed out which reads as under :-

-29-

Comp. App. (AT) (Ins.) No. 978 of 2024 -30- Comp. App. (AT) (Ins.) No. 978 of 2024 -31- Comp. App. (AT) (Ins.) No. 978 of 2024 -32- Comp. App. (AT) (Ins.) No. 978 of 2024 -33- Comp. App. (AT) (Ins.) No. 978 of 2024 -34- Comp. App. (AT) (Ins.) No. 978 of 2024 -35- Comp. App. (AT) (Ins.) No. 978 of 2024 -36- Comp. App. (AT) (Ins.) No. 978 of 2024 -37- Comp. App. (AT) (Ins.) No. 978 of 2024 -38- Comp. App. (AT) (Ins.) No. 978 of 2024

65. Suffice to note that adequate justification of such classification has been

given along with treatment to be made to different categories and cannot be

treated as illegal or on the wrong side of law by any logic.

66. We also note that the commercial wisdom of the CoC cannot be challenged

as stipulated in several judgments of this Appellate Tribunal as well as Hon'ble

Supreme Court of India. In this connection we note that the COC has voted in

favour of the Resolution Plan of Respondent No. 2 by 100% voting rights. At this

juncture, it is significant to point out that the homebuyers as a class have also

voted in favour of the Resolution Plan and thus any single homebuyer cannot be

allowed to challenge the same.

We will also refer to the judgement passed by Hon'ble Supreme Court of

India in case of Essar Steel India (Supra). The relevant portion of the said

judgment is read as under :-

"88. By reading paragraph 77 (of Swiss Ribbons) dehors the earlier paragraphs, the Appellate Tribunal has fallen into -39- Comp. App. (AT) (Ins.) No. 978 of 2024

grave error. Paragraph 76 clearly refers to the UNCITRAL Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in paragraph 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, paragraph 77 itself makes it clear that there is a difference in payment of the debts of financial and operational creditors, operational creditors having to receive a minimum payment, being not less than liquidation value, which does not apply to financial creditors. The amended Regulation 38 set out in paragraph 77 again does not lead to the conclusion that financial and operational creditors, or secured and unsecured creditors, must be paid the same amounts, percentage wise, under the resolution plan before it can pass muster. Fair and equitable dealing of operational creditors' rights under the said Regulation involves the resolution plan stating as to how it has dealt with the interests of operational creditors, which is not the same thing as saying that they must be paid the same amount of their debt proportionately. Also, the fact that the operational creditors are given priority in payment over all financial creditors does not lead to the conclusion that such payment must necessarily be the same recovery percentage as financial creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may -40- Comp. App. (AT) (Ins.) No. 978 of 2024

involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors."

(Emphasis Supplied)

67. From above judgment of Essar Steel India (Supra), it is clear that once the

CoC approves the Resolution Plan by the requisite majority, the same cannot be

challenged by any individual unit buyer/ homebuyer like the Appellant in the

present appeal.

68. We note that the Hon'ble Supreme Court of India in the case of Jaypee

Kensington (Supra) has given a clear ruling that no individual homebuyers has

any locus to challenge resolution plan if the Resolution Plan which has been

approved by voting of more than 50% of voting shares of homebuyers as a class.

The relevant part of the judgment reads as under :-

"210.5. Having regard to the scheme of IBC and the law declared by this Court, it is more than clear that once a decision is taken, either to reject or to approve a particular plan, by a vote of more than 50% of the voting share of the Financial Creditors within a class, the minority of those who vote, as also all others within that class, are bound by that decision. There is absolutely no scope for any particular person standing within that class to suggest any dissention as regards the vote the Resolution Plan. It is obvious that if this -41- Comp. App. (AT) (Ins.) No. 978 of 2024

finality and binding force is not provided to the vote cast by the authorised representative over the resolution plan in accordance with the majority decision of the class he is authorised to represent, a Plan of Resolution involving large number of parties (like an excessively large number of homebuyers herein) may never fructify and the only result would be liquidation, which is not the prime target of the Code. In the larger benefit and for common good, the democratic principles of the determinative role of the opinion of majority have been duly incorporated in the scheme of the Code, particularly in the provisions relating to voting on the Resolution Plan and binding nature of the vote of authorised representative on the entire class of the Financial Creditor(s) he represents.

210.6. To put it in more clear terms qua the homebuyers, the operation of sub-Section (3-A) of Section 25-A of the Code is that their authorised representative is required to vote on the Resolution plan is accordance with the decision taken by a vote of more than 50% of the voting share of the homebuyer; and this 50% is counted with reference to the voting share of such homebuyers who choose to cast their vote for arriving at the particular decision. Once this process is carried out and the authorised representative has been handed down a particular decision by the requisite majority of voting share, he shall vote accordingly and his vote shall bind all the homebuyers, being of the single class he represents.

218. To sum up this part of discussion, in our view, after approval of the Resolution Plan of NBCC by CoC, where -42- Comp. App. (AT) (Ins.) No. 978 of 2024

homebuyers as a class assented to the Plan, any individual homebuyer or association cannot maintain any challenge to the Resolution Plan nor could be treated as carrying any legal grievance."

(Emphasis Supplied)

69. This makes absolutely clear that the Resolution Plan may provide different

categories of creditors and different payment schemes, as seen in the present case

which is valid and legally enforceable. The ratio of the above judgment is very

explicit and clear and therefore we find that the Appellant has no locus in the

present appeal to challenge the Resolution Plan or his classification in category 4

of the Resolution Plan on his own as individual homebuyer/ allottees.

70. As regard the plea of the Appellant that his claims were accepted by the

Respondent No. 1 initially as homebuyer and the Respondents erred in classifying

his claims in category 4 subsequently and therefore, the Impugned Order

approving the Resolution Plan in classifying him into category 4 is perverse.

In this connection, we note the relevant portion of this Appellate Tribunal

earlier order in the case of Fervent Synergies Ltd. (Supra) which reads as under:-

...15. The question which needs to be answered in the present case is whether the doctrine of promissory estoppel can be pressed in respect to a Resolution Plan, which is submitted by Resolution Applicant and approved by the CoC in its commercial wisdom. The submission of the learned Counsel for the Appellant is founded on the ground that the RP has admitted its claim of 10 flats as communicated vide email -43- Comp. App. (AT) (Ins.) No. 978 of 2024

dated 30.06.2021. Acceptance or admission of the claim of a Financial Creditor including homebuyers is one aspect of the scheme under the IBC. Subsequent steps in the IBC including the preparation of Resolution Plan are based on the list of Creditors, admitted claims of the Creditors etc. as per the scheme of the IBC, but the principle of promissory estoppel cannot be pressed against the Resolution Applicant, who submits Resolution Plan on the basis of relying on the Information Memorandum, the list of Creditors and other aspect of the matter. The Resolution Applicant has not extended any promise to the Financial Creditors of the Corporate Debtor that the claim submitted by Financial Creditor or any other creditor shall be accepted in toto. The mandatory contents of the Resolution Plan are laid down in the CIRP Regulations, 2016. If a Resolution Plan is compliant with the provision of Section 30, sub-Section (2) of the IBC and the provisions of the Regulations, 2016, the Plan cannot be faulted on the ground of the promissory estoppel, which the Appellant is pressing against the Resolution Professional, who has admitted the claim. We, thus, are of the view that submission of the Appellant based on the doctrine of promissory estoppel cannot be pressed into service in reference to the Resolution Plan, which has been submitted by a Resolution Applicant and approved by the CoC in its commercial wisdom. We, thus, do not find any merit in the submissions of learned Counsel for the Appellant on the basis of promissory estoppel.

(Emphasis Supplied) -44- Comp. App. (AT) (Ins.) No. 978 of 2024

Above judgment does not support the cause of the Appellant.

71. In view of above detailed discussions, we do not find any merit in the

appeal. The appeal devoid of any merit stand dismissed. No Costs. Interlocutory

Application(s), if any, are Closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

Sim