Innova Home Buyers Neyveli Association vs P And G Construction Pvt Ltd

[Arising out of Order dated 13.12.2019 passed by the Adjudicating Authority /National Company Law Tribunal, Division Bench-I, Chennai Bench in MA/554/2019 in CP/193/IB/2018]

IN THE MATTER OF: Innova Home Buyers Neyveli Association (Registered vide No. SRG/Cuddalore/24/2019) Through its Vice-President, T. Thamizhmaran, S/o. P. Thambusamy, R/o E-163, Anna Road, Block 17 Neyveli Ts, Kurinjipadi, Cuddalore, Tamil Nadu - 607801. ...Appellant

Versus

1. P Dot G Construction Pvt. Ltd. Having Registered Office at No. 26, 8 Square, Porur, Tamil Nadu - 600116 Through its Resolution Professional Mr. Sundaresan Nagarajan Aa 60/3, 4th Street, Anna Nagar (west), Chennai, Tamil Nadu - 600040 ...Respondent No.1

2. Mr. Sundaresan Nagarajan, Resolution Professional of Respondent No. 1 Aa 60/3, 4th Street, Anna Nagar (west), Chennai, ...Respondent No.2 Tamil Nadu - 600040

3. DMI Finance Private Limited Through its director Express Building, 3rd Floor, No. 9-10, Bahadur Shah Zafar Marg, New Delhi - 110002. ...Respondent No.3

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 1 of 22 4. RCC E-Construct Private Limited, Resolution Applicant, C-74, Sushant Lok, Phase 1, Gurgaon, Haryana 122002. ...Respondent No.4 Email: contactus@firefulcrurn.com

Present: For Appellant : Ms. Shabnam Banu, Advocate Ms. Sushil Sarayu, Advocate.

For Respondents : Mr. Ayush Gupta, Advocate for R-1. Mr. Ashish Dholakia, Senior Advocate for R-2. Mr. Kinshuk Chatterjee, Advocate & Amicus Advocates & Solicitor for R-3 Ms. Anannya Gosh & Mr. Dushyant Manocha , Advocates for R4.

(Virtual Mode) (13.12.2022)

NARESH SALECHA, MEMBER (TECHNICAL)

The Present `Appeal' has been filed against the 'impugned order' dated

13.12.2019, passed in MA/ 554/ 2019 in CP/ 193/ IB/ 2018 by the

'Adjudicating Authority' (National Company Law Tribunal, Chennai Bench),

whereby, the 'Adjudicating Authority' had dismissed the `Miscellaneous

Applications', filed under Insolvency & Bankruptcy Code, 2016 (in short 'I

& B Code, 2016')

Brief Facts:

2. 'Innova Homebuyer Neyveli Association' is the 'Appellant' herein,

is an Association of the 'Homebuyers'.

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 2 of 22 'P Dot G Construction Pvt. Ltd.' is the 1st Respondent herein, who is the

'Corporate Debtor' undergoing the 'Corporate Insolvency Resolution Process'.

'Mr. Sundaresan Nagarajan' is the 2nd Respondent herein, who is the

'Resolution Professional' of the 1st Respondent.

'DMI Finance Private Limited' is the 3rd Respondent herein, who is the

'Financial Creditor'.

'RCC e-Construct Private Limited' is the 4th Respondent herein, who is

the 'Successful Resolution Applicant' on 13.12.2019.

3. The 'Corporate Insolvency Resolution Process' was initiated against the

1st Respondent - 'M/s P Dot G Constructions Pvt. Ltd. & Anr.' on 13.07.2018

and based on the recommendations of 'Committee of Creditors', the

'Adjudicating Authority' approved the 'Resolution Plan' of 'Successful

Resolution Applicant' viz. M/s RCC e-Construction Pvt. Ltd.

4. Aggrieved by above 'Resolution Plan', the appeal before this 'Appellate

Tribunal', has been filed. Several issues have been raised by the 'Appellant'

which, inter-alia, include issues regarding fairness of 'Resolution Plan', the

'Resolution Plan' amount being lower than the `Liquidation Value',

`exorbitant interest charges' by the 'Financial Creditors' in their claims,

denial of claims of the 'Appellant' etc.

5. The `Petitioner /Appellant / Association' earlier in IA 576 of 2020 (TA

No. 50 of 2021 in Comp. App (AT) (Ins.) No. 215 of 2020), had prayed for

condoning the delay of around 15 days, in preferring the `Appeal'.

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 3 of 22

6. According to the `Petitioner / Appellant / Association', the `Certified'

copy of the `impugned order' dated 13.12.2019 in MA / 554 / 2019 in

CP/193/IB/2018, was communicated to the `Appellant' on the same day and

that the `Limitation Period' of 30 days for preferring the instant `Appeal'',

expired on 12.01.2020 and hence the instant `Appeal', was filed with a minor

delay of 15 days. The IA 576 of 2020 (Condone Delay Application), filed by

the `Applicant / Appellant', was allowed by this `Appellate Tribunal', as early

as on 12.08.2021. Hence, the main `Company Appeal (AT) (Ins.) No. 215 of

2020, is being dealt in following parts.

Appellant's Submissions:

7. The Learned Counsel for the Appellant summarised the history of the

case and events which led to the present appeal. The Learned Counsel for

the Appellant stated that the members of the association ('Homebuyers') (the

Appellant herein) have purchased flats in 'Innova Real Estate' from 1st

Respondent and association comprises of 73 Members. The Learned Counsel

for the Appellant submitted that the members of the association had entered

into agreement during 2011-13 and had paid entire sale consideration for

purchase of flats @ Rs. 1300 to Rs. 1700 per sq. ft. However, the 1st

Respondent failed to deliver the flats to the 'Homebuyers' and also defaulted

in payment to its 'Creditors', which led to 'Corporate Insolvency Resolution

Process' of the 1st Respondent.

8. The Learned Counsel for the Appellant alleged that the 3rd Respondent

and the 2nd Respondent in collusion have taken actions against interest of

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 4 of 22 the 'Appellant' which undermine the 'Appellant's' claims in order to

artificially and illegally increased the 3rd Respondent voting shares in

'Committee of Creditors'. The Learned Counsel for the Appellant also

assailed the conduct of 2nd Respondent who awarded exorbitant interest

charges @ ranging from 18% to 36% on principal amount outstanding of the

3rd Respondent and in contrast has awarded, only 8% interest to the

'Homebuyers'.

9. The Learned Counsel for the Appellant stated that the 2nd Respondent

in collusion with the 3rd Respondent through wrong forensic audit

undermined the value of no dues certificates and consolidated receipts which

resulted into denials of claims of the 'Appellant' in the 'Resolution Plan'. The

Learned Counsel for the Appellant stated that to add to their injuries,

demand for additional payment of 70% to 100% of initial amount was asked

for possession of their flats within the period of 60 days from the date of the

'impugned order' with threat to cancel flats otherwise. In contrast, the

'Homebuyers' who entered in the scenario at much later stage were asked to

be pay only 15% to 25% of booking amount causing undue discrimination,

vis-à-vis members of the association.

10. The Learned Counsel for the Appellant emphasised that the

'Resolution Plan' is illegal and unethical which does not provide even the

minimum liquidation value of assets of the 1st Respondent in violation of

Section 30(2)(b) of I & B Code, 2016. The Learned Counsel for the Appellant

assailed the 'impugned order' dated 13.12.2019 which approved such a

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 5 of 22 'Resolution Plan' on pretext that additional capital is required for additional

construction.

11. The Learned Counsel for the Appellant faulted the conduct of the 2nd

Respondent who disallowed large claims of the 'Homebuyers' which were

substantiated by consolidated single receipt on the letterhead of the

Corporate Debtor and/ or accompanied with the 'No Dues Certificates'. The

Learned Counsel for the Appellant stated this denial was done only due to

fact that such payments could not be tallied with the Books of Accounts of

the Corporate Debtor as maintained in Tally which is not fault of the

'Appellant'.

12. The Learned Counsel for the Appellant mentioned that the 4th

Respondent is closely related to the 1st Respondent and in collusion

submitted discriminatory 'Resolution Plan' which is prejudicial against the

'Appellant'.

The Learned Counsel for the Appellant further mentioned that against

various relief sought against the 'Homebuyers' who are members of the

association without making them as a party, the 'Appellant' filed the

Miscellaneous Application bearing MA/451/2019 in MA/230/2019 in

CP/193/IB/2018 to allow the claims of the 'Appellant' on the basis of the 'No

Dues Certificate' issued by the 1st Respondent. However, the said

Miscellaneous Application was dismissed by the 'Adjudicating Authority' by

way of order dated 21.10.2019. The Learned Counsel for the Appellant

further submitted that the 'Appellant' filed CA (AT) (Ins.) No. 1444 of 2019

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 6 of 22 before this 'Appellate Tribunal' which was also dismissed vide order dated

13.12.2019 with a liberty to the 'Appellant' to bring out the grievances before

the 4th Respondent who is 'Successful Resolution Applicant'. The Learned

Counsel for the Appellant submitted that however after approval of the

'Resolution Plan', the members of Appellant were asked to pay additional

sum of Rs. 1 lakhs to Rs. 15 lakhs despite having paid the entire amount

long back.

13. The Learned Counsel for the Appellant also challenged the under

valued amount of the 'Resolution Plan', being lower than the amount of

`Liquidation Value' and stated that the liquidation value of the 1st

Respondent is Rs. 44.25 crores whereas the 4th Respondent has proposed to

infuse only Rs. 30.48 crores in discharge against the dues of the 3rd

Respondent including the 'Appellant' claims.

14. The Learned Counsel for the Appellant concluded his pleadings with a

request to set aside the 'impugned order' and give stay on the 'Resolution

Plan'.

Respondent's Submission:-

15. The Learned Counsel for the Respondents opposed the admission of

the appeal, which according to them devoid of any merit and need to be

dismissed with costs. The Learned Counsel for the Respondents submitted

that the 'impugned order' has been passed after factoring into account all

the facts and relevant laws on the subject. The Learned Counsel for the

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 7 of 22 Respondents also pointed out that while approving the 'Resolution Plan', all

applicable regulations and procedures were fully met with and since then the

4th Respondent has already started implementation of the 'Resolution Plan'

and any interference or order affecting the 'Respondents' will adversely affect

revival of the 'Corporate Debtor'.

16. The Learned Counsel for the Respondent No. 1 submitted that the

'Counter Affidavit' filed by the 2nd Respondent in the present appeal is being

endorsed by the 1st Respondent in toto. The Learned Counsel for the

Respondent No. 1 requested this 'Appellate Tribunal' to reject and dismiss

the appeal.

17. The Learned Counsel for the Respondent No. 2 assailed that the

accusation of the 'Appellant' wherein it has been alleged that the 2nd

Respondent has reduced the shares of the 'Homebuyers' by accepting higher

interest rate for financial institution in contrast to the 'Homebuyers'. The

Learned Counsel for the Respondent No. 2 further clarified that the interest

rates were accepted based on the already existing agreements with the

'Creditors' and where it was not stipulated interest rate was provided @8%

in line with the Regulation 16A of the IBBI (Resolution Process for Corporate

Person, Regulation 2016).

18. The Learned Counsel for the Respondent No. 2 also countered the

'Appellant' allegations regarding denial of the Appellant's claims and not

taking into the account the 'No Dues Certificate' issued by the 'Corporate

Debtor' along with cash payment made to the 'Corporate Debtor'. The

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 8 of 22 Learned Counsel for the Respondent No. 2 further assailed that the

acceptance of such claims based on 'No Dues Certificates' which apparently

had been issued on alleged cash payments were not in accordance with law

and violation of provisions of the 'Income Tax Act, 1961'. In any case, there

was no documentary evidence in favour of the 'Appellant's' claims and

admittedly such claims could not be found and could not be verified in the

accounts of the 'Corporate Debtor', hence the 2nd Respondent as 'Resolution

Professional' strictly acted as per law.

19. The Learned Counsel for the Respondent No. 3 submitted that the

perception has been created as if, 3rd Respondent was having majority voting

shares in 'Committee of Creditors' and therefore influenced decisions in the

'Resolution Plan' in his favour whereas in reality the 3rd Respondent had only

39.5% of the voting shares. In fact, during the 'Corporate Insolvency

Resolution Process' voting share of the 3rd Respondent was reduced from

39.5% to 36.68% due to partial rejection of the claims of the 3rd Respondent.

20. The Learned Counsel for the Respondent No. 3 maintained that the

composition of the 'Committee of Creditors' was done in terms of Regulation

16A(7) of the IBBI (Resolution Process for Corporate Person, Regulation

2016).

The Learned Counsel for the Respondent No. 3 further submitted that

interest of 18% to 22% were based on binding loan agreement executed

between the 3rd Respondent and the 1st Respondent ('Corporate Debtor').

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 9 of 22

21. The Learned Counsel for the Respondent No. 3 also supported reply

submitted by the Learned Counsel for the Respondent No. 2 regarding denial

of the unauthorised and unproved claims of the 'Appellant'. The Learned

Counsel for the Respondent No. 3 refuted the allegations and stated that the

so-called 'No Dues Certificates' were not accompanied with official receipt,

registered sale deed in favour of the 'Appellant' and the same could not be

identified in the Tally Books of the 'Corporate Debtor' as such the 2nd

Respondent rightly rejected wrong claims. The Learned Counsel for the

Respondent No. 3 stated that in any case majority of the 'Homebuyers' were

actively participating in the 'Committee of Creditors' who voted in favour of

the 'Resolution Plan' and it is only few 'Homebuyers' who are raising this

issue as after thought to derail the whole process of revival.

22. The Learned Counsel for the Respondent No. 3 further denied of the

'Appellant' allegation regarding scope and outcome of the forensic audit. The

Learned Counsel for the Respondent No. 3 clarified that scope was discussed

and approved in 'Committee of Creditors' and outcomes as drawn was

conducted by a professional 'Chartered Accountants Firm' and accepted by

the 'Resolution Professional', which also inter-alia, commented on 'No Dues

Certificates' authenticity.

23. The Learned Counsel for the Respondent No. 3 concluded his

arguments and stated that the intention of the 'Appellant' is to make

unwarranted gains by obtaining flats without making required payments as

per 'Resolution Plan' duly approved by the 'Adjudicating Authority'.

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 10 of 22

24. The Learned Counsel for the Respondent No. 4 pointed out that the

decision of the 'Adjudicating Authority' in rejecting the claims of the

'Appellant' which have now again been raised which have already reached

finality in view of dismissal of Appellant's appeal before this 'Appellate

Tribunal' passed vide order dated 13.12.019 in CA (AT) (Ins.) No. 1444 of

2019 which was not challenged by the 'Appellant'. The Learned Counsel for

the Respondent No. 4 further pointed out that this cannot be pleaded now

as barred by res judicata.

25. The Learned Counsel for the Respondent No. 4 cited the judgment of

the Hon'ble Supreme Court of India in Jaypee Kensington Boulevard

Apartments Welfare Assn. vs. NBCC (India) Ltd. Reported in (2022) 1 SCC

401 in favour of his argument.

26. The Learned Counsel for the Respondent No. 4 also countered the

allegation that the amount of the 'Resolution Plan' is lower than the

'Liquidation Value'. The Learned Counsel for the Respondent No. 4 stated

that against the 'Liquidation Value' of around Rs. 44 crores, the 'Resolution

Plan' provides the value of around Rs. 91 crores.

27. The Learned Counsel for the Respondent No. 4 also countered that the

allegation of the 'Appellant' that the 4th Respondent is closely associated with

the 3rd Respondent. The Learned Counsel for the Respondent No. 4 stated

that the 4th Respondent has entered into the arrangement with the 3rd

Respondent for financial support to fund the 'Resolution Plan' which is

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 11 of 22 legally permissible and no embargo has been put on such arrangement

anywhere.

Findings:

28. Heard Learned Counsel for the 'Appellant' and the 'Respondents' and

also perused record made available to us. Several issues have been raised

in the Appeal which are required to be deliberated upon before coming to

final conclusion.

(I) (a) Whether there was an error in refusal to admit claims of the

'Homebuyers' members of the Appellant's Association while dealing with the

'Resolution Plan' based on 'No Dues Certificates' and cash payments made

by them to the 1st Respondent as sale consideration.

(b) Whether the percentage recovery available to members of the

association lower than 'Financial Creditor' is permissible.

(c) Whether approved 'Resolution Plan' can provide for differential

treatments to the different class of 'Homebuyers' by way of charging different

premium rates.

(II) Whether the amount under the 'Resolution Plan' can be less than the

'Liquidation Value' ?

(III) Whether the 4th Respondent who is 'Successful Resolution Applicant'

is close associate of 3rd Respondent who is 'Financial Creditor' of the 1st

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 12 of 22 Respondent (Corporate Debtor) and whether the 4th Respondent as such can

be barred by I &B Code, 2016 for submission of the 'Resolution Plan'.

29. Issue No. (I) (a) Whether there was an error in refusal to admit

claims of the 'Homebuyers' members of the Appellant's Association

while dealing with the 'Resolution Plan' based on 'No Dues Certificates'

and cash payments made by them to the 1st Respondent as sale

consideration.

(b) Whether the percentage recovery available to members of the

association lower than 'Financial Creditor' is permissible.

(c) Whether approved 'Resolution Plan' can provide for differential

treatments to the different class of 'Homebuyers' by way of charging

different premium rates.

• The challenge of the 'Appellant' with regards to denial of the claims

and asking of additional payment for handing over flats are the main

issues of this appeal. The I & B Code, 2016 and many judgments of

Hon'ble Supreme Court of India has established that distribution of

proceeds of the 'Resolution Plan' is subject to the wisdom of

'Committee of Creditors' and it cannot be challenged, even by way of

an appeal.

• The I & B Code, 2016 under Section 30(4), obligates the 'Committee of

Creditors' to assess the viability and feasibility of the Resolution Plan.

In respect of the same, the Code prescribes for the manner in which

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 13 of 22 the 'Resolution Plan' will be evaluated as per Evaluation Matrix. On

the basis of the score of the different resolution applicants, the

'Committee of Creditors' if approves the 'Resolution Plan' by a vote of

not less than prescribed percentage then the same is required to be

placed before the 'Adjudicating Authority' under Section 31 of the I &

B Code, 2016.

• Once the 'Adjudicating Authority' approves the 'Resolution Plan', the

same binds the corporate debtor, its employees, members, creditors,

including the Central Government, any State Government or any local

authority to whom a debt in respect of the payment of dues arising

under any law for the time being in force, such as authorities to whom

statutory dues are owed, guarantors and other stakeholders involved

in the resolution plan.

• In K. Sashidhar v. Indian Overseas Bank and Ors. Reported in

(2019) 4 SCC (Civ.) 222 the Hon'ble Supreme Court of India

conclusively held that the legislature, while enacting the Code, has

consciously ensured that no ground is available to question the

'commercial wisdom' of the individual financial creditors or the

collective decision of the 'Committee of Creditors' before the

Adjudicating Authority, in approving or rejecting a resolution plan and

such commercial considerations are outside the scope of judicial

review.

"55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020]

14 of 22 to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 15 of 22 resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code."

• Thereafter, the Hon'ble Supreme Court of India reaffirmed this view in

Committee of Creditors of Essar Steel India Limited vs. Satish

Kumar Gupta and Ors. Reported in (2020) 8 SCC 531 holding that, it

is clear that the scope of judicial review while approving resolution

plans was required to be within ambit of the I & B Code, 2016 and in

no circumstance either the 'Adjudicating Authority' or the 'Appellate

Tribunal' could trespass upon a business decision of the majority of

the 'Committee of Creditors'. The Apex Court further observed that

the 'Adjudicating Authority' cannot interfere on merits with the

commercial decision taken by the 'Committee of Creditors'. The scope

of interference of the 'Adjudicating Authority' on approving resolution

plan has been described by Section 61(3) of the I & B Code, 2016.

• This 'Appellate Tribunal' also observes that there is time values of

money and rights as well as obligations of the 'Homebuyers', who

entered into scenario at different time periods can be treated

separately. It can't be expected that the 'Homebuyers' who purchased

flats at later time horizon and assumably paid more, can be equitable

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 16 of 22 with 'Homebuyers' who agreed to buy flats at earlier dates presumably

at lower rates. It is for the 'Resolution Plan' to propose treatment and

if the 'Committee of Creditors' consider favorably then recommend to

the 'Adjudicating Authority' who approve then no fault can be

attributed for such differential premium demands. It is also noted that

the 'Committee of Creditors' comprised of members of 'Homebuyers'

and the constituted 53% of voting shares of the 'Committee of

Creditors'.

• This 'Appellate Tribunal' that the 'Resolution Plan' was approved by

overwhelming majority and 81% of the members of the 'Committee of

Creditors' approved the 'Resolution Plan' including the majority

'Homebuyers' and that the 'Homebuyers' constitute majority of the

'Committee of Creditors' voting shares with 53.26% of the total voting

shares whereas the 3rd Respondent i.e. 'Financial Creditor' is having

only 37.68% voting shares and remaining 8% voting shares are being

held by other 'Financial Creditors' along with the 3rd Respondent,

majority of 'Homebuyers' represented in the 'Committee of Creditors'

voted in favour of the 'Resolution Plan'. This clearly denotes that the

'Resolution Plan' was equitable and fair to all with the sole objective

for revival of the 'Corporate Debtor' and handing over the flats to the

'Homebuyers'.

• In the appeal before this 'Appellate Tribunal', it has been brought and

the 'Resolution Plan' was approved by the 'Committee of Creditors'

including majority of the votes from 'Homebuyers' in favor of approval TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 17 of 22 of the 'Resolution Plan'. The contention of the 'Appellant' with regards

to equitable treatment with the financial creditor and not being treated

at par with them does not seems to hold ground as the Hon'ble

Supreme Court of India had established in case of Committee of

Creditors of Essar Steel India Limited vs. Satish Kumar Gupta

and Ors. Hence the challenge to the 'impugned order' on ground that

percentage recovery available to members of the association is lower

than 'Financial Creditor' is not palatable. Therefore, this 'Appellate

Tribunal' do not find any error in the 'impugned order' on this ground.

30. Issue No. (II) Whether the amount under the 'Resolution

Plan' can be less than the 'Liquidation Value' ?

• The apex court in the case of Maharashtra Seamless Ltd Vs

Padmanabhan Venkatesh & Ors. Reported in (2020) 11 SCC 467.

"26. No provision in the code or regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016....

27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 18 of 22 Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. We, per se, do not find any breach of the said provisions in the order of the Adjudicating Authority in approving the resolution plan.

28. The Appellate Authority has, in our opinion, proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. Such is the scheme of the Code."

[emphasis supplied]

• The 'Appellant' has alleged that purportedly the Resolution Plan is less

than the 'Liquidation Value'.

• The Resolution professional in its submissions has said that the

liquidation value was strictly according to the regulations of the I & B

Code, 2016 and were valued by two independent registered valuers. It

has also been said that the 'Resolution Plan' amount was approved by

'Committee of Creditors' including, majority of the of the 'Homebuyers'.

All apartments forming part of pending projects of the 'Corporate

Debtor' had been included and made part of the information

memorandum, which was approved by the 'Committee of Creditors'.

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 19 of 22 • As regard, the contention of the 'Appellant' with regards to the

'Resolution Plan' value being lower than 'Liquidation Value', no fault

can be found in view of judgment of the apex court in the case of

Maharashtra Seamless Ltd Vs Padmanabhan Venkatesh & Ors.

(Supra) and therefore the 'Adjudicating Authority' rightly held that the

resolution plan amount need not match the Liquidation value.

31. Issue No. (III) Whether the 4th Respondent who is 'Successful

Resolution Applicant' is close associate of 3rd Respondent who is

'Financial Creditor' of the 1st Respondent (Corporate Debtor) and

whether the 4th Respondent as such can be barred by I &B Code, 2016

for submission of the 'Resolution Plan'.

• The 'Appellant' has contended that there has been collusion between

the 4th Respondent as 'Successful Resolution Applicant' and the 3rd

Respondent DMI Finance (P) Limited as the 'Financial Creditor' of the

1st Respondent ('Corporate Debtor'). However, the 'Respondent' has

denied that 'Resolution Applicant' is 'Special Purpose Vehicle' of DMI

Finance Limited. It has been said that the 4th Respondent had entered

into formal financial support arrangement with the 3rd Respondent to

fund partly the 'Resolution Applicant' and nowhere does the I & B

Code, 2016 opposes such relation and this cannot be termed as

collusion.

TA No. 50 of 2021 [Company Appeal (AT) (CH) (Ins.) No. 215 of 2020] 20 of 22 • This 'Appellate Tribunal' tends to agree to contention of the

'Respondent' on this part, looking to provisions of the I & B Code,

2016.

• Hence, it can be said that as the I & B Code, 2016 places no embargo

upon a financial creditor from voting upon a 'Resolution Plan' which is

fully funded by it or partly funded by the 'Successful Resolution

Applicant'.

• The judgment of the Hon'ble Supreme Court of India in Jaypee

Kensington Boulevard Apartments Welfare Assn. vs. NBCC (India)

Ltd. Reported in (2022) 1 SCC 401 gives following ratio :-

"...The homebuyers as a class shall be deemed to have voted in favour of approval of the resolution plan of NBCC; and once having voted so, any particular constituent of that class cannot be heard in opposition to the plan by way of objection or appeal. The statue, that is IBC, has itself provided for estoppel against any such attempted opposition to the plan by a constituent of the class that had voted in favour of approval".

[emphasis supplied]

32. Thus, this 'Appellate Tribunal', does not find `any material irregularity'

or `patent illegality', in the `impugned order' dated 13.12.2019, passed by

the `Tribunal' (`National Company Law Tribunal', Division Bench-I, Chennai

Bench) in MA/554/2019 in CP/193/IB/2018.

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33. The `Appeal' is, `devoid of any merits' and the same is dismissed. No

costs. The connected pending `Interlocutory Application(s)', if any, are

Closed.

[Justice M. Venugopal] Member (Judicial)

[Naresh Salecha] Member (Technical)

Simran

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