Mayukh Chakraborthy vs K V Developers Private Limited & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 390 of 2022 (Arising out of Order dated 11.11.2021 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-III in I.A. No.5146 of 2021 in C.P.(IB) No.236/(ND)/2020)

IN THE MATTER OF: Puneet Kaur, through her Attorney Amrit Pal Singh R/o Flat No.57, Sanchar Vihar Sector 62, Noida Uttar Pradesh-201301. .... Appellant

Vs

1. K V Developers Private Limited Through the Resolution Professional K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032.

2. Mr. Pankaj Narang, Resolution Professional of K V Developers Private Limited 203 - 204, Jeevan Villa, 2nd Floor, Near Gurudwara, 111, Ansari Road, Daryaganj, Delhi - 110002.

3. Committee of Creditors K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032.

4. Consortium of Sumit Kumar Khanna and M/s. Brij Kishore trading Pvt. Ltd. Successful Resolution Applicant of K V Developers Private Limited Through Mr. Sumit Kumar Khanna D - 153, Sector 40, Noida, Uttar Pradesh - 201303. ... Respondents

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 1 With Company Appeal (AT) (Insolvency) No. 391 of 2022 (Arising out of Order dated 26.10.2021 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III in I.A. No.4864 of 2021 in C.P.(IB) No.236/(ND)/2020)

IN THE MATTER OF: Mayukh Chakraborthy R/o 8204, ATS One Hamlet, Sector 104, Noida, Uttar Pradesh - 201301. .... Appellant

Vs

1. K V Developers Private Limited Through the Resolution Professional K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032.

2. Mr. Pankaj Narang Resolution Professional of K V Developers Private Limited 203 - 204, Jeevan Villa, 2nd Floor, Near Gurudwara, 111, Ansari Road, Daryaganj, Delhi - 110002.

3. Committee of Creditors K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032. ... Respondents

With Company Appeal (AT) (Insolvency) No. 392 of 2022 (Arising out of Order dated 04.01.2022 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III in I.A. No.5119 of 2021 in C.P.(IB) No.236/(ND)/2020)

IN THE MATTER OF: 1. Mahesh Chandra Sahu R/o Flat No.1603, ATS Greens 2, Sector 50, Noida, Uttar Pradesh - 201301.

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 2 2. Shruti Anand R/o Flat No.702, Greenwich Tower A, Grand Omaxe, Sector - 93B Noida, Uttar Pradesh - 201301. .... Appellants

Vs

1. K V Developers Private Limited Through the Resolution Professional K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara, New Delhi - 110032.

2. Mr. Pankaj Narang Resolution Professional of K V Developers Private Limited 203 - 204, Jeevan Villa, 2nd Floor, Near Gurudwara, 111, Ansari Road, Daryaganj, Delhi - 110002.

3. Committee of Creditors K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara, New Delhi - 110032. ... Respondents

With Company Appeal (AT) (Insolvency) No. 393 of 2022 (Arising out of Order dated 04.01.2022 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III in I.A. No.4863 of 2021 in C.P.(IB) No.236/(ND)/2020)

IN THE MATTER OF: Ravi Raghavachary, R/o Flat No.57, Sanchar Vihar, Sector 62, Noida, Uttar Pradesh - 201309. .... Appellant

Vs

1. K V Developers Private Limited Through the Resolution Professional K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032.

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 3 2. Mr. Pankaj Narang Resolution Professional of K V Developers Private Limited 203 - 204, Jeevan Villa, 2nd Floor, Near Gurudwara, 111, Ansari Road, Daryaganj, Delhi - 110002.

3. Committee of Creditors K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032. ... Respondents

With Company Appeal (AT) (Insolvency) No. 394 of 2022 (Arising out of Order dated 07.12.2021 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III in I.A. No.5602 of 2021 in C.P.(IB) No.236/(ND)/2020)

IN THE MATTER OF: Shabnam, W/o Sajid Ali, R/o E18/2, 2nd Floor, Shaheen Bagh, Abul Fazal Enclave Part - II, New Delhi - 110025. .... Appellant

Vs 1. K V Developers Private Limited Through the Resolution Professional K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032.

2. Mr. Pankaj Narang Resolution Professional of K V Developers Private Limited 203 - 204, Jeevan Villa, 2nd Floor, Near Gurudwara, 111, Ansari Road, Daryaganj, Delhi - 110002.

3. Committee of Creditors K V Developers Private Limited 621/9, First Floor, 18 Quarters, Vishwas Nagar, Shahdara New Delhi - 110032. ... Respondents

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 4 Present:

For Appellant(s): Mr. Mahesh Kumar and Ms. Simran Soni, Advocates.

For Respondent: Mr. Abhinav Vasisht, Sr. Advocate with Mr. Rakesh Kumar Bajaj and Mr. Harish Taneja, Advocates for R-1 & 2.

Mr. Nitin Kumar and Mr. Gagan Gulati, Advocate for R-3.

Mr. Sumesh Dhawan and Ms. Vatsala Kak, Advocates for R-4.

JUDGMENT

ASHOK BHUSHAN, J.

These five Appeal(s) have been filed by Homebuyers of Corporate

Debtor - K V Developers Private Limited aggrieved by order of the

Adjudicating Authority refusing to entertain their belated claims as

Financial Creditors of the Corporate Debtor.

2. In Company Appeal (AT) (Insolvency) No. 390 of 2022 the order dated

11.11.2021 rejecting the I.A. No.5146 of 2021 has been challenged. The

Adjudicating Authority while rejecting the I.A. observed that the claim by

the Applicant in the matter was filed after delay of eight months from the

cut-off date as decided by Resolution Professional. The Resolution

Professional having already been put up to voting prior to the filing of claim,

the Application was rejected.

In Company Appeal (AT) (Insolvency) No. 391 of 2022, order dated

26.10.2021 of the Adjudicating Authority rejecting the I.A. 4864 of 2021

filed by the Appellant has been challenged, by which order, Adjudicating

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 5 Authority observed that the Resolution Plan for the Corporate Debtor

having already approved by the Committee of Creditors ("CoC"), the claim

of the Appellant filed after lapse of eight months from the cut-off date

cannot be entertained.

In Company Appeal (AT) (Insolvency) No. 392 of 2022 order dated

04.01.2022 has been challenged, by which I.A. No.5119 of 2021 filed by

the Appellant has been rejected observing that Committee of Creditors has

already approved the Resolution Plan on 20.07.2021, which is pending

consideration before the Tribunal for final approval, hence the Applicant,

who had submitted Application after a gap of more than eight months,

cannot be entertained.

In Company Appeal (AT) (Insolvency) No. 393 of 2022, the order dated

04.01.2022 has been challenged, by which order I.A. No.4863 of 2021 filed

by the Appellant has been rejected observing that CoC has already

approved the Resolution Plan on 20.07.2021, which is pending

consideration before the Tribunal, hence, Applicant who has come after a

gap of more than eight months, cannot be entertained.

In Company Appeal (AT) (Insolvency) No. 394 of 2022, the order dated

07.12.2021 has been challenged, by which order, I.A. No.5602 of 2021 filed

by the Appellant has been rejected observing that CoC having already

considered the Resolution Plan and the Applicant has come up after a gap

of more than eight months by filing a claim on 09.11.2021, the claim

cannot be entertained.

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 6

3. The claim of the Appellant(s) were filed against the same Corporate

Debtor, i.e., K V Developers Private Limited, a real estate Company arising

out of more or less same facts and circumstances. All these Appeal(s) have

been heard together and are being decided by this common judgment.

4. For deciding all these Appeal(s), it is sufficient to notice the facts and

sequence of events in Company Appeal (AT) (Insolvency) No. 390 of 2022 -

Puneet Kaur vs. K V Developers Private Limited:

(i) The Adjudicating Authority vide order dated 28.10.2020

admitted the Application under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to as the "Code")

filed by LIC Housing Finance Limited, a Financial Creditor.

The Respondent No.2 Shri Pankaj Narang was appointed as

Interim Resolution Professional, who was subsequently

confirmed as Resolution Professional. The Resolution

Professional published Form-A dated 30.10.2020 inviting

claim from creditors on or before 11.11.2020. Publication was

also made in two newspapers.

(ii) The Appellant(s) who have booked their flats with the

Corporate Debtor, could not know about the publication of

Form-A and the initiation of Corporate Insolvency Resolution

Process ("CIRP"). The Appellant in Company Appeal (AT)

(Insolvency) No. 390 of 2022, resides in UK; the Appellant in

Company Appeal (AT) (Insolvency) No. 392 of 2022, resides in

Jhansi; the Appellant in Company Appeal (AT) (Insolvency) No.

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 7 393 of 2022 resides in Chennai, "although he has given

address of Noida, which is same as that of attorney of

Appellant in Company Appeal (AT) (Insolvency) No. 390 of

2022. The Appellant's husband in Company Appeal (AT)

(Insolvency) No. 394 of 2022 resides in Bangalore. Due to

Appellant(s) not being residing in Noida, where the office of the

Corporate Debtor situated, could not have learnt about

Corporate Insolvency Resolution Process ("CIRP") and, hence,

could not file their claims within time.

(iii) The Appellant in Company Appeal (AT) (Insolvency) No. 390 of

2022 filed its claim on 14.07.2021, whereas, Successful

Resolution Applicant namely - Consortium of Sumit Kumar

Khanna and M/s. Brij Kishore trading Pvt. Ltd. Filed its

Resolution Plan on 09.04.2021, which was put for E-voting

from 13.07.2021 to 19.07.2021. The Appellant in Company

Appeal (AT) (Insolvency) No. 390 of 2022 has filed her claim in

Form-CA to the Resolution Professional for an amount of

Rs.23,18,422/-. Along with claim, the Appellant has

submitted allotment letter dated 22.02.2016 and 15 payment

receipts of Rs.23,18,422/-.

(iv) The Resolution Plan submitted by the Successful Resolution

Applicant was approved on 20.07.2021 by 100% voting in the

15th CoC meeting. The Resolution Professional filed I.A.

No.3447 of 2021 under Section 30, sub-section (6) before the

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 8 Adjudicating Authority seeking approval of the Resolution

Plan. I.A. No.5146 of 2021 was filed by the Appellant - Puneet

Kaur before the Adjudicating Authority praying for direction to

the Resolution Professional to admit the claim of the Applicant,

which Application came to be rejected by impugned order

dated 11.11.2021.

(v) The facts and sequence of events in other four Appeal(s) are

more or less same. The case in all other Appeal(s) is also that

they could not know about the CIRP and they filed their claim

belatedly. The claim of Appellant in Company Appeal (AT)

(Insolvency) No. 391 of 2022 was filed on 23.07.2021 in Form-

CA for an amount of Rs.34,00,000/- along with allotment letter

containing receipts of the payments made.

In Company Appeal (AT) (Insolvency) No. 392 of 2022 a claim

was filed on 23.07.2021 raising a claim of Rs.27,57,259/-

along with Form-CA, allotment letter and receipt of the

payments were filed.

In Company Appeal (AT) (Insolvency) No. 393 of 2022, a claim

was submitted on 23.07.2021 for an amount of

Rs.18,63,489/- along with Form-CA with allotment letters and

payment receipts were also filed.

In Company Appeal (AT) (Insolvency) No. 394 of 2022, the

claim was submitted on 09.11.2021 for an amount of

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 9 Rs.38,55,267/-, Builder Buyers Agreement and payment

receipts were also filed along with Form-CA.

(vi) As noted above, Appellant(s) filed IAs before the Adjudicating

Authority seeking direction to the Resolution Professional to

admit their claims, which have been rejected by the

Adjudicating Authority observing that claims having been filed

after gap of eight months from the last date of the submission

of the claim, they cannot be admitted. Further, CoC has

already approved the Resolution Plan. Aggrieved by the orders

passed by the Adjudicating Authority, Appellant(s) have come

up in this Appeal,

5. We have heard Shri Mahesh Kumar, learned Counsel for the

Appellant, Shri Abhinav Vasisht, learned Senior Counsel has appeared for

Resolution Professional, Shri Nitin Kumar, learned Counsel appeared for

CoC and Shri Sumesh Dhawan, learned Counsel appeared for Successful

Resolution Applicant.

6. learned Counsel for the Appellant(s) submits that Appellant(s) are

Financial Creditors and even though, they could not file their claims within

the time prescribed in Form-A, but details of their allotment and payments

made by them already existed in record of the Corporate Debtor. It was the

duty of the Resolution Professional to inform the Appellant(s) to file their

claims and further the claim of the Appellant(s) qua the Corporate Debtor

being matter of record, Resolution Professional could very well included

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 10 their claims in the Information Memorandum prepared under Regulation

36 of CIRP Regulations as liabilities to Corporate Debtor to inform the

Resolution Applicant to take into consideration the liabilities towards those

Homebuyers, who could not file their claims. The Resolution Professional

could have included the names of all the Homebuyers and mentioned about

them in the Information Memorandum. The Resolution Professional has

not included the names of the Appellant(s) in the Information

Memorandum, which has caused great prejudice to the Appellant(s). The

Appellant(s), who are Homebuyers cannot be equated with other Financial

Creditors. The Homebuyers have to be treated in different category.

7. The learned Counsel for the Appellant(s) further submits that claims

of the Appellant(s) ought to have been admitted based on the record of the

Corporate Debtor. It is further submitted that the Resolution Professional

has dealt with claims including the belated claims submitted before the

Resolution Professional are 225+239 total 464, whereas, Resolution Plan

does not indicate any provision with regard to money, which was deposited

by the Appellant(s) and the claim of possession of flats by the Appellants.

It is submitted that in the reply filed by the Resolution Professional in these

Appeal(s) in paragraph 11 of the reply, it was stated that claims towards

the Homebuyers/ Allottees including the Appellant herein have already

been dealt with in the Resolution Plan and Appellant(s) are abusing the

process of this Appellate Tribunal by filing the Appeal for seeking relief. It

is submitted that fact is that there is no provision in the Resolution Plan

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 11 with regard to claims of the Appellant(s) and other Homebuyers, who could

not file their claims.

8. The learned Senior Counsel for Resolution Professional Shri Abhinav

Vasisht refuting the submissions of the learned Counsel for the

Appellant(s) submits that Appellant(s) have submitted their claim much

after submission of the Resolution Plan. Only Appellant in Company

Appeal (AT) (Insolvency) No. 390 of 2022 has filed the claim before the

approval of the Resolution Plan. All other Appellant(s) have filed their

claims subsequent to approval of Resolution Plan by CoC. It is submitted

that Appellant(s) having not filed their claims within time and filing of their

claim was also beyond 90 days as provided by Section 12 of the Code, no

error has been committed by Resolution Professional in not including the

Appellant(s) in the List of Creditors. There was no occasion to include the

name of the Appellant(s) in Information Memorandum, since, they have not

filed their claim within time. There is no obligation on the Resolution

Professional to inform the Homebuyers for filing their claims, apart from

making publication in Form-A as required by Insolvency and Bankruptcy

Board of India (Insolvency Resolution Process for Corporate Persons)

Regulations, 2016 (hereinafter referred to as the "CIRP Regulations"). The

law as it exists, does not oblige the Resolution Professional to send any

information to Homebuyers.

9. The learned Counsel for the Successful Resolution Applicant also

supported the submission of learned Senior Counsel for the Resolution

Professional and submitted that claims filed by all the Appellant(s) were

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 12 beyond the time prescribed for filing the claim. The Resolution Plan was

approved by the CoC on 20.07.2021 and except Appellant in Company

Appeal (AT) (Insolvency) No. 390 of 2022, all other claims were filed after

20.07.2021. The Appellant(s) having not filed their claim before the

prescribed time, their rights have extinguished after the approval of the

Resolution Plan by the CoC on 20.07.2021. The Adjudicating Authority

has rightly rejected the IAs filed by the Appellant(s). The Resolution Plan

has been submitted based on the Information Memorandum prepared by

the Resolution Professional. The Regulation 36(2)(d) of CIRP Regulations

mentions that Information Memorandum shall contain a List of Creditors

containing the names of creditors and the amount claimed by them and

amount of their claims admitted and the security interest, if any, in respect

of such claims. The Resolution Applicant has submitted the Resolution

Plan as per Information Memorandum and now no claim can be entertained

after approval of the Resolution Plan. The CIRP has been conducted in the

time bound manner and now the Application for approval of Resolution

Plan is pending consideration before the Adjudicating Authority.

10. The learned Counsel for the parties in support of their submissions

have relied on various judgments of this Tribunal as well as Hon'ble

Supreme Court, which shall be referred to while considering submissions

in detail.

11. We have considered the submissions of learned Counsel for the

parties and have perused the record.

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 13

12. From the submissions of learned Counsel for the parties, following

are the questions, which arise for consideration in these Appeal(s):

(1) Whether the Adjudicating Authority has rightly rejected the IAs

filed by the Appellant(s) seeking direction to include their

claims, which was belatedly filed?

(2) Whether after approval of the Resolution Plan on 20.07.2021

by CoC, the claim of the Appellant(s) stood extinguished?

(3) Whether the Resolution Professional was obliged to include the

details of Homebuyers as reflected in the records of the

Corporate Debtor in the Information Memorandum, even

though they have not filed their claim before the Resolution

Professional within time?

(4) Whether Resolution Applicant ought to have also dealt with

Resolution Plan regarding Homebuyers, whose names and

claims are reflected in the record of the Corporate Debtor,

although they have not filed any claim?

Question No.(1)

13. There is no dispute between the parties that the claim by the

Appellant(s) were filed beyond the timeline prescribed in Form-A. Form-A

required that the claims to be filed by 11.11.2020, whereas the claims were

filed by the Appellant(s) on 14.07.2021, 23.07.2021 and in 09.11.2021.

The learned Counsel for the Respondent has placed reliance on a judgment

of this Tribunal in Mukul Kumar vs. M/s RPS Infrastructure - Company

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 14 Appeal (AT) (Insolvency) No. 1050 of 2020, where this Tribunal has held

that the Resolution Plan has already been approved by the CoC and

pending resolution for approval, new claims cannot be entertained. In

paragraph 34 of the judgment, following has been laid down:

"34. With the aforesaid, we are of the view that when the Resolution Plan has already been approved by the CoC and it is pending before the Adjudicating Authority for approval, at this stage, if new claims are entertained the CIRP would be jeopardized and the Resolution Process may become more difficult. Keeping in view the object of the IBC which is resolution of Corporate Debtor in time bound manner to maximize the value, if such request of claimant is accepted the purpose of IBC would be defeated. Hon'ble Supreme Court in the case of CoC of Essar Steel India Ltd. (Supra) held as under:-

88. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6)of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 15 and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count."

14. The same principle has been reiterated in another judgment of this

Appellate Tribunal, i.e., Harish Polymer Product v. George Samuel RP

for Jason Dekor Private Limited - Company Appeal (AT) (Insolvency)

No.420 of 2021.

15. The List of Creditors was already published by Resolution

Professional, which did not include the name of the Appellant(s). The

Resolution Plan as submitted by Resolution Applicant was based on List of

Creditors as published by Resolution Professional. It is true that

Homebuyers whose number runs in several hundred in real estate project

belong to different class of Financial Creditors. All Homebuyers who have

booked a flat may not normally be residing in the area where Corporate

Debtor has its corporate office and registered office. The publication in the

newspaper is normally done in the area where Corporate Debtor has its

registered office and corporate office and there is every likelihood that all

Homebuyers could not know within the fourteen days period allowed in

Form-A to file their claim and practically Homebuyers who are hundreds

in number neither come to know about the CIRP nor did they file their

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 16 claim within the fourteen days' time allowed. Even in maximum 90 days

period as provided in Section 12(2), on several occasion, Homebuyers could

not file their claims. The Homebuyers are a class belonging to middle class

of society and majority of whom, who book flat has taken loan from Banks

and other financial institutions and they are saddled with liability to pay

their loan from their hard-earned income they make payment to the

Corporate Debtor in hope of getting a possession of the flat for their

residence. Non-submission of claim within the time prescribed is a

common feature in almost all project of real estate. But as law exists today,

they cannot be included in the List of Creditors and that too after approval

of Plan by CoC. We, thus, do not find any ground to interfere with order of

the Adjudicating Authority rejecting their Application for admission of their

claim. However, their claims need to be dealt in a manner, which we shall

deal in later part of this judgment.

Question No.(2)

16. The submission raised on behalf of Resolution Professional as well

as Successful Resolution Applicant is that after approval of the Resolution

Plan by CoC on 20.07.2021, the claim of all the Appellant(s) stood

extinguished, which submission is refuted by the learned Counsel for the

Appellant(s). The question to be answered is as to whether after the

approval of the Resolution Plan by the CoC, which does not include the

claim of the Appellant(s), the claim of the Appellant(s) stood extinguished?

The answer is to be found in statutory provision of Section 31, sub-section

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 17 (1), which deals with the approval of Resolution Plan is to the following

effect:

"31. Approval of resolution plan. - (1) If the Adjudicating

Authority is satisfied that the resolution plan as approved

by the committee of creditors under sub-section (4) of

section 30 meets the requirements as referred to in sub-

section (2) of section 30, it shall by order approve the

resolution plan which shall be binding on the corporate

debtor and 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.

Provided that the Adjudicating Authority shall, before

passing an order for approval of resolution plan under this

sub-section, satisfy that the resolution plan has provisions

for its effective implementation."

17. The Hon'ble Supreme Court in Ghanashyam Mishra and Sons

Private Limited vs. Edelweiss Asset Reconstruction Company Limited

- (2021) 9 SCC 657 while dealing with the above question, concluded in

paragraph 102.1 and held that once Resolution Plan is approved by the

Adjudicating Authority, the claims as provided in the Resolution Plan shall

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 18 stand frozen and all such claims, which are not part of Resolution Plan

shall stand extinguished. Paragraph 102.1 is as follows:

"102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan."

18. It is thus clear that extinguishment of claim of the Appellant(s) shall

happen only after approval of the Plan by the Adjudicating Authority. The

argument of the Respondents that since CoC has approved the Resolution

Plan, the claim of the Appellant(s) have been extinguished, cannot be

accepted as there is no extinguishment of claim of the Appellant(s) on

approval of Plan by the CoC. Question No.(2) is answered accordingly.

Question Nos. (3) and (4)

Since, both the above questions are interrelated, they are taken up

together.

19. We have noticed above that in the event a claim belatedly filed by a

Homebuyer is not accepted to be taken up, such Homebuyer cannot be

included in the List of Creditors as prepared under CIRP Regulations. The

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 19 case of Homebuyers has been now recognized as Financial Creditors under

the provisions of the Code as amended by Act 26 of 2018 (w.r.e.f

06.06.2018). The amendment in Code was brought to mitigate the misery

of Homebuyers and to give them participation in the CIRP of a real estate

Company. Looking to the procedure as is prevalent regarding filing of the

claim by Financial Creditors, large number of Homebuyers are unable to

file their claim within the time due to various genuine reasons related to

such Homebuyers. Homebuyers make payment to the Corporate Debtor,

receive allotment letter from the Corporate Debtor and also enter into

Builder Buyers Agreement. All the documents pertaining to Homebuyers

are on the record of the Corporate Debtor and Interim Resolution

Professional/ Resolution Professional does take charge also of all the

records of the Corporate Debtor. Even though, Interim Resolution

Professional/Resolution Professional are not obliged to include the name

of such Homebuyers, who have not filed the claim within the time in their

List of Creditors, but there is no reason for not collating the claims of such

Homebuyers whose claims are reflected from the records of the Corporate

Debtor, including their payments and allotment. Regulation 36 of CIRP

Regulations as amended with effect from 4th July, 2018 provides:

"36. Information memorandum. (1) Subject to sub- regulation (4), the resolution professional shall submit the information memorandum in electronic form to-

(a) each member of the committee within two weeks of his appointment as resolution professional; and

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 20

(b) to each prospective resolution applicant latest by the date of invitation of resolution plan under clause (h) of sub-

section (2) of section 25 of the Code.]

(2) The information memorandum shall contain the following details of the corporate debtor-

(a) assets and liabilities with such description, as on

the insolvency commencement date, as are generally

necessary for ascertaining their values.

Explanation: 'Description' includes the details such as date of acquisition, cost of acquisition, remaining useful life, identification number, depreciation charged, book value, and any other relevant details.]

(b) the latest annual financial statements;

(c) audited financial statements of the corporate debtor for the last two financial years and provisional financial statements for the current financial year made up to a date not earlier than fourteen days from the date of the application;

(d) a list of creditors containing the names of creditors, the amounts claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims;

(e) particulars of a debt due from or to the corporate debtor with respect to related parties;

(f) details of guarantees that have been given in relation to the debts of the corporate debtor by other persons, specifying which of the guarantors is a related party;

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 21

(g) the names and addresses of the members or partners holding at least one per cent stake in the corporate debtor along with the size of stake;

(h) details of all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities;

(i) the number of workers and employees and liabilities of the corporate debtor towards them;

(j) 15[***] (k) 16[***] (l) other information, which the resolution

professional deems relevant to the committee."

20. There are two important provisions of Regulation 36. Regulation

36(2)(a) and Regulation 36(2)(l). Regulation 36(2) oblige the Resolution

Professional to include the details of Corporate Debtor regarding assets and

liabilities. The word "liabilities" is an expensive word. The "liability" has

been defined in P Ramanatha Aiyar - Advanced Law Lexicon in

following words:

"The term 'liability means a liability to pay money or money's worth and it includes "any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution. [(English) Insolvency Act, 1986, section 382(4) as cited in Chitty on Contracts, 27th Edition, 1994 Vol. I, c.20, para 20- 037, p.1015]"

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 22

21. When the allotment letters have been issued to the Homebuyers,

payments have been received, there are Homebuyers and there is obligation

on the part of real estate Company to provide possession of the houses

along with other attached liabilities. The liability towards those

Homebuyers, who have not filed their claim exists and required to be

included in the Information Memorandum. Further, under Regulation 36,

sub-regulation 2(l), there is column for other information, which the

Resolution Professional deems relevant to the Committee. The liabilities

which have been undertaken by the Corporate Debtor, huge money

received by the Corporate Debtor from Homebuyers, whose claims, which

could not be filed within time, could not be wished away by the Resolution

Professional, on the convenient ground that claims have not been filed by

such Homebuyers. The purpose of CIRP of Corporate Debtor is to find out

all liabilities of the Corporate Debtor and take steps towards resolution.

Unless all liabilities of the Corporate Debtor are not known or included in

the Information Memorandum, the occasion to complete the CIRP shall not

arise.

22. In the above context, we refer to certain observation of this Tribunal

in Company Appeal (AT) (Insolvency) No. 871-872 of 2019 - Santosh

Wasantrao Salokar vs. Vijay Kumar V. Iyer decided on 24th January,

2020 along with other Appeals, where this Tribunal made observations in

paragraph 23 as follows:

"23. It is further observed in respect of Company Appeal (AT) (Insolvency) No. 892-893 of 2019 &Company Appeal

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 23 (AT) (Ins) No.924 - 925 of 2019 that various claims are collected by the Resolution Professional during the CIRP process by inviting the claim from individual, organisations etc. But there are several micro claimant as also large claimants like Government claimants particularly Sales tax department, Income Tax Department etc., who generally are not filing claim, filing claim at a belated stage or filing not in appropriate format as a result of which Government dues are not considered although it may be reflected in the financial statements/books of Accounts of Corporate Debtor and similarly micro claims relating to Individual, MSME, and other small traders are also not considered by the Resolution Professional because of time constraint, belated receipt or non receipt of the claim even though the same may be provisioned for in the books of Accounts of Corporate Debtor hence in order to strengthen the system including the preparation of information memorandum as per regulation 36 of IBBI, it would be fair and proper if appropriate provision is incorporated under IBBI, (Insolvency Resolution Process for Corporate persons) Regulation 2016 for preparation of Balance Sheet as on date of initiation of CIRP process and the same gets audited from a regular Statutory Auditor of the Corporate Debtor certifying all schedules, including micro details of both Assets and Liabilities so that admitted liabilities in the Corporate Debtor records are not ignored even if such claims are not received in time etc. It will aid & smoothen the existing system of collection and consideration of claim and these small individuals, MSME, SME and Government Department will not be the sufferer. It will also avoid large number of cases being filed by such left out Creditors."

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 24

23. We thus are of the considered opinion that Information

Memorandum ought to have included the claim of those Homebuyers, who

have not even filed their claims to correct liabilities of the Corporate Debtor

for its appropriate resolution. In the present case, in the reply filed by

Resolution Professional in paragraph 11, following statement has been

made:

"11. It is pertinent to mention herein that the claims towards the Homebuyer/ Allottees including the Appellant herein have already been dealt with in the Resolution Plan as submitted by Respondent No.4. it is stated that despite the same, the Appellant is abusing the process of this Hon'ble Appellate Authority by filing the captioned Appeal for seeking reliefs against the Respondents on frivolous grounds."

24. During the course of hearing, when pointed query was made to the

Counsel appearing for Resolution Professional and Successful Resolution

Applicant that what is the provision made for those claims including the

claims of the Appellant(s), who have not filed their claim. The answer given

was that their claims shall stand extinguished. The reply in paragraph 11

as quoted above sought to give impression that claim of the Homebuyers,

who have not filed their claims have been dealt with in the Resolution Plan,

but during the submission, it has been stated that their claims stand

extinguished.

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 25

25. However, we further take exception to the statement made in

paragraph 11 that Appellant(s) are abusing the process of this Tribunal by

filing the Appeal. The Appellant(s), who are Homebuyers and have made

payments to the Corporate Debtor, has every right to agitate their claim.

The Resolution Professional and Resolution Applicant having not given any

credence to their claims, cannot be heard in saying that Appellant are

abusing the process by filing Appeal in the Appellate Tribunal.

26. The learned Counsel for the Appellant(s) has also placed reliance on

a judgment of this Tribunal in Company Appeal (AT) (Insolvency) No. 700

of 2021 - Amit Goel vs. Piyush Shelters India Private Ltd. decided on

18.01.2022 with other connected Appeals. In the aforesaid Company

Appeal(s), Appeal(s) were filed challenging the order passed by the

Adjudicating Authority approving the Resolution Plan with regard to real

estate Corporate Debtor. In the above case, the claims were divided in two

categories. The submissions of the Appellants were noted in paragraph-4

to the following effect:

"4. The Appellants have stated that later, in the 8th CoC meeting which took place on 25.09.2019, it was decided to publish the 4th Expression of Interest (EOI) which was published in Jansatta and Financial Express newspapers on 01.10.2019 with last date for submitting EOI on 07.10.2019. It is claimed by the appellants that Maya Buildcon, which had earlier withdrawn its resolution plan, filed CA no. 282/2019 before Adjudicating Authority that it be allowed to submit a revised resolution plan. This application remained pending but the RP allowed a

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 26 consortium which included Maya Buildcon to submit a resolution plan and place it before the CoC for consideration. A revised plan was subsequently approved by the CoC in e-voting held on 6/7 November 2019. While the resolution plan was pending consideration of the Adjudicating Authority an applicant Vishal Saxena, who could not file his claim in time. obtained order of the Adjudicating Authority in CA No. 12/2020 on 3.2.2020, for admission and consideration of his claim. The appellants have further stated that while Vishal Saxena's claim and other claims that were filed after delay were admitted/accepted by the RP, the resolution plan approved by the CoC and the Adjudicating Authority the Impugned Order has created two separate categories of financial creditors in class - one of 'claimants who filed their claims in time', and the other of 'non-claimants' who could not file their claims in time. The two categories have received different shares in the approved resolution plan, and so while the 'claimants' have received possession of the booked properties, the 'non-claimants' have got just 10% of their booked amount after verification of their claims within one month, and thereafter all such claims would stand extinguished."

In the above case, the Resolution Plan contemplated a provision that

those Homebuyers, who are non-claimants, they shall be paid 10% of their

booked amount after verification of their claims. In the above case,

hundreds of Homebuyers could not file their claims, final Resolution Plan

contained the following as extracted in paragraph 8 of the judgment is as

follows:

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 27 "8. The Appellant-Harjeet Kaur in Company Appeal (AT) (INS) No. 761 of 2021, is an allottee in the project of the Corporate Debtor. Similarly, the Appellant in Company Appeal (AT) (Ins) No. 925 of 2021, Shri Bala Pareek and others are also allottees of the Corporate Debtor. The Learned Counsels for Appellants in CA 761 of 2021 and CA 925 of 2021 have claimed that the approved resolution plan gives unequal treatment to the same category of financial creditors thus discriminating between financial creditors of the same class. The final resolution plan provides as follows in its Para V(7) (at Pg. 153 of the Appeal Paperbook in Company Appeal No. 700 of 2021):-

"The allottees with MOU, who have not filed their claim till the last date of filing resolution plan, shall not be entitled for any relief or claim for possession over the property, whether paid in full or part. However, resolution applicant make an offer for them to take 10% of the verified amount within a period of one month and thereafter their claim shall be treated as abandoned.""

This Tribunal allowed the Appeal(s) by observing in paragraph 27 and

28:

"27. We now turn our attention to the allegation of the Appellants that due to inadequate publicity regarding the initiation of CIRP of the Corporate Debtor, they were not aware of the public announcement, and hence could not file their claims with Resolution Professional in time. The replies on behalf of Resolution Professional submitted in CA No. 700 of 2021 at page 26, para 30 mentions that,

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 28 "That it is respectfully submitted, that, the erstwhile resolution professional did not get any cooperation from the Appellant as was statutorily required from him for discharge of duties by the resolution professional during the CIRP of Corporate Debtor, further, the registered office of the Corporate Debtor at Meerut was closed and the only principal place of business at Faridabad as per MCA records -Piyush Global situated at Plot 5, YMCA Chowk, Delhi Mathura Road, Faridabad (HR) which was sealed by the secured financial creditor - HDB Financial Services Limited (HDBFS) under SARFAESI Act, 2002 and Municipal Corporation of Faridabad (MCF) since prior to start of CIRP on 3rd December,2018. Further, all the employees of the Corporate Debtor had left and no employees of the Corporate Debtor were on the rolls of the corporate debtor as on insolvency commencement date on 3rdDecember 2018. All the business operation of the Corporate Debtor was also closed."

28. Thus we see that the homebuyers/allottees could not have had access to either the registered office of the corporate debtor or the principal place of business at Faridabad since both were closed. Moreover, without the meeting/getting together by the homebuyers/allottees, it was not easy for them to discuss and convey their views to the Authorized Representative who would then represent their views in the CoC. When we see that out of a total of 473 home buyers/allottees only 222 allottees could file claims in time before the Resolution Professional and 251 allottees could either not do so or did so belatedly, we feel

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 29 that exclusion of more than 251 i.e. about 53% of total homebuyers/allottees cannot lead to a fair and just resolution of the Corporate Debtor. We also feel that the providing 10% of the claimed amounts to homebuyers/allottees who could not file their claims in the circumstances of this case is an unfair and inadequate treatment of the financial creditors."

This Tribunal in the above case has held that when 251 of allottees

could not file their claims or filed their claims belatedly, the exclusion of

251 Homebuyers cannot lead to a fair and just resolution of the Corporate

Debtor and provisions of providing 10% also held to be unfair and

inadequate treatment to the Financial Creditors. The appeal was allowed

by issuing following direction in paragraph 39:

"39. In light of the aforementioned discussion, we set aside the impugned order dated 14.7.2021 and direct that the process be started afresh with claims of homebuyers/allottees accepted by the Resolution Professional by giving them realistic time limit for submission of claims, in keeping with the order of the Adjudicating Authority in CA 12/2020, leading to a revised information memorandum, which should then be used for inviting Expressions of Interest. In the CIRP, the views of the financial creditors in class should be elicited by the Authorized Representative prior to CoC meetings in letter and spirit of section 25A of IBC. Thereafter, the CoC shall consider the resolution plans so received in accordance with the provisions laid down in law. For this entire

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 30 exercise, we allow a period of 90 days to the CoC from the date of this order to complete the entire exercise."

27. In the present case there is no denial that details of the Appellant(s)

and other Homebuyers, who could not file their claims has not been

reflected in the Information Memorandum. There being no detail of claims

of the Appellant(s), the Resolution Applicant could not have been taken any

consideration of the claim of the Appellant(s), hence, Resolution Plan as

submitted by Resolution Applicant cannot be faulted. However, we are of

the view that the claim of those Homebuyers, who could not file their

claims, but whose claims were reflected in the record of the Corporate

Debtor, ought to have been included in the Information Memorandum and

Resolution Applicant, ought to have been taken note of the said liabilities

and should have appropriately dealt with them in the Resolution Plan.

Non-consideration of such claims, which are reflected from the record,

leads to inequitable and unfair resolution as is seen in the present case.

To mitigate the hardship of the Appellant, we thus, are of the view that ends

of justice would be met, if direction is issued to Resolution Professional to

submit the details of Homebuyers, whose details are reflected in the records

of the Corporate Debtor including their claims, to the Resolution Applicant,

on the basis of which Resolution Applicant shall prepare an addendum to

the Resolution Plan, which may be placed before the CoC for consideration.

The above exercise be completed within a period of three months from today

and the addendum along with minutes of the CoC be placed before the

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 31 Adjudicating Authority at the time of approval of Resolution Plan, which is

pending consideration before the Adjudicating Authority. The Resolution

Applicant may also bring into the notice of the Adjudicating Authority the

order of this date, so that the Adjudicating Authority may await the

addendum and minutes of the CoC, which may be considered along with

approval of the Resolution Plan. We thus, dispose of these Appeal(s) with

following directions:

(1) The Resolution Professional shall provide all details of

Homebuyers along with their claims as reflected from the

record of the Corporate Debtor, who had not filed their

claims, including the Appellant(s) to the Resolution

Applicant within a period of one month from today.

(2) The Resolution Applicant shall prepare an addendum on

the basis of information as submitted by Resolution

Professional and place the same before the CoC within a

further period of one month.

(3) The CoC shall consider the addendum in its meeting and

decision of the CoC on the Information Memorandum

and addendum be placed before the Adjudicating

Authority. The CoC shall take decision in its meeting

within a period of one month from the date of submission

of addendum by the Resolution Applicant.

(4) The Adjudicating Authority while considering approval of

the Resolution Plan, which is pending consideration in

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 32 IA No.3447 of 2021 shall consider the addendum and the

minutes of the CoC at the time of finalizing the

Resolution Plan.

28. The Resolution Professional shall bring into the notice of the

Adjudicating Authority, the order of this date, so as to enable the

Adjudicating Authority to await the filing of addendum along with the

minutes of the CoC.

29. The Appeal(s) are disposed of in view of the above terms. Parties shall

bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Ms. Shreesha Merla] Member (Technical)

[Naresh Salecha] Member (Technical)

NEW DELHI

1st June, 2022

Ash/NN

Company Appeal (AT) (Insolvency) Nos. 390, 391, 392, 393 & 394 of 2022 33