Mrs. Supriya Singh & Ors vs M/S Ansal Urban Condominiums Pvt. Ltd

[Arising out of the Order dated 07.08.2024, passed by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi, Court-III) in I.A. No. 5939/2023 in CP/IB-113(ND)/2021]

IN THE MATTER OF: 1. Mrs. Supriya Singh D/o Shastra Pal Singh A-93, First Floor, Radha Krishna Lane, Kaushambi, Ghaziabad, Uttar Pradesh- 201010 ...Appellant No. 1

2. Mrs. Namrata Singh D/o Shastra Pal Singh A-93, First Floor, Radha Krishna Lane, Kaushambi, Ghaziabad, Uttar Pradesh- 201010 ...Appellant No. 2

3. Mrs. Shilpi Sharma W/o Dinesh Chandra Sharma SA-604, Gulmohar Towers, ChiranjivVihar, Ghaziabad, Uttar Pradesh- 201002 ...Appellant No. 3

4. Mr. Prabin Kumar S/o Late Sh. Sheo Kumar Singh C1-93, Orchid Harmony, Applewood T-Ship, SP Ring Road, South Bopal, Ahmedabad, Gujarat- 380058 ...Appellant No. 4

5. Mr. Sandeep Singh Gill S/o Gurmit Singh Gill 31/75, Garden Colony, Jalandhar, Punjab-14403 ...Appellant No. 5

6. Mrs. Anjali Dabral W/o Dr. Sameer Mohan Dabral E4/1 Sector 13, RK Puram, New Delhi- 110066. ...Appellant No. 6

Versus

1. M/s Ansal Urban Condominiums Pvt. Ltd. (Through Resolution Professional Mr. Rajesh Ramnani) Having its registered office at: 115, AnsalBhawan 16, K.G. Marg, New Delhi, Delhi, India, 110001 ...Respondent No. 1

2. One City Infrastructure Pvt. Ltd. Having its registered office at: 8-D, Hanslaya, 15 Barakhamba Road New Delhi- 110001 ...Respondent No. 2

Present: For Appellant : Mr. Vivek Kumar, Advocate.

For Respondent : Mr. Shivanshu Kumar and Mr. Rajesh Ramnani, Advocates for R-1/RP. Ms. Anuja Pethia and Mr. Rishabh Govila, Advocates for SRA.

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

This Appeal is filed by six Appellants/homebuyers whose Application

before the National Company Law Tribunal (NCLT), New Delhi, was rejected

as per the Orders dated 07.08.2024 in IA No. 5939/2023 in CP/IB No. 113

(ND/2021), which is being impugned in this case. As per this Appeal, the

Appellants are seeking, inter-alia, equitable treatment with that of other

creditors in class. Specifically, they seek amendment of the Information

Memorandum (IM) reflecting the units of the Appellants as cancelled and

further seek that the present Appeal be allowed and the Impugned Order be

set aside.

Submissions of the Appellant

2. The Appellants had entered into several flat buyer's Agreements with

the Corporate Debtor on various dates, under which flats were allotted to the CA (AT) (Ins) No. 1974 of 2024 2 of 20 Appellants. As per the Agreements, the Appellants had paid their respective

consideration amount. The details of Agreement along with payments are

herein below:

Sl. Name of the Allottee Date of the Flat Buyer Consideration No. Agreement/Endorsement (Amount paid to builder till date)(INR)

1. Shilpi Sharma 13.10.2007 35,62,609.00

2. Supriya Singh 21.06.2013 22,93,145.09

3. Namrata Singh 21.06.2013 23,40,852.94

4. Prabin Kumar 03.08.2012 39,24,156

5. Sandeep Singh Gill 20.09.2007 19,56,995

6. Anjali Dabral 05.09.2007 22,91,533.00

3. As per the aforesaid flat buyer Agreement, the Corporate Debtor had

promised to deliver the possession of the flats within a prescribed timeline.

However, the possession of the respective units was never delivered to the

Appellants. Aggrieved by the acts of the Corporate Debtor, the Appellants filed

different complaints before the Uttar Pradesh Real Estate Regulatory

Authority (hereinafter referred to as UPRERA), seeking refund of the amount

paid by them. The Hon'ble UPRERA passed decree in favour of the

complainants (Appellants herein), the details of which are herein below:

Sl. Name of the Date of issuance of Decretal No. Applicants Decree (Date of RC) Amount 1. Shilpi Sharma 28.08.2019 73,04,251.74 2. Supriya Singh 13.09.2019 37,56,023.15 3. Namrata Singh 17.10.2019 41,17,013.21 4. Prabin Kumar 28.11.2019 61,02,237.31 5. Sandeep Singh Gill 25.02.2021 43,05,850.16 6. Anjali Dabral 21.09.2020 47,05,519.84

4. Basis the above orders of UPRERA, amounts decreed in favour of the

Appellants are hereunder:

CA (AT) (Ins) No. 1974 of 2024 3 of 20 Sl Name of the Allottee Amount received under Decretal No. the decree (INR) Amount (INR) 1. Shilpi Sharma 5,00,000 73,04,251.74 2. Supriya Singh 5,00,000 37,56,023.15 3. Namrata Singh 5,00,000 41,17,013.21 4. Prabin Kumar 14,50,000 61,02,237.31 5. Sandeep Singh Gill 2,50,000 43,05,850.16 6. Anjali Dabral 3,00,000 47,05,519.84

5. It is contended by the Appellants that while they were pursuing the

execution of the Decree, an Application under Section 7 of the Code was filed

against the CD, which was admitted by the Adjudicating Authority (AA) on

10.03.2022.

6. Appellants, being allottees falling under the class of creditors as

provided under Regulation 2 (1) (AA) of the IRP of the CIRP Regulations, 2016,

filed their claims under Form-CA as provided under Regulation 8A of the said

CIRP Regulation. The IRP admitted their claim, but adjusted the amount

already received by the Appellants while admitting their claim. The admitted

claims were as follows:

Sl Name of the Date of Claim Amount No. Applicant filing of Amount Admitted Claim 1. Shilpi Sharma 19.04.2022 77,39,536 73,37,421.98 2. Supriya Singh 29.03.2022 37,49,773.36 36,82,803.87 3. Namrata Singh 29.03.2022 42,33,270.54 38,16,822.74 4. Prabin Kumar 31.03.2022 46,52,237.00 46,52,237.00 5. Sandeep Singh Gill 31.03.2022 40,55,850.00 38,05,850.00 6. Anjali Dabral 08.04.2022 44,05,519.00 45,05,369.00

7. RP issued the Form -G/EOI and five EOI were received all of which were

found to be defective. Form -G was revised and re-published on 23.06.2022.

After various extensions in the CIRP, on 20.10.2022 in the 5th meeting of the

CA (AT) (Ins) No. 1974 of 2024 4 of 20 CoC, the matter relating to the allotment of cases similar to Appellants' cases

was discussed as item no. 8 of the agenda, which is reproduced as follows:

"............

Item No. 8 Discussion on the issue of Status of Recipients of Refund Amount According to the Insolvency and Bankruptcy Code, 2016.

The RP informed the CoC Members that certain unit holders have sought refund either from RERA /Consumer Dispute Resolution forums. At the time of receipt of the partial refunds by these recipients, their units were cancelled without informing the unit holders about the same and allotted to someone else in some cases. As a result, the said recipients are no longer allotees of the said units.

The Members of the Committee of Creditors with regard to determination of the status of recipients of refund either from RERA or Consumer Dispute Resolution forum(s), whose units were cancelled without informing the unit holders at the time of receipt of refund by them and in some cases the units were allotted to others, were of the opinion that the unilateral cancellation of the units by the Corporate Debtor on part refund of the claim amount does not stand have a legal standing and the transaction can be contested to be null and void by the unit holder as the entire claim of the buyer unit holder has not been refunded, and the claimant of the partial refund cannot prima- facie be losing the status of home buyers.

The RP enquired from the Members of the Committee of Creditors that whether the said unit holders be classified as unsecured Financial Creditors or any Other Creditors but the Members of the Committee of Creditors were not clear about the answer to the question.

As the matter was complicated and there could not be generalised decision on the matters, the Members of the Committee of Creditors opined that the RP and his team should try to find the legal perspective of such transactions and if felt necessary, a legal opinion be taken on the matter.

................"

8. This was also discussed in the 6th meeting of the CoC, held on

29.11.2022, and in the 7th meeting of the CoC, held on 23.12.2022, agenda

item relating to the opening of the Resolution Plans was discussed. On

02.01.2023, the Appellants were sent an email with the Information CA (AT) (Ins) No. 1974 of 2024 5 of 20 Memorandum, wherein they found that their names in the list of allottees

whose units have been cancelled but these units are still vacant. The

Appellant contends that, it was for the first time when the Appellants were

made aware that their units have been cancelled.

9. In similar cases where unit holders, who had approached the RERA

and filed their complaint, even though unit holders were paid significant

amount, such units were never cancelled. In their case the units have been

cancelled unilaterally and arbitrarily.

10. The RP intimated the Appellants, through the authorised

representative, that their units were found cancelled in the books of accounts

of Corporate Debtor, prior to the CIRP initiation and hence the same cannot

be restored. It was further informed by the RP that the Appellants cannot be

treated at par with other 15 homebuyers whose units were not cancelled,

despite them being on the same boat.

11. The final approved Resolution Plan of Clause 6 provides that the

allottees whose units have been cancelled shall be allotted unit at base selling

price (BSP) of INR 4200 per sq feet of super area. Additionally, it was provided

that 100% of their admitted principal amount shall be adjusted against the

freshly allotted unit. The Resolution Plan further provided that the allottees

shall have the option to choose from a unit within 90 days from the plan

effective date. Further in the event allottees do not choose a unit for allotment

as per the terms mentioned, such allottees will be entitled to refund of 50%

of the principal amount in terms of Clause 6. It was also clarified that allottees

CA (AT) (Ins) No. 1974 of 2024 6 of 20 who have clear allotment and do not fall in any of the above categories, shall

be allotted a unit at their original allotment rate as per their BBA or Allotment

Letter.

12. Appellant contends that the AA has wrongly relied on the judgment of

this Appellate Tribunal in "Sunil Chauhan vs. Rabindra Kumar Mintri"

Company Appeal No. (Ins) 407 of 2023, to say that they could not have

been treated at par with the other creditors in class. In the said judgment,

the cancellation was made effective by informing the allottees. Moreover, in

that case the allottees were at fault by not paying the balance amount to the

Corporate Debtor. In the instant case of the Appellants, they were never

informed about the cancellation. In fact, the Appellants were treated as the

Financial Creditor in class, till the time the Resolution Plan was received and

were also exercising their right of voting to the agendas.

13. Appellant contends that the AA has wrongly relied on the judgment of

the "K. Sashidhar vs. Indian Overseas Bank & Ors. in Civil Appeal No.

10673 of 2018, to say that the commercial wisdom of CoC is given

paramount status, when the Information Memorandum which was incorrect,

basis which the Resolution Plan was approved. Had the CoC been provided

with correct facts, the CoC would not have voted incorrectly. The AA has not

only dismissed the Application by not following the principles of natural

justice, but has also caused grave prejudice to the Appellants herein by

denying their rightful ownership of the units.

CA (AT) (Ins) No. 1974 of 2024 7 of 20

14. Appellant also places reliance on the judgment of Hon'ble Supreme

Court of India in the matter of "Vishal Chelani & Ors. vs. Debashish Nanda

[(2023) 10 Supreme Court Cases 395]" which states that

"to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together wish such interest as ordered by the competent authority, would be highly inequitable".

Submissions of the Resolution Professional/Respondent No. 1

15. The Applicants had approached UPRERA for refund of their money

along with interest from the Corporate Debtor and they secured the same

Order. The Applicants went for the execution of their respective orders for

refund and in turn were paid partial amount by the Corporate Debtor.

16. After initiation of CIRP, the Applicants filed their respective claims with

the Resolution Professional for full amount without deducting the amount of

part payment received by them from their Corporate Debtor.

17. RP carried out the verification of their claims as per the records of the

Corporate Debtor and it was found that the units allotted to the Applicants

were cancelled by the Corporate Debtor even prior to the initiation of CIRP

period.

18. Respondent No. 1/RP admitted the balance amount to be paid to them

and kept them in a separate category of creditors in a class of homebuyers.

19. The details of the flat buyer Agreement, date of RERA Order, date of

cancellation of the units by the Corporate Debtor and data submission of

claims with the RP are as follows:

CA (AT) (Ins) No. 1974 of 2024 8 of 20 S.No Name of Date of Date of Date of Date of Date of the the Flat issuance of Cancellation admission Submissio Allottees Buyer RERA of Units by of CIRP of n of Claim Agreement Order CD the CD with RP 1. Shilpi 13.10.2007 24.07.2018 15.11.2019 19.04.2022 Sharma 2. Supriya 21.06.2013 14.03.2019 04.01.2021 29.03.2022 Singh

10.03.2022 3. Namrata 21.06.2013 12.04.2019 04.01.2021 29.03.2022 Singh 4. Prabin 03.08.2012 07.02.2019 04.01.2021 31.03.2022 Kumar 5. Sandeep 20.09.2007 20.09.2007 20.01.2022 31.03.2022 Singh Gill 6. Anjali 05.09.2007 11.12.2018 31.08.2021 08.04.2022 Dabral

20. It is claimed by the Resolution Professional that the Applicants had

come to know about the cancellation of units through the Information

Memorandum only on 02.01.2023. RP contends that Appellants could have

very well obtained this information even earlier from the RP.

21. The Resolution Plan submitted by Respondent No. 2/SRA was being

discussed by the homebuyers and the Financial Creditors in various CoC

meetings starting from the 7th CoC meeting on 23.12.2022, till its approval in

the 12th CoC meeting, which was held on 03.08.2023. The CoC approved the

Resolution Plan of Respondent No. 2/SRA after thorough discussion and

application of their commercial wisdom. It was approved with 100% voting

share including the approval from 285 homebuyers on 09.08.2023.

22. The Resolution Plan also provides for the treatment of such allottees/

Appellants whose units have been cancelled as per Clause 3.9 (11) (C) of the

approved Resolution Plan.

CA (AT) (Ins) No. 1974 of 2024 9 of 20

23. It is to be noted that the units were cancelled pre-CIRP and the

Appellants had full knowledge for about 10 months but they did not raise

their grievance. They waited till the time the Resolution Plan provided specific

treatment as dismissed in earlier paragraphs for the categories of allottees

whose units were cancelled and which was approved by the CoC by 100%

majority.

24. Hon'ble NCLT is concerned only with the matters relating to CIRP of the

CD and any cancellation of the units done by the CD prior to the initiation of

CIRP cannot be challenged before this Hon'ble NCLT.

25. RP relies upon the Judgment of Hon'ble NCLAT in Sunil Chauhan vs.

Rabindra Kumar Mintri (supra) in which it was has held as follows:

"11. The order cancelling the allotment of the Appellant has been brought on the record which indicate that the allotment was cancelled due to non-payment of balance amount by the Appellant. As noted above, the Resolution Plan contains a clause which deals with the claims which have been filed as well as which have not been filed before the Resolution Professional. As observed above, in event, the Appellant is entitled for refund of part of its amount, it is always open for the Appellant to make a request to the Resolution Professional after approval of the plan, to deal his claim as per the Resolution Plan."

26. Further IRP/RP is required to only collate all the claims filed before him

and verify the same from the books of the CD as per the provisions of the

Insolvency and Bankruptcy Code, 2016. The RP lacks adjudicatory powers on

the claims filed before him. The RP could not have reversed the actions of

cancellation taken by the Corporate Debtor prior to the initiation of CIRP.

CA (AT) (Ins) No. 1974 of 2024 10 of 20

27. It is further to be noted that the Applicants in the instant case had gone

into the execution of the Order of refund of money and were made part

payments by the CD prior to the initiation of CRIP.

Submissions of Respondent No. 2/SRA

28. One City Infrastructure Pvt Ltd is the Successful Resolution Applicant

(SRA) in the instant case. It is claimed by the SRA that basis invitation of

expression of interest (Form-G) on 21.06.2022, they filed their expression of

interest. The allotment of the Applicants was shown as cancelled in the

Information Memorandum. In fact, this was cancelled by the erstwhile

management of the Corporate Debtor, much prior to the commencement of

CIRP of the CD. However, when the CoC and the RP requested the SRA to

address the concern qua the cancelled allotment in the Resolution Plan, the

Respondent agreed to provide fair and equitable treatment to the said

cancelled allotments. Accordingly, the cancelled units have already been dealt

by the SRA under Clause 3.9 (11) (C) of the Resolution Plan.

29. The Resolution Plan was approved by the CoC with 100% majority in

their 12th CoC meeting held on 03.08.2023. It is contended by the SRA that

the Resolution Plan has been prepared and filed by the Resolution Applicant

in compliance with Section 30 of the Code, only after looking into the claims

collated and provided by the Resolution Professional in the Information

Memorandum. Even though the allotments were cancelled by the erstwhile

management of the Corporate Debtor, the Respondent has provided treatment

to the said cancelled allottees.

CA (AT) (Ins) No. 1974 of 2024 11 of 20

30. The Resolution Plan has been duly approved by the CoC in their

commercial wisdom and it is trite law that commercial wisdom of the CoC is

paramount in nature and once the Resolution Plan is approved by the CoC in

its commercial wisdom it is deemed to be feasible and viable.

31. It is also submitted that Section 19 of the RERA provides that an

allottee can either claim the possession of unit or refund of the amount paid

at the time of the booking, along with interest in the event the promoter fails

to handover the possession of the units in terms of the builder buyer

Agreement.

32. In the present case, the Applicant had already approached UPRERA

seeking the refund of their entire amount along with interest which was

awarded to them in terms of the RERA. The Applicant had admittedly

accepted the partial amount from the erstwhile management, which implies

that the Applicants by accepting the partial refund had acquiesced to the

cancellation of the allotment. It can be presumed that once the allottee has

accepted the refund, it has accepted the cancellation of the allotment. It

cannot be given a colour of unilateral cancellation of the allotment.

33. Even though the Applicants were aware of the cancellation of their

units, they could have approached the Hon'ble Tribunal prior to the approval

of the Resolution Plan by the CoC, which they did not.

Appraisal

34. Appellant mainly seeks amendment of the Information Memorandum,

which reflects that the units of the Appellant are cancelled and also

CA (AT) (Ins) No. 1974 of 2024 12 of 20 restoration of their units which were shown to be cancelled in the records of

the Corporate Debtor. This is noted in their prayers at page 36 of APB, which

is reproduced as follows:

".....

(a)Allow the present Appeal;

(b) Set aside the Impugned Order dated 07.08.2024 passed in IA No. 5939/2023 in CP IB-113(ND)/2021 by the Hon'ble National Company Law Tribunal, New Delhi, Bench -III.

(c) Pass a direction restoring the units no. D03/08/01, D02/04/01, D03/08/03, D11/04/02, D09/05/02, D11/02/03 back to the Appellants (original allottee) in terms of the builder buyer agreement executed between Appellants and the Corporate Debtor.

(d) direct the Respondent No. 1/Resolution Professional to modify/amend the Information Memorandum and include the units of the Appellants under the same category as that of the other unit holders.

(e) Direct the Respondent No. 2 to make appropriate amendment in the Resolution Plan and treat the Appellants at par with the other allottees having clear allotment and allot units no.

D03/08/01, D02/04/01, D03/08/03, D11/04/02, D09/05/02, D11/02/03 to the Applicant (original allottee) in terms of the builder buyer agreement executed between Appellants and the Corporate Debtor; and

(f) Pass any other or further order(s) as this Hon'ble Tribunal may deem fit and necessary in the facts and circumstances of the given case..."

35. It is noted that the Information Memorandum was prepared by the RP

basis the records of the Corporate Debtor. On receipt of all claims, along with

those of the Appellants, the Resolution Professional carried out their

verification as per the records of the Corporate Debtor. It was found by the

RP that the units allotted to the Applicants were cancelled by the Corporate

Debtor, much prior to the initiation of CIRP against it, which becomes quite

apparent from the details as reproduced below:

CA (AT) (Ins) No. 1974 of 2024 13 of 20 S. Name of Date of the Date of Date of Date of Date of No the Flat Buyer issuance of Cancellation admission Submission Allottees Agreement RERA of Units by of CIRP of of Claim Order CD the CD with RP 1. Shilpi 13.10.2007 24.07.2018 15.11.2019 19.04.2022 Sharma 2. Supriya 21.06.2013 14.03.2019 04.01.2021 29.03.2022 Singh

10.03.2022 3. Namrata 21.06.2013 12.04.2019 04.01.2021 29.03.2022 Singh 4. Prabin 03.08.2012 07.02.2019 04.01.2021 31.03.2022 Kumar 5. Sandeep 20.09.2007 20.09.2007 20.01.2022 31.03.2022 Singh Gill 6. Anjali 05.09.2007 11.12.2018 31.08.2021 08.04.2022 Dabral

36. It is to be noted that it is the duty of the RP to collate all the claims filed

before him and verify the same from the books of the Corporate Debtor. We

agree with the submission of the RP that it lacks adjudicatory powers on the

claims filed before him. The RP could not have reversed the action of

cancellation taken by the Corporate Debtor prior to the initiation of CIRP.

37. Even then, basis the grievance of the Appellants, RP took up the matter

in the CoC, to address the concern qua the cancellation of the allotment. The

grievance of the Appellants was deliberated upon in various CoC meetings.

Eventually, the cancelled units were dealt by the Successful Resolution

Applicant (SRA) in the Resolution Plan as per Clause 3.9 (11) (C), which is

once quoted here:

"11-For the following categories of Allottees whose claim have been admitted

a. Allottees who have not been allotted a unit or not have not been provided with a cost of the unit by the corporate debtor,

b. For Allottees who have a decree in their favour, and the original unit as per BBA is not available,

c. For Allottees whose unit had been cancelled prior to plan effective date, and the refund due to them had not been made, or only partial refund has been made,

CA (AT) (Ins) No. 1974 of 2024 14 of 20 d. For Allottee whose unit is not available with the corporate debtor.

e. For Allottee with a unit in the Unsold towers as per IM,

These allottees do not have a unit allotted to them or if allotted, the allotment is invalid not available. Therefore, fresh allotment shall be done only for these cases. These Allottees/Decree Holders can choose from available units with the Corporate Debtor at a Base Selling Price (BSP) of INR 4200 per square feet of Super area. 100% of their admitted Principal Amount shall be adjusted against the freshly allotted unit. These Allottees shall have to choose from a unit within 90 days from the Plan Effective Date. In the event Allottees do not choose a unit for allotment as per the terms mentioned, such Allottees will be entitled to refund of 50% of the Principal Amount in terms of clause 6. It is clarified that Allottees who have clear allotment and do not fall in any of the above categories, shall be allotted a unit at their original allotment rate as per their BBA or allotment letter".

38. Even though the allotment were cancelled by erstwhile management of

the Corporate Debtor, the Resolution Plan had provided treatment to the said

cancelled allottees. And this Resolution Plan was approved by the CoC with

100% majority in their 12th CoC meeting held on 03.08.2023.

39. Resolution Plan was prepared and filed by the Resolution Applicant in

compliance with Section 30 of the Code and later it has been duly approved

by the CoC in its commercial wisdom. It is well settled position of law that the

Resolution Plan, duly approved by the COC as per their commercial wisdom

has a very limited scope of judicial review and which is circumscribed by the

provisions contained in Section 31 of the Code.

CA (AT) (Ins) No. 1974 of 2024 15 of 20

40. It is factual position that the Appellants had approached UPRERA,

which in turn had ordered for refund of their amounts. As per Order of

UPRERA, some amounts were also paid to the Appellants by the erstwhile

management as contained in their own submissions at page 14 of the appeal

paper book.

41. For better appreciation of claims of the Appellants, it would be

appropriate to look into the provisions of Section 19 of the RERA Act, which

are extracted as follows:

"19 (4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder."

In the instant case, the Appellants had already approached UPRERA, seeking

refund of their entire amount, along with the interest which was decreed in

their favour. The Applicant had accepted partial amount paid to them from

the erstwhile management. The conduct of the allottees in accepting the

refund towards their allotment, indicates that allottees have accepted the

cancellation of the allotments. In this conspectus, we agree with the

submissions of the Respondent that the refund, which was initiated by the

erstwhile management at the instance of the Appellants, cannot be given a

colour of unilateral cancellation of allotment.

42. With respect to the claim that the principles of natural justice have not

been followed, the Appellants always had opportunities to raise the objections CA (AT) (Ins) No. 1974 of 2024 16 of 20 either at the stage when they were getting part money based on the UPRERA

Order or at the very beginning when CIRP process was going on and when

they had an opportunity to raise the objections. It is to be noted that the

Information Memorandum was based on the Corporate Debtor's record and

the Appellants by participating in the CoC meetings were deemed to have the

knowledge of the information contained therein. Even though they had

brought out their grievances before the RP, who in turn took it up in the

meeting of the CoC, they cannot claim that they did not have the knowledge

of the cancellation of their units till the time of the 5th CoC meeting and there

was violation of principles of natural justice.

43. It is to be noted that the Appellants did not challenge their cancellation

of allotment, which was pre-CIRP. It is also clear from records that they have

accepted the partial payments basis the decretal amount of UPRERA. Now

their primary grievance is qua the cancellation of their respective units. Since

earlier they had accepted the money and while filing their claims they

misrepresented and filed full claim and are now seeking the revocation of the

cancellation of the units. If they were aggrieved from pre-CIRP cancellation of

their units, they could have immediately approached the NCLT. However, they

first participated in CIRP by participating in CoC meetings and waited till the

time the Resolution Plan provided specific treatment to these categories of

allottees, which was approved by the CoC with 100% majority on 09.08.2023.

If they were aggrieved of the cancellation, as noted earlier they could have

challenged immediately.

CA (AT) (Ins) No. 1974 of 2024 17 of 20

44. It is also contended by the Appellants that there is a violation of the

UPRERA Decree. The Appellants contend that as per UPRERA Decree, only

partial payment was made and therefore the Corporate Debtor has not

complied with the Orders of the UPRERA. On the contrary, it is to be noted

that the Respondent had acknowledged that a Decree was passed under

UPRERA in favour of the Appellants. However, we agree with their argument

that Decree did not specifically override the cancellation of the units or

prevent the Corporate Debtor from taking action under the Insolvency and

Bankruptcy Code, 2016. In fact, this Decree was prior to institution of

insolvency and part payment was also made by the erstwhile management.

The CoC, RP could not have revoked the cancellation as it was beyond their

jurisdiction. In fact, they had gone ahead as per the information collated from

the records of the Corporate Debtor. Therefore, the contention of the

Appellant that there is a failure to comply with the UPRERA Decree cannot

be accepted.

45. Appellant also contends that the Information Memorandum which was

used to determine the Resolution Plan contained incorrect facts regarding the

Appellant's unit. They argue that, had correct information been provided, the

CoC may not have approved the Resolution Plan. Per contra, the Respondents

argue that the Information Memorandum reflected the status of the

Appellant's claim including the cancellation of their units. The CoC had

access to this Information Memorandum, and made an informed decision

based on the available data. Therefore, this contention also cannot be

accepted.

CA (AT) (Ins) No. 1974 of 2024 18 of 20

46. Now we look into the judicial precedents cited by the contrasting

parties. It is contended that the AA has wrongly relied on the judgment of this

Appellate Tribunal in "Sunil Chauhan vs. Rabindra Kumar Mintri"

(supra), wherein the cancellation was made effective by informing the

allottees. Appellant claims that the said case is the case where the allottees

were at fault by not paying the balance amount to the Corporate Debtor. The

facts of the two cases are distinguishable and we accept the contention of this

Appellant that this judgment cannot be relied upon in the facts of the case.

But even then it doesn't support the cause of the Appellant due to different

facts as noted in other parts of this judgment.

47. We find that the reliance placed by the Appellant on the judgment of

Hon'ble Supreme Court in "Vishal Chelani (supra)" also doesn't support the

present case as in the said case the units allotted to the homebuyers were not

cancelled and in that case the Resolution Professional had not admitted the

claims of the allottees under the category of creditors in a class. But in the

present case the units allotted to the Appellants were already cancelled prior

to the initiation of CIRP of the Corporate Debtor and the RP has already

admitted the claims of the Applicants in the category of creditors in a class.

48. It is further contended by the Appellant that the AA has wrongly relied

on the judgment of "K. Sashidhar vs. Indian Overseas Bank (supra)" to

say that the commercial wisdom of CoC is given paramount status. We cannot

find justification in the claim of the Appellants that the Information

Memorandum was based on wrong facts and therefore commercial wisdom

CA (AT) (Ins) No. 1974 of 2024 19 of 20 cannot be paramount as we don't find an infirmity in the Information

Memorandum.

Conclusion and Order

49. As per the analysis noted herein, the cancellation of the units was

based on the UPRERA's Order which was not challenged. The Information

Memorandum contained this information and CoC could not have revoked

the cancellation and acted within its commercial wisdom approving the

Resolution Plan. We, therefore, cannot find any fault in the due process which

was followed by AA. The Appeal lacks merit and is therefore dismissed. There

are no orders as to cost.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) New Delhi.

25th November, 2024.

pawan/sr

CA (AT) (Ins) No. 1974 of 2024 20 of 20