Sabari Realty Private Limited vs Sivana Realty Private Limited & Ors

[Arising out of order dated 19.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-V in I.A. No. 2981 of 2021 in CP (IB) - 3169/MB/2019]

IN THE MATTER OF:

SABARI REALTY PRIVATE LIMITED A/6 Sunil Sadan, MDS Marg, Chembur, Mumbai - 400 071 Through its Authorised Representative Hiren Bharani. ...Appellant

Vs.

1. SIVANA REALTY PRIVATE LIMITED Through its Resolution Professional Mr. Manish Jaju Samriddhi Garden, CTS No. 403/C, LBS Road, Opp. Eshwar Nagar, Bhandup (west), Mumbai - 400 078.

2. M/s. Kabra Estate & Investment Consultants 1001, 10th Floor, Kamla Hub, JVPD Scheme, N. S. Road No.1, Juhu, Mumbai - 400049.

3. Mr. Pratik Jayesh Vira Director, Kalpatru Advisory Services Private Ltd. & Vira Capital Private Ltd. 24/A, Haria House, First Floor, St. Paul Street, Hindmata, Dadar, East Mumbai, MH - 400014 ...Respondents

Present:

For Appellant: Mr. P. Nagesh, Sr. Advocate with Mr. Akshay Sharma, Mr. Prashant Kumar Nair, Advocates For Respondents: Mr. Abhijeet Sinha, Mr. Dhaval Deshpande, Advocates with Mr. Manish Jaju, RP for R1. Mr. Arun Kathpalia, Sr. Advocate with Mr. Vishesh, Mr. Vinit Trehan, Mr. Aditya Dhopar, Mr. Nipun Singh Kalra, Mr. Akshay Jain, Advocates for SRA.

Cont'd.../ -2-

Mr. Krishnendu Datta, Sr. Advocate with Mr. Lzafeer Ahmad B.F, Mr. Rajdeep Saraf, Ms. Neha Agarwal, Advocates for R3.

With

Company Appeal (AT) (Insolvency) No.1178 of 2023

[Arising out of order dated 19.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-V in I.A. No. 533 of 2022 in CP (IB) - 3169/MB/2019]

IN THE MATTER OF:

SABARI REALTY PRIVATE LIMITED A/6 Sunil Sadan, MDS Marg, Chembur, Mumbai - 400 071 Through its Authorised Representative Hiren Bharani. ...Appellant

Vs.

1. SIVANA REALTY PRIVATE LIMITED Through its Resolution Professional Mr. Manish Jaju Samriddhi Garden, CTS No. 403/C, LBS Road, Opp. Eshwar Nagar, Bhandup (west), Mumbai - 400 078.

2. Mr. Pratik Jayesh Vira Director, Kalpatru Advisory Services Private Ltd. & Vira Capital Private Ltd. 24/A, Haria House, First Floor, St. Paul Street, Hindmata, Dadar, East Mumbai, MH - 400014 ...Respondents

Present:

For Appellant: Mr. P. Nagesh, Sr. Advocate with Mr. Akshay Sharma, Mr. Prashant Kumar Nair, Advocates For Respondents: Mr. Abhijeet Sinha, Mr. Dhaval Deshpande, Advocates with Mr. Manish Jaju, RP for R1. Mr. Krishnendu Datta, Sr. Advocate with Mr. Lzafeer Ahmad B.F, Mr. Rajdeep Saraf, Ms. Neha Agarwal, Advocates for R2.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -3-

With

Company Appeal (AT) (Insolvency) No.1179 of 2023

[Arising out of order dated 19.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-V in I.A. No. 933 of 2022 in CP (IB) - 3169/MB/2019]

IN THE MATTER OF:

SABARI REALTY PRIVATE LIMITED A/6 Sunil Sadan,MDS Marg, Chembur, Mumbai - 400 071 Through its Authorised Representative Hiren Bharani. ...Appellant

Vs.

1. SIVANA REALTY PRIVATE LIMITED Through its Resolution Professional Mr. Manish Jaju Samriddhi Garden, CTS No. 403/C, LBS Road, Opp. Eshwar Nagar, Bhandup (west), Mumbai - 400 078.

2. M/s. Kabra Estate & Investment Consultants 1001, 10th Floor, Kamla Hub, JVPD Scheme, N. S. Road No.1, Juhu, Mumbai - 400049.

3. Mr. Pratik Jayesh Vira Director, Kalpatru Advisory Services Private Ltd. & Vira Capital Private Ltd. 24/A, Haria House, First Floor, St. Paul Street, Hindmata, Dadar, East Mumbai, MH - 400014 ...Respondents

Present:

For Appellant: Mr. P. Nagesh, Sr. Advocate with Mr. Akshay Sharma, Mr. Prashant Kumar Nair, Advocates For Respondents: Mr. Abhijeet Sinha, Mr. Dhaval Deshpande, Advocates with Mr. Manish Jaju, RP for R1. Mr. Krishnendu Datta, Sr. Advocate with Mr. Lzafeer Ahmad B.F, Mr. Rajdeep Saraf, Ms. Neha Agarwal, Advocates for R2.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -4-

JUDGMENT

ASHOK BHUSHAN, J.

These three Appeals between the same parties' challenges order dated

19.07.2023 passed by the Adjudicating Authority (National Company Law

Tribunal), Mumbai Bench, Court -5. Order under challenge in these three

Appeals although of the same date are different orders passed in different

applications in CP (IB) - 3169/MB/2019. Company Appeal (AT) (Insolvency)

No.1179 of 2023 has been filed against order dated 19.07.2023 passed in I.A.

No. 933 of 2022 which was filed by the Appellant (Applicant) praying for

rejection of the Resolution Plan submitted by M/s Kabra Estate & Investment

Consultants (Successful Resolution Applicant), the Respondent No.2 herein.

Company Appeal (AT) (Insolvency) No.1178 of 2023 has been filed against

order dated 19.07.2023 passed in I.A. No. 533 of 2022 by which application

the Applicant has sought rectification of the Register of Member of the

Corporate Debtor which application was dismissed by the Adjudicating

Authority by the impugned order. Company Appeal (AT) (Insolvency) No.1162

of 2023 has been filed against order dated 19.07.2023 by which I.A. No. 2981

of 2021 filed by the Resolution Professional seeking approval of the Resolution

Plan submitted by Respondent No.2 has been allowed. The Resolution Plan

was approved by 99.96% voting share of the members of the Committee of

Creditors which stood approved by the impugned order dated 19.07.2023

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -5-

passed by the Adjudicating Authority. The Appellant aggrieved by the above

three orders have filed these three Appeals.

2. We now proceed to note the facts and sequence of events giving rise

to these three Appeals. The Corporate Debtor earlier known as Sunshine

Housing Private Ltd. is a real estate company which owned two projects

namely 'Samriddhi Garden', (Phase-1 project) and 'Sunshine Oakwood',

comprising of Wing 'A' and 'B' (Phase-2 project). In the year 2008, Appellant

alongwith its sister concern - 'Sabari Developers LLP' acquired 11.31% and

26.38% share of the Corporate Debtor, respectively. Appellant also advanced

a loan of Rs.7 Crores to the Corporate Debtor. A mortgage deed was executed

on 15.09.2017 between the Corporate Debtor and the LIC Housing Finance

Limited. The Corporate Debtor mortgaged Wing 'C' and 'D' of the Phase-I and

project Phase-II in its entirety in favour of LIC Housing Finance Ltd. As per

the mortgage deed, the Corporate Debtor was required to take prior written

permission of LIC before sale or creation of any third-party rights over the

aforesaid mortgaged properties. In the year 2017, certain disputes arose

between the minority shareholders namely Vira Group and Sunshine Housing

and Infrastructure Pvt. Ltd. who was the majority shareholder of the

Corporate Debtor. A petition under Section 241-242 of the Companies Act,

2013 was filed by the Vira Group against Sunshine Housing and

Infrastructure Pvt. Ltd. (SHIPL). Orders passed in the proceedings were

carried to the Hon'ble Supreme Court in Civil Appeal No. 4247 of 2018.

Allotment letter dated 05.04.2018 was issued by the Corporate Debtor to the

Appellant allotting an area of 12515.09 sq. ft. in the project Sunshine

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -6-

Oakwood for a total consideration of Rs.18,77,20,000/- only. Letter further

stated that amount of Rs.14,64,98659/- shall be appropriated from the loan

taken by the Corporate Debtor from Appellant and balance amount of

Rs.4,12,21,341/- shall be paid on possession and upon obtaining occupation

certificate. 25 premises were allotted by the said letter dated 05.04.2018. In

Civil Appeal No.4247 of 2018, Hon'ble Supreme Court on 06.08.2018 directed

the parties i.e. Vira Group and SHIPL to go to the mediation centre of the

Bombay High Court to settle the pending disputes. A Memorandum of

Settlement dated 31.10.2018 was entered between the Vira Group and SHIPL

where the shareholders of the Corporate Debtor including the Appellant as

part of a larger settlement agreed to transfer their entire shareholding in

favour of the Vira Group. To give effect to the Memorandum of Settlement, a

Share Purchase Agreement dated 31.10.2018 was entered between the

Appellant, Jayesh Shantilal Vira, father of Respondent No.3 and the

Corporate Debtor. A joint application was also preferred before the Hon'ble

Supreme Court, the Hon'ble Supreme Court by order dated 03.12.2018

disposed of the Appeal in terms of the settlement arrived between the parties.

On 16.10.2019, Appellant issued a notice to Vira Group alleging failure to

issue Allotment letter and failure to pay Share Purchase consideration. The

legal notice was replied by Vira Group on 28.11.2019. On 11.08.2020 CIRP

was initiated against the Corporate Debtor on an application filed by 'Spartan

Engineering Industries Pvt. Ltd.'. Mr. Manish Jaju (Respondent No.2) was

appointed as the Resolution Professional. On 11.01.2021, the Appellant filed

its claim in Form CA as Homebuyers/Allottees/ Financial Creditors in a class

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -7-

in respect of 25 flats in the project of the Corporate Debtor. In the Form the

Appellant mentioned itself as related party. Appellant's claim was not initially

accepted by the Resolution Professional, hence, I.A. No. 1485 of 2021 was

filed by the Appellant seeking direction against the Resolution Professional for

acceptance of the claim. The Resolution Professional by email dated

06.07.2021 admitted the Appellant's claim as Homebuyers/Allottees/

Financial Creditors in a class in respect of 25 flats. Objections were raised by

LIC Housing Finance Ltd. as well as Forensic Auditor appointed by the

Resolution Professional regarding admission of the claim. LIC objected to the

claim of the Appellant on the ground that LIC has mortgage over the property

and for any allotment consent of the LIC was required, which was not taken

in regard to allotment in favour of the Appellant. Authorised Representative

of the Homebuyers also informed the Appellant that in view of the mortgage

deed, NOC of LIC was required for effecting any sale/allotment to flats in the

project. A Request was made by the Appellant seeking documents pertaining

to CIRP and requesting permission to participate in the voting in the CIRP.

Vira Group sent an email dated 03.08.2021 informing that Memorandum of

Settlement dated 31.10.2018 has been revoked and cancelled in view of the

fact that there was neither any transfer of consideration amount nor any

transaction documents were lodged with the Company for transfer of shares.

Appellant sent an email dated 06.08.2021 requesting Vira Group to withdraw

email dated 03.08.2021. Resolution Professional communication a

clarification to the Appellant that Appellant is a related party and could not

be permitted to participate in the CIRP. Resolution Plan submitted by

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -8-

Respondent No.2 was approved by the CoC with 99.96% voting share. With

regard to creditors in a class, Resolution Plan has classified them in two

categories 'affected allottees' and 'unaffected allottees'. Voting result

regarding approval of the Resolution Plan was announced on 22.11.2021. On

18.12.2021, Appellant filed I.A. No. 933 of 2022 objecting to the Resolution

Plan. I.A. No. 533 of 2022 was filed by the Appellant for rectification of

Register of the Corporate Debtor. Resolution Professional filed I.A. No. 2981

of 2021 for approval of the Resolution Plan immediately after voting result

was declared. The Adjudicating Authority by order dated 19.07.2023 allowed

I.A. No. 3981 of 2023 approving the Resolution Plan. By separate order dated

19.07.2023, I.A. No. 933 of 2022 filed by the Applicant has been rejected and

by order of the same date I.A. No. 533 of 2022 has also been rejected.

Challenging the aforesaid three order, these three appeals have been filed.

3. We have heard Shri P. Nagesh, learned senior counsel appearing

for the Appellant, Shri Abhijeet Sinha, learned counsel appearing for the

Resolution Professional and Shri Arun Kathapalia, learned senior counsel

appearing for the Successful Resolution Applicant. Shri Krishnendu Datta,

learned senior counsel has appeared for the Respondent No.3 - Kalpatru

Advisory Services Pvt. Ltd. in Company Appeal (AT) (Ins.) No. 1179 of 2023.

4. Shri P. Nagesh, learned senior counsel for the Appellant challenging

the impugned order submits that Appellant was not related party of the

Corporate Debtor. There being already settlement agreement entered between

the parties for transfer of shareholding of the Appellant in favour of the Vira

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -9-

Group, the Appellant was no more related party and was entitled to participate

in the CoC which was denied vitiating the entire CIRP process. It is submitted

that the Respondent No.3 and its associates inspite of being related party have

been allowed to participate in the CoC whereas they having shareholding in

the Corporate Debtor could not be member of the CoC. The Resolution

Professional allowed the related party of the Corporate Debtor i.e. Kalpatru

Advisory Services Pvt. Ltd. (KASPL). KASPL holding 16% shareholding of the

Corporate Debtor was also classified as related party in the Transaction Audit

Report dated 08.10.2021, hence, KASPL was not entitled to participate in the

CoC or to vote. The Resolution Professional has not allowed the Appellant to

be member of the CoC on the ground that it holds 11.31% shareholding

whereas KASPL despite holding 16% shareholding was allowed to vote as the

member of the CoC. It is submitted that the Resolution Plan could not have

been provided for cancellation of the allotment of Affected Allottees. Clause

7.1.10.2 of the Resolution Plan stipulates that allotment of the allottees who

had not obtained NOC from LIC Housing Finance Ltd. will stand cancelled by

the Resolution Plan and their allotted area will be reduced by 80% from the

existing allotted area. The classification of class of creditors in Affected and

Unaffected is against the provision of the Code. There can be no differential

treatment between same class of creditors i.e Homebuyers/allottees. The

Unaffected Allottees are allowed to retain their entire area whereas the

Affected Allottees are being allotted only 20% of their original area.

Classification of the Allottees of the Corporate Debtor in two sub-classes

namely 'Affected Allottees' and 'Unaffected Allottees' merely on the basis of

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -10-

non-issuance of NOC by LIC Housing Finance Ltd. is unjustified. The above

classification is completely arbitrary in nature and without any reasonable

basis. Obtaining NOC is liability of the Corporate Debtor and not of the

Appellant. Appellant has paid the amount to the Corporate Debtor which has

been admitted by the Resolution Professional. Learned counsel for the

Appellant in support of his various submissions has placed reliance on

judgment of this Appellate Tribunal and the Hon'ble Supreme Court, which

shall be referred to while considering submissions of the parties.

5. Learned counsel for the Resolution Professional refuting the

submission of learned counsel for the Appellant submits that the Appellant

has filed its claim as a related party which admittedly alongwith its sister

concern - 'Sabari Developers LLP' holds 36.69% shareholding in the Corporate

Debtor. As per Memorandum of Settlement dated 31.10.2018, Appellant

alongwith its sister concern was to transfer their entire shareholding in favour

of the Vira Group, which transfer never took place neither was recorded in the

books of the Corporate Debtor. Appellant has not taken any steps by filing

any application under Section 59 of the Companies Act, 2013. The Appellant

is reflected as the shareholder in the books of accounts of the Corporate

Debtor as on the date of commencement of CIRP. The Resolution Professional

has rightly classified the Appellant as related party. The Registrar of

Companies has not recorded a transfer of shareholding as per the Share

Purchase Agreement, indicating incomplete transfer and/or documentary

non-compliances. The share transfer itself is incomplete on account of

Appellant not receiving the consideration in full for such transfer, this is an

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -11-

admitted fact. Appellant filed its claim as related party on 08.01.2021 and

subsequently after six months has informed that there is error in filing of

claim. There is no discrimination in classifying the homebuyers as 'Affected'

and 'Unaffected' categories. The allotment made to the group of homebuyers

classified as 'Affected Allottees' were those whose allotments were made

without taking NOC from the LIC Housing Finance Ltd. to whom the project

was mortgaged. Allotment in favour of the Appellant without NOC of LIC was

no allotment and rightly been treated as void in the plan, however, fresh

allotments have been made in favour of the Affected Parties on the basis of

sum received by the Affected Parties. The Resolution Plan has been approved

by the homebuyers as creditors in a class. Even homebuyers in Affected

group has also by majority has approved the Resolution Plan. The Appellant

who is a homebuyer could not be allowed to challenge the approval of the

Resolution Plan when creditors in a class by majority has approved the

Resolution Plan. The learned Adjudicating Authority has rightly relying on

the judgment of Hon'ble Supreme Court in "Jaypee Kensington Boulevard

Apartments Welfare Association & Ors. Versus NBCC (India) Ltd. & Ors.,

(2022) 1 SCC 401" has dismissed the objection raised by the Appellant to

the Resolution Plan. It is submitted that the commercial wisdom of the CoC

could not be allowed to be challenged. The CoC in its commercial wisdom has

classified the allottees in two groups 'Affected' and 'Unaffected' which has

Intelligible Differentia i.e. allotment which was made without NOC of LIC

Housing Finance Ltd and allotment which was made with NOC of LIC Housing

Finance Ltd., which is a valid classification and could not be said to be

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -12-

arbitrary and inequitable. Allotment without NOC was in fact no allotment.

The Resolution Plan also contains provision for allotment of 20% area to such

homebuyers taking into consideration the amount already paid by said

allottees. The Appellant alongwith its sister concern - 'Sabari Developers LLP'

holds 36.69% shareholding of the Corporate Debtor as per books of accounts

since 2008 and they have rightly been categorized as related party. The

Respondent No.3 would have become shareholder by Share Purchase

Agreement dated 31.10.2018 had it been given effect to but Share Purchase

Documents having never being executed, Respondent No.3 never became

shareholder.

6. Learned counsel appearing for the Successful Resolution Applicant

submits that the Resolution Plan submitted by the Successful Resolution

Applicant does not violate any provisions of the Code. It is submitted that the

Appellant has no locus to challenge the Resolution Plan which was approved

by overwhelming majority of 99.96% of the CoC. When by a vote of more than

50% of the voting share of Financial Creditors within a class a decision is

taken, all others within that class, are bound by that decision. Appellant who

is part of class of creditors who had already voted for resolution plan,

Appellant cannot be allowed to challenge the majority decision. Reliance has

been placed on judgment of Hon'ble Supreme Court in "Jaypee Kensington

Boulevard Apartments Welfare Association & Ors. Versus NBCC (India)

Ltd. & Ors., (2022) 1 SCC 401". Voting and approval of CoC cannot be set

at naught on the basis of any purported dissatisfaction of a miniscule minority

of a single homebuyer and such minority has to sail alongwith the view of

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -13-

majority in terms of the scheme of IBC. Under the Code, the commercial

wisdom of the CoC has been given paramount status and any judicial

intervention on equitable grounds or any grounds beyond those contemplated

under Section 30 and 31 of the IBC is impermissible. It is submitted that

there is reasonable classification between the Affected and the Non-affected

homebuyers. It is submitted that the Phase-I project is 85% complete, here

escalation charges are Rs.2850 per sq. ft. whereas Phase-II project is still at

ground level and escalation charges are Rs.8500 per sq. ft. It is submitted

that feasibility and viability of the plan has been examined by the CoC.

7. Learned counsel for Respondent No.3 submits that Appellant

cannot initiate proceedings for rectification in register after commencement of

CIRP. The Appellant had by its notice dated 16.10.2019 held the proposed

share transfer to be null and void. Appellant himself has abandoned the

Settlement Agreement and Share Purchase Agreement. In the books of

accounts and financial statements of the Corporate Debtor Appellant is shown

as a shareholder of the Corporate Debtor. Share transfer form was never

submitted to the ROC and transfer of shares never took place. Appellant is

bound by the commercial wisdom of the CoC. The Respondent No.3 had 16%

share of the company through his subsidiary Kalpataru Advisory Services Pvt.

Ltd. The Respondent No.3 is not a related party of the Corporate Debtor.

Share of the Respondent No.3 in the Corporate Debtor is less than 20%,

hence, it is not a related party whereas Appellant is related party by its own

admission as per it sown claim form and as per its own Annual Reports which

is recorded in the impugned order.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -14-

8. We have considered the submissions of learned counsel for the

parties and perused the record.

9. From the submissions of learned counsel for the parties following

are the issues which arise for consideration:

(i) Whether the Appellant is not a related party and was entitled to vote

in the Committee of Creditors?

(ii) Whether the Vira Group being related party consequently

Respondent No.3 was also related party and as Director of Kalpataru

Advisory Services Pvt. Ltd. could not be member of the Committee

of Creditors or voted in the Committee of Creditors?

(iii) Whether the Appellant is entitled to challenge the Resolution Plan

which was approved by majority of creditors in class i.e.

homebuyers?

(iv) Whether the categorization of the homebuyers in class as 'Affected'

and 'Unaffected' homebuyers is violative of Section 30(2)(e) and the

Resolution Plan deserve to be set aside on this ground alone?

Issue No.1

10. The Appellant has questioned non-inclusion of the Appellant in the

Committee of Creditors. It is undisputed fact that the Appellant holds 11.31%

shareholding of the Corporate Debtor and in the CIRP of Corporate Debtor

Appellant filed its claim vide Form CA dated 08.01.2021. In the declaration

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -15-

which was filed alongwith the claim form in Para 5 following has been

declared:

"5. We are a related party of the corporate debtor, as defined under section 5(24) of the Code."

11. In the financial statement of the Corporate Debtor, Appellant has

been reflected as shareholder on the date of commencement of the CIRP. The

Registrar of Companies has not recorded transfer of shares as per the Share

Purchase Agreement. Share Purchase Agreement dated 31.10.2018 after the

Settlement Agreement between the parties could not be implemented, which

is a fact on record. The Appellant itself has filed application for contempt

against the Vira Group before the Hon'ble Supreme Court alleging the

violation of order of Hon'ble Supreme Court which contempt was permitted to

be withdrawn with liberty to the Appellant to take such proceedings as may

be advised. Filing of contempt itself recognises that Memorandum of

Settlement dated 31.10.2018 was breached. We are of the view that in this

proceeding it is not necessary for us to express any opinion as to who is

responsible for breach of settlement. Suffice it to say that settlement could

not be implemented resulting in non-implementation of Share Purchase

Agreement and shares of Appellant and others could not be transferred in

favour of Vira Group. The Resolution Professional proceeded to classify the

Appellant as related party on account of declaration of the Appellant itself in

the claim form that it is a related party. The shareholding of the Appellant

still continues in the Corporate Debtor which is not yet been transferred as

per the Settlement Agreement. We do not find any error in the decision of the

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -16-

Resolution Professional classifying the Appellant as related party and not

giving the Appellant a seat and voting share in the Committee of Creditors.

Issue No.1 is answered accordingly.

Issue No.2:

12. The case of the Appellant is that Kalpatru Advisory Services Pvt.

Ltd. (KASPL) is a voting member of the Committee of Creditors. His

submission is that KASPL holds 16% shareholding of the Corporate Debtor

and Mr. Pratik Jayesh Vira was Director of Corporate Debtor from 01.01.2010

to 19.02.2019 and is also Director of KASPL. Learned counsel for the

Appellant has relied on Section 5(24)(d) to submit that KASPL is a related

party. According to own case of the Appellant, Mr. Pratik Jayesh Vira who

was Director of the Corporate Debtor as well as KASPL resigned on

19.02.2019. Learned counsel for the Appellant has relied on judgment of

Hon'ble Supreme Court in "Phoenix ARC vs. Spade Financial Services,

(2021) 3 SCC 475". However, there is no material on record that resignation

of Respondent No.3 was with intend to be member of the Committee of

Creditors. There being no material or pleading to come to the conclusion that

KASPL still continues to be related party by virtue of Section 5(24)(d) whereas

after 19.02.2019, Mr. Pratik Jayesh Vira does not continue as Director of the

Corporate Debtor and CIRP against the Corporate Debtor commenced on

11.08.2020, more than a year after such resignation. With regard to 16%

shareholding of KASPL, learned counsel for the Respondent No.3 has

submitted that to attract Section 5(24)(j), the KASPL had to control more than

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -17-

20% of voting rights in the corporate debtor on account of ownership or a

voting agreement. It has only 16% shareholding in the Corporate Debtor,

hence, cannot be held as related party as per Section 5(24)(j). The submission

of the Appellant objecting participation of KASPL on the basis of its

shareholding which in view of the definition clause 5(24)(j) does not fulfils it

to be related party, hence, participation of KASPL in voting cannot be faulted.

As noted above, transfer of shareholding in favour of the Vira Group could not

materialise.

Issue No.3

13. The Adjudicating Authority by the impugned order has rejected the

objection filed by the Appellant challenging the Resolution Plan on the ground

that Appellant being a part of the class of creditors i.e. homebuyer who has

voted for Resolution Plan cannot be allowed to challenge the Resolution Plan.

The Adjudicating Authority in holding that Appellant as an individual cannot

oppose the Resolution Plan has relied on judgment of Hon'ble Supreme Court

in "Jaypee Kensington Boulevard Apartments Welfare Association &

Ors. Versus NBCC (India) Ltd. & Ors., (2022) 1 SCC 401". The Hon'ble

Supreme Court in the above case has categorically held that where

homebuyers as a class has assented to the plan any individual homebuyer

and Association cannot raise challenge to the Resolution Plan. In Paras 218

and 226 of the judgment following has been laid down:

"218. To sum up this part of discussion, in our view, after approval of the resolution plan of NBCC by CoC,

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -18-

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

"226. For what has been discussed above, we hold that the homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the Real Estate (Regulation and Development) Act, 2016 does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project could be segregated merely for the reason that the same has been completed or is nearing completion."

14. From the facts which have been brought on the record, it is clear

that homebuyer as a class have approved the Resolution Plan. Voting results

on the plan have been brought on the record which clearly shows that the

homebuyers as a class had approved the Resolution Plan. Appellant, who is

a dissatisfied minority, a single homebuyer has to sail alongwith the view of

the majority in terms of the scheme of IBC. We, thus, concur with the view

of the Adjudicating Authority that Appellant as a class of homebuyers cannot

be allowed to challenge the Resolution Plan which has received approval of

class of homebuyers on the basis of majority of votes of homebuyers.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -19-

Issue No.4

15. The Resolution Plan is sought to be attacked by the Appellant on

the ground that the homebuyers in class have been given different treatment

under the heading 'Affected Homebuyers' and 'Unaffected Homebuyers'. We

may for this purpose first notice certain clauses of the Resolution Plan.

Clause 7.1.10 deals with proposal for 'Affected Homebuyers' and Clause

7.1.11 deals with proposal for 'Unaffected Homebuyers'. It is useful to extract

clause 7.1.10 of the Resolution Plan:

"7.1.10 Proposal for affected home buyers.

7.1.10.1 The affected allottees have been allotted a total area of approx. 83,000 sq. ft. for a total consideration of Rs. 132 crores. Out of this, they have paid against their units a total sum of approx. Rs. 93 crores and amount of Rs. 39 crore is payable by them. LIC HFL has raised objection to allotment / sale of such units since NOC of LIC HFL was not obtained towards their allotment / sale. It is also noticed that some of the affected parties are shareholders of the Company and they have been classified as a related party by the RP and the RA has proposed the same treatment for them as other affected parties.

7.1.10.2 In order to resolve the Corporate Debtor, it is proposed that allotment of such units where NOC was not obtained, their allotments / sale shall stand cancelled vide this resolution plan. The affected homebuyers will have to execute

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -20-

cancellation agreements within 30 days of the trigger date. In case they fail to do so, then the Resolution Applicant shall be entitled to do a one side cancellation agreement for the same under the Resolution Plan.

7.1.10.3 Against the aforesaid cancelation the RA proposes to allot fully paid-up units as per Annexure I & J as full and final settlement against their allotment or the amounts paid to the corporate debtor by such unit holders or the amounts credited to their account as paid by the corporate debtor against the aforesaid units. Accordingly, such units shall no longer be liable to pay the balance consideration of Rs. 39 crores as mentioned above and LIC HFL will be deemed to have given its NOC in respect of such allotment to these affected allottees and these units shall be released from the mortgage on approval of the resolution plan by the Adjudicating Authority. The details of such allotment is given in Annexure I & J hereto. Such unit holders who have executed the cancellation agreement will be given fresh allotment letters showing the revised area allotted to them and the consideration adjusted against the same.

7.1.10.4 The number of units coming to the share of each affected homebuyer is given in Annexure I hereto and if the same is not possible to be allotted due to the RERA carpet area of the units being higher or lower, then for the

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -21-

difference in area the concerned homebuyer shall either make payment or be entitled to a refund calculated at the rate of Rs.24,500 per sq. ft . The payment of the said additional consideration for the additional area shall be made as per the schedule given in the agreement for the respective unit to be entered into with the affected allotee after approval of the plan. It is pertinent note that plans for phase 2 have not yet been approved by MCGM and fresh plans have to be submitted for approval by RA and hence allotment of units in phase 2 to affected units shall happen only after the plans are approved by MCGM. It shall be the endeavor of the RA to allot units to the affected allottees as per the areas mentioned in list attached hereto as Annexure I.

7.1.10.5 The units to be allotted to the affected home buyers shall be fully paid up as regards the sale consideration is concerned, but they will have to pay the stamp duty, registration charges, GST, and other applicable taxes and charges including electricity meter deposit, development charges, society formation charges, membership fees of the society, etc. as are applicable to all other unit buyers.

7.1.10.6 The affected allottees of phase 1 shall also be liable to pay an escalation charge of Rs. 2850 per sq.ft. of Rera carpet area in the manner provided here in below:

a) 30% within 60 days of the trigger date.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -22-

b) 30% within 6 months of the trigger date.

c) 20% within 9 months of the trigger date. d) 20% within 12 months of the trigger date.

Such escalation charges are at par with the escalation charges provided for unaffected allottees.

The affected allottees of phase 2 shall also be liable to pay an escalation charge of Rs. 8500 per sq.ft. of Rera carpet area in the manner provided hereinbelow.

a. 30% within 60 days of the CC of phase 2. b. 15% within 6 months of the CC of phase 2. c. 15% within 12 months of the CC of phase 2. d. 15% within 18 months of the CC of phase 2. e. 15% within 24 months of the CC of phase 2. f. 10% within 30 months of the CC of phase 2."

16. We have noticed above that Project-II was mortgaged to LIC Housing

Finance Ltd. by Mortgage Deed dated 15.09.2017. The Mortgage Deed

provided that the Corporate Debtor was required to take prior consent of LIC

before creating of any third party rights over the mortgaged property. It is

undisputed fact that allotment in favour of the Appellant on 05.04.2018,

which is subsequent to the Mortgage Deed, was made without taking NOC

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -23-

from the LIC Housing Finance Ltd. The allotment in favour of the Appellant

was made by the Corporate Debtor and Allotment Letter indicate that

consideration for the allotment was substantial part of the amount of the loan

which was taken from the Appellant and rest of the amount was to be paid at

the time of handing over of possession. The Resolution Plan states that such

allotment for which no NOC was obtained shall be considered cancelled and

Affected party has to execute cancellation agreement and by the same plan

the Resolution Plan proposes to allot fully paid-up units as full and final

settlement against allotment and the amount paid to the Corporate Debtor by

such unit holders or the amounts credited. There is a clear demarcation line

between Affected and Unaffected homebuyers. The distinction has been made

between allottees with NOC from the Mortgagee and allottees without NOC of

the Mortgagee. When the Mortgage Deed especially provide for NOC by the

Mortgagee, any allotment made in breach of such mortgage condition could

not have been ignored by the Resolution Professional and the Committee of

Creditors in its commercial wisdom has decided to deal with homebuyers who

had allotment with NOC of LIC Housing Finance Ltd. and those who does not

have NOC, the said treatment by the Committee of Creditors cannot be said

to be in violation of provisions of Section 30(2)(e) of the I&B Code.

17. From the relevant clauses of the Resolution Plan, as extracted

above, it is clear that those homebuyers who were given allotment without

NOC and from whom amount were received or credited have been offered

allotment, ofcourse of the reduced area. The submission of the Appellant that

both categories of homebuyers who were given allotment with NOC of LIC and

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -24-

those who were given allotment without NOC of LIC has to be treated as

member of one class and were entitled to similar treatment in the Resolution

Plan. In a real estate project when the class of creditors consist of

homebuyers and when the project spread into several units and several

projects which are at different stages of construction the CoC in its

commercial wisdom can take appropriate decision to satisfy the claim of class

of creditors in a reasonable and fair manner.

18. Learned counsel for the Appellant has placed reliance on judgment

of this Tribunal in "Company Appeal (AT) (Ins.) No. 700 of 2021, Amit Goel

vs. Piyush Shelters India Pvt. Ltd." to support his submission that there

cannot be differentiation in treatment of homebuyers. In the case of Amit

Goel Resolution Plan was approved which provided for allotment of unit to

those homebuyers whose claim was filed within time and admitted and with

regard to those homebuyers who did not file their claim within time were

proposed to get 10% of their booked amount after verification. The Resolution

Plan was challenged on various grounds. The ground to challenge the

Resolution Plan has been noticed in Para 6 of the judgment, which is to the

following effect:

"6. The Appellants in the three appeals have assailed the Impugned Order on the following grounds: -

(i) The Learned Adjudicating Authority has passed the Impugned Order in CA No. 371/2019 while an earlier CA No. 282/2019 filed by the Resolution Applicant for consideration of his resolution plan was

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -25-

pending before the Adjudicating Authority. Since no orders have been passed in CA No. 282/2019, the Committee of Creditors (CoC) could not have considered the resolution plan submitted by the consortium.

(ii) In the ninth meeting of CoC held on 1.11.2019, the CoC failed to consider the circumstances under which the earlier resolution plan of the Maya Group was withdrawn and revised resolution plan was being considered

(iii) Section 25-A of the IBC clearly stipulates that the authorized representative of the financial creditors in class (in this case homebuyers) shall attend the meeting of CoC on their behalf and vote in accordance with prior instructions of the financial creditors in class. In the present case the e-voting of the financial creditors in class took place along with e-voting on the resolution plan by the CoC which is evident from the results of e-voting. Thus, no prior voting by the financial creditors in class was organized by the authorized representative, thereby contravening provisions of Section 25A of the IBC.

(iv) The Resolution Professional should have considered maximization of value of the assets of the Corporate Debtor which was not done and the liquidation value is not sufficient to cover the amounts owed to financial creditors and other creditors.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -26-

(v) Only 222 homebuyers/allottees, out of a total of 473 homebuyers/allottees, have filed claims before the RP and claims of remaining 251 allottees have been almost extinguished with the approval of the resolution plan. The 251 homebuyers/allotees could not file their claims because wide publicity was not given to the CIRP as the newspapers in which the public notices appeared are published from New Delhi, whereas the project is situated in District Faridabad(Haryana) and registered office of Corporate Debtor is in Meerut (UP)."

18. This Tribunal after hearing the submission of the parties by the

order set aside the order of the Adjudicating Authority and directed the

process to be started afresh by giving realistic time limit for submission of

claims for the homebuyers. It is true that this Tribunal in the judgment

observed that provision of 10% of the claim amounts to homebuyers/allottees

who could not file their claims is an unfair and inadequate treatment of the

financial creditors. In Para 28 of the judgment following observations have

been made:

"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

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -27-

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 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."

19. However, when we look into the entire judgment of this Tribunal,

the reason which found favour with this Tribunal was that voting as required

under Section 25A was not correctly done. In Para 34 of the judgment this

Tribunal itself has noted the distinguishing feature of the case i.e. question

raised in the Appeal is about Section 25A and how it was put in operation.

This Tribunal held that action of the Resolution Professional and Authorised

Representative of financial creditors in class fell foul of Section 25A. In Para

37 of the judgment following has been observed:

"37. The Maharashtra Seamless judgment (supra) is distinguished on the basis that there were flaws in operationalizing the provision of Section 25Awhich is for the benefit of financial creditors in class when the Authorized Representative did not do "prior consultation" with the homebuyers/allottees who he sought to represent. Thereafter, the RP allowed e- voting on the final resolution plan wherein all the homebuyers participated, not as a class represented

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -28-

by the Authorized Representative alongwith the other members of CoC. All this means that section 30(2)(e) of the IBC was infringed and the resolution plan is therefore liable to be rejected on such a ground."

20. Ultimately in Para 39 following directions were issued:

"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 exercise, we allow a period of 90 days to the CoC from the date of this order to complete the entire exercise."

21. The above judgment thus is not founded on the ground that

Resolution Plan provides for 10% of claim to the homebuyers who could not

file the claim, rather is founded on the ground that Section 25A has not been

followed. The above judgment, thus, does not lend support to the submission

of the Appellant that even though there are features for distinguishing a class

of creditors in terms of the Resolution Plan, the same is impermissible.

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -29-

22. Another judgment relied by learned counsel for the Appellant is

judgment of this Appellate Tribunal in "Company Appeal (AT) (Ins.) No. 708

of 2019, Jaypee Greens Krescent Home Buyers Welfare Association &

Ors. vs. Jaypee Infratech Ltd. Through Anuj Jain, Interim Resolution

Professinal". In the above judgment of this Tribunal delivered on

30.07.2019 we do not find any preposition of law which may support the

Appellant in the present case.

23. We, thus, are of the view that different treatment of two sets of

homebuyers in view of the allotment to the homebuyer with/without NOC of

the Mortgagee has rational for separate treatment and the submission of the

Appellant cannot be accepted that all homebuyers should be treated in the

same manner in the Resolution Plan. We may further notice that present is

not a case where there is distribution of any amount as per the Resolution

Plan to a class of creditors. Learned counsel for the Appellant has also relied

on judgment of this Tribunal in "Company Appeal (AT) (Ins.) No. 1148 of

2022, Akashganga Processors Pvt. Ltd. vs. Shri Ravindra Goyal, decided

on 13.07.2023". In the above case this Tribunal took the view that

distribution to the Operational Creditor has to be in the same proportion and

there can be no discrimination in payment of Operational Creditors. This

Tribunal noticing that there was discrimination in payment to the Operational

Creditors inter se, has directed that Operational Creditors be paid the same

amount. In the above case, the Adjudicating Authority has rejected the

Resolution Plan on the ground that there is differentiation in payment of

Operational Creditors inter se. The Appeal was allowed by this Tribunal and

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -30-

Resolution Plan was upheld subject to direction that Operational Creditors be

made payment to the equal effect. In Para 8, 9 and 10 following has been

held:

"8. As far as the submission that payment was made to Gujarat Industrial Development Corporation and Surat Municipal Corporation to keep the Corporate Debtor as a going concern, the said payment can very well be made by the Corporate Debtor but not in the manner as adopted in the Resolution Plan. In the present case, the Resolution Plan was approved by the CoC on 06.08.2021 with 99.84% vote share, however, the Adjudicating Authority rejected the plan by the impugned order. It is also to be noticed that none of the Operational Creditors i.e. State Tax, Government of Gujrat and Central Excise, Government of India have come up in appeal.

9. The Punjab National Bank (Financial Creditor) has also filed an Additional Affidavit in pursuance of order dated 31.03.2023 indicating reason to accept the amount as allocated in the plan. We are satisfied that the said reason makes reasonable decision taken by the Bank to accept the plan. Under the Plan the Financial Creditor has conceded amount of Rs.32,78,102/- to Gujarat Industrial Development Corporation and Surat Municipal Corporation.

10. In the facts of the present case, we are of the view that ends of justice be served in disposing of this appeal in directing that the amount of Rs.32,78,102/- be distributed to all the four Operational Creditors so

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -31-

as to save the plan from being invalidated. We, thus, are of the view that the Adjudicating Authority having found that there is discrimination in payment of Operational Creditors could have directed for compliance of provision of the Code by distribution of Rs.32,78,102/- without affecting the other terms and conditions of the plan. By this modification the plan shall be able to sail and implemented, which is approved by CoC with 99.84% vote share. The plan need to be implemented with modification as directed above."

24. The above judgment does not help the Appellant in the present case

since in the above case the question was distribution of amount under the

Resolution Plan to the Operational Creditors inter se and this Tribunal

directed payment of amount to the Operational Creditors in the same

proportion to uphold the Resolution Plan. The present is not a case of

distribution of any amount rather Resolution Plan provides for ways and

manner to complete the project and handover units to the allottees. Allottees

have been classified in two groups - 'Affected' and 'Unaffected', as noted above,

and we have found the classification justified in the treatment of claims.

Learned counsel for the Appellant has failed to point out any violation of any

provision of law by aforesaid classification of 'Affected' and 'Unaffected'

homebuyers. We, thus, are of the view that the Resolution Plan does not

violate any provision of law.

25. We are conscious that the Hon'ble Supreme Court in "Committee

of Creditors of Essar Steel India Limited Through Authorised Signatory

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -32-

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

there can be difference in payment of the different category of creditors. In

Para 88 of the judgment following has been held:

"88. By reading paragraph 77 (of Swiss Ribbons) dehors the earlier paragraphs, the Appellate Tribunal has fallen into grave error. Paragraph 76 clearly refers to the UNCITRAL Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in paragraph 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, paragraph 77 itself makes it clear that there is a difference in payment of the debts of financial and operational creditors, operational creditors having to receive a minimum payment, being not less than liquidation value, which does not apply to financial creditors. The amended Regulation 38 set out in paragraph 77 again does not lead to the conclusion that financial and operational creditors, or secured and unsecured creditors, must be paid the same amounts, percentage wise, under the resolution plan before it can pass muster. Fair and equitable dealing of operational creditors' rights under the said Regulation involves the resolution plan stating as to how it has dealt with the interests of operational creditors, which is not the same thing as saying that they must be paid the same amount of their debt proportionately. Also, the fact that the operational creditors are given priority in payment over all financial

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -33-

creditors does not lead to the conclusion that such payment must necessarily be the same recovery percentage as financial creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors."

26. What was emphasised in the judgment is that there shall be fair and

equitable treatment in dealing dues of Operational Creditors and further there

can be difference in payment to the Financial Creditor and the Operational

Creditors. Hon'ble Supreme Court in the said judgment has held that

commercial wisdom of the Committee of Creditors cannot be substituted. In

Para 144 and 147 following has been held:

"144. What is important to note is that when one reads the abovementioned judgment, it is a majority of 66% of the Committee of Creditors who has exercised the discretion vested in it under the Code in this particular manner, which has then correctly not been disturbed by the NCLT and NCLAT. Far from helping Shri Sibal's client, the principle that is applied in such a case is that ultimately it is the commercial wisdom of the requisite majority of the Committee of Creditors that must prevail on the facts of any given case, which would include distribution in the manner suggested in Orissa

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -34-

Manganese (supra). It is, therefore, not possible to accept the argument that the Adjudicatory Authority and consequently the Appellate Authority would be vested with the discretion to apply what was applied by the Committee of Creditors in the Orissa Manganese case (supra). This submission is also devoid of merit and is, therefore, rejected."

"147. The NCLAT judgment which substitutes its wisdom for the commercial wisdom of the Committee of Creditors and which also directs the admission of a number of claims which was done by the resolution applicant, without prejudice to its right to appeal against the aforesaid judgment, must therefore be set aside."

27. We, thus, are of the view that commercial wisdom of the Committee

of Creditors, which has approved the Resolution Plan under which different

treatment has been given to 'Affected Homebuyers' and 'Unaffected

Homebuyers', cannot be faulted. We, thus, are of the view that there are no

grounds made out to challenge the approval of the Resolution Plan. Further,

the Adjudicating Authority has also rightly rejected the objections filed by the

Appellant by I.A. No. 933 of 2022.

28. Coming to the order passed by the Adjudicating Authority in I.A. No.

533 of 2022 by which Appellant prayed for rectification of Register of Corporate

Debtor. In support of I.A. No. 533 of 2022, the Appellant has relied on

settlement dated 30.10.2018 as referred in its order dated 03.12.2021 by the

Hon'ble Supreme Court. The Adjudicating Authority has observed that no

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -35-

steps are shown to have been taken by the Applicant Company in terms of the

Memorandum of Settlement and Share Purchase Agreement. In Para 34 of

the order following has been observed by the Adjudicating Authority:

"34. Strangely enough, the applicant Company has not impleaded in this Application any other party with whom the terms of settlement or the share purchase agreement was executed. The applicant Company has simply sought a direction to the Respondent/ Resolution Professional to carry out the change in the register of members of Company on the basis of aforesaid settlement document/share purchase agreement on its own. Since admittedly there has been dispute between the parties with regard to the settlement terms and even the sale consideration in respect of the transfer of shares has not been exchanged, the Resolution Professional cannot be expected to effect any change in the register of members on the basis of the documents with regard to which a dispute continues to exist between the relevant parties. It has been rightly pointed out by the RP in the reply that the appropriate remedy available with the Applicant under the circumstances was to seek rectification of the register of members of the Corporate Debtor under Section 59 of the Companies Act, 2013. However, the said remedy was not availed by the Applicant prior to the initiation of the CIRP on 11.08.2020. Therefore, under the circumstances, the prayer with regard to the register of members by the Resolution Professional is not as per law and the same cannot be granted."

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023 -36-

29. We, thus, are of the view that no error has been committed by the

Adjudicating Authority in rejecting I.A. No. 533 of 2022. The Register of the

Corporate Debtor cannot be rectified on application filed by the Appellant and

Appellant in fact by the application prayed for specific performance of

Memorandum of Settlement which admittedly could not be implemented due

to various reasons which are not necessary to be noted for the purposes of

this case.

30. In view of the foregoing discussion and conclusions, we do not find

any error in orders dated 19.07.2023 approving the Resolution Plan and

rejecting I.A. No. 533 of 2022 and I.A. No. 933 of 2022. In result, all the

Appeals are dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI

2nd November, 2023

Archana

Company Appeal (AT) Insolvency No. 1162 of 2023, 1178 of 2023 and 1179 of 2023