Yester Investment Private Limited vs Manish Motilal Jaju And Othrs

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 1286 of 2023 & I.A. No. 4551 of 2023 (Arising out of Order dated 19.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-V in IA No.368/2022 in C.P. (IB) No.3169/MB/2019)

IN THE MATTER OF: Yester Investment Private Limited, A106- 109, Satyam Commercial Centre, M.G. Road, Ghatkopar (East) Mumbai- 400077 ... Appellant Vs 1. Manish Motilal Jaju, Resolution Professional of Sivana Realty Private Limited D 502, Neelkant Business Park, Vidya Vihar (W), Mumbai - 400 086 2. Monitoring Committee of Sivana Reality Private Limited (Through its Chairman, the Resolution Professional) 3. LIC Housing Finance Limited 45/47, Bombay Life Building Veer Nariman Road, Fort, Mumbai - 400001 4. Mr. Vithal M. Dahake (Authorized Representative of Homebuyers/ Allottees) Samridhi Garden, CTS No.430/C, L.B.S. Road, Opposite Eshwar Nagar, Bhandup (West), Mumbai - 400048 5 M/s Kabra Estate and Investment Consultant 1001, 10th Floor, Kamla Hub, JVPD Scheme, N.S. Road No. 1, Juhu Mumbai- 400049 ... Respondents

Present:

For Appellant: Mr. Yogesh Jagia, Mr. Harshit Ratra, Advocates. For Respondents: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Dhaval Despande, Mr. Amir Arsiwala, Nupur Shaha, Advocates for R-1.

Mr. Arun Kathpalia, Sr. Advocate with Mr. Kunal Tandon, Mr. Visheshkalra/ Vishal Kalra, Mr.

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 1 Atishay Jain, Ms. Tanushree Sogani, Advocates for SRA.

Ms. Anannya Ghosh, Ms. Doel Bose, Mr. Mrinalini Mishra, Advocates for R-3.

Mr. Vinit Trehan, Ms. Bhavya Jain, Advocates for R4.

With Company Appeal (AT) (Insolvency) No. 1287 of 2023 & I.A. No. 4554 of 2023 (Arising out of Order dated 19.07.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-V in IA No.2981/2021 in C.P. (IB) No.3169/MB/2019)

IN THE MATTER OF: Yester Investment Private Limited, A106- 109, Satyam Commercial Centre, M.G. Road, Ghatkopar (East) Mumbai- 400077 ... Appellant Vs 1. Manish Motilal Jaju, Resolution Professional of Sivana Realty Private Limited D 502, Neelkant Business Park, Vidya Vihar (W), Mumbai - 400 086 2. Monitoring Committee of Sivana Reality Private Limited (Through its Chairman, the Resolution Professional) 3. LIC Housing Finance Limited 45/47, Bombay Life Building Veer Nariman Road, Fort, Mumbai - 400001 4. Mr. Vithal M. Dahake (Authorized Representative of Homebuyers/ Allottees) Samridhi Garden, CTS No.430/C, L.B.S. Road, Opposite Eshwar Nagar, Bhandup (West), Mumbai - 400048 5 M/s Kabra Estate and Investment Consultant 1001, 10th Floor, Kamla Hub, JVPD Scheme, N.S. Road No. 1, Juhu Mumbai- 400049 Email: manishkabra2004@yahoo.co.in ... Respondents

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 2 Present: For Appellant: Mr. Yogesh Jagia, Mr. Harshit Ratra, Advocates. For Respondents: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Dhaval Despande, Mr. Amir Arsiwala, Nupur Shaha, Advocates for R-1.

Mr. Arun Kathpalia, Sr. Advocate with Mr. Kunal Tandon, Mr. Visheshkalra/ Vishal Kalra, Mr. Atishay Jain, Ms. Tanushree Sogani, Advocates for SRA.

Ms. Anannya Ghosh, Ms. Doel Bose, Mr. Mrinalini Mishra, Advocates for R-3.

Mr. Vinit Trehan, Ms. Bhavya Jain, Advocates for R4.

JUDGMENT

ASHOK BHUSHAN, J.

Interlocutory Application Nos. 4551 and 4554 of 2023

These IAs have been filed by the Appellant(s) for condonation of delay

of 13 and 6 days in filing of the Appeal. Sufficient cause being shown by

the Appellant(s), the delay in filing of the present Appeal(s) are hereby

condoned. I.A. Nos.4551 and 4554 of 2023 are disposed of.

Company Appeal (AT) (Insolvency) Nos. 1286 and 1287 of 2023

These two Appeals have been filed by the same Appellant, arising out

of Corporate Insolvency Resolution Process ("CIRP") of the Corporate

Debtor Sivana Reality Pvt. Ltd. Company Appeal (AT) (Insolvency) No. 1286

of 2023 has been filed against the order dated 19.07.2023 passed in IA

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 3 No.368 of 2022 filed by the Appellant objecting to the Resolution Plan

submitted by M/s Kabra Estate and Investment Consultants (Successful

Resolution Applicant ["SRA"]). Company Appeal (AT) (Insolvency) No. 1287

of 2023 has been filed against the order dated 19.07.2023 passed by

Adjudicating Authority in IA No.2981 of 2021, by which order, Application

filed by Resolution Professional ("RP") for approval of Resolution Plan

submitted by M/s Kabra Estate and Investment Consultants was allowed.

Both the Appeals raises common question of facts and law, hence, have

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

2. Brief facts of the case necessary for deciding the Appeals are:

(i) The Corporate Debtor - Sivana Reality Pvt. Ltd. had two real

estate projects namely - Samridhi Gardens (Phase-1) and

Okwood Plaza (Phase-2). The Appellant in the year 2015 paid

an amount of Rs.2.50 Crores in Project Samridhi Gardens and

unregistered Agreement dated 10.07.2015 was executed

between the Corporate Debtor and the Appellant. The

Appellant paid another amount of Rs.5 Crores and entered into

an Agreement. By way of letter dated 25.07.2015, the

Corporate Debtor agreed to sell Flat Nos. D-201, D-202, D-203

and D-204 in Wing-D Samridhi Gardens. The Appellant, thus,

in total paid an amount of Rs.7.50 Crores for six units.

(ii) The Corporate Debtor obtained loan facility from LIC Housing

Finance Ltd. ("LICHFL") by executing a Loan Facility

Agreement dated 15.09.2017. As per Loan Facility Agreement,

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 4 the LICHFL had charge over the real estate project of the

Corporate Debtor.

(iii) Registered Agreement dated 09.08.2018 entered between the

Corporate Debtor and the Appellant for sale of Flat Nos.D-103,

D-104, D-201, D-202, D-203 and D-204 in D wing in

Samriddhi Garden.

(iv) On 11.08.2020, Company Petition No.3169 of 2019 was

admitted against the Corporate Debtor. Respondent No.1 was

appointed as RP. The Form-G was published on 02.12.2020.

A Resolution Plan with regard to Phase-1 Project of the

Corporate Debtor was approved on 01.03.2021, which was

submitted by one Vira Realspace LLP. On 17.03.2021, an IA

No.643 of 2021 was filed by RP for approval of Resolution Plan

of Phase-1. On 20.03.2021, Form-G was published in

supersession of previous advertisement to invite prospective

Resolution Applicants only for Phase-2.

(v) On 09.06.2021, RP apprised the Committee of Creditors

("CoC") regarding the receipt of email from Kabra Group

seeking permission to participate in the EOI process and for

condoning the delay in submission of EOI. On 09.06.2021,

the CoC resolved to allow Kabra Group to submit their EOI.

On 12.07.2021, the Adjudicating Authority passed an order

directing the RP to resolve pertaining to Phase-1 Resolution

Plan by convening a CoC meeting within a period of one week.

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 5 13th CoC Meeting was held on 03.08.2021 wherein it was

resolved that IA No.643 of 2021 be withdrawn. It was also

resolved to rescind the previous From-G and issue a fresh

advertisement for holistic resolution of the Corporate Debtor.

On 08.08.2021, fresh Form-G was published, inviting EOI for

consolidation of Phase-1 and Phase-2 of the Corporate Debtor.

Last date of submission of Resolution Plan was 27.09.2021.

(vi) Kabra Estate & Investment Consultants submitted EOI on

17.08.2021. EMD of Rs.2 Crores was deposited on

27.09.2021. The CoC on 30.10.2021 in the 18th Meeting

approved the Resolution Plan with 99.96% of the total voting

shares. IA No.2675 of 2021 was filed by RP for withdrawal of

IA No.643 of 2021.

(vii) On 09.02.2022, the Appellant filed an IA No.368 of 2022

challenging the Resolution Plan.

(viii) On 04.01.2023, the Adjudicating Authority disposed of IA

No.643 of 2021 as infructuous.

(ix) The Adjudicating Authority vide order dated 19.07.2023

dismissed IA No.368 of 2022 and by order of the same date

approved the Resolution Plan of M/s Kabra Estate and

Investment Consultants. Challenging these two orders dated

19.07.2022, these two Appeals have been filed by the

Appellant.

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 6

3. We have heard learned Counsel for the Appellant as well as learned

Counsel appearing for the RP; learned Counsel appearing for Successful

Resolution Applicant ("SRA") and learned Counsel appearing for LIC

Housing Finance Ltd. ("LICHFL").

4. Before we enter into respective submissions of learned Counsel for

parties, it is relevant to notice that the Plan approval order dated

19.07.2023 passed by Adjudicating Authority, was challenged by several

other Appeals, e.g. Company Appeal (AT) (Insolvency) No.1162 of 2023

- Sabari Realty Pvt. Ltd. vs. Sivana Realty Pvt. Ltd. Two other Appeals

were filed by the same Appellant, challenging the order passed by

Adjudicating Authority on 19.07.2023 rejecting the IAs filed by Sabari

Realty Pvt. Ltd. This Tribunal vide its judgment and order dated

02.11.2023 dismissed the Appeal and upheld the order dated 19.07.2023

approving the Resolution Plan. The Appeals challenging order passed in IA

Nos.533 and 933 of 2022 was also dismissed. Against the order passed by

this Tribunal dated 02.11.2023, a Civil Appeal No.446 of 2024 was filed by

Sabari Realty Pvt. Ltd., which Appeal was dismissed by Hon'ble Supreme

Court by order dated 25.01.2024.

5. In the Appeals, which were filed by Sabari Realty Pvt. Ltd., one of the

ground raised in the Appeal was that Resolution Plan has classified the

homebuyers into two categories, i.e. 'affected homebuyers' and 'unaffected

homebuyers'. 'Unaffected homebuyers' were those homebuyers who have

been allotted the units after obtaining No Objection Certificate ("NOC") from

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 7 LIC Housing Finance Ltd., who has charge over the Project and 'affected

homebuyers' were those who were allotted units without there being any

NOC from LICHFL. Affected homebuyers although allotted the units, but

area of allotment was reduced and the amounts advanced by them, which

was admitted in the CIRP was adjusted against the allotments made under

the Resolution Plan. The challenge of Resolution Plan by Sabari Realty Pvt.

Ltd. with regard to categorization of 'affected homebuyers' and 'unaffected

homebuyers' was rejected in the Appeal and it was held that Resolution

Plan has rightly dealt with the two groups of homebuyers, i.e., 'affected'

and 'unaffected' homebuyers. The allotment made in favour of homebuyers

without NOC of LICHFL was held to be void allotment, however, fresh

allotments have been made in favour of the affected parties in lieu of the

amounts received from those homebuyers, although the area of the

allotment was reduced accordingly. This Tribunal vide order dated

02.11.2023 has upheld the classification as 'affected' and 'unaffected'

homebuyers and has upheld the Resolution Plan as well as the order dated

19.07.2023 of the Adjudicating Authority approving the Resolution Plan.

6. The learned Counsel for the Appellant challenging the impugned

order submits that although now the Appellant is not raising issue

regarding challenge to classification of homebuyers as 'affected

homebuyers' and 'unaffected homebuyers', but there are other issues in

these Appeal, which need consideration. The learned Counsel for the

Appellant submits that although subsequent to registered Agreement dated

09.08.2018, there was no NOC obtained from LICHFL, but the amount was

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 8 advanced by the Appellant in the year 2015, i.e., much before the Facility

Agreement was executed between the Corporate Debtor and the LICHFL,

i.e., 15.09.2017. The Agreement dated 09.08.2018 being in reference to

the earlier Agreement dated 10.07.2015, the requirement of obtaining NOC

from LICHFL was not there. It is further submitted that in the Agreement

dated 09.08.2018, it was contemplated that all necessary permissions have

been obtained.

7. The learned Counsel for the Appellant further submits that the RP

has conducted the CIRP, violating the provisions of Insolvency and

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

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process

for Corporate Persons) Regulations, 2016 ("CIRP Regulations") and there

being material irregularity in the conduct of the CIRP by the RP, entire CIRP

deserves to be set-aside, including the order approving the Resolution Plan.

The learned Counsel submits that the Resolution Plan of the Kabra Estate

and Investment Consultants (SRA) was entertained by the RP beyond the

last date for EOI mentioned in Form-G published on 20.05.2021. It is

submitted that last date for submission of EOI was 04.06.2021, whereas

the CoC in its Meeting held on 09.06.2021 condoned the delay in

submitting the EOI, which is contrary to the CIRP Regulations. It is

submitted that SRA has been given a preferential treatment and has been

permitted a back door entry in the CIRP. It is submitted that the Resolution

Plan of Respondent No.5 was approved without due diligence under Section

29A. The learned Counsel for the Appellant further submits that the

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 9 Appellant has been wrongly classified as 'affected homebuyer', since the

Agreement to Sale dated 09.08.2018 was in furtherance of amount

advanced in July 2015. It is further submitted that Resolution Plan of

Phase-1 was approved and Application for approval of Resolution Plan was

filed, but the CoC proceeded to take fresh Resolution Plan for both the

Projects, which was contrary to the procedure prescribed in the Code and

the CIRP Regulations.

8. The learned Counsel for RP, Respondent No.3 and Respondent No.5

refuting the submissions of learned Counsel for the Appellant submit that

Resolution Plan submitted by Respondent No.5, having been approved by

the Adjudicating Authority vide order dated 19.07.2023, which order

having already been upheld on 02.11.2023 and the Appeal challenging the

same order of the Adjudicating Authority dated 19.07.2023, deserves to be

rejected. It is submitted that the classification of homebuyers as 'affected'

and 'unaffected' homebuyers having been upheld by this Tribunal and the

Appellant being categorized as 'affected' homebuyer under the Resolution

Plan, which classification having been upheld, the Appellant cannot be

allowed to challenge the Resolution Plan. It is further submitted that the

Resolution Plan having been approved by 99.96% vote shares of the CoC,

the Appellant is only a minority homebuyers, who is now seeking to

challenge the Resolution Plan, whereas in view of the judgment of the

Hon'ble Supreme Court in Jaypee Kensington Boulevard Apartments

Welfare Association & Ors. Versus NBCC (India) Ltd. & Ors., (2022) 1

SCC 401, a minority or single homebuyer has to sail along with the

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 10 majority in the interest of the Scheme of the Code. It is submitted that

homebuyers having also approved the Resolution Plan, the Appellant

cannot be allowed to challenge the Resolution Plan. It is further submitted

that the argument of the Appellant that there being approval of Resolution

Plan of Phase-1, and Application being IA No.643 of 2021 being pending

for approval, the CoC could not have taken a decision to withdraw the

approval of Resolution Plan, hence, all other subsequent steps are vitiated,

is wholly erroneous and incorrect. It is submitted that the Appellant

himself has voted for withdrawal of the Resolution Plan of the Phase-1,

which materials have been brought on the record, the Appellant cannot be

allowed to raise any grievance with regard to withdrawal of Resolution Plan

of Phase-1. It is further submitted that Adjudicating Authority had already

dismissed IA No.643 of 2021, which was filed for approval of Resolution

Plan of Phase-1 by its order dated 04.01.2023, which order having become

final, no grievance can be raised by the Appellant with regard to withdrawal

of Resolution Plan of Phase-1. Insofar as submission of the Appellant that

Respondent No.5 was given back door entry and had submitted Plan after

the last date of EOI. It is submitted that the EOI, which was referred by

the Appellant was EOI, which was accepted by the CoC in its Meeting dated

09.06.2021. However, subsequent to the CoC's decision on 03.08.2021,

fresh Form-G was published on 08.08.2021, both for Phase-1 and Phase-

2 Project, under which the last date for submission of EOI was 23.08.2021,

whereas Respondent No.5 has submitted its Plan on 17.08.2021, i.e., well

within the time and the order impugned is in reference to the Resolution

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 11 Plan submitted by the Respondent No.5 in consequence to the EOI dated

08.08.2021. Hence, the submission of Appellant that Respondent No.5 has

given back door entry is wholly erroneous and incorrect.

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

parties and have perused the record.

10. One of the submissions of learned Counsel for the Appellant is that

the Agreement to Sale dated 09.08.2018 was in reference to the payments

made by the Appellant in July 2015 and so was in continuation of the

Agreement to Sale dated 10.07.2015, hence, the requirement of obtaining

NOC from LICHFL was not there. Hence, the Appellant could not have been

categorized as 'affected' homebuyers. We may notice, both the Agreements,

which have been relied on by the learned Counsel for the Appellant. The

Agreement dated 10.07.2015 is an unregistered Agreement entered

between the Corporate Debtor and the Appellant. The Agreement was

between Sunshine Housing Pvt. Ltd. and the Appellant. The Sunshine

Housing Pvt. Ltd. subsequently was changed to Sivana Reality Pvt. Ltd.

The said Agreement was with regard to Flat No.103 and 104 in 'D' Wing for

consideration of Rs.1.30/- Crores. Now, we come to Agreement dated

09.08.2018, which is basis of the claim of the Appellant. When we look

into the Agreement dated 09.08.2018, the Agreement although refers to

several earlier events and proceedings prior to 09.08.2018, but it does not

refer to Agreement dated 10.07.2015. Agreement dated 09.08.2018 having

been executed subsequent to 15.09.2017, on which date the Corporate

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 12 Debtor obtained loan from LICHFL, which obliged the Corporate Debtor to

make an allotment only after the NOC from the LICHFL. The requirement

of obtaining NOC was very much there and it is not the case of the

Appellant that for allotment dated 09.08.2018, any NOC was obtained from

LICHFL by the Appellant. Thus, categorization of the Appellant as 'affected'

homebuyer cannot be faulted. In this context, we may refer to the

judgment of this Tribunal, where challenge to the categorization of

homebuyers into 'affected' and 'unaffected' homebuyers was noted and

considered. Issue No.4 was framed by this Tribunal in Company Appeal

(AT) (Insolvency) No.1162 of 2023, which Issue No.4 was answered in

paragraph 23 to 27, which are as follows:

"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

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 13 payment of Operational Creditors inter se. The Appeal was allowed by this Tribunal and 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 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,

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 14 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 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

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 15 creditors, operational creditors having to receive a minimum payment, being not less than liquidation value, which does not apply to financial creditors. The amended Regulation 38 set out in paragraph 77 again does not lead to the conclusion that financial and operational creditors, or secured and unsecured creditors, must be paid the same amounts, percentage wise, under the resolution plan before it can pass muster. Fair and equitable dealing of operational creditors' rights under the said Regulation involves the resolution plan stating as to how it has dealt with the interests of operational creditors, which is not the same thing as saying that they must be paid the same amount of their debt proportionately. Also, the fact that the operational creditors are given priority in payment over all financial creditors does not lead to the conclusion that such payment must necessarily be the same recovery percentage as financial creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may 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

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 16 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 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."

11. In view of the aforesaid, we are of the view that there is no error

committed by the SRA in classifying the Appellant into 'affected' homebuyer

as his allotment dated 09.08.2018, having been obtained without NOC of

LICHFL. The treatment to the Appellant as all other affected homebuyers

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 17 in the Resolution Plan has already been upheld by this Tribunal as noted

above.

12. Now, we may notice other submission raised by learned Counsel for

the Appellant, challenging the impugned order dated 19.07.2023. The first

submission of the Appellant is that Respondent No.4 - SRA has been given

a back door entry in the CIRP. Respondent No.5 has given his EOI after

the last date of EOI, which was 04.06.2021. From the facts, which have

been brought on record, it is relevant to notice that Resolution Plan for

Phase-1 was approved by the CoC on 01.03.2021 of one Vira Realspace

LLP. With regard to Phase-2, Form-G was published, where the last date

for submission of EOI was 04.06.2021. The RP received an email from

Kabra Group seeking permission to participate in the EOI, which was

placed before the CoC on 09.06.2021. The CoC passed the resolution to

allow Kabra Group to submit their EOI. Thus, EOI was considered by the

CoC. The subsequent events as noticed above indicate that IA No.643 of

2021, which was filed for approval of Resolution Plan of Vira Realspace LLP

for Phase-1 was decided to be withdrawn by the CoC in its Meeting on

03.08.2021 and it was further resolved by CoC to rescind the previous

From-G and issue a fresh advertisement for holistic resolution of the

Corporate Debtor. Subsequently, on 08.08.2021 fresh Form-G was

published, where, the last date for submitting of EOI was 23.08.2021.

Respondent No.5 has submitted EOI on 17.08.2021 and thereafter

submitted a Resolution Plan, which was deliberated and approved by the

CoC. The submission advanced by the Appellant with regard to EOI

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 18 submitted against Form-G, which was subsequently rescinded by the CoC

is no more relevant. Furthermore, the impugned order dated 19.07.2023

approving the Resolution Plan, which was submitted consequent to Form-

G issued on 08.08.2021, the submission that Respondent No.5 was given

back door entry is wholly misconceived. The Resolution Plan, which

ultimately was approved was in consequent to Form-G published on

08.08.2021 and there is not even any submission that with regard to Form-

G dated 08.08.2021, there is any breach of timeline by Respondent No.5.

13. Next submission of the Appellant is that when Plan with regard to

Phase-1 was approved on 01.03.2021 by CoC and IA No.643 of 2021 was

filed for approval of such Resolution Plan, the CoC could not have taken

any decision to invite fresh Form-G, which makes the entire process of

CIRP contrary to the Code and the CIRP Regulations. The Adjudicating

Authority on 12.07.2021, while hearing IA No.643 of 2021 and 1241 of

2021 has issued direction to RP to resolve the issue pertaining to Phase-1

and in pursuance to the direction, the CoC in its 13th Meeting held on

03.08.2021 had resolved to withdraw IA No.643 of 2021 and also resolved

to rescind the previous Form-G and to issue fresh Form-G. Fresh Form-G

was published on 08.08.2021. Subsequently on 04.01.2023, IA No.643 of

2021 was disposed of by the Adjudicating Authority as infructuous. Order

passed in IA No.643 of 2021 by the Adjudicating Authority on 04.01.2023

is as follows:

"IA No.643 of 2021 - Not on Board. Taken on Board. This IA is filed under Section 31 for approval of Phase 1 Resolution Plan, which was

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 19 approved by the CoC in 7th Meeting. However, subsequently in the 13th Meeting Phase 1 Resolution Plan was resolved to be withdrawn. In view of this, the above IA has been rendered infructuous and is hereby disposed of accordingly."

14. Thus, in view of the CoC decision in its 13th Meeting to withdraw the

Resolution Plan of Phase 1, the approval of Resolution Plan of Phase-1 was

rendered infructuous, which was recorded by the Adjudicating Authority

and no one has challenged the said order. It is also relevant to notice that

CoC noted the issue as to whether the Resolution Plan of Phase-1 to be

withdrawn and the said Agenda was approved by the CoC for withdrawal

of Phase-1 Resolution Plan and Appellant also voted in favour of withdrawal

of Phase-1, Resolution Plan, which material is on the record. We fail to see

how the learned Counsel for the Appellant is raising submission that when

there was approval of Resolution Plan of Phase-1, the CoC could not have

proceeded further to issue fresh Form-G. We, thus, do not find substance

in this submission of learned Counsel for the Appellant.

15. The next submission of learned Counsel for the Appellant that there

was no due diligence with regard to Section 29A while approving the

Resolution Plan of SRA. The learned Counsel for the Respondents submit

that an affidavit in compliance of Section 29A was submitted by SRA along

with EOI, wherein it was stated Section 29A eligibility analysis of the SRA

as well as the connected entities has been carried out and a report was

submitted on 26.08.2021 certifying the eligibility of SRA under Section

29A. The Plan of SRA was deliberated and approved by the CoC. It is

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 20 further relevant to notice that in IA No.368 of 2022, which was filed by the

Appellant before the Adjudicating Authority, objecting to the Resolution

Plan, the main challenge in the IA was on the ground of treating the

Appellant as 'affected' homebuyer. The Adjudicating Authority in the

impugned order while deciding IA No.368 of 2022 has noted the

submissions of the Appellant, where in paragraph 18 to 21, the objections

of the Appellant were noted, which are as follows:

"18. The Applicant has submitted that the Corporate Debtor was responsible to obtain NOC from the lender-LICHFL and the Applicant is a bona fide purchaser of six flats for valuable consideration and therefore, should not be made to suffer for the wrong doings/ fraudulent conduct of the Corporate Debtor.

19. It has been submitted by the Applicant that the resolution applicant could not ha ve differentiated between the same class/ set of creditors who are otherwise similarly placed as financial creditors (home buyers).

20. It has further submitted that the issue of fl ats sold without NOC of LIC HF'L was first raised for the first time by LIC who was sleeping over this issue till the 7th Meeting of COC.

21. The Applicant has submitted that the impugned Resolution Plan is manifestly arbitrary as it treats equals unequally without any basis. It has further been submitted that LICHFL cannot be given preference over the Applicant who paid value of flats prior to LICHFL coming into the picture."

16. The Adjudicating Authority, after considering reply of the RP as well

as SRA, returned its finding in paragraph 40, 41 and 43, which are as

follows:

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 21 "40. By way of the above IA, the Applicant has primarily sought to impugn the Resolution Plan on the ground that it distinguishes the Financial Creditors in a class of home Buyers into two different categories namely affected and unaffected Allottees which is not justified. It has also been sought that the so-called affected Allottees are to be treated at par with the unaffected Allottees and, therefore, the Resolution Plan of Respondent No. 5 is liable to be rejected.

41. Now the question arises as to whether the so-called affected Allottees, which otherwise fall within the category of Financial Creditors in the class of Home Buyers, are entitled to object to the Plan in any manner once as a class they have voted in the COC in favour of the Plan with a majority of more than 50% within the class.

Rather it has been pointed by the Counsel for the RP that even if the voting pattern of the Home Buyers is separately seen in terms of affected and unaffected Home Buyers, they have voted overwhelmingly in favour of the Resolution Plan. 87.56% of the unaffected category of Home Buyers has voted in favour of the Plan whereas out of the affected Home Buyers 57.63% have voted in favour of the Plan.

43. In the light of what has been held by the Hon'ble Supreme Court in the afore-cited judgment it becomes abundantly clear that Home Buyers can vote for or against the Plan only as a class and if there are some Home Buyers pitted against the Resolution Plan, who are otherwise in minority, absolutely no locus to oppose the Plan in the capacity of dissatisfied or dissenting Home Buyers. It is also abundantly clear that such dissenting minority segment within the class of Home Buyers cannot arrogate themselves to be dissenting Financial Creditors. That being the legal position, which is explained in unequivocal terms by the Hon'ble Supreme Court in Jaypee Kensington s case (supra), in our considered view, any objection raised by the so-called minority Home Buyers raising objection against the Plan, which have been approved by them as a class,

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 22 cannot be entertained and are liable to be rejected at the very threshold without going through the merit of such objections. Therefore, the objections raised in the IA are liable to be dismissed as the Applicant has no locus to maintain any such objections against the Resolution Plan."

17. We may also notice the submission of the Respondents that

Resolution Plan having been approved by 99.96% vote share of the CoC,

which also included homebuyers, both 'affected' and 'unaffected', the

Appellant cannot be allowed to challenge the approval of Resolution Plan

in the Appeal. The Adjudicating Authority has noted the said submission

in the impugned order. From the facts brought on record, it does appear

that Appellant is minority homebuyer, who is objecting to the approval of

Resolution Plan, where majority homebuyers have voted in favour of the

Resolution Plan, which is evident from the 99.96% vote share, the Plan has

been approved. In view of the judgment of the Hon'ble Supreme Court in

Jaypee Kensington Boulevard Apartments Welfare Association, the

Appellant has to sail with the decision of the majority of the homebuyers,

who have decided to approve the Resolution Plan. Total number of

homebuyers are 272, out of which 140 are 'affected' home buyers and 132

are 'unaffected' homebuyers. Out of 140 'affected' homebuyers, 86 have

voted in favour of the Plan and only 26 have voted against the Plan. Thus,

majority of homebuyers have voted in favour of the approval of the

Resolution Plan. Hence, the Appellant cannot be heard to contend against

the majority of homebuyers, who have decided to approve the Resolution

Plan.

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 23

18. The submission of the Appellant that RP conducted the CIRP in

contravention of the Code and CIRP Regulations also does not find any

substance from the materials on record and proceedings undertaken by

the RP. We, thus, do not find any material irregularity in conducting the

CIRP by the RP, which warrant interference.

19. In view of the foregoing discussions and submissions, we do not find

any ground to interfere with the impugned orders dated 19.07.2023, which

are sought to be challenged in these two Appeals. In result, both the

Appeals are dismissed. Parties to bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

NEW DELHI

21st March, 2024

Ashwani

Company Appeal (AT) (Insolvency) Nos.1286 &1287 of 2023 24