Mrs. Renu Kapoor & Ors Vs Shailesh Verma & Ors.
IA No. 769 of 2022 IN CP (IB) No. 1765/9/(MB) 2018
Facts:
1.Corporate Debtor was admitted into CIRP on 30th August 2018 under an Application filed by Raj Infrastructure Development (India) Private Ltd. filed under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2.Respondent No. 1 was appointed as the Resolution Professional (RP). Thereafter, the CIRP of the present Corporate Debtor was consolidated with four of their wholly-owned subsidiaries and a Consolidated Committee of Creditors (CoC), Respondent No. 2 herein, was constituted for all the companies vide Order dated 13th May 2021
3.Resolution Plan dated 20th November 2021 proposed by Darwin Platform Infrastructure Limited was approved with 96.41% majority voting share in the Consolidated Meeting of the CoC held on 23rd November 2021.
4.Application is filed by the Applicants on behalf of 368 Homebuyers who had purchased properties from the Corporate Debtor against the Resolution Plan of the Corporate Debtor alleging misconduct in the (CIRP) of the Corporate Debtor and mistreatment of the Homebuyers
Issue: whether liquidation value is required to be provided to every individual Home buyer under Section 30(2)(b)(ii) in the capacity of a dissenting Financial Creditor
Arguments:
For Applicant:
1.It was submitted that Homebuyers were promised to be paid the Liquidation value in case they vote against the Plan but the Liquidation value attributable to the Homebuyers was never calculated and/or disclosed. Liquidation value derived and presented to the CoC is notional and does not represent the fair value and that the RP completely neglected his duty to calculate the liquidation value for each Home Buyer before putting the Plan to vote
2.Applicants submit that the Resolution Plan is silent on the issue of non-procurement of EC by the RP since the past 2 years. In case the RP is unable to procure the EC, the Applicants will not be able to exercise their choice as the revival of the Corporate Debtor will be rendered impossible.
3.Applicants state that future payments to be made by the Homebuyers is indeterminate and indefinite as most of these Flats or villas are partially built structures, the completion of which would require a substantial amount of expense. cost is undefined and the Homebuyers are unaware of the actual contribution
4.It is submitted that Plan does not provide for an event of default on the part of the RA to implement the Plan and does not make any provision to safeguard the rights of the Homebuyers in case the RA fails to construct and deliver possession as promised under the Plan.
5.Further no submission of projected cash flow, balance sheet and profit and loss account of the Corporate Debtor despite which the CoC voted on the Plan without evaluating its feasibility and viability.
6.It is submitted that the Resolution Plan was put to vote in the 17th CoC Meeting and the voting for CoC was to open from 25th November 2021 and for Homebuyers from 26th November 2021. In the meantime, several issues cropped up during the 18th CoC Meeting which was held when the voting lines were still open and these were to be resolved by submitting addendums to the Resolution Plan by the RA. Three such addendums were submitted by the RA and accepted by the RP but the Homebuyers were not given due notice of this fact and therefore, voted on the original Plan that was put to vote before the deliberations of the 18th CoC Meeting
7.It was submitted that AR failed to circulate the copy of the three addendums of the Resolution Plan to the Homebuyers and then take instructions from them on how to vote.
For Respondent:
1.It was submitted that AR of the Homebuyers has voted in favour of the Resolution Plan, it is indicative of the fact that the decision represents the vote of more than 50% of the Homebuyers who elected to vote. The AR proceeded with the voting after receiving votes of 70.89% Homebuyers in favour.
2.Further there is no requirement under the Code to disclose the Liquidation value with respect to individual Homebuyers before voting on the Resolution Plan.
3.The Liquidation value of the Corporate Debtor was duly calculated by Registered Valuers who provided an estimate
of the fair value and liquidation value in terms of Regulation 35 of the CIRP Regulations hence value is not notional.
4.RP submits that Homebuyers constitute a separate class of creditors and they may be afforded a treatment that is different from other Financial Creditors in the CIRP. The RP argues that it is open for the RA to strike different bargains between creditors belonging to different classes
5.RP states that the Plan cannot be termed as “conditional” merely because it stipulates procuring EC as key to successful resolution and revival of the Corporate Debtor as any development or construction in the area earmarked for building the Hill Station is intrinsically linked to procurement of EC and no meaningful revival is possible in its absence
6.The RP states that due process and fairness was ensured in the voting process and enough time was given to the CoC to cast their votes. The voting lines were extended twice and due notice was provided to all CoC members including the AR to enable them to vote after considering the addendums to the Plan.
Decision: Liquidation value is not required to be provided to every individual Home buyer under Section 30(2)(b)(ii) in the capacity of a dissenting Financial Creditor
Rationale:
1.NCLT noted that Homebuyers, essentially, constitute a different class of creditors distinct from the other Financial creditors. Individual Homebuyers may have divergent views but ultimately, they vote as a class and individuals therein cannot claim to be ‘dissenting financial creditors’ if they vote against the Resolution Plan
2.Since Individual Homebuyers cannot be called as dissenting Financial Creditors, the question of providing separate liquidation values to each Homebuyer under Section 30 of the Code does not arise.
3.Once communication has been made to the AR, it is deemed to have been communicated to all the creditors of the class he represents. As the AR is appointed by the majority vote of the financial creditors of a particular class, he is authorised to act for and on behalf of the class as a whole. In case the Homebuyers are not satisfied with the conduct of the AR, they have the option of replacing him
Order Copy:
