NCLAT New Delhi: Haircut In Resolution Plan Cannot Be Construed As Being Violative Of Section 30(2)(E) Of IBC
The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) held that a haircut in Resolution Plan cannot be construed as being violative of Section 30(2)(e) of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and the minority...
The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) held that a haircut in Resolution Plan cannot be construed as being violative of Section 30(2)(e) of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and the minority homebuyers have to necessarily sail with the majority within the class.
Facts:
The Appellants are a clutch of 25 homebuyers of residential flats in a project developed by Today Homes and Infrastructure Pvt. Ltd. (Corporate Debtor) with admitted claims of about Rs 14 crore. This claim is against a total of Rs. 1110.20 Crores claim of approximately 1,500 home buyers in the project. The Resolution Plan has been approved by the Committee of Creditors (‘CoC’) with a 96.93% vote share.
The Appellants raised objections before the Authorized Representative with respect to certain clauses contained in the Resolution Plan, particularly clause 9. The objection is that the Resolution Plan unjustly deducts payment of compensation/interest from their principal amount. Moreover, differential treatment is being given to the Appellants from other homebuyers having possession, giving a more than 65% benefit to them.
The Appellants contended that the Resolution Plan is also conditional and contingent proving that payments to Appellants will be made only post-completion and selling of the housing units. The CoC’s approval of the Resolution Plan being prejudicial and discriminatory to the Appellant’s interests is an act contrary to Section 30(2)(e) of the IBC.
NCLAT Verdict:
The NCLAT held that merely because there is a reduction in the claim of any creditor does not make the resolution plan illegal. Any clause in the resolution plan that requires creditors to take a haircut cannot be construed as being violative of Section 30(2)(e) of the IBC.
Further, it highlighted that the RP did not fail in discharging his duty since the Appellants were given adequate opportunity to raise objections before the Resolution Professional and the Authorized Representative of the Home Buyers. Further, the RP also gave them a window to discuss their issues with the Resolution Applicants.
It observed that once the CoC has approved the Resolution Plan by the requisite majority in consonance with the applicable provisions of law, the same is not subjected to judicial review and modification.
Further, the contention of the Appellant that the Resolution Plan is contingent and conditional is misconceived since clause 9 deals with the compensation amounts received by the Appellants as ordered by NCDRC including legal costs incurred by them and the Resolution Plan has made adequate provisions for consideration of the claims of the Appellants.
The NCLAT concluded that the Resolution Plan clearly provides for treatment to be provided to the Appellants in case the units are not resold and due care has been taken by NCLT New Delhi on these provisions in clause 9 of the Resolution Plan for the concerns of the Appellants.
Case Title: Mr. Ankur Narang & Ors. vs. Mr. Nilesh Sharma RP & Ors.
Case No.: Company Appeal (AT)(Insolvency) No. 1240 of 2023
Counsel for Appellants: Mr. Pawan Shree Agrawal and Ms. Shubhangi Negi, Advocates.
Counsel for Respondents: Mr. Kanishk Khetan, Advocate for R-1.