No Proceedings Against Corporate Debtor Can Be Initiated Or Continued Over Claim Which Is Not Part Of Resolution Plan: NCLT Mumbai

Brief Facts

The present application has been filed by Mr. Rajkumar Jhawar and Mrs. Shobha Jhawar, homebuyers of "MONARCH BROOKFIELDS”, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ('the Code').

The Applicants were informed that the Corporate Debtor was constructing a residential cum commercial Building by the name "MONARCH BROOKEFIELDS". The Applicants had approached the Corporate Debtor expressing their interest in purchasing Flat

Subsequently, on 23.04.2012, the Corporate Debtor entered into a Registered Agreement for Sale bearing Regn. No. 4264/2012 (" Agreement for sale") of the said flat to the Applicants for a total sale consideration of Rs. 42,00,000/-

The Applicants state that pursuant to payment of the entire sale consideration in accordance with the Agreement for sale, the Applicants have obtained ownership rights over the said Flat. the Corporate Debtor failed to hand over possession of the said Flat to the Applicants within the stipulated timeline prescribed in the agreement.

In the interregnum, on a Company Petition filed by Capri Global Capital Ltd. under section 7 of the Code, this Tribunal vide order dated 27.09.2019 initiated Corporate Insolvency Resolution Process ('CIRP') against the Corporate Debtor and appointed Respondent No. No.1 as Interim Resolution Professional. Respondent No.1 was later confirmed as a Resolution Professional (RP).

When the applicants came to know about the submission of a Resolution Plan by Respondent No. 2, they immediately filed their claims which were rejected by the RP on the ground that the plan had already been approved by the CoC and reserved for orders by the NCLT.

Contentions:

The applicants submitted that Flat no. 1002 has already been sold by the Corporate Debtor in favour of the Applicants prior to the commencement of the CIRP process, and hence title with respect to the said Flat stand absolutely transferred in favour of the Applicants. Therefore, the said Flat should be excluded from the resolution process of the Corporate Debtor.

Per contra, the respondents submitted that if the bank statements are perused, it becomes clear that an amount of 44,75,625/- is stated to have been paid by the Applicants to an account having the name of the Corporate Debtor prior to the execution of the purported Agreement for Sale, i.e., prior to the 23rd of April, 2012.

It was further submitted that Respondent No. 1 is unable to locate any record demonstrating an amount having actually been received from the Applicant into any account of the Corporate Debtor and that there is no proof by the Applicants that the State Bank of India actually disbursed any amount under the purported Sanction Letter produced by the Applicants.

It was further submitted that the Applicant never submitted any claim pursuant to the public announcement taken out by the Interim Resolution Professional therefore they have lost their right to recover their claims as Resolution Plan has already been approved by the NCLT.

Decision of The Tribunal:

The tribunal while referring to the terms of the agreement observed that it is sufficiently clear that at the time of execution and registration of the Agreement, the Flat in question did not exist and no conveyance deed could have been executed at that stage. Further, the construction of the said Flat is still incomplete, so the question of handing over possession of the said Flat did not arise.

In the case of Munishamappa v. M. Rama Reddy and Ors., (2023) the Hon'ble Supreme Court, reiterated that the agreement to sell does not transfer ownership rights or confer any title on the purchaser of the property.

In light of the above, the tribunal observed that the contention of Applicants claiming marketable title to the said Flat without a conveyance deed but based on the Agreement for sale solely because the document is registered and full payment has been made is totally unsustainable.

Insofar as the arguments made with regard to the exclusion of the said Flat from the Resolution Plan are concerned, the tribunal observed that the scheme of the Code provides for homebuyers to submit their claim, and such claims are to be dealt with in the Resolution Plan. In the instant case, the Applicants have filed their claim after approval of the Resolution Plan by the CoC and the said Resolution Plan has also since been approved by the Tribunal.

The tribunal further observed that when the Sale Agreement specified that the flat would be handed over within 36 months (3 years), with an additional grace period of 90 days, the Applicants should have been vigilant in monitoring the construction progress. Regardless of the justifications for any delays, these cannot be sufficient reasons to jeopardize an approved plan that could negatively impact other homebuyers and stakeholders.

In Ghanashyam Mishra and Sons Private Ltd through the Authorised Signatory v. Edelweiss Asset Reconstruction Company Ltd & Ors ( 2019) it was observed by the Supreme Court that “once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on all stakeholders and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not part of the resolution plan.”

Accordingly, the present application was dismissed.

Case Title: Mr. Rajkumar Jhawar and Anr. Vs Mr. Arun Kapoor and Ors.

Case Number: IA No. 3390/2024 In CP (IB) 2517/MB/2018

Date Of Judgment: 21/11/2024

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