Claims Not Part Of The Resolution Plan Shall Extinguish Only After Resolution Plan Approval: NCLT Mumbai Reiterates

Background Facts

Corporate Insolvency Resolution Process (“CIRP”) was initiated against Monarch Brookefields LLP (“Corporate Debtor”) on 27.09.2019 and it is under liquidation.

Shankar Sawant and Sandhya Sawant (“Applicants”) had decided to purchase a flat in Navi Mumbai being developed by the Corporate Debtor. The Applicants paid the token money and were given an Allotment Letter following which the Applicants made multiple payments to the Corporate Debtor. An Agreement to Sell dated 14.09.2015 was executed and registered between the Corporate Debtor and the Applicants. However, the Corporate Debtor kept delaying the handing over of the possession to the flat. The Applicants filed a delayed claim of Rs. 55,30,269 before the Resolution Professional (“RP”) on 2.2.2022 which was rejected by the RP on the ground that the Resolution Plan has been approved by the members of the Committee of Creditors (“CoC”) and was presented before the Hon’ble Tribunal on 2.12.2021. Hence the present Company Appeal was filed.

Observations of the Tribunal

The Tribunal observed that a valid agreement existed between the Corporate Debtor and the Applicants and periodic payments were made by the Applicants to the Corporate Debtor. Further, it was observed that the right of the home buyers to raise the claim before the RP would not cease to exist as the Resolution Plan is still pending for adjudication before the tribunal. Reliance was placed on the judgment by the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited, (2021) 9 SCC 657 wherein it was held that it is only after the Resolution Plan is approved by the Adjudicating Authority that all such claims not forming a part of the Plan shall stand extinguished.

Further reliance was placed on the NCLAT judgment in Puneet Kaur vs. K V Developers Pvt. Ltd. (2022 SCC OnLine NCLAT 245) dealing with rights of bonafide homebuyers wherein it was held that “Unless all liabilities of the Corporate Debtor are not known or included in the Information Memorandum, the occasion to complete the CIRP shall not arise”

On the basis of the aforesaid observations, the tribunal condoned the delay in filing of claims by the Applicants and directed the RP to admit the claims.

Case:Dr. Shankar Sawant & Anr Vs Mr. Arun Kapoor (Resolution Professional) in matter of Capri Global Capital Ltd Vs Monarch Brookefields LLP

Case No. :Company Appeal No. 9 of 2022 in C.P. No. 2517 of 2018

Counsels for the Applicants:Mr. Vishwanath Patil

Counsel for the Respondent :Mr. Amir Arsiwala

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