Unverified Homebuyer Claims Cannot Derail CoC-Approved Resolution Plan: NCLAT
- REEDLAW
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REEDLAW Legal News Network reports: In a pivotal ruling, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, held that once a Resolution Plan is approved by the Committee of Creditors (CoC) with the requisite majority, disputed or unverified homebuyer claims cannot be entertained. The Tribunal clarified that rejecting such claims with a negligible voting share is fully consistent with the framework of the Insolvency and Bankruptcy Code (IBC).
The Principal Bench of the NCLAT, comprising Justice Rakesh Kumar Jain (Judicial Member) and Technical Members Mr. Naresh Salecha and Mr. Indevar Pandey, while adjudicating a Company Appeal and connected Interlocutory Applications, emphasised that CoC-approved Resolution Plans enjoy primacy under the IBC, and the adjudicating authority must not entertain unverified claims from homebuyers holding insignificant voting shares.
The Appellants, who were homebuyers in the real estate projects of the Corporate Debtor, Shubkamna Buildtech Pvt. Ltd., filed an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, challenging the rejection of their impleadment application by the Adjudicating Authority. They contended that they had invested substantial sums in the “Shubhkamna City” and “Shubhkamna Techomes” projects and held valid Builder Buyer Agreements, allotment letters, and receipts. They argued that despite clear directions in earlier appellate proceedings requiring the protection of homebuyers’ interests, the Resolution Professional and the Committee of Creditors failed to follow these directions, merged two distinct projects for voting purposes, and denied them disclosure of their voting shares. They further alleged that their claims were unjustly rejected on the ground that cash receipts were not reflected in the Corporate Debtor’s cash registers, despite the admitted absence of records for the relevant years.
The Appellants relied on the principle laid down in Flat Buyers Association Winter Hills-77, Gurgaon v. Umang Realtech Pvt. Ltd., where it was held that CIRP in real estate cases must be conducted project-wise. They argued that the merger of the projects unfairly diluted their interests, and the exclusion of dissenting flat buyers from the voting process was arbitrary. They also contended that their claims could not be rejected solely on the ground of the absence of entries in the cash registers, particularly when the Resolution Professional had acknowledged that records were missing. They urged that their rights as allottees could not be negated merely because their collective voting share was around 1% of the CoC.
On the other hand, the Resolution Professional and the Respondents argued that the Appellants’ claims lacked any credible basis, as the cash receipts produced were not reflected in the Corporate Debtor’s books of account. It was submitted that the Appellants’ names did not appear in the verified list of homebuyers, and in the absence of proof, their claims could not be admitted. It was further argued that the CIRP process had been conducted strictly in accordance with the Code and CIRP Regulations, multiple CoC meetings were held, and a Resolution Plan was approved with an overwhelming 87% majority, including 66.7% of homebuyers. The Respondents relied on the Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Others, REEDLAW 2019 SC 11505 judgment and subsequent rulings to emphasise that once a Resolution Plan was approved, no fresh claims could be entertained to avoid disrupting the CIRP and undermining the commercial wisdom of the CoC.
The Appellate Tribunal noted that the Appellants’ impleadment plea was rejected because their claims had already been dismissed by the Resolution Professional and they held an insignificant voting share. It further observed that the Resolution Plan had already been approved by the CoC with more than 87% voting share and was pending consideration before the Adjudicating Authority. In view of the settled legal position that once a Resolution Plan was approved by the CoC, fresh claims could not be entertained, the Tribunal found no ground to interfere. The appeal was accordingly dismissed, affirming that the rejection of the Appellants’ claims and their exclusion from voting rights were consistent with the IBC framework and judicial precedents.
Mr. Ajit Singh, Advocate, represented the Appellants.
Mr. Abhishek Anand, Mr. Nipun Gautam, Advocates, appeared for the Resolution Professional.
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