25A

Procedure for replacement of an Authorised Representatives as per CIRP Regulation 16A(3A) has to be followed for replacement of Authorised Representatives | A lone Homebuyer cannot be allowed to question the voting by Authorised Representatives on behalf of majority of Financial Creditor in a class – Ashmeet Singh Bhatia Vs. Rakesh Verma and Anr. – NCLAT New Delhi

The NCLAT New Delhi held that:

(i) The date of refiling after curing the defects cannot be treated to be date of filing of the Appeal for purposes of computation of limitation and date of e-filing cannot be treated to be fresh date of filing of the Appeal.
(ii) All Authorised Representative in a class are bound by the voting by majority of votes as reflected by the voting by the AR. A lone Homebuyer cannot be allowed to question the voting by Authorised Representatives on behalf of majority of Financial Creditor in a class.
(iii) When a procedure for replacement of the Authorised Representatives have been introduced in the Regulations by 16A(3A) inserted on 18.09.2023, the said statutory provision has to be followed for replacement of Authorised Representatives.

Procedure for replacement of an Authorised Representatives as per CIRP Regulation 16A(3A) has to be followed for replacement of Authorised Representatives | A lone Homebuyer cannot be allowed to question the voting by Authorised Representatives on behalf of majority of Financial Creditor in a class – Ashmeet Singh Bhatia Vs. Rakesh Verma and Anr. – NCLAT New Delhi Read Post »

Proviso to Section 33(5) of IBC is mandatory | Proceedings instituted by Liquidator without prior approval of NCLT is unauthorized and incompetent | Post facto approval for continuation of proceedings shall make proceedings authorized and competent from the date when post facto approval is granted | Before granting approval, the party against whom proceedings are to be instituted is not to be given a notice or hearing necessarily – Slimline Realty Pvt. Ltd. Vs. Mr. Jigar Bhatt – NCLAT New Delhi

In this judgment, Hon’ble NCLAT has answered the following issues:
(1) Whether the statutory requirement under Section 35 Sub-section (5) proviso to obtain prior approval of the Adjudicating Authority by the Liquidator to institute a suit or proceeding on behalf of the Corporate Debtor is a mandatory requirement or only a directory requirement?
(2) What are the consequences and status of the proceedings instituted by the Liquidator on behalf of the Corporate Debtor without prior approval of the Adjudicating Authority?
(3) Whether a post facto approval granted by the Adjudicating Authority of proceedings instituted by the Liquidator without obtaining prior approval shall make the proceedings authorized/ competent?
(4) Whether before approval under Section 33(5) to the Liquidator to institute proceeding on behalf of the Corporate Debtor, the party against whom proceedings are to be instituted has to be given an opportunity?
(5) Whether the impugned order dated 07.02.2024 passed by the Adjudicating Authority is unsustainable and deserves to be set aside?

Proviso to Section 33(5) of IBC is mandatory | Proceedings instituted by Liquidator without prior approval of NCLT is unauthorized and incompetent | Post facto approval for continuation of proceedings shall make proceedings authorized and competent from the date when post facto approval is granted | Before granting approval, the party against whom proceedings are to be instituted is not to be given a notice or hearing necessarily – Slimline Realty Pvt. Ltd. Vs. Mr. Jigar Bhatt – NCLAT New Delhi Read Post »

Voting as contemplated in Section 25A(3A) of IBC is not to be applied when an application under Sec. 12A is to be considered which requires 90% vote shares of the CoC (Homebuyers) – Vijay Saini Vs. Shri Devender Singh and Ors. – NCLAT New Delhi

In this case, Adjudicating Authority held that the Resolution Professional ought to have followed the method prescribed under sub-section 3A of Section 25A and come to a conclusion that since more than 50% of the voting has been done in favour of 12A proposal, he should have taken it as 100% since the Financial Creditor have to be treated as a class.

Hon’ble NCLAT holds that:

(i) The voting under sub-section (3A) which is to be cast by Authorised Representative is to be on the basis of vote of more than 50% of the voting share of the Financial Creditor in a class but the said provision of sub-section (3A) was subject to the proviso which proviso created a different voting pattern for 12A.
(ii) For computing voting with regard to 12A proposal, the voting has to be computed as per Section 25A (3A) proviso r/w Section 25A(3). As per Section 25A(3), if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share.
(iii) When the statute i.e. Section 12A provides 90% voting for approval of Section 12A proposal, 90% of the voting share of the creditor in class have to be taken into consideration.
(iv) Since voting by each homebuyers who represented creditor in class has to be computed as per his voting share and adding all vote shares of the creditor in class with any other Financial Creditor if it is at least up to 90% only then 12A proposal is held to be passed.
(v) The present is a case where the Resolution Professional is required to conduct the proceeding of the CoC according to the IBC and take a decision on the result of voting. There can be no question of Resolution Professional taking, in the present case, any sides. In so far as computation of votes is concerned, the Resolution Professional is required to compute the votes as per the statute. Hence, the judgment of the Hon’ble Supreme Court in Regen Powertech Private Limited vs. Giriraj Enterprises & Anr. (2023) ibclaw.in 111 SC which was in the facts of the said case cannot be said to be applicable in the present set of facts.

Voting as contemplated in Section 25A(3A) of IBC is not to be applied when an application under Sec. 12A is to be considered which requires 90% vote shares of the CoC (Homebuyers) – Vijay Saini Vs. Shri Devender Singh and Ors. – NCLAT New Delhi Read Post »

In a real estate project, CoC in its commercial wisdom can take appropriate decision to satisfy the claim of class of creditors in a reasonable and fair manner and different treatment of two sets of Homebuyers in view of the allotment to Homebuyer with/without NOC of the mortgagee is justified – Sabari Realty Pvt. Ltd. Vs. Sivana Realty Pvt. Ltd. – NCLAT New Delhi

In this landmark judgment, Hon’ble NCLAT held that:
(i) Appellant, who is a dissatisfied minority, a single homebuyer has to sail alongwith the view of the majority in terms of the scheme of IBC.
(ii) Appellant as a class of homebuyers cannot be allowed to challenge the Resolution Plan which has received approval of class of homebuyers on the basis of majority of votes of homebuyers.
(iii) In a real estate project when the project spread into several units and several projects which are at different stages of construction the CoC in its commercial wisdom can take appropriate decision to satisfy the claim of class of creditors in a reasonable and fair manner.
(iv) Different treatment of two sets of homebuyers in view of the allotment to the homebuyer with/without NOC of the Mortgagee has rational for separate treatment
(v) Commercial wisdom of the Committee of Creditors, which has approved the Resolution Plan under which different treatment has been given to ‘Affected Homebuyers’ and ‘Unaffected Homebuyers’, cannot be faulted.

In a real estate project, CoC in its commercial wisdom can take appropriate decision to satisfy the claim of class of creditors in a reasonable and fair manner and different treatment of two sets of Homebuyers in view of the allotment to Homebuyer with/without NOC of the mortgagee is justified – Sabari Realty Pvt. Ltd. Vs. Sivana Realty Pvt. Ltd. – NCLAT New Delhi Read Post »

There is no concept of dissenting homebuyers within Creditors in class – Mrs. Taruna Suhas Saraph Vs. Mr. Dyaneshwar Chaudhari (Suspended Director) – NCLT Mumbai Bench

NCLT Mumbai Bench held that Home Buyers can vote for or against the Plan only as a class and if there are some Home Buyers pitted against the Resolution Plan, who are otherwise in minority, they have absolutely no locus to oppose the Plan in the capacity of dissatisfied or dissenting Home Buyers. It is also abundantly clear that such dissenting minority segment within the class of Home Buyers cannot arrogate themselves to be dissenting Financial Creditors.

There is no concept of dissenting homebuyers within Creditors in class – Mrs. Taruna Suhas Saraph Vs. Mr. Dyaneshwar Chaudhari (Suspended Director) – NCLT Mumbai Bench Read Post »

NCLT approves Consolidated Resolution Plan of Rs. 14,867.50 crores submitted by NARCL in group insolvency of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd., FSP – Rajneesh Sharma, Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. Vs. National Asset Reconstruction Company Ltd. (NARCL) – NCLT Kolkata Bench

On 11.08.2023, NCLT Kolkata Bench has approved the Resolution Plan of National Asset Reconstruction Company Ltd. (NARCL) in consolidated CIRP of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd.
NARCL is a government entity, has been incorporated on 07.07.2021 with majority stake held by Public Sector Banks and balance by Private Banks with Canara Bank being the Sponsor Bank. NARCL is registered with the Reserved Bank of India as an Asset Reconstruction Company under SARFAESI Act, 2002.
NARCL and IDRCL will infuse funds into the Corporate Debtors and other funds towards Assignment Payments, and provide for Corporate Debtors to undertake repayment obligations in the manner set out in this Resolution Plan, aggregating to INR 14,867.50 crores, which amount shall be utilized for funding payments proposed to be made to the stakeholders of the Corporate Debtors, subject to the terms of this Resolution Plan.

NCLT approves Consolidated Resolution Plan of Rs. 14,867.50 crores submitted by NARCL in group insolvency of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd., FSP – Rajneesh Sharma, Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. Vs. National Asset Reconstruction Company Ltd. (NARCL) – NCLT Kolkata Bench Read Post »

Even after completion of Challenge Mechanism under CIRP Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP – Vistra ITCL (India) Ltd. Vs. Torrent Investments Pvt. Ltd. & Ors. – NCLAT New Delhi

In this landmark judgment, NCLAT has interpreted CIRP Regulation 39 with questions such as (i) Whether Regulation 39(1A) contains an implied prohibition on the jurisdiction of the CoC to enter into any further negotiations with Resolution Applicant or to further ask a Resolution Applicant to increase its Resolution Plan value, (ii) Whether the Regulation 39(1A) has taken place of the negotiation process and it forecloses any negotiation by CoC with Resolution Applicant (iii) authorisation of authorised representative to file a appeal etc.

NCLAT has concluded that even after completion of Challenge Mechanism under Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP. Regulation 39(1A) cannot be read as a fetter on the powers of the CoC to discuss and deliberate and take further steps of negotiations with the Resolution Applicants, which resolutions are received after completion of  Challenge Mechanism.

Even after completion of Challenge Mechanism under CIRP Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP – Vistra ITCL (India) Ltd. Vs. Torrent Investments Pvt. Ltd. & Ors. – NCLAT New Delhi Read Post »

Even if some of Homebuyers have not voted in favour of Resolution Plan, but the majority (more than 50%) have voted in favour of the Resolution Plan approving the same, the dissenting Homebuyers who are in minority have to go along with the views of the majority – Bipin Sharma Vs. Earth Infrastructure Ltd. Through Shri Akash Singhal, RP – NCLAT New Delhi

NCLAT held that the Authorised Representative so selected to participates in the CoC meetings as well as in decision making in the CoC, he does so on behalf of all the home allottees/homebuyers and the view of individual homebuyer is therefore subsumed in the majority (of more than 50%) decision coming through that process when the financial creditors in class express views and voted in any matter. The appellants, who have exercised their right to vote or not cared to exercise their right to vote form a miniscule minority, opposing the approval of resolution plan. Having done so, they now do not possess an independent right to challenge the majority vote (99.97%) of the homebuyers. NCLAT concluded that we are of the clear opinion that even if some of the homebuyers have not voted in favour of the plan, but the majority (more than 50%) have voted in favour of the resolution plan approving the same, the dissenting homebuyers who are in minority have to go along with the views of the majority. They are, therefore, not entitled to prefer this appeal. The appeal is disposed of on the ground of non-maintainability.

Even if some of Homebuyers have not voted in favour of Resolution Plan, but the majority (more than 50%) have voted in favour of the Resolution Plan approving the same, the dissenting Homebuyers who are in minority have to go along with the views of the majority – Bipin Sharma Vs. Earth Infrastructure Ltd. Through Shri Akash Singhal, RP – NCLAT New Delhi Read Post »

Even if some of the homebuyers have not voted in favour of the plan they have to sail with the majority – Earth Buyers Association for Justice Vs. Mr. Akash Singhal, RP for Earth Infrastructure Limited & Ors. – NCLAT New Delhi

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Even if some of the homebuyers have not voted in favour of the plan they have to sail with the majority – Earth Buyers Association for Justice Vs. Mr. Akash Singhal, RP for Earth Infrastructure Limited & Ors. – NCLAT New Delhi Read Post »

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 – Mrs. Renu Kapoor & Ors. Vs. Shailesh Verma & Ors. – NCLT Mumbai Bench

The Adjudicating Authority held that in order to deal with the question that fell for consideration, it is pertinent to note 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.

The Adjudicating Authority referred Jaypee Kensington judgment and held that 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.

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 – Mrs. Renu Kapoor & Ors. Vs. Shailesh Verma & Ors. – NCLT Mumbai Bench Read Post »

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