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VR2 Land Development Pvt. Ltd. Vs. Mr. Jayesh Sangharajka and Ors. – NCLT Mumbai Bench Read Post »
In this case, the Applicant has challenged the termination of Agreements that the RP terminated the lease without the written consent of both parties in violation of the Agreement. The RP has contended that the Applicant is a Related Party of the Corporate Debtor.
NCLT New Delhi Bench Court-II held that:
(i) In terms of Section 28(1)(f) read with Section 28(3) of IBC 2016, the “related party transactions” cannot be undertaken by the RP during the period of CIRP without the approval of the CoC with 66% of the votes. In the instant case, the CoC instead of giving approval to continue with “the related party transactions in terms of Lease Deed and Service Agreements” gave its consent to terminate or did not object to termination of those related party agreements, in its commercial wisdom; and
(ii) In view of the settled position, related party contracts can be sought to be terminated via the relevant Clauses in the Resolution Plan. Therefore, we find no illegality committed by the RP in terminating the Service Agreement dated 01.09.2006, Lease Agreement dated 31.12.2013 along with Supplementary Agreement dated 01.01.2014.
(iii) The application is Dismissed, being devoid of merits.
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This judgment covers:
A. Commercial decision of CoC and the limited Judicial Review or the jurisdiction of Adjudicating Authority in dealing with a Resolution Plan.
A.1 Role of Resolution Professional, Resolution Applicant and Committee of Creditors (CoC).
A.2 Decision of Liquidation is with CoC.
A.3 Limited judicial review available to NCLT lies within the four corners of Section 30(2) of IBC.
A.4 Grounds on which a Resolution Plan can be challenged.
A.5 The limited judicial review as laid down in Essar Steel judgment.
A.6 Power of approval conferred on the Adjudicating Authority in Section 31 of the Code.
A.7 Assessment about maximisation of the value of assets.
B. Simultaneous voting over two Resolution Plans by CoC.
C. Treatment of Dissenting Financial Creditor, Secured Financial Creditor and Operational Creditor.
C.1 Issue in the present case.
C.2 The expression “payment” occurs in Section 30(2) of the Code.
C.3 Payment of CIRP Cost and Debt of Operational Creditors has to be in terms of Money alone.
C.4 Payment to Dissenting Financial Creditors has to be in terms of Money alone.
C.5 A Dissenting Financial Creditor is a Secured Creditor.
C.6 Interpretation of Explanation 1 to clause (b) of Section 30(2).
C.7 No estoppel against the Dissenting Financial Creditor.
C.8 Option on pay in Cash or in kind.
C.9 Payment under Section 8 of IBC.
D. Modification in Resolution Plan by NCLT without sending back to CoC.
E. Rights of Minority Home Buyers/Allottees/dissatisfied homebuyers/Dissenting Homebuyers.
E.1 Voting Share mechanism in case of class of HomeBuyers/Allottees.
E.2 The minority of those who vote, as also all others within that class, are bound by that decision.
E.3 For Section 25A(3A) of IBC, majority of 50% is of those homebuyers who cast their vote.
E.4 The interplay of RERA and IBC.
F. Other Matters.
This judgment covers: A. Interpretation Rule for the provisions of the IBC. B. Jurisdiction of the NCLT/NCLAT over contractual disputes. C. Residuary jurisdiction of the NCLT under section 60(5)(c): “arising out of” and “in relation to”. D.1 Position of ipso facto clauses in international and multilateral organizations. D.2 Position of ipso facto clauses in India. E. Going concern concept under IBC. F. NCLT would have been empowered to set aside the termination of the PPA. G. Others: Interpretation of a ‘word’ in the statue. H. Conclusion
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State Bank of India Vs. Bhushan Steel Ltd. -NCLT Principal Bench Read Post »
