JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. v. NBCC (INDIA) LTD. & ORS.

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A rather than carrying the cargo of such debts which need to be satisfied (to the extent required) and then jettisoned. The expressions “payment” and “amount to be paid”, when read in the context and on the canvass of the objects and purposes of the Code, in our view, these expressions only convey their ordinary meaning, as understood in ordinary business parlance, that is, delivery of money alone; and there is no reason to construe these expressions to be conveying the meaning of ‘delivery of money or its equivalent’.

123Copy pinpoint123. A good length of arguments on behalf of IRP are devoted to the stand that, what CoC considers in sub-section (4) of Section 30 is the manner of distribution proposed; and such manner of distribution ought to be fair and equitable, as explained in Explanation 1 to clause (b) of Section 30(2). It is contended that if legislature intended the word “payment” to have a prescriptive meaning, that is, payment by way of payment of money only, there would have been no need to add Explanation 1 to clause (b) which provides that distribution under clause D (b) to operational and dissenting financial creditors shall be fair and equitable because in such a case, the distribution would only mean a crystallised sum of money with no room to test if distribution was fair and equitable. The argument is, again, of stretching the plain words beyond their real intent and meaning. The said Explanation is for removal of doubts and for clarification that distribution in terms of clause (b) shall be fair and equitable to the creditors covered thereunder that is, operational and dissenting financial creditors. This Explanation appears to have been necessitated for the reason that quantification of the minimum amount payable under clause (b) of Section 30(2) is in the realm of certain guesswork or estimate with reference to the distribution envisaged by Section 53 of the Code. This Explanation cannot and does not provide meaning to the expressions “payment” and “amount to be paid”. These and other arguments of similar nature, could only be rejected. 123.1. A submission made on behalf of IRP suggesting estoppel against the dissenting financial creditor for having not raised the issue in the meeting of the Committee of Creditors also remains baseless. This is for the simple reason that no estoppel could operate against the statutory right of the dissenting financial creditor to receive payment in terms of Section 30(2)(b) of the Code.

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123.2. The submission that commercial banks are permitted by A the Banking Regulations Act, 1949 to swap the debt for land and equity has its own shortcomings, rather shortfalls. The expressions “payment” and “amount to be paid” and “amount payable” as occurring in Section 30(2) and Regulation 38(1) cannot be interpreted only for the purpose of banks as financial creditors; the provisions refer to “financial creditors” B as such and it would be too far stretched to say that these expressions may have different meanings for different financial creditors in the manner that a financial creditor who could accept payment by any mode other than money could be “paid” by that mode and the other financial creditors who cannot accept anything except money shall be receiving payment in cash. This kind of interpretation would not only be reading words but even phrases and provisos in the statutory provisions, which is entirely impermissible. 123.3. Similarly, the suggestion that the Government and the Governmental bodies, which are not permitted by law to swap debt with equity or land will have to be paid by way of money and to that extent, the meaning of “payment” in the first part of clause (b) of Section 30(2) will have contextually different meaning, is, again, seeking to provide multiple sub-sects of the mode of payment, whereas no such differentiation or classification is indicated in the provisions under reference or in any other provision contained in the Code. E 123.4.The suggestion about prejudice being caused to the assenting financial creditors by making payment to the dissenting one has several shortcomings. As noticeable, in the scheme of IBC, a resolution plan is taken as approved, only when voted in favour by a majority of not less than 66% of the voting share of CoC. Obviously, the dissenting sect stands at 34% or less of the voting share of CoC. Even when the financial creditors having a say of not less than 2/3rd in the Committee of Creditors choose to sail with the resolution plan, the law provides a right to the remainder (who would be having not more than 34% of voting share) not to take this voyage but to disembark, while seeking payment of their outstanding dues. Even this disembarkment does not guarantee them the time value for money of the entire investment in the corporate debtor; what they get is only the liquidation value in terms of Section 53 of the Code. Of course, in the scheme of CIRP under the Code, the dissenting financial creditors get, whatever is available to them, in priority over their assenting counterparts. In the given scheme of the statutory H

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A provisions, there is no scope for comparing the treatment to be assigned to these two divergent sects of financial creditors. The submissions made on behalf of assenting financial creditors cannot be accepted. 123.5.The other submissions and counters with reference to the phraseology of Section 8 of the Code do not require much dilation because, the said provision essentially relates to the dues of an operational debtor and the steps envisaged before commencement of insolvency resolution process. Nevertheless, “payment” for the purpose of the said provision is also of money transfer; and not by any other mode.

124Copy pinpoint124. To sum up, in our view, for a proper and meaningful implementation of the approved resolution plan, the payment as envisaged by the second part of clause (b) of sub-section (2) of Section 30 could only be payment in terms of money and the financial creditor who chooses to quit the corporate debtor by not putting his voting share in favour of the approval of the proposed plan of resolution (i.e., by dissenting), cannot be forced to yet remain attached to the corporate debtor by way of provisions in the nature of equities or securities. In the true operation of the provision contained in the second part of sub-clause (ii) of clause (b) of sub-section (2) of Section 30 (read with Section 53), in our view, the expression “payment” only refers to the payment of money and not anything of its equivalent in the nature of barter; and a provision in that regard is required to be made in the resolution plan whether in terms of direct money or in terms of money recovery with enforcement of security interest, of course, in accordance with the other provisions concerning the order of priority as also fair and equitable distribution. We are not commenting on the scenario if the dissenting financial creditor himself chooses to accept any other method of discharge of its payment obligation but as per the requirements of law, the resolution plan ought to carry the provision as aforesaid.

125Copy pinpoint125. For what has been observed and held hereinabove, we have no hesitation in rejecting the contentions urged in challenge to that part of the decision of NCLT where the proposition in the resolution plan, concerning the method of meeting with the liability towards dissenting financial creditors, has been disapproved. That part of the decision of NCLT is unexceptionable and is approved.

126Copy pinpoint126. However, as noticed, after disapproving the terms of the resolution plan concerning dissenting financial creditors, the Adjudicating H Authority proceeded on the assumption that the offending terms could

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 819 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

be modified without changing the basic structure of the plan; and then A proceeded to make such modifications by providing that payment shall be made to the dissenting financial creditor bank in instalments. The question is as to whether the Adjudicating Authority could have done so? The answer is simply in the negative.

127Copy pinpoint127. As noticed and held in Point A (supra), the Adjudicating B Authority has no jurisdiction to enter into the commercial aspects of the resolution plan and to interfere with the wisdom of the Committee of Creditors. The terms as provided in the resolution plan for discharging the obligations towards the dissenting financial creditors were clearly and directly pertaining to the financial model proposed by the resolution applicant and accepted by the requisite majority of the Committee of C Creditors. The submissions made on behalf of the IRP in this regard are correct that if the Adjudicating Authority was of the view that the plan did not meet with any particular requirement, it could have only sent it back to the CoC to consider the proposed modifications, so as to afford an opportunity to the resolution applicant to modify the plan and to the D CoC to reconsider and vote upon the same.

128Copy pinpoint128. In other words, the Adjudicating Authority, of its own, could not have made any modification in the resolution plan, particularly on any commercial aspect thereof. The suggestions that in carrying out the requisite modifications by the Adjudicating Authority, the basic structure E of the resolution plan is not altered do not merit acceptance, particularly because the terms taken up for modification by the Adjudicating Authority belong to the thick of commercial aspects of the resolution plan; and any alteration thereof goes to the very root of the financial model propounded by the plan. F

129Copy pinpoint129. The upshot of the discussion foregoing is that though the Adjudicating Authority has not erred in disapproving the treatment of dissenting financial creditor like ICICI Bank in the resolution plan but, has erred in modifying the terms of the resolution plan and in not sending the matter back to the Committee of Creditors for reconsideration while extending an opportunity to the resolution applicant to make the necessary G modifications.

130Copy pinpoint130. For what has been discussed and held hereinabove, we see no reason to enter into the other area of suggestions and disputes concerning the particular parcels of land being offered by the resolution applicant to the objector bank. These aspects are rendered redundant H

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A once we have held that the payment envisaged by Section 30(2)(b) read with Section 53 of the Code has to be in monetary terms and not in any other mode. Point E Matters related with fixed deposit holders B

131Copy pinpoint131. As regards payment to the fixed deposit holders, it is noticed that the resolution plan has provided for 100% upfront payment to the fixed deposit holders whose claims were forming part of the admitted financial debt in the following terms (Schedule 2 to the plan relating to the steps for implementation): - C “VIII. STEP 7: PAYMENT TO FD HOLDERS Following the Approval Date, the Admitted Financial Debt of the FD Holders shall be settled by making 100% upfront payment of their principal dues within 90 days from the Approval Date but D after payment of the CIRP Cost and the Admitted Operational Debt. It is clarified that other than the Claims of FD Holders forming part of the Admitted Financial Debt, no other payment shall be made to any other FD Holder.”

132Copy pinpoint132. It is also noticed from the minutes of CoC meeting dated 07.12.2019 that the authorised representative of the fixed deposit holders made the submissions for honouring the claims received until the date of approval of the resolution plan, which was recorded as under: - “Payment to FD Holders: Authorised Representative (“AR”) F of Fixed Deposit (“FD”) holders submitted to CoC that FD claims have increased to INR 29 Crores as per the latest CoC reconstitution dated 30.11.2019 and both the Resolution Applicants have fixed the amount to FD holders at INR 28 Crores which shall be paid on pro rata basis, therefore the principal amount to FD holders shall be reduced proportionately. AR of FD holders G requested CoC that all the claims received from FD holders till the Resolution Plan approval date should be honored by the Resolution Applicants to avoid any sort of litigation by FD holders.”

133Copy pinpoint133. However, the NCLT, in paragraph 125 of its order has proceeded to modify the said term of the resolution plan as approved by H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 821 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

CoC and has provided that the resolution applicant shall make provision to clear even the dues of unclaimed fixed deposit holders when they would make a claim and such a right will remain in force as long as they were entitled to make a claim under the Companies Act, 2013.

134Copy pinpoint134. The aforesaid modification of the terms of resolution plan has been challenged by NBCC with the submissions that such directions of the Adjudicating Authority are wholly unjustified and are beyond the mandate of this Court in Essar Steel (supra). In our view, the submissions of NBCC deserve to be accepted.

135Copy pinpoint135. In the scheme of the process for corporate insolvency resolution, it is preliminarily provided in Section 13 of the Code that, after admission of an application for corporate insolvency resolution process, the Adjudicating Authority, apart from declaring moratorium and appointing an interim resolution professional, is also required to cause a public announcement of the initiation of CIRP and ‘call for submission of claims under Section 15’. As per Section 15, the material information in the public announcement is to contain, inter alia, ‘the last date for submission of claims, as may be specified’. The IRP is enjoined with several duties under Section 18 and as per clause (b) thereof, he is to ‘receive and collate all the claims submitted by the creditors to him, pursuant to the public announcement made under sections 13 and 15’. CIRP Regulations make the position clearer still, where, by virtue of Regulation 12, a creditor is required to submit his claim with proof ‘on or before the last date mentioned in the public announcement’; and a creditor who fails to submit the claim within the stipulated time, may yet submit the claim with proof ‘on or before the ninetieth day of the insolvency commencement date’. As per Regulation 13, the resolution professional concerned is to verify the claims within seven days of the last date of receipt of claims. 135.1.Due adherence to the timelines provided in the Code and the related Regulations and punctual compliance of the requirements is fundamental to the entire process of resolution; and if a claim is not made within the stipulated time, the same cannot become a part of the G Information Memorandum to be prepared by IRP and obviously, it would not enter into consideration of the resolution applicant as also of the Committee of Creditors. In the very scheme of the corporate insolvency resolution process, a resolution applicant cannot be expected to make a provision in relation to any creditor or depositor who has failed to make H

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A a claim within the time stipulated and the extended time as permitted by Regulation 12. In Essar Steel (supra), while dealing with the topic ‘Extinguishment of Personal Guarantees and Undecided Claims’, this Court disapproved that part of the NCLT judgment which held that other claims, that might exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate B Tribunal, could be decided in an appropriate forum in terms of Section 60(6) of the Code. This Court specifically held that a resolution applicant cannot be made to suddenly encounter undecided claims after resolution plan submitted by him has been accepted; and in the scheme of the Code, all claims must be submitted to, and decided by, the resolution C professional so that the resolution applicant could proceed on a fresh plate. This Court, inter alia, held as under: - “107. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/ D Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count.” 135.2.It has not been the case of anyone that in the process in question, any of the requirements of Sections 13, 15 and 18 had not been complied with. It has also not been anybody’s case that any claim made by any fixed deposit holder within the stipulated time was not taken into account by IRP.

136Copy pinpoint136. In the given fact situation and in view of the law declared by this Court, we find no justification for the directions contained in paragraph

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 823 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

125 of the order passed by NCLT. Those directions are required to be annulled. Point F Objections of the financial creditor of subsidiary of the corporate debtor B

137Copy pinpoint137. Indisputably, the corporate debtor JIL owns 100% equity shareholding in JHL which is having three operational hospitals in the State of Uttar Pradesh. Substantial part of the shareholding of JHL is pledged with its lenders. In the resolution plan, NBCC has proposed in regard to JHL as follows: - C “Since, majority of shareholding of Jaypee Healthcare Limited is already pledged to the lenders to the hospitals to secure the indebtedness of Jaypee Healthcare Limited, it is proposed to divest the entire shareholding of Jaypee Healthcare Limited by inviting bids for the same and utilize the divestment funds for settlement of outstanding debt obligations of Jaypee Healthcare D Limited, without any additional payment by the Corporate Debtor. In this regard, the pledge over shareholding of JIL (shares of Jaypee Healthcare Limited held by JIL) created in favour of the lenders of Jaypee Healthcare Limited shall stand released in terms of this Resolution Plan immediately upon the approval of this E Resolution Plan by the Adjudicating Authority. Such release would inter alia be in consideration of the proposed repayment of the outstanding debt of the lenders of Jaypee Healthcare Limited. Such repayment would not include levy of any penalties or charges including prepayment penalty, penal charges, etc. In furtherance of the aforesaid objective the lenders of Jaypee Healthcare Limited F shall not be entitled to deal with the assets of Jaypee Healthcare Limited or adversely interfere with the continued business operations of Jaypee Healthcare Limited in any manner whatsoever including enforcement of any security created in their favour by the Corporate Debtor or by Jaypee Healthcare Limited G (pledge, mortgage, etc.), entering into operation and maintenance agreements or any other agreements with any person which has an effect of selling, leasing or otherwise disposing off the whole or substantially the whole of the undertaking of Jaypee Healthcare Limited, take any action which would otherwise require the consent of the shareholders of Jaypee Healthcare Limited or take any H

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A other steps which may be contrary to the treatment proposed for Jaypee Healthcare Limited under this Resolution Plan. Further, the Resolution Applicant also reserves its right to cause the Corporate Debtor to transfer its entire shareholding in Jaypee Healthcare Limited into a trust. Such trust would be settled by the B Corporate Debtor, the beneficiary of the trust would be the Resolution Applicant and the trustee would be a professional entity (to be appointed by the Resolution Applicant). The trust property would comprise inter alia of the entire shareholding of the Corporate Debtor in Jaypee Healthcare Limited.”

138Copy pinpoint138. The objector YES Bank Limited, as being the financial creditor of JHL, had raised objections as regards such stipulations and proposals while asserting that the assets of its debtor JHL could not have been dealt with in this resolution plan. The Adjudicating Authority, though took up such objections for consideration but observed that the resolution applicant NBCC and YES Bank having agreed for constitution of a D committee to deal with the shares and assets of the subsidiary company, this issue was not required to be discussed.

139Copy pinpoint139. The objector YES Bank has taken exception to the aforesaid part of the order impugned with the submissions that no such settlement was drawn out with NBCC and the Adjudicating Authority has failed to E consider the objections on rather incorrect assumptions. It is submitted that the resolution plan interferes with the statutorily protected rights of the lenders of JHL, who are effectively the third parties and not the members of CoC of JIL. It is also submitted that the transfer of the entire undertaking and business of JHL, a wholly-owned subsidiary of F JIL, under the garb of sale of equity is not permissible as per the Section 18(f) read with its Explanation (b) and Regulation 37(a) of the CIRP Regulations whereby, the resolution plan is only limited to the assets of the corporate debtor. With reference to various decisions, including that in the case of Vodafone International Holdings BV v. Union of India and Anr.: (2012) 6 SCC 613, it is submitted that holding company does not own the undertaking or business of subsidiary company even if it holds all the shares therein. It is also contended that the CIRP of JHL must be independently conducted as the sale of business or undertaking in the manner suggested by NBCC severely prejudices the rights of the creditors of JHL to recover their legitimate dues. It is yet further submitted that the shares of JIL, the corporate debtor, are subject to the pledge

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 825 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

created by them to secure the debts of JHL and the resolution plan cannot unilaterally extinguish the security interest provided to the lenders of JHL, who are not the creditors of JIL and therefore, not the part of the CoC of JIL. This objector bank submits that the resolution plan does not account for the total debts incurred by JHL and the securities or encumbrances, to the extent of 63.65% of the shares, as created by B JHL over its assets. It has, therefore, been prayed that this objector bank be allowed to continue with its appeal before the Allahabad Bench of NCLT against JHL and the portion of resolution plan dealing with JHL and its assets be deleted. 139.1.It is noticed that without prejudice to the aforesaid and other submissions, the objector YES Bank has given out its proposition for evolving a workable mechanism with certain stipulations in sub-paragraphs “ff” and “gg” of paragraph 7 of the memo of appeal, which read as under: - “ff. Without prejudice to any of the above and the following legal grounds raised in the present proceedings, the Appellant in the best interest of all the interested parties including the interests of the Resolution Applicant and in spirit of reconciliatory approach is still willing to work with the Resolution Applicant in finding a working solution so that JHL assets can be monetized in a timely manner. Provided, the Respondent No. 2 / Resolution Applicant E is willing to accept the proposals and the safeguards as requested by the Appellant. For brevity’s sake, the Appellant’s proposal for a workable mechanism is set out in the Written Submissions filed before the Ld. Adjudicating Authority, which is reiterated below: (i) The lenders of JHL led by YBL will take all necessary preparatory measures required for finding a viable buyer to take over the JHL units in a completely transparent manner. (ii) To the above cause, JHL lenders shall be permitted to prepare an information memorandum, seek bids from prospective buyers, appoint independent, impartial and reputed investment bankers to run the process of JHL monetisation. (iii) This is proposed to be done through fullest co-operation from RP of JIL as well as Board and Management of JHL as information and engagement will be critical to run an efficient and effective sale process. H

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A (iv) JHL lenders shall liaise with the IRP, Mr. Jain and share the status of the steps periodically with IRP and NBCC. (v) A Sale Committee to bet set up with participation of lenders of JHL and NBCC, for sale of JHL; (vi) The decision to accept the bid of a particular buyer shall be taken by a unanimous vote of NBCC and YBL (on behalf of the lenders of JHL); (vii) The sale process shall be finalised within a period on 3 months from the date of approval of the resolution plan by Hon’ble NCLT and latest by June 30, 2020 and until such time rights of lenders of JHL vis-à-vis assets of JHL as well as pledge of JHL Shares (held by JIL as investment) in favour of JHL lenders shall be kept intact; (viii) In the event of successful disinvestment of JHL, the disinvestment funds shall be utilized for settlement of debt of JHL D lenders in priority, in accordance with existing Resolution Plan; (xi) During the period above, until June 30, 2020, there shall be a moratorium on the rights of the JHL lenders to enforce its securities held in JHL including the share pledge by JIL; (x) Should the sale still not be finalised before June 30,2020, E for any reason whatsoever (including any delay due to legal proceedings), then the moratorium over enforcement of pledged shares as well as other assets of JHL, shall stand lifted; and (xi) Thereafter, JHL lenders will have all rights to enforce its securities against JHL to recover its outstanding dues including F but not limited to enforcement of pledge, and, or continuation of CIRP against JHL. gg. If the Respondent No. 2 is agreeable to accept the above mechanism then the Appellant shall not press its remedies for challenging the Resolution Plan. Failing which the entire Resolution G Plan insofar as it relates to JHL Assets is required to be severed and set aside.”

140Copy pinpoint140. In response, it is submitted that as a resolution applicant, NBCC is entitled to get the management of the corporate debtor on a clean slate (as observed by this Court in the case of Essar Steel); and H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 827 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

when NBCC under its plan is extinguishing all the contingent liabilities, disinvestment of JHL shares cannot be taken exception of. It has also been submitted that in the resolution plan, it was made clear that NBCC does not possess the expertise to run the operation of a healthcare business and, therefore, seeks to divest the entire shareholding of JHL to a third party and/or a trust who would have the requisite expertise to deal with the requirements of healthcare business. It is also submitted, with reference to Section 18(f)(v) of the Code, that the assets of the corporate debtor include securities and shares held in any subsidiary; and shares of a subsidiary company are held as the assets of the parent company in its books, as held by this Court in the case of Vodafone (supra). C 140.1.Apart from the above, NBCC has referred to the proceedings before the Adjudicating Authority before passing of the order dated 03.03.2020 and it is pointed out that the Adjudicating Authority, in its order dated 04.02.2020 observed that a settlement may be reached between NBCC and YES Bank and pursuant thereto, YES Bank and D NBCC held a meeting on 06.02.2020 to discuss the mechanism for sale of shares of JHL and thereafter, on 07.02.2020, a proposal for sale of shares of JHL was given by YES Bank to which NBCC, in its email dated 14.02.2020 stated that “NBCC is agreeable for constitution of a committee which will take forward the disinvestment process of JHL after approval of the resolution plan as submitted by NBCC.” E Thus, according to NBCC, there has been an agreement between the parties on the manner of sale to be carried out of JHL shares. This apart, NBCC has also referred to the aforesaid proposal stated in the memo of appeal and while reproducing the first part of the above-quoted paragraph “gg”, has stated its acceptance of the proposal so made by F YES Bank subject to the approval of resolution plan.

141Copy pinpoint141. We have carefully examined the submissions made by the parties. In the totality of circumstances of the case and the stance of respective parties, when it is noticed that the aforesaid proposal of YES Bank, as stated in sub-paragraphs “ff” and “gg” of paragraph 7 of the G memo of appeal, is acceptable to NBCC, subject to approval of the resolution plan, we do not find any reason to say anything further on this score and would leave the parties to work out a viable solution in the best interest of all the stakeholders; and for that purpose, the parties concerned, if necessary, may seek appropriate orders from NCLT, as regards mode and modalities of the process to be carried out. H

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142Copy pinpoint142. In view of the above, we do not consider it necessary to render any other finding in this point for determination except the observation that the resolution plan essentially deals with the assets of the corporate debtor JIL and not that of its subsidiary JHL. Differently put, what the resolution plan deals with are the shares in JHL, which are regarded as assets of the corporate debtor JIL. As observed, no further B comments are required and we leave this aspect of the matter at that only. Point G Grievance of agreement holders

143Copy pinpoint143. As regards certain transfers without proper agreement/sub- lease deed and without consideration, the resolution applicant had reserved a right in itself to cancel such instruments or term sheets without any corresponding obligation to the counter party in the following terms (Clause 21 Schedule 3 of the resolution plan): - D “21. With respect to any alleged transfer of land parcels by the Corporate Debtor to third parties without any proper agreement/ sub-lease deeds and where the consideration amount has not been paid to the Corporate Debtor inter alia including the land parcels listed in Annexure G, the Resolution Applicant reserve a right to cancel such instruments/agreements/term sheets and upon cancellation the title in such land parcels will continue to be legally vested in the Corporate Debtor without any liability/obligation to the counter-party.”

144Copy pinpoint144. The NCLT has observed that when an agreement is invalid and consideration has not been paid, no separate stipulation is required to be made that such agreement could be cancelled. However, at the same time, NCLT has also observed that even though such a clause has been mentioned in the resolution plan, that did not mean that the agreement holders have lost their right to seek remedy before the competent forum.

145Copy pinpoint145. The agreement holders, while questioning this part of the resolution plan in their appeal, have given the details of five term sheets/ agreements with the corporate debtor between 01.05.2017 to 08.08.2017 i.e., before the date of initiation of CIRP (09.08.2017). It is submitted that those term sheets were rectified by CoC in its meetings dated 10.11.2017 and 28.11.2017 and upon assurances of IRP for external development and providing of other services, the appellants had made

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 829 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

further part payment, in addition to the amounts already paid. It is further submitted that the resolution plan is contrary to Section 30(2)(e) of IBC as the term sheets/agreements were found valid during the CIRP by the CoC and they cannot become improper agreements overnight on the mere saying of the resolution applicant. The grievance of the appellants is that even after holding that the appellants have not lost their right to seek remedy before a competent forum, the questioned Clause 21 (in ‘reliefs and concessions’) of the resolution plan was not modified by NCLT. According to the appellants, the approved resolution plan carrying such a clause purports to take away their rights without due process of law in contravention of Article 300-A of the Constitution of India and hence, is violative of Section 30(2)(e) of IBC. The appellants also submit that the Development Plan of the concerned area has not yet been renewed by the Noida Authority and the status of the development is also uncertain. 145.1.With these submissions, the appellants have stated their prayer in the manner that they are willing to pay the balance amount within 1 year in respect of the property at C-1/E, Sector 133 Noida, which is in their possession and to cancel the other 4 term sheets/ agreements relating to the land at Sector 151 Noida with adjustment of the payments made therein towards the property at Sector 133 Noida; and to execute the sale deed and get the master plan sanctions for the next 5 years. Alternatively, the appellants pray for the refund of the amount deposited by them, to the tune of INR 24.03 crores approximately, with appropriate interest.

146Copy pinpoint146. Per contra, NBCC maintains that the resolution plan as approved by CoC and the Adjudicating Authority is binding on all the stakeholders including the appellants and in any case, the relief in question, as provided in the resolution plan, is limited to such instances where no proper agreements/sub-lease deeds have been executed by the corporate debtor with counter parties and therefore, Article 300-A of the Constitution is not violated and the relief provided in the resolution plan is not arbitrary or unfair. It is also submitted by NBCC that while dealing with the segment of ‘reliefs and concessions’, the Adjudicating Authority has not passed any favourable order in regard to the said relief; and even while granting the right to NBCC to cancel the agreement, has kept intact the right of an affected party to seek remedy in a competent forum. H

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147Copy pinpoint147. In our view, looking to the nature of dealings and the propositions advanced by agreement holders, the observations made by the Adjudicating Authority, in addendum to Clause 21 of ‘reliefs and concessions’ in the resolution plan but, without encroaching upon the commercial wisdom of CoC, only work towards viability of the plan while extending a fair treatment to the agreement holders, by keeping their right to seek remedy in a competent forum intact. The resolution applicant, NBCC, also does not appear to be having any qualms about it.

148Copy pinpoint148. Thus, in the overall scheme of the resolution plan, the stipulation in question cannot be said to be unfair; and the observations of the Adjudicating Authority in paragraphs 132 and 133 of the impugned order dated 03.03.2020 remain just and proper. No further orders are required in this regard. This point stands determined accordingly. Point H Grievance of minority shareholders

149Copy pinpoint149. The other set of objectors is of the non-promoter shareholders of the corporate debtor, who are also referred to as the minority shareholders. Their grievance is that the resolution plan does not deal with their interests and they have not been provided with a fair exit option. It is submitted that such non-promoter shareholders have invested their hard-earned money in the equity of the corporate debtor much E before initiation of CIRP; that they had made the investment on the basis of the financial statements filed by the corporate debtor, suggesting the valuation of various assets including the Expressway and other land parcels; and the corporate debtor has adequate and appreciating assets to take care of all the liabilities and interests of the stakeholders.

150Copy pinpoint150. These shareholders have referred to a valuation report, said to have been prepared by India Infrastructure Finance Co. Ltd., on 31.03.2017 suggesting that even after accounting for liabilities, net worth of the corporate debtor was about INR 7,377 crores. It is submitted that the IRP itself had valued the corporate debtor at INR 8,257 crores but G NBCC is attempting to acquire the company for a meagre sum of INR 120 crores and extinguishing the entire public shareholding of the corporate debtor by paying a sum of INR 1 crore in total, as against the fair value per share at INR 56.68; and the offer of NBCC is unconscionable, is against the principles of proportionality, results in misappropriation of funds of these shareholders, and is being used as a H device to enrich the resolution applicant at the cost of stakeholders.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 831 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

150.1. It is also submitted that the plan is in contravention of A Section 230 of the Companies Act, 2013, which provides for the power to compromise or make arrangements with any creditor or member of a company; that the minority shareholders, even if not a part of the CoC, have a right to know and participate in any compromise or arrangement which affects their rights; that they have a right to dissent with any terms of the compromise or arrangement which affects their rights and for that matter, they would be deemed to be dissenting shareholders, who need to be provided a reasonable exit option or opportunity. It is further submitted, while referring to the decision in Essar Steel (supra), that the ultimate decision of what amount to pay may rest with the CoC, but the decision should be made by taking into account the maximum value of the assets of the corporate debtor and after adequately balancing the interests of all stakeholders including operational creditors. 150.2. These minority shareholders further contend that when the intent of the IBC is to keep the corporate debtor as a going concern, the action of delisting the public shareholding of the corporate debtor totally defeats the objective. It is also submitted that the resolution plan has not been formulated in accordance with the procedure envisaged by the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 200984 which require that an exit opportunity ought to be provided for de-listing of shares from the stock exchange. E 150.3. It is submitted that though the said shareholders were not part of CoC and did not get the opportunity to attend the meetings of CoC, they made all efforts to voice their concerns and even got issued the notice dated 19.02.2020 to IRP and the resolution applicant but the notice failed to evoke any response. According to these objectors, the resolution plan, as approved by the NCLT, is not in accord with Regulation F 38(1A) of the CIRP Regulations and is contrary to the intent of IBC inasmuch as it has failed to maximise the value of assets of corporate debtor and to protect the interests of all the stakeholders. It is also contended that the interests of all the stakeholders ought to have been protected but the Adjudicating Authority has not even considered the G matter relating to the interests of the minority shareholders. 150.4. With the aforesaid submissions, it has been prayed that appropriate orders are required to safeguard the interests of minority

84 Hereinafter also referred to as ‘Delisting Regulations’. H

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A shareholders and the respondents deserve to be directed to device a reasonable exit scheme for them whereby, they are given a price at least as per the book value of shares at the time of initiation of CIRP or an order be issued to swap the shares of existing minority shareholders with the shares of NBCC.

151Copy pinpoint151. The contentions so urged are opposed by NBCC with the submission that these shareholders have, for the first time, approached in appeal though they were aware of the proceeding before the Adjudicating Authority, as is evidenced by the letter sent by their advocate on 19.02.2020; and the issue has been raised at this stage only to create unnecessary hindrances and to cause prejudice to the entire process. C 151.1. As regards fairness of the treatment given to the minority shareholders, it is submitted that the resolution plan provides an exit option to the existing public shareholders at a price which is higher than the liquidation value; and they are being paid an exit price of INR 1 crore, which is in contrast to the treatment being accorded to promoter D shareholders, whose shareholding is being extinguished and cancelled in its entirety without any consideration. 151.2. It is submitted that the liquidation value as determined by the valuers appointed by the IRP under the Code is approximately INR 17,876 crores (as per RBSA) and INR 17,658 crores (as per GAA), E whereas the total debt owed to financial creditors is approximately INR 23,247 crores. In the aforesaid scenario, according to NBCC, where the minority shareholders are not entitled to any value, the resolution plan, with offer of exit at a price of INR 1 crore, is neither unfair nor arbitrary. 151.3. It has further been submitted that in the scheme of IBC, F specific and novel method of insolvency resolution is provided wherein, by way of amendment brought about by Act 26 of 2018 w.e.f. 06.06.2018, the Explanation to Section 30(2)(e) has been inserted, providing for deemed approval of shareholders and, therefore, the submissions on behalf of the minority shareholders do not deserve consideration. G

152Copy pinpoint152. Having given anxious consideration to the rival submissions, we are clearly of the view that objections sought to be taken by the minority shareholders must fail.

153Copy pinpoint153. It is noticed from the resolution plan that the Delisting Regulations, as amended on 31.05.2018, have been duly taken note of; H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 833 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

and the step for delisting and extinguishment of existing shareholding is provided in Schedule 2 thereof, in the following terms: - “IX. S TEP 8: DELISTING AND E XTINGUISHMENT OF E XISTING SHAREHOLDING

1. As an integral part of the Resolution Plan, post implementation of Step 1, the shares of the Corporate Debtor shall be de-listed, in terms of SEBI (Delisting of Equity Shares) Regulations, 2009. (“Delisting Regulations”), as amended by Amendment to Delisting Regulations dated May 31, 2018, which prescribes that the procedure under the Delisting Regulations are not applicable for any delisting pursuant to an approved resolution plan under the Code, if: (a) the resolution plan sets out a specific delisting procedure; or (b) the resolution plan provides an exit option to existing public shareholders at a price which is higher of the liquidation value (as applied in the order of priority of claims prescribed under Section 53 of IBC) and the exit price being paid to the promoters. In this regard, the Non-Promoter Shareholders (i.e. the public shareholders) shall be paid an exit price aggregating to INR 1 Cr and pursuant to the same, their shareholding shall be extinguished. E

2. In terms of the definition of Public Shareholders under the Delisting Regulations, Existing Promoters are specifically carved out. Accordingly, simultaneous to the de-listing, the issued equity share capital of the Corporate Debtor as held by the Existing Promoters i.e. 84.70 Cr equity shares of face value of INR 10 F (Rupees Ten each) shall be extinguished and cancelled in its entirety without any consideration.

3. Extinguishment of shares of Corporate Debtor may be done through Capital Reduction or selective Capital Reduction.

4. Extinguishment of shares of Corporate Debtor may be done G through credit to Capital Reserve Account. The equity shareholding of the Corporate Debtor post De-listing and Capital Reduction shall be as follows:

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It cannot be said that the resolution plan is not compliant with the requirements of Regulation 38(1A) of the CIRP Regulations. 153.1. As noticed, by way of Explanation to Section 30(2)(e) of the Code, it has been made clear by the legislature that if any approval of shareholders is required under the Companies Act, 2013 or any other law for the time being in force for implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. The attempt on the part of minority shareholders to raise objection against the resolution plan simply flies in the face of this Explanation to Section 30(2)(e) of the Code. E 153.2. Needless to reiterate that in the scheme of IBC, only the CoC is entrusted with the task of dealing with and approving the plan of insolvency resolution; and the shareholders of a corporate debtor, who is already reeling under debts, have not been provided any participation in the insolvency resolution process. It goes without saying that in the case of a corporate debtor like JIL, if the process of liquidation is resorted to under Chapter III of the Code, there is a very little likelihood of the shareholders getting even dewdrops out of the waterfall of distribution of assets, as delineated in Section 53 of the Code, where the preference shareholders and equity shareholders stand last in the order of priority. In the totality of circumstances, when the promoters’ shareholding is extinguished and cancelled in toto without any consideration, even nominal exit price of INR 1 crore for minority shareholders cannot be termed as unfair or inequitable. In any case, a decision in regard to the aforesaid step in the resolution plan had been that of the commercial wisdom of the Committee of Creditors and is not amenable to judicial review. H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 835 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

153.3. Reference to Section 230 of the Companies Act, 2013, A which deals with power to compromise or make arrangements with creditors and members is entirely inapt in the context of the present case because no such proceedings for compromise or arrangements are in contemplation. On the contrary, in the present case, the proceedings of CIRP under the Code have reached an advanced stage with approval of resolution plan by the CoC and the Adjudicating Authority. 153.4. Apart from the above, NBCC also appears right in contending that once the resolution plan stands approved by the Adjudicating Authority, the objecting shareholders, who did not even raise any grievance before the Adjudicating Authority, cannot now, for the first time, object to the arrangement arrived under the resolution plan, in view of Section 31 read with Section 238 of the Code which provide that the approved resolution plan shall be binding on all stakeholders and that the provisions of IBC shall prevail not only over the laws but also the instruments having effect by virtue of any such law.

154Copy pinpoint154. Viewed from any angle, in our view, it cannot be said that the resolution plan does not adequately deal with the interests of minority shareholders. The grievances as suggested by these shareholders cannot be recognised as legal grievances; and do not provide them any cause of action to maintain their objections. The objections by the minority shareholders stand rejected. E Point I Matters related with dissatisfied homebuyers of JIL

155Copy pinpoint155. We may now take up the issues raised by a section of homebuyers of JIL against the resolution plan of NBCC. For dealing with this segment of disputes, a bit of prelude concerning the status and position of homebuyers in CIRP shall be apposite.

156Copy pinpoint156. Not much of discussion is required to notice that the largest block of stakeholders, who are likely to bear the brunt in the event of liquidation of JIL and conversely, who are likely to find succor in case of resolution of insolvency of JIL, is that of the homebuyers, who have invested their hard-earned money in the projects of JIL. In the first two rounds of litigation, they had been the focal point of consideration where this Court invoked its powers under Article 142 of the Constitution of India to ensure that the insolvency resolution process of JIL is taken ahead within the discipline of IBC while obviating the likelihood of H

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A liquidation. As narrated in sufficient detail hereinbefore, during the pendency of the case of Chitra Sharma, by the amendment of IBC with insertion of Explanation to Section 5(8)(f), the doubts about the status of homebuyers got clarified and, for being duly recognised as financial creditors of the corporate debtor, the homebuyers got their say in the Committee of Creditors. In fact, such an amendment and inclusion of homebuyers in the Committee of Creditors had far-reaching and ground-breaking effects in the present case for the reason that the homebuyers, as a class, acquired a dominant status in the Committee of Creditors, with more than half of the voting share with them. Obviously, no effective decision of the Committee of Creditors could have been taken without the involvement and assent of the homebuyers. As noticed, the resolution plan in question had been approved by CoC of JIL with more than 97% of the voting share in its favour. In this voting, the homebuyers had the voting share of more than 57%. It goes without saying that if the homebuyers were not to vote for this plan, the same would have not seen its approval with minimum 66% of the voting share of financial creditors, as required by the Code. The other plan of Suraksha Realty got less than 3% votes. If both the plans were unable to muster the requisite (not less than 66%) voting share, the only consequence would have been liquidation of JIL, which every stakeholder wanted to avoid.

157Copy pinpoint157. In the process envisaged by the Code, where the CoC may approve a resolution plan by a vote of not less than 66% of voting share, there remains an obvious possibility of some of the financial creditors not voting for approval of the plan but by the very nature of process, they would be having the voting share of not more than 34% and could be conveniently described as ‘dissenting financial creditors’. The resolution plan is required to carry specific provision for payment of debts of such dissenting financial creditors, more particularly in view of the requirements of the second part of Section 30(2)(b) of the Code. All the features related with such provisions and their operation have been examined in Point D (supra) concerning the dissenting financial creditor, who has indeed not voted in favour of the plan in question.

158Copy pinpoint158. The relevant aspect for the present point for determination is that apart from such dissenting financial creditors, a few of the associations of homebuyers and some of the individual homebuyers carry their own grievances against the resolution plan and seek to submit that H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 837 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

their interests have not been safeguarded and they are being denied of their legal rights. These dissatisfied associations and individual homebuyers seek to contend that the resolution plan is lacking in various requisite arrangements; is violative of the CIRP Regulations; and is also violative of the provisions of RERA and therefore, it could not have been approved. One block of such objectors is rather differently dissatisfied for the reason that according to them, the housing projects which have been completed or are nearing completion ought to be kept out of the purview of this plan of resolution. In counter, it is contended on behalf of the resolution applicant that these dissatisfied homebuyers or associations have no right to maintain any objection as if being the dissenting financial creditors because the homebuyers have voted as a C class in favour of the resolution plan and are bound as a class with ‘drag along’ provisions in the Code. The objections have been refuted on merits too. These rival submissions have led to the formulation of four different questions in this point for determination.

159Copy pinpoint159. The associations and the individual homebuyers who are dissatisfied with the resolution plan and the process of its approval have made various overlapping and repeat submissions; we may summarise the substance thereof, while avoiding prolixity, as far as possible. 159.1. It is contended on behalf of the association of homebuyers, who has filed the appeal (in T.C. No. 243 of 2020) and has also filed an intervention application in the appeal filed by other associations, that the homebuyers have the locus standi to file an appeal even though they belong to a class of creditors represented through an authorised representative, who voted in favour of the resolution plan of NBCC. This association of dissatisfied homebuyers submits that sub-section (3A) of Section 25A of the Code is only intended to iron out the logistical issues and technical difficulties which arise due to the large number of creditors; and the mere fact that more than 51% of the homebuyers voted in favour of the resolution plan cannot take away the statutory right of appeal. 159.1.1. As regards the major part of grievances, it is contended on behalf of this association that the resolution plan in question is patently illegal and is in contravention of the provisions of RERA and its rules. With reference to Section 30(2)(e) of the Code, it has been argued that the resolution plan must be in conformity with other laws in force and merely because IBC has a non-obstante provision over other laws would H

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A be no ground to hold that a resolution plan framed under the scheme must also be elevated to such status; that RERA is one such legislation which expressly deals with the rights of the homebuyers and if there is any inconsistency between IBC and RERA, the former would prevail but, the same cannot be said about a resolution plan under IBC. It is submitted that Sections 13(2), 18 and 19(4) of RERA as also U.P. RERA B (Agreement for Sale/Lease) Rules, 2018 are in violation as the resolution plan does not provide an option to the homebuyers to seek refund in case the flat is not delivered within the time period prescribed in the revised schedule; and does not provide interest as well as compensation on the amounts already paid by homebuyers, in case they seek refund. C Therefore, according to this association, if the resolution plan as existing is approved, it would take away all the rights bestowed upon the homebuyers under RERA and homebuyers will be at the mercy of ‘one sided agreements’ made by NBCC with no future remedies available to them. It is also submitted that the resolution plan actually recognises the interest amount to be paid to the homebuyers as part of the ‘Admitted D Amount’ but does not pass on this amount to the homebuyers. 159.1.2. In another line of submissions, it has been contended that 758 acres of land is returned to JIL as per the judgment of this Court dated 26.02.2020 in the case of Anuj Jain (supra) but NBCC has failed to specify anything in the resolution plan regarding the treatment and utilisation of this big parcel of land though the same ought to be put to use for the purpose of providing delay penalty/interest to the homebuyers. It is submitted that NBCC cannot be allowed to unjustly enrich itself at the cost of the corporate debtor’s unencumbered assets and ought to use this land bank to make its resolution plan compliant with the provisions of RERA. 159.1.3. In yet another line of submissions, it has been contended that the IRP, while filing Form-H along with the approval application, has not placed on record the liquidation costs; and this cost is required for assessing the feasibility and viability of the resolution plan. Therefore, G there had been complete violation of Regulation 39B of the CIRP Regulations. It is also submitted that the resolution plan in question, being a conditional one in terms of Clauses 1 and 2 of Schedule 3 thereof, could not have been taken as a resolution plan standing in conformity with the requirements of Regulation 36A(7) of the CIRP Regulations. H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 839 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

159.1.4. Of course, as regards the said amount of INR 750 crores A deposited by JAL, this association maintains that the same was to protect the interests of homebuyers of JIL and forms the part of corpus of JIL but, it is also submitted that if there be any ambiguity with respect to the homebuyers of JAL and they are also to be covered under the deposit so made by JAL, then the amount may be used by the corporate debtor and B JAL on a pro rata basis so as to secure the interests of the homebuyers of both these companies. It has also been prayed that NBCC be directed to start the construction within 30 days and to complete the entire project within 3 years; that NBCC be barred from withdrawing; and that NBCC be prohibited from charging the homebuyers with any extra amount towards arbitrary increase in the name of ‘Super Built-Up Area’, which would be illegal without corresponding increase in the carpet area. 159.2. Another society of homebuyers of the projects undertaken by JIL has directly approached this Court against the order dated 03.03.2020 passed by NCLT, and is essentially aggrieved that the resolution plan does not provide for the interest to be accrued to the homebuyers or compensation for delay period on their deposits. 159.2.1. On behalf of this society also, the aforesaid submissions relating to 758 acres of land, violation of the provisions of RERA and proposed changes in ‘Super Built-Up Area’ are re-emphasised. This apart, it is submitted that the resolution plan provides for unfair treatment to the homebuyers of JIL inasmuch as they are liable to pay interest at 18% p.a. in the event of default to pay the remaining instalments but, on the other hand, a meagre delay compensation, amounting to INR 5/- per square feet per month, is offered to them in case of delay in construction and the same is stated to be due only after the expiry of one year from the date of delivery of possession. It is submitted that the “financial debt” in terms of Section 5(8) of IBC is that of “disbursal against the consideration for the time value of money”, which means compensation for the length of time for which the money has been disbursed. Thus, the provisions for the homebuyers in the resolution plan ought to mandatorily include a just and fair interest to account for the period of delay. G 159.3. As noticed, in paragraph 126 of the order dated 03.03.2020, the Adjudicating Authority rejected the submissions sought to be made by a few other homebuyers, who asserted themselves to be the “dissenting” homebuyers, because the authorised representative on behalf of the homebuyers had assented to the resolution plan while H

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A observing that ‘it cannot be said that dissenting homebuyers before authorised representative to be considered as dissenting financial creditors against the total voting of CoC’. These homebuyers have filed a separate appeal (in T.C. No. 242 of 2020) with many a submissions running common to those of the contesting associations. While avoiding repetition, we may take note of the other material submissions on behalf of these appellants-homebuyers. 159.3.1. It is contended on behalf of these homebuyers that they and several other homebuyers have consistently dissented from the resolution plan as the proposed timelines for completion are not workable and there is no clause for refund of money in a situation that the construction is not completed within time; and cent percent approval has not been given for effectuating the resolution plan. The grievance is that their application was rejected by NCLT on the ground that AR on behalf of the homebuyers had assented to the resolution plan but without dealing with the specific objection raised by the appellants with regard to the proceedings before the CoC and the procedure adopted by it; and they were not even allowed to make all their submissions before NCLT. According to these appellants, NCLT has applied two standards while dealing with objections of two dissenting financial creditors i.e., ICICI Bank on one hand and the appellants on the other, which amounts to unfair discrimination amongst the same class of creditors; and the findings in paragraph 126 of the impugned order are in the teeth of NCLT’s findings in paragraphs 100 and 101 of the same order. 159.3.2. It is submitted that in the 16th meeting of CoC, there was no consensus with regard to the resolution plan to be adopted; and on evaluation of the resolution plans, it was found that the plan of Suraksha F Realty was better than that of NBCC considering the scores given by the experts. The appellants have submitted that in the resolution plan by Suraksha Realty, provision was made for delay penalty pertaining to previous period in the form of fixed compensation by way of transfer of land worth INR 250 crores at Mirzapur and for this purpose, creation of G a Trust was proposed; and it was also proposed that the said resolution applicant shall endeavour to monetise the land for 4 years and the sale proceeds would be distributed amongst the eligible homebuyers. According to the appellants, the plans were put to vote contrary to the provisions of IBC and yet, IRP moved an application for approval of the plan submitted by NBCC, which was objected by them and various other H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 841 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

parties with the submissions that the resolution plan of NBCC was unfairly adopted through illegal voting; and that the plan of NBCC was in contravention of RERA. 159.3.3. It is submitted that in the resolution plan in question, Schedule 2 Step 9 provides for treatment of homebuyers and refund seekers in the manner that the claim of homebuyers shall be satisfied by ensuring delivery of flats in accordance with the schedule at Annexure A, whereby project completion period is provided as 42 months with moratorium period of one year and therefore, for 54 months, the appellants and other homebuyers would not get any compensation and thereafter only a delay penalty of INR 5/- per square feet per month is provided, which is also subject to non-occurrence of any force majeure event. C

159.3.4. While questioning the process of voting and the proposition that homebuyers have as a class assented to the plan of NBCC, these appellants have submitted that the voting percentage in respect of NBCC’s plan was distributed in the following manner: D Home Buyers voting share 57.66%; Assenting 34.10%; Dissenting 1.05%; Abstained 22.51% E Therefore, according to the appellants, the claim that 97.02% homebuyers have voted for NBCC’s plan is misleading; and as per the voting percentage, rough ratio is that for every 3 homebuyers who voted for NBCC, 2 have dissented/abstained. The appellants have further contended that the authorised representative of homebuyers made two wrong statements before the Committee of Creditors: one, that both the resolution plans of Suraksha Realty and NBCC would be put to vote and second, that the majority of homebuyers had written to him indicating NBCC as the preferred choice. It is submitted that both these statements on behalf of the homebuyers were grossly incorrect and contrary to record and as such, the entire voting process of the CoC, as contemplated under Section 21(8) of the Code, is vitiated. There had been no such written instruction to the authorised representative of the homebuyers and he could not have determined what was the majority mark of homebuyers. It is further submitted that even if the said authorised representative could have consented to put both the resolution plans to H

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A vote contrary to the mandate of Regulation 39(3), CoC could not have acted contrary to the provisions of IBC as there could be no waiver of the statute. It is submitted that these objections could have been, and had rightly been, raised before the Adjudicating Authority because there is no other forum to raise these concerns; but the Adjudicating Authority has not addressed them at all. B 159.3.5. The issue relating to the said land parcel of 758 acres has also been raised by these appellants with the submissions that after the judgment of this Court dated 26.02.2020, the said land ought to have been included in the resolution plan and used in the interest of homebuyers but the Adjudicating Authority has not examined this aspect of the matter C either. 159.4. The submissions on behalf of yet another association of homebuyers (appellant in T.C. No. 240 of 2020) are considerably different, where it is prayed that the project related with its members being substantially complete, deserves to be separated from the resolution plan. D 159.4.1. It is submitted on behalf of this association that the construction of all 4228 flats in 26 towers of the project “Jaypee Greens Aman” is complete and only the finishing works for Tower Nos. 23, 24, 25 & 27 are pending due to delay in execution of the agreements. It is also submitted that out of 18153 homebuyers of the corporate debtor forming part of the financial creditors, only 459 homebuyers in Project Aman (which amount to 2.53 %) were part of the creditors at the time of voting for the resolution plan. According to this association, “Jaypee Greens Aman” is an inhabited project where more than 1500 families have already started living and it is situated over 10 kms away from the location of “Wish Town” and hence, should be considered as an independent housing colony and ought to be separated from the resolution plan; and any order on the resolution plan should not have an adverse impact on this project. It is submitted that in relation to the project in question, the resolution applicant is only to complete the finishing work which could be carried out by the IRP himself to avoid further delay whereas, if the resolution plan is followed, these homebuyers shall have to wait for another 18 months to receive possession of the completed flats which would add to their mental agony. 159.4.2. It has also been submitted that the members of this association had deposited an Interest Free Maintenance Deposit H (‘IFMD’) and a Maintenance Advance and also executed Maintenance

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 843 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Agreements with JAL; and even though this refundable security deposit A was not a part of the information memorandum, the resolution plan in question stakes claim over this amount while ignoring the basic rules of business and to siphon off the hard-earned/borrowed money of the allottees. According to the association, this amount ought to be refunded to the allottees concerned. B 159.4.3. It is also submitted that the approved resolution plan only talks about the date of completion of the construction of flats but does not indicate the completion date of the entire project of “Jaypee Greens Aman”; and as construction of flats of this project is carried out, specific directions need to be issued for completion of the project with all amenities and finishing works. C

159.4.4. This association has also relied upon decision of this Court in the case of Wg. Cdr. Arifur Rahman Khan & Ors. v. DLF Southern Homes Pvt. Ltd. & Ors.: (2020) SCC OnLine SC 667 and has prayed for a relief of 6% p.a. simple interest which shall be attached to the allottees of the project “Jaypee Greens Aman” on the total amount paid towards the purchase of the flats in addition to the delay period penalty. It is also submitted that the allottees of Tower Nos. 23, 24, 25 & 27 should not be discriminated and must be treated at par with other allottees, who have already received the penalty for delayed period. 159.4.5. This association has also prayed for directions to IRP to release the payments in a time bound manner to keep the project and its activities as a going concern as the work at the project “Jaypee Greens Aman” has come to a standstill for want of requisite payment of bills of contractors. This association has made yet another prayer for directions to the Noida Authority to issue the necessary Occupancy Certificate. F 159.5. Apart from the above-mentioned appellants, a few more homebuyers have filed intervention applications in the leading appeal while essentially reiterating the same contentions that the resolution plan of NBCC is not compliant with the requirements of RERA and that the homebuyers would be put to prejudice in relation to their rights under G RERA. The issue relating to the said 758 acres of land has also been raised. 159.6. For completing the panorama of diverse submissions, we may take note of the fact that the applicant of I.A. No. 84309 of 2020 has filed separate written submissions and has contended that there had H

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A been diversion of the money deposited by homebuyers to YEIDA and the same was accepted by JIL and the lenders constituting the CoC without considering that it was a wrongful and fraudulent diversion against accepted norms; that JIL and YEIDA have remained silent on the issue and allowed homebuyers’ money to be used in Yamuna Expressway, which acted as an interest free loan to JIL for almost 10 B years and therefore, the homebuyers ended up funding 25% of the project of Expressway and the said investment ought to be returned to the homebuyers; that the provisions of the Concession Agreement regarding curing the defaults were never addressed before NCLT and before this Court; that when JIL caused a delay in delivering possession of the flats C to the homebuyers, the material adverse effect clause should have been invoked, rather than initiation of the CIRP; that the homebuyers were made aware of liquidation of JIL as the only possibility; that the homebuyers were not provided with the Concession Agreement and even when it was demanded from the IRP, it was not furnished. Therefore, not sharing CA and not providing any such legal advice on D CA has put the CIRP proceedings under the scanner and the same be held null and void. It has further been contended that the resolution plan of NBCC ought to have been rejected as it contravenes several of the provisions of law including that of RERA. It is also contended that the homebuyers to whom flats were delivered could not have been taken out of CoC once it had been constituted; and such taking out has impacted a few thousand homebuyers and thereby, the voting weightage by about 10%. The applicant has further submitted that the present one is an exceptional case requiring innovative approach and has even suggested the alternative that Government of Uttar Pradesh takes over the full project as it is, provided it meets all rights of the homebuyers! It is submitted that this could be a possibility under Article 142 of the Constitution of India.

160Copy pinpoint160. The submissions so made have been duly opposed by the persons/entities standing in favour of the resolution plan as approved by the Adjudicating Authority. For avoiding unnecessary expansion, we deem it appropriate to take note of the submissions made on behalf of IRP and NBCC as also the financial creditor of JIL in this regard. 160.1. It is submitted on behalf of IRP and NBCC that these associations and homebuyers have no locus standi to challenge the approved resolution plan because, in terms of Section 25A(3A) read with Section 21(6A) of the Code, the homebuyers vote in the CoC as a

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 845 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

class; even a dissenting individual within the class is bound by the decision of the majority of that class; and as such, this decision operates as a statutory estoppel against the members of the entire class. It is submitted that the manner of voting by homebuyers has been extensively dealt with by this Court in Pioneer Urban (supra) and the Adjudicating Authority has, in accordance with Section 25A(3A) and the law laid down in Pioneer Urban, rightly dealt with the issue of ‘dissenting homebuyers’ in paragraph 126 of the order impugned. It is further submitted that the legislature has recognised the likelihood of conflicting interests among the groups of homebuyers and accordingly, the IBC amendment dated 16.08.2019 has provided a ‘drag along’ mechanism so far as voting by homebuyers in relation to the approval of a resolution plan is concerned, by way of insertion of sub-section (3A) to Section 25A of the Code. It is, therefore, evident that the minority shall be dragged along with the majority in voting on approval of a resolution plan and hence, the appellants are bound by the decision taken by the collective majority of the homebuyers. D 160.2. It is also submitted that as per Section 61 of the Code, an appeal can be filed by a person who is aggrieved by the approval of the resolution plan but, considering that homebuyers as a class have assented to the resolution plan of NBCC, individual homebuyers cannot be treated as dissenting creditors or even aggrieved persons within the meaning of Section 61 of the Code. It is, therefore, submitted that such appeals ought to be dismissed for having been filed without any locus. 160.3. It is yet further submitted that the appellant Wish Town Society attempted to submit an application and objections that were rejected by the Adjudicating Authority on 31.01.2020, essentially on the grounds that the society had failed to implead itself as the party to the application; that only 448 homebuyers had voted against the resolution plan but the society was claiming to represent 1500 homebuyers without mentioning as to who were the persons who authorised filing of the objections; and that the society had no locus to raise objections. It is submitted that now the society is seeking to place on record a list of alleged 1248 members but no such list was produced before the Adjudicating Authority and cannot be allowed to be introduced at the appellate stage. 160.4. As regards the questions related with RERA, it is submitted that the alleged violation of RERA has been contended by these H

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A homebuyers without demonstrating the manner in which any provision under RERA is being violated; and that the resolution plan, at no instance, states that it would not comply with the applicable laws. However, it is submitted that in the event there is any conflict between the approved resolution plan and the provisions of RERA, the approved resolution plan shall remain binding on all stakeholders under Section 31 of the B Code and would override the provisions of RERA in accordance with Section 238 of the Code. 160.5. It is also submitted that resolution plan can alter the contracts with financial creditors and the Code gives wide powers to the resolution applicant to modify financial and operational contracts so as to best serve the interests of all the stakeholders. It is submitted that, as per the proposal under the resolution plan, NBCC would construct and deliver the flats to homebuyers but would not be paying outstanding interests to any homebuyer, and such a proposition is permissible under Regulation 37(f) of CIRP Regulations, that permits a resolution plan to reduce any debts due to any creditors; and such an amendment to the contracts having been agreed to by the overwhelming majority of the CoC, remains binding on all the homebuyers. 160.6. As regards liquidation costs, it is submitted that under Regulation 39B of the CIRP Regulations, CoC has been given a discretion to ascertain the liquidation costs at the time of approval of a resolution plan or deciding to liquidate a company; and, as per the Explanation to Regulation 39B, liquidation costs have the same meaning as given to it under Regulation 2(1)(ea) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, whereunder ‘liquidation costs’ have been defined to mean, inter alia, the costs in the liquidation process of a company. It is submitted that non-submission of liquidation costs under Form-H is not an irregularity that is fatal to the CIRP or the resolution plan; that the liquidation costs have no bearing on the feasibility and viability of a resolution plan; and liquidation costs are different from liquidation value, which has been defined under Regulation 2(k) of the G CIRP Regulations to mean ‘the estimated realisable value of the assets of the corporate debtor, if the corporate debtor were to be liquidated on the insolvency commencement date’. The IRP under Form-H has mentioned the fair value and liquidation value of the corporate debtor. 160.7. As regards the objections raised by Jaypee Aman Owners H Welfare Association for exclusion from resolution plan, it is submitted

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 847 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

that the NBCC’s resolution plan is intended to cover all the homebuyers A of JIL, where the creditor-debtor relationship continues to subsist i.e., where the final settlement between the homebuyer and JIL, through execution of sub-lease deed, has not been achieved. With reference to the provisions in the resolution plan, it is submitted that the plan specifically provides that “Aman Project” shall be completed within a period of 15 B months from the date resolution applicant acquires the shareholding of the corporate debtor; and such an indicative period has been provided in respect of all the pending projects of JIL, which are to be completed by NBCC in terms of the resolution plan. It is further submitted that the contents of the plan including the indicative delivery schedules were available to all homebuyers and they had, in full cognizance of the same, chosen to approve the plan in question which would remain binding on all the stakeholders of the corporate debtor in terms of Section 31 of the Code once it is approved; and therefore, the said association is estopped from challenging, or seeking an exit from, the resolution plan as the plan stands approved. In regard to the submission that the IRP may be directed to do certain things like apply for OCs in respect of certain towers or issue OOPs, it is submitted that the IRP has disclosed in an affidavit before the Court that during the CIRP process, he has been managing JIL as a going concern and has continued construction of residential and commercial dwelling units and has issued OOPs for 7996 units based on the OCs received from the Noida Authority; and out of the OOPs issued, sub-lease registration of 6429 has been completed. It is submitted that the claims of a homebuyer vis-à-vis JIL stand settled on execution of the sub-lease deed and, therefore, all those homebuyers whose sub-lease deeds have not been executed shall be bound by the resolution plan approved by the CoC of JIL. F 160.8. Again, as regards IFMD, Step 9 in Schedule 2 has been referred and it is submitted that the above provision is only in relation to the monies paid by the homebuyers to JAL (either directly or indirectly, including payment through JIL) as the resolution applicant does not and will not have any control over JAL. G 160.9. Apart from the above, it has also been submitted on behalf of IRP that Regulation 36A(7) applies only to expression of interest which cannot be conditional but that provision does not apply to the resolution plan and it is no one’s case that the expression of interest submitted by NBCC was conditional. The amendment to the Code with H

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A effect from 28.12.2019, that is, before passing of the order by NCLT has also been referred to submit that with Section 32A having been inserted to the Code, NBCC would be entitled to claim the protection thereunder and the question of withdrawing from the resolution plan for the reason stated in Clause 2 of Schedule 3 does not arise. B 160.10. The financial creditor of JIL has also opposed the submissions made by these dissatisfied homebuyers and it is submitted that they have erroneously identified ICICI Bank to be similarly situated with them. It is submitted that this bank is a dissenting financial creditor in terms of the resolution plan unlike those dissatisfied homebuyers; and this bank is entitled to a different treatment in terms of Section 30(2)(b) C of the Code.

161Copy pinpoint161. We have given anxious consideration to the wide variety of submissions made by dissatisfied homebuyers and the counters thereto.

162Copy pinpoint162. Before proceeding further, it appears appropriate to point D out that the contentions urged in regard to simultaneous voting over two resolution plans have already been discussed and rejected in Point B hereinbefore. These contentions, in our view, have unnecessarily been taken by the persons who wish to remain on the dissenting side of the fence by carving out every possible objection, whether of substance or not. The issue relating to 758 acres of land, that is now available to JIL E after the judgment of this Court in the case of Anuj Jain, is being considered separately in Point K infra. Likewise, the issue relating to the amount of INR 750 crores deposited by JAL pursuant to the directions in the case of Chitra Sharma as also other areas of accounting between JAL and JIL including the issue relating to IFMD are being considered separately in Point J infra. These issues, thus, would require no comment herein.

163Copy pinpoint163. Taking up other aspects of the rival submissions and having examined the scheme of the Code in relation to a plan of insolvency resolution, we are clearly of the view that the propositions of some of the associations and individual homebuyers to claim themselves as ‘dissenting homebuyers’ and thereby, ‘dissenting financial creditors’ do not stand in conformity with the scheme of the Code and the manner of voting on a plan of resolution by the Committee of Creditors.

164Copy pinpoint164. As noticed, for the purpose of approval of a resolution plan in CIRP, what is required is its approval by a vote of not less than 66% of H

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the voting share of financial creditors; and what is counted for the requisite percentage (66) is the voting share of the financial creditors and not the individual votes of financial creditors. The expression ‘voting share’ has been precisely defined in clause (28) of Section 5 to mean the voting rights of a single financial creditor in the Committee of Creditors, which is based on the proportion of the financial debt owed to such a financial creditor vis-à-vis the financial debt owed by the corporate debtor. In the scheme of the Code with Explanation to Section 5(8)(f), the debt owed by the corporate debtor towards allottees of the real estate project is considered to be a financial debt but for that matter, every individual allottee does not become an independent financial creditor of the corporate debtor, if the number of allottees are 10 or more, in terms of the meaning assigned to the expression “class of creditors” in CIRP Regulations 85. The allottees, like the homebuyers of JIL, falling within clause (f) of sub-section (8) of Section 5, do carry the status of financial creditors but they would be falling in a class collectively; and the voting share of that class would be in terms of the financial debt owed to that class as a D whole. 164.1. Specific provisions have been made for voting on behalf of a class of creditors in terms of clause (b) of sub-section (6A) of Section 21 by the authorised representative. The rights and duties of the authorised representative of financial creditors are also delineated in Section 25A of the Code and any doubt, as to how he would vote and how his vote is counted, is put to rest by insertion of sub-section (3A) to Section 25A, which provides that notwithstanding anything to the contrary contained in sub-section (3), the AR shall cast his vote on behalf of all the financial creditors he represents ‘in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote’. 164.2. At this juncture, we may usefully take note of the enunciation of this Court in the case of Pioneer Urban (supra) that has direct bearing on the questions raised herein. The decision in Pioneer Urban was rendered by this Court in the backdrop of challenge to the said amendment made to the Code whereby, the allottees of real estate projects were 85 The relevant definition clause in CIRP Regulations, inserted with effect from 04.07.2018 reads as under: - “(aa) “class of creditors” means a class with at least ten financial creditors under clause (b) of sub-section (6A) of section 21 and the expression, “creditors in a class” shall be construed accordingly;” H

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A provided the status of financial creditors by way of insertion of Explanation to sub-clause (f) of clause (8) of Section 5 of the Code and with corresponding insertion of Section 25A as also sub-section (6A) to Section 21. While dealing with such a challenge, in Pioneer Urban (supra), this Court extensively referred to the objects and reasons for these amendments as also their meaning, connotation and effect. The B relevant part of the matter, in regard to the issue at hand, is that along with the aforesaid amendment, this Court also examined the amendment of Section 25A with insertion of sub-section (3A) by Act 26 of 2019. This Court explained the connotation of the said amendment and its logic, while rejecting the challenge to Section 21(6A) and 25A of the C Code, in the following: - “63. Given the fact that allottees may not be a homogeneous group, yet there are only two ways in which they can vote on the Committee of Creditors—either to approve or to disapprove of a proposed resolution plan. Sub-section D (3-A) goes a long way to ironing out any creases that may have been felt in the working of Section 25A in that the authorised representative now casts his vote on behalf of all financial creditors that he represents. If a decision taken by a vote of more than 50% of the voting share of the financial creditors that he represents is that a particular plan be either accepted or rejected, it is clear that the minority of those who vote, and all others, will now be bound by this decision. As has been stated by us in Swiss Ribbons, the legislature must be given free play in the joints to experiment. Minor hiccups that may arise in implementation can always be sorted out later. Thus, any challenge to the machinery provisions contained in Sections 21(6-A) and 25A of the Code must be repelled.” (emphasis in bold supplied) 164.3. In the face of clear language of sub-section (3A) of Section G 25A of the Code, read with the law declared by this Court in Pioneer Urban (supra), the suggestion on behalf of the dissatisfied homebuyers that the said provision was only intended to iron out the logistical issues and technical difficulties is required to be rejected altogether. The said provision, as held by this Court, is to iron out the creases that might have been felt in the proper working of Section 25A; and it is made explicit

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 851 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

that the allottees, even if not a homogeneous group, they could vote only either to approve the resolution plan or to disapprove the same. Divergence of the views within their own class may exist but, when coming to the vote in the Committee of Creditors, their vote would be that of a class. 164.4. Having regard to the scheme of IBC and the law declared by this Court, it is more than clear that once a decision is taken, either to reject or to approve a particular plan, by a vote of more than 50% of the voting share of the financial creditors within a class, the minority of those who vote, as also all others within that class, are bound by that decision. There is absolutely no scope for any particular person standing within that class to suggest any dissention as regards the vote over the resolution plan. It is obvious that if this finality and binding force is not provided to the vote cast by the authorised representative over the resolution plan in accordance with the majority decision of the class he is authorised to represent, a plan of resolution involving large number of parties (like an excessively large number of homebuyers herein) may never fructify and the only result would be liquidation, which is not the prime target of the Code. In the larger benefit and for common good, the democratic principles of the determinative role of the opinion of majority have been duly incorporated in the scheme of the Code, particularly in the provisions relating to voting on the resolution plan and binding nature of the vote of authorised representative on the entire class of the financial creditor/s he represents. 164.5. To put it in more clear terms qua the homebuyers, the operation of sub-section (3A) of Section 25A of the Code is that their authorised representative is required to vote on the resolution plan in accordance with the decision taken by a vote of more than 50% of the voting share of the homebuyers; and this 50% is counted with reference to the voting share of such homebuyers who choose to cast their vote for arriving at the particular decision. Once this process is carried out and the authorised representative has been handed down a particular decision by the requisite majority of voting share, he shall vote accordingly and his vote shall bind all the homebuyers, being of the single class he represents.

165Copy pinpoint165. In the present case, on one hand, it has consistently been submitted by the stakeholders, particularly the homebuyers, that liquidation of JIL should be eschewed, but on the other hand, some of the associations H

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A and homebuyers have attempted to find faults with the resolution plan to which their majority, who voted, took the decision for approval. There is no scope for any homebuyer suggesting himself to be a dissenting financial creditor merely because he was not with majority within the class. His dissatisfaction does not partake the legal character of a dissenting financial creditor. B 165.1. A rather overambitious attempt has been made by the homebuyers who have filed separate appeal (T.C. No. 242 of 2020) to refer to the percentage of voting share of homebuyers and it has been suggested that out of the total voting share of homebuyers i.e., 57.66%, the assenting voting share was only 34.10%, whereas 22.51% abstained and 1.05% dissented. It is submitted that roughly, for every 3 homebuyers who voted for NBCC, 2 had dissented/abstained. Even assuming the percentage as stated by these appellants to be correct, we are at a loss to find any logic in the submissions so made. A re-look at sub-section (3A) of Section 25A would make it clear that ‘50%’ for the purpose of the said provision is of those homebuyers who cast their vote. On the percentage figures as given before us, out of the total voting share of homebuyers at 57.66%, the persons carrying 22.51% voting share simply abstained and of the persons casting their votes, ayes were having the voting share of 34.10% whereas nays were having the voting share of 1.05%. Obviously, 50% would be counted only of the persons who chose to vote where, much higher than 50% of the homebuyers who cast their vote, stood for approval of the resolution plan of NBCC86. Such a voting cannot be set at naught for the purported dissatisfaction of a miniscule minority, which was about 3.69% in terms of the number of persons voting; and about 1.05% in terms of the voting share. They have to sail along with the overwhelming majority. That is the purport and effect of ‘drag along’ or ‘sail along’ provisions in the scheme of the Code. 85 The IRP has given the details of voting by the allottees in the following terms (in paragraph 4 of its written submissions under the heading- ‘Issues raised by homebuyers’):- “…. In the present case, out of 21781 allottees forming the class of allottees, 12147 cast their vote on the Resolution Plan. (It is pertinent to mention that through the resolution plan process of JIL, around 9000 allottees have always remained non-responsive and abstained from voting at any time.) Out of 12147 allottees who cast their vote (present and voting), 11699 allottees voted in favour of the Resolution Plan while 448 voted against the Resolution Plan. Thus, the number of allottees who voted in favour of the Resolution Plan, this 11699, comprise 96.31% of the total number of allottees present and voting….”

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166Copy pinpoint166. For what has been discussed hereinabove, the suggestions that there was no cent percent approval of the resolution plan, or that there was no consensus amongst homebuyers, or that the plan of Suraksha Realty was considered better, are required to be rejected. It is not the case that the AR of homebuyers has not voted in accordance with the decision taken by a vote of more than 50% of the voting share of homebuyers who did cast their vote. In the given set of facts, we have no hesitation in thoroughly disapproving the unnecessary imputations made by one set of homebuyers against the AR that he made any incorrect statement before the CoC. That being the position, and the authorised representative having voted in accordance with the instructions given to him from the class of financial creditors i.e., homebuyers, every individual falling in this class remains bound by his vote and any association or homebuyer of JIL cannot be acceded the locus to stand differently and to project its/his own viewpoint or grievance by way of objections or by way of appeal. All such objections and appeals are required to be rejected on this ground alone. D

167Copy pinpoint167. The suggestion about the so-called statutory right of appeal has only been noted to be rejected. The homebuyers as a class shall be deemed to have voted in favour of approval of the resolution plan of NBCC; and once having voted so, any particular constituent of that class cannot be heard in opposition to the plan by way of objection or appeal. The statute, that is IBC, has itself provided for estoppel against E any such attempted opposition to the plan by a constituent of the class that had voted in favour of approval.

168Copy pinpoint168. The misplaced assumptions on the part of dissatisfied homebuyers have gone to the extent that they have attempted to put themselves at par with the dissenting financial creditors like ICICI Bank, F who carry an entirely different legal status in CIRP, for being not within the class of homebuyers and being of a different class of financial creditors. The said financial creditor has rightly opposed these submissions and has rightly pointed out that its rights in terms of Section 30(2)(b) of the Code stand at an entirely different footing. G

169Copy pinpoint169. Another attempt has been made as regards calculation of voting weightage by suggesting that the homebuyers to whom flats have been delivered could not have been taken out of CoC. Even this suggestion remains bereft of substance. When a person does not stand in the capacity of a financial creditor i.e., to whom no financial debt is H

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A owed by the corporate debtor, he could only be taken out of the block of financial creditors. We are impelled to observe that consideration and voting at the resolution plan is not a process or event where any objection or grievance could be raised even by a person who does not stand in the capacity of a financial creditor. His remedies, in accordance with law, could be elsewhere but not in this process of approval of resolution plan under the Code. 169.1. For the same reasons as above, the suggestion to keep any housing project which is already complete or nearing completion out of the purview of the resolution plan is required to be rejected. When approval of the resolution plan is to be voted by CoC; and its composition is specified by the Code, there is no such concept of keeping any particular homebuyer out of CoC even if the relationship of creditor and debtor subsists between him and the corporate debtor.

170Copy pinpoint170. To sum up this part of discussion, in our view, after approval of the resolution plan of NBCC by CoC, where homebuyers as a class assented to the plan, any individual homebuyer or association cannot maintain any challenge to the resolution plan nor could be treated as carrying any legal grievance.

171Copy pinpoint171. Once we have held that these dissatisfied homebuyers and associations are not entitled to put up any challenge to the resolution plan contrary to the decision of the requisite majority of their class, all their objections are required to be rejected outright. Yet, in the interest of justice, we have examined these objections to find if there be any aspect worth consideration within the periphery of Section 30(2) of the Code. We find none. F 171.1.The major part of the objections of these dissatisfied homebuyers relate to the purported rights under RERA. We are afraid, even such propositions do not stand in conformity with law. The interplay of RERA and IBC also came up for fuller exposition in the case of Pioneer Urban (supra) and this Court rejected the contentions urged G on behalf of the petitioners that RERA being a special enactment dealing with real estate development projects must be given precedence over the Code. In Pioneer Urban, this Court noticed Section 238 of the Code and held as under: - “25. It is significant to note that there is no provision similar to that of Section 88 of RERA in the Code, which is meant to be a H

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complete and exhaustive statement of the law insofar as its subject- A matter is concerned. Also, the non obstante clause of RERA came into force on 1-5-2016, as opposed to the non obstante clause of the Code which came into force on 1-12-2016. Further, the amendment with which we are concerned has come into force only on 6-6-2018. Given these circumstances, it is a little difficult to accede to arguments made on behalf of the learned Senior Counsel for the petitioners, that RERA is a special enactment which deals with real estate development projects and must, therefore, be given precedence over the Code, which is only a general enactment dealing with insolvency generally. From the introduction of the Explanation to Section 5(8)(f) of the Code, it is clear that Parliament was aware of RERA, and applied some of its definition provisions so that they could apply when the Code is to be interpreted. The fact that RERA is in addition to and not in derogation of the provisions of any other law for the time being in force, also makes it clear that the remedies under RERA D to allottees were intended to be additional and not exclusive remedies. Also, it is important to remember that as the authorities under RERA were to be set up within one year from 1-5-2016, remedies before those authorities would come into effect only on and from 1-5-2017 making it clear that the provisions of the Code, which came into force on 1-12-2016, would apply in addition to E RERA.” *** *** ***

29. It is clear, therefore, that even by a process of harmonious construction, RERA and the Code must be held to co-exist, and, in the event of a clash, RERA must give way to the Code. F RERA, therefore, cannot be held to be a special statute which, in the case of a conflict, would override the general statute viz. the Code.

30. As a matter of fact, the Code and RERA operate in completely different spheres. The Code deals with a proceeding in rem in G which the focus is the rehabilitation of the corporate debtor. This is to take place by replacing the management of the corporate debtor by means of a resolution plan which must be accepted by 66% of the Committee of Creditors, which is now put at the helm of affairs, in deciding the fate of the corporate debtor. Such H