While staying the liquidation of Three C Homes and remanding the matter back to National Company Law Tribunal (NCLT), the National Company Law Appellate Tribunal (NCLAT), Delhi Bench ruled that liquidation to be last resort for Insolvency Resolution Process of any Residential Project.
The NCLT had rejected the resolution plan of the appellant, Ace Infracity Developers for Three C Homes and directed its resolution professional (RP) Gaurav Katiyar to initiate the liquidation process by filing an application before it.The NCLT had observed that the liquidation value of Three C Homes was Rs 480.70 crore, while the resolution plan of Ace Infracity Developers involves infusion of only Rs 95 crore by the bidder and that too over a period of two years.
Mr. Sumesh Dhawan, the counsel for the appellant that NCLT has not considered the impact of calculations such as Rs 211 crore, the quantum of debt due to allottees as after giving the possession of plots to allottees, Rs 50.70 crore to be paid by Resolution Applicant to ex-management and Rs 38.75 crore waived in satisfaction of interest due to the allottees.
The Appellant has also stated that the Resolution Plan had been approved with 62.9% voting share which would be considered as 100% as per Section 25A (3A) of the Code in favour of the ‘Resolution Plan’. They have also raised the issue that the decision of the CoC in respect of commercial issues cannot be challenged by the Adjudicating Authority.
The coram of Judicial Member, Justice Jarat Kumar Jain and Technical Member, Dr. Ashok Kumar Mishra observed that while the Resolution Plan will generally provide a higher value than the liquidation value but in case of Real Estate Project may not be always feasible and homebuyers are in dire need of getting their homes at the earliest. However, in this case certain reconciliation are required that what is the actual realisable value which the homebuyers are getting whether it is below liquidation value or above liquidation value.
The Tribunal said that there is also a need to look at the CIRP Regulations (4th Amendment) 2020 notified on 07.08.2020 and 5th CoC meeting circulated on 04.08.2020 and held on 08.08.2020. There is a need for implementing Yamuna Expressway Industrial Development Authority (YEIDA) to ascertain the status of dispute with farmers and its consequential impact, if any, on these projects. Liquidation is the last resort and this programme of homebuyers needs some calibration and proper evaluation.
“We are remanding back the matter to the Adjudicating Authority and setting aside their liquidation order with a direction to review the programme in full alongwith the relevant provisions of the code and Regulations and then the Adjudicating Authority is free to pass appropriate order as they think fit and proper in accordance with law. Pending IAs, if any, stands disposed of. Any interim order(s) passed by this Appellate Tribunal stands vacated,” the NCLAT said.
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