Homebuyers can only vote on resolution plan as a class, expounds NCLT, Read Judgement

The NCLT, Mumbai Bench propounded that homebuyers can vote in favour or against the plan only as a class. Therefore, there is no locus standi for some of the home buyers who are otherwise in the minority also to oppose the plan as dissatisfied home buyers.

Brief Facts:

The present interim application has been filed to seek declaration that part of the resolution plan proposing that unaffected home buyers pay escalation charges is illegal.

Brief Background:

The Applicant purchased residential premised on basis of 2 separate registered agreements for sale. The Applicant approached RERA on account of delayed possession. The RERA directed the Corporate Debtor to pay interest for the same.

Thereafter, the Corporate Debtor was admitted to insolvency. The resolution plan submitted by one M/s Kabra Estate and Investment consultants was accepted and the Applicant opposed the same.

Contentions of the Applicants:

The resolution plan was objected because the committee of creditors was improperly constituted. Further, that the sub-classification of home buyers was not permitted by law. It was argued that the approved plan cannot re-determine the claims of the Applicants.

Lastly, it was argued that the legal rights and remedies of the affected parties could not be taken away by the resolution plan.

Contentions of the Respondent No.1:

It was argued that no legal distinction has been made between the affected allottees and unaffected allottees. In either category, the allottees are financial creditors.

Further, it was contended that the treatment of creditors is sole prerogative of the committee of creditors. It was asserted that the resolution applicant could not determine claims as the same is under the domain of the resolution professional.

Observations of the Tribunal:

The primary issue was whether home buyers individually can object to the resolution plan when the home buyers as a class has voted by a majority in favour of the plan.

It was propounded that homebuyers can vote in favour or against the plan only as a class. Therefore, there is no locus standi for some of the home buyers who are otherwise in the minority also to oppose the plan as dissatisfied home buyers.

The decision of the Tribunal:

Based on the aforementioned reasons, the Tribunal accordingly dismissed the interim application.

Case Title: Jyotsna Kailash Veera & Anr. v. Mr. Manish Motilal Jaju & Ors.

Case No.: IA 605 of 2022 in CP 3169 of 2019

Coram: Hon’ble Shri Kuldip Kumar Kareer (Judicial Member), Hon’ble Smt. Anuradha Sanjay Bhatia (Technical Member)

Advocate for Applicant: Adv. Mr. Chetan Shah

Advocates for Respondents: Advs. Mr. Amir Arsiwala, Ms. Nidhi Shah, Ms. Nupur Shah