In a recent judgment passed by the Hon’ble National Company Law Appellate Tribunal (‘NCLAT’) titled Puneet Kaur v. KV Developers Pvt. Ltd and Ors.1, it was, inter-alia, observed that the rights and claims of homebuyers, whose names are reflected in the books of the Corporate Debtor (‘CD’) do not extinguish till the resolution plan is approved by the Adjudicating Authority (‘AA’), even if filed at a belated stage. Further, the NCLAT also held that all details of homebuyers, along with their claims, as reflected from the record of the Corporate Debtor ought to be included in Information Memorandum by Resolution Professional, irrespective of them having filed any claim or not.
The brief facts leading up to the present appeal are that the Appellants herein, booked their flats with the CD which is a real estate company. Vide order dated 28.10.2020, the AA admitted the application filed by one of the financial creditors under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiating Corporate Insolvency Resolution Process (“CIRP”) against the CD. Subsequently, a Resolution Professional (“RP”) was appointed who, as a part of his duties, invited claim from creditors. Unaware of the initiation of CIRP and publication of Form-A, the Appellants were unable to file their claims within time period stipulated by the RP.
Thereafter, on 09.04.2021, a resolution plan was filed and was successfully approved by the CoC. This resolution plan was thereafter submitted to the AA for final approval. The Appellant(s), before the approval of resolution plan by AA, filed their applications before the National Company Law Tribunal (‘NCLT’) seeking direction to the RP to admit their claims. However, the NCLT rejected their claims on the pretext that the claims, having been filed after gap of eight months from the last date of the submission of the claim, cannot be admitted. Further, CoC had already approved the resolution plan. Aggrieved by the orders passed by the AA, the Appellant(s) filed an Appeal before the Hon’ble NCLAT.
The NCLAT, while dealing with the issues pertaining to the inclusion of names of homebuyers who have not filed their claims within the stipulated time period, placed reliance on Mukul Kumar v. M/s. RPS Infrastructure2 which settled that once a resolution plan has already been approved by CoC but is pending for approval before the AA, new claims cannot be entertained as it would jeopardize CIRP which is a time bound process. On the same line, the NCLAT ruled in the present case that the Appellants, as law exists today, cannot be included in the list of creditors, since resolution plan has already been approved by CoC. Therefore, new claims filed by Appellants cannot be entertained at this stage and thus, NCLT has rightly rejected their claim in accordance with the law. However, the NCLAT went ahead and observed that the claims of the Appellants need to be dealt in a specific manner.
Subsequently, the NCLAT distinguished between the homebuyers who had not filed their claims but their names appear in the record of the CD, and those homebuyers who have neither filed their claims, nor whose names appear in the record of the CD. Placing its reliance on Ghanshyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Limited3, the NCLAT settled the question of extinguishment of claim by observing that the right to file claim stands extinguisher after the approval of resolution plan by AA.
The court observed that it is the approval of resolution plan by AA which extinguish the claims, whether appearing or not appearing in the resolution plan. In the instant case, only the approval of CoC was taken and the approval of AA was pending, settling the dispute that the claims of appellants are not extinguished till the approval of resolution plan by AA.
In addition to the aforesaid issues, the NCLAT delved into the question of obligation of the RP to include the names of the homebuyers in the Information Memorandum, even though they have not filed their claim within time, as also the duty of the Resolution Applicant to have also dealt with resolution plan regarding homebuyers, whose names and claims are reflected in the record of the CD, although they have not filed any claim.
While dealing with the former, the Hon’ble NCLAT observed that the homebuyers, whose claims were reflected in the record of the CD, ought to have been included in the Information Memorandum and the Resolution Applicant, ought to have been taken note of the said liabilities and should have appropriately dealt with them in the Resolution Plan. Non-consideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution.
Dealing with the latter, the Hon’ble NCLAT observed that while Resolution Plan cannot be rejected outrightly, however, an addendum to the resolution plan be prepared by Resolution Applicants on the basis of information received by RP about the claims of the homebuyers whose details appeared in the record of the company but did not file their claim within prescribed time. This addendum along with the resolution plan, shall, thereafter be presented to the AA for approval after being considered by the CoC.
The present findings of the NCLAT, without transgressing the boundaries laid down by the IBC, provided for a way out for the homebuyers, who often, lose the opportunity of filing their claims before the RP for want of appropriate information. That being said, the respite and flexibility in entertaining claims is limited to those homebuyers whose claims are reflected in the books of the CD.
By - Rishika Jain, and Vanshika Agrawal
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