NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) has set aside a liquidation order passed by NCLT against Lotus City, a project which was being developed by Three C Homes before it went into insolvency in September 2019.
The project situated along the Yamuna Expressway was launched in 2012 but never got complete. After Three C Homes went into bankruptcy only one resolution applicant Ace Infrastructure filed a resolution plan which was approved with 62.9% voting share which would be considered as 100% as per Section 25A (3A) of the Insolvency and Bankruptcy Code.
However, NCLT rejected the resolution plan and directed the company into liquidation. It had said that the liquidation value of Three C Homes is Rs 480.70 crore while resolution plan involves infusion of only Rs 95 crore by Ace Infrastructure and that too over a period of two years.
The plan assumes that the farmers will forgo their claim of Rs 71.66 crore in exchange of the Ace Infrastructure’s promise to spend a sum of Rs 15 crore towards the development of village Salarpur, which the court said was amateurish.
NCLT hence came to the conclusion that the resolution plan did not have any potential to fulfill the dreams of homebuyers which is at just 19.77 % of the liquidation value of Three C Homes.
The Lotus City Plot Buyers Welfare Association, being represented by advocate Piyush Singh of PSP Legal among others, however pleaded that NCLT did not include Rs 211 crore i.e. the quantum of debt due to allottees as after giving the possession of plots to allottees, the debt due to allottees would stand satisfied.
It also did not include Rs 50.70 crore which Ace Infrastructure agreed to pay to ex-management of Three C Homes. It didn’t consider discounts of Rs 8.18 crore and Rs 38.75 crore waived off in satisfaction of interest due to the allottees.
NCLAT observed, “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.”
There is also a need for Yamuna Expressway Industrial Development Authority (YEIDA) to ascertain status of dispute with farmers and its consequential impact, if any.
Liquidation is the last resort and this programme of homebuyers needs some calibration and proper evaluation, the court said.