The CIRP was initiated in 2021 against Sidhartha Buildhome, a real-estate company, on an application by Oriental Bank of Commerce (now merged with Punjab National Bank).
40.15 per cent of homebuyers voted in favour of the Section 12A resolution proposed by Sidhartha Buildhome’s promoter to withdraw the CIRP against the company. 29.20 per cent of homebuyers voted against the proposal and 11.08 percent abstained from voting. Punjab National Bank (another financial creditor), which held a 12.42 per cent vote share, voted in favour of the resolution while Punjab & Sind Bank (financial creditor holding a 7.15 percent vote share) voted against it.
The Resolution Professional (RP) pointed out that this only meant that only 52.57 percent of financial creditors had voted “yes” for the proposal, which was less than the 90 per cent threshold mentioned under Section 12A of the IBC. Therefore, the RP rejected the Section 12A proposal.
This decision was challenged before the National Company Law Tribunal (NCLT) by a section of the homebuyers who had voted in favour of the Section 12A proposal, as well as the authorised representative of the homebuyers.
The homebuyers made reference to Section 25A (3A) of the IBC, which supported the view that an authorised representative would vote on behalf of the majority of homebuyers (financial creditors) in CoC meetings.
The NCLT allowed this challenge and concluded that the Section 12A proposal should be viewed as having been approved. It opined that the homebuyers were one class with one vote, with the vote in this case being in favour of the Section 12A proposal. This verdict was challenged before the NCLAT by the dissenting homebuyers as well as the RP.
Source: Barandbench
