The NCLAT held that the aforesaid procedure was contrary to Regulation 19 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which stipulates that notice of the CoC meeting shall be given at least five days in advance. It was also held that sub-regulation (9) of Regulation 16A was not followed. This provision requires the authorized representative to circulate the agenda and give voting instructions to the creditors in class he represents at least twenty hours in advance, and to keep the voting window for creditors in class open for at least twelve hours.
Further, the procedure adopted was contrary to sub-sections 3 and 4 of Section 25A of the Code, which stipulates that the views of financial creditors in class should be sought in an appropriate manner by the authorized representative prior to the meeting of the CoC. The NCLAT held that even though it was not questioning the commercial wisdom of the CoC, when the voting procedure followed was not in consonance with the Code, the approval of the Resolution Plan would have to be set aside.
Moreover, it was held that discrimination between homebuyers on the basis of delay in filing of their claim was contrary to the Code, particularly when 53% of the homebuyers were being left out.
Source: Barandbench
