Sandeep Kumar Jain and Ors. vs. Anil Tayal, RP of AVJ Developers (India) Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 446 of 2022 and Company Appeal (AT) (Insolvency) No. 451 of 2022: NCLAT (decided on 27 April 2022)
- Two Homebuyers filed two separate Intervention Applications before the National Company Law Tribunal, New Delhi (“NCLT”). The Intervention Applications had been filed because the Appellants were of the opinion that their interests were not being safeguarded and the authorized representation of the homebuyers was not being provided.
- On 28.02.2022, the NCLT passed an order wherein it rejected the two Intervention Applications since the Homebuyers as a class was already represented in the matter.
- Consequently, the Appellant filed appeal challenging the NCLT’s order dated 28.02.2022.
- Whether the decision of Homebuyers as a class is binding on every individual Homebuyer?
In a brief yet important order, the two-member Bench of the National Company Appellate Law Tribunal, New Delhi (“NCLAT”) opined that the decision taken by the authorised representative of the Homebuyers is binding on every Homebuyer. The Appellant being a homebuyer has to accept the decision adopted by their authorised representative. As such, the Adjudicating Authority did not commit any error in rejecting the Intervention Applications.
The NCLAT further clarified that the authorised representative of the Homebuyers may approach the Resolution Professional and the NCLT to seek clarifications or convey any concerns, as and when required.
The decision is in line with the jurisprudence laid down by the Hon’ble Supreme Court in cases such as Jaypee Kensington Boulevard Apartments Welfare Association & Ors. vs. NBCC (India) Ltd. & Ors., and, Pioneer Urban Land and Infrastructure Ltd. & Anr. v. Union of India & Ors, which have clearly held that homebuyers constitute a class of financial creditors and that once a decision is taken by the majority of that class (for example, approval of the resolution plan), then even a dissenting individual within the class is bound by the decision of the majority of that class. The Apex Court in Jaypee explained the rationale behind the said ruling in the following terms, “In the larger benefit and for common good, the democratic principles of the determinative role of the opinion of majority have been duly incorporated in the scheme of the Code (IBC), particularly in the provisions relating to voting on the resolution plan and binding nature of the vote of authorised representative on the entire class of the financial creditor/s he represents.” The rule is also necessary to attach some form of finality to the decisions of the majority members of a class.
 Civil Appeal No. 3395 of 2020 (Supreme Court of India)
 (2019) 8 SCC 416