Companies Act / Revival · F2J-C-2789
Vineet Goel v. A.N. Buildwell Private Limited & Ors. and connected matters
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Holding (ratio)
Conditional votes could not be counted as unconditional consent when testing approval of a company revival scheme.
Operative order (extract)
78. The Appeals are, accordingly, allowed and the Impugned Judgment dated 17.02.2020 sanctioning the Revival Scheme is set aside. The matter is remanded to the learned Single Judge for fresh consideration of the Revival Scheme and the objections thereto, in accordance with law. 82. The present batch of Appeals, along with pending applications, shall stand disposed of.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 04.08.2026
Judgment pronounced on: 13.08.2026
Judgment uploaded on: 13.08.2026
# CNR No. DLHC010236272020
+ CO.APP. 11/2020, CM APPL. 14993/2021, CM APPL.
55543/2023, CM APPL. 68286/2025, CM APPL. 68289/2025
and CM APPL. 13172/2026
VINEET GOEL .....Appellant
Through: Mr. Animesh Sinha, Mr.
Shubham Budhiraja, Ms. Ishita
Pandey, Advs.
versus
A.N. BUILDWELL PRIVATE LTD & ORS. .....Respondents
Through: Mr. Vikrant Pachnanda, Mr.
Mukul Katyal, Advs. for R-3.
Mr. Shivank Pratap Singh, Ms.
Priya Singh, Mr. Samyak Jain,
Advs. for SELFC.
Mr. Shlok Chandra, Mr
Parikshit Singh Bhati, Ms
Lolita Crasta, Advs. for
Applicant in CM APPL.
68286/2025.
Ms. Ruchi Sindhwani, Ms.
Megha Bharara, Adv. for OL.
Mr. Nidhi Raman, CGSC with
Mr. Arnva Mittal, Adv. for
RoC.
Mr. Arnav Kumar, Ms.
Akanksha Singh, Ms. Preeti
Pant, Advs. for Spire Woods
Residents Welfare Association.
# CNR No. DLHC010275812020
+ CO.APP. 12/2020, CM APPL. 14995/2021, CM APPL.
13138/2026 and CM APPL. 13139/2026
VIJAY GUPTA .....Appellant
Through: Ms. Pragya Kumar, Adv.
Signature Not Verified
versus
Signed By:JAI
NARAYAN
CO.APP. 11/2020 and connected matters
Signing Date:13.08.2026 Page 1 of 32
12:40:38
A N BUILDWELL PRIVATE LIMITED & ORS.
.....Respondents
Through: Mr. Vikrant Pachnanda, Mr.
Mukul Katyal, Advs. for R-3.
Mr. Shlok Chandra, Mr
Parikshit Singh Bhati, Ms
Lolita Crasta, Advs. for
Applicant in CM APPLs.
13138-39/2025.
Ms. Ruchi Sindhwani, Ms.
Megha Bharara, Adv. for OL.
Mr. Nidhi Raman, CGSC with
Mr. Arnva Mittal, Adv. for
RoC.
Mr. Arnav Kumar, Ms.
Akanksha Singh, Ms. Preeti
Pant, Advs. for Spire Woods
Residents Welfare Association.
# CNR No. DLHC010275772020
+ CO.APP. 13/2020, CM APPL. 14997/2021 and CM APPL.
68294/2025
SONU GARG .....Appellant
Through: Mr. Vijay Gupta, Mr. Pardeep
Chauhan, Advs.
versus
A N BUILDWELL PRIVATE LIMITED & ORS.
.....Respondents
Through: Mr. Vikrant Pachnanda, Mr.
Mukul Katyal, Advs. for R-3.
Mr. Shlok Chandra, Mr
Parikshit Singh Bhati, Ms
Lolita Crasta, Advs. for
Applicant in CM APPL.
68294/2025.
Ms. Ruchi Sindhwani, Ms.
Megha Bharara, Adv. for OL.
Mr. Nidhi Raman, CGSC with
Mr. Arnva Mittal, Adv. for
RoC.
Signature Not Verified
Signed By:JAI
NARAYAN
CO.APP. 11/2020 and connected matters
Signing Date:13.08.2026 Page 2 of 32
12:40:38
# CNR No. DLHC010118932021
+ CO.APP. 4/2021 and CM APPL. 68290/2025
VIJAY SHANKAR PANDEY .....Appellant
Through: Mr. Lakshay Khanna, Adv.
versus
A N BUILDWELL PVT LTD & ORS. .....Respondents
Through: Mr. Vikrant Pachnanda, Mr.
Mukul Katyal, Advs. for R-3.
Mr. Shlok Chandra, Mr
Parikshit Singh Bhati, Ms
Lolita Crasta, Advs. for
Applicant in CM APPL.
68290/2025.
Ms. Ruchi Sindhwani, Ms.
Megha Bharara, Adv. for OL.
Mr. Nidhi Raman, CGSC with
Mr. Arnva Mittal, Adv. for
RoC.
Mr. Arnav Kumar, Ms.
Akanksha Singh, Ms. Preeti
Pant, Advs. for Spire Woods
Residents Welfare Association.
# CNR No. DLHC010149802021
+ CO.APP. 5/2021
VIJAY SHANKAR PANDEY .....Appellant
Through: Mr. Lakshay Khanna, Adv.
versus
M/S A N BUILDWELL PVT LTD & ORS. .....Respondents
Through: Mr. Vikrant Pachnanda, Mr.
Mukul Katyal, Advs. for R-3.
Mr. Shlok Chandra, Mr
Parikshit Singh Bhati, Ms
Lolita Crasta, Advs. for R-4.
Ms. Ruchi Sindhwani, Ms.
Megha Bharara, Adv. for OL.
Mr. Nidhi Raman, CGSC with
Mr. Arnva Mittal, Adv. for
RoC.
Mr. Arnav Kumar, Ms.
Akanksha Singh, Ms. Preeti
Signature Not Verified
Signed By:JAI
NARAYAN
CO.APP. 11/2020 and connected matters
Signing Date:13.08.2026 Page 3 of 32
12:40:38
Pant, Advs. for Spire Woods
Residents Welfare Association.
# CNR No. DLHC010300742021
+ CO.APP. 7/2021, CM APPL. 33578/2021, CM APPL.
13140/2026 and CM APPL. 13141/2026
RENUKA KULKARNI .....Appellant
Through: Mr. Lakshay Khanna, Adv.
versus
A.N. BUILDWELL PVT. LTD. (THROUGH OFFICIAL
LIQUIDATOR) & ORS. .....Respondents
Through: Mr. Vikrant Pachnanda, Mr.
Mukul Katyal, Advs. for R-3.
Mr. Shlok Chandra, Mr
Parikshit Singh Bhati, Ms
Lolita Crasta, Advs. for
Applicant in CM APPLs.
13140-41/2026.
Ms. Ruchi Sindhwani, Ms.
Megha Bharara, Adv. for OL.
Mr. Nidhi Raman, CGSC with
Mr. Arnva Mittal, Adv. for
RoC.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MS. JUSTICE SHAIL JAIN
JUDGMENT
ANIL KSHETARPAL, J.:
1. Vide this common Judgment, six (06) connected Company
Appeals, namely, Company Appeal Nos.11/2020, 12/2020, 13/2020,
4/2021, 5/2021 and 7/2021, preferred under Section 483 of the
Companies Act, 1956 [hereinafter referred to as „Companies Act‟],
challenging the common Judgment dated 17.02.2020 passed by the
learned Single Judge in Company Petition No.6/2019, whereby the
Scheme of Compromise and Arrangement [hereinafter referred to as
Signature Not Verified
Signed By:JAI
NARAYAN
CO.APP. 11/2020 and connected matters
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12:40:38
„Revival Scheme‟] under Sections 391 to 393 of the Companies Act
came to be sanctioned, shall stand decided by this common judgment.
2. The principal question which arises for consideration is whether
the learned Single Judge was justified in sanctioning the Revival
Scheme, having regard to the objections raised by the Appellants, who
are allottees/investors in the projects of Respondent No.1, A.N.
Buildwell Private Limited [hereinafter referred to as „the Company‟].
The Appellants principally contend that the Revival Scheme is neither
fair nor equitable to the allottees, the interests of different classes of
allottees have not been adequately protected, the Revival Scheme as
sanctioned materially departs from the one placed before the
stakeholders for approval, and the learned Single Judge failed to
subject the Revival Scheme to the degree of judicial scrutiny
contemplated under Sections 391 to 393 of the Companies Act.
3. Since all the Appeals arise out of the common Judgment dated
17.02.2020 and involve overlapping questions of fact and law, they
were heard analogously and are being decided by this common
Judgment. For the sake of convenience and to avoid repetition,
Company Appeal No.11/2020 is being treated as the lead appeal.
Accordingly, the factual matrix is being noticed principally from the
pleadings in the said Appeal, while the distinct contentions and
individual grievances raised in the remaining Appeals shall be dealt
with at the appropriate stage.
FACTUAL MATRIX:
4. In order to comprehend the controversy involved in the present
Appeals, the relevant facts, in brief, are required to be noticed.
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NARAYAN
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5. The Company was engaged in the business of development of
real estate projects in Gurugram, Haryana. Its projects comprised both
commercial and residential developments, including the commercial
project known as „Spire Edge‟, consisting of different commercial
blocks and office spaces, and the residential project known as „Spire
Woods‟. In order to finance the development of the aforesaid projects,
the Company invited bookings from members of the public by
allotting commercial units, office spaces and residential units under
separate Builder Buyer Agreements [hereinafter referred to as
„BBAs‟].
6. The Appellants are amongst such allottees/investors who
booked commercial and/or residential units in the aforesaid projects
pursuant to the respective BBAs executed with the Company. It is
their case that substantial amounts, and in several cases the entire sale
consideration, stood paid to the Company in terms of the respective
allotments.
7. According to the Appellants, the BBAs envisaged completion
of the projects and delivery of possession within the stipulated
timelines. In respect of the commercial units in the Spire Edge project,
the Company had also assured returns @12% per annum on the
amounts deposited till completion of the project. The BBAs further
stipulated that in the event the project was not completed by the
agreed date, the Company would be liable to pay compensation for
delay at the rate of Rs.55/- per square foot per month, apart from the
assured returns, besides other contractual obligations incorporated
therein. The BBAs further provided that, in the event of default by the
Company in making payments due to the allottees, interest @1% per
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Signed By:JAI
NARAYAN
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month would be payable on the defaulted amount.
8. It is the common case of the Appellants that despite receiving
substantial consideration from the allottees, the Company failed to
complete the projects within the stipulated timelines envisaged under
the respective BBAs. The Appellants allege that possession was either
not offered in accordance with the contractual stipulations or was
offered without the requisite statutory approvals, including the
completion/occupation certificate, resulting in disputes between the
Company and the allottees. It is further their case that the Company
failed to honour various contractual obligations under the BBAs.
9. In addition to the aforesaid common grievances, the Appellant
in Company Appeal No.11/2020 has specifically pleaded that
although the BBAs represented that the land on which the Spire Edge
project was developed had been allotted by the Haryana State
Industrial and Infrastructure Development Corporation („HSIIDC‟) on
a freehold basis and that the units would be allotted on a perpetual
lease basis, he was informed, at the stage of the offer of possession,
that the lease deeds would be executed only for a period of twenty-
nine (29) years at a time, renewable in accordance with the prevailing
policy of HSIIDC. It is further alleged that despite repeated requests,
the Company failed to furnish the requisite completion certificate.
According to the said Appellant, upon issuance of the possession
letter, the Company also discontinued payment of the assured returns
and failed to discharge its contractual obligation of paying delay
compensation and interest on the defaulted amounts, ultimately
compelling him to initiate civil and criminal proceedings against the
Company and its Directors.
Signature Not Verified
Signed By:JAI
NARAYAN
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10. Owing to mounting financial difficulties and the Company‟s
alleged failure to discharge its financial and contractual obligations
towards various stakeholders, including the allottees, several winding-
up petitions came to be instituted before this Court. During the
pendency of the winding-up proceedings, the Official Liquidator
attached to this Court was appointed as the Provisional Liquidator of
the Company. Thereafter, a proposal for revival of the Company by
way of Revival Scheme was placed before the learned Single Judge.
Pursuant to the orders passed by the learned Single Judge, meetings of
the different classes of creditors, allottees and other stakeholders were
convened for considering the proposed Revival Scheme.
11. Upon the meetings being conducted, the respective
Chairpersons submitted their reports recording the voting pattern of
the different classes of stakeholders. The proposed Revival Scheme,
having secured the requisite statutory majority, was thereafter
considered by the learned Single Judge. By the Impugned Judgment
dated 17.02.2020, the learned Company Judge sanctioned the Revival
Scheme, while overruling the objections preferred by certain allottees
and objectors and issuing consequential directions for its
implementation. According to the Appellants, the Revival Scheme as
ultimately sanctioned materially differed from the Scheme which had
been placed before the stakeholders for approval and failed to
adequately safeguard the interests of certain categories of allottees.
12. In addition to the aforesaid common facts, the Appellant in
Company Appeal No.11/2020 has specifically pleaded that the
proposed Revival Scheme was founded on suppression of material
facts and incorrect disclosures regarding the status of possession, the
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NARAYAN
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rights of certain allottees, and the pendency of civil and criminal
proceedings. It is further alleged that the Revival Scheme failed to
recognise a separate category of allottees who had not accepted
possession on account of the absence of the completion certificate and
that several statements made in support of the Revival Scheme were
factually incorrect.
13. Besides the common challenge to the sanction of the Revival
Scheme, the present Appeals also raise certain distinct questions
arising out of the individual facts and contractual rights of the
respective Appellants. These include, inter alia, the legality of
modifications carried out to the Revival Scheme after obtaining the
approval of the stakeholders without convening fresh meetings, the
validity of the classification of creditors and allottees into separate
classes for the purposes of voting, the treatment accorded to different
categories of allottees under the sanctioned Scheme, the effect of the
Scheme upon the contractual rights flowing from the respective
BBAs, and other issues arising from the peculiar facts and contractual
arrangements forming the subject matter of the individual Appeals.
14. Having noticed the factual background leading to the sanction
of the Revival Scheme and the institution of the present Appeals, this
Court shall now proceed to examine the rival submissions advanced
on behalf of the parties.
CONTENTIONS OF THE PARTIES:
15. Heard learned counsel for the parties at length and perused the
record placed before the Court.
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Signed By:JAI
NARAYAN
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16. Learned counsel appearing on behalf of the Appellants have
assailed the Impugned Judgment principally on the ground that the
learned Single Judge proceeded to sanction the Revival Scheme
merely upon being satisfied that the requisite statutory majority had
voted in favour thereof, without adequately examining whether the
Revival Scheme, in its substance and effect, was fair, reasonable and
equitable to the different categories of allottees. It is submitted that the
jurisdiction of the Company Court under Sections 391 to 393 of the
Companies Act is not merely ministerial and the Court is required to
independently satisfy itself that the Revival Scheme is not oppressive,
unconscionable or prejudicial to the interests of the stakeholders who
are bound by it.
17. It is further submitted that the Revival Scheme placed before
the allottees for voting contained different options, including an option
to vote “for, with modification”. According to the Appellants, a
substantial number of allottees had voted in favour of the Revival
Scheme subject to specific modifications and conditions. Such
conditional assent, it is submitted, could not have been treated as an
unconditional approval of the Revival Scheme. The learned Single
Judge, according to the Appellants, erred in treating the objections and
modifications as having been considered and rejected without
examining whether the Revival Scheme, as ultimately sanctioned,
corresponded with the Revival Scheme which had actually received
the requisite approval.
18. The Appellants have also questioned the manner in which the
interests of different categories of allottees were dealt with under the
Revival Scheme. In particular, the Appellants have pointed out that
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NARAYAN
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the contractual rights flowing from the respective BBAs, including the
assured returns, lease commitment charges, compensation for delay,
interest on defaulted payments and the obligation to provide lawful
and usable possession, could not have been diluted or altered merely
by sanctioning a revival arrangement, unless the statutory
requirements for such alteration were strictly complied with and the
interests of the affected allottees were adequately protected.
19. Learned counsel representing the Appellants have further
submitted that material facts concerning the status of the projects, the
possession offered to the allottees, the statutory approvals and
completion/occupation certificates, the status of the leasehold rights
and the pending liabilities of the Company were either not placed
before the learned Single Judge in their correct perspective or were not
adequately examined while considering the Revival Scheme. It is
submitted that the Revival Scheme was premised on representations
regarding the feasibility and completion of the projects, whereas the
subsequent developments demonstrate that substantial hurdles
continued to remain in the implementation of the Scheme.
20. Insofar as the Spire Edge project is concerned, it has been
submitted that although possession of certain units in Towers B, C and
D had been offered and taken by a large number of allottees, disputes
continued regarding the completion of the project, statutory approvals,
lease documentation, payment of assured returns and other contractual
dues. According to the Appellants, these matters were material to the
determination of the rights of the allottees and should have been
considered while assessing whether the Revival Scheme adequately
protected their interests.
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NARAYAN
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21. The Appellants have also relied upon the subsequent conduct of
the parties to demonstrate that the concerns raised by them were not
merely speculative. It is pointed out that, even after sanction of the
Revival Scheme, considerable difficulties arose in obtaining statutory
approvals, renewal of licences, change of status of the Company and
handing over of possession of portions of the project. In relation to the
Spire Woods project, the revival and renewal of the requisite licence
itself remained subject to further proceedings and compliance with
conditions imposed by the competent authorities. The Appellants
submit that these developments reinforce their contention that the
feasibility of the Scheme had not been subjected to adequate scrutiny
at the stage of its sanction.
22. It is also submitted that the Revival Scheme contemplated
completion of the projects within specified periods and was founded
upon certain commitments by the propounders and the proposed
developers. The subsequent record, however, discloses that the
implementation of the Revival Scheme encountered substantial
impediments and that some of the essential steps contemplated under
the Revival Scheme were not undertaken within the stipulated time.
The Appellants contend that the Court could not have sanctioned the
Revival Scheme without satisfying itself, on the material then
available, that the proposed mechanism was capable of protecting the
investments and contractual rights of the allottees.
23. Per contra, learned counsel representing the Respondents have
supported the Impugned Judgment and submitted that the Revival
Scheme was approved by the requisite majority of the stakeholders
and was consequently binding upon all concerned. It is submitted that
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NARAYAN
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the Company was facing liquidation and that the Revival Scheme
provided the only realistic mechanism for protecting the interests of
the allottees and reviving the projects.
24. It is further submitted on behalf of the Respondents that the
majority of the allottees had supported the Revival Scheme and that
the Court should not substitute its own view for the commercial
wisdom of the stakeholders. Reliance has also been placed upon the
progress made after sanction of the Revival Scheme, including
infusion of funds by the Propounders, execution of the Joint
Development Agreement [hereinafter referred to as „JDA‟] in relation
to the Spire Woods project, steps taken for renewal of the requisite
licences and permissions and efforts made towards completion and
restoration of the projects.
25. In relation to the objections concerning the voting process, it is
submitted that the modifications accompanying the ballots were duly
noticed and considered by the learned Single Judge and that the
substance of the principal objection relating to the continuation of
criminal proceedings had already been dealt with in the Impugned
Judgment. It is therefore submitted that no prejudice can be said to
have been caused to the Appellants on account of the manner in which
the votes were considered.
26. The Respondents have also contended that the Appellants
represent only a small minority of the allottees and that setting aside
the Revival Scheme at this stage would seriously prejudice the large
number of allottees who have supported the Revival Scheme and are
awaiting completion of their respective projects. It is submitted that
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NARAYAN
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the Court should have regard to the interests of the overwhelming
majority of the allottees and should not permit a small number of
dissenting allottees to frustrate the revival process.
27. No other submissions have been made by learned counsel
representing the parties.
ANALYSIS AND FINDINGS:
28. This Court has given its thoughtful consideration to the rival
submissions advanced by learned counsel representing the Appellants,
the propounders of the Revival Scheme, the Company, the Official
Liquidator and the other Respondents. This Court has also carefully
perused the Revival Scheme, the reports of the Chairpersons of the
meetings, the Modification Slip, the objections placed before the
learned Single Judge, the Impugned Judgment dated 17.02.2020, the
subsequent orders passed in the proceedings arising therefrom and the
material placed before this Court during the pendency of the present
Appeals.
29. At the outset, this Court deems it appropriate to delineate the
scope of interference in an appeal against an order sanctioning a
Scheme under Sections 391 to 393 of the Companies Act. There can
be no quarrel with the proposition that the Court does not sit in appeal
over the commercial wisdom of the creditors or members who, upon
being duly informed and acting bona fide, approve a scheme by the
requisite statutory majority. The Court is not required to determine
whether a different scheme would have been commercially more
advantageous or whether the terms of the scheme could have been
improved.
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NARAYAN
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30. The aforesaid limitation, however, operates only after the Court
has satisfied itself that the statutory requirements governing sanction
of the scheme stand fulfilled. The commercial wisdom of the majority
cannot displace the statutory duty of the Court to ascertain whether the
scheme placed before the Court is the scheme which was approved by
the requisite majority, whether the material placed before the voters
was sufficient to enable an informed decision, whether the class acted
bona fide and fairly, whether the scheme is just, fair and reasonable to
the class as a whole, whether it is contrary to law or public policy,
and, in the case of a company under liquidation, whether the
arrangement genuinely provides for revival and protection of the
interests of the stakeholders rather than merely postponing or
circumventing the consequences of liquidation.
31. These principles are not matters of appellate policy but
constitute the very parameters within which the jurisdiction under
Sections 391 to 393 of the Companies Act is required to be exercised.
The decision of the Supreme Court in Meghal Homes (P) Ltd. v.
Shree Niwas Girni K.K. Samiti & Ors.1, relied upon in the Impugned
Judgment itself, recognises that the Court must examine whether the
statutory procedure has been complied with, whether the requisite
majority has approved the scheme, whether the members or creditors
had the relevant material to arrive at an informed decision, whether
the decision is just and fair to the class as a whole, whether the scheme
is contrary to law or public policy, whether the stakeholders acted
bona fide and whether the scheme as a whole is just, fair and
reasonable. The same decision also makes it clear that, once these
1
(2007) 7 SCC 753
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requirements are satisfied, the Court does not sit in appeal over the
commercial wisdom of the majority.
32. Thus, the question before us is not whether the Revival Scheme
was commercially preferable to liquidation, nor whether the majority
of stakeholders could have arrived at a different commercial
arrangement. The question is narrower and anterior: whether the
statutory majority contemplated by Section 391(2) of the Companies
Act had, in fact, agreed to the Revival Scheme which came to be
sanctioned by the learned Single Judge, and whether the Court had
before it sufficient material to record the requisite satisfaction for
sanction thereof.
33. In the considered view of this Court, this distinction assumes
decisive significance in the present case.
Re: Votes cast “For, with Modification”
34. The principal difficulty arises from the manner in which the
votes cast by the allottees of Blocks B, C and D of the Spire Edge
Project have been treated.
35. The Chairman‟s Report records that, out of 384 valid votes, 22
votes were cast in favour of the Revival Scheme without modification,
293 votes were cast in favour of the Revival Scheme with
modification, 19 votes were cast against without modification and 50
votes were cast against with modification. Thus, while 315 votes were
categorised as being “for” the Revival Scheme, the overwhelming
majority, namely 293 votes, were expressly accompanied by
modifications.
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NARAYAN
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36. The learned Single Judge noticed the aforesaid voting pattern
and recorded that 82% of the valid votes had been cast, by the
investors present and voting, in favour of the Revival Scheme,
resulting in approval by more than 75% of the creditors present and
voting. The learned Single Judge thereafter proceeded on the basis that
the majority had approved the Scheme “with modification” and
declined to interfere, inter alia, on the ground that the Court could not
sit in appeal over the commercial wisdom of the majority.
37. However, this Court is of the considered opinion that the
aforesaid approach overlooks the anterior question arising from the
very nature of the votes cast.
38. Section 391(2) of the Companies Act requires a majority in
number representing three-fourths in value of the creditors, or class of
creditors, present and voting, to agree to the compromise or
arrangement. The statutory requirement is, therefore, not satisfied
merely because a numerical majority has been categorised as having
voted “for”. What is required to be ascertained is whether the requisite
majority agreed to the arrangement which the Court was ultimately
called upon to sanction.
39. A vote cast “for” the Scheme simpliciter expresses assent to the
Scheme as placed before the meeting. A vote cast “for, with
modification” is, by its very description, conditional upon the
modification accompanying the vote. The two cannot be treated as
identical without first examining the nature and effect of the condition
attached to the latter vote.
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NARAYAN
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40. This distinction assumes significance where the modifications
are substantive and concern the contractual and financial rights of the
allottees under the BBAs, including assured returns, lease
commitment charges and other obligations relating to the projects. The
modifications, therefore, could not be treated as merely clerical or
inconsequential matters of form.
41. The distinction is therefore not one of form. The modifications
went to the substantive rights and obligations of the allottees. If the
modifications were accepted, the arrangement assented to by such
voters would be one arrangement. If they were rejected, the
arrangement would be materially different.
42. Once this position is appreciated, the conditional votes could
not have been aggregated with the unconditional votes and treated as
an unqualified approval of the Revival Scheme. The learned Single
Judge was required to examine the precise terms of the modifications
and determine their legal effect before concluding that the requisite
statutory majority had approved the Scheme ultimately sanctioned.
43. This Court is conscious that the Chairman‟s Report is an
important document and that the voting result recorded therein
ordinarily deserves due weight. The present enquiry is not directed
towards questioning the manner in which the meeting was conducted
or substituting this Court‟s assessment for that of the Chairman. The
issue is the legal consequence to be attached to the votes recorded
therein while exercising jurisdiction under Section 391 of the
Companies Act.
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44. If the 293 votes were conditional upon acceptance of the
modifications and those modifications were ultimately not
incorporated into the Revival Scheme, such votes could not, without
further examination, be treated as unconditional assent to the Scheme
in its original form. At the very least, the Court was required to
determine whether, notwithstanding the modifications, those votes
could lawfully constitute assent to the Scheme ultimately sanctioned.
45. No such exercise is discernible from the Impugned Judgment.
The modifications appear to have been considered substantially as
objections seeking better terms, while the aggregate votes in favour
were treated as constituting the requisite majority. In the considered
view of this Court, this conflated two distinct stages of the statutory
enquiry: first, whether the requisite majority had agreed to the
arrangement; and second, whether the Court should sanction the
arrangement so approved.
46. Commercial wisdom cannot be invoked to overcome
uncertainty as to whether the statutory majority had, in fact, assented
to the arrangement being sanctioned. It becomes relevant only after
the existence of the requisite statutory assent is established.
47. This Court is, therefore, unable to sustain the finding that the
Revival Scheme had obtained the requisite statutory majority merely
by aggregating the votes cast “without modification” with those cast
“with modification”, without first determining the legal effect of the
conditions attached to the latter category.
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Re: Nature of the Modifications and Contractual Rights
48. The Respondents have contended that the modifications sought
by the allottees were merely an attempt to secure better terms and that,
once the statutory majority had approved the Revival Scheme,
individual creditors could not insist upon their preferred terms. There
can be no quarrel with the proposition in principle. However, the
question in the present case is anterior: whether the votes cast “for,
with modification” could be treated as assent to the Revival Scheme in
the form ultimately sanctioned.
49. The nature of the modifications assumes significance in this
regard. Pursuant to the order dated 11.01.2019, the allottees exercising
the option of voting “for, with modifications” were required to attach
the proposed modifications to their respective ballot papers. The
modifications thus formed part of the manner in which such votes
were cast.
50. The language of the Modification Slip makes the nature of the
assent clear. The voter first recorded a vote “AGAINST” the Scheme
“as currently Proposed” and thereafter voted “FOR” the Scheme
subject to deletion of specified clauses and incorporation of further
modifications. The assent was, therefore, expressly conditional. The
clauses identified in the Modification Slip concerned, inter alia,
financial obligations, adjustment of assured returns, payments
contemplated under the Scheme, the position of Blocks B, C and D
and past-period litigation. These were not matters merely incidental or
clerical in nature.
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50.1 The Modification Slip has been reproduced under for ready
reference:
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51. The modifications also cannot be viewed entirely divorced from
the contractual rights asserted by the allottees under their respective
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BBAs, including claims relating to assured returns, lease commitment
charges, delay compensation and other financial obligations. This
Court is not, in these Appeals, adjudicating upon the ultimate
entitlement of any individual allottee to such amounts. Their relevance
is confined to the question whether the Revival Scheme proposed to
affect rights which formed part of the contractual relationship between
the Company and the allottees and whether the assent relied upon in
support of the Scheme was an informed and unconditional assent.
52. The learned Single Judge was, therefore, required to examine
the precise modifications attached to the votes and determine their
legal effect. If the modifications were not accepted and were not
incorporated into the Revival Scheme, the Court was required to
consider whether votes expressly made subject to those modifications
could nevertheless constitute assent to the Scheme in the form
ultimately sanctioned. Treating the modifications merely as objections
seeking better terms did not answer this question.
53. This Court is not holding that contractual rights of allottees
cannot be compromised by a Scheme sanctioned under Sections 391
to 393 of the Companies Act. Nor is this Court adjudicating upon the
merits of the claims raised by the allottees. The limited question is
whether, where votes were expressly made subject to substantive
modifications affecting such rights, those votes could be counted as
unconditional assent to the Scheme without first determining the legal
effect of the conditions attached to them.
54. In the considered view of this Court, the aforesaid enquiry was
necessary before the votes could be relied upon for establishing the
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requisite statutory majority. The failure to undertake that enquiry
assumes significance in the present case, particularly when the
modifications were treated in the Impugned Judgment substantially as
objections seeking better terms rather than as conditions attached to
the votes themselves.
55. It is also material that the objections raised by the individual
allottees were not examined by the learned Single Judge in the manner
required. The Impugned Judgment principally considers the objections
raised by Spire Edge Maintenance Lease and Facilitation Ltd.
(„SELFC‟), while the substantive objections of the individual allottees,
including those concerning their contractual rights and the effect of
the proposed Revival Scheme thereon, do not appear to have been
independently examined. Their objections could not have been
rejected merely by treating them as an attempt to secure better terms
under the Scheme. The Court was required to consider the nature of
those objections and determine whether they raised any issue bearing
upon the validity, fairness or statutory approval of the Revival
Scheme.
56. This omission assumes significance in the present case because
the modifications attached to the ballot papers were not unrelated or
collateral demands. They concerned matters capable of materially
affecting the rights and obligations of the allottees under the BBAs.
The learned Single Judge was, therefore, required to examine those
objections and the modifications sought before treating the votes cast
subject to such modifications as assent to the Revival Scheme as
sanctioned. The absence of such an examination cannot be treated as a
mere matter of commercial judgment.
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Re: Informed Decision and Material Disclosure
57. Section 393 of the Companies Act requires that the creditors or
members called upon to consider a Scheme be furnished with the
material necessary to enable them to take an informed decision. The
purpose of this requirement is to ensure that the statutory majority is
arrived at upon a proper understanding of the Scheme and its
consequences.
58. In the present case, the Revival Scheme concerned two distinct
projects, namely, Spire Edge and Spire Woods, involving different
categories of allottees, different stages of construction and different
contractual arrangements. The Court was, therefore, required to
examine whether the material placed before the respective classes was
sufficient to enable them to understand the manner in which the
Scheme proposed to deal with their respective interests and
obligations.
59. This enquiry assumes particular significance where the Revival
Scheme seeks to govern existing rights and obligations of allottees
under their respective BBAs. The fact that the Scheme was supported
by a substantial majority could not dispense with the requirement that
such majority should have been furnished the material necessary to
make an informed decision.
60. The Impugned Judgment, however, does not disclose any
substantive examination of whether the material furnished to the
allottees was sufficient for this purpose. In the absence of such
examination, the Court could not have proceeded solely on the basis
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of the numerical voting result to conclude that the statutory
requirement for sanction of the Revival Scheme stood satisfied.
Re: Fairness to the Class as a Whole
61. The Respondents have placed considerable reliance upon the
fact that 82% of the valid votes, present and voting, in Blocks B, C
and D were categorised as being in favour of the Revival Scheme and
that the overwhelming majority of the allottees of Spire Woods had
also voted in favour. In relation to Spire Woods, 358 out of 364 valid
votes were recorded in favour of the Scheme, of which 292 were “with
modification”.
62. This Court has no doubt that a substantial majority of the
stakeholders supported the revival of the Company and its projects.
Such support is undoubtedly relevant, however, the relevant test is
whether the Revival Scheme is just, fair and reasonable to the class as
a whole. This requires the Court to consider whether the Scheme fairly
addresses the interests of the members of the class and the effect
which the Scheme proposes to have upon their existing rights.
Numerical superiority, by itself, cannot dispense with such an enquiry.
63. At the same time, the mere fact that some stakeholders oppose
the Revival Scheme cannot, by itself, justify its rejection. Where the
statutory requirements have been complied with, the requisite majority
has approved the Scheme and the Scheme is otherwise just, fair and
reasonable, the Court cannot interfere merely because some
stakeholders may consider an alternative arrangement more beneficial.
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64. In the present case, however, the enquiry into fairness cannot be
divorced from the manner in which the approval itself was recorded.
The substantial number of votes cast with modifications, coupled with
the objections raised by the allottees, required the Court to ascertain
whether the Scheme, in the form sanctioned, fairly represented the
arrangement to which the class had assented. That enquiry was
material to the exercise of jurisdiction under Sections 391 to 393 of
the Companies Act.
Re: Commercial Wisdom
65. This Court may now examine the principal submission
advanced on behalf of the Respondents that the Revival Scheme
should not be interfered with, as doing so would amount to an
impermissible interference with the commercial wisdom of the
majority.
66. There can be no dispute with the proposition. Indeed, the same
principle has been recognised by the Supreme Court in Meghal
Homes (supra) and by the learned Single Judge in the Impugned
Judgment.
67. However, the proposition has no application where the Court is
called upon to determine whether the statutory requirements preceding
the exercise of such commercial wisdom have been satisfied. The
Court is not required to choose between two commercially viable
schemes. It is required to determine whether the scheme placed before
it was validly approved and whether the process leading to sanction
satisfied the statutory safeguards.
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68. In the present case, the interference is not founded upon any
disagreement with the commercial decision to revive the Company or
the terms of the Revival Scheme. It arises from the failure to
determine whether the votes relied upon as constituting the requisite
majority amounted, in law, to assent to the Revival Scheme in the
form ultimately sanctioned. That enquiry falls within the statutory
jurisdiction of the Court and does not constitute an interference with
commercial wisdom.
Other Grounds Urged:
69. The Appellants have also questioned the feasibility of the
proposed revival of the Spire Woods Project, including the sufficiency
and certainty of the proposed investment of Rs.20 crores by the new
developer, as well as the status of approvals and infrastructure
concerning the Spire Edge Project. This Court does not propose to
undertake any independent assessment of the commercial sufficiency
of the proposed investment or the technical feasibility of the projects.
70. The relevance of these objections is confined to whether the
Revival Scheme, particularly when challenged on specific grounds by
the stakeholders, was sufficiently definite and capable of
implementation to constitute a genuine arrangement for revival. The
subsequent material placed before this Court, including the steps
required for renewal of licences and other statutory approvals, does
not by itself establish that the Scheme was incapable of
implementation on the date of sanction, but does indicate that the
concerns regarding its feasibility were not wholly speculative.
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71. The Respondents have also relied upon the steps taken after
sanction of the Revival Scheme, including infusion of funds,
appointment of consultants and contractors, supervision by the Court
Appointed Commissioner and efforts towards obtaining requisite
permissions and renewals. Such subsequent developments are relevant
circumstances, but cannot retrospectively validate an order of sanction
if the statutory requirements were not satisfied when the order was
passed. This Court, therefore, does not interfere on account of any
subsequent difficulty in implementation or delay in revival. The
subsequent developments cannot, however, cure any defect in the
statutory process preceding sanction.
72. The Appellants had further objected to clauses of the Revival
Scheme which contemplated, inter alia, restriction upon proceedings
by statutory authorities and stay or vacation of pending civil and
criminal proceedings. The learned Single Judge, relying upon J.I.K.
Industries Ltd. & Ors. v. Amarlala V. Jumani & Anr.2, and Krishna
Texport Industries Ltd. v. DCM Ltd.3 had already declined to approve
the portions which purported to interfere with criminal proceedings.
This Court finds no occasion to differ from that approach and,
accordingly, does not base its conclusion upon these clauses.
73. Considerable submissions have also been advanced regarding
the alleged financial irregularities, siphoning of funds and conduct of
persons associated with the erstwhile management, as well as the
alleged conduct of some of the Appellants. This Court does not
consider it necessary to return any finding on such allegations, which
2
(2012) 3 SCC 255
3
(2008) 104 DRJ 101 (DB)
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remain matters for the competent forums. The learned Single Judge
had, in any event, taken supervisory measures by appointing a Court
Appointed Commissioner and directing maintenance of funds in an
escrow account. Such safeguards may regulate implementation, but
cannot cure any defect in the statutory process by which the Revival
Scheme was sanctioned.
74. The Respondents have urged that the Appellants constitute only
a small group of allottees and that their objections were intended to
frustrate the revival process. The number of persons raising
objections, however, cannot determine the validity of the order of
sanction. Likewise, the mere fact that an allottee seeks enforcement of
contractual rights having financial implications cannot, without more,
establish mala fides. These considerations may bear upon individual
claims, but cannot validate a Scheme if the statutory requirements
governing its sanction have not been duly satisfied.
75. This Court is also conscious that setting aside the Revival
Scheme may cause prejudice to the allottees who supported it and
have been awaiting completion of the projects. That consideration
cannot, however, substitute for compliance with the statutory
requirements. This Court is not expressing any view that revival is
preferable or otherwise to liquidation, nor is it holding that the
Company or its projects cannot be revived. The interests of the
stakeholders who supported revival would equally require that any
arrangement ultimately binding upon them is legally valid and
sanctioned in accordance with law.
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76. In view of the aforesaid, the interference in the present Appeals
does not proceed upon any assessment of the commercial merits or
feasibility of the Revival Scheme, nor upon the subsequent difficulties
in its implementation, the conduct of the parties, or the number of
stakeholders supporting or opposing it. The interference arises from
the foundational question already noticed hereinabove, namely,
whether the Scheme in the form sanctioned had obtained the requisite
statutory approval and whether the objections and material placed
before the learned Single Judge were adequately examined before
such sanction was granted.
CONCLUSION:
77. On an overall consideration of the matter, this Court is
satisfied that the Impugned Judgment dated 17.02.2020 cannot be
sustained and is liable to be set aside.
78. The Appeals are, accordingly, allowed and the Impugned
Judgment dated 17.02.2020 sanctioning the Revival Scheme is set
aside. The matter is remanded to the learned Single Judge for fresh
consideration of the Revival Scheme and the objections thereto, in
accordance with law.
79. The learned Single Judge shall, while considering the matter
afresh, examine the legal effect of the votes cast “for, with
modification”, the modifications attached thereto, the objections raised
by the individual allottees and other stakeholders, and such other
issues as may arise for consideration in accordance with Sections 391
to 393 of the Companies Act. If any fresh Scheme or modified
arrangement is proposed, the same shall be dealt with in accordance
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with the statutory procedure, including convening of meetings,
wherever required in law, and furnishing of the material necessary to
enable the concerned stakeholders to take an informed decision.
80. It is clarified that this Court has not adjudicated upon the
individual claims of any allottee for refund, assured returns, lease
commitment charges, penalty, interest, compensation or any other
amount under the respective BBAs. All such claims, if otherwise
maintainable, shall remain open to be pursued before the forum
competent to adjudicate the same.
81. Nothing contained in this Judgment shall affect any criminal
proceedings, investigation or proceedings before statutory authorities,
which shall continue to be governed by law and by the orders passed
by the competent forum.
82. The present batch of Appeals, along with pending
applications, shall stand disposed of.
ANIL KSHETARPAL, J.
SHAIL JAIN, J.
AUGUST 13, 2026
s.godara/shah
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Disclaimer: Educational and research material only; not legal, tax, investment or professional advice. Verify the controlling court record, statutory version, jurisdiction and subsequent history.