Anindya Infrastructure Pvt. Ltd. vs M/s Shubhkamna Buildtech Private Limited & Anr.

NARESH SALECHA, MEMBER (TECHNICAL)

The present appeal has been filed by the Appellant i.e. Anindya Infrastructure Pvt. Ltd., under Section 61 of the Insolvency and Bankruptcy Code, 2016 ("Code") against the Impugned Order passed in Interlocutory Application No. 369 of 2019 in CP NO. IN-1059/ND/2018 by the National Company Law Tribunal, New Delhi, (“Adjudicating Authority”) on 17.03.2021.

M/S Shubkamna Buildtech Private Limited (Corporate Debtor) through its Resolution Professional Mr. Anand Sonbhadra is the (contesting) Respondent No.1 herein. M/S Concord Infrastructure Private Limited (Operational Creditor) is the (non-contesting) Respondent No.2 herein.

The Appellant submitted that it is a company incorporated under the Companies Act, 1956, and has been engaged in the real estate business since its inception. The Appellant submitted that it has maintained a business relationship with the respondent Corporate Debtor since May 2015 with an understanding reached with Shubhkamna Advert Buildtech Pvt. Ltd., a sister concern of the Corporate Debtor, formalized through a letter of intent dated 14.05.2015 which could not be implemented. Consequently, the Corporate Debtor proposed a Joint Development Agreement (JDA) dated 06.03.2016 with the Appellant, which included Clause 5 which explicitly stipulated that payments previously made by

the Appellant to the Corporate Debtor’s sister concern would be treated as payments to the Corporate Debtor itself, thereby formalizing the financial reconciliation between the parties.

The Appellant submitted that the respondent Corporate Debtor transferred actual physical possession of Plot No. GH-02A, Sector-1, Greater Noida, designated for the construction of 176 Studio Apartments under Tower T-9, utilizing a Floor Area Ratio (FAR) of 6,983.52 square meters.

The Appellant submitted that in accordance with the responsibilities outlined in the Joint Development Agreement, it commenced preparations for advertising and marketing Tower T-9 including installing hoardings at the project site, establishing a site office, hiring manpower, and initiating the booking process for the apartments in Tower T-9. The Appellant elaborated that the Appellant was solely responsible for both sales and construction activities under the terms of the agreement.

The Appellant submitted that upon receiving the architectural and structural designs, it engaged a contractor named "Adstec" to undertake the construction of Tower T-9 in accordance with the specifications provided by the architect.

The Appellant submitted that work at the project site was halted due to the irresponsible behaviour of the Corporate Debtor and its contractor for other towers, which resulted in a civil suit filed by buyers of those towers. Specifically, a civil suit bearing No. 450 of 2017 was initiated by M/s Subhkamna City Welfare

Association (SKCWA) against M/s Shubhkamna Buildtech Pvt. Ltd. in the Civil Court of Gautam Budh Nagar (Noida), U.P. The Appellant stated that the court referred the parties to mediation, leading to a final settlement as outlined in the Minutes of Meeting dated 30.12.2017 between the home buyers and the Corporate Debtor. The Appellant further elaborated that this settlement culminated into a Tripartite Agreement between the Flat buyers, Operational Creditor and Corporate Debtor dated 28.02.2018. The Appellant stated that following the mediation and settlement, a consent decree was issued on 28.05.2018 by the Civil Judge (Senior Division), Gautam Budh Nagar, in Civil Suit No. 460/2017.

The Appellant submitted that despite the mediation and settlement between the Corporate Debtor and the home buyers, work at the project site came to a complete halt due to the continued misdeeds of the Corporate Debtor. The Appellant submitted that to resolve these issues, a full and final settlement agreement was executed between the Appellant and the Corporate Debtor on 09.05.2018, which aimed to address all outstanding disputes and claims comprehensively.

The Appellant submitted that a dispute arose between the Corporate Debtor and the Operational Creditor concerning payments under the agreement dated 28.05.2018. The Appellant stated that due to the non-payment of dues, the Operational Creditor filed an application bearing IB No. 1059/ND/2018 in July 2018 before the Adjudicating Authority which was admitted under section 9 of the code after passing an ex-parte order on 26.11.2018, appointing an Interim

Resolution Professional (IRP) as proposed by the Operational Creditor and the Corporate Debtor was subjected to CIRP.

The Appellant submitted that on 07.02.2019, the first meeting of the Committee of Creditors (CoC) was conducted by the IRP and during the meeting, the IRP recorded in paragraph 11 of the minutes that Ms. Shalini Singh, a Director of Anindya Infrastructures Pvt. Ltd., stated that her company was carrying out the construction of Tower T-9, which had been purchased from Shubhkamna Buildtech Pvt. Ltd. Furthermore, she mentioned that the remaining five towers were being managed on behalf of Shubhkamna Buildtech Pvt. Ltd. and SKCWA, an Association of Flat Buyers, under orders from the District Court in Greater Noida.

The Appellant submitted that it filed its claim as an Operational Creditor in Form B before the IRP on 21.02.2019, providing all necessary particulars and attaching relevant documents, including the Joint Development Agreement dated 06.03.2016 and the full and final settlement agreement dated 09.05 2018.

The Appellant submitted that the Resolution Professional, through an email dated 21.04.2019, responded to the claim submitted by the Appellant in Form B on 21.02 2019. The Resolution Professional informed the Appellant that the claim could not be admitted based on the submitted documents. The Resolution Professional observed that while Mr. Piyush Tiwari, the signatory to the Joint Development Agreement dated 06.03.2016 and the full and final settlement agreement dated 09.05.2018, as a Director of the Corporate Debtor had

been disqualified as a Director under Section 164(2)(a) of the Companies Act, 2013, effective from 1st November 2015. Consequently, under Section 167(1)(a) of the Companies Act, 2013, the Resolution Professional concluded that Mr. Tiwari was not holding the position of Director at the time of executing these agreements, rendering them unenforceable against the Corporate Debtor under the doctrine of constructive notice. Additionally, the Resolution Professional raised objections to Clauses 5, 11, and 13 of the Joint Development Agreement dated 06.03.2018, stating that payment to an unspecified sister concern, which could not be verified, did not constitute valid consideration under the Indian Contract Act. However, the Resolution Professional indicated willingness to reconsider the claim upon submission of further substantiating documents.

The Appellant submitted that several flat buyers challenged the order of appointment of the IRP dated 26th November 2018 before the Adjudicating Authority in Company Appeal (AT) (Insolvency) No. 471 of 2019. In its order dated 10.05.2019, the Adjudicating Authority observed that "in the meantime, construction, etc., of the flats must continue, and the Interim Resolution Professional will ensure that the company remains a going concern and will take assistance from the suspended Board of Directors, paid directors, and the employees."

The Appellant submitted that despite the prevailing order of the Adjudicating Authority dated 10.05.2019, which directed that construction work must continue and the company remain a going concern under the supervision of

the Resolution Professional, the Resolution Professional deliberately refused to recognize the status of the Appellant which is evident from the minutes of the 3rd CoC meeting dated 18.05.2019, which recorded allegations that Smt. Shalini, Director of Anindya Infrastructures Pvt. Ltd., "forcibly entered into said property and took possession of assets and premises by misbehaving with security personnel." The Appellant contended that these allegations are baseless, as it was already on record before the Resolution Professional that Smt. Shalini was the Director of Anindya Infrastructures Pvt. Ltd., supported by Form B, the Joint Development Agreement dated 06.03.2016, and the full and final settlement agreement dated 09.05.2018.

The Appellant submitted that on 19.08.2019, the Adjudicating Authority issued an order in the present proceedings, directing the issuance of bailable warrants against Piyush Tiwari and Deep Tiwari, former Directors of Shubhkamna Buildtech Pvt. Ltd. The Appellant submitted that the Directors are still absconding, and there has been no communication whatsoever from the Resolution Professional with the Directors of the Corporate Debtor. The Appellant alleged that the Resolution Professional made no efforts to connect with the office of the Corporate Debtor or to inquire about its accounts, payments, documents, or agreements to verify the claims of flat buyers and other creditors including those of the Appellant and buyers of flats in Tower T-9, which raises concerns regarding the Resolution Professional's commitment to fulfilling the responsibilities under the insolvency proceedings.

The Appellant submitted that the Directors of the present Appellant have faced legal actions from flat buyers of Tower T-9, who booked flats constructed under the Joint Development Agreement dated 06.03.2018. These buyers have raised issues that were settled through a Full and Final Settlement Agreement dated 09.05.2018 with the Corporate Debtor. Complaints, proceedings under Section 138 of the Negotiable Instruments Act, and FIRs have been lodged against the Appellant for delays in the construction of flats in Tower T-9, leading to the arrest of the Applicant by the police concerning flat bookings in this tower. The Appellant highlighted that following the signing of the Final Settlement Deed, the Corporate Debtor issued Builder Buyer Agreements directly in favor of the allottees of flats in Tower T-9.

The Appellant submitted that construction work for Tower T-9 is currently ongoing, executed by the Appellant through its contractor, Adstec. The site displays flags and hoardings for Tower T-9 under the name "Anindya Suites," indicating that the project exists not only in documentation but also physically on the ground. The Appellant noted that in an email dated 21.04.2019, the Resolution Professional stated that the Appellant could present documents to support their claims, however, when the Director of the Appellant visited the Resolution Professional's office, she was neither recognized nor were the flat buyers of Tower T-9 acknowledged. This exclusion was based on the assertion that the signatories to the Joint Development Agreement, Full and Final Settlement Agreement, and subsequent Builder Buyer Agreements were technically not

Directors, despite their names appearing on the Registrar of Companies (‘RoC’) website which raises concerns regarding the Resolution Professional's adherence to due process and his commitment in recognizing legitimate claims associated with Tower T-9 and its flat buyers.

The Appellant submitted that the matter regarding the alleged cash register and its entries can only be clarified if the Resolution Professional gains access to the register or if it is provided by the directors, representatives, account department, or officers of the Corporate Debtor. The Appellant submitted that however, in the present case, the directors are absconding, and no inquiry has been conducted by the Resolution Professional to ascertain the status of allotment of flats to the Appellant.

It is the case of the Appellant that in view of these circumstances, the Appellant filed an application under Section 60(5) of the Code, 2016, read with Rule 11 of the NCLT Rules, 2016, vide M.A. No. 369/2019 which was disposed of by the Impugned order dated 17.03.2021.

The Appellant submitted that the Appellate Tribunal erred in rejecting its claims under the Joint Development Agreement (‘JDA’) dated 06.03.2018 on the hyper-technical ground of disqualification of the signatory directors, while simultaneously permitting the CIRP proceedings to proceed based on agreements executed during the same period by the very same disqualified directors.

The Appellant submitted that its claim could not have been rejected on the ground of non-submission of documents that were in the possession of the

Corporate Debtor and subsequently in the possession of the Resolution Professional. The Appellant stated that the Adjudicating Authority erred in inferring that the Appellant's claims were barred by law, contrary to the rationale of Section 31 of the Code. The Adjudicating Authority did not decide the claim on its merits but dismissed it on the ground that it was "hydra-headed," which is arbitrary and unjust. The Appellant asserts that such a dismissal undermines the principles of fairness and due process enshrined in insolvency proceedings.

The Appellant submitted that the Adjudicating Authority also erred in applying the principles laid down in the judgment of Essar Steel vs Satish kumar Gupta [(2020)8 SCC 531] which pertain to successful resolution applicants, despite the fact that in the present case, the application under Section 30(6) of the Code, was then pending, and the resolution plan was not approved to qualify as a successful resolution plan.

Concluding his arguments, the Appellant urged this Appellate Tribunal to dismiss the Impugned Order and allow its appeal.

Per Contra, the Respondent denied all the averments made by the Appellant in the present appeal.

The Respondent No. 1 submitted that the Corporate Debtor, incorporated on 08.12.2006 under the provisions of the Companies Act, 1956, is engaged in the real estate business with its registered office located at 197-E, Pocket-IV, Mayur Vihar Phase-I, Delhi. The Respondent No.1 stated that at the time of insolvency proceedings, the Corporate Debtor had two ongoing real estate

projects: Shubhkamna Techomes Project situated at Plot GH 05B, Sector-137, Noida, and Shubhkamna City Project located at Plot GH02A, Sector-1, Greater Noida West. These projects form a critical part of the Corporate Debtor's operations and are central to the claims and disputes arising in the present proceedings.

The Respondent No.1 submitted that an application for the commencement of the CIRP was filed by an Operational Creditor, Concord Infrastructure Pvt. Ltd., under Section 9 of the Code. The CIRP was initiated by the Adjudicating Authority through its order dated 26th November 2018. In the same order, Ms. Gurkamal Hora Arora (Registration No. IBBI/IPA-001/IP-P00588/2017-18/11958) was appointed as the IRP. Subsequently, public announcements in Form A were published twice, on 29th November 2018 and 5th January 2019, in compliance with the procedural requirements under the Code.

The Respondent No. 1 submitted that the first meeting of the CoC was conducted by the IRP on 7th February 2019 and during this meeting, the CoC resolved to replace the then IRP with Mr. Anand Sonbdhara as Respondent No. 1 as the Resolution Professional for the Corporate Debtor, a decision confirmed by the Adjudicating Authority through its order dated 12.02.2019. Subsequently, the second CoC meeting was conducted by Respondent No. 1 as Resolution Professional, on 11.03.2019. The key agenda items discussed included the preparation of the Information Memorandum, transfer of documents from Interim Resolution Professional to Resolution Professional, appointment of Registered

Valuers and forensic auditors, and approval of resolutions for the bid evaluation matrix, Form G, eligibility criteria, and other procedural matters essential to progressing the CIRP. These steps were duly put to vote in accordance with the provisions of the Code.

The Respondent No. 1 submitted that the third meeting of the CoC was conducted on 18.05.2019, wherein several critical issues were deliberated, including the claims received, fixing the performance security amount, extending the timelines for submission of Expressions of Interest (‘EoI’), and seeking an extension of the CIRP period beyond 180 days for an additional 90 days. The CoC noted that claims had been provisionally admitted by the Resolution Professional, comprising 1,264 claims from home buyers, four each from financial creditors and operational creditors, and 17 from workmen/employees. Further, during this meeting, M/s Ravi Ranjan & Co. and Alamak Capital Advisors Pvt. Ltd. were appointed as registered valuers to conduct the valuation of all three classes of assets of the Corporate Debtor. Additionally, the appointment of M/s Hari Bhakti & Co. LLP as Forensic Auditor for Shubhkamna Buildtech Private Limited was confirmed. These decisions were made to ensure compliance with Code, while progressing towards resolution in a structured and transparent manner.

The Respondent No. 1 submitted that the resolution plans submitted by the two prospective resolution applicants (PRA)were opened during the 5th meeting of the CoC and the key aspects of the respective plans were discussed in detail during the meeting. Subsequently, a comparative note highlighting the essential

points of both resolution plans was circulated among the Authorized Representative, homebuyers, and other CoC members for their review and consideration and the Resolution Professional undertook a detailed deliberation to ensure that the submitted plans complied with the terms and conditions specified in the Request for Resolution Plan (‘RFRP’) published on 07.08.2019.

The Respondent No. 1 submitted that the resolution plan in the captioned matter was approved by the CoC with a voting percentage of 87.57%, which included 66.70% of homebuyers (creditors in a class) voting in favor of the plan. Following this, on 09.10.2019, the CoC approved the resolution plan, and the Resolution Professional filed an application under Section 31 of the Code, on 23.10.2019, seeking approval from the Adjudicating Authority which was later approved by the Adjudicating Authority.

The Respondent No.1 further submitted that after the approval of the resolution plan by the CoC, the Resolution Professional ensured compliance with procedural requirements and addressed claims submitted during the CIRP. The Respondent No.1 clarified that the Appellant submitted its claims as an unpaid operational creditor in Form B on 24.02.2019, however, in response to this claim, the Resolution Professional sent a detailed reply on 11.04.2019, stating that the documents submitted were insufficient to substantiate the claim.

The Respondent No. 1 submitted that following the email reply sent by the Resolution Professional on 11.04.2019 to the Appellant seeking more information and directions the Appellant failed to provide any additional documents to

substantiate its claim and furthermore, the Appellant did not approach the Adjudicating Authority for any remedy against the rejection of its claim by the Resolution Professional. On 27.08.2019, the Appellant made another inquiry regarding the status of their claim without submitting the requested documents. It is the case of the Appellant that he as the Resolution Professional responded on the same day to the Appellant, referring the Appellant to the detailed reply sent on 11.04.2019 but the Appellant failed to respond with the required clarifications or documents for over five months. Subsequently, in September 2019, while deliberations over the Resolution Plan by the CoC were ongoing, the Appellant filed an application before the Adjudicating Authority which was listed on 27.09.2019. The Respondent No.1 highlighted that the Resolution Plan was approved by the CoC on 17.102019 with a voting share of 87.57%. It is also the case if the Respondent No.1 that the Appellant is barred from raising grievance at this belated stage. The issue of "filing of claims" has already been settled by this Appellate Tribunal in its order dated 30.07.2021 in case Mukul Kumar vs. M/s RPS Infrastructure Ltd passed in Company Appeal (AT)(Ins.) No. 1050 of 2020. This precedent underscores that claims not properly filed within the stipulated timeline cannot be entertained after the approval of a Resolution Plan by the CoC.

The Respondent No. 1 submitted that the Resolution Professional is not obligated to accept any claims filed after the stipulated period outlined in Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency

Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulation,2016). The Respondent No.1 submitted that the Resolution Professional lacks the discretion to admit claims submitted after the expiration of the 90-day period as per the applicable CIRP regulations.

The Respondent No. 1 submitted that the Appellate Tribunal , in its order dated 18th June 2021, stated that-

The Respondent No. 1 submitted that, as per Clause 5 of the Joint Development Agreement dated 06.03.2018 executed between the Appellant and the Corporate Debtor, the claimed debt was not owed by the Corporate Debtor to the Appellant. Instead, it was explicitly stated that the payment of Rs. 2.5 Crores were made by the sister concern of the Corporate Debtor to the sister concern of the Appellant and would be considered as payment under the Joint Development Agreement dated 06.03.2018. The Respondent No.1 submitted that the Appellant cannot be classified as a creditor of the Corporate Debtor.

The Respondent No. 1 submitted that the Appellant has failed to provide any details regarding transactions in which money was remitted to the Corporate Debtor. Furthermore, no proof of disbursement or evidence of any payment was attached to the claim form submitted by the Appellant. The Respondent No.1 highlighted that the sister concern of the Corporate Debtor is a distinct legal entity and therefore, any claim related to alleged transactions with the sister concern cannot be considered a valid claim in the CIRP of the Corporate Debtor.

The Respondent No. 1 submitted that the settlement agreement dated 09.05.2018, signed by Mr. Piyush Tiwari on behalf of the Corporate Debtor, is not tenable in law as Mr. Tiwari was disqualified from acting as a director by the RoC for the period 01.11.2015 to 31.10.2020 under Section 164(2)(a) of the Companies Act, 2013. The Respondent No.1 clarified that as per the Doctrine of Constructive Notice, documents filed with the Registrar are deemed public documents, and anyone dealing with the company is presumed to have reviewed and understood these documents in their true perspective. Moreover, the list of disqualified directors for the relevant period was available on the Ministry of Corporate Affairs (MCA) website, making it a public document. The Respondent No.1 emphasized that the Appellant, therefore, had an obligation to verify the directorship status of Mr. Piyush Tiwari before entering into any agreement with him on behalf of the Corporate Debtor and the failure to exercise due diligence renders the agreement legally invalid and unenforceable.

The Respondent No. 1 submitted that the list of disqualified directors, including their details, was updated on the Ministry of Corporate Affairs (MCA) website on 12th September 2017. This information was affirmed by the MCA through an affidavit filed before the Adjudicating Authority in the present case. The Respondent No.1 also submitted that the Appellant has forcefully taken possession of a portion of the premises belonging to the Corporate Debtor, despite an order passed by the Adjudicating Authority against the Appellant in CA No. 86/2019, and the Appellant had failed to vacate the said property to date. The Respondent No.1 had also written to the relevant authorities seeking assistance in vacating the premises, but no action has been taken so far.

The Respondent No. 1 submitted that the tripartite arrangement between the Corporate Debtor, Operational Creditor, and Shubhkamna City Welfare Association holds no relevance in the present case. The Respondent No.1 emphasized that as a result of fact, the members of Shubhkamna City Welfare Association passed a resolution expressing their support and confidence in the CIRP of the Corporate Debtor.

The Respondent No. 1 submitted that the Respondent No.1 does not possess any details regarding the alleged letter of intent, and it has no bearing on the subject matter of the present application. The Respondent No.1 further submitted that the said letter of intent was executed with a different entity, namely Shubhkamna Advert Buildtech Limited, which is a separate legal entity distinct from the Corporate Debtor, as such, the letter of intent is irrelevant to the

current proceedings and cannot be considered in relation to the CIRP of the Corporate Debtor.

The Respondent No. 1 submitted that it is unclear which subsidiary the Appellant's sister concern allegedly made payments to, and no specific details have been provided to substantiate these claims. The Respondent No.1 submitted that the Joint Development Agreement dated 06.03.2018 cited by the Appellant has no bearing on the current dispute raised in this application. The Respondent No.1 emphasized that the said Joint Development Agreement was executed by a disqualified director of the Corporate Debtor, Mr. Piyush Tiwari, and therefore lacks legal sanctity. The Respondent No.1 alleged that the Appellant's actions in collusion with Mr. Tiwari was deliberately done to raise frivolous liabilities upon the Corporate Debtor which warrant scrutiny. The Respondent No.1stated that Mr. Tiwari had been disqualified by the MCA, and it remains ambiguous how the Appellant proceeded to enter into the JDA under such circumstances. Moreover, the Appellant has admitted that the consideration was received by their sister concern, which is a separate legal entity from the Corporate Debtor. Under corporate law principles, debts owed to one entity cannot be presumed to be debts owed to another distinct entity.

The Respondent No. 1 specifically denied that the Appellant has lawfully taken possession of the site bearing No. GH-02A, Sector-1, Greater Noida. It is submitted that a part of the project site office is currently under the illegal possession of the Appellant, who has no rightful claim over the said part of the

site, as it belongs to the Corporate Debtor. The Respondent No.1 brought to the attention of this Appellate Tribunal that there is no record indicating lawful transfer or handing over of possession of the site by the Corporate Debtor to the Appellant. The Respondent No.1 reiterated that an order/direction has already been passed by this Appellate Tribunal against the Appellant, directing it to vacate the portion of the site it is unlawfully occupying. Despite this order, the Appellant continues to retain possession in violation of legal directives, obstructing the CIRP.

The Respondent No. 1 submitted that it is incorrect to suggest that any mediation was lawfully or legitimately entered into with the Appellant. The Mediation Proceeding Report dated 21.05.2018 was signed by Mr. Piyush Tiwari, who had already been disqualified as a director by the MCA at the time of signing and the Appellant was not a party to the said mediation proceedings, which involved only the Shubhkamna City Welfare Association. The Respondent No.1 stated that the Appellant merely signed the Mediation Report as a witness, and therefore, it has no bearing on the present subject matter of dispute. The Respondent No.1 castigated the Appellant’s attempt to mislead this Appellate Tribunal by implying that they were a party to these proceedings and in a previous appeal filed by a group of homebuyers, Tribunal had already addressed and dismissed similar issues related to the settlement in question.

The Respondent No. 1 submitted that the purported "full and final settlement" dated 09.05.2018 was entered into by a disqualified director of the

Corporate Debtor, rendering it non-est and devoid of any legal sanctity. The Respondent No.1 further submitted that the Appellant’s conduct raises serious concerns, as they have entered into multiple agreements with disqualified directors of the Corporate Debtor. The Respondent No.1 stated that the information regarding disqualified directors was made publicly available on the MCA website on 12.09.2017 and was affirmed by the MCA through an affidavit filed before the Adjudicating Authority. This public disclosure imposes an obligation on parties dealing with such directors to exercise due diligence, which the Appellant has failed to do and consequently, the settlement agreement cited by the Appellant has no bearing on the present matter and cannot be relied upon in these proceedings.

The Respondent No. 1 submitted that the Appellant failed to provide any of the information requested by the Resolution Professional. Furthermore, the Respondent No.1 asserts that the Appellant's claim regarding ongoing construction work is misleading and to substantiate this, the Respondent No.1 referred to the email sent by the IRP to Ms. Shalini, Director of the Appellant, on 08.12.2018. demonstrating the IRP's attempts to obtain necessary information from the Appellant, which were not adequately addressed.

The Respondent No. 1 clarified that no substantiation of the claim was provided by the Appellant. The Resolution Professional emphasized that the Joint Development Agreement dated 06.03.2018 and the full and final Settlement dated 09.05.2018 are non-est and legally untenable.

The Respondent No. 1 stated that from the initial pages of the alleged Builder Buyer Agreements which the Corporate Debtor does not indicate any liability toward the Appellant. Moreover, in the absence of receipts for money paid or bank transaction records, the Corporate Debtor does not have any such alleged liability. The Respondent No.1 stated that it is also unclear when these Builder Buyer Agreements were entered into and if they were signed by a lawful Authorized Representative of the Corporate Debtor.

Concluding his arguments, the Respondent No.1 requested this Appellate Tribunal to dismiss this appeal with exemplary costs.

The Appellant had challenged the Impugned Order dated 17.03.2021 basically on two primary grounds, based on which we find that, following issues are required to be examined and determined to decide the present appeal.

Issue No. (I) Whether, the claims of the Appellant submitted to the Respondent No. 1 should have been accepted based on various documents submitted by the Appellant or not.

Issue No. (II) Whether, disqualification of Mr. Piyush Tiwari, the former director of the Corporate Debtor, was only technical in nature and therefore, the agreement signed by the Appellant with Mr. Piyush Tiwari remained valid or not.

Since, both these issues are inter-dependent, inter-connected and inter-related, we shall deal these issues in conjoint and combined manner in the following discussions.

It is the case of the Appellant that it has submitted various documents to substantiate its claim, inter-alia, including joint development agreement dated 06.03.2016 signed between the Appellant and the Corporate Debtor and therefore that its claims are squarely covered based on this joint development agreement dated 06.03.2018.

Since, the joint development agreement dated 06.03.2018 seems to be the foundation of the present appeal, we would like to refer to the relevant part and clauses of the joint development agreement dated 06.03.2018 which are reproduced as under :-

case the same is not granted free of cost by the land owning Authority.

collected in the said escrow account shall be distributed in the abovesaid proportion till all the payments contemplated under the present agreement arc paid by the Developer to the O\.vner. The Parties agree that such Escrow Account shall be opened by the Developer \1vithin a period of two weeks from the date of the present Agreement.

From the above, we note that the joint development agreement dated 06.03.2016 was signed by Mr. Piyush Tiwari, who has signed as director of Subhkamna Buildtech Pvt. Ltd., and by Smt. Shalini Singh, Director of Anindya infrastructure Pvt. Ltd., the Appellant herein.

It is noted that M/s Subhkamna Buildtech Pvt. Ltd., the Respondent No. 1 herein is stated to be “owner or the first party”, whereas Anindya infrastructure Pvt. Ltd., the Appellant herein is stated to be “developer or the second party” and

Smt. Shalini Singh w/o Mr. Ranjan Kumar Singh alongwith Mr. Ranjan Kumar Singh are stated to be “conforming parties/ guarantors”.

The Corporate Debtor was allotted a plot of land bearing GH-02A, Sector -1, Greater Noida, District Gautambudhnagar, U.P. admeasuring about 33538 sq. mtr. and was developing a real estate project under the name of Subhkamna Buildtech Pvt. Ltd. (Group Housing) at the said plot. It is further brought out that the Corporate Debtor wanted to engage a developer to construct, develop and market one of the towers of the project consisting of studio apartment, commercial area and the basement parking, to be constructed and developed by the developer in fully furnished condition.

We note that the Appellant is stated to be a developer in joint developer agreement. It has further been mentioned that the developer were given construction and marketing rights of 176 studio apartments utilizing 6983.52 sq. meter i.e., 75,170 sq. ft. of FAR.

It is noted from the joint development agreement dated 06.03.2018 that it seems that the Appellant had already made a payment of Rs. 2.5 Crores to the sister concern of the owner i.e., the Corporate Debtor

Clause 11 of the Joint Development Agreement dated 06.03.2018 stipulates that all money received by the sale and marketing of the units of the said tower were to be deposited in the escrow account and to be distributed amongst the Appellant and the Respondent No. 1 in the ratio of 50% each on daily basis in

their respective accounts after paying first Rs. 2.5 Crores to the Appellant from the escrow account.

This escrow account was to be opened by the developer within a period of two weeks from the date of joint development agreement signed on 06.03.201, which was not opened by the Appellant.

During pleading before us, it has been brought out that as stipulated in Clause 5 of the Joint Development Agreement dated 06.03.2018 between the Appellant and the Corporate Debtor, the purported debt forming the basis of the Appellant’s claim is, in reality, owed to the sister concern of the Corporate Debtor by the Appellant’s sister concern, as the alleged payments related to this transaction was directed to Shubhkamna Advert Buildtech Pvt Ltd, the sister concern of the Corporate Debtor, and not to the Corporate Debtor itself, Shubhkamna Buildtech Pvt Ltd. Thus, it is inferred that the Appellant does not have the necessary direct privity of contract with the Corporate Debtor concerning the present alleged debt and, as a result, the alleged claimed debt does not qualify as a financial creditor of the Corporate Debtor as defined under Section 5(7) of the Code, which reads as under :-

(Emphasis Supplied)

While examining the attached joint development agreement dated 06.03.2018, we observe that as per Clause 5, the Appellant is said to have paid Rs. 2.5 Crores to sister concern of the Corporate Debtor. Interestingly, Clause 11 further states that Rs. 2.5 Crores paid by the developer i.e., Appellant herein will be repaid to the Appellant. We fail to understand the logic of such circuitous transaction, which denotes the purpose of such alleged joint development agreement dated 06.03.2018 was something else. This does not augur well for the cause of the Appellant.

We have noted that the Appellant has failed to furnish any details of transactions evidencing the remittance of funds to the Corporate Debtor and no proof of disbursement or payment has been annexed with the claim form to substantiate the alleged debt. There cannot be any dispute that the sister concern of the Corporate Debtor is a distinct legal entity and any claim arising from transactions with such a sister concern cannot be treated as a valid claim in the CIRP of the Corporate Debtor, thereby making the claim submitted by the Appellant non-est in law. We have noted that in terms of Clause 11 of the Joint Development Agreement 06.03.2018, the parties were required to open an Escrow account within two weeks, however, the same was admittedly never opened, making it evident that no disbursement was ever made to the Corporate Debtor, and the clauses of the Joint Development Agreement were not honoured. This absence makes it clear that the Joint Development Agreement dated 06.03.2018

was never acted upon, rendering the Appellant’s claims unsubstantiated and legally untenable.

We observe that the Appellant has allegedly paid the consideration amount, as stipulated by the Joint Development Agreement to the sister concern of the Corporate Debtor. We also note submissions of the Respondent No. 1 that even the ledger account maintained with the Corporate Debtor's sister concern clearly demonstrates that all payments were allegedly made in cash to Shubhkamna Advert Buildtech Ltd as such these transactions have no connection to the Corporate Debtor, Shubhkamna Buildtech Pvt Ltd, and no amount has been disbursed by the Appellant to the Corporate Debtor. This fact demonstrates the lack of a valid financial debt owed by the Corporate Debtor to the Appellant.

We note that as per Regulation 12 of the CIRP Regulations, 2016, every creditor has to submit proof of its claim to the IRP, alongwith relevant supporting documents. The submission of this proof of claim, along with the necessary supporting documentation, is a critical requirement under the Code, as it enables the IRP to properly scrutinize the claim, assess its validity, and determine the admissibility of the claim submitted by the creditors of the Corporate Debtor. Without proper proof of claim and supporting documents, the claim cannot be verified or admitted. From various pleadings and correspondence exchange between the Respondent No. 1/ Resolution Professional and the Appellant, it seems that the Appellant failed to establish its claims.

We have noted during the hearing that the Respondent No.1 stated that upon receiving the claim from the Appellant, the Respondent No.1 requested the Appellant to provide any lease deed or tenancy agreement signed between the parties for the allotment of space, if any, however, the Appellant failed to provide any such lease deed or tenancy agreement, which also does not support the cause of the Appellant.

We also take into consideration the fact that, after verifying the documents provided by the Appellant, the Respondent No.1 informed the Appellant via email dated April 11, 2019, that their claim could not be verified as the documents produced by the Appellant were executed by Mr. Piyush Tewari, acting as a Director of the Corporate Debtor, where as Mr. Piyush Tiwari had already been disqualified as a Director of the Corporate Debtor under Section 164(2)(a) of the Companies Act, 2013, as of November 1, 2015. This disqualification rendered the Agreements supporting the Appellant's claim non-enforceable as on the date of their execution, as Mr. Piyush Tewari lacked the authority to act as an Authorized Signatory of the Corporate Debtor and execute such documents. Consequently, the agreements lack legal validity.

At this stage, we will take into consideration Section 164(2)(a) and Section 167 (1) of the Companies Act, 2013 which reads as under :-

subsidiary or associate company, ceases to hold such office or other employment in that company.” (Emphasis supplied)

We note that as per Section 164(2)(a) read with Section 167(1) of the Companies Act, 2013, Mr. Piyush Tiwari was disqualified from acting as a director with effect from November 1, 2016, due to the non-filing of Financial Statements and Annual Returns for three consecutive years. This formal declaration by the MCA further reinforces the Respondent No.1’s contention that agreements executed by Mr. Tiwari during his period of disqualification are invalid.

We observe that Respondent No. 1 had communicated his doubts regarding the enforceability of Joint Development Agreement dated 06.03.2018. It has been brought to our notice that the Appellant acknowledged these concerns of the Respondent No. 1 through an email dated 28.08.2019, but failed to provide further clarifications or supporting documents for a long time and consequently, the claims remained unverified and non-compliant with Regulation 12 of the CIRP Regulations, 2016. We observe that the Adjudicating Authority in the Impugned Order dated 13.03.2021 concluded that requisite documents were not provided to substantiate the Appellant's claim, thereby justifying dismissal of the Claim application filed by the Appellant. The relevant para of the Impugned Order reads as under:

Respondent that the resolution professional has sought for the clarifications/ documents with regard to the claim. The Applicant sat on their claim for months, without furnishing the proof substantiating the claim, owing to which their claim could not be verified. In the absence of documents supporting the claim of the Applicant, the RP cannot process and accept the claim of the Applicant.” (Emphasis Supplied) We cannot find any error in the Impugned Order in this account.

We also note that the 6th CoC meeting was held on 09.10.2019, during which the Resolution Plan submitted by the Consortium of Executive of Association of Home Buyers, Mr. Surender Kumar Singhal, and Mr. Sunil Kumar Agarwal was put to vote and approved with an affirmative voting percentage of 87.60%, making them the Successful Resolution Applicant for the Corporate Debtor. Subsequently, Respondent No. 1 filed an application bearing C.A. No. 485/ND/2019 under Section 30(6) read with Section 31(1) of the Code, seeking approval of the Resolution Plan by the Adjudicating Authority. The Resolution Plan was duly approved by the Adjudicating Authority vide its Order dated 12.09.2022.

It is the case of the Appellant that its claims were not considered rightfully by the Appellant and the Adjudicating Authority. It is further the case of the Appellant that its claims did not get extinguished. In this connection, we note that the Hon’ble Supreme Court of India, in a catena of judgments, has clearly held that once a Resolution Plan stand approved under Section 31 of the Code, all

claims not included in the plan stand extinguished, holding that claims post-approval would amount to “hydra head popping,” creating uncertainty regarding the liabilities and amounts payable by the SRA, who takes over the Corporate Debtor's business. This principle ensures that the SRA begins operations with a clean slate, free from pre-existing liabilities, thereby upholding the sanctity and finality of the approved Resolution Plan.

We note that the Adjudicating Authority, vide its well-reasoned Order dated 17.03.2021, rightly observed that the Respondent No.1 had, through an email dated 11.04.2019, clearly communicated to the Appellant that their claim would be reconsidered upon submission of relevant documents substantiating the claim, however, despite this communication, the Appellant failed to act promptly and sat on their claim for months without furnishing the requisite documents. This inaction prevented the Respondent No.1 from verifying the Appellant’s claim, thereby justifying the observations and conclusions made by the Adjudicating Authority in dismissing the claim application.

Thus, we note that the Appellant failed to provide relevant information and documents to establish its claims and we also reiterate that there has been no evidence of any payment made by the Appellant to the Corporate Debtor directly. The alleged claimed payments made by the sister concern of the Appellant/ Appellant to the sister concern of the Corporate Debtor, does not translate into debts. We also noted from the submissions of the Respondent No.1 that even the books of sister concern of the Corporate Debtor do not corroborate the claims of

the Appellant. The fact that alleged documents furnished by the Appellant i.e. Joint Development Agreement dated 06.03.2018 to the Respondent No.1 were non est as counter party on behalf of the Corporate Debtor i.e. Mr. Piyush Tiwari had already ceased to be the Director of Corporate Debtor in the terms of Section 164 and Section 167 of the Companies Act, 2013.

Thus, we do not find any merit in the appeal and same stand rejected. No Cost. IA, if any, are closed.