M/s. Reliance Nippon Life Asset Management Limited & Anr. vs M/s. BCIL Red Earth Developers India Pvt. Ltd.

I.A. No. 289 of 2019 in CP(IB)No.06/BB/2018 is filed by Shri Amit Chandrakant Shah (Applicant/Resolution Professional) dated 13.06.2019, by inter alia seeking to take on record modified Form H, dated 13.06.2019.

Heard Shri Amit Chandrakant Shah, learned Resolution Professional/Applicant along with Shri Varun. S, learned Counsel for Resolution Professional. We have carefully perused the pleadings of the party and extant provisions of the Code.

We considered the pleadings of the parties and convinced that the IA.No.289 of 2019 in C.P. (IB)No.06/BB/2018 can be allowed by taking modified Form H on record. Hence, modified Form H has been taken on record.

Hence, I.A.No.289 of 2019 in C.P.(IB)No.06/BB/2018 is hereby allowed.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.381/2019 in C.P. (IB) No.06/BB/2018 is filed by Mrs. Jamal Ahmad ('Applicant'), U/s. 5 of the Limitation Act, 1963, by inter alia, seeking to condone the delay on the part of the Applicant in filing the instant Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

I.A.No.380/2019 in C.P. (IB) No.06/BB/2018 is filed by Mrs. Jamal Ahmad ('Applicant'), U/s. 60(5) of the IBC, 2016, by inter alia, seeking to direct the RESOLUTION PROFESSIONAL to reconsider the claim of the Applicant dated 07.11.2018.

Brief facts of the case as mentioned in the IA.No.381/2019, by inter alia, stating are as follows:

Mrs. Jamal Ahmad (Applicant) has submitted her claim in the prescribed format on 07.11.2018, i.e. on the last date of which 90 days of period was expired., claiming for sum of Rs.94,93,616/- (Rupees Ninety Four Lakhs Ninety Three Thousand Six Hundred and Sixteen only), in pursuant to the notification issued by the Resolution Professional of the Corporate Debtor, Applicant has made a claim in Form-CA on 26.10.2018 to the Resolution Professional.

Upon perusal of the documents submitted by the Applicant, the Resolution Professional rejected the claim on the ground that original transactions was with BCIL Red Earth India Private Limited, which is not a part of the ongoing CIRP process. Therefore, her claim treated as Financial Creditor of Red Earth Developers India Private Limited cannot be accepted. However, the instant Application is filed by seeking to condone the delay in filing the instant Application, with days NIL.

The Company Petition for initiating CIRP of Corporate Debtor filed by M/s. Reliance Nippon Life Asset Management Limited & Anr. was admitted by this Adjudicating Authority vide Order dated 09.08.2018, and thereafter, Ms. Nidhi Seksaria was appointed as the Interim Resolution Professional (IRP).

It is submitted that the Applicant has submitted her claim in the prescribed format on 07.11.2018, claiming a sum of Rs.94,93,616/- (Rupees Ninety Four Lakhs Ninety Three Thousand Six Hundred and Sixteen only), the Resolution Professional upon review of the claims of the Applicants, rejected the same vide mail dated 22.11.2018. In the said communications, the Resolution Professional has stated that upon review of all documents, the original transactions were with M/s. BCIL Red Earth India Private Limited, which is not a part of the ongoing CIRP Process. However, once again sent a follow up mail again Resolution Professional rejected the claims of the Applicant, reiterating her earlier stance vide mail dated 05.12.2018. Aggrieved by the same, the Applicant has filed the instant Application.

The Resolution Professional indicated that her claim as financial creditor of BCIL would remain verification until the further course of action is determined. However, no communication was forthcoming from the Resolution Professional. Under these circumstances, she was came to know that the committee of creditors had passed a Resolution Plan and that the same was produced before this Adjudicating Authority and thus filed the instant application.

Shri Amit Chandrakant Shah, learned Resolution Professional, has filed Affidavit-in-reply dated 15.07.2019, by inter alia contending, are as follows:

With reference to the public announcement issued in pursuant to the Admission of C.P.(IB)No.06/BB/2018, the Applicant submitted her form dated October 26, 2018 vide email dated 02.11.2018. Accordingly, the erstwhile Resolution Professional sought additional information vide email dated 05.11.2018. Upon perusal of the documents, the Erstwhile Resolution Professional realized that the property certificate dated 30.07.2008 confirming that the Application has been allotted with three (3) houses/units against the consideration of Rs.2,73,00,000/- paid was issued by BCIL Red Earth India Private Limited and that the receipt of the payments was duly acknowledge by BCIL Red Earth India Private Limited on July 16, 2008.

BCIL Red Earth India Private Limited and BCIL Red Earth Developers (India) Private Limited (Corporate Debtor) are separate legal entities. The Erstwhile Resolution Professional vide her email dated 22.11.2018 rejected the claim of the Applicant. Therefore, the Applicant is not entitled for any relief.

Heard Shri Shashank Nagendran, learned Counsel for the Applicant and Shri Amit Chandrakant Shah, learned Resolution Professional. We have carefully perused the pleadings of the party and extant provisions of the Code.

It is not in dispute the claim of the Applicant was rejected as early as on 22.11.2018, on the ground that original transaction was with M/s. BCIL Red Earth India Private Limited and not with the M/s. BCIL Red Earth Developers India Private Limited, which is Corporate Debtor in the instant case. The Applicant has not mentioned number of days even to consider for condoning the delay. Moreover, the claim itself lacks merits, as mentioned by the Resolution Professional and another point to be noted is that the Resolution Professional has already filed I.A.No.236/2019, by seeking to approve the Resolution Plan and the same was approved by the Adjudicating Authority vide separate order dated 09.08.2019. Therefore, the Applicant failed to make out any case so as to condone the delay in filing the Application and the thus I.A.No.381/2019 is liable to be rejected and consequently IA No. 380 of 2019 is to be rejected.

In the result, I.A.No.381/2019 is hereby rejected. Consequently, I.A.No.380/2019 in C.P. (IB) No. 06/BB/2018 is also hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A. No. 326 of 2019 in C.P. (IB) No.06/BB/2018 is filed by Ms. Nidhi Seksaria (‘Applicant/Erstwhile RP’), under Section 19(2), R/w and 19(3) of the IBC, 2016, by inter alia seeking to direct the Respondent to immediately resume the duties and extend all assistance and co-operation to the Applicant as may be required in managing the affairs of the Corporate Debtor and return the documents, information and the assets of the Corporate Debtor under the custody of the Respondent.

Brief facts of the case, as mentioned in the Application, are as follows:

(1) The present Application is filed by Ms. Nidhi Seksaria, Erstwhile Resolution Professional of M/s. BCIL Red Earth Developers India Pvt. Ltd. ('Corporate Debtor') under Section 19(2) R/w and 19(3) of the Code, by inter alia seeking necessary directions against the Respondent to extend assistance and cooperation to the application as required by the Applicant in managing the affairs of the Corporate Debtor as going concern as envisaged under the Code.

(2) The Applicant states that as per the Corporate Debtors records, the Respondent has been employed with the Corporate Debtors since December 01, 2015 and presently holds the designation of President – Asset Management. The duties and responsibilities of the Respondent, inter alia includes as under:-

The Tribunal vide its order dated (9^{\text{th}}) August, 2018 passed in C.P.(IB)No.06/BB/2018 and two other cases, has admitted by initiating CIR process of M/s. BCIL Red Earth Developers (India) Private Limited filed by M/s. Reliance Nippon Life Asset Management Limited and Anr., and appointed the Applicant as IRP. The Committee of Creditors (CoC) of the Corporate Debtor subsequently confirmed the appointment of the Applicant as the Resolution Professional.

In pursuant to taking charge and upon perusal of the records of the Corporate Debtor, it came to the knowledge of the Applicant that the Respondent has been employed with the Corporate Debtors since December 01, 2014 (as per the revised appointment letter dated December 15, 2014) and presently holds the designation of President - Asset Management.

The Applicant further noticed that the Respondent has not been attending office since September 2018 despite request, and that the Respondent has in his possession the Corporate Debtor's documents and key information and assets of the Corporate Debtor, which the Respondent has failed and/or neglected to return and/or hand over to the Applicant till date despite various requests, reminders and follow ups.

The Applicant states that the Applicant has vide email dated November 16, 2018, sent a letter to the Respondent informing the Respondent about the initiation of the CIR process of the Corporate Debtor and the Applicant's appointment and/or confirmation as the interim Resolution Professional/the Resolution Professional by the Adjudicating Authority and Committee of Creditors as the case may be. In the very letter, the Applicant stated that in terms of the revised letter of appointment dated December 15, 2014 and records of the Corporate Debtor, the Respondent has been employed with the Corporate Debtor since December 01, 2014 and that the Respondent holds the designation of President – Asset Management. The Applicant in the very letter also stated that the Respondent has not been attending office and as a senior employee of the Corporate Debtor, the Respondent has been negligent in discharging his duties toward the Corporate Debtor. The Applicant vide a covering email, requested the Applicant to immediately resume his duties and extend all assistances and/or co-operation to the Applicant.

The Applicant states that the Respondent vide his email dated November 19, 2018 responded to the Applicant's email dated November 16, 2018. The Respondent stated that the Respondent has not received proper salary from the Corporate Debtor for a period of more than a month and consequently is having personal family, and financial difficulties due to the non-payment of dues. The Respondent further stated that the Corporate Debtor has also not provided insurance policy to the Respondent. The Respondent denied that the Respondent has not been attending office regularly and further stated that the Respondent's work connected with outside governments and that he has been executing the Corporate Debtor work from outside. The Respondent further states that the required information, data information and documents have been provided to the Applicant through Respondent's colleague Mr. John and Mr. Jagannath and as a matter of individuality, the Respondent would provide available date and documents at the earliest. The Respondent further expressed his desire to resign owning to challenges being faced without money and stated that the Respondent would share his resignation with the Applicant.

The Applicant states that pursuant to the receipt of email from the Respondent, the Applicant discussed the issue with regard to the resignation and pending dues of the Respondent with the CoC. The Applicant pursuant to the discussion with the CoC, conveyed to the Respondent vide email dated December 11, 2018 that Respondent's regular salary would be paid to the Respondent in accordance with the Respondent's employment letter provided the Respondent reports to work and undertakes duties and responsibilities entrusted upon him. The Applicant further requested the Respondent to be available on calls and in office to function better since projects are not operational and accordingly, there is limited activity on the liaison side and further stated that the Respondent should report to head office to take up routine matters and provide documentary support for on-going due diligence/ litigation and work related to day-to-day functions and business of the Corporate Debtor. The Applicant further stated that the Respondent being a senior professional having long association with the Corporate Debtor group is expected to provide support in connection with the operations of the Corporate Debtor.

The Applicant states that despite several requests/ reminders/follow ups by the Applicant to the Respondent requesting/calling upon the Respondent to resume his duties, return and/or handover the key information/ Corporate Debtor's documents and/or assets of the Corporate Debtor and extend all assistance and/or co-operation to the Applicant, the Respondent failed and neglected to resume his duties, return and handover the key information/Corporate Debtor's documents assets of the Corporate Debtor and extend assistance and co-operation to the Applicant.

The Applicant states that the acts/omissions and negligence on the part of the Respondent not to attend office, nor to return and handover Corporate Debtor's documents, key information and assets, had serious impact and adverse implications on the management and administration of the Corporate Debtor. The Applicant further states that the Applicant is facing difficulty in managing the operations of the Corporate Debtor as a going concern due to non- disclosure and/or handing over the key information/ Corporate Debtor's documents and/or assets of the Corporate Debtor by the Respondent. The Applicant states that the Respondent is not assisting and co-operating with the Applicant despite various request, reminders, and follow-ups.

According to provisions of Section 19 of the Code, the personnel of the Corporate Debtor, its promoters or any other person associated with the management of the Corporate Debtor are required to extend all assistance and cooperation to the Applicant in managing the affairs of the Corporate Debtor, however if the aforesaid persons do not assist or cooperate with the Applicant, the Applicant may vide an Application seek necessary directions from the Adjudicating Authority. The Adjudicating Authority may on receiving such Application, direct the aforesaid persons to comply with the instructions of the Applicant and to cooperate with the Applicant to enable the Applicant to manage the affairs of the Corporate Debtor. Section 19 of the Code is reproduced as under:

It is submitted that this Adjudicating Authority has powers under the provisions of Section 19 and inherent powers under the NCLT Rules, 2019 to provide the reliefs sought vide the present Application.

It view of the aforesaid, the Applicant states and submits that if the reliefs sought is not granted, grave injustice, prejudice and hardship will be caused in the CIR process of the Corporate Debtor and the Applicant would continue to have difficulties to manage the affairs of the Corporate Debtor as going concern.

Heard Ms. Nidhi Seksaria, learned Applicant/erstwhile Resolution Professional along with Shri C.K.Nandakumar, learned Counsel for the erstwhile Resolution Professional. We have carefully perused the pleadings of the party and extant provisions of the Code.

Since the present Resolution Professional namely Shri Amit Chandrakant Shah, has filed I.A No. 236 of 2019 in C.P. (IB) No.06/BB/2018, U/s 60(5) R/w Section 30(6) of the IBC, 2016, by inter alia seeking to approve the Resolution Plan submitted by M/s. Citrus Ventures Private Limited. Accordingly, the Adjudicating Authority accepted the Resolution Plan vide order dated 09.08.2019. Therefore, no further orders are necessary.

In the result, I.A.No.326 of 2019 in C.P. (IB)No.06/BB/2018 is hereby closed, as no further orders are necessary. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.236 of 2019 in C.P. (IB)No.06/BB/2018 is filed by Shri Amit Chandrakant Shah ('Applicant/Resolution Professional') U/s. 60(5) (c), R/w Section 30(6) of the IBC, 2016, by inter alia, seeking to approve the final Resolution Plan dated 24^th April 2019 submitted by Citrus Ventures Private Limited, till then the existing Resolution Professional of the Corporate Debtor may be continued etc.

Brief facts of the case, which are relevant to the issue in question, as mentioned in the Application, are as follows:

C.P. (IB)No.06/BB/2018 is filed by M/s. Reliance Nippon Life Asset Management limited & Anr. ('Petitioner/Financial Creditor') U/s.7 of the IBC, 2016, R/w Rule 4 of the I&B (AAA) Rules, 2016, by inter alia seeking to initiate CIRP, appoint IRP etc. Accordingly, the Adjudicating Authority admitted the case by an order dated 09^th August, 2018 appointed Mrs. Nidhi Seksaria, as Interim Resolution Professional, imposing moratorium etc. Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07, 2018, confirmed the appointment of Mrs. Nidhi Seksaria as the Resolution Professional.

This Adjudicating Authority vide order dated 31st January 2019, extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5, 2019 i.e. till May 6, 2019 upon an application filed by erstwhile RP under Section 12 of the Code, read with Regulations 40 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Subsequently, the Adjudicating Authority vide order dated 01st April 2019 allowed the application filed on behalf of Committee of Creditors of the Corporate Debtor to change the Resolution Professional of the Corporate Debtor and appointed Mr. Amit Chandrakant Shah as the Resolution Professional in place of Mrs. Nidhi Seksaria.

The erstwhile RP pursuant to the provisions of Section 25(2)(h) of the Code, invited Expression of Interest (EOI) from potential resolution applicants for the purpose of submission of resolution plans for the Corporate Debtor. The advertisement for inviting EOI was published in Business Standard, on October 23, 2018, calling upon the potential resolution applicants to submit EOIs, in accordance provisions of the Code on or before November 7, 2018.

In view of having a competitive process and maximising the value for all stakeholders and in order to facilitate the participation of the Resolution Applicants in the corporate insolvency resolution process of the Corporate Debtor, the publication of 2nd process of EOI and 3rd process of EOI was carried out. Under the second bid process, the erstwhile RP once again invited EOI from interested parties/prospective resolution applicants vide its newspaper advertisement dated November 17, 2018. In furtherance to the aforesaid publication a corrigendum was published on November 19, 2018 in the Business Standard to clarify certain corrections. Under the 3rd Bid Process, the erstwhile RP once again invited EOI from interested parties/prospective resolution applicants vide its newspaper advertisement dated December 7, 2018.

In addition to the abovementioned newspaper publications, the erstwhile RP also placed the advertisements inviting EOI on the website of the Corporate Debtor and published the advertisement for inviting EOI in regional newspapers. The Applicants craves leave to refer to and rely upon the advertisements placed on the website of the Corporate Debtor and the publication of advertisement for inviting EOI in the regional newspapers.

The erstwhile RP encouraged all prospective resolution applicants to submit all necessary documents required before finally short listing the prospective resolution applicants who were eligible to submit a resolution plan. However, out of 5 prospective resolution applicants, only 3 resolution applicants were able to submit all necessary documents. The final shortlisted resolution applicant U/s. 36A (12) of the CIRP Regulations were (i) Aishu Dreamlands Limited (ii) Citrus Ventures Private Limited and (iii) A Padma Manohar (“prospective Resolution Applicants”). Subsequently, the erstwhile RP issued a Bid Process Memorandum and Evaluation Matrix to submit the Resolution Plan for the Corporate Debtor on December 18, 2018 (“Process Memorandum”) inviting the Prospective Resolution Applicants to submit a Resolution Plan for the Corporate Debtor.

Further, the erstwhile RP in the 5th meeting of the CoC dated January 9, 2019 informed the members of the CoC that they had received requests from Prospective Resolution Applicants for extending the timeline for submission for the Resolution Plan. The CoC deliberated on the said issue and decided that time may be extended till January 25, 2019 for submission of the Resolution Plan. The said resolution was put to vote. As per the results of voting, the CoC approved the extension of time till January 25, 2019 for submission of the Resolution Plan with a majority of 75.27%.

Further, the erstwhile RP in the 6th meeting of the COC dated February 2, 2019 informed the members of the CoC that two Prospective Resolution Applicants i.e. Aishu Dreamlands Limited and Citrus Ventures Private Limited (“Collectively referred to as Resolution Applicants”) had submitted resolution plans dated January 25, 2019. That the Resolution Plans submitted by the two Resolution Applicants were not fully compliant with the provisions of the Code and the Process Memorandum issued by the erstwhile RP. In the light of the said facts the CoC deliberated on the said issue and contemplated if further extension of time till February 15,2019, be given to the Resolution Applicants to submit a revised/rectified resolution plan. The erstwhile RP informed the members that the RP team had sent detailed observation to the Resolution Applicants about the deficiencies in their plans and had given the Resolution Applicants time till February 1, 2019 to submit revised/rectified resolution plan. However, no revised/rectified resolution plans were received from the said Resolution Applicants and therefore the CoC deliberated if further extension of time till February 15, 2019 shall be provided to the Resolution Application for submission of rectified/revised resolution plans. The said issue was put to vote and it was approved by the CoC with a majority of 72.48%.

Further, the erstwhile RP in the 7th meeting of the CoC dated February 19, 2019 informed the members of the CoC that the Resolution Applicants had not submitted a revised/rectified Resolution Plan and that the erstwhile RP had received mails from the Resolution Applicants seeking extension of timelines for submission of revised/rectified Resolution Plan until February 28, 2019. The CoC deliberated on the said issue and the same was put to vote. That as per the voting results the extension of time to submit the revised/rectified resolution plan by February 28, 2019 was approved by the CoC with 76.21%.

Further, in the 8th meeting of the CoC dated March 14, 2019, the erstwhile RP once again apprised the members of the CoC that no revised/rectified plan was received by the erstwhile RP from the Resolution Applicants. In light of the said fact the CoC ratified the extension of time till March 15, 2019 provided to the Resolution Applications for submission of a revised/rectified plan and deliberated if further extension of time till March 31, 2019 should be provided to the Resolution Applicants for submission of revised/rectified resolution plans. The said issue was put to vote. That as per the voting results, the extension of time provided to the Resolution Applicants for rectification/revision of the resolution plan till March, 31, 2019 was approved by the CoC with a majority vote of 73.36%.

That during the 9th meeting of the CoC dated April 12, 2019, the RP appraised the CoC that two Resolution Plans were received from the Resolution Applicants and the same were forwarded to the members of the CoC vide an email dated April 4, 2019. The Chairman requested all the CoC members/the authorized representatives of Home Buyers to list down all the concern/questions/inputs/doubts/ clarification/suggestion of respective financial creditors/ Home Buyers relating to the Resolution Plans so the same can be discussed with the Resolution Applicants in the next CoC meeting. In the said meeting the RP appraised the members of the CoC regarding the following two issues (i) that in terms of Regulation 39(4) of the CIRP Regulations, RP is required to endeavour to submit the resolution plan approved by the Committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process, however in light of various revisions made to the resolution plans submitted by the Resolution Applicants, it would be difficult to abide by the timelines for submission of Resolution Plan prescribed under the CIRP Regulations and (ii) that the copy of the Admission Order of the Corporate Debtor was received by the erstwhile RP on August 11, 2018 which was two days after the date on which the Admission Order was passed. Therefore, an application was proposed to be filed by the RP for exclusion of the period of 2 days from the Corporate Insolvency Resolution Process of 270 days of the Corporate Debtor. The CoC deliberated on the said issues and the requisite resolutions relating to points (i) and (ii) above were put to vote and both the resolutions were approved with a majority vote of 73.36%. The application for exclusion of the period of 2 days from the Corporate Insolvency Resolution Process of 270 days of the Corporate Debtor has been filed on May 3, 2019.

During the 10th meeting of CoC dated April 15, 2019, the RP appraised the CoC that the RP has received two Resolution Plans from the Resolution Applicants, Aishu dreamlands Limited and Citrus Ventures Private Limited and the same were forwarded to the members of the CoC vide an email dated April 13, 2019 along with the observations of the RP on the said Resolution Plans. The RP informed the CoC members that he had received the report from Kroll a division of Duff and Phelps India engaged by the erstwhile RP with the approval of the CoC relating to the eligibility of the Resolution Applicants in terms of section 29A of the Code and that the said Kroll Report contained certain qualifications with respect to both the Resolution Applicants. The said qualifications were discussed with the Resolution Applicants individually and RP sought explanation/clarification with regards to the qualification mentioned in the Kroll Report from the Resolution Applicant. Further, the modifications required in the documents submitted by the Resolution Applicants in compliance with the Process Memorandum and the Code were discussed individually with the Resolution Applicants and in furtherance to the said discussion the Resolution Applicants were asked to carry out the requisite changes to the documents submitted by them. The CoC deliberated on the said aforesaid points and was of the opinion that a time may be extended till April 19, 2019 for submission of final resolution plan with relevant modifications, compliances and clarifications and the same was put to vote. As per the voting results the CoC approved a time period 4 days to the Resolution Applicants to provide the aforesaid explanation/ clarification required under Section 29A of the Code and to submit a revised/rectified resolution plan with a majority vote of 74.02%.

That during the 11th meeting of the CoC dated April 20, 2019, the RP appraised the CoC that both the Resolution Applicants were yet to submit all the supporting documents/clarifications sought by the RP vide an email dated April 11, 2019. Therefore, the said issue was deliberated by the CoC.

At the 12th meeting of the CoC dated April 23, 2019, the Resolution Professional appraised the CoC the members of the CoC that the revised Resolution Plan after incorporating certain modifications, compliances and clarifications as discussed in the previous CoC meeting had been received from the Resolution Applicant, Citrus Ventures Private Limited. RP informed the members of the CoC that the following documents were received by the RP from the said Resolution Applicant Citrus Ventures Private Limited;.

At the 13th meeting of the CoC dated 26th April 2019, the Resolution Professional informed the members that Aishu Dreamlands Limited had pursuant to an email dated April 20, 2019 submitted to the Resolution Professional that they were not interested to take over the control and management of the Corporate Debtor and that they were interested to act as development managers of the Corporate Debtors. Accordingly, the following resolution was put to vote.

The Chairman asked the members to vote on the above resolution through e-voting facility as per the instructions for e-voting as provided in the Notice of the meeting.

The aforesaid resolution was put to vote and the members of the CoC approved that the resolution plan for the Corporate Debtor submitted the Aishu Dreamlands Limited was not to be considered with 97.33% votes in favour of the said resolution. The voting results are reproduced below:

That in the same meeting the Resolution Professional placed before the CoC the resolution plan submitted by Citrus Ventures Private Limited along with the observations and due diligence report of the RP. The said resolution plan submitted by Citrus Ventures Limited was presented to the CoC for voting. Thereafter upon detailed discussion/ deliberation and negotiations between the CoC member and the Resolution Applicant on certain aspects of the resolution plan submitted Citrus Ventures Private Limited by on April 24, 2019 it was unanimously decided and agreed by all the members of the CoC that RP shall put to vote the modified/updated Resolution Plan which will be submitted by the Resolution Applicant as per the discussion during the meeting. It was also agreed by the members to approve certain waiver(s) and relaxation(s) pertaining to the Resolution Plan Application. Accordingly, the following resolution was put to vote:

Together with a note that subsequent to the meeting, the modified/updated Resolution Plan was submitted by the Citrus Ventures Private Limited. The same was enclosed with the minutes of the meeting circulated to the members and put to vote accordingly.

The Chairman asked the members to vote on the above resolution through e-voting facility as per the instructions for e-voting as provided in the notice of the meeting.

The aforesaid resolution was put to vote along with the modified/updated resolution plan dated April 24, 2019 and the members of the CoC approved the updated/modified resolution plan submitted by Citrus Ventures Private Limited with 87.39% votes. The voting results are reproduced below:

Therefore, the said resolution plan was approved by the CoC members in terms of section 30(4) of the Code. And the Resolution plan satisfied the provisions of Section 30 of the Code, which are reproduced here in under:

Heard Shri Amit Chandrakant Shah, learned Resolution Professional/Applicant along with Shri Nandakumar, and learned Counsel for the Resolution Professional. We have carefully perused the pleadings of party and extant provisions of the Code and the law on the issue.

Shri Amit Chandrakant Shah, learned RP/Applicant, while reiterating various averments made in the Application, has further submitted that the Resolution Plan as approved by the CoC satisfies all the requisite conditions as per the provisions Code and the same is approved with requisite majority and thus urged the Adjudicating Authority to approve the Resolution Plan.

The learned Resolution Professional has produced the minutes of the 12th meeting of CoC of BCIL Red Earth Developers (India) Private Limited, the Corporate Debtor, held on 23rd April, 2019, which was subsequently modified as on 24th April, 2019 filed by Citrus Ventures Private Limited, was considered in depth. He has also submitted that 13th finally CoC meeting held on 26th April, 2019, and also filed Compliance Certificate in Form-H, Under Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

In order to approve a Resolution Plan U/s. 31(1) of the Code, Resolution Professional should examine each Resolution Plan should confirm the following conditions as per Section 30(2) of the Code:

In compliance with the said conditions, the Resolution Professional has submitted various documents and statements as per provisions of the Code and the Rules made there under. And these compliances are briefly pointed hereunder.

The learned Applicant/Resolution Professional has filed Compliance Certificate in Form-H, Under Regulation 39(4) of the IBBI (Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016:

The interest of existing shareholders have been altered by the Resolution Plan as under: As per clause 3.1.8 of the Resolution Plan submitted by Citrus Ventures Private Limited states that the resolution applicant will acquire all 100% shares of the Corporate Debtor, upon approval of the Resolution Plan. As a part of the Resolution Process, takeover of the Company is proposed to be achieved in compliance with the authorities' orders including transfer of promoters share. Since, there is no terminal value in the Company beyond the Resolution proposed the shares will be transferred at a token value.

The compliance of the Resolution Plan is as under:

As stated supra, the Resolution Professional has filed compliance Certificate dated 13.06.2019, Under Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, by inter alia stating, that there are no preferential transactions and only fraudulent transactions for which IA s are pending before the Adjudicating Authority, and details are furnished below;:

And thus, they have filed any application for the same are pending before the Adjudicating Authority.

The above facts and circumstances, clearly established that the Resolution Plan dated 24^th April 2019 for M/s. BCIL Red Earth Developers (India) Private Limited, submitted by Citrus Ventures Private Limited, Resolution Applicant confirmed all the requisite conditions under the Code so as to approve it under Section 31(1) of Code. The Resolution Plan is approved by the CoC with 87.39% in accordance with law. Therefore, we are of the considered opinion that the said Resolution Plan is a fit to be approved under Section 31(1) of the IBC, 2016.

In the result, by exercising the powers conferred on this Adjudicating Authority, U/s.31(1) IBC, 2016, C.P.(IB)No.06/BB/2018 & I.A.No.236/2019 are disposed of with the following directions:

The Resolution Plan dated 24^th April, 2019 submitted by Citrus Ventures Private Limited (Resolution Applicant) as approved by the Committee of Creditor at 13^th meeting held on 26^th April, 2019 with 87.39% is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Debtor and its employees, members, creditors, guarantors, and other stakeholders involved in the resolution plan.

The moratorium imposed vide order dated 09.08.2019 passed in the CP shall cease to have affect from the date of communication of the order.

The Resolution Professional is directed to handover the management control all the assets, documents/records in physical and/or digital form on an as is where is basis to the Resolution Applicant immediately, and the Resolution Professional will ceased to be resolution professional.

The Resolution Professional shall forward all records relating to the conduct of the CIRP and the resolution plan to the Board to be recorded on its database.

The Resolution Applicant shall pursuant to the Resolution Plan approved under sub-section (1) obtain the necessary approval required under any law for the time being in force within a period of the one year from the date of approval of the Resolution Plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, which is later:

Provided that where the resolution plan contains a provisions for combination as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the Resolution Applicant shall obtain the approval of the Competition Commission of India under the Act, prior to the approval of such resolution plan by the Committee of Creditor.

The Resolution Applicant is at liberty to file any miscellaneous application seeking for clarification, if any, in the implementation of the terms and conditions to the Resolution Plan.

No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.457 of 2018 and I.A.No.256 of 2019 in C.P. (IB) No. 06/BB/2018 is filed by Shri Amit Chandrakant Shah (hereinafter referred to as 'Applicant/RP') U/s 66 of the IBC, 2016, by inter alia seeking to order and direct the Respondent Nos.1 to 3, to make such contributions to the assets of the Corporate Debtor as it may deem fit in accordance with Section 66 of the Code and to direct investigation against the Respondent Nos.1 to 3 in respect of the writing off for an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the Respondent No.4 etc.

Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows:

The present Application is filed by Shri Amit Chandrakant Shah (IP Registration No.IBBI/IPA-001/IP-P00821/2017-2018/11397), the Resolution Professional of M/s. BCIL Red Earth Developers India Private Limited ('Corporate Debtor') under Section 66 of the IBC, 2016, inter alia seeking appropriate directions from this Adjudicating Authority in respect of identified transaction wherein the Corporate Debtor has written off an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4, a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group companies including the Company undergoing CIRP under the common order i.e. M/s.Biodiversity Conservation India Private Limited (‘BCIL’) before the commencement of the Corporate Insolvency Resolution period.

The main Company petition filed by M/s. Reliance Nippon Life Asset Management Limited & Anr., a Financial Creditor, under Section 7 of the IBC, 2016 R/w Rule 4 of the I&B (AAA) Rules, 2016 was by this Adjudicating Authority vide order dated August 9th, 2018 (‘Admission Order’) by initiating CIRP, appointing Mrs. Nidhi Seksaria (IBBI Registration No.IBBI/IPA-001/IP- P00866/2017-2018/11464 as appointed as the IRP, moratorium etc. Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07th, 2018, confirmed the appointment of Mrs. Nidhi Seksaria (‘erstwhile RP’) as the Resolution Professional.

It is stated that this Adjudicating Authority vide its order dated January 31st, 2019 extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5th 2019 i.e., till May 6th 2019 upon an application filed by the erstwhile RP under Section 12 of the Code read with Regulation 40 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Subsequently, the Adjudication Authority vide its order dated April 01st, 2019 allowed the application filed on behalf of the Committee of Creditors of the Corporate Debtor to change the Resolution Professional of the Corporate Debtor and thus appointed Mr. Amit Chandrakant Shah as the RP in place of Mrs. Nidhi Seksaria.

It is stated that pursuant to the erstwhile RP taking charge of the Corporate Debtor and upon perusal/review/ analysing the books of accounts and other records of the Corporate Debtor, the erstwhile RP noticed that an amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4. The erstwhile RP carried out an exercise to determine if the transactions of the Corporate Debtor may be classified inter alia as fraudulent transactions under Section 66 of the Code. Based on the findings in respect thereto, the Applicant has filed this present application for getting appropriate directions from this Adjudicating Authority.

It is further stated that upon detailed perusal of the matter, the erstwhile RP noticed that Respondent No.4 had been a vendor for the Corporate Debtor and Group Companies and each of the mentioned a separate ledger for their respective transactions. The Corporate Debtor had advanced as sum of Rs.2,17,00,000/-(Rupees Two Crores Seventeen Lakhs Only) to the Respondent No.4 between April 2014 to September 2014 as an advance, in tranches, as reflected in the books of the accounts of the Corporate Debtor. Subsequently, an amount of Rs.92,54,954/-(Rupees Ninety Two Lakhs Fifty Four Thousand Nine Hundred and Fifty Four Only) was transferred from Respondent No.4 to the Corporate Debtor between February 2015 and September 2016, leaving a balance of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only).

It is stated that the Applicant further noticed the above- mentioned amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) was written off in the Corporate Debtor's books of accounts in Financial Year 2015-16. The Applicant during internal investigation did not find any documents evidencing effort and/or measures taken by the Respondent Nos.1 to 3 for recovery of the abovenamed amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) due and payable to the Corporate Debtor by the Respondent No.4.

It is stated that an amount of Rs.2,50,25,000/-(Rupees Two Crore Fifty Lakhs Twenty Five Thousand Only) was transferred from Respondent No.4 to Respondent No.5 between April 2014 and September 2014 towards purchase of plots. During the same period, during which the Corporate Debtor had transferred monies to Respondent No.4 as advance (refer para 6 above). The dates of transfers from Corporate Debtor to Respondent No.4 and the subsequent transfers from Respondent No.4 to Respondent No.5 as per the books and records of the respective companies are summarised below:

LID

Subsequently, Respondent No.5 has paid Rs.1,13,55,000/- (Rupees One Crore Thirteen Lakhs Fifty Five Thousand Only) as a refund upon cancellation of abovementioned plots between June 2016 and September 2016. It is pertinent to note that this coincides with the period during which Respondent No.4 had returned monies to the Corporate Debtor. The balance of Rs.1,36,70,000/- (Rupees One Crore Thirty Six Lakhs Seventy Thousand Only) still reflects as a liability in the books of Respondent No.5. The dates of transfers from Respondent No.5 to Respondent No.4 and the subsequent transfers from Respondent No.4 to Corporate Debtor as per the books and records of the respective companies are summarised below:

It is stated that the Applicant vide email dated 20.12.2018 wrote the R-4. The Applicant vide email informed the R-4 that the CIRP process for the Corporate Debtor has commenced and this Adjudicating Authority vide its order dated 09.08.2018 (received by the Applicant on 11.08.2018) appointed the Applicant as IRP and that the Applicant's appointment as the RP is confirmed and/or approved by the CoC. The Applicant further informed the R-4 that the powers of Board of Directors have been vested in the Applicant. The Applicant during interaction with employees and management of the Corporate Debtor learned that the R-4 was handling works related to club houses for R-5. It is further informed the R-4 that the Applicant has noticed that a sum of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) is receivable from R-4 and that the Applicant is unable to find necessary/proper documentation to ascertain the recovery of the said amount and further requested the R-4 to provide clarification/confirmation along with appropriate documentation in support.

It is stated that R-4 vide its email dated 09.01.2019 responded to the email sent by the Applicant, stating that the R-4 has been carrying out various works including club house related projects of R-5 and the Corporate Debtor. As per the scope of work, the R-4 provided supplies related to construction and also undertook civil contract works along with labour supply for which R-5 and the Corporate Debtors issued work orders and the R-4 maintained a consolidated ledger for both the Companies. Advances received from R-5 or Corporate Debtor and dues to them were adjusted against work carried out for each Company, or for the other Company, as mutually agreed and this was the practice and understanding from since 2010. The email further stated that an amount of Rs.2,50,25,000/- was invested by R-4 in a residential project at Mysore for R-5 during the period of 02.04.2014 to 01.04.2016. However, subsequently transaction could not be completed, and the plots could not be transferred in favour of the R-4 due to factor not originally anticipated by the R-4 and the Corporate Debtor, and therefore, it was agreed to mutually terminate agreement and adjust advances paid towards project with other transactions. Accordingly, after making adjustments, further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) which was due and payable by R-5 to the R-4 was adjusted towards advance received by the Corporate Debtor by way of transfer entry in the ledger as mutually agreed with the management of Companies. The R-4 vide the very email shared a copy of the Indemnity Bond executed by the R-1 on 30.03.2016, confirming adjustment. The R-4 also shared its ledger accounts for R-5 and the Corporate Debtor.

The Applicant further called upon R-1 to 3 to provide explanations/ information and/or clarifications in regard to amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the R-4. The Respondent No. 1 via emails dated 08.01.2019 and 25.01.2019 failed to provide a satisfactory response/explanation with regard to writing off, in question, The writing off in question receivable from the R-4 as per the books of accounts of the Corporate Debtor in the absence of any valid explanation/ clarifications by the R-1 to 3 indicates an overstatement of loss in the books of the Corporate Debtor. It is alleged that the impugned write off was done in order to settle the accounts between the group company of the Corporate Debtor and the R-4. In the event that Corporate Debtor was taking on the liability of a group Company, the journal entries should have been made accordingly and R-5 should be reflecting as a debtor in the books of the Corporate Debtor.

It is stated that the Corporate Debtor is the Company which has been funded by the main Petitioner in the Company Petition and R-5 is the Corporate Guarantor/Co-obligor to the transaction. The transfer of Rs.2,17,00,000/- (Rupees Two Crores and Seventeen Lakhs Only) to R-4 appears to be for the purpose of diversion of funds to R-5 which is not a funded Company. Only a fraction of the amount transferred was returned and the balance was written off instead of recording it as a debt owed by R-5.

It is also stated that the lack of an explanation or clear accounting entries for this transaction indicates that R-1 to 3 have not been carrying on the business of the Corporate Debtor in a proper and transparent manner and that receivables of the Corporate Debtor. In terms of Section 66 of the Code, it is found that the aforesaid transactions are carried on with intent to defraud Creditors of the Corporate Debtor and/or for any fraudulent purposes, the Adjudicating Authority may direct further investigation of the said matter.

The Respondent No.1 namely Shri Hariharan Chandrashekhar has filed Statement of Objections dated 16.07.2019, by inter alia contending as follows:

It is stated that the Corporate Debtor was engaged in the business of real estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approval bodies including the Local Panchayat. Further, the Corporate Debtor also had to undertake customisations beyond the scope of construction agreements, which works were executed by third-party vendors under the overall supervision of the construction team of the Corporate Debtor.

It is stated that detailed Homebuyer MIS was handed over to the RP by the management team, which included the amounts of cash collections for each homebuyer. This information was handed over to the Petitioner Financial Creditor and the auditors appointed them vide e-mails. The disclosure of cash collections by the management team to the RP and Petitioner by itself demonstrates that there was no mala fide intent in concealing any collections and all cash collections have been independently verified with the homebuyers as well. Further, there was no exercise undertaken by the RP to ascertain whether Respondent Nos. 2 and 3 were involved in any cash collections from homebuyers with objective to defraud the creditors or conduct business fraudulently as alleged by the Resolution Professional.

The averment that the RP carried out an exercise to determine if transactions could be classified as fraudulent under Section 66 of the Code is incorrect as the RP has till date not disclosed the manner in which the alleged finding out made out. Further, the RP has not even confirmed whether the Respondent Director 2 and 3 were even Directors at the time of the transactions and whether the Directors had any role in the transactions. The averment of the RP is refuted as false and are made with mala fide intent.

The Respondent No.2 namely Ms. Kanchan Kaur and Respondent No.3 namely Shri Sanjay Ramanujam, have filed common Statement of Objections dated 16.07.2019, by inter alia contending as follows:

(1) It is stated that the Corporate Debtor was engaged in the business of reals estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approval bodies including the Local Panchayat. Further, the Corporate Debtor also had to undertake customisations beyond the scope of construction agreements, which works were executed by third-party vendors under the overall supervision of the construction team of the Corporate Debtor.

(2) It is also stated that the Respondent No.2 is only a Non- Executive Director on the Board of the Corporate Debtor. Further, the Respondent No.2 has been in full time employment in Indian Institute of Journalism & New Media since 2004. She is currently Dean of the said Institute. Due to her full time employment with the institute, she was hardly involved in the day today affairs of the Corporate Debtor an in fact she had no role to play in the running of the business of the Corporate Debtor.

(3) It is stated that the Respondent No.3 was appointed as an Executive Director of the Corporate Debtor on 1 December 2014 purely on a monthly salary payment without any entitlement to shareholding in the Corporate Debtor. The dues to Respondent No.3 has in fact been treated by the RP as “Dues of Consultant” in the list of admitted claims. Further, Respondent No.3 was appointed as Executive Director of the Corporate Debtor effective 1st December 2014, which is prior to the date of purported transaction. The amounts were transferred from the project-escrow amount to Respondent No.4 and all disbursements from the project-escrow account were subject to prior approvals from the Petitioner. The Petitioner was therefore fully aware of the purpose of the payment and the payment happened to R-4 only with the prior approval of Petitioner.

It is further stated that the Resolution Professional has made unfounded and baseless allegations against the Answering Respondents and are alleging them for fraud without even furnishing any material document on record. Further, the Resolution Professional has made generic allegations against all the Respondents. There are no specific pleadings against each Respondent in respect of the allegations by the Resolution Professional. Further, the Resolution Professional has failed to consider the responses provided by the Respondent No.3 in respect to the issues raised by the Resolution Professional (RP).

It is further submitted that the transaction in question pertains to the period April 2014. Admittedly, the Petitioner has received substantial payment post the year 2014 and therefore, if the Answering Respondents had any intention to cheat or defraud the Creditors, they would not have paid substantial payments subsequent to the transaction in 2014. Further, for the purposes of Section 66 of the Code, the Answering respondents ought to have undertaken any action with a view to defraud the creditors and knowing the Corporate Debtor would go into the liquidation. However, admittedly, the Corporate Debtor continued its business and also continued to discharge its liabilities towards the creditors and therefore, Section 66 of the Code would not apply to the present transaction as the transaction with the Respondent No.4 was done on arm's length and during the ordinary course of business. This fact is further corroborated from the Petitioner's approval for disbursement/transfer of funds from the escrow account.

Notwithstanding the fact that the transactions between the Corporate Debtor and the Respondent No.4 were made in good faith and in the ordinary course of business, all of the said transactions happened even before Respondent No.3 was appointed as the Executive Director of the Corporate Debtor effective 1st December 2014. Further, as mentioned in para 9 above, all transfers from Corporate Debtor to R-4 were made from the project escrow bank account for which the Petitioner is the sole approving authority and therefore it is certainly not a fraudulent transfer as alleged by the RP. It is unclear if the RP had asked the Petitioner to explain the basis for approving the bank-transfers from project escrow bank account and what were the responses received from the Petitioner. Further, it is also unclear why the Petitioner has not been included as Respondent as all transfers were made from the escrow account controlled by the Petitioner.

The averment of the RP refers to e-mails being sent to Respondent No.3 have been placed on record which contains the special audit report and the Respondent is unable to refer to the e-mails mentioned by the RP. It is also pertinent to note that SPR & Co. were appointed by and at the behest of M/s. Reliance Nippon Life Asset Management Limited at the CoC meeting held on 10th October 2018 as special auditor. The appointment of SPR & Co as special auditor by M/s. Reliance Nippon Life Asset Management Limited is contrary to the IBBI (Insolvency Professional) Regulations 2016 as SPR & Co. have conflict of interest. They are also been appointed by M/s. Reliance Nippon Life Asset Management Limited as their nominee auditor for auditing the books of their investee companies. Therefore, the RP was required not to appoint them as the special auditor. Further, it is not within the purview of the CoC to appoint the special auditor and the RP ought to have exercised his independent decision while appointing the special auditor. This is also explicitly set-out in IBBI/Facilitation/002 dated 1st February 2019 and the Order of IBBI Disciplinary Committee No. IBBI/DC/07/2018 dated 23rd August. It is also stated that RP has chosen to share the entire special audit report with Respondent No.4, rather than sharing only relevant extracts therefrom. This is completely against the direction of the IBBI, which does not permit sharing of report on avoidance transactions beyond the CoC. The Minutes of the meeting of CoC dated 14th March 2019 have been placed on record. In the said meeting, the CoC categorically directed the RP not to share the findings of the special audit report with the erstwhile Management.

The Respondent No.4 namely M/s. Promptech Incorporated has filed on 17.07.2019, by inter alia contending as follows:

It is stated that this Respondent No.4 i.e. M/s. Promptech Incorporated is a partnership firm having its office at 436/20, 1st Floor, A-Cross, 2nd Main Mathikere, Bangalore-560054 represented herein by its partner, Shri Ramachandran Venu. The Respondent No. 4 is a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group Companies including the Company undergoing CIRP i.e. M/s. Biodiversity Conservation India Pvt. Ltd. ('BCIL') much before the commencement of the CIRP since the year 2011 to be precise.

It is denied that the Respondent No 4 not carried out nor is a party to any fraudulent transaction and all the transactions carried out with the Corporate Debtor and the R-5 have been duly accounted in the books of this Respondent. This Respondent's scope of work was mainly by way of supplies related to construction, and also undertaking the internal finish work along with labour supply, for which purchase and work orders were issued from time to time by both M/s. Biodiversity Conservation India Private Limited (BCIL) and M/s. BCIL Red Earth Developers India Private Limited ('RED') and a consolidated ledger account for both companies were maintained by this Respondent as these were related Companies with the main Promoter being the same. The advances received from BCIL (R-5) or RED (Corporate Debtor) and dues to them, were adjusted against work carried out for each Company, or for the other Company, as mutually agreed, and on the directions of the management of the aforesaid Companies. In other words, payments to or from one Company for work carried out for that Company were often adjusted against payments due to or from the other Company and this was the practice and understanding from the year 2010 when the work commenced. The ledger accounts of the respective Companies would also reflect that these adjustments were made periodically from the year 2011 when this Respondent started work with them.

The Respondent No.4 is a vendor for the Corporate Debtor and Group Companies since the year 2011 and maintained a separate ledger for their respective transactions. Therefore, the respective ledgers of both BCIL and RED would reflect the details of the payments made for the BCIL Mysore project and subsequent adjustments/refunds when the transaction was not completed. These payments were duly accounted for in the books of account of this Respondent and there is nothing fraudulent about these payments. The application does not dispute that work has been carried out for both BCIL and RED by this Respondent from the year 2011 and regular payments were received for the same.

It is further stated that as stated by the Applicant in paragraph (iv) 8, paragraph (iv) 10 and (iv) 11 of the application, R-4 had agreed to invest in a residential project being undertaken by BCIL at Mysore and had entered into agreements dated 05.05.2014 and 09.09.2014 for purchase of residential plots in Mysore from BCIL. An amount of Rs.2,50,25,000/- (Rupees Two Crore Fifty Lakhs Twenty Five Thousand Only) was paid to BCIL during the period 02.04.2014 to 01.04.2016 towards this project. However, subsequently the transaction could not be completed and the plots could not be transferred and registered in R-4's favour due to factors that were not originally anticipated by both parties. Hence, both parties agreed to mutually terminate the agreements and adjust the advances paid towards the project with other transactions. Accordingly, after making adjustments, a further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) that was due to this Respondent from BCIL for the aforesaid Mysore project, that was adjusted towards advances received from RED by way of a transfer entry in the ledger, as mutually agreed with the management of the Companies at that point of time. This Respondent has provided copies of the relevant ledgers and other documents to the RP and undertakes to produce the same if so required by this Adjudicating Authority.

It is further stated that an Indemnity Bond was executed by the Chairman and Managing Director of BCIL, Mr. Chandrasekhar Hariharan on 30.03.2016, confirming the adjustment stating that “it was agreed by both the parties (BCIL & Promptech) that the Sale Agreement will be terminated and that advances paid by M/s.Promptech Incorporated will be adjusted against other transactions between both Parties.” It was only pursuant to this Agreement that the advances received form RED were adjusted against the dues from BCIL to this Respondent.

It is denied that an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) is due to the Corporate Debtor from this Respondent. As mentioned above, amounts due to this Respondent from BCIL were adjusted against advances paid by RED and merely because a corresponding entry was not made in the books of RED, it does not mean and it is categorically denied that an amount of Rs.1,25,45,046/- is due from this Respondent. It is reiterated that no amounts are due to either BCIL or RED from this Respondent, and dues from BCIL have been adjusted against advances paid by RED as mutually agreed with the management at that point of time and as was the practice over a period of time. The Applicant cannot dispute that an amount of Rs.2,50,25,000/- was paid to BCIL during the period 02.04.2014 to 01.04.2016 towards the Mysore project and subsequently, after making adjustments of refunds received from BCIL, a further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) that was due to this Respondent from BCIL for the aforesaid Mysore Project, was adjusted towards advances received from RED as agreed with the management of these Companies.

It is also stated that this Respondent has wrongly been made a party to this application and proceeding and that the Respondent has already stated the true and relevant facts in its mail dated 09.01.2019 addressed to the Applicant, making it clear that this Respondent is not a party to or involved in any fraudulent transactions as being alleged by the Applicant. In the circumstances, no relief can be claimed against this Respondent and the Application is only to be dismissed as against this Respondent.

Heard Shri Amit Chandrakant Shah, learned RP, Shri C.K. Nandakumar, learned Counsel for the RP and Shri Thomas Vellapally, and learned Counsel for the Respondent No.4 and Shri Vivek B.R. for R-1. We have carefully perused the pleadings of all the parties and extant provisions of the Code and the law on the issue.

As detailed supra, during the enquiry conducted by Resolution professional in the affairs of the Corporate Debtor, it is found that an amount of Rs.1,25,45,406/- was written off against the receivables from the R-4 (Contractor/Vendor) who undertook works with regard to club houses of the Corporate Debtor and its group companies including the Company undergoing CIRP under the common order dated 09.08.2018. The Corporate Debtor had advance a sum of Rs.2,17,00,000/- to the R-4 between April 2014 to September 2014 as an advance, as reflected in the books of accounts of the Corporate Debtor. However, an amount of Rs.92,54,954/- was transferred from R-4 to the Corporate Debtor between February 2015 and September 2016; leaving a balance of Rs.1,25,45,046/-. There is no record to show that whether any efforts made by the R-1 for recovery abovementioned amount.

It is further noticed that an amount of Rs.2,50,25,000/- was transferred from the R-4 to R-5 between April 2014 and September 2014 towards purchase of plots. The R-5 has paid Rs.1,13,55,000/- as a refund upon cancellation of abovementioned plots between June 2016 and September 2016. However, the balance of Rs.1,36,70,000/- still reflects as a liability in the books of R-5 Company.

The Applicant submits that Ms. Nidhi Seksaria then RP has engaged S.P.R. & Co. (Chartered Accountants) vide engagement letter dated 23.10.2018 to conduct a review as requires them to identify and report which reads as under:

Accordingly, M/s.S.P.R. & Co. (Chartered Accountants) has prepared a report analysing the subject issue which is in regards of Review of Related Party Transactions, Statutory Compliances and Summary of Avoidance Transactions for NCLT Filing. The report pointed out several irregularities in the affairs of the Corporate Debtor, which reads as under:

Apart from the above, on perusal of the review report, the Bench points out the following points for resolving the issue which reads as under:

Similarly, several irregularities have been pointed out in the report justifying the conclusion of the RP as stated supra.

Therefore, we are of the prima facie view that the Review Audit report got by RP has detected various fraudulent transactions which attracts to take action under Section 66 of the Code and the case required to be ordered further investigation.

In the similar circumstance, one application was filed under Section 66 R/w Section 25(2), 69, 70 and other applicable Sections of the IBC, 2016 before this Adjudicating Authority, the Adjudicating Authority passed by order dated 16.04.2019 in I.A. No.446 of 2018 in C.P.(IB)No.122/BB/2017 by directing the Central Government to refer matter to the SFIO for further investigation into the Affairs of the Corporate Debtor etc. And this order was questioned before the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No.498 of 2019 (Mr.M.Srinivas Vs. Smt.R.Bhuvaneshwari & 8 Others) and it was dismissed by an order dated 24.07.2019 by upholding the order, by inter alia holding as follows: Para 17 of the order reads as follows:

In view of above facts and circumstance of the case and the law as cited, we are of the considered opinion that issue raised in the instant Company Application are required to be further investigation by the Serious Fraud Investigation Office. Therefore, appropriate action can be taken against the erring Officials/Respondents basing on the report.

In the result, by exercising powers conferred on this Adjudicating Authority, which being NCLT, U/s 213 of Companies Act, 2013, I.A.No.457 of 2018 and I.A.No.256 of 2019 in C.P.(IB) No.06/BB/2018 are disposed of with the following directions:

Learned Resolution Professional is directed to forward all material documents, which is connected to the present case including a Review Report prepared by S.P.R. & CO. (Chartered Accountant) including copies of instant Interim Applications to the Central Government, within a period of three weeks from the receipt of the copy of the order with a copy to all concerned parties duly following principles of natural justice.

The Central Government is directed to refer the matter to the SFIO for further investigation into the Affairs of the Corporate Debtor namely M/s.BCIL Red Earth Developers India Private Limited, Shri Hariharan Chandrashekhar, Ms. Kanchan Kaur, Shri Sanjay Ramanujam and M/s.Promptech Incorporated and other related Persons and Companies including Director of Companies of Corporate Debtor & related Companies, basing on the Review Report as expeditiously as possible.

The parties are at liberty to take appropriate legal course of action basing on the ultimate findings given by the SFIO in this case. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A No.180 of 2019 in C. P (IB)No.06/BB/2018 is filed by Shri Akash Gupta ('Applicant/Financial Creditor') U/s 60(5)(c) of the IBC, 2016 and Section 32 R/w Rule 11 of the NCLT, Rules, 2016, by inter alia, seeking to hold that the Applicant is financial creditor; to direct the Resolution Professional to include the Applicant herein as a member in the Committee of Creditors.

I.A No.183 of 2019 in C. P (IB)No.06/BB/2018 is filed by Shri Akash Gupta ('Applicant/Financial Creditor') U/s 60(5)(c) of the IBC, 2016 and Section 32 R/w Rule 11 of the NCLT, Rules, 2016, by inter alia, seeking to stay the proceedings before the Resolution Professional and CoC meetings until the inclusion of Petitioner as member of CoC.

Brief facts of the case, which are relevant to the issue in question, as mentioned in the Application, are as follows:

Mr. Akash Gupta (Applicant) claimed he is one of the Financial Creditors of the Corporate Debtor, M/s. BCIL Red Earth Developers India Pvt. Ltd. The Corporate Debtor owes a sum of Rs.12,73,88,854.79 (Indian Rupees Twelve Crore Seventy-Three Lakhs Eighty-Eight Thousand Eight Hundred and Fifty Four and Seventy Nine paise) as on 31.10.2018 + 3% per month additional thereon to Mr. Akash Gupta.

In pursuant to the public announcement of commencement of insolvency proceedings against the Corporate Debtor, a claim was filed on 09.11.2018 by Akash Gupta as a financial creditor of the Corporate Debtor. This claim was not accepted by the former Resolution Professional on the grounds of 2 days delay in filing. Therefore, he has filed I.A.No.389/2018 in C. P (IB)No.06/BB/2018, by seeking to condone delay and thus the Tribunal condoned the said delay vide its order dated 04.01.2019, with direction to the Resolution Professional to consider the claim as per law.

Thereafter, the then Resolution Professional, Ms. Nidhi Sekseria, while assessing the claim of Akash Gupta, requested certain additional information and raised certain additional queries through her email date 23.01.2019 and 28.01.2019. Subsequently through email on February 12, 2018 informed the Applicant that on the basis of the documents produced and explanations provided, she was not able to agree that Akash Gupta's claim fell within the definition of financial debt under the IBC, 2016 and directed Akash Gupta to make claim in Form F. However, the Applicant did not agree for this suggestion and alleged that it was non-application of mind on the part of the RP.

It is stated that the Applicant invested a sum of Rs.4,05,00,000/- (Rupees Four Crores Five Lakhs only) into Compulsory Convertible Debentures (CCDs) of the Company. With respect to the subscription of the CCDs, on 22.07.2013, a Share Subscription and Shareholders Agreement (SSSHA) was entered into and the Applicant invested an amount of Rs.4,05,00,000/- out of which Rs.4,04,73,000/- formed part of consideration towards subscription of CCDs and the balance of Rs.27,000/- formed part of 2,700 Equity Shares of Rs.10/- each in its associate companies namely - Biodiversity Conservation India Ltd., (BCIL) and BCIL Red Earth Developers Pvt. Ltd (Associate Companies). In terms of the SSSHA, the Corporate Debtor was require to issue CCDs which were to be on the terms and conditions specified in Schedule X to the SSSHA. The CCDs carried a coupon rate of 12% per annum and was to be paid in a specified mechanism. The CCDs were to be redeemed at the end of the 10th year. The Applicant had the option of converting the CCDs into shares. It is contended that till (Compulsory Convertible Debentures (CCDs) or Optionally Convertible Debentures (OCDs) are converted into equity, the CCDs or OCDs are debt instruments in the books of the Company. Thus investment pursuant to the SSSHA was towards subscription of debenture instruments, which when issued by the Company till the time it is converted into equity is debt of the Company.

The Corporate Debtor having received payment towards subscription of the debentures, however failed to issue the debentures or make payment of the coupon rate promised in relation to the debentures. In view of the default and failure to comply with the obligations with respect to the issuance of debentures and payment of coupon on the debentures as per the terms thereof, the Corporate Debtor agreed to return the amounts which were paid towards subscription of debentures. Further, as promised 27% of shares, which were promised to be issued pursuant to payment of the share subscription amount were also not issued. After having collected monies towards issuance of debentures and shares and collecting monies towards that amounts received.

On account of above default, the Corporate Debtor and its Associate Companies entered into a Memorandum of Understanding dated 31.01.2015 with the Applicant, which clearly stated the Corporate Debtor and its associate companies undertook to “pay the total amount of Rs.68,121,719/- to the Second Party. The above said amount of Rs.68,121,719/- is the liability due and outstanding as per payment scheduled in this document to the Second Party herein by the First Party. For any delay in payment, until the complete payment of the abovementioned amounts, the First Party undertakes to pay an interest at the rate of 3% per month on the outstanding till the complete payment is made.

The MoU further categorically states in Clause 8 that “It is the understanding between the parties to pay the interest agreed upon herein since the Second Party was entitled to the benefits of the investment in the shares of BCIL Zed Ria Properties Private Ltd and the returns that he would have been entitled to if the parties had acted in accordance with the Share Subscription and Shareholders Agreement.”

The content of the MOU explicitly precipitates the fact that on account of the Corporate Debtor’s inability to perform their obligations under the SSSHA, the Corporate Debtor acknowledged the amounts due and payable by it to the Applicant and they agreed to refund the monies with interest in due course. As such from the date of the MOU the Applicant became a creditor of the Corporate Debtor and agreed to be paid in due course with interest on the amounts acknowledged to be repaid by the Corporate Debtor.

A bare reading of the MOU would clearly indicate that the Applicant is a Financial Creditor. The MOU also records the fact that certain lands at Coorg being Coffee Plantation have been given as security to make payment against the said financial debt. It is also apparent that there is a clear violation of the terms of the MOU in that the entire liability has not been cleared and as significant amount of money still requires to be recovered including by way of sale of the assets at Coorg, which are mortgaged by deposit of title deeds in favor of the Applicant.

The Applicant has a claim of Rs.12,73,88,854.79/- against the Corporate Debtor and its Associate Companies. Classifying the Applicant as anything other than a financial creditor would be unfair, illegal and against the Code. The CoC meetings require the presence of the Applicant, which has been not done in view of the delay caused by the RP in failing to recognize the Applicant as a financial creditor. This makes all meetings of the CoC held thus far illegal.

The Resolution Professional has filed common reply affidavit dated 27.04.2019, by inter alia contending are as follows:

That in pursuant to the common Admission Order, the Applicant had filed a claim on 9.11.2018 for Rs.12,73,88,854.79/- in the capacity as a financial creditor of the Corporate Debtor (defined as the SPV in the The Applicant had also filed similar claims for same amount in M/s. Biodiversity Conservation India Private Limited and BCIL Red Earth Developers India Pvt. Ltd, which are group companies of the Corporate Debtor undergoing corporate insolvency restructuring process as per the above order.

That upon perusal of the claim and the supporting documents submitted by Mr. Akash Gupta, it was noted that M/s. Biodiversity Conservation India Private Limited, the Corporate Debtor, BCIL Red Earth Developers India Pvt. Ltd, the promoters of the Company namely Dr. C. Hariharan, Mr. Sanjary Ramanujan and Dr. Dinesh Shivanna and Mr. Amith Rastogi and Mr. Akash Gupta entered into Share Subscription and Shareholders Agreement dated July 22, 2013 with the stated objective of recording the terms and conditions governing the terms of investment of the investors in the SPV and the relationship between the investors and Company as shareholders in the SPV.

That in terms of Clause 3.1 of the SSSHA, the Applicant agreed to invest in the SPV by purchasing shares of the Company against a consideration of Rs.7,50,00,000 in the following manner: (i) a sum amounting to 7,49,00,000 Crores as share allotment money towards subscription of Compulsorily Convertible Debentures and (ii) purchase of 5000 equity shares from the Parent Company at par value of Rs.50,000 representing 50% of the total issued share capital of the SPV on a fully diluted basis.

Thereafter, MOU was entered into between the M/s. Biodiversity Conservation India Private Limited, the Corporate Debtor, BCIL Red Earth Developers India Pvt. Ltd., and the applicant herein dated 31.01.2015. It is recorded in terms of the Recitals of the MOU that:

It is pertinent to note that the MOU was executed on January 31, 2015 but was only stamped after a gap of more than 2 ½ years on August 21, 2017. And there is no reference to CCDs or any financial debt made in the Recitals of the MOU. In fact it is recorded that performance of the Conditions Precedent as per the SSSHA were never even completed or performed. The intention of the parties as gathered from the MOU reflects that the MOU was entered into in order to record the terms of repayment of the amounts invested by the Respondent i.e Rs.4,20,00,000 towards capital through direct equity contributions of Rs.1,60,00,000 and through Bank Loans of Rs.2,60,00,000/- against his own credit profile, in the Corporate Debtor and to compensate him for the benefits of investment in the shares of the Corporate Debtor and the returns he would have been entitled to if the parties had acted in accordance with the SSSHA. Although there is a mention of CCDs in terms of the SSSHA, there is no document placed on record to evidence that subscription money towards issuance of debentures was contributed, in fact, it is clearly recorded in terms of the MOU, that the intention of the Applicant was towards investment in 27% of shares of the Corporate Debtor and that the Respondent had invested approximately Rs.4,20,00,000 toward capital through direct equity contribution of Rs.1,60,00,000/- and through Bank Loans of Rs.2,60,00,000 against his own credit profile. It is further recorded that the above investments were by way of subscription to the agreement for sale dated 12.07.2013 executed between BCIL Red Earth India Pvt. Ltd, BCIL Red Earth Developers India Private Limited and the Applicant for sale of Villa no.19 in Zed Earth project and the agreement for sale dated 12.07.2013 executed between M/s. Biodiversity Conservation India Private Limited and the Applicant for sale of Apartment No.A004 and A104 in BCIL Collective project for a total amount of approx. Rs.4,20,00,000/.

Thereafter pursuant to email dated February 12, 2019, the Applicant was requested to re-submit its claim as per Form F, it was also pointed out that the amount of liability as calculated by the erstwhile RP differed from the amount claimed by the Applicant, and the applicant was requested to furnish the additional details and clarifications.

With respect to the contention of the Applicant that even refund share application money with interest of money satisfies the definition of financial debt, it is submitted that the same would not constitute financial debt since the amounts were not “disbursed against the consideration for the time value of money” and were instead disbursed towards investments in shares.

Attention is drawn to the fact that as per the MOU, it is recorded that Rs. 4,20,00,000/- was contributed by the Respondent towards capital through direct equity contribution of Rs.1,60,00,000/- and through Bank Loans of Rs.2,60,00,000/- against his own credit profile, in the Corporate Debtor. It is further recorded in the MOU that the above investment was made by subscribing to the agreement for sale dated 12.07.2013 executed between BCIL Red Earth India Pvt. Ltd., BCIL Red Earth Developers India Private Limited and the Applicant for sale of Villa No.19 in Zed Earth project for purchase consideration of Rs. 78,85,350 (“Sale Agreement 1°) and the agreement for sale dated 12.07.2013 executed between M/s. Biodiversity Conservation India Private Limited and the Applicant for sale of Apartment no. A004 and A104 in BCIL. Collective (Zed Woods) project for consideration of Rs. 64,29,936 (Sale Agreement 2).

It is submitted that from the documents placed on record it is not clear that the original investment amount of Rs. 4,20,00,000 (Rupees Four Crore Twenty Lakhs only) was disbursed as consideration towards CCDs since the same amount of Rs. 4,20,00,000 (Rupees Four Crore Twenty Lakhs only) is also stated to be consideration under the aforementioned sale agreements as well. Moreover, the sale agreements pertain to apartments of BCIL Red Earth India Pvt. Ltd, BCIL Red Earth Developers India Private Limited in and M/s Biodiversity Conservation India Private the Zed Earth project and M/s. Biodiversity Conservation India Private Limited in the BCIL Collective (Zed Woods) and are not even properties of the entity which was supposed to issue the CCDs as per the SSSHA being Corporate Debtor. It is further stated he amount of Rs.4.20,00,000 Crore amount has not been infused by the Respondent in Corporate Debtor (the entity which was supposed to issue the CCDs in terms of the SSSHA) or in BCIL Red Earth Developers (India) Private Limited, at all, however the Respondent has submitted claim forms in the capacity of financial creditor for both the aforementioned entities in addition to filing a claim as financial creditor of the Corporate Debtor.

The Applicant has claimed an amount Rs.12,73,88,854.79 from each of the group companies of the Corporate Debtor in his individual claims filed in the corporate insolvency resolution process of M/s. BCIL Red Earth Developers India Private Limited, the Corporate Debtor and the M/s. Biodiversity Conservation India Private Limited, creating an overlap in the amounts claimed by the Applicant. The Applicant has not provided a bifurcation of the respective claims against each of the three companies nor has the Applicant provided company wise accounts/ledgers.

Further, on verification of the claim of the Applicant, it is further complicated by the fact that Axis Bank Limited has submitted its claims against M/s. Biodiversity Conservation India Private Limited for two loans availed by the Applicant for the purchase of two house being Villa no. 19 in Zed Earth project, owned by BCIL Red Earth India Pvt. Ltd and BCIL Red Earth Developers India Private Limited ("Property 1") Sale Agreement 1; and Apartment no. A04 and A104 in BCIL Collective (Zed Woods) project owned by M/s. Biodiversity Conservation India Private Limited (Property 2) under Sale Agreement 2, on the basis of a two Triplicate Agreements both dated July 24, 2013 executed Axis bank, the Applicant and BCIL Red Earth India Pvt. Ltd (Tripartite Agreement 1) and other the executed between Axis Bank, the Applicant and M/s. Biodiversity Conservation India Private Limited (Tripartite Agreement 2").

Axis Bank Limited has filed its claims against M/s. Biodiversity Conservation India Private Limited in respect of two loans availed by the Applicant from Axis Bank Limited for an amount of Rs. 1,30,00,000/- each for purchase of Property 1 and Property 2 is by way Sale Agreement 1 and Sale Agreement 2 respectively. In order to secure the loans availed by the Applicant from Axis Bank Limited Tripartite Agreement 1 and Tripartite Agreement 2 were executed. As per clause 4 of Tripartite Agreement 1 and Tripartite Agreement 2 if the Applicant failed to honor his commitment to repay the loans availed by the Applicant from Axis Bank Limited as per the Schedule in the loan agreements, Axis Bank Limited had the right get Property 1 and Property 2 registered in its name, thereby enforcing its security over the properties secured by the said Tripartite Agreement.

It is stated that in relation to Sale Agreement 1 an amount of Rs.1,30,00,000/- (Rupees One Crore Thirty Lakhs) has been availed by the Applicant as bank loan from Axis Bank Limited and in relation to Sale Agreement 2 an amount of Rs.1,30,00,000 (Rupees One Crore Thirty Lakhs) has been availed by the Applicant as bank loan from Axis Bank Limited. The transaction under Sale Agreement 1 and Sale Agreement 2 forms the basis of transactions contemplated under the MOU pursuant to which an amount of Rs.12,73,88,854.79 is claimed by the Applicant as financial creditor of M/s. Biodiversity Conservation India Private Limited, an amount of Rs.12,73,88,854.79 is claimed by the Applicant as financial creditor of M/s. BCIL Zed Ria Properties Limited and an amount of Rs.12,73,88.854.79 (Rupees Twelve Crore Seventy Three Lakhs Eighty Eight Thousand Eight Hundred and Fifty Four And Seventy Nine Paise) is claimed by the Respondent as financial creditor of the Corporate Debtor.

It is also stated that the applicant has filed multiple proceedings for the same claim against the BCIL group companies. An arbitration proceeding A.C. No. 147 of 2018 before the sole arbitrator at the Arbitration & Conciliation Centre - Bangalore is pending adjudication on the same matter.

Therefore, the applicant failed to substantiate its claim at all and raised so many disputed question of fact and thus it is liable to be dismissed.

Heard Shri S. Vivekananda learned Counsel for the Applicant and Shri Amit Chandrakant Shah, learned Resolution Professional along with Shri C.K.Nandakumar, Shri Raghuram Cadambi, Shri Varun.S, learned Counsels of the Resolution Professional. We have carefully perused the pleadings of both the parties and extant provisions of the code.

As stated supra, the Tribunal admitted the case by common order dated 09.08.2018 passed in C.P(IB)No.03/BB/2018, C.P(IB)No.06/BB/2018 and C.P(IB)No.14/BB/2018. However, the Petitioner started making claims in Form – C dated 09.11.2018 before the then RP by inter alia contending that he was an individual as a secured Financial Creditor against M/s. BCIL Zed Ria Properties Private Limited, Biodiversity Conservation India Ltd., and BCIL Red EARTH Developers India Pvt. Ltd., by claiming total an amount of Rs.12,73,88,854.79/- (Indian Rupees Twelve Crore Seventy-Three Lakhs Eighty-Eight Thousand Eight Hundred and Fifty Four and Seventy Nine paise) as on 31.10.2018 + 3% per month additional thereon basing on the Memorandum of Understanding (MOU) dated 31.01.2015, executed between group Companies and the Applicant. He Claimed to have paid of Rs. 4,05,00,000/- (Rupees Four Crores Five Lakhs) to the group Companies in 2013. In terms of Share Subscription and Shareholders Agreement (SSSHA), that Company they failed to perform the commitments, they have entered into a Memorandum of Understanding dated 31.01.2015 with group Companies undertaking to refund an amount of Rs.6,81,21,719/- (Rupees Sixty Crores Eighty One Lakhs Twenty One Thousand Seven Hundred and Nineteen only) with an interest at the rate of 3% per month, in case, it failed to refund amount.

The basis for claiming the amount in question, in the instant Application, is Memorandum of Understanding dated 31.01.2015 which is executed by between M/s. BCIL Zed Ria Properties Private Limited and 2 Ors group Companies and Shri Akash as per the claim made by the Applicant dated 09.11.2018 wherein he has declared that he has paid sum of Rs. Rs.4,05,00,000/- (Rupees Four Crores Five Lakhs only) to the Companies in 2013 in terms of Share Subscription and Shareholders Agreement (SSSHA) dated 22.07.2013 which is placed at page No. 58 to 119 along with material paper filed along with to the IA.No.180/2019. And the same is made among three (3) Group Companies, the Promoters of the Company and SPV and Mr. Amit Rastogi, "Investor No.1" and Mr. Akash Gupta "Investor No.2". The object of agreement stated therein was that Investor No.1 & 2 wish to invest in the SPV floated by Company towards construction and sale of the project known as Zed Ria and the investors wanted to make an investment in the SPV in order to expansion of the business of the SPV.

As per above Share Subscription and Shareholders Agreement (SSSHA), the investors agreed to invest in the SPV by purchase of shares from the Company amounting to Rs.7,49,50,000/- (Rupees Seven Crores Forty Nine Lakhs Fifty Thousand only) (“Investor Subscription Amount”) as under:

On alleged failure of performing the commitment of the said Share Subscription and Shareholders Agreement (SSSHA), the said Memorandum of Understanding dated 31.01.2015, was stated to have been executed by and between Biodiversity Conservation (India) Private Limited and 2 Others group Companies and Mr. Akash, S/o... Aged about 38 years, R/at, Flat 22, Tower 6, Pebble Bay, RMV Stage II, Bangalore, by inter alia stating that Mr. Akash Invested approx. Rs.4,20,00,000/- (Rupees Four Crores Twenty Lakhs only) and the First party agreed undertakes to pay total due amount of Rs.6,81,21,719/- (Rupees Six Crores Eighty One Lakhs Twenty One Thousand Seven Hundred and Nineteen only) to the Second Party. The Second Party hereby acknowledge the receipt of the same and the First party undertakes to pay an amount of Rs.6,19,00,000/- (Rupees Six Crores Nineteen Lakhs only). Therefore the entire claim is based on the Share Subscription and Shareholders Agreement (SSSHA) and the Memorandum of Understanding.

As stated supra, it is not in dispute Share Subscription and Shareholders Agreement (SSSHA) dated 22.07.2013 was executed by group Companies and Mr. Amit Rastogi, “Investor No.1” and Mr. Akash Gupta “Investor No.2” which was for investments in SPV floated by Company towards constructions. However, the present Memorandum of Understanding dated 31.01.2015 is stated to have executed by and between 3 group Companies and Mr. Akash, S/o... Aged about 38 years, R/at, Flat 22, Tower 6, Pebble Bay, RMV Stage II, Bangalore only. In said Memo, they have mentioned the name of only Mr. Akash instead of Mr. Akash Gupta, by keeping father’s name blank. Moreover, the Memorandum was registered after long lapse it only on 21.08.2017. Therefore, admittedly the Applicant stated to have made investment in question in the group Companies towards expansion for purchase of shares. Therefore, the Applicant cannot come under the definition of the Financial Creditor, and thus, we agree with the reasoning given by the Resolution Professional, in the reply as briefly stated supra. Moreover, Share Subscription and Shareholders Agreement (SSSHA) refers two investors, as referred to above, but only Mr. Akash is only named as party.

The proceedings initiated under Code are summary in nature and the various questions of fact or disputes, raised by the parties in a Petition/Application filed under the Code, cannot be gone into. This Tribunal has already admitted the Company Petition by common order dated 09.08.2018, by initiating CIRP in respect of all three (3) groups Companies. Accordingly, the Resolution Professional has conducted various meetings of the CoC and ultimately found one Resolution Plan satisfying all the conditions prescribed under the Code and the same was duly accepted by the CoC with requisite majority. Accordingly, the Resolution Professional has filed I.A.No.236 of 2019 in C.P.(IB)No.06/BB/2018, U/s. 60(5) (c) R/w Section 30(6) of the IBC, 2016, by inter alia seeking to approve the Resolution Plan submitted by M/s. Citrus Ventures Private Limited. Accordingly Adjudicating Authority has approved the Resolution Plan by separate order dated 09.08.2019, after the Adjudicating Authority satisfying that Resolution Plan satisfied all the requisite conditions to approve it.

The Applicant has filed similar claims for the same in all the three (3) group Companies basing on the very same Share Subscription and Shareholders Agreement (SSSHA) and Memo. The Applicant failed even to substantiate that the investment in question was made and on the contrary, the Resolution Professional by perusing the record of Corporate Debtor disputed the amount itself. The intention of the Applicant, as per MOU, was investment in 27% of the shares in all the 3 Companies, and those investments were made for by way of subscription to agreement for sale of villas in question. If the alleged amount is considered as investment for the shares, as per Section 42 (6) of the Companies Act, 2013, allotment require to be made within 60 days failing which amount has to be returned within 15 days failing which it carries the interest at 12% p.a. However, he cannot make claim as Financial Creditor under the proceedings initiated under the Code and the same is misconceived and not maintainable. Even the Company failed to refund Share Applicant money with interest, it cannot constitute financial debt and it cannot be called consideration for the time value of the money as per definition under Section 5(8) of Code.

As state supra, that Axis Bank Limited has also submitted its claim against all the group of the Companies for the loan availed by the Applicant for the purchase of villas, Apartments, in question. Accordingly, Triplicate 2 agreement dated 24.07.2013 was executed between Axis Bank, the Application of M/s. BCIL Red Earth (India) Pvt. Ltd and other agreement between Applicant and M/s. Biodiversity Conservation (India) Private Limited, as per the clause 4 of the Triplicate agreement, if the Applicant feel to honour its commitments to re fund all loans availed by the Applicant from the bank, Axis Bank has right to get properties in question registered in its name. Therefore, the Applicant is raising several disputed issues in support of its and the same is baseless.

For the aforesaid reasons and circumstances, we are of the considered opinion that the claim made by the Applicant is baseless and thus it is liable to be rejected.

Hence, both I.A.Nos.180 & 183 of 2019 in C.P.(IB)No.06/BB/ 2018 are hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.329/2019 in C.P.(IB)No.06/BB/2018 is filed by M/s. BCIL Yelahanka Projects LLP ('Applicant'), U/s. 60 (5) (c) of the IBC, 2016, R/w. Rule 11 of the NCLT Rules, 2016, by inter seeking to direct RP to register sale-deeds for all sale-agreements in respect of unsold plots held by RH LLP as has been done for home buyers, who purchased plots prior to the debenture investment by RMF; OR to direct the Resolution Professional to provide for a settlement to RH LLP @ Rs.2,624 per sq. ft. prior to entering into any construction agreement on the same plots; for release of its rights on the plots; direct the Resolution Professional to re-consider the Resolution Plan and to incorporate the above aspects in the Resolution Plan.

Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows:

The Company Petition bearing C.P. (IB)No.06/BB/2018 was filed by Reliance Nippon Life Asset Management part of erstwhile Anil Ambani Group of Companies, and Vistra India ITCL Limited on behalf of its Portfolio Management Services (PMS) Clients on 22 December 2017. The Adjudicating Authority, vide its order dated 9th August 2018, admitted the C.P.(IB)No.06/BB/2018 by initiating CIRP by appointing against the Corporate Debtor by interalia appointing Mrs. Nidhi Seksaria as Interim Resolution Professional, imposing moratorium etc. Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07, 2018, confirmed the appointment of Mrs. Nidhi Seksaria as the Resolution Professional. Subsequently, the this Adjudicating Authority vide its order dated 31st January 2019, extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5, 2019 i.e. till May 6, 2019. And the said IRP was changed by nominating Amit Chandra Kant Shas as RP and the same was approved by Adjudicating Authority, vide its order dated 01st April, 2019.

M/s. BCIL Yelahanka Properties LLP, (herein after referred as 'Applicant'), has entered into registered sale-agreements for purchase of plots in the approved residential layout owned by BCIL Red Earth Developers India Private Limited, and it is a financial creditor in the CIRP Process initiated against the Respondent. The Applicant is represented by its authorized signatory Mrs. Rachna Rego.

In the Company Petition, RMF and Vistra, had claimed an amount of Rs.46,07,22,926/- (Rupees Forty Six Crores Seven Lakhs Twenty Two Thousand Nine Hundred and Twenty Six only) was due from the Corporate Debtor, as on 31st March, 2017 and that this amount was comprised the principal amount, interest, redemption, premium, additional interest and default interest. The Application was filed by RMF and Vistra on behalf of their Portfolio Management Services ("PMS"). However, no disclosure was made till date on the names of the PMS investors and amounts due to them individually despite requests for the same in the CoC Meetings. This is in complete contravention of Regulation 13(2) of CIRP Regulations and in the absence of such information, the inclusion/exclusion of individual PMS investors and accuracy of amounts claimed by them individually has not been established. Further, the chances that unauthorized and ineligible persons, who are not even rightful financial creditors, will likely to receive proceeds of resolution plan, which is against the object of the Code.

While the RP has provided details of identities and amounts due to individual home-buyers, no details of identities of PMS investors and amounts due to them individually have been provided. Such a prima facie inconsistency in key disclosures and lack of transparency as mentioned above, begs the question on whether the RP permitted being undue influence by certain financial creditors in forming and controlling the CoC.

On an investment of Rs.38.52 Crores, PMS investors having already received Rs.21.66 Cr., have further claimed Rs.46.07 Cr. And thus revised to Rs.74.09 Cr and again to Rs.146.52 Cr. Even at the admitted claim amount, return claimed by PMS investors is approximately 176% over 3.5 years and every upward revision in Claim only aggravates the calculations further. Such returns are clearly usurious, extortionate and detrimental to the interest of public policy and clearly contravene the provisions of Usurious Loans Act, 1918 and Karnataka Money-Lending Act. The fact that the financial creditors are actually PMS investors, this is only a money-lending arrangement under the cover of the Fund Manager. It is alleged that grossly usurious claims have been used by the RP to determine the voting-share in the CoC. All major decisions such as ongoing management of the Project, selection of resolution -applicants, relaxation of criteria on submission of resolution plans, appointment of auditor for the purpose of auditing avoidance transactions have therefore been left to the approval of the CoC, whose voting share has been based on improper usurious claims and undisclosed identities of financial creditors. Therefore, if the usurious claims are reduced to the actual amount that due and payable to the PMS investors, the voting share of RMF and Vistra would have drastically come down and the other financial creditors including the home-buyers, would have had a greater role to play in deciding the resolution process.

While the debenture subscription agreement mentions about 23% XIRR payable to debenture-investors at the end of the investment period, only 18% interest is mentioned as payable in accordance with Part A of Schedule V of the Debenture Subscription Agreement dated 17.01.2014. Despite request for disclosure of calculations on claims submitted by RMF and Vistra, the RP has not provided any information in this regard. The Applicant, who has registered sale-agreements over plots in the project of the Corporate Debtor since November 2012, had first submitted its claim as a financial creditor considering that the Applicant has a first charge having funded the Company before Reliance and also having given a conditional NOC to RMF for amounts beyond what is due to the Applicant.

In the last meeting of the CoC on 26th April 2019, the Resolution plan submitted by Citrus Ventures Private Limited (Resolution Applicant) abruptly changed the status of the Applicant to an investment agreement holder and revised the amount from Rs.6 crores to Rs.2 Crores, without any such change to other financial creditors, despite that the Applicant holds almost 30% of the unsold area of the Project. Further, the Resolution plan provides for abrupt transfer of plots from Applicant to the Corporate Debtor despite that the Applicant has paid practically the entire consideration due on the Plots. Such cessation of security-interest of the Applicant, despite holding the first charge/primary security even before RMF became a financial creditor and having given a conditional NOC to Reliance PMS; in order to benefit the usurious claims of the Reliance PMS investors is not in accordance with the objectives of the IBC, which aims to balance the interests of all stakeholders. The Resolution Applicant for reasons best known to it has provided the plan mainly to protect the interest of RMF. This is fairly evident in that Applicant has been offered Rs.2 Crore at the end of the Project despite the Applicant holding approximately 30% of the unsold area of the Project whereas RMF is being provided a commitment upto Rs.43 Crores when they have already received Rs.22 Crores out of Rs.38.5 Crores till date.

The employee dues have also been subjected to the dues of the PMS investors and further, SME vendors, who have contributed to completion of 60% of the project, have also not been provided with even their principal amounts. This further substantiates that the process was managed so as to only benefit RMF.

Shri Amit Chandrakant Shah, learned Resolution Professional, has filed an Affidavit-in-Reply dated 16.07.2019, by inter alia contending are as follows:

The Resolution Professional reiterates that the Applicant has also failed to substantiate its claim/allegations made against Reliance Nippon Life Asset Management Limited and others on this ground alone the Application is liable to be dismissed with cost at the threshold. Reliance Nippon Asset Management Limited and Reliance India Opportunity Limited have been omitted as necessary parties to the Application even though in the present Application also there are certain specific allegations made against Reliance Nippon Asset Management Limited and/or Reliance India Opportunity Limited, and therefore the said parties are required to be made necessary parties to the present Application. Omission of Reliance Nippon Asset Management Limited and Reliance India Opportunity Limited in the present application indicates that the present Application is not filed with bonafide intentions.

The Petitioner/Financial Creditor has filed an application for initiation of CIRP process before this Adjudicating Authority for an amount of Rs.46,07,22,926/- i.e. debt outstanding as on March 31, 2017 and also claimed for 23% interest rate from March 31, 2017 until realization of the payment. Subsequently, the Petitioner/Financial Creditor has filed claim with the erstwhile RP aggregating to an amount of Rs.74,09,35,442/- which includes Rs.46,07,22,926/- i.e. debt outstanding towards principal amount accrued interest, redemption premium, additional interest and default interest in relation to the debentures premium, additional interest and default interest in relation to the debentures issued by the Corporate Debtor, which were duly admitted by the erstwhile RP, after verifying claim with the documents provided by Petitioner/Financial Creditor.

It is stated that that the Petitioner/Financial Creditor represented through its trustee's, has filed revised Form C with the erstwhile RP on November 2, 2018 for an amount of Rs.146,52,39,998/- within a period of 90 days from the ICD. Upon enquiry/perusal of the additional documents provided by the Petitioner/Financial Creditor, the erstwhile RP noticed/determined that out of total amount claimed of Rs.146,52,39,998/-, Petitioner/Financial Creditor claimed Rs.74,09,35,442/- towards principal amount, accrued interest, redemption premium, additional interest and default interest in relation to the debentures issued by the Corporate Debtor. The Petitioner/Financial Creditor further claimed from the Corporate Debtor, an amount of Rs.72,43,04,556/- as on August 9, 2018 being the Insolvency Commencement Date towards the corporate guarantee issued by the Corporate Debtor guaranteeing the payment of the debt owed by Zed Ria. Further that on November 28, 2018, the Petitioner/Financial Creditor and Reliance India Reality Opportunities LLP represented through their debenture trustee filed a revision/amendment to the revised form dated November 02, 2018 separately identifying the claims of the Petitioner/Financial Creditor and Reliance India Reality Opportunities LLP in writing to the revised claim form dated November 2, 2018, which was well within the prescribed time of ninety days from the ICD as stipulated under Regulation 12(2) of the CIRP Regulation.

It is stated that in terms of Section 18(b) of the Code, it is the duty of the Resolution Professional to receive and collate all the claims submitted by the creditors. According to provisions of Regulation 12(2) of the CIRP Regulations, a creditor is allowed to file his claims along with proof with the Resolution Professional on or before the ninetieth day of the insolvency commencement date. In terms of Regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulation 2016, the Resolution professional is required to revise the amounts of claims admitted as soon as may be practicable, when he comes across additional information warranting such revision. The verification of claims, constitution of Committee of Creditors and determination of voting share of the Creditors has been conducted/carried out by the erstwhile RP in accordance with the provisions of the Code and the CIRP Regulations. In terms of Regulation 5(28) of the CIRP Regulations “voting share” means the share of the voting rights of a single financial creditors in the committee of creditors, which is based on the proportion of the financial debt owed to such financial creditor in relation to the financial debt owed by the Corporate Debtor.”

Further, the Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors., has observed that “It is clear from a reading of the Code as well as the Regulations that Resolution professional has no adjudicatory powers”. The Hon’ble Supreme Court further goes on to observe that “...the Resolution professional is really a facilitator of the resolution process, whose administrative functions are overseen by the Committee of Creditors and by the Adjudicating Authority”.

In view of the foregoing, it is clear that it is the duty of the Resolution Professional to verify the claims of the Creditors in accordance with the provisions of the Code on the basis of the documents submitted by the creditors to substantiate their claim.

It is stated that the Resolution Professional is not required to furnish or submit for scrutiny the calculation details pertaining to the claims of the one creditor to the other creditors. Therefore, the RP has not disclosed to any of the creditors of the Corporate Debtor (including the Applicant) the details of the calculations in respect of the claims of other creditors. Further, it is stated that the Applicant has not raised any request seeking details in relation to the names of the individual PMS investors and the amounts due to them.

The Supreme Court in Arcelor Mittal India Private Limited vs. Satish Kumar Gupta & Ors. has observed as follows: "The Resolution Professional is required to examine that the resolution plan submitted by various applicants is complete in all respects, before submitting it to the Committee of Creditors. The Resolution Professional is not required to take any decision, but merely to ensure that the resolution plans submitted are complete in all respects before they are placed before the Committee of Creditors, who may or may not approve it." The fact that the Resolution Professional is also to confirm that a resolution plan does not contravene any of the provisions of law for the time-being in force, including Section 29A of the Code, only means that his prima facie opinion is to be given to the Committee of Creditors that a law has or has not been contravened. Section 30(2)(e) does not empower the Resolution Professional to "decide" whether the resolution plan does or does not contravene the provisions of Law."

Thereafter, on 18th & 20th April 20, 2019, the Applicant sent two mails to the Authorized Representative of the Home Buyers highlighting certain points for discussion in the next CoC meeting. The Authorized Representative discussed the said two emails in the 11th CoC meeting dated April 20, 2019 with the CoC members. In the said 11th CoC, one of the Prospective Resolution Applicant, Aishu Dreamlands Limited decided to withdraw their Resolution Plan for the Corporate Debtor and hence CVPL remained the sole Prospective Resolution Applicant

It is stated that in the said 12th CoC meeting, the concerns raised by the Applicant were discussed with CVPL and the CoC members and the RP also requested CVPL to send a written reply by an email addressing the issues raised by the Applicant. Pursuant to the request, CVPL has vide its email dated April 23, 2019 answered the specific concerns of the Applicant. The email sent by Applicant, its circulation mail to CVPL together with all the members of the CoC and Directors of the suspended Board of the Corporate Debtor, the extract of minutes of 12th CoC meeting and the Reply of CVPL to the email of the Applicant.

It is submitted that the RP carried out the CIRP Process as per Law and provided due opportunity to all the members of the CoC (including the Applicant) and the erstwhile management of the Corporate Debtor, to raise their issues regarding the Resolution plans submitted by the Prospective Resolution Applicants in the CoC meetings. In light of the various revisions in the Resolution plans submitted by the Prospective Resolution Applicants and in order to maintain complete transparency in running the CIRP, the Resolution Professional kept the members of the CoC and the erstwhile management of the Corporate Debtor informed of the revised Resolution plans submitted by the said Prospective Resolution Applicants from time to time, and also kept the CoC members and the Prospective Resolution Applicants informed of the concerns raised by the stakeholders regarding the resolution plan from time to time. By sharing the issues raised by the stakeholders with the other CoC members and the Prospective Resolution Applicants, and requesting the Prospective Resolution Applicants to provide response to the queries raised by the CoC members (including the Applicant), the Resolution Professional maintained transparency in the conduct of the CIRP. The Resolution Professional provided due opportunity to the CoC members for negotiation of the plan with the Prospective Resolution Applicants and to the Prospective Resolution Applicants for redressal of the concerns raised by the stakeholders. The Resolution Professional made all the requisite efforts to ensure that the resolution plan was finalized, after due discussions and deliberations amongst the members and the Prospective Resolution Applicants. To this end, the Resolution Professional also invited the Prospective Resolution Applicants to participate in the CoC meetings for discussing and negotiating the plan and for addressing the concerns raised by the stakeholders.

It is stated that the Applicant once again by email dated April 26, 2019 expressed his dissent to the said Resolution Plan. The said email was circulated by the Resolution Professional to all the members of the CoC on April 26, 2019. It is stated that Authorized representative of the homebuyers vide his email dated April 28, 2019 responded to the Applicant that all the mails sent by the Applicant expressing his views on the Resolution Plan have been read out then and there during the CoC meeting and the discussion there on are also recorded in the minutes of the meeting. The Applicant voted against the Resolution Plan. And out of thirty six (36) Home Buyers, twenty-nine (29) Home buyers voted in favor of the Resolution plan in question, six (6) Home Buyers are abstained from voting and one Home buyers i.e. the Applicant voted against the Resolution plan. Since, the resolution plan submitted by CVPL had been approved by a requisite majority, the Resolution Professional upon the instructions of the CoC members, filed an Application for approval of the resolution plan with this Tribunal.

It is further submitted that the payments as proposed to be made to the Applicant under the Resolution plan are as per the commercial assessment of CVPL and the Resolution Professional is not authorized to take a decision on the same.

In view of the aforesaid, the RP has followed the due process prescribed under law to verify the claims filed by Petitioner/Financial Creditor and has endeavored to redress all the concerns raised by all the stakeholders including the Applicant with regard to the Resolution Plan. Therefore, the claims made by the Applicant in his application against the Resolution Professional are false and without any basis. Thus, the Application filed by the Applicant is to be dismissed.

Heard Shri Arun Kumar, learned Senior Counsel with Gaurav Raj Shrawat, learned Counsel for the Applicants and Shri C.K.Nandakumar, learned Counsel for RP and also Shri Amit Chandrakant Shah, Resolution Professional. We have carefully perused the pleadings of both the parties and extant provisions of the Code and the law on the subject issue.

Shri Arun Kumar, learned Senior Counsel for the Applicant, while reiterating the various averments made in the Application, as briefly stated supra, has strenuously contended that there is a lot discrimination and bias meted out to the Applicant vis a vis other similarly situated parties in the instant case by the Resolution professional. He has relied upon the Common judgement dated 14th November, 2018 passed by Hon'ble NCLAT in Binani Industries Limited Vs. Bank of Baroda & Anr. Company Appeal (AT) (Insolvency) No.82 of 2018, Rajputana Properties Pvt. Ltd. Vs. Binani Industries Limited & Ors. Company Appeal (AT) (Insolvency) No.123 of 2018., Rajputana Properties Pvt. Ltd. Vs. Ultratech Cement Ltd. & Ors. Company Appeal (AT) (Insolvency) No.188 of 2018, . Binani Industries Limited Vs. Binani Cements Limited & Anr. Company Appeal (AT) (Insolvency) No.216 of 2018, Mr. Vijay Kumar Iyer, Resolution Professional Vs. Mr. Braj Bhusandas Binani & Ors. Company Appeal (AT) (Insolvency) No.234 of 2018.

Therefore, the Learned Senior Counsel urged the Tribunal that the instant case is covered by the ratio as rendered in the above judgement.

Shri C.K.Nandakumar, learned Counsel for the Resolution Professional along with Shri Amit Chandrakant Shah, Resolution Professional, has once again reiterated their contentions, as briefly mentioned supra. The learned Counsel further urged since Resolution Plan in question was duly approved by COC with requisite majority and I.A.No.236/2019 is also filed before the Adjudicating Authority and thus the instant Application lacks merits and it also liability be dismissed for non-joinder of necessary parties. Urged

The Applicant (M/s. BCIL Yelahanka Projects LLP) has entered into registered agreements to sale with the Corporate Debtor for the purpose of acquiring the flats/lands that was earlier held by the Corporate Debtor. Accordingly, they have invested the amount in the Corporate Debtor, and thus, Applicant is a Home Buyer. The Applicant has admittedly filed its claim through Authorised Representative of the Home Buyers nominated in the instant case, and also filed separately through their own Authorised Representative to the Resolution Professional. Accordingly, claim of the Applicant was duly considered by the Resolution Professional and the same was placed before the CoC and the various concerns expressed by the Applicant was also placed before the CoC, as detailed supra. Therefore, it is not the case of the Applicant that the grievance of the Applicant was not taken into consideration by the Resolution Professional, CoC and the prospective Resolution Applicant. It is also not in dispute there are thirty six (36) Home Buyers of the Corporate Debtor, and out of this, twenty-nine (29) Home Buyers have voted in favour of the impugned Resolution Plan, and six Home Buyers are abstained from voting, and only one Home Buyers (that is Applicant herein) has voted against the Resolution Plan. It is settled position of law, as referred to above, power is conferred on Resolution professional, CoC, and prospective Resolution Applicant, and then finally on the Adjudicating Authority to examine whether the Resolution Plan submitted by the prospective Resolution Applicant is in accordance with law, reasonable, justifiable, equitable in the light of the fair value/nominal/liquidation value of the Corporate Debtor. Basing on various parameters, a Resolution Applicant will offer one's plan to the COC and then COC will examine the same on standard financial principles and thereafter, it is satisfied the Plan may approve or disapprove. In the instant case, the Resolution Plan in question was finally approved by the COC and the same was accepted by the Adjudicating Authority.

It is the cardinal principle of law that whenever a party challenging the claim of the other party, it is necessary to implead them as opposite party. In the instant case, while making several allegations in respect of the claim accepted by the Resolution Professional which is admitted and accepted by the CoC in relation to Reliance Nippon Life Asset Management Ltd., as stated supra, they are not made party to the instant Application, and only IRP is made party Respondent. Moreover, a claim can be proved basing on the evidence available in support of it, and it cannot depend on the claim made by the other party. However, the Applicant is comparing its claim with reference to claim accepted by the Resolution Professional in respect of Financial Creditor. The prospective Resolution Applicant has already given ample opportunity to the Applicant with regard to its grievances and it was duly considered while finalising the Resolution Plan in question. Accordingly, the Resolution Professional has also filed I.A.No.236/2019 for approval of the Resolution Plan, under Section 60(5) (c) R/w Section 30(6) of the IBC, 2016. Therefore, the Adjudicating Authority, after analysing the entire Resolution Plan, in the light of the settled position of law and object of code and in the interest of substantial stake holders in the Company, has approved the Resolution Plan submitted by M/s. Citrus Ventures Private Limited by separate order dated 09.08.2019 by inter alia declaring that the Resolution Plan was binding on all the respective parties.

So far as, the judgement of the Hon’ble NCLAT, New Delhi in the matter of Binani Industries Limited, as relied upon by the Learned Senior Counsel for the Applicant, as referred to above, is concerned; all these Appeals arise out of various orders passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, in respect of Binani Cements Limited and Anr., one of the impugned order in Appeal before the Hon’ble NCLAT is the order dated 28.02.2018 passed by the Adjudicating Authority Kolkata Bench, wherein CA(IB) No.175/KB/2018 was referred back to the ‘Resolution Professional’ to consider in accordance with the rules and regulations of the I&B Code. After considering all the batch cases, the Hon’ble NCLAT has disposed of all the Appeals by Common Judgement dated 14.11.2018, with the following directions under para 73 and 74:

Therefore, it is to be pointed out here that one of the impugned order dated 28.02.2018, passed by the Adjudicating Authority, which was referred back to the 'Resolution Professional' to consider in accordance with the rules and regulations of the I&B Code, was dismissed.

By perusal of the facts and circumstances of the above judgement of Hon'ble NCLAT, New Delhi, we find that the facts and circumstances of that case are not applicable to the facts and circumstances of the instant Company Application. As states supra, the Adjudicating Authority has already approved the Resolution Pan in question, by separate order dated 09.08.2019 by a speaking order.

In view of the above facts and circumstance of the case, we are of the considered opinion that Applicant was given due opportunity with regard to its grievances and the same was considered in transparent manner vis a vis other similarly situated parties. Therefore, the Application lacks merits and it is liable to be rejected.

In the result, I.A. No. 329 of 2019 in C.P (IB) No.06/BB/2018 is hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.360 of 2019 in C.P. (IB)No.06/BB/2018 is filed by Shri Hariharan.C & anr. ('Applicants') U/s. 60(5) of the IBC, 2016, R/w. Rule 11 of the NCLT Rules, 2016, by inter alia, seeking to direct the Resolution Applicant to submit revised Resolution Plan and extinguish personal guarantees of the Applicants by modifying clause 3.1.45 of the Resolution Plan as follows: "Any Corporate /Personal Guarantee issued by the Corporate Debtor to any institution/individual or personal guarantee of the erstwhile Management /promoters of the Corporate Debtor shall stand extinguished "

Brief facts of the case, which are relevant to the issue in question, are as follows:

C.P. (IB)No.06/BB/2018 is filed by M/s. Reliance Nippon Life Asset Management limited & Anr. ('Petitioner/Financial Creditor') U/s.7 of the IBC, 2016, R/w Rule 4 of the I&B(AAA) Rules, 2016, by inter alia seeking to initiate CIRP, appoint IRP etc. Accordingly, the case was admitted by the Adjudicating Authority vide its order dated 09th August, 2018 by initiating CIRP in respect of Corporate Debtor, appointing IRP, imposing moratorium etc.

After due process of law, finally the Resolution Plan submitted by CVPL (Resolution Applicant) in question was accepted by COC of Corporate Debtor with requisite majority. Accordingly, I.A.No.236/2019 is filed by Resolution Professional, under Section 60(5) (c) R/w Section 30(6) of the IBC, 2016, by inter alia seeking to approve the Resolution Plan submitted by CVPL. Accordingly, this Adjudicating Authority approved the Resolution Plan submitted by the CVPL by separate order dated 09.08.2019.

Shri Hariharan.C (herein after we referred as Applicant No.1) is the Promoter and Director of M/s. BCIL Red Earth Developers (India) Private Limited (Corporate Debtor). The Applicant No.2 is wife of the Applicant No.1 and is also a shareholder and Non-Executive Director of the Corporate Debtor.

It is stated that the Smt. Kanchan Kaur (we referred as Applicant No.2) is only a Non-Executive Director on the Board of the Corporate Debtor. And she is in full time employment with the Indian Institute of Journalism & New Media since 2004. She is currently Dean of the said institute. Due to her full time employment with the institute, she was hardly involved in the day-to-day affairs of the Corporate Debtor and in facts she had no role to play in the running of the business of the Corporate Debtor.

The Resolution Professional has also filed I.A.No.457/2018 and 256/2018, under Section 66 of the Code, against the Shri Hariharan.C and his wife and 4 Ors., which includes both the applicants.. The Adjudicating Authority has passed by separate common order dated 09.08.2019 in the above IAs by referring the matter to the SFIO.

Heard Shri Abhijit Atur, learned Counsel for the Applicant/Corporate Debtor and Shri C.K.Nandakumar learned Counsel for the Resolution Professional. We have carefully perused the pleadings of both the parties and extant provisions of the Code and the law.

As stated supra, the Resolution Plan submitted by CVPL is duly approved by the CoC of the Corporate Debtor and also passed separate orders in IA.No.457/2018 and 256/2018, under Section 66 of the Code, against the Shri Hariharan.C and his wife vide separate order dated 09.08.2019. Therefore, the Resolution Plan is binding on all the parties, which include the Applicants herein and thus the relief as asked for by the Applicant is not maintainable and thus it is liable to be rejected. The Applicants cannot be relieved of their Guarantee in question.

In the result, I.A.No.360/2019 in C.P. (IB) No.06/BB/2018 is hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.457 of 2018 and I.A.No.256 of 2019 in C.P. (IB) No. 06/BB/2018 is filed by Shri Amit Chandrakant Shah (hereinafter referred to as 'Applicant/RP') U/s 66 of the IBC, 2016, by inter alia seeking to order and direct the Respondent Nos.1 to 3, to make such contributions to the assets of the Corporate Debtor as it may deem fit in accordance with Section 66 of the Code and to direct investigation against the Respondent Nos.1 to 3 in respect of the writing off for an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the Respondent No.4 etc.

Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows:

The present Application is filed by Shri Amit Chandrakant Shah (IP Registration No.IBBI/IPA-001/IP-P00821/2017-2018/11397), the Resolution Professional of M/s. BCIL Red Earth Developers India Private Limited ('Corporate Debtor') under Section 66 of the IBC, 2016, inter alia seeking appropriate directions from this Adjudicating Authority in respect of identified transaction wherein the Corporate Debtor has written off an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4, a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group companies including the Company undergoing CIRP under the common order i.e. M/s.Biodiversity Conservation India Private Limited (‘BCIL’) before the commencement of the Corporate Insolvency Resolution period.

The main Company petition filed by M/s. Reliance Nippon Life Asset Management Limited & Anr., a Financial Creditor, under Section 7 of the IBC, 2016 R/w Rule 4 of the I&B (AAA) Rules, 2016 was by this Adjudicating Authority vide order dated August 9th, 2018 (‘Admission Order’) by initiating CIRP, appointing Mrs. Nidhi Seksaria (IBBI Registration No.IBBI/IPA-001/IP-P00866/2017-2018/11464 as appointed as the IRP, moratorium etc. Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07th, 2018, confirmed the appointment of Mrs. Nidhi Seksaria (‘erstwhile RP’) as the Resolution Professional.

It is stated that this Adjudicating Authority vide its order dated January 31st, 2019 extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5th 2019 i.e., till May 6th 2019 upon an application filed by the erstwhile RP under Section 12 of the Code read with Regulation 40 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Subsequently, the Adjudication Authority vide its order dated April 01st, 2019 allowed the application filed on behalf of the Committee of Creditors of the Corporate Debtor to change the Resolution Professional of the Corporate Debtor and thus appointed Mr. Amit Chandrakant Shah as the RP in place of Mrs. Nidhi Seksaria.

It is stated that pursuant to the erstwhile RP taking charge of the Corporate Debtor and upon perusal/review/ analysing the books of accounts and other records of the Corporate Debtor, the erstwhile RP noticed that an amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4. The erstwhile RP carried out an exercise to determine if the transactions of the Corporate Debtor may be classified inter alia as fraudulent transactions under Section 66 of the Code. Based on the findings in respect thereto, the Applicant has filed this present application for getting appropriate directions from this Adjudicating Authority.

It is further stated that upon detailed perusal of the matter, the erstwhile RP noticed that Respondent No.4 had been a vendor for the Corporate Debtor and Group Companies and each of the mentioned a separate ledger for their respective transactions. The Corporate Debtor had advanced as sum of Rs.2,17,00,000/-(Rupees Two Crores Seventeen Lakhs Only) to the Respondent No.4 between April 2014 to September 2014 as an advance, in tranches, as reflected in the books of the accounts of the Corporate Debtor. Subsequently, an amount of Rs.92,54,954/-(Rupees Ninety Two Lakhs Fifty Four Thousand Nine Hundred and Fifty Four Only) was transferred from Respondent No.4 to the Corporate Debtor between February 2015 and September 2016, leaving a balance of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only).

It is stated that the Applicant further noticed the above-mentioned amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) was written off in the Corporate Debtor's books of accounts in Financial Year 2015-16. The Applicant during internal investigation did not find any documents evidencing effort and/or measures taken by the Respondent Nos.1 to 3 for recovery of the abovenamed amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) due and payable to the Corporate Debtor by the Respondent No.4.

It is stated that an amount of Rs.2,50,25,000/-(Rupees Two Crore Fifty Lakhs Twenty Five Thousand Only) was transferred from Respondent No.4 to Respondent No.5 between April 2014 and September 2014 towards purchase of plots. During the same period, during which the Corporate Debtor had transferred monies to Respondent No.4 as advance (refer para 6 above). The dates of transfers from Corporate Debtor to Respondent No.4 and the subsequent transfers from Respondent No.4 to Respondent No.5 as per the books and records of the respective companies are summarised below:

Subsequently, Respondent No.5 has paid Rs.1,13,55,000/- (Rupees One Crore Thirteen Lakhs Fifty Five Thousand Only) as a refund upon cancellation of abovementioned plots between June 2016 and September 2016. It is pertinent to note that this coincides with the period during which Respondent No.4 had returned monies to the Corporate Debtor. The balance of Rs.1,36,70,000/- (Rupees One Crore Thirty Six Lakhs Seventy Thousand Only) still reflects as a liability in the books of Respondent No.5. The dates of transfers from Respondent No.5 to Respondent No.4 and the subsequent transfers from Respondent No.4 to Corporate Debtor as per the books and records of the respective companies are summarised below:

It is stated that the Applicant vide email dated 20.12.2018 wrote the R-4. The Applicant vide email informed the R-4 that the CIRP process for the Corporate Debtor has commenced and this Adjudicating Authority vide its order dated 09.08.2018 (received by the Applicant on 11.08.2018) appointed the Applicant as IRP and that the Applicant's appointment as the RP is confirmed and/or approved by the CoC. The Applicant further informed the R-4 that the powers of Board of Directors have been vested in the Applicant. The Applicant during interaction with employees and management of the Corporate Debtor learned that the R-4 was handling works related to club houses for R-5. It is further informed the R-4 that the Applicant has noticed that a sum of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) is receivable from R-4 and that the Applicant is unable to find necessary/proper documentation to ascertain the recovery of the said amount and further requested the R-4 to provide clarification/confirmation along with appropriate documentation in support.

It is stated that R-4 vide its email dated 09.01.2019 responded to the email sent by the Applicant, stating that the R-4 has been carrying out various works including club house related projects of R-5 and the Corporate Debtor. As per the scope of work, the R-4 provided supplies related to construction and also undertook civil contract works along with labour supply for which R-5 and the Corporate Debtors issued work orders and the R-4 maintained a consolidated ledger for both the Companies. Advances received from R-5 or Corporate Debtor and dues to them were adjusted against work carried out for each Company, or for the other Company, as mutually agreed and this was the practice and understanding from since 2010. The email further stated that an amount of Rs.2,50,25,000/- was invested by R-4 in a residential project at Mysore for R-5 during the period of 02.04.2014 to 01.04.2016. However, subsequently transaction could not be completed, and the plots could not be transferred in favour of the R-4 due to factor not originally anticipated by the R-4 and the Corporate Debtor, and therefore, it was agreed to mutually terminate agreement and adjust advances paid towards project with other transactions. Accordingly, after making adjustments, further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) which was due and payable by R-5 to the R-4 was adjusted towards advance received by the Corporate Debtor by way of transfer entry in the ledger as mutually agreed with the management of Companies. The R-4 vide the very email shared a copy of the Indemnity Bond executed by the R-1 on 30.03.2016, confirming adjustment. The R-4 also shared its ledger accounts for R-5 and the Corporate Debtor.

The Applicant further called upon R-1 to 3 to provide explanations/ information and/or clarifications in regard to amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the R-4. The Respondent No. 1 via emails dated 08.01.2019 and 25.01.2019 failed to provide a satisfactory response/explanation with regard to writing off, in question, The writing off in question receivable from the R-4 as per the books of accounts of the Corporate Debtor in the absence of any valid explanation/ clarifications by the R-1 to 3 indicates an overstatement of loss in the books of the Corporate Debtor. It is alleged that the impugned write off was done in order to settle the accounts between the group company of the Corporate Debtor and the R-4. In the event that Corporate Debtor was taking on the liability of a group Company, the journal entries should have been made accordingly and R-5 should be reflecting as a debtor in the books of the Corporate Debtor.

It is stated that the Corporate Debtor is the Company which has been funded by the main Petitioner in the Company Petition and R-5 is the Corporate Guarantor/Co-obligor to the transaction. The transfer of Rs.2,17,00,000/- (Rupees Two Crores and Seventeen Lakhs Only) to R-4 appears to be for the purpose of diversion of funds to R-5 which is not a funded Company. Only a fraction of the amount transferred was returned and the balance was written off instead of recording it as a debt owed by R-5.

It is also stated that the lack of an explanation or clear accounting entries for this transaction indicates that R-1 to 3 have not been carrying on the business of the Corporate Debtor in a proper and transparent manner and that receivables of the Corporate Debtor. In terms of Section 66 of the Code, it is found that the aforesaid transactions are carried on with intent to defraud Creditors of the Corporate Debtor and/or for any fraudulent purposes, the Adjudicating Authority may direct further investigation of the said matter.

The Respondent No.1 namely Shri Hariharan Chandrashekhar has filed Statement of Objections dated 16.07.2019, by inter alia contending as follows:

It is stated that the Corporate Debtor was engaged in the business of real estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approval bodies including the Local Panchayat. Further, the Corporate Debtor also had to undertake customisations beyond the scope of construction agreements, which works were executed by third-party vendors under the overall supervision of the construction team of the Corporate Debtor.

It is stated that detailed Homebuyer MIS was handed over to the RP by the management team, which included the amounts of cash collections for each homebuyer. This information was handed over to the Petitioner Financial Creditor and the auditors appointed them vide e-mails. The disclosure of cash collections by the management team to the RP and Petitioner by itself demonstrates that there was no mala fide intent in concealing any collections and all cash collections have been independently verified with the homebuyers as well. Further, there was no exercise undertaken by the RP to ascertain whether Respondent Nos. 2 and 3 were involved in any cash collections from homebuyers with objective to defraud the creditors or conduct business fraudulently as alleged by the Resolution Professional.

The averment that the RP carried out an exercise to determine if transactions could be classified as fraudulent under Section 66 of the Code is incorrect as the RP has till date not disclosed the manner in which the alleged finding out made out. Further, the RP has not even confirmed whether the Respondent Director 2 and 3 were even Directors at the time of the transactions and whether the Directors had any role in the transactions. The averment of the RP is refuted as false and are made with mala fide intent.

The Respondent No.2 namely Ms. Kanchan Kaur and Respondent No.3 namely Shri Sanjay Ramanujam, have filed common Statement of Objections dated 16.07.2019, by inter alia contending as follows:

(1) It is stated that the Corporate Debtor was engaged in the business of reals estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approval bodies including the Local Panchayat. Further, the Corporate Debtor also had to undertake customisations beyond the scope of construction agreements, which works were executed by third-party vendors under the overall supervision of the construction team of the Corporate Debtor.

(2) It is also stated that the Respondent No.2 is only a Non- Executive Director on the Board of the Corporate Debtor. Further, the Respondent No.2 has been in full time employment in Indian Institute of Journalism & New Media since 2004. She is currently Dean of the said Institute. Due to her full time employment with the institute, she was hardly involved in the day today affairs of the Corporate Debtor an in fact she had no role to play in the running of the business of the Corporate Debtor.

(3) It is stated that the Respondent No.3 was appointed as an Executive Director of the Corporate Debtor on 1 December 2014 purely on a monthly salary payment without any entitlement to shareholding in the Corporate Debtor. The dues to Respondent No.3 has in fact been treated by the RP as “Dues of Consultant” in the list of admitted claims. Further, Respondent No.3 was appointed as Executive Director of the Corporate Debtor effective 1st December 2014, which is prior to the date of purported transaction. The amounts were transferred from the project-escrow amount to Respondent No.4 and all disbursements from the project-escrow account were subject to prior approvals from the Petitioner. The Petitioner was therefore fully aware of the purpose of the payment and the payment happened to R-4 only with the prior approval of Petitioner.

It is further stated that the Resolution Professional has made unfounded and baseless allegations against the Answering Respondents and are alleging them for fraud without even furnishing any material document on record. Further, the Resolution Professional has made generic allegations against all the Respondents. There are no specific pleadings against each Respondent in respect of the allegations by the Resolution Professional. Further, the Resolution Professional has failed to consider the responses provided by the Respondent No.3 in respect to the issues raised by the Resolution Professional (RP).

It is further submitted that the transaction in question pertains to the period April 2014. Admittedly, the Petitioner has received substantial payment post the year 2014 and therefore, if the Answering Respondents had any intention to cheat or defraud the Creditors, they would not have paid substantial payments subsequent to the transaction in 2014. Further, for the purposes of Section 66 of the Code, the Answering respondents ought to have undertaken any action with a view to defraud the creditors and knowing the Corporate Debtor would go into the liquidation. However, admittedly, the Corporate Debtor continued its business and also continued to discharge its liabilities towards the creditors and therefore, Section 66 of the Code would not apply to the present transaction as the transaction with the Respondent No.4 was done on arm's length and during the ordinary course of business. This fact is further corroborated from the Petitioner's approval for disbursement/transfer of funds from the escrow account.

Notwithstanding the fact that the transactions between the Corporate Debtor and the Respondent No.4 were made in good faith and in the ordinary course of business, all of the said transactions happened even before Respondent No.3 was appointed as the Executive Director of the Corporate Debtor effective 1st December 2014. Further, as mentioned in para 9 above, all transfers from Corporate Debtor to R-4 were made from the project escrow bank account for which the Petitioner is the sole approving authority and therefore it is certainly not a fraudulent transfer as alleged by the RP. It is unclear if the RP had asked the Petitioner to explain the basis for approving the bank-transfers from project escrow bank account and what were the responses received from the Petitioner. Further, it is also unclear why the Petitioner has not been included as Respondent as all transfers were made from the escrow account controlled by the Petitioner.

The averment of the RP refers to e-mails being sent to Respondent No.3 have been placed on record which contains the special audit report and the Respondent is unable to refer to the e-mails mentioned by the RP. It is also pertinent to note that SPR & Co. were appointed by and at the behest of M/s. Reliance Nippon Life Asset Management Limited at the CoC meeting held on 10th October 2018 as special auditor. The appointment of SPR & Co as special auditor by M/s. Reliance Nippon Life Asset Management Limited is contrary to the IBBI (Insolvency Professional) Regulations 2016 as SPR & Co. have conflict of interest. They are also been appointed by M/s. Reliance Nippon Life Asset Management Limited as their nominee auditor for auditing the books of their investee companies. Therefore, the RP was required not to appoint them as the special auditor. Further, it is not within the purview of the CoC to appoint the special auditor and the RP ought to have exercised his independent decision while appointing the special auditor. This is also explicitly set-out in IBBI/Facilitation/002 dated 1st February 2019 and the Order of IBBI Disciplinary Committee No. IBBI/DC/07/2018 dated 23rd August. It is also stated that RP has chosen to share the entire special audit report with Respondent No.4, rather than sharing only relevant extracts therefrom. This is completely against the direction of the IBBI, which does not permit sharing of report on avoidance transactions beyond the CoC. The Minutes of the meeting of CoC dated 14th March 2019 have been placed on record. In the said meeting, the CoC categorically directed the RP not to share the findings of the special audit report with the erstwhile Management.

The Respondent No.4 namely M/s. Promptech Incorporated has filed on 17.07.2019, by inter alia contending as follows:

It is stated that this Respondent No.4 i.e. M/s. Promptech Incorporated is a partnership firm having its office at 436/20, 1st Floor, A-Cross, 2nd Main Mathikere, Bangalore-560054 represented herein by its partner, Shri Ramachandran Venu. The Respondent No. 4 is a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group Companies including the Company undergoing CIRP i.e. M/s. Biodiversity Conservation India Pvt. Ltd. ('BCIL') much before the commencement of the CIRP since the year 2011 to be precise.

It is denied that the Respondent No 4 not carried out nor is a party to any fraudulent transaction and all the transactions carried out with the Corporate Debtor and the R-5 have been duly accounted in the books of this Respondent. This Respondent's scope of work was mainly by way of supplies related to construction, and also undertaking the internal finish work along with labour supply, for which purchase and work orders were issued from time to time by both M/s. Biodiversity Conservation India Private Limited (BCIL) and M/s. BCIL Red Earth Developers India Private Limited ('RED') and a consolidated ledger account for both companies were maintained by this Respondent as these were related Companies with the main Promoter being the same. The advances received from BCIL (R-5) or RED (Corporate Debtor) and dues to them, were adjusted against work carried out for each Company, or for the other Company, as mutually agreed, and on the directions of the management of the aforesaid Companies. In other words, payments to or from one Company for work carried out for that Company were often adjusted against payments due to or from the other Company and this was the practice and understanding from the year 2010 when the work commenced. The ledger accounts of the respective Companies would also reflect that these adjustments were made periodically from the year 2011 when this Respondent started work with them.

The Respondent No.4 is a vendor for the Corporate Debtor and Group Companies since the year 2011 and maintained a separate ledger for their respective transactions. Therefore, the respective ledgers of both BCIL and RED would reflect the details of the payments made for the BCIL Mysore project and subsequent adjustments/refunds when the transaction was not completed. These payments were duly accounted for in the books of account of this Respondent and there is nothing fraudulent about these payments. The application does not dispute that work has been carried out for both BCIL and RED by this Respondent from the year 2011 and regular payments were received for the same.

It is further stated that as stated by the Applicant in paragraph (iv) 8, paragraph (iv) 10 and (iv) 11 of the application, R-4 had agreed to invest in a residential project being undertaken by BCIL at Mysore and had entered into agreements dated 05.05.2014 and 09.09.2014 for purchase of residential plots in Mysore from BCIL. An amount of Rs.2,50,25,000/- (Rupees Two Crore Fifty Lakhs Twenty Five Thousand Only) was paid to BCIL during the period 02.04.2014 to 01.04.2016 towards this project. However, subsequently the transaction could not be completed and the plots could not be transferred and registered in R-4's favour due to factors that were not originally anticipated by both parties. Hence, both parties agreed to mutually terminate the agreements and adjust the advances paid towards the project with other transactions. Accordingly, after making adjustments, a further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) that was due to this Respondent from BCIL for the aforesaid Mysore project, that was adjusted towards advances received from RED by way of a transfer entry in the ledger, as mutually agreed with the management of the Companies at that point of time. This Respondent has provided copies of the relevant ledgers and other documents to the RP and undertakes to produce the same if so required by this Adjudicating Authority.

It is further stated that an Indemnity Bond was executed by the Chairman and Managing Director of BCIL, Mr. Chandrasekhar Hariharan on 30.03.2016, confirming the adjustment stating that “it was agreed by both the parties (BCIL & Promptech) that the Sale Agreement will be terminated and that advances paid by M/s.Promptech Incorporated will be adjusted against other transactions between both Parties.” It was only pursuant to this Agreement that the advances received form RED were adjusted against the dues from BCIL to this Respondent.

It is denied that an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) is due to the Corporate Debtor from this Respondent. As mentioned above, amounts due to this Respondent from BCIL were adjusted against advances paid by RED and merely because a corresponding entry was not made in the books of RED, it does not mean and it is categorically denied that an amount of Rs.1,25,45,046/- is due from this Respondent. It is reiterated that no amounts are due to either BCIL or RED from this Respondent, and dues from BCIL have been adjusted against advances paid by RED as mutually agreed with the management at that point of time and as was the practice over a period of time. The Applicant cannot dispute that an amount of Rs.2,50,25,000/- was paid to BCIL during the period 02.04.2014 to 01.04.2016 towards the Mysore project and subsequently, after making adjustments of refunds received from BCIL, a further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) that was due to this Respondent from BCIL for the aforesaid Mysore Project, was adjusted towards advances received from RED as agreed with the management of these Companies.

It is also stated that this Respondent has wrongly been made a party to this application and proceeding and that the Respondent has already stated the true and relevant facts in its mail dated 09.01.2019 addressed to the Applicant, making it clear that this Respondent is not a party to or involved in any fraudulent transactions as being alleged by the Applicant. In the circumstances, no relief can be claimed against this Respondent and the Application is only to be dismissed as against this Respondent.

Heard Shri Amit Chandrakant Shah, learned RP, Shri C.K. Nandakumar, learned Counsel for the RP and Shri Thomas Vellapally, and learned Counsel for the Respondent No.4 and Shri Vivek B.R. for R-1. We have carefully perused the pleadings of all the parties and extant provisions of the Code and the law on the issue.

As detailed supra, during the enquiry conducted by Resolution professional in the affairs of the Corporate Debtor, it is found that an amount of Rs.1, 25,45,406/- was written off against the receivables from the R-4 (Contractor/Vendor) who undertook works with regard to club houses of the Corporate Debtor and its group companies including the Company undergoing CIRP under the common order dated 09.08.2018. The Corporate Debtor had advance a sum of Rs.2,17,00,000/- to the R-4 between April 2014 to September 2014 as an advance, as reflected in the books of accounts of the Corporate Debtor. However, an amount of Rs.92,54,954/- was transferred from R-4 to the Corporate Debtor between February 2015 and September 2016; leaving a balance of Rs.1,25,45,046/-. There is no record to show that whether any efforts made by the R-1 for recovery abovementioned amount.

It is further noticed that an amount of Rs.2,50,25,000/- was transferred from the R-4 to R-5 between April 2014 and September 2014 towards purchase of plots. The R-5 has paid Rs.1,13,55,000/- as a refund upon cancellation of abovementioned plots between June 2016 and September 2016. However, the balance of Rs.1,36,70,000/- still reflects as a liability in the books of R-5 Company.

The Applicant submits that Ms. Nidhi Seksaria then RP has engaged S.P.R. & Co. (Chartered Accountants) vide engagement letter dated 23.10.2018 to conduct a review as requires them to identify and report which reads as under:

Accordingly, M/s.S.P.R. & Co. (Chartered Accountants) has prepared a report analysing the subject issue which is in regards of Review of Related Party Transactions, Statutory Compliances and Summary of Avoidance Transactions for NCLT Filing. The report pointed out several irregularities in the affairs of the Corporate Debtor, which reads as under:

- Upon review of the client Sheets/ Sales MIS, it was found that 8 villas pertaining to Zed Earth Phase II were sold at a value less than the Minimum Sales price (5300 per sq. feet) and the differential value between the actual sale value and the minimum sale value was not brought in by the company or promoters subsequently. - Out of those 8 villas, 5 villas were sold without obtaining NOC from the financial creditor. - Such differential value has result in a total shortfall of Rs.1.66 crores out of which 1.08 Crores pertains to those 5 villas for which NOC was not obtained, which ought to be brought in to HDFC Escrow Account by the company/guarantors, however, the same has not been made.

Apart from the above, on perusal of the review report, the Bench points out the following points for resolving the issue which reads as under:

Similarly, several irregularities have been pointed out in the report justifying the conclusion of the RP as stated supra.

Therefore, we are of the prima facie view that the Review Audit report got by RP has detected various fraudulent transactions which attracts to take action under Section 66 of the Code and the case required to be ordered further investigation.

In the similar circumstance, one application was filed under Section 66 R/w Section 25(2), 69, 70 and other applicable Sections of the IBC, 2016 before this Adjudicating Authority, the Adjudicating Authority passed by order dated 16.04.2019 in I.A. No.446 of 2018 in C.P.(IB)No.122/BB/2017 by directing the Central Government to refer matter to the SFIO for further investigation into the Affairs of the Corporate Debtor etc. And this order was questioned before the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No.498 of 2019 (Mr.M.Srinivas Vs. Smt.R.Bhuvaneshwari & 8 Others) and it was dismissed by an order dated 24.07.2019 by upholding the order, by inter alia holding as follows:

Para 17 of the order reads as follows:

In view of above facts and circumstance of the case and the law as cited, we are of the considered opinion that issue raised in the instant Company Application are required to be further investigation by the Serious Fraud Investigation Office. Therefore, appropriate action can be taken against the erring Officials/Respondents basing on the report.

In the result, by exercising powers conferred on this Adjudicating Authority, which being NCLT, U/s 213 of Companies Act, 2013, I.A.No.457 of 2018 and I.A.No.256 of 2019 in C.P.(IB) No.06/BB/2018 are disposed of with the following directions:

Learned Resolution Professional is directed to forward all material documents, which is connected to the present case including a Review Report prepared by S.P.R. & CO. (Chartered Accountant) including copies of instant Interim Applications to the Central Government, within a period of three weeks from the receipt of the copy of the order with a copy to all concerned parties duly following principles of natural justice.

The Central Government is directed to refer the matter to the SFIO for further investigation into the Affairs of the Corporate Debtor namely M/s.BCIL Red Earth Developers India Private Limited, Shri Hariharan Chandrashekhar, Ms. Kanchan Kaur, Shri Sanjay Ramanujam and M/s.Promptech Incorporated and other related Persons and Companies including Director of Companies of Corporate Debtor & related Companies, basing on the Review Report, as expeditiously as possible.

The parties are at liberty to take appropriate legal course of action basing on the ultimate findings given by the SFIO in this case. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.381/2019 in C.P. (IB) No.06/BB/2018 is filed by Mrs. Jamal Ahmad ('Applicant'), U/s. 5 of the Limitation Act, 1963, by inter alia, seeking to condone the delay on the part of the Applicant in filing the instant Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

I.A.No.380/2019 in C.P. (IB) No.06/BB/2018 is filed by Mrs. Jamal Ahmad ('Applicant'), U/s. 60(5) of the IBC, 2016, by inter alia, seeking to direct the RESOLUTION PROFESSIONAL to reconsider the claim of the Applicant dated 07.11.2018.

Brief facts of the case as mentioned in the IA.No.381/2019, by inter alia, stating are as follows:

Mrs. Jamal Ahmad (Applicant) has submitted her claim in the prescribed format on 07.11.2018, i.e. on the last date of which 90 days of period was expired., claiming for sum of Rs.94,93,616/- (Rupees Ninety Four Lakhs Ninety Three Thousand Six Hundred and Sixteen only), in pursuant to the notification issued by the Resolution Professional of the Corporate Debtor, Applicant has made a claim in Form-CA on 26.10.2018 to the Resolution Professional.

Upon perusal of the documents submitted by the Applicant, the Resolution Professional rejected the claim on the ground that original transactions was with BCIL Red Earth India Private Limited, which is not a part of the ongoing CIRP process. Therefore, her claim treated as Financial Creditor of Red Earth Developers India Private Limited cannot be accepted. However, the instant Application is filed by seeking to condone the delay in filing the instant Application, with days NIL.

The Company Petition for initiating CIRP of Corporate Debtor filed by M/s. Reliance Nippon Life Asset Management Limited & Anr. was admitted by this Adjudicating Authority vide Order dated 09.08.2018, and thereafter, Ms. Nidhi Seksaria was appointed as the Interim Resolution Professional (IRP).

It is submitted that the Applicant has submitted her claim in the prescribed format on 07.11.2018, claiming a sum of Rs.94,93,616/- (Rupees Ninety Four Lakhs Ninety Three Thousand Six Hundred and Sixteen only), the Resolution Professional upon review of the claims of the Applicants, rejected the same vide mail dated 22.11.2018. In the said communications, the Resolution Professional has stated that upon review of all documents, the original transactions were with M/s. BCIL Red Earth India Private Limited, which is not a part of the ongoing CIRP Process. However, once again sent a follow up mail again Resolution Professional rejected the claims of the Applicant, reiterating her earlier stance vide mail dated 05.12.2018. Aggrieved by the same, the Applicant has filed the instant Application.

The Resolution Professional indicated that her claim as financial creditor of BCIL would remain verification until the further course of action is determined. However, no communication was forthcoming from the Resolution Professional. Under these circumstances, she was came to know that the committee of creditors had passed a Resolution Plan and that the same was produced before this Adjudicating Authority and thus filed the instant application.

Shri Amit Chandrakant Shah, learned Resolution Professional, has filed Affidavit-in-reply dated 15.07.2019, by inter alia contending, are as follows:

With reference to the public announcement issued in pursuant to the Admission of C.P.(IB)No.06/BB/2018, the Applicant submitted her form dated October 26, 2018 vide email dated 02.11.2018. Accordingly, the erstwhile Resolution Professional sought additional information vide email dated 05.11.2018. Upon perusal of the documents, the Erstwhile Resolution Professional realized that the property certificate dated 30.07.2008 confirming that the Application has been allotted with three (3) houses/units against the consideration of Rs.2,73,00,000/- paid was issued by BCIL Red Earth India Private Limited and that the receipt of the payments was duly acknowledge by BCIL Red Earth India Private Limited on July 16, 2008.

BCIL Red Earth India Private Limited and BCIL Red Earth Developers (India) Private Limited (Corporate Debtor) are separate legal entities. The Erstwhile Resolution Professional vide her email dated 22.11.2018 rejected the claim of the Applicant. Therefore, the Applicant is not entitled for any relief.

Heard Shri Shashank Nagendran, learned Counsel for the Applicant and Shri Amit Chandrakant Shah, learned Resolution Professional. We have carefully perused the pleadings of the party and extant provisions of the Code.

It is not in dispute the claim of the Applicant was rejected as early as on 22.11.2018, on the ground that original transaction was with M/s. BCIL Red Earth India Private Limited and not with the M/s. BCIL Red Earth Developers India Private Limited, which is Corporate Debtor in the instant case. The Applicant has not mentioned number of days even to consider for condoning the delay. Moreover, the claim itself lacks merits, as mentioned by the Resolution Professional and another point to be noted is that the Resolution Professional has already filed I.A.No.236/2019, by seeking to approve the Resolution Plan and the same was approved by the Adjudicating Authority vide separate order dated 09.08.2019. Therefore, the Applicant failed to make out any case so as to condone the delay in filing the Application and the thus I.A.No.381/2019 is liable to be rejected and consequently IA No. 380 of 2019 is to be rejected.

In the result, I.A.No.381/2019 is hereby rejected. Consequently, I.A.No.380/2019 in C.P. (IB) No. 06/BB/2018 is also hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.360 of 2019 in C.P. (IB)No.06/BB/2018 is filed by Shri Hariharan.C & anr. ('Applicants') U/s. 60(5) of the IBC, 2016, R/w. Rule 11 of the NCLT Rules, 2016, by inter alia, seeking to direct the Resolution Applicant to submit revised Resolution Plan and extinguish personal guarantees of the Applicants by modifying clause 3.1.45 of the Resolution Plan as follows: "Any Corporate /Personal Guarantee issued by the Corporate Debtor to any institution/individual or personal guarantee of the erstwhile Management /promoters of the Corporate Debtor shall stand extinguished "

Brief facts of the case, which are relevant to the issue in question, are as follows:

C.P. (IB)No.06/BB/2018 is filed by M/s. Reliance Nippon Life Asset Management limited & Anr. ('Petitioner/Financial Creditor') U/s.7 of the IBC, 2016, R/w Rule 4 of the I&B(AAA) Rules, 2016, by inter alia seeking to initiate CIRP, appoint IRP etc. Accordingly, the case was admitted by the Adjudicating Authority vide its order dated 09th August, 2018 by initiating CIRP in respect of Corporate Debtor, appointing IRP, imposing moratorium etc.

After due process of law, finally the Resolution Plan submitted by CVPL (Resolution Applicant) in question was accepted by COC of Corporate Debtor with requisite majority. Accordingly, I.A.No.236/2019 is filed by Resolution Professional, under Section 60(5) (c) R/w Section 30(6) of the IBC, 2016, by inter alia seeking to approve the Resolution Plan submitted by CVPL. Accordingly, this Adjudicating Authority approved the Resolution Plan submitted by the CVPL by separate order dated 09.08.2019.

Shri Hariharan.C (herein after we referred as Applicant No.1) is the Promoter and Director of M/s. BCIL Red Earth Developers (India) Private Limited (Corporate Debtor). The Applicant No.2 is wife of the Applicant No.1 and is also a shareholder and Non-Executive Director of the Corporate Debtor.

It is stated that the Smt. Kanchan Kaur (we referred as Applicant No.2) is only a Non-Executive Director on the Board of the Corporate Debtor. And she is in full time employment with the Indian Institute of Journalism & New Media since 2004. She is currently Dean of the said institute. Due to her full time employment with the institute, she was hardly involved in the day-to-day affairs of the Corporate Debtor and in facts she had no role to play in the running of the business of the Corporate Debtor.

The Resolution Professional has also filed I.A.No.457/2018 and 256/2018, under Section 66 of the Code, against the Shri Hariharan.C and his wife and 4 Ors., which includes both the applicants.. The Adjudicating Authority has passed by separate common order dated 09.08.2019 in the above IAs by referring the matter to the SFIO.

Heard Shri Abhijit Atur, learned Counsel for the Applicant/Corporate Debtor and Shri C.K.Nandakumar learned Counsel for the Resolution Professional. We have carefully perused the pleadings of both the parties and extant provisions of the Code and the law.

As stated supra, the Resolution Plan submitted by CVPL is duly approved by the CoC of the Corporate Debtor and also passed separate orders in IA.No.457/2018 and 256/2018, under Section 66 of the Code, against the Shri Hariharan.C and his wife vide separate order dated 09.08.2019. Therefore, the Resolution Plan is binding on all the parties, which include the Applicants herein and thus the relief as asked for by the Applicant is not maintainable and thus it is liable to be rejected. The Applicants cannot be relieved of their Guarantee in question.

In the result, I.A.No.360/2019 in C.P. (IB) No.06/BB/2018 is hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.329/2019 in C.P.(IB)No.06/BB/2018 is filed by M/s. BCIL Yelahanka Projects LLP ('Applicant'), U/s. 60 (5) (c) of the IBC, 2016, R/w. Rule 11 of the NCLT Rules, 2016, by inter seeking to direct RP to register sale-deeds for all sale-agreements in respect of unsold plots held by RH LLP as has been done for home buyers, who purchased plots prior to the debenture investment by RMF; OR to direct the Resolution Professional to provide for a settlement to RH LLP @ Rs.2,624 per sq. ft. prior to entering into any construction agreement on the same plots; for release of its rights on the plots; direct the Resolution Professional to re-consider the Resolution Plan and to incorporate the above aspects in the Resolution Plan.

Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows:

The Company Petition bearing C.P. (IB)No.06/BB/2018 was filed by Reliance Nippon Life Asset Management part of erstwhile Anil Ambani Group of Companies, and Vistra India ITCL Limited on behalf of its Portfolio Management Services (PMS) Clients on 22 December 2017. The Adjudicating Authority, vide its order dated 9th August 2018, admitted the C.P.(IB)No.06/BB/2018 by initiating CIRP by appointing against the Corporate Debtor by interalia appointing Mrs. Nidhi Seksaria as Interim Resolution Professional, imposing moratorium etc. Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07, 2018, confirmed the appointment of Mrs. Nidhi Seksaria as the Resolution Professional. Subsequently, the this Adjudicating Authority vide its order dated 31st January 2019, extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5, 2019 i.e. till May 6, 2019. And the said IRP was changed by nominating Amit Chandra Kant Shas as RP and the same was approved by Adjudicating Authority, vide its order dated 01st April, 2019.

M/s. BCIL Yelahanka Properties LLP, (herein after referred as 'Applicant'), has entered into registered sale-agreements for purchase of plots in the approved residential layout owned by BCIL Red Earth Developers India Private Limited, and it is a financial creditor in the CIRP Process initiated against the Respondent. The Applicant is represented by its authorized signatory Mrs. Rachna Rego.

In the Company Petition, RMF and Vistra, had claimed an amount of Rs.46,07,22,926/- (Rupees Forty Six Crores Seven Lakhs Twenty Two Thousand Nine Hundred and Twenty Six only) was due from the Corporate Debtor, as on 31st March, 2017 and that this amount was comprised the principal amount, interest, redemption, premium, additional interest and default interest. The Application was filed by RMF and Vistra on behalf of their Portfolio Management Services ("PMS"). However, no disclosure was made till date on the names of the PMS investors and amounts due to them individually despite requests for the same in the CoC Meetings. This is in complete contravention of Regulation 13(2) of CIRP Regulations and in the absence of such information, the inclusion/exclusion of individual PMS investors and accuracy of amounts claimed by them individually has not been established. Further, the chances that unauthorized and ineligible persons, who are not even rightful financial creditors, will likely to receive proceeds of resolution plan, which is against the object of the Code.

While the RP has provided details of identities and amounts due to individual home-buyers, no details of identities of PMS investors and amounts due to them individually have been provided. Such a prima facie inconsistency in key disclosures and lack of transparency as mentioned above, begs the question on whether the RP permitted being undue influence by certain financial creditors in forming and controlling the CoC.

On an investment of Rs.38.52 Crores, PMS investors having already received Rs.21.66 Cr., have further claimed Rs.46.07 Cr. And thus revised to Rs.74.09 Cr and again to Rs.146.52 Cr. Even at the admitted claim amount, return claimed by PMS investors is approximately 176% over 3.5 years and every upward revision in Claim only aggravates the calculations further. Such returns are clearly usurious, extortionate and detrimental to the interest of public policy and clearly contravene the provisions of Usurious Loans Act, 1918 and Karnataka Money-Lending Act. The fact that the financial creditors are actually PMS investors, this is only a money-lending arrangement under the cover of the Fund Manager. It is alleged that grossly usurious claims have been used by the RP to determine the voting-share in the CoC. All major decisions such as ongoing management of the Project, selection of resolution -applicants, relaxation of criteria on submission of resolution plans, appointment of auditor for the purpose of auditing avoidance transactions have therefore been left to the approval of the CoC, whose voting share has been based on improper usurious claims and undisclosed identities of financial creditors. Therefore, if the usurious claims are reduced to the actual amount that due and payable to the PMS investors, the voting share of RMF and Vistra would have drastically come down and the other financial creditors including the home-buyers, would have had a greater role to play in deciding the resolution process.

While the debenture subscription agreement mentions about 23% XIRR payable to debenture-investors at the end of the investment period, only 18% interest is mentioned as payable in accordance with Part A of Schedule V of the Debenture Subscription Agreement dated 17.01.2014. Despite request for disclosure of calculations on claims submitted by RMF and Vistra, the RP has not provided any information in this regard. The Applicant, who has registered sale-agreements over plots in the project of the Corporate Debtor since November 2012, had first submitted its claim as a financial creditor considering that the Applicant has a first charge having funded the Company before Reliance and also having given a conditional NOC to RMF for amounts beyond what is due to the Applicant.

In the last meeting of the CoC on 26th April 2019, the Resolution plan submitted by Citrus Ventures Private Limited (Resolution Applicant) abruptly changed the status of the Applicant to an investment agreement holder and revised the amount from Rs.6 crores to Rs.2 Crores, without any such change to other financial creditors, despite that the Applicant holds almost 30% of the unsold area of the Project. Further, the Resolution plan provides for abrupt transfer of plots from Applicant to the Corporate Debtor despite that the Applicant has paid practically the entire consideration due on the Plots. Such cessation of security-interest of the Applicant, despite holding the first charge/primary security even before RMF became a financial creditor and having given a conditional NOC to Reliance PMS; in order to benefit the usurious claims of the Reliance PMS investors is not in accordance with the objectives of the IBC, which aims to balance the interests of all stakeholders. The Resolution Applicant for reasons best known to it has provided the plan mainly to protect the interest of RMF. This is fairly evident in that Applicant has been offered Rs.2 Crore at the end of the Project despite the Applicant holding approximately 30% of the unsold area of the Project whereas RMF is being provided a commitment upto Rs.43 Crores when they have already received Rs.22 Crores out of Rs.38.5 Crores till date.

The employee dues have also been subjected to the dues of the PMS investors and further, SME vendors, who have contributed to completion of 60% of the project, have also not been provided with even their principal amounts. This further substantiates that the process was managed so as to only benefit RMF.

Shri Amit Chandrakant Shah, learned Resolution Professional, has filed an Affidavit-in-Reply dated 16.07.2019, by inter alia contending are as follows:

The Resolution Professional reiterates that the Applicant has also failed to substantiate its claim/allegations made against Reliance Nippon Life Asset Management Limited and others on this ground alone the Application is liable to be dismissed with cost at the threshold. Reliance Nippon Asset Management Limited and Reliance India Opportunity Limited have been omitted as necessary parties to the Application even though in the present Application also there are certain specific allegations made against Reliance Nippon Asset Management Limited and/or Reliance India Opportunity Limited, and therefore the said parties are required to be made necessary parties to the present Application. Omission of Reliance Nippon Asset Management Limited and Reliance India Opportunity Limited in the present application indicates that the present Application is not filed with bonafide intentions.

The Petitioner/Financial Creditor has filed an application for initiation of CIRP process before this Adjudicating Authority for an amount of Rs.46,07,22,926/- i.e. debt outstanding as on March 31, 2017 and also claimed for 23% interest rate from March 31, 2017 until realization of the payment. Subsequently, the Petitioner/Financial Creditor has filed claim with the erstwhile RP aggregating to an amount of Rs.74,09,35,442/- which includes Rs.46,07,22,926/- i.e. debt outstanding towards principal amount accrued interest, redemption premium, additional interest and default interest in relation to the debentures premium, additional interest and default interest in relation to the debentures issued by the Corporate Debtor, which were duly admitted by the erstwhile RP, after verifying claim with the documents provided by Petitioner/Financial Creditor.

It is stated that that the Petitioner/Financial Creditor represented through its trustee's, has filed revised Form C with the erstwhile RP on November 2, 2018 for an amount of Rs.146,52,39,998/- within a period of 90 days from the ICD. Upon enquiry/perusal of the additional documents provided by the Petitioner/Financial Creditor, the erstwhile RP noticed/determined that out of total amount claimed of Rs.146,52,39,998/-, Petitioner/Financial Creditor claimed Rs.74,09,35,442/- towards principal amount, accrued interest, redemption premium, additional interest and default interest in relation to the debentures issued by the Corporate Debtor. The Petitioner/Financial Creditor further claimed from the Corporate Debtor, an amount of Rs.72,43,04,556/- as on August 9, 2018 being the Insolvency Commencement Date towards the corporate guarantee issued by the Corporate Debtor guaranteeing the payment of the debt owed by Zed Ria. Further that on November 28, 2018, the Petitioner/Financial Creditor and Reliance India Reality Opportunities LLP represented through their debenture trustee filed a revision/amendment to the revised form dated November 02, 2018 separately identifying the claims of the Petitioner/Financial Creditor and Reliance India Reality Opportunities LLP in writing to the revised claim form dated November 2, 2018, which was well within the prescribed time of ninety days from the ICD as stipulated under Regulation 12(2) of the CIRP Regulation.

It is stated that in terms of Section 18(b) of the Code, it is the duty of the Resolution Professional to receive and collate all the claims submitted by the creditors. According to provisions of Regulation 12(2) of the CIRP Regulations, a creditor is allowed to file his claims along with proof with the Resolution Professional on or before the ninetieth day of the insolvency commencement date. In terms of Regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulation 2016, the Resolution professional is required to revise the amounts of claims admitted as soon as may be practicable, when he comes across additional information warranting such revision. The verification of claims, constitution of Committee of Creditors and determination of voting share of the Creditors has been conducted/carried out by the erstwhile RP in accordance with the provisions of the Code and the CIRP Regulations. In terms of Regulation 5(28) of the CIRP Regulations “voting share” means the share of the voting rights of a single financial creditors in the committee of creditors, which is based on the proportion of the financial debt owed to such financial creditor in relation to the financial debt owed by the Corporate Debtor.”

Further, the Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors., has observed that “It is clear from a reading of the Code as well as the Regulations that Resolution professional has no adjudicatory powers”. The Hon’ble Supreme Court further goes on to observe that “...the Resolution professional is really a facilitator of the resolution process, whose administrative functions are overseen by the Committee of Creditors and by the Adjudicating Authority”.

In view of the foregoing, it is clear that it is the duty of the Resolution Professional to verify the claims of the Creditors in accordance with the provisions of the Code on the basis of the documents submitted by the creditors to substantiate their claim.

It is stated that the Resolution Professional is not required to furnish or submit for scrutiny the calculation details pertaining to the claims of the one creditor to the other creditors. Therefore, the RP has not disclosed to any of the creditors of the Corporate Debtor (including the Applicant) the details of the calculations in respect of the claims of other creditors. Further, it is stated that the Applicant has not raised any request seeking details in relation to the names of the individual PMS investors and the amounts due to them.

The Supreme Court in Arcelor Mittal India Private Limited vs. Satish Kumar Gupta & Ors. has observed as follows: "The Resolution Professional is required to examine that the resolution plan submitted by various applicants is complete in all respects, before submitting it to the Committee of Creditors. The Resolution Professional is not required to take any decision, but merely to ensure that the resolution plans submitted are complete in all respects before they are placed before the Committee of Creditors, who may or may not approve it." The fact that the Resolution Professional is also to confirm that a resolution plan does not contravene any of the provisions of law for the time-being in force, including Section 29A of the Code, only means that his prima facie opinion is to be given to the Committee of Creditors that a law has or has not been contravened. Section 30(2)(e) does not empower the Resolution Professional to "decide" whether the resolution plan does or does not contravene the provisions of Law."

Thereafter, on 18th & 20th April 20, 2019, the Applicant sent two mails to the Authorized Representative of the Home Buyers highlighting certain points for discussion in the next CoC meeting. The Authorized Representative discussed the said two emails in the 11th CoC meeting dated April 20, 2019 with the CoC members. In the said 11th CoC, one of the Prospective Resolution Applicant, Aishu Dreamlands Limited decided to withdraw their Resolution Plan for the Corporate Debtor and hence CVPL remained the sole Prospective Resolution Applicant

It is stated that in the said 12th CoC meeting, the concerns raised by the Applicant were discussed with CVPL and the CoC members and the RP also requested CVPL to send a written reply by an email addressing the issues raised by the Applicant. Pursuant to the request, CVPL has vide its email dated April 23, 2019 answered the specific concerns of the Applicant. The email sent by Applicant, its circulation mail to CVPL together with all the members of the CoC and Directors of the suspended Board of the Corporate Debtor, the extract of minutes of 12th CoC meeting and the Reply of CVPL to the email of the Applicant.

It is submitted that the RP carried out the CIRP Process as per Law and provided due opportunity to all the members of the CoC (including the Applicant) and the erstwhile management of the Corporate Debtor, to raise their issues regarding the Resolution plans submitted by the Prospective Resolution Applicants in the CoC meetings. In light of the various revisions in the Resolution plans submitted by the Prospective Resolution Applicants and in order to maintain complete transparency in running the CIRP, the Resolution Professional kept the members of the CoC and the erstwhile management of the Corporate Debtor informed of the revised Resolution plans submitted by the said Prospective Resolution Applicants from time to time, and also kept the CoC members and the Prospective Resolution Applicants informed of the concerns raised by the stakeholders regarding the resolution plan from time to time. By sharing the issues raised by the stakeholders with the other CoC members and the Prospective Resolution Applicants, and requesting the Prospective Resolution Applicants to provide response to the queries raised by the CoC members (including the Applicant), the Resolution Professional maintained transparency in the conduct of the CIRP. The Resolution Professional provided due opportunity to the CoC members for negotiation of the plan with the Prospective Resolution Applicants and to the Prospective Resolution Applicants for redressal of the concerns raised by the stakeholders. The Resolution Professional made all the requisite efforts to ensure that the resolution plan was finalized, after due discussions and deliberations amongst the members and the Prospective Resolution Applicants. To this end, the Resolution Professional also invited the Prospective Resolution Applicants to participate in the CoC meetings for discussing and negotiating the plan and for addressing the concerns raised by the stakeholders.

It is stated that the Applicant once again by email dated April 26, 2019 expressed his dissent to the said Resolution Plan. The said email was circulated by the Resolution Professional to all the members of the CoC on April 26, 2019. It is stated that Authorized representative of the homebuyers vide his email dated April 28, 2019 responded to the Applicant that all the mails sent by the Applicant expressing his views on the Resolution Plan have been read out then and there during the CoC meeting and the discussion there on are also recorded in the minutes of the meeting. The Applicant voted against the Resolution Plan. And out of thirty six (36) Home Buyers, twenty-nine (29) Home buyers voted in favor of the Resolution plan in question, six (6) Home Buyers are abstained from voting and one Home buyers i.e. the Applicant voted against the Resolution plan. Since, the resolution plan submitted by CVPL had been approved by a requisite majority, the Resolution Professional upon the instructions of the CoC members, filed an Application for approval of the resolution plan with this Tribunal.

It is further submitted that the payments as proposed to be made to the Applicant under the Resolution plan are as per the commercial assessment of CVPL and the Resolution Professional is not authorized to take a decision on the same.

In view of the aforesaid, the RP has followed the due process prescribed under law to verify the claims filed by Petitioner/Financial Creditor and has endeavored to redress all the concerns raised by all the stakeholders including the Applicant with regard to the Resolution Plan. Therefore, the claims made by the Applicant in his application against the Resolution Professional are false and without any basis. Thus, the Application filed by the Applicant is to be dismissed.

Heard Shri Arun Kumar, learned Senior Counsel with Gaurav Raj Shrawat, learned Counsel for the Applicants and Shri C.K.Nandakumar, learned Counsel for RP and also Shri Amit Chandrakant Shah, Resolution Professional. We have carefully perused the pleadings of both the parties and extant provisions of the Code and the law on the subject issue.

Shri Arun Kumar, learned Senior Counsel for the Applicant, while reiterating the various averments made in the Application, as briefly stated supra, has strenuously contended that there is a lot discrimination and bias meted out to the Applicant vis a vis other similarly situated parties in the instant case by the Resolution professional. He has relied upon the Common judgement dated 14th November, 2018 passed by Hon'ble NCLAT in Binani Industries Limited Vs. Bank of Baroda & Anr. Company Appeal (AT) (Insolvency) No.82 of 2018, Rajputana Properties Pvt. Ltd. Vs. Binani Industries Limited & Ors. Company Appeal (AT) (Insolvency) No.123 of 2018., Rajputana Properties Pvt. Ltd. Vs. Ultratech Cement Ltd. & Ors. Company Appeal (AT) (Insolvency) No.188 of 2018, . Binani Industries Limited Vs. Binani Cements Limited & Anr. Company Appeal (AT) (Insolvency) No.216 of 2018, Mr. Vijay Kumar Iyer, Resolution Professional Vs. Mr. Braj Bhusandas Binani & Ors. Company Appeal (AT) (Insolvency) No.234 of 2018.

Therefore, the Learned Senior Counsel urged the Tribunal that the instant case is covered by the ratio as rendered in the above judgement.

Shri C.K.Nandakumar, learned Counsel for the Resolution Professional along with Shri Amit Chandrakant Shah, Resolution Professional, has once again reiterated their contentions, as briefly mentioned supra. The learned Counsel further urged since Resolution Plan in question was duly approved by COC with requisite majority and I.A.No.236/2019 is also filed before the Adjudicating Authority and thus the instant Application lacks merits and it also liability be dismissed for non-joinder of necessary parties.

The Applicant (M/s. BCIL Yelahanka Projects LLP) has entered into registered agreements to sale with the Corporate Debtor for the purpose of acquiring the flats/lands that was earlier held by the Corporate Debtor. Accordingly, they have invested the amount in the Corporate Debtor, and thus, Applicant is a Home Buyer. The Applicant has admittedly filed its claim through Authorised Representative of the Home Buyers nominated in the instant case, and also filed separately through their own Authorised Representative to the Resolution Professional. Accordingly, claim of the Applicant was duly considered by the Resolution Professional and the same was placed before the CoC and the various concerns expressed by the Applicant was also placed before the CoC, as detailed supra. Therefore, it is not the case of the Applicant that the grievance of the Applicant was not taken into consideration by the Resolution Professional, CoC and the prospective Resolution Applicant. It is also not in dispute there are thirty six (36) Home Buyers of the Corporate Debtor, and out of this, twenty-nine (29) Home Buyers have voted in favour of the impugned Resolution Plan, and six Home Buyers are abstained from voting, and only one Home Buyers (that is Applicant herein) has voted against the Resolution Plan. It is settled position of law, as referred to above, power is conferred on Resolution professional, CoC, and prospective Resolution Applicant, and then finally on the Adjudicating Authority to examine whether the Resolution Plan submitted by the prospective Resolution Applicant is in accordance with law, reasonable, justifiable, equitable in the light of the fair value/nominal/liquidation value of the Corporate Debtor. Basing on various parameters, a Resolution Applicant will offer one's plan to the COC and then COC will examine the same on standard financial principles and thereafter, it is satisfied the Plan may approve or disapprove. In the instant case, the Resolution Plan in question was finally approved by the COC and the same was accepted by the Adjudicating Authority.

It is the cardinal principle of law that whenever a party challenging the claim of the other party, it is necessary to implead them as opposite party. In the instant case, while making several allegations in respect of the claim accepted by the Resolution Professional which is admitted and accepted by the CoC in relation to Reliance Nippon Life Asset Management Ltd., as stated supra, they are not made party to the instant Application, and only IRP is made party Respondent. Moreover, a claim can be proved basing on the evidence available in support of it, and it cannot depend on the claim made by the other party. However, the Applicant is comparing its claim with reference to claim accepted by the Resolution Professional in respect of Financial Creditor. The prospective Resolution Applicant has already given ample opportunity to the Applicant with regard to its grievances and it was duly considered while finalising the Resolution Plan in question. Accordingly, the Resolution Professional has also filed I.A.No.236/2019 for approval of the Resolution Plan, under Section 60(5) (c) R/w Section 30(6) of the IBC, 2016. Therefore, the Adjudicating Authority, after analysing the entire Resolution Plan, in the light of the settled position of law and object of code and in the interest of substantial stake holders in the Company, has approved the Resolution Plan submitted by M/s. Citrus Ventures Private Limited by separate order dated 09.08.2019 by inter alia declaring that the Resolution Plan was binding on all the respective parties.

So far as, the judgement of the Hon'ble NCLAT, New Delhi in the matter of Binani Industries Limited, as relied upon by the Learned Senior Counsel for the Applicant, as referred to above, is concerned; all these Appeals arise out of various orders passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, in respect of Binani Cements Limited and Anr., one of the impugned order in Appeal before the Hon'ble NCLAT is the order dated 28.02.2018 passed by the Adjudicating Authority Kolkata Bench, wherein CA(IB) No.175/KB/2018 was referred back to the 'Resolution Professional' to consider in accordance with the rules and regulations of the I&B Code. After considering all the batch cases, the Hon'ble NCLAT has disposed of all the Appeals by Common Judgement dated 14.11.2018, with the following directions under para 73 and 74:

Therefore, it is to be pointed out here that one of the impugned order dated 28.02.2018, passed by the Adjudicating Authority, which was referred back to the 'Resolution Professional' to consider in accordance with the rules and regulations of the I&B Code, was dismissed. By perusal of the facts and circumstances of the above judgement of Hon'ble NCLAT, New Delhi, we find that the facts and circumstances of that case are not applicable to the facts and circumstances of the instant Company Application. As states supra, the Adjudicating Authority has already approved the Resolution Pan in question, by separate order dated 09.08.2019 by a speaking order.

In view of the above facts and circumstance of the case, we are of the considered opinion that Applicant was given due opportunity with regard to its grievances and the same was considered in transparent manner vis a vis other similarly situated parties. Therefore, the Application lacks merits and it is liable to be rejected.

In the result, I.A. No. 329 of 2019 in C.P (IB) No.06/BB/2018 is hereby rejected. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A. No. 326 of 2019 in C.P. (IB) No.06/BB/2018 is filed by Ms. Nidhi Seksaria (‘Applicant/Erstwhile RP’), under Section 19(2), R/w and 19(3) of the IBC, 2016, by inter alia seeking to direct the Respondent to immediately resume the duties and extend all assistance and co-operation to the Applicant as may be required in managing the affairs of the Corporate Debtor and return the documents, information and the assets of the Corporate Debtor under the custody of the Respondent.

Brief facts of the case, as mentioned in the Application, are as follows:

The present Application is filed by Ms. Nidhi Seksaria, Erstwhile Resolution Professional of M/s. BCIL Red Earth Developers India Pvt. Ltd. ('Corporate Debtor') under Section 19(2) R/w and 19(3) of the Code, by inter alia seeking necessary directions against the Respondent to extend assistance and cooperation to the application as required by the Applicant in managing the affairs of the Corporate Debtor as going concern as envisaged under the Code.

The Applicant states that as per the Corporate Debtors records, the Respondent has been employed with the Corporate Debtors since December 01, 2015 and presently holds the designation of President – Asset Management. The duties and responsibilities of the Respondent, inter alia includes as under:-

The Tribunal vide its order dated 9th August, 2018 passed in C.P.(IB)No.06/BB/2018 and two other cases, has admitted by initiating CIR process of M/s. BCIL Red Earth Developers (India) Private Limited filed by M/s. Reliance Nippon Life Asset Management Limited and Anr., and appointed the Applicant as IRP. The Committee of Creditors (CoC) of the Corporate Debtor subsequently confirmed the appointment of the Applicant as the Resolution Professional.

In pursuant to taking charge and upon perusal of the records of the Corporate Debtor, it came to the knowledge of the Applicant that the Respondent has been employed with the Corporate Debtors since December 01, 2014 (as per the revised appointment letter dated December 15, 2014) and presently holds the designation of President – Asset Management.

The Applicant further noticed that the Respondent has not been attending office since September 2018 despite request, and that the Respondent has in his possession the Corporate Debtor's documents and key information and assets of the Corporate Debtor, which the Respondent has failed and/or neglected to return and/or hand over to the Applicant till date despite various requests, reminders and follow ups.

The Applicant states that the Applicant has vide email dated November 16, 2018, sent a letter to the Respondent informing the Respondent about the initiation of the CIR process of the Corporate Debtor and the Applicant's appointment and/or confirmation as the interim Resolution Professional/the Resolution Professional by the Adjudicating Authority and Committee of Creditors as the case may be. In the very letter, the Applicant stated that in terms of the revised letter of appointment dated December 15, 2014 and records of the Corporate Debtor, the Respondent has been employed with the Corporate Debtor since December 01, 2014 and that the Respondent holds the designation of President – Asset Management. The Applicant in the very letter also stated that the Respondent has not been attending office and as a senior employee of the Corporate Debtor, the Respondent has been negligent in discharging his duties toward the Corporate Debtor. The Applicant vide a covering email, requested the Applicant to immediately resume his duties and extend all assistances and/or co-operation to the Applicant.

The Applicant states that the Respondent vide his email dated November 19, 2018 responded to the Applicant's email dated November 16, 2018. The Respondent stated that the Respondent has not received proper salary from the Corporate Debtor for a period of more than a month and consequently is having personal family, and financial difficulties due to the non-payment of dues. The Respondent further stated that the Corporate Debtor has also not provided insurance policy to the Respondent. The Respondent denied that the Respondent has not been attending office regularly and further stated that the Respondent's work connected with outside governments and that he has been executing the Corporate Debtor work from outside. The Respondent further states that the required information, data information and documents have been provided to the Applicant through Respondent's colleague Mr. John and Mr. Jagannath and as a matter of individuality, the Respondent would provide available date and documents at the earliest. The Respondent further expressed his desire to resign owning to challenges being faced without money and stated that the Respondent would share his resignation with the Applicant.

The Applicant states that pursuant to the receipt of email from the Respondent, the Applicant discussed the issue with regard to the resignation and pending dues of the Respondent with the CoC. The Applicant pursuant to the discussion with the CoC, conveyed to the Respondent vide email dated December 11, 2018 that Respondent's regular salary would be paid to the Respondent in accordance with the Respondent's employment letter provided the Respondent reports to work and undertakes duties and responsibilities entrusted upon him. The Applicant further requested the Respondent to be available on calls and in office to function better since projects are not operational and accordingly, there is limited activity on the liaison side and further stated that the Respondent should report to head office to take up routine matters and provide documentary support for on-going due diligence/ litigation and work related to day-to-day functions and business of the Corporate Debtor. The Applicant further stated that the Respondent being a senior professional having long association with the Corporate Debtor group is expected to provide support in connection with the operations of the Corporate Debtor.

The Applicant states that despite several requests/ reminders/follow ups by the Applicant to the Respondent requesting/calling upon the Respondent to resume his duties, return and/or handover the key information/ Corporate Debtor's documents and/or assets of the Corporate Debtor and extend all assistance and/or co-operation to the Applicant, the Respondent failed and neglected to resume his duties, return and handover the key information/Corporate Debtor's documents assets of the Corporate Debtor and extend assistance and co-operation to the Applicant.

The Applicant states that the acts/omissions and negligence on the part of the Respondent not to attend office, nor to return and handover Corporate Debtor's documents, key information and assets, had serious impact and adverse implications on the management and administration of the Corporate Debtor. The Applicant further states that the Applicant is facing difficulty in managing the operations of the Corporate Debtor as a going concern due to non- disclosure and/or handing over the key information/ Corporate Debtor's documents and/or assets of the Corporate Debtor by the Respondent. The Applicant states that the Respondent is not assisting and co-operating with the Applicant despite various request, reminders, and follow-ups.

According to provisions of Section 19 of the Code, the personnel of the Corporate Debtor, its promoters or any other person associated with the management of the Corporate Debtor are required to extend all assistance and cooperation to the Applicant in managing the affairs of the Corporate Debtor, however if the aforesaid persons do not assist or cooperate with the Applicant, the Applicant may vide an Application seek necessary directions from the Adjudicating Authority. The Adjudicating Authority may on receiving such Application, direct the aforesaid persons to comply with the instructions of the Applicant and to cooperate with the Applicant to enable the Applicant to manage the affairs of the Corporate Debtor. Section 19 of the Code is reproduced as under:

It is submitted that this Adjudicating Authority has powers under the provisions of Section 19 and inherent powers under the NCLT Rules, 2019 to provide the reliefs sought vide the present Application.

It view of the aforesaid, the Applicant states and submits that if the reliefs sought is not granted, grave injustice, prejudice and hardship will be caused in the CIR process of the Corporate Debtor and the Applicant would continue to have difficulties to manage the affairs of the Corporate Debtor as going concern.

Heard Ms. Nidhi Seksaria, learned Applicant/erstwhile Resolution Professional along with Shri C.K.Nandakumar, learned Counsel for the erstwhile Resolution Professional. We have carefully perused the pleadings of the party and extant provisions of the Code.

Since the present Resolution Professional namely Shri Amit Chandrakant Shah, has filed I.A No. 236 of 2019 in C.P. (IB) No.06/BB/2018, U/s 60(5) R/w Section 30(6) of the IBC, 2016, by inter alia seeking to approve the Resolution Plan submitted by M/s. Citrus Ventures Private Limited. Accordingly, the Adjudicating Authority accepted the Resolution Plan vide order dated 09.08.2019. Therefore, no further orders are necessary.

In the result, I.A.No.326 of 2019 in C.P. (IB)No.06/BB/2018 is hereby closed, as no further orders are necessary. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.236 of 2019 in C.P. (IB)No.06/BB/2018 is filed by Shri Amit Chandrakant Shah ('Applicant/Resolution Professional') U/s. 60(5) (c), R/w Section 30(6) of the IBC, 2016, by inter alia, seeking to approve the final Resolution Plan dated 24^th April 2019 submitted by Citrus Ventures Private Limited, till then the existing Resolution Professional of the Corporate Debtor may be continued etc.

Brief facts of the case, which are relevant to the issue in question, as mentioned in the Application, are as follows:

C.P. (IB)No.06/BB/2018 is filed by M/s. Reliance Nippon Life Asset Management limited & Anr. ('Petitioner/Financial Creditor') U/s.7 of the IBC, 2016, R/w Rule 4 of the I&B (AAA) Rules, 2016, by inter alia seeking to initiate CIRP, appoint IRP etc. Accordingly, the Adjudicating Authority admitted the case by an order dated 09^th August, 2018 appointed Mrs. Nidhi Seksaria, as Interim Resolution Professional, imposing moratorium etc. Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07, 2018, confirmed the appointment of Mrs. Nidhi Seksaria as the Resolution Professional.

This Adjudicating Authority vide order dated 31st January 2019, extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5, 2019 i.e. till May 6, 2019 upon an application filed by erstwhile RP under Section 12 of the Code, read with Regulations 40 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Subsequently, the Adjudicating Authority vide order dated 01st April 2019 allowed the application filed on behalf of Committee of Creditors of the Corporate Debtor to change the Resolution Professional of the Corporate Debtor and appointed Mr. Amit Chandrakant Shah as the Resolution Professional in place of Mrs. Nidhi Seksaria.

The erstwhile RP pursuant to the provisions of Section 25(2)(h) of the Code, invited Expression of Interest (EOI) from potential resolution applicants for the purpose of submission of resolution plans for the Corporate Debtor. The advertisement for inviting EOI was published in Business Standard, on October 23, 2018, calling upon the potential resolution applicants to submit EOIs, in accordance provisions of the Code on or before November 7, 2018.

In view of having a competitive process and maximising the value for all stakeholders and in order to facilitate the participation of the Resolution Applicants in the corporate insolvency resolution process of the Corporate Debtor, the publication of 2nd process of EOI and 3rd process of EOI was carried out. Under the second bid process, the erstwhile RP once again invited EOI from interested parties/prospective resolution applicants vide its newspaper advertisement dated November 17, 2018. In furtherance to the aforesaid publication a corrigendum was published on November 19, 2018 in the Business Standard to clarify certain corrections. Under the 3rd Bid Process, the erstwhile RP once again invited EOI from interested parties/prospective resolution applicants vide its newspaper advertisement dated December 7, 2018.

In addition to the abovementioned newspaper publications, the erstwhile RP also placed the advertisements inviting EOI on the website of the Corporate Debtor and published the advertisement for inviting EOI in regional newspapers. The Applicants craves leave to refer to and rely upon the advertisements placed on the website of the Corporate Debtor and the publication of advertisement for inviting EOI in the regional newspapers.

The erstwhile RP encouraged all prospective resolution applicants to submit all necessary documents required before finally short listing the prospective resolution applicants who were eligible to submit a resolution plan. However, out of 5 prospective resolution applicants, only 3 resolution applicants were able to submit all necessary documents. The final shortlisted resolution applicant U/s. 36A (12) of the CIRP Regulations were (i) Aishu Dreamlands Limited (ii) Citrus Ventures Private Limited and (iii) A Padma Manohar (“prospective Resolution Applicants”). Subsequently, the erstwhile RP issued a Bid Process Memorandum and Evaluation Matrix to submit the Resolution Plan for the Corporate Debtor on December 18, 2018 (“Process Memorandum”) inviting the Prospective Resolution Applicants to submit a Resolution Plan for the Corporate Debtor.

Further, the erstwhile RP in the 5th meeting of the CoC dated January 9, 2019 informed the members of the CoC that they had received requests from Prospective Resolution Applicants for extending the timeline for submission for the Resolution Plan. The CoC deliberated on the said issue and decided that time may be extended till January 25, 2019 for submission of the Resolution Plan. The said resolution was put to vote. As per the results of voting, the CoC approved the extension of time till January 25, 2019 for submission of the Resolution Plan with a majority of 75.27%.

Further, the erstwhile RP in the 6th meeting of the COC dated February 2, 2019 informed the members of the CoC that two Prospective Resolution Applicants i.e. Aishu Dreamlands Limited and Citrus Ventures Private Limited (“Collectively referred to as Resolution Applicants”) had submitted resolution plans dated January 25, 2019. That the Resolution Plans submitted by the two Resolution Applicants were not fully compliant with the provisions of the Code and the Process Memorandum issued by the erstwhile RP. In the light of the said facts the CoC deliberated on the said issue and contemplated if further extension of time till February 15,2019, be given to the Resolution Applicants to submit a revised/rectified resolution plan. The erstwhile RP informed the members that the RP team had sent detailed observation to the Resolution Applicants about the deficiencies in their plans and had given the Resolution Applicants time till February 1, 2019 to submit revised/rectified resolution plan. However, no revised/rectified resolution plans were received from the said Resolution Applicants and therefore the CoC deliberated if further extension of time till February 15, 2019 shall be provided to the Resolution Application for submission of rectified/revised resolution plans. The said issue was put to vote and it was approved by the CoC with a majority of 72.48%.

Further, the erstwhile RP in the 7th meeting of the CoC dated February 19, 2019 informed the members of the CoC that the Resolution Applicants had not submitted a revised/rectified Resolution Plan and that the erstwhile RP had received mails from the Resolution Applicants seeking extension of timelines for submission of revised/rectified Resolution Plan until February 28, 2019. The CoC deliberated on the said issue and the same was put to vote. That as per the voting results the extension of time to submit the revised/rectified resolution plan by February 28, 2019 was approved by the CoC with 76.21%.

Further, in the 8th meeting of the CoC dated March 14, 2019, the erstwhile RP once again apprised the members of the CoC that no revised/rectified plan was received by the erstwhile RP from the Resolution Applicants. In light of the said fact the CoC ratified the extension of time till March 15, 2019 provided to the Resolution Applications for submission of a revised/rectified plan and deliberated if further extension of time till March 31, 2019 should be provided to the Resolution Applicants for submission of revised/rectified resolution plans. The said issue was put to vote. That as per the voting results, the extension of time provided to the Resolution Applicants for rectification/revision of the resolution plan till March, 31, 2019 was approved by the CoC with a majority vote of 73.36%.

That during the 9th meeting of the CoC dated April 12, 2019, the RP appraised the CoC that two Resolution Plans were received from the Resolution Applicants and the same were forwarded to the members of the CoC vide an email dated April 4, 2019. The Chairman requested all the CoC members/the authorized representatives of Home Buyers to list down all the concern/questions/inputs/doubts/ clarification/suggestion of respective financial creditors/ Home Buyers relating to the Resolution Plans so the same can be discussed with the Resolution Applicants in the next CoC meeting. In the said meeting the RP appraised the members of the CoC regarding the following two issues (i) that in terms of Regulation 39(4) of the CIRP Regulations, RP is required to endeavour to submit the resolution plan approved by the Committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process, however in light of various revisions made to the resolution plans submitted by the Resolution Applicants, it would be difficult to abide by the timelines for submission of Resolution Plan prescribed under the CIRP Regulations and (ii) that the copy of the Admission Order of the Corporate Debtor was received by the erstwhile RP on August 11, 2018 which was two days after the date on which the Admission Order was passed. Therefore, an application was proposed to be filed by the RP for exclusion of the period of 2 days from the Corporate Insolvency Resolution Process of 270 days of the Corporate Debtor. The CoC deliberated on the said issues and the requisite resolutions relating to points (i) and (ii) above were put to vote and both the resolutions were approved with a majority vote of 73.36%. The application for exclusion of the period of 2 days from the Corporate Insolvency Resolution Process of 270 days of the Corporate Debtor has been filed on May 3, 2019.

During the 10th meeting of CoC dated April 15, 2019, the RP appraised the CoC that the RP has received two Resolution Plans from the Resolution Applicants, Aishu dreamlands Limited and Citrus Ventures Private Limited and the same were forwarded to the members of the CoC vide an email dated April 13, 2019 along with the observations of the RP on the said Resolution Plans. The RP informed the CoC members that he had received the report from Kroll a division of Duff and Phelps India engaged by the erstwhile RP with the approval of the CoC relating to the eligibility of the Resolution Applicants in terms of section 29A of the Code and that the said Kroll Report contained certain qualifications with respect to both the Resolution Applicants. The said qualifications were discussed with the Resolution Applicants individually and RP sought explanation/clarification with regards to the qualification mentioned in the Kroll Report from the Resolution Applicant. Further, the modifications required in the documents submitted by the Resolution Applicants in compliance with the Process Memorandum and the Code were discussed individually with the Resolution Applicants and in furtherance to the said discussion the Resolution Applicants were asked to carry out the requisite changes to the documents submitted by them. The CoC deliberated on the said aforesaid points and was of the opinion that a time may be extended till April 19, 2019 for submission of final resolution plan with relevant modifications, compliances and clarifications and the same was put to vote. As per the voting results the CoC approved a time period 4 days to the Resolution Applicants to provide the aforesaid explanation/ clarification required under Section 29A of the Code and to submit a revised/rectified resolution plan with a majority vote of 74.02%.

That during the 11th meeting of the CoC dated April 20, 2019, the RP appraised the CoC that both the Resolution Applicants were yet to submit all the supporting documents/clarifications sought by the RP vide an email dated April 11, 2019. Therefore, the said issue was deliberated by the CoC.

At the 12th meeting of the CoC dated April 23, 2019, the Resolution Professional appraised the CoC the members of the CoC that the revised Resolution Plan after incorporating certain modifications, compliances and clarifications as discussed in the previous CoC meeting had been received from the Resolution Applicant, Citrus Ventures Private Limited. RP informed the members of the CoC that the following documents were received by the RP from the said Resolution Applicant Citrus Ventures Private Limited;.

The RP shared his observations with the Resolution Applicant viz Citrus Ventures Private Limited on the aforesaid points and sought further clarifications on the same. Since the revised plan was submitted by the Resolution Applicant on the day of the CoC Meeting, the representatives of Citrus Ventures Private Limited was asked to highlight the changes of the revised resolution plan submitted by him. Accordingly, the members were given time to review the plan.

At the 13th meeting of the CoC dated 26th April 2019, the Resolution Professional informed the members that Aishu Dreamlands Limited had pursuant to an email dated April 20, 2019 submitted to the Resolution Professional that they were not interested to take over the control and management of the Corporate Debtor and that they were interested to act as development managers of the Corporate Debtors. Accordingly, the following resolution was put to vote.

Heard Shri Amit Chandrakant Shah, learned Resolution Professional/Applicant along with Shri Nandakumar, and learned Counsel for the Resolution Professional. We have carefully perused the pleadings of party and extant provisions of the Code and the law on the issue.

Shri Amit Chandrakant Shah, learned RP/Applicant, while reiterating various averments made in the Application, has further submitted that the Resolution Plan as approved by the CoC satisfies all the requisite conditions as per the provisions Code and the same is approved with requisite majority and thus urged the Adjudicating Authority to approve the Resolution Plan.

The learned Resolution Professional has produced the minutes of the 12th meeting of CoC of BCIL Red Earth Developers (India) Private Limited, the Corporate Debtor, held on 23rd April, 2019, which was subsequently modified as on 24th April, 2019 filed by Citrus Ventures Private Limited, was considered in depth. He has also submitted that 13th finally CoC meeting held on 26th April, 2019, and also filed Compliance Certificate in Form-H, Under Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

In order to approve a Resolution Plan U/s. 31(1) of the Code, Resolution Professional should examine each Resolution Plan should confirm the following conditions as per Section 30(2) of the Code:

In compliance with the said conditions, the Resolution Professional has submitted various documents and statements as per provisions of the Code and the Rules made there under. And these compliances are briefly pointed hereunder.

The learned Applicant/Resolution Professional has filed Compliance Certificate in Form-H, Under Regulation 39(4) of the IBBI (Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016:

The Resolution Plan received from Resolution Applicant Citrus Ventures Private Limited and approved by Committee of Creditors (CoC) of M/s. BCIL Red Earth Developers (India) Private Limited (Corporate Debtor).

He has hereby certified that:

The list of financial creditors of the M/s. BCIL Red Earth Developers India Private Limited (Corporate Debtor) being members of the CoC and distributed of voting share among them is as under:

The Resolution Plan includes a statement under Regulation 38(1A) of the CIRP Regulations as to how it has dealt with the interest of all stakeholders in compliance with the Code and Regulations made there under: The amount provided for the stakeholders under the Resolution Plan is an under:

(Amount in Rs. Lakh)

*if there are sub-categories in a category, please add rows for each sub-category.

#Amount provided over time under the Resolution Plan and includes estimated value of non-cash components. It is not NPV.

Notes:1) Net surplus shall be first available towards payment of CIRP Expenses. The resolution plan has considered CIRP expenses of Rs.1.5 Crore. Any change in CIRP expenses will be adjusted from claims of other creditors on proportionate basis. The same shall be paid within 9 months from the date of takeover of the Company.

Any available net surplus from the project after payment of CIRP fees, employees dues and RA fees shall be then utilized towards repayment to the Secured Financial Creditor upto Rs.43 Crore. Remaining balance if any shall be shared between the Secured Financial Creditor and operational Creditor (including any statutory dues) in the ratio of 80:20 to be payable at the completion of the project.

Notwithstanding contrary to anything the RA shall Endeavour to service debt repayment to the extent of Rs.43 Crores to the Secured Financial Creditor. Further, for any sale above the stipulated base price of Rs.5,750 per square feet as disclosed in the business plan, the incremental price above the stipulated base price as per the business plan will be shared between the Secured Financial Creditor and the Resolution Applicant in the ratio of 80:20.

RA shall endeavour that all sold villas are handed over to the customers without any encumbrances and lien. RA requests Secured Financial Creditor to issue unconditional NOCs to all sold units without any additional cost subject to clause 3.1.12 and 3.1.25a of the resolution plan.

Against the payment to BCIL Yelahanka, the RA proposes a one-time payment of Rs. 2 Crores which will be paid at the completion of the project.

Employee dues shall be adjusted from the realization of the Secured Financial Creditor basis mutual discussion and conclusion as per clause 3.1.25b of the resolution plan.

The interest of existing shareholders have been altered by the Resolution Plan as under:

As per clause 3.1.8 of the Resolution Plan submitted by Citrus Ventures Private Limited states that the resolution applicant will acquire all 100% shares of the Corporate Debtor, upon approval of the Resolution Plan. As a part of the Resolution Process, takeover of the Company is proposed to be achieved in compliance with the authorities' orders including transfer of promoters share. Since, there is no terminal value in the Company beyond the Resolution proposed the shares will be transferred at a token value.

The compliance of the Resolution Plan is as under:

As stated supra, the Resolution Professional has filed compliance Certificate dated 13.06.2019, Under Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, by inter alia stating, that there are no preferential transactions and only fraudulent transactions for which IA s are pending before the Adjudicating Authority, and details are furnished below;:

And thus, they have filed any application for the same are pending before the Adjudicating Authority.

The above facts and circumstances, clearly established that the Resolution Plan dated 24^th April 2019 for M/s. BCIL Red Earth Developers (India) Private Limited, submitted by Citrus Ventures Private Limited, Resolution Applicant confirmed all the requisite conditions under the Code so as to approve it under Section 31(1) of Code. The Resolution Plan is approved by the CoC with 87.39% in accordance with law. Therefore, we are of the considered opinion that the said Resolution Plan is a fit to be approved under Section 31(1) of the IBC, 2016.

In the result, by exercising the powers conferred on this Adjudicating Authority, U/s.31(1) IBC, 2016, C.P.(IB)No.06/BB/2018 & I.A.No.236/2019 are disposed of with the following directions:

(1) The Resolution Plan dated 24^th April, 2019 submitted by Citrus Ventures Private Limited (Resolution Applicant) as approved by the Committee of Creditor at 13^th meeting held on 26^th April, 2019 with 87.39% is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Debtor and its employees, members, creditors, guarantors, and other stakeholders involved in the resolution plan.

The moratorium imposed vide order dated 09.08.2019 passed in the CP shall cease to have affect from the date of communication of the order.

The Resolution Professional is directed to handover the management control all the assets, documents/records in physical and/or digital form on an as is where is basis to the Resolution Applicant immediately, and the Resolution Professional will ceased to be resolution professional.

The Resolution Professional shall forward all records relating to the conduct of the CIRP and the resolution plan to the Board to be recorded on its database.

The Resolution Applicant shall pursuant to the Resolution Plan approved under sub-section (1) obtain the necessary approval required under any law for the time being in force within a period of the one year from the date of approval of the Resolution Plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, which is later: Provided that where the resolution plan contains a provisions for combination as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the Resolution Applicant shall obtain the approval of the Competition Commission of India under the Act, prior to the approval of such resolution plan by the Committee of Creditor.

The Resolution Applicant is at liberty to file any miscellaneous application seeking for clarification, if any, in the implementation of the terms and conditions to the Resolution Plan.

No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A.No.457 of 2018 and I.A.No.256 of 2019 in C.P. (IB) No. 06/BB/2018 is filed by Shri Amit Chandrakant Shah (hereinafter referred to as 'Applicant/RP') U/s 66 of the IBC, 2016, by inter alia seeking to order and direct the Respondent Nos.1 to 3, to make such contributions to the assets of the Corporate Debtor as it may deem fit in accordance with Section 66 of the Code and to direct investigation against the Respondent Nos.1 to 3 in respect of the writing off for an amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the Respondent No.4 etc.

Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows:

The present Application is filed by Shri Amit Chandrakant Shah (IP Registration No.IBBI/IPA-001/IP-P00821/2017-2018/11397), the Resolution Professional of M/s. BCIL Red Earth Developers India Private Limited ('Corporate Debtor') under Section 66 of the IBC, 2016 , inter alia seeking appropriate directions from this Adjudicating Authority in respect of identified transaction wherein the Corporate Debtor has written off an amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4, a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group companies including the Company undergoing CIRP under the common order i.e. M/s.Biodiversity Conservation India Private Limited (‘BCIL’) before the commencement of the Corporate Insolvency Resolution period.

The main Company petition filed by M/s. Reliance Nippon Life Asset Management Limited & Anr., a Financial Creditor, under Section 7 of the IBC, 2016 R/w Rule 4 of the I&B (AAA) Rules, 2016 was by this Adjudicating Authority vide order dated August 9th, 2018 (‘Admission Order’) by by initiating CIRP , appointing Mrs. Nidhi Seksaria (IBBI Registration No.IBBI/IPA-001/IP- P00866/2017-2018/11464 as appointed as the IRP, moratorium etc . Subsequently, the Committee of Creditors of the Corporate Debtor in their first meeting held on September 07th, 2018, confirmed the appointment of Mrs. Nidhi Seksaria (‘erstwhile RP’) as the Resolution Professional.

It is stated that this Adjudicating Authority vide its order dated January 31st, 2019 extended CIRP of the Corporate Debtor by further 90 days beyond 180 days starting from February 5th 2019 i.e., till May 6th 2019 upon an application filed by the erstwhile RP under Section 12 of the Code read with Regulation 40 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Subsequently, the Adjudication Authority vide its order dated April 01st , 2019 allowed the application filed on behalf of the Committee of Creditors of the Corporate Debtor to change the Resolution Professional of the Corporate Debtor and thus appointed Mr. Amit Chandrakant Shah as the RP in place of Mrs. Nidhi Seksaria .

It is stated that pursuant to the erstwhile RP taking charge of the Corporate Debtor and upon perusal/review/ analysing the books of accounts and other records of the Corporate Debtor, the erstwhile RP noticed that an amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4. The erstwhile RP carried out an exercise to determine if the transactions of the Corporate Debtor may be classified inter alia as fraudulent transactions under Section 66 of the Code. Based on the findings in respect thereto, the Applicant has filed this present application for getting appropriate directions from this Adjudicating Authority.

It is further stated that upon detailed perusal of the matter, the erstwhile RP noticed that Respondent No.4 had been a vendor for the Corporate Debtor and Group Companies and each of the mentioned a separate ledger for their respective transactions. The Corporate Debtor had advanced as sum of Rs.2,17,00,000/-(Rupees Two Crores Seventeen Lakhs Only) to the Respondent No.4 between April 2014 to September 2014 as an advance, in tranches, as reflected in the books of the accounts of the Corporate Debtor. Subsequently, an amount of Rs.92,54,954/-(Rupees Ninety Two Lakhs Fifty Four Thousand Nine Hundred and Fifty Four Only) was transferred from Respondent No.4 to the Corporate Debtor between February 2015 and September 2016, leaving a balance of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only).

It is stated that the Applicant further noticed the above-mentioned amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) was written off in the Corporate Debtor's books of accounts in Financial Year 2015-16. The Applicant during internal investigation did not find any documents evidencing effort and/or measures taken by the Respondent Nos.1 to 3 for recovery of the abovenamed amount of Rs.1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) due and payable to the Corporate Debtor by the Respondent No.4.

It is stated that an amount of Rs.2,50,25,000/-(Rupees Two Crore Fifty Lakhs Twenty Five Thousand Only) was transferred from Respondent No.4 to Respondent No.5 between April 2014 and September 2014 towards purchase of plots. During the same period, during which the Corporate Debtor had transferred monies to Respondent No.4 as advance (refer para 6 above). The dates of transfers from Corporate Debtor to Respondent No.4 and the subsequent transfers from Respondent No.4 to Respondent No.5 as per the books and records of the respective companies are summarised below:

Subsequently, Respondent No.5 has paid Rs.1,13,55,000/- (Rupees One Crore Thirteen Lakhs Fifty Five Thousand Only) as a refund upon cancellation of abovementioned plots between June 2016 and September 2016. It is pertinent to note that this coincides with the period during which Respondent No.4 had returned monies to the Corporate Debtor. The balance of Rs.1,36,70,000/- (Rupees One Crore Thirty Six Lakhs Seventy Thousand Only) still reflects as a liability in the books of Respondent No.5. The dates of transfers from Respondent No.5 to Respondent No.4 and the subsequent transfers from Respondent No.4 to Corporate Debtor as per the books and records of the respective companies are summarised below:

It is stated that the Applicant vide email dated 20.12.2018 wrote the R-4. The Applicant vide email informed the R-4 that the CIRP process for the Corporate Debtor has commenced and this Adjudicating Authority vide its order dated 09.08.2018 (received by the Applicant on 11.08.2018) appointed the Applicant as IRP and that the Applicant's appointment as the RP is confirmed and/or approved by the CoC. The Applicant further informed the R-4 that the powers of Board of Directors have been vested in the Applicant. The Applicant during interaction with employees and management of the Corporate Debtor learned that the R-4 was handling works related to club houses for R-5. It is further informed the R-4 that the Applicant has noticed that a sum of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) is receivable from R-4 and that the Applicant is unable to find necessary/proper documentation to ascertain the recovery of the said amount and further requested the R-4 to provide clarification/confirmation along with appropriate documentation in support.

It is stated that R-4 vide its email dated 09.01.2019 responded to the email sent by the Applicant, stating that the R-4 has been carrying out various works including club house related projects of R-5 and the Corporate Debtor. As per the scope of work, the R-4 provided supplies related to construction and also undertook civil contract works along with labour supply for which R-5 and the Corporate Debtors issued work orders and the R-4 maintained a consolidated ledger for both the Companies. Advances received from R-5 or Corporate Debtor and dues to them were adjusted against work carried out for each Company, or for the other Company, as mutually agreed and this was the practice and understanding from since 2010. The email further stated that an amount of Rs.2,50,25,000/- was invested by R-4 in a residential project at Mysore for R-5 during the period of 02.04.2014 to 01.04.2016. However, subsequently transaction could not be completed, and the plots could not be transferred in favour of the R-4 due to factor not originally anticipated by the R-4 and the Corporate Debtor, and therefore, it was agreed to mutually terminate agreement and adjust advances paid towards project with other transactions. Accordingly, after making adjustments, further amount of Rs.1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) which was due and payable by R-5 to the R-4 was adjusted towards advance received by the Corporate Debtor by way of transfer entry in the ledger as mutually agreed with the management of Companies. The R-4 vide the very email shared a copy of the Indemnity Bond executed by the R-1 on 30.03.2016, confirming adjustment. The R-4 also shared its ledger accounts for R-5 and the Corporate Debtor.

The Applicant further called upon R-1 to 3 to provide explanations/ information and/or clarifications in regard to amount of Rs.1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the R-4. The Respondent No. 1 via emails dated 08.01.2019 and 25.01.2019 failed to provide a satisfactory response/explanation with regard to writing off, in question, The writing off in question receivable from the R-4 as per the books of accounts of the Corporate Debtor in the absence of any valid explanation/ clarifications by the R-1 to 3 indicates an overstatement of loss in the books of the Corporate Debtor. It is alleged that the impugned write off was done in order to settle the accounts between the group company of the Corporate Debtor and the R-4. In the event that Corporate Debtor was taking on the liability of a group Company, the journal entries should have been made accordingly and R-5 should be reflecting as a debtor in the books of the Corporate Debtor.

It is stated that the Corporate Debtor is the Company which has been funded by the main Petitioner in the Company Petition and R-5 is the Corporate Guarantor/Co- obligor to the transaction. The transfer of Rs.2,17,00,000/- (Rupees Two Crores and Seventeen Lakhs Only) to R-4 appears to be for the purpose of diversion of funds to R-5 which is not a funded Company. Only a fraction of the amount transferred was returned and the balance was written off instead of recording it as a debt owed by R-5.

It is also stated that the lack of an explanation or clear accounting entries for this transaction indicates that R-1 to 3 have not been carrying on the business of the Corporate Debtor in a proper and transparent manner and that receivables of the Corporate Debtor. In terms of Section 66 of the Code, it is found that the aforesaid transactions are carried on with intent to defraud Creditors of the Corporate Debtor and/or for any fraudulent purposes, the Adjudicating Authority may direct further investigation of the said matter.

The Respondent No.1 namely Shri Hariharan Chandrashekhar has filed Statement of Objections dated 16.07.2019, by inter alia contending as follows:

It is stated that the Corporate Debtor was engaged in the business of real estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approval bodies including the Local Panchayat. Further, the Corporate Debtor also had to undertake customisations beyond the scope of construction agreements, which works were executed by third-party vendors under the overall supervision of the construction team of the Corporate Debtor.

It is stated that detailed Homebuyer MIS was handed over to the RP by the management team, which included the amounts of cash collections for each homebuyer. This information was handed over to the Petitioner Financial Creditor and the auditors appointed them vide e-mails. The disclosure of cash collections by the management team to the RP and Petitioner by itself demonstrates that there was no mala fide intent in concealing any collections and all cash collections have been independently verified with the homebuyers as well. Further, there was no exercise undertaken by the RP to ascertain whether Respondent Nos. 2 and 3 were involved in any cash collections from homebuyers with objective to defraud the creditors or conduct business fraudulently as alleged by the Resolution Professional.

The averment that the RP carried out an exercise to determine if transactions could be classified as fraudulent under Section 66 of the Code is incorrect as the RP has till date not disclosed the manner in which the alleged finding out made out. Further, the RP has not even confirmed whether the Respondent Director 2 and 3 were even Directors at the time of the transactions and whether the Directors had any role in the transactions. The averment of the RP is refuted as false and are made with mala fide intent.

The Respondent No.2 namely Ms. Kanchan Kaur and Respondent No.3 namely Shri Sanjay Ramanujam, have filed common Statement of Objections dated 16.07.2019, by inter alia contending as follows:

It is stated that the Corporate Debtor was engaged in the business of reals estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approval bodies including the Local Panchayat. Further, the Corporate Debtor also had to undertake customisations beyond the scope of construction agreements, which works were executed by third-party vendors under the overall supervision of the construction team of the Corporate Debtor.

It is also stated that the Respondent No.2 is only a Non- Executive Director on the Board of the Corporate Debtor. Further, the Respondent No.2 has been in full time employment in Indian Institute of Journalism & New Media since 2004. She is currently Dean of the said Institute. Due to her full time employment with the institute, she was hardly involved in the day today affairs of the Corporate Debtor an in fact she had no role to play in the running of the business of the Corporate Debtor.

It is stated that the Respondent No.3 was appointed as an Executive Director of the Corporate Debtor on 1 December 2014 purely on a monthly salary payment without any entitlement to shareholding in the Corporate Debtor. The dues to Respondent No.3 has in fact been treated by the RP as “Dues of Consultant” in the list of admitted claims. Further, Respondent No.3 was appointed as Executive Director of the Corporate Debtor effective 1st December 2014, which is prior to the date of purported transaction. The amounts were transferred from the project-escrow amount to Respondent No.4 and all disbursements from the project-escrow account were subject to prior approvals from the Petitioner. The Petitioner was therefore fully aware of the purpose of the payment and the payment happened to R-4 only with the prior approval of Petitioner.

It is further stated that the Resolution Professional has made unfounded and baseless allegations against the Answering Respondents and are alleging them for fraud without even furnishing any material document on record. Further, the Resolution Professional has made generic allegations against all the Respondents. There are no specific pleadings against each Respondent in respect of the allegations by the Resolution Professional. Further, the Resolution Professional has failed to consider the responses provided by the Respondent No.3 in respect to the issues raised by the Resolution Professional (RP).

It is further submitted that the transaction in question pertains to the period April 2014. Admittedly, the Petitioner has received substantial payment post the year 2014 and therefore, if the Answering Respondents had any intention to cheat or defraud the Creditors, they would not have paid substantial payments subsequent to the transaction in 2014. Further, for the purposes of Section 66 of the Code, the Answering respondents ought to have undertaken any action with a view to defraud the creditors and knowing the Corporate Debtor would go into the liquidation. However, admittedly, the Corporate Debtor continued its business and also continued to discharge its liabilities towards the creditors and therefore, Section 66 of the Code would not apply to the present transaction as the transaction with the Respondent No.4 was done on arm's length and during the ordinary course of business. This fact is further corroborated from the Petitioner's approval for disbursement/transfer of funds from the escrow account.

Apart from the above, on perusal of the review report, the Bench points out the following points for resolving the issue which reads as under:

Similarly, several irregularities have been pointed out in the report justifying the conclusion of the RP as stated supra. Therefore, we are of the prima facie view that the Review Audit report got by RP has detected various fraudulent transactions which attracts to take action under Section 66 of the Code and the case required to be ordered further investigation.

In the similar circumstance, one application was filed under Section 66 R/w Section 25(2), 69, 70 and other applicable Sections of the IBC, 2016 before this Adjudicating Authority, the Adjudicating Authority passed by order dated 16.04.2019 in I.A. No.446 of 2018 in C.P.(IB)No.122/BB/2017 by Vijay directing the Central Government to refer matter to the SFIO for further investigation into the Affairs of the Corporate Debtor etc. And this order was questioned before the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) No.498 of 2019 (Mr.M.Srinivas Vs. Smt.R.Bhuvaneshwari & 8 Others) and it was dismissed by an order dated 24.07.2019 by upholding the order, by inter alia holding as follows:

Para 17 of the order reads as follows:

In view of above facts and circumstance of the case and the law as cited, we are of the considered opinion that issue raised in the instant Company Application are required to be further investigation by the Serious Fraud Investigation Office.

Therefore, appropriate action can be taken against the erring Officials/Respondents basing on the report.

In the result, by exercising powers conferred on this Adjudicating Authority, which being NCLT, U/s 213 of Companies Act, 2013, I.A.No.457 of 2018 and I.A.No.256 of 2019 in C.P.(IB) No.06/BB/2018 are disposed of with the following directions:

Learned Resolution Professional is directed to forward all material documents, which is connected to the present case including a Review Report prepared by S.P.R. & CO. (Chartered Accountant) including copies of instant Interim Applications to the Central Government, within a period of three weeks from the receipt of the copy of the order with a copy to all concerned parties duly following principles of natural justice.

The Central Government is directed to refer the matter to the SFIO for further investigation into the Affairs of the Corporate Debtor namely M/s.BCIL Red Earth Developers India Private Limited, Shri Hariharan Chandrashekhar, Ms. Kanchan Kaur, Shri Sanjay Ramanujam and M/s.Promptech Incorporated and other related Persons and Companies including Director of Companies of Corporate Debtor & related Companies, basing on the Review Report as expeditiously as possible.

The parties are at liberty to take appropriate legal course of action basing on the ultimate findings given by the SFIO in this case. No order as to costs.

Per: Rajeswara Rao Vittanala, Member (J)

I.A No.180 of 2019 in C. P (IB)No.06/BB/2018 is filed by Shri Akash Gupta ('Applicant/Financial Creditor') U/s 60(5)(c) of the IBC, 2016 and Section 32 R/w Rule 11 of the NCLT, Rules, 2016, by inter alia, seeking to hold that the Applicant is financial creditor; to direct the Resolution Professional to include the Applicant herein as a member in the Committee of Creditors.

I.A No.183 of 2019 in C. P (IB)No.06/BB/2018 is filed by Shri Akash Gupta ('Applicant/Financial Creditor') U/s 60(5)(c) of the IBC, 2016 and Section 32 R/w Rule 11 of the NCLT, Rules, 2016, by inter alia, seeking to stay the proceedings before the Resolution Professional and CoC meetings until the inclusion of Petitioner as member of CoC.

Brief facts of the case, which are relevant to the issue in question, as mentioned in the Application, are as follows:

Mr. Akash Gupta (Applicant) claimed he is one of the Financial Creditors of the Corporate Debtor, M/s. BCIL Red Earth Developers India Pvt. Ltd. The Corporate Debtor owes a sum of Rs.12,73,88,854.79 (Indian Rupees Twelve Crore Seventy-Three Lakhs Eighty-Eight Thousand Eight Hundred and Fifty Four and Seventy Nine paise) as on 31.10.2018 + 3% per month additional thereon to Mr. Akash Gupta.

In pursuant to the public announcement of commencement of insolvency proceedings against the Corporate Debtor, a claim was filed on 09.11.2018 by Akash Gupta as a financial creditor of the Corporate Debtor. This claim was not accepted by the former Resolution Professional on the grounds of 2 days delay in filing. Therefore, he has filed I.A.No.389/2018 in C. P (IB)No.06/BB/2018, by seeking to condone delay and thus the Tribunal condoned the said delay vide its order dated 04.01.2019, with direction to the Resolution Professional to consider the claim as per law.

Thereafter, the then Resolution Professional, Ms. Nidhi Sekseria, while assessing the claim of Akash Gupta, requested certain additional information and raised certain additional queries through her email date 23.01.2019 and 28.01.2019. Subsequently through email on February 12, 2018 informed the Applicant that on the basis of the documents produced and explanations provided, she was not able to agree that Akash Gupta's claim fell within the definition of financial debt under the IBC, 2016 and directed Akash Gupta to make claim in Form F. However, the Applicant did not agree for this suggestion and alleged that it was non-application of mind on the part of the RP.

It is stated that the Applicant invested a sum of Rs.4,05,00,000/- (Rupees Four Crores Five Lakhs only) into Compulsory Convertible Debentures (CCDs) of the Company. With respect to the subscription of the CCDs, on 22.07.2013, a Share Subscription and Shareholders Agreement (SSSHA) was entered into and the Applicant invested an amount of Rs.4,05,00,000/- out of which Rs.4,04,73,000/- formed part of consideration towards subscription of CCDs and the balance of Rs.27,000/- formed part of 2,700 Equity Shares of Rs.10/- each in its associate companies namely - Biodiversity Conservation India Ltd., (BCIL) and BCIL Red Earth Developers Pvt. Ltd (Associate Companies). In terms of the SSSHA, the Corporate Debtor was require to issue CCDs which were to be on the terms and conditions specified in Schedule X to the SSSHA. The CCDs carried a coupon rate of 12% per annum and was to be paid in a specified mechanism. The CCDs were to be redeemed at the end of the 10th year. The Applicant had the option of converting the CCDs into shares. It is contended that till (Compulsory Convertible Debentures (CCDs) or Optionally Convertible Debentures (OCDs) are converted into equity, the CCDs or OCDs are debt instruments in the books of the Company. Thus investment pursuant to the SSSHA was towards subscription of debenture instruments, which when issued by the Company till the time it is converted into equity is debt of the Company.

The Corporate Debtor having received payment towards subscription of the debentures, however failed to issue the debentures or make payment of the coupon rate promised in relation to the debentures. In view of the default and failure to comply with the obligations with respect to the issuance of debentures and payment of coupon on the debentures as per the terms thereof, the Corporate Debtor agreed to return the amounts which were paid towards subscription of debentures. Further, as promised 27% of shares, which were promised to be issued pursuant to payment of the share subscription amount were also not issued. After having collected monies towards issuance of debentures and shares and collecting monies towards that amounts received.

On account of above default, the Corporate Debtor and its Associate Companies entered into a Memorandum of Understanding dated 31.01.2015 with the Applicant, which clearly stated the Corporate Debtor and its associate companies undertook to “pay the total amount of Rs.68,121,719/- to the Second Party. The above said amount of Rs.68,121,719/- is the liability due and outstanding as per payment scheduled in this document to the Second Party herein by the First Party. For any delay in payment, until the complete payment of the abovementioned amounts, the First Party undertakes to pay an interest at the rate of 3% per month on the outstanding till the complete payment is made.

The MoU further categorically states in Clause 8 that “It is the understanding between the parties to pay the interest agreed upon herein since the Second Party was entitled to the benefits of the investment in the shares of BCIL Zed Ria Properties Private Ltd and the returns that he would have been entitled to if the parties had acted in accordance with the Share Subscription and Shareholders Agreement.”

The content of the MOU explicitly precipitates the fact that on account of the Corporate Debtor’s inability to perform their obligations under the SSSHA, the Corporate Debtor acknowledged the amounts due and payable by it to the Applicant and they agreed to refund the monies with interest in due course. As such from the date of the MOU the Applicant became a creditor of the Corporate Debtor and agreed to be paid in due course with interest on the amounts acknowledged to be repaid by the Corporate Debtor.

A bare reading of the MOU would clearly indicate that the Applicant is a Financial Creditor. The MOU also records the fact that certain lands at Coorg being Coffee Plantation have been given as security to make payment against the said financial debt. It is also apparent that there is a clear violation of the terms of the MOU in that the entire liability has not been cleared and as significant amount of money still requires to be recovered including by way of sale of the assets at Coorg, which are mortgaged by deposit of title deeds in favor of the Applicant.

The Applicant has a claim of Rs.12,73,88,854.79/- against the Corporate Debtor and its Associate Companies. Classifying the Applicant as anything other than a financial creditor would be unfair, illegal and against the Code. The CoC meetings require the presence of the Applicant, which has been not done in view of the delay caused by the RP in failing to recognize the Applicant as a financial creditor. This makes all meetings of the CoC held thus far illegal.

The Resolution Professional has filed common reply affidavit dated 27.04.2019, by inter alia contending are as follows:

That in pursuant to the common Admission Order, the Applicant had filed a claim on 9.11.2018 for Rs.12,73,88,854.79/- in the capacity as a financial creditor of the Corporate Debtor (defined as the SPV in the The Applicant had also filed similar claims for same amount in M/s. Biodiversity Conservation India Private Limited and BCIL Red Earth Developers India Pvt. Ltd, which are group companies of the Corporate Debtor undergoing corporate insolvency restructuring process as per the above order.

That upon perusal of the claim and the supporting documents submitted by Mr. Akash Gupta, it was noted that M/s. Biodiversity Conservation India Private Limited, the Corporate Debtor, BCIL Red Earth Developers India Pvt. Ltd, the promoters of the Company namely Dr. C. Hariharan, Mr. Sanjary Ramanujan and Dr. Dinesh Shivanna and Mr. Amith Rastogi and Mr. Akash Gupta entered into Share Subscription and Shareholders Agreement dated July 22, 2013 with the stated objective of recording the terms and conditions governing the terms of investment of the investors in the SPV and the relationship between the investors and Company as shareholders in the SPV.

That in terms of Clause 3.1 of the SSSHA, the Applicant agreed to invest in the SPV by purchasing shares of the Company against a consideration of Rs.7,50,00,000 in the following manner: (i) a sum amounting to 7,49,00,000 Crores as share allotment money towards subscription of Compulsorily Convertible Debentures and (ii) purchase of 5000 equity shares from the Parent Company at par value of Rs.50,000 representing 50% of the total issued share capital of the SPV on a fully diluted basis.

Thereafter, MOU was entered into between the M/s. Biodiversity Conservation India Private Limited, the Corporate Debtor, BCIL Red Earth Developers India Pvt. Ltd., and the applicant herein dated 31.01.2015. It is recorded in terms of the Recitals of the MOU that:

It is pertinent to note that the MOU was executed on January 31, 2015 but was only stamped after a gap of more than 2 ½ years on August 21, 2017. And there is no reference to CCDs or any financial debt made in the Recitals of the MOU. In fact it is recorded that performance of the Conditions Precedent as per the SSSHA were never even completed or performed. The intention of the parties as gathered from the MOU reflects that the MOU was entered into in order to record the terms of repayment of the amounts invested by the Respondent i.e Rs.4,20,00,000 towards capital through direct equity contributions of Rs.1,60,00,000 and through Bank Loans of Rs.2,60,00,000/- against his own credit profile, in the Corporate Debtor and to compensate him for the benefits of investment in the shares of the Corporate Debtor and the returns he would have been entitled to if the parties had acted in accordance with the SSSHA. Although there is a mention of CCDs in terms of the SSSHA, there is no document placed on record to evidence that subscription money towards issuance of debentures was contributed, in fact, it is clearly recorded in terms of the MOU, that the intention of the Applicant was towards investment in 27% of shares of the Corporate Debtor and that the Respondent had invested approximately Rs.4,20,00,000 toward capital through direct equity contribution of Rs.1,60,00,000/- and through Bank Loans of Rs.2,60,00,000 against his own credit profile. It is further recorded that the above investments were by way of subscription to the agreement for sale dated 12.07.2013 executed between BCIL Red Earth India Pvt. Ltd, BCIL Red Earth Developers India Private Limited and the Applicant for sale of Villa no.19 in Zed Earth project and the agreement for sale dated 12.07.2013 executed between M/s. Biodiversity Conservation India Private Limited and the Applicant for sale of Apartment No.A004 and A104 in BCIL Collective project for a total amount of approx. Rs.4,20,00,000/.

Thereafter pursuant to email dated February 12, 2019, the Applicant was requested to re-submit its claim as per Form F, it was also pointed out that the amount of liability as calculated by the erstwhile RP differed from the amount claimed by the Applicant, and the applicant was requested to furnish the additional details and clarifications.

With respect to the contention of the Applicant that even refund share application money with interest of money satisfies the definition of financial debt, it is submitted that the same would not constitute financial debt since the amounts were not “disbursed against the consideration for the time value of money” and were instead disbursed towards investments in shares.

Attention is drawn to the fact that as per the MOU, it is recorded that Rs. 4,20,00,000/- was contributed by the Respondent towards capital through direct equity contribution of Rs.1,60,00,000/- and through Bank Loans of Rs.2,60,00,000/- against his own credit profile, in the Corporate Debtor. It is further recorded in the MOU that the above investment was made by subscribing to the agreement for sale dated 12.07.2013 executed between BCIL Red Earth India Pvt. Ltd., BCIL Red Earth Developers India Private Limited and the Applicant for sale of Villa No.19 in Zed Earth project for purchase consideration of Rs. 78,85,350 (“Sale Agreement 1") and the agreement for sale dated 12.07.2013 executed between M/s. Biodiversity Conservation India Private Limited and the Applicant for sale of Apartment no. A004 and A104 in BCIL. Collective (Zed Woods) project for consideration of Rs. 64,29,936 (Sale Agreement 2).

It is submitted that from the documents placed on record it is not clear that the original investment amount of Rs. 4,20,00,000 (Rupees Four Crore Twenty Lakhs only) was disbursed as consideration towards CCDs since the same amount of Rs. 4,20,00,000 (Rupees Four Crore Twenty Lakhs only) is also stated to be consideration under the aforementioned sale agreements as well. Moreover, the sale agreements pertain to apartments of BCIL Red Earth India Pvt. Ltd, BCIL Red Earth Developers India Private Limited in and M/s Biodiversity Conservation India Private the Zed Earth project and M/s. Biodiversity Conservation India Private Limited in the BCIL Collective (Zed Woods) and are not even properties of the entity which was supposed to issue the CCDs as per the SSSHA being Corporate Debtor. It is further stated he amount of Rs.4.20,00,000 Crore amount has not been infused by the Respondent in Corporate Debtor (the entity which was supposed to issue the CCDs in terms of the SSSHA) or in BCIL Red Earth Developers (India) Private Limited, at all, however the Respondent has submitted claim forms in the capacity of financial creditor for both the aforementioned entities in addition to filing a claim as financial creditor of the Corporate Debtor.

The Applicant has claimed an amount Rs.12,73,88,854.79 from each of the group companies of the Corporate Debtor in his individual claims filed in the corporate insolvency resolution process of M/s. BCIL Red Earth Developers India Private Limited, the Corporate Debtor and the M/s. Biodiversity Conservation India Private Limited, creating an overlap in the amounts claimed by the Applicant. The Applicant has not provided a bifurcation of the respective claims against each of the three companies nor has the Applicant provided company wise accounts/ledgers.

Further, on verification of the claim of the Applicant, it is further complicated by the fact that Axis Bank Limited has submitted its claims against M/s. Biodiversity Conservation India Private Limited for two loans availed by the Applicant for the purchase of two house being Villa no. 19 in Zed Earth project, owned by BCIL Red Earth India Pvt. Ltd and BCIL Red Earth Developers India Private Limited ("Property 1") Sale Agreement 1; and Apartment no. A04 and A104 in BCIL Collective (Zed Woods) project owned by M/s. Biodiversity Conservation India Private Limited (Property 2) under Sale Agreement 2, on the basis of a two Triplicate Agreements both dated July 24, 2013 executed Axis bank, the Applicant and BCIL Red Earth India Pvt. Ltd (Tripartite Agreement 1) and other the executed between Axis Bank, the Applicant and M/s. Biodiversity Conservation India Private Limited (Tripartite Agreement 2").

Axis Bank Limited has filed its claims against M/s. Biodiversity Conservation India Private Limited in respect of two loans availed by the Applicant from Axis Bank Limited for an amount of Rs. 1,30,00,000/- each for purchase of Property 1 and Property 2 is by way Sale Agreement 1 and Sale Agreement 2 respectively. In order to secure the loans availed by the Applicant from Axis Bank Limited Tripartite Agreement 1 and Tripartite Agreement 2 were executed. As per clause 4 of Tripartite Agreement 1 and Tripartite Agreement 2 if the Applicant failed to honor his commitment to repay the loans availed by the Applicant from Axis Bank Limited as per the Schedule in the loan agreements, Axis Bank Limited had the right get Property 1 and Property 2 registered in its name, thereby enforcing its security over the properties secured by the said Tripartite Agreement.

It is stated that in relation to Sale Agreement 1 an amount of Rs.1,30,00,000/- (Rupees One Crore Thirty Lakhs) has been availed by the Applicant as bank loan from Axis Bank Limited and in relation to Sale Agreement 2 an amount of Rs.1,30,00,000 (Rupees One Crore Thirty Lakhs) has been availed by the Applicant as bank loan from Axis Bank Limited. The transaction under Sale Agreement 1 and Sale Agreement 2 forms the basis of transactions contemplated under the MOU pursuant to which an amount of Rs.12,73,88,854.79 is claimed by the Applicant as financial creditor of M/s. Biodiversity Conservation India Private Limited, an amount of Rs.12,73,88,854.79 is claimed by the Applicant as financial creditor of M/s. BCIL Zed Ria Properties Limited and an amount of Rs.12,73,88,854.79 (Rupees Twelve Crore Seventy Three Lakhs Eighty Eight Thousand Eight Hundred and Fifty Four And Seventy Nine Paise) is claimed by the Respondent as financial creditor of the Corporate Debtor.

It is also stated that the applicant has filed multiple proceedings for the same claim against the BCIL group companies. An arbitration proceeding A.C. No. 147 of 2018 before the sole arbitrator at the Arbitration & Conciliation Centre - Bangalore is pending adjudication on the same matter.

Therefore, the applicant failed to substantiate its claim at all and raised so many disputed question of fact and thus it is liable to be dismissed.

Heard Shri S. Vivekananda learned Counsel for the Applicant and Shri Amit Chandrakant Shah, learned Resolution Professional along with Shri C.K.Nandakumar, Shri Raghuram Cadambi, Shri Varun.S, learned Counsels of the Resolution Professional. We have carefully perused the pleadings of both the parties and extant provisions of the code.

As stated supra, the Tribunal admitted the case by common order dated 09.08.2018 passed in C.P(IB)No.03/BB/2018, C.P(IB)No.06/BB/2018 and C.P(IB)No.14/BB/2018. However, the Petitioner started making claims in Form – C dated 09.11.2018 before the then RP by inter alia contending that he was an individual as a secured Financial Creditor against M/s. BCIL Zed Ria Properties Private Limited, Biodiversity Conservation India Ltd., and BCIL Red EARTH Developers India Pvt. Ltd., by claiming total an amount of Rs.12,73,88,854.79/- (Indian Rupees Twelve Crore Seventy-Three Lakhs Eighty-Eight Thousand Eight Hundred and Fifty Four and Seventy Nine paise) as on 31.10.2018 + 3% per month additional thereon basing on the Memorandum of Understanding (MOU) dated 31.01.2015, executed between group Companies and the Applicant. He Claimed to have paid of Rs. 4,05,00,000/- (Rupees Four Crores Five Lakhs) to the group Companies in 2013. In terms of Share Subscription and Shareholders Agreement (SSSHA), that Company they failed to perform the commitments, they have entered into a Memorandum of Understanding dated 31.01.2015 with group Companies undertaking to refund an amount of Rs.6,81,21,719/- (Rupees Sixty Crores Eighty One Lakhs Twenty One Thousand Seven Hundred and Nineteen only) with an interest at the rate of 3% per month, in case, it failed to refund amount.

The basis for claiming the amount in question, in the instant Application, is Memorandum of Understanding dated 31.01.2015 which is executed by between M/s. BCIL Zed Ria Properties Private Limited and 2 Ors group Companies and Shri Akash as per the claim made by the Applicant dated 09.11.2018 wherein he has declared that he has paid sum of Rs. Rs.4,05,00,000/- (Rupees Four Crores Five Lakhs only) to the Companies in 2013 in terms of Share Subscription and Shareholders Agreement (SSSHA) dated 22.07.2013 which is placed at page No. 58 to 119 along with material paper filed along with to the IA.No.180/2019. And the same is made among three (3) Group Companies, the Promoters of the Company and SPV and Mr. Amit Rastogi, “Investor No.1” and Mr. Akash Gupta “Investor No.2”. The object of agreement stated therein was that Investor No.1 & 2 wish to invest in the SPV floated by Company towards construction and sale of the project known as Zed Ria and the investors wanted to make an investment in the SPV in order to expansion of the business of the SPV.

As per above Share Subscription and Shareholders Agreement (SSSHA), the investors agreed to invest in the SPV by purchase of shares from the Company amounting to Rs.7,49,50,000/- (Rupees Seven Crores Forty Nine Lakhs Fifty Thousand only) (“Investor Subscription Amount”) as under:

On alleged failure of performing the commitment of the said Share Subscription and Shareholders Agreement (SSSHA), the said Memorandum of Understanding dated 31.01.2015, was stated to have been executed by and between Biodiversity Conservation (India) Private Limited and 2 Others group Companies and Mr. Akash, S/o... Aged about 38 years, R/at, Flat 22, Tower 6, Pebble Bay, RMV Stage II, Bangalore, by inter alia stating that Mr. Akash Invested approx. Rs.4,20,00,000/- (Rupees Four Crores Twenty Lakhs only) and the First party agreed undertakes to pay total due amount of Rs.6,81,21,719/- (Rupees Six Crores Eighty One Lakhs Twenty One Thousand Seven Hundred and Nineteen only) to the Second Party. The Second Party hereby acknowledge the receipt of the same and the First party undertakes to pay an amount of Rs.6,19,00,000/- (Rupees Six Crores Nineteen Lakhs only). Therefore the entire claim is based on the Share Subscription and Shareholders Agreement (SSSHA) and the Memorandum of Understanding.

As stated supra, it is not in dispute Share Subscription and Shareholders Agreement (SSSHA) dated 22.07.2013 was executed by group Companies and Mr. Amit Rastogi, “Investor No.1” and Mr. Akash Gupta “Investor No.2” which was for investments in SPV floated by Company towards constructions. However, the present Memorandum of Understanding dated 31.01.2015 is stated to have executed by and between 3 group Companies and Mr. Akash, S/o... Aged about 38 years, R/at, Flat 22, Tower 6, Pebble Bay, RMV Stage II, Bangalore only. In said Memo, they have mentioned the name of only Mr. Akash instead of Mr. Akash Gupta, by keeping father’s name blank. Moreover, the Memorandum was registered after long lapse it only on 21.08.2017. Therefore, admittedly the Applicant stated to have made investment in question in the group Companies towards expansion for purchase of shares. Therefore, the Applicant cannot come under the definition of the Financial Creditor, and thus, we agree with the reasoning given by the Resolution Professional, in the reply as briefly stated supra. Moreover, Share Subscription and Shareholders Agreement (SSSHA) refers two investors, as referred to above, but only Mr. Akash is only named as party.

The proceedings initiated under Code are summary in nature and the various questions of fact or disputes, raised by the parties in a Petition/Application filed under the Code, cannot be gone into. This Tribunal has already admitted the Company Petition by common order dated 09.08.2018, by initiating CIRP in respect of all three (3) groups Companies. Accordingly, the Resolution Professional has conducted various meetings of the CoC and ultimately found one Resolution Plan satisfying all the conditions prescribed under the Code and the same was duly accepted by the CoC with requisite majority. Accordingly, the Resolution Professional has filed I.A.No.236 of 2019 in C.P.(IB)No.06/BB/2018, U/s. 60(5) (c) R/w Section 30(6) of the IBC, 2016, by inter alia seeking to approve the Resolution Plan submitted by M/s. Citrus Ventures Private Limited. Accordingly Adjudicating Authority has approved the Resolution Plan by separate order dated 09.08.2019, after the Adjudicating Authority satisfying that Resolution Plan satisfied all the requisite conditions to approve it.

The Applicant has filed similar claims for the same in all the three (3) group Companies basing on the very same Share Subscription and Shareholders Agreement (SSSHA) and Memo. The Applicant failed even to substantiate that the investment in question was made and on the contrary, the Resolution Professional by perusing the record of Corporate Debtor disputed the amount itself. The intention of the Applicant, as per MOU, was investment in 27% of the shares in all the 3 Companies, and those investments were made for by way of subscription to agreement for sale of villas in question. If the alleged amount is considered as investment for the shares, as per Section 42 (6) of the Companies Act, 2013, allotment require to be made within 60 days failing which amount has to be returned within 15 days failing which it carries the interest at 12% p.a. However, he cannot make claim as Financial Creditor under the proceedings initiated under the Code and the same is misconceived and not maintainable. Even the Company failed to refund Share Applicant money with interest, it cannot constitute financial debt and it cannot be called consideration for the time value of the money as per definition under Section 5(8) of Code.

As state supra, that Axis Bank Limited has also submitted its claim against all the group of the Companies for the loan availed by the Applicant for the purchase of villas, Apartments, in question. Accordingly, Triplicate 2 agreement dated 24.07.2013 was executed between Axis Bank, the Application of M/s. BCIL Red Earth (India) Pvt. Ltd and other agreement between Applicant and M/s. Biodiversity Conservation (India) Private Limited, as per the clause 4 of the Triplicate agreement, if the Applicant feel to honour its commitments to re fund all loans availed by the Applicant from the bank, Axis Bank has right to get properties in question registered in its name. Therefore, the Applicant is raising several disputed issues in support of its and the same is baseless.

For the aforesaid reasons and circumstances, we are of the considered opinion that the claim made by the Applicant is baseless and thus it is liable to be rejected.

Hence, both I.A.Nos.180 & 183 of 2019 in C.P.(IB)No.06/BB/ 2018 are hereby rejected. No order as to costs.