Manjinder Singh Sandhu & Ors. vs Original Committee Of Creditors Of Class Home Buyers & Ors.

PER: MANNI SANKARIAH SHANMUGA SUNDARAM, MEMBER (J)

Upon consideration is an application filed by the Applicants who are Financial Creditors in a class of Golden Peacock Residence Private Limited (“Corporate Debtor”) undergoing the Corporate Insolvency Resolution Process (“CIRP”) under Section 60 (5)(a) of the Insolvency and the Bankruptcy Code 2016 read with Rule 11 of the National Company Law Tribunal Rules 2016 with the following prayer:

The facts that are relevant for the determination of the issues involved in this application are stated as follows:

Subsequently, the Applicants personally visited the office of the Resolution Professional to reiterate their request for convening the meeting; however, the same was declined. Thereafter, vide email dated 20.01.2021 at 10.36 AM, the Petitioners/Applicants sought inclusion of an additional agenda item to their requisition dated 14.01.2021, namely, the replacement of Mr. Jitesh Gupta as Resolution Professional under Section 27 of the IBC, and proposed the appointment of Mr. Naresh Kumar Aggarwal (IP Reg. No. IBBI/IPA/001/IP-P-02116/2020-21/13274) in his place. The Applicants also requested that the said resolution be placed for voting.

The Applicants respectfully submit that the induction of Respondent Nos. 4 to 13 into the CoC was effected only after the proposal for replacement of the Resolution Professional had been raised. Such inclusion was part of an ulterior design to frustrate any effective attempt at his replacement and to influence the process concerning the Resolution Plan.

On perusal of the casefile, it is noted that an application bearing C.P. (IB) No. 1591/(PB)/2018 was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by Mr. Manjinder Singh Sandhu (“Financial Creditor”) seeking initiation of the Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor i.e. M/s. Golden Peacock Residence Pvt. Ltd. Upon admission of the said application, this Adjudicating Authority declared moratorium in terms of Section 14 of the Code and further appointed the Respondent as the Interim Resolution Professional, who was subsequently confirmed as the Resolution Professional of the Corporate Debtor in accordance with the provisions of the Code.

On 06.12.2019, the Resolution Professional issued emails to Respondents No. 4 to 13 requesting the submission of supporting documents for verification of their claims. Subsequently, on 24.06.2020, the RP issued a second notice reiterating the requirement for corroborative documentation. Thereafter, on 13.07.2020, the RP once again, via email, requested Respondents No. 4 to 13 to furnish the necessary documents to facilitate verification of their claims. Despite these repeated requests, the RP, by email dated 25.07.2020, rejected the claims of Respondents No. 4 to 13, characterizing them as spurious and fraudulent. In response to the rejection, the said Respondents filed applications (I.A. No. 4117 of 2020, I.A. No. 4091 of 2020, and I.A. No. 4118 of 2020) before this Adjudicating Authority, challenging the impugned rejection of their claims by the RP.

It is the case of the Applicants that the conduct of the Resolution Professional in re-admitting the previously rejected claims of Respondents No. 4 to 13, (when the above-said applications are pending for adjudication before this Adjudicating Authority) was not merely irregular but appears to have been actuated by a deliberate and calculated strategy to thwart the Applicants' efforts to replace him. The sequence of events underscores this mala fide intent. The Resolution Professional had no jurisdiction to revisit or reverse his earlier decision suo-motu, particularly while the matter remained sub judice before this Adjudicating Authority.

On 14.01.2021, the Applicants addressed an email to the RP, requesting the convening of the 7th meeting of the Committee of Creditors and explicitly proposing as agenda items matters of critical importance, namely: a re-vote on the resolution plan submitted by Sanjay Goyal (H1), discussion on Form-H, and the status of the forensic audit. Subsequently, on 20.01.2021 at 10.36 AM, the Applicants formally requested the inclusion of an additional agenda item, namely, the proposal for replacement of the RP.

It is the case of the Applicant that the RP had gone to the extent of diluting the voting share of the Committee of Creditors (CoC). From the records, it is seen that the RP had filled the Counter in IA 5108/2020, wherein the Resolution Professional (RP) in its reply, which he had furnished on 11.02.2022 submitted that claims of the petitioner therein (Respondent no. 4-13 in present application) were fraudulent, fabricated, and aimed at extorting money from the Corporate Debtor by misusing the CIRP process. The payments relied upon are inconsistent, as the booking form is dated 2015 while the ledger shows payments from 2013, and the receipts are in the name of M/s Singla Traders, of which the Applicant became a partner only in 2016. Further, the receipts were issued by Homestead Infrastructure Pvt. Ltd., whereas the Flat Buyer Agreement was with Golden Peacock Residence Pvt. Ltd., and the agreement itself was improperly executed by a person not a director at the time. The RP also alleged collusion, noting that identical ledgers and receipts were used by multiple individuals to raise fictitious claims, with the Applicant even altering claim amounts without proper justification. Thus, the RP contends that the claim is baseless, inconsistent, and part of a larger orchestrated fraud.

It is seen that by email dated 23.06.2020, the RP had demanded additional documents from the claimants. The excerpt of the mail is reproduced here-below:

It is seen that the RP in its reply in the aforementioned application i.e. IA 5108/2020 in Para 83 submitted the following which is reproduced here below:

Subsequently, in its reply filed in IA 5108/2020, the RP stated that he had re-admitted the claim of the Claimant on the basis of an e-mail dated 20.01.2021 received from the Claimants. The relevant portion of the Reply of the RP is reproduced here-below:

Thus, upon perusal of the Reply filed by the RP in IA 5108/2020 and the records of the present application, we note that, as on the date when the claims were admitted by the RP, the issues earlier raised by him vide e-mails dated 23.06.2020 and 13.07.2020 had not been addressed by the Claimants.

Further, it is evident from the counter filed by the RP in IA 5108/2020 on 11.02.2022, that there is no reference whatsoever to the purported letter dated 05.01.2021 from the ex-director, Mr. Pramod Gupta, allegedly concerning the submission of certain files/documents to the Resolution Professional, nor to the subsequent letters dated 14.01.2021, 15.01.2021, and 16.01.2021. This clearly indicates that such documents were not in existence at the time when the reply in IA 5108/2020 was signed and filed.

It was only after the receipt of the copy of the Application in the present application, i.e., IA 3143/2022 on 02.07.2022, wherein the Original CoC members sought quashing of the RP's decision to include Respondents No. 4 to 13 as homebuyers/financial creditors, and further prayed for voting on the agenda including the resolution for removal of the RP, the RP in its counter filed these documents (purported letter dated 05.01.2021 from the ex-director, Mr. Pramod Gupta, allegedly concerning the submission of certain files/documents to the Resolution Professional, and letters dated 14.01.2021, 15.01.2021, and 16.01.2021), which surfaced. The sequence of events unmistakably demonstrates that the said letters were fabricated, orchestrated, and concocted with the intent to create an impression of genuineness, despite their complete absence in the RP's earlier reply in IA 5108/2020.

It is observed that the claims of Respondents No. 4 to 13 were re-admitted even though no supporting documents were provided. These claims were based on identical letters and emails that were submitted in a suspiciously coordinated manner. The emails were sent very close to each other and the letters were identical in content and language, showing that they were neither independently prepared nor genuinely supported. This uniformity strongly indicates collusion between the claimants and the Resolution Professional, rather than a sincere submission of claims.

Additionally, it is the contention of the RP that Respondents No. 4 to 13 submitted hard copies of the desired documents to the Resolution Professional between 14.01.2021 and 16.01.2021, followed by e-mails dated 20.01.2021 and that the physical files of various flat buyers/allottees, including those of Respondents No. 3 to 14, were handed over in person to the Resolution Professional on 05.01.2021 by the suspended Director of the Corporate Debtor, Mr. Pramod Kumar. Further, during the course, the RP in its Written submission has submitted that "the Same is informed, to the already existed COC members orally, now R-2 needs to corroborate these claims."

On the basis of the said documents, the Resolution Professional claims to have verified the submissions of Respondents No. 3 to 14 and, accordingly, confirmed acceptance of their claims vide his e-mail dated 21.01.2022.

Further, upon perusal of the record, it is evident that Respondents No. 4 to 13 did not submit any new or additional material at the time of their purported re-admission of claims on 21.01.2021. The letters dated 14.01.2021, 15.01.2021, and 16.01.2021 were merely identical, templated communications that contained no substantive documentation. Further, Respondent Nos. 5 and 12, in their reply, have merely referred to an email dated 21.01.2021, with no mention whatsoever of any letter. Significantly, there is no acknowledgement on record from the Resolution Professional evidencing receipt of such letters, neither disclosing the mode of delivery, nor furnishing any proof of the date, time, or manner of their receipt. The Resolution Professional has also failed to produce any corroborative material demonstrating such acknowledgement. In the absence of any fresh or credible evidence, the Resolution Professional had neither legal nor factual justification to reverse his earlier decision. The subsequent re-admission of the claim appears to be motivated solely by a change in the Resolution Professional’s personal stance vis-à-vis the Applicants’ request for his removal. Such re-admission cannot, therefore, be treated as a bona fide reconsideration or review; rather, it constitutes a collusive exercise aimed at circumventing the due process of law.

Further, during the course of the hearing, this Hon’ble Adjudicating Authority observed in its Order dated 02.05.2025 as follows:

We are inclined to refer to the Order passed by Hon’ble NCLAT the matter of Mr. Rajnish Jain vs. Manoj Kumar Singh (RP) and Ors (Company Appeal (AT) (Insolvency) No. 519 of 2020) wherein it has been held that:

We note that the duty of the Resolution Professional is strictly confined to verifying and confirming that the claims submitted to him are genuine and supported by requisite documentation. In the present case, the RP has exceeded the scope of his powers by suo-motu reviewing and admitting the claims of the Applicants while the matter was pending before this Hon’ble Adjudicating Authority. Such conduct constitutes an overreach of authority, as the RP cannot unilaterally entertain or re-admit claims that are sub judice before this Tribunal. The action of admitting the claims in these circumstances is therefore contrary to the principles of law and the procedural safeguards prescribed under the Insolvency and Bankruptcy Code.

As per section 18(1)(b) of the Code, the IRP is duty bound to receive and collate all the claims submitted by the creditors to him/her, pursuant to the public announcement u/s 13 and 15. Further, u/s 25(2)(e) of the IBC, the Resolution Professional is mandated to maintain an updated list of claims. The manner in which such duties which are cast upon the IRP and the RP are to be performed, have been prescribed under Regulation 10 to 14 of the CIRP Regulations, 2016. Regulation 13 of the CIRP Regulations deals with verification of claims. Regulation 13 states that the IRP/RP, as the case may be, shall verify every claim, as on the insolvency commencement date, within 7 days from the last date of the receipt of claims, and thereupon maintain a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims and update it. We find that there is no provision of law whereby the IRP/RP can conditionally accept or reject the claim. We also observe that such “verification” of claims should be made based on the information that is furnished by the creditor as well as the records of the Corporate Debtor. It is settled position in law that the Resolution Professional is not an adjudicator but merely a facilitator and therefore, the powers conferred on the resolution professional for this purpose is merely an “administrative power” and the same cannot be used by the professional to act like an “adjudicating authority” which power is exclusively conferred on the NCLT and NCLAT by the IBC. In the present case, the IRP/RP had rejected the claims of the Applicants on merit, and while an appeal against such rejection was pending adjudication before this Adjudicating Authority, the RP, relying on a newly fabricated set of documents, allowed the admission of the claims. We opine that once a claim is admitted or rejected; to re-verify it of its own would be exceeding the powers and duties of the present Resolution Professional without the approval of the adjudicating authority, such conduct is clearly impermissible and cannot be sustained.

It is evident from the record that the Resolution Professional has clearly exceeded the scope of his authority and, in doing so, compromised the integrity of his function. The manner in which the claims of Respondents No. 4 to 13 were re-admitted, without any fresh or credible documentation and while the matter was sub judice, indicates a conduct that is inconsistent with the impartial and fiduciary duties owed by the RP to the corporate debtor and its creditors.

The sequence of events and the uniformity of the claims suggest that the RP has acted in concert with the claimants, reflecting a possible collusion with an intent to undermine the legitimate interests of other stakeholders. Such overreach in admitting claims, despite the absence of requisite proof and judicial oversight, constitutes a dereliction of duty and a clear abuse of office. In view of the foregoing, strict action against the RP is warranted.

We further note that under the statutory framework, the Resolution Professional is not empowered to receive documents in hand or through any informal mode. Regulation 8(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 mandates that:

The Resolution Professional, therefore, could not have entertained or acted upon alleged documents or letters that do not comply with the statutory requirement. Further, It is on record that Respondent Nos. 5 and 12, during the hearing of this matter had submitted that they had not received any confirmation or acknowledged from the RP for the alleged letters. This strengthens the inference that such letters have been prepared, concocted or fabricated solely with the object of reducing and diluting the legitimate voting share of the existing CoC members.

Subsequently, on 20.01.2021, the Applicants emailed the RP requesting the addition of a fourth agenda item for discussion in the 7th CoC meeting, namely, the replacement of the RP (Respondent No. 2 herein). Despite these circumstances, on 21.01.2021, the RP admitted the claims of Respondents No. 4 to 13 based on their emails. We note that the Applicants, by email dated 20.01.2021 at 10:36 AM, formally requested the inclusion of an additional agenda item, namely, the proposal for the replacement of the Resolution Professional. It is significant that the alleged claims of Respondents Nos. 4 to 13 were admitted through emails dated 21.01.2021, merely one day after the Applicants' request for the RP's replacement. This timing strongly indicates that the documents were created with a mala fide intention to dilute the Committee of Creditors, thereby protecting the Respondents position and preventing the Resolution Professional from demitting office. Therefore, we observe that the documents were fabricated to create a misleading impression of authenticity and to simulate substantial veracity.

It is noted that the Resolution Professional, having once rejected the claims of Respondent Nos. 4 to 13 upon due verification and having duly communicated the same to the Authorised Representative vide email dated 25.07.2020, had no justifiable basis to subsequently reintroduce and accept those very claims in the impugned 7th CoC Meeting. The sequence of events clearly indicates that such reversal was not borne out of any fresh material or lawful consideration, but rather appears to have been orchestrated by the Resolution Professional with a view to safeguard his continuance in office. The purported letter dated 05.01.2021 from the ex-director, Mr. Pramod Gupta, concerning the submission of certain files/documents to the Resolution Professional coupled up with the timing of the alleged letters dated 14.01.2021, 15.01.2021 and 16.01.2021, whereby these claims came to be reconsidered, in close proximity to the applicants’ requisition dated 20.01.2021 seeking replacement of the Resolution Professional under Section 27 of the Code, lends credence to the inference that the Resolution Professional had deliberately planted/ manufactured such alleged documents to dilute the voting share of the genuine homebuyers and to frustrate the legitimate move for his replacement.

Further, from the record before us, it is evident that no documents were furnished by the Claimants as per the emails dated 23.06.2020 and 13.07.2020 to comply with the request of the RP in order to overcome his Objections. We are, therefore, at a loss to comprehend as to what “mysterious” documents surfaced before the RP, on the basis of which he proceeded to admit the claims after levelling such stern and stringent allegations against the claimants wherein it had earlier rejected their claims. This peculiar sequence of events casts a serious cloud of doubt on the credibility of the RP’s actions.

The omission of any reference to the alleged letters dated 14/15/16 January 2021 in the earlier reply filed by the Resolution Professional (RP) in IA 5108/2020, and their subsequent introduction for the first time in the reply to the present proceedings, clearly indicates that the said documents were fabricated by the RP in collusion with the Director of the Corporate Debtor and Respondent Nos. 4 to 13. Such fabrication was evidently undertaken with the mala fide intent of diluting the composition of the Committee of Creditors (CoC) of the Corporate Debtor and to secure his undue benefit by subverting the proposal for his removal from the position of RP, thereby exposing the manipulative conduct of the RP.

It is a settled proposition of law that the Resolution Professional has no authority under the Code to unilaterally reconstitute the Committee of Creditors by admitting or rejecting claims contrary to an earlier decision already taken. The Hon'ble National Company Law Appellate Tribunal, in Union Bank of India v. Rajdeep Clothing and Advisory Pvt. Ltd. & Ors. (Company Appeal (AT)(Ins) No. 399 of 2021), upheld the decision of the Adjudicating Authority to replace the Resolution Professional on the ground that he had reconstituted the CoC without obtaining the specific approval of the Adjudicating Authority. A similar view was taken by the Hon'ble NCLAT in Rajnish Jain v. Manoj Kumar Singh & Ors. (Company Appeal (AT)(Ins) No. 519 of 2020), wherein it was categorically held that the Resolution Professional does not possess the power to review his own decision, and if aggrieved by such decision, the proper course would be to seek directions from the Adjudicating Authority for reconstitution of the CoC. The Hon’ble NCLAT, while so holding, also referred to its earlier decision in Mahal Hotel Pvt. Ltd. v. Asset Reconstruction Company (India) Ltd. & Ors. (Company Appeal (AT)(Ins) No. 633 of 2018), thereby reaffirming the principle that a Resolution Professional cannot suo motu alter the composition of the CoC, and any such act amounts to overreach of jurisdiction.

The Hon’ble National Company Law Appellate Tribunal, in Union Bank of India v. Rajdeep Clothing and Advisory Pvt. Ltd. & Ors. (Company Appeal (AT)(Ins) No. 399 of 2021) The relevant para are reproduced here below:

In view of the foregoing discussion, we note that material irregularity in the conduct of the CIRP is one that significantly impacts the fairness, legality, and integrity of the process. Such irregularities can lead to delays, financial losses, and litigation, thereby defeating the objectives of the Code. Material irregularities may arise from non-compliance with the statutory provisions, rules, and regulations governing the CIRP. Any deviation from these prescribed legal provisions, both procedural or substantive, may amount to a material irregularity and affect the legitimacy of the resolution process, of-course, depending upon the facts and context of each case and no strict guidelines can be laid down

At this stage, we must record our profound concern over the conduct of the Resolution Professional. Such dereliction of duty undermines the confidence that creditors and other stakeholders repose in the insolvency resolution process. In our considered view, the RP can no longer be entrusted with the continuation of the Corporate Insolvency Resolution Process, which necessitates immediate corrective intervention. In the exercise of our inherent powers under Rule 11 of the NCLT Rules, 2016, and in order to prevent abuse of the process while safeguarding the integrity of the Insolvency and Bankruptcy Code, 2016. Accordingly, we pass the following orders:

A. For reasons recorded hereinabove, we hold that the Resolution Professional acted beyond his authority in including Respondent Nos. 4 to 13 as financial creditors/homebuyers, relying on fabricated and improperly submitted documents, in clear contravention of the Code, CIRP Regulations and hence we direct the present RP to be replaced forthwith.

B. The decision of the Resolution Professional to include the said ten creditors (Respondent Nos. 4 to 13) is quashed and set aside. Consequently, all decisions of the CoC taken post such inclusion are declared void ab initio.

C. Hence, this Adjudicating Authority hereby appoints Mr. Vineet Gupta having address: 408, Laxmi Deep Building, Dist. Centre, Laxmi Nagar, New Delhi, National Capital Territory of Delhi, 110092, Email id [email protected], registration number - IBBI/IPA-001/IP-P00810/2017-2018/11377 as Resolution Professional (RP) of the Corporate Debtor to carry out the functions as per the Code subject to submission of a valid Authorisation of Assignment in terms of regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 within three days of this order. The Resolution Professional shall also file a 'Declaration Disclosure Statement' within two days from the date of this order.

D. The fee payable to the RP, as the case may be, shall be compliant with such Regulations, Circulars and Directions as may be issued by the Insolvency & Bankruptcy Board of India (IBBI). The IRP shall carry out his functions as contemplated by sections 15, 17, 18, 19, 20 and 21 of the Code.

E. The erstwhile Resolution Professional, Mr. Jitesh Gupta (Registration No. IBBI/IPA-002/IP-N00144/2017-18/10380), is hereby directed to immediately and unconditionally hand over all documents, records, and any other material in his possession pertaining to the Corporate Debtor to the newly appointed Resolution Professional, Mr. Vineet Gupta. This handover shall include all physical and electronic records, correspondences, financial statements, and any other relevant documentation or data necessary for the continuation and effective administration of the Corporate Insolvency Resolution Process (CIRP). The handover is to be completed without delay to ensure there is no impediment in the progression of the insolvency proceedings, and to facilitate a smooth transition in the management of the CIRP.

F. The Registry/Court Officer is hereby directed to promptly communicate a certified copy of this order to both Mr. Jitesh Gupta and Mr. Vineet Gupta. The Resolution Professional, Mr. Vineet Gupta, is further directed to file a compliance report before this Adjudicating Authority upon the successful receipt of all relevant materials from Mr. Jitesh Gupta.

G. The Registry is further directed to send a copy of this order to the Insolvency and Bankruptcy Board of India (“IBBI”) for their record and necessary proceeding against the erstwhile RP Mr. Jitesh Gupta.

H. The newly appointed Resolution Professional herein, is directed to convene a meeting of the CoC strictly in accordance with law, placing the four agenda items requisitioned vide letters dated 14.01.2021 and 20.01.2021, including the agenda for inviting fresh Resolution Plans.

The Application stands allowed in the above terms.