Mr. Rupesh Das & Ors. vs Mr. Gaurav Katiyar

An application under section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") was filed by the Financial Creditor i.e. M/s. Nisus Finance & Investment LLP, against the Corporate Debtor i.e. M/s. Earthcon Universal Infratech Private Limited and the said application was admitted by this Adjudicating Authority vide order dated 08.11.2020 and a moratorium was declared including appointment of Mr. Jitendra Arora as an Interim Resolution Professional. Subsequently, the present Respondent namely Mr. Gaurav Katiyar was confirmed as Resolution Professional. ii. The Resolution Plan was submitted by the Successful Resolution Applicant namely Consortium of M/s. D S Infraheights Private Limited and M/s. Anand Buildtech Private Limited which was approved by the CoC in its 26th meeting dated 19.08.2023 by 70.18% voting share in respect of the CIRP of the Corporate Debtor after considering its feasibility and viability. Thereafter, Mr. Gaurav Katiyar, the Resolution Professional of M/s. Earthcon Universal Infratech Private Limited submitted an IA-4466/2023 for seeking approval of Resolution Plan under Section 30(6) read with Section 31 of IBC, 2016 on 22.08.2023, which is pending adjudication before this Adjudicating Authority.

It is the case of the Applicant that during the CIRP of the Corporate Debtor, the RP took decisions which are detrimental to the interest of hundreds of homebuyers, including the Applicants, in flagrant violation of duties and responsibilities cast upon him under the provisions of the IBC read with CIRP Regulations. The impugned decisions do not have any basis in the provisions of the Apartment Buyers Agreement ("ABA"), the Allotment Letter, leading to an irresistible inference about the possible collusion of the RP with the erstwhile management of the Corporate Debtor, in mismanaging the affairs of the Corporate Debtor.

The instances of acts and omissions by the RP are as follows: A. Opaqueness in the conduct of 3rd COC meeting of 19.12.2020 whereby materially adverse decisions taken, in a stark departure from the conduct of the 2nd COC meeting. B. Raising of illegal demands from the homebuyers, beyond the contractual dues, in the form of higher charges for electricity, as well as, claiming of unlawful maintenance charges. C. Illegal demands made from the Homebuyers for depositing interim finance @ Rs. 20,000/- per claim of real estate units. D. Gross and deliberate deficiency in collation of claims. E. Adoption of unlawful and coercive techniques by the RP. F. Ostensibly deliberate delay in closing the books of accounts and conducting statutory audit. G. Gross delay in appointing a Forensic Auditor to identify the modus operandi of siphoning off of the assets of the Corporate Debtor. iii. In light of the above, the Applicants/homebuyers are praying for directions to the RP to expedite finalization and closure of books of accounts, appointment of Forensic Auditors, and collation of claims of homebuyers and also the RP may be directed to desist from making illegal and unlawful demands of electricity and maintenance charges.

The Resolution Professional has filed reply affidavit denying the contentions and allegations made in this application filed by the Applicants/ homebuyers. The Respondent/ Resolution Professional has submitted that with regard to the increase in rate of maintenance charges, it is submitted that the same has not been done as the CoC in its 4th meeting vide agenda no 9 has rejected its earlier decision of increase in rate of maintenance charges. The main grievance of the Applicants in the present application is increase of electricity rate from Rs. 7.00/- unit to Rs. 8.91/- unit w.e.f. 01.01.2021 and raising of interim finance @ Rs. 20,000/- per allottees (from 900 allottees).

It is submitted that before the insolvency commencement date the Corporate Debtor has given the possession of units/flats to various allottees despite the fact that the construction of the real estate project was not complete.

It is further submitted that since the NPCL has provided the temporary electricity connection to CD for construction purposes therefore the NPCL is rightly charging the per unit rate of commercial slab (i.e. Rs. 8.91 /unit).

During the month of July, 2020, the NPCL issued disconnection notice because of there accumulated dues when the answering Respondent was appointed as RP from the past history of electricity consumption by the Corporate Debtor.

Currently, the Corporate Debtor who is providing the electricity to the allottees is charging Rs. 7/- per unit from the residents residing at the Sanskriti and Casa Royal project (from the allottees) whereas the Noida Power Corporation Limited (NCPL) charged Rs. 8.91/- per unit (per unit rate of commercial slab) from the Corporate Debtor.

It is submitted that the disconnection of electricity will not adversely affect the Corporate Debtor as no construction activity from February' 2020 was done but the disconnection would adversely affect the lives of the residents residing there.

The average consumption of the residents is ranging between 180-200 units per month which shall not cost to the applicants more than Rs. 350-400 per month which may be less than the cost of this application.

it is submitted that raising of interim finance is permissible under Section 25(2)(c) read with Section 28(1)(a) of the Insolvency & Bankruptcy Code, 2016. It is further submitted that as per Section 5(13)(a) of the code, the insolvency resolution process cost includes the interim finance raised by the IRP/ RP. Further, as per Section 30(2)(a) of the code, the insolvency resolution process cost has its own priority. It is also pertinent to mention here that the RP proposed to raise Rs. 180.56 lakhs from the allottees subject to contribution of Rs. 20,000/- per allottee which means as per the agenda number 19, the RP is empowered to raise interim finance from 900 allottees only. It is also pertinent to highlight here that the aforesaid agenda was approved by 980 allottees (i.e. 86 % of the 1140 allottees participated as class).