M/s. Umak Investments Co Private Limited & Anr vs U.G. Hotels and Resorts Limited & Ors

Subrata Kumar Dash, Member (Technical)

CA Nos. 74/2021, 75/2021, 126/2023, 50/2022, 79/2023

These applications, being interlinked, are taken up together for adjudication.

CA No. 126/2023 has been filed to amend the prayer clauses in CA No.75/2021 in terms of our order dated 29.05.2023, wherein the Ld. Administrator was requested to amend the prayer clause in view of the offer received by him subsequent to the filing of these applications. Respondent No. 7 being a necessary party, the amended memo of parties along with the amended prayers were taken on record and CA No. 126/2023 is disposed of as discussed in later part of this order.

CA No. 79/2023 is a status report filed by the Ld. Administrator to bring on record certain relevant developments and has, inter alia, been mentioned as under:

M/s Umak Investment Company Pvt. Ltd. assailed the Order dated 23.11.2022 passed by the NCLAT in the Hon'ble Supreme Court of India. The Hon' ble Supreme Court was not inclined to intervene in the matter in exercise of its jurisdiction under Article 136, while observing, vide Order dated 09.02.2023, that it was only a matter of opening of a "Food and Beverage Outlet" in the entire Resort and instead passed the following Order:

"1. But for requesting that the National Company Law Tribunal may dispose of the proceedings expeditiously within a period of three months, we are not inclined to intervene, at this stage.

The appeal is accordingly dismissed.

Pending application, if any, stands disposed of."

(Emphasis Supplied)

The Status Report is taken on record and CA No. 79/2023 stands disposed of.

CA No. 74/2021:

This is an application filed by M/s. U.G. Hotels and Resorts Limited against the respondents, i.e., Umak Investment Co Pvt Ltd (respondent No. 1), Umesh Phalpher (respondent No. 2), Bhalinder Ghai (respondent No. 3), Kamaljit Kaur Ghai (respondent No. 4),: Gurpreet Kaur (respondent No. 5) with a prayer that the earlier contemplated "Tripartite Agreement" be now permitted to be entered into an agreement between Purchaser, U.G. Hotels and Resorts Pvt. Ltd through Administrator, Sh. Umesh Phalpher and M/s Umak Investment Co. Pvt. Ltd. without the LRs of Sh. H. S. Ghai who have forfeited their right on account of various acts and omissions and commissions to represent M/s U.G. Hotels and Resorts Pvt. Ltd.

The facts as mentioned in the application are as under:

i. Vide order dated 19.03.2021 in CA No. 781/2019 RT CP No. 06(ND)/2009, this Tribunal noticed that Sh. HS Ghai had expired on 10.01.2020. During subsequent proceedings, notices have been issued to the LRs of Sh. H.S. Ghai who were impleaded and brought on record vide order dated 25.11.2020

in CA No. 403/2020.

ii. It is stated on account of consistent and continued actions against the interest of the respondent company including litigation inflicted on the company by Late Sh. H.S. Ghai, his associates and his LRs, the applicant seeks relaxation to have a proper agreement including annexures for approval being granted without including the LR’s of H.S. Ghai. It is further submitted that the voting rights of H.S. Ghai in respect of 9,35,000 stand suspended by an order dated 06.01.2015 of this Tribunal which has attained finality. It is further stated that the LRs have continued the acts and commissions of Late Sh. Ghai, have non-cooperated with the Administrator and has not paid any amount to the administrator for the maintenance of the company. Further, they have obstructed the efforts for the sale of the resort by dissuading the prospective buyers from inspecting public notice appointed by the public Administrator.

iii. The administrator has made allegations of instigation to the workers to go slow and to demand absurdly higher wages on the part of late Shri Ghai and also of criminal trespass, committed by him, and his associates in December 2014. It is stated that FIRs were filed and prosecution is pending before the District Court. It is also stated that Late Shri Ghai had got an attachment on the property and restrained the revenue records from being updated on the division and transfer of land due to an alleged sales tax demand of Rs.3,59,00,00,000 of his sole proprietary concern. The said attachment was withdrawn after the Administrator made representations to the revenue authorities, Late Shri Ghai also filed numerous litigations against the company in an attempt to frustrate the mandate given by this Tribunal. The Ld. Administrator also has to institute litigations and proceedings to defend and protect the interest of the company.

iv. It is further alleged that false, frivolous and collusive suits were filed by Mr Ghai before various Courts and Tribunals. The Ld. Administrator had submitted that his LRs have continued to pursue the said litigations and also remain in unauthorized possession in the trespassed portion of the Kothi. The Ld. administrator has stated that as per the directions of the Hon’ble High Court of Shimla, Himachal Pradesh, the sale proceeds are not to be distributed to the creditors without the leave of the Hon’ble High Court. Thus, it is submitted that the interests of the LRs of late Shri Ghai, both as creditors and shareholders, stand duly protected.

In the reply filed by respondent No. 1, i.e., Umak Investment Company Private Limited, a detailed account of the various acts and omissions by the Late Mr. Ghai has been submitted, and it has also drawn attention to certain extracts from the order of the Hon’ble CLB dated 18.10.2015 and certain extracts from the report of the Administrator dated 21.07.2018.

Keeping in view the various acts committed by Late Shri Ghai against the company, the applicant has prayed for modification of Clause 5 of the order dated 31.01.2014 to do away with the requirement of signing the tripartite agreement and the sale agreement/deed and also related formalities, which is prayed to be completed without respondent No.3.

In the reply filed by respondent No. 2, i.e., Sh. Umesh Phalpher stated that the reciprocal obligations are binding on all the parties and without the express leave, permission or consent of any of the parties there could be no modification or change to the consent terms/ agreed between the parties. He has made certain insinuations against the steps taken by the Ld. Administrator and has alleged that the Administrator has acted contrary to the order of the Court. The Ld. Administrator was to locate a buyer to purchase the assets of the company and in doing so, prepare of draft providing agreement between Umak Investment, Lt. Sh. Ghai and Mr. Umesh Phalpher.

It is further stated that the reciprocal obligations are binding on all the parties and respondent No. 2 has not agreed or consented to change any of the clauses in the consent terms. It is stated that the present application filed by the administrator is premature and the applicant has no locus standi to file the present application. The draft Tripartite agreement as per binding court order could only have been made with the purported Buyer/investor/lender when

i. All parties to the Lis were ad idem.

ii. All parties were called for discussions.

iii. All parties were privy to the meeting and negotiations.

It is further alleged that great damage has occurred to the value of the assets of the company by underquoting and undervaluing the assets.

In the reply, respondent Nos. 3 to 5, i.e., Kamaljit Kaur Ghai, Gurpreet Kaur and Gurpreet Kaur Bhatia have stated that the present application is not maintainable on the ground that once the company petition was disposed of in the year 2009, in terms of the settlement reached between the parties, all parties became bound by such terms. The order having become final, could not be modified without the consent of all parties. It is further stated that once the investor has consciously accepted the terms of the settlement, and had agreed to the fact that the sale could not take place without the consent of late Shri Ghai, it was not for the Ld. Administrator to supplant his wisdom over the conscious decision taken by the litigant. It is further stated that the Ld. Administrator was not a party to the company petition and is neither a party to the settlement agreement in terms of which the company petition has been disposed of. Hence, it is submitted that the applicant in the present application has no locus to maintain the present application, not being an affected party. It is further submitted that the limited mandate given to the Ld. Administrator was to look for a buyer to purchase the assets of the company and in doing so, prepare a draft tripartite agreement between the investor, the company, Late Mr Ghai and Mr Phalpher. Regarding the allegations against the Late Mr Ghai made by the Ld. Administrator, it is stated that suspicion, no matter how grave, cannot take the place of definitive proof in a court of law.

Respondent Nos. 3 & 5 have further stated that this Tribunal has no jurisdiction to pass any direction, including the one sought by means of the present application as there was no recording of a positive finding qua operation and loss or mismanagement in a company as held in the decision of the Hon’ble NCLAT in the matter of Upper India Steel Manufacturing and Engineering Co. Ltd. and Ors. vs. Gurlal Singh Grewal and Ors; Company Appeal (AT) No. 150 of 2017.

It is also stated that Umak Investment had filed two civil suits before the Hon’ble Delhi High Court and the said suits came to be decreed in terms of the settlement dated 15.07.2009 vide order dated 26.11.2013, passed by the Hon’ble Delhi High Court. The said order categorically states that the suits were decreed in terms of settlement, which shall be appended to form a part of the decree. If Umak Investment still wants to recover any amount under the settlement agreement, it has the option of filing and executing the decree dated 26.11.2013 passed by the Delhi High Court, at which point, the Hon’ble Court still decide if money is payable to Umak Investment or not.

CA No. 75/2021:

This is an application filed by M/s. U.G. Hotels and Resorts Limited against the respondents, i.e., Umak Investment Co Pvt Ltd (respondent No. 1), Umesh Phalpher (respondent No. 2), Bhalinder Ghai (respondent No. 3), Kamaljit Kaur Ghai (respondent No. 4),: Gurpreet Kaur (respondent No. 5); GR Buildhomes Pvt Ltd (respondent No. 6) with the following prayers:

A. Accept the proposal/offer as may be made by the highest of the two offerors for the purchase of Shilon Bagh Resort and assets/liabilities of the Company subject, of course, to any further or additional terms and conditions which this Tribunal in its wisdom and discretion may consider proper and desirable. However, if the said offeror fails to pay the balance sale consideration within the stipulated time of 4 months or such time as the Tribunal may deem fit, the upfront/earnest money as deposited with the Administrator, would be liable to forfeiture.

B. * This Hon’ble Tribunal may be pleased not to hear the LRs of late Mr. Ghai unless they have unconditionally done the following acts: (* Not pressed by the counsel for the applicant as per our daily order dated 13.09.2023).

Withdrawing and vacating the portion of the Kothi in which they had wrongfully trespassed and continue to be in unauthorized possession;

Withdraw the false, fraudulent, and collusive suits, being C.S. No. 32, 39 and 45 of 2019 filed before the Civil Judge, District Court Shimla, in the name of Sonu Devi and Shoop Ram.

Withdraw the Revenue Appeals got filed by the late Sh. H.S. Ghai through Bhoop Ram, Ram Kumar, Mansa Ram, Chandu Lal and Sonu Devi against the Order dated 08.01.2016 of the Naib Tehsildar setting aside the CA No. 182 of 26.07.2003.

Withdraw the winding-up petitions, being Company Petition Nos. 9,10,11 and 12, filed by the companies controlled by late Mr H.S. Ghai and his family members against the Respondent Company, subject to such amount as this Tribunal directs being kept apart for meeting any claims of creditors.

Withdraw all other litigations as per the list attached to the Affidavit dated 28.09.2020.

Undertake to pay their proportionate contribution for the expenses incurred in the security and maintenance of the property as well as the office of the Administrator till date as may be determined by this Hon'ble Tribunal.

During the pendency of this application, by CA No. 126/2023, the Ld. Administrator amended the original prayer and has stated as under:

That it is stated that the respondent no. 7 (M/s MC Jain & Company Pvt. Ltd.) has made an offer to purchase the property and assets of M/s. U. G. Hotels and Resorts Ltd. for a sum of Rs. 46 Crores on "as is where is" basis and also has made a deposit of Rs. 2.30 Crores as earnest money in the form of FDR. That on 02.06.2023, the applicant/ administrator received an email from the respondent no. 6 wherein the said respondent has revised his offer to purchase/ acquire the property and assets of M/s. U. G. Hotels and

Resorts Ltd. for Rs. 47.08 Crores on "as is where is basis". A copy of the Email dated 02.06.2023 sent by respondent no. 6 is annexed herewith as Annexure A-10. The email has been followed by a duly signed letter dated 02.06.2023, which is enclosed as Annexure A-11. Advance service of affidavit on behalf of respondent no. 6 in CA No. 75 of 2021 received vide email dated 05.06.2023 and the Administrator's reply dated 06.06.2023 is annexed hereto as Annexure A-12 (Colly.).

It is pertinent to mention here that both the respondents i.e., respondents no. 6 and 7 having been informed of the encumbrances and litigations concerning the property and assets, M/s. G.R. Build Home Pvt. Ltd. (Respondent no. 6) had submitted a bid initially for Rs. 40 Crores for the purchase of the subject property and assets "on as is where is basis". However, now the said respondent has revised the bid to Rs. 47.08 Crores on "as is where is" basis whereas M/s MC Jain & Company Pvt. Ltd. (Respondent No. 7) has submitted its offer for a sum of Rs. 46 Crores on "as is where is" basis for purchasing the assets of M/s. U.G. Hotels and Resorts Ltd. M/s G.R. Build Home Pvt. Ltd. have been informed that incremental earnest money at the rate of 5% of Rs. 7.08 Crores i.e., Rs. 35,40,0000/- by way of FDR would need to be deposited with the Administrator for forwarding their offer for consideration by the NCLT.

That applicant is under a bounden duty to place the bids as received before the Hon'ble NCLT, especially in the light of the Order passed by the Tribunal on 29.05.2023 to amend CA No. 75/2021 to bring on record of the said application the bid of M/s. M.C. Jain 8 Company Pvt. Ltd. Accordingly, the revised bid as received from M/s. G.R. Build Home Pvt.

Ltd. is also sought to be brought on record in the present amendment application.

That considering that initially respondent no. 6 (M/s G.R. Build Home Pvt.Ltd.) had given a bid for Rs. 40 Crores on 23.01.2021 which was pending consideration before the Hon'ble NCLT, Chandigarh. In the meanwhile, a bid from respondent no.7 (M/s. M.C. Jain & Company Pvt. Ltd.) dated 26.09.2022 for Rs. 46 Crores was received, which was placed before the Tribunal and is pending consideration (CA No. 79/2023). The revised bid by respondent no. 6 (M/s. G. R. Build Home Pvt. Ltd.) has been submitted after nearly two years and four months of the initial bid and after one and a half years after the bid by respondent no. 7 (M/s. M. C. Jain & Company Pvt. Ltd.)

In these facts and circumstances, the applicant / Administrator, is prima facie of the view that it would be in the interest of justice and the applicant company, that the Hon'ble Tribunal considers giving to both the bidders an option for open bidding before it and accept the highest bid as offered. Alternatively, the Hon'ble Tribunal may direct them to submit within a week their best offer in a sealed cover before the Administrator to be opened before the Tribunal on a specified date, making it clear that the bids are to be on "as is where is basis" together with the acknowledgement that they have been apprised of the encumbrances and litigations on the property and assets.

(Emphasis Supplied)

In the course of the present proceedings, the learned counsel for the applicant stated that “in the prayer in IA No. 75/2021 as amended by CA No. 126/2023 at this stage he is pressing prayer A of IA No. 75/2021 as modified by CA No. 126/2023. As recorded in our daily order dated 13.09.2023; “the learned counsel for the applicant has also stated that at the moment he is not pressing the other prayers and he is, however, at liberty to agitate these prayers at relevant time.”.

In our discussion, we have considered the prayers and amended memo of parties filed by CA No. 126/2023.

The facts as per the applicant are as under:

I. The Ld. Administrator of the company, M/s. UG Hotel and Resorts Limited, was appointed vide order dated 31.01.2014 passed by the erstwhile Company Law Board in CA No. 282/2012. The said appointment was with the consent of all stakeholders, which includes respondent Nos. 1 & 2 and three LRs of Late. Sh. Ghai impleaded as Respondent Nos. 3,4,5.

II. It is stated that the Ld. Administrator has taken all requisite steps for clearing clouds on the property and assets of the company including getting the valuation done and instituting appropriate representation before various authorities against many litigations initiated mainly by one of the promoters, i.e., Late Sh. Ghai. The other steps taken by the Administrator include the appointment of M/s. Quikr Realty Ltd., an e-auction service provider, publication in newspapers. Mainly due to the obstructions from one of the promoters, i.e., Late Shri. Ghai, no prospective purchaser was coming forward to purchase the resort and the property got the tag of being a litigated one. Subsequently, the proposal from one M/s. GR Buildhomes Private Limited was received which gave a commitment regarding the purchase price, and upfront payment to be made by the purchaser. After negotiations, the prospective purchaser M/s GR Buildhomes Private Limited has made an upfront payment through two demands drafts dated 01.03.2021 bearing Nos. 018693 and 01879 for INR Rs. 1Cr each along with the bank Comfort Letter furnished on 03.03.2021. It was subsequently amended as per the desire of the Ld. Administrator and re-submitted on 05.03.2021. The Administrator has deposited the same of Rs. 2 Cr. with instructions to make two FDRs for a period of 120 days for INR 1 Cr. each on 06.03.2021. It is also submitted that the promoters have failed to bring buyers. It is informed that the sale deed to be executed is only in respect of land converted to industrial use and transferred to the company, i.e., 92 bighas and 8 biswas. For the remaining land, i.e., 72 Bighas and 10 biswas, which is in agricultural/horticultural use, but in possession of the company for which the company had paid full sale consideration, only possession is to be handed over pending the prospective purchaser seeking and obtaining permission for conversion of the use from agricultural to Industrial/Residential to enable transfer of the said remaining land. This also includes 7 bighas and 11 biswas of land on which the associates of Lt. Sh. H.S. Ghai, namely Bhoop Ram and Sonu Devi have obtained status quo orders on the basis of forged and fabricated documents.

The gist of the replies filed by respondents to CA No. 75/2021 are as under:-

·         Respondent No.1, i.e., Umak Investment Company Private Limited, stated that the fact of the amount due to respondent No.1 and interest thereon as per the terms of settlement dated 15.07.2009 was duly endorsed by respondent Nos. 1 & 2. It is further stated that a sum of Rs. 16.50 Crores along with interest @ 12% per annum is due to respondent No. 1 under the settlement agreement dated 15.07.2009 read with orders dated 20.07.2009 and 31.01.2014. The respondent No. 1 has also contributed towards the day-to-day expenses of running the applicant company. These expenses involve security charges, fees of administrator, litigation expenses etc. Respondent No.1 has furnished details of a sum of Rs.41.50 Crores which is stated to be due towards it apart from the resources invested in terms of manpower, time and legal expenses.

·         In the reply filed by respondent No. 2, i.e., Umesh Phalpher, it is stated that the Ld. Administrator has no locus standi to file the present application which is in any case premature and without following the mandate of the CLB and settlement dated 15.0 7.2009. It is further stated that the condition precedent as held by the CLB in its order dated 31.01.2014 appointing the administrator is yet to be fulfilled. It is submitted that the petitioner company has not complied with the obligations in terms of the settlement dated 15.07.2009. The details of such non-compliance by the company have been outlined in this reply. It is further stated that the Ld. administrator has exceeded his brief and has committed acts and omissions which are not in consonance with the order of this Bench. Various instances of such omissions and commissions have been outlined in the reply. It is also stated that the draft Tripartite agreement as per binding court order, could only have been made when:

(i)                   All parties to this Lis, were ad idem.

(ii)                 were called for discussions.

(iii)                privy to the meeting and negotiations.

Admittedly, no such document has been filed by the applicant to substantiate that. It is thus deemed to be admitted that all this was done in dungeon caves by keeping the majority stakeholders at bay. This blatant infraction of the court order has to be entered very seriously.

In their replies, respondents No. 3 to 5, i.e., Mr Bhalinder Ghai, Ms Kamaljit Kaur Ghai, Ms Gurpreet Kaur have stated as under:

·         It is stated that the present application is unsustainable and cannot be maintained at the instance of the Ld. Administrator, inter alia for the following reasons;

a. The applicant hearing has no locus to file the present application.

b. The Ld. Administrator has no authority to bypass the terms of the consent agreement entered into between the parties in 2009

c. The Ld. Administrator, is bound by the directions of the predecessor of this Tribunal, i.e., the Hon’ble CLB.

d. That the property of respondent No. 1 company has been grossly undervalued, and the offer made by the proposed buyer is acceptable to the answering respondents.

e. The actual ownership of the land has not been disclosed to the proposed buyer, and it is a ploy by the proposed buyer to scrupulously secure the seal of approval from this tribunal for grabbing the adjoining agricultural land, which does not belong to the company.

f. The proposed buyer is only a front for Umak Investment.

g. Umak Investment has failed to carry out reciprocal obligations cast on all parties in the order dated 31.01.2014. It is not entitled to receive the money agreed to under the settlement. It is further stated that the obligations against the late Mr Ghai are motivated and Ld. Administrator has completely digressed from the order of the Hon’ble CLB by seeking an acceptance for the offer made by the M/s. GR Buildhomes Private Limited bypassing the respondents. The details of the obligations cast on Umak Investment Private Limited in the CLB’s order have been outlined along with the various instances of alleged deviation from the aforementioned order of the Hon’ble NCLAT.

In its reply, respondent No.6, i.e., GR Buildhomes Private Limited has stated that the Ld. Administrator vide order dated 29.05.2018 in CP No.9 of 2012 before the High Court of Judicature at Shimla, Himachal Pradesh, obtained the permission to sell the property, albeit with a provision that the proceeds from the sale of the property would not be distributed amongst the creditors of the company without the leave of the High Court.

·         It is further stated that in the negotiations between the Administrator and applicant with the respondent a final offer of consideration to the tune of Rs.40,00,00,000/- (Rs. Forty Crores) was duly agreed upon the terms that 5% of the said consideration was agreed to be paid upfront and kept in FDR (pending the consideration of the offer by this Tribunal) and the rest was to be paid in six instalments, along with the Bank Comfort Letter to cover the transaction and the rest was to be paid in six instalments, along with the Bank Comfort Letter to cover the transaction.

·         It is also stated that once the offer of the answering respondent has been accepted by the administrator/applicant in terms of the said order and the same has been brought on record for approval before this Tribunal, no subsequent offer can be brought on record by the applicant and/or the same can be entered by this Tribunal or the same can be entered by this tribunal.

·          It is also admitted that the answering respondent has been made aware of the valuation report, balance sheet, and pending litigations, involving the property in the letter dated 07.01.2021 issued to the answering respondent by the administrator/applicant. Pursuant to the receipt of the said letter, inter alia, the answering respondent had offered/proposed to purchase the property on an “ as is where is”.

In the rejoinder filed, it is stated by the applicant that the preliminary submissions/objections raised by respondent No. 2 are misconceived and untenable. It is stated that in the absence of the compliance of terms of settlement dated 15.07.2009 by the respondents about the payments to be made to the petitioner, the only option left is to sell the assets of the company and to comply with the terms of settlement dated 15.07.2009 and order dated 31.01.2014 passed by the Hon’ble CLB.

·          It is further stated that the present application has been filed as per the mandate of the Hon’ble Company Law Board as it then existed. This is the only reasonable and purposive interpretation of the said order dated 31.01.2014, in the present facts and circumstances.

·          It is stated that by filing the present reply, respondent No. 2 has also joined the said bandwagon acting against the interest of the shareholders. The directors are now desirous of somehow extracting whatever they can, to the detriment of the public shareholders. As per the mandate of this Tribunal, the sale proceeds are to be disbursed as per his direction and supervision and after due permission from the NCLT and the Hon’ble High Court of Himachal Pradesh.

·          It is submitted that the various status reports and applications filed by the Ld. Administrator, from time to time, before the Hon’ble Tribunal demonstrate that the administrator has been doing the acts as per the mandate of the Hon’ble CLB and which are in the interest of the parties.

·          It is further submitted that the Ld. Administrator was appointed with the consent of all stakeholders, with the mandate as set out in the order dated 31.01.2014.

·          In its short note, respondent No.1, i.e., Umak Investment Company Private Limited has stated that CA No. 781/ 2019 was jointly filed by Umak and Mr. Phalpher. It is further stated that the Ld. Administrator is making tireless efforts to perform his functions and that respondent No. 2 is being made to suffer by the actions of Late. Mr H.S. Ghai.

·          It is further stated that despite the directions of the Hon’ble CLB, erstwhile promoters or legal heirs of Late Shri. Ghai have not contributed anything towards the expenses incurred by the administrator. Both are in defiance of the aforementioned orders. Umak Investment has spent over Rs. 3 Crores for expenses by the administrator which includes litigation initiated at the behest of Mr Ghai.

·          It is stated that vide order dated 08.10.2015, the Hon’ble CLB, Principal Bench, has recorded various non-compliances by the erstwhile promoters, and the said order has attained finality. Also, the rights concerning shares of Mr HS Ghai have been frozen. The erstwhile promoters have not complied with the orders of the CLB dated 06.01.2015 and 13.01.2015. Hence, until their compliance, they cannot be heard on their applications.

·          It is further stated that two interested parties are willing to purchase the property “ as is where is” basis. Considering various litigations initiated by promoters/trespass by their LRs, it would be best to have inter-se bidding between two parties to put a quietus to 15 years old litigation. Hence, CA No. 75/2021 may be allowed.

·

In the short submission filed by respondent No. 2, i.e., Umesh Phalpher, it is stated that the company petition was never decided or heard on merits but was settled amicably between the parties under mutually agreed terms and consent and order were obtained from CLB. The consent terms laid down certain reciprocal obligations and the petitioner has not fulfilled these obligations. The Hon’ble CLB appointed the Ld. Administrator with the consent of all parties on 31.01.2014 but the Ld. The administrator has not fulfilled the mandate given to him by the CLB. The terms of the settlement have to be complied with first by the Ld. Administrator and Umak before any sale can even be proposed by this Hon’ble Tribunal. It is further stated that the consent order dated 20.09.2009 with the terms of settlement dated 15.07.2009 and consent order dated 31.01.2014 in force the settlement dated 15.07.2009 cannot be modified without the express permission and consent of all parties.

·          It is stated that the valuation of the assets of respondent No.1 not in accordance with company Law are as under:

Valuation of assets in a Company can only be valued by registered and approved valuers u/s 247 of the Companies Act.

The Valuation done by the Administrator and Umak is to benefit the applicant buyers who are bidding a very low rate for the assets of the R1 Company. The Valuation has to be rejected in terms of section 247 of the Companies Act.

See Valuation of assets of UGHRL done by Administrator in 2015 for 95 bighas and 8 biswas page 45 of the CA 75 of 2021] @ 80 lacs per bigha [INR 76 crores]

See the Valuation of assets of UGHRL done by the Administrator in 2018 for 95 bighas and 8 Biswas [page 65 of the CA 75 of 2021]

d. Hence Administrator is attempting to encroach on other peoples land, that too agricultural, under the garb of permission received from this Hon'ble Tribunal. e. UGHRL cannot own or be in possession of agricultural land by virtue of bar under Section 118 of the HP Tenancy and Land Reforms Act.

Administrator has attempted to do a closed-door deal with GR Buildhomes/ Sikka to grab the assets of UGHRL at a very low price detrimental to the interests of UG, Ghai and 14000 other shareholders.

Written submissions filed by respondent No. 6, i.e., GR Buildhomes Private Limited, mention the following:

·          It is submitted that the ‘ unconditional offer’ of respondent No. 6 to the tune of INR 47.08 Crores on an “ as is, where is basis” submitted by respondent No. 6 vide email dated 02.06.2023 is substantially above the estimated market value of the property as ascertained by the Registered Government Valuer. wide email dated 02.06.2023 is substantially above the estimated market value of the property as ascertained by the registered government valuer.

·          It is stated that Respondent No. 6 is a Special Purpose Vehicle (SP) incorporated solely for the purpose of acquiring the property. Moreover, they possess the required expertise, experience and financial means to provide the property with a much-required face-lift and are therefore viable offerors for the same.

·          It is further stated that the Interpretation of the Settlement Order suggests that the condition for preparing a 'Draft Tripartite agreement' is an additional condition and not a prerequisite, thus, it is not a necessary precondition to seek the Tribunal's approval for the sale of the property. Respondent Nos. 2 to 5 may be prevented from creating hindrances in the purchase of the Property of the Applicant Company, post approval of the offer of Respondent No. 6 by this Hon'ble Tribunal.

·          Respondent No. 6 seeks the liberty of this Hon'ble Tribunal to suggest that an “Open Bidding” between Respondent No. 6 and Respondent No. 7 be conducted before the Ld. Administrator and 'not' before this Hon'ble Tribunal.

·          Respondent No. 6 undertakes to submit the earnest money deposit upon acceptance of its offer, which would be floated in the Open Bidding to be conducted before the Ld. Administrator.

·          It is prayed to direct the administrator/applicant to conduct an open bid between respondent Nos. 6 & 7 before himself, and accordingly, bring the best offer for approval before this Tribunal.

In the written submissions filed by respondent No. 7, i.e., MC Jain & Company Private Limited, it is stated that vide letter dated 26.09.2022, he has submitted his offer of Rs. 46.00 Crores for the purchase of the assets of UG Hotels & Resorts Ltd along with a demand draft for 5% of the total bid/offer i.e., Rs. 2,30,00,000/- (Rs. Two Crores Thirty Lakhs) as EMD, and this fact is acknowledged by the Ld. Administrator in his report dated 13.6.2023 filed vide CA No. 126/2023. Out of the initial four bids received, admittedly, respondent No. 7 was the unconditional highest bidder for the purchase of the property.

23.1 It is further stated that vide status report in CA No. 126/2023 dated 13.06.2023, the Ld. Administrator placed on record the revised bid of Rs. 47.08 Crores by Respondent No. 6. It is submitted that Respondent No. 6 did not submit a revised bid for more than a period of two years, and this revised bid was submitted by after gaining knowledge of the value of the bid submitted by Respondent No. 7.

23.2 It is also stated that the Ld. Administrator in para 8 of his status report dated 13.06.2023 has suggested two options:

a. Give both the bidders i.e. Respondents # 6 & 7 an option for open bidding before this Hon'ble Tribunal; or

b. Direct both the bidders, i.e. Respondents # 6 & 7 to submit their best offer to the Ld. Administrator within one week in a sealed envelope, which would be opened before this Hon'ble Tribunal on a specified date.

It is pointed out that the Ld. Administrator has nowhere suggested for inviting fresh bids from bidders apart from Respondent Nos. 6 & 7. It is prayed that respondent No. 6 be barred from participating in the bidding as it has failed to deposit the incremental earnest money.

23.3 In the written submissions filed, respondent No. 7 has further stated that it prefers the option of open bidding in this Tribunal subject to the same being restricted only to respondent Nos. 6 and 7 and respondent No. 6 depositing the prerequisite EMD. It is further stated that the second option regarding the bidding by way of sealed cover would further defer the conclusion of the matter which has already been inordinately delayed. It was submitted that Respondent No. 6 has not deposited the incremental earnest money @ 5% of Rs. 7.08 Crores i.e., Rs. 35,40,0000/- (Rs. Thirty Five Crores Forty Lakhs) by way of FDR along with the revised bid. As per information of respondent No. 7, till the last date of hearing i.e., on 17.07.2023, this amount had not been deposited and hence, if the EMD is not deposited, then the bid of Respondent No. 6 cannot be treated as a valid bid and consequently, Respondent No. 7 should be declared as the successful bidder.

In compliance of our order dated 11.09.2023, the applicant has filed a compilation of relevant orders of the Hon’ble CLB, and has submitted, inter alia, that Mr. Phalpher has not complied with order of Hon’ble CLB to deposit Rs. 5 Lakhs and that the late. Mr. Ghai has not complied with the directions of CLB and has taken forcible possession of the Kothi/Main cottage, and their conduct is deplorable hence, Mr. Ghai should be proceeded ex-parte.

CA No. 126/2023

This application has been filed by the Ld. Administrator amending the prayer clauses of CA No. 75/2021 and praying further that M/s MC Jain and Company Private Limited be impleaded as Respondent No. 7 in CA No. 75/2021 and accodingly, amended memo of parties be taken on record.

It is submitted, inter alia, that as regards the execution of the Tripartite Agreement, which was initially envisaged to be executed between the purchaser on the one hand and M/s U.G Hotels and Resorts Ltd. through Administrator, M/s UMAK Investments Pvt. Ltd., Sh. Umesh Phalpher, and Sh. H.S. Ghai. The said agreement be executed without the LRs of Late Sh. H.S. Ghai, for reasons set out, in details, in a separate Application CA No. 74/2021.

It is further prayed that suitable direction by the Hon'ble Tribunal for bearing the cost of security of the resort and expenses of defending and prosecuting the litigations, including expenses of the Office of the Ld. Administrator, till the sale consideration is paid by the highest offeror as M/s UMAK Investments Pvt, Ltd. may not be inclined to meet the said expenses in future.

CA No. 50/2022:

This is an application filed by Umesh Phalpher against the respondents, i.e., UG Hotels and Resorts Limited (through Administrator) (respondent No. 1), Umak Investment Co Pvt Ltd (respondent No. 2); Bhalinder Ghai (respondent No. 3) with the prayers to Direct the Administrator and \ the Respondent No. 2/Umak Investment Co Pvt. Ltd

(a) To comply with paragraph 5(b) of the order dated 31.01.2014 to take steps to get the reciprocal obligations of the parties in \ the parties in the same order as contained in the settlement dated 15.07.2009.

(b) To comply with paragraph 5(c)(ii) of the order dated 31.01.2014 to withdraw the Criminal Complaint filed before the EOW against the Applicant and Respondent No. 3.

(c) To comply with paragraph 5(c)(iii) of the order dated 31.01.2014 to withdraw the Criminal Complaint pending in the Shimla Trial Courts against the Applicant and Respondent No.3.

and to further direct the Administrator after due compliance of the prayers (a), (b) and (c) above and other reciprocal obligations in terms of the settlement dated 15.07.2009, to thereafter locate any buyer/lender etc. for the Respondent No. 1 in terms of the Settlement dated 15.07.2009 and order dated 31.01.2014 with the consent of the Applicant and the Respondent No. 3 in the Alternate. Set aside the terms of the settlement dated 15.07.2009 and order dated 31.01.2014 and decide the Company Petition on merits;

As stated in the application, Umak Investment Company Private Limited had advanced inter-corporate loans to UG Hotels and Resorts Limited and also personal loans to its promoters, late Mr. Harmeet Ghai & Mr. Umesh Phalpher. On the failure of the promoters, i.e., late Mr. Harmeet Ghai & Mr. Umesh Phalpher to pay back the individual loans, the promoters sold 9,82,200 shares of Ms. UG Hotels and Resorts Private Limited to M/s. Umak Investment Company Private Limited on various dates, and after adjusting the consideration of the sale of shares, the loan still remained outstanding against the promoter and a certain sum was payable by both late Mr. Harmeet Ghai and Mr. Umesh Phalpher to UG Hotels Resorts Limited. The parties have been involved in litigations which were sought to be settled by a Mutually Agreed Settlement dated 15.07.2009. This settlement laid down certain reciprocal obligations of the parties involved.

The application gives the details of the various compliances to be made by applicant, respondent No. 1 and respondent No.3 and stated that the same have been complied with to the extent possible by respondent No. 1 and 3. It, however, admitted that there was difficulty in enforcing the settlement dated 15.07.2009 and the petitioner as well as respondent number 3 did not comply with the terms of the settlement. In order to enforce the settlement dated 15.07.2009 an administrator was appointed by the Hon’ble Company Law Board by its order dated 31.01.2014.

This application further points out various defaults by the Ld. Administrator in meeting the reciprocal obligations under the said agreement. It also states that the sale price offered by the applicant is an undervalued price, and the promoters were kept in the dark about the efforts to select a buyer for the estate on the part of the Ld. Administrator. 32. It is also submitted that the consent order dated 31.01.2014 appointing of the Administrator is also a continuation of the earlier consent terms and meant only to enforce the settlement dated 15.07.2009. Even by the order dated 31.01.2014, nothing changes in the terms of the settlement dated 15.07.2009. Thus, it is stated that the failure on the part of the Administrator to carry out mutual obligations makes the doctrine of parti delecto applicable to the present case.

In the reply filed on behalf of the Ld. Administrator, it is stated that the present application proceeds entirely on the false premise that the above mandate requires the stipulations clause C (i) to (iv) being reciprocal promises to be implemented simultaneously with the prime obligation of removing clouds on the title of the Estate and making it marketable and thereupon locating a suitable buyer. It is submitted that unless the above is achieved, the reciprocal promises are of no consequence.

It is further stated that the applicant himself, far from acting to prevent illegalities, failed either to take corrective steps and/or to take appropriate legal remedies. The applicant is in flagrant breach of its obligation by failing to contribute towards meeting expenses for the security and administration of the company. It is further stated that the Ld. Administrator has already placed on record a list of 30 such litigations in his status report filed along with an affidavit dated 12.09.2020 in CA No.781/2019. Attention has been drawn to the observations made by the Hon’ble Tribunal in its order dated 13.01.2015 following which the Ld. Administrator moved the High Court in a Criminal Writ Petition under section 482 CrPC. This led to the direction by the Hon’ble High Court to the State Government to appoint SIT. The status report dated 16.03.2015 of the Ld. Administrator states that finally, after a thorough investigation, the SIT directed the prosecution of the former Director and his associates, including Sh. Bhalinder Ghai. It is further pointed out that the applicant Mr Umesh Phalpher, who in fact was a joint applicant in the application moved by Umak Company Private Limited for being permitted to set up and operate the F & B outlet has now done a volt face and is opposing the present application.

In the reply filed by Respondent No 2, i.e., Umak Investment Company Private Limited, it is stated that the applicant and late Mr Ghai defaulted in the settlement entered into by order dated 20.7.2009. Further, Mr Ghai started creating hindrances for the Ld. Administrator, and the Ld. Administrator has pointed out to various acts of omission and commission by the applicant and Mr Ghai, in his status reports dated 27.10.20,40, 25.11.2014 and 26.12.2014. It is also stressed that neither the applicant nor the Late Mr Ghai has brought any buyer or facilitated the Administrator in locating a buyer. They also not made any payments towards the maintenance of the Estate. The Hon’ble CLB by its order dated 8.10.2015 has recorded various non-compliance by the applicant as well as by Late Mr Ghai. Thus, about that the the application is not maintainable on the ground that the applicant has not complied with the directions of the CLB. It is also submitted that the application is not maintainable as the applicant's stand is contrary to his stand taken in CA No. 781/2019, and the applicant is raising unnecessary issues at a stage where there is a prospective buyer with an intent to derail the process further.

It is stated in the reply filed on behalf of respondent No. 3 that both Umak Investment Company Private Limited and the Ld. Administrator have failed to take any action to enforce compliance of the terms of the Settlement Agreement. Making a reference to the order of the Hon’ble CLB dated 31.01.2014, it is stated that respondent No. 3 has made certain compliances required under the said agreement. It is, however, repeated that the Ld. Administrator did not keep respondent No. 3 informed about the developments with regard to the sale of the impugned property. The respondent has also repeated the same allegations against the Ld. Administrator made by the respondent No. 2.

In the rejoinder filed, it is stated that the Administrator was appointed due to the non-compliance of the reciprocal obligations by UMAK towards the settlement and consent order dated 15.07.2009. It is further mentioned that respondent No. 2 has deliberately defaulted to act upon the terms and conditions. It is also submitted that the Ld. Administrator has yet to get the land of the company demarcated and has got the land divided and mixed with the adjoining land which is not permissible under the law.

We have heard the learned counsels for the parties and have gone through the relevant records available.

Before examining the various issues raised by the learned counsels, it would be appropriate to place these issues in context by referring to the background leading to the present applications at hand. As narrated in the aforementioned paragraphs, a settlement agreement dated 15.07.2009 was entered into by the stakeholders with regard to the disputed property, i.e., Shilon Bagh Resort. The said settlement agreement recorded, inter alia, that the parties had settled the dispute amicably and had agreed to the payment terms for respondent Nos 1 to 3, i.e., UG Hotels and Resorts Limited, Mr Umesh Phalpher, and Late Mr HS Ghai. The agreement had also laid down certain reciprocal obligations mainly relating to the withdrawal of pending cases/litigation against the parties. Terms of the mutually agreed settlement were placed before the Hon’ble Company Law Board, which passed the following order dated 20.07.2009.

“The parties have filed a joint application enclosing terms of agreed settlement dated 15.07.2009. Thus dispute have been resolved. In terms of the settlement, cheques to the petitioner of Rs. 50 Lakhs have been handed over to the petitioner who will deposit the cheques for realization after 27.07.2009.

All the parties will strictly comply with the terms of settlement.

The petition is disposed of in terms of the settlement, with liberty to parties, in case of any difficulty, default in compliance with/working out the terms of settlement, to apply.”

(Emphasis Supplied)

Subsequently, the parties to the said settlement did not honour the conditions which they themselves had laid down and the issue was taken before the Hon’ble Delhi High Court, and their observation dated 26.11.2023 was as under:

“10. From the orders passed by the CLB on 20th and 21st November 2013, it is seen that all parties had agreed that an Administrator should be appointed by the CLB to take over the management and assets of U.G. Hotels and Resorts Ltd. for the purpose of enforcement of the reciprocal obligations of the parties contained in the settlement dated 15th July 2009 which has the imprimatur of the order dated 20th July 2009 by this Board. The proceedings dated 21st November 2013 of the CLB reflects the suggested modalities of working out the terms of the said agreement between the parties. Even today all the parties, including Defendant No.2 in CS (OS) No. 1750 of 2012, stand by the settlement. The Court, therefore, sees no reason why the said settlement should not be given further legal imprimatur by this Court as that will only strengthen the hands of the Administrator to be appointed by the CLB.

Xxxxx

Both suits i.e. CS (OS) No. 1749 of 2007 and (S(OS) No. 1750 of 2007 are decreed in terms of the settlement dated 15th July 2009 between the parties which shall be appended to and form part of the decree.”

(Emphasis Supplied)

When the matter was brought before the Hon’ble Company Law Board, it appointed the Ld. Administrator by its order dated 31.01.2014 with the consent of all the stakeholders, who are also parties to the present applications, to implement the agreement settlement dated 15.07.2009 and gave him the following  mandate:

“After the buyer/lender is located by the Respondent Nos. 1 to 3, they shall seek permission of the Hon'ble CLB to sell, mortgage, or encumber the assets of the Respondent No 1 Company and thereafter enter into a tripartite agreement (between Petitioner No. 1, Respondent Nos. 1 to 3, and the Buyer/Lender) in respect of the payment of the remaining amount of Rs. 15.6 crores directly by the buyer/lender to the Petitioner No. 1 and the sale/mortgage/encumbrance etc. shall only be effected after permission from the Hon'ble CLB and on the payment of the balance sum to the Petitioner No.  1 and till such time the Respondent Nos. 1 to 3 undertake not to sell/mortgage/encumber the assets of the Respondent No. 1 Company.

Pursuant to the consent accorded by the parties and recorded in the order dated 02.12.2013 I appoint Justice Manmonian Sarin (Retd.) as Administrator in UG Hotels and Resorts Ltd. (henceforth the company) till further orders.

The said Administrator shall, under the authority of this order, perform the following functions:-

a. Take steps to clear the douds, if any, over the title to the assets of the company in the revenue records to make it marketable by ensuring that all or any permissions required under law to sell the property are obtained. The Administrator shall, in case the buyer Introduced by the R-1 & 2 is not willing to buy the assets of the company, further take steps to locate a buyer to purchase the assets of the company and on so doing prepare a draft Tripartite Agreement between B. & RI to 3 and the buyer and seek permission for sale of the assets of the company from this Board. On grant of such permission he shall ensure that monies payable by such buyers are deposited in a Escrow account so that on sale of the assets of R-1 company the monies payable to P-1 under the settlement dated 15.07.2009 are released in favour of P-1.

b. Take steps to get enforce the reciprocal obligations of the parties in the sane order as contained in the terms of settlement dated 15.07.2009.

C. Ensure

i. That the parties a petition under section 482 CRPC for quashment of FIR/Charge sheet relating to pending criminal case No. CC No.3180/1 of 2008.

ii. That CC No.28/1 and the criminal complaint filed before EOW, Crime Branch New DetNis Withdrerwn by P-1.

iii. That the criminal complaint ponding in the Shimla Trial Courts against Mr. Layak Ram and R-2 & 3 are withdrawn by taking appropriate steps required under law.

On failure of any of the parties to comply with the above the administrator shall have the authority to take appropriate steps under law and to act under the authority of this order.

iv. that the parties undertake not to pursue any further complaints against each other. d. Parties shall cooperate with the administrator in the due performance of his functions.

e. The Administrator shall supersede the Board of Directors of the company and. shall be in complete control and management of its assets and day-to-day affairs till enforcement of the sieltlemant dated 15.07.2009.

f. The administrator shall be at liberty to approach this Board for seeking further directions in case of any difficulty in the enforcement of this Order and the settlement dated 15.07.2009.”

(Emphasis Supplied)

Thus, the present applications are in continuation of the litigations from 2009 onwards. The stakeholders who were parties to these applications under discussion have been in agreement twice, i.e., once in 2009, when the consent terms were drawn by the parties only to be violated later, and again in 2014, when they agreed before the Hon’ble CLB to appoint Ld. Administrator who was mandated to implement the consent terms by the parties.

We also note the fact that the estate is embroiled in several litigations with other parties praying for protection of their rights and further vide order dated 29.05.2018 as per the directions of the Hon’ble High Court of Shimla, Himachal Pradesh, the sale proceeds are not to be distributed to the creditors without the leave of the Hon’ble High Court.

The relevant part of the aforementioned order of the Hon’ble Shimla High Court dated 29.05.2018 is extracted below for the sake of clarity.

“Consequently, in view of the above, interim order dated 11.10.2012, is modified to the extent that learned Administrator shall take all the steps pursuant to order dated 31-1-2014, passed by the Company Law Board for evaluation and sale of the property in question, but sale proceeds, if any, received shall not be disbursed to the creditors without the leave of the court.”

As stated in his application, the Ld. Administrator through his efforts, has managed to get two buyers who are ready to purchase the property on “as is where is basis”. Now a third buyer has filed a bid of higher amount of Rs. 50 Crores and has approached this Bench by through CA No. 175/2023, which was filed after the orders in these present IAs were reserved We also note that, despite their expressed consents before various Judicial Authorities, the promoters have in no way supported the Administrator in identifying the buyers to dispose of the impugned property. Rather, hurdles have been created by them. In this connection, we make another reference to the following orders of the Hon’ble Company Law Board dated 06.01.2015, which adversely reflects on the conduct of Late Sh. H.S. Ghai.

“Another report of the administrator sent in compliance with the directions contained in the order dated 19.12.2014, received on 29.12.2014 is perused. MOU dated 18.09.2010 executed Sh. Raj Kumar and Shri Harmeet Singh Ghai and the accompanying share certificates and documents are also pursued. The transfer of 23.26% of the shares of the UGHRL by Sh. H.S. Ghai to Shri Raj Kumar appears to be in clear breach of the Clause 8 of the mutually agreed terms dated 15.07.2009. It is therefore imperative that pending further enquiry and investigation voting rights in respect of 9,35,900 shares of Sh. H.S. Ghai which has been transferred to Sh. Raj Kumar is suspended. I order accordingly.”

(Emphasis Supplied)

We further note that the conduct of the stakeholders and especially the promoters had come under the adverse notice of the Hon’ble Company Law Board, which in its order dated 08.10.2015 has narrated the facts contained in the report of the Ld. Administrator and has observed that the conduct of Shri H.S. Ghai is wholly unworthy and that he has failed to comply with the directions issued by the Bench.

It is noticed that even at present, the LRs of Mr Ghai have not complied with the directions of the Hon’ble Company Law Board and remain in forcible possession of the Kothi/Main cottage. After going through the details of 30 litigations mentioned in the report of the Ld. Administrator, the only view that we can arrive at is that consistent efforts have been made by Late Shri H.S Ghai and subsequently by his LRs to frustrate the efforts of the Ld. Administrator to sell the impugned property.

The twin objectives before this Bench, therefore, are to first order expeditious disposal of the property and realization of its existing sale value before it erodes further, and second to ensure that the rights of all the stakeholders and third parties are protected.

In the course of the present proceedings, the promoters and their LRs have mainly raised the following objections:

Firstly, the NCLT has no jurisdiction to go behind the decree and adjudicate the issues which were amicably settled through the Settlement Agreement dated 15.07.2009 and subsequently got the seal of approval of the Hon’ble Delhi High Court and the Hon’ble Company Law Board, which includes the Tripartite Agreement between the purchaser, UG Hotels and Resorts Private Limited through Ld. Administrator, Sh. Umesh Phalpher and the LRs of Late Shri. H.S. Ghai (erstwhile promoters) and M/s. Umak Investment Company Private Limited. Secondly, the Ld. Administrator cannot sell the property without placing the said Tripartite Agreement before the NCLT.

Regarding the first issue, we note that in its observations in the order dated 31.01.2014, the Hon’ble CLB foresaw the possibility of the consent agreement remaining unimplemented due to the non-cooperation by the parties and gave liberty to the Ld. Administrator “to approach this Board for seeking further directions in case of any difficulty in the enforcement of this Order and the settlement dated 15.07.2009.”

Further, it is a matter of record that Late Sh. H.S. Ghai & Mr. Umesh Phalpher, i.e., the promoters, have not been cooperating with the Ld. Administrator with the former filing as many as 30 litigations against the Ld. Administrator/Corporate debtor. The conduct of one of the promoters, i.e., Late Sh. H.S. Ghai has made the settlement Agreement virtually unimplementable and, therefore, to protect the interest of the other stakeholders, the Hon’ble CLB itself gave necessary powers to the ld. Administrators to overcome such resistance by promoters. It is pertinent to note that the Late Mr. Ghai and Mr. Phalpher instead of approaching the CLB or NCLT for implementation of the agreement, filed scores of litigation before Civil Court and other fora. The actions of the promoters, thus, made the consent agreement unimplementable and now they cannot be allowed to invoke the conditions of the same settlement. We are also of the view that the present issues are continuing from 2009 onwards which were considered by the Hon’ble CLB and the NCLT being the successor to the Hon’ble CLB, has the jurisdiction to adjudicate on the issues raised in the present application.

As regards the objection regarding the valuation of the property, we note that the said objections are merely technical in nature without pointing to any material defect in the valuation made by the Registered Government Valuer. In view of the same, no adverse view regarding the valuation can be drawn on the basis of the facts placed before us.

As regards the second plea that the Tripartite Agreement between the Ld. Administrator and the promoters as laid down in the order of Hon’ble Company Law Board is a Sine-qua-non for selling the property, we note that the major thrust of the order of the CLB was for the Ld. Administrator to take steps to clear the clouds over the title to the assets of the company to make it marketable and after locating a buyer and effecting a sale, put the sale proceeds in an Escrow Account for subsequent distribution among stakeholders. In short, the Hon’ble Company Law Board had focused on the realisation of the value of the assets of the company as so held by the Hon’ble Shimla High Court vide order dated 29.05.2018 . Regrettably, the promoters through their actions have frustrated the efforts of the Ld. Administrator to realise the value of the assets and the matter has taken long nine years to date to go to a satisfactory conclusion. This has resulted in severe erosion in the value of the assets and has adversely affected the interest of all the stakeholders including the promoters. We, therefore, hold that to secure the interest of all the stakeholders, it is imperative that the assets be sold without any further loss of time. We agree with the Ld. Senior Counsel for one of the bidders, i.e., respondent No. 6 in CA No. 75/2021 that the requirement for making a Draft Tripartite Agreement is not a precondition but a mere technical/ procedural formality which is otherwise frustrated due to the conduct of promoters or their LRs. Thus, it should not be allowed to act as an impediment in achieving the ultimate mandate of the order of the CLB.

In view of the aforementioned discussions, we do not agree with the contentions of the erstwhile promoters, i.e., Late Sh. H.S Ghai (and his LRs) and Mr. Umesh Phalpher, made in CA No. 50/2022 and in their pleadings in other CAs. As a result, CA No. 50/2022 is dismissed and disposed of accordingly.

We further note that the Ld. Administrator has made clear in his application that both the interested parties are willing to purchase the property on “as is where is basis”. Even the third party who has filed the bid before the Ld. Administrator and also filed CA No. 175/2023 has clarified in its application that they are ready to buy the property on “as is where is basis”. Further, we make it clear that before the bidding, the Ld. Administrator will ensure that affidavits are filed by all three parties stating that they have been made aware of all the litigation pending and other charges, mortgages, and other encumbrances running with the property, and their offer is to purchase the impugned property on “as is where is basis”. It is noted that the clause of “as is where is basis' would protect the interests of all the stakeholders, including pending litigations.

This Bench directs the Ld. Administrator to hold the bid and complete the selection of the successful buyer on the basis of the highest bid within a period of 30 days of this order. In case, the highest bidder fails to comply with the terms and conditions of the bid, then the offer would be given to the next one and so forth. After completion of the selection of the successful buyer, the Ld. Administrator is at liberty to approach the promoters and others, as laid down in the Hon’ble CLB’s order, for their cooperation to arrive at a Tripartite Agreement. In the interest of justice and fairness, we do not accede to the prayer of the Ld. Adminsitrator to exclude the LRs of the late Sh. H.S. Ghai in the process of arriving at a Tripartite Agreement between the purchaser, UG Hotels and Resorts Private Limited, through the Ld. Administrator, Sh. Umesh Phalpher, and the LRs of Late Shri. H.S. Ghai (erstwhile promoters) and M/s. Umak Investment Company Private Limited. Given the background of hostile litigation among the parties, if the said Tripartite Agreement is not arrived at within 10 days of the selection of the buyer of the Shilon Bagh Resort, the Ld. Administrator is directed to move an application seeking permission from this Bench to sell the assets of UG Hotels and Resorts Limited to the successful bidder. On grant of such permission, the sale certificate will be issued only after the entire sale consideration is paid and other terms and conditions as laid down by the Ld. Administrator for the bid are complied with by the successful bidder. The Ld. Administrator will further ensure that money payable by the successful bidder is deposited in an Escrow Account. The Ld. Administrator will then approach the Hon’ble High Court of Shimla, Himachal Pradesh, in whose territorial jurisdiction the property under sale is situated for the distribution of the sale proceeds to the creditors in compliance with the order of the Hon’ble High Court dated 29.05.2018.

Before parting with this order, we clarify that this order meets the dual requirements of early realization of the value of the Shilon Bagh Resort before it deteriorates further with the passage of time and also to protect the interests of all the stakeholders, including the promoters. Higher value realization of the impugned property will logically leave higher amounts to be distributed to the erstwhile promoters and other stakeholders, and this distribution will protect their interests as the same would be subject to the leave of the Hon’ble Shimla High Court.

In view of the discussions above, CA No. 74/2021, 75/2021 read with CA No. 126/2023 are allowed and disposed of accordingly. The documents filed by CA No. 79/2023 have been taken on record, and the said application is disposed of accordingly.

In the aforementioned applications, several other applications were filed on the identical issue along with overlapping prayers. As these applications mostly made identical prayers on the same facts, this Bench directed by its order dated 29.04.2022 as under:

“It is made clear that no notice will be issued in new application and the applicant may directly argue the said application along with main applications which have been pending since long.

It is further made clear that if any party wants to obtain reply/rejoinder/pleadings filed by other party then he/she is at liberty to obtain the same from the Registry.”

The arguments by the counsel on these applications have been heard at length, and they were given the liberty to file short written submissions, which have been discussed in this order. The issues raised in these CAs will be discussed in the following paragraphs, and necessary directions will be issued, therein, wherever required. CA Nos. 190/2021, 107/2022, 109/2023, 34/2023, 175/2023

These five applications are related to the offers made by GR Buildhomes Private Limited and M.C. Jain Company Private Limited. Subsequent to the orders being reserved in the first four IAs, one JFC Finance India Limited filed an application, i.e., CA No. 175/2023, seeking consideration and acceptance of the offer made by him for purchase of the impugned property. The gist of these applications are as below:

CA No. 109/2023 & CA No. 190/2021:

CA No. 109/2023

This is an application filed by G.R. Buildhomes Private Limited against the respondent, i.e., UG Hotels and Resorts Limited (respondent No. 1), Sh. Umesh Phalpher (respondent No. 2), Sh. Bhalinder Ghai (respondent No. 3), Ms. Kamaljit Kaur (respondent No. 4), Umak Investment Co Pvt Ltd (respondent No. 5), M/s. Kundan Care Products Limited (respondent No. 6), MC Jain & Company Pvt. Ltd (respondent No. 7) with the prayer to allow the present application for bringing on record additional legal submissions and objections/clarification to CA No. 50/22. CA No. 74/21, CA No. 75/21, CA No. 34/23 and CA No. 16/22 in CP No. 06(ND)/2009 [RT CP No. 1/CHD/HP/2016] (captioned petition); (ii) It is further prayed that in the light of the submissions made in the present application approve the proposal/offer of the Applicant submitted by the Ld. Administrator in CA No. 75/21 in CP No. 06(ND)/2009 [RT CP No. 1/CHD/HP/2016] for purchase of assets and properties of the Respondent No. 1 Company and also grant the reliefs sought by the Applicant in CA No. 190/21 in the CP No. 06(ND)/2009 [RT CP No. 1/CHD/HP/2016] and further to dismiss CA No. 16/22 and CA No. 34/23 in CP No. 06(ND)/2009 [RT CP No. l/CHD/HP/2016] filed by the other offerors seeking direct approval of their offers from this Tribunal.

The additional legal submissions in CA No. 109/2023 are being summarized as under:

I. The primary object/intention of the Hon’ble CLB was to ensure the settlement dated 15.09.2009 entered into by respondent no. 1 company, its erstwhile management, and respondent No. 5. Therefore, Ld. Administrator has duly complied with its obligations in terms of the order of the Hon’ble CLB.

II. As regards the condition to prepare a draft tripartite agreement, it is submitted that using “literal rule of interpretation” in interpreting the guidelines as laid down in the order of the Hon’ble CLB, the condition of preparing a “draft tripartite agreement” is clearly a condition in addition to the condition of seeking permission of this Tribunal for the sale of assets. The Hon’ble CLB did not intend it as a condition precedent for seeking the permission of the NCLT. The draft tripartite agreement, therefore, is not a necessary pre-condition and is merely a procedural formality, but the permission of the NCLT is a mandatory condition. In any case, even if the Hon’ble CLB intended the same to be a necessary pre-condition, the same has been prevented/obstructed from being performed in light of the ongoing disputes and history of acrimonious litigation between the stakeholders of the respondent No. 1 company. Hence, the requirement, being a mere technical/procedural one, must not act as an impediment in achieving the ultimate mandate of the order of the CLB. Hence, the requirement, being a mere technical/procedural one, must not act as an impediment in achieving the ultimate mandate of the order of the CLB.

III. It is further submitted that the captioned petition was transferred to the Tribunal from the Hon’ble Company Law Board for adjudication and the NCLT does not have the jurisdiction to set aside the order of Hon’ble CLB (being its predecessor). It is also submitted that any setting aside of the earlier order is against the interest of the majority of the stakeholders and also that of the estate itself. Furthermore, the Ld. Administrator was appointed with the consent of all the parties and any grievance, pertaining to the said order should have been appealed against before the honourable High Court within a period of 60 days. It is pointed out that more than 12 years have elapsed since the settlement has been entered into between the parties and over 9 years have passed since the appointment of the Ld. Administrator. Therefore, substantial Judicial, time of the CLB as well as that of the NCLT has been consumed. Now, setting aside of the order dated 31.01.2014 as prayed for by the promoters, shall mean nothing more than a mockery of a judicial process in our country.

IV. On the issue of the jurisdiction of this Tribunal to choose from the different offers by different purported buyers, it is stated that this Tribunal cannot directly review the other proposals before the Ld. Administrator if the same has not been brought for consideration before this Tribunal.

V. It is further submitted that once an offer has been admitted by the Administrator, and the same is brought before NCLT for seeking approval, the Administrator cannot consider any subsequent proposal/offers. Reliance has been placed on the decision of Navlakha & Sons vs. Ramayna Das, (1969), 3 SCC 537 and Vedica Procon Private Limited vs, Balleshwar Greens Private Limited (2015), 10 SCC 94.

VI. It is submitted that the applicant's offer for the purchase of the impugned property is a fair and tenable offer. It is pointed out that the final offer of the applicant was in consonance with the valuation conducted on behalf of the Ld. Administrator by the Registered Government Valuer, especially in the light of the fact that the report was submitted in 2018, i.e., 2 years prior to the offer made by the applicant.

VII. It is further submitted that the sale of the property and the assets of the respondent company cannot be treated as a bidding process wherein the highest offer is to prevail. It is mentioned that the order dated 31.01.2014 never envisaged the sale of the property and the assets of the respondent No. 1 company by way of a bid process or auction.

VIII. It is submitted that the inclusion or non-inclusion of the legal heir of Mr Ghai will not materially affect the rights of the applicant and they will abide by the decision of the Hon’ble Tribunal on this issue.

CA No. 190/2021

CA No. 190/2021 filed by G.R. Buildhome Private Limited makes a prayer, inter alia, for the confirmation of the sale of the Shilon Bagh Resorts along with other related facilities for a sale price of Rs. 40 Crores. We note the fact that the applicant has subsequently offered an higher amount and is ready for a competitive offer.

We have heard the learned senior counsel and have carefully gone through the submissions made.

At the outset, we agree with the proposition of the present applicant that the requirement of Tripatrite Agreement between the purchaser, UG Hotels and Resorts Private Limited through the Ld. Administrator, Sh. Umesh Phalpher and the LRs of Late Shri. H.S. Ghai (erstwhile promoters), and M/s. Umak Investment Company Private Limited is not a condition precedent for the sale of the property but only a procedural requirement. We, however, do not accede to the prayer made to exclude the other bidders from the process in view of the specific directions to the Ld. Administrator contained in the order of the CLB dated 30.01.2014, wherein the administrator was mandated to locate buyer(s) after making the said property marketable. Restricting the sale to the first buyer being located by the Ld. Administrator will not serve the purpose of realising the maximum value of the asset of the corporate debtor. Furthermore, the reliance placed by the learned Senior Counsel on the decision of Navlakha & Sons (Supra) and Vedica Procon Private Limited (supra), discusses the ground for refusing confirmation of a sale or offer already made in view of a higher offer. The present case can, however, be distinguished on facts as the applicant’s offer is under consideration at the moment and the Ld. Administrator has not taken any final decision on the same. We note that the applicant itself has raised its bid after the entry of the second buyer and has, thus, already participated in the competitive process to acquire the property. Thus, in the interest of justice, we direct that the applicant be considered along with the other two bidders before the Ld. Administrator in an open bid among these bidders. The Ld. Administrator is, however, directed to ensure that additional EMD payable by the applicant on the upwardly revised offer is paid before the date of bidding. These CAs, i.e., 109/2023 and 190/2021 are, thus, partly allowed with the above observations.

CA No. 107/2022:

This is an application filed by Umesh Phalpher against the respondent, i.e., UG Hotels and Resorts Private Limited (respondent No. 1), and GR Buildhomes Private Limited (respondent No. 2) with the following prayers

(a) Implead Mr. Umesh Phalpher as the Respondent No. 2 in C.A. No. 190/2021 filed in C.P. No. 06(ND) of 2009; and

(b) Implead Mr. Bhalinder Ghai as the Respondent No. 3 in C.A. No. 190/2021 filed in C.P. No. 06(ND) of 2009;

We have carefully considered the submissions made by the learned counsel of the applicant.

We note the fact that the submissions made on related issues by the applicants have been considered in detail while discussing the different CAs hereinbefore parting with this order, we also note that the interest of the applicant is fully protected as distribution of the value realized from the proposed sale will be with the leave of Hon’ble Shimla High Court. The applicant is also directed to cooperate with the Ld. Administrator in formulating the Tripartite Agreement to protect their interests.

We, therefore, feel that there is no need to accede to the prayers of the applicant to implead the erstwhile promoters in CA No. 190/2021. As a result, CA No. No. 107/2022 is dismissed and disposed of accordingly.

CA No. 34/2023:

This is an application filed by MC Jain & Company Pvt. Ltd against the respondent, i.e., UG Hotels and Resorts Limited (through Administrator) with a prayer to allow and admit the present application: Consider the bid submitted by the Applicant herein and in the event it is found to be the highest bid and appropriate directions be passed· in favour of the applicant herein for possession, issuance of sale certificate/sale deed;

In the said application, it is stated that the applicant had submitted its offer for the purchase of the assets of U.G Hotels Resorts Ltd of Rs. 46,00,00,000 to the Administrator by letter dated 26.09.2022. Further, the applicant has also furnished the demand draft of 5% of the bid/offer i.e. Rs. 2.30 Lakhs as earnest money, subject to acceptance of the offer by this Tribunal. A copy of the letter dated 26.09.2022 sent by the applicant to the Administrator is annexed to the application. The relevant extract of the offer in the applicant's letter dated 26.09.2022 is extracted below.

“Our offer for the purchase and transfer of all assets of the aforesaid properties, including buildings and facilities thereon, admeasuring 168 bighas is Rs. 46 Crores (Rs. Forty-Six Crores Only).

In furtherance of the same, and to show our bonafide, genuineness and seriousness for the said purchase, we are hereby tendering Demand Draft no.027844 Dated 27/09/2022 drawn on H.D.F.C

Bank, New Delhi being 5% of the total bid / offer i.e., Rs. 2,30,00,000 / - (Rs. Two Crores Thirty Lakhs Only) issued in favour of U.G. Hotels & Resorts Ltd, as earnest money, subject to acceptance of our offer by the Hon'ble National Company Law Tribunal.

Thereafter, immediately upon confirmation of the acceptance of the bid from the Hon'ble National Company Law Tribunal and the Hon'ble High Court of Shimla, we shall make the remaining payment as per our bid / offer within a period of six (6) months or as may be directed providing us some reasonable time to make the remaining balance payment. It is hereby made clear that we have our resources/finances in place and the modalities of the said transaction will be completed in a time-bound manner on our part after the confirmation of the bid/ offer submitted by us.

We wish to further clarify that the transfer of the assets would be on "as is where is" basis. However, we shall not assume any responsibility or liability statutory or otherwise of the Company. The transfer of the assets would be subject to the pending litigation in respect thereof of which we have been apprised.

Please note that the instant offer / bid is being submitted for your kind consideration for an appropriate recommendation to the Hon'ble National Company Law Tribunal for acceptance. In case any clarification is required, the undersigned will be happy to assist your good self with the same.”

The following extracts from the letter of the Ld. Administrator to the applicant dated 17.10.2022 is also relevant for this discussion:

“You have also been apprised of the encumbrances and litigation pending as also all the liabilities of M/s U.G. Hotels and Resorts Ltd. and thereupon submitted your bid on "as is where is basis"

Based on the understandings as recorded above, your bid is being forwarded to the NCLT for consideration with the attached correspondence. As discussed with you, the earnest money of Rs. 2 Crore 30 Lakhs would be kept in an FDR for a period of 91 days carrying out the applicable rate of interest. In case of acceptance of your bid the same together with the interest as accrued shall be adjustable against the sale consideration and in case of your failure to complete the sale the same would be liable to be forfeited.”

The applicant further submits that his application being the highest bid should be considered by this Tribunal. It is further informed that the applicant has already deposited a sum of Rs.2.30 Lakhs in September 2022.

We have heard the learned counsel and gone through the submissions made.

In view of our findings in CA No. 74/2021 and 75/2021, the applicant has already been allowed to participate in the open bid to be conducted by the Ld. Administrator. In the interest of justice and also to maximize the value of the impugned asset, which can only be achieved through open bidding of the three bidders before the Ld. Administrator, we do not accept the proposal of the applicant that the bidding should be restricted to the first two bidders before the Ld. Administrator.

In the result, this application is partly allowed with the above observations.

CA No. 175/2023

This is an application filed by JFC Finance India Limited attaching their bid dated 20.09.2023 before the Ld. Administrator of UG Hotels and Resorts Limited to acquire the assets of UG Hotels and Resorts Limited including 169 bighas of land along with plant equipment etc. at Shilon Bagh, Shimla, Himachal Pradesh.

In this application, the applicant has stated that they have submitted their bid to take over the assets on “as is where is basis” and on a payment of consideration of Rs. 50 Crores. It is further stated that the two bids being considered by the Ld. Administrator as on date are not bids received pursuant to any auction process and thus, the pending bidders in no manner have any vested right in their favour to seek confirmation of their bids.

We have gone through the application and heard the learned counsel.

In view of our directions in CA No. 74/2021 and 75/2021 directing the Ld. Administrator to consider the bid of the present applicant, no separate direction is being issued under this application. In the result, this application is allowed and disposed of accordingly.

CA No. 12/2023:

This is an application filed by UG Hotels and Resorts Limited (through Administrator) with a prayer to hold Annual General Meetings for the Financial Years 2020-21 & 2021-22 onwards; for filing the Annual Return along with other documents electronically with the Registrar of the Companies (RoC); for complying with provisions of Sections 134 & 179 of the Companies Act, 2013; for publishing of quarterly results and/or complying with SEBI requirements/guidelines for listed companies;

We have gone through the application and heard the learned counsel.

In view of the requirement to keep the corporate debtor as a going concern, the Ld. Administrator is allowed to make the compliances under various Acts as mentioned in this application.

In the result, this application is allowed and disposed of accordingly.

CA No. 79/2023:

This is an application filed by UG Hotels and Resorts Limited (through Administrator) with a prayer to take the Status report on record, in the interest of justice equity and fair- play. It is further prayed that this Hon'ble Tribunal may kindly dispose of the proceedings as per the directions issued by the Hon'ble Supreme Court.

This document filed in this application has been taken on record subject to just exceptions and disposed of accordingly.

CA No. 199/2022:

This is an application filed by the applicant- Shanti Devi against the respondents, i.e., UG Hotels and Resorts Limited (through Administrator) (respondent No. 1), Umak Investment Co Pvt Ltd (respondent No. 2), Umesh Phalpher (respondent No. 3), Bhalinder Ghai (respondent No. 4), Kamaljit Kaur (respondent No. 5), Gurpreet Kaur (respondent No. 6), GR Buildhomes, Pvt. Ltd. (respondent No. 7) with a prayer to allow the present Application and dismiss the Application of respondent no. 1 in total and especially with respect to the permission being sought qua respondent no. 1 for the alienation of rights/title/possession as sought by it on grounds detailed in the application and/or; In alternative, pass an order directing that any permission/order passed/granted will not affect the rights of the Applicant and her deceased husband Bhoop Ram over the ownership and possession of the applicant’s husband land measuring 15 bighas and 2 Biswas and further will not be in contravention of orders dated 01.03.2022; it is further prayed that no permission (affecting the rights of the Applicant/her husband) be granted to Respondent No. 1 during the pendency of the present Application on grounds mentioned in the application including that the same would be in contravention of interim orders dated 01.03.2019.

We have gone through the application and heard the learned counsel.

We are of the view as the impugned property is to be bought by the successful bidder on “as is where is basis” and after being made aware of all the pending litigation, the rights of the applicant in the present application will be protected by the Judicial Authority before whom the matter is pending. In view of the same, we do not feel the necessity to order a stoppage of the sale of the property.

In the result, this application is dismissed as above.