Ranjit Das & Ors. vs M/s. Msx Mall Private Limited

PER: SH. L. N. GUPTA, MEMBER (T)

The present IA No. 2003 of 2022 has been filed by Mr. Anil Kumar Jain, Resolution Professional of MSX Mall Private Limited (hereinafter referred to as the ‘Applicant) under Sections 66 and 67 of IBC, 2016, seeking the following reliefs:

To put the facts succinctly, the underlying main Petition CP (IB)-334/ND/2018 was filed by Ranajit Das & Ors. against the Corporate Debtor (CD) namely, M/s MSX Mall Private Limited under Section 7 of IBC, 2016, which was admitted vide Order dated 09.07.2018 of this Adjudicating Authority and the Corporate Insolvency Resolution Process (CIRP) in respect of the CD was initiated. The CD, at present, is represented through its RP Mr. Anil Kumar Jain.

We heard the submissions of both parties and perused the documents/pleadings placed on record. The Applicant/RP, through its application as well as arguments during the hearing, has alleged the following Fraudulent Transactions:

In support of its contentions, the Applicant has placed on record the Forensic Auditor’s Report dated 15.01.2019, indicating the details of such Fraudulent Transactions. Accordingly, we would like to deal with each of the transactions separately.

First, we would like to examine the transactions relating to the loans advanced by the CD to its related party companies. It is contended by the Applicant that the CD extended loans worth Rs.280.55 Lakhs prior to the year 2012 to its “related entities”, which remains outstanding. It is further alleged that these loans did not carry any interest and were given without any underlying documents/ agreements. The details of the alleged transactions, as stated by the Applicant, read thus:

To substantiate its argument, the Applicant/RP has annexed the Forensic Auditor’s Report dated 15.01.2019, stating that the aforesaid transactions are Fraudulent. The relevant extracts of the Forensic Audit Report, relied upon by the RP, read thus:

On notice, Respondents No.1 and 2 have filed their replies and Written Submissions and stated the following on these loan transactions:

Thus, regarding the issue of siphoning off funds to M/s MSX Developers Pvt. Ltd and New Wave Hospitality Services Pvt. Ltd., Respondents no.1 and 2 have stated that they availed their services for the construction of MSX Mall, for which the Corporate Debtor made payments to them. According to them, UPSIDC in July 2014 issued the completion certificate to CD, proving that the Corporate Debtor availed services of MSX Developers (P) Limited.

It is against this backdrop that we would like to examine the contention of the Respondent Whether the amount of Rs.2,80,55,517/-extended as loans by the CD to its “related companies” is a Fraudulent Transaction. To prove its point, the Applicant/RP has annexed the Balance Sheet of the Corporate Debtor as of 31.03.2015 i.e., the period prior to initiation of CIRP, the relevant contents of which reads thus:

From the perusal of the Balance Sheet (ibid), it is seen that the CD had “Loans and advances outstanding/receivable from its Related Parties” worth Rs.2,80,65,517/-. Per Contra, Respondents No.1 and 2 have stated that this amount was a payment to the two companies (MSX Developers Pvt. Ltd and New Wave Hospitality Services Pvt. Ltd.) towards the construction services provided by them to the CD. However, Respondents No.2 and 3 have failed to file or produce either any RA Bills on record to depict that this was an amount paid to the two companies for the construction services rendered by them to the CD or any agreement/ Work order, in consideration of which the said amount was paid by the CD. Moreover, it is seen from the record that Respondents No.2 and 3 have signed the abovementioned Balance Sheet which affirms the admission on their part that the aforesaid amount was given as a loan to the two companies and it could not be a so-called “payment towards construction services.” Hence, we find no force in the contention raised by Respondents No.1 and 2.

Since the loan reflected in the balance sheet of the CD advanced to the related parties was (a) without any agreement/document and interest rate; and (b) no efforts were ever made to recover the said loan amount, Respondent No.1 and 2/ the Directors had acted prejudicial to the interest of the Corporate Debtor and therefore, caused injury to the Corporate Debtor. In our considered view, the debt advanced with no intention to get repayment will constitute a Fraudulent Transaction. Hence, we find that the amount of Rs.2,80,55,517/- granted as a loan by CD to the related companies viz., MSX Developers Pvt. Ltd. and New Wave Hospitality Services Pvt. Ltd was a Fraudulent Transaction. We accordingly direct Respondents No.1 and 2 to make a contribution of Rs.2,80,55,517/- to the Bank account of the Corporate Debtor.

The Applicant has further added that the CD also diverted funds by way of extending loans and advances to the “related party individuals” to the tune of Rs.57.44 Lakhs, which are still outstanding. The details of such transactions, as submitted by the Applicant, are given overleaf:

To substantiate its argument, the Applicant/RP has annexed the Forensic Auditor’s Report dated 15.01.2019, stating that the aforesaid transactions are Fraudulent. The relevant extracts of the Forensic Audit Report relied upon by the RP, read thus:

Respondents No.1 and 2 in their replies/Written Submissions have stated the following on these loan transactions:

As regards the Loan amount of Rs.57,44,612/- given to the “Individual Related Parties”, initially, we would like to deal with the first transaction of Rs.15,00,000/- pertaining to one Mr. Ashok Singhal, who is stated to be Brother-in-Law of the Director. Respondents no.1 and 2 have denied that it was a Fraudulent Transaction. In their reply dated 06.02.2023, Respondents no.1 and 2 have averred the following:

It is further stated by Respondents No.1 and 2 in their Written Submissions that the CD’s Ledger fails to reflect the payment of the amount of Rs.15 Lakhs, which was already settled.

Per Contra, the Applicant/RP in its Rejoinder has denied the claim of Respondent No.1 and 2 and stated that there are no transactions reflected in the ledger of Mrs. Vandana Singhal’s account, hence the question of adjustment of the loan given to Mr. Ashok Singhal from her account does not arise. Further, there is no Ledger of Mrs. Neelam Singhal maintained in the books of Accounts of the CD.

It is against this backdrop that we would like to examine the transaction. Accordingly, we refer to the ledger Account of Mr. Ashok Singhal annexed by the Respondent, the Contents of which reads thus:

From a perusal of the Ledger (ibid), it is observed that the payment has been received on behalf of Mr. Ashok Singhal vide 3 cheques each of Rs.5,00,000/- entered in the Ledger on 15.09.2016, 12.06.2017, and 29.07.2017. However, as noted above, the Applicant/RP has denied such adjustments even from Ms. Vandana and Neelam Singhal as claimed by the Respondents.

However, the Applicant/RP has not denied the receipt of cheques (ibid), and if received, what was the purpose, if the same were not in relation to the payments of the loan amount given to Mr. Ashok Singhal? Moreover, the RP has failed to place or produce on record the Bank Account of the CD pertaining to this transaction. Hence, there is not adequate material on record to prove beyond doubt that the amount of Rs.15,00,000/-extended to Mr. Ashok Singhal was not paid back to the CD and therefore, in the absence of conclusive evidence, we cannot treat this transaction as a Fraudulent Transaction.

Now, we would like to examine the next transaction of Rs. 16,45,352 stated to be a loan given to Sh. Vikas Gupta, son-in-law of the Director of the CD, and Rs. 8,76,605 stated to be a loan given to Ms. Garima Gupta, daughter of the Director. It is stated by the Respondents in their Written Submissions that as per the Balance Sheet as of 31.03.2015, the amount reflected against Mr. Vikas Gupta is “Nil”. The RP has placed reliance on an unaudited balance sheet whereby a balance of Rs. 16,45,342/- has been shown against Mr. Vikas Gupta.

Per Contra, the Applicant/RP in its Rejoinder has stated that there is no Loan Agreement existing in the records of CD for any such Loan Facility extended to Mr. Vikas Gupta and Ms. Garima Gupta. The Applicant has annexed the Ledger Account and the Account Statement of Mr. Vikas Gupta and Ms. Garima Gupta justifying the amounts (ibid) recoverable from them.

It is against this backdrop, that we would like to refer to the extracts of the Audited Balance Sheet of CD as of 31.03.2015 placed by the Respondents on record, which read thus:

As per the Balance Sheet of the CD (ibid), Short-term loans and advances against Mr. Vikas Gupta and Ms. Garima Gupta are shown to be Nil. It is not the case of the Applicant/RP that the said Balance Sheet was not prepared in a true and fair manner. Even if it was not prepared in a true and fair manner, it is not clear what steps the Applicant/RP took to rectify the Balance Sheet. Hence, in view of the ‘nil’ balance appearing in the Balance Sheet as of 31.03.2015 against the names of Mr. Vikas Gupta and Ms. Garima, the RP has failed to establish conclusively, the transactions of Rs. 16,45,352/- and Rs. 8,76,605/- as Fraudulent transactions.

Now, we would like to examine the next transaction pertaining to the loan of Rs.12,50,000/- granted to Sh. Satya Narayan Gupta (Father-in-Law of Garima Gupta). Respondents No. 1 and 2 have contended that the payment made by the CD to Sh. Satya Narayan Gupta pertains to the settlement of friendly loans and advances given by him to the CD in previous years for the smooth functioning of the business activities.

From a perusal of the record, it is observed that Respondents No. 1 and 2 have not annexed any bank statements to substantiate that Sh. Satya Narayan Gupta had earlier disbursed any loan/advance to the Corporate Debtor, which was repaid by the CD. Further, this claim of Respondents No. 1 and 2 has not been established through the balance sheets of the CD. Hence, we find no plausible explanation given by Respondents No. 1 and 2 as to why an amount of Rs.12,50,000/- was disbursed to Sh. Satya Narayan Gupta, and that too without any loan agreement/document. Hence, we find that the aforesaid transaction of Rs.12,50,000/- in favour of Sh. Satya Narayan Gupta from the account of CD as a ‘fraudulent transaction’. We accordingly direct Respondents No.1 and 2 to make a contribution of Rs.12,50,000/- to the Bank account of the Corporate Debtor.

Now, we examine the transactions pertaining to the payments of Rs.3,00,000/- (Rs. 1,00,000/- paid on 24.09.2015 and Rs 2,00,000/- paid on 01.06.2017) to Mr. Sharad Aggarwal, the nephew of the Director of the Corporate Debtor. Respondents No. 1 and 2 have stated in their reply/Written Submissions that the payments of Rs.3,00,000/- were made to Mr. Sharad Aggarwal towards the Technical and Consultancy Services rendered by him to the Corporate Debtor in the ordinary course of business. In order to support their contention, Respondents have relied on the email dated 11.12.2013 sent by Mr. Sharad Agarwal to the Director of the CD to show that the services were sought by the Respondents from Mr. Sharad Agarwal. The said e-mail dated 11.12.2013 reads thus:

It is observed that whereas the aforementioned email from Mr. Sharad Agarwal relied on by the Respondents for providing consultancy services to the CD is of 11.12.2013, the payment of Rs. 1,00,000/- to him was made on 24.09.2015 and of Rs 2,00,000/- was made on 01.06.2017. The long time gap between the reported consultancy services and payment in lieu thereof raises suspicion. Moreover, neither any Letter of Appointment nor any Consultancy Agreement nor any invoice has been placed or produced by the Respondents on record. Furthermore, no proof of deduction of TDS on this transaction has been placed on record. In the absence of such documents, the contention of the Respondents loses its force. Therefore, we have no other option but to consider the payment of Rs.3,00,000/- made to Mr. Sharad Agarwal as a “fraudulent transaction”. We accordingly direct Respondents No.1 and 2 to make a contribution of Rs. Rs.3,00,000/- to the Bank account of the Corporate Debtor.

Now, we examine the payment of Rs.1,72,655/- made to Sh. Arpit Agarwal, the son of the Director of the Corporate Debtor. Respondents No. 1 and 2 have contended that this payment was made towards technical and consultancy services rendered by him to the Corporate Debtor in the ordinary course of business.

However, we do not see any documentary proof placed or produced on record by the Respondents in their replies or written submissions, which could depict that Sh. Arpit Agarwal was appointed/engaged to render such services to the Corporate Debtor. Therefore, we have no other option but to treat this payment of Rs.1,72,655/- made to Sh. Arpit Agarwal from the account of the CD as a “fraudulent transaction”. We accordingly direct Respondents No.1 and 2 to make a contribution of Rs. Rs.1,72,655/- to the Bank account of the Corporate Debtor.

Other than the abovementioned loans advanced to the related parties, the Applicant/RP has contended that Respondents No. 1 and 2 misused the loan of Rs.1.80,00,000/- disbursed by Religare Finvest Limited to the CD. The Applicant/RP has submitted the following:

When we refer to the record, it is seen that the Forensic Auditor has given the following observations with respect to this transaction in its report:

Per contra, Respondents No. 1 and 2 have submitted that Mr. Madhav Saran Agarwal i.e., Respondent No. 1 availed the loan in his personal capacity and not in the name of the CD. Further, the CD was only a Co-Borrower. Therefore, there is no abuse in the end use of the loan taken from Religare Finvest Limited. Further, the RP had sent an email dated 10.09.2018 to Religare Finvest Limited, which clearly shows that the Principal Borrower is Mr. Madhav Saran Agarwal and not the CD i.e., MSX Mall Private Limited. Furthermore, a transaction could be called a fraudulent transaction when it is established that the money was kept away from the reach of the Corporate Debtor. The loan availed by Mr. Madhav Saran Agarwal was with respect to a property that was purchased and mortgaged against the loan i.e., the purchased property was a secured Asset. It is further submitted that the Corporate Debtor is a Corporate Guarantor and the claim of Religare Finvest Limited has already been admitted by the RP and Religare Finvest Limited is an assenting Financial Creditor in respect of the Resolution Plan approved by the CoC.

On the other hand, the Applicant/RP has denied the submissions made by Respondents No. 1 and 2 and stated that Religare Finvest Ltd. disbursed the loan in favour of the Respondents whereby the purchased property was mortgaged against the loan which is a fraudulent transaction. The Applicant has denied that the Corporate Debtor stood as a Co-guarantor of the said loan and the purchased property was mortgaged against the said loan as a secured asset. The Applicant/RP has submitted that -

It is further submitted by the Applicant/RP that the claim of Religare Finvest Ltd. was admitted by him because the CD stood as the Co-borrower of the said Loan. It is further submitted that the approval of the Resolution Plan by Religare Finvest Ltd. having a 3.02% voting share in the COC does not overcome the fraud carried out by the Respondents.

Now, we would like to examine the contentions of both parties. Accordingly, we refer to the “Disbursal Advice” of Religare Finvest Ltd. placed on record by the Applicant which reads thus:

From the perusal of the aforesaid “Disbursal Advice” of Religare Finvest Ltd., it is seen that Mr. Madhav Saran Aggarwal, the Respondent No. 1 was the primary applicant for the loan and the MSX Mall Pvt. Ltd., the Corporate Debtor was the Co-Applicant along with two other individuals. Further, it is noticed from the “Disbursement Details” given in the Disbursal Advise that the disbursement of Rs. 9,49,722/- was made to Mr. Madhav Saran Aggarwal (R-1) and Rs. 1,80,00,000/- to Mr. Kunal Arora and Rajat Mohan Pathak. Thus, it is found that for the disbursed loan amount of Rs. 9,49,722/- + Rs. 1,80,00,000/- = Rs. 1,89,49,722/-, the Corporate Debtor was not the end user.

However, the RP had contended that the loan was disbursed to the Corporate Debtor but it has failed to demonstrate the same by way of any documentary evidence. Further, the Forensic Auditor’s report contains no evidence that this amount was directly disbursed to the Corporate Debtor and not to the Respondents. However, still, we are of the view that if the Corporate Debtor was not the beneficiary of the loan and any installments are paid from the account of the Corporate Debtor, the same shall be reimbursed by Respondent No. 1 and 2 into the account of the Corporate Debtor. Hence, we direct the RP to ascertain the exact amount of loan that is not utilized by CD but paid from the Bank account of the CD to the Creditor Religare Finvest Limited and take steps to recover the same from Respondent No.1 and 2, to the bank account of the Corporate Debtor.

The next alleged transaction is regarding the embezzlement of the closing cash balance of Rs.45,30,173/- as of 06.06.2018, for which RP has stated the following:

In this regard, the Forensic Auditor has observed the following :

Respondents no.1 and 2, in their response, have denied such transactions, as alleged by the Applicant and Forensic Auditor. They have stated that as per the last audited books of accounts as of 31.03.2015, no such transaction was recorded. The Cash Book annexed on Page 291-296 of Volume 3 of the Application reflects that there was a cash balance of Rs.45,30,173/-, the relevant extracts of which reads thus:

We are aware that the CIRP of the CD was initiated on 09.07.2018, whereas the Corporate Debtor had uploaded its Balance Sheet only till 31.03.2015. Respondents No.1 and 2, who were managing the affairs of the Corporate Debtor, did not upload the remaining Balance Sheets. In our view, they cannot take benefit of their own lapse/wrongdoing. Moreover, the Forensic Auditor had indicated transactions from April 2017 to July 2018, which would obviously not have been reflected in the Balance Sheet as of 31.03.2015. Merely the Books of Accounts of the CD were not audited, for the lapse on the part of the ex-management, will not create an escape route for Respondents No.1 and 2 from explaining and accounting for the aforesaid transactions. Since no just explanation has been given by Respondents No.1 and 2 about the cash balance of Rs. 45,30,173/-appearing in the Books of Accounts of the CD prior to the initiation of CIRP and the fact that the said cash balance was not handed over to RP, we have no other option but to consider the cash of Rs. 45,30,173/- as Fraudulently embezzled and we direct the Respondents No.1 and 2 to contribute this amount to the Bank Account of the CD.

Now, we consider the next transaction pertaining to the embezzlement of Cash of Rs. 65.29 Lakhs collected as “rent from the users of Kiosks of CD”. The RP has submitted the following with respect to this transaction:

The Forensic Auditor has stated the following with respect to the aforesaid transactions -

Respondents No.1 and 2, in their response, have stated that the CD being a going concern, had to incur various expenses for running the MSX Mall and further, Respondent No.1 and 2 had no knowledge about any entry or non-entry of the cash book. It is further contended by them that since the Books of accounts of the CD were not audited when such expenses were incurred by the CD, the same cannot be called a Fraudulent Transaction.

The plea of Respondents No.1 and 2 having no knowledge about the entries made in the books of account itself reflects that they did not act in a prudent manner while managing the affairs of the Corporate Debtor as Directors. Further, as observed earlier too, merely that the Books of Accounts were not audited, does not create an escape route for the Respondents from explaining the transactions. As a matter of fact, Respondents No.1 and 2 have not denied the collection of rent and other charges in cash from the occupants of the Kiosks of the CD. Further, they have failed to bring anything on record that this cash was utilized against any business expenses of the CD. Hence, in the absence of any just explanation, we have no other option but to conclude that Respondents No.1 and 2 have fraudulently embezzled the cash of Rs. 65.29 Lakhs. We accordingly direct Respondents No.1 and 2 to make a contribution of Rs 65.29 Lakhs to the Bank account of the Corporate Debtor.

Now, we would like to examine the transaction pertaining to “Unaccounted Cash Receipts” of Rs 3,80,25,500/-. The Applicant/RP had stated the following with respect to this transaction:

From the record it is seen that the Forensic Auditor has observed the following with respect to these transactions along with details as given in Annexure 1.5.6 (reproduced below) of the report:

In response, Respondents No.1 and 2 have stated that the Applicant has failed to attach any cogent documentary evidence for the cash payments allegedly received by the Respondents. It is further submitted that the Applicant/RP in the I.A. No. 124 of 2019 has annexed certain allotment letters along with the cash receipts, however, the same is not legible and the annexed documents are not of the creditors of the Corporate Debtor but of MSA Developers.

We have perused the documents as placed on record. Though, the RP has claimed an amount of Rs 3,80,25,500/- on the basis of the “unaccounted cash receipts” and the details of the Ledger given by the Forensic Auditor, but it has not placed such cash receipts on record. However, we notice that Respondents No.1 and 2 have annexed those cash receipts from pages 32 to 75 of their Written Submissions. Though Respondents No.1 and 2 have claimed in their Written Submissions that the same were not legible and belonged to MSA Developers, on perusal we find that the said Cash receipts are quite legible barring one, and are issued by the Corporate Debtor i.e., MSX Mall Pvt. Ltd. and not by MSA Developers. Hence, the explanation given by the Respondents is far from true. Since Respondents No.1 and 2 have failed to provide any just explanation for the transactions relating to the unaccounted cash receipts, we have no other option but to treat the transactions as Fraudulent. Accordingly, we direct Respondent No.1 & 2 to contribute the amount of Rs 3,80,25,500/- to the Bank Account of the CD.

Now, we examine the next group of transactions relating to multiple allotments of units worth Rs. 23,11,74,979/-. In this regard, the Applicant/RP has stated that on scrutiny of records of the CD, and on receipt of the proofs of claims from various allottees of the Corporate Debtor, he noticed that the CD has fraudulently allotted 129 units of the MSX Mall to the second or third allottee (i.e., allotment of one unit to multiple allotees) and thus, committed a fraud amounting to Rs.23,11,74,797/-. Since the suspended board of directors of the CD allotted the same space to various investors and carried out the business for fraudulent purposes with an intent to defraud creditors of the CD, the Respondents be asked to contribute towards the loss caused to the creditors due to multiple allotments.

From the record, it is seen that on the issue of transactions relating to multiple allotments, the Forensic Auditor has observed the following:

The details of the multiple allotment cases are given in Annexures 1.5.1 to 1.6.3 of the Forensic Auditor report.

In response, Respondents No.1 and 2 have stated in their Written Submissions that the Resolution Plan approved by the COC provides treatment to all these allottees and the same has been dealt with category-wise. Furthermore, when the allotment letters were issued, it was made clear that the allotments made were provisional in nature. The relevant clause of the Allotment Letter relied by them is reproduced below:

In our view, the issue of multiple allotments and provision for the allottees by an SRA in the Resolution Plan are two distinct issues. Usually, the SRA is not a Promoter, though in the instant case, the Ex-Directors claiming the CD to be an MSME, have submitted the Resolution Plan. However, the mere submission of the Resolution Plan with a provision for the allottees cannot provide immunity to Ex-Directors i.e., Respondent No.1 and 2 from the wrongdoings or Fraudulent Transactions entered by them in terms of making multiple allotments to the allottees. Apparently, Respondents No.1 and 2 cannot make multiple allotments of a single unit and then, do the damage control by presenting a Resolution Plan. Further, plea taken by Respondents No.1 and 2 is that allotment was provisional, however, the aforesaid clause nowhere stipulates that the Respondents could have done multiple allotments of the same unit without canceling the earlier unit. By doing multiple allotments of the same unit(s), Respondents No.1 and 2 had played fraud not only on the Corporate Debtor but also on the allottees. Accordingly, we direct Respondents No.1 and 2 to contribute the amount of Rs. 23,11,74,797 to the bank account of the CD. However, the RP on receipt of this amount shall release the same, as per the records of the CD, to the allottees, who are the victims of such multiple/fraudulent allotments, since the aforesaid amount being fraudulently collected by the CD through Respondents No.1 and 2, the same cannot be added to the asset pool of the Corporate Debtor and deserves to be returned to the respective victim allottees.

Now, we would like to examine the next transaction relating to the Transfer of shops/units to the creditors of Respondent No. 3 being the related party. The following is stated by the Applicant/RP with respect to

such transactions:

From the record, it is seen that the Forensic Auditor has stated the following with regard to this transaction between the CD and R-3:

Respondents No.1 and 2 have filed their reply stating that the said transactions were against the credit balance of Respondent No.3. Their reply is reproduced below:

In response to these transactions, RP of the Respondent No. 3 (under CIRP) has filed its reply and stated the following:

The RP of Respondent No.3 has submitted that R-3 i.e., MSA Developers Private Limited has been undergoing the CIR Process before Court-VI in C.P. No. (IB) 806(PB) of 2019 titled "Rabindra Kumar Agarwal & Ors vs. MSA Developers Limited”. We are conscious of the fact that Respondent No.1 was also in the management of Respondent No.3. In other words, he was a common Director in Corporate Debtor herein as well as in Respondent No.3.

In their reply, Respondents No. 1 and 2 have admitted that the transactions were against the credit balance of Respondent No. 3, which they have otherwise failed to substantiate, in terms of the absence of any documentary evidence placed on record. Hence, we are of the view that since the Corporate Debtor has diverted or sacrificed its units/assets (being allotted to the creditors of R-3) for a ‘Nil’ Consideration, we have no hesitation in concluding that the said transactions have caused injury to the Corporate Debtor and are, therefore, of Fraudulent in nature. We accordingly direct Respondents No.1 and 2 to make a contribution of Rs.13,55,57,104/- to the Bank account of the Corporate Debtor.

Now, we would like to examine the transaction relating to the transfer of 900 sq. ft. of land to the vendor of Respondent No. 3 without consideration. In this regard, the Applicant/RP has stated the following:

Respondents No.1 and 2 have stated that Combine India Home Developers Pvt. Ltd. was not a creditor of the Corporate Debtor. It was Respondent No. 3, who issued a work order in the name of the Combine India Home Developers Pvt. Ltd. for certain constructions, and pursuant thereto, one unit was allotted to Combine India Home Developers to settle the liability. The Respondents have placed the allotment letter of Unit no. 212A to R-3 dated October 27, 2017 on page nos. 99-109 of their written submissions, which is reproduced below:

It is further submitted by the Respondents that they canceled the allotment due to a dispute raised over the invoice amount. It is further submitted that the Respondents further advised Combine India Home Developers Pvt. Ltd. to file their claim in the CIR process of Respondent No. 3. However, the Resolution Professional of Respondent No. 3 did not admit the claim of Combine India Home Developers Pvt. Ltd.

We have gone through the submission made by the Applicant/RP as well as the reply and written submissions filed by Respondents No. 1 and 2. Whereas, in their written submissions, they have enclosed an allotment letter dated October 27, 2017 of the CD and thereby admitted that Unit no. 212A was allotted to the creditor namely, Combine India Home Developers Pvt. Ltd of Respondent No. 3 i.e., MSA Developers Pvt. Ltd. but failed to bring or produce on record any document in support of their averment regarding the cancellation of the said shop. In the circumstances, we have no other option but to treat the transaction as fraudulent and direct Respondents No. 1 & 2 to contribute an amount of Rs. 1,10,29,835/- to the bank account of Corporate Debtor.

Accordingly, the IA-2003/2022 stands allowed in terms of the directions contained in paragraphs no. 8, 18, 20, 22, 28, 32, 36, 40, 44, 49 and 52 of this order. Respondents no. 1 and 2 are directed to contribute the amount in terms of the directions contained in the aforesaid paragraphs to the Bank Account of the Corporate Debtor within a period of 30 days of this order, failing which, the Insolvency Professional in-charge of the Corporate Debtor shall take necessary action to recover the amount from Respondents No. 1 and 2 to the Bank account/asset pool of the Corporate Debtor.

The Registrar/Court Officer is directed to send a copy of this order to the IBBI for their record.