RR Securities And Finance Pvt. Ltd. vs Mr. Rishabh Chand Lodha & Anr.

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’ in short) by the Appellant arises out of the Order dated 16.10.2025 (hereinafter referred to as the ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench– V) in I.A. No. 795 of 2025 in C.P. (IB) No. 804/ND/2020. By the impugned order, the Adjudicating Authority has rejected the claim of the Appellant - R.R. Securities and Finance Pvt. Ltd. (“RRSFPL” in short) in the Corporate Insolvency Resolution Process (“CIRP” in short) of the Corporate Debtor-DMC Infrastructure Pvt. Ltd (“DMCIL” in short). Aggrieved by the impugned order, the present appeal has been preferred by the Appellant.

Coming to the factual matrix, it is relevant to note that JMD Commercial Pvt. Ltd. (“JMDCPL” in short) a sister concern of the Corporate Debtor-DMCIL had purchased goods valued at approximately Rs. 6.39 Crores from M/s RS International. JMDCPL purportedly failed to honour its payment obligations resulting in substantial outstanding dues. To resolve their outstanding debt, a Collaboration-cum-Redevelopment Agreement dated 07.08.2017 was executed between DMCIL, JMDCPL, certain shareholder/promoters of the Corporate Debtor and RS International under which agreement limited lease-hold rights over the immovable property-Filmistaan Cinema (hereinafter referred to as “subject property”) owned by DMCIL-Corporate Debtor was purportedly given to RS International. However, due to unresolved encumbrances and other subsisting third-party interests in the said property, the proposed redevelopment of the said property could not be undertaken and as this arrangement failed to fructify, the debt of JMDCPL remained unpaid. Subsequently, on 31.03.2021, the rights of RS International under the Collaboration-cum-Redevelopment Agreement was assigned to the Appellant-RRSFPL by an Assignment Agreement. On the same date i.e. 31.03.2021 the Corporate Debtor and JMDCPL also addressed a communication to Appellant conveying a joint acknowledgment of debt and corporate guarantee admitting the outstanding liability of Rs. 6.40 Cr. with interest at 24% per annum, compounded monthly. Soon thereafter, on 15.04.2021, the Corporate Debtor-DMCPIL was admitted into CIRP. The CoC in the first meeting held after the Corporate Debtor was admitted into CIRP resolved to seek liquidation of the Corporate Debtor. However, the fifth CoC meeting held on 15.04.2024 resolved to withdraw the liquidation proposal and accordingly the RP preferred IA No. 2356 of 2024 before the Adjudicating Authority seeking withdrawal of the liquidation application. IA No. 2356 of 2024 was allowed by the Adjudicating Authority on 20.09.2024 with directions to complete the resolution process. Form-G was published and Expression of Interests were also received from potential resolution applicants. The Appellant on 04.01.2025 sent an e-mail to the RP asserting their rights over the subject property and for reflecting the same on the Information Memorandum (“IM” in short) in terms of the 2017 Agreement. This was followed by an application bearing IA No. 647 of 2025 filed by the Appellant before the Adjudicating Authority seeking directions to be issued to the RP to update the rights of the Appellant over the subject property in the IM. The Appellant also filed their claim in Form-F in the category of “Other Creditors,” by relying on the alleged Guarantee Deed dated 31.03.2021 purportedly executed by the Corporate Debtor in their favour and staked a total claim of Rs. 15.35 Cr including accrued interest as on the insolvency commencement date. This claim was rejected by the Resolution Professional (“RP” in short) on 11.02.2025. On 13.02.2025, the Appellant filed IA No. 795 of 2025 before the Adjudicating Authority challenging the rejection of their claim by the RP. The Adjudicating Authority by the impugned order dated 16.10.2025 dismissed both IA Nos 647 and 795 of 2025 filed by the Appellant. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant.

Making submissions on behalf of the Appellant, Shri Paras Mithal, Ld. Counsel contended that the Adjudicating Authority, failed to appreciate holistically the continuous chain of commercial transactions commencing with the purchase of goods by JMDCPL from RS International in 2017; the unpaid debts arising from these transactions which in turn led to the execution of Collaboration-cum-Redevelopment Agreement dated 07.08.2017 towards liquidation of the outstanding dues followed by an Assignment Agreement dated 31.03.2021 executed in favour of the Appellant besides a joint acknowledgment and guarantee deed dated 31.03.2021 by the Corporate Debtor and JMDCPL in favour of the Appellant. It was contended that the Adjudicating Authority also failed to appreciate that these developments are fully supported by documentary evidence. However, the Adjudicating Authority erred in having perused these documents in isolation without looking at them in their totality. When seen together, these documents clearly establish a legally enforceable monetary liability qua the Corporate Debtor. Submission was also pressed that the issue of the letter dated 31.03.2021 was not only an admission of the joint acknowledgment of dues of Rs 6.39 Cr. along with interest @ 24% per annum by JMDCPL and the Corporate Debtor but also unequivocally reflected the intention of the Corporate Debtor to act as a guarantor. It was pressed hard that their claim before the RP was a pure monetary claim founded on a valid assignment of debt which is substantiated by acknowledgment of liability and corporate guarantee and that this claim was independent of redevelopment of the subject property which was at the heart of the Collaboration-cum-Redevelopment Agreement. It was clarified that the Appellant not having asserted any possessory or proprietary rights over the subject property, it was misconceived on the part of the Adjudicating Authority to link the claim amount and the subject property and for denying the claim by holding it contingent and inchoate. It was also contended that reliance placed by the RP on the absence of entries in the audited financial statements of the Corporate Debtor to reject their claims was also misconceived since no direct disbursement was ever claimed by the Appellant.

Refuting the contentions of the Appellant, Shri Rachit Mittal, the Ld. Counsel for the Respondent-RP submitted that both IAs 647 and 795 of 2025 were not maintainable and had been rightly dismissed by the Adjudicating Authority. The Appellant had failed to establish any legally enforceable debt for establishing their claim or effectively demonstrate any vested right against the Corporate Debtor, hence, the RP had rightly rejected their claims. The Appellant had also failed to show that it had supplied goods or rendered services to the Corporate Debtor. Nor did the Appellant advance any loan or hold any registered charge or valid corporate guarantee. Further no liability is reflected in the audited financial statements of the Corporate Debtor qua the Appellant. Submission was pressed that the Collaboration-cum-Redevelopment Agreement dated 07.08.2017, basis which the claim is staked was unenforceable as it was executed without due authorization of the Board of Directors and without the requisite mandatory shareholder’s approval under Section 180 of the Companies Act, 2013. Further, the rights claimed by the Appellant qua the subject property was purely contingent as it was subject to the prior and subsisting security interest of the Corporation Bank (now Union Bank of India). In the absence of resolution of such encumbrance, no vested or crystallized rights had accrued in favour of the Appellant. The Appellant therefore had no legal basis to seek modification of the Information Memorandum as the subject property did not vest in the Appellant. It was also pressed that the letter of 31.03.2021 from the Corporate Debtor and JMDCPL to the Appellant which has been claimed by the Appellant to be a deed of corporate guarantee did not constitute an enforceable document as it was not duly executed, stamped or properly notarized and was only a unilateral offer made by the Corporate Debtor and there is no acknowledgment or acceptance of the same by the RS International. Hence this letter was incapable of creating any binding guarantee and at best was an incomplete and inchoate document. The RP further contended that the claim of the Appellant was rejected not only on the ground of absence of their enforceable rights over the subject property but also for no evidence to show either supply of goods or services by them; or lack of proof of any loan having been advanced or disbursed by them; and no proof of existence of the amount claimed by the Appellant in the financial statements of the Corporate Debtor.

We have duly considered the arguments advanced by the Ld. Counsels for both parties and perused the records carefully.

The short issue for our consideration is whether the impugned order of the Adjudicating Authority affirming the decision of the RP to reject the claim filed by the Appellant suffers from any infirmity.

At the very outset, we would like to advert attention to the findings returned by the Adjudicating Authority wherein the broad reasons for supporting the rejection of the claims of the Appellant by the RP has been captured which is as reproduced below:

It is the case of the Appellant that the impugned order had wrongfully rejected their claim despite having placed on record supporting documents which substantively established a legally enforceable financial obligation on the part of the Corporate Debtor-DMCIL qua the Appellant. One of the principal documents relied upon by the Appellant in support of their claim is the Collaboration-cum-Redevelopment Agreement of 07.08.2017. While acknowledging the fact that the Collaboration-cum-Redevelopment Agreement stipulated that the Corporate Debtor was required to take certain steps to remove the encumbrances on the subject property, it was contended that even if the encumbrances were not cleared by the Corporate Debtor, this did not undermine the underlying outstanding debt which gave rise to the monetary claim of the Appellant.

Per contra, it is the contention of the Respondent-RP that in terms of the Collaboration-cum-Redevelopment Agreement, it is an admitted fact the Corporate Debtor was required to take steps to remove the encumbrances of the Union Bank of India over the subject property. It was contended that it is also an undisputed fact that these encumbrances were not cleared by the Corporate Debtor and, therefore, the rights arising from the Collaboration-cum-Redevelopment Agreement had not crystallised into an enforceable monetary claim and therefore the RP had not committed any error in rejecting the claim filed by the Appellant basis the Collaboration-cum-Redevelopment Agreement. Further, in the absence of any evidence of authorisation in favour of the signatory who executed the said document on behalf of the Corporate Debtor and this Agreement not having been registered, this rendered the document legally unenforceable and therefore could not have constituted sufficient basis for making any claims.

At this stage, it will be relevant to peruse the relevant clauses of the Collaboration-cum-Redevelopment Agreement which is as reproduced below:

Having taken notice of the above document, we first come to the contention of the RP that this Agreement was executed on 07.08.2017 while the date of purchase of stamp paper is shown as 03.04.2014. It is also contended by the RP that this Agreement is neither notarized nor attested. Since this Agreement was unregistered, it was legally unenforceable in terms of Section 17 of the Registration Act, 1908. The executant of this Agreement on behalf of the Corporate Debtor also lacked order of authorisation from the Corporate Debtor thereby making the authenticity of the document doubtful. Since the authenticity of the primary document was itself questionable, it is the case of the RP that the claim filed on the basis of such a document was untenable. While we are of the view that disputes involving authenticity and genuineness of contractual documents do not fall strictly within the remit of the RP, given the fact that Regulations 10, 12 and 13 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations,2016 enjoins upon the RP to verify claims submitted by creditors, there was nothing unusual on the part of the RP to take notice that there existed grounds for doubting the authenticity and bonafide of the documents basis which claims were raised. Be that as it may, we do not wish to comment on this aspect since records placed before us do not carry proof as to whether the RP had sought further clarifications from the concerned on this aspect while considering the claims of the Appellant to determine their authenticity and accuracy.

However, more importantly, when we look at the terms of the above Collaboration cum Redevelopment Agreement, it becomes clear that the rights of RS International over the subject property was contingent upon resolution of the encumbrance. When this condition precedent of resolution of the encumbrances had admittedly remained unmet, the RS International and the Appellant as their assignee could not have claimed benefit of the subject property. The RS International and their assignee could have claimed remedies available under the Collaboration cum Redevelopment Agreement only when the title deed of the subject property was returned by the Union Bank of India which not having materialized, the claim of lease-hold rights over the subject property cannot be seen to have fructified. Thus, the finding of the RP which was later affirmed by the Adjudicating Authority that the claim of the Appellant could not have been enforced basis terms of the Collaboration cum Redevelopment Agreement cannot be faulted. No right had crystallized in favour of the Appellant under this Collaboration cum Redevelopment Agreement. Hence, the Adjudicating Authority had correctly held that the encumbrances with respect to the subject property not having been resolved which was integral to the Agreement terms, no enforceable right over the subject property had concretized and hence no claim could have been made basis the Agreement.

The other salient document on which the Appellant has relied upon to assert the inclusion of their rights over the subject property in the Information Memorandum and for the RP to accept their claim was the Assignment Agreement which had been entered into between RS International as the ‘Assignor’ and the Appellant as the ‘Assignee’. Submission was pressed that the Assignment Agreement provided for the transfer and conveyance of all rights, titles and interest over the subject property in the Collaboration-cum-Redevelopment Agreement from the Assignor to the Assignee. It was contended that alongwith the debt of the Corporate Debtor, the vested right over the subject property was also assigned to the Appellant by the Assignor.

Per contra, it is the contention of the Respondent that Assignment Agreement provided for assignment of rights and interests on the re-developed portions of the subject property. Since this limited right of re-development did not take place on account of encumbrances over the subject property, the vested rights over the subject property had not yet devolved upon RS International which party was the assignor, hence, the same rights or title could not have been assigned by them to the Appellant. Hence no claim on the basis of the Assignment Agreement could have been made by the Appellant.

It may be useful at this stage to notice the relevant provisions of the Assignment Deed which is as reproduced below:

We notice that the above terms of the Assignment Deed have also been noticed by the Adjudicating Authority in the impugned order at para 15. From a plain reading of the above Clauses of the Assignment Deed, it is evident that this deed clearly identified the select portions of the redeveloped property on which RS International as the Assignor had exclusive rights. That the subject property was not redeveloped owing to non-removal of encumbrances over the subject property has also not been controverted by the Appellant. Since the redeveloped units had not come into existence, the Adjudicating Authority committed no mistake in holding that no rights, title or interest on the subject property had therefore accrued in favour of the Appellant under the above-mentioned Assignment Deed. Until the title deeds were returned to the custody of the Corporate Debtor by the Union Bank of India, RS International was not entitled to exercise any rights in relation to the subject property and therefore the assignment by them of their rights to the assignee was hollow and baseless. Furthermore, the Agreement has been executed without the consent/NOC from the Union Bank of India at a time when the subject property stood encumbered with Union Bank of India. We have already noticed in the preceding paragraphs that the title deeds of the subject property had also not yet been returned by the Union Bank of India to the Corporate Debtor, hence in such circumstances, the Appellant cannot be seen to exercise any rights in relation of the said property in terms of the Assignment Agreement. We thus find no reasons to disagree with the finding returned by the Adjudicating Authority that when the Assignor did not get any right in the subject property, the Assignor could not have transferred any right on the subject property to the Assignee as it is settled law that the rights of the assignee cannot be more than what the original assignor possesses. We are therefore clear in our minds that the Assignment Deed does not lend any foundation to the argument canvassed by the Appellant that their claim was wrongfully rejected by the RP.

This now brings us to the letter dated 31.03.2021 which has been claimed by the Appellant to evidence a joint acknowledgment of debt and corporate guarantee given by the Corporate Debtor admitting their outstanding liability of Rs. 6.40 Cr. with interest at 24% per annum, compounded monthly. This was contended by the Appellant to be an acknowledgement of debt which debt crystallized their monetary claim independent of any property-linked contingent rights. As the provisions of the Indian Contract Act, 1872 recognises a guarantee whether it is oral or written and does not prescribe any particular format to be followed, it was asserted that the letter sufficed for being treated as a guarantee deed.

Rebutting the above argument, it was contended that the letter dated 31.03.2021 did not constitute a valid guarantee. Further, since this letter of 31.03.2021 was undisputedly post the purported execution of the Collaboration-cum-Redevelopment Agreement of 07.08.2017 and this letter clearly altered the terms of the Collaboration-cum-Redevelopment Agreement, the letter should have been consented to by all the parties who were signatories to the Collaboration-cum-Redevelopment Agreement. It was therefore vehemently contended that in the absence of a formal agreement, this letter was thus at best an incomplete and inchoate document incapable of creating any binding guarantee.

To arrive at our findings, we would like to advert our attention to the letter dated 31.03.2021 and the signatories therein basis which the Appellant has claimed this document to be a formal Guarantee Deed. The said letter which appears at page 84 of the Appeal Paper Book is as reproduced below:

 Principal Amount : Rs. 6,39,40,140/  Accrued Interest (as on 31.03.2021) : Rs. 8,81,81,015/-

When we look at the letter of 31.03.2021 which has been relied upon by the Appellant to contend that a Corporate Guarantee had been issued by the Corporate Debtor, we find the document to be a mere letter which is neither stamped nor notarised but more significantly not consented to by all the relevant parties i.e. the surety/guarantor; principal debtor/defaulting party and the creditor/receiver. It is only a unilateral offer by the Corporate Debtor bereft of mutual consent of all concerned parties and on the face of it suffers from the infirmity of being an incomplete instrument incapable of creating a binding guarantee. There is no mention of whether the consent of Union Bank of India has been taken apart from mentioning that they were striving to resolve the encumbrance held by the bank. Prima facie, this puts a question mark on the validity and enforceability of the letter dated 31.03.2021 thereby rendering the corporate guarantee legally untenable.

We are therefore of the considered view that mere existence of documents like the Collaboration-cum-Redevelopment Agreement, Assignment Agreement or the Letter of Guarantee in itself cannot substantiate the claims of the Appellant when the claims were contingent and dependent on removal of encumbrances of the subject property by the Corporate Debtor. We do not find any material on record to substantiate the fact that the encumbrances had been removed and that the title deed of the subject property deposited with the Union Bank of India had been returned to the Corporate Debtor. Further in the present facts of the case when the Appellant has admitted that the Corporate Debtor had not yet fulfilled its obligations to cure the encumbrances over the subject property, though it had expressly undertaken to do so, we have no reasons to disagree with the Respondent-RP that there was no enforceable right enjoyed by RS International or their assignee over the subject property and hence the claim staked by the Appellant lacked foundational basis. It therefore, follows as a logical corollary that the rights of the Appellant still remaining nebulous, amorphous and indeterminate, such contingent rights did not acquire the character of a crystallised and enforceable right, basis which any claim could have been accepted by the RP.

Additionally, we also find that Adjudicating Authority has taken cognisance of the fact that the RP while deciding on the acceptance had noticed that the CIRP of the Corporate Debtor was initiated by the Adjudicating Authority vide order dated 15.04.2021 but the Applicant had filed their claim belatedly almost after four years and that too by asserting their contingent rights over an encumbered subject property. Given this backdrop, we do not find any error on the part of the RP to not have updated the Information Memorandum in respect of the subject property or in rejecting the claim of the Appellant and for the Adjudicating Authority to have upheld these decisions of the RP in the impugned order.

In result we do not find any merit in the Appeal. The Appeal is dismissed. No costs.