NCLAT (2025.05.30) in Dr. Vichitra Narayan Pathak Vs. Suraksha Realty Ltd. & Anr. [(2025) ibclaw.in 420 NCLAT, Company Appeal (AT) (Insolvency) No. 1017, 1018, 1060, 1061,1085, 1096, 1309 & 1310 of 2024] held that;
A ‘secured creditor’ under ‘liquidation process’ has an indefeasible right to realise its security interest by excluding its assets from the Liquidation Estate per Section 52. In case of ‘liquidation’ a ‘Secured Creditor’ who intends to realise its ‘security’ outside the ‘waterfall mechanism’ as per section 53, has to prove that he has a “Charge” over a property.
Further, the definition of “Liquidation Estate” under 36(3) (g) includes ‘secured assets’ only and only if the ‘secured creditor’ has relinquished its interest. Distinctively, Section 18(1)(f) and 25(2)(a) mandates the Resolution Professional to take control of ‘all assets’ of the Corporate Debtor irrespective of any encumbrance. Further, no secured creditor has right to ‘realise’ its ‘security interest’ during ‘CIRP’
We, thus, are of the view that the impugned order dated 13.05.2023 in far as it direct for reducing the claim of Arrow Engineering to Rs.40.75 Crores is unsustainable. We make it clear that our decision to set aside the said direction is on the basis that said order was passed without giving opportunity of submission to the Arrow Engineering in violation of principles of natural justice.
We, thus, do not accept the submission of learned Counsel for the RP that Adjudicating Authority lack jurisdiction to pass an order replacing the RP.
We are of the opinion that the Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of the RP particularly in a situation where the RP had not taken any steps to convene a meeting of the CoC for the purposes of removal of RP.
We are conscious of the fact that the provision of Section 27 of the Code contemplates that the replacement of the Resolution Professional can be done by the CoC alone. But if the ingredients of Section 27 of the Code cannot be met i.e. in the event, the RP is not convening the meeting of CoC, which in turn has to decide the replacement of the RP himself, we are of the considered view that the Adjudicating Authority, in order not to delay the CIRP proceedings, on an application under Rule 11 of the NCLT Rules, 2016 has rightly invoked its inherent jurisdiction and passed the impugned order.
When the CIRP process was already over despite extensions granted by the Adjudicating Authority, at this stage, there was no necessity for issuing any direction for forensic audit.
No stakeholders having made any complaint or having requested for any forensic audit, direction to carry on forensic audit shall further delay the CIRP process which is already delayed and running beyond the timeline. We, thus, are of the view that there was no occasion to direct for forensic audit by the Adjudicating Authority.
Excerpts of the order;
These Appeals arise out of the Corporate Insolvency Resolution Process (CIRP) of Corporate Debtor- ‘M/s Golden Tobacco Limited’. Company Appeal (AT) (Insolvency) No.1017 of 2024 and Company Appeal (AT) (Insolvency) No.1018 of 2024 have been filed by Dr. Vichitra Narayan Pathak, the Resolution Professional of the Corporate Debtor. Company Appeal (AT) (Insolvency) No. 1060 of 2024 and Company Appeal (AT) (Insolvency) No. 1061 of 2024 have been filed by the Central Bank of India, a Financial Creditor of the Corporate Debtor. Company Appeal (AT) (Insolvency) No.1096 of 2024 has been filed by Arrow Engineering Ltd., another Financial Creditor of the Corporate Debtor and Company Appeal (AT) (Insolvency) No.1309 of 2024 and Company Appeal (AT) (Insolvency) No.1310 of 2024 have been filed by Suraksha Realty Ltd. and Sheth Developers Ltd. Respectively, the Financial Creditors of the Corporate Debtor. Company Appeal (AT) (Insolvency) No.1085 of 2024 has been filed by Shree Ram Vessel Scrap Pvt. Ltd. who could not submit a Resolution Plan by 02.03.2024 which was last date for submitting Resolution Plan. On 19.03.2024, Company Appeal (AT) (Insolvency) No.1085 of 2024 has been filed by Shree Ram Vessel Scrap Pvt. Ltd. seeking direction to submit Resolution Plan as a Resolution Applicant in the CIRP of the Corporate Debtor. Order passed by the Adjudicating Authority (National Company Law Tribunal) Ahmedabad Bench, Court II dated 13.05.2024 passed in IA No.357 of 2023 and IA No.358 of 2023 are under challenge in these Appeals.
# 2. Brief facts of the case giving rise to these Appeals need to be noticed are:-
2.1. Arrow Engineering Ltd. filed an application under Section 7 against the Corporate Debtor- ‘M/s Golden Tobacco Limited’ praying for initiation of the CIRP against the Corporate Debtor. The application under Section 7 was rejected by order dated 25.01.2021 passed by the Adjudicating Authority against which Company Appeal (AT) (Insolvency) No.183 of 2024 was filed which was allowed by this Tribunal on 02.12.2021 directing Adjudicating Authority to pass consequential order including the order of Moratorium. In pursuance of the order dated 02.12.2021, an order was passed on 07.06.2022 admitting Section 7 application commencing the CIRP process. Dr. Vichitra Narayan Pathak was appointed as Interim Resolution Professional (IRP). IRP in pursuance of the CIRP made public announcement on 09.06.2022. The Financial Creditor- Arrow Engineering Ltd. who has initiated the CIRP process filed claim and the Resolution Professional admitted the claim to the extent of Rs.265,97,10,569/- on 17.06.2022. Suraksha Realty Limited and Sheth Developers Limited filed their claims in Form C as Financial Creditors on 21.06.2022. Resolution Professional expressed its inability to consider the claims of Suraksha Realty Limited and Sheth Developers Limited. IA No.690 of 2022 was filed by Sheth Developers Limited and Suraksha Realty Limited seeking a direction to set aside the communication sent by the IRP and further direction to accept the claims of Applicants as Secured Financial Creditors. Central Bank of India also filed its claim as Financial Creditor on 30.09.2022. Name of Central Bank was reflected in the list of creditors as Unsecured Financial Creditors. Central Bank’s claim was admitted to the extent of Rs.592.67 Crores. The application filed by Sheth Developers Limited and Suraksha Realty Limited came to be decided by order dated 16.03.2023. Adjudicating Authority held that the claim of Applicants is as a financial debt within the meaning of IBC. Adjudicating Authority directed the IRP to consider the claims of Applicants towards interest and their prayer to be treated as Secured Creditors. After the order dated 16.03.2023, Resolution Professional accepted the claims as a Financial Creditor and communicated its decision on 20.03.2023 that the claim of the Applicants for interest cannot be admitted and notional value of Rs.1/- is accepted as contingent liability of the Corporate Debtor. With regard to claim of security interest, it was opined by the Resolution Professional that the Applicants are not Secured Creditors. Aggrieved by the decision of the Resolution Professional dated 20.03.2023, IA No.357 of 2023 was filed by Suraksha Realty Limited seeking a direction to accept the claim of interest as well as Applicants be declared as Secured Financial Creditors. To the similar effect, IA No.358 of 2023 was filed by Sheth Developers Limited. In IA No. 357 of 2023 and IA No.358 of 2023, the Adjudicating Authority passed an order on 28.03.2023 directing filing of the reply by RP. Adjudicating Authority passed an interim order directing that voting on the Resolution Plan as and when submitted before the CoC shall not be undertaken till the disposal of the IAs.
2.2. Arrow Engineering Limited filed an IA No.1058 of 2023 in IA No.357 of 2023 praying for impleadment in IA No.357 of 2023. Adjudicating Authority heard IA No.1058 of 2023 and vide order dated 22.03.2024 rejected the application IA No.1058 of 2023. It was observed that in IA No.357 of 2023, no prayers have been made against the Arrow Engineering Limited and it was only for the Resolution Professional to reply IA No.357 of 2023. Suraksha Realty Limited and Sheth Developers Limited have filed IA No.703 of 2023 and IA No.697 of 2023 seeking direction to remove and reject the claims filed by Central Bank of India, Arrow Engineering Ltd. and other Financial Creditors. Adjudicating Authority vide order dated 10.10.2023 has extended the CIRP period till 21.12.2023. In IA No.357 of 2023 and IA No.358 of 2023, Resolution Professional filed a reply. On 18.12.2023, fresh invitation for EoI under Form G was published. In the 11th CoC meeting held on 29.01.2024, CoC passed a Resolution with majority of 88.58% continuing Vichitra Narayan Pathak as the Resolution Professional. A complaint was also filed by Suraksha Realty Limited against the Resolution Professional which was disposed of by the IBBI on 27.02.2024 by way of advisory. In 12th CoC meeting held on 05.03.2024, seven Resolution Plans received in the CIRP were opened and plans were circulated to the members of the CoC. In 13th CoC meeting held on 15.03.2024, CoC rejected request for further extension of time for submission of the Resolution Plan. IA No. 357 of 2023 and IA No.358 of 2023 were heard. In IA No.614 of 2024 filed by Suraksha Realty Limited, Adjudicating Authority directed that no further meeting of the CoC be held and no decision to be taken till the orders reserved in IA No.357 of 2023 are pronounced. By order dated 13.05.2024, IA No.357 of 2023 has been partly allowed and certain directions have been issued by the Adjudicating Authority including discharge of Resolution Professional- Dr. Vichitra Narayan Pathak and appointing another Resolution Professional. Adjudicating Authority also directed for conduct of Forensic Audit. By order of the same date, IA No.358 of 2023 filed by Sheth Developers Limited has also been partly allowed. By order dated 13.05.2024, the claims of Suraksha Realty Limited and Sheth Developers Limited have been accepted insofar as claim of interest @18% is concerned, Adjudicating Authority, however, rejected the claims of Suraksha Realty Limited and Sheth Developers Limited to declare them as Secured Financial Creditors.
# 13. From the submissions advanced by Counsel for the parties and matrials on record, following are questions which arise for consideration in this group of Appeals:
I. Whether Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. are Financial Creditors of the Corporate Debtor?
II. Whether Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. are Secured Financial Creditors of the Corporate Debtor in view of the MoU dated 26.12.2009 coupled with deposit of title with the common agent (Escrow Agent)?
III. Whether the order of the Adjudicating Authority passed in IA No. 357 of 2023 and IA No.358 of 2023 holding that Appellant Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. are entitled for 18% interest is sustainable?
IV. Whether Adjudicating Authority by the impugned order could have reduced the claim of Arrow Engineering Limited to the extent of Rs.40.75 Crores without giving an opportunity to the Arrow Engineering Ltd.?
V. Whether the conclusion of the Adjudicating Authority that Resolution Professional accepted inflated claim of Central Bank of India are sustainable especially when Central Bank of India was neither heard nor was made party to IA No. 357 of 2023 and IA No.358 of 2023?
VI. Whether the Adjudicating Authority committed error in exercise of its jurisdiction in directing replacement of the Resolution Professional and there were sufficient material on the record to make adverse observations against the Resolution Professional?
VII. Whether there was any basis for issuing direction for conducting a detailed Forensic Audit by KPMG as directed by the Adjudicating Authority in the impugned order?
VIII. Whether Appellant- Shree Ram Vessel Scrap Pvt. Ltd. has made out a case for interfering with the direction in Para 42(vi)(k) and 43(D) of the order dated 13.05.2024 passed by the Adjudicating Authority in IA No.358 of 2023?
IX. Relief to which Appellants in this group of Appeals are entitled?
Question No. (I) –Whether Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. are Financial Creditors of the Corporate Debtor?
# 17. The fact remains that the order dated 16.03.2023 declaring Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. as Financial Creditors has become final having not been questioned by any stakeholders and in pursuance of the said order dated 16.03.2023, Resolution Professional has included both Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. in the CoC. The CIRP process is a time bound process and when Adjudicating Authority decides the claim of a particular creditor unless the said order is challenged in the higher forum, thus, the finality of the said claim has to be respected to permit the CIRP process to be completed within time bound period. We, thus, hold that the order dated 16.03.2023 declaring Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. as Financial Creditors having become final, the said question cannot be allowed to be raised in these Appeals which have been filed challenging the order dated 13.05.2024 deciding IA No.357 of 2023 and IA No.358 of 2023 filed by Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. with regard to claim of interest and claim of being Secured Creditors.
Question (II)- Whether Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. are Secured Financial Creditors of the Corporate Debtor in view of the MoU dated 26.12.2009 coupled with deposit of title with the common agent (Escrow Agent)?
# 32. When we look into Section 58(f), the keywords for mortgage by deposit of title deed is “with intent to create a security thereon”. Thus, the intention of the parties for deposit of title are one of the relevant factors for determining as to whether mortgage is creating by deposit of title. In the present case, documents of title were deposited with Advocates & Solicitors to keep the documents in escrow pending completion of the obligation of the parties. Paragraph 4 of the letter dated 26.12.2009 mentioned that “in the event the MOU has been terminated by the Developers and the Developers intimate you that consequent to termination they have not been paid the whole of the amount payable to them in terms of the MOU then we request you to continue to hold the under mentioned documents of title in your custody until the Developers have intimated to you that they have been paid the whole amount payable to them in terms of the MOU”. The entire transaction indicates that transaction was towards keeping the title deed with escrow agents and there was no intent to create mortgage in the assets of the Corporate Debtor.
# 33. It is relevant to note that the Corporate Debtor was well aware of the Rehabilitation Scheme sanctioned by BIFR. Scheme itself noted that the debts are various banks, secured creditors and government departments. Corporate Debtor has to be presumed to be well aware that the mortgage right cannot be legally or validly created in assets which are subject matter of Rehabilitation Scheme framed by BIFR, hence, the deposit of title was with limited purpose and intent which is reflected in the letter dated 26.12.2009 as extracted above. We, thus, are of the view that looking at the anvil of Section 58(f), intent on the part of the Corporate Debtor to create a mortgage by deposit of title is not reflected in the transaction. In this context, we may need to notice certain judgments relied by parties.
38. In paragraph 51, the Hon’ble Supreme Court has noticed the requisite for valid mortgage. Paragraph 51 is as follows:-
“51. Deposit of title deeds is one of the many forms of mortgages whereunder there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. The three requisites for a valid mortgage are, (i) debt; (ii) deposit of title deed; and (iii) an intention that the deed shall operate as security for the debt. In other words, when the debtor deposits with the creditor title deeds of his property with an intent to create a security, the law implies a contract between the parties to create a mortgage and no registered instrument is required under Section 59 of the Act, 1882 as in other classes of mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. Whether there is an intention that the deed shall be security for the debt is a question of fact to be decided in each case on its own merits. The said fact will have to be decided just like any other fact based on legal presumptions, oral, documentary and/or circumstantial evidence. Normally, title deeds are delivered to the bank along with a covering letter indicating therein an intention of delivering title deed i.e. to create security for the present or future liability. In turn, bank gives a letter to the person delivering title deeds indicating acceptance of the documents and/or title deeds by way of security either for the outstanding dues or for the loan to be advanced. The banks, normally, maintain register of securities called Equitable Mortgage Register; wherein the entry of title deeds is taken in the form of memorandum signed by the Branch Manager alone, as a person accepting delivery of the documents as security. These formalities are done to establish three essential requisites of equitable mortgage, viz. (1) debit, (2) deposit of title deed and (iii) the intention that deed shall operate as security for the present or future debt. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage.”
# 39. There can be no quarrel to the proposition laid down by the Hon’ble Supreme Court in the above case. The question to be considered is as to whether essential ingredients requisite as noticed above are fulfilled in the present case or not. We have already noticed that the deposit of title deeds by the debtor was not with intent to create a mortgage rights in the Corporate Debtor assets rather than the title documents were deposited with the escrow agent to keep with escrow agent till the obligation under MoU is fulfilled. The transaction when look into all attended circumstances and intent of the parties clearly indicate that there was no intent for creating mortgage.
# 40. Counsel for the Appellant- Suraksha Realty Limited has also relied on the judgment of this Tribunal in “Home Kraft Avenues vs. Jayesh Sanghrajka- 2025 SCC OnLine NCLAT 309” where this Tribunal while considering Section 77 of the Companies Act, 2013 held that intent of legislature was never to apply Section 77 of the Companies Act upon the Corporate Insolvency Resolution Process. In paragraphs 12 and 13, following was laid down:-
“12. A bare reading of Section 77(3) of Companies Act, 2013 casts an obligation upon ‘Liquidator’. However, the present case is confined to the duty and role of ‘Resolution Professional’ and admittedly company is not under liquidation.
13. The intent of legislature was never to apply Section 77 of Companies Act upon the ‘Corporate Insolvency Resolution Process’. This is for the reason the treatment of “secured creditor” and “security interest” in liquidation process is entirely different from that of during the ‘Corporate Insolvency Resolution Process’. A ‘secured creditor’ under ‘liquidation process’ has an indefeasible right to realise its security interest by excluding its assets from the Liquidation Estate per Section 52. In case of ‘liquidation’ a ‘Secured Creditor’ who intends to realise its ‘security’ outside the ‘waterfall mechanism’ as per section 53, has to prove that he has a “Charge” over a property. In that case the Liquidator has to ‘recognise a charge’ which is “registered as per section 77 of Companies Act”. Further, the definition of “Liquidation Estate” under 36(3) (g) includes ‘secured assets’ only and only if the ‘secured creditor’ has relinquished its interest. Distinctively, Section 18(1)(f) and 25(2)(a) mandates the Resolution Professional to take control of ‘all assets’ of the Corporate Debtor irrespective of any encumbrance. Further, no secured creditor has right to ‘realise’ its ‘security interest’ during ‘CIRP’”.
# 41. The present is not a case where the claim of Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. to declare them as secured creditors is being resisted by the Resolution Professional on the ground that the charge has not been registered under Section 77 of the Companies Act, 2013, hence, the above judgment has no application. We, thus, are satisfied that in the facts of the present case, by deposit of title deeds by letter dated 26.12.2009 to the escrow agent which was documented by MoU, no mortgage was created within the meaning of Section 58(f). We, thus, uphold the decision of the Resolution Professional and the Adjudicating Authority holding that Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. does not have any security interest in the assets of the Corporate Debtor.
# 42. Lastly and more importantly, the Hon’ble Supreme Court vide its judgment dated 12.05.2016 has held that agreement (MOU dated 26.12.2009) being in violation of the scheme (Rehabilitation Scheme sanctioned by BIFR), the agreement with Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. entered into by the company loses its legal force and no right would accrue to the interveners on the basis of said agreement. The Hon’ble Supreme Court had occasion to notice the arrangement of Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. with the Company i.e. Corporate Debtor dated 26.12.2009 and held that no right would accrue to these interveners (Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd.) on the basis of said agreement. When the Hon’ble Supreme Court has specifically held that no right shall accrue to the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd on the basis of 26.12.2009, it is difficult to accept the submission of the Appellant that security interest in the assets of the Corporate Debtor i.e. Vile Parle property is created in favour of Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. and they have mortgage rights in the Corporate Debtor. We, thus, are of the clear opinion that the claim of the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. to claim mortgage rights on the assets has to be rejected.
Question No.(III)- Whether the order of the Adjudicating Authority passed in IA No. 357 of 2023 and IA No.358 of 2023 holding that Appellant Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. are entitled for 18% interest is sustainable?
# 48. The issue in the present proceeding in the CIRP process was with regard to financial debt within the meaning of I&B Code. ‘Financial Debt’ is defined in Section 5 Sub-section (8) of the I&B Code, which contains the definition. Section 5(8)(f) provides for a financial debt with regard to any amount raised under any other transaction. There is no dispute between the parties that amount of Rs.132 Crores was advanced by Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. Even if, the MOU dated 26.12.2009 was declared unenforceable by Hon’ble Supreme Court by its order dated 12.05.2016, the amount of Rs.132 Crores received by the Company cannot be negated. We have already held that the decision of the Adjudicating Authority declaring that the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd.are financial creditors by its order dated 16.03.2019 has become final having not been challenged by any stakeholder. We, thus, have to proceed on the premise that the said amount was financial debt. Thus, even if, MOU dated 26.12.2009 has been declared as unenforceable and void, the financial transaction taken thereunder remains a financial transaction. We have also noticed Clause 17 of the MOU which provides that in the event, any provision of this Agreement is declared by judicial or any other competent authority, quasi-judicial or administrative, to be void, voidable, illegal or otherwise unenforceable, the Parties shall construe the concerned provision of the Agreement in a reasonable manner which achieves the intention of the Parties without illegality. From the pleadings made by the Corporate Debtor in the proceedings before the Bombay High Court under Section 9 of the Arbitration and Conciliation Act, it is indicated that the Company made submission that the amounts are to be refunded with interest. Thus, both the parties are under clear understanding that amount advanced by Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. has to be refunded with interest. In the Para 24 of the impugned order passed in IA No.357 of 2023, the Adjudicating Authority has made following observations:
“24. The annual reports for the year 2011-2012, 2012- 2013, 2013-2014 and the Balance Sheet of CD also demonstrates that the applicant is entitled to interest on the said amount. The CD mentioned in the balance-sheet that the company has proposed that the money received under the MoU be refunded along with interest as approved by the BIFR. It has also mentioned further that “the company has in the MDRS submitted to the OA appointed by BIFR in July 2013 sought for refunding advances and also advances of Rs. 40,75,00000/- received from strategic investor against Vile Parle property along within interest, if any, as decided by the BIFR by selling the said property”. Thus, the RP overlooked admission given by the CD. Even otherwise, irrespective of MoU, it is a financial debt. Interest kicks in only when there is default. Hence, the debt and date of default should be from the date of MoU as it becomes the return of principal and interest agreed based on time value of money. Intention of borrower was to repay amount with interest. So we allow the borrowed funds to be repaid in terms of Contract Act as per agreement. We therefore, hold that the applicant is entitle to interest @ 18% per annum from the date of MoU i.e 26.12.2009.”
# 49. We fully concur the view taken by the Adjudicating Authority that Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. were entitled for their amount with 18% per annum interest.
Question No. (IV)- Whether Adjudicating Authority by the impugned order could have reduced the claim of Arrow Engineering Limited to the extent of Rs.40.75 Crores without giving an opportunity to the Arrow Engineering Ltd.?
# 53. When we look in to the aforesaid reason, where the Adjudicating Authority has observed that Arrow Engineering has no locus in the present application to be made party in IA No.357 of 2023 and it is for the Resolution professional to reply the facts of the case, thus, the Adjudicating Authority did not admit the application of Arrow Engineering in IA No.357 of 2023. It is, thus, clear that in IA No.357 of 2023 there was no opportunity to the Arrow Engineering to make its submissions. The order of the Adjudicating Authority in IA No.357 of 2023 to reduce the claim of Arrow Engineering to Rs.40.75 Crore was thus uncalled for. When Arrow Engineering was not being heard in IA No.357 of 2023, the order in IA No.357 of 2023 and IA No.358 of 2023 reducing the claim of Arrow engineering to Rs.41.70 Crores deserved to be set aside having been passed in violation of principles of natural justice.
# 54. Furthermore, the applications filed by Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd., where the admission of claim of Arrow Engineering as well as Central Bank of India is challenged are still pending. A copy of IA No.703 of 2023 has been brought on the record in Company Appeal (AT) (Ins.) No.1060 of 2024. IA No.703 of 2023 has been filed by Suraksha Realty Ltd. where both Arrow Engineering and Central Bank of India are parties. In the said application IA No.703 of 2023 Suraksha Realty Ltd. made following prayers:
“(a) That this Hon’ble Tribunal be pleased to reject the claim of Rs.592,67,70,051/- (Rupees Five Hundred Ninety-Two Crore Sixty-Seven Lakh Seventy Thousand Fifty-One Only) of Respondent No.3 (Central Bank of India) as a financial creditor in its entirety and accordingly direct the Respondent No. 1 to reconstitute the Committee of Creditors of the Corporate Debtor;
(b) That this Hon’ble Tribunal be pleased to reject the claim of Rs.265,97,10,569/- (Rupees Two Hundred Sixty-Five Crore Ninety Seven Lakh Ten Thousand Five Hundred Sixty-Nine Only) of Respondent No.2 (Arrow Engineering Limited) and admit only a sum of Rs.40,75,00,000/- (Rupees Forty Crore Seventy-Five Lakh Only) and accordingly direct the Respondent No. 1 to reconstitute the Committee of Creditors of the Corporate Debtor with appropriate voting rights of Respondent No. 2 (Arrow Engineering Limited);
(c) That this Hon’ble Tribunal be pleased to reject the claim submitted by Respondent No.5 (Aimgold Hospitality LLP) and Respondent No.4 (Punjab National Bank) on 21st March 2023 and 11th October 2011 respectively as a financial creditor and accordingly direct Respondent No. 1 to reconstitute the Committee of Creditors of the Corporate Debtor;
(d) That this Hon’ble Tribunal be pleased to reconstitute the Committee of Creditors of the Corporate Debtor;
(e) That this Hon’ble Tribunal may be pleased to remove Respondent No.1 as the Interim Resolution Professional / purported Resolution Professional of the CIRP process of the Corporate Debtor;
(f) In furtherance of prayer clause (e), this Hon’ble Tribunal be pleased to replace Respondent No.1 as the Interim Resolution Professional 1 purported Resolution Professional with another Interim Resolution Professional for the CIRP process of the Corporate Debtor from the panel of Interim Resolution Professionals with IBBI as this Hon’ble Tribunal may deem fit;
(g) That this Hon’ble Tribunal be pleased to order and direct Respondent No.1 to produce all relevant information, documents, and papers (including but not limited to the documents submitted by Central Bank along with its claim) based on which Respondent No. 1 admitted and verified the claim of Central Bank for a sum of Rs.592,67,70,051/- (Rupees Five Hundred Ninety-Two Crore Sixty-Seven Lakh Seventy Thousand Fifty-One Only);
(h) That this Hon’ble Tribunal be pleased to nullify all the decisions, orders and resolutions passed by the impugned Committee of Creditors of the Corporate Debtor till the due committee of creditors of the Corporate Debtor is reconstituted;
(i) Pending the hearing and final disposal of the present Application, this Hon’ble Tribunal be pleased to direct that no meeting of the Committee of Creditors of the Corporate Debtor, Golden Tobacco Limited be held;
(j) Pending the hearing and final disposal of the present Application, this Hon’ble Tribunal be pleased to direct that no voting be undertaken in any meeting of the Committee of Creditors of the Corporate Debtor;
(k) For ad-interim /interim reliefs in terms of the prayer clause (i) and (j);
(I) For such further and other reliefs as this Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the present case.”
# 55. Similarly, IA No.697 of 2023 has been filed by Sheth Developers Pvt. Ltd. praying for similar reliefs. Specific prayers were made in the application to reject the claim of Arrow Engineering of Rs.265,97,10,569/- and admit claim of only Rs.40,75,00,000/-. When issues in the said applications are still pending, there was no occasion for issuing any direction by the Adjudicating Authority for reducing the claim of Arrow Engineering to Rs.40.75 Crores. We, thus, are of the view that the impugned order dated 13.05.2023 in far as it direct for reducing the claim of Arrow Engineering to Rs.40.75 Crores is unsustainable. We make it clear that our decision to set aside the said direction is on the basis that said order was passed without giving opportunity of submission to the Arrow Engineering in violation of principles of natural justice. We are not expressing any opinion on the merits of the application and said issue need to be decided while deciding IA No.703 of 2023 and IA No.697 of 2023 in accordance with law.
Question No.(V): Whether the conclusion of the Adjudicating Authority that Resolution Professional accepted inflated claim of Central Bank of India are sustainable especially when Central Bank of India was neither heard nor was made party to IA No. 357 of 2023 and IA No.358 of 2023?
# 56. The Adjudicating Authority in the impugned order has also made observation with regard to claim of Central Bank of India. Claim of Central Bank of India has been admitted by the Resolution Professional to the extent of Rs.592,67,70,051/-. The Adjudicating Authority in the impugned order has made observation that the Resolution Professional has admitted the inflated claim of the Central Bank of India. The Adjudicating Authority has also issued direction that claim of Central Bank of India will be re-examined in the light of decree passed by the DRT and the BIFR by the new RP including legal position, limitation etc. In the body of the judgment, the submission advanced by the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. was noticed that the Resolution Professional being earlier in employment of the Central Bank of India has accepted the inflated claim of the Central Bank of India.
# 57. Applications IA No.357 of 2023 and IA No.358 of 2023 were filed by the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. praying for allowing their claim with interest @ 18% per annum and their claim of being Secured Creditor. In the application only these two issues were under consideration. As noted above, both Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. have filed separate IAs being IA No.703 of 2023 and 697 of 2023 praying for rejection of claim of Central Bank of India. Prayers made in IA No.703 of 2023, we have already noticed above, were with regard to Central Bank of India to reject the claim of Central Bank of India, Financial Creditor in its entirety. When separate applications have already been filed by the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. praying for rejection of claim of Central Bank of India, there was no occasion to make adverse observation by the Adjudicating Authority against the Central Bank of India while deciding IA No.357 of 2023 and IA No.358 of 2023.
# 58. We, thus, are of the view that observation of the Adjudicating Authority in the impugned order that Resolution Professional has accepted the inflated claim of Central Bank of India deserves to be set aside. Observation has been made against Central Bank of India and direction for re-examination has been passed without giving an opportunity to the Central Bank of India to have its say is unsustainable. The question is answered accordingly.
Question No. (VI): Whether the Adjudicating Authority committed error in exercise of its jurisdiction in directing replacement of the Resolution Professional and there were sufficient material on the record to make adverse observations against the Resolution Professional?
# 61. The mere fact that Resolution Professional was appointed in the Central Bank of India cannot lead to inference that admission of the claim of Central Bank of India by the Resolution Professional is for any extraneous consideration. Neither any such evidence was brought before the Adjudicating Authority nor anything was proved that there was any bias by the Resolution Professional in favour of the Central Bank of India. We having held that observation of the Adjudicating Authority that Resolution Professional admitted inflated claim of Central Bank of India is unsustainable, which has been passed in violation of the principles of natural justice, said observations cannot be any basis for direction of replacement of Resolution Professional. Further, with regard to claim of the Arrow Engineering which has been directed to be limited to Rs.40.75 Crores, we have also held that said decision is unsustainable, which decision was rendered in violation of principles of natural justice. The adverse observations, as noted above, and admission of the claim of Arrow Engineering of Rs.265 Crores appears to be foundation of order directing for replacement of the Resolution Professional.
# 62. Learned counsel appearing for the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. has contended that the Adjudicating Authority has power under Rule 11 of NCLT Rules to grant reliefs considering specific facts and circumstances. Learned counsel for the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. has relied on judgment of this Tribunal in “Stressed Assets Stabilization Fund (SASF) vs. Piyush Periwal & Ors., Company Appeal (AT) (Insolvency) No. 947 of 2021” and the judgment of this Tribunal in “Srigopal Choudary, Resolution Professional vs. SREI Equipment Finance Ltd., Company Appeal (AT) (Insolvency) No. 1443 of 2022” where this Tribunal has held that the Adjudicating Authority has power to replace the Resolution Professional in exercise of its power in the facts and circumstances of present case. In the Stressed Assets Stabilization Fund (SASF) vs. Piyush Periwal & Ors. (Supra) in Para 61- 67 following was laid down:
“61. The learned Counsel for the RP has emphatically submitted that Adjudicating Authority had no jurisdiction to pass an order replacing the RP. He submits that RP can be replaced only in accordance with Section 27 of the Code, when a Resolution is passed by the CoC for such replacement. There can be no doubt to the scheme of the Code for removal of the RP by the CoC which has to pass a Resolution. The Adjudicating Authority, who has appointed the RP cannot be said to lack jurisdiction to take a decision to replace the RP, when the facts and circumstances of a particular case warrants. In the present case, where serious allegations were made against the RP, regarding not conducting the CIRP transparently, the Adjudicating Authority did not lack jurisdiction to pass an order for replacement of the RP. The jurisdiction of Adjudicating Authority to pass an order replacing the RP has also been accepted by this Tribunal in Company Appeal (AT) (INS.) No.1443 of 2022 – Srigopal Choudary vs. SREI Equipment Finance Ltd., wherein in paragraph 14 and 16, this Tribunal held following:
“14. We are of the opinion that the Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of the RP particularly in a situation where the RP had not taken any steps to convene a meeting of the CoC for the purposes of removal of RP.
16. After going through the material available on record we are satisfied that the Adjudicating Authority with an object to implement the provisions of IBC in its letter and spirit has rightly exercised its inherent jurisdiction by way of passing order of removing the appellant as RP of the CD. This fact which is reflected on record is sufficient to draw an inference that the Appellant was proceeding contrary to the statutory provisions as contained in the IBC and also delaying the smooth conclusion of CIRP. We are of the considered opinion that there is no defect in the impugned order warranting interference by this Tribunal. On the contrary the conduct of the appellant/RP which was observed by the Adjudicating Authority and reflected so in the impugned order is sufficient enough to direct IBBI to conduct an inquiry regarding the role played by the RP in this matter.
62. We, thus, do not accept the submission of learned Counsel for the RP that Adjudicating Authority lack jurisdiction to pass an order replacing the RP.
63. Coming to the conflict of interest, we have already taken the view that observations made in the impugned order against Respondent No.3, i.e., Anand Verma were uncalled for. We have already allowed Company Appeal (AT) (Insolvency) No. 804 of 2022 filed by Anand Varma, Advocate challenging adverse observations made against him, which Appeal was decided on 04.11.2022. We are also of the view that the plea taken on behalf of Respondent No.5/ Praful Jindal, who was an Advocate, appearing for Financial Creditor was correct that Respondent No.5 never appeared for the RP and he always appeared for the Financial Creditor. Thus, there is no question of any conflict of interest with regard to Respondent No.5 with other Respondents. We thus are of the view that adverse observations made against Respondent No.5, Praful Jindal in the above order also deserves to be set aside and ordered accordingly.
64. Insofar as observation made in the impugned order by the Adjudicating Authority regarding and RP are concerned, we are of the view that said observations were made only for the purposes of deciding the Application and the observations cannot furnish any foundation for initiating any action against RP in any Forum. We, thus, observe and clarify that observations made against RP be not treated regarding integrity of RP and the observations will be confined and treated as observation for the purpose of case only and the said observations shall not be made basis for initiating any proceedings against RP in any Forum.
65. As observed above, the decision of the Adjudicating Authority in IA No.43 of 2021 for terminating the CIRP from Second EOI and replacement of RP can be sustained by our reasons and conclusions while deciding Company Appeal (AT) (Insolvency) No. 526 of 2022, hence, we need not delve upon various other contentions raised by respective parties regarding the collusion between SASF, RP and PLBB.
66. Insofar as Financial Creditor is concerned, the Adjudicating Authority in paragraph 22 has observed that information which was submitted by Financial Creditor in Section 7 Application were incorrect. However, Adjudicating Authority has taken the view that present is not a case where any proceeding under Section 75 of the Code be proceeded with. We fully concur with the view taken by the Adjudicating Authority in paragraph 22 of the impugned order, which is to the following effect:
“22. The action of the FC attracts the provisions of Section 75 of IBC for incorrect information about claim amount furnished in the Application filed before this Bench. However, considering the submissions of the FC and the lack of exposure on the part of the officials of the FC in filing the Application under Section 7 of IBC, we take a lenient view and the prayer made by the Petitioner to proceed in the matter is rejected.”
67. In view of our forging discussions and conclusions, we dispose of Company Appeal (AT) (Insolvency) Nos. 499 of 2022, 525 of 2022 and 612 of 2022 in following manner:
(I) The order of Adjudicating Authority dated 08.04.2022 passed in IA No.43 of 2021 to the extent it terminates the CIRP from the stage of Second EOI as well as replacement of the RP is upheld.
(II) The adverse observations made by the Adjudicating Authority against Respondent No.5 in the impugned order, i.e., Counsel who was appearing for Financial Creditor are deleted. Ordered accordingly.
(III) Observations made by the Adjudicating Authority against the RP shall not to be treated as adverse to the integrity of RP and not be made basis for initiating any proceeding or action against the RP in any Forum.
(IV) The new RP, who has been appointed under the impugned order shall conclude the entire CIRP process within 90 days from today, under the supervision and control of Committee of Creditors.”
# 63. In Srigopal Choudary, Resolution Professional vs. SREI Equipment Finance Ltd. (Supra) in Paras 14 and 15 following was laid down:
“14. We are of the opinion that the Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of the RP particularly in a situation where the RP had not taken any steps to convene a meeting of the CoC for the purposes of removal of RP.
15. At the cost of repetition, it is pertinent to mention that the CIRP was initiated vide order dated 06.11.2019 and the first CoC Meeting was conducted on 19.04.2021 after a lapse of one and half years and the Adjudicating Authority has categorically observed that the RP has ‘miserably failed to adhere to the timelines stipulated in the Code’. We are conscious of the fact that the provision of Section 27 of the Code contemplates that the replacement of the Resolution Professional can be done by the CoC alone. But if the ingredients of Section 27 of the Code cannot be met i.e. in the event, the RP is not convening the meeting of CoC, which in turn has to decide the replacement of the RP himself, we are of the considered view that the Adjudicating Authority, in order not to delay the CIRP proceedings, on an application under Rule 11 of the NCLT Rules, 2016 has rightly invoked its inherent jurisdiction and passed the impugned order. Needless to add, this order shall not come in the way or impede any directions issued by the Hon’ble Apex Court in any connected matter and the Adjudicating Authority shall proceed in accordance with law.”
# 64. There is no dispute to the proposition that the Adjudicating Authority has power to replace the Resolution Professional while exercising powers under Rule 11 of 2016 Rules and Section 60(5), even though there is no resolution by the CoC under Section 27 of I&B Code. We, however, in the present case, are satisfied that basis and foundation given by the Adjudicating Authority for replacement of Resolution Professional are unfounded and adverse observations and direction given by the Adjudicating Authority have not been sustained by us.
# 65. One of the submission which has been made by learned counsel for Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. that IBBI has initiated disciplinary proceeding against the Resolution Professional on the complaint filed by Suraksha Realty Ltd. On the said complaint advisory has already been issued by the IBBI to the Resolution Professional which was also one reason on which the Resolution Professional ought to have been replaced.
# 66. The complaint which has been filed by Suraksha Realty Ltd. against the Resolution Professional was the complaint with regard to the present CIRP process making allegations against the Resolution Professional in conducting the CIRP process not in accordance with Regulations and the Resolution Professional being earlier employee of Central Bank of India, which he failed to disclose. The IBBI decision dated 27.02.2024 has been brought on the record as Annexure P-16, which is as follows:
“F.No. IBBI/C/2023/01014
27th February 2024
To,
Mr. Vichitra Narayan Pathak,
IBBI/IPA-001/IP-P01353/2018-2019/12063
120, Jharneshwar Colony, Madhuban Vihar,
Near International Public School, Hoshangabad Road,
Bhopal, Madhya Pradesh – 462047
Subject: Complaint against Mr. Vichitra Narayan Pathak, Insolvency Professional (IBBI/IPA-001/IP-P01353/2018-2019/12063) in the matter of Golden Tobacco Limited
Dear Sir,
This is in reference to the investigation conducted by the Insolvency and Bankruptcy Board of India (IBBI/ the Board) in exercise of its powers under Section 218(1) of the Insolvency and Bankruptcy Code, 2016 (Code) pursuant to the complaint dated 30.10.2023 received from Sheth Developers Private Limited.
2. On consideration of the investigation report in accordance with the Code and Regulations made thereunder, the Board has noted that you have not made disclosure about your past employment with Central Bank of India, to the CoC.
3. The Board has taken note of this and deemed it appropriate to advise you to be vigilant and strictly adhere to the requirements as prescribed under the Code and Regulations made thereunder in all your existing/ future assignments.
Yours faithfully,
(Nitish Saini)
Deputy General Manager”
# 67. The advisory issued by the IBBI, as above, cannot be said to furnish any foundation for replacement of Resolution Professional from its present assignment as Resolution Professional of the Corporate Debtor. Thus, the said decision also cannot furnish any basis for replacement of Resolution Professional from the present assignment.
# 68. We, thus, are of the view that there are no sufficient reasons to allow replacement of Resolution Professional and order passed by the Adjudicating Authority in IA No.357 of 2023 and IA No.358 of 2023 directing for replacement of Resolution Professional deserves to be set aside.
# 69. The Adjudicating Authority by the impugned order has directed for appointment of another Resolution Professional, one Mr. Sanjay Borad, who has continued to discharge functions of Resolution Professional during pendency of the appeal. We, thus, are of the view that order of the Adjudicating Authority directing replacement of Resolution Professional is unsustainable and deserve to be set aside, the consequence of which is that new IRP stand replaced.
Question No.(VII):- Whether there was any basis for issuing direction for conducting a detailed Forensic Audit by KPMG as directed by the Adjudicating Authority in the impugned order?
# 70. The Adjudicating Authority in the impugned order has also directed for forensic audit to be conducted through KPMG. The facts of the present case indicate that CIRP process was conducted after obtaining necessary reports from Valuers as per CIRP Regulation, 2016. Form G was published in the year 2023 under which 13.04.2023 was last date for submission of Expression of Interest. Resolution Plans have been received and they were under consideration before the CoC. On 18.09.2023, NCLT has directed the Resolution Professional to convene meeting and seeks view of CoC on the CIRP period expiring on 22.09.2023 and also place the eligible Resolution Applications within 14 days. CIRP period was extended till 21.12.2023. The Adjudicating Authority, however, has directed that no Resolution Plan be considered and process is held up for last one year. In these Appeals also, this Tribunal passed an interim order on 21.05.2024 directing that no further steps shall be taken in pursuance of the impugned order.
# 71. A perusal of the impugned order indicate that no stakeholders made any prayer for directing for any forensic audit. The issues which were under consideration before the Adjudicating Authority were issues regarding nature of claim, quantum of the claim which were all in the domain of the Resolution Professional. The Resolution Professional has taken a decision, which decision was under challenge before the Adjudicating Authority by the Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd., whose claim of interest and prayer to be declared as Secured Creditor was rejected. When the CIRP process was already over despite extensions granted by the Adjudicating Authority, at this stage, there was no necessity for issuing any direction for forensic audit. The quantum of claim, nature of claim and the adjudication of claim were on the basis of claims filed and materials received in the CIRP process as well as affidavit. No stakeholders having made any complaint or having requested for any forensic audit, direction to carry on forensic audit shall further delay the CIRP process which is already delayed and running beyond the timeline. We, thus, are of the view that there was no occasion to direct for forensic audit by the Adjudicating Authority. The Adjudicating Authority committed error in issuing direction to conduct detailed forensic audit. The issues did not relate to forensic audit rather issues before the Adjudicating Authority related to nature of claim and quantum of claim.
Question No.(VIII):- Whether Appellant- Shree Ram Vessel Scrap Pvt. Ltd. has made out a case for interfering with the direction in Para 42(vi)(k) and 43(D) of the order dated 13.05.2024 passed by the Adjudicating Authority in IA No.358 of 2023?
# 72. The case of the Appellant – Shree Ram Vessel Scrap Pvt. Ltd. is that as per Form G published, last date for submission of Resolution Plan was 02.03.2024. Appellant on 12.03.2024 sent an email to the Resolution Professional showing its inclination for submitting a Resolution Plan and further proposed a plan of approx. Rs.1400 Crores. The Resolution Professional has responded to the Appellant that CoC members in 12th meeting held on 05.03.2024 has not granted any extension the timeline for submission of Resolution Plan. The Adjudicating Authority in the impugned order in Para 42(vi)(k) recorded following conclusion:
“k) All resolution plans received as on date would be put up before newly constituted CoC after the report of KPMG is submitted to this Tribunal and approved.”
# 73. Another direction which is sought to be impugned by the Appellant is Para 43(D), which is as follows:
“(D) The CoC will not continue any process of any fresh resolution plans (other than already received) and will be reconstituted after the forensic report.”
# 74. On its own showing, Appellant has not been able to submit the Resolution Plan with within the timeline allowed. Appellant was informed by the Resolution Professional that the CoC has not taken decision to extend the timelines for submission of Resolution Plan. Appellant has further submitted that it has filed an application IA No.723 of 2024 seeking direction to issue fresh Form G and earlier filed IA No.456 of 2024 seeking direction for consideration of the proposal of the Resolution Plan of the Appellant. According to the Appellant, the said applications are still pending. Application filed by the Appellant on the above issues being still pending, the direction issued by the Adjudicating Authority in Paras which have been impugned in the present appeal cannot be set aside, at the instance of the Appellant. We only observe that it is always open for the Appellant to press his applications IA No.456 of 2024 and IA No.723 of 2024 before the Adjudicating Authority.
Question No.(IX):- Relief to which Appellants in this group of Appeals are entitled?
# 75. In view of our foregoing discussion and conclusions, we decide all these Appeals in following manner:
I. Company Appeal (AT) (Ins.) No.1309 of 2024 and 1310 of 2024 praying for setting aside finding of the judgment dated 13.05.2024 to the extent that Appellant has not been granted status of Secured Financial Creditor of the Corporate Debtor are dismissed.
II. Company Appeal (AT) (Ins.) No.1017 of 2024 and 1018 of 2024 filed by the Resolution Professional are allowed. Direction contained in the impugned order replacing the Appellant is set aside. Consequently, direction to appoint a New Resolution Professional – Sanjay Borad shall come to an end. The New Resolution Professional who was allowed to function during pendency of these appeals shall handover all the records to the Appellant within seven days from today to enable the Appellant to proceed further in the CIRP, in accordance with law. Both the Appeals are allowed to the above extent.
III. Company Appeal (AT) (Ins.) No.1096 of 2024 is allowed to the extent of setting aside the observation and direction in the impugned order dated 13.05.2024 by which claim of Arrow Engineering was restricted to Rs.40.75 Crores.
IV. IA No.703 of 2023 filed by Suraksha Realty Ltd. and IA No.697 of 2023 filed by Sheth Developers Pvt. Ltd. which are pending be decided in accordance with law without being influenced by any observation in the impugned order which decision shall be taken by the Adjudicating Authority within 60 days from 17.6.2025. Looking to the fact that the CIRP process has already been delayed, we direct both the parties to appear before the Adjudicating Authority on 17.06.2025. Copy of the order passed by this Tribunal may be filed by the parties before the date fixed.
V. Company Appeal (AT) (Ins.) No.1060 of 2024 and 1061 of 2024 are partly allowed deleting observation made in the impugned order that Resolution Professional has inflated the claim of Central Bank of India.
VI. Company Appeal (AT) (Ins.) No.1085 of 2024 is dismissed with liberty to the Appellant to pursue his pending applications IA No.456 of 2024 and IA No.723 of 2024, in accordance with law.
VII. IA No.849 of 2023 filed by the Arrow engineering pending before the Adjudicating Authority to remove the names of Suraksha Realty Ltd. and Sheth Developers Pvt. Ltd. from the list of Financial Creditors has become infructuous in view of the order of this Tribunal, as above.
VIII. The Resolution Professional after decision of the Adjudicating Authority in IA No.703 of 2023 and 697 of 2023, as above, shall reconstitute the CoC and convene a meeting for consideration of the Resolution Plans, in accordance with law.
IX. The direction of the Adjudicating Authority to conduct a forensic audit by KPMG is set aside.
X. The CIRP process shall be conducted and completed within a period of two months after decision of the Adjudicating Authority in IA No.703 of 2023 and 697 of 2023.
XI. The period from 21.05.2024 till date is excluded from the CIRP process, during which period the interim order passed in the appeal has operated. CIRP period is extended till 17.10.2025 during which entire CIRP process shall be completed.
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