Hitesh Hasmukhlal Damania and Anr. Vs. Manish Lalji Dawda (RP) - “the IRP after collation of Claims and Formation of CoC was not entitled to suo-moto review or change the status of a creditor from financial to operational creditor, updating list and review are different acts.

NCLT Mumbai-V (2025.07.18) in Hitesh Hasmukhlal Damania and Anr. Vs. Manish Lalji Dawda (RP) [(2025) ibclaw.in 939 NCLT, IA/942/2024 in C.P. (IB) No. 3126/MB-V/2019] held that;

• “the IRP after collation of Claims and Formation of CoC was not entitled to suo-moto review or change the status of a creditor from financial to operational creditor, updating list and review are different acts. 

• The resolution professional cannot arbitrarily on its own overturn earlier decision change the status of a creditor from financial creditor to Operational creditor.”

Excerpts of the Order;

# 1. This is an application filed seeking necessary directions to the Resolution Professional to consider and admit the claim filed by the Applicant in the class of Financial Creditor. 

# 2. The relevant facts leading to the filing of this Application are briefly as under:- 

CONTENTIONS OF THE APPLICANT: - 

# 3. That Board of Directors of the Corporate Debtor at their Board Meeting held on 23.01.2019 offered and settled the adjustment of outstanding dues amounting to Rs. 26,63,030/- of Hitesh H. Damania & Co. (Proprietorship Firm of Mr. Hitesh Hasmukhlal Damania) who has rendered various types of income-tax consulting services to the Company, as sale consideration for under construction commercial unit/shop at TMC project at Karjat as full and final settlement. The Company agreed to offer premises of Commercial Unit/ Shop bearing no. 101 admeasuring carpet area 38.84 Sq. Mtr. (418.074 Sq. Ft.) on the Ground Floor/Podium 01 of the Building No. Y11 being constructed in the PALISO series of Sheltrex Smart Phone City 2 project situated at Village-Akurle, Taluka-Karjat, District-Raigad and within the Registrar Sub District of Karjat. 

# 4. That Company allotted the Allotment Letter on 31st January, 2019 for allotment of Commercial Unit/ Shop “101” in “Y11” building in “SHELTREX SMARTPHONE CITY Project 2” Phase I. 

# 5. That to reduce in writing and record the terms as agreed, Corporate Debtor and Applicant executed Memorandum of Understanding (“MOU”) on 28th September, 2020 where Corporate Debtor agreed for registration of said commercial unit in favor to the Applicant.

# 6. That Corporate Debtor executed an “Agreement for Sale” with the Applicant on 27th January, 2023 which also got registered with the jurisdictional Sub- Registrar Office Karjat where requisite stamp duty was also paid by the Applicant. 

# 7. That CIRP of the Corporate Debtor has been initiated by this Tribunal vide order dated 01.02.2023 wherein Mr. Arun Nandlal Agarwal, Insolvency Professional having IBBI Registration No. IBBI/IPA-003/IP-N00282/2020-2021/13234 was appointed as the Interim Resolution Professional. 

# 8. That as per the records of the Corporate Debtor available on IBBI Portal, Public Announcement in Form A got published on 08th February, 2023 where last date to file claim mentioned was 20th February, 2023. 

# 9. That pursuant to the above said provisions of the Regulation 8A of the CIRP Regulations, Applicant had submitted the claim in Form CA along with all the supporting documents with the Interim Resolution Professional Mr. Arun Nandlal Agarwal through email on 18th February, 2023 for an amount of Rs. 26,25,000. 

# 10. That Mr. Arun Nandlal Agarwal, IRP through email dated 02nd March, 2023 admitted the claim of the Applicant for an amount of Rs. 26,25,000. 

# 11. That as per the List of Creditors upto 10th June, 2023 available on the IBBI Portal, the claim of the Applicant has been accepted by the IRP in “Claims received in Class- Home Buyer” category where name of the Applicant is reflecting in Sr. No. 47 for total admitted amount of Rs. 26,25,000 as claimed by the Applicant. 

# 12. That as per the records available on the IBBI Portal, Respondent Mr. Manish Lalji Dawda, Insolvency Professional having IBBI Reg. No. IBBI/IPA-001/IP- P-02506/2021- 2022/13797 has been appointed as Resolution Professional of the Corporate Debtor with effect from 13th June, 2023 in place of Mr. Arun Nandlal Agarwal. 

# 13. That suddenly on 25th December, 2023 (327th Day of CIRP) Applicant had received an email having subject line “Rejection of Claim as Financial Creditor in respect of Sheltrex Karjat Private Limited” from the Respondent RP for rejecting the claim even after admission by the Erstwhile IRP. 

CONTENTIONS OF THE RESPONDENT: - 

# 14. The respondent has filed his reply and contended that the Applicant had filed the Claim before the Erstwhile Interim Resolution Professional (hereafter referred to "IRP") on 18th February 2023 in Form CA claiming to be a Financial Creditor. The Respondent i.e., the current RP had rejected the claim that of the Applicant on 25th December 2023. 

# 15. The Respondent states that, the Board Resolution which was passed on 23rd January 2019, were in relation to the consultancy services provided by the Applicant. It 1s pertinent to note that, the said Board Resolution is defective in nature as in the said minutes of the board meeting which is attached by the Applicant there is no quorum mentioned in the minutes of the board meeting and the number of directors who have attended board meeting and necessary resolution passed in relation to the transfer of the said flat to the Applicant. Further the said Board Resolution was signed by one of directors Mr. Suresh Singh who without any authority was acting as a chairman for the Corporate Debtor. The Respondent further states that, the said decision which was taken will fall under the category of "special business" for which no special resolution was passed in the Annual General Meeting/Extra ordinary General Meetings and for which no Form MGT-14 was filed with the ROC. 

# 16. The Respondent states that it has been mentioned that allotment letter was issued by the Corporate Debtor on 31st January 2019 for the unit/shop "101" in Y 11" building in "SHELTREX SMARTPHONE CITY PROJECT 2" Phase I. In the said allotment letter there are various variance and non-compliances observed by the Respondent which are as follows: “Is said board resolution dated 23rd January 2019 which is annexed and marked as Annexure-A2 the value of said unit was Rs. 26,63,030/ - (Rupees Twenty-Six Lakh Sixty-Three and Thirty Only) where is in the allotment letter dated 31st January 2019 the value was the said unit which was transfer to the Applicant was mention as Rs. 25,00,000 /- (Rupees Twenty-Five Lakh Only). Further in the said allotment letter it has been clearly mentioned that the Applicant has to bear the taxes, stamp duty and registration charges in addition to the said consideration which would be inclusive of Service Tax/Value Added Tax/Goods and Services Tax. However, on perusal of the documents/returns the Applicant has neither produce GSTR-2A, Copy of GSTR-1 and the copy of challan in relation to the payment of GSTR-3B. On perusing the documents by the Respondent which were provided by the Suspended Director of the Corporate Debtor and extracted from the Government Sites by the Respondent, it came to the notice of the Respondent that the Applicant has neither paid any taxes/duties/other charges in relation to the transfer of the said unit. Further the Applicant has also assured in the allotment letter that as and when the taxes will be demanded by the Corporate Debtor, the Applicant will have to pay the same. However, it has been verified by the Respondent that none of the taxes has been paid by the Applicant which were levied by the statutory authorities. It is pertinent to note that, it has been expressly mentioned that the Applicant will have to bear documentation charges in addition to amount mentioned in the allotment letter. The Applicant h a s only relied upon the allotment letter and has not taken any further steps to get the unit transferred in his name which will prove that he has valid title. The Applicant has mentioned and it has been also captured in the impugned Board Resolution that, as a part of the settlement between the Applicant and the Corporate Debtor, the said unit was transferred as full and final settlement for the outstanding fees which were to be paid by the Corporate Debtor to the Applicant. However, in the allotment letter it has been categorically mentioned that, if the Applicant will commit any breach of the terms mentioned in the allotment letter, then in that case, the Corporate Debtor will still have full rights to terminate the said allotment of the said unit and will have rights to sell/ dispose of/ or deal with the unit as it deems fit to the Corporate Debtor. This prima facia shows that, the said transfer is frivolous in nature as the Applicant at one instance has mentioned that the said unit was transferred by the Corporate Debtor as a full and final settlement of his outstanding dues for the services provided to the Corporate Debtor and on the other hand, in the allotment letter the terms and conditions itself speak as if the Applicant himself is purchasing the said unit from the Corporate Debtor wherein the Applicant himself has breached the terms of the allotment letter.” 

# 17. The respondent has submitted that Section 5(8)(f) Read with Regulation 8A of the CIRP Regulations, contemplates that an amount raised under any transaction which includes forward sale or purchase agreement, having the commercial effect of a borrowing which include amount raised from home buyer who has not only entered into an agreement for sale and/ or letter of allotment and has paid consideration for purchase of the said units which are registered under RERA. It is pertinent to note that the Applicant in his own, Application has categorically mentioned that he has rendered various types of Income Tax consulting services in the capacity of a professional which is termed as Operational Creditor. 

# 18. The Respondent contends that the Applicant itself has averred in his application that, he has provided various Income Tax Services to the Corporate Debtor for which the amount was due and payable by the Corporate Debtor and the Applicant need to file his claim in Form B as in Operational Creditor where he has to provide a contract for rendering services, invoices raised demanding payment, ledger copies and a copy of Goods and Services Tax paid. However, the Applicant instead of filing its claim in Form B as an Operational Creditor has filed his claim in Form CA calling himself as home buyer. 

# 19. The Respondent relying upon Section 23(2) and 25(2)(e) of the Insolvency and Bankruptcy Code 2016 contended that the Resolution Professional has to perform his duties as vested on the Interim Resolution Professional which also include maintain and updated list of claims filed by the claimants. The Respondent further states that, he was appointed as Resolution Professional by the Hon’ble NCLT on 13th June 2023 and subsequently he took charge of the custody of the assets of the Corporate Debtor and took the handover from the erstwhile IRP of the books of accounts and other documents. After looking into the complexity of the transactions in the Corporate Debtor, as a good governance the RP has again started verifying the claims of the Corporate Debtor which were initially either admitted or rejected by the Erstwhile IRP, where it came to his notice that the claim which was submitted by the Applicant was filed in the capacity of a home buyer in Form CA and not in the capacity of Operational Creditor in Form B. Due to which the Respondent has rejected the claim on 25.12.2023.

# 20. It is pertinent to note that, Section 23(2) and Section 25(2)(e) of the Insolvency and Bankruptcy Code 2016 gives powers to the Respondent and also the Respondent is duty bound to re-verify the claims that were verified, either admitted/ or rejected by the erstwhile IRP. The Respondent further states that, as a newly appointed RP he is duty bound to check and verify the claim along with the supporting annexures that under which head the claimant falls and subsequently the Resolution Professional has to check whether the claim filed by the claimants are filed as per the provision read with relevant regulations of the Code. The Respondent has prima facie checked the transaction trail between the Applicant and the Corporate Debtor where it came to the notice of the Respondent that the Applicant had given consultancy services to the Corporate Debtor hence it clearly falls under definition of Operational Debt whereas the Applicant as per his arrangement with the Corporate Debtor has received flats against his outstanding fees, however the Applicant has filed his claim as home buyer due to which the Respondent has to reject the claim. Hence the Respondent has not acted as an adjudicating authority but as an officer of the court where in order to facilitated the CIRP has acted diligently in the interest of all stakeholders. 

# 21. The Respondent states that, in the matter of "Umesh Kumar versus Narendra Kumar Sharma Company Appeal (AT) (Insolvency) No. 100 of 2024 decided on February 13, 2024" where the Hon'ble NCLAT has held that: - 

• "the IBC framework has endowed the RP with the cardinal responsibility as facilitator of the CIRP process. This obligates the RP to take reasonable care and diligence while performing his duties. That being so the RP is very much required to undertake appropriate verification and analysis of the claims filed. RP cannot afford to be unmindful of the f act that he is expected to assist in CIRP process in a fair and objective manner in the best interest of all stakeholders. As an officer of the court vested with administrative powers, the RP is expected to conduct the CIRP process with fairness, diligence, forthrightness and highest sense of responsibility. It is quite clear from the sequence of events in the present facts of the case that the RP had been consistently pointing out that he is not in a position to verify the claims due to want of documents substantiating the claims"

# 22. The Respondent further states that, he can only admit the claim if the said claim is filed as per the procedure laid down in the code otherwise his bound to reject the claim. The Respondent after verifying the claim along with the annexed document came to a logical conclusion that the Applicant despite giving professional services had filed its claim as a Financial Creditor in a class and not as an Operational Creditor. 

POINTS FOR CONSIDERATION: - 

# 23. After considering the rival contentions of either party to the present application the points which arise for determination in this case is as under: - 

• a. Whether, the applicant, who, rendered various income tax related services for the project of the Corporate Debtor, was offered an allotment of commercial unit in the project of the corporate debtor and having executed an agreement of sale in his favour should be considered as the Financial Creditor or an Operational Creditor? 

• b. Whether, the decision of the present Resolution Professional reviewing the decision of the Erstwhile Resolution Professional is as per law and needs any interference? 

ANALYSIS AND FINDINGS: - 

# 24. It is submitted by the learned counsel for the applicant that the board of director of the Corporate Debtor in its board meeting held on 23.01.2019 offered and settled the outstanding dues amounting to Rs. 26,63,030/- of the applicant as a sale consideration for under construction commercial unit in the project of the corporate debtor as full and final settlement. The allotment letter was issued, MOU was executed and an agreement for sale was also registered in favour of the applicant thereafter, the CIRP was initiated against the Corporate Debtor. The erstwhile Resolution Application has admitted the claim of the Applicant under the category of home buyers. The present Resolution Professional vide his e-mail rejected the claim of the applicant as Financial Creditors and considered him as an Operational Creditor. It is therefore contended that the claim of the applicant as home buyer was justified and the rejection of claim by the present Resolution Professional cannot be sustained in the eyes of law. 

# 25. As against this contention it is the contention of the Resolution Professional that the applicant himself has admitted that he has rendered various income tax related services and has raised the bills for the services rendered therefore, he cannot be considered as a Financial Creditor on the contrary as per the provisions of Section 5(21) Read with Regulations 7 of the CIRP Regulations, the applicant has rightly clarified as an Operational Creditor. 

# 26. It is not in dispute that the applicant has rendered various income tax related services to the Corporate Debtor for his project and has also raised a bill for the same and the board of directors of the Corporate Debtor at its board meeting on 23.01.2019, settled and adjusted the outstanding dues of the Applicant and in lieu of the adjustment of the dues a commercial unit/shop at TMC Project at Karzat as full and final settlement was offered to the applicant. The allotment letter was also issued in favour of the Applicant vide letter dated 31.01.2019. An MOU was also executed in favour of the applicant on 28.09.2020, where the corporate debtor agreed for registration of the said commercial unit in favour of the applicant. The applicant also executed agreement of sale on 27.01.2023, and it was registered with the Sub-Registrar’s Office at Karzat and the requisite stamp duty was also paid by the Applicant. 

# 27. In the light of these admitted facts the erstwhile Resolution Professional has admitted the claim of the Applicant as a home buyer and his name appeared at Serial no. 47 for total admitted amount of Rs. 26,25,000/-. It is pertinent to note that the amount of fees for the services rendered was settled between the parties and in lieu of that amount a commercial unit in the project was offered and was in fact allotted, an agreement of sale is also executed. Therefore, so far as the project of the Corporate Debtor is concerned the applicant has rendered services and the amount due is treated as an amount paid to the Corporate Debtor for allotment of commercial unit and hence, the applicant acquires the status of an allottee as such the applicant has acquired the status of financial creditor. Therefore, the claim of the applicant in view of the agreement of sale in his favour and allotment of the commercial unit in his favour by the Corporate Debtor can no longer be considered as operational debt as defined under Section 5(21) of the IBC and therefore, the decision of the present Resolution Professional to review and consider the applicant as the Operational Creditor is erroneous. Section 5(8) as amended contemplates any amount raised from a allottee under the Real Estate Project shall be deemed to be the amount having commercial effect of the borrowing and therefore, the applicant in the present case although has rendered various services to the Corporate Debtor, it was between the Corporate Debtor and the Applicant that they have converted into a commercial transaction of allotment of commercial unit in the project in lieu of the services rendered and, therefore, the applicant has to be considered as an allottee who has document of allotment in his favour and the agreement of sale in his favour. Therefore, the decision of the present Resolution Professional is certainly erroneous. 

# 28. It is the contention of the Resolution Professional that the board resolution which were passed on 23.01.2019, where in relation to the consultancy services provided to the applicant the said board resolution is defective in nature as in the said minutes of the board meeting which is attached by the applicant there is no quorum mentioned in the minutes of the board meeting and the number of directors who have attended the board meeting and necessary resolution passed in relation to transfer of the said flats to the applicant. The board resolution was signed by one Director Mr. Suraj Singh, who was without any authority, was acting as a chairman of the Corporate Debtor. The said decision taken will fall under the category of special business for which no resolution was passed in the annual general meeting/extraordinary general meeting. He further raised a contention that the amount/value of the said unit in the board resolution is different than what is mentioned in the allotment letter. He has also pointed out that the applicant has neither paid the taxes, duties, charges or other dues to the transfer of the said unit. It is therefore, contended that the said transfer is frivolous in nature as the applicant on the one instance has mentioned that the said unit was transferred by the Corporate Debtor as full and final settlement of his outstanding dues for the service provided to the Corporate debtor and on the other hand in the allotment letter the terms and conditions itself speak as if the applicant is purchasing the said unit from the Corporate Debtor wherein the Applicant himself has breached the terms of the allotment letter. 

# 29. Relying on Section 23(2) and 25(2)(e) of the IBC. It is submitted that the Resolution Professional is duty bound to reverify the claim that were verified. The respondent has prime-facie checked the transaction trial between the applicant and the corporate debtor where it came to the notice of the Respondent that the applicant has given consultancy services hence it is clear under the definition of the Operational debt whereas the applicant as per his arrangement with the Corporate Debtor has received flats against his outstanding fees however, the applicant has filed his claim as home buyer due to which the respondent has to reject the claim. Relying on the judgment of the Umesh Kumar  Versus Narendra Kumar Sharma it is submitted by the Respondent that he has performed his duty by re-verifying the claim of the Applicant. 

# 30. It is pertinent to note that the Resolution Professional/Respondent does not dispute the fact that the commercial unit in the project of the Corporate Debtor was allotted by a board resolution and allotment letter as well as the agreement of sale made in favour of the Applicant. The contention that the board resolution is not passed properly there was no quorum or that the applicant has not paid the taxes and that the agreement of sale in favour of the applicant is sham or bogus, is the subject matter which if the Resolution Professional felt were not in accordance with law or they are sham and bogus, it becomes the subject matter of investigation by the Appropriate Authority, for which the Resolution Professional could have initiated appropriate proceedings before the appropriate authorities which the Resolution Professional has not done in the present case. He suo-moto reviews the decision taken by the IRP admitting the claim. Once the claim of the applicant was admitted by the IRP, as contended by the respondent in the present case it was the duty of IRP to verify the claim properly and only after verification the claim could have been admitted or rejected. Once it is admitted or rejected; to re-verify it of its own would be exceeding the powers and duties of the present Resolution Professional without the approval of the adjudicating authority. Admittedly the Resolution Professional/Respondent has not moved the adjudicating authority for decategorization of the applicant from the category of the home buyer to the category of Operational Creditor and therefore, the action of the Resolution professional is certainly erroneous and cannot be sustained in the eyes of law. To fortify this preposition, reliance can be placed on the decision of the Hon’ble NCLAT Reported in [2020] Ibclaw.in 409 NCLAT Mr. Rajnish Jain vs. Manoj Kumar Singh (RP) and Ors. It is held by their lordship that:- 

• “the IRP after collation of Claims and Formation of CoC was not entitled to suo-moto review or change the status of a creditor from financial to operational creditor, updating list and review are different acts. If the resolution professional was aggrieved, he should have moved the adjudicating authority. The aggrieved person can challenge either constitution. The resolution professional cannot arbitrarily on its own overturn earlier decision change the status of a creditor from financial creditor to Operational creditor.” .

# 31. The learned counsel for the applicant has also relied upon the judgment of this Hon’ble Tribunal in the case of “MA 1435/2018 & IA 76/2018 in CP No. 870/IBC/NCLT/MB/MAH/2017 Dr. Ramakant Suryanath Pande Versus CS Prakash K. Pandya” wherein it is held that the Resolution Professional is not an adjudicating authority and is not required to enquire into factual scenario between the parties determine their rights and liabilities. The task of the Resolution Professional is to limit itself to confirm that the claim received by him are true and correct, thus in the present case the Resolution Professional has exceeded its powers and duties and has suo-moto reviewed the decision taken by the IRP and has arbitrarily rejected the claim of the applicant as home buyer in spite of the fact that the allotment letter and the agreement of sale of the units in the project of the Corporate Debtor were in its favour it amounts to adjudication on the part of the Resolution Professional. Therefore, the following order is passed. 

ORDER 

• i. The subject claim rejection e-mail dated 25th December 2023, sent by the Respondent RP to the Applicant is hereby quashed and set aside. 

• ii. Respondent RP is directed to admit the claim of the Applicant as a Financial Creditor in the class as admitted by the Erstwhile IRP/RP. iii. The IA/942/2024 is allowed.

--------------------------------------------------------- 

 

Tajinder Pal Setia Vs. Sh. Arvind Kumar (RP) and Ors. - In our view the Speculative Investor is barred from initating the CIR Process. However, we don’t find any impediment to treat the Allottees, even if they are speculative investors, from filing their claim and admission of their claim as Financial Creditor in a class. The claim of an allottee cannot be extinguished merely because of being a Speculative Investor.

 NCLT Chandigarh (2025.07.02) in Tajinder Pal Setia Vs. Sh. Arvind Kumar (RP) and Ors. [(2025) ibclaw.in 873 NCLT, IA (I.B.C)/2105(CH)2023 in CP(IB) No. 248/Chd/Chd/2019] held that;

• We do not find any merit in the submission of the Applicant that the claim of the Respondent Nos. 2 and 3 are liable to be rejected as the same do not appear in the audited balance sheets. Balance sheet is not the sole basis for proving or admission of claim. Hence, mere non reflection of the claim amount in the Balance Sheet cannot be the sole ground of rejection.

• Thus, it becomes clear that whether the homebuyer/ allottee is genuine homebuyer or genuine allottee or speculative homebuyers/ allottee but if he has paid the money for acquisition of such properties or given the advance, such allottee/ homebuyer shall be treated as Financial Creditor in terms of Section 5(8)(f) of the Code

• In our view the Speculative Investor is barred from initating the CIR Process. However, we don’t find any impediment to treat the Allottees, even if they are speculative investors, from filing their claim and admission of their claim as Financial Creditor in a class. The claim of an allottee cannot be extinguished merely because of being a Speculative Investor.

• As such, the financial creditor who in praesenti is not a related party, would not be debarred from being a member of the CoC. However, in case where the related party financial creditor divests itself of its shareholding or ceases to become a related party in a business capacity with the sole intention of participating the CoC and sabotage the CIRP, by diluting the vote share of other creditors or otherwise, it would be in keeping with the object and purpose of the first proviso to Section 21(2), to consider the former related party creditor, as one debarred under the first proviso.

Excerpts of the Order;

The present Application has been filed by Mr. Tejinder Pal Setia, Suspended Director of Chandigarh Overseas Private Limited (“Corporate Debtor” or “CD”) under ection 60(5) read with Section 21 of Insolvency and Bankruptcy Code (“IBC”) seeking  to exclude Respondent No. 2 and 3 from the Committee of Creditors (“CoC”) on the ground that they are neither Financial Creditors nor Class of Creditors- Homebuyers/Allottees, as they are business partners/service providers and cannot be treated as homebuyers and are speculative investors and with a prayer to reconstitute the CoC and declare all the actions and decisions including the resolutions passed in1st CoC meeting dated 03.08.2023 as illegal. A further prayer has been made that affairs of the Respondent Nos. 2 and 3 be inquired/investigated by Proforma Respondents 4-7, i.e. jurisdictional Department of Income Tax and Registrar of Companies.

2) The Respondent No. 1 had earlier filed Reply vide Diary No. 2967/1 dated 26.9.2023 and was later permitted to file an Updated Reply vide order dated 4.1.2024, in compliance with which, Updated Reply was filed vide Diary No. 2967/11 dated 15.1.2024. Replies have also been filed by Respondent Nos. 2 & 3 vide Diary No. 2967/2 dated 3.10.23 and Diary No.2967/3 dated 4.10.23 respectively. The Applicant has filed Rejoinder to Replies vide Diary No. 2967/4 dated 04.10.2023, Diary Nos. 2967/5 and Diary No. 2967/6 dated 10.10.2023. Respondent Nos. 2 and 3 have filed further Replies vide Diary Nos. 2967/7 and 2967/8 dated 16.10.2023. The Respondent Nos. 4-7 have not entered appearance. The parties have also filed their respective Short Notes.

3) The Applicant had also filed IA No. 2209/2023 to place on record additional documents in the present IA, which was allowed subject to just exceptions vide order dated 09.05.2024.

4) BRIEF FACTS: The uncontroverted chronological facts in brief are as under:

Dates	Events
27.02.2023	Order of admission by this Hon'ble Tribunal
01.03.2023	Public Announcement in Financial Express (English), Amar Ujala (Hindi), Punjabi Tribunal (Punjabi)
02.03.2023	The order of admission dated 27.02.2023 was stayed by the Hon'ble NCLAT
04.07.2023	The Hon'ble NCLAT dismissed the aforesaid appeal and vacated the stay
07.07.2023	Public notice published in three newspapers namely Financial Express (English), Amar Ujala (Hindi), Punjabi Tribune (Punjabi)
14.07.2023	Last date of Submission of claim
20.07.2023	NCLT directed IRP not to constitute the CoC till 26.07.2023
26.07.2023	This Hon'ble Tribunal was pleased to exclude the period of 120 days i.e. from 02.03.2023 to 04.07.2023 in IA 1564/23
03.08.2023	First meeting of CoC was held
04.08.2023	Hon'ble Supreme Court passed an order of status quo
11.08.2023	Hon'ble NCLAT granted stay till the pronouncement
23.08.2023	Hon'ble NCLAT was pleased to dismiss the Appeal and vacate the stay
06.09.2023	Appeal by the Erstwhile promoter was dismissed by the Hon'ble Apex Court
17.09.2023	Publication of Form-G
02.10.2023	Last date for receipt of expression of interest
12.10.2023	Date of issue of provisional list of prospective resolution Applicants
17.10.2023	Last date for submission of objections to provisional list
17.10.2023	Last date for issue of request for Resolution Plans under Regulations 36B (after exclusion)
18.10.2023	Expiry of 90 days from the date of Commencement of CIRP (After Exclusion)
17.11.2023	Last Date for submission of Resolution Plan
22.11.2023	4th meeting of the CoC
17.12.2023	5th meeting of the CoC
20.12.2023	Revised last date for submission of Resolution Plan

SUBMISSIONS OF THE APPLICANT

5) The Respondent No. 2 and 3 are not homebuyers/allottees/Financial Creditors nor are they entitled to be part of COC. They are business partners, developers, speculative investors and interested only in the profit the project and are not homebuyers. Their business terms are completely different as compared to other allottees. Further, Inflated and exaggerated claims have been admitted by the RP for oblique motive contrary to records of the CD and on the basis of unsubstantiated, inadmissible and illegal documents.

6) The affairs of Respondent No. 2 and 3 including their directors and shareholders, be inquired and investigated by Respondent Nos. 4 to 7.

7) It has been further averred as under: 

i. The RP has admitted the claim on the basis of a receipt dated 31.12.2023 for Rs. 20,52,32,957/- wherein the said amount has been shown as paid through cheque and cash collectively with no bifurcation with respect to the cash and cheque. Moreover, an amount of Rs. 9,96,50,000/- paid by the respondent no. 2 has already been exhausted against the sale deeds executed and therefore, the said amount should not have been part of the claim. The said receipt is executed by ex- director of CD (who also happens to be common director in another company with director of R-2). The description of property is also termed as “ACCORD HIGH STREET” in the said sale deeds.

ii. The audited Balance Sheet of Respondent no. 2 as on 31.03.2014, which happens to be for the period after the said alleged receipt was made, neither support the said claim nor the investments made by the respondent no. 2 with the applicant as the total of the Balance Sheet i.e., 7.10 Crores of Rupees, itself does not cover the amount as mentioned in the said receipt of Rs. 20.52 Crores of Rupees. Therefore, the said receipt is false, fabricated and back-dated. iii. The claim of Respondent No. 2 has been admitted at Rs. 31,30,40,054/- whereas Rs. 5,39,21,712/- is recoverable from it.

iv. The Applicant has also submitted that the books of accounts were provided to the RP on 31.07.2023.

v. The Respondent no(s) 2 and 3 were speculative investors and are not genuine home buyers and hence, their claims cannot be admitted.

vi. The RP has wrongly admitted the Claim of Respondent No. 2 based on Agreement dated 24.06.2011 with the CD as under the said Agreement the said Respondent was to market and sell the properties constructed by the CD, issue allotment letters, receive payments and to execute buyer-seller agreements and other documents and hence, is a speculative investor and is not covered within the definition of a financial creditor as a home buyer.

vii. The another Agreement to Sell dated 26.02.2012 was executed between Respondent No. 2 and the CD which stated that the properties will be built by the CD and handed over to the respondent who will have right to further sell the property, hence the said Respondent is a speculative investor and is not covered within the definition of a financial creditor as a home buyer.

viii. The Respondent No. 2 had been marketing the properties allotted to it by the CD and on a complaint by a buyer from the said respondent, District Consumer Disputes Redressal Forum, Chandigarh had directed refund against the said respondent, which shows that the said Respondent is a speculative investor and is not covered within the definition of a financial creditor as a home buyer. 

ix. There was collusion between the ex-directors of CD and director of Respondent No. 2 as both were common directors in Sarv Awas Housing Bhiwadi Private Limited which is currently in CIRP and hence, Respondent No. 2 is a related party.

x. The applicant further submitted that the name of the respondents 2 & 3 company was struck off under Section 248 of the Companies Act, 2013 for non-filing of financial statements and hence cannot file claim.

xi. The Respondent No. 2 has made cash payments to the CD and as per Section 269SS of the Income Tax Act, such transactions are barred.

xii. The claim of the Respondents is time barred.

8) With regard to Respondent No. 3, it has been averred that an Agreement dated 29.06.2009 was entered into between the said respondent and the CD wherein the Respondent No. 2 has been referred to as promoter and the CD has been referred to as developer and the said Respondent had agreed to buy 40 residential units and 40 industrial units and the respondent could sell the properties and sign builder buyer agreement. It has further been averred that as per Ledger of CD Rs. 3.41 crore is payable to Respondent No. 3 whereas a claim of Rs. 28.21 Crores has been admitted by the RP without any basis.

9) The balance sheet of the CD doesn’t reflect the names or amounts of claims which have been admitted by the RP.

10) It has further been averred that the Applicant has the locus to maintain the present application and this Adjudicating Authority has power to order for inquiry into the affairs of the Respondents.

11) In support of his averments, the Applicant has placed reliance on the following judgments:

• i. Pioneer Urban Land & Infrastructure v. Union of India: 2019 [8) SCC 416.

• ii. M/s Jagbasera infrastructure Pvt. Ltd. v. Rawal Variety Construction Ltd. : NCLAT: CA(AT)(Ins.) 150 of 2019: D/d- 04.04.2022.

• iii. Vipul Ltd. v. M/s Solitaire Buildmart Ltd.: NCLAT: CA (AT) (Ins.) 550 of 2020 : D/d- 18.08.2020.

• iv. Mohit Prasad v. M/s S & N Lifestyle Infrastructure Pvt. Ltd.: NCLT (New Delhi): CP(IB) 1026 of 2020: D/d- 28.03.2023.

• v. Mukesh N. Desai v. Piyush Patel & Ors.: NCLAT: CA(AT)(Ins.) 780 of 2020: D/d- 24.02.2022.

• vi. Nidhi Rekhan v. M/s Samyak Projects Pvt. Ltd.: NCLAT: CA(AT) (Ins.) 1035 of 2020: D/d- 31.01.2022.

• vii. Budhpur Buildcon Pvt. Ltd. v. Abhay Narayan Manudhare: NCLAT: CA (AT) (Ins.) 589 of 2021: D/d-09.09.2022.

SUBMISSIONS BY RESPONDENT NO. 1 RP

12) At the outset, the RP has averred that the Applicant is a chronic litigant and is trying to disrupt the CIRP and has raised preliminary objection on the maintainability of the Application on the ground of res judicata and unclean hands of the Applicant as under:

i. Another suspended director, Jagbir Singh had filed IA No. 1571/2023 inter alia seeking to place on record a Forensic Audit Report inter alia disputing the claims of Respondent Nos. 2 and 3 and the same was dismissed by this Adjudicating Authority vide orders dated 27.07.2023.

ii. The Applicant, Tejinder Pal Setia had filed Civil Appeal Nos. 5533-34 of 2023 before the Hon’ble Supreme Court (against judgment of Hon’ble NCLAT dated 23.8.2023) wherein the Grounds of appeal, similar grievances have been raised as in the present Application (Annexure R-1/2).

iii. The Respondent No. 2 and 3 herein, who’s claims are being challenged by the Applicant were also arrayed as Respondent Nos. 54 and 55 respectively in the said Civil Appeal and;

iv. These facts have not been disclosed in the present Application and accordingly, the Applicant is guilty of suppression of material facts and forum shopping.

13) It has further been averred as under:

i. After initiation of the CIRP, the claim of the R2 and R3 were accepted based on the claim documents in the absence of any other information/data as per regulation 14(1). The CoC was constituted on 27.07.2023 by which time the suspended directors had not provided any records/books of accounts relating to the CD. On receipt of further claims, the Coc was reconstituted on 04.09.2023. Thereafter, the suspended management provided the books of account, bank account statements and other records on 17.09.2023, based on this fresh information, the existing claims were revised under regulation 14 (2).

ii. As and when direct claims from buyers of units from R-2 and R-3 were filed, the same were collated and corresponding admitted claims of R-2 & R-3 were reduced. The claims were updated under regulation 14(2) and the CoC was constituted six times after its first constitution. The claims of R2 and R3 were as below on the dates of reconstitution of the CoC on various dates as per the following table (The authority intimate  and available on website of IBBI):

Sr. No	Date of CoC Constitution /Reconstitution	Total Claim Amount Admitted (in Rs.)  Accord Infra Developers Pvt Ltd (R2)(Principal + Interest as per Reg. 16(A) + Penalty	Total Claim Amount Admitted (in Rs.) Mohali Hi- Tech (R3) (Principal + Interest as per Reg. 16(A) + Penalty
	27-07-2023	31,30,40,054.00*	28,21,95,718.00
	04-09-2023	32,76,46,589.00	28,21,95,718.13
	18-10-2023	29,16,33,617.67	25,03,50,836.97
	15-11-2023	29,16,33,617.67	21,98,89,715.22
	25-12-2023	10,21,62,831.82	21,98,89,715.22
	11-01-2024	10,21,62,831.82	8 ,75,22,094.68
	12-03-2024	8,82,33,357.77	7,78,60,384.00

*typographical error in updated reply at page 10 para 10 which totals Rs. 36,41,63,732 as the interest amount of 13,04,58,367 mentioned includes penalty and penalty of Rs. 5,11,23,678/- has been separately mentioned.

iii. Thus, the after 17.9.2023, ledger, bank account statements, books of accounts etc. of the CD has been duly considered for verification of the claims, including revision of existing claims.

iv. The allegations of the Applicant have been controverted and basis of admission of claims have been averred as under: . . . . . . . .

v. It has also been stated that the claims of the allottees have been collated as per the terms of the allotment letters/agreements and interest has been added to the claim as per Regulation 16A (7) (which is not reflected in the balance sheet) and penalty as per the Agreement.

vi. It has been averred that there is no anomaly in admission of the claims of the Respondent Nos. 2 and 3.

vii. As on date of approval of resolution plan on 19.03.2024, total number of claims of home-buyers is 365 valued at RS. 2,07,89,58, 476.31/- and value of claims of R-2 and R-3 is Rs. 8,82,33,357.77/- (voting share 4.21%) and 7,78,60,384/- (3.72%). The Plan was approved with 99.21% voting.

SUBMISSIONS BY RESPONDENT NOS. 2 AND 3

14) These Respondents have taken a similar stand that the Applicant has no locus standi and after the petition was admitted by this Adjudication Authority u/s 9 of the IBC on 27.2.2023, the Applicant has indulged into various litigations for closure of CIRP before Hon’ble NCLAT/Hon’ble Supreme Court having been unsuccessful, he is now trying the frustrate the CIRP proceedings.

15) They have further submitted that the Application is vexatious and is an attempt to threaten the respondents into withdrawing their claims as the Applicant have impleaded RoC/Income Tax Department as Proforma Respondents while seeking a prayer for inquiry/investigation by them into the affairs of these Respondents. 

16) The Respondent No. 2 avers that it had initially entered into an Agreement dated 24.06.2011 with the CD, which was superseded by an Agreement to Sale dated 26.03.2012. As a consideration, a sum of Rs. 20,52,32,957/- has been paid by it to the CD towards which receipt dated 31.12.2023 was issued by the CD. The units sold to the respondent were not delivered by the CD and hence, claim was filed with the IRP. 

17) The respondents have further stated that the audited balance sheet for the year 2020-21 (Annexure A-5), does not name any allottee as its creditors. However, the balance sheet shows a sum of Rs. 71,47,31,028/- under the head “Advance from customers. Similarly, the balance sheet for the year ended 31.03.2013 shows a sum of Rs. 70,84,90,632/- under the head “Advance from customer received against projects”. The Auditors Report for the year 2020-21 states as under:

18) It is stated that if the averment of the Applicant is to be accepted that only those allottees who’s name appear in the balance sheet, then all the other claims filed with the IRP/RP are null and void, which is not the case.

19) The Respondent No. 3 has further stated that it had issued a Legal Notice (Annexure R-3/0) dated 2.12.2015 to the CD by attaching Ledger Account of the CD showing payment of RS. 6.07 cr. and the CD did not respond to its legal notice and the Applicant has never challenged the Agreements entered into between the said respondent and the CD.

20) The allegation of the Applicant that the Agreements were entered into with the CD when the CD was under the old management is of no substance as it is the inner working of the CD. The Agreement is with the CD which is a separate entity than the management. As Respondent No. 2 had substantial interest in the project of the CD, its direct was a witness to the change of management Agreement dated 15.10.24 (Annexure R-2/9).

21) The Applicant had filed IA No. 1571 of 2023 under Section 12A of the IBC read with Regulation 30A of CIRP Regulations. The Respondents along with other had filed IA No. 1584/23 to be impleaded as Respondent Nos. 51 and 52. By way of order dated 25.7.2023, this Authority had allowed the intervention as necessary parties – Home buyers and eventually, IA 1571 was dismissed after hearing the respondents herein. This order was challenged by the Applicant before Hon’ble NCLAT and Hon’ble Supreme Court by way of Appeals, which were dismissed vide orders dated 23.8.23 and 6.9.2023 respectively. Hence, the Applicant cannot say that the respondents are not home buyers. W.r.t Respondent No. 3, when Applicant has admitted in paragraph

22 of the Application that a sum of Rs. 9,96,50,000/- has been received by the CD through banking channels.

22) The Respondents have a continuous cause of action as their Agreements have clause for damages for the delayed period of possession. As per RERA approval, the project was to be completed by 30.6.2022 (Annexure R- 2/11). Hence it is denied that the claim of respondents is time barred.

23) It is wrong to say that the respondents are shell companies merely on the ground that their name has been struck off by the RoC. Under Section 250 of the Companies Act, even if a company is dissolved under section 248, it can still realise the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

ANALYSIS AND FINDINGS

24) We have heard the parties and perused the record including the Written Submissions filed by both the parties. Through the present Application the Applicant who is member of Suspended Board of Directors has challenged the constitution of COC, i.e., inclusion of Respondent No.2 and 3 in the CoC

25) The Applicant has contended that the claim of the Respondents ought to be rejected as the same was not reflected in the Audited Balance Sheet of the Corporate Debtor. We would like to examine this contention of the Applicant. At this juncture we refer to Regulation 8A of CIRP Regulations which deals with manner of proving the claims by creditors in a class. It reads as under:

• “(1) A person claiming to be a creditor in a class shall submit claim with proof to the interim resolution professional in electronic form in Form CA of the Schedule.

• (2) The existence of debt due to a creditor in a class may be proved on the basis of-

• (a) The records available with an information utility, if any; or

• (b) Other relevant documents, including any-

• (i) Agreement for sale;

• (ii) Letter of allotment;

• (iii) Receipt of payment made; or

• (iv) Such other document, evidencing existence of debt.

• (3) A creditor in a class may indicate its choice of an insolvency professional, from amongst the three choices provided by the interim resolution professional in the public announcement, to act as its authorised representative.”

26) We do not find any merit in the submission of the Applicant that the claim of the Respondent Nos. 2 and 3 are liable to be rejected as the same do not appear in the audited balance sheets. Balance sheet is not the sole basis for proving or admission of claim. Hence, mere non reflection of the claim amount in the Balance Sheet cannot be the sole ground of rejection.

27) The Applicant has contended that the respondent no. 2 & 3 are business partners, developers, speculative investors and interested only in the profit the project and are not homebuyers by referring to the Agreements dated 24.6.2011 and 26.3.2012 with Respondent No. 2 and Agreement dated 26.6.2029 & 29.8.2014 with Respondent No. 3. From these Agreements, it transpires that the units purchased by the Respondents will be constructed/developed by the CD and the said Respondents could  sell/market the units and received consideration.

28) We would like to examine the contention that whether the claim of the Respondents can be rejected merely on the ground of being speculative Investor. In this context we refer to the Judgement of Hon’ble NCLAT in the matter of Everlike Real Estate & Developers Pvt. Ltd. Vs. Mr. Mohit Goyal, CA(RP) and Anr. (2024) ibclaw.in 429 NCLAT, wherein it has been held as under:

• “The Hon’ble Supreme Court of India in Pioneer Urban Land (2019) ibclaw.in 13 SC held that the allottee, who has given advance or paid money to the Real Estate Developers is a Financial Creditor. The issue regarding the genuine Homebuyers v/s Speculative Homebuyers is relevant only at the stage for the admission of CIRP under Section 7 of the Code. Thus, it becomes clear that the Hon’ble Supreme Court of India held the position of speculative investors only for seeking unnecessary insolvency of the Corporate Debtor. The Hon’ble Supreme Court held that any allottee who paid for purchasing units will be treated as having effect of commercial borrowing and consequently such unit purchaser will be treated as Financial Creditors. (p49)

• Thus, it becomes clear that whether the homebuyer/ allottee is genuine homebuyer or genuine allottee or speculative homebuyers/ allottee but if he has paid the money for acquisition of such properties or given the advance, such allottee/ homebuyer shall be treated as Financial Creditor in terms of Section 5(8)(f) of the Code. Hence, the pleadings of the Respondent No. 2 in this regard that the Appellant is speculative investor will not affect the rights of the Appellant to be treated as the Financial Creditors. (p50).

29) From perusal of the above it is observed that even though the allottee may be falling under the category of speculative investor, it will still be considered as Financial Creditor. In our view the Speculative Investor is barred from initating the CIR Process. However, we don’t find any impediment to treat the Allottees, even if they are speculative investors, from filing their claim and admission of their claim as Financial Creditor in a class. The claim of an allottee cannot be extinguished merely because of being a Speculative Investor. Hence, we reject this contention of the Applicant.

30) Another allegation has been levelled that That Respondent No. 2 and 3 are related parties of CD. Mr. Gurcharan Batra is the erstwhile Director of CD in the year 2014 hence, are related parties. In this regard, it would be apposite to refer to the Reply of Respondent No. 1 as under:

31) That the test of related party has to be seen as on the date of CIRP as held by the Hon’ble Supreme Court in Phoenix ARC Private Limited v Spade Financial Services Limited & Ors (Civil Appeal No. 2842 of 2020 with Civil Appeal No. 3063 of 2020. The relevant excerpts of the Judgement reads as under:-

• 94. Thus, it has been clarified that the exclusion under the first proviso to Section 21(2) is related not to the debt itself but to the relationship existing between a related party financial creditor and the corporate debtor. As such, the financial creditor who in praesenti is not a related party, would not be debarred from being a member of the CoC. However, in case where the related party financial creditor divests itself of its shareholding or ceases to become a related party in a business capacity with the sole intention of participating the CoC and sabotage the CIRP, by diluting the vote share of other creditors or otherwise, it would be in keeping with the object and purpose of the first proviso to Section 21(2), to consider the former related party creditor, as one debarred under the first proviso.

32) The Applicant has not said anything contrary to the Reply. Further the Reply of the Respondent suggest that they ceased to be the related party in the year 2014 and the CIRP was initiated much after that. Hence we do not find any force in the allegation of the Applicant.

33) The Applicant has further alleged that the claims of Respondent Nos. 2 and 3 are barred by limitation. In this regard, Respondent No. 2 in its Reply has annexed Annexure R-2/1 which is a Reply on behalf of Corporate Debtor in CP(IB) No. 210/Chd/Hry/2020 filed before this Adjudicating Authority in a petition u/s 7 filed by home buyers wherein, both Respondent nos. 2 and 3 are Petitioners. In the said Reply, the CD has taken a categoric stand as under:

• “i. On 14.3.2014, in Civil Writ Petition No. 4856 fo 2014 titled as Rupinder Kaur & Ors. Vs. State of Punjab & Ors., Division Bench of Punjab & Haryana High Court was pleased to pass a ‘Status Quo’ order on the project. That the said litigation finally came to end on 16.1.2018. Therefore, in view of the order of injunction/stay granted by Division Bench of Punjab and Haryana High Court, the date of handing over possession of the Project gets automatically extended and there is no cause of action to file the present petition. 

• ii. New management took over the Project under a ‘Share Purchase Agreement’ and thereafter infused funds/resources in the Project. After the Litigation of the High Court got over in 2018, new promoters under RERA laws submitted the plans and competition date, which is accepted by the authorities that is in June 2022 (subject to COVID related delays. Thus, there is no cause of action to file the present petition.”

34) The allegation regarding the claims being barred by limitation is in the teeth of the above stand of the CD before this Tribunal. Admittedly the date of completion has  been extended to 30.6.2022 as per Registration approval dated 17.10.2017 granted by RERA, Punjab (Annexure R-2/11). Hence, there is no merit in the allegation that claims of the Respondent Nos. 2 and 3 are time barred.

35) The Applicant has raised another ground that as per MCA data, Respondent Nos. 2 and 3 have been struck off under Section 248 of the Companies Act, 2013 and hence, their claim cannot be accepted. It is been stated by the Respondents that under Section 250 of the said Act, even if a company is dissolved under Section 248, there is no bar from realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company. It has recently been held by the Hon’ble High Court of Delhi in the matter of A.B. Creations and Anr. V. Bhan Textiles Pvt. Ltd., (2024) ibclw.in 1155 HC as under:

• “12. What, therefore, follows on a careful reading of the words in Section 250 of the Act by invoking the golden rule of construction that the words in the statute should be interpreted in their ordinary, normal and grammatical meaning, is that even if the name of a company is struck off from the register, it remains operational in so far as it can pursue legal remedies for realisation of the ‘dues’ of the said company against its debtors, which have either crystalised or remain uncrystallised, arising from any liability or obligation of its debtors to the company, but even the creditors can pursue legal remedies against the said company for the payment and discharge of its liabilities or obligations arising from any contract or statutory implications.”

36) In the light of discussion and reasons recorded hereinbefore the application being bereft of merits deserves dismissal. As a result the IA- 2105 of 2023 is accordingly dismissed with no order to costs.

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