Section 213 investigation approved for company liquidation amid excessive property sales and fake lease allegations

The NCLT Bengaluru allowed a petition under Section 213 of the Companies Act, 2013 seeking investigation into a company's affairs during liquidation. The tribunal found specific allegations of irregularities including excessive sale of 2,43,037 sq. ft. against entitlement of only 82,216.30 sq. ft. under joint development agreement, and fake lease agreements with related parties to mislead buyers with false rental return promises. The resolution professional failed to address these allegations with proper explanations or denials, warranting investigation under Section 213.

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Issues Involved:
1. Allegations of fraudulent sale of property by the company.
2. Violation of court orders and collusion among respondents.
3. Request for investigation into the affairs of the company u/s 213 of the Companies Act, 2013.

Summary:

Allegations of Fraudulent Sale of Property:
The Petitioners alleged that M/s. Vikram Structures Pvt. Ltd. (R-1) sold a total area of 2,43,037 sq. ft., whereas the company was entitled to sell only 82,216.30 sq. ft. as per the Joint Development Agreement (JDA). The company collected Rs. 136,50,19,085/- by executing 164 Sale Deeds or Agreements to Sell. The company and its directors allegedly sold the same property multiple times by specifying only the area and floor, luring buyers with fake rental assurances through lease agreements with M/s. Innovent Spaces Pvt. Ltd. (R-16) and M/s. Project Craft Solutions (R-17). The Petitioners provided specific details of these transactions, which were not contested by the Respondents.

Violation of Court Orders and Collusion:
The company and its directors allegedly violated an injunction order dated 27.04.2019 by the City Civil and Sessions Judge, Bangalore, in CS No. 3301 of 2019. The owners of the land, despite knowing the fraudulent activities, did not inform the buyers and withdrew the suit, aiding the company in defrauding the buyers. The Petitioners sought an investigation into the affairs of the company and related parties u/s 213 of the Companies Act, 2013.

Request for Investigation:
The Tribunal referred to Section 213 of the Companies Act, 2013, which allows investigation into a company's affairs if there are circumstances suggesting fraudulent conduct. The Petitioners, being buyers of units in 'VSPL Pinnacle,' provided specific details and documents supporting their allegations. The Respondent No. 1 (R-1) did not contest these allegations. The Tribunal noted that the company was ordered to be liquidated, but it retained its corporate existence and could be investigated.

Decision:
The Tribunal allowed the petition and directed the following:
(a) The Petitioners' Counsel to forward all material documents to the Central Government within three weeks.
(b) The Central Government to investigate the affairs of R-1 Company and related parties by appointing Inspector(s) u/s 213(b) of the Companies Act, 2013.
(c) The Liquidator of R-1 Company to cooperate with the Petitioners in handing over requisite documents.
(d) The Registry to forward a copy of the order to the Ministry of Corporate Affairs for necessary follow-up action.

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