2021 (7) TMI 985 - AT - Insolvency and Bankruptcy

Tribunal instructs recognition of Dr. Tandon as Financial Creditor, dismisses Operational Creditor appeal

J.M. Financial Asset Reconstruction Company Ltd. Versus Dr. Anil Kumar Tandon, Dr. Ankit Tandon, Smt. Sumati Tandon, Devendra P. Jain, Resolution Professional/ Liquidator of Sandhya Prakash Limited, Suspended Management of the Company Mr. Bharat Patel, Smt. Smita B. Patel., Smt. Bharti S. Patel

J.M. Financial Asset Reconstruction Company Ltd. Versus Dr. Anil Kumar Tandon, Dr. Ankit Tandon, Smt. Sumati Tandon, Devendra P. Jain, Resolution ... Issues Involved:1. Determination of Financial Creditor status of Dr. Tandon and others.2. Validity of the Agreement to Sell and its implications.3. Directions for refund of money to Dr. Tandon and others.4. Status of Appellants in Company Appeal (AT) (Ins.) No. 1203 of 2019.5. Grievances against the Resolution Professional in Company Appeal (AT) (Ins.) No. 1176 of 2019.Issue-wise Detailed Analysis:1. Determination of Financial Creditor Status of Dr. Tandon and Others:The Appeals arose from the CIRP initiated against Sandhya Prakash Ltd., with Mr. Devendra Padamchand Jain as the Resolution Professional and later the Liquidator. Dr. Tandon and others claimed to be Financial Creditors based on an Agreement to Sell (ATS) for a unit in AURA Mall, Bhopal. They sought inclusion in the CoC and execution of the sale deed. The Adjudicating Authority held that Dr. Tandon and others were not Financial Creditors, as their claim was based on an unregistered and insufficiently stamped agreement, and the execution was disputed. It was also noted that the claim was barred by limitation and pending litigation. However, the Adjudicating Authority directed the Resolution Professional to refund the amount given as advance by Dr. Tandon and others.2. Validity of the Agreement to Sell and Its Implications:J.M. Financial, a Financial Creditor, opposed the inclusion of Dr. Tandon and others as Financial Creditors, arguing that the ATS was not valid due to the mortgage of the property and lack of registration. The Adjudicating Authority found that the ATS could not be treated as evidence due to its unregistered status and insufficient stamping. It also noted that the money advanced could not be treated as financing for the building project, as the shop was already built. The claim was considered time-barred as the ATS was dated March 31, 2012, and the three-year limitation period had expired.3. Directions for Refund of Money to Dr. Tandon and Others:The Adjudicating Authority directed the Resolution Professional to refund the amount of Rs. 2.17 crores to Dr. Tandon and others, stating that it was an improper receipt of money under a disputed agreement. This direction was challenged by J.M. Financial, arguing that it bypassed Section 53 of the IBC. The Tribunal found that the Adjudicating Authority erred in directing the refund, as it was against the provisions of the IBC.4. Status of Appellants in Company Appeal (AT) (Ins.) No. 1203 of 2019:The Appellants in this appeal claimed to be Financial Creditors based on various agreements with the Corporate Debtor. The Adjudicating Authority directed them to file their claims before the Liquidator. The Tribunal found that the Appellants could not be treated as Financial Creditors, as their claims were in the nature of rent or security deposit refunds. The Liquidator was directed to receive and appropriately treat their claims under the provisions of law.5. Grievances Against the Resolution Professional in Company Appeal (AT) (Ins.) No. 1176 of 2019:The Appellant, an Operational Creditor, raised various grievances against the Resolution Professional, alleging improper conduct of the CIRP. The Tribunal noted that the Liquidation Order was a necessary consequence due to the expiration of the prescribed period under Section 12 of the IBC. The Tribunal declined to set aside the Liquidation Order and left the grievances against the Resolution Professional to be addressed by the IBBI, the regulatory authority.Conclusion:The Tribunal quashed and set aside the Impugned Order regarding the Financial Creditor status of Dr. Tandon and others, directing the Liquidator to treat them as Financial Creditors. The appeals by the other Appellants were disposed of with directions to the Liquidator to appropriately treat their claims. The appeal by the Operational Creditor was dismissed, with no order as to costs.