TaxTMI 
TaxTMI 
2022 (4) TMI 1450
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....ondent to admit the claim filed by the Applicant as a financial creditor and reconstitute the Committee of Creditors ("COC") of the Corporate Debtor by inducting the Applicant as a member. 2. The Applicant, i.e. Piramal Capital & Housing Finance Limited was previously known as Dewan Housing Finance Corporation Limited ("DHFL") Pursuant to the order dated 3 December 2019, this Hon'ble Tribunal initiated a corporate insolvency resolution process ("CIRP") against DHFL. Thereafter, by an order 7 June 2021, this Hon'ble Tribunal approved the resolution plan submitted by the Piramal Capital & Housing Finance Limited, in terms of which Piramal Capital & Housing Finance Limited merged into DHFL and the name of the merged entity has been changed to Piramal Capital & Housing Finance Limited with effect from 3rd November 2021. Loan availed by the Corporate Debtor from the Applicant and payment default: 3. The Corporate Debtor is engaged in the business of construction and development of residential houses and apartments. One of the projects that the Corporate Debtor was developing was a residential building named 'Royal Accord' on the land situated at Survey No. 429, ....
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.... in the Application. 6. As per the terms of sanction, the Loan was to be repaid in 24 equated monthly instalments ("EMIs") commencing after 36 months from the date of first disbursement. Sometime in August 2018 the Corporate Debtor began defaulting in the payment of the EMIs as per the Sanction Letter and the Loan Agreement and accordingly the loan account of the Corporate Debtor was classified as a non-performing asset in the books of the Applicant on 1 November 2018. In view of the defaults, the Applicant issued a Recall Notice dated 8 November 2019 to the Corporate Debtor and the guarantors/mortgagors, calling upon them to make payment of the outstanding amount of INR 37,97,56,230/- (Rupees Thirty Seven Crore, Ninety Seven Lakhs, Fifty Six Thousand, Two Hundred and Thirty only) as on 8 November 2019 together with accrued interests, costs, charges and expenses within 7 days of the notice. Thereafter, the Applicant issued a notice under Section 13(2) of the Securitization and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act") bearing number PF/2020-21/SARFESI/ANURADHA dated 5 August 2020 ("13(2) Notice") calling upon the Corpo....
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....Claim Form, that the Respondent vide his email dated 7 December 2021, sought certain additional information/clarification pertaining to the Claim. One of the issues regarding which the clarification was sought was the status and details of certain proceedings purportedly initiated by the Corporate Debtor against the Applicant before the Hon'ble Debt Recovery Tribunal ("DRT") allegedly in respect of the payment of the outstanding amounts under the Loan having been made by a corporate guarantor on behalf of the Corporate Debtor. 11. The Applicant vide its letter dated 9 December 2021 duly provided all additional information/clarification sought in the Respondent's email dated 7 December 2021. Specifically with respect to the clarification pertaining to the payments allegedly made by a corporate guarantor on behalf of the Corporate Debtor, it was clarified that RDPL is not only a corporate guarantor for the loan availed by the Corporate Debtor from DHFL, but also a borrower of DHFL having availed a separate loan backed by mortgage being loan account No. 0034776 from the Applicant. It was further clarified that the payment of INR 38,51,98,790 by RDPL to the Applicant on 19 N....
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....at the Respondent is still in the process of verifying its Claim. 15. By its letter dated 31 December 2021, the Applicant once again reiterated the inordinate delay that has occurred in the admission of its Claim despite all additional information/clarification sought by the Respondent having been provided. The Applicant also highlighted the grave prejudice being caused to the Applicant as a result of non-verification of the claim, and called upon the Respondent to conclude the verification of Claim within 7 (seven) days thereof and reconstitute the CoC. 16. In response to the Applicant's letter dated 31 December 2021, the Respondent vide his letter dated 6 January 2022 has inter alia once again stated that the Claim continues to be under verification, and that the opinion of a retired Judge is being obtained on the issue. It is pertinent to note that even vide the email dated 22 December 2021, the Respondent had informed that the Applicant that he is seeking appropriate professional advice on the matter. Yet two weeks later, the Respondent is yet to conclude the process and the Applicant's Claim remains un-admitted and under verification. Reply 17. The Responde....
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.... and several capacity, duly discharged the entire outstanding debt towards the Applicant by making payment of Rs. 38,51,98,790/- on 19.11.2018 to the Applicant. 20. It is also established that the claim of the Applicant in its entirety stands extinguished and thus the Applicant has no claim whatsoever against the Corporate Debtor, much less a financial claim against the Corporate Debtor. 21. It is pertinent to note that the amount of loan given to the Corporate Debtor cannot be differentiated with the loan/credit with respect to RDPL for the following reasons: "A. Same Management The promoters/directors of both the companies were common when the said transactions came to be entered into which also demonstrates that the control and management of the corporate debtor was same as that of RDPL. B. Transaction in contravention to RBI Guidelines and established Fair Practice required to be followed by all financial institutions. It is further stated that upon perusal of the accounts of the Corporate Debtor, even though the account is claimed to be classified as a Non-Performing Asset (hereinafte....
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....itted by the respondent as Financial Claim reflected as outstanding in the total debt of RDPL It is pertinent to note that as per the pending adjudication of Miscellaneous Application No. 1448 of 2019 in C.P.I.B. No. 4258/MB/2019 filed by the Administrator of Dewan Housing Finance Corporation Limited vs. Kapil Wadhawan and Ors. under Section 45, 60(5) and 66 of the Code, 2016, the principal amount outstanding and recoverable from RDPL is Rs. 758.52 crores as per the loan sanctioned by the Applicant. However, if the Applicant is claiming that the amount disbursed by RDPL was in furtherance of the loan granted to RDPL and not in furtherance of relieving the debt of the Corporate Debtor, then the recoverable amount in the said Application by DHFL would be approximately Rs. 719.88 crores and not Rs. 758.40 crores. It is pertinent to mention that the abovementioned Interlocutory Application has been filed against the erstwhile suspended management of DHFL alleging financial fraud committed in relation to the fraudulent disbursement of loans and equally fraudulent cover-up by purportedly providing securities for impaired loan accounts categoriz....
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....l of the Books of account of the Corporate Debtor, the Respondent herein found that the claim submitted was not being reflected in the books of account and financial records of the Corporate Debtor. The Respondent was appraised of the pending proceedings against the Applicant at the Learned DRT, Mumbai in respect of the outstanding amount of loan having made by RDPL on behalf of the Corporate Debtor. 15.11.2021 The respondent sought an opinion of Retired Hon'ble Justice K. A. Puj. for treatment to the said claim. 29.11.2021 In light of the discrepancies with respect to the amount of claim, the Respondent herein sought legal opinion of Retd. Hon'ble Justice K.A. Puj in which the Respondent was advised to seek further clarifications with respect to the claim and pending proceedings from the Applicant in light of the pending DRT proceedings. The Respondent begs to annex a copy of the legal opinion dated 29.11.2021 as Annexure-R8 to the present affidavit. 03.12.2021 The Respondent herein received email from the Applicant seeking admittance of their claim to which the Respondent stated that the process of verification is ongoing and intimated about a discussion over....
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....aim to which the Respondent responded that due to contradictory records, the process of verification is taking time. 20.12.2021 & 29.12.2021 The Suspended Director vide letter to the Respondent provided further clarifications with regards to the transactions of DHFL and the Rite Group of Companies stating that RDPL had provided assistance in repaying the loan of the Corporate Debtor. The Respondent was also provided with the supporting documents stating that the alleged claim of Applicant had been dispensed with by RDPL along with the details of the transactions. The Respondent begs to annex Copies of Letter and supporting documents as Annexure-R12 to the present affidavit. 31.12.2021 The Applicant vide letter insisted on admitting their claim and reconstitution of the Committee of Creditors. The Respondent replied to the said letter on 06.01.2022 by reinstating that all necessary steps and evaluation process is being undertaken to ensure that the CIRP is carried out in an effective manner. 08.01.2022 The Resolution Professional finalized and provided the information memorandum. It is pertinent to mention that the claim of the applicant is reflected in the I....
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....esolution Professional in relation to verification of claim is not adjudicated in nature. The Respondent refused to admit the claim of the Petitioner on the basis of an unaudited financial statement. It is settled law that the unsigned balance sheet cannot be relied upon. 25. Further, the Applicant pointed out that instead of collating the claim and verifying the claim of the Applicant, the Respondent has entered in to the rowing enquiry and sought to adjudicate the entire claim. The fact that the Corporate Debtor, the RDPL under the common management does not in any manner affect the Applicant's claim or reduce the Corporate Debtors admitted liability towards the Applicant. On the contrary, as stated above, the misstatement of RDPL has allegedly repaid the Corporate Debtor, the letters of exchange between the RDPL and the Corporate Debtor immediately prior to the commencement of the Corporate Debtor's insolvency and the change in stance with respect to the loan availed from the applicant in the draft balance sheet of the Corporate Debtor for the financial year ended 31st March, 2021, all show that the debt has been repaid by the RDPL is nothing but a pre-mediated and ma....
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....ate Debtor. The Applicant further states that the documents supporting the claim were submitted by the respondent on 01.11.2021 and 02.11.2021. 31. The Applicant states that upon perusing the documents submitted by the Respondents and discussions with respect to the claim, the records taken into custody, provisional financials and clarifications/information/details/documents sought from the Suspended Management of the Corporate Debtor as per Regulation 13 of the IBBI (CIRP) Regulations, 2016, the Applicant found that the claim was not being reflected in the books of account and financial records of the Corporate Debtor as provided by the erstwhile management of the Corporate Debtor. 32. The Applicant further states that the Applicant was appraised of the pending proceedings of the Respondent before the Hon'ble Debt Recovery Tribunal (DRT), Mumbai in respect of the payment of the outstanding amounts of the Loan having been made by a corporate guarantor, Rite Developers Private Limited (RDPL) on behalf of the Corporate Debtor. 33. The Applicant states that on account of the discrepancies with respect to the claim and the pending proceedings of the Respondent before the D....
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....also sought clarifications and documents from the Suspended Management pertaining to status of Application filed at Hon'ble DRT, Mumbai, status of legal action taken by DHFL against RDPL, statement of account of RDPL with DHFL and the details of deployment of funds disbursed by DHFL to the Corporate Debtor. The Applicant further states that the information was provided to the Applicant vide emails dated 20.12.2021. 38. The Applicant further submits that Respondent vide letter dated 15.12.2021 informed the Applicant that the copy of Securitisation Application filed by the Corporate Debtor before the Hon'ble DRT had not been served to the Respondents and further informed that the admission of the claim as a financial creditor is not dependent on the Application filed against the Respondent before the Hon'ble DRT. Grounds 39. The Applicant submits that as per the order of the Hon'ble Tribunal dated 11.08.2021, the Corporate Insolvency Resolution Process of the Corporate Debtor was initiated and the Applicant herein was appointed as the Interim Resolution Professional and directed to discharge its duties as the Interim Resolution Professional as under Section 1....
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....o DHFL and therefore, the Corporate Debtor wrote a letter to its sister concern i.e. RDPL seeking assistance. The Applicant states that RDPL informed the Corporate Debtor that an amount of Rs. 38,51,98,790 was lying as credit in the account of the DHFL and suggested to utilize the same to settle its dues with DHFL because RDPL is also a Corporate guarantor in the loan sanctioned by DHFL to Corporate Debtor and the process was carried out. 46. The Applicant states that as per the definition of "financial creditor" under Section 5A(7) of the Code which states that "financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred", it is not within the authority of the Applicant to declare the Respondent as a financial creditor and admit its claim owing to the discrepancies arising from the books of record, pending adjudication before the Hon'ble DRT and the justification given by the Respondent. 47. The Applicant states that in view of the above stated facts and circumstances, upon perusing and pursuing all the relevant statutory provisions of law, seeking legal opinions, appointing profess....
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....wing of DHFL. The balance sheet for the year 31st March, 2021 is reproduced below: 54. The Applicant/RP in I.A. 308 of 2022 has filed the present application seeking adjudication of claim of the Respondent. He has also placed reliance on the opinion of former judge of Gujarat High Court, wherein he has opined that due to failure on the part of the DHFL disbursing the complete loan amount, the Corporate Debtor has decided to repay the said loan back to the DHFL and therefore, the Corporate Debtor wrote letter to its sister concern RDPL seeking the assistance in the matter on 27.07.2020. On 18.02.2021, RDPL informed Corporate Debtor that an amount of Rs. 38,51,98,790/- was lying as credit in the account of DHFL. Thereafter, the RDPL has suggested that that above amounts was lying in the DHFL could be used by Corporate Debtor to settle its dues to DHFL. The relevant part of the opinion is reproduced below: 55. It is pertinent to refer to the letter dated 27.07.2020 by Corporate Debtor to RDPL, which states that the Corporate Debtor had got a sanction of Rs. 100 crores loan from DHFL. However, even after several reminder the DHFL has only disbursed an amount of Rs. 32,50,00,000/-....
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.... 01/06/2018 by DHFL have mentioned mortgage of the unsold flat till 38th Floor. Even the mortgage agreement executed between the company and DHFL have mortgage the unsold flat till 38th floor. c. Question arises As per the prevalent guidelines as the width of the road was less than 9 meters, the height of the building was restricted to 9th floor only. On what basis the mortgage till 38th floor was done when the building can be maximum of 9th floor only. The increase in the floor is directly related to the width of the road. The architect in its report has confirmed that still the width of the road is less than 9 meters and hence even today the height of the building cannot be more than 32 meters. The loan was sanction ignoring this main aspect of the project and the mortgage was done till 38th floor whereas the given current conditions the construction cannot be more than 9th floor. Dispute in the matter of the repayment of the Loan of Anuradha Real Estate Developers Private Limited * As stated earlier in the report, the loan which was sanctioned to the Corporate Debtor ARD....
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....Rs. 100.00 and did not possess the repayment capacity. 2) Violation of the terms and Conditions of the Sanction Letter: It can be seen from that the Corporate Debtor has not complied with the Terms and Conditions of the Sanction Letters. Apart from the Company it was also the responsibility of the DHFL to see that the Terms and Conditions of the Sanction letter are followed in true spirit. Opening of Escrow Account as per the Sanction letter was one of the critical requirements for the loan transactions in case of the company involved in the real estate development projects. Non opening of the escrow account is itself a red flag transaction. It is very surprising indeed DHFL being a financial institution have ignored this and have not forced for the opening of Escrow Account. 3) Disbursement of the Loan after the Account was classified as NPA: It has been observed that the account of Corporate Debtor was classified as NPA in November 2018 itself. The first loan disbursement was made on 11/06/2018 and the last disbursement was made on 10/04/2019 aft....
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....her than the one for which the loan was sanction. The funds have been transferred to other entitles which is strictly against the terms and conditions for which the loan was sanctioned. The loan amount seems to be deliberately allowed to be used for other than the work for which the loan was sanctioned, which is fraudulent in nature. 58. It is relevant to refer to the bank statements of Rite Developers Private Limited which records two entries on the same day namely disbursement by RTGS by Dewan Housing Finance Corporation Limited and a reverse entry of the same amount by RDPL, however, the counsel for the Applicant Piramal Capital & Housing Finance Limited disputed the claim that the monies were repaid by the RDPL. The internal communication marked between the Corporate Debtor and the RDPL was not marked to the applicant herein. Therefore, he claimed that in the books of accounts of Piramal Capital & Housing Finance Limited the liability of repayment of loan is still outstanding and hence has filed the present claim. 59. This bench notes that the Resolution Professional under section 18 of the Code is not empowered to adjudicate the claim of the Applicant herein and is bound....
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....43,00,000 26,23,00,000 Document 2 ANURADHA REAL ESTATE DEVELOPERS PVT. LTD. Notes forming part of Financial Statements for the period ended 31st March 2021 Note 2: Reserves and Surplus Reserves and Surplus As at March 31,2021 Amount in Rs. As at March 31,2020 Amount in Ren a. Surplus in Profit & Loss Account Opening balance (+) Net Profit/(Net Loss) For the current year (+) Excess Provision of Income Tax of earlier years (-) Transfer to Reserves Closing Balance Note 3: Non-Current Liabilities a. Long Term Borrowings Secured Particulars i Term Loan - DHFL (Refer Note 1) ii Inter Corporate Loans 232,970 237 326,952 (93,982) 232,970 232,970 Total 232,970 232,970 As at March 31,2021 Amount In Rs. 22,800,000 22,800,000 As at March 31,2020 Amount in Rs. 325,000,000 9,300,000 334,300,000 Total 22,800,000 334,300,000 Document 3 It appears that the querist has considered the above stand of PCHFL in light of the securitisation application filed by CD in the DRT, Mumbai, wherein, it is specifically averred that due to failure on the part of DHFL i....
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.... Ste Address: Royal Accord, CTS No.-1069/A/2, Vilege Malad, Near Gandhi Compound, Mind Spece, Off Chinahali Bunder fload, Malad (Well, Mund-400004 [email protected] Ac©©/ Document 5 Rite Developers Private Limited Exhibit-Y B. Salve INDI rite evolve GOVT. OF Ref: RF/General/02-01/2021 Date: 18th February, 2021 To, Anuradha Real Estate Developers Private Limited 1069, Balaji School, behind Evershine Mall Malad (West), Village Malad, Mumbai 400064 Dear Sir, Sub: Response to the mication Ref: Your Letter dated 27 July, 2020 for seeking assistance in reference to the Loan obtained from DHFL We, Rite Developers Private Limited received your letter dated 27 July, 2020 asking for the financial assistance, being your corporate guarantor we, hereby extend our support that our credit Amt Rs. 38, 51,98, 790/- (Rupees Thirty-Eight Crores Fifty One Locs Ninety Eight Thousand Seven Hundred and Ninety only) with DHFL can be adjusted unconditionally towards the loan amount availed by you Rs. 32,50,00,000/-/- (Rupees Thirty-Two Crore Fifty Lacs only) and acknowledge the longterm debt in accounts ....