AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (3) TMI 448
X X X X Extracts X X X X
X X X X Extracts X X X X
.... - III) in I.A. No. 1606/2021 in C.P. (IB) No.1348/ND/2019, whereby the Adjudicating Authority has directed the Resolution Professional ('RP') to exclude 205 Flats from the pool of the Assets of the 'Corporate Debtor'. 2. Facts in brief are that I.A.1606/2021 was preferred by the Applicants namely Nisus Finance and Investment Managers LLP (hereinafter referred to as 'Nisus Finance') and Beacon Trusteeship Limited (hereinafter referred to as 'Beacon') seeking the following reliefs: (a) direct the RP to amend the Information Memorandum so as to exclude 268 Flat Units in the Real Estate Project Casa Royal Sanskriti from the agents of the 'Corporate Debtor'. (b) declare that 268 Units which are Mortgaged in favour of the Appellants are within the exclusive charge of the Applicants, and hence not available to any other Creditor during the CIRP and further direct the RP, not to include these 268 Flats in the pool of the 'Corporate Debtor'. 3. It was averred that Nisus Finance and Beacon are 'Financial Creditors' and claim their rights by virtue of the Debenture Trust Deed ('DTD') dated 13.06.2017, executed between Nisus Finance as facility Agents/Debenture Holders....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2018, in favour of Beacon as Mortgagee collectively mortgaging 268 Units and transferred all rights, title and interest in relation to the said units to Beacon and further created as an exclusive charge of the Mortgage Properties by way of various Mortgage Deeds in favour of Beacon which was acting for and on behalf of the Debenture Holders. 5. It is stated that the RP in the Information Memorandum included these 268 Flat Units receivables thereof, when Nisus Finance objected to the same vide, email dated 04.02.2021 and the RP in his Reply dated 20.02.2021 sought for the relevant Clause from the Guarantee Deed, creating Mortgage pledge and hypothecation. Nisus Finance responded to the email and provided BBAs and the Power of Attorney and the mentioned the relevant Clauses of 9.1 and 9.6 of the DTD. While so, the RP vide email dated 01.03.2021 denied the transaction between the 'Corporate Debtor' and EIPL as well as the charge in favour of Nisus. The Adjudicating Authority while allowing the Application preferred by Nisus and Beacon framed the following issues and observed as hereunder: "11. The moot questions which emerge from the above pleadings are as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y when all the documentation indicate full agreed consideration having flown between CD and Applicant herein in terms of DTD, Mortgage Deed etc. 13. In view of the above findings, this Tribunal hereby allows the IA on following terms: i) Out of 268 flats, 205 flats shall be considered as being under exclusive control and rights of Applicants and the same shall not form part of the Information Memorandum (IM) and rest of 63 flats for which no Mortgage Deed was registered, no charge filed with RoC and not registered with Sub-Registrar, shall continue to remain part of the IM. ii) The voting rights of Applicant No. 1 as secured 'Financial Creditor' herein in the CoC shall be reduced by the amount of the value aforesaid 205 flats. iv) The RP is directed to issue appropriate amendment to the IM immediately for information of all concerned." 6. Submissions of the Learned Sr. Counsel, Mr P. Nagesh appearing on behalf of the Appellants/Resolution Professional of the 'Corporate Debtor': * Learned Sr. Counsel, Mr P. Nagesh submitted that the relationship of the 'Corporate Debtor' and the Issuer Company is disputed and submitted that the Issuer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts outstanding to Debenture Holders. As per Clause 14 of the DTD, the Respondent shall release the security in favour of relevant obligers or as they may direct. * The 'Corporate Debtor' also executed Offer Purchase Agreement that the Issuer Company/EIPL to buyback the Flats sold to the Issuer Company at a price of Rs.1,250 per square foot at a Minimum Guarantee Price of Rs.2,500 per square foot and the buyback period coincides with the redemption schedule of the Debentures. It is submitted that no man of ordinary prudence would enter into a transaction of sale and purchase involving a loss of Rs.69.67Crs./-. * It is argued that a conjoint reading of the Offer Purchase Agreement and the Escrow mechanism, the money is going back from the 'Corporate Debtor' to the Respondent even without any default made by the Issuer Company. Hence the circle of incoming and returning of funds is complete which clearly establishes that the amount received from the Issuer Company is a 'loan' and not a Sale Consideration. * Clauses 4 & 9 of the DTD are contradictory to each other and if two constructions are possible, the one which gives effect to all the Clauses of the doc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Learned Sr. Counsel appearing on behalf of the Respondents: * Learned Counsel submitted that on 13.06.2017, DTD was executed between EIPL. Issuer Company on the Nisus Finance as facility Agent/Debenture Holder and Beacon as a DTD and EIPL, the 'Corporate Debtor', herein in the capacity of the Corporate Guarantor for the purpose of raising funds to the Issuer Company. Learned Counsel placed reliance on the Clauses 9.1, 9.1.1, 9.1.7 of the BBAs, on the details of the Mortgage Premises and '151 Units' as defined in the first DTD. * On 20.12.2018, DTD was amended including 54 Units as additional area of units. On 24.12.2018, in the second amendment to the DTD, 63 Units defined in Clause 2.9 was included. * On 13.06.2017, Offer Purchase Agreement was executed between the Issuer Company, the 'Corporate Debtor', the Promoters of the 'Corporate Debtor' and Earthcon Constructions Private Limited, whereby the 'Corporate Debtor' undertook to buyback the units from the Issuer Company, which reinforces the existence of BBAs entered into between the 'Corporate Debtor' and the Issuer Company. It also establishes that the ownership of the units is vested with the EIPL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Supreme Court in 'Embassy Property Developments Private Limited' Vs. 'State of Karnataka & Ors.' 2019 SCC OnLine SC 1542, in support of his case. * Learned Counsel, Mr. Sinha submitted that RP is bound by the contracts entered into the 'Corporate Debtor' and that these contracts cannot be interfered with by the Adjudicating Authority. The RP ought to have challenged the documents of transferring the 268 Flats to EIPL and cannot simpliciter include the same in the Information Memorandum as inventory of the 'Corporate Debtor'. * The BBAs can be relied upon by the Respondents which prove that these 268 Flats are not the Assets of the 'Corporate Debtor'. Registered Mortgage Deed dated 16.06.2017, 05.12.2017 and December 2018, executed by EIPL and 'Corporate Debtor' as Mortgagor and co-Mortgagor collectively create first and exclusive charge over the said 268 Units in favour of Respondent 2 to secure repayment of entire outstanding amount owed to the Respondents. The sub-Registrar could not have registered the Mortgage Deeds if the title of EIPL/Mortgagor for the Units was not perfect or if EIPL did not have the title. The BBAs entered into between the 'Corporate Debto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ised Representative of the 'Financial Creditor' in class (Homebuyers) in the Committee of Creditors ('CoC') of the 'Corporate Debtor', aggrieved by the Impugned Order dated 23.07.2021 passed by the Learned Adjudicating Authority in I.A. No. 1606/2021, whereby the Adjudicating Authority on basis of DTD, Mortgage Deed and Deed of OPA has directed the RP to exclude 205 Flats from the Assets of the 'Corporate Debtor'. B. Submissions of the Learned Counsel appearing on behalf of the Homebuyers in 736/2021: * It is submitted that the Homebuyers constitute 70% of the Voting Rights in the CoC; and Respondents 1 & 2 have connived with the 'Corporate Debtor', the erstwhile Director of the 'Corporate Debtor', the Issuer Company who are signatories to the DTD dated 13.06.2017 and the amendments dated 20.12.2017 and 24.12.2018, diverting the hard earned money of the Homebuyers; that in the garb of Financial Transactions, Rs.52.5Crs./- was routed through the Issuer Company purportedly executing a number of documents including DTD, amendments, BBAs, Mortgage Deeds, Offer to Purchase Agreement, Corporate Guarantee etc., and the Adjudicating Authority did not consider whether these 268 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered in accordance with Section 17 or by any provision of the Transfer of Property Act, 1882, or any other law for the time being in force. * It is submitted that money i.e., Rs. 51.75Crs./- paid by the Issuer Company (EIPL) to the 'Corporate Debtor' is a loan because of the following reasons: As per Offer Purchase Agreement the 'Corporate Debtor' was liable to buyback the Flats @ Rs.2500+GST per sq. ft. to repay the secured obligations of the ElPL as against the ostensible sale price of Rs. 1150 + GST per sq. ft. The properties of more than Rs. 115.50Crs./- were ostensibly sold as ostensible Sale Consideration of Rs. 51.75Crs./- which is equivalent to 44% of total value of property which shows the Margin Money of loan of Respondents. The Respondents were having change over the debtors/receivables of the Corporate Debtor via Escrow Agreement. And as per Escrow Agreement the net receivables of 'Corporate Debtor' were required to be deposited in Escrow Account to repay the secured obligations. The Corporate Debtor directly exposed itself to the liabilities of the EIPL whereas in Sale Consideration from other Homebuyers the 'Corporate Debto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The Respondent No. 1 provided funds to EIPL which was incorporated on 19.02.2015 and at the time of issue of Debentures, has not even started its business operations. EIPL was a shell company and it raises question on the business model of Respondent No. 1 as whether any entity can sanction such a significant amount without any proper due diligence. There has been non-compliance of the basic terms and condition of the Debenture Trust Deed since the funds given by EIPL are only towards the construction of the units to be purchased by EIPL but the funds have been utilized to the tune of Rs. 23.87 Crores for the repayment of loan from Punjab & Sind Bank. The 205 Units of the Corporate Debtor have been mortgaged in accordance with Debenture Trust Deed to secure the amount paid by EIPL to the Corporate Debtor. However, the amount received from EIPL as per terms of Debenture Trust Deed is not a loan amount but is only an advance for the purchase of units. Since the basic terms and condition for utilization of funds have not been complied with, there should be no amount payable to Respondent No. 1. The transaction of Respondent No. 1 with EIPL and 'Corporate Debtor' is p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is submitted that the Auditors had recommended that the Mortgage of the 205 Flats ought to be set aside and included in the inventory of the 'Corporate Debtor' and that the BBA has no debt on the Agreement. * In the 8th Meeting of the CoC concluded on 03.05.2021, the Resolution Plan given by Ms. Saya Homes Private Limited ('Saya Homes') along with Saya Buildcon Consortium Private Limited and Roseberry Developers Private Limited was duly approved with 91% Affirmative Votes and the Respondent No. 1 had also voted in favour of the Resolution Plan. This Resolution Plan was based on the Information Memorandum dated 14.01.2021 prepared by the RP and is therefore binding on all concern. Once having given their consent, Respondents 1 & 2 could not have been allowed to question the Information Memorandum. * Most of the Sanskriti Buyers have paid the amount in full and are in physical possession of the Flats. It is submitted that out of the 57 Flats belonging to Sanskriti Project which purportedly have been mortgaged in favour of Respondents 1 & 2, most of them have been sold to the Members of the first Appellant in a surreptitious manner without even disclosing any of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....* It is submitted that the Information Memorandum, was within the knowledge of the Respondents and the Resolution Plan drawn on the strength of this Information Memorandum and providing for inclusion of these units, in the corpus of the 'Corporate Debtor', was tabled for approval in the 8th CoC Meeting, concluded on 03.05.2021 and therefore is final. * The alleged sale through execution of the BBA and the irrevocable Power of Attorney is fraudulent. It is submitted that the challenge in these Appeals is not to these documents but the Claim of Transfer of Title under them. The exclusion of units from the corpus of the 'Corporate Debtor' on the ground of Mortgage, during the pendency of the CIRP is against the provisions contained in Section 14 of the Code which prohibits any action to foreclose, recover or enforce in the Security Interest created by the 'Corporate Debtor'. * The BBAs were executed way back in January 2013-2014 with the possession due to be given within 36 months from there. At a time when it was defaulting in handing over the possession, the CIRP of the 'Corporate Debtor' came to be orchestrated by the Respondents in conclusion with the Promoters o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Guarantee or execute other documents. The recitals in DTD do not portray the correct picture and Clause 4 contradicts with Clause 9 of the DTD. Sale Consideration is never required to be returned back whereas Clause 9 of DTD makes the 'Corporate Debtor' liable to pay the secured obligations received by the 'Corporate Debtor' as alleged Sale Consideration of 200 Flats. * On 29.04.2017, 'Corporate Debtor' executed the Offer Agreement with the Issuer Company to buyback the Flats sold to the Issuer Company at (Rs.1,250 per square feet) at Minimum Guaranteed Price of Rs.2,500 per square foot. Therefore, the amount mentioned in the BBA is a loan to the 'Corporate Debtor' and not a Sale Consideration. Comp. App. (AT) (Ins.) No. 912/2021 A. This Appeal has been preferred by Homebuyers Mr. Rajesh Kr. Bhandula & Ors., aggrieved by the Impugned Order dated 23.07.2021 passed in I.A. 1606/2021 on the ground that they were not made parties to the Application. B. Submissions of the Learned Counsel appearing on behalf of the Mr. Bhandula & Ors./Homebuyers: * It is submitted that the Adjudicating Authority has not taken into consideration that the Resolution Plan was ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the first Appellant as a 'Secured Financial Creditor' in the CoC be reduced by the amount of 205 Flats held to be as the exclusive Asset of the Appellant and outside the scope of the Information Memorandum. Therefore, this Appeal is limited to the reduction of Voting Rights and balance 63 Flats excluded as being Assets of the 'Corporate Debtor'. B. Submissions of the Learned Sr. Counsel appearing on behalf of the Appellants: * Learned Sr. Counsel Mr. Krishnendu Datta submitted that I.A. 1606/2021 was filed seeking exclusion of 268 Flats from the pool of the 'Corporate Debtor' based on the documents executed namely the DTD, the BBAs, the Mortgage Deeds and the Offer Purchase Agreements. The Adjudicating Authority has held that 205 Flats were not within the pool of this 'Corporate Debtor' and directed the RP to exclude the same and hence this Appeal is limited to whether the Adjudicating Authority was justified in not including the Balance 63 Flats and also in reducing the Voting Rights. * Learned Counsel Mr. Shikhil Suri submitted that the security has no co-relation to the Voting Rights and drew our attention to the DTDs and the amended Deeds and submitted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s shall be fully paid up." "9.1.9 Power of attorney ("Registration PoA") executed by the Obligor 3 in favour of the Company, Facility Agent or any of their nominees granting all the requisite powers to have (i) the BBAs and conveyance deeds executed pursuant thereto, registered with the applicable authorities and take on record the sale of the Units; (ii) execute the conveyance deeds for the Units in favour of itself for its nominees." "9.3 The Debenture Trustee shall have the power, subject to obtaining prior approval of the Facility Agent (on behalf of all Debenture holders), to agree to the substitution or release of any property charged in their favour upon such terms and conditions as the Facility Agent (on behalf of all Debenture Holders) may deem fit." "9.6 The Obligor 3 states that it has availed of a facility of Rs.100,00,00,000/- (Rupees One Hundred Crore only) from CF lender and has opened the Obligor 3 Escrow Account under the terms of availing such facility. In addition to the Security mentioned above the Parties shall also create a first charge on the Obligor 3 Current Accounts such that 10% (ten per cent) on the amounts transferred to the O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....applicable for use of parking space, if any, club membership charges, and preferential location charges, if any. The aforesaid consideration includes the amount of Service Tax and all other applicable taxes. It has been agreed between the Parties hereunder that the aforesaid consideration is the final amount payable towards the transfer, possession and handover of a particular Unit and car parkings along with all approvals and rights of the said Unit to the Company and the Company shall not be responsible to pay any other amount to the Obligor 3 in any manner, whatsoever." 13.2 GRANT AND TRANSFER, CONVEY, ASSIGN, ASSURE In consideration of the Debenture Holders subscribing to the Debentures, the Company and Obligor 3 jointly and/or severally ("Mortgagors") hereby creates a charge and mortgage on the assets prescribed." * The number of Flats mortgaged is 151. Second Debenture Deed was executed on 20.12.2017 and the number of Flats Mortgaged is 149. * The third Mortgage Deed for covering Rs.30Crs./- is an unregistered one. * Offer to Purchase Agreement substantiates that it is a Sale Consideration amount and not a Loan Amount. * O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ention to Clause 9 dealing with 'Security', which is reproduced as hereunder: "9. SECURITY 9.1 The Obligors hereby agrees that the Outstanding Amounts shall be secured by" 9.1.1 First ranking exclusive charge by way of a registered English mortgage over the Mortgaged Premises (as defined hereunder). It is agreed by and between the Parties that the first and exclusive charge created on the Mortgaged Premises and the Company and the Co-Mortgagor agrees and covenants to undertake all necessary statutory and corporate actions to give effect to the same; 9.1.2 An Escrow Agreement which grants the first and exclusive charge on the (a) Escrow Account (including the DSRA) opened under the terms of the Escrow Agreement; (b) all rights, title, benefit and interest in the Escrow Account; and (c) the amounts deposited or to be deposited in and forming part of the Escrow Account including the Receivables; 9.1.3 Unconditional and irrevocable corporate guarantee from Obligor 1 and Obligor 3 in favour of the Debenture Trustee ('Corporate Guarantee"); 9.1.4 Unconditional and Irrevocable Personal Guarantee from the Personal Guarantors in favour o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....1.1 First ranking exclusive charge by way of registered English mortgage over the mortgaged premises (as defined hereunder). It is agreed by and between the parties that the first and exclusive charge created on the Mortgaged premises and the Company and the Co Mortgagor hereby agrees and convenants to undertake all necessary statutory and corporate actions to give effect to the same." 12. Recital 3 of the Mortgage Deed, which the Respondent/Nisus Finance and Beacon claim that all rights, title and interest in the Mortgage premises is transferred to them, is reproduced below: "3. One of the conditions of the DTD is that the Mortgagors shall collectively mortgage the Units (as defined hereinafter) and along with the same transfer all rights, title and interest in relation to the same and create an exclusive charge by way of registered mortgage of the Mortgaged properties (as defined below) in favour of the Mortgagee, acting on behalf of and for the benefit of the holders of the instruments issued under the terms of the DTD." 13. Section 58 of the Transfer of Property Act 1882 which defines English Mortgage and relied upon by both the Parties is detailed as hereunder:....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... units without executing any registered instruments. It is seen from the record that Homebuyers had valid BBAs executed with the 'Corporate Debtor' way back in 2013-14, as per the terms of which, the possession was to be delivered within 36 months from the date of execution of the BBA. Admittedly, the 'Corporate Debtor' did not complete the project, during which period the CIRP was initiated. 16. At this juncture, we place reliance on paras 15, 16 - 20, 23 & 24 of the Judgement of the Hon'ble Supreme Court in 'Suraj Lamp & Industries Private Limited' Vs. 'State of Haryana & Anr.' (2009) 7 SCC 363, in which the Hon'ble Supreme Court has observed as follows: "15. The Registration Act, 1908 was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration. 16. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sclosing them as assets held. (c) Purchasers who want to avoid the payment of stamp duty and registration charges either deliberately or on wrong advice. Persons who deal in real estate resort to these methods to avoid multiple stamp duties/registration fees so as to increase their profit margin. 20. Whatever be the intention, the consequences of SA/GPA/will transactions are disturbing and far-reaching, adversely affecting the economy, civil society and law and order. Firstly, it enables large-scale evasion of income tax, wealth tax, stamp duty and registration fees thereby denying the benefit of such revenue to the Government and the public. Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby encouraging circulation of black money and corruption." .............................................................................. "23. Any process which interferes with regular transfers under deeds of conveyance properly stamped, registered and recorded in the registers of the Registration Department, is to be discouraged and deprecated. The present case is a typica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and not in estate. No privity in estate can be deduced therefrom which can bind the estate, as is the position in cases of mortgage charge or lease. Of course, such personal right created against the vendor to obtain specific performance can ultimately bind any subsequent transferee who obtains transfer of the property with notice of the agreement of sale. (See in this respect AIR 1967 SC 744, Ram Baran Prasad v. Ram Mohit Hazra)." 18. It is also seen from the record that the Purchase Price mentioned in the BBA was calculated on the basis of Clause 9.1 of the DTD which specifies that the Purchase Price would be 33% of the value of Flats i.e., Rs.1,250 per square foot and will have the margin of 66% in favour of the Debenture Holders and adopting a similar Modus Operandi for 200 Flats, the 'Corporate Debtor' received an amount of Rs.51.79Crs./- from EIPL as against the fair value of the property which is Rs.15.5Crs./-. It is the case of the RP that the deed of Rs.63.75Crs./- represents the Margin Money which is clearly corroborated in Clause 9.8. The Offer to Purchase Agreement executed by the 'Corporate Debtor' with the Issuer Company to buyback the Flats sold to the Issuer Comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... nature of transactions involved herein and the contention of the 'Corporate Debtor' that the amount involved is a Sale Consideration and not a loan and the argument of M/s. Nisus Finance and Beacon Trusteeship Limited that right, title and interest of 268 Flats rests with them, we are of the considered view that this is a fit case for the 'Corporate Veil' to be lifted, to the extent to see the 'Nature of Transaction' whether 'loan' or 'Sale Consideration' as contended by the Appellant as laid down by the Hon'ble Supreme Court in 'Arcelormittal India Private Limited' Vs. 'Satish Kumar Gupta & Ors.' (2019) 2 SCC 1. 21. The Hon'ble Apex Court in a catena of Judgements has laid down that the Courts must see the real intent of the parties towards documents/transactions. The Learned Counsel for the Resolution Professional drew our attention to the copy of the Net Worth Certificate of the Issuer Company which shows that the Issuer Company did not have any independent source of income and also did not have any asset base to redeem the Debentures. The Issuer Company had a net worth of Rs.68,800/- only and has common Shareholders and Directors with the 'Corporate Debtor'. The Hon'ble Ape....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the security of the goods. If there is a bona fide and completed sale of goods, evidenced by documents, anterior to and independent of a subsequent and distinct hiring to the vendor, the transaction may not be regarded as a loan transaction, even though the reason for which it was entered into was to raise money. If the real transaction is a loan of money secured by a right of seizure of the goods, the property ostansibly passes under the documents embodying the transaction, but subject to the terms of the hiring agreement, which become part of the buyer's title, and confer a licence to seize. When a person desiring to purchase goods and not having sufficient money on hand borrows the amount needed from a third person and pays it over to the vendor, the transaction between the customer and the lender will unquestionably be a loan transaction. The real character of the transaction would not be altered if the lender himself is the owner of the goods and the owner accepts the promise of the purchaser to pay the price or the balance remaining due against delivery of goods. But a hire-purchase agreement is a more complex transaction. The owner under the hire-purchase agreement ente....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se, keeping in view the flow of funds, the nature of transactions, the amended DTD, the Term Sheets and the entire material on hand, this Tribunal is of the earnest view that the amount received from the Issuer company is a 'Loan' and not a Sale Consideration and the BBAs executed are secured documents. 24. It is the case of the RP that as on the date of the said email dated 20.02.2021 none of the BBAs were made available with the Resolution Professional. It is a fact that this amount was included as a 'loan amount' in the Balance Sheet of the 'Corporate Debtor Company' but it is the case of the 'Corporate Debtor Company' that this was a genuine error. 25. Be that as it may, as per the provisions of the Code, the Information Memorandum is required to be prepared on the basis of Assets as recorded in the Balance Sheet of the 'Corporate Debtor'. 26. The decisive issue which arises for consideration in these Appeals is whether after having voted in favour of the Resolution Plan, M/s. Nisus Finance/the 'Financial Creditor' is empowered under the Code to seek a direction to the Resolution Professional to amend the Information Memorandum, based on which the Resolution Plan has b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto." 27. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganisation and insolvency resolution of corporate debtors. Unless such reorganisation is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximisation of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imelines within which the Resolution Process is to take place and that it is a beneficial Legislation which aims to put the 'Corporate Debtor' back to its feet maximising the interest of all Stakeholders and is not a mere recovery Legislation. This Tribunal in 'Kalinga Allied Industries India Private Limited' Vs. 'Committee of Creditors (Bindals Sponnge Industries Limited) through Punjab National Bank & Anr.' 2022 SCC OnLine NCLAT 1618, has reiterated the importance of timelines and the effect of CoC seeking withdrawal of an already approved Resolution Plan which would have identical repercussions to the findings given by the Hon'ble Apex Court in 'Ebix Singapore Pvt. Ltd.' Vs. 'Committee of Creditors of Educomp Solutions Limited' 2021 SCC OnLine SC 707, in which the Hon'ble Apex Court discussing modifications and withdrawals by Successful Resolution Applicant ('SRA') has observed as follows: "244. The residual powers of the Adjudicating Authority under the IBC cannot be exercised to create procedural remedies which have substantive outcomes on the process of insolvency. The framework, as it stands, only enables withdrawals from the CIRP process by following the procedure ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anner that enables the appellants' desired course of action, it is wholly unclear on whether a withdrawal of a CoC-approved Resolution Plan at a later stage of the process would result in the Adjudicating Authority directing mandatory liquidation of the Corporate Debtor. Pertinently, this direction has been otherwise provided in Section 33(1)(b) of the IBC when an Adjudicating Authority rejects a Resolution Plan under Section 31. In this context, we hold that the existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved Resolution Plans, at the behest of the successful Resolution Applicant, once the plan has been submitted to the Adjudicating Authority. A Resolution Applicant, after obtaining the financial information of the Corporate Debtor through the informational utilities and perusing the IM, is assumed to have analyzed the risks in the business of the Corporate Debtor and submitted a considered proposal. A submitted Resolution Plan is binding and irrevocable as between the CoC and the successful Resolution Applicant in terms of the provisions of the IBC and the CIRP Regulations. In the case of Kundan Care, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....per the statutory Scheme contained in Regulation, the Information Memorandum must be prepared and circulated to the Members of the Committee of Creditors prior to issuance of Form-G, which was done in the instant case. There are no substantial reasons given by the 'Financial Creditor' for being a part of the CoC and having approved the Resolution Plan to challenge at this belated stage the contents of the Information Memorandum. 32. The Hon'ble Apex Court in 'Ngaitlang Dhar' Vs. 'Panna Pragati Infrastructure Private Limited & Ors.' Civil Appeal Nos. 3665-3666/2020, has observed as follows: "31. It is trite law that 'commercial wisdom' of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by the IBC. It has been consistently held that it is not open to the Adjudicating Authority (the NCLT) or the Appellate Authority (the NCLAT) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) of the IBC. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce to timelines as laid down by the Hon'ble Apex court in a catena of Judgements. It is relevant to mention that 'the 'Financial Creditor' Nisus Finance participated in all the CoC Meetings being the Secured Creditor and having the maximum Voting Rights. Secondly, after attending several CoC Meetings and having approved the Resolution Plan proposed by Saya Homes, Nisus Finance preferred an Application for enforcing it Security Interest under Section 60(5) of the Code. 34. Letter of Intent dated 07.05.2021 is reproduced as hereunder : 35. The Resolution Applicant/M/s. Saya Homes sought to intervene in I.A.2510/2021 and submitted that the Adjudicating Authority itself has concluded that the documents were executed to create Security Interest of the Respondent over 205 Flats of the 'Corporate Debtor' and that the Resolution Professional has collated the Claim of the Respondent as Secured Financial Creditors, pursuant to which the Respondent participated in various CoC Meetings having maximum Voting Share. 36. The Minutes of the proceedings of the 8th Meeting of the CoC admittedly attended by the 'Financial Creditors' M/s. Nisus Finance Investment Manager LLP shows the result ....