TaxTMI 
TaxTMI 
2023 (12) TMI 1322
X X X X Extracts X X X X
X X X X Extracts X X X X
....021 under Sections 213 and 221 of the Companies Act, 2013 r/w Rules 11 and 74 of the National Company Law Tribunal Rules, 2016 seeking a direction for investigation into the affairs of the Company, namely, M/s. Vikram Structures Pvt. Ltd. and those of the related parties. 2. Brief facts of the case as stated by the Petitioners are as under: (1) On 29.09.2008 M/s. Vikram Structures Pvt. Ltd. was incorporated as a private company limited by shares by Mr. Vikram Prabhakar and his wife Mrs. Asihwarya Gummanreddy Byrareddy. (2) During the year 2013, the Company entered into an arrangement with owners of a parcel of land measuring 41,702.873 Sq. ft. at Municipal Khatha No. 71/650/B, Hebbal, Bengaluru - 560024 (hereinafter referred to as the 'said land') to develop a commercial building upon the same. Accordingly, on 11.09.2013 the Company on the one hand and the Owners of the Land i.e., Mr. B.N. Narayanaswamy, his wife Mrs. Rukminiyamma, his daughters Dr. B.N. Pavittara and his two sons namely Mr. B.N. Praveen and Mr. B.N. Rakesh (hereinafter collectively referred to as the "Owners") on the other executed a Joint Development Agreement, as per which the Company was to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to the Flat (in Sq. ft.) 1. Ground Floor - Southern Portion 6262.88 1589.24 2. 1st Floor - Northern Side 6224.45 1579.60 3. 2nd Floor - Southern Side 7427.87 1884.91 4. Entire 5rd Floor 14855.00 3770.07 5. Entire 6th Floor 14855.00 3770.07 6. Entire 9th Floor 13014.00 3302.84 7. Entire 10th Floor 13014.00 3302.84 8. 11th Floor - Northern Portion 6507.23 1651.42 Total 82216.30 20851.00 Thus, according to the Agreement between the Company and the Owners of the Land, the Company has the right to sell a maximum area of 82,216.30 Sq. Ft. out of the entire built-up saleable area of 1,64,432.60 Sq. Ft. (4) It is stated that with start of the Project, the Company through its Directors Mr. Vikram Prabhakar and Mrs. Aishwarya G.B., Mr. Manjunath Ravindra and other Directors of the Company started allotting and selling the Property in the Project to different Buyers of Commercial Units available on the said Project. Accordingly, the Company through its Directors convinced many buyers including the Petitioners herein to purchase the commercial property in the said Projec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... so the ignorant buyers do not sense that they are being defrauded. To give their plan a realistic picture so cheating and defrauding of the buyers becomes easy and the buyers do not doubt genuineness of the claim of the Company, through its Directors namely Mr. Vikram Prabhakar, Mrs. Aishwarya G.B. and Mr. Manjunath Ravindra, the Owners of the land and R-16: M/s. Innovent Spaces Pvt. Ltd. entered Agreement for Lease dated 12.10.2018 wherein the former two Parties are undersigned as the Lessors and the latter is undersigned as the Lessee. The said Lease Agreement was signed for a period of 20 years with a lock in period of 5 years in which the Lessee had to agree to take on long term lease, the Ground Floor, the 1st, 2nd, 3rd, 4th, 5th and 6th Floor (office space) and 100 (one hundred) covered car parking spaces at Basement-1 and Basement-2, having total chargeable area of approximately 79,804 Sq. Ft. However, this exercise was done not to do real business but to merely to given an impression to Buyers that the Property which they are purchasing has fixed income for next 20 years. (8) R-16 by executing an Agreement to Lease in respect of the Project building and also put i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are siphoned off from the accounts of the Company to its Directors and other entities including other Respondents herein. R2 to R4 collected huge amount by committing fraud upon the buyers by selling non-existent property by mentioning only area of the Units and the Floor where it is located and executed Agreement to Sale and Sale Deeds accordingly. Because of this, multiple sales of the same Property are committed and the said Respondents successfully sold more area than the area available in the Property. The magnitude of fraud is that the money collected from buyers is more than Rs.200 Crores. (12) It is also stated that the affairs of the Company have not been conducted to do real estate business as mentioned in the Memorandum of Association but to collect huge amounts and thereafter to siphon them off. The Company and its Directors having malicious intention to cheat and defraud the purchasers have not only sold the area of 2,43,037 Sq. Ft. instead of 82,216.30 Sq. Ft. area available for sale, and collected money as stated supra. The money and assets of the Company have been so diverted that it is left with no funds to settle the claims of its Creditors, in case the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Agreement dated 11.09.2013 executed between the owners of the Project Land and Respondent No. 1 Company iii. Power of Attorney dated 11.09.2013 executed by the owners of the Project Land in favour of the Director of the R-1 Company iv. Supplementary Agreement dated 05.02.2015 executed between the owners of the Project Land and Respondent No. 1 Company v. Assignment Agreement dated 26.07.2019 executed between the R-1 and M/s. Project Crafts Solutions vi. Lease Agreement dated 12.10.2018 executed between the R-1 and M/s. Innovent Spaces Pvt. Ltd. vii. Order dated 27.04.2019 passed by the Ld. City Civil and Sessions Judge Bengaluru in OS No. 3301 of 2019 viii. Copies of Agreements to Sale entered into between Harshan Goodwin Hector, Tahera Iqbal, Arthi Ravi & Shailendra Ravi, Meghana T.V., Ramesha A.V. and M/s. Vikram Structures Pvt. Ltd. ix. Sale Deeds executed in favour of Harshan Goodwin Hector, Tahera Iqbal, Arthi Ravi & Shailendra Ravi, Meghana T.V., Deepa Narasimha Nayak, Ramesha A.V. and M.N. Vijai. x. Lease Agreement dated 12.10.2018 executed between R-1 and M/s. Innovent Spaces Pvt. Ltd. xi. Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lic announcement on 25.02.2022, the RP received claims from various stakeholders including those of the Petitioners herein, the details of which are as under: Sl. No. Name Claim Submitted (Yes/No) Amount (Rs.) Admitted or Not admitted 1. Ms. Tahera Iqbal Yes 1,35,78,071 Not admitted (since a sale deed holder) 2. Mr. Harshan Goodwin Hector Yes 1,29,62,324 Not admitted (since a sale deed holder) 3. Shailendra Ravi Yes (Jointly with Ms. Arti Ravi) 1,85,48,692 Not admitted (since a sale deed holder) 4. Deepa Narasimha Nayak Yes 1,36,79,025 Not admitted (since a sale deed holder) 5. Meghana T.V. Yes 1,47,87,557 Not admitted (since a sale deed holder) 6. Ramesha A.V. Jointly withMs. Vinutha 76,63,307 Not admitted (since a sale deed holder) 7. M.N. Vijay Yes 1,22,49,536 Not admitted (since a sale deed holder) Total 9,34,68,512 (d) As seen from the above, the claims of the Petitioners were rejected since they are Sale Deed holders. The Petitioners are homebuyers who have got executed Sale Deeds in respect of the Properties purchased by them and as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2022 have opted to liquate the Corporate Debtor and in this regard an application bearing IA No. 526 of 2022 seeking an order for liquidation has been filed. When the CoC has already decided on the next course of action in the insolvency process of R-1, the Petitioners cannot now try and enter into the CIRP of the R-1 Company. (h) It is contended that CIRP of R-1 has rapidly progressed and stakeholders whose claims have been admitted are now seeking to proceed with the next step in insolvency to recover their claims. At this stage, an order for investigations into the affairs of R-1 will disrupt the entire flow in CIRP. The entire conduct of Petitioners shows that they are seeking to subvert the waterfall mechanism u/s 53 of the Code. (i) Further, it is contended that Sec.238 of the Code would override anything inconsistent contained in any other enactment including the Companies Act, 2013. If orders under the Companies Act, 2013 were allowed to go through, it would come in direct conflict with Section 238 as well as Sections 15, 17, 18 and 25 of the Code. The omnibus provision u/s 14 of the Code would also be hit. Therefore, it is beneficial to give the Code an ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nto a PG Accommodation and that their address is not known. Therefore, the Petitioner adopted substituted service through paper publication on 23.09.2022 in 'Indian Express', English Edition and 'Kannada Prabha', Kannada Edition, and thus, service of notice through substituted mode is complete. Therefore, service of notice is complete on all the Respondents. 8. On perusal of records, it is seen that the Petitioners herein are the buyers of real estate units in the project namely 'VSPL Pinnacle' situated in Bengaluru developed by R-1 Company, namely, M/s. Vikram Structures Private Limited. This project is developed by the Company in furtherance of a Joint Development Agreement dated 11.09.2013 executed between the Company and the Owners of the Land, namely, Mr. B.N. Narayanaswamy, his wife Mrs. Rukminiyamma, his daughter Dr. B.N. Pavithra and his two sons namely Mr. B.N. Praveen and Mr. B.N. Rakesh (collectively referred to as the 'Owners'). In terms of the said Joint Development Agreement, the R-1 Company was to develop a commercial building on the said land at its cost and expense and in lieu thereof was to get 50% of the built up area in the said Building and right to sell the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such fact to the knowledge of the Buyers. The Owners knowing the facts that the Company is executing fraudulent Sale Deeds in violation of interim orders never took any action against the Company. The owners of the land to help the Company in defrauding the buyers withdrew the suit on 02.10.2020 leaving the units buyers completely unaware of frauds being committed upon them. The buyers of the units came to know about the injunction order of the Court only subsequently when the owner filed two suits against the Company, its Director and unit buyers including the Petitioners herein when they received summon of the Suit along with documents relied upon in the said Suit. In view of the irregularities listed above and the allegations, the Petitioners have sought direction for the investigation into affairs of the Company and related parties under Section 213 of the Companies Act, 2013. 10. It is apt to refer Section 213 of the Companies Act, 2013 which is reproduced hereunder: "213. Investigation into company's affairs in other cases. The Tribunal may,- (a) on an application made by- (i) not less than one hundred members or members holding not less....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t and the person or persons concerned in the formation of the company or the management of its affairs shall be punishable for fraud in the manner as provided in section 447." 11. The Seven Petitioners who filed the instant Petition are the Buyers in the Property, namely, 'VSPL Pinnacle'. As per the Sale Deeds/Agreement to Sell of the Petitioners enclosed with the Petition, the following details are observed: Sl. No. Date of Execution Purchaser Sub Reg. Doc No. Sale Consideration (Rs.) Floor No. Area Sq. Ft. UDS Sq. Ft. 1. 27.11.2019 Mrs. Arthi Ravi & Mr. Shailendra Ravi HSR-1-02804-2019-20 57,00,000 GF 1000 125 2. 21.08.2019 Mrs. Deepa Narsimha Nayak GNR-1-02119-2019-20 57,00,000 2 1000 250 3. 03.10.2019 Mrs. Meghana T.V. GNR-1-02871-2019-20 60,00,000 5 1000 250 4. 18.06.2020 Mr. M.N. Vijai HSR-1-01180-2019-20 60,00,000 6 1000 250 5. 13.12.2019 Mr. Ramesha A.V. HSR-1-02956-2019-20 27,29,245 6 500 125 6. 09.07.2014 Mr. Ramesha A.V. & Mrs. Vinutha H.S. BYP-1-01421-2014-15 35,00,000 6 500 125 7. 30.12.2019 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s alleged that the R-1 Company through its Directors, namely, Mr. Vikram Prabhakar, Mrs. Aishwarya G.B. and Mr. Manjunath Ravindra, the Owners of the Land and R-16: M/s. Innovent Spaces Pvt. Ltd. created a 'Lease Agreement' showing the first two Parties as Lessors and R-16 as the Lessee. This document was made to create a fake impression of non-existent rental assurances with respect to the Property; luring the Buyers who were guided by this fake impression created. This document has duly been attached with the Petition. It is alleged that the so-called 'Lease Agreement' was signed for a period of twenty years with a lock-in period of five years, but it was not for a real purpose, but merely to impress the Buyers regarding the fixed income likely to accrue to them. Further, R-1 Company made the Buyers enter into another similar Lease Agreement with R-17 entity i.e. M/s. Project Craft Solutions, only to give a false hope of the Property giving a regular rental income. It is also alleged that some of the Buyers were induced into buying some Units on the basis of the Agreement with R-16 and R-17, whereas, in reality, these Units sold to these Buyers were not at all in existence or wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the above Petition filed under Section 7 of the I&B Code, 2016, there was also a moratorium imposed under Section 14 of the Code, and the Petitioner's claims have been rejected in the CIRP since the Petitioners have chosen to not to have relinquished their rights during the CIRP proceedings. Some of the explanations given in the reply filed by the R-1 does not have any relevance in so far as the Petition u/s 213 of the Companies Act, 2013 for investigation into the affairs of the Company is concerned. The RP has given a detailed explanation related to claim of refund by some of the stakeholders including the Petitioners herein, stating that since the Sale Deed has been registered and the Legal Title has been transferred to the Petitioners, they cannot seek refund of the purchase amount of the Property. However, this is not the matter at hand and no such claim of refund has been made in the Petition filed u/s 213 of the Companies Act, 2013. Therefore, the RP has given an explanation in the reply which is not relevant at all for the purposes of this Petition. As has been discussed in detail, there have been specific allegations about the irregularities stated in this application u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal' before the Adjudicating Authority related to the period before 'Corporate Insolvency Resolution Process'. 38. It cannot be lost sight of that a Company in liquidation retains its existence and it is entitled to 'sue' and be 'sued' in its name, till it is dissolved in the manner known to law. Under Section 430 of the Companies Act, 2013 'National Company Law Tribunal' will have jurisdiction to deal with the disputes arising out of the Companies Act, 2013." 18. Moreover, the Appellant also stated that even in the case when the Company was undergoing CIRP also, investigation into the affairs of the Company by exercising powers under Section 213 of the Companies Act, 2013 was valid, for which, reliance was placed on the decision of Hon'ble NCLAT in Mr. Lagadapati Ramesh Vs. Mrs. Ramanathan Bhuvaneshwari in Company Appeal (AT) (Insolvency) No. 574 of 2019 dated 20.09.2019. 19. Accordingly, it is held that investigation under Section 213 of the Companies Act, 2013 is possible in respect of the Company which is undergoing the process of liquidation. Therefore, by exercising powers under Section 213 of the Companies Act, 2013, we are of the considered opinion that the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2019-20 GF 856 217 7. 1/18/2020 2019-20 8. 3/3/2020 9. 12/2/2019 2019-20 HSR-1-02826- Mr Vijay Reddy GNR-1-04590- Sale Deed 67,50,000.0 GF Jalapally Sai Krishnam Raju HSR-1-03763- Sale Deed Nadimpalli PranaviSreeramoju 882 220.5 65,13,000.0 GF 1300 325 Sale Deed 27,50,000.0 GF 500 125 2019-20 10. 11/27/2019 Mrs. Arthi Ravi & Mr. HSR-1-02804- Sale Deed 57,00,000.0 GF 1000 125 Shailendra Devi 2019-20 11. 11/8/2019 Mr. ShayedShukur HSR-1-02736- Sale Deed 10,88,000.0 GF 250 50 Basha 2019-20 12. 10/22/2019 Mrs. Syed Wajida HSR-1-02668- Sale Deed 10,88,000.0 Begum 2019-20 13. 10/22/2019 Mr. Syed Khader HSR-1-02664- Sale Deed 10,88,000.0 Basha 2019-20 14. 10/22/2019 Rashad Hussain HSR-1-02660- Sale Deed 2019-20 15. 10/22/2019 Sayad Abdu Rahiman HSR-1-02663- Sale Deed 10,88,000.0 GF 200 2019-20 16. 11/8/2019 Mrs. Shaik Nasira HSR-1-02727- Sale Deed 20,00.000.0 Begum 2019-20 17. 9/7/2019 Mr. Kopparapu GNR-1-02460- Sale Deed 58,00,000.0 GF 999 999 GF ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mata Ralhan HSR-1-03339- Sale Deed 20,000,000.0 2 5000 1250 2019-20 36. 1/10/2020 Mrs. Pedada Saritha GNR-1-04488- Sale Deed 2019-20 57,00,000.0 2 1000 250 37. 1/6/2020 Mr. Soudagar Khaja GNR-1-04415- Sale Deed 20,050,000.0 2 3500 875 38. 1/2/2020 Atahar Ms. Priyanka Bhatt 2019-20 GNR-1-04369- Sale Deed 13,000,000.0 2 3000 750 2019-20 39. 12/23/2019 Mrs. Farnaz Sharif HSR-1-03258- Sale Deed 57,00,000.0 2 1000 250 2019-20 40. 12/23/2019 Mrs. Farnaz Sharif HSR-1-03265- Sale Deed $7,00,000.0 2 1000 250 2019-20 41. 10/19/2019 Zurar Siraj Tambawala&Murtuza Siraj Tambawala HSR-1-02641- Sale Deed 2019-20 10,000,000.0 2 2500 625 42. 11/25/2019 Mr. Yarlagadda Sri Venkatavara Prasad GNR-1-03678- Sale Deed 2019-20 16,500,000.0 2 3500 875 Rep. By CPA Mr. Surapaneni Rambabu 43. 2/5/2014 Mr. J Vishwas BYP-1-06627- Agreement 84,00,000.0 2 2000 500 Sripawtham 2013-14 44. 8/5/2019 Mr. Sukumar Sreedhar Menon & Mrs. to Sale GNR-1-01876- Sale Doed 2019-20 57,00,000.0 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enuka HSR-1-03270- Sale Deed 95,12.000.0 5 1380 594.5 2019-20 65. 12/16/2019 Manish Kapoor HSR-1-02999 Sale Deed 22,600,000.0 5 4000 1000 2019-20 66. 10/10/2019 Dr. Pallavi P Vastrad GNR-1-02927 Sale Deed 27,50,000.0 S 500 125 2019-20 67. 10/3/2019 Mrs. Meghana T.V. GNR-1-02871- Sale Deed 60,00,000.0 5 1000 250 2019-20 68. 9/6/2019 Mr. PS Vastrad GNR-1-02421- Sale Deed 70,00,000.0 5 1000 250 2019-20 69. 8/20/2019 Sri Venugopal Arul GNR-1-02101- Sale Deed 86,50,000.0 5 1500 375 Anand 2019-20 70. 8/3/2019 Mr. PrawinKawware& Mrs. Pallavi Kawware GNR-1-01866 Sale Deed 84,50,000.0 2019-20 5 1500 375 71. 7/26/2019 Mrs. Isho Krishna MAnwani GNR-1-01746- Sale Deed 2019-20 79,20,000.0 5 2000 500 72. 6/5/2017 K. Chandrashekhar HBB-1-0858- Kartha of HUF 2017-18 Agreement 20,000,000.0 5 10 Sale 4000 1000 73. 5/12/2017 K. Chandrashekhar HBB-1-02508- Agreement 10,000,000.0 5 2000 500 Kartha of HUF 2017-18 10 Sale 74. 1/19/2017 Mr. Naresh Kumar CC ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2019 Mr. Rajdeep K GNR-1-02166- Sale Deed 75,00,000.0 6 2000 500 Manwani 2019-20 96. 8/23/2019 Mr. Rajdoop Manwani K GNR-1-02167- Sale Deed 75,00,000.0 6 2000 500 2019-20 97. 7/26/2019 Mrs. Ishoo Krishna GNR-1-01746- Sale Deed 79,20,000.0 6 3000 750 93. 7/28/2014 Manwani Mr. SR Rama Prasad 2019-20 BYP-1-01680- & Mrs. Sudha R. 2014-15 Agreement 35,00,000.0 to Sell 6 500 125 Prasad 99. 7/9/2014 Mr. Ramesha A.V. & BYP-1-01421- Mrs. Vinutha H.S. Agreement 35,00,000.0 6 500 125 100. 7/9/2014 Mrs. Vidya Rajesh 2014-15 BYP-1-01420- to Sell Agreement 70,00,000.0 6 1000 250 Rao 2014-15 101. 10/22/2019 Mr. Syed Khader HSR-1-02659- to Sell Sale Deed 19,00,000.0 7 500 125 102. Basha 10/14/2019 Manjunath C 2019-20 HSR-1-02601- Sale Deed 11,110,000.0 7 2000 500 2019-20 103. 7/26/2019 Dr. Surendra MC & GNR-1-01732- Sale Deed Asha 82,50,000.0 7 1500 333.1 2019-20 Channakrishnappa 104. 4/20/2019 Mr. Raghunandan B A 105. 2/18/2020 Mrs. HBB-1-0015....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k Munavar GNR-1-02618- Sale Deed 26,94,000.0 9 600 150 126. 9/13/2018 Hussain Mrs. Mubeen Begum 2019-20 127. 5/31/2016 T Sridhar GNR-1-02535 Sale Deed 2019-20 HBB-1-05561- Agreement 70,71,049.0 10,000,000.0 9 2500 625 9 1500 375 2015-16 128 5/31/2016 MV Murali Krishna to Sale HBB-1-05560- Agreement 70,71,049.0 9 1500 375 2015-16 to Sale 129. 5/31/2016 Mr. Basavaraj HBB-1-05563- Ndagouda 2015-16 Agreement 47,21,523.0 9 to Sale 1000 250 130. 9/6-2019 Mrs. M Vijaya GNR-1-02426- Sale Deed 23,840,000.0 9 4928 1232 2019-20 131. 8/26/2019 Mr. Muddasani Satish Kumar Reddy GNR-1-02200 Sale Deed 2019-20 84,50,000.0 9 1500 375 132 8/16/2019 Mrs. Veena Katakam GNR-1-02032- Sale Deed 2019-20 4,000,000.0 9 1000 250 133. 1/6/2020 Mr. S.N. Damodar GNR-1-04412- Sale Deed Rao 2019-20 51,85,301.0 10 1000 250 134. 12/23/2019 Renuka Salwan HSR-1-03270- Sale Deed 2019-20 95,12,000.0 10 998 222 135 12/13/2019 Sowmya J HSR-1-02955- Sale Deed 13,50,000.0 10 2....