2025 (7) TMI 1550
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....4701, 5504, 7151 of 2024 - -<br>Insolvency & Bankruptcy<br>JUSTICE RAKESH KUMAR JAIN MEMBER (JUDICIAL), MR. NARESH SALECHA MEMBER (TECHNICAL) AND MR. INDEVAR PANDEY MEMBER (TECHNICAL) For the Appellants: Mr. Amit Sibal, Sr. Adv. with Mr. Mrinal Harsh Vardhan, Mr. Rituparna Patra, Akankrita Sinha, Adv For the Respondents: Mr. Shikhil Suri, Sr. Advocate along Ms. Prachi Johri, Mr. Saurabh Jha, Mr. Siddhant Katyal, Adv. for R-1. JUDGEMENT NARESH SALECHA, MEMBER (TECHNICAL) 1. There are eight appeals with 18 IAs before us arising out of three Impugned Orders dated 02.05.2024 under section 61 of the Insolvency & Bankruptcy Code, 2016 (in short 'Code') passed by National Company Law Tribunal, New Delhi Bench, (in short 'Adjudicating Authority') in IA No. 5238 of 2023 in C.P. No-1348/ND/2019, IA No. 4466 of 2023 in C.P. No-1348/ND/2019 and IA No. 5125 of 2023 in C.P. No-1348/ND/2019. 2. Details of IAs dealt by the Adjudicating Authority in the three impugned order dated 02.05.2024 are as follows: (i) IA-5238/2023 in IB-1348/ND/2019- M/s. Nisus Finance & Investment Managers LLP & Anr. challenged the Resolution Plan for M/s. Earthcon Universal Infratech ....
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.... & Anr. as Financial Creditors. The IA No. 5125/2023 was disposed of vide this order dated 02.05.2024. 3. Now, we will take up the appeals filed before us. Company Appeal (AT) (Ins.) No. 963-965 of 2024 4. This appeal has been filed by the Appellant i.e. Gaurav Katiyar, who is the Resolution Professional of M/s Earthcon Universal lnfratech Private Limited (hereinafter referred to as "Corporate Debtor"), against the Impugned Order dated 02.05.2024, passed by the NCLT-New Delhi-III (hereinafter referred to as "Adjudicating Authority") in I.A. No. 5238 of 2023 in Company Petition IB No. 1348/ND/2019, I.A. No. 4466 of 2023 in Company Petition IB No. 1348/ND/2019 and I.A No. 5125 of 2023 in Company Petition IB No. 1348/ND/2019. 5. Nisus Finance and Investment Managers LLP, who was the Financial Creditor of the CD, is the Respondent No.1 herein. Beacon Trusteeship Limited, who was the Financial Creditor of the CD, is the Respondent No.2 herein. Tulsiani Constructions and Developers Private Limited, who has claimed to be a majority shareholder of 75%, is the Respondent No.3 herein. Mahesh Kumar Tulsiani, who is the Nominee Director of Respondent No.3 (Tulsiani Constru....
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.... and Mahesh Kumar Tulsaini, have been opposing the Resolution Plan and have supported the Impugned Order rejecting the Resolution Plan. We shall refer them as "parties opposing the Resolution Plan" hereinafter for sake of convenience and clarity. 11. We shall deal pleadings of "parties supporting Resolution Plan" and "parties opposing the Resolution Plan" in conjoint manner for the sake of brevity and avoidance of repetition of arguments. 12. The "parties supporting Resolution Plan" contended that, pursuant to Form G issued on 10.05.2023 by Resolution Professional inviting EoI, the SRA submitted its EoI and was included in the list of eligible PRAs on 08.06.2023. The "parties supporting Resolution Plan" further submitted that SRA's Resolution Plan, submitted to Resolution Professional, was placed before the CoC in the 26th CoC meeting, was approved by the CoC with 70.18% voting share. The "parties supporting Resolution Plan" submitted that Resolution Professional issued a Letter of Intent (LoI) on 19.08.2023, and the SRA furnished a bank guarantee of Rs. 2.5 crores, as required. The "parties supporting Resolution Plan" submitted that the project, slated for completion by 2014....
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....ies supporting Resolution Plan" contended that the Adjudicating Authority misconstrued this requirement by implying that the funds needed to be blocked during the interregnum from EoI submission to the Effective Date, in addition to the Rs. 2.5 crore bank guarantee. The Appellant further submitted that such an interpretation is commercially impractical and contrary to a prudent businessman's assessment of credentials. 17. The "parties supporting Resolution Plan" submitted that the Resolution Professional verified the Rs. 20 crore commitment letter's authenticity with HDFC Bank via email dated 10.08.2023, with the bank confirming its validity. The "parties supporting Resolution Plan" contended that the Adjudicating Authority's finding that the commitment letter was "false and baseless" is contrary to this evidence and unsupported by any substantiation from Nisus. 18. The "parties supporting Resolution Plan" contended that no objection was raised by any stakeholder, including Nisus Finance and Investment Managers LLP, regarding the credentials of the SRA at the stage of issuing the provisional and final lists of PRAs. 19. The "parties supporting Resolution Plan" submitted th....
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....our certificates (Electricity NoC, Fire Safety NoC, Lift Installation NoC, and Structural Safety Certificate) to substantiate its work experience, which were verified by the Resolution Professional. 23. The "parties supporting Resolution Plan" stated that Section 15A of the Uttar Pradesh Urban Planning and Development Act, 1973 and the UP RERA order dated 16.09.2019 provide for "deemed completion" if the authority fails to issue or refuse a completion certificate within stipulated period of the notice of completion. The SRA's eligibility was assessed based on these provisions and certificates. 24. The "parties supporting Resolution Plan" submitted that the eligibility criteria do not mandate that a PRA's work experience be assessed solely based on Occupancy Certificates or Completion Certificates, nor do they contain an exclusion clause disqualifying work experience without such certificates. The "parties supporting Resolution Plan" contended that the Adjudicating Authority's reliance on the absence of such certificates to conclude that the SRA failed to deliver 10,00,000 sq. ft. was erroneous. The "parties supporting Resolution Plan" further submitted that Anand Buildtech Pv....
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.... credible, which falls within the CoC's commercial wisdom as per the Hon'ble Supreme Court's ruling in K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139 (SC). The "parties supporting Resolution Plan" contended that the Adjudicating Authority misdirected itself by interfering with the CoC's commercial wisdom, which encompasses the assessment of the SRA's feasibility, viability, and capability to implement the resolution plan. 30. The "parties supporting Resolution Plan" submitted that the SRA claimed a developed area of 14,73,215 square feet in its EoI/Resolution Plan, exceeding the eligibility criteria of 10 lakh square feet. Even if the 1,46,803 square feet of the Luv Nest project is excluded, the SRA fulfils the eligibility criteria. The "parties supporting Resolution Plan" contended that the Luv Nest project was not the sole basis for verifying the SRA's eligibility, and the Resolution Professional duly considered other credentials. 31. Concluding the arguments, the "parties supporting Resolution Plan" requested this Appellate Tribunal to set aside the Impugned Order which rejected the approval of the Resolution Plan and allow their appeals. 32. Per contra....
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....developed by M/s. Shreehari Realtech Pvt. Ltd., not the SRA, reducing the claimed area of SRA by 1,46,803 square feet. The "parties opposing Resolution Plan" contended that the Urban Woods project, developed by M/s. D S Infraheights Pvt. Ltd., lacks a completion certificate (CC) or occupancy certificate (OC) as of 19.08.2023, per RTI responses from the LDA dated 19.08.2023 and 01.09.2023. This incomplete status disqualifies 4,17,922 square feet from the SRA's claimed experience. The "parties opposing Resolution Plan" submitted that, after deducting 5,64,725 square feet (Luv Nest and Urban Woods), the SRA's remaining claimed area of 9,08,490 square feet lacks substantiation. The SRA's involvement in these projects appears limited, possibly as a contractor, failing to meet the eligibility criteria. 36. The "parties opposing Resolution Plan" contended that the "parties opposing Resolution Plan" reliance on Section 15A of the Uttar Pradesh Urban Planning and Development Act, 1973, for "deemed completion" is misplaced. Section 15A requires a notice of completion to the authority, which the SRA did not submit to LDA. The UP-RERA office order dated 16.09.2019 also mandates such an appl....
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...." submitted that the Resolution Professional failed to perform its duties by overlooking the SRA's ineligibility, despite being aware of misrepresentations regarding financial capability and work experience. This conduct of Resolution Professional is detrimental to the Corporate Debtor and its stakeholders, indicating collusion with the SRA. 41. The "parties opposing Resolution Plan" submitted that the resolution plan was approved by homebuyers, who constituted the majority of the CoC, but was rejected by all institutional creditors, including Greater Noida Industrial Development Authority and Punjab & Sindh Bank. The home buyers' approval was influenced by the SRA's misrepresentations, which the CoC/Resolution Professional deliberately overlooked. 42. The "parties opposing Resolution Plan" contended that the CoC's approval does not immunize the resolution plan from scrutiny, as the SRA's ineligibility renders the plan inadmissible and reliance on K. Sashidhar v. Indian Overseas Bank (Supra) is misconstrued, as commercial wisdom does not extend to approving plans by ineligible applicants. 43. The "parties opposing Resolution Plan" contended that allegation that earlier res....
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.... regulations, further invalidating the SRA's claim. 46. The parties opposing Resolution Plan submitted that approving the SRA Resolution Plan, tainted by misrepresentations and ineligibility, would be detrimental to the interests of all stakeholders, including homebuyers and financial creditors like Nisus Finance and Investment Managers LLP and further contended that the impugned order protects the integrity of the CIRP by rejecting an ineligible plan of SRA and directing the Resolution Professional to issue a fresh Form G, aligning with the Code's objective of ensuring a fair and transparent process. 47. Concluding their arguments, "the parties opposing the Resolution Plan" requested this Appellate Tribunal to dismiss the Appeals of parties supporting Resolution Plan with cost. Findings 48. We note that the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor commenced on 08.01.2020, on an application filed under section 7 of the Code filed by the financial creditor Nisus Finance and Investment Managers LLP against the Corporate Debtor. We further note that the Appellant contended that the Resolution Professional published Form-G four times, and the C....
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....uments asked from PRAs in support of their eligibility and submission of such document by the consortium in order to meet these stipulated eligibility criteria to become SRA. Hence, we shall refer to eligibility criteria which reads as under :- 53. Similarly, the supporting documents have also been asked by the Resolution Professional from all Resolution Applicants to be attached with EoI as per Annexure B of EoI, which reads as under:- 54. Issue No. I (a) Whether, the experience taken by consortium (DS Infra Heights Private Limited and Anand Buildtech Private Limited) of Luv Nest Project developed by M/s Shree Hari Realtech Pvt. Ltd. could have been counted by consortium based on stipulated eligibility criteria. (b) Whether, the consortium has delivered at least 10 Lakhs sq. ft. super area as per the stipulated eligibility criteria No. 3 of EoI. (i) Having noted the eligibility criteria, it would be desirable to understand as to who were eligible to submit the EoI. It becomes clear that the prospective Resolution Applicant could have been a consortium. According to eligibility criteria, a PRA may form a consortium and in eligibility criteria No. II, ....
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....t. as per eligibility criteria. The Adjudicating Authority concluded that after exclusion of these two projects, delivered area by the consortium remains 9,06,490 sq. ft., i.e., less than eligibility criteria, hence rejected the Resolution Plan of the consortium. (vii) We have also noted the contentions of the "parties opposing the Resolution Plan" that Luv Nest project was not developed by either DS Infra Heights Private Limited or Anand Buildtech Private Limited and indeed the project was pertained to Shri Hari Realtech Pvt. Ltd. On this issue, it is the case of the SRA that Shri Hari Realtech Pvt. Ltd is a related party of DS Infra Heights Private Limited by virtue of presence of a common director. The consortium also referred to a certificate issued by the Chartered Accountant firm M/s Sanjay Bhuwania & Co., wherein it was certified that Shri Hari Realtech Pvt. Ltd. is a related party of M/s DS Infra Heights Private Limited. The certificate of Chartered Accountant firm dated 07.06.2023 reads as under:- (viii) On this issue, we take into consideration the fact that the project delivered by Luv Nest, the "parties opposing the Resolution Plan" stated that the pro....
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....fore us that Luv-Nest Project was mentioned just to say that the said project is developed under mentorship of SRA because Mr. Shashank Gupta was one of the shareholders of Shri Hari Realtech Private Limited. The SRA submitted that even Luv-Nest project is excluded from experience of delivered area, the SRA will still meet the eligibility criteria of 10 Lakhs sq. ft. super area. (xv) At this stage, we need to understand that the relevant threshold date is to be considered (regarding eligibility criteria) i.e., the date of submission of the Resolution Plan in response to Form G by consortium and information contained therein. We observe that none of the parties can change the facts at a later stage either to include the additional area or to exclude the submitted area for purpose of determining the experience eligibility criteria. It is not in dispute that while submitting the Resolution Plan, the project Luv Nest was indeed included by consortium in counting its experience. (xvi) It is further noted from the documents attached by consortium that the name of Shri Hari Realtech Private Limited was not forming the part of details of the consortium members and it give....
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....30.09.2023 the project Urban Woods Project stand completed to the extent of 92.18% which was evident from Chartered Accountant Certificate filed by the consortium with UP RERA for the purpose of withdrawal of money from designated accounts. (xxii) It is the case of the "parties opposing Resolution Plan" that as per Clause 3 of the eligibility criteria, the delivery of super area should have been completed by March, 2023 and not later than that. Thus, at the time of submissions of Resolution Plan, the project Urban Woods was not complete and could not have been taken into consideration by the SRA for counting experience. (xxiii) The "parties opposing the Resolution Plan" also opposed the fact that the SRA was entitled to factor into the deemed completion certificate of project Urban Woods and submitted that LDA in its order dated 21.12.2022 reflected that families have allegedly settled in the project "without completion certification OC/ CC" and further mentioned regarding unauthorised construction site and demolishing of part of projects. (xxiv) At this stage, we would like to take into consideration the relevant provisions of the Uttar Pradesh Urban Pla....
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....nd application for completion certificate has to be submitted to the competent authority along with 1- Electrical Safety Certificate, 2 - Fire Safety Certificate, 3 - Structural Engineer Certificate and 4- Lift Installation/Safety Certificate, and whereas the competent authority has not rejected the promoter's application within 7 working days and has not informed the applicant with the required amendments within 8 working days, then such completion certificate will be deemed approved by the competent authority. We take into account the various such certificates which SRA has claimed to have obtained while submitting his application for CC/OC to LDA on 10.09.2022. These are noted from page no. 26 to 38 of Convenience Compilation (Volume I). (xxx) Thus, based on above, the SRA argued that it would have entitled to use deemed completion since it has given all the certificates. (xxxi) We note that SRA has sent letter to LDA on 10.09.2022 which is not available in present appeal file, but can be noted from following LDA's note sheet which mentions SRA's letter dated 10.09.2022: (xxxii) Now, we take into consideration the LDA order dated 21.12.2022 which c....
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....r UP RERA order dated 16.09.2019. However, the LDA letter on 01.09.2023 has stated categorically that they have received the online application LDA/ BP 21- 22/OCC/0015 on 14.03.2022 with regard to Tower 1, 2 and 3 M/s DS Infra Heights Private Limited, Sushant Golf City Project on which objections were sent online on 15.03.2022. The LDA has mentioned that because of non resolution of objections by SRA, the completion certificate of the site has not been issued. (xxxviii) Similarly, we note that in another letter dated 19.08.2023 to an RTI Applicant, Shree Faizal Haider Zaidi (quoted earlier), LDA again reconfirmed that OC/ CC certificate of DS Infra Heights Private Limited has not been issued till date. (xxxix) Thus, from above RTI information, it is evident and clear that LDA had not issued the CC/ OC to DS Infra Heights Private Limited even on 01.09.2023 which contradicts the claim of SRA that for Urban Wood Project with deemed completion certificate has been deemed to have been issued by LDA due to DS Infra Heights Private Limited letter dated 06.01.2023. Thus, we are not in position to accept the contentions of SRA along with contentions of Resolution Professio....
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.... committed funds, we look into Resolution Plan submitted by the SRA on 29.06.2023, wherein in Chapter 4 (in Para 4.1) it has been indicated that "resolution Applicant has already submitted a commitment letter of Rs. 20 Cores to HDFC to the Resolution Professional with EoI". We take into consideration the documents submitted by the SRA to the Resolution Professional regarding fulfilling this criterion. We take into consideration that there is a commitment letter issued by HDFC which is at Pg. 82 as Annexure A-7 of the appeal which reads as under: - (iii) This letter is marked to DS Infra Heights Pvt. Ltd. indicating that HDFC committed for fund requirement of Rs. 20 Crores subject to submission of required documents, requisite permission/ approval by SRA in compliance of banks extended guidelines and procedures at the time of sanction. It is the case of the SRA, CoC & Resolution Professional that this complied with the eligibility criteria as there was a clear commitment letter of HDFC Bank. (iv) On the other hand, we have noted the contentions of the "parties opposing the Resolution Plan" the said letter cannot be construed is the proper document indicating the av....
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....bursal of funds may happen at a later stage. In the present case, the eligibility criteria stipulated that PRA should have committed fund available of Rs. 20 Crores or more and the PRA was required to submit the proof of availability of aforesaid funds along with EoI. Thus, the committed fund were required more in nature of availability of the said fund as on date of effective date i.e., within 90 days of approval of Resolution Plan. The simpliciter commitment letter of HDFC with various conditions relating to future sanction as produced by the SRA could not have met the kind of eligibility criteria, envisage in the EOI. Keeping in view this, the SRA did not demonstrate availability of funds on effective date. While we agree to logic of the parties supporting Resolution Plan that there was no requirement of blocking of funds during the interregnum from EoI submission to effective date and funds were rather required to be made available on effective date. We also find merit in contention of parties supporting Resolution Plan blocking funds at submission of EoI stage is commercially impractical and against prudent financial policies. However, we need to understand that eligi....
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....is requirement along with Regulation 39 of the IBBI (Insolvency Resolution Process for Corporate Persons Regulations, 2016 which we have discussed earlier. Thus, we find that the Adjudicating Authority was correct in dismissing the application of Resolution Professional for approval of Resolution Plan of SRA. (ii) We take into consideration the recent judgement of the Hon'ble Supreme Court of India delivered on 02.05.2025 in the matter of Kalyani Transco vs. M/s Bhushan Power and Steel Limited & Ors. [Civil Appeal No. 1808 of 2020] wherein in Para 79 the Hon'ble Supreme Court of India has categorically stated an illegality of any nature cannot be permitted to be perpetuated. The relevant portion of the para reads as under :- "79. An illegality of any nature cannot be permitted to be perpetuated, and a plea of fait accompli cannot be permitted to be raised by any party to cover up their illegal acts, after achieving the ill motivated intentions circumventing the law.****" (Emphasis Supplied) We find above ratio applicable to present appeals. 58. Based on above detailed analysis, all appeals fail and stands dismissed. I.A., if any, are Closed. No costs. ....
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..... 10 lakhs shall be returned back within 2 weeks after submission of resolution plan or within 2 weeks from last date to submit resolution plan in case resolution plan not submitted by such PRA 7. A PRA should have Committed funds available for investment/deployment in the real estate project of the corporate debtor of INR 20 Crores or more as on Effective Date and the PRA has to submit the proof of availability of aforesaid funds along with Bol Clarifications : I. The Effective Date in the resolution plan should not be more than 90 days from the date of approval of the resolution plan by the Hon'ble Adjudicating Authority. Il. The PRA shall be required to arrange fund for the entire cost of construction after approval of resolution plan by the Hon'ble Adjudicating Authority." Document 3 ANNEXULE B SUPPORTING DOCUMENTS TO BE ATTACHED WITH FOI [Note. In ause of consortwint, the delails set out below ave lo be provided for each of the sendera] For all prospective resolution applicants a Name and Address: : Name of the Firm/Company/Organisation. IL Address: ilt Telephone No: IV Fax: v Email VI. PAN/CIN. b. Profile of the prospecti....
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....IN of Directors including Independent Dectors Names of key lendess, sl any, to the Company os its affiliates History if any, of the Company or alldites of the Company beug declared a 'wilful defaulter', 'non-cooperative borrower', "non-impared asset' os "non-performing asset". Any other selevant details which would be useful for the ausolation professional to Iw aware of us suspect of the ECE including but not hunted to thisr elspinshity / sredigibility pursuant to conditions peuscubed under Section 29A of the Code. --- n Any other selevant delats which would be weful for the resolution professional to evaluate the EOI and llp to shortlist for the next stage in the process. Document 5 Earthcon Universal Infratech Private Limited (In CIRP) Detailed urvilation for EDI to subuttet susolution plan Date of issue: 13 04 20223 Date of amendment: 10 05.2023 P ... 12123 Document 6 20 SANJAY BHUWANIA & CO Chartered Accountants Annexure-2 CA TO WHOMSOEVER IT MAY CONCERN Based on our examination of the relevant papers and documents and rolying upon the clarification and explanations provided to us, we hereby certify that M/s Shreehari Realtech Private Limited (CIN:....
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.... Total Daleable area Grant Total Saleable area 9,00,490 14.73,215 1.6. ASSET CLASIFICATION OF THE RESOLUTION APPLICANTS (a) W/S D.S. INFRAHEIGHTS PRIVATE LIMITED: is not currently classified as "non- performing assets" in the books of their respective lenders. (b) M/s. Anand Buildtech Private Limited: is not currently performing assets" in the books of their respective lenders. classified "non- For Consortium of DS Infrahelg Pvt. Ltd. & Anand Buildjech Pour Lad. Sla signatory Document 9 Lucknow Development Authority NOTESHEET Proposal Details File Number :LDA/AP/22-23/OCC/0021 Submitted On 10/9/2022 Case Type New Architect Name AFREEN MIRZA Owner Name D S INFRAHEIGHTS PVT.LTD Architect Mobile 9415759250 License No AM1983604 Sr. No Officers Name Designation Officers Remarks Date 1 Non Mital Chief Town Planner 13 October 2022 2 SANJAY JINDAL Executive engineer conect objection pored to JE AF 13 Octncer. 2022 3 Rajesh Sharma Assistant Engineer Please overect objections raised by JE 12 October 2022 4 Shashi Bhushan Mishra Jurvoi engineer Yon have not removed pro-intimated chjections df 12 09 2022 Picav....
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....orm you regarding the amount deposited by you in the authority fund as per the above-mentioned Authority's letter number258/RTI/HTIG/2023 dated 28/08/2023, that Online application number LDA/BP21-22/OCC/0015 was received in the authority on 14/03/2022 regarding Tower - of 1, 2 and 3 of M/s DS Infra Heights Sushant Golf City Project, on which objection was sent online on 15/03/2022. Due to not doing the resolution of the objections., the completion certificate of the site has not been issued. The downloaded records of the related records are sent by attaching them with the letter. Enclosure: As above Yours truly Signature in English Illegible Asst. Engineers/Public Information Officer (Map Cell) Copy: For information to Public Information Section Asst. Engineers/Public Information Officer (Map Cell) Document 12 Lucknow Development Authority, Lucknow By. Assistant Engineer/ Public Information Officer (Map Cell) Lucknow Development Authority. Gomti Nagar, Lucknow To. Shri Fazal Haider Zaidi, 24 Kaiserbagh, Lucknow 226001 Number: 3574/RTI/HTIG/2023 Dated: 19.08.2023 Subject: Regarding the information sought under the Right to Public Informatio....


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