TaxTMI 
TaxTMI 
2025 (8) TMI 1830
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....s Healthclubs Limited, is the Respondent herein. 3. The Appellant submitted that it is a service provider engaged in the business of offering financial technology services, specifically by operating as a payment gateway and entered into an arrangement with Talwalkars Better Value Fitness Limited ("TBVFL") for the provision of such services in relation to TBVFL's diverse health and wellness offerings. The Appellant submitted that TBVFL's business activities, prior to the demerger, were not confined merely to gym operations but encompassed a broader spectrum of wellness-related services. The Appellant's role was however limited to facilitating payments for their entire services and the Appellant did not form part of the core gym business of TBVFL. 4. The Appellant submitted that, the Adjudicating Authority vide order dated 21.12.2017, approved a scheme of demerger whereby only the gym business of TBVFL was transferred to the resulting company i.e. Talwalkars Lifestyles Limited (TLL) (subsequently renamed Talwalkars Healthclubs Limited (THL), the Respondent/Corporate Debtor). The Appellant submitted that, pursuant to the said scheme, the health and fitness activities includi....
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....submitted that, in view of TBVFL's failure to fulfil the requirements under Clause 2.2 of the SHA, the Appellant called upon TBVFL, vide email dated 09.05.2020, to surrender its shares to the Appellant. Accordingly, on 09.06.2020, the shares held by TBVFL were duly transferred to the Appellant, and this transaction is properly reflected in the Appellant's accounts. The Appellant submitted that, by virtue of this transaction, all rights of TBVFL and any alleged rights of the Corporate Debtor arising from a mistaken interpretation of the demerger stood extinguished in respect of these shares. 9. The Appellant submitted that the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated vide order dated 09.03.2021, and submitted that the extinguishment of TBVFL's interest in the shares took place well prior to the commencement of CIRP. The Appellant elaborated that the transaction audit report dated 24.12.2021, as relied upon by the Respondent, has erroneously recorded that the Corporate Debtor holds approximately 19% equity share capital of the Appellant of face value Rs. 10 each. The Appellant contended that the shares have already been transferred ....
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....ere in the possession of TBVFL and were later taken by the Liquidator of the Corporate Debtor in his capacity as the Liquidator of TBVFL, not the Corporate Debtor. Consequently, the Appellant contended that these shares do not form part of the liquidation estate of the Corporate Debtor under Section 36 of the Code. 13. The Appellant submitted that the demerger scheme defined the gym business under Clause 2.1.5, which included only assets exclusively related to the gym business. The investment in the Appellant was not exclusively related to the gym business, as TBVFL's operations encompassed fitness centers and lifestyle services. The Appellant contended that the Respondent's business, as per the Marketing Agreement, has no direct correlation with TBVFL's gym business, and thus, the shares cannot be deemed to have been transferred to the Corporate Debtor. 14. The Appellant submitted that the Transaction Audit Report explicitly highlights manipulation in the Respondent's books of accounts, with the erstwhile management inflating the value of the investment in the Appellant through adjustments to present a healthier balance sheet. The Appellant relied on the Doctrine of Indoor M....
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....ondent submitted that, while discharging its duties as Liquidator, he noted that the physical share certificates for the Subject Shares remained in TBVFL's name, despite their transfer to the Corporate Debtor under the Scheme Approval Order. The Respondent contended that the Appellant's annual return (e-form MGT-7) for FY 2020-21 listed TBVFL as the holder of the Subject Shares, while the Corporate Debtor's financial statements for FY 2018-19 and the Transaction Audit Report dated 24.12.2021, confirmed the Corporate Debtor's ownership. 22. The Respondent submitted that on 27.09.2022, be issued a letter to the Appellant, requesting an update of its books to reflect the Corporate Debtor's ownership of the Subject Shares in light of the Scheme Approval Order. The Respondent contended that the Appellant, vide email dated 22.10.2022, denied the Corporate Debtor's rights, claiming they were "extinguished" due to TBVFL's alleged non-fulfilment of Clause 2.2 of the SHA. 23. The Respondent submitted that on 02.11.2022, be issued a legal notice to the Appellant, demanding recognition of the Corporate Debtor's ownership of the Subject Shares. The Respondent contended that the Appellant,....
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....dated 23.07.2024, and 14.08.2024, outlining compliance modalities, the Appellant has failed to issue the share certificates, remaining in non-compliance with this Appellate Tribunal's order. 27. The Respondent submitted that the Appellant's persistent failure to comply with the Impugned Order and the Appellate Tribunal's directive of 09.07.2024, constitutes contempt and justifies dismissal of the Appeal. The Respondent contended that the Appellant's inaction, despite assurances, reflects bad faith. 28. The Respondent submitted that the Appellant's shifting positions-extinguishment (22.10.2022), buy-back (18.07.2023), and transfer to Mr. Sanmati Pandey (18.08.2023)-undermine its credibility. The Respondent contended that such inconsistencies, as held in S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1], disentitle the Appellant from relief due to suppression of facts and fabrication of evidence. 29. The Respondent submitted that the Appellant's documents supporting the alleged 09.06.2020, transfer are dubious: • The e-form MGT-7 for FY 2020-21 lists TBVFL as the shareholder as of 31.03.2021, contradicting the transfer claim. • The share certif....
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.... to the Respondent i.e., liquidator of Corporate Debtor. We have already noted that the Appellant, who, in need of money, issued the said shares to TBVFL for a consideration of Rs. 5 Crores, which the Appellant had received from TBVFL on 31.03.2017 and the Appellant issued share certificates in the name of TBVFL on 01.04.2017. 36. It is noted that TBVFL was restructured after NCLT approved the scheme vide "Scheme Approval Order" dated 21.12.2017 passed in CSP No. 405 of 2017 in CSA No. 242 of 2012, under which the gym business of TBVFL was transferred to the Corporate Debtor and, investment pertaining to the concerned business was also transferred to the Corporate Debtor. 37. We have gone through and examined the relevant portion of "scheme approval order" dated 21.12.2017 and SHA dated 27.12.2016. 38. From the relevant clauses of the Scheme Approval Order dated 21.12.2017, we note that the gym business has been defined as "gym business" of demerged companies, comprising inter-alia the assets and liabilities including movable assets owned by demerged company i.e., TBVFL. The movable assets of the Corporate Debtor include the shares held in the Appellant's company. Further,....
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....nging its stand regarding ownership and repossession of shares. The stand of the Appellant on 22.10.2022 was that shares got extinguished. The stand of the Appellant on 18.07.2023 was that it exercised buy-back of shares. The Appellant again shifted its position on 18.08.2023 that these shares have been transferred to Mr. Sanmati Pandey. This shifting position by the Appellant does not inspire confidence about its ownership and legal repossession of the said shares. 46. We find many contradictions in the pleadings of the Appellant made before the Adjudicating Authority as well as this Appellate Tribunal in the present appeal. Such shifting stands taken by the Appellant reflects that the Appellant has not been forthcoming with correct facts. We are not in position to accept the pleading of the Appellant made before us that the aspects of extinguishment of share v/s buy-back of shares v/s transfer of shares to one of its ex-promoters Mr. Sumanti Pandey are irrelevant for the purpose of this appeal. We do not find any logic in the contention of the Appellant and reject the same. On this aspect, we find logic in the pleadings of the Respondent. We note that in Para 24 of Impugned Or....
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....aran [email protected]; Ravin Kapur [email protected]; [email protected] [email protected] Cc: GAURANGI PATIL <[email protected]; Admin Account <[email protected]> Subject: [EXT] Growfitters Private Limited v/s Gajesh Labchand Jain NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI COMPANY APPEAL(AT) (INS) NO.605 OF 2024 IN THE MATTER OF :- GROWFITTER PRIVATE LIMITED ... Appellants Versus GAJESH LABCHAND JAIN (The Liquidator of Talwalkars Health Club Ltd) ... Respondents Dear Sir, We are concerned for our clients, Growfitter Private Limited, the Appellant in the above captioned matter. As you are aware that the captioned matter was last listed on 9th July 2024 before Hon'ble NCLAT, Delhi wherein Adv Aditya Ajgaonkar, a/w Adv Bhavesh Joshi i/b GP AND ASSOCIATES, appeared on behalf of the Appellant. The Hon'ble NCLAT, Delhi provided us a time frame of 30 days from the date of order dated 9th July,2024 to transfer/convey the shares in the name of your clients. As per instructions, our Clients are re....
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....rate Debtor. We also take into consideration that forensic audit for the Corporate Debtor was done and according to which, the subject shares were held to be the assets of the Corporate Debtor. 54. The Appellant has taken the plea that subsequent to board resolution dated 01.06.2020, it has purchased back the shares and made the payment of Rs. 5 Crores to the Respondent. In fact, he had filed an affidavit in rejoinder before us, wherein he has attached exhibit 'A' as the copy of the bank statement of Appellant claiming the payment made by him towards said transfer. However, the Appellant has not pointed out specific dates and entries which he has referred regarding payment back to the Respondent. We also tried to identify such payment entries from the bank statement filed by the Appellant before us in the affidavit in the rejoinder but could not find any specific entries of Rs. 5 Crores that the Appellant claimed to have paid to the Respondent. We have also taken into consideration the statement of the Respondent that he did not find any such entries in the records of the Corporate Debtor and as such we are unable to accept the arguments by the Appellant that he has paid back Rs....