TaxTMI 
TaxTMI 
2026 (7) TMI 529
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..... (Corporate Debtor) was allowed and the Appellant was directed to furnish complete details of rent and parking income allegedly collected from Avani Riverside Mall for Financial Years 2021-22 and 2022-23. 2. The dispute arises from the Resolution Professional's contention that information relating to the revenues generated from the mall is necessary for successful completion of Corporate Insolvency Resolution Process (CIRP) of Corporate Debtor (CD), whereas Mega Mall Management Services Pvt. Ltd./Appellant asserts that it is an independent third-party entity having no ownership, financial, or operational nexus with the Corporate Debtor in respect of the mall after execution of the agreements dated 31.01.2018. Appellant has preferred the present appeal seeking setting aside of the impugned order on the ground that it proceeds on an erroneous interpretation of the contractual arrangements between the parties and compels disclosure by a third party without first establishing any subsisting ownership or financial interest of Corporate Debtor in the mall or its income. Brief Facts of the Case 3. The brief facts of the case relevant to this appeal are given below: ....
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....me could have relevance to the CIRP of the Corporate Debtor. (vii) The Appellant in its reply on 05.07.2022 asserted that there were no fixed assets of the Corporate Debtor within Avani Riverside Mall, the Corporate Debtor was merely the developer of the mall and had ceased to have any ownership interest in the mall property or its constituent units. (viii) The Resolution Professional initiated contempt proceeding against the Appellant by filing Contempt Application Cont. A.(IBC)/11/KB/2022 on 22.08.2022 alleging non-compliance of the earlier directions issued by the Adjudicating Authority and alleging continued non-cooperation by Mega Mall Management Services Pvt. Ltd. and other parties. (ix) During the pendency of the contempt proceedings, various directions were issued by the Adjudicating Authority requiring the Resolution Professional to ascertain whether Avani Riverside Mall or any part thereof continued to be an asset of the Corporate Debtor. Appellant as well as several shop owners and occupants of the mall produced registered conveyance documents and other records to demonstrate that ownership rights in the mall units had been transferred to indiv....
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....ly, following deliberations in Committee of Creditors meeting held on 26.02.2024, the Resolution Professional sent a communication dated 29.02.2024 to the Appellant seeking details of rent and parking charges allegedly collected from the mall for Financial Years 2021-22 and 2022-23 as well as thereafter. (xv) The Appellant vide its reply dated 08.03.2024, rejected the request and reiterated that it was not connected with the Corporate Debtor in the manner alleged by the Resolution Professional. It further maintained that internal financial details relating to the operations of the mall could not be disclosed, merely because the Corporate Debtor had once acted as the developer of the project. (xvi) Thereafter, the Resolution Professional filed IA (IBC) No. 910 of 2024 on 19.04.2024 under Section 60(5) of the Code seeking directions against the Appellant for disclosure of details relating to rent and parking income generated from Avani Riverside Mall. The application was filed in the pending CIRP proceedings of the Corporate Debtor and formed the basis of the present dispute. (xvii) The Appellant in its Reply Affidavit dated 01.07.2024, not only challenged ....
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....t company. The said application, being I.A. No. 395 of 2020, was disposed of by Order dated 13.06.2022 directing cooperation with the Resolution Professional. Pursuant thereto, the Appellant furnished all information and particulars sought by the Resolution Professional. 5. He submits that despite such compliance, the Resolution Professional initiated contempt proceedings being CONT. (IBC) No.11/KB/2022. During those proceedings, various documents were produced by stakeholders and directions were issued requiring the Resolution Professional to ascertain whether shops and showrooms in the mall had already been sold or transferred prior to CIRP and whether the Corporate Debtor retained any ownership rights in the mall. 6. It is submitted that the contempt proceedings were ultimately disposed of by Order dated 04.09.2023 recording that twenty-five shop owners had furnished ownership documents. The Resolution Professional was directed to examine those documents and determine, whether such units formed part of the assets of the Corporate Debtor. The Resolution Professional was further directed to approach the Registrar of Assurances, Kolkata and verify the ownership rights, if any....
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....t contended that the allegations contained in the rejoinder were beyond the scope of the original application, unrelated to the relief sought therein and incapable of being introduced without amendment of the main pleadings. He submits that the Resolution Professional relied upon two agreements executed between the Corporate Debtor and the Appellant, namely the Agreements dated 01.06.2011 and 31.01.2018, which had already been disclosed by the Appellant through its email dated 02.07.2022. 11. Ld. Counsel submits that the 2011 and 2018 Agreements clearly demonstrated that the rent and parking charges sought by the Resolution Professional were not receivables of the Corporate Debtor. It was submitted that Clause 3, Paragraphs 1 and 2 of the 2011 Agreement stood superseded and novated by the subsequent Agreement dated 31.01.2018 executed in the ordinary course of business. Consequently, the rights and obligations of the parties were governed by the 2018 Agreement. He further submitted that at the hearing, the Appellant specifically argued that no new case could be made out through a rejoinder affidavit. The allegations regarding the Appellant being a related party or step-down subs....
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....ph 22 of the said judgment, the Hon'ble Supreme Court held that in the absence of a cross-appeal or cross-objection, an appellant cannot be placed in a position worse than the one existing prior to filing the appeal. Applying the said principle, it is submitted that the present appeal must be decided solely on the basis of the findings contained in the impugned order and the Resolution Professional cannot be permitted to introduce new controversies or seek enlargement of the issues involved. Accordingly, he submits that the impugned Order dated 18.06.2025 deserves to be set aside and the present Appeal deserves to be allowed. Submissions of Respondent 16. Ld. Counsel for the Resolution Professional submits that under the original Agreement dated 01st June 2011 executed between Avani Projects and Infrastructure Limited (Corporate Debtor) and the Appellant, the Appellant was engaged to provide maintenance, housekeeping, security and other operational services in relation to the shopping Mall. Under this arrangement, the Appellant was entrusted with collection of revenue generated from the Mall on behalf of the Corporate Debtor, and was required to transfer the same to the Corpo....
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....ly irrational. The financial records further show that Aster itself generated revenue of approximately Rs. 193.53 Lakhs. The consideration reflected in the Tripartite Agreement, therefore bears no reasonable nexus with the value of the rights transferred and strongly indicates lack of bona fides. 21. He further submits that the surrounding circumstances clearly establish that the true intent behind the agreements dated 31st January 2018 was to divert and siphon the funds and revenue streams of the Corporate Debtor. The agreements were so structured that substantial economic benefits arising from the Mall were diverted to related entities, thereby prejudicing creditors. 22. Ld. Counsel submits that the fraudulent nature of the transaction becomes even more apparent in light of the winding-up proceedings against the Corporate Debtor. The Hon'ble High Court at Calcutta had admitted a winding-up petition by order dated 01st December 2017 and appointed a Provisional Liquidator on 07th September 2018. A petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 had also been filed on 14th March 2018. Despite these developments, the parties proceeded to execute arrange....
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....LP, and upon an independent assessment, the Respondent has filed IA No. 591 of 2025 under Sections 45, 49 and 66 of the Insolvency and Bankruptcy Code, 2016, which is presently pending adjudication before the Adjudicating Authority. 27. Ld. Counsel submits that the Appellant and the Corporate Debtor have always remained closely connected entities. The Appellant was incorporated on 14th March 2011 and its entire shareholding was held by Deveran Conglomerate Private Limited and Jairon Tie-Up Private Limited, each holding 50%. Further, both Deveran and Jairon were subsidiaries and/or step-down subsidiaries of the Corporate Debtor, the Appellant became a step-down subsidiary and consequently a related party of the Corporate Debtor. 28. He further submits that the commonality of ownership and management is evident from the corporate structure and shareholding records. The documentary record shows that Deveran and Jairon remained wholly owned subsidiaries within the group structure, and consequently the Appellant continued as a step-down subsidiary of the Corporate Debtor until at least FY 2022. This relationship persisted well beyond commencement of CIRP on 13th March 2019. He sub....
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....iginal Agreement dated 01st June 2011, there was no commercial or legal justification for entering into subsequent arrangements that diluted or extinguished the Corporate Debtor's entitlement to CAM charges and other revenues arising from the Mall. The later agreements were specifically designed to alter the revenue structure to the detriment of the Corporate Debtor and its creditors and therefore warrant strict scrutiny by this Appellate Tribunal. Analysis and Findings 32. We have gone through the records of the case including written submissions, and heard the ld. Counsels. 33. At the outset, it is important to note that the impugned order does not determine ownership of Avani Riverside Mall, does not adjudicate competing contractual rights between the parties, does not declare that any amount is payable by the Appellant to the Corporate Debtor, and does not finally decide whether the revenues generated from the mall belong to the Corporate Debtor or to the Appellant. The Adjudicating Authority has merely directed the Appellant to furnish details relating to rent and parking collections sought by the Resolution Professional. Therefore, the principal question before u....
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....blished. The record, however, does not support such an assumption. The materials placed before us indicate that the winding-up petition against the Corporate Debtor had already been admitted on 01.12.2017, whereas the agreements upon which the Appellant places heavy reliance were executed thereafter on 31.01.2018. Consequently, the transactions reflected in those agreements cannot automatically be treated as beyond scrutiny. Where valuable commercial rights, revenue streams and operational benefits are alleged to have been transferred away from a financially distressed company after commencement of winding-up proceedings, such transactions necessarily require careful examination from the standpoint of creditors and stakeholders. Therefore, the Appellant cannot insist that the Resolution Professional must first accept the validity of the 2018 arrangements before seeking information relating to revenues generated under those very arrangements. 37. It is seen from the records that a transaction audit has been conducted during the CIRP and that the findings thereof have led to initiation of proceedings under Sections 45, 49 and 66 of the Insolvency and Bankruptcy Code. Those proceed....
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.... part of the Corporate Debtor's group structure. The shareholding pattern demonstrates that entities holding shares in the Appellant are subsidiaries and/or step-down subsidiaries of the Corporate Debtor, thereby rendering the Appellant a related party. The Appellant has, at all material times, been intrinsically connected with the affairs and management of the Corporate Debtor and is in possession of relevant financial information. In view thereof, the Appellant is squarely covered under Section 19 of the Code, which mandates all persons associated with the management of the Corporate Debtor to extend full cooperation to the Resolution Professional. 41. At this stage, it is necessary to draw a distinction between disclosure of information and determination of rights. The Appellant appears to equate the two. However, furnishing information does not amount to an admission that the revenues belong to the Corporate Debtor. Nor does it result in a declaration that the Appellant has acted improperly. Production of records merely enables the Resolution Professional and the Adjudicating Authority to ascertain the true factual position. The question whether any revenue ultimately belong....