TMI Blog2019 (1) TMI 1800X X X X Extracts X X X X X X X X Extracts X X X X ..... Anil Nanda including AKME Projects Limited the Corporate Debtor, and also held Key Managerial roles in the companies. On perusal of the letter 25.10.2012, issued by Appellant No 2 to the corporate debtor, it is evident that Agreement Dt 25th Oct 2012 was merely a camouflage, and the Appellant No2 and corporate debtor AKME were partners in developing the project to be sold to third party for profit. Therefore the Appellant No 2 is Related Party to the corporate debtor in terms of Sec 5(24)(a) of the I B Code 2016 - Thus, Appellant, No 2 is a related party to the corporate debtor in terms of Sec 5(24)(a) of the Insolvency and Bankruptcy Code 2016. On perusal of the documents filed by the parties, it is also apparent that AKME Projects Ltd, i.e. Corporate Debtor, promoted by Sri Arun Anand and his son Mr Aditya Anand, being majority shareholder therein. The Arun Anand and his family members, i.e. his wife, his son and daughter are the majority shareholder in the Appellant SPADE Financial Services. The said Mr Arun Anand, Ms Renu Anand and Ms Gayatree Anand are the directors of the Appellant SPADE, while Appellant No 2, AAA Landmark is wholly owned subsidiary of it - Admittedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the affairs of the 'Corporate Debtor; as well as the Group of Arun Anand companies are deeply entangled and it is difficult for the Tribunal in a summary jurisdiction to unravel the same. Considering that the 'Corporate Debtor' and Spade and AAA were in close business relationship in the past and also the fact that the accounts of the 'Corporate Debtor' have not been finalised and audited and filed with the Registrar of Companies since 2016, the Adjudicating Authority has allowed the application of the Yes Bank Limited and Phoenix ARC Private Limited and declared that the Spade and AAA Landmark are related parties to the 'Corporate Debtor'. Feeling aggrieved by the said order, this appeal has been filed. 2. The main issue under-challenge is regarding the declaration of Appellants Spade Financial Services Limited, and it's wholly-owned subsidiary AAA Landmark Private limited as a related party to the corporate debtor AKME Projects Ltd. They are in the 'Committee of Creditors' of the corporate debtor AKME Projects Limited (for brevity APL ) because of being 'Financial Creditors' of APL. The main ground under challenge i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Landmark Private Limited filed their claims as Financial Creditors. The IRP‟ rejected the claim of appellant No.1 on the ground that the alleged transaction does not involve time value money. The appellant No.2 claim was rejected by IRP‟ on the ground that it was received after the last date of submission of the claim as stated in public announcement. The rejection of the claim was challenged before the Ld. Adjudicating Authority. The Adjudicating Authority held that there is no dispute, that the amount has been received by the corporate debtor as a deposit, which is duly mentioned in the balance sheet. The entries of interest payment are reflected in Form ‟26 AS‟, deducting TDS on interest and thus claim of appellant No.1 is a Financial Creditor. After that first meeting of Committee of Creditors (in short CoC) held on 1st June 2018, unanimous decisions were taken to have a forensic audit into the accounts of Corporate Debtor and replace the IRP‟. 7. During first CoC‟ the Financial Creditors, i.e. Yes Bank (Respondent No.4) and Phoenix ARC Private Limited (Respondent No.5) filed an application that the Appellants No.1 and 2, i.e. Spade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. The appellants vehemently contended that they are not a related party to the Corporate Debtor. The allegations for five years before the commencement of CIRP would not be a relevant consideration, given the provision of Section 43(4) and Section 46 of the Insolvency and Bankruptcy Code, 2016 (in short I B Code, 2016). 11. We have heard the counsel for both the parties and perused the record. Admittedly appellants are the Financial Creditors of the Corporate Debtor AKME Projects Limited (in short APL‟). By the impugned order, Adjudicating Authority had treated the appellant as a related party to the Corporate Debtor, as per provision of Section 5(24) and Section 21(2) of the I B Code, 2016. To know the natures of the transactions entered into between the appellants and the Corporate Debtor, it is imperative that status, influence and interrelationship among the parties must be examined, inter-alia, for the period of the transactions that were entered into between in 2010 to 2013. In this regard, the close relationship of the key managerial person of the Corporate Debtor (Mr Anil Nanda) and Appellant (Mr Arun Anand) is quintessential. Based on the claim forms of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whole Time Director of Joint Investment Private Limited (holding company of a Corporate Debtor AKME Projects Limited) and Director of the Corporate AKME Projects Limited, and Mr Anil Nanda was the Director of the Corporate Debtor AKME Projects Limited. d) On 18th May 2011, an Agreement to Sale was executed between Corporate Debtor AKME Projects Limited and the appellant Spade Financial Services Private Limited for alleged development of the project. The said agreement was entered, even though Spade Financial Services Private Limited was incorporated only to render financial services at the time of agreement Mr Arun Anand was appointed as Financial Consultant/Strategic Advisor for the Corporate Debtor AKME Projects Limited and Mr Sonal Anand was Whole Time Director of Joint Investment Private Limited, i.e. holding company of AKME Projects Limited and Director of the Corporate Debtor AKME Projects Limited and Mr Anil Nanda was Promoter/Director of AKME Projects Limited. e) On 12th August 2011 Memorandum of Understanding was arrived between Corporate Debtor AKME Projects Limited and Spade Financial Services Private Limited, stating that ICD of ₹ 26.55 crores granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anand, who was the Director and Majority Shareholder. The other Directors included his wife and daughter. The AAA Landmark Private Limited is a 100% subsidiary of the Spade Financial Services Private Limited and was incorporated in June 2011. Spade Financial Services Private Limited gave inter-corporate deposits to the Corporate Debtor from 1st June 2009 to January 2013 amounting to ₹ 66 crores vide Memorandum of Understanding dated 12th August 2011. Out of inter- corporate deposits given by Spade Financial Services Private Limited to the Corporate Debtor, ₹ 43.06 crores credited to the account of Mr Arun Anand by consent. The Spade Financial Services Private Limited was hired as Consultant by the Corporate Debtor on assignment basis during the period 1st June 2009 to 28th February 2011. Appellants contend that Mr Anil Nanda is the major shareholder of Joint Investment Private Limited (in short JIPL‟) the company holding 80% of the Corporate Debtor share. The Corporate Debtor is a part of Mr Anil Nanda Group of Companies, Mr Arun Anand holds different positions in the Group Companies of Mr Anil Nanda at different point of time. Details of the position held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe), who was the Director of Corporate Debtor from November 2007 to 2013. It is further contended by the respondents that said Mr Sonal Anand and Mr Anil Anand have common Directors on the Board of the same Group of Companies, i.e. GI Power Company Limited, AKME Projects Limited, Akme Rhine River Projects Private Limited, Joint Investment Private Limited, GI Insurance Services Limited, Akme Maintenance 86 Utilities Limited and cathedral acme Projects Private Limited. 14. The appellant also contends that Mr Arun Anand has admitted in affidavit dated 4th August 2018 before the Adjudicating Authority that, Mr Sonal Anand was a Non-Executive Director of the Corporate Debtor, which categorically shows that Mr Arun Anand and Mr Sonal Anand fall in the category of a related party in terms of Section 5(24) of the I B Code, 2016. 15. It is further pointed out by the IRP that Spade Financial Services Private Limited was claiming monies transferred by it to the account of AAA Landmark Private Limited, as Inter Corporate Deposit to the Corporate Debtor AKME Projects Limited, but no interest is claimed on such debt. 16. Respondent further contends that there was nexus between the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Insolvency and Bankruptcy Code 2016. On perusal of the documents filed by the parties, it is also apparent that AKME Projects Ltd, i.e. Corporate Debtor, promoted by Sri Arun Anand and his son Mr Aditya Anand, being majority shareholder therein. The Arun Anand and his family members, i.e. his wife, his son and daughter are the majority shareholder in the Appellant SPADE Financial Services. The said Mr Arun Anand, Ms Renu Anand and Ms Gayatree Anand are the directors of the Appellant SPADE, while Appellant No 2, AAA Landmark is wholly owned subsidiary of it. It is an undisputed fact that Mr Arun Anand is the director of the Appellant SPADE Financial Services since its inception. Even though Mr Arun Anand claims that he resigned from the corporate debtor since 2007. But even after that, the Appellant Spade Financial Services, was appointed as Consultant on 1.6.2009 to carry out the assignment, assigned by the corporate debtor. It is also on record that first Inter Corporate Deposit was given by the Appellant SPADE FINANCIAL SERVICES on 1.6.2009 when Appellant SPADE was appointed as a consultant. (Page 117-119 of Respondent No‟s 4 replies).The said consultancy agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... un Anand being the relative also falls within the definition of a Related party in terms of Sec 5(24)(a) read with Sec 5(24)(A) of the Code. On perusal of the documents specifically, Memorandum of Understanding signed on 2nd December 2010 signed between Spade Financial Services Private Limited through Mr Arun Anand and AKME Projects Limited Corporate Debtor, Memorandum of Understanding dated 8th February 2011 between Spade Financial Services Private Limited and AKME Projects Limited, Agreement to Sale dated 18th May 2011 between AKME Projects Limited and Spade Financial Services Private Limited allegedly development project and Memorandum of Understanding dated 12th August 2011 between AKME Projects Limited and Spade Financial Services Private Limited, Memorandum dated 1st March 2012 between AKME Projects Limited and AAA Landmark Private Limited, Agreement to Sale dated 25th October 2012 executed by AAA Landmark Private Limited and AKME Projects Limited. Therefore we are of the considered opinion that Mr Anil Nanda, Mr Arun Anand had created a Web of Companies in which both along with the near and dear ones including Ms Renu Anand (Wife of Mr Arun Anand) and Mr Sonal Anand (Both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices Private Limited and AAA Landmark Private Limited neither objected to not staked any claim against Yes Bank Limited, even when it proceeded against AKME Projects Limited to sell the project land, even though it is alleged that the appellants investments are purportedly linked to the said project. It is pertinent to mention that under the order of the Adjudicating Authority dated 13th May 2018, the IRP convened Committee of Creditors meeting on 1st June 2018 in which Mr Arun Anand and Ms Renu Anand (representing AAA Landmark Private Limited and Spade Financial Services Private Limited) were also present. It was during said CoC meeting, the respondent Phoenix came to know about the alleged claims of AAA Landmark Private Limited and Spade Financial Services Private Limited. On perusal of the documents, it became apparent to Phoenix that Spade Financial Services Private Limited and AAA Landmark Private Limited (Acting through Mr Arun Anand) and at the behest of Mr Arun Nanda) are related parties to the Corporate Debtor AKME Projects Limited. Accordingly, Phoenix ARC and Yes Bank filed their application before the Adjudicating Authority for the exclusion of Spade Financial Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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