9911796707
TMI Blog2023 (12) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... anies 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 develop a commercial Building on the said land at its cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 Project and entered into Agreements to Sell whereby the Company undertook to sell and, in most cases, sold various commercial units to the Buyers. The details of 164 Buyers and area and other details of the Units sold to them are given in tabular form at Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnovent 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 its hoarding/signage on the premises of the Property has helped R-1 in creating an impression that they have already taken the property on lease and it has fixed income for next 20 years. The buyers having wrongful impression which was facilitated by the collusion of R1 i.e. M/s. Vikram Structures Pvt. Ltd., R2 i.e. Mr. Vikram Prabhakar, R3 i.e. Mr. Manjunath Ravindra, R4 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 liability is determined upon the Company. (13) Therefore, enquiry into affairs of the Company is required to be conducted to track funds diverted from the Company. The affairs of the Company have been conducted to defraud its Creditors / Buyers of the Units by conducting acts of forgery of the Sale Deed / Agreement to Sale. The Company, its Directors and connected persons have further committed off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Copies of Lease Deed executed between Tahera Iqbal, Arthi Ravi & Shailendra Ravi, Meghana T.V., Deepa Narasimha Nayak, Ramesha A.V., M.N. Vijai and M/s. Project Craft Solutions. xii. Copy of Summon and Plaint of Suit in OS No. 4273 of 2020 pending before Prl. City Civil and Sessions Judge, Bengaluru xiii. Copy of Plaint of Suit in Comm. OS No. 423 of 2020 pending before Addl. City Civil and Sessions Judge, Bengaluru. 3. In response to above, Respondent No. 1 i.e., Resolution Professional representing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yak 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 such, today the said Properties stand in the names of the Petitioners and not the R-1 Company. In this regard, RP also issued a letter dated 16.05.2022 to each of the Petitioners explaining that as on date, the Petitioners are the holders of registered Sale Deeds with regard to conveyance of title of the Properties purchased by them. Upon registration of such Sale Deeds, the legal title to the said asset is with the Petitioners, and not with the R-1. Since the Petitioners are now the owners of the said properties, it is not clear on what basis the Petitioners are seeking refund of amounts paid for purchase of the Property. (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners 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 overriding effect over other laws so that the RP and the CoC can take control over R-1 assets and resolve its insolvent state without any hindrance. 4. The Petitioners filed written synopsis vide Diary No. 5617 dated 21.12.2022 while reiterating the facts, as stated supra, has further relied upon the following decisions: (a) The Barium Chemicals Ltd. and Ors. v. The Company Law Board & Ors., (AIR 1967 SC 295); (b) Mr. Lagadapati Ramesh v. Mrs. Ramanathan Bhuvaneshwari, Company Appeal (AT) (Insolvency) No. 574 of 2019; (c) Vijay Pal Garg & Ors. v. Pooja Bahry, Company Appeal (AT) (Insolvency) No. 949 of 2019; (d) Union of India, Ministry of Corporate Affai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 same. Accordingly, upon development of the building i.e. 'VSPL Pinnacle' the R-1 Company got a total area of 82216.30 Sq. Ft. to sell and the Land Owners to get the same area in their share. The respective shares of the Company and the Owners, quantified in terms of area of the Project Building and their floor-wise allocation are duly recorded in Supplementary Agreement dated 05.02.2015 executed between the Company and the said Land Owners. In terms of the Supplementary Agreement total available area of 82216.30 Sq. Ft., which the Company got in terms of the Agreement, are half of the built-up area on the Ground Floor, 1st Floor, 2nd Floor and 11th Floor and the entire area on 5th, 6th, 9th and 10th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 than one-tenth of the total voting power, in the case of a company having a share capital; or (ii) not less than one-fifth of the persons on the company's register of members, in the case of a company having no share capital, and supported by such evidence as may be necessary for the purpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or (b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that- (i) the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Mr. Harshan Godwin Hector GNR-1-04324-2019-20 57,00,000 9 1000 250 8. 11.11.2019 Mr. Tahera Iqbal HSR-1-02743-2019-20 64,60,000 10 1000 250 12. It is noticed that the main allegation is related to the Company having sold the built-up area of three times of its entitlement in accordance with the Joint Development Agreement (JDA); specifically, the total area sold as per the Sale Agreements / Deeds was 2,43,037 sq. ft. whereas the Company was entitled to only 82,216 sq. ft. The Petitioners have given the specific list of 164 such Sale Deeds / Agreement to Sell showing a total area of 2,43,037 sq. ft. for a total consideration of Rs. 136,50,19,085/-, along with the details such as Date of Execution, name of Buyers, Sub-Registrar Document No. etc., which has been listed from Pages 25 to 31 of the Petition and is being reproduced hereunder for ready reference: The above tabular form includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 were already sold. There is no response / reply to this set of allegation also on behalf of the Respondents, whereas, the specific documents i.e. Agreements with R-16 and R-17 have been duly enclosed with the CP. 15. The next set of allegations are regarding multiple sales of the same Property by the R-1 Company and the Respondents. It is stated that the bogus Sale Deeds without the Property being in existence was entered into, for which, the method utilised was mentioning only the Area of the Unit and the Floor without giving any other specific details of the constructed Property. It is also alleged that because of the multiple sales they were able to collect an amount of more than Rs.200 Crores including some portion in cash, which was also collected. There is also an allegation of siphoning of funds arising from these sales by the Promoters of the R-1 Company. Again, there is no objection/reply filed to these allegations by the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. 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/s 213 and the RP's reply does not take care of any of these allegations which is with reference to the specific details and documents discussed above. There is no denial in the RP's reply with respect to 164 Buyers listed in Page 25 onwards of CP, comprising of sale of 2,43,037 sq. ft. in total by the R-1 Company, whereas, they were entitled to ownership of only 82,216.30 sq. ft. as per the JDA. This excessive sale, three times of their entitlement by the R-1 Company, has neither been explained nor has any denial been filed. Furthermore, there has been allegation regarding the fake Lease Agreement with R-16 and R-17 to lure the Buyers with a false promise of assured rental return which was non-existent, for which, the Petitioners have also filed the specific documents for such Lease Agreements with R-16 and R-17. However, in the reply filed by RP on behalf of the R-1 Company, no explanation has been furnished about the same. 17. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 instant Petition deserves to be allowed and accordingly, the instant Company Petition bearing CP No. 14/BB/2022 is hereby disposed of with following directions: (a) Ld. Counsel for the Petitioners is directed to forward all material documents, which is connected to the present case to the Central Government along with a copy of this Order, within a period of three weeks from the receipt of the Certified Copy of this Order with a copy to all the concerned Parties, duly following the principles of natural justice. (b) The Central Government is directed to adopt the procedure prescribed under Section 213(b) of the Companies Act, 2013 and the Central Government may get the affairs of the Respondent No. 1 Company herein, namely, M/s. Vikram Structures Pvt. Ltd. (presently under Liquidation process under the I&B Code, 2016) and those of the related parties be investigated by appointing Inspector(s) to carry out the investigation by following the due procedure. (c) Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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