Deepak Sakharam Kulkarni & Anr. vs Manoj Kumar Agarwal, Resolution Professional of D.S. Kulkarni Developers Ltd. & Ors.
Company Appeal (AT) (Insolvency) No. 63 of 2024
Facts:
1) DSK Group, which consists of the Corporate Debtor – D.S. Kulkarni Developers Ltd. and other Group Entities, partnership firms, engaged in different business, primarily real estate development. The CIRP proceedings culminated into the Resolution Plan, which has been approved by the impugned order dated 23.06.2023. There has been several proceedings including the proceedings under Prevention of Money Laundering Act, 2002 (hereinafter referred to as the “PLMA Act”) against the Corporate Debtor and its Promoters, Related Entities, which also need to be noticed.
2) Bank of Maharashtra filed an Application under Section 7 against the Corporate Debtor and by order dated 26.09.2019, CIRP against the Corporate Debtor commenced. It is to be noted that prior to initiation of CIRP against the Corporate Debtor, Deepak Sakharam Kulkarni and Hemanti Deepak Kulkarni were arrested in the PMLA case on 07.02.2018. Hemanti Deepak Kulkarni was released on 18.11.2022, whereas Deepak Sakharam Kulkarni was released on 09.03.2023. Claim of the homebuyers, who could not file any documents to support their payment to the Corporate Debtor were rejected. The claims of the homebuyers who are Appellants before us, also was not included in the list of creditors, as admitted claims.
3) Appeal(s) have been filed against the – (i) Order dated 23.06.2023 passed by National Company Law Tribunal, Mumbai Bench-I in IA No.1950 of 2021 filed by the Resolution Professional (“RP”), by which order Resolution Plan submitted by Ashdan Properties Pvt. Ltd.; Classic Promoters and Builders Pvt. Ltd. and Atul Builders India Pvt. Ltd. (in Consortium) have been approved by the Adjudicating Authority in respect of the Corporate Insolvency Resolution Process (“CIRP”) of D.S. Kulkarni Developers Ltd. (the Corporate Debtor); and (ii) Orders dated 01.08.2023, rejecting the IA’s filed by Homebuyers as infructuous consequent to order dated 23.06.2023.
4) The Adjudicating Authority heard the IA No.1950 of 2021 filed by the RP for approval of the Plan and approved the Resolution Plan by order dated 23.06.2023. IAs filed by some of the homebuyers, challenging the rejection of their claims, remained pending, on the date when Resolution Plan was approved. The homebuyers, who are in Group No.II, have filed these Appeal(s), challenging the order dated 23.06.2023 approving the Resolution Plan. Some of the Homebuyers have challenged subsequent order dated 01.08.2023.
Issue: Whether the appeal can be allowed ?
Arguments:
Appellant:
1) Counsel submitted that Appellant being lodged in Jail had no access to any of the documents prepared or drawn by the Resolution Professional (RP). After release the Appellants were in process of seeking further information from the stakeholders in respect of Corporate Debtor, when they learnt that orders on the application for approval of the Resolution Plan has been heard and reserved. On 23.06.2023, Adjudicating Authority allowed the application filed by the RP. Appellant’s case in the appeal is that the assets of the Corporate Debtor are extremely undervalued.
2) It was submitted that actual book asset valuation of the assets is over Rs. 1900 Crores and same has been sold at the meagre amount of around Rs. 826.30 Crores in respect of which only a sum of Rs. 30 Crores is being paid upfront and remaining amount is to be payable within seven years. It was submitted that the assets which do not belong to the Corporate Debtor have been included in the Resolution Plan. The case of the Appellant is that the personal properties of the promoters have been included in the Resolution Plan.
3) Counsel submitted that assets having been attached under the PMLA Act, 2005, prior to commencement of CIRP cannot be made the subject matter of the Resolution Plan. The order passed by the Adjudicating Authority, PMLA dated 06.08.2019 cannot be eclipsed by operation of provisions of Section 14 of the Code, inclusion of the said assets makes the Resolution Plan not in compliance of law.
4) Counsel submitted that there is no written contract between the Appellant and the Corporate Debtor and there is no contract between Appellant and any of the Financial Creditors and further said properties are mortgaged in favour of Toyota Financial Services India Ltd. in respect of loan given to DSK Motors Private Limited.
5) Counsel submitted that RP without verifying the records and without verifying the ownership of the assets have included assets in the Resolution Plan. There has been dereliction of duty by Respondent No. 1 and the Committee of Creditors (CoC). The Partners of the Appellant firm and their family being imprisoned on account of Criminal Proceedings could not actively realise the nature of fraud that was being played on them in the CIRP.
6) Counsel submitted that RP did not terminate the Lease Agreement since on termination, the Appellant was entitled for compensation with regard to building constructed by the Appellant on the lease land, to save the Corporate Debtor from liability of paying compensation, the Lease Deed was never terminated. The Resolution Plan cannot terminate the Lease Deed which was granted for 99 years to the Appellant. The Appellant has also prayed for setting aside the impugned order dated 23.06.2023
Respondent:
1) Counsel submitted that the RP has prepared the Information Memorandum on the basis of attachment orders available from the Directorate of Enforcement. The Suspended Directors being unavailable, could not provide any inputs or documents. It is submitted that the RP conducted the proceedings in accordance with the IBC and CIRP Regulations. The two Valuers were appointed as per Regulation 35 of the CIRP Regulations, who have submitted their Report. No objection at any point of time was filed by the Appellant before the Adjudicating Authority.
2) Counsel submitted that Appellants, who were the Director and have grounded the Corporate Debtor are not entitled to be heard. Valuation was conducted as per Regulation 35 of the CIRP Regulations by the two Valuers, who have assessed all assets of the Corporate Debtor. It is submitted that period of CoC was extended till 24.08.2021, whereas Plan was approved on 13.08.2021.
3) Counsel submitted that Promoters have no locus to challenge the valuation. It is submitted that there was no challenge to valuation by any Member of the CoC, even in any paragraph of the Appeal, there was no challenge to the valuation and it is only by way of an additional affidavit, valuation is sought to be challenged by the Appellant.
4) Counsel submitted that land which is claimed by the Appellant by virtue of above Gift Deeds, were all land belonging to the Corporate Debtor and purchased from the consideration of the Corporate Debtor. It is submitted that the above land, which have been gifted to the Appellant were the land purchased by different Members of the family, directly from farmers, for which the consideration was paid to family Members by Hemanti Deepak Kulkarani and out of the said consideration, the individual family Members have purchased the land from farmers directly. Purchase by family Members of the Deepak Sakharam Kulkarni were all on the basis of money received from the Corporate Debtor/ its sister companies. Hence, the land did not belong to the individual family Members in whose name Sale Deeds were purchased.
Decision: NCLAT partly allowed appeal and dismissed some appeals.
Rationale:
1) NCLAT noted that land which is in the name of Appellant is also part of the integrated Township Project, which Project was got approved by the Corporate Debtor from State of Maharashtra. There is no dispute that integrated Township Project belongs to the Corporate Debtor, which is part of the assets of the Corporate Debtor and we do not find any flaw in Resolution Plan dealing with the entire land of integrated Township Project, which also consists of above 7.33 acres of land, which is in the name of the Appellant.
2) It held that the land was purchased from the consideration of the Corporate Debtor and its sister companies. Taking overall facts and circumstances into consideration, we are not persuaded to accept the submission of the Appellant that the land 7.33 acres of land situated at Fursungi, Pune be deleted from the Resolution Plan. We thus are satisfied that no error has been committed in dealing the aforesaid land 7.33 acres in the Resolution Plan and no exception can be taken by the Appellant to the Clause 13.8 in the facts of the present case as noted above.
3) It also noted that name of Appellant in whose favour the Gift Deed was executed on 29.09.2009 was only for namesake, and Appellant held the land as a son of Deepak Sakharam for the benefit of the Corporate Debtor, since utilising the funds from Corporate Debtor and its sister company, the entire land was purchased from Agriculturist in the name of relatives.
4) It noted that Corporate Debtor was admittedly owner of the lease land and lease land has been taken into CIRP by the RP. The building, which was constructed on the lease land, was the building constructed by the Appellant as per the terms and conditions of the Lease Deed and the Appellant is the owner of the building.
5) It explained that for example – a Corporate Debtor is owner of a building, which has been leased out for 30 years’ lease to a tenant on payment of yearly rent. When the building is taken in the CIRP, the tenant shall not be automatically deprived of his tenancy rights in the assets. The termination of tenancy can be only done in accordance with the Clauses of the lease, which, if permissible, may be done during CIRP or even thereafter. But by taking the building in the CIRP, rights of tenant cannot be extinguished.
6) It held that Resolution Plan could not have extinguished the rights of the Lessee, who owns the lease hold rights and the rights of the building erected thereon. The Resolution Plan has sought to do many things indirectly, which cannot be directly done.
Order:
