Delhi High Court - Orders
Manmohan Singh Bhalla vs Assotech Limited on 21 January, 2019
Author: Jayant Nath
Bench: Jayant Nath
$~CP-31
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 357/2015
MANMOHAN SINGH BHALLA ..... Petitioner
Through Ms.Neelam Rathore, Ms.Pooja
Sharma and Mr.Shaantanu Devansh, Advs. for
petitioner
versus
ASSOTECH LIMITED ..... Respondent
Through Mr.Amit Bansal and Ms.Seema Dolo,
Advs. for Religare Ltd./secured creditor
Mr.Rajiv Nayyar, Sr.Adv. with Mr.Tarun Singla,
Mr.K.C.Joshi and Mr.Vishal Bhardwaj, Advs. for
IDBI Trusteeship/secured creditor
Mr.Rumit K.Bhalla, Ms.Chetna Bhalla and
Mr.Rachit, Advs. for ICICI Bank Ltd.
Mr.Manish Shukla and Ms.Krishna Murari, Advs.
for applicant in CA 2045/2017
Ms.Lata Chauhan, Adv. for applicant in CA
56/2019 and CA 59/2019
Ms.Chandrika Gupta, proxy counsel for
Mr.Saakaar Sardana, Adv. for applicant in CA
113/2018
Mr.Manish Paliwal, Mr.Vikas Kumar and
Mr.Dheeraj Singh, Advs. for applicant in CA
882/2018
Mr.Gaurav Kejriwal and Mr.Sujit Keshri, Advs.
for social welfare association
Mr.Keshav Mohan, Mr.Rishi K.Awasthi and
Ms.Ritu Arora, Adv. for respondent
Ms.Sangeeta Chandra, Adv. for OL
Mr.Ashwarya Sinha, Adv. for Homebuyers of
Windsor Court & Breeze
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
CO.PET. 357/2015 Page 1 of 9
ORDER
% 21.01.2019
1. The OL has filed the status report. The conclusion of the status report is as follows:-
"11.Conclusion To sum up the position, it is opined that in the present case, keeping in mind the fact that the Company (in Liqn.) is a Real Estate Company, revival is a better option as compared to the option of liquidation.
The question would then arise as to who will revive the Company (in Liqn.)? This could either be the Ex-Management or a new investor.
It is felt that as the Ex-Management is familiar with all the projects of the Company (in Liqn.) they are in a better position to build/complete the projects in comparison to any new investor who would need time to evaluate the entire issue before making investment and any delay in the projects will only increase the outstanding amount of the Secured Creditors as well as the dues of the Government Authorities.
For this purpose, the Ex-Management shall have to build the confidence of the home buyers with complete facts and figures and take their consent through a meeting of the home buyers and establish that the majority of the home buyers are agreeable to have faith on the proposal of the Ex-Management for revival of the Company (in Liqn.). The Ex-Management will also need to take consent of the Secured Creditors.
The Ex-Management shall also have to bring in an upfront amount for starting the finishing process of almost ready built flats in the Company (in Liqn.). The Ex-Management has committed to bring an upfront amount of Rs.15 crores.
The Ex. Management also has to take steps to get a time bound refund of the money given/lent to other Companies. It has been observed from the aforementioned financial statement that the figure of loan and advance/investment to associate/subsidiary Company made is around Rs.228.45 Crores which is a major part of the revival amount. It appears that this amount seems to have been diverted/misappropriated by the Ex.Management. Therefore, it is CO.PET. 357/2015 Page 2 of 9 necessary for the Ex-Management to take expeditious steps to bring in these funds for revival of the Company (in Liqn.) forthwith with interest.
In case, the Ex-Management is not in a position to take steps as stated above, a paper publication will have to be made by the Official Liquidator with relevant facts and figures inviting any interested party who is prepared to invest in the completion of the projects under way after a physical verification. Decision on this will have to be taken based on the terms and conditions set out by the proposed investors.
A court appointed administrator will also be need to be appointed for looking after the Escrow accounts of the Company (in Liqn.)
12.That, therefore, if the Ex-Management is able to secure the consent of the home buyers and Secured Creditors, a time period of the first phase of 9 months can be given to fulfil their commitments as promised with the conditions that an administrator/CA will be appointed to see the inflow and outflow of the Company (in Liqn.) including in the Escrow accounts and also to ensure on monthly basis that the progress is going on as per the revival scheme."
2. Hence, essentially what the OL has proposed is that keeping in view the fact that the Ex. Management is familiar with the projects of the company it would be in a better position to build and complete the project in comparison to the new investors.
3. I have heard arguments of various learned counsel appearing in court regarding the options available for the purpose of trying to revive the company and completing the pending projects to enable completion of the flats/real estate space for the benefit of flat buyers. The best option appears to be to entrust the Ex-Management to complete the pending projects under the supervision of a Court Commissioner appointed preferably a retired High Court Judge and the OL. The other prospect of, namely, trying to invite investors to come forward to take control of the company /its assets CO.PET. 357/2015 Page 3 of 9 and complete the pending projects appears to be a long drawn affair and may not generate success.
4. The Ex. Management has also put up an action plan. The conclusion of the action plan reads as follows:
"Conclusion:
The action plan submitted by the Ex. Management highlights the following issues:
a. In the first 9 months, the company shall infuse the following funds:
Rs.15 Cr. Upfront.
Rs.12 Cr. from Associate Companies (The repayment is duly supported by undertakings).
b. 169 Flats/Units shall be handed over to the Home Buyers in the first 9 months as under:-
1. Celesta Tower : 11 flats including 2 flats of the
2. Assotech Windsor Court : 33
3. The Nest : 25 c. However, there are further scope of handing over another 50 flats in Assotech Windsor Court over and above committed 169 flats.
d. The delivery of aforesaid flats will generate approximately Rs.25 Cr.
e. Secured Creditors shall receive an amount of approximately Rs.9 Cr.
f. Noida Authority will receive approximately Rs.10 Cr. towards land premium.
g. Unsecured Creditors are being paid Rs.7 Cr.
The copy of the detailed Action Plan is enclosed herewith. It is submitted that the company and its Ex.Directors (themselves Civil Engineer) are in the real estate business since last 32 years. They have successfully delivered over 20 thousand flats pan CO.PET. 357/2015 Page 4 of 9 India.
The Ex. Directors are well versed and have vast experience, expertise in real estate business and are well equipped to perform as per their commitment."
5. On the last date of hearing various proposals to take the pending projects of the respondent company forward were discussed. Today also these proposals have been discussed. The consensus that has emerged amongst most counsel is that this court may pass the following order/direction:-
(i) A retired Judge of the High Court is appointed as the Court Commissioner to supervise the completion of the pending three projects, namely, Celesta Tower, Sector-44, Noida; Windosr Court. Sector-78 and; The Nest, Crossing Republik, Ghaziabad.
(ii) The construction of the three towers in question and to ensure completion of construction would be undertaken by the respondent company under supervision of Mr.Sanjeev Srivastav, Ex. Director of the respondent company. The said company is allowed access to these three assets for the purpose of carrying out completion of the construction and handing over possession of the completed units to respective investors/flat buyers.
(iii) The Ex. Management will open an escrow account and will deposit a sum of Rs.5 crores in the escrow account within three weeks from today.
The said escrow account will be used exclusively only for the purpose of completion of construction of the above three pending projects and related miscellaneous expenses. All revenues/receipts will be deposited into the said account. The Ex. Director Mr.Sanjeev Srivastav will file undertaking in the CO.PET. 357/2015 Page 5 of 9 Court not to utilise the funds received in any other manner contrary to the terms of this order.
(iv)The Ex. Management will remain bound by the aforesaid action plan and will make necessary payments to the secured and unsecured creditors in terms of the plan. They will also ensure necessary payments are brought in by the Ex. Management and the associate companies.
(v) The Ex. Management is free to raise loans for the purpose of completion of the project. For the said purpose any formalities that are required to be completed they are free to do so subject to approval of the Court Commissioner
(vi) The Ex. Management would be entitled to demand and receive payments from the flat buyers in terms of the agreements already executed by them. In the eventuality any home/flat buyers does not respond to such demands for payments they would suffer necessary consequences, as per law.
(vii) The entire supervision of the finances and handing over of possession of the completed flats to the flat buyers would be done under the control and supervision of the Court Commissioner. No immoveable property shall be sold/parted with or mortgaged without prior permission of the Court Commissioner.
(viii) The Court Commissioner is free to ask for any information/detail including pending accounts from the Ex. Management/Official Liquidator. The Court Commissioner shall monitor the inflow and outflow from the escrow account. He will also file the monthly progress reports before this court.
(ix) The Official Liquidator shall cooperate and provide all assistance to the CO.PET. 357/2015 Page 6 of 9 Court Commissioner.
(x) Any of the flat buyers, if he has any issue, is free to approach the Official Liquidator/Court Commissioner who may pass appropriate directions.
6. At this stage, learned senior counsel appearing for the IDBI Trusteeship Limited which is a secured creditor and has given a principal loan of Rs.30 crores states that they have strong objection to this order being passed inasmuch as the Ex. Management should at least pay an amount of Rs.10 crores upfront, for approval of his clients to the proposed order. He submits that the land of the two main projects, namely, Windsor Court and The Nest are mortgaged with the secured creditor.
7. Learned counsel for the Ex. Management, however, states at best they can pay Rs.4 to 5 crores each to the secured creditors within a period of nine months,
8. Let the Ex. Management have a meeting with the secured creditor at Andheri Office of Essel Finance on 29.01.2019 at 11:00 A.M. to try and sort out the issue.
9. List for arguments on the objection of the secured creditors on 05.02.2019. I withhold the above order for the time being.
10. SFIO has filed a preliminary report. In the report, SFIO has pointed out that analysis of the financial statements show that the respondent company has made investments. The details of the investments made from 2010-2011 to 2016-2017 by the respondent company have been spelt out in the report. The report also states that the respondent company has entered into financial transactions with related parties. Letters have been sent to the companies in which the investments were made and related parties seeking details and the purpose of transaction of the investments made. Most of the CO.PET. 357/2015 Page 7 of 9 letters have been returned undelivered. The report says that investments have been made in number of subsidiaries and associate companies, LLPs, Partnership Firms and other companies.
11. In my opinion it would be in the interest of justice that steps are taken for recovery of this outstanding amount by the Official Liquidator.
12. Issue notice to the following companies to show cause as to why they should not be directed to refund to the respondent company the amounts these companies received as loans from the respondent:-
SUBSIDIARIES ASSOTECH CP INFRASTRUCTURE PVT. LTD. (EQ9900X10) ASSOTECH GLOBAL (MAURITIUS) LTD ASSOTECH HOTELS PVT. LTD.
EXPRESS HOSPITALITY PVT. LTD.
IINDEX IMPEX (P) LTD.
PRATIBHA IMPEX PVT. LTD.
ASSOTECH RIDGE GREE REALTY PVT. LTD.
ASSOCIATES ASSOTECH MOONSHINE URBAN DEVELOPERS PVT. LTD.
ASSOTECH MOONSHINE URBAN DEVELOPERS PVT. LTD.
ASSOTECH BEBL INFRASTRUCTURE PVT. LTD.
ASSOTECH CORPORATE PARKS PVT.
LTD.
ASSOTECH HEALTHCARE SERVICES PVT. LTD.
LLPS ASSOTECH NEW CITY LLP CO.PET. 357/2015 Page 8 of 9 IMPREGNABLE REALTY LLP PLUM PAD RELATY LLP REGULUS REALTY LLP SUNGROWTH URBAN DEVELOPERS LLP SUNGROWTH INVEST REALTY LLP PARTNERSHIP FIRMS ASSOTECH SUPERTECH JOINT VENTURES INVESTMENT IN PROPERTY SECTOR-24 NOIDA 7 FLATS IN ANTRIKSH IN SECTOR 78 NOIDA INVESTMENT IN OTHER COMPANIES APV RELATY LTD.
CROSSING INFRASTRUCTURE PVT.
LTD.
PARAMOUNT HOMLAND PVT. LTD.
SUPERTECH INFRASTRUCTURE P. LTD.
ANGUL BUS TERMINAL COMPANY TERMINAL PVT. LTD.
13. List on 05.02.2019.
JAYANT NATH, J.
JANUARY 21, 2019/n CO.PET. 357/2015 Page 9 of 9