Resolution Plan Dismissed Over Statutory Non-Compliance and Accusations of Misconduct Against Resolution Professional
In a significant ruling, the National Company Law Tribunal (NCLT) in New Delhi has rejected the resolution plan for Kalka Home Developers Pvt. Ltd., citing non-compliance with statutory provisions and serious allegations of fraudulent activities by the Resolution Professional (RP). The tribunal's decision mandates a fresh corporate insolvency resolution process (CIRP) with the appointment of a new Interim Resolution Professional (IRP), Mr. Vikram Kumar, to oversee the proceedings.
The bench, comprising Judicial Member Mr. Ashok Kumar Bhardwaj and Technical Member Mr. Atul Chaturvedi, scrutinized the conduct of the existing RP, Mr. Mukesh Gupta, following allegations of fraudulent transactions and the siphoning of assets during the CIRP. The allegations were raised by Mr. Deepak Mangla, a suspended director of Kalka Home Developers, in an application under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016.
The tribunal found that the resolution plan proposed was below the liquidation value, violating Section 30(2)(b) of the IBC, which mandates that operational creditors receive no less than the amount payable in the event of liquidation. Additionally, the plan failed to adequately address the cause of default or provide a feasible implementation schedule, as required by Regulation 38(3)(a).
Serious allegations against the RP, including manipulating the voting process and transferring properties to promoters and their relatives instead of filing necessary applications under Section 66 of the IBC, were considered grave enough to reject the resolution plan. The tribunal emphasized the importance of maximizing the value of the corporate debtor's assets while ensuring compliance with the statutory framework.
Moreover, the tribunal noted the RP's failure to secure claims from the majority of the corporate debtor's allottees and creditors, further questioning the integrity of the CIRP. The tribunal has ordered the new IRP to issue a fresh call for claims and complete the process, including forming a new Committee of Creditors (CoC), within 150 days. If the process is not completed in this timeframe, the corporate debtor will face liquidation.
The tribunal has also appointed Mr. Diwakar Maheshwari, Advocate, to supervise the process pro-bono and authorized him to appoint a Forensic Auditor if necessary. The costs for the forensic audit will be borne by the applicant in the original application.
This ruling underscores the NCLT's commitment to ensuring transparency and statutory compliance in the insolvency resolution process, while also addressing serious allegations of misconduct that could undermine the integrity of the process.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Conduct of Resolution Professional (RP) scrutinized for alleged fraudulent activities during the Corporate Insolvency Resolution Process (CIRP). Resolution plan rejected due to non-compliance with statutory provisions, including maximization of asset value and addressing operational creditors' dues. Fresh process initiated with appointment of new Interim Resolution Professional (IRP).
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Sections 12, 30(2)(b), 66; Regulation 38(3)(a); Regulation 6A; National Company Law Tribunal Rules, 2016 - Rule 11
DCB Bank Ltd. v. Kalka Home Developers Pvt. Ltd., (NCLT)(New Delhi) : Law Finder Doc id # 2942490
