In the matter of Starlite Infracon Private Limited

I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 In the matter of: Under section 7 of the Insolvency and Bankruptcy Code, 2016. In the matter of: Reliance Home Finance Limited ... Financial Creditor Versus Starlite Infracon Private Limited ... Corporate Debtor I.A. (IB) No. 314/KB/2021 An application under section 43, section 45, section 49 and section 66 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 In the matter of: Niraj Kumar Agarwal, Resolution Professional of Starlite Infracon Private Limited … Applicant Versus 1. Mudit Poddar 2. Manoj Kumar Poddar 3. Md. Sadique Islam

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 4. Rafiza Nusrat 5. Sahajaham Molla 6. Puja Roy 7. Md Sarique Islam 8. Zakir Hussain Khan Saheb 9. Vikram Singh 10. Neelam Singh 11. Binod Chakraborty 12. Sk. Jahangir Ali 13. Avecon Infrastructure Pvt. Ltd. 14. Sk. Jahangir Ali, Sole Proprietor of Creative Construction & Company 15. Dipanjan Mukherjee 16. Anuradha Shaw 17. Vijay Kumar Shaw 18. Sanjib Chowdhury 19. Debolina Biswas 20. Koushik Bandopadhyay 21. Mainak Bandopadhyay 22. Sumita Banerjee 23. Dilu Mondal 24. Bina Mondal 25. Biswajit Ghosh Roy 26. Sanwaj Mondal 27. Safiuddin Mondal 28. Rubina Khatoon 29. Rahul Bhandari 30. VAB Commercial Private Limited 31. Arpita Mukherjee 32. Sharmila Sengupta 33. Shampa Dutta

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 34. Anil Kumar Sharma 35. Monika Sharma … Respondents Coram: Shri Rohit Kapoor, Member (Judicial) Shri Harish Chander Suri, Member (Technical)

Appearances (via hydrid mode): For the Resolution Professional : Mr. Saurav Jain, Advocate For Respondent No. 9, 10, 23, : Mr. Shwetaank Nigam, Advocate 24, 32, 33 Date of Hearing: 21.03.2022 Date of pronouncing the order: 06.07.2022 ORDER Per : Rohit Kapoor, Member (Judicial): 1. This Court convened through hybrid mode. 2. This I.A. has been filed under section 43, section 45, section 49 and section 66 of the Insolvency and Bankruptcy Code, 2016 was filed on 10.02.2021 seeking reliefs against the suspended Board of Directors and parties to whom flats have been sold. 3. There are as many as 35 Respondents and notice was issued by this Adjudicating Authority on 07.04.2021. The Respondents Nos. 9, 10, 23, 24, 32 and 33 have filed their reply whereas the right of the Respondents who did not file their reply was closed. 4. Coming to the contentions of the Resolution Professional and appearing Respondents, it is relevant to point out that the Company Petition (IB) No. 676/KB/2019 under section 7 before this Adjudicating Authority. 5. This Adjudicating Authority admitted the section 7 petition on 16 March 2020 and Mr. Niraj Kumar Agarwal was appointed as the Interim

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 Resolution Professional (“IRP”). The Applicant was then appointed as the Resolution Professional on 08.10.2020. 6. The IRP published Form A for inviting claims on 20.03.2020 in two leading newspapers and issued invitation for Expression of Interest (“EoI”) in Form G on 08.10.2020, by making advertisement in two newspapers viz. Business Standard and Aajkal and designated website of IBBI. 7. In this publication, Starlite Infracon Private Limited is shown to be the Corporate Debtor along with other details in Form G issued by the Resolution Professional. 8. The Resolution Plan was filed before this Adjudicating Authority on 10.02.2021. Coming to the contents of I.A. (IB) No. 314/KB/2021 filed by the Resolution Professional on 10.02.2021. The factual position as pleaded by the Applicant is summarised herein below: Sl Respondent Contention Date Transactions No. 1. Respondent Sale of Flat Agreement of Sale: Undervalued Nos. 3 & 41 No. 1B, Block 09.04.2019 and A of DNP Transfer of title of fraudulent Heights for property:26.09.2019 Rs.25,67,000/- 2. Respondent Sale of Flat Agreement of Sale: Undervalued No. 5 No. 1B, Block 03.04.2019 and A of DNP Transfer of title of fraudulent Heights for property:26.09.2019 Rs.22,50,000/- 3. Respondent Sale of Flat Agreement of Sale: Undervalued No. 6 No. 1G, Block 04.02.2020 and A of DNP fraudulent Heights for Rs.16,58,000/- 4. Respondent Sale of Flat Agreement of Sale: Undervalued No. 7 No. 3G(1), 04.04.2019 and Block A of Transfer of title of fraudulent DNP Heights property:13.03.2020

1 Written as Respondent Nos. 9 and 10 in paragraph 12 which does not correspond with the causetitle.

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 for Rs.13,85,000/- 5. Respondent Sale of Flat Agreement of Sale: Undervalued No. 8 No. 5G(2), 04.04.2019 and Block A of fraudulent DNP Heights for Rs.8,32,000/- 6. Respondent Sale of Flat Agreement of Sale: Undervalued, Nos. 9 & 10 No. 4B, Block 23.06.2017 fraudulent, B of DNP Transfer of title of and Heights for property:19.03.2019 preferential Rs.21,00,000/- 7. Respondent Sale of Flat Agreement of Sale: Undervalued No. 11 No.4G, Block 25.03.2019 and A of DNP (unregistered) preferential Heights for Rs. 23,66,000/- 8. Respondent Sale of flats Agreement of Sale: Undervalued, Nos. 12, 13 10.01.2017 fraudulent and 15 (unregistered) and preferential 9. Respondent Sale of Flat Agreement of Sale: Undervalued, Nos. 13, No. 2B, Block 10.01.2017 fraudulent 14, 16 & 17 A of DNP (unregistered) and Heights for Deed of preferential Rs. Conveyance 20,00,000/- 07.02.2018 10. Respondent Sale of Flat Agreement of Sale: Undervalued, Nos. 13, No.2C, Block 10.01.2017 fraudulent 14, 16 &.17 A of DNP (unregistered) and Heights for Deed of preferential Rs. Conveyance 19,28,000/- 17.02.2018 11. Respondent Sale of Flat Agreement of Sale: Undervalued, Nos. 13, No. 2D, Block 10.01.2017 fraudulent 14, 18 & 19 A of DNP (unregistered) and Heights for preferential Rs. 20,08,000/-

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 12. Respondent Sale of Flat Agreement of Sale: Undervalued, Nos. 13, No. 5C, Block 10.01.2017 fraudulent 14, 20, 21 B of DNP (unregistered) and & 22 Heights for preferential Rs. 25,92,000/- 13. Respondent Sale of Flat Agreement of Sale: Undervalued No. 23 & No.1F, Block 11.03.2016 and 24 B of DNP (unregistered) fraudulent Heights for Rs. 30,94,000/- 14. Respondent Sale of Flat Agreement of Sale: Undervalued No. 25 No. 4A, Block 09.03.2016 and A of DNP Transfer of title of fraudulent Heights for property: Rs. 17.02.2020 35,25,250/-and garage for Rs.2,00,000/- 15. Respondent Sale of Flat Agreement of Sale: Undervalued No. 26 No.3G1, 03.04.2019 and Block A of (cancelled) fraudulent DNP Heights for Rs.13,54,000/- 16. Respondent Sale of Flat Agreement of Sale: Undervalued No. 27 No. 4B, Block 03.04.2019 and A of DNP (cancelled on fraudulent Heights for 01.02.2020) Rs. 16,70,000/- 17. Respondent Sale of Flat Agreement of Sale: Undervalued No. 28 No. 3D, Block 03.04.2019 and A of DNP (cancelled on fraudulent Heights for 01.02.2020) Rs.16,70,000/- 18. Respondent Sale of Flat Agreement of Sale: Undervalued Nos. 29, 30 No. 5A, Block 12.03.2015 and A of DNP fraudulent Heights for Rs. 35,25,250/-

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 19. Respondent Sale of Flat Agreement of Sale: Undervalued No. 31 No. 5(G1), 18.11.2016 and Block A of fraudulent DNP Heights for Rs. 16,57,000/- 20. Respondent Sale of Flat Deed of Undervalued Nos. 33 & No. 2F, Block Conveyance: and 34 B of DNP 23.03.2018 fraudulent Heights for Rs. 15,58,000/- 21. Respondent Sale of Flat Agreement of Sale: Undervalued Nos. 34 & No. 5A, Block 29.12.2017 and 35 B of DNP fraudulent Heights for Rs. 31,00,000/- 9. It is further revealed from this Application that the Committee of Creditors (“CoC”) proposed the appointment of forensic auditor M/S Bhandari and Co. to conduct the forensic audit of the Corporate Debtor. 10. The forensic auditor submitted its report dated 15.12.2020, a copy of the report has been annexed with the I.A. and marked with the Letter “C”. 11. The Applicant has further stated that he has gone through the said report and the records made available to the Applicant by the Corporate Debtor as also the documents which were available in the public domain and the Applicant is of the opinion that the transactions fall under preferential, undervalued and fraudulent transactions with an intent to defraud the creditors of the Corporate Debtor. Reply of the Respondent Nos. 9 and 10 12. The Respondent Nos. 9 and 10 disputed and denied the contents of the application filed by the Resolution Professional 13. They stated that have purchased a flat measuring 1425 sq. ft. and covered garage at a consideration of Rs.21,00,000/- and the said flat was sold during the ordinary course of business.

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 14. The Flat was not handed over to the answering Respondents within time. The absence of Board Resolution is an internal document and hence the answering Respondents are not concerned. 15. The Deed of Conveyance was entered into on 23.06.2017, which is almost three years prior to the date of initiation of CIRP. Reply of the Respondent Nos. 23 and 24 16. It is submitted that the Respondent Nos. 23 and 24 had purchased a flat measuring 1190 sq. ft. and covered garage at a consideration of Rs.30,94,000/- and the said flat was sold during the ordinary course of business. 17. The Flat was not handed over to the answering Respondents within time. The absence of Board Resolution is an internal document and hence the answering Respondents are not concerned. 18. The Agreement for Sale was entered into on 11.03.2016, which is almost four years prior to the date of initiation of CIRP. Reply of the Respondent Nos. 32 and 33 19. The Respondent Nos. 32 and 33 submitted that the Respondent Nos. 32 and 33 had purchased a flat measuring 1190 sq. ft. and covered garage at a consideration of Rs.15,58,000/- and the said flat was sold during the ordinary course of business. 20. The Flat was not handed over to the answering Respondents within time. The absence of Board Resolution is an internal document and hence the answering Respondents are not concerned. 21. The Deed of Conveyance was entered into on 23.03.2018, which is almost two years prior to the date of initiation of CIRP. Analysis and Findings 22. The Resolution Professional has contended that the transactions are undervalued, preferential and fraudulent in nature. For convenience, the undervalued amount for each of the transactions as stated by the Resolution Professional, has been tabulated hereunder:

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 Sl Respondent Agreement Price Circle Value Undervalue No. (Rs.) (Rs.) (Rs.) 1. Respondent Rs. 25,67,000/- @ Rs. 39,62,000/- Rs.13,95,000/- Nos. 3 & 42 Rs 1814/sq ft @Rs. 2800/ sq ft 2. Respondent Rs. 22,50,000/-@ Rs. 31,50,000/-@ Rs.9,00,000/- No. 5 Rs 2000/sq ft Rs. 2800/ sq ft 3. Respondent Rs. 16,58,000/- Rs.25,48,000/- Rs.8,90,000/- No. 6 @ Rs 1800/sq ft @Rs. 2800/ sq ft 4. Respondent Rs.13,85,000/- Rs.26,39,000/- Rs.12,54,000/- No. 7 @ Rs 1500/sq ft @Rs. 2800/ sq ft 5. Respondent Rs.8,32,000/- Rs.14,56,000/- Rs.6,24,000/- No. 8 @ Rs 1500/sq ft @Rs. 2800/ sq ft 6. Respondent Rs.21,00,000/- Rs.42,70,800/- Rs.22,75,000/- Nos. 9 & 10 @ Rs 1400/sq ft+ @Rs. 2800/ sq ft Car Park 7. Respondent Rs.23,66,000/- Rs.25,48,000/- No. 11 910 sq ft @ Rs @Rs. 2800/ sq ft 2600/sq ft 8. Respondent Rs.21,04,000/- Rs.36,12,000/- Rs.13,95,000/- Nos. 12, 13, @ Rs 1600/sq ft+ @Rs. 2800/ sq ft 14 and 15 Car Park 9. Respondent Rs.20,00,000/- Rs.35,11,250/- Rs.15,11,250/- Nos. 13, 14, @ Rs. 1600/-sq ft+ @ 2800/ sq ft + 16 & 17 car park car park 10. Respondent Rs.19,28,000/- @ Rs.34,12,800/- Rs.14,84,800/- Nos. 13, 14, 1600 /sq ft @2800/sq ft + car 16 &.17 park 11. Respondent Rs.20,08,000/- Rs.34,44,000/- Rs.14,26,000/- Nos. 13, 14, @1600/sq ft+ Car @2800/sq ft +Car 18 & 19 park park 12. Respondent Rs.25,92,000/- Rs.44,60,000/- Rs.18,68,000/- Nos. 13, 14, @1600+ car park 20, 21 & 22

2 Written as Respondent Nos. 9 and 10 in paragraph 12 which does not correspond with the causetitle.

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 13. Respondent Rs.30,94,000/- Rs.33,32,000/- Rs.2,38,000/- No. 23 & 24 @ Rs 2600/sq ft @Rs. 2800/ sq ft 14. Respondent Rs.35,25,250/- Rs.43,84,300/- Rs.8,59,050/- No. 25 @ Rs 2350/sq ft+ @Rs. 2900/ sq ft Car Park 15. Respondent Allotment of flats were cancelled before commencement of No. 26 CIRP. Prayer is not pressed against these respondents. 16. Respondent No. 27 17. Respondent No. 28 18. Respondent Rs.35,25,250/- Rs.42,42,000/- Rs.7,16,750/- Nos. 29, 30 @ Rs 2350/sq ft+ @Rs. 2800/ sq ft Car Park 19. Respondent Rs.26,57,000/- Rs.2748000/- No. 31 @Rs. 2800/ sq ft @ Rs 2700/sq ft+ Car Park 20. Respondent Rs.15,58,000/- Rs.33,43,900/- Rs.17,85,900/- Nos. 33 & @ Rs 1309/sq ft @Rs. 2810/ sq ft 34 21. Respondent Rs. 31,00,000/- Rs.43,26,000/- Rs.12,26,000/- Nos. 34 & @ Rs 2000/sq ft+ @Rs. 2800/ sq ft 35 Car Park

23. The above transactions have been determined to be under valued by the Resolution Professional. The above chart also shows the amount of under valued amount of each of such transactions. We have gone through the application filed by the Resolution Professional and the averments contained therein. 24. It is relevant to note here the Resolution Professional while forming his opinion has referred to a forensic auditor report dated 15th of December, 2020. Copy of which has been annexed as Annexure- C along with documents mentioned therein. The details of each transaction have been incorporated in the averments in this application. The Resolution Professional has also referred to the transactions as fraudulent in relation to a suspended board of management.

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 25. From the contents of the application and the averments contained therein, it is clear that there has been a determination regarding these transactions being undervalued, fraudulent and preferential and the Resolution Professional has dealt with each of these transactions separately. 26. Now seen in the context of law laid down by the Hon’ble Supreme Court in Anuj Jain vs. Axis Bank Limited and Ors., MANU/SC/0228/2020, observed in paragraph 29.1 as follows: “29.1. However, we are impelled to make one comment as regards the application made by IRP. It is noticed that in the present case, the IRP moved one composite application purportedly Under Sections 43, 45 and 66 of the Code while alleging that the transactions in question were preferential as also undervalued and fraudulent. In our view, in the scheme of the Code, the parameters and the requisite enquiries as also the consequences in relation to these aspects are different and such difference is explicit in the related provisions.

As noticed, the question of intent is not involved in Section 43 and by virtue of legal fiction, upon existence of the given ingredients, a transaction is deemed to be of giving preference at a relevant time. However, whether a transaction is undervalued requires a different enquiry as per Sections 45 and 46 of the Code and significantly, such application can also be made by the creditor Under Section 47 of the Code. The consequences of undervaluation are contained in Sections 48 and 49. Per Section 49, if the undervalued transaction is referable to Sub-section (2) of Section 45, the Adjudicating Authority may look at the intent to examine if such undervaluation was to defraud the creditors. On the other hand, the provisions of Section 66 related to fraudulent trading and wrongful trading entail the liabilities on the persons responsible therefor. We are not elaborating on all these aspects for being not necessary as the transactions in question are already held preferential and hence, the order for their avoidance is required to be approved; but it appears expedient to observe that the arena and scope of the requisite enquiries, to find if the transaction is undervalued or is intended to defraud the creditors or had been of wrongful/fraudulent trading are entirely different.

Specific material facts are required to be pleaded if a transaction is sought to be brought under

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 the mischief sought to be remedied by Sections 45/46/47 or Section 66 of the Code. As noticed, the scope of enquiry in relation to the questions as to whether a transaction is of giving preference at a relevant time, is entirely different. Hence, it would be expected of any resolution professional to keep such requirements in view while making a motion to the Adjudicating Authority.”: We are of the view, the Resolution Professional has considered the above aspects laid down in the above referred judgment while determining these transactions under Section 43, 45 and 66 of the Code while determining these transaction and forming his opinion. 27. Let us now consider whether these transactions have taken place within the look back period with respect to undervalued and preferential transactions i.e. one year preceding the insolvency commencement date. From the table given in paragraph 8 above, it is pertinent to note that only the transactions that have been entered into with Respondent Nos. 3, 4, 5, 6, 7, 8, 11 fall within the look back period. 28. The Resolution Professional has clearly determined the undervalued transactions as well as preferential and fraudulent transactions. There transactions entered into with Respondent Nos. 3, 4, 5, 6, 7, 8, 11 by the Respondent Nos. 1 and 2 were clearly done with the intention to defraud the other creditors, hence, the Respondent Nos. 1 and 2 have entered into fraudulent transactions. 29. In view of the position as mentioned above, we hereby allow this application and grant the relief as directed hereunder: The Respondent Nos. 1, 2, 3 and 4 are directed to jointly deposit a sum of Rs.13,95,000/-, Respondent Nos. 1, 2 and 5 are directed to jointly deposit a sum of Rs. 9,00,000/-, Respondent Nos. 1, 2 and 6 are directed to jointly deposit a sum of Rs. 8,90,000/-, Respondent Nos. 1, 2 and 7 are directed to jointly deposit a sum of Rs.12,54,000/-, Respondent Nos. 1, 2 and 8 are directed to jointly deposit a sum of Rs.6,24,000/-, Respondent Nos. 1, 2 and 11 are directed to jointly deposit a sum of Rs.28,28,000/- to the Resolution Professional/Monitoring Agency, within two months from the date of this order.

KOLKATA BENCH Niraj Kumar Agarwal v. Mudit Poddar I.A. (IB) No. 314/KB/2021 in C.P. (IB) No. 676/KB/2019 30. I.A. (IB) No. 314/KB/2021 is, therefore, disposed of with the above directions. 31. The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Counsel for information and for taking necessary steps. 32. Certified Copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

Harish Chander Suri Rohit Kapoor Member (Technical) Member (Judicial) The order is pronounced on the 6th day of July, 2022.

GGRB_LRA/Safura_LRA