Roshan Lal Sancheti Director (Power ... vs Tiffany Finance Private Limited

(Arising out of the Order dated 16.07.2024 passed by the National Company Law Tribunal, Jaipur Bench, in CP IB No. 01/07/JPR /2023)

IN THE MATTER OF:

1. Roshan Lal Sancheti Director (Power Suspended) Sancheti Buildtech Pvt. Ltd. Having its registered office at 13, Hari Sewa Marg, Bhilwara -311001 (Rajasthan) Email: rlsancheti20@gmail.com ...Appellant No. 1

2. Asha Devi Sancheti Director (Power Suspended) Sancheti Buildtech Pvt. Ltd. Having its registered office at 13, Hari Sewa Marg, Bhilwara -311001 (Rajasthan) Email: ashasancheti08@gmail.com ...Appellant No. 2

Versus

1. M/s Tiffany Finance Pvt. Ltd. Through its Director Having its registered office at 1st Floor, Tiffany Tower, Near Fani Ki Tanki, Sham Ki Sabji, Mandi, Bhilwara, Rajasthan Email: info@tiffanyfinance.com ...Respondent No.1

2. Sancheti Buildtech Pvt. Ltd. Through Mr. Rishabh Chand Lodha, Resolution Professional Reg. No. IBBI/IPA-001/IP- P01075/2017-2018/11766 -Office at E-5, Shraman Basant V.ihar,Gandhi Nagar, Bhilwara, Rajasthan- 311001. Email: cirp.sancheti@gmail.com ...Respondent No.2 Comp. App. (AT) (Ins.) No. 1678 of 2024

3. Prateek Sancheti A 194/195, Sahpura House Love Garden Road, R K Colony Bhilwara-311001 Email: prateeksancheti17@gmail.com ...Respondent No. 3

Present For Appellants: Mr. Aditya Madaan, Mr. Prabhar P., Advocates.

For Respondents: Mr. Abhishek Naik, Ms. Gulafsha Kureshi and Ms. Khushi Chauhan, Advocates for R-1. Mr. Rishabh Chand Lodha, Advocate

JUDGEMENT

(02.05.2025)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed by Roshan Lal Sancheti and Asha Devi

Sancheti (Appellants herein) who are the Suspended Directors of Sancheti

Buildtech Private Limited i.e., Respondent No. 2 herein challenging the

Impugned Order dated 16.07.2024 filed under Section 61 of the Insolvency and

Bankruptcy Code, 2016 (Code'') passed by the National Company Law Tribunal,

Jaipur Bench (Adjudicating Authority) in C.P.(IB) No. 01/07/JPR/2023., where

the Adjudicating Authority has admitted an application under Section 7 of the

Code filed by the Respondent No. 1 i.e., M/s Tiffany Finance Pvt. Ltd.

2. Sancheti Buildtech Private Limited who is the Corporate Debtor) is the

Respondent No. 2 herein and Mr. Prateek Sancheti, one of borrower, is the

Respondent No. 3 herein.

Page 2 of 17

Comp. App. (AT) (Ins.) No. 1678 of 2024

3. It is noted that the Corporate Debtor along with Mrs. Asha Devi Sancheti,

Mr. Prateek Sancheti, Mr. Roshan Lal Sancheti, M/s Sancheti Traders and

Sancheti Buildtech Private Limited (jointly termed as borrowers hereinafter ) had

approached the Respondent No. 1 (Financial Creditor) for availing financial

facilities of availing Rs. 5.85 Crores. Three loan agreements were signed i.e., of

Rs. 1.5 Crores vide Loan Agreement bearing No. TL/MTG-483 dated 19.04.2021

referred to as Loan Agreement No. 1, another loan of Rs. 1.5 Crores vide Loan

Agreement bearing No. TL/MTG-481 dated 19.04.2021 referred to as Loan

Agreement No. 2 and lastly loan of Rs. 2.85 Crores vide Loan Agreement bearing

No. TL/MTG-479 dated 19.04.2021 referred to as Loan Agreement No. 3.

4. It has been brought out to our notice that for these three loan agreements

several properties had been mortgaged in favour of the Respondent No. 1. The

Corporate Debtor could not adhere to the repayment schedule and thus, the loan

agreements were breached. It has also been brought out that the loan agreements

were foreclosed and the loans of the Corporate Debtor were classified as NPA on

19.04.2022.

5. It has been submitted before us that the Respondent No. 1 issued a demand

notice dated 10.11.2022 against the Corporate Debtor, however, the amount

remained unpaid and finally the application under Section 7 of the Code was filed

by the Respondent No. 1 before the Adjudicating Authority for Rs. 2,01,04,362/-

for loan no. 1 and Rs. 3,76,00,196/- for loan No. 2 and Rs. 2,01,04,379/- Loan

Page 3 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

No. 3. Thus, the total default for which application was filed under Section 7 of

the Code was of Rs. 7,78,08,937/- as on 17.10.2022.

6. It is the case of the Appellants that the fraud has been played upon by the

Respondent No.1/ Financial Creditor upon them. The Appellants submitted that

they were in financial discomfort and wanted financial assistance of Rs. 4.25

Crores only. The Appellants alleged that Mr. Virendra Ranka of Respondent No.

1/ Financial Creditor with mala-fide intention forced them to accept loans of Rs.

5.85 Crores. The Appellants alleged that the balance amount of Rs. 1.60 Crores

was meant to be transferred to Mr. Rounak Ranka son of Mr. Virendra Ranka.

The Appellants alleged that this circuitous root was adopted by the Financial

Creditor to siphon off the funds of the NBFC for his own son and Mr. Virendra

Ranka was conduit to funnel money of his son.

7. The Appellants conceded that three loan agreements were indeed executed

with the Sancheti's family member, however the Corporate Debtor were also

made a party at the instance of the Financial Creditor on the pretext that there are

dummy guarantors of the said loan agreement just to comply RBI Guidelines. The

Appellants further alleged that the Respondent No. 1 got loan agreement signed

by the Appellants and the other family members and the Corporate Debtor

wrongly as "borrower" instead of "guarantors.

8. The Appellants empathetically argued that their true status were of the

guarantors and not of the borrowers. The Appellant further argued that the term

Page 4 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

"guarantors" has been strategically struck off from the bottom of the pages of loan

agreement.

9. The Appellants submitted that based on the instructions of the Mr. Virendra

Ranka of Respondent No. 1, on 16.04.2021 Rs. 60 Lakhs were transferred to Mr.

Rounak Ranka by Mr. Roshan Lal Sancheti. Similarly, on 19.04.2021 Rs. 50

Lakhs was transferred by other Appellants i.e., Mrs. Asha Devi Sancheti to Mr.

Rounak Ranka again at the instructions of Mr. Virendra Ranka of Respondent No.

1 and finally another amount of Rs. 50 Lakhs was transferred from Mr. Prateek

Sancheti i.e., another alleged co-borrower into account of Mr. Rounak Ranka son

of Mr. Virendra Ranka of Respondent No. 1. The Appellants stated that by this

way Rs. 1.60 Crores was illegally got transferred by them into accounts of Mr.

Rounak Ranka son of Mr. Virendra Ranka of Respondent No. 1.,

10. The Appellants conceded that at the instance of Respondent No.1 they

made part payment of Rs. 10 Lakhs on 07.08.2021. The Appellants also brought

out that one statement agreement dated 09.09.2021 was executed between

Mr. Rounak Ranka, Mr. Virendra Ranka and the Appellants herein wherein the

Corporate Debtor and M/s Sancheti Traders were not made the parties to the said

settlement agreement as they were never borrower.

11. The Appellants argued that it is Sancheti's who had received money from

Respondent No. 1 and the Corporate Debtor has not received any money and

therefore there is no financial debt between the Corporate Debtor and Financial

Creditor. The Appellants empathetically argued that since no money was

Page 5 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

disbursed by the Financial Creditor to the Corporate Debtor, the application under

Section 7 could not have been initiated by the Respondent No. 1 and the Impugned

Order has been wrongly passed by the Adjudicating Authority.

12. The Appellants also brought out that on 11.03.2022 one Mr. Neeraj Saha,

representative of Respondent No. 1 filed a FIR No. 125/2022 against the

Appellants (Mr. Roshan Lal and Mrs. Asha Devi Sancheti along with Mr. Prateek

Sancheti) and in the FIR the allegation was made against the Sancheti's for not

paying the money and no allegation was made against the Corporate Debtor or

against them as directors of the Corporate Debtor. The Appellants further

submitted that Mr. Prateek Sancheti also filed a FIR No. 213/2022 against the Mr.

Virendra Ranka, Mr. Neeraj Shah and Mr. Rounak Ranka.

13. The Appellants alleged that Respondent No. 1 illegally issued Demand

Notice on 10.11.2021 dispatching three separate demand notices pertaining to

three distinct loan accounts sent to the Appellants as well as the Corporate Debtor

just to implicate the Corporate Debtor as the borrower. The Appellants further

pleaded that since there was no authorisation from the Corporate Debtor to the

Appellants to sign the loan agreements, the alleged loan agreements are illegal

and don't have force of law.

14. The Appellants further argued that loans disbursed were made into directly

personal accounts of Sancheti's and not to the Corporate Debtor and as such no

financial debt can exist between the Corporate Debtor and the Financial Creditor.

The Appellants also pleaded that no security or mortgaged facilities existed

Page 6 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

between the Respondent No.1 and the Corporate Debtor and as such the Corporate

Debtor cannot be proceeded against. The Appellants also refuted the allegations

regarding the account of the Corporate Debtor being classified as NPA.

15. The Appellants assailed the Impugned Order which treated the Appellants

and the Corporate Debtor as the co-borrowers rather than as guarantor. The

Appellants submitted that the Adjudicating Authority failed to understand the true

relationship between the Appellants and the Respondent No. 1 and also failed to

notice that there is no role whatsoever of the Corporate Debtor in the whole series

of transaction.

16. Concluding their arguments, the Appellants stated that since no money was

disbursed by the Respondent No.1 to the Corporate Debtor, there cannot be any

financial debt between Corporate Debtor and the Financial Creditor and

subsequently no default. The Appellants requested this Appellate Tribunal to

dismiss the Impugned Order and allow their appeal.

17. Per contra, the Respondent No.2, who is the main contesting Respondent

herein, denied all averments made by the Appellants as misleading and baseless.

18. The Respondent No. 1 gave details of the various loan agreements executed

legally between the Appellants and the Respondent No. 1, wherein the Appellants

have also signed as borrowers of the loan agreements. The Respondent No. 1

stated that in the year 2021, M/s. Sancheti Builders Pvt Ltd. ("Corporate Debtor")

along with Mrs. Asha Devi Sancheti, Mr. Prateek Sancheti, Mr. Roshan Lal

Sancheti and M/s Sancheti Traders (collectively known as "Borrowers") had

Page 7 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

approached the Financial Creditor/Respondent No.1 for seeking three business

loan facilities in the form of secure term loans by mortgaging property in favour

of the Financial Creditor/Respondent No.1 and pursuance thereof an amount of

Rs.5,85,00,000/- was sanctioned vide three loan agreement bearing No. TL-

MTG-479 dated 15th April 2021, TL/MTG-483, TL/MTG-481 dated 19th April

2021. The Respondent No. 1 highlighted the very first para of the Loan

Agreements where the names of Borrowers have been stated in the Schedule 1 to

the Loan Agreements and wherein names of all the five Borrowers including the

Corporate Debtor have been mentioned.

19. The Respondent No. 1 stated that the Borrowers initially re-paid the

instalments without any objection / protest and further assured to pay regularly.

Subsequently, the borrowers started defaulting, however, considering the

business relationship, multiple times, oral reminder were made by the Respondent

No. 1 to the Borrowers to regularize the accounts for which assurances were given

by borrowers but never complied with. As a consequence, the Borrowers started

defaulting in repayment of loan. It is the case of the Respondent No. 1 during that

the inspection / visit, he found that under the garb of availing business loans, the

Borrowers have misappropriated and siphoned off the funds. Consequently, the

Respondent No. 1 lodged a FIR being No. 125 / 2022 with PS City Kotwali,

Bhilwara, against Sh.Roshan Sancheti, Smt.Asha Devi Sancheti, and Sh.Prateek

Sancheti with the above reason stating offence committed under Section 420 /406

of IPC. The Respondent No. 1 stated that the Police has already filed a charged

Page 8 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

sheet upon which the appropriate court has also taken cognizance of the same and

further the Revision Petition filed against framing of charges by the Sancheti's

were also dismissed.

20. The Respondent No. 1 submitted that the Adjudicating Authority has

rightly passed the Impugned Order dated 16.07.2024 finding that there exists a

debt of Rs.5,85,00,000/- and default of the same, as such meets all the requirement

stipulated under Section 7 of the Code. The Respondent No. 1 denied the

allegations of the Appellants that the Directors of Respondent No. 1 were

involved in round tripping of Rs.1,60,00,000/- which is not correct. The

Respondent No. 1 pleaded that even for the sake of arguments, the allegations of

the Appellants are considered at its face value, and Rs.1,60,00,000/- is excluded

from the computation, the Borrowers still owed a debt of Rs.4,25,00,000/-. The

Respondent No. 1 stated that the disbursal of such amount is also not disputed by

the Appellants and the only contention raised by the Appellants is that the

disbursal was made to other Borrowers other than the Corporate Debtor, which is

also misleading inasmuch as the Borrowers themselves authorized such transfer

into the individual accounts as can be seen from the Schedule of each loan

agreements. The Respondent No. 1 stated that that the Creditors have right to

proceed against the co-borrowers in case of default.

21. The Respondent no. 1 also denied the allegations of the Appellants that

Respondent No. 1 pressurized them to avail loans and referred to loan agreements

Page 9 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

where it is clearly mentioned that it is borrowers who approached the lenders for

loan agreements.

22. The Respondent No.1 submitted that Clause 3 of the Demand notices dated

10.11.2022, clearly addressed the Appellants and others including the Corporate

Debtor as "Borrowers", however, no objection was raised. Moreover, in all the

memorandum for recording creation of mortgage by deposit of title deeds

executed by the respective mortgagee, name of all persons appears against the

head "Borrower's Name".

23. The Respondent No.1 denied that the Respondent No.1 exploited the

Borrowers in any manner whatsoever. The Respondent No.1 also denied that the

Borrowers only needed Rs. 4.25 Crores as loan amount. The Respondent No. 1

stated that the Borrowers were sanctioned loan amount to the extent it was sought

as per the Application Forms which was duly signed by all the Borrowers. The

Respondent No.1 denied that an amount of Rs.1,60,00,000/- transferred to

Mr. Ronak Ranka, or there was any sort of arrangement to siphon off money. The

Respondent No.1also denied that the Respondent No.1 and any of its officials

including the Directors are involved in any kind of siphoning off /

misappropriation of funds. The Respondent No. 1 submitted that on the contrary,

it is Borrowers who have indulged in siphoning / misappropriation of loan amount

for which the Respondent No. 1 got registered an FIR No.125 / 2021, in which

the chargesheet has been filed and the concerned Court has also taken cognizance

of the same and charges under Section 406, 415 of the IPC etc., has been framed.

Page 10 of 17

Comp. App. (AT) (Ins.) No. 1678 of 2024

24. The Respondent No.1 submitted that for the sake of arguments and without

admitting anything, even if the Corporate Debtor's status in the loan agreement

was that of a "Guarantor", still the Respondent No. 1 as per the provisions of the

Code as well as law very well settled by the Hon'ble Supreme Court of India, a

creditor has all the right to proceed against the Corporate Guarantor and the

Insolvency Application, as such is maintainable in the eyes of law.

25. The Respondent No.1 submitted that, the word "Guarantor(s)" was struck

off from the printed loan agreement as there were no guarantor(s) to the Loan

Agreements for signature as per the arrangement arrived at between the

Respondent No. 1 and the Corporate Debtor.

26. The Respondent No.1 denied that that as per instructions of Mr. Virendra

Prakash Ranka, an amount of Rs.60,00,000/- on 16.04.2021, Rs.50,00,000/- on

19.04.2021 and Rs.50,00,000/- on 22.04.2021 transferred from the Appellants

No.1, 2 and Respondent No.3's account respectively to Mr.Ronak Ranka account.

The Respondent No.1 also denied that the same amount was transferred as

predetermined scheme to funnel the money. The Respondent No.1 clarified that

the transactions as alleged were neither made towards the repayment of the loan

facilities nor the payment were received by the Respondent No. 1. The

Respondent No. 1 submitted that the alleged amount has been transferred is in the

name of "SCRIBBLING SHIPPING PRIVATE LIMITED" and the Respondent

No. 1 does not have any nexus with the alleged account No. 0061002101613993.

Page 11 of 17

Comp. App. (AT) (Ins.) No. 1678 of 2024

27. The Respondent No.1 denied that Mr. Virender Prakash Ranka i.e. director

of Respondent No. 1 himself transferred an amount of Rs.10,00,000/- to the

account of Mr. Roshan Lal Sancheti to enable him to pay the said amount to the

Respondent No. 1. The Respondent No. 1 submitted that the amount of Rs.

10,00,000/- in question was a loan in personal capacity by Virendra Prakash

Ranka to Roshan Lal Sancheti for repayment of which cheque No. 011619 dated

28.09.2021 payable out of Account No. 908001200000406, Mahesh Bank Branch

Bhilwara. The said cheque was submitted by Mr. Virender Prakash Ranka for

payment through his bank account but the same was dishonoured with the

endorsement "Funds insufficient". On failure to repay the cheque amount on

statutory demand notice under Section 138, Negotiable Instrument Act, 1881, Mr.

Virender Prakash Ranka submitted a Criminal Complaint being Case No. 4815 /

12 2021 for the offence of dishonour of cheque under Section 138 in the court of

Special Judicial Magistrate, Bhilwara. The said transaction among Mr. Virender

Prakash Ranka and Mr. Roshan Lal Sancheti was in their personal capacity and

has nothing to do with the loan transaction executed between the Borrowers

including Corporate Debtor and the Respondent No. 1.

28. The Respondent No.1 denied that Corporate Debtor and M/s. Sancheti

Trader were not made parties to the Settlement Agreement dated 09.09.2021 as

they were guarantor(s) and not borrower(s) and further denied that amount of

Rs.1,60,00,000/- was funnelled into account of Respondent's director's son. The

Respondent No. 1 denied that the settlement confirms the scheme whereby

Page 12 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

Sancheti's were made to borrow more than their actual requirement to facilitate

the transfer to Mr. Ranka's son. The Respondent No. 1 submitted that the

Corporate Debtor had failed to repay the outstanding dues as such Borrowers

approached the Respondent No. 1 and desperately wanted to settle the account by

selling their properties/assets. Therefore, considering the relationship between the

Parties, a Settlement Agreement dated 09.09.2021 was executed between Mr.

Roshan Lal Sancheti and Virendra Kumar Ranka whereby the Mr. Roashan Lal

Sancheti had agreed to sale certain immovable properties (more particularly

described in the settlement agreement) to Mr. Virendra Kumar Ranka, however

since Mr. Roshan Lal Sancheti did not honour the terms of the Settlement

Agreement dated 09.09.2021. In this background, the Respondent No. 1 was

compelled to file an application under Section of the Code.

29. Concluding his remarks, the Respondent No. 1 requested this Appellate

Tribunal to dismiss the appeals with exemplary cost.

Findings

30. It is noted that there has been financial arrangement among the Respondent

No. 1 and the Appellants along with other borrowers like Prateek Sancheti and

the Corporate Debtor who were all classified as borrowers. It is noted that total

Rs. 5.85 Crores loans were sanctioned through three loan agreements of Rs. 1.5

Crores dated 19.04.2021, Rs. 1.5 Crores dated 19.04.2021 and Rs. 2.85 Crores

dated 15.04.2021. The disbursement of money is not a disputed fact and is taken

Page 13 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

as such. We have also noted that various properties were mortgaged in favour of

the Financial Creditors.

31. The case developed by the Appellants is that they were guarantors and not

borrowers and further the Corporate Debtor did not receive the money.

32. In this connection, we take into account relevant portion of three loan

agreement along with schedule which reads as under :-

Page 14 of 17

Comp. App. (AT) (Ins.) No. 1678 of 2024

33. We note that in Para 1 and 2 read with Schedule 1 of the Loan Agreement

specifically states that the Borrowers have approached the Lender and not vice

versa as pleaded by the Appellants. Relevant portion of the said loan agreement

reads as under:

"1. The Borrower had approached the lender for a loan amount as stated in Schedule 1 (the loan amount hereinafter shall be referred to as 'the loan' or "loan" or "Loan Amount") on the terms, conditions and the purpose as stated / Contained in this agreement and/or in the borrower's application for the loan. The borrower hereby confirms that the funds are for business purpose.

2. The lender hereby grants to the borrower and the borrower agrees to avail from the Lender, a financial assistance of the Loan amount on the terms and conditions contained in this agreement. The tenure, interest rate ("Interest") and the schedule of repayment in respect of the loan shall be as specified in schedule 1 as set out herein or as may be amended in accordance with this agreement."

(Emphasis Supplied)

34. Thus, it is seen that the Appellants and Corporate Debtor jointly

approached the Respondent No.1 seeking financial loan facilities in the form of

secure term loans, and also offered for mortgaging their personal properties and

submitted three Mortgage Loan Application Forms ("Application Forms") to the

Respondent No.1 seeking loans. We also to note that in Mortgage Loan

Application Forms, the details of all the Borrowers are jointly mentioned, and in

Page 15 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

all places, the Borrowers including the Corporate Debtor have jointly signed and

affix respective seal/stamp.

35. From above, it is clear that at all places in the loan agreements, the

Appellants have been categorically stated to be borrowers and have signed

accordingly. It is also noted that for Sancheti Buildtech Pvt. Ltd./ Corporate

Debtor, the Director has signed the agreement and similarly, for M/s Sancheti's

Traders it has been signed by partner. We also note that this was the standard

loan agreement used by the Respondent No. 1 and the printed term the guarantor

was struck off as there was no guarantors. Thus, we are unable to accept the

contention of the Appellants that they were guarantors and not borrowers. We

observe that all the three loan agreements contained the similar clauses and

categorically states that the Appellants and the Corporate Debtor as borrowers

and not a guarantors. Thus, the argument of the Appellants on this account stands

rejected.

36. As regard, the issue of FIR filed by the Respondent No. 1 against the

Appellants and subsequently counter FIR filed by one of co-borrowers against the

Respondent No. 1 and other representative of the Respondent No. 1, we feel that

these FIR's does not have any impact on the application initiated by the

Respondent No. 1 under Section 7 of the Code.

37. As regards, the allegation that the Appellants they were being in financial

distress and were lured by the Respondent No. 1 to take excess loan of Rs. 5.85

Crores rather than the requirements of Rs. 4.25 Crores. We do not find any merit

Page 16 of 17 Comp. App. (AT) (Ins.) No. 1678 of 2024

in such allegations of the Appellants without any substance. It is illogical to accept

that for such substantial loan, the borrowers (Sancheti's Family) and the

Corporate Debtor will sign under alleged force of the Respondent No. 1. We have

already noted the allegation that Rs. 1.60 Crores was transferred by the Sancheti's

family members in the accounts of Mr. Rounak Ranka and also noted the

statement of the Respondents that this money was transferred in the name of

"Scribbling Shipping Pvt. Ltd." which has nothing to do with the case.

38. We have also gone through the Impugned Order and find that the

Adjudicating Authority has examined all the facts and the law and came to correct

conclusion of passing the necessary order to initiate Corporate Insolvency

Resolution Process against the Corporate Debtor.

39. We do not find any merit whatsoever in the contentions and the arguments

of the appeals and rejected the same.

40. We do not find any error in the Impugned Order. The Appeal devoid of any

merit stand reject. No cost. I.A., if any, are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sim

Page 17 of 17