Rupinder Singh Gill vs Three C Universal Developers Pvt Ltd

(Arising out of the Order dated 07.08.2020 passed by the National Company Law Tribunal, New Delhi Bench-II in IA 2102/2020 and IA 2276/2020 in CP (IB) No. 2582 (ND) /2019.) IN THE MATTER OF:

Rupinder Singh Gill, S/o Shri Karan Singh Gill r/o Gill Farms, Bullepur Road, Khanna, Dist. Ludhiana Email: rupindersinghgill10@yahoo.com ...Appellant

Versus Three C Universal Developers Private Limited Through Resolution Professional Rakesh Kumar Gupta Having office at: 701, Vikrant Tower 4, Rajendra Place New Delhi 110008 Email: cirp.3cuniversal@gmail.com ...Respondent

Present For Appellant: Ms. Prachi Johri & Mr. Sharad Agnihotri, Advocates.

For Respondent: Mr. Abhishek Anand, Ms. Meghna Rao, Mr. Aadhar Nautiyal & Mr. Harshit Goel, for RP.

JUDGEMENT

(04.09.2025)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed by the Appellant i.e. Rupinder Singh Gill

under Section 61 of the Insolvency and Bankruptcy Code, 2016 ('Code') against Comp. App. (AT) (Ins.) No. 702 OF 2020

the Impugned Order dated 07.08.2020 passed by the National Company Law

Tribunal, Delhi Bench- II ('Adjudicating Authority') in I.A. No. 2102/2020 and

I.A. 2276/2020 in C.P.(IB) No. 2582 (ND)/2019).

2. Three C Universal Developers Pvt. Ltd., which is the Corporate Debtor, is

being represented through Resolution Professional and is the Respondent herein.

3. The Appellant submitted that he is the director of Challengerz Web

Solutions Pvt. Ltd. ("Challengerz") and Hacienda Infosoftech Pvt. Ltd.

("Hacienda"), companies in which the Corporate Debtor holds shares. The

Appellant submitted that the Corporate Debtor entered into two Agreements to

Sell dated 08.10.2018 with the Respondent for the transfer of 100% equity

shareholding of Challengerz and Hacienda. It is the case of the Appellant that

these agreements were entered into following verbal assurances by the Promoters

of the Three C Group, who represented that the transfer of shares would facilitate

the development of valuable properties owned by these companies, namely Plot

FH-17, Sector 133, Noida (owned by Challengerz) and Plot 8A, Sector 127,

Noida (owned by Hacienda).

4. The Appellant submitted that they were induced to enter into these

agreements based on assurances that the properties were free of encumbrances

and that the Appellant would gain full management control and physical

possession of the properties to develop and market them. The Appellant further

submitted that the Promoters personally assured attractive and financially viable

Page 2 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

terms, promising significant profits for the Appellant and the unlocking of the

Three C Group's stalled investments.

5. The Appellant contended that, pursuant to the Agreements to Sell dated

08.10.2018, they fulfilled their initial obligations by depositing 2% of the total

agreed consideration for each company. Specifically:

• For Challengerz, the Appellant deposited Rs. 20,00,000/- (2% of the total

agreed consideration of Rs. 10,00,00,000/-) into a newly opened bank account

with the Bank of India, Phase-9 Branch, Mohali, Punjab, in September 2018.

• For Hacienda, the Appellant deposited Rs. 61,81,500/- (2% of the total

agreed consideration of Rs. 30,93,75,000/-) into a newly opened bank account

with the same bank in September 2018.

6. The Appellant submitted that these payments were made in good faith, and

the Agreements to Sell (ATS) were duly executed on 08.10.2018. The Appellant

stated that the Appellant was handed physical possession of the properties on the

same day, and on 09.10.2018, the Appellant deployed their own security agency

to safeguard the plots. The Appellant further submitted that the appointments of

three Additional Directors, as per their preference, were confirmed by the Annual

General Meetings of Challengerz and Hacienda, reinforcing the Appellant's

management control.

7. The Appellant submitted that, despite fulfilling their initial obligations, the

Corporate Debtor failed to honour their obligations to the Appellant, citing

various excuses and delaying the execution of necessary documentation. The Page 3 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

Appellant contended that this non-performance constitutes a deliberate breach of

the Agreements to Sell dated 08.10.2018.

8. The Appellant further submits that Clause 2 of the Agreements to Sell

explicitly obligated the Corporate Debtor to obtain requisite approvals from

NOIDA & other authorities within 11 months from 08.10.2018 for the transfer of

shares. The Appellant contended that the Corporate Debtor failed to secure these

approvals within the stipulated 11-month period, thereby breaching its

obligations. Consequently, the Appellant's obligation to pay the remaining

consideration has not arisen, as the Corporate Debtor's non-performance is solely

attributable to its own actions.

9. The Appellant submitted that the Corporate Debtor, in collusion with the

Promoters of the Three C Group, engaged in fraudulent and illegal actions to

undermine the Appellant's rights. The Appellant contended that the Corporate

Debtor and the Promoters caused the bank accounts of Challengerz and Hacienda

to be frozen through fraudulent letters dated 17.10.2018 sent to the Manager,

Bank of India, Mohali, accompanied by backdated and forged documents. The

Appellant further submitted that the Corporate Debtor, through Three C Builders

Pvt. Ltd. (a non-shareholder in Hacienda or Votive Propbuild Pvt. Ltd.),

misrepresented facts in a letter dated 25.10.2018 to the authorities. This letter

falsely claimed that a sale of properties owned by Hacienda and Votive Propbuild

Pvt. Ltd. was to occur, leading to the wrongful attachment of Hacienda's property

(Plot 8A, Sector 127, Noida) to satisfy a recovery decree of Rs. 34.75 Crores

Page 4 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

issued by the National Consumer Disputes Redressal Commission (NCDRC) on

05.09.2018 against six Judgment Debtors, including the Corporate Debtor and the

Promoters.

10. The Appellant contended that the attachment, ordered by the Sub-

Divisional Magistrate, Dadri, on 27.10.2018, was blatantly illegal, as Three C

Builders Pvt. Ltd. had no legal authority to act on behalf of Hacienda or Votive

Propbuild Pvt. Ltd. The Appellant submitted that the transaction involved only

the transfer of shares, not the sale of properties, rendering the attachment invalid.

The Appellant further submitted that they, along with Hacienda and Votive

Propbuild Pvt. Ltd., were constrained to approach the Hon'ble High Court of

Allahabad, which, vide orders dated 30.01.2019 and 31.01.2019, directed the

Collector and District Magistrate, Gautam Budh Nagar, to pass a detailed and

lawful order after hearing all concerned parties.

11. The Appellant submitted that the Corporate Debtor issued an alleged

Notice of Frustration dated 28.01.2019, claiming that the Agreements to Sell

dated 08.10.2018 were frustrated under Section 56 of the Indian Contract Act,

1872. The Appellant contended that this notice is illegal, invalid, and malicious,

as Section 56 applies only to events that the promisor could not prevent. The

Appellant submitted that the Corporate Debtor's deliberate breaches, including

its failure to transfer shares, obtain requisite approvals, and fraudulent actions in

freezing bank accounts and attaching properties, preclude it from invoking the

doctrine of frustration. The Appellant further submitted that the Corporate

Page 5 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

Debtor's actions were intentional and dishonest, aimed at deceiving the Appellant

and undermining the agreements.

12. The Appellant submitted that the Corporate Debtor's actions constitute a

gross breach of trust and contractual obligations. The Appellant contended that,

as per the Agreements to Sell, the Corporate Debtor holds the shares of

Challengerz and Hacienda in trust for the Appellant, with its only right being to

receive the balance consideration upon fulfilling its obligations, which it has

failed to do. The Appellant further submitted that the wrongful attachment of

Hacienda's property and the freezing of bank accounts are illegal and prejudicial

to the Appellant's rights, particularly given their financial contributions of Rs.

20,00,000/- and Rs. 61,81,500/- for Challengerz and Hacienda, respectively, and

their assumption of management control and physical possession of the

properties.

13. The Appellant submitted that the Adjudicating Authority lacked

jurisdiction to adjudicate issues already pending in the company petitions, which

involve similar prayers and directly concern the validity of the Agreements to

Sell dated 08.10.2018. The Appellant contended that the Adjudicating Authority

cannot assume jurisdiction over matters pending before another tribunal or court.

14. The Appellant submitted that the applications and the impugned order

are infructuous due to the loss of original share certificates of Challengerz and

Hacienda. The Appellant contended that in August 2019, they misplaced a bag

containing these documents at City Centre, Khanna. Despite efforts, including

Page 6 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

filing a police complaint (No. 105-5D, dated 26.10.2019) and a reminder

application dated 09.06.2020 with the Deputy Superintendent of Police, Khanna,

the documents remain unrecovered. The Appellant submitted that this fact could

not be presented during the hearing on 29.07.2020 due to technical disruptions

disconnecting their counsel, and the briefing counsel was not permitted to make

further submissions.

15. The Appellant contended that the Adjudicating Authority erred in failing

to recognize that the original title deeds and documents of the properties held by

Challengerz (Plot FH-17, Sector 133, Noida) and Hacienda (Plot 8A, Sector 127,

Noida) belong to these companies as separate legal entities, not the Corporate

Debtor. The Appellant submits that the Corporate Debtor, as a shareholder, has

no ownership rights over these assets, and the Adjudicating Authority lacked

jurisdiction to decide ownership issues concerning properties not held by the

Corporate Debtor.

16. The Appellant submitted that the impugned order overlooks the Corporate

Debtor's default in fulfilling its obligations under the Agreements to Sell dated

08.10.2018 and its fraudulent actions in collusion with the Promoters of the Three

C Group. The Appellant contended that the Corporate Debtor cannot benefit from

its own default or use the initiation of the CIRP to defeat the Appellant's rights

under the agreements. The Appellant further submitted that the Adjudicating

Authority failed to address the broader scheme of fraud, including the Corporate

Debtor's alleged collusion with the operational creditor to maliciously initiate the

Page 7 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

CIRP. The Appellant contended that the Resolution Professional, instead of

acting impartially, has acted as a mouthpiece for the suspended management,

thereby prejudicing the Appellant's rights.

17. Concluding his arguments, the Appellant requested this Appellate Tribunal

to set aside the Impugned Order and to allow his appeal.

18. Per contra, the Respondent denied all averments made by the Appellant as

misleading and baseless.

19. The Respondent submitted that the approach by the Appellant reflected a

mala fide intent to undermine the lawful proceedings and to obstruct the orderly

conduct of the CIRP.

20. The Respondent submitted that the instant reply is filed on behalf of Mr.

Rakesh Kumar Gupta, who has been duly appointed as the RP of the Corporate

Debtor, namely M/s Three C Universal Developers Private Limited vide the order

dated 17.12.2019, as pronounced by the Adjudicating Authority in the

proceedings of CP-IB No. 2582/ND/2019 titled M/s Jakson Limited v. M/s Three

C Universal Developers Private Limited. The Respondent asserted that this

appointment vests him with the full statutory authority and responsibility to

oversee and manage the CIRP in accordance with the provisions of the Code.

21. The Respondent submitted that, in accordance with the provisions of

Section 25(2)(a) of the Code, the Resolution Professional is statutorily obliged

and duty-bound to take immediate custody and control of all the assets of the

Page 8 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

Corporate Debtor, including, but not limited to the business records and other

critical documents of the Corporate Debtor.

22. The Respondent further submitted that, under the provisions of Section

18(1)(a), (d), and (f) of the Code, the Interim Resolution Professional is entrusted

with a range of duties, which are equally applicable to the Resolution Professional

post-appointment. The Respondent contended that these statutory obligations

unequivocally mandate the Resolution Professional to secure and take possession

of all assets of the Corporate Debtor, including the original share certificates and

related documents that form part of the Corporate Debtor's estate

23. The Respondent submitted that, upon assuming control and charge over

the management and affairs of the Corporate Debtor, it came to his knowledge

that the Corporate Debtor had entered into Agreements to Sell dated 08.10.2018

with the Appellant herein. The Respondent contended that these Agreements

were executed for the sale of shares held by the Corporate Debtor in the subsidiary

companies, namely Challengerz for a total consideration amounting to Rs. 10

crores and Hacienda for a total sale consideration of Rs. 30,93,75,000. The

Respondent asserted that these financial terms were explicitly stipulated in Clause

1 of the respective Agreements, forming the cornerstone of the contractual

obligations between the parties.

24. The Respondent submitted that the shares held by the Corporate Debtor in

its subsidiary companies, namely Challengerz and Hacienda, constitute valuable

assets of the Corporate Debtor as per the provisions of the Companies Act, 2013,

Page 9 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

and the rules framed thereunder. The Respondent contended that the original

share certificates, which were handed over to the Appellant at the time of their

execution, along with the documents of title deed pertaining to the properties, are

integral components of the Corporate Debtor's asset base. The Respondent

further submitted that the term of the said Agreements was expressly limited to a

period of 11 months from the date of execution, which expired on 07.09.2019. In

light of this efflux of time, the Respondent asserted that the Agreements stand

automatically determined and have become infructuous, thereby extinguishing

any rights or obligations arising therefrom.

25. The Respondent submitted that the Appellant has deliberately and

malafidly failed to perform his obligations under the terms of the aforementioned

Agreements, particularly with regard to the payment of the entire consideration

& within the stipulated 11-month period. The Respondent contended that, in

response to this non-performance, Notices of Termination dated 16.01.2020

notices were duly served upon the Appellant. These Notices granted the

Appellant a grace period of three days to comply with his payment obligations as

per the Agreements. The Respondent asserted that the Notices explicitly

stipulated that failure to make the requisite payments within the stipulated

timeframe would result in the deemed termination of the Agreements, which were

in any event already determined by efflux of time. The Respondent contended

that, to date, the Appellant continues to retain illegal custody and possession of

the original share certificates and other original documents, the Agreements for

Page 10 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

temporary possession. The Respondent further submitted that the Appellant has

falsely alleged that he made a payment equivalent to 2% of the total consideration

amount into the bank account of the Corporate Debtor and asserted that no such

payment has been received or recorded, and the Appellant's claim lacks any

evidentiary support.

26. The Respondent submitted that, as the duly appointed Resolution

Professional, he was legally and morally duty-bound to discharge the

responsibilities entrusted to him under Sections 18 and 25 of the Code.

Accordingly, upon taking over the charge and management of the Corporate

Debtor, the Respondent had undertaken all necessary and appropriate steps in

strict compliance with the law and the provisions of the Code to ensure the

protection and custody of any asset over which the Corporate Debtor retains

ownership rights, as recorded in the balance sheet of the Corporate Debtor. The

Respondent contended that this includes the original share certificates of

Hacienda and Challengerz along with all other original documents that were

temporarily possessed by the Appellant.

27. The Respondent submitted that the Appellant, with the sole intention of

deviating the attention of this Appellate Tribunal, has raised frivolous and

extraneous contentions regarding an alleged dispute between the Appellant and

the promoters of the Three C Group, namely Mr. Nirmal Singh, Mr. Supreet

Singh Suri, and Mr. Vidur Bhardwaj. The Respondent contended that these

contentions have no bearing whatsoever on the subject matter of the present

Page 11 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

proceedings, as the Respondent is discharging his duties and functions solely in

terms of the provisions of the Code and is not involved or interest in the said

alleged disputes. The Respondent further submitted that, upon the admission of

the Section 9 Petition and the commencement of the CIRP on 17.12.2019, the

Respondent stepped into the shoes of the management of the Corporate Debtor.

Consequently, the Respondent is required to take control over all assets of the

Corporate Debtor, including the original share certificates and other title

documents as adumbrated hereinabove. The Respondent asserted that, in light of

the moratorium imposed under Section 14 of the Code, which bars the

transferring, encumbering, alienating, or disposing of any assets of the Corporate

Debtor from the date of CIRP commencement, the Agreements in question can

no longer be acted upon and have become infructuous due to the operation of law,

with time being of the essence for the performance of any contract.

28. The Respondent submitted that, being aggrieved by the illegal, mala fide,

and unjustifiable conduct of the Appellant in refusing to comply with the terms

of the Agreements and in retaining the original share certificates and documents,

the Respondent was left with no alternative but to approach the Adjudicating

Authority by filing Applications bearing IA No. 2102/2020 and IA No.

2276/2020. The Respondent contended that these Applications sought the

indulgence of the Adjudicating Authority to issue appropriate directions against

the Appellant to hand over the original share certificates of the companies,

Page 12 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

namely Hacienda and Challengerz along with other title documents that were in

the Appellant's possession.

29. The Respondent submitted that, after a thorough consideration of the facts

and circumstances presented before it, the Adjudicating Authority pronounced

the impugned order dated 07.08.2020. The Respondent contended that the

Adjudicating Authority rightly allowed the Applications bearing IA No.

2102/2020 and IA No. 2276/2020, directing the Appellant to hand over the

original share certificates, along with other original documents pertaining to

Hacienda and Challengerz to the Respondent within a period of seven days from

the date of the pronouncement of the Impugned Order. The Respondent

contended that the Impugned Order is a well-reasoned and legally sound decision

that upholds the rights of the Corporate Debtor and the Resolution Professional

to reclaim its assets.

30. The Respondent submitted that the status quo order dated 05.04.2019, as

pleaded by the Appellant only serves to support the Respondent's claim, as it

mandates the maintenance of the status quo regarding the shareholding of

Hacienda and Challengerz, which are 100% subsidiaries of the Corporate Debtor.

The Respondent asserted that, as of the present date, the shareholding of the said

companies continues to vest exclusively with the Corporate Debtor. The

Respondent further submitted that the Appellant has no legal or equitable right

whatsoever to hold custody of the original share certificates of Hacienda and

Challengerz.

Page 13 of 27

Comp. App. (AT) (Ins.) No. 702 OF 2020

31. The Respondent referred to the judgment of the Hon'ble Delhi High Court

in Liberty House Group Pvt. Ltd. v. State Bank of India and Ors., reported in

MANU/DE/0727/2019, which reaffirmed that no civil court shall have

jurisdiction over matters within the purview of the NCLT under the Code.

32. The Respondent submitted that the Appellant has, for the very first time

and under the garb of the instant Appeal, raised a frivolous contention regarding

the filing of police complaints dated 26.10.2019 and 28.10.2019 with the Police

Station at PS Khanna City-2, alleging the loss of original documents and

photocopies pertaining to Hacienda and Challengerz. The Respondent contended

that this alleged fact was never brought to the notice of the Respondent at any

prior stage, nor was it argued or pleaded before the Adjudicating Authority during

the adjudication of the Applications. The Respondent further submitted that the

fact that, after the orders were reserved in the aforementioned Applications, the

Appellant arbitrarily claims to have filed an additional affidavit, which was

neither placed before the Adjudicating Authority bench nor served upon the

Respondent. The Respondent asserted that no proof of filing such an affidavit has

been placed on record by the Appellant, rendering this claim dubious and

unreliable. The Respondent further submitted that a perusal of the alleged police

complaints reveals no mention of the loss of the original share certificates of

Hacienda and Challengerz, which are currently in the Appellant's possession,

which clearly demonstrates that the Appellant is attempting to perpetrate a fraud

upon this Appellate Tribunal as well as upon the Respondent. The Respondent

Page 14 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

asserted that the Appellant never made any submission regarding the loss of

documents in his replies to the Notices issued by the Resolution Professional, in

his responses to the Applications, or during the course of arguments before the

Adjudicating Authority. The Respondent contended that the Appellant's reference

to this excuse, raised for the first time in June 2020, is a complete fabrication and

a baseless approach that is not maintainable under the law.

33. Concluding his arguments, the Respondent requested this Appellate

Tribunal to dismiss this appeal with exemplary cost.

Findings

34. We note that vide Impugned Order dated 07.08.2020, the Adjudicating

Authority has allowed I.A. No. 2102/2020 and I.A. 2276/2020 filed by the

Resolution Professional whereby the Appellant herein was directed to return

share certificates along with original documents possessed by the Appellant of

two companies, namely, Hacienda and Challengerz. It was held in the Impugned

Order the Resolution Professional can claim possession on these share certificates

along with original document.

35. It has been pleaded before us that ATS dated 08.10.2018 between the

Corporate Debtor and according to the Appellant, the Corporate Debtor was

required to transfer 100% shareholding of both the companies i.e., Hacienda and

Challengerz. Further, the Corporate Debtor was required to get requisite

permission and approvals from various authorities within 11 months of the ATS

Page 15 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

and thereafter, the Appellant was required to pay the balance consideration. It has

also been pleaded that 2% of the consideration was paid and acknowledged by

the Corporate Debtor as stipulated in Clause 1 of the ATS dated 08.10.2018.

36. The Appellant has also brought out that in terms of Clause 6 of ATS,

possession of title deed of property owned by Hacienda and Challengerz along

with share certificates and some statutory documents were handed over to the

Appellant. The Appellant further brought out that Corporate Debtor initiated

proceedings against the Appellant under Section 241 and 242 of the Companies

Act, 2013 in respect of Hacienda and Challengerz and status quo order of

shareholding was passed by the National Company Law Tribunal on 05.04.2019.

37. During arguments, the Appellant conceded that he was willing to return

back share certificates as ordered by the Adjudicating Authority, however, the

Appellant claimed that the bag of the Appellant containing original share

certificates and some other documents were lost by him in City Centre, Khanna

somewhere in August, 2019 for which, he had filed a police complaint No. 105-

5D, dated 26.10.2019 and a reminder application dated 09.06.2020 with the

Deputy Superintendent of Police, Khanna, followed by communication with

police authorities. The Appellant also pleaded before us that he was not in a

position to return back the original shares certificates as well as the other

documents of Hacienda and Challengerz.

38. It is also the case of the Appellant that since these are not the properties of

Corporate Debtor and rather belongs to the subsidiaries of Corporate Debtor, the

Page 16 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

Respondent/ Resolution Professional could not have requested to repossess these

documents.

39. The Appellant has emphasised that it is the failure of the Corporate Debtor

in obtaining the approvals from authorities within 11 months of the ATS, the

Appellant was not required to pay remaining dues and also was not required to

submit back the original documents of Hacienda and Challengerz to the

Respondent /Corporate Debtor.

40. On the other hand, it is the case of the Respondent that the Adjudicating

Authority was within the right to adjudicate the two IA's filed by the Resolution

Professional, as, the Resolution Professional, was duty bound to protect the

properties of the Corporate Debtor in order to maximise the value of the

Corporate Debtor. The Resolution Professional also pointed out that the ATS

dated 08.10.2018, has been determined by efflux of time and due to operation of

law. The Resolution Professional pointed out that the Appellant took illegal

custody of the share certificates as well as other documents without any

consideration.

41. At the outset, we consciously note that in terms of Section 25(2)(a) of the

Code, the Resolution Professional is obligated and required to take over all the

assets of the Corporate Debtor and run the management keeping in view to

maximise the asset of the Corporate Debtor. Therefore, the Resolution

Professional / Respondent was well within his right to move I.A. No. 2102/2020

Page 17 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

and I.A. 2276/2020 before the Adjudicating Authority seeking repossession of

the documents sought. The relevant section is reproduced as under: -

"25. Duties of resolution professional:

(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:

--

(a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;"

(Emphasis Supplied)

This makes position quite clear in favour of the Respondent.

42. We further observe that in terms of Section 18(1)(a), (d) and (f) of the

Code, the Respondent/Resolution Professional is also required to take over the

assets of the Corporate Debtor. The relevant portion reads as under: -

"18. Duties of interim resolution professional. --The interim resolution professional shall perform the following duties, namely: --

(a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to--

(i) business operations for the previous two years;

(ii) financial and operational payments for the previous two years;

(iii) list of assets and liabilities as on the initiation date; and

Page 18 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

(iv) such other matters as may be specified;

(d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee of creditors;

(f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including--

(i) assets over which the corporate debtor has ownership rights which may be located in a foreign country;

(ii) assets that may or may not be in possession of the corporate debtor;

(iii) tangible assets, whether movable or immovable;

(iv) intangible assets including intellectual property;

(v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies;

(vi) assets subject to the determination of ownership by a court or authority;

(g) to perform such other duties as may be specified by the Board."

(Emphasis Supplied) From above, it is clear that the Resolution Professional is required to take

control and custody of any assets for which the Corporate Debtor has ownership

Page 19 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

right including the assets that may or may not be in possession of the Corporate

Debtor, security is including shares held in any subsidiary of the Corporate

Debtor, financial, insurance policy and finally assets subject to the determination

of ownership by a court or authority. Thus, Section 18(1)(f)(v) of the Code makes

it abundantly clear that it is within the ambit of the Resolution Professional/

Respondent to repossess the shares held in any subsidiaries of the Corporate

Debtor. It is not a disputed fact that Hacienda and Challengerz are the subsidiary

of the Corporate Debtor and therefore, the Resolution Professional is within the

right to take back the share certificate of Hacienda and Challengerz of the

Appellant.

43. It is also surprising to note that the Corporate Debtor, being a corporate

entity could have handed over the shares of Hacienda and Challengerz in this

manner to the Appellant, without following the due process as stipulated in

Companies Act, 2013 and without receiving the consideration. It is reiterated that

Corporate Debtor is a corporate entity and not a personal property of any

individual, hence, the whole process of the Appellant taking possession of the

share certificate, without following due process and without paying the

consideration, is fallacious and not legal.

44. The Appellant conceded that he was willing to handover the shares of

Hacienda and Challengerz, however, it was not possible due to fact that the same

was lost by the Appellant at City Centre, Khanna, Punjab. The Appellant also

tried to impress upon us that he has taken the reasonable steps of following it up

Page 20 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

with the police. In this connection, it was perplexing to understand as to why the

Appellant had chosen to take such important documents to City Centre, Khanna.

On a pointed query by the Appellate Tribunal to the Appellant, the Appellant

could not give any satisfactory answer and could not satisfy to why no proper FIR

was filed. The Appellant merely filed police complaint bearing No. 105-5D,

dated 26.10.2019 which does not reflect the seriousness of the Appellant.

We also note that the Appellant, for the first time, has raised this contention

concerning a purported police complaint filed on 26.10.2019 and 28.10.2019 at

P.S. Khanna City-2, alleging loss of original and documents of Hacienda and

Challengerz after requiring the order by the Adjudicating Authority. Notably, the

Appellant failed to disclose the existence of such complaints to the Respondent

or raise them before this Appellate Tribunal during hearing. Subsequent to the

reservation of orders by the Adjudicating Authority, the Appellant claims to have

filed an additional affidavit, which was neither permitted by the Adjudicating

Authority nor served upon the Respondent, rendering such to open questioning

about it.

45. Thus, on the issue of handing over all the share certificate of Hacienda and

Challengerz held by the Appellant as ordered by the Adjudicating Authority, we

do not find any error in the Impugned Order.

46. On the other issue regarding the handing over the property and other

documents as requested by the Respondent/ Resolution Professional, it is the case

of the Appellant that these are not properties of the Corporate Debtor since these

Page 21 of 27 Comp. App. (AT) (Ins.) No. 702 OF 2020

belong to the subsidiaries of the Corporate Debtor which are having independent

legal entities. The Appellant pointed out that this is contrary to the provisions as

Section 18 and 25 of the Code only empowers the Resolution Professional to take

possession of the assets of the Corporate Debtor and not the assets of any other

company including subsidiary.

47. In this regard, we have already noted that the Respondent/ Resolution

Professional pointed out that the basis on which the Appellant had taken over the

document of Hacienda and Challengerz means subsidiary of the Corporate Debtor

was w.r.t. ATS dated 08.10.2018, which has been determined by efflux of time

and due to operation of law. It is the case of the Respondent that as per Clause 2

of the ATS, dated 08.10.2018, the whole transaction was to be completed within

the period of 11 months from the date of agreement and therefore, it should have

been completed by 08.09.2019, however, the same could not be fructified till date

as due to non-co-operation of the Appellant as well as due to non-payment by the

Appellant and therefore, the ATS has become infructuous by efflux of time. We

find merit in the contentions of the Appellant.

48. We note that in terms of ATS dated 08.10.2018, the Appellant was required

to make payment of total consideration of Rs. 10 Crores in respect of Challengerz

and Rs. 30,93,75,000/- in respect of Hacienda as stipulated in Clause 1 of the

agreement. We also note that the Resolution Professional has brought out clearly

that the Appellant has failed to perform its obligation of payments under said ATS

and therefore, the Resolution Professional had served notice of termination dated

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16.01.2020 asking the Appellant to make the payment, failing which the said ATS

shall be deemed to be terminated.

49. The Appellant has claimed that he has already paid 2% of consideration

amount in the bank account of the Corporate Debtor. However, on asking specific

details by this Appellate Tribunal, the Appellant could not identify and clarify

exact date of the transaction through which such payment was made or specific

details of payments made. The Appellant repeated that he made payments to the

Corporate Debtor in newly opened bank account with Bank of India, sometime

in September, 2010. At this stage, we reiterate that we could not find any such

details of payments to the Corporate Debtor in the appeal paper book or other

submitted documents by the Appellant. It is also interesting to note that the

Appellant has claimed to make payment sometime in September, 2010, whereas

the ATS itself was signed on 08.10.2018. In other words, the Appellant claims

that he made payments to Corporate Debtor without any documentations. Such

facts are hard to believe and does not support cause of the Appellant. On this

issue, the Resolution Professional has further confirmed that he could not

corroborate the said receipt of 2% consideration from books of the Corporate

Debtor or other records of the Corporate Debtor. We do not have any reason to

disbelief the RP on this account.

50. Keeping in view these facts, we are unable to accept the contentions of the

Appellant that he has paid 2% of the consideration to the Corporate Debtor and

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since, the Corporate Debtor could not fulfil its promise of obtaining all approvals

within 11 months of the ATS, the Appellant was discharged from his obligations.

51. As regard, the property document and other important documents as

required by the Respondent/ Resolution Professional, it is a fact that these belong

to the subsidiaries of the Corporate Debtor and therefore, there may not be direct

ownership of the Corporate Debtor. However, the fact remains that the Appellant

has not paid any consideration and has not proved even alleged initial payment

of 2% of total consideration, therefore, the Appellant is not entitled to retain

custody of such documents. It cannot be denied that as Resolution Professional,

the Respondent is entitled to seek custody of the documents of the ownership of

the property of Hacienda and Challengerz which are 100% subsidiary of the

Corporate Debtor. In fact, the Corporate Debtor is direct beneficiary although,

separate legal entities are required to follow due process of law about ownership.

52. The Appellant has raised an issue regarding lack of jurisdiction by the

Adjudicating Authority to adjudicate on such matters. We observe that the

Adjudicating Authority is vested with clear jurisdiction to adjudicate upon the

such matters as contained in I.A. No. 2102/2020 and I.A. 2276/2020 filed by the

Respondent before the Adjudicating Authority, as provided under Section 60(5)

of the Code.

53. The relevant provision is reproduced hereunder: -

"Section 60(5): Notwithstanding anything to the contrary contained in any other law for the time being in force, the

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National Company Law Tribunal shall have jurisdiction to entertain or dispose of-- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or any liquidation proceedings of the corporate debtor or corporate person under this Code."

(Emphasis Supplied)

54. We will also refer to Sections 63, 231, and 238 of the Code, which bars

any civil court or other authority, except NCLT or Appellate Tribunal, from

taking cognizance of matters pertaining to the CIRP process. The relevant

provisions are reproduced hereunder:

"Section 63: Civil court not to have jurisdiction-- No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction...

Section 231: Bar of jurisdiction-- "No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered by, or under, this Code to pass any order and no injunction shall be

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granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority under this Code...

Section 238: Provisions of this Code to override other laws-- "The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law..."

(Emphasis Supplied)

55. Thus, we hold that the Adjudicating Authority possesses the powers and

jurisdiction to decide the said Applications in terms of Sections 60(5), 63, 231,

and 238 of the Code.

56. We also find that there are several judicial precedents. In C.A. No. 719 of

2018 titled Encore Asset Reconstruction Company Pvt. Ltd. v. Ms. Charu

Sandeep Desai & Ors., this Appellate Tribunal held in Para 13 which reads as

follows:

"...It is not the case of the Appellant that the title of the assets has already been transferred or they have sold the assets in terms of Section 13(4) of the SARFAESI Act, 2002. It was also not the case of the Appellant that the assets owned by a third party is in possession of the 'Corporate Applicant' in terms of Section 18, as it is the duty of the 'Interim Resolution Professional' to take control and custody of any asset over which the 'Corporate Applicant' has 'ownership rights' as

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recorded in the balance sheet of the 'Corporate Applicant'. Even if it is not in possession of the 'Corporate Applicant', a person who is in possession of the same, including the 'Dena Bank' or 'Encore Asset Reconstruction Company Pvt. Ltd.' is bound to hand over the same to the 'Resolution Professional', when title still vests with 'Corporate Applicant..."

(Emphasis Supplied)

57. Based on above detailed observations, we do not find any error in the

Impugned Order. The Appeal is devoid of any merit and stand rejected. No cost.

I.A., if any, are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sim

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