JUDGEMENT

(12^th April, 2023) [Per: Dr. Alok Srivastava, Member (Technical)] This Appeal has been filed under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (in short ‘IBC’) by the Appellant who is aggrieved by the order dated 06.05.2021 of the Adjudicating Authority (National Company Law Tribunal, Court No.

V, Mumbai Bench) (in short ‘Impugned Order passed in C.P. (IB) No. 4108/MB/2019’). The Appellant is aggrieved by the Impugned Order whereby a Section 7 application filed by the Respondents No. 1 and 2 before NCLT, Mumbai was admitted and Corporate Insolvency Resolution Process (in short ‘CIRP’) was initiated.

2. In brief, the case of the Appellant is that the Corporate Debtor – Bharucha & Motivala Infrastructure Private Limited (in short ‘B & M Infra’) had given a Corporate Guarantee as a Co-Obliger in respect of the residential project called ‘The Cove’ which was being developed by Lake District Realty Private Limited (in short ‘LDRPL’ and also ‘Issuer Company’). It was developing the project with Pune Kondhwa Realty Private Limited (in short ‘PKRPL’) on land owned by PKRPL admeasuring a total of 6.7272 ha in village Yeolewadi, Taluka Haveli, District Pune through a Joint Development Agreement entered into between PKRPL with LDRPL on 27.06.2016.

3. The Appellant has further stated that PKRPL executed a Power of Attorney in favour of LDRPL in relation to the development of the project ‘The Cove’ and according to Joint Development Agreement, LDRPL was entitled to (a) 71.8% of the realization of unsold units (b) 87.1% of realization of allotted premises and (c) 57% of realization of row houses and villas constructed on the said property.

4. The Appellant has further stated that the Issuer Company LDRPL issued Non-Convertible Debentures (in short ‘NCDs’) to raise funds for the development of the said property and NCDs for Rs.

40,00,00,000/- were to be issued to the Debenture Holders on private placement basis which were subscribed by the R1 and R2 i.e. Reliance AIF Management Company Limited and Reliance Nippon Life Asset Management Limited (formerly known as Reliance Capital Asset Management Limited) respectively.

5. The Appellant has further added that Debenture Trust Deed dated 06.10.2016 was signed by the Debenture Holders with Vistra ITCL Pvt. Ltd. as the Debenture Trustee.

6. The Appellant has added that Series I Debentures were to be redeemed not later than 30.09.2020 and Series II Debentures were to be redeemed not later than 30.09.2021 and for security of repayments, upon insistence of Debenture Holders, a number of documents were executed which included a ‘Deed of Irrevocable and Unconditional Guarantee’ by the Issuer Company and PRA Realty Private Limited (which was providing project management services) in favour of the Debenture Trustee and all the security documents are referred as ‘Transaction Documents’.

7. It is also stated by the Appellant that R1 subscribed to 13,625 NCDs amounting to Rs. 27,25,00,000/- and R2 subscribed to 1,000 NCDs amounting to Rs. 2,00,00,000/- and project management fees was to be disbursed to the Issuer Company by the Debenture Trustee/Debenture Holders and approximately Rs. 94,27,000/- was disbursed till December, 2016 but thereafter, from January, 2017, the Debenture Holders refused to release the project management fees instalments on the plea that no work was being carried out for the said project on the said property. Noticing delay in release of PM fees instalments, the Issuer Company sent an email dated 17.01.2017 and follow up emails thereafter, whereupon it was asked to submit expenditure statement by the Debenture Holders, which was submitted by the Issuer Company. Thereafter, certain disbursements were made by the Debenture Holders in February and March, 2017.

8. The Appellant has further stated that on the hesitation of the Debenture Holders to release further amounts the Issuer Company inquired of the Debenture Holders whether they continued t