Joint venture investment for project development with shared profits/control does not qualify as financial debt lacking borrowing effect; participant deemed related party via joint control over net assets despite no common ownership.

ORDER

The present Application is filed on behalf of the Resolution Professional of Future Colonizers and Construction Limited (hereinafter referred to as the Applicant) under section 60(5) and other applicable provisions of the Insolvency and Bankruptcy Code (hereinafter referred to as the Code) and rules and regulations made thereunder for seeking appropriate directions against the Respondent i.e Mr. Atul Kumar Kinra, the RP of Chandigarh Overseas Private Limited (hereinafter referred to as the Respondent). The Applicant has sought the following reliefs:

(a) to pass an order allowing the present Application and set aside the decision of the Respondent communicated vide e-mail dated 18.10.2023 (Annexure A-2);

(b) to pass an order directing the Respondent to accept the Claim of the Applicant Company as Financial Creditor being non-related party to the Corporate Debtor;

(c) to pass an order directing the Respondent to accept the Claim of the Applicant Company as Financial Creditor being non-related party to the Corporate Debtor, to the tune of Rs.135,94,96,779;

(d) to pass an order thereby directing the inclusion of the Applicant Company as member / financial creditor in the CoC of the Respondent Company with voting rights;

(e) during the pendency of the present case, pass an ad-interim ex-parte stay on the approval of any resolution plan by the CoC of the Corporate Debtor or such approval, if any, shall be subjected to the outcome of the present case;

2. The facts of the case, as stated by the Applicant in the Application, are as under:

(a) The Chandigarh Overseas Private Limited (hereinafter referred to as the CD) went into CIRP vide Order dated 27.02.2023 by this Tribunal and the Respondent Sh. Arvind Kumar was appointed as IRP and later confirmed as RP.

(b) The Applicant Company was also admitted to CIRP vide Order dated 13.10.2022 passed by this Tribunal in CP(IB) No. 49 of 2019 and Sh. Rajeev Bhambri was appointed as the IRP and later was confirmed as RP.

(c) The Applicant Company had entered into Joint Venture Agreement (hereinafter referred to as the JVA) with the CD on 08.01.2023 wherein the Applicant Company had to invest an amount of Rs. 40 crores in the construction and development of “Development Project” as stated in the the JVA. The Applicant company had the exclusive right to sell/dispose off, in any manner, 55 flats and 12 penthouses at mutually agreed price.

(d) The Applicant stated that the CD has acknowledged the investment of Rs. 19.17 crores by the applicant in terms of JVA by receipt dated 28.01.2014. No receipt dated 28.01.2014 has been attached.

(e) The Applicant stated that the investment in the CD was in the nature of the financial debt having commercial effect of borrowing and also have time value for money as the Applicant was to get exclusive right to sell/dispose off the flats, etc, he submitted a claim in Form C to the Respondent vide email dated 13.02.2023 to the tune of Rs. 135,94,96,779 as financial creditor.

(f) The Applicant submitted that after more than 7 months of submission of the claim Form, the Respondent vide its email dated 18.10.2023 had partially rejected the claim without giving the reasons and the Applicant again requested the respondent to reconsider it but no reply was received by the Applicant.

(g) The Applicant submitted that the Respondent vide its email dated 18.10.2023 has illegally reduced the claim of the Applicant from Rs. 135,94,96,779 to Rs. 19,17,00,000/-, illegally converted the Claim of the Applicant from financial debt to operational debt; and illegally declared the Applicant Company as related party to the Corporate Debtor.

(h)