The , has dismissed an application seeking the removal of seven alleged “ ” from the in the ongoing of Spaze Towers Private Limited. The tribunal held that mere allegations of proxy or status, without conclusive judicial findings, are insufficient grounds to exclude creditors from participating in the resolution process. The ruling clarifies the extent of a Resolution Professional’s authority in verifying claims and the status of homebuyers who have entered into assured-return agreements.
The applicants, a group of twenty homebuyers led by Vivek Khanna, had approached the tribunal claiming that certain creditors were acting on behalf of the corporate debtor’s suspended management to manipulate the insolvency process. They argued that these individuals had entered into dubious assured-return arrangements and received payments despite failing to pay the full consideration for their units. The applicants sought to purge these claimants, invalidate their voting rights, and requested a comprehensive forensic audit to expose alleged financial siphoning.
Presiding over the matter, the bench of Judicial Member Mahendra Khandelwal and Technical Member Atul Chaturvedi emphasized that the constitution of the is a statutory process governed by the . Once claims have been formally admitted by the Resolution Professional following due verification under , they attain a degree of legitimacy that cannot be easily dismantled through speculative assertions.
The tribunal underscored the limited scope of the Resolution Professional’s powers, noting that the position is essentially administrative rather than adjudicatory. While addressing the applicants' arguments, the bench stated, “The Resolution Professional is not vested with to conclusively determine disputed questions of fraud, benami ownership or criminality. Consequently, where the claims had already been verified and admitted, their exclusion from the CoC cannot be directed merely on the basis of allegations which remain to be established.”
Dispute Over Assured Returns A central point of contention was the eligibility of allottees who had signed assured-return contracts. The applicants contended that these individuals were essentially "speculative investors" rather than genuine homebuyers, thereby disqualifying them from the status of . The tribunal, however, relied upon established legal precedents to reject this characterization. It referenced the ruling in , confirming that creditors holding assured-return contracts fall within the statutory definition of an " " under the Code.
The tribunal clarified that the presence of an assured-return clause does not automatically invalidate a claimant's status as a financial creditor. While individual discrepancies in payment records or common addresses might necessitate further investigation, these facts do not serve as proof of illegality. The bench observed that for such exclusions to be valid, there must be a definitive, pre-existing finding of wrongdoing. "The mere allegation that a claimant is a proxy, or connected with the suspended management cannot, by itself, furnish a basis for exclusion from the CoC,” the order noted.
Limits of Allegations and Evidence The applicants had attempted to rely on historical police reports and alleged discrepancies in the company’s Tally data to suggest widespread fraud. They argued that the absence of reliable accounting records for older projects made it impossible to verify the claims properly, thus necessitating a court-mandated forensic audit.
The tribunal found these arguments unpersuasive. While acknowledging that the loss of technical accounting data from earlier years posed challenges, the bench held that it did not justify the wholesale invalidation of claims that had been supported by the documents available during the verification process. Furthermore, the tribunal pointed to the submission by the Resolution Professional that a closure report had been filed in the relevant criminal investigations. The court expressed dissatisfaction with the applicants’ selective reliance on earlier status reports while seemingly disregarding later developments in the same investigation.
The bench also noted that significant allegations regarding are already subject to scrutiny in other legal forums, including the . It maintained that the current insolvency proceedings should not be diverted by premature trials of potential siphoning allegations. By refusing to intervene in the voting decisions made during the third meeting, the tribunal affirmed the commercial autonomy of the committee members, provided no specific or in the voting process is demonstrated.
Procedural Finality of the Resolution Professional The tribunal’s decision also touched upon the necessity of procedural finality. It noted that the constitution of the had already been formally taken on record by the Adjudicating Authority in . The current attempt to reopen these matters was viewed as an effort to previous administrative actions and orders, including the appointment of the current Resolution Professional, which had already attained finality.
Regarding the demand for a fresh forensic audit, the tribunal noted that its primary function is to supervise the resolution process within the framework of the Code rather than acting as a roving investigative body. The court concluded that it cannot order such extensive investigations based purely on suspicion. The ruling reinforces that the mechanism for handling fraudulent or preferential transactions remains available under the specific provisions of the Code should evidence of such conduct emerge during the standard audit process.
In its final order, the tribunal dismissed the application in its entirety, finding that the arguments provided by the applicants lacked the substantive evidentiary support required to override the existing verification of claims. The resolution process for Spaze Towers is expected to proceed with the currently constituted , as the bench found no grounds to interfere with the ongoing exercise of commercial decision-making by the creditors. No costs were awarded in the dismissal of the application.
corporate insolvency - creditor committee
