Pursuant to acceptance of resolution plan by NCLT, accused persons have no control over property: Delhi HC grants bail to Director of Developer Company in complaint case filed by aggrieved home buyers
Justice Amit Mahajan [12-03-2024]

Read Order: RAM SINGH v. STATE [DEL HC- BAIL APPLN. 545/2024]

LE Correspondent

New Delhi, March 15, 2024: In a case where proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 were initiated against the Developer Company, the Delhi High Court has granted conditional bail to one of the Directors. The High Court opined that the applicant could not have done anything after the Developer was admitted into insolvency and the NCLT had taken over the charge of the project.

The Single-Judge Bench of Justice Amit Mahajan was considering a petition filed under Section 439 of the Code of Criminal Procedure, 1973 (CrPC) seeking grant of regular bail in an FIR registered under Sections 120B/420/409 of the Indian Penal Code, 1860.

The FIR, in this case, was registered against M/s Alpine Realtech Private Limited (developer) in a complaint made by the authorized representative of Ekdant Welfare Society– formed by the 51 aggrieved home buyers. The applicant was one of the directors of the developer and was arrested in the present FIR. The members of the Society were stated to be the buyers in the group housing project namely ‘FNG Ekdant’.

It was alleged that the developer failed to complete the project on time and had only constructed skeleton structures on the project site. It is further alleged that on being approached for payment of the penalty for the delay in handing over the projects, the developer started making various excuses and did not pay any money.  During the course of investigation, it was revealed that approximately Rs 22,35,00,000 had been withdrawn by way of cash and huge sums of money were transferred to the bank accounts of the other group companies, that is, M/s Ekdant Buildtech Private Limited, M/s Ekdant Infrabuild Private Limited, M/s Ekdant India Limited and other firms and companies of the accused persons.

The allegations against the present applicant was that he was one of the Directors of the developer company and was a signatory to the bank accounts. These accounts were opened under the signatures of the erstwhile company directors. However, the authority to operate the said accounts was vested with Raveesh Vats and Raveen Vats who were stated to be the sons of the present applicant.

It was also alleged that the present applicant along with Dinesh Kumar Singhal entered into a criminal conspiracy to defraud the flat buyers. They collected money without obtaining requisite approval of the building plans. It was alleged that the accused company had collected Rs100 crore from the home buyers and also took a term loan for Rs 65 crore from Punjab and Sind Bank. The total estimated cost of the project was assessed at Rs 154 crore. It was also alleged that the applicant and other accused persons had siphoned off major portions of money collected from the home buyers as cash withdrawals or by transferring the same to their other group companies.

At the outset, the Bench clarified that though the allegations in each complaint may at times require registration of separate FIR considering the peculiar facts of each case, however, when the allegations are common as in the present case, that is, the developer has failed to deliver the possession of the flats after taking money from the home buyers, seeking bail in each FIR would become an onerous task and could at times become an impossibility. The registration of multiple FIRs based on same set of allegations would render the remedy of seeking bail illusionary, it added.

In the matter at hand, proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 were initiated against the developer and was admitted by the National Company Law Tribunal. A Resolution Plan had also been approved by the Punjab and Sindh Bank as well as home buyers being part of the committee of creditors. It was also noted that the semifinished structure was already in existence and there were approximately 100 flats which were still to be sold which would have generated revenue for the company.

“It is also admitted that applicant could not have done anything after the developer was admitted into insolvency and the NCLT had taken over the charge of the project”, the Bench held. It was contended that the construction could not be completed for the various reasons such as economic meltdown, rise in cost of construction, etc. In such circumstances, the Bench opined that whether there was any dishonest inducement on behalf of the applicant and other accused persons to deceive the complainants to deliver the monies would be subject matter of trial.

Taking note of the fact that the subject property is now under the control of a company, namely, SAVFAB Developers Private Limited pursuant to the acceptance of the resolution plan by the NCLT, the Bench stated that the accused persons have no control over the property where the complainants have invested the money. The complainants and the banks had supported the resolution plan which also provide for the possession of the flats to the investors/ complainants in a period of thirty-six months from the date of passing of the resolution plan.

Though it was alleged that the applicant would influence the witnesses and tamper with the evidence if released on bail, the Bench opined that the same was only a bald assertion. Moreover, the same could be taken care of by putting appropriate conditions. Referring to Sanjay Chandra v. CBI [LQ/SC/2011/1492, the Bench held that undertrial prisoners cannot be detained in custody for an indefinite period. It is a settled principle of law that bail is the rule and jail is an exception.

Noticing that the applicant is 78 years of age and is suffering from HIV and other age-related ailments and has already spent more than 300 days in custody, the Bench granted him conditional bail on furnishing a personal bond for a sum of Rs 1,00,000.