corporate law
On March 6, 2025, the Insolvency and Bankruptcy Board of India (IBBI) issued a Disciplinary Committee order regarding Mr. Surender Devasani, an Insolvency Professional (IP). This order addressed allegations that arose during the Corporate Insolvency Resolution Process (CIRP) of Vikram Structures Pvt. Ltd. (VSPL).
The case primarily involved disputes between two groups of claimants concerning properties in the Pinnacle Project: those with registered sale deeds and those with agreement-to-sell claims. As the appointed Resolution Professional (RP), Mr. Devasani faced scrutiny for rejecting claims from registered sale deed holders while admitting those from agreement-to-sell claimants. Furthermore, he had excluded the Pinnacle Project from the corporate debtor's assets as recorded in the information memorandum and company books.
Claim Submission and Clarifications: The Disciplinary Committee (DC) noted that correspondence was sent to registered sale deed holders on March 12, 2022, and May 16, 2022, requesting clarification and evidence to substantiate their claims. Mr. Devasani contended that the registered deed holders retained ownership rights, necessitating proof of relinquishment for claim validation. However, none of these claimants responded or pursued action with the Adjudicating Authority (AA).
Prior Complaints: The DC examined previous complaints against Mr. Devasani, which were reviewed by the Indian Institute of Insolvency Professionals of ICAI (IIIP-ICAI). The IIIP-ICAI determined that no actionable evidence existed regarding the sales prior to the initiation of the CIRP and dismissed those complaints.
Ongoing Investigation: The DC acknowledged a continuing investigation by the Registrar of Companies (RoC), Bangalore, under Section 213(b) of the Companies Act, 2013. This investigation focused on allegations of fraudulent asset sales by the corporate debtor and its affiliates.
The DC found that Mr. Devasani complied with the CIRP protocols and emphasized the need for claimants to clarify their rights. It underscored adherence to the Code of Conduct and indicated that the RoC's ongoing investigation would be taken into account for future actions regarding possible fraud. The DC dismissed the show cause notice and directed Mr. Devasani to notify the Board about the investigation's findings.
NCLT Admission: On February 17, 2022, the National Company Law Tribunal (NCLT), Bengaluru Bench, admitted an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by M/s India Asset Growth Fund and M/s Vistra (ITCL) India Limited to initiate the CIRP of Vikram Structures Pvt. Ltd. Subsequently, Mr. Devasani was appointed as Interim Resolution Professional (IRP) and later as RP.
Liquidation: In its 9th meeting on October 28, 2022, the Committee of Creditors (CoC) voted in favor of liquidation, resulting in the AA's order on April 13, 2023, appointing Mr. Devasani as liquidator.
Complaints: Complaints regarding Mr. Devasani's handling of claims led the IBBI to invoke its authority under Section 218 of the Code and commence an investigation.
Mr. Devasani's Response: In addressing the allegations, Mr. Devasani submitted explanations, but the Investigating Authority (IA) reported possible violations of the Code, prompting the issuance of a Show Cause Notice (SCN).
The SCN claimed that Mr. Devasani wrongfully denied claims from registered sale deed holders. Key observations included:
Claims Processing: He clarified that claims were managed per the Code, asserting that ownership was established via sale deeds, yet these properties were not part of the company's assets after the sale.
Unresponsiveness to Clarifications: Despite sending multiple requests, Mr. Devasani maintained that claimants must approach the AA if they disagreed with his assessments.
After careful review, the DC determined:
The Disciplinary Committee's findings reinforced the procedural integrity of the CIRP process and underlined the necessity for claimants to provide substantiated claims. This order emphasizes the role of ongoing investigations in addressing governance concerns within corporate insolvency matters and has important implications for future disputes involving claims.