MUMBAI: In a rare development, the promoters of realty developer Rashmi Housing, while the company was still undergoing the Corporate Insolvency Resolution Process (CIRP), sold 82 apartments in the company’s projects in contravention of the law. The tribunal has now set aside the sale of these 82 flats and has also imposed a fine of Rs 3 lakh on each of the promoters.

Finance Advisors & Managers and Vista ITCL, formerly an IL&FS trust company, had taken the developer Rashmi Housing to the National Company Law Tribunal (NCLT) following its default in payments.

The NCLT had admitted the company’s insolvency and had appointed OP Agrawal as the interim resolution professional to take over the operations of the defaulter company in 2018 while suspending its directors and intimating them about the implications of the moratorium under the code. In February 2019, one of the employees of the company had requested the resolution professional through an email to authorize the suspended directors to sign pre-CIRP sale agreements.

In response to the said email the resolution professionally held that permission for agreements related to the pre CIRP period will be required to be put before the COC.

Advocate Rohan Agarwal appeared for the resolution professional of the company and argued that no permission was granted at any point of time for signing of sales during the CIRP or even for pre-CIRP.

On receipt of the invitation of the expression of interest the suspended directors had initially submitted a resolution plan in November 2019 and the same was rejected. These directors submitted a revised resolution plan which was put forward for consideration before the committee of creditors (CoC) in its March 2020 meeting. Owing to the rejection of this plan too, the resolution professional filed an application to initiate liquidation in June 2020. The said application for liquidation is still pending and sub-judice as of date.

In order to maintain the company as a going concern, the resolution professional had retained some employees involved in day-to-day affairs. These retained employees were categorically informed to act only on instructions of the resolution professional and not to act on instructions of any of the suspended directors.

These employees were aware about the unsold inventories of the company and it was practically impossible for the resolution professionals to physically manage 393 unsold inventories spread over 17 projects in 73 buildings situated at different parts of Mumbai including Ghatkopar, Vasai and Naigaon.