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NCLT Reverses Insolvency Order Against Logix Infrastructure, Citing Fraudulent Intent
By PropertyGeld Editorial Team
Published on PropertyGeld:
In a significant ruling, the National Company Law Tribunal (NCLT) has revoked its previous order initiating insolvency proceedings against Logix Infrastructure, citing fraudulent intent and misuse of the insolvency framework. The tribunal found that the financial creditor, Experts Realty Professionals, was involved in a manipulative scheme that undermined the objectives of the Insolvency and Bankruptcy Code (IBC).
Fraudulent Intent Behind the Insolvency Petition
The NCLT highlighted a hidden agenda behind the insolvency plea, revealing that Logix Infrastructure and Experts Realty Professionals had undisclosed connections. Instead of being a genuine debt resolution case, the tribunal determined that the process was orchestrated for ulterior motives.
In response, the Serious Fraud Investigation Office (SFIO) has been directed to conduct a detailed investigation into the alleged fraudulent transactions between the two entities.
Case Background & Tribunal’s Ruling
- Initial Insolvency Order: On July 14, 2023, the NCLT had permitted insolvency proceedings against Logix Infrastructure based on a plea by Experts Realty Professionals, which claimed unpaid debt.
- Reversal of Decision: Following further examination, the tribunal nullified the proceedings, stating that the case was a misuse of the insolvency forum.
- Management Restored: The NCLT has ordered that Logix Infrastructure’s management be handed back to its original board of directors.
Financial Penalties & Refund Orders
The tribunal has issued multiple directives to address the financial implications of the fraudulent insolvency attempt:
Refunds for Bidders: Any resolution plan submitted by a bidder must be cancelled, and the earnest money deposit and performance bank guarantee must be refunded within one week.
Cost Burden on Financial Creditor: Experts Realty Professionals has been ordered to bear all expenses, fees, and costs incurred by the Resolution Professional.
Financial Penalty: A ₹5 lakh fine has been imposed on Experts Realty Professionals, which must be deposited in the Prime Minister’s National Relief Fund within 10 days.
Homebuyers’ Role in Exposing the Fraud
The case took a turn when homebuyers of Logix Blossom Country, a project by Logix Infrastructure, approached the tribunal, alleging that the insolvency plea was a fraudulent attempt to deceive creditors and property buyers.
Further investigations uncovered major irregularities, including:
- A former financial creditor of Logix Infrastructure later becoming its director, raising conflict of interest concerns.
- A ₹15 crore financial transaction between the two companies, with discrepancies in documentation and missing stamp papers, casting doubts on its authenticity.