Rashmi Housing sneaks away, selling 82 homes in trouble. Unfair play found!
In a shocking incident, Rashmi Housing, a real estate company in Mumbai, broke the law by selling 82 apartments while it was going through Corporate Insolvency Resolution Process (CIRP). The consequences for this action of the company is severe and the tribunal decided to cancel the sale of these flats and imposed a fine of Rs. 3 lakh on every promoter.
The trouble for Rashmi Housing began when Finance Advisors & Managers and Vista ITCL, a trust company formerly known as IL&FS, took the company to the National Company Law Tribunal (NCLT), as it failed to repay the debts.
The NCLT admitted the company into insolvency and appointed OP Agrawal to handle the company’s affairs. The directors of the company were suspended, and they were informed about the restrictions during the insolvency process. However, an employee of Rashmi Housing sent an email to the resolution professional, asking for permission to sign agreements for the sale of flats before the insolvency process began. In response, the resolution professional replied that such agreements needed to be approved by the Committee of Creditors (CoC), which oversees the insolvency proceedings. Therefore, no permission was granted for the sale of flats during the insolvency process.
The suspended directors of Rashmi Housing, despite being aware of the restrictions, submitted a resolution plan to save the company in November 2019. Unfortunately, their plan was rejected. They later submitted a revised plan in March 2020 which was also rejected. As a result, the resolution professional filed an application for liquidation in June 2020, which is still pending in court.
To keep the company running, the resolution professional retained some employees. These employees were instructed to follow only the resolution professional’s orders and not the suspended director’s. However, some of these employees were aware of the unsold flats belonging to the company, and managing them all became a challenge for the resolution professional.