# In the matter of Ornate Spaces Pvt. Ltd. IA-1927-2021 in CP-IB-4469-(MB)-2019

> NCLT judgment dated 2023-05-02. Citation: TCN-2023-NCLT-03525. The application IA-1927/2021 was filed on 2021-07-16 by the Resolution Professional under…

- **Court:** NCLT
- **Order date:** 2 May 2023
- **Citation:** TCN-2023-NCLT-03525
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/ornate-spaces-pvt-ltd-ia-1927-2021-in-cp-ib-4469-mb-2019-011aca9c

## Summary

### Background

The application IA-1927/2021 was filed on 2021-07-16 by the Resolution Professional under Section 43, 47, and 66 of the Insolvency & Bankruptcy Code, 2016, concerning certain transactions of the Corporate Debtor. The RP sought orders regarding administrative and licensing charges, loans to related parties, foreclosure of loans, routing of interest on fixed deposits, squaring off amounts via bank guarantees, cash transactions with Ornate Developers, shifting of unsecured loans to booking advances, and investment in Aryan Spaces. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on 2020-06-29, and the applicant was appointed as IRP. The applicant, after reviewing the financials, believed certain transactions fell under PUFE

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## Facts

The Resolution Professional filed an application seeking orders under Sections 43, 47, and 66 of the IBC concerning several transactions. These included: (a) Spending of Rs. 8.09 crores on administrative and licensing charges without supporting documentation; (b) Loans of Rs. 116.26 crores to related parties; (c) Foreclosure of loans by transferring them from unrelated to related parties amounting to Rs. 16.24 crores; (d) Routing of Rs. 2.10 crores of interest on fixed deposits; (e) Squaring off Rs. 27 crores via bank guarantee invocation; (f) Cash transactions of Rs. 5.75 crores with Ornate Developers; (g) Shifting of Rs. 44.27 crores of unsecured loans to booking advances for 'Grove Towers'; (h) Investment of Rs. 1.20 crores in Aryan Spaces. The Corporate Insolvency

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## Issues and analysis

### Issue 1: Whether the spending of administrative and licensing charges in cash amounting to Rs. 8.09 crores …

**Ratio:** Section 66 of the Code encompasses carrying on a business for any fraudulent purpose. The

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**Reasoning:** The court found that the payment of cash, which is not supported by any authorization,

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**Interpretation:** Section 66 of the IBC deals with fraudulent or wrongful trading. The court

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**Application:** The court applied the ratio to the specific facts, noting that the cash

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## Parties

- **Judges:** Prabhat…; KISHORE VEMULAPALL…
- **Appellants:** Jayesh Sang…
- **Respondents:** Ornate Spaces…; Ornate Dev…
- **Advocates:** Nausher…; Devesh Ju…; +9 more

## Timeline

- **2021-07-16 — Application…**: Application IA-1927/2021 filed by…
- **2020-06-29 — CIRP Init…**: Corporate Insolvency Resolution Process…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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