IBBI Refers Insolvency Case for Deeper Probe into Claim Admission & Voting Rights

The Insolvency and Bankruptcy Board of India Disciplinary Committee examined allegations against an Insolvency Professional regarding wrongful constitution of the Committee of Creditors (CoC) in CIRP. The key issue was the admission of a joint developer entity as a financial creditor with significant voting rights despite insufficient evidence that its claim qualified as “financial debt” under the Code. The professional had initially admitted the claim based on available documents and continued verification, citing practical constraints including litigation stays and non-cooperation by the suspended management. However, the Committee found that due diligence was inadequate at the stage of admission, as the nature of the transaction—arising from a joint development agreement—should have been scrutinized more carefully before granting CoC participation. The subsequent removal of the creditor after over a year, despite its participation in multiple CoC meetings and key decisions, indicated procedural lapses affecting CoC validity.

The Committee further observed broader concerns regarding the conduct of the professional, including failure to pursue critical pre-CIRP litigation that could have protected the corporate debtor’s rights and inadequate representation of stakeholders’ interests in legal proceedings. It noted that legal actions were narrowly focused on moratorium issues without addressing substantive disputes or allegations involving the disputed creditor. Additionally, similar concerns were raised regarding other creditors who may also have been wrongly classified as financial creditors due to their joint development relationships, potentially impacting CoC composition and voting outcomes. The Committee emphasized that such lapses could significantly alter decision-making in CIRP and undermine stakeholder confidence. While no immediate penalty was imposed, the matter was referred for detailed investigation into the professional’s conduct, including admission of claims, handling of litigation, and overall diligence in safeguarding the insolvency process.

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
(Disciplinary Committee)

Order No. IBBI/DC/308/2026 | Dated: 30th March 2026

This Order disposes of the Show Cause Notice (SCN) No. IBBI/C/2024/01121/913/1029 dated 11.12.2024, issued to Mr. Rajan Garg, who is a Professional Member of the Indian Institute of Insolvency Professionals of ICAI and an Insolvency Professional registered with the Insolvency and Bankruptcy Board of India (IBBI/Board) with Registration No. IBBI/IPA-001/IP-P-02397/2021-2022/13624.

1. Background

1.1. M/s Truly Creative Developers Private Limited (Corporate Debtor/CD) was admitted into Corporate Insolvency Resolution Process (CIRP) vide order dated 11.11.2022 by National Company Law Tribunal, Mumbai Bench (AA) wherein Mr. Rajan Garg was appointed as the Interim Resolution Professional (IRP/IP) and later confirmed as Resolution Professional (RP).

1.2. The Complainant vide complaint dated 22.04.2024 addressed to the Board alleged about the wrongful constitution of CoC. The Board vide e-mail dated 22.05.2024 sought reply of Mr. Rajan Garg on the allegation made by the complainant. Mr. Rajan Garg provided his reply on 07.07.2024.

1.3. The Board examined the allegations in the above complaint vis-à-vis reply of Mr. Rajan Garg and based on such examination and material available on record, the Board formed a prima facie opinion that Mr. Rajan Garg had contravened provisions of the Code and Regulations made thereunder and therefore issued SCN to Mr. Rajan Garg on 11.12.2024.

1.4. The SCN and its response by Mr. Rajan Garg were referred to the Disciplinary Committee (DC) for disposal. Mr. Rajan Garg availed the opportunity of personal hearing before the DC through virtual mode on 01.08.2025 wherein he appeared along with his legal counsel Mr. Ankur Khandelwal. Mr. Rajan Garg also submitted his additional written submissions on 15.10.2025 and relevant annexures on 16.10.2025.

1.5. The DC has considered the SCN, the interim reply to SCN dated 25.12.2024 and final reply to SCN dated 04.01.2025 , oral and written submissions of Mr. Rajan Garg, and proceeds to dispose of the SCN.

2. Alleged Contravention, submissions of Mr. Rajan Garg and findings of the DC.

2.1 Wrongful constitution of CoC.

2.1.1 The CD was admitted into CIRP vide order of the AA dated 11.11.2022 on a Section 9 application filed by Amit Steels. Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) requires the IP to verify the claims within 7 days from the last date of receipt of claims. Further, Section 21(2) of the Code states that the Committee of Creditors (CoC) shall comprise of all financial creditors of the CD.

2.1.2 As per the list of creditors dated 03.12.2022 uploaded on the website of the Board, Six (6) creditors had been classified as unsecured financial creditors, and one creditor was classified as secured financial creditor. M/s Western Habitat Partnership Firm (Western Habitat) was classified as unsecured financial creditor.

2.1.3 Western Habitat was admitted into CoC as an unsecured FC with 24.60% voting rights. Further, as per the list of claims as uploaded on the website of the Board on 06.02.2024, Western Habitat was removed from the list of creditors. The same was also evident from the minutes of the 6th CoC meeting dated 13.06.2024 wherein Western Habitat was not part of the CoC. However, Western Habitat was part of the 1^st to 5^th CoC meetings wherein during the said CoC meetings various important resolutions were passed including but not limited to, confirmation of appointment of IRP as RP ( 1st CoC meeting), ratification of the cost incurred by Mr. Rajan Garg towards the conduct of CIRP including the professional fee of RP (2nd CoC meeting), discussion and approval of the draft Expression of Interest (EoI) for submission of resolution plan (3rd CoC meeting), extension of timeline to invite EoI (4th CoC meeting), and approval of appointment of architect to complete the ongoing real estate projects of the CD (5th CoC meeting).

2.1.4 In continuation of other emails, the Board placed a specific query before Mr. Rajan Garg with regard to the reasons for inclusion of Western Habitat in the CoC and later its removal from the same. The Board observed from reply of Mr. Rajan Garg dated 13.11.2024 that he had admitted Western Habitat in the CoC of the CD based on the claim forms and the documents submitted by it. However, it was observed from reply of Mr. Rajan Garg sent to Western Habitat, that he repeatedly requested Western Habitat to produce evidence to justify its claim of Rs.1.80 crores as financial debt which showed that Mr. Rajan Garg had admitted Western Habitat in the CoC of the CD without sufficient justification to substantiate its claim.

2.1.5 The Board further noted that Mr. Rajan Garg should have exercised due diligence with regard to the admittance of Western Habitat in the CoC of the CD. Mr. Rajan Garg’s lack of due diligence led to Western Habitat participating in the 1^st to the 5^th CoC meetings in which various important resolutions were passed and later removed from the CoC altogether thus evidencing wrongful constitution of CoC.

2.1.6 In view of the above, the Board held prima facie view that Mr. Rajan Garg had violated Sections 21(2), 208(2)(a) and (e) of the Code, Regulation 13 of the CIRP Regulations, and Regulation 7(2)(a) and (h) of IP Regulations read with Clause 14 of the Code of Conduct.

2.2 Submissions by Mr. Rajan Garg.

2.2.1 Mr. Rajan Garg submitted that he received the claim of Rs. 4,39,26,027/- (Rupees four crores thirty nine lakh twenty six thousand twenty seven) from Western Habitat before the last date for submission of claim as mentioned in public announcement made in Form A. The claim amount included Principal amount of Rs. 1,80,000 (Rupees one crore eighty lakh) and interest amount of Rs. 2,59,26,027/- (Rupees two crore fifty nine lakh twenty six thousand twenty seven). Along with the claim they attached few documents for justifying their claim. On several dates, Mr. Rajan Garg requested Western Habitat to submit additional documents for understanding the locus of their claim against the CD. As per Regulation 14 of CIRP Regulations that deals with the determination of amount of claim based on the best estimate, Mr. Rajan Garg admitted the claim on the basis of the information available and documents at the time of initial admission.

2.2.2 He further submitted that post conduct of 1st CoC Meeting, suspended board of CD, Mr. Rajendra Barde filed an appeal before the NCLAT and obtained an interim stay. He produced the timeline as under: –

2.2.3 He further submitted that during the stay order passed by the NCLAT, Mr. Rajan Garg received various claims from different claimants. However, due to stay he was unable to pursue the matter further during that period of stay. The director of the suspended board of the CD had closed all avenues of communications. Thus, post lifting of the stay order passed by the NCLAT, the Mr. Rajan Garg immediately arranged a CoC Meeting to consider the matters that were of utmost importance. The details of the CoC meetings held during this period are as follows:

2.2.4 Mr. Rajan Garg further submitted that he was carrying out CIRP and continuing the process of collating, understanding, and verifying/re-verifying all the claims that were received. Out of various claims, one major re-verification of the claim was made of Western Habitat, where he was constantly seeking additional information and clarifications on the subject matter of claim submission. He was also constantly following up with the suspended board of CD to provide relevant information from them including but not limited to the documents of utmost importance like tally data, financial statements, agreement, orders, etc. Since the suspended board of CD did not provide the documents, Mr. Rajan Garg filed an application under section 19(2) of the Code on 05.06.2023 which was allowed and disposed of by the AA vide order dated 14.07.2023. Pursuant to which the suspended directors provided certain documents. However, due to non-receipt of complete information another application under section 19(2) was filed on 21.05.2024 which is pending for adjudication before the AA. Further, he produced a comparative analysis of voting power of CoC members when Western Habitat was part of the CoC and when Western Habitat was not part of the CoC which is as under: –

A. Voting Percentage during 1^st & and 2^nd CoC meeting:

B. Voting Percentage during 3rd, 4^th and 5^th CoC meeting:

2.2.5 Mr. Rajan Garg further submitted that as per the SCN a concern was raised with regard to the validity of resolution passed during the CoC Meetings. Therefore, considering the aforesaid concern, an effort was made by him to understand and showcase the impact on the resolutions placed during the CoC Meetings. A brief chart of the resolutions passed was prepared, where M/s. Western Habitat had been included into the CoC and vote was taken on record and alternatively when M/s. Wester Habitat not included into the CoC and their votes were not taken on record. The chart prepared for the same is as follows:

2.2.6 It was further submitted that in the tabulated resolutions, it could be seen that the voting on the resolutions would not have created major impact as requisite minimum voting was being observed in case of all the resolutions even after removing Western Habitat from respective CoC Meeting. Mr. Rajan Garg submitted that he undertook due diligence to verify and admit the claim received from Western Habitat to the COC as per information, documents, and data provided by them. Thus, considering the documents received such as ledger copies, particulars of the claims and as per the prima facie understanding built, Mr. Rajan Garg admitted the claim of Principal amount only but the interest claimed amount was put under further verification.

2.2.7 He submitted that as per the records and documents provided by Western Habitat; it was observed that they had paid significant sum of funds to the CD till CIRP Commencement date. Western Habitat had submitted various ledger accounts. There were multiple litigations in different forums including arbitration. Western Habitat had also submitted copy of a claim statement submitted by them in an arbitration proceeding between them & the CD. The claim statement exhibited clearly about payment of Rs. 1.80 Crores which was interest bearing. They submitted many documents which indicated the existence of financial transaction between them. Although the CD had not provided any books of accounts till the time of initial admission of the claim, but the CD had, during a verbal communication acknowledged the fact of their relationship with the claimant. The director of the CD had confirmed that there was dispute going on with the claimant and an arbitration has been ongoing between them, it was further stated by them that currently the arbitration is under stay/status quo. From the documents submitted by the claimant and other available information there was enough conviction of existence of debt.

2.2.8 Mr. Rajan Garg further submitted that he carried on the process of due diligence with respect to the verification of claim of Western Habitat even after initial admission of the claim during the 1st CoC. But as shared that there was a stay on the CIRP proceedings immediately after commencement of CIRP from 14.12.2022 which was vacated only on 19.04.2023, the process of verification of claim could not proceed. However, after the vacation of stay, the process of verification of claims was restarted. The claimant kept on submitting various documents including accounting ledgers and other documents including agreements, etc. for the purpose. However, he was not able to verify these from the records of the CD.

2.2.9 He further submitted that after the order by the AA under section 19(2) directing CD to extend cooperation, the ex-management shared the accounting information for the first time although incomplete. As per the information shared, the existence of financial transaction was there. During this period, he kept the process of verification of the claim. Documents were asked from the claimant. They even provided a document showing payment of an amount of Rs. 15 Crores (Rupees Fifteen Crores) to the CD, which he requested to be admitted as a financial debt. Even apart from these, there were documents of many financial transactions. Western Habitat submitted various documents including ledger accounts, agreements, MOUs, etc. These exhibited that there were financial transactions between the two since 2010 onwards and volume of transactions was quite large.

2.2.10 Mr. Rajan Garg further submitted that while carrying out the due diligence of the claim, he studied the documents and information provided by them. Even he received a copy of unaudited financial statement from the office of the CD and its auditors for the first time on 07.11.2023. At this time, the information provided was correlated. After study it was realized by Mr. Rajan Garg that the debt in question did not constitute a financial debt as per provisions of Section 5(8) of the Code. This fact was communicated to Western Habitat and they were asked to substantiate their claim. Mr Rajan Garg had discussions with their financial team (CFO). Their finance team stood convinced that nature and character of the transaction was such that it could not be covered under the provision of Section 5(8) to be financial debt. Even after this, ample opportunities were given to prove the status of financial transaction and in what manner the transactions can be treated as financial debt within the provisions of the Code. There were repeated reminders, however, there was no response to these emails.

2.2.11 He submitted that based on the above discussion, he sought legal opinion from MDP and Partners. The lawyers studied the documents pertaining to the CD and claimant M/s. Western Habitat. They opined that the amount of Rs. 1.80 crores, although interest bearing, did not constitute as financial debt within the meaning of the provisions of section 5(8) of the Code. Hence, this cannot be treated as financial debt. In view of the same, Mr. Rajan Garg was constrained to reject their claim and removed them from subsequent CoC Meeting.

2.2.12 Based on the above-mentioned information, Mr. Rajan Garg submitted that he had no intentions for wrongful constitution of CoC and violate any law rule and regulations. He submitted that he had taken sufficient due diligence of the claim at the time of initial admission and considering non-receipt of additional explanation, information, documents, data sought from the claimant, the claim had been rejected. He further submitted that even after removing the claims of Western Habitat, the resolutions put in the meeting met the minimum voting requirement under the Code.

2.2.13 Mr. Rajan Garg has also placed on record certain documents vide additional written submissions dated 15.10.2025 and 16.10.2025 respectively in support of his submissions pertaining to the claim of Western Habitat, including the detailed claim assessment, the claim form submitted by Western Habitat with all the annexures which includes a copy of application filed by Western habitat to initiate arbitration proceedings, the Joint Development Agreement dated 31.12.2014 between the CD and Western Habitat, order passed by the Apex Grievance Redressal Committee etc.

2.3 Analysis and Findings of the DC.

2.3.1 The DC has considered the SCN, reply to SCN, the oral and written submissions made by Mr. Rajan Garg, and the material available on record. The primary issue for consideration is whether Mr. Rajan Garg wrongfully constituted the CoC by admitting M/s Western Habitat Partnership Firm (Western Habitat) as an unsecured financial creditor without exercising adequate due diligence to verify whether its claim constituted a financial debt within the meaning of Section 5(8) of the Code.

2.3.2 Before proceeding to examine the contravention, the DC considers it necessary to set out the background facts relating to Western Habitat’s relationship with the CD, as they are directly relevant to the question of due diligence that was required to be exercised by Mr. Rajan Garg at the stage of initial admission of its claim.

2.3.3 The DC notes that Mr. Rajan Garg, in his additional submissions, placed on record a detailed factual account of the relationship between the CD and Western Habitat along with supporting documents. The DC has considered the said submissions and documents and, for the purposes of examining the contravention, has set out the relevant timeline of events emerging from the material placed on record in the tabulated form below.

2.3.4 The DC, upon a careful consideration of the entire chain of events set out above, finds it necessary to record certain observations regarding the overall conduct of Mr. Rajan Garg in relation to Western Habitat across the period of the CIRP. The DC notes that Western Habitat was initially admitted by Mr. Rajan Garg as a financial creditor with a significant voting share of 24.60%, despite the fact that its relationship with the CD was that of a joint developer under the JDA. Western Habitat was subsequently removed from the CoC only after a period of over one year, during which it participated in five CoC meetings in which critical resolutions were passed.

2.3.5 The DC further notes that Writ Petition No. 3512 of 2019, which had been filed by the CD before the commencement of CIRP before the Hon’ble Bombay High Court, directly concerned the rights and interests of the CD over the subject property and was a proceeding in which specific allegations had been made against Western Habitat that it was in collusion with Rajendra Kunj SRA Co-operative Housing Society Ltd. to obtain a back­door entry into the project and that multiple false allegations against the CD had been filed at the behest of Western Habitat. The said petition was dismissed by the Hon’ble Bombay High Court vide order dated 17.01.2024 solely on account of non-removal of office objections, the court recording that not a single attempt had been made to pursue the petition since the year 2019. The DC observes that this petition was pending at the time Mr. Rajan Garg assumed charge as IRP in November 2022

2.3.6 The DC further notes that in Writ Petition No. 1398 of 2024 filed by Mr. Rajan Garg before the Hon’ble Bombay High Court, a specific averment was made that Writ Petition No. 3512 of 2019 had been dismissed for non-removal of office objections and that Mr. Rajan Garg was in the process of taking steps for its restoration. This averment shows that Mr. Rajan Garg was aware of the existence of Writ Petition No. 3512 of 2019 at the time he filed Writ Petition No. 1398 of 2024, and it is not clear from the material placed before the DC whether any steps were in fact taken by Mr. Rajan Garg towards the restoration of Writ Petition No. 3512 of 2019..

2.3.7 The DC further notes that Mr. Rajan Garg upon getting knowledge about the acquisition of land and public notice regarding implementation of slum rehabilitation scheme, filed an application before the AA being IA No. 3895 of 2023, seeking directions against the SRA from continuing the acquisition proceedings on the ground of moratorium under Section 14 of the Code. After the AGRC order dated 23.08.2023, Mr. Rajan Garg again filed another IA (No. not available on record) before the AA on line similar to IA 3895/2023. However, upon considering the judgment of the Hon’ble Supreme Court in Embassy Property Developments (P) Ltd. v. State of Karnataka (2020) 13 SCC 308, Mr. Rajan Garg formed the view that the AA would not be an appropriate forum to adjudicate disputes under the Slum Act, particularly those revolving around decisions of the SRA as a statutory and quasi-judicial authority and filed Writ Petition No. 1398 of 2024 before the Hon’ble Bombay High Court. The DC notes that facts of the case did not match as much to Embassy Properties (supra) as they matched that of Gujarat Urja Vikas Nigam Limited Versus Mr. Amit Gupta & Ors. Civil Appeal No. 9241 of 2019 where it was held that keeping in mind the basic objective of the IBC, being, inter alia, the maximisation of value of assets of the corporate debtor and the fact that the sole business of the corporate debtor was to supply power to the Appellant, the termination of the PPA by the Appellant during insolvency proceedings would have rendered the CIRP redundant and therefore the matter will fall within the jurisdiction of the AA. Here, the termination of the development rights will render the CIRP process redundant in respect of that land. The matter would have been better appreciated in a forum deciding IBC matters as they will consider the interest of all stakeholders including homebuyers.

2.3.8 The DC further notes that the manner in which Writ Petition No. 1398 of 2024 was filed solely on the narrow ground of violation of the moratorium under Section 14 of the Code, without any substantive challenge to the position or conduct of Western Habitat and without any representation regarding the interests of financial creditors, who had given loans to the CD, hundreds of homebuyers who had invested substantial amounts of money in view of the development rights granted by SRA,. The Hon’ble Bombay High Court, in its judgment dated 03.04.2024, specifically and pointedly observed as under:

“15. The RP filed this Petition on 31st January 2024 only on the basis that the Section 14 moratorium declared by the NCLT meant that the acquisition could not proceed. …

…

21. We cannot lose sight of the fact that in the RP’s anxiety to “protect the asset of the corporate debtor” not a thing is being said in this Petition about how that asset or its preservation can ever, let alone in the meantime pending a CIRP, be used for the benefit of those persons for whom the Slum Act is intended and for whose benefit essentially Truly Creative obtained an LoI in the first place.

…

24. In these circumstances, we fail to see the slightest merit in this Petition. It ought never to have been filed. We have no hesitation in rejecting the Petition.”

2.3.9 It appears from the above extract of the order that the writ petition did not address the interest of all stakeholders as the same has not been pointed out by in the WP. Also, since the conduct of Western Habitat has not been questioned, the order is silent regarding the same. Against the order dated 03.04.2024, Mr. Rajan Garg filed a SLP before Hon’ble Supreme Court, in that SLP wherein again the issue raised revolves around whether Section 14 of the IBC overrides the provisions of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971. The SLP was filed without any broader challenge to the proceedings initiated by Western Habitat or any representation of the interests of all stakeholders of the CD including homebuyers. The Hon’ble Supreme Court dismissed the said Special Leave Petition vide order dated 15.07.2024.

2.3.10 The DC observes that when the above sequence of events is considered in its entirety, a pattern emerges that prima facie warrants closer examination. Western Habitat, which was itself a joint developer of the CD under the JDA, was initially admitted as a financial creditor with significant voting rights in the CoC; the pre-CIRP writ petition filed by the CD containing specific allegations against Western Habitat was allowed to lapse for want of prosecution during the CIRP; the legal proceedings subsequently initiated by Mr. Rajan Garg to protect the CD’s rights over the subject property were pursued in forums not dealing with IBC matters and were confined to the narrow ground of moratorium violation, did not raise any substantive challenge to the position of Western Habitat, and did not adequately represent the interests of the stakeholders of the CD especially homebuyers; and ultimately, Western Habitat emerged as the party that stands to benefit from the entire sequence of events, having successfully pursued its position before the SRA in respect of the subject property while the CD’s rights over the same have been diminished affecting all its stakeholders other than slum dwellers. The DC wishes to make it clear that it does not, at this stage, record any definitive finding on the nature of the relationship between Mr. Rajan Garg and Western Habitat, as such an examination would require a detailed investigation into the facts and circumstances which falls outside the scope of the present SCN. However, the DC is of the considered view that the observations recorded above raise questions that warrant a reference to the Board which may conduct an independent investigation into the conduct of Mr. Rajan Garg in relation to Western Habitat..

2.3.11 The DC accordingly refers the matter to the Board which may examine these aspects as suggested above.

Unexamined Allegations Regarding Other CoC Members

2.3.12 The DC, while examining the facts of the present case and going through the detailed complaint filed by the complainant, observed that certain allegations raised in the complaint were not part of the file examination conducted by the Board. On closer scrutiny, the DC noted that the complaint filed in Form A was accompanied by a detailed complaint as an annexure thereto. However, it appears that only the Form A was shared with Mr. Rajan Garg when his reply was sought by the Board, and the detailed complaint was neither shared with him nor was he called upon to respond to the same. Consequently, the allegations contained in the said detailed annexure, including those pertaining to the claims of M/s PVG Enterprises, M/s Labh Shubh Properties Pvt. Ltd., and M/s Mitej Developers being that of related party of the CD, remained unexamined by the Board at the stage of file examination and did not form part of the examination attached with the SCN.

2.3.13 It was specifically alleged in the complaint that these three parties were also joint developers of the CD and that their claims, like those of Western Habitat, may not constitute financial debt within the meaning of Section 5(8) of the Code in terms of order dated 24.02.2022 of NCLAT in Mukesh N. Desai v. Piyush Patel Company Appeal (AT) (Insolvency) No. 780 of 2020 wherein it was held as under: –

“15. The MoU entered into is an Agreement of reciprocal rights and obligations. We are of the earnest view that both parties being ‘Joint Development Partners’ who entered into a consortium of sorts for developing the subject land and for any breach of terms of the contract, Section 7 Application filed under the Code would not be maintainable as the amount cannot be construed as ‘Financial Debt’ as there is no sum(s) i.e., owed, assigned or transferred to in compliance of the provisions of Section 5(8) of the Code. To reiterate, being a profit share owner, who in the event of the success of the Project would receive the residual gain, the amount invested in the land cannot be said to be a ‘Financial Debt’ as defined under Section 5(8) of the Code. Hence, the ratio of the Judgements relied upon by the Learned Counsel for the Appellant are not applicable to the facts of this case..”

2.3.14 If the claims of PVG Enterprises, Labh Shubh Properties Pvt. Ltd., and Mitej Developers also arise from joint development arrangements with the CD, as alleged by complainant, their admission as financial creditors may be examined. This may further change the constitution of CoC and voting percentage in various CoC meetings as is evident from the contentions of Mr. Rajan Garg in his reply dated 04.01.2025 which is as follows: –

(a) During the 1^st and 2^nd CoC meetings, the voting share of Western Habitat was 24.59% and that of PVG Enterprises was 20.49%, together accounting for approximately 45% of the total voting rights in the CoC at that stage;

(b) During the 3^rd, 4^th, and 5^th CoC meetings, the combined voting share of Western Habitat (10.58%), PVG Enterprises (8.81%), Labh Shubh Properties Pvt. Ltd. (20.09%), and Mitej Developers (15.72%) together accounted for approximately 55.20% of the total voting rights in the CoC.

2.3.15 The DC observes that Mr. Rajan Garg has taken a defence to demonstrate that all resolutions passed in the CoC meetings would not have been materially affected by the exclusion of Western Habitat alone. However, the DC notes that this defence is premised solely on the exclusion of Western Habitat and does not account for the scenario where the claims of PVG Enterprises, Labh Shubh Properties Pvt. Ltd., and Mitej Developers are also found to be ineligible for admission as financial debt. If their claims are similarly found not to constitute financial debt within the meaning of Section 5(8) of the Code, the combined exclusion of all four parties may substantially alter the composition of the CoC and they may affect voting outcomes on several resolutions passed across the 1st through 5th CoC meetings and may affect the contention raised by Mr. Rajan Garg. It is also observed that there a large difference between the amounts of claims filed and amounts of claims admitted and large amounts of claims remain under verification for substantial period of time. The reasons for the same may be examined by the Board. The DC accordingly refers the matter to the Board which may examine these allegations.

3. Order.

3.1. In view of the foregoing, the DC in the exercise of the powers conferred under section 220 of the Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 hereby refer the matter to Board to examine the issues as discussed above. The submissions made by Mr. Rajan Garg along with all the documents which were provided by him in support of his submissions before the DC may be forwarded to the Board.

3.2. This order shall come into force immediately.

3.3. A copy of this order shall be forwarded to Indian Institute of Insolvency Professionals of ICAI where Mr. Rajan Garg is enrolled as a member.

3.4. A copy of this order shall also be forwarded to the Registrar of the Principal Bench of the National Company Law Tribunal, New Delhi, for information.

3.5. Accordingly, the show cause notice is disposed of.

Sd/-
(Sandip Garg)
Whole Time Member
Insolvency and Bankruptcy Board of India

Dated: 30 March 2026
Place: New Delhi