Govt asks SFIO to probe CG Power, Cox & Kings
The Ministry of Corporate Affairs (MCA) has asked the Serious Fraud Investigation Office (SFIO) to probe into fund diversion by CG Power and default on commercial paper (CP) payments by Cox & Kings, now an insolvent travel company, according to sources here on Thursday.
 
CG Power has been under the MCA scanner over alleged misreporting of numbers. In August, the Ministry had summoned Gautam Thapar, erstwhile Chairman of the company, along with other executives and the company's auditor.
 
The SFIO probe has been ordered on the MCA Western Regional Director's recommendation, which in its report last month indicated instances of diversion of funds by CG Power.
 
Similarly, the MCA Western Regional Director had submitted to the ministry in October a probe report on Cox & Kings. The probe had been initiated after Cox & Kings defaulted on commercial paper payments.
 
The travel company was admitted for insolvency proceedings by the Mumbai Bench of the National Company Law Tribunal (NCLT) in October on a plea by Rattan India Finance.
 
In June, the company in a regulatory filing informed the exchanges that it had not paid Rs 150 crore out of Rs 200 crore worth of loans. It further defaulted on a Rs 30 crore loan in September.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Centre forms Rs25K cr fund to rescue stalled Housing Projects
    In a much-awaited relief for distressed homebuyers awaiting possession of their flats, the Centre on Wednesday committed up to Rs10,000 crore for completing housing projects stuck for years.
     
    The Union Cabinet has cleared a proposal to set up a 'Special Window' in the form of Alternative Investment Fund (AIF) to provide priority debt financing for the completion of stalled housing projects that are in the affordable and middle-income housing sector.
     
    The corpus size of the AIF would be scaled up to Rs25,000 crore after SBI and LIC pump in funds. It would grow further in the coming days with the addition of sovereign wealth funds and pension funds.
     
    The AIF would meet fund requirements of 1,600 stalled projects where money of 4.58 lakh homebuyers are stuck, Finance Minister Nirmala Sitharaman said briefing the media after Cabinet meeting.
     
    The Special Window will also cover projects that are classified as NPA or where NCLT proceedings have already started but with the rider that they meet other eligibility criteria. Some of the conditions for getting the last-mile funding are projects being networth positive, registered with RERA and falling in the category of affordable and middle-income housing project.
     
    Department of Economic Affairs secretary Atanu Chakraborty said that networth positive clause will be applied project-wise taking into account cash flows and total project cost and not at the corporate level.
     
    This would mean even projects being undertaken by now bankrupt Amrapali and Jaypee Group could qualify for funding depending on the completion status.
     
    Anticipating realty sector booster from the government, the Indian stock market on Wednesday surged to record levels. It may touch a new peak tomorrow, bolteriung realty sector stocks.
     
    "It's a very welcome change from the initial announcement. Now the only criteria for eligibility is net worth positive projects. This will ensure that the fund is actually deployed to complete projects which are even NPA or also in NCLT. We are certain that a majority of stuck homebuyers will benefit from the announcement of a Rs25,000 crore stress fund...Quick deployment of money and efficient decision making for qualification of projects will solve the long pending problems of home buyers," Jaxay Shah, CREDAI National Chairman, said.
     
    Sitharaman said the Special Window would provide funds to stalled housing projects enabling them to complete unfinished projects and consequently ensure delivery of homes to a large number of homebuyers.
     
    She said that the move would reduce the financial stress faced by a large number of middle class home buyers who have invested their hard earned money.
     
    "This will also restore trust between buyers and developers and boost the sentiments of the housing sector as a whole and release large amounts of funds stuck in these projects for productive use in the economy," a press statement said.
     
    The proposed fund would initially be managed by SBI Caps through an escrow account. It will also be registered with market regulator SEBI and will support all RERA certified projects.
     
    "This is a critically important move which eliminates the ambiguity which surrounded theAtimelines for setting up the fund, and its actual implementation. Finally, countless aggrieved homebuyers will see the light at the end of the tunnel," Anuj Puri, Chairman a" ANAROCK Property Consultants said.
     
    Finance Minister Sitharaman had in September announced that a special window for affordable and middle-income housing will be created for providing last-mile funding for housing projects which are stressed.
     
    Fund created under the Special Window will be setup as priority debt funds. A detailed Investment Policy will be laid down to guide the selection of projects to be financed through a detailed due-diligence process that will include legal due-diligence, title due diligence, micro-market analysis, financial analysis etc.
     
    "The final decision will be taken by the Investment Committee of each fund comprising experienced professionals and industry experts. The Investment Committee will approve individual deals independently as per Investment Policy ensuring alignment with investment objectives of the Fund," the statement said.
     
    Sitharam also said that RBI has also issued a clarificatory note that would allow banks to release pendingAloan amounts of home buyers whose money has got stuck in stalled projects.
     
    In order to give a boost to crisis-hit real estate sector, the government has in the last few months announced a slew of measures. It has provided additional deduction up to Rs1,50,000 of interest paid on loans borrowed up to March 31, 2020 for purchase of houses valued up to Rs45 lakh.
     
    The interest rate on House Building Advance has also been lowered and linked with the 10 Year G Sec Yields to encourage more government servants to buy new houses among other key measures. 
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Karnataka HC Stays NCLT Order against Flipkart
    The Karnataka High Court has stayed the order of National Company Law Tribunal (NCLT) which had initiated solvency proceedings against Flipkart.
     
    "Karnataka High Court has stayed the order of the NCLT in favour of Flipkart. This is an ongoing commercial litigation which we are challenging. At this stage, we have no further comments," Flipkart spokesperson Walmart-owned e-commerce company

    said in an email response.
     
    Flipkart had approached the Karnataka High Court after NCLT initiated insolvency proceedings against the Walmart-owned e-commerce company for defaulting on Rs 18 crore payment to one of its suppliers.
     
    The Bengaluru bench of NCLT had initiated corporate insolvency resolution process (CIRP) against Flipkart India under the Insolvency and Bankruptcy Code, 2016. Deepak Saruparia had been appointed as Interim Resolution Professional.
     
    A moratorium had been placed prohibiting the pending case judgements, sale of assets and property and the board of directors asked to extend full cooperation to the IRP. The next date of hearing has been fixed for 25th November.
     
    The case was filed by Cloudwalker Streaming Technologies seeking CIRP against Flipkart on the ground that it has committed default on payment of Rs26.95 crore on supply of LED TVs.
     
    In its petition, Cloudwalker has told NCLT that Flipkart has failed to collect all the TVs ordered, failed to pay the excess charges and costs as promised and failed to honour its commitment.
     
    Cloudwalker claimed that due to Flipkart's failure in fulfilling its commitment it was forced to unload the uncollected goods at heavily marked down price just so it could remain afloat.
     
    Cloudwalker said it had sent a demand notice to which there has been no reply from Flipkart and said that it has "consistently and persistently failed, omitted and neglected to discharge its admitted and acknowledged debt and liability.."
     
    Cloudwalker said in the petition that it is apparent that the corporate debtor company, Flipkart, is commercially insolvent and is unable to pay its debts. The Corporate Debtor company is not economically viable and poses a threat to commercial morality.
     
    Flipkart argued in NCLT that the petition is not maintainable either in law or on facts and it is liable to be rejected with exemplary costs.
     
    Flipkart said it is a profit-making company with sufficient financial strength and is actively doing business. It has already paid Rs85.57 crore and the allegation that it has no money to pay its liabilities or debt is "baseless, frivolous, bereft of truth and filed with malafide intentions".
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    bhaskar

    2 weeks ago

    "Flipkart said it is a profit-making company" - First time read this. How can the lawyer lie like this? All of them - Flipkart, Amazon India, PayTM are making thousand of crores losses every year.

    B. Yerram Raju

    2 weeks ago

    Several e-Commerce Companies respond poorly against irregularities in supply of goods/services and such poor response goes with impunity. In the instant case, since many details are yet to be disclosed, we presume that NCLT erred on the wrong side. As long as NCLT actions are subject to High Court or Supreme Court, the defaulters will have a merry ride as they don't have interest obligation on a few thousands of crores of default. There is a need to ensure that the fly-high Corporate Defaulters are booked and punished within a maximum period of one year from the date the Insolvency Proceedings are launched.

    Nagesh Rao

    2 weeks ago

    It is nothing but mischievous claim by the co. without verifying the fact the NCLT has come to the conclusion. Its nothing but a business dispute. such kind of arbitrary measures will hamper the interest of the Foreign Investors. Thanks.
    Nagesh Rao

    REPLY

    Shashibhushan Gokhale

    In Reply to Nagesh Rao 2 weeks ago

    I felt the same when I read the whole article. Suppliers and consumers would always have commercial disputes, but suppliers resorting to filing insolvency proceedings sound extreme for a company like Flipkart.

    While we don't know the details of the commercial litigation if any, invoking insolvency proceedings and still worse the NCLT actually initiating insolvency proceedings felt like a very ill-thought decision. It evoked a feeling of prejudice, manipulation with the forum being used as a pressure tactic rather than for its intended purpose.

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