Satinder Singh Bhasin Could Not Use IBC Limitation To Shield ₹50 Crore Bail Deposit From BIIPL: Supreme Court

The Supreme Court on Thursday, while considering pleas seeking cancellation of bail granted to Satinder Singh Bhasin, rejected his contention that the Interim Resolution Professional (IRP) of Bhasin Infotech and Infrastructure Pvt. Ltd. (BIIPL), of which he is a director, could not question the Rs.50 crore deposited as a bail condition due to the two-year look-back period under the Insolvency and Bankruptcy Code.

It found that the amount that had been deposited for securing the bail was sourced from company funds and related entities without complying with the law. It held that such objections could not be barred by limitation.

A bench of Justices Sanjay Karol and Nongmeikapam Kotiswar Singh held that the absence of objections at the time of deposit cannot legitimise an otherwise unlawful transaction.

Rejecting Bhasin's reliance on the limitation period under the IBC, the court observed:

“The petitioner cannot be permitted to evade responsibility by submitting that 'no objection' was raised at the time of submission of the said amount before this Court. In our view, the petitioner's submission that IRP cannot raise an objection, as the look back period for transactions under the IBC is two years, has to be rejected. In our view, the IRP has rightly placed reliance on Sections 49 and 66 of the IBC, wherein no time limit has been specified for transactions which are intended to defraud creditors. In the case at hand, where the purported loan has been taken in complete disregard of statutory requirements, the above Sections will apply, and the contentions raised by the IRP can be relied upon.”

The court was dealing with applications seeking cancellation of bail granted to Bhasin on November 6, 2019, subject to deposit of Rs 50 crore in connection with multiple FIRs arising out of the 'Grand Venice' real estate project, where homebuyers had alleged non-completion of projects and diversion of funds.

Examining the source of the deposit, the court found that the money had not been arranged from Bhasin's personal funds but had been deposited from BIIPL and other related entities.

The court noted that the Rs 50 crore deposit had been arranged as a purported loan but without following statutory requirements mandated under company law.

Looking at the structure of the transaction, the bench found it inconsistent with Section 185 of the Companies Act, which restricts companies from extending loans to their directors without due approvals.

On the question of limitation, the court rejected Bhasin's argument that the IRP was barred from examining the transaction due to the two-year look-back period under the IBC.

It clarified that provisions such as Sections 49 and 66, which deal with transactions intended to defraud creditors, do not prescribe any time limit and can be invoked where statutory breaches are apparent.

The bench further noted that not a single rupee had been contributed by Bhasin personally and that the transaction reflected an interest-free commercial benefit extended by the company without safeguards such as security or board approval.

Expressing dissatisfaction with Bhasin's conduct during the insolvency process, the court directed that, since all statutory remedies against the admission of insolvency proceedings had been exhausted, the management and affairs of BIIPL must be handed over to the IRP at the earliest.

Consequently, it cancelled Bhasin's bail. The court also ordered forfeiture of the entire Rs 50 crore deposited by Bhasin along with accrued interest, holding that repeated opportunities to comply with bail conditions had not been availed.

It directed that Rs. 5 crore with proportionate interest be transferred to the National Legal Services Authority, while the remaining amount be transmitted to the IRP for the purposes of the insolvency proceedings.