ED conducts searches into alleged IBC misuse in undervalued land sale

The Enforcement Directorate has conducted searches at six places in Delhi and Gurugram in connection with an alleged undervalued sale of land through misuse of the Insolvency and Bankruptcy Code process.

“The searches included middlemen who were not part of the insolvency process, Resolution Professional, NCLT (National Company Law Tribunal) advocates and buyer of the property M/s RDB Infrastructure and Power Ltd. promoted by Vinod Duggar,” the agency said on Friday.

The ED initiated investigations based on more than 30 First Information Reports registered in and around Delhi against Universal Buildwell Pvt. Ltd. and its promoters for non-completion of real estate projects and for cheating homebuyers and investors, it said.

According to the agency, the company subsequently underwent Corporate Insolvency Resolution Process, resulting in approval of a resolution plan involving homebuyers and other financial creditors, wherein NCLT directed certain assets to be handed over to homebuyers while remaining assets were to be liquidated as per the resolution plan.

“During the investigation, it was noted that the land was sold at throwaway price. At the time of proposed sale, the market value of the property even at government rates was significantly higher than proposed sale value indicating an attempt to profiteer from the process,” the ED said.

“Evidence collected during the search further revealed manipulation of the bidding process through predetermined and artificially suppressed bids, including one bid submitted by the middleman advocate himself, indicating clear collusion and bid rigging,” it said.

The agency alleged that social media communications seized by it established “a nexus between the intermediaries and an official of a private bank which was a secured creditor, who appears to have facilitated the undervaluation scheme while overseeing the sale process”. The private bank had taken a haircut despite a significant appreciation in the value of the property, as alleged.

The ED said its probe also revealed that homebuyers, who had a direct stake in maximising asset value, were “deliberately kept uninformed, and material seized points to negligence on the part of the Resolution Professional”.