2020 (3) TMI 853 - HC - Insolvency and Bankruptcy

Maintainability of petition - non-performing asset - Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - This is a writ petition instituted by a director, when admittedly, on the date of filing of the writ petition an Interim Resolution Professional had been appointed by the NCLT for executing Corporate Insolvency Resolution Process. This fact was suppressed. It was only stated in the affidavit that the respondent bank had filed a claim petition in C.P.No.1100 of 2018 before the National Company Law Tribunal (NCLT), Chennai. No other fact has been disclosed in the writ petition. Therefore, prima facie I hold that the Managing Director has suppressed a vital information from this Court while filing the writ petition and on that ground, the writ petition, has to be dismissed as not maintainable. The fact is that the on going process of project is under a cloud of suspicion since the Thoothukudi Smart City Limited has disclaimed offering of any project to the petitioner herein. Even otherwise, the petitioner should have informed the Interim Resolution Professional about the institution and filing of the writ petition. The writ petitioner has not only suppressed the facts before the Court but, deliberately screened material facts from the knowledge of the Interim Resolution Professional. Any Court can grant reliefs only to a person who comes to the Court with clean hands. Somebody who comes with dishonest intentions can never be granted any relief. Petition dismissed.

Issues:
1. Maintainability of the writ petition based on suppression of facts.
2. Application of circular dated 07/02/2018 issued by the Reserve Bank of India.
3. Role of the Interim Resolution Professional and liquidator in the case.
4. Allegations of suppression of material facts by the Managing Director.
5. Misleading information provided to the Court and the liquidator.
6. Consideration of revival of the company and ongoing project.

Issue 1: Maintainability of the writ petition based on suppression of facts
The writ petition was filed seeking a Mandamus to direct the respondent bank to consider a representation letter dated 8/2/2018 in accordance with a circular issued by the Reserve Bank of India. However, it was revealed that crucial information regarding the appointment of an Interim Resolution Professional and subsequent liquidation of the company had been suppressed by the Managing Director. The Court held that the petition was not maintainable due to the suppression of vital information and dismissed it accordingly.

Issue 2: Application of circular dated 07/02/2018 issued by the Reserve Bank of India
The petitioner sought the benefit of a circular issued by the Reserve Bank of India dated 07/02/2018, which stated that accounts as of 31.08.2017, if regular, should not be declared as Non-Performing Accounts. However, the Court found that the account in question could not be regularized due to lack of funds and discrepancies in the information provided by the petitioner.

Issue 3: Role of the Interim Resolution Professional and liquidator in the case
The Court noted that an Interim Resolution Professional had been appointed by the NCLT for executing Corporate Insolvency Resolution Process, and subsequently, became the liquidator of the company. The liquidator stated that the Managing Director had not cooperated and withheld crucial documents and control over the company, further complicating the situation.

Issue 4: Allegations of suppression of material facts by the Managing Director
The Managing Director was accused of suppressing vital information from the Court, including the appointment of the Interim Resolution Professional and subsequent actions taken by the NCLT. This deliberate concealment of facts was deemed unacceptable by the Court, leading to the dismissal of the petition.

Issue 5: Misleading information provided to the Court and the liquidator
The Court highlighted instances where the Managing Director had misled both the Court and the liquidator regarding the company's affairs and property details. The liquidator had to take corrective actions based on the misleading information provided, further complicating the resolution process.

Issue 6: Consideration of revival of the company and ongoing project
Despite arguments for the revival of the company and ongoing project opportunities, the Court emphasized the importance of transparency and honesty in legal proceedings. Due to the lack of disclosure of material facts and misleading actions by the Managing Director, the Court declined to grant any relief to the petitioner and dismissed the writ petition.

In conclusion, the judgment focused on the importance of full disclosure and honesty in legal proceedings, highlighting the consequences of suppressing vital information. The dismissal of the writ petition underscored the Court's commitment to upholding integrity and transparency in legal matters.

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