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2020 (9) TMI 794 - Tri - Insolvency and BankruptcyWhistle blower Activity - this case is cooked up stage managed by Financial Creditor/Corporate Debtor/Resolution Professional, defrauding one and all - HELD THAT - There is no sufficient proof of loan from Financial Creditor/Applicant to Corporate Debtor. Further, the Corporate Debtor has in reply affidavit admitted Loan . There are two letters from applicant to Corporate Debtor seeking repayment of the alleged loan. The Registry is directed to communicate this order to Resolution Professional by email as well as by speed post - Issue a copy of this order to IBBI for their information and records. Post the matter on 20.03.2020 for further hearing.
Issues: Allegations of collusion between Financial Creditor, Corporate Debtor, and Resolution Professional; Lack of proof of loan between Financial Creditor and Corporate Debtor; Conflict of interest in legal representation.
The judgment by the National Company Law Tribunal, Cuttack Bench, involved serious allegations of collusion between the Financial Creditor, Corporate Debtor, and the Resolution Professional. The Counsel in IA No. 01/CTB/2020 raised concerns about the authenticity of the case, alleging it was "cooked up" and "stage managed" to defraud stakeholders. The Counsel emphasized the need for a thorough investigation to uncover the truth and clear any doubts regarding the matter. Additionally, IA No. 42/CTB/2020, filed by the worker's union of the Corporate Debtor, highlighted the absence of operations since 2007 and pending cases in various courts, questioning the legitimacy of the huge loan claimed by the Financial Creditor. Regarding the lack of proof of the loan between the Financial Creditor and the Corporate Debtor, the Adjudicating Authority found insufficient evidence in the main case CP(IB) No. 01/CTB/2019. The Corporate Debtor admitted to the loan in a reply affidavit, supported by letters from the applicant seeking repayment. However, during the proceedings, the Counsel for the Financial Creditor failed to provide clarity on the nature of the loan, leading to doubts about the validity of the claims made by the parties involved. The judgment also addressed the issue of conflict of interest in legal representation. It was noted that the Counsel appearing for the Applicant also represented the Resolution Professional, raising concerns about conflicting roles. The Adjudicating Authority questioned the Counsel about this conflict, emphasizing the importance of transparency and ensuring that each party's interests are adequately represented. The identities of all counsels involved were recorded to maintain clarity and avoid any potential conflicts in the legal proceedings. In conclusion, the Tribunal issued directions to the Resolution Professional to submit relevant documents, including claims from Financial Creditors, proof of debts, balance sheets, and bank statements, by a specified date. The Registry was instructed to inform the Resolution Professional of these requirements and provide a copy of the order to the Insolvency and Bankruptcy Board of India (IBBI) for their records. The matter was scheduled for further hearing on 20.03.2020 to address the issues raised and ensure a fair and transparent resolution process.
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