2021 (2) TMI 119 - Tri - Insolvency and Bankruptcy

Seeking to implead M/s Inkel Limited as Additional Corporate Debtor - Section 9 of IBC - HELD THAT - The proposed additional Corporate Debtor is in charge of the day to day affairs of the Company and is, therefore, responsible and liable for all the debts and liabilities that are incurred on behalf of the Corporate Debtor. It is further clear that the Corporate debtor has been acquired exclusively for the purpose of entering into agreements and to limit the liability on the proposed additional Corporate Debtor which is in contravention to the provisions of I B Code. The Directors Report to shareholders forming part of the Annual Returns filed by the proposed Respondent in the year 2018-2019 reveals that the Corporate Debtor is a subsidiary of M/s. Inkel Ltd. The Holding Company (M/s. Inkel Limited) have 65% of the shares in the subsidiary company managed by a Managing Director who is a part of the minority shareholder group and promoter - It is seen from the records that the operational affairs of the Corporate Debtor are now being managed by INKEL executives and that the Companies are hopeful of achieving a turnaround in the fortunes of the Corporate Debtor and ensure that the investments stay protected. Thus, it is clear that the Corporate Debtor company have been acquired by M/s Inkel Ltd. and is having a control stake of over 65% of the shares of the Corporate Debtor with effect from 01.12.2017. The operations of Corporate Debtor were managed, controlled and operated by the proposed Corporate Debtor - thus, it is clear that the proposed additional Corporate Debtor is the holding company of the M/s. Seguro Foundations and Structures Pvt Ltd. Therefore, the Application under Section 9 would be maintainable against both of them jointly. Hence, this Tribunal is of the view that M/s. Inkel Limited, should be impleaded as additional Corporate Debtor. Application is disposed of and M/s. Inkel Limited is impleaded as additional Corporate Debtor in the IBA.

Summary

Issues:
1. Impleadment of an additional Corporate Debtor in an application under Section 9 of the Insolvency and Bankruptcy Code.
2. Liability of the proposed additional Corporate Debtor for debts and liabilities of the Corporate Debtor.
3. Interpretation of relevant case law for impleading additional Corporate Debtors.

Issue 1: Impleadment of an additional Corporate Debtor:
The Interlocutory Application was filed under Section 9 of the Insolvency and Bankruptcy Code by the Applicant against the Corporate Debtor for salary arrears. The Applicant sought to implead M/s. Inkel Limited as an Additional Corporate Debtor based on the argument that Inkel Limited had acquired a controlling stake in the Corporate Debtor and was managing its operations. The Applicant contended that Inkel Limited should be held liable for the debts incurred by the Corporate Debtor. The Tribunal analyzed the facts presented, including the share acquisition and management control, and referred to relevant case law. Ultimately, the Tribunal allowed the impleadment of Inkel Limited as an additional Corporate Debtor in the application under Section 9 of the IBC.

Issue 2: Liability of the proposed additional Corporate Debtor:
The Tribunal considered the evidence provided by the Applicant, including the Demand Notice and lack of response from the Corporate Debtor regarding the outstanding salary arrears. The Applicant highlighted that Inkel Limited, the proposed additional Corporate Debtor, had acquired a significant stake in the Corporate Debtor and was actively involved in its management. The Tribunal noted that Inkel Limited had passed a resolution to provide a corporate guarantee for the Corporate Debtor, indicating its involvement in the financial affairs of the company. Based on these findings, the Tribunal concluded that Inkel Limited should be held responsible and liable for the debts and liabilities incurred by the Corporate Debtor.

Issue 3: Interpretation of relevant case law:
The Tribunal referred to the case law of Mrs. Mamatha V. AMB Infrabuild Pvt. Ltd. & Ors to support the decision to implead Inkel Limited as an additional Corporate Debtor. The case law emphasized that when two Corporate Debtors collaborate and form an independent entity, an application under the IBC can be maintained against both jointly. The Tribunal applied this principle to the current case, considering the relationship between the Corporate Debtor and Inkel Limited. By aligning with the interpretation of the case law, the Tribunal justified the impleadment of Inkel Limited as an additional Corporate Debtor in the ongoing insolvency proceedings.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal, the arguments presented by the Applicant, and the legal reasoning behind the decision to implead M/s. Inkel Limited as an additional Corporate Debtor in the insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code.