2021 (6) TMI 941 - Tri - Companies Law

Impleadment in the application - fraud - HELD THAT - Certain banks have initiated proceedings against the Corporate Debtor under the RBI Circular based on the Forensic Audit Report obtained by the Resolution Professional - Applicant who is the SRA of the Corporate Debtor may be concerned with the developments and interested in knowing the contents of the Forensic Audit Report and complaint to CBI relating to the happenings in the Corporate Debtor. It would be between the Financial Creditors and the SRA. Application rejected.

Summary

Issues:
Application for intervention in insolvency proceedings; Impleadment of former director in ongoing proceedings; Request for access to documents related to forensic audit report and complaints; Interpretation of RBI circular on fraud classification; Connection between Writ Petition and intervention application.

Analysis:
The judgment revolves around an Application filed by a former director of a Corporate Debtor seeking to be joined as a party Respondent in ongoing insolvency proceedings and requesting access to certain documents. The Corporate Debtor was put under Corporate Insolvency Resolution Process (CIRP), and the Successful Resolution Applicant's plan was approved by the Tribunal. The Applicant sought to intervene in an Application filed by another party to obtain a forensic audit report and related complaints. The Applicant also highlighted a Writ Petition challenging the RBI circular on fraud classification. The Respondent opposed the intervention, arguing that the Applicant lacked locus and was not affected by the ongoing proceedings.

The Tribunal considered the arguments presented by both parties. It noted that certain banks had initiated proceedings against the Corporate Debtor based on a forensic audit report. While the Successful Resolution Applicant may be concerned with these developments, the Tribunal found that the former director, the Applicant in this case, would not be directly impacted by the outcome of the ongoing Application. The Tribunal emphasized that the decision in the earlier Application would not affect the Applicant and, therefore, there was no necessity to implead the Applicant in those proceedings.

Furthermore, the Tribunal rejected the Applicant's reliance on a judgment in a different context, stating that it did not support the Applicant's contentions in this case. Ultimately, the Tribunal dismissed the Application for intervention, ruling that there was no need to involve the former director in the ongoing proceedings. The judgment underscores the specific roles and interests of the parties involved in insolvency proceedings and emphasizes the limited relevance of certain legal precedents in different contexts.