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2023 (10) TMI 1119 - AT - Insolvency and BankruptcyViolation of principles of natural justice - impugned order passed without perusing the law of the land (the Code) and also ignoring the precedent cases - Levy of penalty u/s 70 of IBC - HELD THAT - It is concluded that clearly the Adjudicating Authority erred in passing the Impugned Order overlooking the law of the land (the Code) and also ignoring the precedent cases settled by this Appellate Tribunal. The impugned order cannot be sustained - matter remanded back to the National Company Law Tribunal, New Delhi Bench, Court - III to have a fresh look of the case and decide in accordance with the law and pass suitable order.
Issues Involved:
1. Jurisdiction of the Adjudicating Authority u/s 70 of the Code. 2. Compliance with Section 236 of the Code. 3. Non-cooperation by the Appellants with the Resolution Professional. Summary: Jurisdiction of the Adjudicating Authority u/s 70 of the Code: The Appellants contended that the Adjudicating Authority lacked jurisdiction to impose penalties u/s 70 of the Code, which deals with "offences and penalties" and falls within the purview of Special Courts as per Section 236 of the Code. They argued that any prosecution under Section 70 must follow the procedure outlined in Section 236(2) of the Code, which mandates that offences be tried by a Special Court. The Appellants cited previous judgments, including *Vivek Prakash v. Dinesh Kr. Gupta* and *Lagadapati Ramesh v. Mrs. Ramanathan Bhuvaneshwari*, to support their claim that the Adjudicating Authority cannot directly impose penalties under Section 70. Compliance with Section 236 of the Code: The Appellants argued that the Adjudicating Authority erred in exercising powers that are vested exclusively in Special Courts under Section 236 of the Code. They emphasized that no Court shall take cognizance of any offences punishable under the Act unless a complaint is made by the Board, the Central Government, or an authorized person. The Appellants referenced multiple judgments, including *Union of India v. Maharashtra Tourism Development Corporation* and *Writer Business Services (P.) Ltd. v. Ashutosh Agrawala*, which clarified that prosecution under Section 70 must be initiated by appropriate authorities and not by the Adjudicating Authority. Non-cooperation by the Appellants with the Resolution Professional: The Respondent, the Liquidator of the Corporate Debtor, alleged that the Appellants failed to provide necessary documents and information, thereby not cooperating with the Resolution Professional. The Adjudicating Authority, in its Order dated 07.06.2022, imposed a fine of Rs. 10,00,000/- on each of the Appellants for their non-cooperation, invoking Section 70 of the Code. The Respondent argued that the Adjudicating Authority acted within its powers to ensure compliance and cooperation as mandated by Section 19 of the Code. Conclusion: After analyzing the arguments and cited judgments, the Appellate Tribunal concluded that the Adjudicating Authority erred in passing the Impugned Order by overlooking the statutory provisions and precedent cases. The Tribunal set aside the Impugned Order and remanded the case back to the National Company Law Tribunal, New Delhi Bench, Court-III for a fresh decision in accordance with the law. The Appellants and the Respondent were directed to appear before the NCLT on 8th November, 2023. No costs were imposed, and any interlocutory applications were closed.
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