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2019 (3) TMI 826 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - Resolution Plan has been approved by the Committee of Creditors in its 7th COC meeting with a vote share of 83.02% - after Hon ble High Court s order for liquidation of the company, this petition was filed under section 10 of the Code without disclosing that the company has been wound up by order of the Hon ble High Court - HELD THAT - After liquidation order passed in a winding-up petition against the corporate debtor then it is barred from filing a petition under section 10 of the Code. Here the corporate debtor has not only suppressed the material fact that the winding up petition has not only been filed and admitted, but liquidation order has also been passed against the corporate applicant/corporate debtor liquidator has been directed to expedite liquidation proceedings expeditiously. The corporate applicant suppressed this material fact, knowing it to be material, and filed the petition under section 10 and in contravention of Rule 10 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The alleged act of the corporate applicant is punishable under section 77 (a) of the Insolvency and Bankruptcy Code 2016. The Registrar of Companies, Mumbai is directed to lodge prosecution against the corporate applicant under section 77(a) of the insolvency and bankruptcy code in 2016. Since the petition has been filed under section 10 of the Insolvency and Bankruptcy Code 2016 after the suppression of the material facts, which were known to be material, therefore the petition is rejected with cost ₹ 10 lakhs which shall be paid by the Corporate Applicant. The cost will be deposited in the account of the Prime Ministers National Relief Fund. It is to be clarified that by the order dated 25.1.2017 of Hon ble Bombay High Court, the Corporate Applicant stands wound up and the Ofifical Liquidator has already been directed to expedite process of liquidation expeditiously.
Issues Involved:
1. Whether the corporate debtor/corporate applicant filed the application under Section 10 of the Insolvency and Bankruptcy Code (IBC) 2016 after suppressing material facts known to be material. Issue-Wise Detailed Analysis: 1. Suppression of Material Facts by Corporate Debtor: Background and Context: The Resolution Professional filed MA No. 524 of 2018 for approval of the Resolution Plan under Section 30(6) of the I&B Code, 2016. The plan was approved by the Committee of Creditors (CoC) with an 83.02% vote share. However, IDBI Bank Ltd. highlighted that the company had been ordered for liquidation by the Hon’ble High Court, Bombay, on January 25, 2017, and this fact was suppressed in the petition filed under Section 10 of the I&B Code. Legal References and Arguments: - The Corporate Applicant filed the petition on May 29, 2017, without disclosing the High Court's liquidation order. - Section 11(d) of the I&B Code expressly bars a corporate debtor under a liquidation order from initiating the Corporate Insolvency Resolution Process (CIRP). - Rule 10 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, mandates the disclosure of any winding-up petition immediately upon awareness. - Section 77 of the I&B Code prescribes punishment for providing false information or omitting material facts in an application under Section 10. Tribunal's Findings: - The Corporate Applicant was aware of the winding-up proceedings and the liquidation order but failed to disclose these facts. - The CoC and the Resolution Professional were informed about the liquidation order during the 2nd CoC meeting on November 17, 2017, by IDBI Bank. - The Tribunal found that the Corporate Applicant suppressed material facts, which is a punishable offense under Section 77(a) of the I&B Code. Conclusion and Order: - The petition under Section 10 of the I&B Code was filed after suppressing material facts, making it inadmissible. - The Tribunal directed the Registrar of Companies, Mumbai, to lodge prosecution against the Corporate Applicant under Section 77(a) of the I&B Code. - The petition was rejected with a cost of ?10 lakhs to be paid by the Corporate Applicant, to be deposited in the Prime Minister's National Relief Fund. - The Tribunal clarified that the Corporate Applicant stands wound up as per the High Court's order dated January 25, 2017, and the Official Liquidator is to expedite the liquidation process. Communication of Order: - The Registry was directed to immediately communicate this order to the Resolution Professional, the CoC, the Official Liquidator, the Corporate Applicant, and the Registrar of Companies, Mumbai.
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