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2020 (10) TMI 308 - HC - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - Chief Legal Head of the Bank of India, is directed to remain present today at 03.00 p.m. after consulting the concerned ofcers of Bank of India, who according to the Interim Resolution Professional have condoned the aforesaid conduct of the suspended Directors and have not taken any action in the matter. The Prothonotary and Senior Master shall forthwith email a copy of this Order to the Chief Legal Head of the Bank of India, Main Branch, Fort, Mumbai and also inform him telephonically that he should remain present through video conferencing before this Court today at 03.00 p.m. - This order will be digitally signed by the Personal Assistant of this Court.
Issues:
1. Impugning a letter of acceptance and work order issued by Navi Mumbai Municipal Corporation. 2. Company petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2018. 3. Appeal before the National Company Law Appellate Tribunal regarding the constitution of the Committee of Creditors. 4. Suspension of powers of Directors under Section 17 of the IBC. 5. Allegations of fraud by the Directors in collusion with Municipal Corporation officers. 6. Siphoning of funds by the Petitioner. 7. Actions of the Interim Resolution Professional and Bank of India. Analysis: 1. The Petitioner challenged a letter of acceptance and work order issued by Navi Mumbai Municipal Corporation. The matter stemmed from a company petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2018, by Bank of India against the Petitioner, leading to the admission of the petition and the imposition of a moratorium. 2. The Directors of the Petitioner appealed to the National Company Law Appellate Tribunal regarding the constitution of the Committee of Creditors. Despite attempts at settlement, the resolution professional was eventually directed to constitute the Committee of Creditors. 3. The Interim Resolution Professional informed the Petitioner about the suspension of the Directors' powers under Section 17 of the IBC. However, allegations arose during the court proceedings regarding fraud committed by the Directors in collusion with Municipal Corporation officers, involving the transfer of funds to unauthorized accounts. 4. The court discovered that the Directors had indeed siphoned significant amounts by activating an old account and transferring funds to related entities, violating the IBC provisions. The Interim Resolution Professional's response to this misconduct raised concerns about the lack of action taken against the Directors by the Bank of India. 5. In response to these revelations, the court directed the Chief Legal Head of Bank of India to appear and address the condonation of the Directors' actions. The urgency of the situation was emphasized by the court's directive for immediate communication and action to rectify the fraudulent conduct. 6. The court's intervention highlighted the seriousness of the situation, emphasizing the need for accountability and adherence to the legal framework governing insolvency proceedings. The case underscored the importance of transparency, integrity, and diligent oversight in insolvency resolution processes to protect the interests of all stakeholders involved.
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