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TMI Blog2019 (1) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... at date learned representatives from the side of the Financial Creditor and the Operational Debtor, both were present. Again the matter was listed on 21 June 2018 for final hearing, but before the final hearing for consideration of admission could commence, a learned senior counsel Mr. Janak Dwarkadas appeared and objected the adjudication of this Petition on the ground that the 'Corporate Debtor' has not informed that other proceedings before NCLT Mumbai are pending in Court Room No. I. On hearing the alleged preliminary objections this bench had made prima facie observations as under;- "1. The Learned Representatives of both the sides are present. 2. A Petition under section 7 of the I&B Code submitted on 11.06.2018 by the Financial Creditor The Invex Pvt. Ltd. pertaining to an alleged financial debt of Rs. 30,68,78,974/- (Rupees Thirty Crores Sixty-eight Lakhs Seventy-eight Thousand Nine Hundred Seventy-four only) stated to be outstanding against Dome-Bell Electronics India Pvt. Ltd. Ahmednagar the Corporate debtor. 3. The Learned Counsel of the Petitioner has mentioned this Petition for out of turn early hearing on the ground that there is an apprehension of transfer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Private Limited not to deal in any manner by transferring, pledging or alienating any of its assets as appearing in the Books of Accounts till further orders. 8. Matter be listed for hearing on 11.07.2018." 3. Since a preliminary objection had been raised therefore the matter was adjourned for 11 July 2018. On the said date it was informed that an 'Intervention Application' (MA 695/2018) has been submitted and to be heard First, before adjudication on the main Petition filed under section 7 of the Code. As a consequence, an observation was made that whether Intervener's application could be entertained in this case or not, is to be decided on the next date ?. Hence, the matter was again listed for hearing on 26 July 2018 with the direction to complete the pleadings before that date. From 26 July it was adjourned to 31 July 2018. Learned representatives of both the sides were present and heard at length. It is mutually decided that the 'Intervention Application' shall be heard First and thereafter, if deem fit, the main Petition be heard on merits. 4. A Miscellaneous Application (M.A. 695/2018) was moved dated 11/07/2018 by an Applicant M/s Nityank Infrapower & Multiventures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anteed the payment obligation of the M/s Hindustan Oil in relation to the debentures. Additionally, the payment obligation was partly secured by a share pledge agreement also dated 30 December 2016, entered into between the debenture trustee and certain shareholders of Videocon D2H Ltd, including the Dome-Bell in the said share pledge agreement. Under the said share pledge agreement M/s Dome-Bell had pledged 44,38,400 equity shares of Videocon D2H Ltd in favour of the debenture trustee. Later on by a letter dated 13 September 2017 the Hindustan Oil informed the applicant that there had been changes in the corporate structure of certain companies which had also executed similar agreement and pledged shares in favour of the Applicant. Similarly, the Hindustan Oil also acknowledged, inter alia, that certain shareholders of Videocon D2H entered into a share pledge agreement dated 30 December 2016 for creation of a pledge on an agreed number of 11,34,34,303 shares of Videocon D2H. The Hindustan Oil had also stated that there was a pledger in respect of 44,38,400 equity shares of Videocon D2H. Therefore, according to the Applicant the Hindustan Oil's payment obligation towards the Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of its Assets. The Applicant has learnt that the Dome-Bell had made claim before the Dish TV for allotment of Equity Shares in exchange for identified Shareholding. The apprehension is that on receipt of the shares, the Dome-Bell may alienate shares or deal with those shares to defeat the recovery. In the light of the aforementioned background, this Application has been moved so that the Applicant be made an Intervener, or in the alternate, the Debtor Company be restrained not to pledge 3,40,00,000 shares in Videocon D2H in favour of the ECL Finance Ltd. 4.3 From the side of the Intervener Applicant, Learned Counsel Mr. Ashish Kamat has vehemently pleaded that the impugned Petition filed u/s. 7 is a collusive and malicious Petition with an intent to defeat the Applicant's genuine claim. He has informed that Nityank is a Financial Creditor of the Corporate Debtor Dome-Bell and in that capacity filed a Company Petition No. 1238/2018 u/s. 7 of The code, pending before Court Room No.1, NCLT, Mumbai. In that Petition an Application No. 377/2018 had also been filed seeking Injunction from Court Room No.1, NCLT, for restraining the Corporate Debtor Dome-Bell against disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that they are all part of the same group of Companies. Annexed hereto and marked as Exhibits "H" and "I" are copies of Form No. MGT-7 as uploaded by Electroparts India Pvt. Ltd. and Waluj Components Private Ltd. respectively, along with the corresponding list of shareholders". 4.4 Allegation of the Learned Counsel is that the impugned Petition before this Bench is to defeat the Intervener's claim over the Identified shareholding in fraudulent and malicious manner. With ulterior motive Invex on one hand and Dome-Bell on the other hand have submitted this Insolvency Petition. For this act, they are liable to be penalized under the Insolvency Code. According to the allegation, the Financial Creditor is nothing but a shell Company. The purpose is that on admission the "Moratorium" shall commence which would preclude the Applicant from securing the Pledge of Shares in Dish TV India corresponding to Identified shareholding. He has, therefore, concluded that the Applicant be allowed to be an Intervener in this Petition. Alternatively, the impugned Petition be dismissed, pleaded by Learned Representative. 5. On the other hand, from the side of the Petitioner Invex Pvt. Ltd., Mr. Siril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited Rs. 3,166 crores, was in existence for just six years, before its name was struck off by the RoC recently. The company's last annual general meeting was held in September 2014, according to RoC records. The company has a paid-up capital of Rs. 1 lakh and has only two directors. Both directors are on the boards of eight other companies. The RoC records do not mention the business activity of the company." Unquote. 5.2 According to him, this Petition by M/s Invex is submitted u/s. 7 of The Code, therefore, to be decided within 14 days on the basis of the evidence furnished. As a Financial Creditor, the requirement of the Law is to establish "Financial Debt" and to demonstrate the "Default". By allowing a Third Party as an Intervener will defeat the intent of the Legislation. It will create a bad precedence. According to him this is a simple and straight forward financial transaction of Rs. 8,58,00,000 duly debited in the Federal Bank of the Invex Private Limited dated 16.03.2011 transferred through RTG in the Account of Dome-Bell Electronics (Corporate Debtor). He has concluded that this Application (MA 695/2018) be dismissed. 6. Before I proceed to decide the main petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction if it is transparent, straight forward and bona fide. As far as the present case is concerned, the nature of the Financial Debt, on the face of it, is simple casting no doubt being a single debit entry in the Bank Account of the Financial Creditor through which an amount of Rs. 8,58,00,000/- was transferred on 16.03.2011 through RTG in the account of Corporate Debtor (Dome-Bell). In respect of this transaction the Intervener is totally silent without casting any doubt. Rest of the transactions which are reported are complex dovetailed transactions, but merely because of their complexity do not put this transaction within the ambits of a "Fraudulent transaction". It is worth to make an observation that the Applicant was legally required to establish a direct nexus of his debt with the debt of the present Petitioner. No such nexus is established to conclusively prove that the Debtor Company Dome-Bell has any connection with regard to this very Debt with the Debt of Nityank. For granting intervention this should be a fundamental legal requirement. In the absence of direct connection or nexus of Nityank with the Debt in question in this Petition it is absolutely unfair to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, Contract if any, evidence of default and so forth. This information can be utilized by a Third party other than for the purpose of proceedings in progress. Hence a careful approach is needed while dealing with such type of demand. Considering the totality of the circumstances this demand to direct the Financial Creditor (Invex) to supply a copy of the main petition is hereby rejected. 6.4 That the allegation of "collusiveness" is required to be established to the hilt. The First onus is on a person raising such doubt. A "collusive" transaction can be said to be a transaction to defraud another. An Agreement to obtain something forbidden by law can be treated a "Collusive Transaction", otherwise not. A business transaction is always between two Parties. Simply because of involvement of two connected parties does not convert a bona fide transaction into a "collusive" transaction. A fair commercial deal which may throw a Third Party out of the deal being less advantageous cannot be adjudged as a "collusive" transaction. A fair business competition is expected in such type of dealings. A Third Party being not permitted to enter into a deal does not lead to an automatic conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Ltd. v. Right Tower (P.) Ltd. (Company Appeal (AT) Insolvency) No. 38 of 2018) Order dated 20.02.2018 is on the issue of Privity of Contract on the part of the Intervener. The facts being not clear the Hon'ble NCLAT had restored the matter back to the file of the Adjudicating Authority by leaving the question open to decide the issues as raised, keeping in mind the question of "Maintainability" as well. Since there was no 'Finding' either on Law or on Fact, hence the reliance on this case law is misplaced. On the other hand, the Press release as well as the facts narrated in the reply have put the Intervener's intention under suspicion. An allegation of involvement in misutilization of Demonetization Scheme as also the allegation of branding as a "Shell Company" are presently not rebutted. 7. In the light of the detailed discussion held in foregoing paragraphs I am of the view that there is no substance in this Misc. Application, therefore, the request to allow as an Intervener is hereby rejected. Misc. Application No. 695 of 2018 stands dismissed. 8. Decision on main CP(IB) 2051/2018 :- The above view is further buttressed by the contents and evidences of the main petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Account of the Petitioner (Invex Private Limited) wherein vide a single entry dated 16.03.2011 the impugned amount of Rs. 8,58,00,000/- was debited by issuing RTG favouring Dome-Bell. 8.6 The Corporate Debtor had given "Ledger Confirmation" by affirming the outstanding balance as per the Books of Accounts of the Financial Creditor for the period of 2012 upto 2017. It is worth to mention that the Debtor Company has not raised any objection or doubt in respect of the Financial Debt now under consideration. FINDINGS 9. In the light of the above discussion and on due perusal of the documents annexed, the Debt is to be qualified as "Financial Debt" as defined under section 5(8) of Insolvency & Bankruptcy Code, 2016. As a result, the Financial Creditor has filed this Application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. 10. Since this is a Petition of "Financial Creditor", therefore, the Insolvency Process shall commence as prescribed under Section 7 of IBC, 2016. The occurrence of "default" is established. The Financial Debtor had failed to pay the amounts due. 11. Having considered the totality of the facts and circumstances ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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