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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 ..... ation, the proposal of appointment of the IRP is hereby confirmed. Upon Admission of the Application and Declaration of “Moratorium” the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of the Code. The appointed IRP shall perform the duties as an Interim Resolution professional as defined under section 18 of the Code and inform the progress of the Resolution Plan and the compliance of the directions of this Order within 30 days to this Bench. - CP-(IB) 2051/NCLT/MB/MAH/2018 AND M.A. 695/2018 - - - Dated:- 21-8-2018 - Shri M. K. SHRAWAT, MEMBER (JUDICIAL) For The Petitioner (s) : Siril Purohit, Vishal Thaker, Ms. Bindi Dave, Adv. and Ieshan Sinha, Advocate And Ghandy And Co. For The Respondent (s) : Zal Andhyarujena, Faran Khan and Minish Doshi, Advocates for the Intervener : Janak Dwarkadas, Senior Advocate and Ashish Kamat, Advocate ORDER 1. A Petition has been filed by a Financial Creditor namely M/s Invex Private Limited on 11 June 2018 in respect of a financial debt of ₹ 30,68,78,974/-(Rs.6,18,12,446/- Principal + ₹ 24,50,66,528/- Interest) against M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever in Court Room No. 2 appeared without raising any objection of this Petition or without intimating that matter is sub-judice before another Bench. 5. One more Order is placed bearing M.A. No. 357/2018 in CSP-462/2017 CSP-471/2018 (MB) dated 26.04.2018 wherein the name of the parties are Dome-Bell Electronics India Pvt. Ltd. v. Dish TV India Ltd. Ors. under section 230-232 of the Companies Act which stood adjourned to 21.06.2018 and by consent further adjourned to 01.08.2018 by NCLT Bench in Court Room No. 1. The Learned Senior Counsel has informed that even in that case the Corporate debtor has consented for the adjournment but on the other hand appeared in this case without giving any information of the proceedings subjudice before Court Room No. 1. 6. On hearing all the parties present this Bench hereby place on record an observation that the litigants are expected to be just, fair and truthful while representing a case by placing on record the complete information specially if any case is subjudice before any Court of law. The Petitioner as well as the Respondent being duly represented by the Learned Counsels have concealed those facts which is unexpected fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation further it is informed that there was a fraudulent share pledge transaction entered into by the M/s Invex Pvt. Ltd. (Financial Creditor) in favour of the M/s Dome-Bell (Corporate Debtor) with the intent to defeat the legitimate claim of the Applicant against the First Respondent (Invex). There is reference of a Third entity i.e. Hindustan Oil Ventures, Chennai Tamil Nadu. Narrating the facts in brief, it is a Public Limited Company engaged in the business of oil extraction. With the purpose to raise finances the Hindustan Oil proposed to issue on private placement 16,260 non-convertible debentures of ₹ 10 lakhs each having aggregate nominal value of ₹ 1626 crores. In the aforesaid transition the Hindustan Oil Trusteeship Ltd [the debenture trustee] executed a Debenture Trust Deed dated 30 December 2016 [debenture trust deed]. Pursuant to the said debenture trust deed the Hindustan Oil issued non-convertible debentures having face value of ₹ 10 lakhs each at par aggregating to ₹ 1626 crores by the debenture trustee in favour of the applicant Nityank. The applicant Nityank has become the beneficial owner of the said debentures within the meaning of Debe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntures. In a reminder notice once again called upon to pay the outstanding sum of ₹ 1873,39,20,000/-. In view of the said default and in view of the indebtedness of the M/s Dome-Bell, the Applicant/Nityank was constrained to file a company Petition. In this Application further information is given that the Dome-Bell was the owner of 4,08,90,000 shares of Videocon D2H. Pursuant to an oral agreement it was agreed that the Dome-Bell shall issue additional security to the Applicant of those identified shareholding. It was found by the Applicant that the M/s Dome-Bell had pledged some of those shares to a third party after the default committed of non-payment. Through a correspondence it was found that the Dome-Bell had pledged 3,40,00,000 equity shares out of the identified shareholding. According to the applicant the impugned transaction was entered fraudulently to defeat the Applicant s (Nityank) claim. In a reminder notice the Applicant (Nityank) had called upon the Dome-Bell to pay outstanding amount of ₹ 2035,83,00,000/-. 4.2 The allegation is that although the Company was fully conscious of its obligation towards the Applicant (Nityank) under the said Corporate Gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pies of the paper and other relevant documents of the said proceedings. The Applicant s Advocate had attempted to serve its letter and also posted email but not received any reply. Learned Advocate had also vehemently asked to provide the papers and all proceedings of the Petition filed before this Bench. According to him, the entire transaction was a fraudulent transaction to defeat the claim of the Financial Creditor Nityank in Court Room No.1. It is alleged that the Petitioner as a Financial Creditor and the Corporate Debtor, both are related party, deeply connected with each other, therefore, the Petition is not maintainable. Facts in this regard are stated to be, The Petitioner/purported Financial Creditor and Corporate Debtor are part of the Videocon group of companies which have intricate cross-shareholding patterns, and in fact the Corporate Debtor holds 19% shares in the Petitioner s holding company, one Electroparts India Pvt. Ltd. (which holds 57% shares in the Petitioner), The Corporate Debtor also holds 14.60% shares in one Waluj Components Private Ltd. (holder of 19% shares in the Petitioner). The Petitioner s other shareholders are one Century Appliances Pvt. Lt. (5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Room No.1. He has also pleaded that the remarks in Para-6 of Order dated 21.06.2018 be expunged because the Petitioner was not aware about the Insolvency Proceedings against the Corporate Debtor M/s. Dome-Bell. 5.1 According to Learned Counsel of the Petitioner (The Invex Pvt. Ltd.), the Intervener Nityank Infrapower is not a genuine entity. A reporting of Times of India dated 31.07.2018 is submitted across the Bar wherein it is reported that a City-based Company had deposited and withdrawn ₹ 3,178 Crore in Bank post de-monetization and now under investigation by SFIO. The Registered Office is found to be a ghost Registered address in Hyderabad. The Company is not operational from the said Registered Office. According to him, the same Registered Office is also informed to MCA as per the Master Data, copy placed during the hearing. In his counter allegation it is informed that the Intervener was under the control of Videocon Group. On 25.10.2017, there was a change in the Management of the Applicant Company (Nityank). The entire shareholding forming part of the Videocon Group were transferred to one Mr. Mohammed Tamseel Qureshi and his wife Mrs. Arooba Tamseel Qureshi. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to his detriment. A person is said to do a thing Fraudulently if he does that thing with intent to defraud, but not otherwise. A false representation of a matter of fact whether by words or by conduct, or concealment of what should have been disclosed with the intention to deceive another so that the individual will act upon is called as Fraud . In Indian Contract Act, 1872 vide Section 17 Fraud means and includes an act committed by a party to a contract with his connivance to deceive another party or to induce another party to enter into a contract. These allegations are serious in nature. A heavy burden to establish is on the person who is raising these serious allegations. These allegations should not be expected to be raised lightly or in an irresponsible manner. Transactions which were recorded among the parties, as discussed at some length in the foregoing paragraphs are in the nature of a complex business transaction involving few parties. Those parties are expected to be vigilant at the time of entering into the contract. A normal business decision having several cross-transactions not to be alleged as a fraudulent transaction if both the sides are watching their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be granted permission to get a copy of the Plaint. Here in this case, it is a Petition u/s. 7 of the Insolvency Code. The Law is trite in this regard that only after being admitted as a Party to the Litigation an Intervener can get entitlement for demand of a copy of a pleading. If a Third Party is not made Party to the Litigation , then in that situation he is a stranger to the Litigation being not permitted to join the Litigation. As a result, at present being an unconnected outsider, not entitled for a copy. Otherwise also, financial dealings always have a clause of confidentiality , either written or implied. The proceedings under Insolvency Code fall within this ambit. Parties to the Lis under the Insolvency Code are Financial Creditor or Operational Creditor on one hand, and on the order hand Corporate Debtor. Until a Petition is not admitted either under section 7, 9 or section 10 of The Code, the condition of confidentiality is implied. But once a Petition is admitted, then upon commencement of CIRP, public at large is informed through advertisement. Since the Insolvency Code has provided this mechanism, therefore, at this stage, prior to admission an Intervener b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code. 6.5 That a question is raised whether the Financial Creditor in fact had given the advance in question ?, is a baseless allegation due to the simple reason that the Petitioner (Financial Creditor) has furnished sufficient corroborative evidences to establish the genuineness of the transaction. A copy of the Bank transaction and Ledger confirmation are not only the substantial, but also the effective evidence to establish the actual happening of the transaction under consideration. 6.6 As far as the two case laws submitted from the side of the Intervener are concerned, both have been carefully perused and found to be distinctive on facts as well as on Law. In case of Jeevan Credit Leasing v. King Airways Ltd. (CA No. IB 13/PB/2017) Order dated 08.03.2017, a finding on fact was that the defects in filing displayed glaring inconsistencies which had gone to the root of the Application s Maintainability . According to the finding, it was puzzling as to how the Applicant and Respondent could be categorized as Corporate Persons , A finding was given that the Applicant had also failed to furnish necessary Board Resolution affirming grant of Loan. The acknowledgements have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Corporate Debtor. Demand Promissory Note was issued by the Corporate Debtor dated 12th September 2011 . 8.1 On 12.09.2011 the Financial Creditor has informed the Corporate Debtor that on fulfilment of certain Terms and Conditions the request for Inter-Corporate Deposit on Demand Short Term Loan (ODL) for a sum of ₹ 8,58,00,000/- could be granted, repayable on demand on or before 31.03.2014. It was decided that ODL shall be repaid with interest @ 18% p.a. if demanded before 31.03.2014 and in case of delay, carry an interest of 24%. The advance of ODL was to be secured to the satisfaction of the Financial Creditor. 8.2 On that very day (12.09.2011) a Demand Promissory Note was executed by the Financial Debtor. 8.3 On 15.03.2014 the Financial Creditor has communicated the extension of time for repayment of ODL by informing that the Facility shall continue repayable on demand on or before 31.03.2018 and if demanded before 31.03.2018 shall be repaid with interest @ 24% p.a. from payment. 8.4 On 04.05.2018 a Demand Notice was issued by the Financial Creditor through which it was informed that a Loan dated 12.09.2011 which was renewed on 15.03.2014 was payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posal of appointment of the IRP is hereby confirmed. 13. Upon Admission of the Application and Declaration of Moratorium the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of the Code. The appointed IRP shall perform the duties as an Interim Resolution professional as defined under section 18 of the Code and inform the progress of the Resolution Plan and the compliance of the directions of this Order within 30 days to this Bench. A liberty is granted to intimate even at an early date, if need be. The IRP shall submit the Resolution Plan for approval as prescribed under section 31 of the Code. The Intervenor can lodge its claim of Debt, if any, before the IRP/RP by adopting due process of law as prescribed under the Code. 14. It is hereby pronounced that the Moratorium as prescribed under Section 14 of the Code 2016 shall come into operation. As a result, institution of any suit or parallel Proceedings before any Court of Law are prohibited. The assets of the Debtor must not be liquidated until the Insolvency Process is completed. However, the supply of essential goods or services to the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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