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TMI Blog2019 (12) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of Creditors'; prepared the 'Information Memorandum'; called for 'Resolution Plan' with the approval of the 'Committee of Creditors' and 'Resolution Plans' were placed before the 'Committee of Creditors'. The 'Resolution Plan' submitted by one of the 'Resolution Applicant' was approved by the 'Committee of Creditors' in its 7th meeting with voting share of 83.02%. The 'Resolution Professional' filed Miscellaneous Application No. 524 of 2018 before the Adjudicating Authority for approval of the 'Resolution Plan' under Section 31 of the I&B Code. 3. The Adjudicating Authority (National Company Law Tribunal), Mumbai Bench heard the parties and noticed the submissions made on behalf of the IDBI Bank Limited that Hon'ble High Court of Bombay has already passed order of 'Liquidation' of the Company. The Counsel for the IDBI Bank also brought to the notice of the Adjudicating Authority the order of the Hon'ble Bombay High Court dated 25th January, 2017 passed in Company Petition No.7/2015, wherein the Hon'ble Bombay High Court observed and passed the following order: - "2. Ld. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate 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. 36. 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 Rs. 10 lakhs which shall be paid by the Corporate Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Bombay High Court, passed order for 'Liquidation' and the 'Provisional Liquidator' was appointed on 31st July, 2013, as quoted below:- "IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 289 OF 2013 Jamnadas Mathuradas ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO. 517 OF 2012 Enterprise International Ltd. ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO.26 OF 2013 IDBI Bank Ltd. ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO.166 OF 2013 Bhoruka Part Pvt. Ltd. ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO.187 OF 2013 L & T Finance Ltd. ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO.199 OF 2013 Prem Hemandas Rupani ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO. 264 OF 2013 Bank of India ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH COMPANY PETITION NO. 279 OF 2013 Zigma Distributors Pvt. Ltd. ... Petitioner Versus Amar Remedies Ltd. ... Respondent WITH CO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny shall file their Affidavit before this Court on 27.11.2014 setting out the progress before the BIFR. (S.J. KATHAWALLA, J.)" 9. The aforesaid order shows that the Petitioner(s) were allowed to move before the BIFR. 10. Earlier, order of winding-up was passed by the Hon'ble Bombay High Court on 27th August, 2014. On 19th September, 2014, the matter was taken up by the BIFR under Section 15(1) of Sick Industrial Companies Act, 1985 (hereinafter referred to as the 'SICA, 1985'). According to the learned Counsel for the Appellant, in terms of Section 22 of the SICA, 1985, all proceeding remained stayed. However, the BIFR having refused to pass any order of restructuring, the Company moved before the Appellate Authority for Industrial & Financial Reconstruction (hereinafter referred to as the 'AAIFR'), New Delhi in Appeal No. 4/16. In the said Appeal, the AAIFR passed order on 7th November, 2016, as follows: - "After hearing Ms. Varsha Banerjee ld. Counsel for the appellant and Mr. M.L. Rajora ld. Counsel appearing for M/s. Saraswat Bank and M/s. Edelweiss, we are of the view that the presence of M/s. State Bank of India is necessary to adjudicate this appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Sick Industrial Companies (Special Provisions) Act, 1985 shall stand abated: Provided that a company in respect of which such appeal of reference or inquiry stands abated under this clause may make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 within one hundred and eighty days from the commencement of the Insolvency and Bankruptcy Code, 2016 in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016: Provided further that no fees shall be payable for making such reference under Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or inquiry stands abated under this clause." 13. As the Appeal No. 4/16 preferred by the Company - "M/s. Amar Remedies Limited" stood abated, pursuant second proviso of sub-clause (b) of Section 4 of SIC Repeal Act, 2013, made reference for 'Corporate Insolvency Resolution Process' as per Insolvency and Bankruptcy Code, 2016. 14. Learned Counsel appearing on behalf of the Appellant-Pratima P. Shah submitted that for reference in terms of substituted sub-clause (b) of Section 4 of the SIC Repeal Act, 2003, no specific Form was prescribed by the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the best of my knowledge, Ms. Jayashree Shukla Dasgupta is fully qualified and permitted to act as an Insolvency Professional in accordance with the provisions of Insolvency and Bankruptcy Code, 2016 and the associated rules and regulations. [The relevant fee is not being paid as the Company is filing this application pursuant to the notification of the SICA Repeal Act, 2003. As per Section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 as amended by Section 252 read with Schedule VIII of the Insolvency and Bankruptcy Code, 2016 ("IBC"), a company in respect of which such appeal or reference or inquiry pending before AAIFR or BIFR stands abated, may make reference to the National Company Law Tribunal under IBC within 180 days from commencement of IBC, without payment of fees in accordance with the provisions of IBC. Copy of last AAIFR order dated 07.11.2016 in the matter of Amar Remedies Limited is enclosed as Annexure 17. Apart from the above stated Annexure, certain further stated documents which are relevant to the filing of the present application are attached herewith as per index attached to the Application." 16. From the plain reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11 of the I&B Code prohibits the corporate debtor to prefer any application under Chapter II of Part II to initiate 'Corporate Insolvency Resolution Process' against itself in case liquidation order has been made, as quoted below: - "11. Persons not entitled to make application.-The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:-- (a) a corporate debtor undergoing a corporate insolvency resolution process; or (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or (c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under this Chapter; or (d) a corporate debtor in respect of whom a liquidation order has been made. Explanation.-For the purpose of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor." 21. Applications under Section 7; Section 9 and Section 10, are the only applications, which are filed for ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor' for reference under sub-section (b) of Section 4 of SIC Repeal Act, 2003 if files application in a modified Form-6, it cannot be treated as a proceeding under Section 10. It should be treated as a 'Corporate Insolvency Resolution Process' by reference under sub-section (b) of Section 4 of SIC Repeal Act, 2003. In absence of prescribed Form, we hold that it was open to the Company/'Corporate Debtor' to suitably draft the format of reference. If the 'Corporate Debtor' chose the Form 6 for the purpose of reference, it will continue to be a reference by a Company/'Corporate Debtor' under sub-section (b) of Section 4 and such reference will not be hit by Section 11. 26. The Adjudicating Authority failed to notice that the Company/'Corporate Debtor' has right under substituted sub-section (b) of Section 4 of SIC Repeal Act, 2003 to file reference for its own Insolvency. 27. The Adjudicating Authority noticed the order of the Hon'ble Bombay High Court and the pendency of the petition for winding-up, but failed to appreciate that in terms of Section 434 of the Companies Act, 2013, the said proceeding is to be transferred fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pratima P. Shah, Director, the direction was issued to initiate proceeding under Section 77(a) of the I&B Code, 2016 in violation of rules of 'natural justice'. 33. The 'Corporate Insolvency Resolution Process' was initiated more than a year back by a separate Bench of the Adjudicating Authority (National Company Law Tribunal) on 16th June, 2017. Subsequently, at the stage of approval of the 'Resolution Plan' under Section 31(1), it was not open to the another Bench of the Adjudicating Authority to declare the initiation of 'Corporate Insolvency Resolution Process' as illegal. A subsequent Bench of the Adjudicating Authority has no jurisdiction to sit in appeal over the order passed by the earlier Bench of the Adjudicating Authority nor it is competent to deliberate on such issue. 34. For the reasons aforesaid, we set aside the impugned order dated 29th January, 2019 and remit the case to the Adjudicating Authority (National Company Law Tribunal) to pass appropriate order under Section 31 of the I&B Code, taking into consideration the fact that the 'Resolution Plan' has already been approved by the 'Committee of Creditors' in their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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