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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 ..... Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Though, wrong reference of Section 10 has been made therein, in the opening paragraph, the Adjudicating Authority noticed that the 'Corporate Insolvency Resolution Process' was sought for and earlier the matter was pending before the BIFR in reference No. 55/2014, followed by Appeal No. 4/2016 filed before AAIFR. Therefore, it is clear that reference case was filed by the Appellant, while admitting the application mentioning of a wrong provision of law such as Section 10 by the Adjudicating Authority, cannot takeaway the right of the Company to file application for 'Corporate Insolvency Resolution Process' under sub-section (b) of Section 4 of the SIC Repeal Act, 2003. In view of Section 252 of the I B Code read with Schedule Eighth annexed thereto; and substituted sub-section (b) of Section 4, particularly proviso thereto of SIC Repeal Act, 2003 is a part of the Code. In terms of the proviso to Section 4(b) of SIC Repeal Act, 2003, as the Appeal before the AAIFR stood abated, the Company had a right to file reference for initiation of 'Corporate Insolvency Resolution Process' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority (National Company Law Tribunal), Mumbai Bench treated the Form-6 as an application under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'I B Code') showing Amar Remedies Limited as 'Corporate Applicant' and admitted the application vide order dated 16th June, 2017. 2. Pursuant to the 'Corporate Insolvency Resolution Process', 'Interim Resolution Professional' collated the claims; constituted the 'Committee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of this section, it does not follow that until a liquidation order has been made against the corporate debtor, an insolvency petition may be filed under section 7 or section 9 as the case may be, as has been held by the Appellant Tribunal. Hence, any reference to section 11 in the context of the problem in view of the law laid down by them was in the above mentioned case before us is wholly irrelevant. 35. Given the law laid down by Hon'ble Supreme Court in the abovementioned case, it is clear 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 Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and others' for winding up 'Amar Remedies Ltd.' (Company - 'Corporate Debtor') before the Hon'ble Bombay High Court. In the said case, the Hon'ble Bombay High Court ordered to keep the petitions 'stand over' with further order to serve the copies of the reference on the office of the Official Liquidator and the Advocate for the Petitioners. The Petitioners were asked to appear before the BIFR and to make necessary representations. The Ex-directors of the Company were asked to report the Hon'ble Bombay High Court on 27th November, 2014 setting out the progress before the BIFR. In the aforesaid petition, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Ashish Kamat i/by M/s. Desai and Diwanji, for Petitioner in CP. No. 298 of 2013. Mr. Anindya Basakod i/by M/s. Khaitan and Co., for Petition in CP Nos.279, 280, 281 of 2013. Mr. B.R. Palav with Mr. A. Mathkar, for Petition in CP No. 458 of 2013. Mr. Dharmapal Dave with Ms. Mansi Tihyani i/by M/s. Mansukhlal Hiralal and Co., for Petitioner in CP No. 298 of 2013. Mr. Amol Joshi i/by M/s. C.R. Naidu and Co., for Petitioner in CP No. 307 of 2013. Mr. Darshan Mehta i/by M/s. Dhruve Liladhar and Co., for Petitioner in CP No.166 of 2013. Ms. S.I. Joshi i/by M/s. S.I. Joshi and Co., for Petitioner in CP No.187 of 2013. Mr. Mayur Khandeparkar with Mr. Amol Kumeriai/by Mr. Y.R. Kanchan, for Respondent. Mr. S. Ramakantha, Official Liquidator, present. Mr. Reddy and Mr. Gupta, Dy. Official Liquidator, present. CORAM: S.J. KATHAWALLA, J. DATE: 13TH OCTOBER, 2014 RC.: 1. Stand over to 27.11.2014 2. Copies of the Reference shall be served on the office of the Official Liquidator as well as Advocates for the Petitioners. The Petitioners shall be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st day of December, 2016, as the date on which the provisions of the said Act shall come into force. NOTIFICATION New Delhi the 25th November, 2016 S.O. 3569(E),.- In exercise of powers conferred by clause (b) of section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (1 of 2004), the Central Government hereby notifies the 1st day of December, 2016, as the date for the purposes of clause (b) of section 4 of the said Act. [F. No. 3/2/2011-IF-II] R.N. DUBEY, Economic Advisor 12. Insolvency and Bankruptcy Code, 2016 came into force since 1st December, 2016. Pursuant to Section 252 of the I B Code read with Schedule Eighth of the Code, amendment to the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 was made and in Section 4 for sub-clause (b), the following sub-clause was substituted: - The Insolvency and Bankruptcy Code, 2016 THE EIGHTH SCHEDULE (See Section 252) AMENDMENT TO THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) REPEAL ACT, 2003 (1 OF 2004) In section 4, for sub-clause (b), the following sub-clause shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Company in respect of which appeal or reference or inquiry was pending before AAIFR or BIFR stood abated. The last order of the AAIFR dated 7th November, 2016 passed in the appeal of 'Amar Remedies Limited' (the Company) was enclosed as Annexure 17. The relevant portions of Form-6 are extracted below: - BEFORE THE HON'BLE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI AMAR REMEDIES LIMITED (ARL) (CORPORATE DEBTOR) FORM-6 (Sub-rule (1) of rule 7) APPLICATION BY CORPORATE APPLICANT TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC) (Under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules 2016) 29.05.2017 To, The National Company Law Tribunal 6th Floor, Fountain Telecom Building, No.1, Near Central Telegraph, M.G. Road, Mumbai - 400001 From, Amar Remedies Limited (ARL) (Corporate Debtor/Corporate Applicant) Block No.3, Second Floor, Sane Guruji Premises, 386, S.V. Savarkar Marg, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Form-6, it is specifically mentioned that the reference application was filed consequent upon abatement of ARL's reference before BIFR. 18. The Adjudicating Authority while admitting the application by order dated 16th June, 2017 mentioned that this Company Petition was filed by Amar Remedies Ltd. (Company-'Corporate Debtor') under Section 10 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Though, wrong reference of Section 10 has been made therein, in the opening paragraph, the Adjudicating Authority noticed that the 'Corporate Insolvency Resolution Process' was sought for and earlier the matter was pending before the BIFR in reference No. 55/2014, followed by Appeal No. 4/2016 filed before AAIFR. Therefore, it is clear that reference case was filed by the Appellant, while admitting the application mentioning of a wrong provision of law such as Section 10 by the Adjudicating Authority, cannot takeaway the right of the Company to file application for 'Corporate Insolvency Resolution Process' under sub-section (b) of Section 4 of the SIC Repeal Act, 2003, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess.-(1) A corporate insolvency resolution process carried out in accordance with this Chapter shall be called as fast track corporate insolvency resolution process. (2) An application for fast track corporate insolvency resolution process may be made in respect of the following corporate debtors, namely:- (a) a corporate debtor with assets and income below a level as may be notified by the Central Government; or (b) a corporate debtor with such class of creditors or such amount of debt as may be notified by the Central Government; or (c) such other category of corporate persons as may be notified by the Central Government. 23. For initiation of 'Fast Track Corporate Insolvency Resolution Process' under Section 55 (Chapter-IV), prohibition under Section 11 is not applicable. 24. Similarly, for initiation of 'Corporate Insolvency Resolution Process' by reference under sub-section (b) of Section 4 of SIC Repeal Act, 2003, the prohibition under Section 11 is not applicable. 25. The substituted sub-section (b) of Section 4 of SIC Repeal Act, 2003 provides relief to the Company in respect of which appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIFR, which passed order on 7th November, 2016 and stood abated in view of the I B Code, which come into force since 1st December, 2016. The Adjudicating Authority also failed to notice that details of background were mentioned and highlighted by the Appellant-Pratima P. Shah, on behalf of the 'Corporate Debtor' in the end of Form. Having failed to notice the above facts, the Adjudicating Authority wrongly held that the Company/the Appellant-Pratima P. Shah has suppressed the fact of pendency of the winding-up proceeding. 29. It is also to be noticed that the Form-5 do not provide any column either in Part-I, Part-II, Part-III, Part IV or Part V to disclose pendency of any winding-up proceeding before any Court or Tribunal for the purpose of finding out ineligibility under Section 11 of the I B Code. The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 also do not mandate to provide such intimation to the Adjudicating Authority. 30. Therefore, it cannot be alleged that the Company/'Corporate Debtor' or the Appellant-Pratima P. Shah, Director suppressed the material fact of the pendency of the winding-up petition. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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