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TMI Blog2021 (4) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... peals emanate from the Order dated 30 July 2020 passed by the Adjudicating Authority/National Company Law Tribunal, Mumbai Bench, Mumbai in three separate Company Petitions - CP (IB) 1416/MB/2017, CP (IB) 1415/MB/2017 and CP (IB) 1414/MB/2017 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code'), which were all dismissed on similar grounds and captioned Appeals raise the identical question of facts and law. Therefore, all these appeals are taken together. 2. The Appellants are aggrieved by the certain observations made against them while dismissing the Petition under Section 7 of the Code. The present Appeals are limited to the extent of observations. Accordingly, the only relief being sought by the Appellant's herein is the quashing/expunging/ setting aside said observations from the impugned judgments. 3. On the contrary, the Respondent contends that the Adjudicating Authority ought to have taken action against the Appellants under Sections 65, 72 and 75 of the I&B Code 2016. The Respondents have preferred the cross Appeals - CA (AT) (Ins.) Nos. 1016 of 2020, 1018 of 2020 and 1019 of 2020 praying action against the Appellants under Sections 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. This also brings out the fact that there is no difference between the Petitioner and the Corporate Debtor as the Petitioner is Promoter and in control of the day to day affairs of the Corporate Debtor Company. This Bench notes that even in his submissions, the Petitioner has not denied the fact that the demand notice have been issued, received and replied amongst him and his brother only. 19. This Bench also has come to a conclusion that the effective control of the Corporate Debtor Company has remained with the Petitioner only. This Bench also fairly concludes that the whole process of issuing, receiving and replying of the demand notice by the the Petitioner and his brother has been without any knowledge of the other Directors and therefore clearly shows malicious intention of the Petitioners. Therefore, the Bench concludes that there is not been any "Effective service of Demand notice". (Verbatim copy, emphasis supplied) Grounds of Appeal 8. These Appeals are filed mainly on the ground that; The Adjudicating Authority has failed to notice that there is no requirement of issuance of demand notices under Section 7 of the Code. The Learned Adjudicating Authority' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors was called on 27 June 2017. To run away from all the above allegations, the petitioners and all his family members filed the Petition against the Corporate Debtor and other Directors and tried to kill the Corporate Debtor. 10. We have heard the arguments of the Learned Counsel for the parties and perused the record. Discussions and Finding 11. Learned Counsel for the Appellants contends that the Adjudicating Authority's observation in the Judgement aggrieves them, so the challenge is limited to the extent of observations of the Adjudicating Authority in the impugned orders. Therefore we are only considering the merit of the impugned orders to the limited extent of observations by the Adjudicating Authority. 12. The Adjudicating Authority has concluded that the alleged debt was not Financial Debt. Undeniably, issuance of demand notice under Section 7 of the Code is not a mandatory requirement. There is no concrete material other than a relationship to conclude any collusion, much less unlawful collusion. All the Allegations against the Appellants are based on unsubstantiated allegations. Suspicion, howsoever strong, does not take the place of proof to conclude collusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 16. In addition to CP No 1416/MB/2017 earlier, two more similar Petitions, i.e., CP (IB) 1414/MB/2017 and CP (IB) 1415/MB/2017, were filed by the same Petitioner(s) against other family-owned Companies. It is to be noted that the facts, documents annexed, and submissions made by both the parties are almost the same/similar in all these Petitions. 17. The Corporate Debtor contended that there is no due and payable debt in terms of Section 5(8) of I &B Code, 2016, and therefore there is no default. It is further submitted that the contribution made by the Petitioner was in the form of share capital like other Directors and shareholders, and the amount was invested as quasi capital in the Company. The Petitioner has initiated fraudulent and malicious proceedings against the Corporate Debtor to save themselves from various allegations, which was the subject matter of the Board meeting dated 27.06.2017. 18. The Adjudicating Authority rejected the Application because what is being claimed as debt by the Petitioner is, in fact, infusion of funds as Promoter and Shareholder contributed for running its operations since it is a private business of the Kewalramani family. The amount adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after looking at the case , that it is a contribution to the capital structure of the Company as there is no any written or oral agreement for any fixed tenure for which money has been given to the corporate debtor company and hence, by no stretch of imagination, the amount can qualify as financial debt." 24. There was no valid ground to conclude that the Petition was filed with malicious intent. The Adjudicating Authority's finding regarding malicious intent cannot be treated as valid by any stretch of the imagination. The Petition was dismissed mainly because alleged debt cannot be treated as financial debt. Only on this basis, the inference cannot be drawn that the Petition was filed with malicious intent. In any event, the apparent malicious intent was for the issuance of the demand notice, which, as stated above, is not even a legal requirement under Section 7 of the Code. Therefore it is clear that the observation of the learned Adjudicating Authority that the Petition is filed with malicious intent is invalid. 25. In the facts and circumstances of the present case, only on the ground that the Adjudicating Authority has not treated the alleged Transaction as a financial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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