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TMI Blog2021 (4) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor is to vest in the Interim Resolution Professional. With such appointment, the powers of the Board of Directors or the partners of the Corporate Debtor as the case may be are to stand suspended. Having regard to the orders passed by the NCLT admitting the application, under Section 7, and also the ordering of moratorium under Section 14 of the IBC and the orders which have been passed by the tribunal otherwise, the impugned order of the High Court resulting in the Respondent No. 1 being allowed to operate the account without making good the amount of ₹ 32.50 lakhs to be placed in the account of the Corporate Debtor cannot be sustained. The Learned Counsel for the Appellant has also no objection in the Respondent No. 1 being allowed to operate its account subject to it remitting an amount of ₹ 32.50 lakhs into the account of the Corporate Debtor. The Respondent No.1 is allowed to operate its account subject to it to first remitting into the account of the Corporate Debtor, the amount of ₹ 32.50 lakhs which stood paid to it by the management of the Corporate Debtor - Appeal allowed. - CRIMINAL APPEAL NO.447 OF 2021 (Arising out of SLP (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conscious about the order passes by the Hon ble Supreme Court and the legal consequences thereof. ii.In view of the above submissions of the respondents, this Tribunal expects that the respondents would maintain status-quo in respect of the IRP proceedings. As the main company petition was remanded back to the Hon ble NCLAT for fresh disposal in accordance with law, this Tribunal is of the considered opinion that the petitioner has to approach the Hon ble NCLAT for any further directions in the above matter and accordingly above application stands disposed of with the above observations. Even otherwise, the order of admission of the company petition has not attained finality and, therefore, no interim orders as prayed for needs to be passed today. iii.In the result, IA No. 07 of 2020 is disposed of with the above observations. Thereafter there is order dated 20.03.2020 passed which we will advert to. 3.It is the case of the Appellant that the former Managing Director of the Corporate Debtor in conspiracy with the Respondent No.1 engaged in an illegal transaction to the tune of ₹ 32.50 lakhs without authority from the Appellant and in violation of Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 noticed the limitations flowing from Rules 154 and 155 of the NCLT, Rules, 2016 in the matter of review. It is observed that for the reasons highlighted in the 20.05.2020 the former Directors of the Corporate Debtor are found prima facie liable to refund the amount unauthorisedly withdrawn from the account of the Corporate Debtor. It is also noticed that the Directors of the suspended board were not made respondents. The application for review came to be dismissed. 7.The genesis of the impugned order is the FIR lodged against the Appellant and arose from the payment effected into the account of Respondent No.1 in a sum of ₹ 32.50 lakhs. The said FIR came to be challenged in a petition under Section 482 of the Cr.P.C. by the Respondent No.1 by filing Criminal Petition No. 454 of 2020. In the same the Appellant also filed I.A. No. 453 of 2020. 8.On 19.01.2021 the NCLT, Guwahati passed an order in I.A No. 37 of 2020. By the said order the Appellant was directed to discharge his duties as per the provisions of the IBC. Thereafter, it also passed the following directions: - i. The Learned Counsel for the Respondents has confirmed that the Suspended Management has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly cause unnecessary hardship, which may not be necessary for the investigation of the present FIR in view of the nature of the accusation made therein as well as in view of the offer made by the petitioner to furnish a bond. Therefore, in my consider view, the petitioner is entitled to the interim relief as sought for. Accordingly, it is provided that the lien created upon the bank account no. 149905001306 maintained with the ICICI Bank Limited, Chandrasekarpur Branch, Bhubaneswar be lifted, the petitioner and its creditors shall be allowed to operate the bank account over which lien has been created and the accounts have been frozen pursuant to the instruction of the Respondent No. 2 in connection with Margherita P.S. Case No. 0112/2020, until further order of the Court. iii.It is however, made clear that the interim relief granted to the petitioner as above with regard to unfreezing the bank account and lifting of lien shall be subject to the condition that the petitioner shall withdraw the WP (C) No. 118/2020 filed before the Itanagar Permanent Bench of this Court and furnishing an indemnity bond undertaking to refund the amount of ₹ 32.50 Lakhs if required, subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due from the Corporate Debtor to the Respondent No. 1. It is emphasized as a MSME it would cause grave prejudice to it if the impugned order is set aside. 14.It is the case of the Respondent No. 1 further that the business relationship between the Respondent No. 1 and Corporate Debtor has existed for more than 15 years. The Corporate Debtor has been declared a sick industry on 18.04.2006. It was nursed back by the Respondent No. 1. Our attention is drawn to the minutes of the first meeting of the Committee of Creditors dated 23.09.2019. The minutes reveal that committee of creditors observes that a substantial part of the raw materials is purchased from Respondent No.1 and that the relatives of the Corporate Debtor directors or shareholders hold more than 51 percent shareholding of the first respondent. It is further noted that the processes to assess the veracity and reasonableness of the transaction in such situation were let known and the purchases/sales must be benchmarked against arm s length transactions and open market transactions. (We may also notice that the meeting resolved that all the banks were to act on the instructions of the appellant interalia.) It is the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that the Appellant is prevented from disbursing the salary of the workers. Nearly four months salary would be disbursed with the amount which was paid by the former management without any authority as noticed. It is the case of Appellant that the transactions between the Respondent No.1 and the Corporate Debtor was not authorised by the Appellant during the period from 21.02.2020 to 27.04.2020. FINDINGS 16.The contours of the jurisdiction under 482 of the Cr.P.C. are far too well settled to require articulation or reiteration. Undoubtedly, in this case by 26.08.2019 an application filed under section 7 of the IBC was admitted, the appellant appointed as the interim resolution professional and what is more a moratorium declared. With the declaration of the moratorium the prohibitions as enacted in section 14 came into force. It is clear that the assets of the company would include the amounts lying to the credit in the bank accounts. There cannot be any dispute that well after the order under section 14 was passed, a sum of ₹ 32.50 lakhs has been remitted into the account of Respondent No.1 company. No doubt it is the definite case of the Respondent No.1 that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners of the Corporate Debtor as the case may be are to stand suspended. Section 17 further declares that the powers of the Board of Directors or partners are to be exercised by the Interim Resolution Professional. The financial institutions are to act on the instructions of the Interim Resolution Professional. Section 14 is emphatic, subject to the provisions of sub section (2) and (3). The impact of the moratorium includes prohibition of transferring, encumbering, alienating or disposing of by the Corporate Debtor of any of its assets. 19.Sub section 2 reads as follows:- The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. 20.Essential goods and services referred to in Section 14(2) has been defined by Regulations. Regulation 32 of the INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2016, reads as follows:- Essential Supplies. The essential goods and services referred to in section 14(2) shall mean- i.Electricity; ii.water; iii.telecommunication services; and iv.in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the NCLT admitting the application, under Section 7, and also the ordering of moratorium under Section 14 of the IBC and the orders which have been passed by the tribunal otherwise, the impugned order of the High Court resulting in the Respondent No. 1 being allowed to operate the account without making good the amount of ₹ 32.50 lakhs to be placed in the account of the Corporate Debtor cannot be sustained. The Learned Counsel for the Appellant has also no objection in the Respondent No. 1 being allowed to operate its account subject to it remitting an amount of ₹ 32.50 lakhs into the account of the Corporate Debtor. In such circumstances, Appeal is allowed. The Impugned order is modified as follows: i.The Respondent No.1 is allowed to operate its account subject to it to first remitting into the account of the Corporate Debtor, the amount of ₹ 32.50 lakhs which stood paid to it by the management of the Corporate Debtor. The assets of the Corporate Debtor shall be managed strictly in terms of the provisions of the IBC. The Appellant as RP will bear in mind the provision of Section 14 (2A) and the object of IBC. We however make it clear that our order sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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