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TMI Blog2021 (7) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... g DD/Bankers Cheque of equal amount for making down payment as per the Resolution Plan way back on 02.02.2021 itself, which has been allowed to be revalidated on 07.05.2021 by this Bench. The RA's conduct, thus appears bona fide and they cannot be held liable for breach of the Resolution Plan so as to warrant punishment u/s. 74(3) of the Code - question framed above in the negative. Can an application seeking award of criminal punishment u/s. 74(3) of the Code be filed by the erstwhile RP before this Adjudicating Authority? - HELD THAT:- The IBC being a complete Code in itself has also incorporated a specific section for trial of offences under the Code by a Special Court - A reference to the provisions of section 236 makes it abundantly clear (I) that all offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 and (II) that a complaint in this behalf can only be made either by the Board or the Central Government or any person authorised by the Central Government. The applicant in the instant application on the one hand has failed in due discharge of his duties as an erstwhile RP and a Member of the MC, by absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PF monthly payment working and dues status till date (ix) Audited Financial Statements for the last four financial years (x) Resolutions passed by the Corporate Debtor in the last 3 years and other filings made before the RoC (xi) Books of Accounts, Tally Data or any other financial data in any other software (xii) Accounts which were accessed by statutory bodies (xiii) Income Tax orders, assessment orders, notices, proceedings, etc. (xiv) List of all license copies, permissions, agreements, etc. (xv) Sale Deeds of the Corporate Debtor's Adilabad Lands admeasuring 273 Acres. (xvi) Survey Report of Kurnool factory. (xvii) Original Property Document of Plot No. D26, admeasuring 743.3 sq.yds. at Visakhapatnam. (xviii) Confirm the availability of all property documents pertaining to the Corporate Debtor and handover the originals of the same. (xix) Any other document that the Applicant may require in the future in furtherance to the implementation of the Resolution Plan. (xx) Allotment of shares of ₹ 5.00 Crores b) File an Affidavit of Compliance in relation to General Circular No. 8 of 2020 issued by the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mail dated 13.02.2021, ordering forfeiture of the Performance Guarantee. d. That in-spite of almost two weeks having passed from the due date, the Resolution Applicant except intermittently sending mails, has miserably failed to handover the DDs of down payment till date. The Resolution Applicant purchased the DDs on 02.02.2021 and yet has failed to hand-over the same to the Resolution Professional for reason best known to RA. e. The contravention of the Resolution Plan by the RA is deliberate, willful and the RA have continuously failed to honor its commitments and faltered in implementing the Resolution Plan. That the Resolution Professional is duly empowered under Section 74(3) to punish the Respondents for contravention of the terms and conditions of the Resolution Plan. 5. Per contra, counsel for Successful Resolution Applicant (RA and R1 in I.A. No. 105/2021 and Applicant in IA Nos. 29/2021 and 52/2021) inter-alia contended as under:- a. That the Monitoring Committee (MC) was constituted by virtue of the orders of this Adjudicating Authority dated 07.01.2021 which has come into effect immediately for supervising the implementation of the approved plan. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Applicant and Financial Creditors/erstwhile CoC were constrained to continue with the 1st meeting of MC. g. The MC in the said meeting dated 29.01.2021 has acknowledged the difficulty of Resolution Applicant in making the upfront payment in view of non-cooperation of erstwhile RP and further decided to open a separate bank account to be operated by MC for facilitating the deposit and disbursement of upfront amount; h. That there was a difficulty for the MC in opening a separate bank account in the name of Corporate Debtor and the erstwhile RP was not providing the bank account details for transferring the monies, the Resolution Applicant on 02.02.2021 has taken out two Demand Drafts to the tune of ₹ 40.86 crores towards upfront payment. The balance upfront payment of ₹ 2.00 crores was also already paid in the form of performance guarantee which is to be adjusted against upfront payment as per the terms of the plan. Hence, by virtue of taking out the demand drafts, the amount has already been released from the end of Resolution Applicant and as such, there is no breach of the terms of approved resolution plan i. That the erstwhile RP failed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r making the down payment in February 2021 itself. They also sought our permission to revalidate the Bankers Cheque during the month of May, which was allowed vide our order 07.05.2021. In these circumstances, the questions that arise are framed as under: (i) In the instant case, can the RA be accused of backing out after submission of Resolution Plan, so as to warrant criminal punishment u/s. 74(3) of the Code? (ii) Can an application seeking award of criminal punishment u/s. 74(3) of the Code be filed by the erstwhile RP before this Adjudicating Authority? 12. In the scheme of the IBC, if a successful RA either refuses or evades the implementation of the approved Resolution Plan, it may tantamount to an offence under Section 74(3) of the Code. 13. The rationale behind criminal punishment for breach or violation of a resolution plan is for maintaining the sanctity of the CIRP process and for deterring pseudo-bidders from delaying or sabotaging the insolvency resolution process. 14. Section 74 of the Code, reads as under: Section 74. Punishment for contravention of moratorium or the resolution plan. (1) Where the corporate debtor or any of its officer v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 236: Trial of offences by Special Court. *236. (1) Notwithstanding anything in the Code of Criminal Procedure, 1973, offences under this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. (2) No Court shall take cognizance of any offence punishable under this Act, save on a complaint made by the Board or the Central Government or any person authorised by the Central Government in this behalf. (3) The provisions of the Code of Criminal Procedure, 1973 shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in case of a complaint under sub-section (2), the presence of the person authorised by the Central Government or the Board before the Court trying the offences shall not be necessary unless the Court requires his personal attendance at the trial. 17. A reference to the provisions of section 236 makes it abundantly clea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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