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TMI Blog2022 (1) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... . If the Appellant provides the Emails ID of the Respondents, let notice be issued through Email also. The Office of the Registry is directed to List the matter on 28.02.2022. - COMPANY APPEAL (AT)(CH)(INS) NO. 1/2022 IA Nos. 19 of 2022 - - - Dated:- 13-1-2022 - (Justice M. Venugopal) Member (Judicial) And (Mr. Kanthi Narahari) Member (Technical) For Appellant No.1 :Dr. Abhishek Singhvi, Advocate for Avinash Krishnan Ravi, Jerin Asher Sojan and Naveen W, Advocates For Appellant No.2 :Mr. P.H. Arvindh Pandian, Sr. Advocate for Avinash Krishnan Ravi, Jerin Asher Sojan and Naveen W, Advocates For Respondent No.1 :Mr. P.S. Raman, Sr. Advocate /Caveator for R2 For Ms. M. Savitha Devi Mr. M.S. Elamathi, Advocates For Respondent No.3 :Mr. Gopal Sankaranarayanan, Sr. Advocate For Karuppaiah Meyyappan, Advocate For Respondent No.2 :Mr. Krishnendu Datta, Advocate ORDER VIRTUAL MODE IA No. 1 of 2022 in Company Appeal (AT)(CH)(Ins)No. 1/2022. According to the Learned Senior Counsel for the Appellant No.1 the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) in MA/731/2019 in CP/280/IB/2018 (Filed by the Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security Interest in the eye of law as no charge was created in the register of charges, as required under Section 77 of the Companies Act, 2013 which is considered to be a sine qua non , for recognition of any Security Interest in the I B Code. 7. The Learned Senior Counsel for the 1st Appellant comes out with a plea that the Adjudicating Authority is bound in law to cause an enquiry and subjectively satisfy itself in regard to the sanctity of documents projected before it and where the documents are ante dated to escape the look back period. 8. The Learned Senior Counsel for the 1st Appellant contends that the Adjudicating Authority had failed to take note of the fact that the Information Memorandum of the Corporate Debtor including the Balance Sheets of the Corporate Debtor as they stood immediately before the commencement of CIRP and in respect of the Balance Sheets, the 3rd Respondent was shown as the subsidiary of the Corporate Debtor and no encumbrance was disclosed as existing in relation to the shares of the 3rd Respondent held by the Corporate Debtor . 9. The Learned Senior Counsel for the 1st Appellant submits that the jurisdiction for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2nd Respondent (represented by 5th Respondent) and the Corporate Debtor (represented by her husband), the 4th Respondent had entered into three loan agreements and one share pledge agreement. 15. The Learned Senior Counsel for the 2nd Appellant points out that the 4th and 5th Respondents/former promoters of the Corporate Debtor had informed the Resolution Professional that the Corporate Debtor had failed to follow the terms of the loan agreement and as such, the shares held by the Corporate Debtor in the 3rd Respondent, purportedly pledged to the 2nd Respondent was invoked by the 2nd Respondent, after series of notices, which were supposedly hand delivered between the 4th and 5th Respondents/husband and wife. 16. The Learned Senior Counsel for the 2nd Appellant takes a plea that based on due diligence conducted on numerous public documents of the Corporate Debtor under the former management as well as on the 2nd Respondent/purported creditor to the Corporate Debtor , the Resolution Applicant discovered that though ₹ 12.5 crores was said to have been disbursed on 02.03.2016, the Balance Sheet of the 2nd Respondent for the period ending 31.03.2016 (financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abricated one. 22. The other contention of the Learned Senior Counsel for the 2nd Appellant is that the Corporate Debtor had not recorded any charge in respect of the transactions, at any point of time, earlier to the starting of the Insolvency Proceedings. Furthermore, the 2nd Respondent before the Adjudicating Authority had represented that the shares were sold on 28.10.2018 to M/s Goodyield Investments Pvt Ltd/11th Respondent but the Resolution Applicant had discovered that the Annual Report of the 11th Respondent as on 31.03.2019 had reported total assets worth of ₹ 1,21,680/- and the only shares held by the 11th Respondent on 31.03.2019 were the shares in a company named Imphal worth ₹ 25000/-. 23. The Learned Senior Counsel for the 2nd Appellant brings it to the notice of this Tribunal that the Adjudicating Authority had not considered the plea where the charge is not registered, such creditor cannot be treated as a secured creditor for the purpose of the Code and resultantly the Share Pledge Agreement could not have been relied upon as creating a Security Interest by the Adjudicating Authority , as per decision of this Tribunal in Volkswagon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed asset of the petitioner should be alienated or encumbered without the express previous leave of the NCLT, Chennai and no other asset or stock in trade or the like may be dealt with or disposed of or alienated or encumbered or any third party right created in respect thereof, except in the usual or ordinary course of business. Here again, it is recorded that according to the successful resolution applicant, the factory of the petitioner remains closed for three years with little prospect of reopening in the immediate future. and contends that the transaction sought to be avoided by the Resolution Professional as preferential fulfils the requirements of Section 43 of the Code and relies on the judgement of the Hon ble Supreme Court in Anuj Jain V. Axis Bank Ltd. 29. The Learned Senior Counsel for the 1st Respondent/Appellant submits that the Adjudicating Authority had misread the Information Memorandum and rendered a contradictory finding which is not a valid one in the eye of Law. 30. The Learned Senior Counsel for the 1st Respondent/Appellant points out that the Information Memorandum contains a detailed note on the shareholding of the Corporate Debtor in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it to the notice of this Tribunal that the 1st Appellant/SNJ Distilleries Pvt Ltd was not impleaded consciously in the Avoidance Application by the Adjudicating Authority and its impleadment application was dismissed as a consequence of the impugned order, therefore, it is projected on the side of the 2nd Respondent that the Appellant has no Locus Standi to pursue or prosecute and Avoidance Application and resultantly has no locus to prefer the instant Appeal . 36. The Learned Senior Counsel for the 2nd Respondent contends that under Section 43 of the I B Code, an Application for the preferential transaction(s) is to be preferred by a Live Resolution Professional and in this connection refers to Regulation 35A Preferential Other Transactions of the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 37. The Learned Senior Counsel for the 2nd Respondent (vide Comp App (AT)(CH)(ins) No.1/2022) and 1st Respondent (vide Comp Appl (AT)(CH(Ins) No.9/2022 i.e. South (India) Hotels Pvt Ltd) projects an argument that the contention advanced on behalf of the Appellants that the shares of the 3rd Respondent are an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (AT)(CH(Ins) No.9/2022 i.e. South (India) Hotels Pvt Ltd) that Respondent No.11 (present owner of shares) was not represented before the Adjudicating Authority in the impugned order. 43. Further, it is stated on the side of the 2nd Respondent that the application for Impleadment of Respondent NO.11 was filed more than two years after the filing of the Main Application before the Adjudicating Authority and after obtaining knowledge of the sale and that the said Application appears to be still pending on the file of the Adjudicating Authority and in such circumstances no interim order of restraint can be passed without hearing the Respondent No.11. Also that it is not known whether the Respondent No11 had sold the shares to the third party and any encumbrance was created thereto. 3RD RESPONDENT S CONTENTIONS 44. The Learned Senior Counsel for the 3rd Respondent/Apollo Distilleries Breweries Pvt Ltd submits that the 1st Appellant/SNJ Distilleries is a Successful Resolution Applicant of the 2nd Appellant/Corporate Debtor whose Resolution Plan was approved on 20.01.2020 and that the 1st Appellant is not entitled to more than what was mentioned in the Information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order passed by the Adjudicating Authority , this Tribunal opines that there shall be no interim order and that the contentious factual and legal issues/controversies (centring around the Appeals), require a detailed final hearing, of course, after providing due opportunities to all the parties (including unserved Respondents) to complete the pleadings, in the instant Appeals, like filing of Replies, Rejoinders , etc. 51. Let notice be issued to Respondent No.4 to 11 in Comp Appeal (AT)((CH)(Ins) No.1/2022 and Respondent No.3 to 9 in Company Appeal (AT)(CH)(Ins) No.9/2022 through speed post returnable on 29.2.2022. Requisites alongwith process fee be paid within three days from today. If the Appellant provides the Emails ID of the Respondents, let notice be issued through Email also. 52. The Appellants are directed to serve copy of the Appeal Paper Book(s)/material papers in both the Appeals to the Respondents within a week. Respondent are directed to file their Reply/Respondent within three weeks thereafter, before the office of the Registry, not through E filing but also through Hard Copy and the copy of the same shall be served to the concerned Counsels a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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