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TMI Blog2022 (7) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... lace before the Adjudicating Authority, especially the order dated 09.08.2017 of the Division Bench, which was passed on the Application filed by Respondent No.1 himself, that is, CA No.107 of 2016. We are, thus, satisfied that Respondent No.1 is guilty of suppression of material facts and relevant orders before the Adjudicating Authority and the submission of learned Counsel for the Appellant is correct that the suppression was made only with the motive to obtain an admission order to somehow grab the assets of the Corporate Debtor. Locus of the appellant - HELD THAT:- The Application of Appellant as well as Respondent No.1 was considered and rejected by Company Judge by order dated 14.07.2014. Thus, when the Appellant was before the Company Judge claiming his right as unsecured creditor, he has every right to file an I.A. No.1069 of 2021. When Adjudicating Authority heard the Appellant and considered his claim and rejected the same, we see no reason, as to why the Appellant cannot be held to be aggrieved by the order impugned, so as to enable him to file Appeal under Section 61 of the Code. Default in payment of dues - period of limitation - company is under liquidati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, even though no defence has been taken by the Respondent. In the present case, the Corporate Debtor being into liquidation, it appears that no reply has been filed in Section 7 Application. The position of law is clear by the aforesaid pronouncement of the Hon ble Supreme Court. Although, pendency of winding-up petition before the High Court may not preclude filing of Section 7 Application, but in the present case, when there are various orders passed by Company Judge, in Company Petition No.355 of 1997, which has relevance and consequence on Section 7 Application, the orders passed in Company Petition ought to have been adverted by the Adjudicating Authority before admitting Section 7 Application - thus, Adjudicating Authority committed error in admitting Section 7 Application, which did not deserve admission in the facts of the present case. Appeal allowed - Application which was admitted by the NCLT dismissed. - Company Appeal (AT) (Insolvency) No 320 of 2022 & I.A. No. 1066 & 1082 of 2022 - - - Dated:- 22-7-2022 - [ Justice Ashok Bhushan] Chairperson , [ Ms. Shreesha Merla ] Member ( Technical ) And [ Mr. Naresh Salecha ] Member ( Technical ) For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) A winding up petition under Section 433 and 434 of the Companies Act, 1956 being Company Petition No.355 of 1997 was filed by M/s R K Garodia Company before the Calcutta High Court. The same was admitted on 09.09.1997 by the Calcutta High Court and was allowed by order dated 26.11.1997 directing winding up of the Company (Corporate Debtor). An order of liquidation was passed. The assets of the Company were taken control by the Official Liquidator after order dated 26.11.1997 of the Calcutta High Court passed in Company Petition No.355 of 1997. (iv) Respondent No1 Company was incorporated on 28.07.2007. Respondent No.1 claimed to have obtained assignment of debts by the Secured Creditors of the Corporate Debtors on different dates. The details of the assignment of the debts of the Corporate Debtor by different secured/ un-secured creditors in favour of Respondent No.1 are as follows: (a) United Bank of India on 06.07.2007 has assigned the debts recoverable from the Company to M/s Teesta Multipurpose Private Limited for an amount of Rs.45 lakhs. M/s Teesta Multipurpose Private Limited in turn assigned the debts of the Company to Respondent No.1 on 13.02.2008 for conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng dues in IIBI s books of account against the Company and the personal and corporate guarantees, executed to secure IIBI s financial assistance stand discharged. (viii) In a Registered Indenture dated 14.09.2015, Allahabad Bank and Respondent No.1, there was mention of Recovery Certificate of Rs. Rs.26,20,41,281/- and also the fact that Company went into liquidation on 26.11.1997 and further the Secured Creditor has withdrawn the recovery proceedings initiated by it and pending before Ld. Debts Recovery Tribunal, Kolkata being T.A. No.64 of 1994 and R.P. No.42 of 1996. (ix) In the Company Petition No. 355 of 1997, several Applications were filed by different creditors. One of the Application was filed by Respondent No.1 also. One Hilton Vinimay Pvt. Ltd. filed an Application for stay of the winding up order and for appointment of Special Officer. The above Company Petition and the Applications filed therein came to be heard and decided by the Calcutta High Court on 14.07.2014. Calcutta High Court while deciding the Applications also noticed the assignments, which were claimed by Respondent No.1. One of the Application being CA No.453 of 2013 was also filed by Appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication being CA 58 of 2020 in the Company Court for transfer of C.P. No.355 of 2017 along with pending Applications to the NCLT Kolkata. On 21.09.2021, Section 7 Application came before the Adjudicating Authority, which recorded the submission that Transfer Petition in the matter is pending before Calcutta High Court. (xiii) On 12.12.2021, the Appellant - Dolphin Vintrade Pvt. Ltd. filed an I.A. No.1069 of 2021 seeking to intervene in the insolvency Application and praying for dismissal of the Section 7 Application. The Adjudicating Authority by the impugned order dated 31.01.2022 rejected I.A. No.1069 of 2021 and admitted the Application filed under Section 7 by the Ashray. The Appellant, who had filed I.A. No.1069 of 2021 before the Adjudicating Authority, aggrieved by the order dated 31.01.2022 has filed this Appeal. 3. We have heard Shri Sanjeev Sen, learned Senior Counsel for the Appellant, Shri Abhinav Vasisht, learned Senior Counsel for Respondent No.1, Shri Sumesh Dhawan, learned Counsel for Respondent No.2. We have also heard Shri Ankit Kohli, Shri Sudhir Bansal, Shri Avneesh Garg, learned Counsel for Intervenors and also Ms. Debjani Mitra, learned Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 28.02.2020 reviving the Company Petition. No debt as claimed by Respondent No.1 in the Application fell due, nor was payable on the date when Application under Section 7 was filed. The Company was in liquidation with effect from 26.11.1997. All assets were in the custody of Official Liquidator, that is, assets of Company are custodial legis. No default on the part of Corporate Debtor can be assumed after liquidation order has been passed on 26.11.1997. The date of default mentioned in the Application is imaginary and fictious, to show the filing of the Application in time. Whereas, the debt due from the Company as claimed by Respondent No.1 is clearly barred by time. In the Application under Section 7 there are no details to show that any cause of action arose to Respondent No.1 to file Section 7 Application within the period of three years from the date of filing of Section 7 Application, that is, within three years from 18th February, 2020. The limitation for filing an Application as per Article 137 is only three years. The Financial Creditors had already initiated proceedings for recovery of the debt even before the Company went into liquidation. The Recovery Certificates w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeded irrespective of pendency of Company Petition before the High Court. It is submitted that debt and default are sufficient ground for admitting a Corporate Debtor in the Corporate Insolvency Resolution Process ( CIRP ). Non-registration of 3 out of 4 assignment deeds are inconsequential. At the time of consideration of Section 7 Application the Adjudicating Authority is only to see that there exists a valid debt against Corporate Debtor and whether the Corporate Debtor has defaulted in re-payment. During the pendency of the petition for winding up in the High Court, admission of Section 7 Application before NCLT is permissible. The Section 7 Application was filed on 18.02.2020 on which date Company Petition No.355 of 1997 was not pending, since it was dismissed for non-prosecution on 19.12.2019 and there was no hurdle in filing Section 7 Application. There is registered assignment deed executed by Allahabad Bank in the year 2015, which is also on record. Hence, there was at least one registered assignment deed, which proves debt and default on the part of Corporate Debtor. The Corporate Debtor owed debt to Indian Bank, Allahabad Bank, United Bank of India and Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 7 Application, there is no scope of any resolution of the Company. 10. We have considered the submissions of learned Counsel for the parties and perused the record. 11. The first submission, which has been made by learned Senior Counsel for the Appellant regarding suppression of facts and concealment by Respondent No.1 in his Section 7 Application, needs to be first considered. The Company Petition No.355 of 1997 was admitted by Company Judge, Calcutta High Court by an order dated 26.11.1997. Thereafter, Official Liquidator took possession of the assets of the Company, that is, Corporate Debtor and all assets of the Company thereafter are custodial legis. Few proceedings in the Company Petition No.355 of 1997 need to be noted, where the Respondent No.1 was also party and had filed various application seeking different reliefs. Respondent No.1 Ashray in Company Petition No.355 of 1997 has based its case on the basis of four consignment deeds as noted above. In Company Petition No.355 of 1997, Company Applications were filed by Respondent No.1 and while considering various Company Applications including the Company Application filed by Respondent No.1, Calcutta High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its assets and properties and is answerable to all its creditors. A bystander or a passerby cannot be allowed to hijack the assets of the company (in liquidation) by convening an illegal meeting. The Court has to guard against such mala fide attempts as the present one and the Court is duty-bound to do so. Since the very application carried to the company Court, without any reference to a company petition number, was under a provision that does not authorise the making or the receipt of such application, CA No.107 of 2016 is dismissed with costs assessed at Rs.1 lakh for such irresponsible application. The applicant in CA No.107 of 2016, whether by itself or through any agent or otherwise, shall not obtain orders similar to those sought in CA No.107 of 2016 without this order being specifically brought to the notice of the Court or forum where such orders may be sought. The order impugned dated December 5, 2016 stands set aside. All steps taken pursuant to such order are illegal and of no effect and shall not be given effect to in any manner of form. 14. It is further relevant to notice that against the order dated 09.08.2017 passed by the Division Bench, Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that since on 19.12.2019, the Company Petition itself was dismissed for non-prosecution, resulting in discharge of all orders passed therein, there was no need to file the Division Bench order in the Application under Section 7. When there was specific order of the Division bench restraining Respondent No.1 to file any Application in any other forum without disclosing the order dated 09.08.2017, it was incumbent upon Respondent No.1 to file the copy of the said order before the Adjudicating Authority. Respondent No.1 has concealed the said order from the Adjudicating Authority, since the order had made adverse observation against Respondent No.1, which would have resulted in rejection of Section 7 Application. Further, the order dated 14.07.2014, where the assignments were observed by the High Court as a dubious, were also not brought before the Adjudicating Authority. We are thus satisfied that Respondent No.1 has concealed the relevant orders passed by the Company Judge in CP No.355 of 1997, which Respondent No.1 was obliged to place before the Adjudicating Authority, especially the order dated 09.08.2017 of the Division Bench, which was passed on the Application filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication, it was submitted. 18. The Application of Appellant as well as Respondent No.1 was considered and rejected by Company Judge by order dated 14.07.2014. Thus, when the Appellant was before the Company Judge claiming his right as unsecured creditor, he has every right to file an I.A. No.1069 of 2021. When Adjudicating Authority heard the Appellant and considered his claim and rejected the same, we see no reason, as to why the Appellant cannot be held to be aggrieved by the order impugned, so as to enable him to file Appeal under Section 61 of the Code. Section 61, sub-section (1) provides: 61. Appeals and Appellate Authority.-(1) Notwithstanding anything to the contrary contained under the Companies Act 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal. 19. The Appellant, whose I.A. No.1069 of 2021 was rejected and Section 7 Application has been admitted, is fully aggrieved by the order and hence, he has locus to file this Appeal and the objection of Respondent No.1 cannot be accepted. Furthermore, the Appellant by I.A. No.1069 of 2021 has brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence. Thus, when an application is filed beyond the limitation, it has to be dismissed, although limitation has not been set up in the defence. 24. Now we come to Section 7 Application filed by the Appellant. In Part-IV, under the Column-2, following has been stated: 2. Amount claimed to be in default and the date on which the default occurred (attach the working for computation of amount and days of default in tabulation form) Rs.24,864,480,162.85/- only (Rs. Two Thousand Four Hundred and Eighty Six Crores Forty Four Lakhs Eighty Thousand One Hundred and Sixty Two rupees and eighty five paise) inclusive of interest. The date on which the debt fell due is 19.12.2019 25. The date of default on which the debt fell due is mentioned in the Application as 19.12.2019. 19.12.2019 is the date when Company Petition No.355 of 1997 was dismissed for non-prosecution, which order was subsequently recalled on 28.02.2020. How the dismissal of Company Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth hereby conform that in so far as the Company (now in liquidation) is concerned, the Assignor has withdrawn the recovery proceedings initiated by it and pending before the Ld. DRT Kolkata being T.A. No.64/1994 and R.P. No.42/1996. 27. When the Recovery Certificate was issued to the Allahabad bank in 1996, it gave a fresh cause of action to file application within a period of three years, in view of the law laid down by the Hon ble Supreme Court in Dena Bank vs. C. Shivakumar Reddy and Anr. (2021) 10 SCC 330. The limitation for filing any application for recovery for defaulted amount came to an end three years thereafter. 28. Similarly, other Banks have also initiated proceedings, which have been noticed above. Initiation of proceedings for recovery indicate that default has occurred prior to initiation default by Company. The Application under Section 7 by Respondent No.1 does not indicate as to on what basis it can claim that it has right to file an Application under Section 7 on 18.02.2020. As observed above, the date of default of debt fell due mentioned in the Application as 19.12.2019, is wholly fictious and incorrect, the said date has no relevance with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. It is further relevant to notice that when Adjudicating Authority took the matter for consideration on 21.09.2021, it was informed that a Transfer Petition 58 of 2020 has been filed by Respondent No.1 before the Company Judge for transferring C.P. No.355 of 1997 to the NCLT Kolkata. The order dated 21.09.2021 is as follows: 1. Ld. Counsel for the Financial Creditor present. Ld. Counsel appearing for the Official Liquidator in respect of the Corporate Debtor present. 2. It is submitted that the transfer proceedings in the mater are pending for final adjudication before the Hon ble High Court. In view of this post this matter on 24/11/2021. Liberty to mention is granted, in case a decision is taken on the transfer proceedings that are pending before the Hon ble Calcutta High Court. 32. On the next date, when the matter was heard by the Adjudicating Authority, the Adjudicating Authority failed to advert as to what has happened to the Transfer Petition No.58 of 2020 filed by Respondent No.1 itself. 33. The learned Senior Counsel for Respondent No.1 has heavily relied on the judgment of Hon ble Supreme Court in A. Navinchandra Steels Pvt. Ltd. vs. SREI Equipme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, to be called, held and conducted in such manner as the Tribunal directs. Explanation.-For the purposes of this sub-section, arrangement includes a reorganisation of the company's share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods. What is clear by this Section is that a compromise or arrangement can also be entered into in an IBC proceeding if liquidation is ordered. However, what is of importance is that under the Companies Act, it is only winding up that can be ordered, whereas under the IBC, the primary emphasis is on revival of the corporate debtor through infusion of a new management. 29. Dr Singhvi and Shri Ranjit Kumar have vehemently argued that SREI has suppressed the winding-up proceeding in its application under Section 7 IBC before NCLT and has resorted to Section 7 only as a subterfuge to avoid moving a transfer application before the High Court in the pending winding-up proceeding. These arguments do not avail the appellant for the simple reason that Section 7 is an independent proceeding, as has been held in a catena of judgments o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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