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TMI Blog2023 (10) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 07.06.2022 ("Impugned Order") passed by the National Company Law Tribunal, New Delhi Bench - III in I.A. 1678 of 2021 in CP (IB) No. 921(ND) of 2020, thereby, allowing the Application under Section 19(2) read with Section 19(3) of the Code read with Rule 11 of the NCLT Rules, 2016. The Adjudicating Authority imposed a cost of Rs. 10,00,000/- each on the Appellants under Section 70 of the Code. It is the case of the Appellants that Adjudicating Authority while passing the Impugned Orders, failed to appreciate the fact that Section 70 of the Code comes within Part II Chapter VII of the Code which deals with offences and penalties and - appropriate order if any under Section 70 can only be passed by way of trial offences by a Special Court in terms of Section 236 of the Code. 3. The Respondent is Mr. Chandra Prakash, Liquidator (Erstwhile Resolution Professional) of the Corporate Debtor. 4. M/s Gem Batteries Pvt Ltd. ("Corporate Debtor") is a private limited Company, incorporated on 13.08.2003, engaged in the business of manufacturing of Electrical Equipment's. 5. Upon an Application under Section 7 of the Code by RBL Bank being a Financial Creditor, the Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. It is further directed to suspended board of directors to provide all the information as sought by the applicant in paragraph 8 within one months." (Emphasis Supplied) 10. The Appellants submitted that the present Appeal be allowed on the grounds that the Impugned Order passed by the Adjudicating Authority is without jurisdiction and is in violation of the principles of natural justice. 11. It is the case of the Appellants that the Impugned Order is unreasoned order as the Adjudicating Authority erred in passing Impugned Order thereby, imposing a penalty of Rs. 10,00,000/- each upon the Appellants herein under the provisions of the Code cannot pass an Order under Section 70 of the Code which deals with "offences and penalties." 12. It is further case of the Appellants that the Adjudicating Authority erred in exercising powers under Section 236 of the Code which has only been vested upon Special Court under and the Adjudicating Authority erred in considering the true scope, effect purported of Section 70 and Section 236 of the Code and failed to consider that Section 236(2) of the Code stipulates that no Court shall take cognizance of any offences punishable under this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicating Authority. 18. The Respondent reiterated that the Appellants were given opportunity to explain the non- compliance but the Appellants kept changing their stand for non- compliance, therefore, the Adjudicating Authority was left with no other choice but to levy penalty on the Appellants in the interest of justice. 19. The Respondent submitted that this Appellate Tribunal, in the matter of Vikram Puri and Anr. vs Universal Buildwell Pvt. Ltd. held, while holding that issuing of non- bailable warrant by the National Company Law Tribunal against the erstwhile directors for ensuring the compliance of the provisions of the Code fell within the ambit of Section 19 of the Code. 20. The Respondent submitted that the instant Appeal is mala-fide and the Appellants have not approached this Appellate Tribunal with clean hands as the Appellants have been non-cooperative with the Resolution Professional/Liquidator since the commencement of the CIRP and used all tactics to delay the CIRP and to deny the Financial Creditors of the Corporate Debtor their legitimate claims. The present Appeal is also one of such tactics of the Appellants and therefore liable to be dismissed. 21. Conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) fails to inform there solution professional the information in his knowledge that a debt has been falsely proved by any person during the corporate insolvency resolution process; or (e) prevents the production of any book or paper affecting or relating to the property or affairs of the corporate debtor; or (f) accounts for any part of the property of the corporate debtor by fictitious losses or expenses, or if he has so attempted at any meeting of the creditors of the corporate debtor within the twelve months immediately preceding the insolvency commencement date, he shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years, or with fine, which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both: Provided that nothing in this section shall render a person liable to any punishment under this section if he proves that he had no intent to do so in relation to the state of affairs of the corporate debtor. (2) If an insolvency professional deliberately contravenes the provisions of this Part the shall be punishable with imprisonment for a term which may extend to six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority to issue appropriate direction for compliance." The facts and the ratio of the quoted judgment is different from the facts and the basis of the prayer of the present Appeal and therefore, the submissions of the Respondent on this account are not appreciable. 25. Now, we will examine the judgment quoted by the Appellants. The first case cited case in the matter of Vivek Prakash(Suspended Director & MD) v. Dinesh Kr. Gupta, Liquidator of M/s Jarvis Infratch Pvt. Ltd. C.A.(AT)(Ins.) No. 169 of 2022 , wherein it was held :- "8. Thus, prosecution under Section 70 has to be on complaint filed by the Board or Central Government or person authorized by the Central Government. The submission of the Learned Counsel for the Appellant that Resolution Professional is not empowered to initiate the prosecution is correct. Learned Counsel for the Resolution- Resolution Professional has however, explained that no prosecution has been initiated under Section 70 by the Resolution Professional and he has only sent the information to the Board and it is for the Board to take appropriate action. We, thus, clarify that any prosecution under Section 70 can be initiated only in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn to the decision of this Appellate Tribunal in the matter of Vikram Puri v. Universal Buidwell (P.) Ltd. [(2022) SCC OnLine NCLAT 306], where this Appellate Tribunal has observed that the prosecution under Section 70 of the Code is a separate and independent proceedings, which in no manner fetter power upon the Tribunal to invoke the Section 70 of the Code. 29. We will also refer to the judgment passed by this Appellate Tribunal in the matter of Sapan Mohan Garg, Resolution Professional of Sort India Enviro Solution Ltd. v. Manish G Patel & Anr. C.A. (AT) (Ins.) No. 837 of 2021, wherein it has been held that in order to initiate prosecution under Section 70 of the Code the complaint has to be filed by the Insolvency and Bankruptcy Board of India (IBBI) or Central Government or person authorized by the Central Government. 30. Finally, we find that in another decision of this Appellate Tribunal in in the matter of Writer Business Services (P.) Ltd. v. Ashutosh Agrawala, Resolution Professional for Cox & Kings Ltd. [(2022) SCC OnLine NCLAT 2234], where it was held that :- "27. When the allegation of Resolution Professional was that Appellant has contravened the Moratorium the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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