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TMI Blog2024 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... h to have a fresh look and decide in accordance with the law. - [ Justice Anant Bijay Singh ] Member ( Judicial ) And [ Mr. Naresh Salecha ] Member ( Technical ) For the Appellants : Mr. Ashish Choudhury, Mr. S C Das, Advocates For the Respondent : Mr. Mohak Sharma, Mr. Supriyo Banerjee, Advocates JUDGEMENT NARESH SALECHA, MEMBER (TECHNICAL) 1. The instant Appeal under Section 61 of the Insolvency Bankruptcy Code, 2016 (in short Code ) has been preferred by the Appellants against the Impugned Order passed by the National Company Law Tribunal, New Delhi Bench (in short Adjudicating Authority ) on 02.03.2022 in C.A. 871/2019 IN CP (IB) No.979 (ND) of 2019, vide which the Adjudicating Authority imposed a fine of Rs. 5 lacs on each of the Appellants. 2. M/s Gupta Marriage Halls Pvt. Ltd. (Corporate Debtor) is a private limited company incorporated under the provisions of Companies Act, 1956. The Appellants are the suspended Directors of the said Corporate Debtor. 3. The Corporate Debtor was engaged in the business of hiring Hotels, Restaurants, Marriage Halls and doing the business of running the Hotels, Restaurants and Marriage Halls. The Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that The 'offences and penalties' as prescribed and dealt with in Chapter VII and appropriate order of punishment can be passed only by way of trial of offences by a Special Court in terms of Section 236 of the Code. 10. It is the case of the Appellant that the Respondents contention that costs has been imposed upon the appellant and not fine is baseless. In this case, the Appellant pleaded that admittedly, the Adjudicating Authority has under Section 70 of the Code imposed a fine of Rs. 5 lacs upon the Appellants and any Imposition of fine is always in the nature of punishment. The Appellant drew to our attention that P Ramanatha Aiyar, Advanced Law Lexicon, 6th Edition defines the term 'fine' as a pecuniary punishment imposed by the judgment of a Court upon a person convicted of crime. 11. It is further the case of the Appellants that this Appellate Tribunal in the matter of Writer Business Services Pvt. Ltd. Anr. v. Mr. Ashutosh Agrawala Resolution Professional for Cox Kings Ltd., Comp App (AT) (Ins) No. 956 of 2021, while defining the scope of fine under the Code, held that punishment of fine is a fine which is imposed on a delinquent for an off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Hon ble NCLT to obtain necessary orders. and in pursuance of the resolution passed by the CoC in its 6th meeting, the Resolution Professional (Mr. Mahesh Bansal) filed an Application under Section 33(2) of the Code, seeking liquidation of the Corporate Debtor. 19. The Adjudicating Authority passed an order for liquidation of the Corporate Debtor, M/s Gupta Marriage Halls Private Limited, on an application filed by the erstwhile Resolution Professional bearing IA No. 5289 of 2020 seeking an order under section 33 of the Code pursuant to the decision of the CoC of the Corporate Debtor to liquidate the Corporate Debtor. The Adjudicating Authority appointed the Respondent, Mr. Nitin Narang, as the Liquidator for the Corporate Debtor vide order dated 04.01.2021. 20. It is submitted by the Respondent that during the CIRP, the erstwhile Resolution Professional had filed an Application before the Ld. Adjudicating Authority under Section 19(2) of the Code bearing C.A. 871 of 2019 in C.P. (IB) No. 979(ND)/2019 seeking necessary directions against the suspended director to assist and cooperate with Resolution Professional. 21. The Respondent further submitted that on 01.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenging the intent of Section 70 of the Code. 25. It is the case of the Respondent that if the Adjudicating Authority cannot impose costs on the Appellants who are admittedly not co-operating with the Liquidator, then the intent of Section 19(2), 34(3) of the Code, stands defeated which provides a remedy to the Resolution Professional Liquidator respectively for seeking directions against the personnel of Corporate Debtor to extend cooperation. Furthermore, if the Ex-management fails to defy the orders of the Adjudicating Authority which direct the Ex-management to cooperate will have no binding effect upon the Ex-management and the orders will be flouted. 26. The Respondent submitted that Section 60(1) of the Code provides that the Adjudicating Authority shall have jurisdiction in relation to Insolvency Resolution Liquidation of Corporate Persons including the Corporate Debtor. Rule 149 of the National Company Law Tribunal Rules, 2016 provides as under:- 149. Power to impose Costs- The Tribunal may, in its discretion, pass such order in respect of imposing costs of the defaulting party as it may deem fit. ( Emphasis Supplied ) 27. The Respondent al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corporate Debtor as the main assets of the Corporate Debtor has not been handed over yet. 30. The Respondent argued that IA 3588 of 2021 is not bad in law basis of 'res subjudice' as claimed by the Appellants for the reason that Liquidator stepped into the shoes of the Corporate Debtor and was managing the affairs of the Corporate Debtor and furthermore, the Liquidation process of the Corporate Debtor is governed by Chapter III of the and an express provision being Section 34(3) of the Code has been provided for seeking directions against the personnel of the Corporate Debtor during the Liquidation Process. The Appellants have failed to handover the main asset of the Corporate Debtor being Hotel Samrat Heavens situated at Meerut. Therefore, in order to discharge duties envisaged upon, Respondent, the Respondent filed I.A. 3588 of 2021. 31. The Respondent stated that the Impugned Order which is under challenge in the instant Appeal has no infirmity as the Adjudicating Authority only imposed fine upon the Appellants and the said power vests with the Adjudicating Authority it terms of the Companies Act as well as the I B Code, 2016, therefore, the Appeal is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, or with fine which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both. Section 236: Trial of offences by Special Court. 236. (1) Notwithstanding anything in the Code of Criminal Procedure, 1973, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. It is seen from the said details that the Respondents (1 2) have claimed to have handed over the data balance-sheet to the Corporate Debtor for the year ending 31.03.2016, 2017, 2018 and 2019 along with various other documents. As regards production of tally data in the very same affidavit, the Respondent (1 2) have taken plea that macbook computer containing the tally data of the Corporate Debtor was stolen way back in the year January 2019 and police complaint dated 04.01.2019 was also filed with SHO, Paschim Vihar, West Police Station Paschim Vihar, Delhi a copy of which is available at para 18 of the said affidavit (Annexure-6) Upon looking at the balance-sheet for the year ending 2018-19, it is seen that the same has been signed by the Ex-director on 15.05.2019. From this, it is very clear that the statement made by the Ex-director vide present affidavit to the effect that tally data of the Corporate Debtor was stolen on 04.01.2019 is patently false and misleading as this Tribunal cannot believe that a balance sheet for the year ending 2019 could have been made out without having access to the tally data of the Corporate Debtor for the entire financial year. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Emphasis Supplied) 37. Another case i.e. Lagadapati Ramesh v. Mrs. Ramanathan Bhuvaneshwari [(2019) SCC OnLine NCLAT 1153) is also decision of this Appellate Tribunal, wherein it was held that :- 37. In view of the aforesaid position of law, we hold that the Tribunal/ Adjudicating Authority, on receipt of application/complaint of alleged violation of the aforesaid provisions and on such consideration and being Company Appeal (AT) (Insolvency) Nos. 574 592 of 2019 satisfied that there are circumstances suggesting that defraud etc. has been committed, may refer the matter to the Central Government for investigation by an Inspector or Inspectors as may be appointed by the Central Government. On such investigation, if the investigating authority reports that a person has committed any offence punishable under Section 213 read with Section 447 of the Companies Act, 2013 or Sections 68, 69, 70, 71, 72 and 73 of the 'I B Code', in such case, the Central Government is competent to refer the matter to the Special Court itself or may ask the Insolvency and Bankruptcy Board of India or may authorise any person in terms of subsection (2) of Section 236 of the 'I B Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. When the allegation of Resolution Professional was that Appellant has contravened the Moratorium there was allegation of commission of an offences on which punishment could have been awarded after following the procedure under Section 236. An act which is termed as offence within Comp. App. (AT) (Ins) No. 956 of 2021 specific provision of Chapter VII of Part-II could not have been indirectly dealt with by the Adjudicating Authority by imposing a fine. (Emphasis Supplied) 42. The Respondent has argued vehemently that the Adjudicating Authority only imposed the cost and not the fine, whereby wrongly allegedly by the Appellants of violating Section 70 and Section 236 of the Code and therefore urged this Appellate Tribunal to allow the Impugned Order. In this connection, we have already noted and discussed the submissions of the Appellants regarding distinction between the fine and the cost (discussed in preceding paragraphs) and in view of clear distinction between the cost and fine, we cannot accept that the word fine and the cost to be synonyms. We are clear that the intent and legal basis of cost is different from intent and legal basis of penalty which includes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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