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TMI Blog2024 (7) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... ng party is put on notice. The notice was duly published in two newspapers on 01.04.2022 but in spite of that, the Appellant failed to remain present before the Adjudicating Authority until the matter was set exparte and reserved for orders. In the given facts of the case, it is satisfying that adequate notice was given to the Appellant to appear before the Adjudicating Authority to present their case. The justification proffered now by the Appellant to explain their absence is that there was a demise in the family. Even if we give the benefit of this explanation to the Appellant, this ground cannot hold good for having been absent on 18 occasions each time when the matter was fixed for appearance and hearing - there is force in the contention of the Respondent no. 1 that when the Corporate Debtor also had other Directors on the Company, it is left unexplained why the others could not have pursued the matter before the Adjudicating Authority. Thus, this story of demise of a close relative to explain their absence from appearing before the Adjudicating Authority at a time when the matter was listed for hearing on 18 occasions lacks merit and is an eyewash which deserves scant regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommit any error in admitting the Section 7 application and bringing the Corporate Debtor into the fold of CIRP. The impugned order does not warrant any interference. There is no merit in the Appeal - Appeal is dismissed. - [ Justice Ashok Bhushan ] Chairperson And [ Mr. Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Sameer Jain and Mr. Syed Fazl Askari , Advocates For the Respondents : Mr. Adarsh Rai , Advocate Mr. Shivam Singh and Mr. Bharat Gupta , Advocates for R - 2 JUDGMENT ( Hybrid Mode ) [ Per : Barun Mitra , Member ( Technical ) ] The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 ( IBC in short) by the Appellant arises out of the Order dated 03.02.2023 (hereinafter referred to as Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-V) in C.P. (IB) No. 196/MB/2021. By the impugned order, the Adjudicating Authority allowed the Section 7 application filed by M/s Alka Prakash Agarwal and admitted the Bazargaon Paper Pulp Mills Pvt. Ltd.-Corporate Debtor into the rigours of Corporate Insolvency Resolution Process ( CIRP in short). Aggrieved by this impugned order, the suspended director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or payment of any outstanding amount was served upon the Corporate Debtor which clearly shows that the loan and interest thereupon had already been paid. 5. Assailing the impugned order, it has been contended that the impugned order has been wrongly premised on doctored claims put forth by the Respondent No.1. Besides adding compounded interest to the principal amount to cross the threshold limit of Rs.1 cr, it is also contended that Respondent No.1 had filed the Section 7 application before the Adjudicating Authority on the basis of forged documents. The balance confirmation document contained the forged signature of the Appellant. Hence, a police complaint had also been filed in this regard. However, since the Adjudicating Authority did not take cognizance of the fact that the Section 7 application was based on fabricated documents, the impugned order was therefore liable to be set aside. 6. The Learned Counsel for the Appellant further submitted that the Respondent No.1 placed a forged statement of reconciliation before the Adjudicating Authority and obtained an ex-parte order from the Adjudicating Authority bringing Corporate Debtor into the folds of CIRP. Reiterating that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % interest was not agreed between the parties. Admitting that there was no written contract between the two parties with regard to the quantum of interest payable, it was submitted that Form-26AS of F.Y. 2015-16 clearly shows that the interest component calculated was at 24% compound interest and this calculation was reported to the Income-Tax Department by the Appellant himself. Hence the denial on the part of the Appellant of debt and default is only to escape the liability to repay the outstanding principal and interest amount which meets the pecuniary limits set under the IBC. 9. The Learned Counsel for the Respondent No. 2-Resolution Professional submitted that an I.A. No.5717 of 2023 has been filed by them to take on record two agreements entered into by the Appellant. It was submitted that one agreement was entered into by the Corporate Debtor with a sister-concern to sell of its assets including sale of non-agricultural land and sale of plant and machinery of the Corporate Debtor. It has also been submitted that by another agreement, the Appellant has transferred to its sister-concern Rs.98.34 lakhs which amounts to siphoning of the said amount. The RP has submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor was set ex-parte. 12. The justification proffered now by the Appellant to explain their absence is that there was a demise in the family. Even if we give the benefit of this explanation to the Appellant, this ground cannot hold good for having been absent on 18 occasions each time when the matter was fixed for appearance and hearing. Furthermore, there is force in the contention of the Respondent no. 1 that when the Corporate Debtor also had other Directors on the Company, it is left unexplained why the others could not have pursued the matter before the Adjudicating Authority. Thus, this story of demise of a close relative to explain their absence from appearing before the Adjudicating Authority at a time when the matter was listed for hearing on 18 occasions lacks merit and is an eyewash which deserves scant regard. Moreover, it is noteworthy that during the same period the Appellant was aggressively pursuing the Criminal Applications nos. 585 of 2022 and 181 of 2023, in which applications, the Appellant had contemporaneously acknowledged that Section 7 application is pending before the Adjudicating Authority. In spite of having full knowledge of the Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also had acknowledged its debt vide the document annexed as Confirmation of Accounts dated 31st March 2018 which is duly signed by both the parties. Further, the Corporate debtor had also paid a part payment of principal amount, along with the interest, which is evident from the document annexed as Working Of Default to the Company Petition. 13. After hearing the submissions of the Learned Counsel appearing for the Financial Creditor and upon perusing the above documents relied by the Financial Creditor, this Bench is of the considered opinion that the debt and default in this case are proved beyond doubt. Since the Corporate Debtor remained ex-parte, the claim of the Financial Creditor remained unchallenged. 15. In arriving at its findings, we also notice that Adjudicating Authority has taken note of the material on record/documents to satisfy itself about the debt and default. The relevant para is extracted below as under :- 3. The Petitioner has attached the following documents to demonstrate the existence of Debt: i. The Ledger Statement of the Corporate Debtor for the period beginning from 1st April 2010 to 30th November 2020. ii. Form 26AS which is Tax Statement under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor till F.Y. 2015-16; Form 26AS Tax Statements reflecting payments made by the Corporate Debtor towards TDS amount on interest payment and a statement of reconciliation from F.Y. 2018 to evidence debt and default. It is also the case of the Respondent No.1 that the Corporate Debtor on several occasions admitted its liability by reflecting the name of the Respondent No.1- Financial Creditor under the head unsecured loan from other parties in its audited financial statements till 31.03.2014 and in the balance confirmation statement for the financial year ending 31.03.2018. These documents were also placed by the Respondent No.1 before the Adjudicating Authority to establish debt and default. 19. On the Appellant s claim that the outstanding payments were cleared in June 2017, it has been contested by the Respondent No.1 on the basis of the ledger statement as on 31.03.2017, as emailed to the Appellant by the Respondent No.1 on 16.08.2017, which showed that the closing balance was Rs.51.81 lakhs as placed at page 449 of APB. There is no material placed on record by the Appellant which shows that this ledger statement was controverted at any stage. That the Appellant was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to note that the judgement of this Tribunal in Pawan Kumar supra does not come to the aid of the Appellant in view of the clear findings of this Tribunal in the case of Agarwal Polysacks Ltd. vs K. K. Agro Foods Storage in CA(AT)(Ins)No.1126 of 2022 wherein the facts of the two cases have been distinguished and held that the judgement of this Tribunal in Pawan Kumar supra was applicable only in the context of a Non-Banking Financial Corporation. After going into Regulation 8(2) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and Rule 3(1)(d) and Rule 4(1) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which regulates filing of application by the Financial Creditors, it has been held in Agarwal Polysacks supra that written financial contract is not a pre-condition or an exclusive requirement for proving existence of debt. It has been further amplified that the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and CIRP Regulations makes it is clear that financial debt can be proved from other relevant documents and it is not mandatory that written finan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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