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TMI Blog2024 (9) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... neutral party and not expected to take a stand, which is contrary in present appeal where the Appellant filed appeal on merits of the Impugned Order and that too in his personal capacity as Resolution Professional of Corporate Debtor. It is further interesting to note that one Unsecured Financial Creditor, namely, Paton Construction Private Limited who is supposed to have given a loan of paltry sum of Rs. 1 Lakh knowing well that CIRP is being initiated against the Corporate Debtor, then original IRP is removed and the present Appellant is appointed as Resolution Professional, who in turn rejected the claims of Operational Creditor and accepted the claims of the Unsecured Financial Creditor and claims of promoter. This made the way for making Unsecured Financial Creditor of Rs. 1,05,877/- as a Sole Member of the CoC and ousting the Malharshanti Enterprises Limited the Operational Creditor out of CoC having claim of Rs. 1,94, 62, 148/-. Although the Adjudicating Authority in Impugned Order dated 16.02.2023 in Para 22 has recorded that the conduct of the Resolution Professional also need to be thoroughly investigated . However, the Adjudicating Authority did not give directions for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims submitted by the Operational Creditor - fraudulent claims - HELD THAT:- Once the claims of the Operational Creditor have been crystalized and admitted by the Adjudicating Authority while admitting Section 9 application of Respondent No. 1 and initiating CIRP against the Corporate Debtor. We also find that IRP was duly appointed by the Adjudicating Authority who collated the claims and admitted the claims of the Respondent No. 1 basis on the documentation submitted by the Respondent No. 1. It is surprising as how the claims of the Operational Creditor have been rejected later by the Resolution Professional - appeal dismissed. - [ Justice Rakesh Kumar Jain ] Member ( Judicial ) , [ Mr. Naresh Salecha ] Member ( Technical ) And [ Mr. Indevar Pandey ] Member ( Technical ) For the Appellant : Ms. Anjali Sharma , Ms. Kanishka Sharma , Advocates. Mr. Neeraj Malhota , Sr. Advocate , Mr. Ashutosh Gupta , Mr. Gaurav Rana , Mr. Nimesh , Mr. Ajitesh Kumar , Advocates For the Respondents : Mr. Akshay Goel , Harsh Jadon , Adv. for R5 Mr. Anshuj Dhingra , Kartik Sethi, Shubhamngda Singh , Muskan Bagga , Adv. For R1 JUDGEMENT NARESH SALECHA , MEMBER ( TECHNICAL ) 1. These three Appeals ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Code on the ground of purported settlement entered into by the Corporate Debtor with the sole COC Member, M/s Paton Construction Pvt. Ltd. who is an unsecured Financial Creditor from whom the Corporate Debtor alleged to have borrowed an amount of Rs. 1,58,077/- recently before passing CIRP order which is an ingenious idea of Respondent Nos. 2 and 3 to bring out the Corporate Debtor from the clutches of CIRP order which attained finality from a back-door entry. (Emphasis Supplied) 4. The Applicant has also sought the following reliefs :- a. That this Hon ble Tribunal be pleased to set aside the order dated 16th February, 2023 passed by the Adjudicating Authority, National Company Law Tribunal, Mumbai Bench, in IA No. 47 of 2021 in CP (IB)/ 3753 (MB)/2018. b. For Costs; c. For such further and other reliefs, as this Hon ble Tribunal may deem fit and proper in the nature and circumstances of the case. 5. The third Company Appeal bearing Company Appeal (AT) (Ins.) No. 600 of 2023 has been filed by Naresh Sevantilal Shah and Charu Naresh Shah who are Suspended Directors of the Corporate Debtor against the Malharshanti Enterprises Limited who is the ( Operational Creditor ) as Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, Mumbai Bench, Court-IV order dated 27.01.2020. The same was challenged by Naresh Sevantilal Shah before the Hon ble Supreme Court of India vide Civil Appeal No. 822 of 2021 which was dismissed as withdrawn by the the Hon ble Supreme Court of India vide order dated 10.03.2021 and the following order was passed :- Mr. Salman Khurshid, learned senior counsel for the appellant requests permission to withdraw this appeal to pursue other remedies. Permission is granted. The Civil Appeal is, accordingly, dismissed as withdrawn with aforesaid liberty. (Emphasis Supplied) 10. Thus, we note that the case has been contested against the admission of Section 9 application against the Corporate Debtor by Suspended Director at all level including, this Appellate Tribunal as well as the Hon ble Supreme Court of India and at all places, the judgement came in favour of the Operational Creditor. 11. In this background, we will look into now challenged Impugned Order dated 16.02.2023. The present Resolution Professional Mr. Manish Jaju rejected the claims of Operational Creditor in totality and also admitted the claims of one Unsecured Financial Creditor i.e., Paton Construction Pvt. Ltd. fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023. 15. We note that the issue of the pre-existing disputes raised by the Appellant in the present appeal bearing Company Appeal (AT) (Ins.) No. 545 of 2023 had already been examined by this Appellate tribunal in its detailed judgement dated 19.01.2021, as contained in para 29 31 to 37 which reads as under :- 29. We have heard the arguments of the Learned Counsel for the parties and perused the records. The question that arises for consideration is as follows: a) Whether there was a pre-existing dispute between the parties and weather the pre-existence of dispute shall be seen from the date of the first demand notice dated 2nd December 2017 or the second demand notice dated 23rd August, 2018? b) Whether the Adjudicating Authority rightly allow the petition of the Operational Creditor under section 9 of I B Code? 30. In the case of Mobilox Innovations Pvt. Ltd. vs Kirusa Software (P) Ltd. reported at (2017) 1 SCC OnLine SC 353 the Hon ble Supreme Court held as to what are the facts to be examined by the Adjudicating Authority while examining an application under section 9 of I B Code which is reproduced below : 33. The scheme under Sections 8 and 9 of the Code, appears to be that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tility. In the absence of any existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid Operational Debt . Consequently, the application cannot be rejected under section 9 and is required to be admitted. 31. It is apparent from the records that the Corporate Debtor had not raised any objection pertaining to the work performed by the Operational Creditor prior to the first demand notice dated 2nd December, 2017. It was on 13th December, 2017 when the Corporate Debtor responded for the first time in its reply to the notice issued by the Operational Creditor under Section 8(1) of I B Code. We have noted that a large number of email communications has been made by the Operational Creditor and not even a single response was made by the Corporate Debtor raising such disputes. 32. The Contention of the Appellant that the relevant date for determining whether there was a pre-existing dispute was the date of second demand notice, i.e. 23rd August, 2018 and not the first demand notice dated 2nd December, 2017 as the first petition was dismissed by the Adjudicating Authority as the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issuance of second demand notice when the Operational Creditor was busy in removing the defects in its first petition. This exhibits that the intention of the Appellant behind this was to misuse the provisions under the Code and to intentionally delaying the process of law. There were no objections raised in relation to quality of work prior to the issuance of first demand notice and the work done by the Operational Creditor was in fact certified by the architect appointed by the Corporate Debtor. Moreover, the Municipal Corporation in September, 2016 issued Occupation Certificate to the Appellant. If there were any discrepancies, the appellant could not have obtained Occupation Certificate from municipality. This also shows that all the defects pointed out by the architect have been timely rectified within the appropriate time, so that the Municipal Corporation found it appropriate to issue the Occupation Certificate. 36. In the light of the above observations and the records placed before us. We are of the view that there was no dispute existing prior to the first demand notice and only disputes raised prior to the first demand notice are relevant to determine its pre-existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso by the Hon ble NCLAT with their concurrent findings and the CIRP order attained finality. It is appropriate to mention here that the Corporate Debtor as a respondent in the main company petition if failed to take any plea which he might and ought to have taken, he is barred from raising that plea once again in subsequent proceedings as it is barred by the doctrine of constructive res judicata . The doctrine of constructive res judicata applies to every subsequent proceedings except in cases in which the earlier matter was decided ex-parte. 18. The Respondent Nos. 2 and 3 who are the members of the suspended board have no locus once again to raise any please with regard to the merits of the claim of the Operational Creditor in view of finality of the admission order and they are not at all necessary parties to this application. 19. This Bench further observes that the Resolution Professional has miserably failed to understand that the above CIRP order was passed by the adjudicating authority after prima-facie satisfying about the existence of debt and default of more than Rs. 1,00,000/- as on the date of filing the Company Petition and he shall not reject such claim of the Opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Yadav, the Appellant noted that there are three claims i.e., of Malharshanti Enterprises Limited amounting to Rs. 1,95,01,079/-; another claim filed by Naresh Shah, Suspended Director of the Corporate Debtor for Rs. 1,77,24,370/- and claim of Paton Construction Pvt. Ltd. amounting to Rs. 1,05,877/- as unsecured Financial Creditor. 20. It would be worthwhile to note the table made by the Appellant in the present appeal in Para 5 which reads as under : - 21. From above, we note that total claims against the Corporate Debtor were Rs. 3,73,31,326/- and the Appellant admitted of Rs. 1,78,30,247/- and the claims of the original Operational Creditor (on whose application was initiated CIRP against the Corporate Debtor vide order dated 21.01.2020 for Rs. 1,95,01,079/-) was entirely rejected, whereas a fresh unsecured financial debt claim, which were received after initiation of the CIRP, from Paton Construction Pvt. Ltd., was admitted in full and was also declared as Sole CoC Member and the claim by the Suspended Director of the Corporate Debtor of Rs. 1,77,24,370/- was also admitted in full. 22. It is the case of the Appellant that after examining the books of the Corporate Debtor it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amarjit Chopra, past President of the Institute of Chartered Accountants of India. The Appellant stated that pursuant to the Adjudicating Authority s order dated 30.08.2021, the Appellant received claims from the Malharshanti Enterprises Limited vide mail dated 03.09.2021 but the Appellant still came to conclusion that the documents were not enough to establish the claims of the Malharshanti Enterprises Limited and therefore the Appellant rejected the claims of the Operational Creditor vide e-mail dated 10.09.2021. 28. Concluding his remarks, the Appellant submitted that the Impugned Order need to be rejected. 29. Per contra, the Respondent No. 1 denied all the allegations of the Appellant labelling these as mischievous and misleading. 30. The Respondent No. 1 submitted that the Adjudicating Authority correctly admitted his claims and ordered for CIRP against the Corporate Debtor vide order dated 27.01.2020 which was challenged by Suspended Director of the Corporate Debtor and this Appellate Tribunal vide order dated 19.01.2021 dismissed the appeal upholding the correctness of the CIRP vide order dated 27.01.2020 and rejecting all the issues raised by the Suspended Director. The Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Financial Creditor sought to pass a resolution seeking withdrawal of CIRP against the Corporate Debtor on the ground that the Corporate Debtor is a solvent entity. 36. The Respondent No. 1 alleged that conduct of the Resolution Professional and the Financial Creditor as well as that of the suspended Director clearly establish malafide intentions and therefore the Respondent no. 1 filed an IA bearing no. 1241/2020 before the Adjudicating Authority challenging the constitution of sole member CoC. The Respondent No. 1 alleged that in retaliation and even before the 3rd CoC meeting could be conducted, the Resolution Professional vide Email dated 02.12.2020 rejected the legitimate claims of the Respondent No. 1 so that the alleged Unsecured Financial Creditor as sole CoC member could pass a resolution to withdraw the CIRP against the Corporate Debtor and indeed this exactly happened. 37. The Respondent No. 1 submitted that in the third CoC meeting dated 07.12.2020, the Financial Creditor, sole CoC member contended that he does not wish to continue with the CIRP and wants to continue its business with the corporate debtor and therefore, the Resolution Professional filed an applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was solely to oust the operational creditor. 41. The Respondent No. 1 stated that the Appellant has no locus in the present appeal as he cannot be treated as an aggrieved person. The Respondent No. 1 emphasised that role of Resolution Professional is of neutral qua the claim of any creditor and therefore there cannot be any interest in the matter let alone any personal interest since he is only a creature of the Code with specific role and obligations. The Respondent No. 1 cited judgement of the Hon ble Supreme Court of India in the matter of Regen Powertech (P) Ltd. v. Giriraj Enterprises Anr. [(2023) ibclaw.in 111 SC.] in support of this argument. 42. The Respondent No. 1 concluded his remarks stating that there was no error in the Impugned Order and the appeal is without any merit and deserves to be set aside with exemplary cost. Findings 43. We note that the role of the Resolution Professional, the Appellant herein, has been defined in the Code, inter-alia, regarding collation of claims as against the adjudicator s role given to the liquidator qua the claims filed in the liquidation proceedings, whereas, in the present case the Appellant has gone ahead in deciding the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as Resolution Professional of Corporate Debtor. This is contrary to ruling of the Hon ble Supreme Court of India. The relevant para of the said judgment reads as under :- We are of the opinion that in view of the facts and circumstances, the Resolution Professional should not have filed the present appeals. The Resolution Professional should have maintained a neutral stand. It is for the aggrieved parties, including the Committee of Creditors of Regen Powertech Private Limited (RPPL) and Regen Infrastructure and Services Private Limited (RISPL), to take appropriate proceedings or file an appeal before this Court. Recording the aforesaid, the present appeals preferred by the Resolution Professional are dismissed as not entertained. (Emphasis Supplied) 49. In this detailed background, we wonder as on what basis the Resolution Professional dismissed the claims of the Operational Creditor altogether which has gone through the entire round of litigation from the Adjudicating Authority to this Appellate Tribunal to the Hon ble Supreme Court of India. Prima-facie this is much beyond his role and scope. If such approach of Resolution Professional is to be accepted then the whole process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor without any substantial basis. 56. In this background, shorn of unnecessary details, since the claims have been adjudicated at all stages and had been admitted in full by the Erstwhile IRP after verification of all documents, we do not need to go into these aspects again which has attained finality at all judicial fora including the Hon ble Supreme Court of India. 57. The entire sequences of events leaves much less to be desired as it become quite clear that there seems to be conjoint action on part of the Resolution Professional along with the Suspended Director of the Corporate Debtor and Unsecured Financial Creditor i.e., Paton Constructions Pvt. Ltd. to derail the process of CIRP and to deny the admitted claim of the Operational Creditor. This is evident from fact that the Resolution Professional filed CP (IB) 3753/MB/C-IV/2018, as per direction of single Member of CoC for closure of CIRP under Section 12 A of the Code. The aforementioned circumstances point out the high handedness and the malafide intentions of the Appellant conjointly with suspended Directors of Corporate Debtor and the Unsecured Financial Creditor. 58. We note that although the Adjudicating A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant and the Corporate Debtor and during hearing, the Adjudicating Authority ordered the appointment of forensic auditor of the Corporate Debtor. The Appellant submitted that though I.A. No. 1241 of 2020 was listed, however, the Adjudicating Authority disposed the IA No. 47 of 2021 by way of Impugned Order dated 16.02.2023 by placing reliance of forensic audit report and gave relief beyond sought in the pleadings concluding that the transaction between the Appellant and the Corporate Debtor is ingenious idea of the members of the Suspended Director of the Corporate Debtor. 63. The Appellant submitted that he is Financial Creditor, who meets the criteria of Rs. 1 Lakh and therefore was within his right to be sole CoC Member with 100% voting rights. The Appellant defended the action taken by the CoC and assailed the Impugned Order which has gone beyond jurisdiction of the Adjudicating Authority in treating the Financial Creditor unjustly and unfairly. 64. Concluding his remarks the Appellant requested to set aside the Impugned Order. 65. Per contra, the Respondent No. 1 Malharshanti Enterprises Limited denied of the allegations of the Appellant labelling these as mischievous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore this Appellate Tribunal against the CIRP Order, stated that it has an asset base of Rs. 7,09,41,985/- as reserves and surplus; therefore in such circumstances it is surprising that Corporate Debtor hurriedly availed a meagre loan of Rs. 1 Lakh from Appellant immediately on the next day of conclusion of oral arguments before the NCLT to defraud the Operational Creditor. 70. The Respondent No. 1 submitted that vide email dated 14.03.2020, the erstwhile IRP issued agenda of first CoC meeting and vide the said email, the identity of the Appellant was recognized for the first time against which the Respondent no. 1 vide email dated 17.03.2020 objected the Appellant s claim as the sole CoC member. On 18.03.2020, the first CoC meeting was conducted wherein the erstwhile IRP admitted the claims of the Respondent no. 1 and also the Respondent no. 1 was apprised of the fact that Appellant had lent a sum of Rs 1 lakh to the Corporate Debtor on 06.09.2019. The erstwhile IRP also recorded in the meeting that the claim of the Respondent No. 1 was verified and admitted on the basis of the supporting documents provided by the Respondent No. 1. The Respondent No. 1 alleged that since the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Adjudicating Authority. The Respondent No. 1 defended Para 20 which according to him have mere observation on the basis of inconsistency drawn by the forensic auditor in its report and also clearly in the facts of the case. 75. Concluding his arguments the Respondent No. 1 requested that the Appeal should be dismissed with exemplary cost. Findings 76. We note from the sequence of events that the Appellant has lent Rs. 1 Lakh when CIRP of the Corporate Debtor was almost imminent. We note that by giving a loan of Rs. 1 Lakh, the Appellant became Unsecured Financial Creditor and on inviting of claims from the Creditors by Erstwhile IRP, the Appellant filed claims for Rs. 1,05,877/- which barely meets the threshold of minimum Rs. 1 Lakh prevalent at that time. 77. We put a direct query to the Appellant regarding nature of his business and whether he has been involved in giving such loans to other parties and particularly how many such loans were given to the Corporate Debtor prior to this loan. The Appellant submitted that he is in a construction business and working as Real Estate Developer and not in financial business but in given circumstances he decided to give Rs. 1 Lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss relations with the Corporate Debtor. Incidentally it has been brought to our notice by the Respondent No. 1 that the alleged loan agreement was backdated and unstamped documents. 81. It is interesting to note that value of the said transaction is of Rs. 1 Lakh vis- -vis the stand of solvency of the Corporate Debtor, having reserves of more than Rs. 7 Crores and failure on the part of the corporate debtor to pay back Rs 1 lakh to Appellant when the said amount was never disputed. These circumstances lead us to belief that the Appellant was brought into CIRP so that the committee of creditor could comprise of only Unsecured financial creditor and the CIRP could be stage- managed as per desires. In this context, we reiterate that the forensic auditor in its report had observed that loan agreement was prepared on stamp paper dated May 2019 of Rs 100 for purpose of affidavit only and not for the purpose of obtaining loan and stamp paper was even prior to the Board resolution. It has been brought to our notice that as per Maharashtra stamp Act, stamp duty of 0.2% of the amount agreed in the contract gets attracted if amount exceeds 10 lakhs which in the present case was Rs 50 lakhs, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod and the same was inclusive of all costs. The Appellant submitted that in the work order, it was clear that time was essence of the work and the work was to be completed by March, 2015 which the Respondent No. 1 miserably failed to complete. Thereafter, the Corporate Debtor and the Respondent No. 1 entered into the MoU dated 25.09.2015 where it was agreed that the Respondent No. 1 would complete the work on or before 10.10.2015 and would be entitled only for payment of Rs. 5 Lakhs for completing the work. 90. According to the Appellant, it is admitted fact that the Respondent No. 1 could not complete the work even withing the extended time. 91. The Appellant submitted that based on the MoU signed by both the parties, on 25.09.2015 the Respondent No 1 was entitled to receive only Rs. 5 Lakh in full and final settlement from the Corporate Debtor and assailed the conduct of the Respondent No. 1 who created false and record and fabricated documents in order to demand further amount from the Corporate Debtor. 92. The Appellant reiterated that there were pre-existing disputes and MoU was signed on 25.09.2015, thus the demand notice under Section 8 was illegal and the same was replie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code. The Appellant castigated the conduct of the Respondent No. 1 who is unnecessary dragging the Corporate Debtor into insolvency and litigation. 100. The Appellant also defended the action of Respondent No. 6 for rejection of claims filed by the Respondent No. 1 since the Respondent No. 1 has not given the required documentations specifying claims of the Respondent No. 1 despite several opportunities given to him by the Respondent No. 6. 101. The Appellant assailed the conduct of the Respondent No. 1 who has been playing fraud on the Corporate Debtor based on fabricated documents in order to justify his false claims. The Appellant further submitted that the Respondent No. 1 fabricated document based on which certain payment was made by the Corporate Debtor to the Operational Creditor and referred to cube testing reports which are used to determine crushing strength of the concrete tubes utilised by the Corporate Debtor in the present project and even cube test reports were found to be fabricated. 102. The Appellant also assailed the Impugned Order which has ignored the several vital facts including that the debt was not due and there was no default. The Appellant also raised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctrine of res-judicata the appeal is deserves to be dismissed with cost. 110. The Respondent No. 1 also denied the averments made by the Appellant that the Respondent No. 1 has been indulging into fabrication and forging documents and also denied the fact that the Appellant allegedly got the RTI information from relevant authorities regarding cube testing report and stated that they are manipulated and fabricated by the Appellant since validity of such information kept by the relevant authority is for 5 years. 111. The Respondent No. 1 submitted that based on these cube test report which was accepted by the Corporate Debtor and the Corporate Debtor got the payments from other agencies hence plea of fabricated cube testing report is only after thought at this stage to somehow mislead this Appellate Tribunal raising such frivolous issues regarding alleged fabrication and forgery. 112. The Respondent No. 1 reiterated the ploy of the Appellant in connivance that the Paton Constructions Pvt. Ltd. alleged Unsecured Financial Creditor for mere amount of Rs. 1,05,877/- and in connivance that the Resolution Professional Manish Jaju is deny the admitted claims of the Respondent No. 1 and to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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