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2018 (7) TMI 2183 - NATIONAL COMPANY LAW TRIBUNAL, ALLAHABAD BENCHMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Fraud - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- On perusal of the report of Amicus Curiae it appears that the corporate debtor company i.e. The Prism Industrial Complex Limited has committed a financial fraud. It appears that the corporate debtor company has issued secured debentures of the aggregate value of ₹ 31.79 crores up to 31 March 2017. The paid-up share capital of the company on that date was merely [= ₹ 5 lakh +50 lakh (application money)] ₹ 55 lakhs. The only tangible asset of the company was land valuing ₹ 75.08 lakhs. The funds of Prism Industrial Complex Limited raised through secured debentures might have been diverted to group companies and/or the directors and their associates - The offer for sale of land now is nothing but farce and a clever device to prolong the proceedings in cases where orders have been passed against them. Since this land is owned by Prism Infracon Ltd and not by Prism Industrial Complex Limited, it cannot be sold and proceeds utilised for meeting the liabilities of Prism Industrial Complex Limited. The present case is one where interests of a large number of retail investors, from whom money has been raised in the guise of debentures or deposits, is involved, None of these retail investors, who have been deprived of their life’s savings, could be intending to be benevolent to think of resolution or revival of such a company. it is also evident that having raised money from numerous investors, the promoters/directors have siphoned the funds out into various affiliated companies. This is evident from a study of the balance sheet of the company - This will actually mean the orders made by SEBI or NCLT for immediate refund of the money raised from retail investors will not be implemented during the moratorium period. Also, the constitution of the Committee of Creditors and the system of voting there at, goes on the basis of majority by value. It is quite possible that the corporate person may have created creditors with high value, who may care least for the interests of retail investors, from whom money has been raised. Hence, the so-called resolution plan may harm the interests of such investors. Thus it is clear that while a petition is filed under Insolvency and Bankruptcy Code 2016, fraudulently with malicious intention for initiation of CIRP, then in that case the petition can not be admitted not be admitted and actions should be initiated under section 65 of the Code. This is a fit case where that this petition has been filed fraudulently for intimation of corporate insolvency process, therefore petition deserves to be dismissed. Petition dismissed.
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