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2018 (12) TMI 1125 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - non conducting the business due to certain RBI Circular dated March 13, 2018 - Whether the Corporate Applicant succeeds in proving default in payment of debt due to its creditors? - Held that:- Annexure A-12 reflects the demand notices raised by the Income Tax Authorities. Truly, execution petitions are also seen filed by the operational creditors on the strength of an award passed in the year 2013 and it is pending for consideration before various courts. So, there is default in regards operational debt due to the statutory authorities and operational creditors. However, the operational creditors objected the application alleging that corporate applicant has filed this application to defraud all its creditors and to frustrate the orders passed by the Hon’ble Supreme Court of India and the Hon’ble High Court at Calcutta. Whether the application filed, is to defraud its creditors or not will be dealt with while answering point No. 2. The default in repayment of operational debt being proved, I can come to a conclusion that the occurrence of default as far as operational debt is concerned, stands proved in this case. Application with mala fide intention - Whether the Corporate Applicant has filed the application with malicious intent and to defraud the creditors? - Corporate Applicant has changed the name of the company and its registered office - Held that:- Applicant has changed its name about three days prior to the institution of this Application; that the Corporate Applicant changed the registered address of the applicant before one day of the date of institution of this Application; that the applicant has suppressed the name change in the Form 6 and in the affidavit filed along with the application; that the Applicant failed in proving occurrence of default as defined under Section 10(1) of the code; that no materials brought out to prove existence of default as provided under section 3(12) of the code; that Annexure A-11, a letter of information obtained by the applicant three days prior to the institution of this Application for establishing that there was no repayment of the amount due; that none of the financial creditors of the Corporate Applicant has issued demand notice demanding repayment of the loan amount or any part of the amount allegedly due to them or recalled the loan before the date of filing the application; that none of the financial creditors declared the debt as NPA; that the financial statements produced on the side of the corporate applicant prove that the company was running in profit, and that there are pending litigations in between Operational Creditors, Financial Creditor and shareholders for recovery of money, are all circumstances which lead to a conclusion that the Corporate Applicant came forward/rushed to this Tribunal to misuse the chance of declaring moratorium so as to stay all the litigation for money recovery pending against it. The above said circumstances accordingly are sufficient to come to a conclusion that the corporate applicant filed the application with mala fide intention and with ulterior motive for purpose other than for the resolution. The two points are answered accordingly. Non-compliance of Sub-clause(c) to Section 10 (3) - Whether the application is maintainable for want of production of special resolution as per Section 10(3)(c) of the Code? - Held that:- To sum up the proposition that was held in BK Educational Services (P.) Ltd. (2018 (10) TMI 777 - SUPREME COURT), that procedural law should apply retrospectively, that sub-clause(c) of the Code inserted to Section 10(3) can be construed as a procedural law by applying the proposition laid down in Thirumalai Chemicals Ltd.’s case (2011 (4) TMI 489 - SUPREME COURT OF INDIA), it appears to me that sub-clause(c) is procedural and should apply retrospectively. Upon applying it as retrospectively, have no hesitation in holding that non-compliance of Sub-clause(c) to Section 10 (3) of the Code proves that one among the essential ingredients to be proved on the side of the corporate applicant has not been complied by the applicant.
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