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2022 (2) TMI 250 - AT - Insolvency and BankruptcyJurisdiction of NCLT to levy fine u/s 235A of IBC - seeking for a declaration that the Respondent is not entitled to any payments in terms of the Agreement towards record management services and record retrieval services after commencement of CIRP of the Corporate Debtor - Refusal of Moratorium in refusing the record management services which were critical services within the meaning of Section 14(2A). Whether the Adjudicating Authority in exercise of jurisdiction under Section 235A can impose a fine of ₹ 20 Lakh as has been imposed by the impugned judgment on the Appellant? - HELD THAT:- Section 235A is a provision for awarding a punishment of fine and the provision is for punishment of an offence. The trial of such offence has to be as per Section 236 on taking cognizance by Special Court by complaint made by the Board or Central Government for punishment of a person. For any offence law prescribe a procedure which broadly requires framing of charges and opportunity to answer the same. In event, it is accepted that power under Section 235A can be exercised by the Adjudicating Authority while passing orders on an I.A filed for different reliefs pertaining to CIRP, the person punished with fine may be deprived of his right to answer charge of an offence. The present case is an example which fully supports the interpretation which we have put on Section 235A. 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 specific provision of Chapter VII of Part-II could not have been indirectly dealt with by the Adjudicating Authority by imposing a fine - the fine imposed by the Adjudicating Authority of ₹ 20 Lakh on the Appellant in exercise of powers under Section 235A was beyond jurisdiction and direction insofar as in para 15(c) is to be set aside. Whether Record Management Services are critical services within the meaning of Section 14(2A) which should not be terminated during the period of Moratorium and the Adjudicating Authority is right in issuing direction to Appellant to continue to provide Record Management Services during CIRP period? - HELD THAT:- In the facts of the present case, Resolution Professional was of the opinion that services of record management services are critical services for Corporate Debtor and it should be provided during period of Moratorium. In the facts of the present case, the record management services can fall within the definition of ‘critical services’ as referred to in sub-section (2A) of Section 14. The Appellant in this Appeal has categorically stated that they have continued to provide record management services during CIRP proceedings, there are no error in the direction issued by the Adjudicating Authority in paragraph 15(A) to continue providing its services to the Corporate Debtor. Hence, direction issued in paragraph 15(A) is affirmed - In the Rejoinder filed by the Appellants an order dated 06.12.2021 has been brought on record by which order Adjudicating Authority has directed for liquidation of the Corporate Debtor. The CIRP thus has come to an end w.e.f. 16.12.2021. Whether Adjudicating Authority has rightly issued direction to the Appellant to refund the amount received from the Resolution Professional after initiation of CIRP? - HELD THAT:- It is on the record that Appellant has issued invoices for payment for the services provided during CIRP and part payment was made during the period. The prayer of the Resolution Professional in his second Application i.e. I.A. 484 of 2021, the direction be issued to the Appellants that they are not entitled to receive any payment for services during CIRP period could not have been granted. There was no occasion for the Adjudicating Authority to issue any direction to refund the amount which has already been paid by the Resolution Professional for the services provided during the CIRP. Thus, direction issued also cannot be sustained. The Appeal partly by setting aside the direction in para 15(B) and 15(C) - directions issued in paragraph 15(A) are affirmed.
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