TMI Blog2018 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... or that the voluntary liquidation proceedings have been initiated with the intent to defraud any person. In the absence of any such grounds recorded by the Adjudicating Authority, the impugned order cannot be upheld. The case is remitted back to the Adjudicating Authority for admission of the application under Section 10, if the application is otherwise complete. In case it is incomplete, the Adjudicating Authority will grant time to the appellant to remove the defects. - Company Appeal (AT) (Insolvency) No. 174 of 2017 - - - Dated:- 22-3-2018 - Mr. S. J. Mukhopadhaya And Mr. Bansi Lal Bhat, JJ. For The Appellant : Shri Alok Dhir, Ms. Varsha Banerjee, Shri Milan Singh Negi and Shri Kunal Godhwani, Advocates For The Respondent : Shri A. Vasisht, Senior Advocate assisted by Ms. P. Singh, Shri M. Singh, Ms. G. Shahi, Shri Manmeet Singh, Shri Anugrah Robin Frey and Ms. Geetanjali Shahi, Advocates. JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. M/s Neeta Chemicals (I) Private Limited ( Corporate Applicant ) filed an application under section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I B Code ). On notice and hearing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic money involved is more than ₹ 324 Corers, and the Corporate Debtor is making frivolous and un-tenable contentions. We have no doubt in our mind that the present application is filed on frivolous and mischievous grounds with a malafide intention and un-clean hands to take advantage of provisions of IBC, 2016. Therefore, it is a fit case to impose exemplary costs for invoking provisions of IBC. 19. In the above circumstances, we are of the considered view that the Corporate Debtor has failed to satisfy the Adjudicating Authority as per various provisions especially Section 10 of IBC, for admission of the case. Therefore, it is not a fit case to admit the case. 20. As stated supra, the account of Corporate Debtor was classified as NPA as early as 26.12.2013 and bank has spent sufficient time, money and energy to recover the debt from the Corporate Debtor, which could be seen from the pre-paras. In the interest of the case, we would like to narrate few important steps taken by the bank such as number of default notices issued to the Corporate Debtor, legal notices issued to the Corporate Debtor and also to the guarantors, demand notice issued under section 13(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there are other instances which shows malafide on the part of the Appellant. 7. Similar issue fell for consideration before this Appellate Tribunal in M/s. Unigreen Global Private Limited Vs. Punjab National Bank Ors.─ Company Appeal (AT) (Insolvency) No. 81 of 2017 , wherein this Appellate Tribunal, by its judgment dated 1st December, 2017 taking into consideration the provisions of Section 10 of the I B Code and other relevant provisions, observed and held as follows: 20. Under both Section 7 and Section 10, the two factors are common i.e. the debt is due and there is a default. Sub-section (4) of Section 7 is similar to that of sub-section (4) of Section 10. Therefore we, hold that the law laid down by the Hon ble Supreme Court in Innoventive Industries Ltd. (Supra) is applicable for Section 10 also, wherein the Hon ble Supreme Court observed as The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority . 21. In an applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 10 on the ground of suppression of fact/not come with clean hand. 24. 1st Respondent financial creditor has referred to pendency of a Civil Suit between Mayank Maheshwari v. Anurag Garg and another suit between Sh. Jagar Nath Mehto v. Vedika Overseas Tradex Ltd. . Pendency of such suits cannot be a ground to deny admission of an application under Section 10, if all the information in terms of Section 10 of the I B Code and Form 6 has been supplied by Corporate Applicant/Corporate Debtor and the application is otherwise complete. Non-mentioning of suit(s) pending between the parties cannot termed to be suppression of facts nor can be a ground to reject the application. In fact, once the application under Section 10 is admitted, all such related proceedings, including suits for recovery of moveable or immovable property of the Corporate Debtor and other proceeding cannot proceed further in any Court or Tribunal or Authority in view of order of moratorium as may be declared under Section 13 and prohibition that may be imposed under Section 14 of I B Code. 25. Similarly, if any action has been taken by a Financial Creditor under Section 13(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees. ( 2) If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees. 36. Sub-section (11) of Section 5 defines initiation date i.e. the date of initiation of corporate insolvency resolution process and reads as follows: ( 11) initiation date means the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process; If sub-section (11) of Section 5 is read with Section 65 it is clear that if a Financial Creditor , or Corporate Applicant or Operational Creditor makes an application to the Adjudicating authority for initiating Corporate Resolution Process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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