TMI Blog2018 (12) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... dwill and Brand may be treated as a valued assets of a company although it may not be in physical form or reflected in the Balance Sheet. By considering the above facts and circumstances of the present case, we find the present application is found complete and deserves for admission under Section 10 of the IB Code.Therefore, the present I.B. Petition is admitted, consequently the moratorium is declared in respect of Corporate Debtor Company under Sections 13 and 14 of the IB Code. - C.P. (I.B) No. 27/10/NCLT/AHM/2018 - - - Dated:- 1-10-2018 - MR HARIHAR PRAKASH CHATURVEDI, MEMBER (J) For The Petitioner : Aditya Gupta, Advocate, Ms. Neeta Madan, Ms. Juhi Naainai and Manish Mulchandani And A. R. Gupta and Associates For The Respondent : Vishal Dave, Ms. Needhi Lodha and Nipun Singhvi, Advocates ORDER 1. By the present I.B. Petition, the Corporate Applicant/Corporate Debtor, M/s. Vaman Fabrics Private Limited has preferred an application under Section 10 of the IB Code seeking for initiation of CIRP in respect of itself as being a Corporate Debtor Company. The present application dated 16.12.2017 is filed in the Form-6 prescribed under Rule 7 of the (Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant company. In addition to this, another independent auditor s report from Chartered Accountant Mr. Manish Surti dated 27.09.2016 has also been annexed with. The Corporate Applicant in the present application has provided description of properties against which, the debt against the Corporate Debtor is wholly or partially secured. Further description of documents which are creating security are also form part of the present application as annexures. The Corporate Applicant has also provided the particulars of its financial and operation debt by providing list of its financial and operational creditors and about unsecured loan received by it and the nature of guarantees given on behalf of the Applicant Company in relation to debt of the Corporate Applicant. The Corporate Applicant has further enclosed the Constitutional Documents (e.g. a copy of the Articles of Association of the company). The Company has also furnished a copy of Certificate of Registration for creation of mortgage under Section 132 r/w Section 135 of the Companies Act, 1956 and particulars of charge registered in favour of the Secured Creditors i.e. PNB, Bank of Baroda, SBI and Dena Bank etc. 5. The Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand over the possession of the secured immovable properties to the Punjab National Bank. The financial creditor Punjab National Bank has also filed an Original Application being O.A. No. 491 of 2017 under Section 19 of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 before the Debt Recovery Tribunal-II, Ahmedabad and the same is pending for adjudication. The next date of hearing is 30.01.2018. By way of an ex parte order dated 23.5.2017 in this O.A. No. 491 of 2017, the corporate applicant was restrained from transferring the secured assets in any manner. The corporate applicant has also challenged the action of the State Bank of India under SARFAESI Act, 2002 by filing a securitisation application being Securitisation Application No. 207 of 2016 under Section 17 of the SARFAESI Act, 2002. The next date of hearing is 03.01.2018. The Punjab National Bank has taken possession of the mortgaged immovable properties on 29.6.2016. The corporate applicant had also approached the Hon ble High Court of Gujarat by filing a Special Civil Application No. 13374 of 2017 wherein by way of an order dated 06.11.2017 where interim relief qua the residential p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be borne by it during the period of CIRP as being sole financial creditor of such CoC. Hence, this would be against the principle of commercial prudence. Therefore, objector PNB has contended that the present application liable to be rejected being not found complete and is filed with no bona fide intention and not in conformity with the provisions of Section 10, read with relevant Rules of the I.B. Code. 11. We carefully considered the oral submissions put forth by the learned Counsel for both the parties during the course of hearing of arguments and further followed by their respective written submissions. Our attention was also invited to the observation of the Hon ble NCLAT made its order dated 15.05.2018 in the Company Appeal No. 2 of 2018 that is in the matter of BCL Homes Ltd. Vs. Canara Bank wherein their Lordship, has followed its another decision in Unigreen Global (P.) Ltd. v. Punjab National Bank have pleased to observe and hold as such. Next it was contended that the Appellant has suppressed certain facts, but we are of the view that such grounds cannot be shown to reject the application till it is shown that such facts were required to be stated in terms of F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n applicant as required under Section 10 and Form-6 and if the Corporate Applicant is otherwise not ineligible under Section 11, the Adjudicating Authority is bound to admit the application and cannot reject the application on any other ground. 23. Any fact unrelated or beyond the requirement under I B Code or Forms prescribed under Adjudicating Authority Rules (Form-6 in the present case) are not required to be stated or pleaded. Non-disclosure of any fact, unrelated to Section 10 and Form-6 cannot be termed to be suppression of facts or to hold that the Corporate Applicant has not come with clean hands except the application where the Corporate Applicant has not disclosed disqualification, if any, under Section 11. Non-disclosure of facts, such as that the Corporate Debtor is undergoing a corporate insolvency resolution process; or that the Corporate Debtor has completed corporate insolvency resolution process twelve months preceding the date of making of the application; or that the corporate debtor has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under the said Chapter; or that the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to remove the defects. If any statement made in Form-6 is misleading, it will be open to the Adjudicating Authority to pass appropriate order in accordance with law. The appeal is allowed with aforesaid observation. No cost. 12. In addition to the above, the Hon ble NCLAT in its another judgment in the matter of Leo Duct Engineers Consultants Ltd. Vs. Canara Bank and others went further to observe and held as such: The appellant, Leo Duct Engineers Consultants Ltd. (Corporate Applicant) preferred an application under Section 10 of the Insolvency and Bankruptcy Code (hereinafter referred to as the I B Code;). On notice the Canara Bank and Standard Chartered Bank (Financial Creditors) appeared and opposed the appeal. The Adjudicating Authority while noticed that the petition has been filed in the required format providing requisite details of its corporate debtor and its creditors and details of debts and default but dismissed the application under Section 10 on the ground that the petition would have serious impact on the financial creditor who have already set the wheel in motion to Securitization and Reconstruction of Financial Assets and Enforcement of Security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd only after due application of mind, consider the case on its merits. 12. In the facts of the case, this Bench does not deem it just, fit and proper to admit the petition as initiation of the proceedings by the Corporate Debtor shall cause irreparable loss and injury to the Banks, and an uncalled for protection to the borrowers and various guarantors. 3. The main plea taken by the appellant-Corporate Applicant is that initiation of proceedings under the SARFAESI Act cannot be a ground to reject an application under Section 10. If otherwise it is complete in terms of I B Code and Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as the Adjudicating Authority Rules ) including Form 6 therein. The respondents on appearance have taken the similar plea as noticed by the Adjudicating Authority and recorded as above. 4. Similar question fell for consideration before this Appellate Tribunal in M/s. Unigreen Global Private Limited v. Punjab National Bank and others - Company Appeal (AT) (Insolvency) 81/2017. In the said case, this Appellate Tribunal by its judgment dated 1st December, 2017 held as follows: 20. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication where the Corporate Applicant has not disclosed disqualification, if any, under Section 11. Non-disclosure of facts, such as that the Corporate Debtor is undergoing a corporate insolvency resolution process; or that the Corporate Debtor has completed corporate insolvency resolution process twelve months preceding the date of making of the application; or that the corporate debtor has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under the said Chapter; or that the corporate debtor is one in respect of whom a liquidation order has already been made can be a ground to reject the application under Section 10 on the ground of suppression of fact/not come with clean hands; 25. Similarly, if any action has been taken by a Financial Creditor under Section 13(4) of the SARFAESI Act, 2002 against the Corporate Debtor or a suit is pending against Corporate Debtor under Section 19 of DRT Act, 1993 before a Debt Recovery Tribunal or appeal pending before the Debt Recovery Appellate Tribunal cannot be a ground to reject an application under Section 10, if the application is complete; 26. Any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise the application under Section 10 is complete and in absence of any ineligibility of appellant, it was incumbent on the part of the Adjudicating Authority to admit the appeal, having no jurisdiction to notice unrelated facts beyond the requirement under the I B Code and the Forms prescribed under the Adjudicating Authority Rules. 7. For the reasons aforesaid and as the case of the appellant is covered by the decision of this Appellate Tribunal in M/s. Unigreen Global Private Limited (supra), we have no option but to set aside the order dated 22nd June, 2017 passed in CP No. 1103/I BP/2017 and the same is accordingly set aside. The case is remitted back to the Adjudicating Authority, Mumbai Bench to admit the application under Section 10 after notice to the parties if there is no defect. In case of any defect, appellant be allowed time to remove the defects. The appeal is allowed with the aforesaid observations. However, there shall be no order as to costs. 13. The Hon ble NCLAT in its judgment in Unigreen Global (P.) Ltd. s case (supra) by following the landmark decision of Hon ble Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank Ltd. and Another (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending between the parties cannot be 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 movable 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 the SARFAESI Act, 2002 against the Corporate Debtor or a suit is pending against Corporate Debtor under Section 19 of DRT Act, 1993 before a Debt Recovery Tribunal or appeal pending before the Debt Recovery Appellate Tribunal cannot be a ground to reject an application under Section 10, if the application is complete. 26. Any proceeding under Section 13(4) of the SARFAESI Act, 2002 or suit under Section 19 of the DRT Act, 1993 pending before Debt Recovery Tribunal or appeal pending before Debt Recovery Appellate Tribunal cannot proceed in view of the order of moratorium as may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have overriding effect and would prevail in any law for the time being in force. 16. Further, it has now well established in law that provisions of IB Code shall have overriding effect on the provision of SARFAESI Act, RDDB FI Act and Money Suit. Although, there is proviso in respect of winding up proceedings filed and pending before the Hon ble High Court providing that during the pendency of such proceedings, application under Section 10 cannot be filed in view of provision made in Section 11 of the IB Code which in our humble view is not the case of Corporate Applicant/Corporate Debtor. 17. By perusal of objections filed and written arguments submitted by the Objector/Respondent PNB, it is seen that the main objection of the Bank is with regard to stalling of or to cause delay of the recovery proceedings initiated by the bank under the provisions of SARFAESI Act and IRDDB FI Act which are reported to be pending before the DRT. It is also contended that the Corporate Applicant did not annex the copy of the Balance Sheet and Financial Statements with the present application which are required to be filed first before the RoC under Section 129 of the Companies Act becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be adopted under the Parliamentary statute will directly be hindered and/or obstructed to that extent in that the management of the relief undertaking, which, if taken over by the State Government, would directly impede or come in the way of the taking over of the management of the corporate body by the interim resolution professional. Also, the moratorium imposed under Section 4 of the Maharashtra Act would directly clash with the moratorium to be issued under Sections 13 and 14 of the Code. It will be noticed that whereas the moratorium imposed under the Maharashtra Act is discretionary and may relate to one or more of the matters contained in Section 4(1), the moratorium imposed under the Code relates to all matters listed in Section 14 and follows as a matter of course. In the present case, it is clear, therefore, that unless the Maharashtra Act is out of the way, the Parliamentary enactment will be hindered and obstructed in such a manner that it will not be possible to go ahead with the insolvency resolution process outlined in the Code. Further, the non-obstante clause contained in Section 4 of the Maharashtra Act cannot possibly be held to apply to the Central enactment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, in order to ascertain this Corporate Applicant is properly authorised to initiate a CIRP we perused the material available on record it shows that the Corporate Applicant has filed a copy of its Board Resolution dated 15.12.2017 by authorising Mr. Girish Kantilal Patel to file the present application on behalf of the Corporate Applicant/Corporate Debtor Company and in the absence of any contrary material, filed in the present case, we do not find any sufficient ground for rejecting the present application because the present applicant is equally having the substantial shareholdings in the Corporate Applicant/Corporate Debtor Company which has stated that it has right for revitalisation and resolution plan under the provisions of Section 10 the IB Code because the Corporate Applicant Company is having its intangible assets in the form of its Goodwill (brand name of the Company) and such goodwill amount to as purchase of brand. Hence, Goodwill expected to be calculated and held as identified asset in the books of account. Hence, Goodwill and Brand may be treated as a valued assets of a company although it may not be in physical form or reflected in the Balance Sheet. 22. By c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (iii) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (iv) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor; (a) The moratorium order in respect of (i), (ii), (iii) and (IV) above shall not apply to the transactions notified by the Central Government; (b) That the supply of essential goods or services to the corporate debtor, if continuing shall not be terminated or suspended or interrupted during moratorium period; (c) The Applicant shall also make public announcement about initiation of Corporate Insolvency Resolution Process, as required by Section 13(1)(b) of the Code. 28. This order of morato ..... X X X X Extracts X X X X X X X X Extracts X X X X
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