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2019 (3) TMI 826

n of the company, this petition was filed under section 10 of the Code without disclosing that the company has been wound up by order of the Hon’ble High Court - HELD THAT:- After liquidation order passed in a winding-up petition against the corporate debtor then it is barred from filing a petition under section 10 of the Code. Here the corporate debtor has not only suppressed the material fact that the winding up petition has not only been filed and admitted, but liquidation order has also been passed against the corporate applicant/corporate debtor liquidator has been directed to expedite liquidation proceedings expeditiously. The corporate applicant suppressed this material fact, knowing it to be material, and filed the petition under section 10 and in contravention of Rule 10 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The alleged act of the corporate applicant is punishable under section 77 (a) of the Insolvency and Bankruptcy Code 2016. The Registrar of Companies, Mumbai is directed to lodge prosecution against the corporate applicant under section 77(a) of the insolvency and bankruptcy code in 2016. - Since the petition has been file .....

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. The Petitioner is at liberty to file affidavit of claim before the Official Liquidator. Official Liquidator s Report is disposed of in the terms above. The company s above petition is also disposed of in the aforesaid terms. 2. On perusal of the above order, it is apparent that liquidation order was passed against the corporate debtor/corporate applicant, and the Official Liquidator had been directed to proceed with the procedure of the winding up expeditiously. 3. We have perused the Petition No.1053/2017, which has been filed by the Amar Remedies Ltd., the Corporate Applicant, on 29.5.2017 for initiation of the corporate insolvency resolution process. In the petition filed under section 10 of I & B Code, the Corporate Applicant has disclosed the following contents: the relevant fee is not being paid as the company is filing this application pursuant to the notification of the SICA Repeal Act,2003. As per Section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, as amended by Section 252 read with Schedule VIII of the Insolvency and Bankruptcy Code, 2016 (IBC), a company in respect of which such appeal or reference or inquiry pending before AAIFR o .....

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ra Bank (1998) 5 SCC 554. It is further stated that as the winding up order was passed by the Hon ble High Court and Official Liquidator was appointed to take over the control and management of the Corporate Debtor, the Board of Directors of the Corporate Debtor, pursuant to the law laid down by Hon ble Supreme Court proceeded to file the reference with BIFR which was duly registered as Case No.55 of 2014. The said reference was rejected by Hon ble BIFR vide order dated 22.9.2014 and same was challenged by the Corporate Debtor in an appeal before the AAIFR. The said appeal got abated on account of Sick Industries (Special Provision) Repeal Act, 2003, with effect from 1.12.2016. After that, as per Provision 6 of the SICA Repeal Act, applicant has filed Petition under Section 10 of IBC within the statutory limit of 180 days. Therefore, the aforesaid act of the Corporate Debtor was pursuant to the legal remedy and the right which was duly exercised as provided to the Corporate Debtor by the statute (both under the Repeal Act and the IBC) It is further contended by the Corporate Applicant that at the time when the application was made by the Corporate Debtor, the procedure of the NCLT .....

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expressly bars a Corporate Debtor in respect of whom a Liquidation Order has been made from initiating the CIRP. It is further stated in the Affidavit of Axis Bank that the corporate debtor has initiated the insolvency resolution process under the Code with malafide and fraudulent intention and it deserves to be subjected to a penalty under sub-section (2) of Section 65 of the Code. 8. In reply to the notice, the RP filed its reply wherein it is stated that he has submitted a report on 9.12.2017 before the Hon ble Tribunal setting out the events leading up to the CIRP and bringing to the notice of this Hon ble Tribunal the facts of liquidation proceedings before the Hon ble High Court against the Corporate Debtor. It is stated in his affidavit that winding up petition was filed against Corporate Debtor which was allowed by the Hon ble High Court by order dated 27.8.2014 and the Corporate Debtor was ordered to be wound up. The RP also contends that he has submitted a report dated 9.12.2017 before the Hon ble Tribunal stating the fact of winding up order dated 25.1.2017. It is also mentioned in the minutes of 2nd CoC meeting dated 17.11.2017 stating that Mr Sagar Pravin Shah, erstwhi .....

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ed to the Resolution Professional about the winding order of the Hon ble High Court dated 25.1.2017, whereby Official Liquidator was directed to proceed with the procedure of winding up of the Corporate Debtor. It is further stated that representative of IDBI Bank attended the 2nd CoC meeting dated 17.11.2017, and categorically informed the CoC that the Hon ble High Court vide its order dated 25.1.2017 has already liquidated the Corporate Debtor and proceedings under I&B Code 2016 is bad in law. 12. The SBI Global Factors Ltd., the Financial Creditor, filed an Affidavit stating that IDBI bank has raised an issue before this Tribunal, but it was addressed by the Resolution Professional, and accordingly Resolution Professional was permitted to proceed with the CIRP. 13. The Bank of Maharashtra, the Secured Creditor and the Saraswat Co-op Bank Ltd., the Secured Creditor, took the stand that in case of Murli Industries Ltd. v. Primo Pick N Pack (P.) Ltd. [2019] 151 SCL 233 (Bom.) in CA 10/2017 in CP No.6/2012 the Hon ble Bombay High Court has held that the action of resolution process during the pendency of winding up proceedings is logical and possible. The Bank of Maharashtra, th .....

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. II of IB Code, 2016 from initiating the CIRP. Copy of the mail communication which was sent to the members of CoC is annexed with the reply of the IDBI Bank as Annexure - K. 17. It is also stated in the Affidavit of IDBI Bank that vide letter dated 21.11.2017 also intimated the office of the Official Liquidator about the conduct of the Corporate Debtor and the RP and also requested the Official Liquidator to take urgent needful action. Copy of the letter sent to Official Liquidator is Exhibit - L. 18. It is further stated by the IDBI Bank that on 8.12.2017 the Officer of the IDBI Bank appeared before the Tribunal and informed that despite liquidation order passed by the Hon ble High Court against the Corporate Debtor, the Corporate Debtor suppressed the facts and filed Petition u/s. 10 of IB Code for initiation of CIRP. 19. It is further stated that the RP appeared before the Tribunal on 11.12.2017 and filed a report dated 8.12.2017, Exhibit - M. 20. On perusal of the said documents, it appears that this Tribunal was informed by IDBI Bank, Gen. Manager that despite the liquidation order passed by the Hon ble High Court Dt. 25.1.2017 the Corporate Debtor, knowingly obtained Admiss .....

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om a liquidation order has been made. Explanation.- For the purposes of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor. Thus it is clear that Section 11(d) of the IB Code, 2016 expressly prohibits the Corporate Debtor, in respect of whom the liquation order has been passed, to apply for initiation of CIRP. 23. Given the provision of Sec 11(d) of the IB Code the corporate debtor was not entitled to make an application for initiation of Corporate Insolvency Process U/S 10 of the I & B Code. But the corporate debtor has filed the petition U/S 10 of the code, after suppressing material facts that the company was wound up by the order dated 25.1.2017 of the Hon ble High Court. 24. It is further pertinent to mention the Rule 10 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 provides that: 10. Filing of application and application fee Xxx xxx xxx (2) An applicant under these rules shall immediately after becoming aware, notify the Adjudicating Authority of any winding-up petition presented against the corporate debtor. Xxxx xxxx xxxx Thus it is clear that the law requires disclosure of winding-u .....

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cation U/S 10 of the Insolvency and Bankruptcy Code 2016 after the suppression of material facts known to be material? 28. Here the corporate applicant has in his application under Sec 10 interalia disclosed that; the relevant fee is not being paid as the company is filing this application pursuant to the notification of the SICA Repeal Act,2003. As per Section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, as amended by Section 252 read with Schedule VIII of the Insolvency and Bankruptcy Code, 2016 (IBC), a company in respect of which such appeal or reference or inquiry pending before AAIFR or BIFR stands abated, may make reference to the National Company Law Tribunal under IBC within 180 days from commencement of IBC, without payment of fees in accordance with the provisions of IBC. Copy of last AAIFR order dated 07.11.2016 in the matter of Amar Remedies Limited is enclosed as Annexure - 17. 29. It is pertinent to mention that corporate debtor has not mentioned anything about the order of the Hon ble High Court, Bombay, dated 25.1.2017 passed in company application no. 7/2015. In the said case Hon ble High Court passed the following order: 1. Officia .....

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before the AAIFR. In the premises, no further proceedings can take place in company winding up Petition. 2. Accordingly, the OLR is adjourned sine die. The Official Liquidator to have the Report mentioned and placed before this Court after the disposal of the pending appeal before the AAIFR. 30. Thus it is clear that the corporate applicant was fully aware of the fact that company, i.e. Amar Remedies Ltd stands wound up by order of the Hon ble High Court dated 25th Jan 2017, and Official Liquidator was directed to proceed with the procedure of winding up of the respondent company expeditiously. The said fact was beyond an iota of doubt material fact for the presentation of the petition under Sec 10 of the Code. The Ld counsel appearing on behalf of the Corporate debtor emphasized on the law laid down by Hon ble Supreme Court in the matter of Rishabh Agro Industries (P.) Ltd. v. PNB Capital Services Ltd. [2000] 25 SCL 461 and Madura Coats Ltd. v. Modi Rubber Ltd. 136 SCL 502 (SC) and also in Real Value Appliances Ltd. v. Canara Bank [1998] 16 SCL 445 (SC). It is further stated that as the winding up order was passed by the Hon ble High Court and Official Liquidator was appointed to .....

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f the Insolvency and Bankruptcy Code, 2016: Provided further that no fees shall be payable for making such reference under Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or inquiry. 33. In this case, as stated earlier we are not examining the right of the corporate applicant for filing petition U/S 10 of the I & B Code. We are only examining whether the petitioner, i.e. corporate applicant has filed the petition suppressing the material facts, which were known to it as material. 34. The Hon ble Supreme Court in Civil Appeal No. 818/2018 in case of FORECH India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd. has held that section 11 of the code specifies which persons are not eligible to initiate proceedings under it. In particular, section 11 (d) reads as follows: 11. Persons not entitled to make application.- The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely- Xxxx xxxx xxxx (d) a corporate debtor in respect of whom a liquidation order has been made. This section is of limited application and only bars a corporate debtor from initiating a petition under .....

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