TaxTMI 
TaxTMI 
2020 (8) TMI 456
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....e memo of appeal to which reference will be made in the following paras. 2. The case set up by the Appellant is that the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) was filed by 'Laxmi Kantha Rao Thota' (Respondent No.3) against 'M/s. IRIS Electro Optics Private Limited'- ('Corporate Debtor') fraudulently with a malicious intent and not for resolution of 'Corporate Debtor', warranting imposition of penalty in terms of Section 65 of the 'I&B Code'. It is the case of the Appellant that the Appellant- 'Bank of India' is a secured creditor which did not trigger any 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor' but 'Laxmi Kantha Rao Thota' (Respondent No.3), who is a 'related party' of the 'Corporate Debtor', filed an application under Section 7 of the 'I&B Code' in connivance with the 'Corporate Debtor'. According to Appellant, it was brought to the notice of the Adjudicating Authority that the 'Financial Creditor' has triggered 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor' in collusion with the 'Corporate Debtor' being a 'related party' to defeat the legitimate interests with the ....
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....hota had submitted resignation letter dated 30th November, 2018 as a Director and the acceptance letter dated 1st December, 2018 was issued by the Managing Director of the 'Corporate Debtor', thereby resulting in cessation of the status of Mrs. Archana Thota as one of the Directors of the 'Corporate Debtor'. It is not in dispute that 'Laxmi Kantha Rao Thota' (Respondent No.3- 'Financial Creditor') is a 'related party' being husband of Mrs. Archana Thota. It is submitted that the document evidencing resignation of Mrs. Archana Thota was not filed before the Registrar of Companies but the same should not be viewed with suspicion as no document has been filed by the 'Corporate Debtor' with the Registrar of Companies right from its inception as is clearly revealed by the Master Data. 7. It is further submitted that despite public announcement by the 'Interim Resolution Professional', the Appellant did not file its claim and a belated claim was submitted after 28 days by which time 'Committee of Creditors' had been constituted. Still the 'Interim Resolution Professional' admitted the claim of the Appellant having regard to its status as a Nationalized Bank. The Respondent No.1 informed....
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....1st December, 2018. Admittedly, the Respondent No.3 filed an application under Section 7 of the 'I&B Code' seeking initiation of the 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor' alleging default in repayment of debt. This happened on 20th March, 2019 and on the same day the 'Corporate Debtor' filed its reply admitting its liability on its own account, in pursuance whereof the order of admission dated 28th March, 2019 came to be passed at the hands of the Adjudicating Authority. 13. The allegations of collusion inter se Respondent Nos. 2 and 3 i.e., the 'Corporate Debtor' and the 'Financial Creditor' have to be viewed in this sequence of events. It is significant to note that the Adjudicating Authority, vide order dated 19th August, 2019, while disposing of IA No. 461 of 2019 filed by the Appellant seeking recall of admission order deferred consideration of the issue raised until final disposal of the petition after observing that Respondent No.3 was the Husband of Director Mrs. Archana Thota and that the Appellant being the 'Secured Financial Creditor' was left out when the 'Interim Resolution Professional constituted 'Committee of Creditors' (page 131 ....
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....r fresh determination of voting share of 'Financial Creditors'. However, such determination was to the detriment of the Appellant in as much as voting share was directed to be assigned to the alleged 'related party'- 'Financial Creditor'. Such direction did manifest in fresh determination with Appellant being allotted 63.95% and the 'related party' with 36.05%. Thus, the voting share allotted to the Appellant was woefully inadequate leaving it short of the requisite percentage to seek replacement of the 'Resolution Professional' who was ex facie guilty of violating provisions of the 'I&B Code' by convening 'Committee of Creditors' but excluding the 'Sole Financial Creditor' i.e., the Appellant from being a part of it. 15. Having regard to the proposition of facts, findings and observations made by the Adjudicating Authority and provisions of Section 65 of the 'I&B Code' in the context of application under Section 7 having been admitted at the instance of the alleged 'related party', we are of the considered opinion that the Adjudicating Authority has failed to exercise jurisdiction vested in it. The material irregularity brought to our notice in the resolution proceeding goes to t....