TMI Blog2021 (4) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petition was filed with malicious intent. In any event, the apparent malicious intent was for the issuance of the demand notice, which, as stated above, is not even a legal requirement under Section 7 of the Code. Therefore it is clear that the observation of the learned Adjudicating Authority that the Petition is filed with malicious intent is invalid. In the facts and circumstances of the present case, only on the ground that the Adjudicating Authority has not treated the alleged Transaction as a financial debt, no action could have, in any event, be taken under Sections 65, 72 and 75 of the Code. In any event, from the facts of the case, none of the preconditions of the above-mentioned provisions of Sections 65, 72 or 75 of the Code has been satisfied, which is evident from the following - Appellant had initiated proceeding under Sections 7 of the Code in the financial creditor's capacity to exercise their legal right. While the petitions were dismissed on merits, there is no doubt that the said proceedings were initiated for the purposes envisaged by law. There is nothing on record to show that the proceedings u/s 7 of the Code were initiated for the purpose othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Parmanand Kewalramani family (being Parmanand Kewalramani himself and his son, Sunil Parmanand Kewalramani and Manoj Permanand Kewalramani). 5. Parmanand Kewalramani and his two sons Sunil Kewalramani and Manoj Kewalramani, advanced loan to the Respondent Companies and, sometimes, in 2017, Parmanand Kewalramani and his sons demanded monies back from the Respondent companies. To that end, notices were issued. Since the other Directors/Stakeholders of the Respondents Companies (i.e. Kanhiyalal Kewalramani and Wadhuram Kewalramani families) were negligent in attending to the affairs of the Respondents Companies, these notices were responded to by the Parmanand Kewalramani and family member itself, admitted that the Respondent Companies did not have sufficient funds. 6. After that, Petitioners moved three Section 7 Petitions; the Adjudicating Authority dismissed all by the impugned Order's dated 30 July 2020. The Adjudicating Authority also dismissed the Application for taking action under Sections 65, 72 and 75 of the Code against the Appellants. The Respondents in its cross Appeals contend that the Learned Adjudicating Authority ought to have proceeded against the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned judgements. Since it is settled law that nobody shall be condemned unheard. The conclusions regarding the Appellants having control over the Respondent companies' affairs are factually incorrect. That has arrived on account of false statements made by the Respondent on the affidavit. The Adjudicating Authority has failed to consider that proceeding under Section 7 was filed by the Appellant in the Financial Creditor's capacity to exercise their legal right to do so. The Adjudicating Authority has failed to consider that proceeding under Section 72 of the Code could only be initiated after the Petition's admission. Respondents Contention 9. The Respondents contend that Appellant repeatedly claims that he is not in control of the Corporate Debtor's affairs. But demand notice dated 21 August 2017 issued by the Petitioner was received by the real brother of the Petitioner, and the same was replied to by the real brother of the Petitioner on 4 September 2017, stating that the Corporate Debtor has no fund to repay. This shows that the demand notice issued and replied by the Petitioner and his brother amongst themselves even petitioners tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l's decision for a sinister purpose. Rupchand Gupta v Raghuvanshi(private) Ltd AIR 1964 SC 1889 It is not the Respondent's case that there was any secret arrangement between the Appellant and the Respondent which could be termed as collusive and could have been used to obtain a decision from the Adjudicating Authority a sinister purpose. Therefore, there could not have been any collusion, as legally understood. 14. The Petitioner, Mr. Sunil Parmanand Kewalramani filed this Petition, seeking to set in motion the Corporate Insolvency Resolution Process (CIRP) against corporate debtor 'Kestrel Import and Export Private Limited' alleging that Corporate Debtor committed default as provided under Section 7 of the Insolvency Bankruptcy Code 2016. The Petitioners contended that they had advanced loan on various dates to the Corporate Debtor, out of which amount is due to the Petitioner by the Corporate Debtor. 15. The Corporate Debtor submits that the Corporate Debtor is a family-owned Company comprising three brothers having 1/3 shares of the Company by each brother and their immediate siblings. It is stated that the Petitioner is Promoter, Director and Sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service of demand notice as demand notice was sent, received and replied by the Petitioner and his brother among themselves. Therefore, this bench clearly finds unlawful collusion and misuse of the position by the Petitioner. This also brings out the fact that there is no difference between the Petitioner and the Corporate Debtor as the Petitioner is Promoter and in control of the day to day affairs of the Corporate Debtor Company . 20. Being aggrieved by the Adjudicating Authority's observations, the Appellants have preferred the Appeal No's 847, 848 and 853 of 2020. Being aggrieved by Order of the Adjudicating Authority for not taking any action against Petitioners /Appellants, Respondents filed Cross appeals No's 1016, 1018 and 1019 of 2020. 21. Interestingly, collusion, in law, requires more than one person. It was necessary for the Respondent to implede all the parties against whom such collusion was alleged. Indisputably, that was not done. Despite that, the Adjudicating Authority concluded that there was collusion between parties when one of them was not even a party before it in the respective Petitions. That itself is a ground to set aside the learned Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings were initiated for the purposes envisaged by law. 27. There is nothing on record to show that the proceedings u/s 7 of the Code were initiated for the purpose other than seeking a resolution, which is the sine qua non for initiation of proceedings under Section 65 of the Code. 28. As far as Section 72 is concerned, the same pertains to the punishment for willful and material omission from statements relating to the Corporate Debtor's affairs. Since the Appellant had initiated the proceedings under Section 7 of the Code in their capacity as 'Financial Creditors'. Section 72 of the Code deals explicitly with the punishment for an officer of the corporate debtor's delinquent act. He makes any material and wilful omission in any statements relating to the corporate debtor's affairs. From the present case facts, there was no occasion for invoking Section 72 of the Code. 29. As far as Section 75 of the Code is concerned, it provides punishment for false information furnished in the Application made under Section 7, relating to material particulars, knowing it to be false or omits any material fact, knowing it to be material. There is nothing on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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