TMI Blog2022 (3) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... n, shall have the meanings respectively assigned to them in those Acts. The Hon ble Supreme Court A.V. PAPAYYA SASTRY ORS VERSUS GOVERNMENT OF A.P. ORS [ 2007 (3) TMI 735 - SUPREME COURT] has also defined the expression fraud . The Hon ble Supreme Court held that the fraud is an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In the resent case, there was neither any fraud practiced by Respondent No.1 nor any misrepresentations made by Respondent No.1 before this Tribunal and the judgment dated 07.01.2022 passed by this Tribunal cannot be held to be obtained by fraud. There are no substance in the submissions of counsel for the Applicant of allegation of fraud or misrepresentation Application disposed off. - I.A No. 190, 191,192 & 337 of 2022 IN Comp. App. (AT) (Ins.) No. 1124-1125 of 2020 Contempt Case (AT) No. 06 of 2022 Comp. App. (AT) (Ins.) No. 1124-1125 of 2020 - - - Dated:- 28-2-2022 - [Justice Ashok Bhushan] Chairperson And [Dr. Ashok Kumar Mishra] Member (Technical) For the Appellant : Mr. Deepak Khosla, Advocate For the Respondents : Mr. Neeraj Malhotra, Senior Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. (vi) Respondent No.1, the Financial Creditor filed an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( Code for short) on 12.06.2018 claiming an amount of ₹ 44,20,38,989.20/. Date of default mentioned in the Application was 29.07.2000. In the Application filed under Section 7, Respondent No.1 has given all the details including the filing of OA No. 251 of 2001, the consent decree passed in O.A and the Recovery Certificate issued by the DRT and the extensions prayed on behalf of the Corporate Debtor for repayment and last extension being granted on 17.12.2015. (vii) In the Application under Section 7, a Reply was filed by the Corporate Debtor. The Adjudicating Authority, after hearing the parties, by order dated 15.03.2019 admitted the CP(IB) No. 866/PB/2018. (viii) Aggrieved by the order dated 15.03.2019, Vineet Khosla, the Suspended Director filed Company Appeal (AT) (Ins.) No. 441 of 2019 before this Tribunal. Company Appeal (AT) (Ins.) No. 441 of 2019 was heard by this Tribunal and was dismissed by order dated 06.09.2019 of this Tribunal. (ix) In the Corporate Insolvency Resolution Process ( CIRP for short) of the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpt Case (AT) No. 06 of 2022, the Applicant has prayed for initiation of proceedings under Section 340 CrPC r/w Sections 191, 191, 192, 196, 197, 198, 199, 200, 202, 204, 2015, 209 of the Indian Penal Code r/w Sections 120-B and 176 of IPC and other provisions of law against the 15 persons named as Prospective Accused Nos. 1-15, and also may examine the case against the 6 individuals named at Sl No. 16-21 of the Memo of Parties. 5. This Tribunal, by order dated 20.01.2022 in I.A Nos. 190, 191 192 of 2022 filed by the Applicants, passed an order for listing the IAs on 08.02.2022 and in the meantime, counsel for the Respondent was permitted to file the Reply of these Applications. Reply to the IAs have been filed by the Respondent No.1 to which Rejoinder-Affidavit has also been filed by the Applicant. Along with the IAs Contempt Case (AT) No. 06 of 2022 also came to be listed as a fresh matter. 6. We have heard Shri Deepak Khosla, Learned Counsel appearing for the Applicant in the above proceedings and Shri Neeraj Malhotra, Learned Senior Counsel for Respondent No.1. 7. Shri Deepak Khosla, Learned Counsel for the Applicant submits that the judgment dated 07.01.2022 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enced a fresh period of limitation were contained in the Company Petition filed before the NCLT which is apparent from observations made in judgment dated 07.01.2022 in para 24. Following observations made in para 24 by the judgment has been emphasized: Para 24 .It is not shown by the Appellant that in reply to the Petition they have challenged the particulars mentioned in the Petition and documents filed alongwith Petition. However, the Respondent No.1 in his Written Submissions filed before this Appellate Tribunal has clarified the dates when the Corporate Debtor had acknowledged the debt, which are as under:- . 8. It is submitted by Learned Counsel for the Applicant that no particulars as has been referred by judgment dated 07.01.2022 were furnished by Respondent No.1 along with the Company Petition whereas as per the table of dates reproduced by this Tribunal in para 24 of the judgment dated 07.01.2022, it is clear that they were not filed before the Tribunal and Respondent No.1 fraudulently represented that letters dated 17.12.2015 and 27.02.2016 were written by the Corporate Debtor whereas they were written by a shareholder. Respondent No.1 knew that it could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... darted 06.09.2019 and it is only after the dismissal of the Appeal when the Resolution was passed by the Committee of Creditors for liquidating the Corporate Debtor. CA 307 of 2020 was filed by the Applicant seeking recall of the admission order dated 15.03.2019 on the ground of fraud. Application CA 307 of 2020 was rejected by the Adjudicating Authority on 10.11.2020 holding that question of limitation is a mixed question of fact and law and this issue was never raised by the Applicant at the time of admission of petition and also in the Appeal. The Adjudicating Authority held that no ground has been made out to recall of admission order, hence Application CA No. 307 of 2020 was rightly rejected. 11. Learned Counsel for the Respondent submits that there being no Resolution Plan, the Adjudicating Authority has rightly taken a decision to liquidate the Corporate Debtor. Consequently, Application CA No. 121 of 2020 was filed by the Resolution Professional which stood allowed on 15.10.2020. It is submitted that in the Appeal filed against the orders dated 10.11.2020 and 15.10.2020 i.e. Company Appeal (AT) (Ins.) Nos. 1124-1125 of 2020, all submissions have been made by respective p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that filing of Contempt Application and prayer of prosecuting the counsel is most objectionable and reckless act on the part of the Applicant. 13. Shri Deepak Khosla, Learned Counsel for the Applicant in his Rejoinder submitted that the submission of Respondent No.1 based on doctrine of merger are misconceived when order is obtained by fraud, it can be very well recalled by any Court even if the Appeal against the said order has been dismissed. It is submitted that no doctrine says that order obtained by fraud merges in appellate order. The Order passed by the Adjudicating Authority was void order and nullity. Non-est order or an order which is nullity shall always be nullity. Respondent No.1 has filed the documents before this Tribunal in the Appeal which documents were not before the Adjudicating Authority. Respondent No.1 misled this Tribunal to believe that documents which have now been filed before the Appellate Tribunal along with the Reply of Respondent No.1 were before the Adjudicating Authority. Learned Counsel for the Applicant however submits that there is no denial to the letters which was written by the Respondent No.1 since they were letters written by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef of the fact; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any such act or omission as the law specially declares to be fraudulent. Explanation.-Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak , or unless his silence is, in itself, equivalent to speech. 17. The definition of fraud as contained in Section 17 of the Indian Contract Act, 1872 becomes relevant for determining a question of fraud claim to be practiced in proceedings under the IBC. Section 3(37) of the IBC expressly provided that words and expressions used but not defined in the Code but defined in the Indian Contract Act, 1872 and other Acts as referred therein, shall have the meanings respectively assigned to them in those Acts. 18. The Appellant alleges that fraud was played on the court i.e. this Tribunal by the Respondent No.1. Elaborate submission of Counsel for the Applicant which according to Applicant constitute fraud has been noticed ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first Court or by the final Court has to be treated as nullity by every Court, superior or inferior. It can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings. 22. The Hon ble Supreme Court in above case has also defined the expression fraud . The Hon ble Supreme Court held that the fraud is an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In para 26, following has been laid down:- 26. Fraud may be defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one gains at the loss of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is thus an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. The principle of 'finality of litigation' cannot be stretched to the extent of an absurdity that it can be utilized as an engine of oppression by dishonest and fraudulent litigants. 23. In Indian Bank vs. Satyam Fibres (India) Pvt. Ltd.- MANU/SC/0657/1996 , the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to recall a judgment or decree which has been obtained by practicing fraud on the Court is correct and supported by several authorities of the Hon ble Supreme Court as noticed above. 27. In the judgment dated 07.01.2022 passed in Company Appeal (AT) (Ins.) Nos. 1124-1125 of 2020, the above proposition has already been accepted and reiterated in para 26 of the judgment where this Tribunal held:- 26. Hon ble Supreme Court in the aforesaid Judgments has settled the principle that every Court/Tribunal has power to recall the order obtained by practicing fraud. The Appellant has miserably failed to prove that the Respondent No. 1 has obtained the order dated 15.03.2019 by practicing fraud. Therefore, Ld. Adjudicating Authority has rightly held that they no jurisdiction to recall the admission order dated 15.03.2019. 28. The Hon ble Supreme Court in the aforesaid judgments has settled the principle that every court/ tribunal has power to recall the order obtained by practicing fraud. 29. We need to consider the submission of the Counsel for the Applicant that judgment dated 07.01.2022 was obtained by Respondent No.1 by practicing fraud on this Appellate Tribunal. Wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. In Part- IV of the Application under Section 7, Applicant (Respondent No.1) has stated that days of default has been calculated from: (July 29, 2000) and in Part-V in Column 2- Particulars of an order of a Court, Tribunal or Arbitral Penal adjudicating on the default, if any . The details of O.A No. 177/2001 filed by the EXIM Bank before the DRT has been mentioned. Copy of the Recovery Certificate No. 67/2011 passed in O.A No. 177/2001 was filed as Annexure A-11 of the Application. It is useful to notice the entire particulars in Column 2:- 2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PENAL ADJUDICATING ON THE DEFAULT, IF ANY The Exim Bank had filed O.A No. 177/2001 before Hon ble Debt Recovery Tribunal Delhi-II under the principles of Order 23 Rule 3 CPC read with Section 22 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 read with Rule 18 of the Rules framed thereunder. The Exim Bank had filed O.A. No. 251/2003 before Hon ble Debt Recovery Tribunal Mumbai-II. A copy of order dated 28.06.2004 passed by the Hon ble Debt Recovery Tribunal Mumbai-II with regards to the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vert to the submissions of the Counsel for the Applicant that Respondent No.1 misrepresented before this Tribunal that documents pertaining extension of limitation were filed by the Respondent to these Applications (i.e. Applicant in Section 7 Application) along with Section 7 Application which misled this Tribunal to believe that all those documents were filed before the Adjudicating Authority. In Company Appeal (AT) (Ins.) Nos. 1124-1125 of 2020 a detail Reply Affidavit was filed by the Respondent No.1 and in the Reply which was filed before this Tribunal copies of the letters of the Corporate Debtor and copies of the letters of the answering Respondent i.e. Financial Creditor were annexed. 35. We may now notice the pleadings of the Respondent No.1- Financial Creditor with regard to letters written on behalf of the Corporate Debtor and the Reply given by the Financial Creditor regarding granting extension of time for payment of OTS amount which have been collectively filed as Annexures R-3 and R-4. In para 20 of the Reply, detailed pleadings and reference of the various letters has been made. It is useful to extract para 20 of the Reply which is to the following effect:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. (vi) That the Corporate Debtor ailed to make the payment of ₹ 50.00 lacs under the re-negotiated settlement before 31.12.2015. However, the Corporate Debtor by its letter dated 27.02.2016 assured the answering respondent that it shall pay the re-negotiated amount of ₹ 5.15 crore by 31.03.2016 along with interest on ₹ 50.00 lacs for the default period i.e. an amount of about ₹ 2.00 lacs. However, the Corporate Debtor failed to make any payment whatsoever after its said letter dated 27.02.2016 to the answering respondent. Copy of the Corporate Debtor s letter dated 27.02.2016 is filed herewith as ANNEXURE R-9. (vii) That from the aforesaid factual details, it is crystal clear that the Corporate Debtor had consistently defaulted in payment of their liability even entering into OTS with the answering respondent and even after grant of several extensions by the answering respondent. In view of the same the answering respondent by its letter dated 05.04.2016, was constrained to revoke the OTS. Copy of the answering respondent s letter dated 05.04.2016 is filed herewith as ANNEXURE R-10. 36. Annexure R-3 (colly) referred to copies of letters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annex R- 7/Pg. 45 46 17.12.2015 Letter by EARC accepting the above settlement As per the re-negotiated settlement, upfront amount of ₹ 50.00 lacs was payable on or before 31.12.2015 and the balance of ₹ 4.65 crore was to be paid on or before 31.03.2016 CD failed to honour the above settlement Reply- Annex R- 8/Pg. 47 27.02.2016 Letter of the CD assuring EARC that it shall pay the re-negotiated amount of ₹ 5.15 crore by 31.03.2016 alongwith interest on ₹ 50.00 lacs for the default period i.e. an amount of about ₹ 2.00 lacs. CD failed to honour the above settlement Reply-Annex R- 9/Pg. 48 -49 05.04.2016 Letter by EARC revoking the above OTS dated 27.02.2016 Reply- Annex R- 10/Pg. 50 12.06.2018 Section 7 Application filed by EARC which was registered as CP No. 866/2018 Appeal- Annex- 5/Pg. 124 146 37. The 3rd Column of the above table as contained in para 24 of the judgment mentioned the details of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. It is not for us to advert on the question of limitation which was never pressed by the Appellant before the Adjudicating Authority in Section 7 Application. The facts and pleadings in Section 7 Application as well as in Company Appeal (AT) (Ins.) Nos. 1124-1125 of 2020 are being noticed in detail to examine the contention of the Applicant that fraud was played by Respondent No.1 on this Tribunal while obtaining the order dated 07.01.2022 dismissing the Appeal. 39. From the pleadings in para 20 of the Reply filed by the Respondent No.1 in Company Appeal (AT) (Ins.) Nos. 1124-1125 of 2020, it is evidently clear that there is no representation by Respondent No.1 that letters referred to Annexures R-3, R4, R5 to R8 (Colly) were filed before the Adjudicating Authority and those letters were brought on record along with the Reply filed in the Appeal. The submission of Respondent No.1 as noted in para 13 of the judgment dated 07.01.2022 cannot be read to mean that Respondent No.1 misrepresented before this Tribunal that particulars mentioned in the Section 7 Application and documents were filed along with the Section 7 Application. The statement of Counsel for Respondent No.1 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentation was done by the Respondent No.1. All correspondence had been brought on the record in Appeal to clarify the position and to bring relevant correspondences in record which evidence the acknowledgment of debt by the Corporate Debtor time and again to satisfy this Tribunal at the time of hearing of the Appeal that neither any fraud practiced by Respondent No.1 regarding limitation of Section 7 Application nor there was any misrepresentation on the part of the Respondent No.1. 41. We, thus, are fully satisfied that there was neither any fraud practiced by Respondent No.1 nor any misrepresentations made by Respondent No.1 before this Tribunal and the judgment dated 07.01.2022 passed by this Tribunal cannot be held to be obtained by fraud. We, thus, do not find any substance in the submissions of counsel for the Applicant of allegation of fraud or misrepresentation. 42. We may further notice the submission of Learned Counsel for the Applicant that letters which were written by the Financial Creditor to the Corporate Debtor were not by any authorized person. It is submitted that letters which were sent by Financial Creditor where addressed to one of the Directors Shri Dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Adjudicating Authority has directed for liquidation and rejected the Application of the Suspended Directors for recalling the order dated 15.03.2019. The orders were already passed in favour of the Respondent No.1 admitting CIRP and the Appeal was filed by Suspended Director challenging the aforesaid two orders. The Appeal filed by the Suspended Directors were dismissed. This Appellate Tribunal has framed only two questions for consideration which are noted in para 20 of the judgment to the following effect:- 2. Issue for consideration before us in these Appeals are that: (i) Whether the Adjudicating Authority is competent to recall the order of initiation of CIRP? (ii) Whether the liquidation order suffers from material irregularity? 44. Question No. (i) was considered by this Tribunal from paras 22 to 30 and in para 31 Question No.(i) was answered in following words: 31. With the aforesaid discussion, we are of the view that in the facts of present case the Adjudicating Authority is not competent to recall the order of initiation of CIRP. 45. This Appellate Tribunal held that Adjudicating Authority was not competent to recall its order dated 15.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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