9911796707
TMI Blog2023 (10) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... er ( Technical ) ] The present appeal filed under Section 61 of Insolvency and Bankruptcy Code, 2016 ("IBC" in short) by the Appellant arises out of the Order dated 19.05.2023 (hereinafter referred to as "Impugned Order") passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-V) in CP (IB) No.283 of 2023. By the impugned order, the Adjudicating Authority has admitted the application under Section 7 of the IBC filed by Vistra ITCL (India) Ltd.- present Respondent No.1 and initiated Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor - Evirant Developers Pvt. Ltd. ("EDPL" in short). Aggrieved by this impugned order, the present appeal has been filed by Shri Sanjay Pandurang Kalate, suspended Director of the Corporate Debtor. 2. The brief facts of the case which are necessary for deciding this appeal are as outlined below: - * The Appellant along with his father and brothers teamed up with Respondents No.2 and 3 to undertake development and construction of residential and commercial projects in Pune. * Subsequently, on 09.10.2018, EDPL-Corporate Debtor was incorporated by them to develop Project Panorama and Project Vedant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en preferred. 3. The Learned Senior Counsel for the Appellant submitted that Section 7 application has been mischievously filed in collusion between the Financial Creditor and Respondents No.2 to 4. It was vehemently contended that though the insolvency petition was filed by Respondent No.1 with fraudulent and malicious intent, the same was ignored by the Adjudicating Authority. It was further stated that though IA No.2002/MB/2023 had been filed by the Appellant to show the unhealthy collusion amongst Respondents Nos. 1 to 4, yet the Adjudicating Authority passed the impugned order without adjudicating upon the above IA. The impugned order was assailed on the ground that it did not even in the passing make a mention about the IA which had been filed by them regarding these serious allegations of fraud, misrepresentation and collusion. 4. It was further submitted that the Respondents No.2 and 3 took unilateral decisions on behalf of the Corporate Debtor while keeping the Appellant uninformed. Further, the Respondents refused to provide statutory records and audited financial statements of the Corporate Debtor to the Appellant. Besides a Civil Suit bearing No.2182/2022 which was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor had contested before the Adjudicating Authority the fact that the Financial Creditor had disbursed credit facilities to the Corporate Debtor by issuance of NCDs. It has also been admitted by the Corporate Debtor that in terms of Debenture Trust Deed dated 26.11.2018, the Financial Creditor was entitled to redemption of the NCDs. The Corporate Debtor did not deny or dispute the claim made by the Respondent No.1 amounting Rs.65,08,05,433/- which had become due and payable on 11.01.2023. Admittedly, the Corporate Debtor failed to redeem these NCDs and remit the requisite amount to the Financial Creditor. We also notice that the Corporate Debtor while explaining as to how and why they had defaulted in repayment of the debt, several reasons were attributed but none of them assigned any fault on the part of the Financial Creditor. We find that the Corporate Debtor on their own volition admitted before the Adjudicating Authority that various macro-market and micro-market factors propelled by the economic downturn caused by the Covid pandemic led to decline in their sales, revenue and cash flow. This had prevented them from paying back the amount due to Financial Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p, when financial debt is undisputedly established and default in payment is also crystal clear, we are of the considered opinion that the Adjudicating Authority did not commit any error in admitting the Section 7 application. 12. This now brings us to the primary contention of the present Appellant that the Adjudicating Authority committed an error for having passed the impugned order in the main company petition without adjudicating on the IA No. 2002/2023. It has been the case of the Appellant that the Adjudicating Authority failed to appreciate various judgments of the Hon'ble Supreme Court which have emphasized that Adjudicating Authority have an important role in preventing any blatant effort made by any party to bring a Corporate Debtor under the rigours of CIRP by taking recourse of malicious and/or collusive filing of insolvency petition. The Learned Senior Counsel for the Appellant referred to the judgment of this Tribunal in Company Appeal (AT) (Ins.) No.258 of 2021 in the Hytone Merchants Private Limited v. Satabadi Investment Consultants Pvt. Ltd. ("Hytone" in short) in which it had been held that if a Section 7 application is filed collusively and with mala- fide in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the Adjudicating Authority wrongly glossed over the fact that the main company petition was fraudulent, collusive and malicious in intent. 15. This was strongly countered by the Learned Senior Counsel of Respondent No. 1 by stating that the contention of the Appellant lacked credence since the IA was considered on 17.05.2023 by the Adjudicating Authority before passing of the impugned order on 19.05.2023. It was asserted that while dismissing the IA, proper reasons were also duly recorded in holding that the IA was frivolously filed by the Appellant and sans the approval and authorization of the Board of Directors of the Company. 16. From material facts on record, we find substance in the contention of Respondent No.1 that the IA was not only heard by the Adjudicating Authority but was heard before pronouncing the order in the main company petition. It is also borne out from the orders that both parties were present and had placed their respective contentions / arguments before the Adjudicating Authority in the matter of the IA. Hence, we are not in a position to accept the submission of the present Appellant that the IA has not been properly adjudicated upon by the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serious as this where an imputation of fraud is being made by the Appellant on behalf of the Corporate Debtor against the Respondents, the Adjudicating Authority has rightly held that allowing such an application, without approval of the Board would suffer from impropriety and hence dismissed it as a frivolous and vexatious. While we prima-facie agree that a collusive Section 7 petition can be rejected as has been laid down in the Hytone (supra) ratio, we must hasten to add the inapplicability of that judgment since in that case the Corporate Debtor was trying to escape its liability as a corporate guarantor in collusion with the Financial Creditor, thereby making the facts distinguishable. We do not countenance this approach of the Appellant of attempting to take undue benefit of the mercies of law by seeking invocation of Section 65 of the IBC. We are also cognizant that given the statutory construct of IBC, the scope and jurisdiction of the Adjudicating Authority being summary in nature, it is distinctly not as extensive as that of a civil court to enquire into disputes arising out of MoUs and related specific performance which have been agitated in the IA. Allowing such meritle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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