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TMI Blog2023 (3) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... st the 'Impugned Order', dated 19.01.2023 in IA(IBC)/1018(CHE)/2022 in CP/759/IB/CB/2018, passed by the 'Adjudicating Authority' ('National Company Law Tribunal', Division Bench - II, Chennai). Petitioner / Appellant's Stance: 2. According to the Petitioner / Appellant, he is not a 'Party' to the Proceedings in which, the 'Impugned Order', came to be passed, but, being the 'Shareholder' of the 'Corporate Debtor' / 'St. John Freight Systems Limited' [Company under Liquidation], holding 3,01,428 equity shares of Rs.100/- each constituting 55.19% of the equity shareholding, is aggrieved of the 'Impugned Order', as it affects directly and prejudices the Petitioner / Appellant's interest. 3. The Learned Counsel for the Petitioner / Appellant, emphatically contends that in deciding, whether a 'Leave', must be granted, an 'Application' / 'Appeal', ought to be taken on 'Demurrer', and the merits of the matter, cannot be gone into, for the sake of determining an 'Application', praying for 'Leave'. 4. Also, it is the submission of the Petitioner / Appellant's side that the 'Petitioner / Appellant / Suspended Director', and a 'Shareholder', his 'Proposed Scheme', was not considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d omissions of material facts are punishable with a penalty which may extend to the hefty amount of rupees one crore, with the CCI being empowered to pass other such orders as it deems fit. This, and the judicious use of heavy costs being imposed when the information supplied is either frivolous or mala fide, can keep in check what is described as the growing tendency of persons being "set up" by rivals in the trade. 17. The 2009 Regulations also point in the same direction in as much as regulation 10, which has been set out hereinabove, does not require the informant to state how he is personally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Also, regulation 25 shows that public interest must be foremost in the consideration of the CCI when an application is made to it in writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. What is also extremely important is regulation 35, by which the CCI must maintain confidentiality of the identity of an informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. It was held that a "person aggrieved" need not only be the first wife, but can also include a second "wife" who may complain of the same. In so saying, the Court held: (SCC pp. 628-29 Para 25) "25. Even otherwise, as explained earlier, the second wife suffers several legal wrongs and/or legal injuries when the second marriage is treated as a nullity by the husband arbitrarily, without recourse to the court or where a declaration sought is granted by a competent court. The expression "aggrieved person" denotes an elastic and an elusive concept. It cannot be confined within the bounds of a rigid, exact and comprehensive definition. Its scope and meaning depends on diverse, variable factors such as the content and intent of the statute of which the contravention is alleged, the specific circumstances of the case, the nature and extent of complainant's interest and the nature and the extent of the prejudice or injury suffered by the complainant. Section 494 does not restrict the right of filing complaint to the first wife and there is no reason to read the said section in a restricted manner as is suggested by the learned counsel for the appellant. Section 494 doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are initiated by the intimation or reference received by the Commission in any of the manners specified under Section 19 of the Act. At the very threshold, the Commission is to exercise its powers in passing the direction for investigation; or where it finds that there exists no prima facie case justifying passing of such a direction to the Director General, it can close the matter and/or pass such orders as it may deem fit and proper. In other words, the order passed by the Commission under Section 26(2) is a final order as it puts an end to the proceedings initiated upon receiving the information in one of the specified modes. This order has been specifically made appealable under Section 53-A of the Act. 38. In contradistinction, the direction under Section 26(1) after formation of a prima facie opinion is a direction simpliciter to cause an investigation into the matter. Issuance of such a direction, at the face of it, is an administrative direction to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lastly mentions "any person". Obviously, it is intended that expanded meaning be given to the term "persons" i.e. persons or bodies who are entitled to appeal. The right of hearing is also available to the parties to appeal. 104. The above stated provisions clearly indicate that the Commission, a body corporate, is expected to be party in the proceedings before the Tribunal as it has a legal right of representation. Absence of the Commission before the Tribunal will deprive it of presenting its views in the proceedings. Thus, it may not be able to effectively exercise its right to appeal in terms of Section 53 of the Act. 105. Furthermore, Regulations 14(4) and 51 support the view that the Commission can be a necessary or a proper party in the proceedings before the Tribunal. The Commission, in terms of Section 19 read with Section 26 of the Act, is entitled to commence proceedings suo motu and adopt its own procedure for completion of such proceedings. Thus, the principle of fairness would demand that such party should be heard by the Tribunal before any orders adverse to it are passed in such cases. The Tribunal has taken this view and we have no hesitation in accepting that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct such modification." (page 794) 23. Obviously, when the CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to subserve the high public purpose of the Act." Pleas of 1st Respondent / Liquidator : 8. The Learned Counsel for the 1st Respondent / Liquidator contends that IA(IBC)/1018(CHE)/2022 in CP/759/IB/CB/2018, was filed by the '1st Respondent' (under Section 60(5) of the I & B Code, 2016, read with Regulations 32A(e), seeking for the 'Sale of Corporate Debtor', as a 'Going Concern', by way of a 'Private Sale', with other 'Reliefs'. 9. In fact, the Petitioner / Appellant, had not taken any steps to 'implead' himself or to submit any 'objections' to IA(IBC)/1018(CHE)/2022 and hence, he cannot maintain the instant IA No. 125 of 2023 in Comp. App (AT) (CH) (INS.) No. 34 of 2023 (coupled with the instant 'Appeal'), because of the fact that he was not a 'Party' to the 'Original Proceedings', before the 'Adjudicating Authority' ('Tribunal'). Also that, the 'Proforma Sole Respondent' in IA(IBC)/1018(CHE)/2022, was only the 'Buyer', Viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r / Appellant', has no 'Locus', to file the instant IA No. 125 of 2023 in Comp. App (AT) (CH) (INS.) No. 34 of 2023, along with the main 'Appeal'. 13. Expatiating his submission, the Learned Counsel for the 1st Respondent points out that the 'Petitioner / Appellant / Promoter' of the 'Corporate Debtor', is unable to prove that he is 'eligible', to re-take control of the 'Corporate Debtor', not being disqualified as per Section 29A of the I & B Code, 2016. Besides this, the instant 'Appeal', was filed on the basis of the 'Petitioner's purported Scheme', for 'Revival' of the 'Corporate Debtor', which was found to be lacking, in terms of material particulars, including on the issue of 'Source of Funds'. 14. The Learned Counsel for the 1st Respondent, brings it to the notice of this 'Tribunal', that the 'Petitioner / Appellant', had filed Comp. App (AT) (INS.) No. 1042 of 2019, before the 'Appellate Authority', and Civil Appeal No. 2113 of 2020, before the Hon'ble Supreme Court, assailing the 'Order' dated 26.11.2019, passed by the 'Adjudicating Authority' ('Tribunal'), for 'initiation' of 'Liquidation', as against the 'Corporate Debtor', and they were 'dismissed'. 15. The Learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittee Meeting dated 30.10.2021', the said 'Operational Creditor', through which the 'Petitioner / Appellant' has been acting, mentioned that they want the 'Appellant', to take over the 'Corporate Debtor', which was recorded in the 'Minutes' of the '9th SCC Meeting', and as such, the Appellant's intention, is to cause 'disruptions', to the 'sanctity' of the due process of 'Liquidation'. 21. The Learned Counsel for the 2nd Respondent points out that the 2nd Respondent, had executed the said 'Going Concern Purchase Agreement', for the takeover dated 27.01.2023, and took over the 'Corporate Debtor' officially, on 30.01.2023, etc. 22. The prime stance of the 2nd Respondent is that, the 'Appellant', is not a 'Stakeholder', in the 'Liquidation Process' of the 'Corporate Debtor', and has 'no vested interest' in the 'Corporate Debtor'. Also that, the 'Payment Consideration' of Rs.44,64,00,000/-, was satisfied and in fact, the 'Consideration', which was 'remitted', was dispersed, in accordance with Section 53 of the I & B Code, 2016, and hence, IA No. 125 of 2023, is to be 'dismissed', in furtherance of 'substantial cause of justice'. Appeal & Appellate Authority : 23. An 'Appellant' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Members', in their '9th Meeting', dated 30.10.2021 and a 'Secured Creditors' meeting, was conducted by the '1st Respondent / Liquidator', to consider the 'Proposal', as per Section 230 of the Companies Act, 2013. In fact, the 'Petitioner / Appellant', was informed that the 'Proposal Terms', were 'not acceptable', by the 'Stakeholders Consultation Committee' and the 'Secured Creditors'. 31. There is no second opinion of an important fact that the 'Petitioner / Appellant', had filed Comp. App (AT) (INS.) No. 1042 of 2019, before the 'Appellate Authority', and preferred a Civil Appeal No. 2113 of 2020, before the Hon'ble Supreme Court, questioning the 'Order', passed by the 'Adjudicating Authority', dated 26.11.2019, has no 'Locus', to prefer any 'Application', before the 'Adjudicating Authority', and the fact of the matter is that, based on the 'Order' dated 19.01.2023 in IA(IBC)/1018(CHE)/2022 in CP/759/IB/CB/2018, passed by the 'Adjudicating Authority', a 'Sale Agreement', dated 27.01.2023, was executed, between the 'Corporate Debtor' and the '2nd Respondent', in and by which, the whole management, was handed over to the '2nd Respondent', and one cannot brush aside a prime fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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