2021 (2) TMI 14 - Tri - Insolvency and Bankruptcy

Tribunal dismisses Company Petition for lack of authorization & malicious intent. Interlocutory Application allowed.

Neesa Agritech and Foods Ltd. Versus Small Industries Development Bank of India

Neesa Agritech and Foods Ltd. Versus Small Industries Development Bank of India - TMI Issues Involved:1. Maintainability of the application under Section 10 of the Insolvency and Bankruptcy Code, 2016.2. Allegations of suppression of facts and incomplete application.3. Authorization to file the application.4. Malicious intent to avoid liabilities and responsibilities.5. Existing recovery proceedings under RDDB Act, 1993 and SARFAESI Act, 2002.6. Objections from financial creditors and other stakeholders.Issue-wise Detailed Analysis:1. Maintainability of the Application:- The Tribunal examined whether the application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 (the Code) was maintainable. It was found that no Board Resolution was passed authorizing Mr. Sanjay Gupta to file the application. The application was filed based on a Special Power of Attorney signed in an Extraordinary General Meeting (EGM), which flouted the norms of the Companies Act, 2013. Therefore, the application was deemed not maintainable for want of proper authorization.2. Allegations of Suppression of Facts and Incomplete Application:- The financial creditors, including SIDBI and Central Bank of India, submitted that the application was incomplete and filed with malicious intention. They pointed out that the applicant had not enclosed necessary documents such as mortgage documents, hypothecation documents, and details of properties mortgaged or charges created. The Tribunal found that the applicant had suppressed information regarding various transactions and properties mortgaged.3. Authorization to File the Application:- The Tribunal noted that the applicant, Mr. Sanjay Gupta, was not a corporate applicant as defined under Section 5(5) of the Code. The applicant was not a director and was disqualified under Section 168 of the Companies Act, 2013. The Tribunal emphasized that the affairs of the company are managed by directors and not by promoters. Since the directors were disqualified, the applicant had no authority to file the application.4. Malicious Intent to Avoid Liabilities and Responsibilities:- The financial creditors argued that the application was filed with the intention to avoid responsibilities and liabilities under the Companies Act, 2013. The Tribunal observed that the applicant had not provided substantial information regarding the properties mortgaged, securities charged, and collateral given for borrowings. The application was found to be filed with malicious intent to stall recovery proceedings pending before the Debts Recovery Tribunal (DRT).5. Existing Recovery Proceedings:- The Tribunal noted that the objectors, including SIDBI and Central Bank of India, had already initiated recovery proceedings under the RDDB Act, 1993, and SARFAESI Act, 2002. The Tribunal found that the instant application was filed to initiate a moratorium and stay the proceedings initiated by the banks. Therefore, the application lacked merit and was dismissed.6. Objections from Financial Creditors and Other Stakeholders:- The objections raised by SIDBI, Central Bank of India, and ICICI Bank Ltd. were considered by the Tribunal. The creditors argued that the application was incomplete, filed with malicious intent, and aimed at stalling legal proceedings. The Tribunal found merit in these objections and concluded that the application deserved to be dismissed.Conclusion:- The Tribunal dismissed the Company Petition CP (IB) No. 423 of 2018 as not maintainable due to lack of proper authorization and malicious intent. The Interlocutory Application No. 76 of 2020 was allowed. No order as to cost was made.