2022 (3) TMI 332 - Tri - Insolvency and Bankruptcy

Court Dismisses Fraud Allegation in Insolvency Process; Applicant's Claims Lack Merit

The court dismissed the application alleging grave fraud by the Resolution Professional in failing to comply with public announcement requirements during ... Publication of public announcement in newspaper where the principal and registered office of the Company is situated - Filing of several applications objecting to the approval of Resolution Plan - whether it is open for the Applicant to file IA making serious allegations with regard to Public Announcement and Publication of Form G, more so at the stage when the Interim Application for approval of Resolution Plan was reserved for orders and in the light of the fact that the applicant has already filed IA filed objecting the approval of the Resolution Plan and the same was also reserved for orders? HELD THAT:- This Application questioned the publication of Public Notice and Form-G by the RP during the CIRP period post admission of CIRP. The Applicant has admitted that the public announcement was made in two publication in Mumbai i.e. Free Press Journal and Navashakti on 22nd April, 2021. This Bench notes that publication or public announcement was carried out in Mumbai and that original copies of regional paper of newspaper was submitted to the Court. The Bench had the privilege of examining the original newspapers published in Prathakal in Hindi of 23rd April, 2021 at Udaipur, which contained the Public Announcement and Prathakal dated 30th May, 2021 which contained the publication of Form G. The said documents were filed by the Respondent-RP as a part of additional documents filed in IA No. 1850 of 2021. It was also pointed out that there are different edition of e-newspaper and physical publication. Further, there is no English paper in publication in Udaipur. This Bench concludes that the allegations put for by the Applicant are untenable and filing of several applications objecting to the approval of Resolution Plan at this stage cannot be entertained. Application dismissed. Issues:- Allegations of grave fraud by the Resolution Professional regarding public announcements and publication of Form G during the Corporate Insolvency Resolution Process (CIRP).- Compliance with Regulation 6 requirements for public announcements and publication of Form G.- Discrepancies in the publication of public announcements in Mumbai and Udaipur.- Respondent's contention of unclean hands by the Applicant and subsequent events post-admission of CIRP.- Examination of documents and publications submitted by both parties.- Allegations of non-compliance and breach of regulations.- Request for action against the Resolution Professional and involvement of IBBI.- Denial and counter-arguments by the Applicant regarding the Respondent's submissions.- Examination of the legal principles and natural justice in considering the Applicant's allegations.- Conclusion on the validity of the Applicant's claims and dismissal of the application.Analysis:The Applicant filed an application alleging grave fraud by the Resolution Professional in failing to comply with the requirements of public announcements and publication of Form G during the CIRP. The Applicant highlighted discrepancies in the publication of public announcements in Mumbai and Udaipur, pointing out that the RP had not followed the mandated regulations for publication. The Applicant sought action against the RP and involvement of IBBI due to the alleged breach of regulations.In response, the Respondent argued that the Applicant had come with unclean hands and had initially presented a false case. The Respondent provided evidence of publication of public announcements in Mumbai and Udaipur, refuting the Applicant's claims of non-compliance. The Respondent emphasized that the allegations made by the Applicant were baseless and that genuine home buyers had not raised any objections to the publication.The Bench examined the documents and publications submitted by both parties, noting the discrepancies between e-newspaper editions and physical publications. The Bench concluded that the Applicant's allegations were untenable and that multiple applications objecting to the approval of the Resolution Plan at that stage could not be entertained. The Bench dismissed the application, finding that the publication requirements had been met and the Applicant's claims lacked merit.Overall, the judgment focused on the compliance with regulatory requirements for public announcements and publication of Form G during the CIRP, addressing the allegations of fraud and non-compliance raised by the Applicant and the Respondent's defense against these claims. The decision was based on a thorough examination of the evidence presented by both parties and a conclusion that the Applicant's allegations were not substantiated.