2022 (6) TMI 866 - DSC - Insolvency and Bankruptcy

Dwarka Court summons five accused for defrauding creditors & violating Insolvency Code

IBBI Versus Piyush Tiwari & Ors.

The District Court in Dwarka took cognizance of offenses alleged against five accused individuals for non-cooperation with the Resolution Professional, ... CIRP - Prosecution proceedings - Failure to provide all the requisite information to the RP - violation of provisions contained in Sections 70, 73 (b) and 19(1) r/w Section 235A of I&B Code - HELD THAT:- IBBI has powers to set the criminal law in motion through its authorized officer. In view of Section 236(1) thereof, the offences punishable under the said Code, are triable by the Special Courts so constituted under Chapter XXVIII of the Companies Act, 2013. The complainant has placed on record notification number S.O. 2554(E) dated 27.07.2016, whereby this Court has been conferred with the jurisdiction to try the offences in the capacity of Special Court so constituted in terms of Section 435(1)(a) of the Companies Act, 2013. After considering the documentary evidence placed on record, this Court is satisfied that prima facie the aforesaid offences under the Insolvency & Bankruptcy Code, 2016 have been committed by the accused person. Thus, cognizance of said offences is taken - Since the present complaint has been made by a public servant in his official capacity, the pre-summoning evidence is required to be dispensed with in view of proviso to Section 200 CrPC. List on 07.07.2022. Issues involved: Allegations of non-cooperation with Resolution Professional, failure to provide essential financial information, defrauding creditors, violation of Insolvency and Bankruptcy Code provisions.Detailed Analysis:1. Allegations of Non-cooperation with Resolution Professional:The case was filed by the Insolvency & Bankruptcy Board of India (IBBI) against five accused individuals, including directors and majority shareholders of a Corporate Debtor. The accused persons were alleged to have willfully not cooperated with the Resolution Professional (RP) by failing to provide crucial information such as books of accounts, financial statements, and related party transaction details despite repeated requests. The accused persons were accused of concealing material facts and assets from the RP, thereby hindering the Corporate Insolvency Resolution Process.2. Defrauding Creditors and Concealment of Material Facts:The accused individuals were further alleged to have defrauded creditors of the Corporate Debtor by concealing material facts and documents from the Resolution Professional. The RP took control of a property being developed by the Corporate Debtor, which was later found to have its lease canceled due to non-payment of dues. Despite the cancellation, the accused persons allegedly continued to collect money from homebuyers without informing them of the lease status, thus defrauding innocent buyers.3. Violation of Insolvency and Bankruptcy Code Provisions:The complaint alleged that the accused persons had violated specific provisions of the Insolvency and Bankruptcy Code, 2016, including Sections 70, 73 (b), and 19(1) read with Section 235A. Based on these allegations and the evidence presented, the Court found prima facie evidence of the offenses being committed by the accused individuals and took cognizance of the offenses.4. Jurisdiction and Summoning of Accused Persons:The complaint was made by a public servant authorized by IBBI, and in accordance with Section 236(2) of the Code, the complainant had the power to initiate criminal proceedings. The Court, having jurisdiction as a Special Court under the Companies Act, 2013, found merit in the complaint and summoned all five accused persons to face prosecution for the alleged violations of the Insolvency and Bankruptcy Code provisions. The Court dispensed with the pre-summoning evidence requirement due to the nature of the complaint being made by a public servant.In conclusion, the District Court in Dwarka took cognizance of the offenses alleged against the accused persons based on their non-cooperation with the Resolution Professional, defrauding creditors, and violating provisions of the Insolvency and Bankruptcy Code. The accused individuals were summoned to appear before the Court for prosecution, and the case was scheduled for further proceedings on a specified date.