Tribunal sets aside order, dismisses petition with penalty for malicious intent.

The Tribunal allowed both appeals, set aside the order dated 18.04.2022, and dismissed the Company Petition No. IB-11/ND/2022 as having been filed with malicious intent. A penalty of Rs. 25,00,000 was imposed on M/s. Rudra Buildwell Constructions Pvt. Ltd. through its owner, to be paid within one month. Consequently, the order dated 25.07.2022 was also set aside.

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Issues Involved:
1. Fraudulent initiation of insolvency proceedings.
2. Validity of invoices supporting the insolvency application.
3. Compliance with Section 10A of the Insolvency and Bankruptcy Code (IBC).
4. Legitimacy of the order directing the handover of the project to the Interim Resolution Professional (IRP).

Detailed Analysis:

1. Fraudulent Initiation of Insolvency Proceedings:
The Appellant contended that the insolvency proceedings were fraudulently initiated by the Operational Creditor in collusion with the Corporate Debtor. It was argued that both entities were controlled by the same person, Shri Raj Kumar, and the initiation of the Corporate Insolvency Resolution Process (CIRP) was intended to defeat the rights of the Appellant. The Tribunal noted that the Operational Creditor, M/s. Rudra Buildwell Constructions Pvt. Ltd., and the Corporate Debtor, M/s PSA IMPEX Private Limited, were indeed controlled by Shri Raj Kumar. The Tribunal found that the Section 9 Application filed by the Operational Creditor was not for the purpose of insolvency resolution but to frustrate the implementation of orders passed by the Real Estate Regulatory Authority (RERA) and to take back the Project from the Appellant.

2. Validity of Invoices Supporting the Insolvency Application:
The Tribunal observed that the invoices submitted by the Operational Creditor were proforma invoices prepared on a single day, 31.03.2020, and did not contain GST numbers or amounts. It was noted that the Central GST Act, 2017, and the Rules framed under it require tax invoices to be issued within a period of 30 days from the supply of service and to mention GST numbers and amounts. The Tribunal concluded that the invoices were prepared for the purpose of the case and were not in the ordinary course of business. Additionally, the ledger entries maintained by the Operational Creditor were found to be haphazard and not in the normal course of business.

3. Compliance with Section 10A of the Insolvency and Bankruptcy Code (IBC):
The Appellant argued that the Section 9 Application was barred by Section 10A of the IBC, which prohibits the initiation of CIRP for defaults occurring during the COVID-19 pandemic. The Tribunal noted that the date of default mentioned in the Section 9 Application was 31.03.2020, which falls within the period covered by Section 10A. The Operational Creditor had previously withdrawn an application on the same grounds. The Tribunal rejected the Adjudicating Authority's reasoning that an acknowledgment of debt on 03.06.2021 changed the date of default. The Tribunal held that the date of default and the acknowledgment of debt are separate events and the application was indeed barred by Section 10A.

4. Legitimacy of the Order Directing the Handover of the Project to the IRP:
The Appellant challenged the order dated 25.07.2022, which directed the Appellant to hand over the project to the IRP. The Tribunal found that the initiation of CIRP was vitiated in law, and therefore, all subsequent orders, including the order dated 25.07.2022, were unsustainable. The Tribunal did not find it necessary to consider additional submissions challenging the order dated 25.07.2022, given that the initiation of CIRP itself was fraudulent.

Conclusion:
The Tribunal allowed both appeals, set aside the order dated 18.04.2022, and dismissed the Company Petition No. IB-11/ND/2022 as having been filed with malicious intent. A penalty of Rs. 25,00,000 was imposed on M/s. Rudra Buildwell Constructions Pvt. Ltd. through its owner Shri Raj Kumar, to be paid within one month. Consequently, the order dated 25.07.2022 was also set aside.

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