TaxTMI 
TaxTMI 
2019 (3) TMI 826
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....ank Ltd., brought to our notice that after Hon'ble High Court's order for liquidation of the company, this petition was filed under section 10 of the Code, after suppressing the material facts by the Corporate Applicant, without disclosing that the company has been wound up by order of the Hon'ble High Court. The Ld. Counsel appearing on behalf of IDBI bank has drawn our attention towards the order of the Hon'ble High Court, Bombay, dated 25.1.2017 passed in Company Petition No. 7/2015. In the said case Hon'ble High Court passed the following order: "2. Ld. Counsel for the respondent states that the proceedings before AFFIR stand abated. The Respondent Company is already wound up. 3. Given these admitted facts, the Official Liquidator is directed to proceed with the procedure of winding up of the respondent company expeditiously. The Petitioner is at liberty to file affidavit of claim before the Official Liquidator. Official Liquidator's Report is disposed of in the terms above. The company's above petition is also disposed of in the aforesaid terms." 2. On perusal of the above order, it is apparent that liquidation order was passed against the corporate debtor/corporate appli....
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....ainst them u/s. 65 of the I&B Code." 5. In reply to the above notice, Suspended Directors of the Corporate Director, Pratima P Shah has filed affidavit wherein it is stated that- "the applicant has filed a reference with the BIFR and the same was registered as Case No.55 of 2014. The reference was filed in the background of the Company Petition No.289 of 2013 which was admitted and order of winding up was passed by the Hon'ble High Court of Bombay on 27.8.2014. The above reference was preferred by the applicant, i.e. Corporate Debtor company for removal of its sickness and revival pursuant to the law laid down by Hon'ble Supreme Court in the matter of Rishabh Agro Industries Pvt Ltd v. PNB Capital Services Ltd (2000) 5 SCC 515 and Madura Coats Ltd. v. Modi Rubber Ltd &Anr. (2016) 7 SCC 603 and also in Real Value Appliances Ltd. v. Canara Bank (1998) 5 SCC 554. It is further stated that as the winding up order was passed by the Hon'ble High Court and Official Liquidator was appointed to take over the control and management of the Corporate Debtor, the Board of Directors of the Corporate Debtor, pursuant to the law laid down by Hon'ble Supreme Court proceeded to file the reference....
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.... of the Corporate Applicant is not tenable/ weaker and putting responsibility on office of NCLT is also not tenable. 7. The Axis Bank, a Member of CoC, submitted an Affidavit stating that Corporate Debtor has obtained the Admission Order dated 16.6.2017 by suppressing the facts of the revival of winding up proceedings concealing the same from this Tribunal. It is further stated in the affidavit that in the light of suppression of the material facts, the Application of the Corporate Debtor under section 10 of I&B Code be dismissed, as not maintainable. In the CoC meeting dated 17.11.2017 the issue regarding the passing of the winding up order was discussed, and after considering the sequence of the event, the RP decided that the CIRP is valid and continued with the same. It is also stated in the affidavit that Section 11(d) of IB Code, 2016 expressly bars a Corporate Debtor in respect of whom a Liquidation Order has been made from initiating the CIRP. It is further stated in the Affidavit of Axis Bank that the corporate debtor has initiated the insolvency resolution process under the Code with malafide and fraudulent intention and it deserves to be subjected to a penalty under sub-....
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....efore AAIFR. Copy of Hon'ble High court's order dated 15.11.2016 is annexed along with Affidavit as Annexure - F. The Corporate Debtor, during proceeding in CP No. 7/2015, informed the Hon'ble High Court that proceedings before AAIFR by the Corporate Debtor is also abated and the Corporate Debtor is already wound up. Given the said admitted fact, the Hon'ble High Court vide order dated 25.1.2017 was pleased to direct the Official Liquidator to proceed with the procedure of winding up expeditiously. 11. It is further contended by IDBI Bank that Corporate Debtor being fully aware of our proceedings, filed a Company Petition No.1053 of 2017 under section 10 of IB Code, without informing the order of liquidation passed by the Hon'ble High Court. It is further contended by the IDBI Bank that the Financial Creditor vide email dated 16.11.2017 intimated to the Resolution Professional about the winding order of the Hon'ble High Court dated 25.1.2017, whereby Official Liquidator was directed to proceed with the procedure of winding up of the Corporate Debtor. It is further stated that representative of IDBI Bank attended the 2nd CoC meeting dated 17.11.2017, and categorically informed the ....
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....2017 and categorically informed the entire CoC that the Hon'ble High Court vide order dated 27.8.2014 had already liquidated the Corporate Debtor and proceedings under I&B Code is bad in law. It is further stated in the Affidavit that the said discussion was recorded in the minutes of the CoC as agenda item No.10. A copy of the minutes has been annexed as Annexure - "J" with the Affidavit. On perusal of the minutes of CoC, it appears that the Financial Creditor IDBI Bank has informed the CoC about the order dated 25.1.2017 passed by the Hon'ble High Court liquidating the Corporate Debtor. 16. It is further stated that the RP vide email dated 21.11.2017 shared the copy of the minutes of the 2nd CoC meeting with all the members of CoC. It is also stated that IDBI Bank informed the RP that the Corporate Debtor is also barred by Section 11(d), Chp. II of IB Code, 2016 from initiating the CIRP. Copy of the mail communication which was sent to the members of CoC is annexed with the reply of the IDBI Bank as Annexure - K. 17. It is also stated in the Affidavit of IDBI Bank that vide letter dated 21.11.2017 also intimated the office of the Official Liquidator about the conduct of the Cor....
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.... the IB Code, 2016 vide CP No.1053 of 2017 on 29.5.2017 without disclosing that a liquidation order has already been passed by the Hon'ble High Court. Section 11 of the I & B Code provides that: 11. Persons not entitled to make application.- The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely- (a) a corporate debtor undergoing a corporate insolvency resolution process; or (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or (c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under this Chapter; or (d) a corporate debtor in respect of whom a liquidation order has been made. Explanation.- For the purposes of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor. Thus it is clear that Section 11(d) of the IB Code, 2016 expressly prohibits the Corporate Debtor, in respect of whom the liquation order has been passed, to app....
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....p; xxxx Thus it is clear that the law requires disclosure of winding-up petition immediately once the applicant becomes aware of it. 25. It is further important to point out that the provisions of Section 77 of I & B Code 2016 provide that: 77. Punishment for providing false information in application made by corporate debtor.- Where- (a) a corporate debtor provides information in the application under Section 10 which is false in material particulars, knowing it to be false and omits any material fact, knowing it to be material; or (b) any person who knowingly and wilfully authorised or permitted the furnishing of such information under sub-clause (a), such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both. Explanation.- For the purposes of this se....
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....xure - 17." 29. It is pertinent to mention that corporate debtor has not mentioned anything about the order of the Hon'ble High Court, Bombay, dated 25.1.2017 passed in company application no. 7/2015. In the said case Hon'ble High Court passed the following order: "1. Official Liquidator's report not on Board. Taken on Board. 2. Ld. Counsel for the respondent states that the proceedings before AAIFR stand abated. The Respondent Company is already wound up. 3. In view of the admitted facts, the Official Liquidator is directed to proceed with the procedure of winding up of the respondent company expeditiously. The Petitioner is at liberty to file affidavit of claim before the Official Liquidator. Official Liquidator's Report is disposed of in the terms above. The company's above petition is also disposed of in the aforesaid terms. No order as to costs." The question that arises is whether disclosure of order mentioned above of the Hon'ble High Court was material or not for applying U/S 10 of I & B Code for initiation of CIRP. It is important to refer to the order of the Hon'ble High Court dated 1st August 2013 passed in Company Application No 26 /2013 which is as follow....
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....tal Services Ltd. [2000] 25 SCL 461 and Madura Coats Ltd. v. Modi Rubber Ltd. 136 SCL 502 (SC) and also in Real Value Appliances Ltd. v. Canara Bank [1998] 16 SCL 445 (SC). It is further stated that as the winding up order was passed by the Hon'ble High Court and Official Liquidator was appointed to take over the control and management of the Corporate Debtor, the Board of Directors of the Corporate Debtor, pursuant to the law laid down by Hon'ble Supreme Court proceeded to file the reference with BIFR which was duly registered as Case No.55 of 2014. The said reference was rejected by Hon'ble BIFR vide order dated 22.9.2014, and same was challenged by the Corporate Debtor in an appeal before the AAIFR. The said appeal got abated on account of Sick Industries (Special Provision) Repeal Act, 2003, with effect from 1.12.2016. After that, as per Provision 6 of the SICA Repeal Act, the applicant has filed a Petition under Section 10 of IBC within the statutory limit of 180 days. Therefore, the act above of the Corporate Debtor was under the legal remedy and the right which was duly exercised as provided to the Corporate Debtor by the statute (both under the Repeal Act and the IBC). 31.....
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....ot be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely- Xxxx xxxx xxxx (d) a corporate debtor in respect of whom a liquidation order has been made. This section is of limited application and only bars a corporate debtor from initiating a petition under section 10 of the Code in respect of whom a liquidation order has been made. From a reading of this section, it does not follow that until a liquidation order has been made against the corporate debtor, an insolvency petition may be filed under section 7 or Section 9 as ....