AI Drafter 
TaxTMI 
TaxTMI 
2020 (4) TMI 420
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....ng evidence for the same was shown to us during the multiple hearings in the case. In their reply, Respondent 1,2 and 3 have countered these allegations and filed documents in support of their stand. Respondent 4, being the Operational Creditor on whose application the CIRP was initiated, has also filed reply countering the allegations made by the RP in the instant application. It is also seen that there have been two unsavory incidents at the premises of the CD namely fire at the factory premises on 12.2.2018 and subsequent attack on the security guard at the office of the CD on 15.03.2018." 8.2.2 Voluminous documents and voucher have been filed by the parties in support of their contentions. The proceedings before this Tribunal are summary in nature and it is not possible for us to conduct an indepth investigation and examine the veracity of these documents and averments. Without an in-depth investigation, it is not possible to arrive at a correct appraisal of the State of Affairs of the Corporate Debtor and to adjudicate upon the allegations made by the RP. Accordingly, we take recourse to 3 provisions of Section 210 (2) of the Companies Act, 2013 which read as follows:....
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....2013 which means the ('National Company Law Tribunal') constituted as per Section 408 of the Companies At, 2013 and further that the jurisdiction exercised by the 'National Company Law Tribunal' in terms of Section 408 of the Companies Act, is distinct from the jurisdiction exercised by the 'National Company Law Tribunal' as the Adjudicating Authority as per Section 5(1) of the 'I&B' Code. 7. The Learned Counsel for the Appellants takes a clear cut stand that the 'National Company Law Tribunal' while acting as the Adjudicating Authority under Part-II of 'I&B' exercises limited jurisdiction and cannot be read as 'Tribunal' entitled to exercise jurisdiction in terms of Section 210(2) of the Companies Act, 2013. In fact, the contention of the Learned Counsel for the Appellants is that the Adjudicating Authority ('National Company Law Tribunal') New Delhi Bench-II had exceeded its jurisdiction by passing an order as per Section 210(2) of the Companies Act, 2013. 8. The Learned Counsel for the Appellants refers to the judgment of this Tribunal in Company Appeal (AT)(Insol.) No. 574 of 2019 in the matte of Mr. Lagadapati Ramesh Vs. Mrs. Ramanathan Bhuvaneshwari, dated 20.09.2019 wh....
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....ts that the impugned order passed by the Adjudicating Authority is not only an unreasoned one but also the same being passed in an arbitrary and whimsical fashion. 13. Lastly, it is the submission of the Learned Counsel for the Appellant that the 'Corporate Debtor' is undergoing 'Liquidation' as on date and thus an investigation as per Section 210 of the Companies Act, 2013 is not feasible as on date and shall result in an unending process. Moreover, the proposed investigation u/s 210 of the Companies Act, 2013 shall be in the nature of a fishing and roving inquiry which has no basis and the same is liable to be struck down by this Tribunal, in the interest of justice. 14. Repelling the contention of the Appellants, the Learned Counsel for the Respondent submits that it is not correct on the part of Appellants to contend that the Appellate Authority has no jurisdiction in directing the Central Government to conduct an investigation into the affairs of the 'Corporate Debtor' as per Section 210(2) of the Companies Act, 2013 and this plea is not tenable one because of the reason that Section 210(2) of the Companies Act, 2013 clearly 8 mandates the Central Government to order an ....
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....uld not have the jurisdiction to pass order under Section 210(2) of the Companies Act. 18. The Learned Counsel for the Respondent submits that just because the additional power of Adjudicating Authority has been vested, the powers of the NCLT under the Companies Act, 2013 do not stand extinguished. Also that in the present case, the Adjudicating Authority had invoked the power u/s 210(2) of the Companies Act which is much wider in scope and does not entail the following specific conditions specified u/s 2013 of the Act. 19. It is represented on the side of the Appellant that a company in liquidation continues to retain its corporate existence and as such it can among other things, sue and be sued in its name, till it is dissolved in accordance with law. 20. At this juncture, the Learned Counsel for Respondent brings to the notice 10 of this Tribunal that in the instant case, no order of dissolution has been passed in respect of the 'Corporate Debtor' so far and further that, the numerous fraudulent/wrongful action and mentioned in the 'Application' filed by the Respondent related to the period prior to the 'Corporate Insolvency Resolution Process' of the &#....
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....he erstwhile management of the 'Corporate Debtor'. Apart from that, the Applicant/Respondent had grounds to believe that CIRP of the 'Corporate Debtor' was initiated fraudulently and/or with malicious intent for a purpose other than for 'Resolution of Insolvency' or Liquidation of Corporate Debtor. Before the Adjudicating Authority the Applicant/Resolution Professional in the application had averred that directions (in suspension) of the Corporate Debtor had not deliberately disclosed the affairs of the 'Corporate Debtor' from time to time to the Applicant / Resolution Professional and indulged in falsification and determination of Books and 12 Records of the 'Corporate Debtor' and made wilful and material omissions relating to its affairs and further defrauded its creditors. In reality, the Applicant/Resolution Professional filed the application before the Adjudicating Authority in terms of Sections 60(5), 66, 67, 70, 71, 72, 73 and 235A of the I&B Code and sought the undermentioned reliefs which run as under:- "a. allow the present application under Sections 60(5), 65, 66 and 67 of the Insolvency and Bankruptcy Code, 2016; b. grant leave to the A....
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....ere made in the Auditor's report. But in the financial year 2013-2014 several qualifications were made in respect of receivables mentioning that there were no supporting documents for the same and in fact more that Rs. 187 crores was shown as Receivable outstanding for more than six months. Also that, the Resolution Professional/Applicant suspected that the records pertaining to fake Debtors were fabricated by the suspended Directors after the Applicant commenced for investigation in respect of the same. 28. According to the Resolution Professional/Applicant the fire incident on the ground floor of the office of the Corporate Debtor at Rohini on 12.2.18 was the handy work of the suspended Directors with a view to evade investigation and prosecution in respect of their actions. In regard to the Fire incident a complaint was lodged in FIR No. 0138/2018, registered by the police authorities u/s 435 and 452 of Indian Penal Code and according to the First Information Report the window of the Office was unbroken by removing the 'Grill'. 29. The Resolution Professional/Applicant recovered from the Corporate Office of the Corporate Debtor a 'show cause notice' of the Office of th....
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.... towards any of its members etc., (which is also the allegation made by the 'Resolution Professional'), in such case, the Tribunal after giving a "reasonable opportunity" of being heard to the parties concerned, that the affairs of the company ought to be investigated by an 'Inspector' or 'Inspectors' appointed by the Central Government and where such an order is passed, in such case, the Central Government is bound to appoint one or more competent persons as Inspectors to investigate into the affairs of the company in respect of such matters and to report 17 thereupon to it in such manner as the Central Government may direct. 35. If after investigation it is proved that (i) the business of the company is being conducted with intent to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose, or that the company was formed for any fraudulent or unlawful purpose; or (ii) any person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, then, every officer of the company who is in default and the person or persons concerned in the formation of the company or th....
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....g Authority have also been empowered to regulate their own procedure. 40. In view of the aforesaid position of law also, the procedure laid down under Section 213 of the Companies Act, 2013 can be exercised by the Tribunal/ Adjudicating Authority, as held above. 41. Further, after the investigation by the Inspector, if case is made out and the Central Government feels that the matter also requires investigation by the 'Serious Fraud Investigation Office' under Section 212 of the Companies Act, 2013, it is open to the Central Government to decide whether in such case the matter may be referred to the 'Serious Fraud Investigation Office' or not. This will depend on the gravity of charges as may be found during the investigation by the Inspector. 42. In view of the aforesaid position of law, we are of the view that the Adjudicating Authority was not competent to straight away direct any investigation to be conducted by the 'Serious Fraud Investigation Office'. However, the Adjudicating Authority (Tribunal) being 20 competent to pass order under Section 213 of the Companies Act, 2013, it was always open to the Adjudicating Authority/Tribunal to give ....
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....t Court' and Section 29(iii) deals with the Court of Session, Section 29(iv) pertains to the Special Court constituted u/s 435 and Section 29(5) is concerned with any Metropolitan Magistrate or Judicial Magistrate of the 1st Class. 33. Likewise, the term Tribunal is defined u/s 2(90) of the Companies Act which means the NCLT constituted under Section 408 of the Companies Act, 2013. 34. It is significant to point out that a court of Law exercises judicial power in discharging judicial function and finally arrive at a conclusion. A 'Tribunal' is similar to a 'Court' but it is not a 'Court'. In short, the 'Court' means a 'Court' 22 of civil judicature and the and the 'Tribunal' means body of men appointed to decided the disputes /controversies (of course judicial power of the state being conferred in it. The procedure of a 'Court of Law' and 'Tribunal' will differ but they function in their own field. However, a 'court of Law' and the 'Tribunal' act judicially in both senses. To put it lucidly, a Tribunal does not have the trappings of a 'court'. 35. An Administrator is to exercise a prudent skill and care in dealing with property affairs, duly entrusted to him. Further, the ....
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....ons the order that may be passed by Adjudicating Authority ('National Company Law Tribunal') on an application filed by the 'Resolution Professional' or Liquidator in a Section 43 proceedings. Section 46 relates to the relevant period for avoidable transactions. As per 24 Section 66 of the I&B Code the 'Resolution Professional' is empowered to institute proceedings in 'fraudulent/wrongful trading' before the 'Adjudicating Authority' and the said authority is to pass necessary orders. As an Adjudicating Authority ('National Company Law Tribunal') a punishment of imprisonment cannot be imposed by it, except to pass orders u/s 66 of the 'I&B' Code. Section 71 of the Code deals with punishment for falsification of books of 'Corporate Debtor' and Section 72 of the Code speaks of punishment for wilful and material omission committed by the Officer of the 'Corporate Debtor' in statements relating to its affairs. Section 73 is concerned with the punishment of fraud and false representations to the Creditors subject to the proof of the same. 41. As per Section 210(c) of the Companies Act, 2013, the Central Government without resorting to an 'investigation' can order for an appropriate....
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....ned u/s 213 of the Companies Act, 2013. In case an exfacie/prima facie case is made out, then, the Tribunal is empowered to refer the matter to the Central Government for an investigation by the Inspectors and upon such investigation, if any action is required to be taken and if the Central Government subjectively opines that the subject matter in issue needs an investigation, through the Serious Fraud Investigation Office, it may proceed in accordance with Law. Suffice it for this court to make a relevant mention that the Tribunal/Adjudicating Authority on receipt of an application/complaint of breach of the relevant provisions of the IBC, 2016 and the Companies Act and after satisfying itself that there are attendant circumstances pointing out fraudulent/wrongful trading etc. was / which has been committed then, it is well within jurisdiction to refer the matter to Central Government for an investigation by Inspector(s) to be appointed by the Central Government. If an investigating authority after completion of investigation comes to a conclusion that any offence punishable in terms of Section 213 read with 447 of Companies Act or under Section 68,69,70,71,72,73 of the IBC Cod....