TaxTMI 
TaxTMI 
2020 (8) TMI 493
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....orporate Insolvency Resolution Process (in short "CIRP") that the Corporate Debtor/Respondent defaulted of debt in payment of loan advanced by the Appellant. The Adjudicating Authority admitted the Application, however made certain observations. According to the Appellant these observations amount to disparaging unwarranted remarks against the Appellant-Bank. Following are the observations made by the Adjudicating Authority. ... "31. Before we part with this order, this Bench wishes to take a serious note on the conduct of the bank authorities who have granted financial facilities in thousands of crores of rupees on a mere pledge of alleged fake diamonds, as per their own allegations now levelled by the Financial Creditor. It is worth to ponder upon the fact that if the diamonds were fake, the bank authorities must not have been inclined to grant the loan facilities. However, as held in Director of Income Tax V. Bharat Diamond Bourse, Order dated 16.12.2002 [(2003) 1 SCC 741], Para 36 says: "....It is wholly unnatural, because one does not expect hard-nosed businessmen to part with an amount of 70 lacs without even recording an agreement under which it is....
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....authorities but without proper recording of inventories and without obtaining the signatures of the management of the debtor company. All such allegations and many more are definitely to be investigated in-depth. 33. That the above discussion, thus leads to one conclusion that first this Corporate Debtor be put under insolvency proceedings and thereafter simultaneously investigation be carried out so that the interest of all the stakeholders can be watched and protected. The appointed IRP shall communicate this order to all the connected Authorities namely, Enforcement Directorate, Economic Offences Wing, Income Tax Department and Serious Fraud Investigation Office etc. to take due cognizance of this insolvency order for further action." .. 4. Learned Counsel for the Appellant submits that the Adjudicating Authority once it reached a conclusion that there is admission of default by the Corporate Debtor and admitting the Corporate Debtor to CIRP, adverse remarks were blatantly unwarranted and unwanted. It is submitted that the Appellant/Financial Creditor had extended various financial facilities and non- fund based facilities to the tune of Rs. 205.00 Crores fr....
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....fect severely jeopardise the reputation and goodwill of the Appellant Bank. Further the Adjudicating Authority erred in directing the Interim Resolution Professional to communicate the Impugned Order to all the concerned authorities namely, Enforcement Directorate, EOW, Income Tax Department and SFIO to take due cognizance of this Insolvency Order for further action. Learned Counsel relied upon the judgment of the Hon'ble Supreme Court in the matter of "State of Uttar Pradesh Vs. Mohammad Naim" reported in AIR 1964 SC 703. The Hon'ble Supreme Court at paragraph 11 held: "It has been judicially recognised that in the matter of making disparaging remarks against persons or authorities whose conduct comes into consideration before courts of law in cases to be decided by them, it is relevant to consider (a) Whether the party in question had the opportunity of explaining or defending itself, (b) whether there is any evidence on record bearing on that conduct justifying the remarks and (c) whether the remarks were necessary for the decision of the case, as an integral part of it. 5. Hon'ble Supreme Court in the matter of 'Om Prakash Chautala Vs. Kan....
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....05: (2005) 6 SCC 636, thought it appropriate to quash the same on the ground of delay. The conclusion could have been arrived at without making series of comments on the Appellant, who, at the relevant time, was the Chief Minister of the State." 6. The learned Counsel relied upon a judgment of the Hon'ble High Court of Chhattisgarh at Bilaspur in the matter of "Lambodar Patel Vs. State of Chhattisgarh and Ors.' 2016 CrLJ 2814 wherein the Hon'ble High Court held as under: .. "though judge has unrestricted right to express his views in any matter before him but there is corresponding duty in a judge not to make unmerited and underserving remarks specially in case of witnesses or the parties who are not before him affecting their character and reputation unless it is absolutely necessary for just and proper decision of the case and that too after affording an opportunity of explaining or defending that witness or the party as the case may be, judicial decisions must be judicial in nature and it must show judicial respect to the litigant/party, witnesses who come before the court for their cause. It is also well settled that this Court in exercise of inherent or extraordina....
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....e Valuation Report appeared to have valued the stock worth only Rs. 199.51 Crores. The Respondent contended that a comparison of the Valuation Report and the Panchnama/statement reveals huge discrepancy/loss in the stock taken from the Company's premises in terms of quantity, quality and value. 11. The learned Counsel for Respondent relied upon the Judgement of Hon'ble Supreme Court in the matter of "ICICI Bank Vs. Shanti Devi Sharma and Others" reported in (2008) 7 SCC 532 at paragraph 9 held as under: ... "9. Given that the investigation had not been completed, the High Court could have prefaced its observations by stating that the facts were alleged. It did, however, note that '... perusal of the Complaint would reveal that the proximate cause of death ... was on account of humiliation caused by the Bank people..." Reference to the "complaint" implies that its contents contain allegations, not facts. Moreover, the investigation was ongoing. Thus, it should have been understood that the High Court was referring to the alleged facts. That said, the Court could have been more careful to note that the facts that it discussed were alleged. Recognising as such, the Court c....
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....editor, an unsecured Creditor and a Decree holder. 'Debt' has been defined in Section 3(11) means a liability or an obligation in respect of a claim which is due from any person and includes a Financial Debt and Operational Debt. The 'Default' has been defined in Section 3(12) of IBC means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the Debtor or the Corporate Debtor as the case may be. 16. In view of default made by the Respondent-Corporate Debtor, the Appellant filed the Application before the Adjudicating Authority and the Adjudicating Authority admitted the Application and observed that the debt and default is concerned, the Corporate Debtor does not deny the same. Further it is observed that the financial facilities have been duly granted and the amounts have been disbursed. 17. It appears that the learned Adjudicating Authority made certain observations at paragraphs 31,32 & 33 in the impugned order on the basis of the Reply filed by the Corporate Debtor therein. It is not out of place to mention that the Appellant-Bank granted cash credit facility/loan for running business of the Corporate....
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....hs 31,32 & 33 are subject to outcome of the investigation. We are of the view that the Adjudicating Authority expressed its anguish in relation to the alleged averments made in the Reply. However, the general observations made as to what is done when such loans are granted were avoidable. Similarly, the observations made with regard to stock seized in proceeding before Debt Recovery Tribunal at the instance of other Bank ICICI were also avoidable as it was not matter before Adjudicating Authority. In any case, the Investigating Agencies are to act independently and the observations are not have any impact on the Insolvency Resolution Process which is under progress. The Hon'ble Supreme Court in the matter of "State of Uttar Pradesh Vs. Mohd. Naim" (supra) in paragraph - 11 held that ... matter of making disparaging remarks against persons or authorities whose conduct comes into consideration before courts of law in cases to be decided by them, it is relevant to consider (a) Whether the parties in question had the opportunity of explaining or defending itself, (b) whether there is any evidence on record bearing on that conduct justifying the remarks and (c....