TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 1279
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to undergo the Corporate Insolvency Resolution Process vide order dated 15th January, 2018 in the CP(IB) No. 695/KB/2017. The order of admission was under challenge before the Hon'ble Appellate Tribunal in Company Appeal No. (AP) (Insolvency) No. 65 of 2018. That appeal was dismissed. This CIRP was initiated firstly by the resolution professional Mr. Rajesh Kumar Kejriwal and thereafter he was replaced by one another Resolution Professional Mr. Jitendra Lohia. While CIRP was in progress the Resolution Professional Mr. Rajesh Kumar Kejriwal has filed an application CA (IB) 430/KB of 2018 under Section 74 of the Insolvency Bankruptcy Code alleging that the suspended Board of Directors of Corporate Debtor had made illegal transaction in violation of the moratorium declared under Section 14 of the Tribunal. Pending consideration of CA (IB) 430/KB of 2018 filed by Mr. Rajesh Kumar Kejriwal, the Committee of Creditors had filed an application CA (IB)605/KB of 2018; praying for issuing direction to the suspended Board of Directors for recalling the funds diverted by the directors during the period of moratorium. An interim order was passed in the above referred application directing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orporate debtor. 7. The applicant further states that after passing of the impugned order of admission in respect of the alleged corporate debtor. The applicant also preferred an appeal against the impugned order of admission dated January 15, 2018 before the Hon'ble National Company Law Appellate Tribunal. The alleged corporate debtor is a Non Banking Financial Institution and that it has obtained a certificate of registration from the Reserve Bank of India under Section 45A of the Reserve Bank of India Act, 1934 to carry on the business of a Non-Banking Financial Institution without accepting public deposits. 8. Upon the said contention the applicant prays for recalling the order of admission by holding that the order of admission dated 15.01.2018 as non-est, null and void ab initio and to dismiss the CP (IB) No. 695/KB/2017 as not maintainable against the alleged corporate debtor. 9. Other than the Resolution Professional and Committee of Creditors, nobody else come forward to challenge this application. 10. The Ld. RP, as well as the COC, opposed this Application and the RP has filed reply affidavit objecting to this Application, contending that the Application is not m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Applicant has filed a rejoinder reiterating the contentions raised in the Application and further would allege that the Corporate Debtor is an NBFC and that the issue whether the Corporate Debtor is an NBFC was not heard or adjudicated upon by the Tribunal or by the Hon'ble Appellate Tribunal and therefore, an Application filed, is perfectly maintainable and that the Tribunal has erroneously passed the impugned order of admission without making any judicial inquiry as to the applicability of the said Code with regard to the alleged Corporate Debtor, herein. The Corporate Debtor does not come within the scope and/or definition of "Corporate Person". The Hon'ble Appellate Tribunal has also failed to check as to the applicability of the said code with respect to the alleged Corporate Debtor and as the Order of this Tribunal dated 15-01-2018, is itself a nullity and hence, an Application of this nature is perfectly maintainable. No CIRP cannot be initiated against the alleged Corporate Debtor and as such, all orders passed in respect of alleged Corporate Debtor are non est in the eyes of law and are nullity and should be declared as such. The Applicant prays for allowing this A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs. State of Kerala and Another (2000) 6 SC Cases 359. Referring to the said judgment, he relied placidium (b) at Page 363. It is good to read placidium (b) as it related to Doctrine of merger and review, which reads as under: "(b) The doctrine of merger and the right of review are concepts which are closely interlinked. If the judgment of the High Court has come up to the Supreme Court by way of a special leave, and special leave is granted and the appeal is disposed of with or without reasons, by affirmance or otherwise, the judgment of the High Court merges with that of the Supreme Court In that event, it is not permissible to move the High Court by review because the judgment of the High Court has merged with the judgment of the Supreme Court. But where the special leave petition is dismissed - there being no merger, the aggrieved party is not deprived of any statutory right of review, if it was available and he can pursue it. It may be that the review court may interfere or it may not interfere depending upon the law and principles applicable to interference in the review." 17. He further would submit that the Hon'ble Supreme Court has held in Swiss Ribbon case that und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ressed for hearing. 20. Therefore, non-consideration of the issue, now raised in this Application, by this Tribunal in the Order dated 15-01-2018, is not at all an error apparent on the face of records or any omission on the side of this Tribunal. The Application was heard at length and decided on merits and after admission, the Order under admission was challenged before the Appellate Tribunal in Company Appeal (AT)(Insolvency) No. 65 of 2018. That Application was dismissed not only because of withdrawal after settlement of the claim as it was not permissible on the date of Order, but in the absence or any other illegality, the Hon'ble Appellate Tribunal has dismissed the Appeal. The order of dismissal reads as follows: "Learned counsel for the Appellant submits that a settlement has been arrived between the Corporate Debtor and the Financial Creditor and thereby requested to set side the impugned order dated 15th January, 2018 passed in CP(IB) No. 695/KB/2017. This is also accepted by Mr. Keith Varghese, learned counsel appearing on behalf of the respondent. However, in view of the fact that the case has already been admitted and under Rule 8 of the Insolvency and Bankrupt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ir alleged violation of the order of the Adjudicating Authority/Tribunal by raising a separate issue which is not required for determination in this appeal in absence of any challenge of order of admission. For the reasons aforesaid, we dismiss both the appeals with liberty to the Adjudicating Authority to initiate Contempt Proceedings against the Appellant-Promoters/Directors etc. for alleged violation and/or to ask for proceeding in terms of Chapter VII of the 'I&B Code', apart from the direction which has already been given. No costs". 23. Upon the above said observations, the Hon'ble Appellate Tribunal has held that the Appellant is liable for punishment under Chapter VII of the Code, particularly, under Section 70/74 etc., they cannot divert the issue of arrangement or their alleged violation of the Order of the Adjudicating Authority/Tribunal by raising a separate issue which is not required for determination in this Appeal in the absence of any challenge to the Order of admission. 24. Both the appeals preferred against the Order of this Tribunal were dismissed without any costs by the Hon'ble Appellate Tribunal. In view of the above said can this adjudica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e or any fraud is committed under the garb of any of the section then such action could be called as vitiated by fraud. In a situation like that, may be, since this Adjudicating Authority has no other provision, it may invoke Section 60(5) of the Code. But, when an action by any of the parties de hors fraud and non compliance of the provisions of the Code cannot be said as an action open to this Adjudicating Authority to exercise jurisdiction u/s 60(5) of the Code. 27. Ld. Sr. Counsel at this juncture has submitted that the Hon'ble Supreme Court has held that under Rule 11, the Tribunal can exercise power of review. When a question was asked whether the Corporate Debtor has taken this very points of NBFC at the very threshold in the reply affidavit, he argued that it has not been referred to be pleaded as point of law. It could be raised at any time and also any point of jurisdiction. To stress his said argument he relied upon Swiss Ribbon Pvt. Ltd. & Anr. Vs. Union of India & Ors. - Writ Petition (Civil) No. 99 of 2019. 28. The Hon'ble Supreme Court in the aforesaid decision interpreting regulation 30A (1) of the CIRP Regulation has observed "Regulation 30A(1) of the CIR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ys from the date of completion of the pleadings, any defect or error in its proceeding before it but if the same relates to determination of the real question or issue raised or depending on such proceeding, as shown below: "155. General power to amend. The Tribunal may, within a period of thirty days from the date of completion of pleadings, and on such terms as to costs or otherwise, as it may think fit, amend any defect or error in any proceeding before it; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceeding." From the aforesaid provisions, it is clear that there is no inherent power to review, as is under Order 47 Rule 11 of the Code of Civil Procedure, 1908 but the Tribunal has power conferred by sub-section (2) of Section 420 of the Act, 2013 to rectify any mistake apparent from the record and to amend the order accordingly The inherent power, as provided under Rule 11, is for making such order for meeting the ends of justice or for preventing abuse of justice, or if necessary for meeting the end of justice or abuse of process of Tribunal. But such power can be exercised during he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led or erred in deciding the maintainability of the application under Section 7 of the Code in respect of the alleged Corporate Debtor. 34. The very same contention seems to have been repeatedly taken by the applicant in the rejoinder filed on 6th August, 2018. The Order of the Hon'ble Appellate Tribunal referred to above, though dismissed the appeal filed by the director of the suspended Board of Corporate Debtor for the reason of a withdrawal application filed being not maintainable and also because of the reason that the appellant has failed to bring to the notice of the Appellant Tribunal as to what prevented the applicant/appellant from raising the issue of maintainability of an application filed before this Tribunal under Section 7 of the Code by a Financial Creditor allegedly against a Corporate Debtor. 35. By filing appeal against the interim order passed by this Bench, the very same contention regarding the maintainability of the order of admission has been challenged by the applicant herein and the Hon'ble Appellate Tribunal discussed at length as to the contention on side of the applicant that the applicant does not fall under the definition of corporate person....