TaxTMI 
TaxTMI 
2020 (10) TMI 1071
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....ional Company Law Tribunal, Ahmedabad in CP (IB) No.161 of 2017 and IA No.300 of 2018 in CP (IB) No.161 of 2017. c. ex-parte ad-interim / interim reliefs in terms of paragraph 105(b) hereinabove; and/or d. any other order(s) that this Hon'ble Court deems fit." 2. The case of the petitioner is that the petitioner is the Promoter, Share Holder and suspended Board of Director of Corporate Debtor. The respondent No.1 is now the Corporate Debtor represented through the Resolution Professional (RP) being Mr.Krishna Chamadia, whereas the respondent No.2 is the manufacturer of BMW vehicles, who had given dealership of BMW Vehicles to the Corporate Debtor in the territory of State of Gujarat from the year 2007 to 2017 and was party respondent in IA No.300 of 2018 (Section 65 Application) filed by CD citing fraudulent / malicious petition. Whereas the respondent No.3 is a group Company of respondent No.2 that had filed the Insolvency Petition being CP (IB) No.161 of 2017 against the Corporate Debtor (CD), whereas the respondent No.4 is the Interim Resolution Professional (IRP) that came to be appointed as IRP of the CD vide impugned order and thereafter, replaced by the said ....
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....ize being large amount of revenue in question. As a result of this, the CD raised a grievance before the respondent No.2. In the wake of territory infringement as stated above, there was exchange of correspondence between CD and respondent No.2 during the year 2014-15 in which according to the CD, vide E-mail dated 21.8.2015 the respondent No.2 has admitted that the count of all such BMW vehicles sold by dealers outside Gujarat to the customers based in Gujarat, would be given to CD and as such, an assurance was given to take care of the financial crunch of the CD. According to the petitioner, approximately 600 cars for 4 years i.e. from 2014 to 2017, were sold from outside Gujarat to the customers based in Gujarat which has caused an average ticket size of Rs. 45 lakhs amount to revenue approximately Rs. 70 crores each year on conservative side. The petitioner has come out with a case that respondent No.2 did not respond to these details till date. Hence, there is a deemed admission. Since the respondent No.2 was profiting out of this kind of sale from outside territory, did not take up the issue seriously and all the time with a dishonest and fraudulent intention the respondent N....
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....f the CD and CD can be salvaged by filing of a resolution plan by any resolution CD. The CD had no other business other than this dealership of sale of BMW vehicles which was well within the knowledge of both the respondent Nos.2 and respondent No.3 and this move has taken place against CD on account of the further fact that respondent No.2 had issued letter on 7.12.2017 informing CD that it had no intention of renewing dealership agreement and as such, the respondents knew that there was not going to be any resolution plan in place because there was not going to be any dealership agreement subsisting making the present Insolvency Petition malicious and fraudulent in nature. According to the petitioner, BMW group not only did not renew the dealership agreement for the year 2018 at the last minutes but, then filed present petition which could not be for the purpose of resolving the debts because without dealership agreement, since CD has no business. In this eventuality, it seems that CD moved an application raising all these contentions against respondent No.2 and respondent No.3 which was registered as IA No.300 of 2018 along with copies of reply and other sets of documents. Prior....
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....rmingled with the dispute with the BMW group. On 2.7.2020, the advocate of the suspended management who earlier represented the Corporate Debtor before the Delhi High Court, received e- mail from advocate hired by Interim Resolution Professional, and informed that they would appear for Interim Resolution Professional, old advocates could appear for the Corporate Debtor for the hearing dated 30.7.2020 and further appearances would be subject to the instructions of the Interim Resolution Professional. 2.4 According to the petitioner, in July, 2020, when the matter was called out before the Delhi High Court being the arbitration petition seeking appointment of arbitrator, the advocates appearing for the Interim Resolution Professional made a statement before the High Court that after reviewing the relevant information in the present matter, it was the Interim Resolution Professional that would decide whether to pursue the present petition further or not and according to the petitioner, this statement goes to show that Interim Resolution Professional was, in fact, acting at the behest of the BMW group, to whom the Interim Resolution Professional has given 88.57% voting share in the ....
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....eeking arbitration was also set in motion. Shri Navin Pahwa, learned Senior Advocate, has submitted that in that proceedings as well, whether to precipitate any further or not or whether to represent or not, was still not clarified which would indicate that the respondents will govern and control the further process. Shri Navin Pahwa, learned Senior Advocate, has further contended that a serious issue is arising in Section 7 application before the NCLT that if the same is to be processed strictly according to Section 7, then CD will be losing right of prosecution and this right of prosecution either of the CD or present petitioner under the scheme since thwarted, is nothing but, violative of fundamental right conferred under Article 14 of the Constitution of India. Since this issue cannot be gone into by NCLT about infringement of fundamental right of the petitioner, it is only the High Court which is an efficacious remedy. 5.2 Shri Navin Pahwa, learned Senior Advocate, has further submitted that even otherwise, the order of NCLT was bad in view of the fact that it has not considered the defence that corporate debtor which had a counter claim of sizable amount against the petiti....
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....ther the prayers sought for deserve to be granted or not, the scheme of the special Statute will have to be looked into by the Court. This Insolvency and Bankruptcy Code, 2016 is the Act to consolidate and amend laws relating to re- organization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such person, who promote entrepreneurship, availability of credit and balance, the interest of stake holders including alteration in the order of priority of payment of Government dues and to establish an insolvency and bankruptcy board of India and for matters connected therewith and incidental thereto. One of the important objectives of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up insolvency process and this has necessitated in view of the circumstance that as per the data available with the World Bank in 2016, insolvency resolution in India took 4.3 years on an average, which was much higher when compared with the other countries and the World Bank's Ease of Doing Business Index, 2015, ranked India as country number 135 out of....
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....inancial debt, the adjudicating authority has merely to see the records of information utility or other evidence produced by Financial Creditor to satisfy itself that default has occurred. It is of no matter that the debt is disputed so long as debt is due i.e payable unless interdicted by some law or has not yet become due, in the sense it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject the application and not otherwise. So, reading of Sections 7, 8 and 9 of the Act, it clearly demarcate a difference between two sets of applications. In Section 7 application, a limited summary inquiry appears to have been made by the adjudicating authority unlike Section 8. 9. The Code has further prescribed the procedure that as soon as the application is admitted, moratorium in terms of Section 14 of the Code is to be declared by the adjudicating authority and public announcement is made stating inter-alia the last date of submission of claims and the details of the interim resolution professional, who shall be vested in management of Corporate Debtor and be responsible for receiving cl....
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....x Court has analyzed entire scheme of the Act and it appears to have opined that one of the main objectives of the Code is to bring Insolvency Law in India under the single unified umbrella with the object of speeding up insolvency process and after considering several decisions, in para 20, it has been observed by the Apex Court that the courts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws. The Legislative bodies have broad scope to experiment with economic problems and the Apex Court does not sit to, subject the state to an intolerable supervision hostile to the basic principles of our government and wholly beyond the protection which the general clause of the Fourteenth Amendment was intended to secure. The Court in the said judgment has also dealt with the classification between Financial Creditor and Operational Creditor found neither discriminatory nor arbitrary nor violative of Article 14 of the Constitution of India and has observed as under : "Where there is challenge to the constitutional validity of a law enacted by the legislature, the Court must keep in view that there is always a presu....
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....uthority and be heard by the said authority before an order is made admitting the said application. So far as the counter claim or set off is concerned, a set-off of amounts due from financial creditors is a rarity. Usually, financial debts point only in one way - amounts lent have to be repaid. However, it is not as if a legitimate set-off is not to be considered at all and as such set-off may be considered at the stage of filing of proof of claims during the resolution process by the resolution professional, his decision being subject to challenge before the Adjudicating Authority under Section 60. So, entire mechanism is well examined by the Apex Court and has clearly opined that there is a clear contrast between scheme of Section 7 and Section 8 of the Code. 13. A further relevant fact which is also not possible to be unnoticed is that moment the application of petitioning creditor is admitted and once an insolvency professional is appointed to manage the company, the erstwhile directors, who are no longer is management, cannot maintain the appeal on behalf of the company. This issue was taken up by the Apex Court in a decision of Innoventive Industries Limited v. ICICI Bank....
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....ext of submissions made by Shri Navin Pahwa on behalf of the petitioner. 16. Here, in the instant case, the financial creditor, namely, BMW Indian Financial Services Private Limited has presented the petition being Company Petition (IB) No.161 of 2017, in which a clear opportunity of hearing is given to the petitioner and the corporate debtor, as well. The corporate debtor i.e. CD has filed detailed objection raising multiple contentions. But then this opportunity which has been given to the corporate debtor is examined by the Tribunal and on the basis of material, has arrived at following conclusion which needs to be incorporated hereinafter : "20. Considering the material, papers filed by the Petitioner, facts mentioned hereinabove and the arguments of both sides, this Adjudicating Authority is satisfied that, (a) The Corporate Debtor availed Financial Facilities from the Petitioner. (b) Existence of debt is above Rs. One Lac; (c) Debt is due and defaulted. (d) Default has occurred on various dates starting from 10.04.2016 onwards as per Annexure IV/27 Colly. (e) Petition has been filed on 13.11.2017 i.e. within the limitat....
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..... On the contrary, an attempt is made to mix up contractual obligations between CD and respondent No.2 and respondent No.3 which arise out of distinct and separate agreements and between different identity. 18. A further fact is also not possible to be unnoticed in view of analysis of scheme propounded by the Apex Court in the judgments which are mentioned herein-before that pursuant to this order impugned, the adjudicating authority has already appointed Insolvency Professional in this regard and issued consequential order while admitting the main petition which reads as under : "21. This Adjudicating Authority hereby appoints, as proposed, Mr. Anish Niranjan Nanavaty, having Insolvency Professional Registration No.IBBI/IPA-002/IP- NO0272/2017-18/10830, Email ID:anish.nanavaty.irp @gmail.com, Mobile No. 98201 54620, Address: 2A/208, Raheja Classique, New Link Road, Andheri (W), Mumbai 400 053 Maharashtra, India as Interim-Resolution- Professional. The Interim Resolution-Professional is further directed to make public announcement of moratorium in respect of Corporate Debtor Company soon after receipt of an authenticated copy of this order and to act further as per the ....
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....romoter, shareholder and suspended board of director of corporate debtor and as such, no case is made out to exercise extraordinary jurisdiction. Further, this petition whether entertainable at the instance of petitioner of suspended management is also seriously in doubt and mostly not entertainable. So, in considered opinion of this Court, all the submissions and the issues which have been raised by learned Senior Counsel for the petitioner have been clearly answered by settled proposition of law in the decisions delivered by the Apex Court quoted herein-before and as such, this Court is of the opinion that no case is made out to entertain the petition. The order in question appears to be not perverse; passed on the basis of all relevant material produced before the Tribunal and after extending full opportunity and in due compliance of principles of natural justice and, therefore, no case is made out to exercise the extraordinary jurisdiction. 20. However, disposal of this petition will not deter the CD to pursue any other legal remedy which may be available. This conclusion is also arrived at on the basis of well defined proposition of law laid down by the Apex Court even on t....
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....ction which it does have or the jurisdiction though available is being exercised by the Court in a manner not permitted by law and failure of justice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction. (5) Be it a writ of certiorari or the exercise of supervisory jurisdiction, none is available to correct mere errors of fact or of law unless the following requirements are satisfied: (i) the error is manifest and apparent on the face of the proceedings such as when it is based on clear ignorance or utter disregard of the provisions of law, and (ii) a grave injustice or gross failure of justice has occasioned thereby. (6) A patent error is an error which is self-evident, i.e. which can be perceived or demonstrated without involving into any lengthy or complicated argument or a long-drawn process of reasoning. Where two inferences are reasonably possible and the subordinate court has chosen to take one view, the error cannot be called gross or patent. (7) The power to issue a writ of certiorari and the supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the jud....