TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 402
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..../ Corporate Debtor filed a counter statement opposing the reliefs sought in the Interlocutory Application. They have stated that the applicant company has only two directors namely Palani Shanmugham and Kolappan Ambujam Kalaavathy. The Director Palani Shanmughan (PR Shanmugham) verified and signed the applications and affidavits stating that he is director of the company. However, both the Directors have been disqualified under Section 164(2) of the Companies Act, 2013 w.e.f. 1.11.2016 to 31.10.2020. It is further stated that by fraud the applicant/financial creditor obtained an order from this Tribunal, as the application has been filed by an incompetent person. It is also stated that this Tribunal by order dated 24.9.2020 granted liberty to the applicant to file fresh application, if the Corporate Debtor did not comply with the conditions stipulated in the settlement. Hence, if the applicant is aggrieved, he has to file a fresh application. They have also made so many allegations such as the applicant is not a financial creditor etc. which they have already contended while contesting the IBA. The contention of the respondents is that the applicant is neither a financial creditor ....
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....wenty-five lakhs only) as full and final settlement of the entire claim between the Corporate Debtor M/s Sree Bhadra Parks and Resorts Limited on the terms mentioned in the settlement agreement. When a settlement has been arrived between the parties, it is duty bound by the Corporate Debtor to make good the payments proposed in that settlement. They cannot go back making various allegations including maintainability of the IBA after making default in the payment agreed to between the parties. The contention regarding the application is not maintainable as the order stipulates for filing a fresh application cannot be accepted because merely on technicalities the Corporate Debtor cannot wash away their hands from complying with the conditions stipulated in the final order passed by this Tribunal" and resultantly allowed the Application by restoring the IBA/13/KOB/2020 to file. Moreover, the 'Adjudicating Authority' (National Company Law Tribunal, Kochi Bench) had also directed the listing of IBA/13/KOB/2020 for hearing on 17.2.2021. APPELLANT'S CONTENTIONS : 3. The Learned Counsel for the 'Appellant' submits that the case of the 'Appellant'/'Respondent'/'Corporate Debtor', right f....
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....ed of, by granting liberty to file fresh 'Application' by the Corporate Debtor(Appellant) had not complied with the conditions mentioned in Form -FA. 9. Advancing his arguments, the Learned Counsel for the 'Appellant' proceeds to point out that 'Petitioner/Applicant' in the Company Petition was disqualified with effect from 01.11.2016 till 31.12.2022 and it is the consistent plea of the 'Appellant' that 'Deponent' was not competent to project the said 'Application' that the 'Applicant' is neither a 'Financial Creditor' nor an 'Operational Creditor'. 10. Besides the above, it is projected on the side of the 'Appellant' that since the terms of the agreement were not complied with, the 'Respondent'/'Applicant' filed a Petition under Rule 11 of the National Company Law Tribunal Rules, 2016, wherein a relief was sought to allow the IA No.02/KOB/2021 and to pass an order in restoring and reviving the Application No.IBA /13/KOB/2020 filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 and further prayed for passing an order in directing the 'Corporate Debtor'(Appellant') to comply with the consent terms in the interest of justice. 11. The grievance of the 'Appellant' is that....
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....rms contemplated, revival of the petition including the appointment of 'Insolvency Resolution Professional' in case of 'Default'. 16. Moreover, in the orders referred to by the 'Respondent' they expressly recorded the right to revival of the said 'Petition' unlike the instant case, where 'Liberty' was granted to file fresh 'Application'. 17. APPELLANT'S DECISIONS: (i) The Learned Counsel for the 'Appellant' cites the decision of the Hon'ble High Court of Madras in Mallappa Chettiar and Ors. V.Alagiri Naicker and Ors. reported in AIR 1931 Mad 791, wherein at Paragraph 6, it is observed as under : "Therefore it will be seen that Athappa Chetty v. Ramanatham Chetty MANU/TN/0076/1919 : (1919) 10 L.W. 359 : 37 M.L.J 536 which the judges in Sheikh Muhammad Mararayar v. Rengasami Naidu (1921) 16 L.W. 515 thought was authority for permitting the court to remand when there was a specific provision in Order 41, Rule 27, is authority for precisely the Contrary view. The mistake has crept in by careless head noting. The Judges in Aathappa. Chetty v.Ramanatham Chetty MANU/TN/0076/1919 : (1919) 10 L.W. 359 : 37 M.L.J. 536 said: "Where a power is given expressly, courts should not exercise t....
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....re the Court has failed to draft the decree in accordance with Order 20, rule 15 and Form 21 as stated above. The decisions cited by Mr. Raja Masilamani, learned counsel for the respondents dealt with cases wherein the statutory rights of the parties have not been properly considered by the Court. In such circumstances, it has been held that the decree cannot be amended under Sec. 151 and Sec. 152 C.P.C but the remedy lies only by way of appeal and review petition. As far as the present case is concerned, it I the duty of the court to draft the decree in accordance with Order 20, Rule 15 C.P.C. and Form No. 21 The mistake committed by the Court has to be rectified only under Sections 151 and 152 C.P.C No authority has been cited contra to this proposition stated by me." (iii) The Learned Counsel for the 'Appellant' refers to the decision of the Hon'ble High Court of Madras in SJS Fernandes V V.Ranganayakulu Chetty reported in AIR 1953 Mad 236, wherein at paragraph 6, it is observed as under: "So far as the invocation of the inherent powers of court is concerned, it has been held repeatedly and has now become well settled law that the power to review is not an inherent power of a....
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.... the settlement of Rs. 2,14,00,000/- arrived between the parties is only for this settlement and if the Corporate Debtor fails to pay the said sum on or before 30.11.2020 then M/s Sri Ramani Resorts and Hotel Pvt Ltd shall be at liberty to file fresh application with actual amount vide IBA/13//KOB/2020 i.e. Rs. 4,25,32,016.405/- along with 24% per annum stand due as on date. Based on this above understanding I request your good selves to withdraw application IBA/13/KOB/2020 Thanks and regards" 20. The Learned Counsel for the 'Respondent' brings to the notice of this 'Tribunal that resting on the aforesaid settlement, the 'Appellant' paid a sum of Rupees One Lakh on 26.8.2020 and Rupees Ten Lakhs on 10.9.2020 to the account of the 'Respondent' and based on the 'Settlement', the 'Appellant' filed a 'Recall Application' (under Rule 11 of the National Company Law Tribunal Rules, 2016) to permit them to recall the order dated 25.8.2020 and permit the parties to settle the matter. Besides this, the 'Respondent' file Form FA with liberty to file fresh 'Application', if the aforesaid settlement fails and that the 'Adjudicating Authority' was pleased to pass orders on 24.9.2020 grantin....
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....,00,000/- (vide cheque No.214322 drawn on South Indian Bank Limited, Kanyakumari dated 30.11.2020) and the said cheque bounced as per 'Return Memo' dated 24.12.2020. 25. The Learned Counsel for the 'Respondent' adverts to the order of the 'Adjudicating Authority' dated 28.1.2021 in IA No.02/KOB/2021 in IBA/13/KOB/2020, whereby and whereunder, its among other things, observed as under: ..............."it is the duty bound the Corporate Debtor to make good the payments proposed in that settlement. They cannot go back making various allegation including maintainability of the IBA after making default in the payment agreed to between parties. The contention regarding the application is not maintainable as the Order stipulates for filing a fresh application cannot be accepted because merely on technicalities the Corporate Debtor cannot was away their hands from complying with the conditions stipulated in the final order passed by this Tribunal. Hence the Application IA No.2/KOB/2021 is to be allowed." 26. The Learned Counsel for the 'Respondent' points out that on 25.2.2021, again the 'Appellant' requested the 'Respondent' to present the cheque amounting to 'Rs. 2,14,00,000/- dated ....
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.... is disposed of as withdrawn. The Appellant as well as shareholders, Directors of the Corporate Debtor will be bound by the terms of settlement. In case there is default in the payment in terms of settlement, it will be open for the Operational Creditor to move this Appellate Tribunal for recall of this Order and to revive the CIRP process against the Corporate Debtor. The Operational Creditor may also file Application for initiation of the contempt proceedings against the defaulting Appellant, Directors/Director and Shareholders". (iii) The Learned Counsel for the Respondent points out the judgement of the Hon'ble Supreme Court dated 31.1.2020 in the matter of M/s Ess Investments Pvt.Ltd. Lokhandwala Infrastructure Pvt.Ltd. & Anr. in Civil Appeal No.324 of 2020 wherein it was held that the National Company Law Tribunal can restore a 'Petition' which was dismissed as an 'infructuous one'. (iv) The Learned Counsel for the Respondent places heavy reliance upon the Judgement of the Hon'ble Supreme Court in Swiss Ribbons Pvt.Ltd. V Union of India reported in Manu/SC/0079 of 2019, wherein it was held that the National Company Law Tribunal Rules, 2016, can be invoked by the 'Tribunal....
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....chase of 100% shares of the 'Appellant' for a total consideration of Rs. 33,08,00,000/- and that the 'Respondent' paid a sum of Rs. 1,00,00,000/- on 21.11.2012. Further, it was mentioned by the 'Respondent'/ 'Financial Creditor' that at the time of entering into the aforesaid agreement, the 'Appellant'/ 'Corporate Debtor' intimated that the properties and assets were encumbrance free and that on investigation, the 'Respondent'/ 'Financial Creditor' found that there were numerous encumbrances and both parties entered into 'Addendum' on 21.11.2012 itself, wherein the 'Appellant'/ 'Corporate Debtor' instructed the 'Respondent'/ 'Financial Creditor' to pay part of the consideration to its other Creditors directly as mentioned in the Agreement. 34. The 'Respondent'/ 'Financial Creditor' had also averred that other creditors of the 'Appellant'/'Corporate Debtor' had not accepted the 'Settlement' of the 'Appellant' and requested to take any payments from the 'Respondent'/ 'Financial Creditors' on behalf of the 'Appellant'/ Corporate Debtor'. 35. In the application, the 'Respondent'/ 'Financial Creditor' had claimed a sum of Rs. 4,25,32,016.405 along with interest at 24% per annum based ....
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....ore, it was mentioned that the said agreement was executed in a 'white paper' without registering the same and hence it is an invalid one. 41. Continuing further, the 'Appellant'/ 'Respondent'/ 'Corporate Debtor' had also stated in the Counter (before the 'Adjudicating Authority') that the 'Agreement' lacked the common seal of the company and as such the same could not be treated as an agreement executed by the company and further that the said agreement is not a valid document. Apart from that, the stand of the 'Appellant'/ 'Respondent'/Corporate Debtor' is that Section 7 Application filed by the 'Respondent'/ 'Financial Creditor' was filed by an incompetent person. 42. In view of the fact that the 'Share Purchase Agreement' dated 21.11.2012 entered into between the parties had not fructified, the aspect of validity of the said agreement due to non-registration is an otiose one and as such, it is not delved in deep, by this 'Tribunal'. 43. The 'Adjudicating Authority' (National Company Law Tribunal, Kochi Bench, Kerala) on 25.8.2020 came to the conclusion that the present debt arose out of the 'Share Purchase Agreement' dated 21.11.2012 and that the said amount was a 'debt' dis....
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.... Bench, Kerala), because of the settlement arrived at between the parties by filing of Form FA before it had disposed of the IBA/13/KOB/2020, granting liberty to the 'Respondent' / 'Financial Creditor'/ 'Applicant' to file fresh application, if the 'Appellant'/ 'Corporate Debtor' complied with the conditions mentioned in the settlement in Form -FA. 48. The 'Respondent'/ 'Financial Creditor'/ 'Applicant' before the 'Adjudicating Authority' had filed IA No.02/KOB/2021 in IBA/13/KOB/2020 (under Rule 11 of National Company Law Tribunal Rules, 2016) against the 'Appellant'/ 'Respondent'/ 'Corporate Debtor' seeking an order to restore and revive Application No.IBA/13/KOB/2020 (filed under Section 7 of the Insolvency & Bankruptcy Code, 2016) and to pass an order in directing the 'Appellant'/ 'Corporate Debtor' to comply with the consent terms and the 'Adjudicating Authority' after observing that when a settlement was arrived at between the parties, it is duty bound by the 'Appellant'/ 'Corporate Debtor' to make good the payments proposed in the settlement etc. and ultimately allowed IA No.02/KOB/2021 and ordered the restoration of the main application in IBA/13/KOB/2020 to its file. 49.....
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.... Court of Madras on 15.12.2020 in Writ Petition No. 18641 of 2020 and therefore, the contra plea taken on behalf of the 'Appellant' is unworthy of acceptance. 53. It is relevantly pointed out that as per amendment made by Companies (Amendment) Act, 2019, (w.e.f. 2.11.2018) a new clause (i) has been inserted in sub-section (1) as per which a person shall be subject to disqualification if he accepts Directorship exceeding maximum number of Directorship provided in Section 165 of the Companies Act, 2013. REVIEW: 54. In Law, a 'Review Petition' has a limited role and cannot be allowed to act as an 'Appeal' in disguise. Only a manifest error would be a ground for 'Review'. I & B (APPLICATION TO ADJUDICATING AUTHORITY) RULES, 2016: 55. Dealing with the aspect of the Appellant's contentions that as per Rule 10 etc., of the Insolvency & Bankruptcy (Application to 'Adjudicating Authority) Rules, 2016, under the caption 'Filing' of application and application fee' that, "till such time the Rules of Procedure for conduct of proceedings under the Code are notified, the application made under Sub-Section (1) of Section 7, Sub-Section (1) of Section 9 or Section (1) of Section 10 of the Cod....