TaxTMI 
TaxTMI 
2022 (11) TMI 757
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....ndent : Mr. Saurav Panda, Ms. Charu Bansal and Ms. Prabhu Simren, Advocates for R1& 6 Mr. Debmalya Ganguli, Adv. for R2 JUDGMENT Per : Justice Rakesh Kumar Jain: This appeal is filed by four Appellant, namely, Manoj Kumar Umashankar Saraf, Rohit Saraf, Ram Kishan Saraf & Vinod Saraf, being aggrieved against the order dated 28.03.2022, passed by the Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) by which an application bearing CA No. 09/CTB/2020 in T.P. No. 42/CTB/2019 [CP(IB) No. 251/KB/2017] filed by Bhuvan Madan (Resolution Professional) under Section 28 r/w Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') has been allowed with a direction to Rohit Saraf to pay a sum of Rs. 46,85,....
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....the CoC in the 28th meeting held on 16.10.2019 that certain payments have been made to the related parties which have not been approved by the CoC. It is alleged that the transactions were put before the CoC in the 28th meeting held on 16.11.2019 for their consideration/approval and ratification. The CoC approved few transactions in the 28th meeting of CoC. Subsequently, certain payments have been rejected in the previous meeting of CoC again put for vote in the 29th meeting of CoC held on 30.10.2019 in which various payments were not approved which have been mentioned in the application and are reproduced as under:- "a. Payments of a sum of Rs. 20,40,000/- made to Facor Alloys Lid. towards residential house situated at 191/A, Sain....
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....entioned earlier in this order as void as the same carried out during the CIRP without the requisite ratification by the CoC as required under Section 28(b) of the Code and further to direct the Respondents to reimburse the amount of Rs. 2,30,76,157/- in the proportions as received by them pursuant to related party transaction. The application was contested by the Respondents before the Adjudicating Authority in which two issues stated of have arisen, one about the maintainability of the application and the second about the liability of the Respondent to return the amount so received from erstwhile RP. The Adjudicating Authority decided both the issues in favour of the Applicant/Respondent No. 1 and against the Respondents/Appellants herein....
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....e suspension of the board. It is also submitted that the Adjudicating Authority has not awarded the amount with interest rather it has been observed that if the amount is not paid within a period of one month from the date of passing of the order then the component of interest would apply. It is further submitted that an application has also been filed before the IBBI for taking appropriate action against the erstwhile RP. The sum and substance of the argument of the Respondent is that all the transactions regarding which the directions have been issued by the Adjudicating Authority are inviolation of Section 28 of the Code which categorically provides the mechanism in which the payments have to be made. It is thus submitted that without pr....
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....uch accounts in excess of the amount as may be decided by the committee of creditors in their meeting; (f) undertake any related party transaction; (g) amend any constitutional documents of the corporate debtor; (h) delegate its authority to any other person; (i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their nominees to third parties; (j) make any change in the management of the corporate debtor or its subsidiary; (k) transfer rights or financial debts or operational debts under material contracts otherwise than in the ordinary course of business; (l) make changes in the appointment or terms of contract of such personnel as speci....
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....ub-section 28(1) has to be approved by the CoC by not less than 66% of the voting shares. Section 28(4) says that any action taken under sub-Section 28(1) by the RP without approval of the CoC, in the manner which is required under the Section is void. Section 28(5) says that the CoC shall have the jurisdiction to report the action of the RP under Section 28(4) to the Board for taking necessary action against him. 9. Thus, any action which is sought to be taken by the RP, in terms of Section 28(1)(a to m), is protected by an internal mechanism of the prior approval of the CoC. Meaning thereby, the RP is not the absolute authority to take a decision in respect of the subject mentioned in Section 28(1) (a to m). Section 28(4) clearly provi....