TaxTMI 
TaxTMI 
2023 (7) TMI 210
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....re and 99 Ors.-Financial Creditors. The Section 7 Application was filed against the Corporate Debtor-Pancard Clubs Limited. The Appellant before us i.e. Securities and Exchange Board of India (hereinafter referred to as "SEBI") who had filed I.A. No. 1894 of 2019 praying for dismissal of the Company Petition. 2. Brief facts of the case necessary to be noted for deciding this Appeal are:- i. The SEBI received various complaints against Pancard Clubs Limited alleging fraudulent fund mobilisation across the Country. After certain proceedings, the SEBI passed an Order dated 29th February, 2016 in exercise of power under SEBI Act, 1992 directing Pancard Clubs Limited and its directors to refund the amounts collected from investors under an unregistered Collective Investment Schemes along with returns or not to carry out any collective investment schemes. The Pan Card Clubs Limited was further directed to wind up existing collective investment schemes and refund through Bank Demand Draft or pay order, the money collected by the said company under the schemes. It was further directed that in event Pancard Clubs Limited not complied with the directions, SEBI shall initiate attachment an....
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....on and Impleadment. The Adjudicating Authority after hearing the parties by the Impugned Order dated 09.09.2022 admitted Section 7 Application filed by the Respondent Nos. 3 to 102. The Appellant aggrieved by the Order dated 09.09.2022, has come up in this Appeal. 3. We have heard Ms. Surekha Raman, Advocate appearing for the Appellant, Mr. Krishnendu Datta, Sr. Advocate appearing for Respondent Nos. 3 to 102 and Mr. Sumesh Dhawan, Advocate appearing for Respondent No. 1-RP. 4. Learned Counsel for the Appellant challenging the Order passed by the Adjudicating Authority submits that the Appellant has already taken appropriate steps for getting the amount refunded to the investors, properties were attached of the Corporate Debtor and 15 properties have already been auctioned collecting total amount of Rs. 104 Crores, due to interim order passed by the High Court, further auction could not take place. It is submitted that the properties has been attached under MPID Court where proceedings are pending in Special Case No. 98 of 2017. It is submitted that the Application under Section 7 filed by the Investors ought not to have been admitted and the Adjudicating Authority ought not to h....
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....n the property of the Corporate Debtor. Writ Petition in the Bombay High Court was filed by some of the Investors at point of time when SEBI was auctioning the properties at grossly undervalued prices. It is submitted that Judgement of Vidarbha Industries Power Limited relied by Learned Counsel for the Appellant has no application in the present case. Investors who are waiting for refund of their money for last several years had no option except to initiate Insolvency Resolution Process under which process all assets of the Corporate Debtor are required to be handed over to the Resolution Professional and used for payment of the Creditors. 6. Learned Counsel for the Resolution Professional submits that the Adjudicating Authority has rightly admitted Section 7 Application. The Resolution Professional has issued publication and invited claims after initiation of Corporate Insolvency Resolution Process (CIRP in short). Resolution Professional has requested the Appellant to submit its claim and to hand over all assets, properties, records and data of the Corporate Debtor to the IRP. Resolution Professional has also appeared in the Writ Petition No. 12998 of 2018 filed in the Bombay Hi....
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....shall be subject to further orders of this Court in the matter. 12. The purchasers entering possession shall not create third party interest until further orders in the matter. 13. In relation to remaining 53 properties though respondent Nos. 1 and 2 may take necessary preparatory steps, actual auction shall not be conducted until further orders." 9. In the Writ Petition, Resolution Professional has also appeared and brought before the Court factum of initiation of CIRP against the Corporate Debtor. The Writ Petitioner themselves sought relief to amend the petition to bring the Resolution Professional of Corporate Debtor on record. Following was passed by the High Court on 20th September, 2022 which is to the following effect: "1. Learned Counsel for petitioners seeks leave to amend and bring the Resolution Professional of respondent no. 3 on record. 2. Leave to amend granted. 3. At the request of learned counsel for petitioners place the matter on 6th December, 2022." 10. We also need to notice the Application filed by the Appellant dated 25th March, 2022 before the MPID Court, Mumbai. In the Application filed by the Appellant, the Appellant has referred to steps....
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....ent of this Tribunal. In paragraph 9 and 11, this Tribunal held following: "9. Learned Counsel appearing on behalf of the Appellant- 'Operational Creditor' submitted that the 'Corporate Debtor' having failed to pay the dues for the work carried out, the Adjudicating Authority cannot reject the application referring to an order dated 29th February, 2016 passed by SEBI. It was submitted that SEBI has passed an order, inter alia, directing the 'Corporate Debtor' not to alienate, dispose or sell any of the assets of the Company except for the purpose of making refunds to its investors and the Ministry of Corporate Affairs and to initiate the process of winding up of the Respondent. .............. 11. Having heard learned counsel for the appellant, while we agree that initiation of 'Corporate Insolvency Resolution Process' under 'I&B Code' cannot be nullified by any order passed by SEBI nor can be a ground to reject an application under Section 9 of the 'I&B Code' but as there is an 'existence of dispute' with regard to the invoices raised by the Appellant-'Operational Creditor', we hold that the application under Section 9 of the 'I&B Code' was not maintainable." 15. This Tri....
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....no other proceedings for recovery against the Corporate Debtor can be continued. The Resolution Professional has also appeared before the High Court in the Writ Petition where Interim Order was passed on 09.01.2019 before the initiation of proceedings under Section 7. Learned Counsel for the RP submits that Resolution Professional has appeared before the High Court and brought relevant facts into the notice of the High Court. We have no doubt that RP shall obtain necessary clarification and modification from the High Court to proceed further in the CIRP Process before finalisation of CIRP Process. 18. We are further of the view that pendency of Special Case no. 98/2017 under MPID Act also can not be ground to not initiate proceedings under Section 7 of the Code. Attachment by Government of Maharashtra to protect the interest of the Investors under Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 was also with object to protect the interest of the Investors. Resolution Professional as well as Appellant has already appeared before the Court in Special Case No. 98 of 2017. We are however of the opinion that pendency of such proceedings in no ma....