AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2024 (1) TMI 46
X X X X Extracts X X X X
X X X X Extracts X X X X
....rporated under the provisions of Companies Act, 1956. The Appellants are the suspended Directors of the said Corporate Debtor. 3. The Corporate Debtor was engaged in the business of hiring Hotels, Restaurants, Marriage Halls and doing the business of running the Hotels, Restaurants and Marriage Halls. The Corporate Debtor was having on Lease the Property/Hotel namely Hotel Samrat Heavens at Meerut and for the upkeeping and to run its day-to-day business affairs, the Corporate Debtor had availed certain credit facilities from Punjab National Bank. 4. Punjab National Bank filed a Petition in the capacity of Financial Creditor under Section 7 of the Code. The Adjudicating Authority admitted the Section 7 application of Punjab National Bank vide order dated 03.09.2019 and appointed Mr. Mahesh Bansal as the Interim Resolution Professional. 5. The Resolution Professional during the pendency of CIRP had filed an application being CA-871/2019 ("subject application") under Section 19(2) of the Code alleging non-cooperation from the suspended board of directors. 6. Vide order 04.01.2021, the Adjudicating Authority passed an order of liquidation of the Corporate Debtor and Mr. Nit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellate Tribunal in the matter of Writer Business Services Pvt. Ltd. & Anr. v. Mr. Ashutosh Agrawala Resolution Professional for Cox & Kings Ltd., Comp App (AT) (Ins) No. 956 of 2021, while defining the scope of fine under the Code, held that punishment of fine is a fine which is imposed on a delinquent for an offence and therefore, fine can only be imposed for an offence and as such the jurisdiction to impose fine after convicting the accused rests only with Special Court established under Chapter XXVIII of Companies Act, 2013 and the Adjudicating Authority does not have any jurisdiction to impose fine. 12. The Appellants also refuted the plea of the Respondent that the Adjudicating Authority has power to impose costs under section 149 of companies act, 2013 and the same power has been utilised here. The Appellants stated that admittedly, the Adjudicating Authority has under Section 70 of the Code, 2016 imposed a fine of Rs. 5 lacs upon the Appellant and nowhere, in the entire impugned order, the word 'cost' has not been used even once. 13. It is argument of the Appellants that this Appellate Tribunal held in the case of 'Mr. Ashish Chaturvedi & Anr. v. Inox Lei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al had filed an Application before the Ld. Adjudicating Authority under Section 19(2) of the Code bearing C.A. 871 of 2019 in C.P. (IB) No. 979(ND)/2019 seeking necessary directions against the suspended director to assist and cooperate with Resolution Professional. 21. The Respondent further submitted that on 01.06.2021 the Respondent also wrote two letters to the Appellants, highlighting, inter alia, that despite the filing of the Application under Section 19(2) of the Code by the erstwhile Resolution Professional, pending adjudication, the Lease Deed entered into between the Corporate Debtor and State Bank of India (Lessee) has not been provided and accordingly, the Liquidator sought the same from the suspended board of directors. 22. The Respondent brought out that since the commencement of the CIRP proceedings, the Appellants have time and again failed to comply with the directions of the Adjudicating Authority and have deliberately decided not to assist and cooperate with the Resolution Professional and Liquidator. The Appellants have till date failed to provide the relevant documents and information. 23. The Respondent also filed an Appeal bearing Company Appeal (AT....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Corporate Debtor. Rule 149 of the National Company Law Tribunal Rules, 2016 provides as under:- "149. Power to impose Costs- The Tribunal may, in its discretion, pass such order in respect of imposing costs of the defaulting party as it may deem fit." ( Emphasis Supplied ) 27. The Respondent also submitted that this Appellate Tribunal in the matter of Committee of Creditors of Amtek Auto Ltd. through Corporation Bank v. Mr. Dinkar T. Venkatasubramanian & Ors. Company Appeal (AT) (Ins.) No. 219 of 2019 held that when Section 74(3) of the Code is triggered, the Resolution Professional or the Committee of Creditors or any other Creditor can file an Application under Section 213 of the Companies Act, 2013 read with Section 74(3) of the Code before the Adjudicating Authority and pursuant thereto, the Adjudicating Authority can decide as to whether the matter is required to be referred to Insolvency and Bankruptcy Board of India or Central Government for taking any action under Section 74(3) of the Code and Section 213 read with Section 447 of the Companies Act, 2013 after following procedure as laid down in Section 213 of the Companies Act, 2013. 28. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pondent stated that the Impugned Order which is under challenge in the instant Appeal has no infirmity as the Adjudicating Authority only imposed fine upon the Appellants and the said power vests with the Adjudicating Authority it terms of the Companies Act as well as the I&B Code, 2016, therefore, the Appeal is liable to be dismissed at the first instance by this Appellate Tribunal. 32. Concluding his pleadings, the Respondent urged this Appellate Tribunal to dismiss the present appeal with exemplary cost. 33. After hearing all the averments and cited judgments by the Appellants and Respondent, we will like to refer to relevant sections of the Code, which reads as under :- "19. Personnel to extend cooperation to interim resolution professional (1) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the corporate debtor. (2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contravenes the provisions of this Part the shall be punishable with imprisonment for a term which may extend to six months, or with fine which shall not be less than one lakh rupees, but may extend to five lakhs rupees, or with both. Section 236: Trial of offences by Special Court. 236. (1) Notwithstanding anything in the Code of Criminal Procedure, 1973, offences under this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. (2) No Court shall take cognizance of any offence punishable under this Act, save on a complaint made by the Board or the Central Government or any person authorised by the Central Government in this behalf. (3) The provisions of the Code of Criminal Procedure, 1973 shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in case of a complaint under sub-section (2), the presence of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is very clear that the statement made by the Ex-director vide present affidavit to the effect that tally data of the Corporate Debtor was stolen on 04.01.2019 is patently false and misleading as this Tribunal cannot believe that a balance sheet for the year ending 2019 could have been made out without having access to the tally data of the Corporate Debtor for the entire financial year. Therefore, the submission made by the Respondents through the present affidavit is completely contradictory and not reliable at all. The conduct of Ex-management as brought out above is very much within the purview of Section 34(3) of the Code read with Regulation 9 of the IBBI (Liquidation Process) Regulations, 2016. The said provisions of the Code as well as Regulations make it obligatory on the part of the ex-management to co-operate with the Liquidator. The said provisions are reproduced below:- Accordingly, we hereby impose fine of Rs. 5 lakhs on the Respondents (No. 1&2) in the present Application. The Respondents are directed to make the payment of the said fine within two weeks to the credit of Central Government (Pay Account Officer, Ministry of Corporate Affair....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orts that a person has committed any offence punishable under Section 213 read with Section 447 of the Companies Act, 2013 or Sections 68, 69, 70, 71, 72 and 73 of the 'I&B Code', in such case, the Central Government is competent to refer the matter to the Special Court itself or may ask the Insolvency and Bankruptcy Board of India or may authorise any person in terms of subsection (2) of Section 236 of the 'I&B Code' to file complaint." (Emphasis Supplied) 38. We also refer to yet another decision of this Appellate Tribunal in the matter of in the matter of Union of India v. Maharashtra Tourism Development Corporation [(2019) SCC OnLine NCLAT 1414], wherein the Appellate Tribunal had referred the matter to Central Government for investigation through 'Inspector(s)' for finding out whether persons related to the company in question has violated the provisions of Section 70 of the Code, further directed that the procedures under Section 213 of the Companies Act, 2013 has to be followed. 39. In another decision of this Appellate Tribunal in the matter of Vikram Puri v. Universal Buidwell (P.) Ltd. [(2022) SCC OnLine NCLAT 306] it was observed that the p....