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Judgment
O R D E R
Per: Justice Rakesh Kumar Jain: (Oral)
05.07.2023: This order shall dispose of two appeals bearing CA (AT) (Ins) No. 1022 of 2021 titled as Bank of India Vs. Naresh Seth (hereinafter referred as ‘First Appeal’) and CA (AT) (Ins) No. 1024 of 2021 titled as Bank of India Vs. Vinod Kumar P. Ambavat, Resolution Professional for Actif Corporation Ltd. (hereinafter referred as ‘Second Appeal’) as these appeals have been filed against the common impugned order dated 05.10.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmadabad Bench) by which applications i.e. I.A. No. 296 of 2020 filed in CP (IB) No. 266/NCLT/AHM/2019 and I.A. No. 522 of 2020 filed in CP (IB) No. 272/NCLT/AHM/2019 have been dismissed.
In brief, as many as seven companies, namely, Vignaharta Corrugators P. Ltd., Charma Holding P. Ltd., Eloquent Traders P. Ltd., Glean Trading P. Ltd., Rajdeep Clothing and Advisory P. Ltd., Royal Compservices P. Ltd. and Wellworth Apparels P. Ltd. filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) as Financial Creditors against Jaybharat Textiles and Real Estate Limited (Corporate Debtor) before the Adjudicating Authority to which CP (IB) 266/NCLT/AHM/2019 was assigned. The said application was admitted on 03.01.2020 because the Respondent Company filed an additional affidavit admitting the total amount as claimed in the petition. Although in the order of admission it is mentioned that Mr. Naresh Sheth, who was proposed by the Applicant as the Interim Resolution Professional (IRP), was appointed but during the course of hearing we have been told that his actual name is Naren Sheth, in so far as first appeal is concerned.
In the second appeal, four Financial Creditors, namely, Clematis Trading Company Pvt. Ltd., Alpha (India) Properties Limited, Glean Trading Pvt. Ltd. and Kanha Textile Pvt. Ltd. filed an application under Section 7 of the Code against Actif Corporation Limited (Corporate Debtor). In this application also the Respondent (Corporate Debtor) filed an additional affidavit admitting the amount for which the resolution was sought for, the application was admitted on 26.11.2019 and Vinod Kumar P. Ambavat was appointed as IRP.
The Appellant (Bank of India) had also filed an application under Section 7 of the Code against the Actif Corporation Ltd. before the Adjudicating Authority which was assigned as CP (IB) No. 368 of 2018 and was admitted on 26.11.2019.
The Appellant filed two applications i.e. I.A. No. 296 of 2020 in CP (IB) No. 266/NCLT/AHM/2019 and I.A. No. 522 of 2020 in CP (IB) No. 272/NCLT/AHM/2019 and made identical prayers, namely, “(a) This Tribunal may dissolve the wrongfully constituted CoC of the Corporate Debtor. (b) This Tribunal may remove the Resolution Professional, as the resolution professional of the Corporate Debtor. (c) This Tribunal may appoint Mr. Subrata Monindranath Maity (having registration no. IBBI/IPA-001/IP-P00884/2017-2018/11481) as the new resolution professional of the Corporate Debtor and grant additional time to the new resolution professional for completion of verification of the claims of the creditors and constitute a new committee of creditors. Attached herewith and marked hereto as Annexure- J is the consent form issued by Mr. Subrata Monindranath Maity. (d) Pending hearing and final disposal of this application, this Tribunal may direct that the first and second meeting of the CoC be held to be null and void and therefore all the decisions taken therein should be held null and void. (e) Pending hearing and final disposal of this Application, this Tribunal may direct that no CoC meeting be conducted pending final disposal of the present Application.”
The Adjudicating Authority consolidated both the applications and disposed them of by the common impugned order dated 05.10.2021 but for the sake of convenience it dealt with the facts of I.A. No. 296 of 2020.
Aggrieved against the impugned order, the present two appeals have been filed before this Court in which an interim order dated 14.12.2021 was passed which read as under:-
“14.12.2021: Issue Notice. Notice is accepted by Learned Counsel appearing for the Respondent. No further notice needs to be issued. He prays for and is allowed two weeks’ time to file Reply. Rejoinder may be filed within one week thereafter.
In his reply the Resolution Professional shall also indicate the calculation of interest with regard to Unsecured Creditors and file the relevant documents alongwith the reply.
List the Appeal on 10th January, 2022.
Learned Counsel for the Appellant submits that Resolution Plan has been approved by the CoC, which is pending consideration before the Adjudicating Authority. In view of the aforesaid, we direct that till these Appeals are heard further proceeding with regard to Resolution Plan shall remain stayed.”
The Interim order dated 14.12.2021 is still continuing.
Counsel for the Appellant has extensively referred to various documents in order to show that the loan extended by unsecured creditors at an interest of 21% compounding payable after fixed period of about 7 years and that the Companies who are unsecured creditors are the related parties with the Corporate Debtor, therefore, these applications filed by the Appellant ought to have been allowed but for the fact that these facts have not been gone into by the Adjudicating Authority in right perspective. It is also submitted that I.A. No. 522 of 2020 was also disposed of without giving any specific findings though the evidence in regard to the allegations made in the application were different from the evidence which has been led in so far as I.A. No. 296 of 2020 is concerned.
Since we are not satisfied with the findings recorded by the Adjudicating Authority as it has not gone into all the aspect of the matter much less the auditor report produced by the Appellant in its right perspective, we are of the considered opinion that these matters deserve to be reheard by the Adjudicating Authority and to record specific findings on specific issues having been raised by the Appellant and defended by the Respondent. We appreciate the stand taken by the Respondent who has not raised any objection in regard to remand back of these cases to the Adjudicating Authority after setting aside the impugned order. However, it is submitted that all the issues may be kept open and no finding may be recorded at this stage on merits which may influence the mind of the Adjudicating Authority who has dealt with the issues involved in these lis.
As a result, the appeals are hereby allowed and the impugned orders are set aside. The matters are remanded back to the Tribunal to decide it again after taking into consideration each and every prayer made by the Appellant in these applications i.e. I.A. No. 296 of 2020 and 522 of 2020 which are hereby restored and pass a speaking order in accordance with law.
It is needless to mention that the Appellant has made a prayer in the present appeal that the Respondent may be directed to produce Form-C alongwith supporting documents of the unsecured financial creditor for their perusal for which the Tribunal shall take on record Form-C alongwith supporting documents of the unsecured financial creditors.
Since, it is an old matter, therefore, the Adjudicating Authority is directed to decide these lis as early as possible but preferably within a period of three month from the date of appearance of the parties before it and till then the interim order which has been passed on 14.12.2021 shall continue.
The parties are directed to appear before the Adjudicating Authority on 20th July, 2023.
It is needless to mention that the parties may file any additional documents and take additional pleas in accordance with law.