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13.01.2025: I.A. No.7176 of 2024: This is an application praying for condonation of 14 days’ delay in filing the appeal. Learned counsel for the Appellant submits that when the order was passed the authorised representative of the Appellant was not present and they came to know about the impugned order by letter dated 13.08.2024 received on 27.08.2024, hence, delay was occurred in preparation and filing of appeal. Learned counsel for the Respondent opposing the condonation of delay submits that no sufficient cause has been shown in Para 3 of the application. After hearing learned counsel for the parties, we are of the view that there is sufficient cause shown by the Appellant in the application and the fact that order impugned was received by letter dated 13.08.2024 on 27.08.2024 and thereafter steps were taken for filing the appeal and appeal was filed on 26.09.2024. We, thus, find sufficient cause for condonation of delay. Delay condoned. I.A. No.7176 of 2024 is allowed.
Heard learned counsel for the Appellant as well as learned counsel for the Respondent. This Appeal has been filed by the Appellant challenging order passed by the Adjudicating Authority dated 13.08.2024 by which application filed by the Appellant being I.A. No.218/JPR/2019 for recall of the admission order has been rejected. The CIRP against the Corporate Debtor commenced by an order passed by the Adjudicating Authority dated 26.04.2019. The application was filed by M/s JFC Finance (India) Ltd., a NBFC, who had extended loan to the Corporate Debtor. On default being committed by the Corporate Debtor, Section 7 application has been filed, which was admitted. The IRP made public announcement on 28.04.2019 inviting claims. Appellant also informed the IRP of their claim of Rs.5,25,93,585/-. The claim of the Appellant was admitted. On 18.07.2019, the Appellant filed application IA No.218/JPR/2019 under Section 49, 66 and 69 of the Code praying for recall of the admission order, which application was heard and rejected by the impugned order. Inspite of Form G having issued, no Resolution Plans have come, hence, order of liquidation has been passed on 11.09.2024. The Adjudicating Authority returned a finding that Applicant could not prove that there was fraudulent initiation of CIRP and it was further noticed that claim of the Appellant amounting to Rs.5,25,93,585 was admitted, hence, there was no ground made out and recall Section 7 application.
Learned counsel for the Appellant contends that there were only two defaults of EMI payment by the Corporate Debtor on which basis the Financial Creditor has initiated the Section 7 proceeding. It is further submitted that in the Balance Sheet of the Corporate Debtor there was sufficient revenue, hence, it is a case of fraudulent initiation of CIRP by the Financial Creditor.
We have considered the submissions of learned counsel for the parties and perused the record.
The Adjudicating Authority in Para 5.1 of the order has noticed following:
“5.1. It was submitted that the Customs Department has already filed its claim in the CIRP of the Corporate Debtor and the same has already been admitted to the tune of Rs. 5,25,93,585/- (Rupees Five Crores Twenty-Five Lakh Ninety-Three Thousand Five Hundred and Eighty-Five Only). Further, the legal position is well settled that the provisions of the IBC shall override the provisions of any other applicable law and accordingly, the claim of the Customs Department shall be dealt in accordance with the provisions of the IBC. The Applicant has actively participated in the proceeding for the admission of its claim. Thus, the instant Application is liable to be dismissed on this ground alone.”
Further findings have been returned by the Adjudicating Authority in Para 18 of the order, which are to the following effect:
“18. In the instant case, the Customs Departinent has made bald allegations without substantiating the same qua fraudulent initiation of the CIRP. Further, the mere allegation pertaining to lack of due-diligence in granting of loan by the Financial Creditor cannot warrant invocation of Section 65 of the Code as the Financial Creditor is an NBFC engaged in the business of lending and the said loan was given in normal course of business. Further, the difference in the amount claimed by the Financial Creditor and the Customs Department cannot by itself bring the case within the folds of fraudulent initiation of the CIRP. In our opinion, the Customs Department has failed to make out a case concerning fraudulent initiation of the CIRP and recalling of the order wherein the CIRP of the Corporate Debtor was initiated.”
The submission of the Appellant that there is default of only two EMIs by the Corporate Debtor, hence, Section 7 proceeding ought not to have been initiated does not commend us. When default was committed by the Corporate Debtor, it was always open for the Financial Creditor to initiate proceeding which is remedy provided under I&B Code.
Insofar as submission of learned counsel for the Appellant that there was enough revenue in the Balance Sheet of the Corporate debtor ending 31.03.2018, the Balance Sheet ending 31.03.2018 has been brought on the record at page 139 of the appeal, which is as follows:
“Ajit Solar Private Limited
National Motors Building, M.L. Road, Jaipur, Rajasthan 302001 CIN: U40106RJ2007PTC024478
Profit and Loss Statement for the Year Ended 31s tMarch 2018
(Amount in Rs.)
Particulars
Refer Note
No.
For the Year Ended
31.03.2018
For the Year Ended
31.03.2017
I.
Revenue from Operations Other Income
Total Revenue
Expenses:
Cost of Materials Consumed Purchases of Stock-in-Trade Changes in Inventories of FG, WIP and Stock-in-Trade Employee Benefits Expense Finance Costs
Depreciation and Amortization Expense
Other Expenses Total Expenses
Profit before exceptional and extraordinary items and tax (II- IV)
Exceptional items Prior Period Interest
Profit before extraordinary items and tax (V-VI) Extraordinary Items
Profit before tax(VII-VIII)
Tax expense:
(1) Current tax
(2) Deferred tax
Profit (Loss) for the period (IX+X)
Earnings per equity share:
(1)Basic
Significant Accounting Policies and Notes on Accounts
2.13
2.14
28,149,604
5,298,338
51,402,773
1,400,841
II.
33,447,942
52,803,614
III.
2.15
14,688,669
19,360
24,917,647
34,948,786
2.16
14,973,374
(5,832,504)
2.17
2.18
2.7
917,000
10,418,638
24,581,307
8,704,459
10,554,986
25,526,469
2.19
338,255
3,773,673
IV.
65,936,603
102,593,514
V.
(32,488,661)
(449,789,900)
VI. VII. VIII.
- 4,506,760
(36,995,421)
30,478,734
- (19,311,165)
IX.
-
-
X.
(36,995,421)
(19,311,165)
XI.
-
-
XII.
-
(36,995,421)
-
19,311,165)
XIII.
(19.31)
(10.08)
1&2
When we look into the ‘Total Revenue’ it is Rs.33,447,942/- it is much less than the revenue of earlier year. When we look into the ‘Total Expenses’ it is Rs.65,936,603/- and profit thus is shown in minus, as noted in the above Balance Sheet, which in no manner support the submission of the Appellant that initiation of CIRP was fraudulent. Further it is relevant to notice that in the CIRP the Appellant has filed its claim which claim has already been admitted and shall be dealt with in the proceeding in accordance with law.
An application to recall an admission order needs sufficient grounds, which are not present in the present case. The Adjudicating Authority in Para 18 of the order has rightly noted that allegations of fraud could not be proved by the Appellant. We, thus, do not find any ground to interfere with the order passed by the Adjudicating Authority rejecting the application filed by the
Appellant for recall of admission order. There is no merit in the appeal.
Appeal is dismissed.