Nand Kishore Palaha & Anr. Vs CMR Lifesciences Pvt. Ltd.

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Judgment

273 paragraphs · 11,051 words

(PER: BENCH)

^1. Originally, ^this ^application ^was filed before ^the ^Hon'ble High Court ^as Company Petition ^No. ⁴⁷⁰ of 2016. Hon'ble High ^Court vide order dated 26.11.2021 ^was pleased ^to transfer the ^same ^to this Tribunal.

^2. ^This ^is ^an application filed by Applicants claiming ^to ^be Financial Creditors ^to initiate the Corporate Insolvency Resolution Process ("CIRP") ⁱⁿ the ^matter ^of CMR Lifesciences ^Private Limited (Corporate Debtor) ^under Section ⁷ ^of ^the Insolvency ^and Bankruptcy Code, 2016 ("IВС, 2016") ^read ^with Rule ⁴ of ^the Insolvency and Bankruptcy (Application ^to Adjudicating Authority) Rules, 2016 ^for initiation of Corporate Insolvency Resolution Process (CIRP) against the Respondent/Corporate ^Debtor ^for having defauited ^payment ^of its outstanding dues.

^3. ^On perusal of ^Part-I of ^the Form-1, it ^is ^seen ^that the their Applicants ^herein ^are individual ^persons having Patel residence ^at 12, Aarohi Villa, ^Near Sun City, Sardar Ring Road, Bopal, Ahmedabad 380058.

Exhibit reproduced from the original judgment

^4. The affidavit ⁱⁿ support ^of the application is affirmed by Shri Nand Kishore Palaha. The authorization letter issued by Applicant ^No. ² Smt. ^Parveen ^Palaha authorizing ^the Applicant No. ¹ i.e. Nand Kishore Palaha ^to file this petition is annexed ^as ^Annnexure ^-A of the petition. Applicant No. 2 ^{is wife} ^of applicant No. 1.

^5. On perusal ^of ^Part-II ^of ^the ^Form-1 reveals ^that ^the Corporate Debtor is CMR Lifesciences Private Limited. The Corporate Debtor ^was incorporated ^on 15.03.2011 ^with CIN: U24230GJ2011PTC064445. ^The registered ^office ^of the Corporate Debtor is situated ^at 506/507, Matrix Tower, Corporate Office Road, Nr. Vadafone Tower, Satellite, Ahmedabad-380015.

On perusal of Part-III of the Form-1 reveals that Financial ^Creditors ^have named ^IP ^Mr. Sunilkumar Kabra, having Registration No. IBBI/IPA/-001/IP-P01011/2017-18/11662 under ^section ¹³ (1)(c) ^of ^the ^Code ^to ^act ^as ^Interim Resolution Professional (IRP). Form ² ^has ^been filed along ^with Authorisation ^for Assignment (AFA). The AFA is valid till 29.11.2024.

Perusal of Part-IV indicates total ^amount of debt granted Rs.4,65,56,970/- (Rs. 1,74,90,000/- Principal ⁺ ^Rs. 2,90,66,970/- towards interest @12% ^p.a. calculated ^upto 30.11.2022).

^8. ^It ^is ^stated ^that ^the Applicant No. ¹ ^is qualified ^B.Sc (Hons), MBA and the Applicant No. ² ^is ^a qualified M.A. due ^to ^the ^vast ^experience ^and professional qualifications, ^the Corporate ^Debtor approached ^the applicant ^no.1 ^for being appointed ^as President of the Company and after ^some discussions, ^the applicant ^no. ¹ ^came ^to ^be appointed ^as ^the President ^of ^the Company w.e.f. 1.1.2013 and ^to that effect letter of appointment dated 1.1.2013 ^came ^to be issued ^to the applicant no.1. ^The applicants ^were requested by the in respondent ^company ^to bring ⁱⁿ funds ^as unsecured ^loan ^the ^Company. ^The applicants accordingly advanced ^unsecured ^loan ^to ^the ^tune ^of 1,75,53,781/- jointly ^on various dates. (The applicant no.1 ^advanced ^Rs. 1,15,40,000, ^while ^the applicant ^no.2 advanced Rs. 59,50,000 ^as unsecured ^loan ^to respondent company). Copy of bank ^statement ^of applicant no.1 ^as ^well ^as applicant ^no.2 ^is ^annexed ^as Annexure ^D ^& ^E respectively.

^It is stated ^that ^the applicants have received letters ^from ^the respondent ^company acknowledging receipts of ^the ^unsecured ^loans from ^the applicants. ^The ^letters ^sent by ^the respondent company also acknowledged the liability of the respondent company ^to pay ^interest and the ^rate thereof ^on ^the ^unsecured ^loans ^advanced by ^the applicants.

^10. ^It ^is stated that during the meeting dated 14.2.2016 held ^between ^the applicants ^and the ^Directors ^of ^the respondent ^company, the respondent company ^gave ^a ^statement containing particulars ^of ^the ^unsecured ^loan advanced by various persons ^to the respondent ^company. ^The statement particulars ^as contains ^on 31.1.2016. ^As ^per this ^statement, ^the respondent ^company acknowledged ^an ^amount of ^Rs. 59,97,761/ ⁱⁿ favour of applicant no.2 and ^an ^amount of Rs. 1,15,56,020/- ⁱⁿ ^favour ^of applicant ^no.1 towards unsecured loan.

11.

^It is established from the letters addressed by the respondent company ^to the applicants, the respondent company agreed ^to pay interest @ 12% ^p.a. ^on ^the ^amount

^of unsecured ^loan advanced by the applicants ^to the respondent company.

^12. ^The respondent ^company paid interest ^@ 12% ^p.a. ^on ^the unsecured ^loans ^advanced by ^the applicant ^no.2 ^upto 31.3.2014 after which ^no interest ^was paid. The applicant no.2 therefore is entitled to interest @ 12% p.a. from 31.3.2014 ^to 30.11.2022. The respondent did ^not ^{pay any} interest amount ^on ^the unsecured loans advanced by the applicant no.1, ^the applicant ^no.1 ^therefore ^is ^entitled ^to interest @ 12% p.a. from 31.3.2014 ^to 30.11.2022. The applicants however learned that the respondent company had credited the ^amount of interest ^on the unsecured loans ^advanced by the applicants ⁱⁿ ^its books. ^On receipt ^of ^a ledger ^account of interest unsecured ^on the ^loan maintained ⁱⁿ the books of ^account of the respondent ^so far ^as ^the applicant ^no.2 ^is concerned. ^As per ^the ledger ^account ^as ^on 31.3.2016, ^the respondent ^company has acknowledged outstanding interest ^amount ^of Rs. 5,77,743/-.

13.

On: ^account of ^several defaults committed by the respondent company ^and ^so also ^on ^account of ^various W

irregularities being ^committed by ^the respondent company ⁱⁿ relation ^to its affairs, ^the applicant no.¹ ^was left ^with ^no option ^but ^to resign from ^all ^the posts of ^the respondent company w.e.f. March 2015.

^14. It is stated ^that instead of settling ^the legitimate dues of ^the applicants, respondent addressed ^an email dated 9.2.2016 ^to ^the applicant no.1 making frivolous allegations. ^The respondent however stated that the points mentioned ⁱⁿ ^the email dated 9.2.2016 will be discussed ⁱⁿ the meeting 14.2.2016 which ^ws scheduled ^between applicant no.1 and the Directors of respondent company.

^15. Accordingly, meeting ^came ^to ^{be held} ^on ^14.2.2016 ^between ^the applicant no.1 ^and ^the ^directors ^of ^the respondent company wherein ^various ^statements including ^statements acknowledging ^the outstanding ^amount of ^unsecured loan, outstanding ^amount of salary, ledger ^account of the Company ⁱⁿ ^relation ^to ^the ^car ^which ^was given ^to the applicant no.1 ^were given by the respondent ^company ^to ^the applicant no.1. The respondent ^company assured ^that ^the dues of ^the applicants will be settled shortly and ^the

applicants will also be furnished all other relevant ^statements shortly.

^16. ^It is stated that in spite of above assurance, the respondent neither made ^any payment ^to ^the applicants ^nor provide further particulars ^and statements ^as promised by ^it.

^17. The applicant no.1 ⁱⁿ ^the meanwhile ^gave its ^response ^to the email dated 9.2.2016 by sending ^an email dated 12.2.2016 ^to the respondent. The applicants thereafter received ^a legal notice ^dated 28.4.2016 ^from ^the respondent, wherein ^once again ^the respondent raised frivolous ^claims against ^the applicants, ^to ^which detailed reply dated 22.6.2016 ^was issued by the applicant through ^his advocates ^to ^the legal ^notice dated 28.4.2016 ^of ^the respondent and applicant ^has issued legal ^notice dated 12.7.2016 ^to ^the respondent calling ^upon ^the respondent ^to heads. ^make payment ^of ^Rs. 2,95,76,349/- towards various

^18. It ^is stated that applicants have received reply dated 28.7.2016 from Advocate ^on behalf of the respondent. A perusal ^of the reply of the respondent ^company would ^show ^that ^most ^of the ^claims made by the applicants ^were

admitted by the respondent company. ^In ^response ^to the reply dated 28.7.2016 of ^the respondent, ^the applicants ^sent ^a detailed response vide letter dated 9.8.2016 through their advocates wherein, applicants reiterated ^the demand ^of applicants ^as ^contained ⁱⁿ ^the ^notice ^dated ^12.7.2016 and ^once again ^called ^upon ^the respondent ^to ^pay the outstanding dues, failing which it ^was stated ^that ^the applicants would initiate appropriate ^action against the respondent ^to which there ^was ^no ^response from the respondent ^company ^nor paid ^any ^amount ^to ^the applicants.

19.

^The ^amount claimed ^to ^be in default is ^Rs. 4,65,56,970/-(Including ^interest @12% p.a.) ^as ^on 30.11.2022.

^20. The applicant thereafter filed Company Petition No. 470 of 2016, ^which ^was presented ^on 04.10.2016 and registered ^on 17.10.2016 ^with Hon'ble High Court of Gujarat.

21.

It is stated that the Corporate Debtor defaulted ^on 31.03.2015. Copy of computation of outstanding ^amount including ^interest ^due ^and payable ^to applicant no.1 ^and ² ^is ^annexed ^at ^{Annexure- F1 & F2} respectively.

22.

The Financial Creditor is relying ^on the following documents:-

^1. Copy of ^master ^data of Respondent Company, ^а ^copy of which is annexed ^as Annexure-I;

^2. Copy of ^{the statement} ^as ^given by ^the ^company ^to the Applicant no.1 ⁱⁿ the meeting ^held ^on 14.2.2016, ^a ^copy of ^which ^is annexed ^as Annexure-J;

^3. Copy of ^the email dated 9.2.2016 addressed by the ^company ^to the Applicant no.1, ^a cоpy of which ^is annexed ^as Annexure-K;

Copy of the email dated 12.2.2016 ^sent by the Applicant no.1 ^to ^the Company, ^a ^copy of ^which ^is annexed ^as Annexure-L;

Copy of the legal ^notice dated 28.4.2016 received from the Companу, ^a cоpу of ^which is annexed ^as Annexure-M.

Сору of the reply dated 22.6.2016 ^sent by Applicant ^no.1 ^to ^the Compaпу, ^a copy of which is annexed ^as Annexure-N;

^7. Copy of ^the ^notice ^dated ^12.7.2016 ^issued by ^Financial Creditors ^to Compaпу, ^а сорy of ^which ^is annexed ^as Annexure-O;

^8. Copy of ^the ^notice dated 28.7.2016 received from the Company through ^its advocate, ^a ^copy of which ^is annexed ^as Annexure-P;

^9. Copy of the ^notice dated 9.8.2016 issued ^on behalf of Financial Creditors ^to Compaпу, ^a соpy of which ^is annexed ^as Annexure-Q;

^10. Copy of ^memo of Company Petition No.470 of 2016 filed ^before ^the ^Hon'ble High ^Court of Gujarat along ^with the ^copy of reply filed by Corporate Debtor and rejoinder thereof filed by ^the Financial Creditors, ^a copy of which ^is ^annexed ^as Annexure-R;

^11: Copy of ^order ^dated ^26.11.2021 passed by ^the Hon'ble (High ^Court of Gujarat ⁱⁿ Company Petition N

No.470 of 2016, ^a ^copy of which ^is annexed ^as Annexure-S;

^23. Reply ^was filed by ^the Corporate ^Debtor ^on 27.06.2023 vide ^inward diary No. 2320, which is affirmed by ^one Mr. Chimanbhai Patel, Head ^of Finance of ^the Respondent and to that effect ^a board resolution dated 16.04.2024 is annexed with the reply ^at ^Annexure А.

24.

^It is stated that ^since ^it ^was Applicant No. ¹ and ^Mr. ^Mandlia (one of the founder director) ^who ^were ^at ^the ^helm ^of ^the ^affairs ^of ^the respondent, ^all major ^decision including sourcing of funds and ^terms and conditions ^were undertaken by Applicant No. ¹ thus, acting ^as de facto directors.

25.

^It ^is stated ^that ^on the basis of investments ^from multiple ^investors in the form of purchase ^of shares and unsecured loans, separate ^memorandum of understandings ^was entered into with such investors and the ^same ^were signed by the founder directors- namely Applicant No. ² and Mrs. Mandlia.

26.

It is stated that in and around October, 2012, Applicant No. 1 and Mr. Manish Mandlia ^were removed from Intas

Pharmaceuticals Ltd. ^In January, 2013, Applicant ^No. 1 and Mrs. Mandlia appointed the Applicants and Mr. ^Manish Mandlia ^as the Director and Additional Director of the Respondent respectively ^and also designated ^as President ^and ^Vice President respectively. ^It ^is further stated ^that ^Intas Pharmaceuticals Ltd. ^initiated criminal proceedings against Applicant No. ¹ ^and for the ^purpose of defending ^the ^criminal prosecution, Applicant No. ¹ engaged and ^consulted legal counsel and the ^fees ^towards the ^same ^was paid from the Respondent's account.

^27. It ^is further ^stated that ^the Applicants ^were drawing ^excessive remuneration ^to the ^tune of ^Rs. 48,82,000/- from ^the Respondent ^even before the Respondent commenced its operations. As ^per the ^terms and conditions of the MoU, Applicant No. ¹ ^and Mr. Manish Mandlia ^were entitled ^to ^a ^20% hike of ^their salary paid by ^Intas Pharmaceuticals Ltd. ⁱⁿ ^the Respondent. However, ^when they joined ^the Respondent and because their respective ^wives ^were ⁱⁿ ^the management of the respondent, they took ^remuneration equivalent ^to 45% ^which ^was ⁱⁿ ^clear ^breach of the ^terms and conditions of ^the ^MoU. Thus, ^an ^excess ^amount of Rs.

48,82,214/- ^has ^been paid towards ^remuneration ^to Applicant No.1 for ^the period from January-2013 ^to October-2014. It is further stated that due to ^excess payment of remuneration, ^the Respondent ^also ^had ^to ^pay ^excess TDS and PF in ^excess to the tune of Rs. 12.59 lakhs.

28.

^On 20.10.2013, after resignation of Applicant No. ² and ^Mrs. ^{Mandlia from} ^the Respondent, ^the ^composition ^of ^the Board with effect from 01.11.2013 ^was ^as under:

Mr. Nand Kishore Pahala

ii.

Mr. Manish Mandlia

iii.

Mr Navin Chandra Mishra

iv.

Dr. Deodatta Chafekar

^It is pertinent ^to ^mention ^that Applicant No. ¹ ^was ⁱⁿ charge of all the ^financial decisions of the Respondent including but ^not limited ^to operation ^of banks accounts of ^the Respondent and signing ^of cheques ^on behalf ^of ^the Respondent.

^29. ^It is pertinent ^to ^{mention that} during Applicant No.l's ^tenure of directorship, Applicant No. ¹ ^was engaged in serious financial mismanagement and embezzlement of funds ^of the Respondent ^such ^as appointment of personnel

^for managing the Respondent's godown without taking ^any security deposit, hiring ^known workers and employees and paying ^them ^extra ordinary salaries, splurging ^money ^on conferences ^and training of employees ^as ^a result ^of which respondent ^faced deficit ^of almost Rs. ⁹ ^Crores during ^the nascent stage. The relevant documents ^are annexed ^as ^Annexure ^B ^to this reply.

30.

When such ^unnecessary expenses and financial mismanagement ^was informed by the ^Finance and Accounts Manager ^to ^the shareholders and other concerned ^persons ^of the Respondent, Applicant No. ¹ ⁱⁿ ^order ^to show sales growth ^to ^the ^investors caused ^the products ^to be indented ^to the stockist without actual sales to the end customers. ^In ^absence of actual retail sales, the products ^remained ^with ^the stockists and ultimately got expired. Consequently, the ^stockists returned the expired material and the Respondent had ^to issue credit ^notes amounting ^to ^approx. Rs. 64 lakhs ^to different stockists.

31.

^In view ^to take stock of the financial situation and in ^view of ^the several queries ^raised by the investors, the ^Board of ^Directors decided ^to hold ^a meeting ^on 16.03.2014 ^at ^9.30

^a.m. and ^the agenda for ^the said meeting ^was circulated. As ^the shareholders ^and investors ^were rightfully raising ^issues regarding ^the management of the Respondent, it ^was decided that ^all ⁹ major investors would ^be appointed ^as directors of the Respondent.

32 It is stated that thereafter, with ^a view of reconcile the ^accounts ^of ^the Respondent, ^the ^investors ^and ^other directors ^of ^the Respondent decided ^to implement several reforms ^such ^as reduction ⁱⁿ salary of Applicant No. ¹ ^as weil ^as Mr. Mandlia, revision ⁱⁿ the ^terms and conditions of ^the MoU, change ⁱⁿ ^the ^manager ^of the godown, etc.

^33. ^It is stated that thereafter, in the board meeting dated 31.08.2014, several important decisions ^were taken including decision of ^the salary payable ^to Applicant No. 1 and Mr. Mandlia. It ^was further decided that ^since the respondent ^is ^not ⁱⁿ ^a position ^to ^make ^payment ^of unsecured loans ^to the investors, it ^was proposed ^to ^convert ^such ^loans ^into equity ^shares ^and Applicant ^no. 1 ^was authorized ^to take ^necessary steps towards the ^same. It ^is stated that in ^the said meeting, it ^was resolved ^that the

^remuneration ^of Applicant ^no. ¹ would ^be ^reduced ^to ^Rs. 50,000/-.

34.

It ^is stated ^that thereafter, despite existence of multiple methods ^to ^infuse funds ^into the Respondent, Applicant No. ¹ unilaterally and purportedly decided ^to infuse funds ^into ^the Respondent thereby rejecting ^other ^reforms ^of infusing funds with ^the sole objective ^of withdrawing the said funds since ^at ^a higher ^rate by applying interest ^at the ^rate ^of 12% it ^was Applicant No. ¹ who ^was authorized ^to sign cheques towards ^the ^same. ^From ^the ledger attached ^with this reply, ^it ^is ^also ^noticed that Applicant ^No. ¹ by drawing ^excess remuneration ^was infusing funds ⁱⁿ the ^form of directorial were ^loan carrying 12% interest ^and ^the said ^funds his withdrawn at ^the behest ^of Applicant No. ¹ according ^to no point whims and fancies. ^It is further submitted ^that ^at said loan ⁱⁿ time, Applicants provided ^reason ^as ^to why ^the of interest. ^is required and that ^to ^at ^such ^a high rate into by

35.

Assuming while denying ^{that the} funds ^were bought ^the Applicant, ^it is ^stated ^that ^there ^was ^no appropriate ^consent of ^the Board of the Respondent ^or the ^investors ^to

undertake ^the liability ^of taking and repaying ^such Director's Loan at the stated ^rate of interest.

^36. Slowly and gradually, ^the ^investors ^and ^other directors of ^the Respondent ^started resigning ^on witnessing ^that Applicant No. ¹ ^was conducting the affairs of ^the Respondent ^on ^his ^own ^sweet will thereby causing grave ^losses ^as ^a result of poor managerial and decision-making skills.

37.

^It ^is stated that thereafter, the Applicant unilaterally and ^without the ^consent of ^the appointed directors ^of the Respondent called ^for ^a board meeting vide ^notice ^for board meeting ^dated 31.01.2015 ^for ^a meeting ^scheduled ^to ^be held ^on 08.02.2015 ^wherein the agenda pertained ^to ^discussions affecting ^the ^financial status/structure ^of ^the company including ^allotment of equity shares, infusion of equity by investors, ^cash credit ^limit ^from bank, ^etc. ^To ^the said notice, ^the Director of Respondent- Shri Navin ^Mishra issued legal ^notice dated 05.02.2015 raising objections. ^A ^copy ^of ^the notice ^dated 05.02.2015 ^is placed ^at ^Annexure-C ^to the reply.

^38. Realizing that there ^were ^no ^more funds and the deteriorating position of ^the Respondent, ^Applicant No. ¹ resigned from ^the Respondent ^on 01.04.2015 leaving the Respondent in deep ^shackles ^of debt.

39.

^It ^is stated that ^at the time of resignation of Applicant No. 1, huge liabilities statutory ^as well ^as non-statutory ^were standing ⁱⁿ ^the ^books ^of ^the Respondent ^and ^salaries of several employees remained unpaid.

^40. ^It ^is stated that thereafter, Applicant No. ¹ ^had ^realised that ^it ^was ^not possible ^to ^run ^the Respondent Company ⁱⁿ ^its ^current state, ^he conveniently resigned ^as ^director of the Respondent ^w.e.f. 28.04.2015. ^Due ^to ^the emergent ^situation of resignation of ^one of ^the last ^two directors, the remaining director who ^was interested in the survival of the Respondent in the interest and ^to ^the benefit of all ^stake holders, appointed Dr. ^Deodatta Chafekar ^as ^the Additional Director in the Board of Directors meeting held ^on 29.04.2015.

41.

Thereafter, ^on 17.05.2015, ^a meeting of ^board of ^directors ^of ^the Respondent ^was called wherein ^several crucial

decisions such ^as settlement of immediate liabilities ^or statutory dues, payment ^to vendors, etc. ^It ^was further resolved ^that ^necessary adjustments, deduction ^and ^entries ^be passed ⁱⁿ ^the ^books ^of ^accounts ^to give effect ^to ^the Resolutions.

42.

In furtherance of the Applicant's oblique and extortionate motive ^the ^Applicant issued legal ^notices ^to ^the Respondent dated 12.07.2016 claiming ^a purported debt ^of Rs. 2,95,76,349/-. To the said notice, the Respondent replied vide ^reply dated 28.07.2016 stated ^that ^the claim of the Applicants ^is illegal ^and ^not called for given ^the ^fact that Applicants ^were the ^reason that ^the Respondent had ^incurred huge ^amount of ^debt. ^To ^the said reply, ^the Applicants. ^issued reply ^dated ^09.08.2016 ^wherein ^the Applicants ^made ^a ^futile attempt ^to justify their ^hollow claims.

43.

Following preliminary objections ^were raised ^{in the} reply ^are ^as under:-

(a)

The Applicants ^are not financial creditors and there is ^no ^financial ^debt ^as defined ^under ^Section ⁵ (7) ^and ⁵ {8) of the ^IB Code, 2016.

(b)

^The present petition has been filed for ^recovery and ^not ^for resolution of ^the respondent.

(c)

Respondent is profit-making company, which ^was loss-making ^company ^due ^to ill ^management of ^the Applicant.

(d)

The ^claim of the Applicant ^is time barred.

(e)

The ^amount claimed by ^the respondent is ^to ^the ^tune of ^Rs. 5,09,73,326/- due ^and payable by ^the Applicant ^no. ¹ ^and the ^same is greater than ^the ^amount ^claimed by ^the Applicant.

^44. Rejoinder ^was filed by ^the applicant under diary No. 2506 dated 10.07.2023, ^the certain point ⁱⁿ rejoinder ^are ^as below.

(i)

Respondent ^has ^not denied ^the unsecured ^loan obtained through the Applicant.

(ii)

^No allegation ^can ^be ^raised ⁱⁿ ^the present petition, which is under Section 7 of the IB Code ^as per the ^settle ^law ^laid by ^Hon'ble Supreme ^Court. ^The Tribunal ^has ^to ^see only debt, default and limitation.

(iii)

None ^of ^the preliminary objections ^has ^been ^raised ^are tenable in the eyes of law.

(iv)

There ^is financial ^debt ^advanced by ^the Applicant in ^terms of Section 5 (7) and 8 of IB Code which is in default.

(v)

^Present petition ^is ^not ^filed ^for ^recovery.

(vi)

The ^present petition ^is within limitation ^as winding ^up petition ^was ^filed ^before ^the ^Honble ^High ^Court ⁱⁿ ^the ^year 2016 whereas the default has occurred ^on 31.03.2015.

(vii)

^It is ^{stated that} ^Hon'bie High Court ^has specifically held in order dated 26.11.2021 that the Tribunal would do the needful in accordance with law to proceed ^with ^the ^matter from the stage ^it ^is transferred. Thus, present petition ^is ^a ^transfer petition is continuation ^of the original proceedings ^which ^were pending ^before ^the ^Hon'ble High Court.

45.

^Written submission of ^the Applicant ^was filed under diary ^No. 4032 dated 13.05.2024 and convenience compilation ^was submitted ^on the ^same date under ^same diary number.

46.

^{In the written} submission, Applicant ^states ^as ^under:

Submissions:
1.
^It is the ^case of Corporate Debtor that there ^is ^no unsecured ^lcan disbursed by ^the Applicants ^to the Corporate ^Debtor ^as

^the ^letter of acknowledgement of the Corporate ^Debtor ^was signed by ^the Applicant ^no.1 himself ^as ^Director.

Response
a)
The said contention of Corporate Debtor is misconceived ⁱⁿ ^as ^much ^as firstly, ^the ^then Board of Directors of^the Corporate Debtor ^had authorized ^the Applicant ^no.1 ^to do ^all ^acts ^and deeds ^on behalf of Corporate Debtor. ^In fact, ^the Board Resolutions of ^the Corporate Debtor (Pg. ⁴⁵⁷ of reply) placed by ^it ^with ^the ^Reply Affidavit ^would reveal that the Board of Directors authorized ^the Applicant no.1 ^to ^execute and ^enter ^into ^various agreements ^with ^various parties ^on behalf of the Corporate Debtor. ^In the Board Meeting dated 12.10.2014, ^the financial responsibility ^was also fixed ^on Applicant ^no.1 and ^one Mr. Manish Mandila ^to look after the day ^to day affairs of ^the Corporate Debtor. Therefore, ^the ^Board of Directors ^had always authorized ^the Applicant ^no.1 ^to ^act ^on behalf of ^the Corporate Debtor and sign agreements, ^etc. ^with ^various vendors. The Applicant ^no.1 ^was ^also entrusted ^to look after the day ^to day affairs of the Company and he ^was also entrusted with the duty of looking after the financial transaction of the Corporate Debtor of his zone.
b)
^{It is} surprising ^to ^{note that} though ^the Corporate ^Debtor ^now refuses ^to accept that unsecured ^loan ^was advanced by the Applicants, but ⁱⁿ the Board Meeting held ^on 12.10.2014 (Pg.452 of Reply), it ^is clearly resolved ^as under-
"Mr. ^Nand Kishore Palaha, Director of the Company, placed before the Board ^that ⁱⁿ ^view of ^the fund requirements of ^the Company, ^loans from directors ^may be taken ^at the simple ^rate of interest of 12% ^per ^annum. The Board discussed the item in detail and passed the following resolution unanimously-
"RESOLVED UNANIMOUSLY THAT pursuant ^to Memorandum and Articles of Association, and according ^to the provisions of the Companies Act, 2013, ^loan from directors in the Company be and ^are hereby approved ^at ^a simple ^rate of interest of 12% ^per ^annит.

FURTHER RESOLVED THAT the said loan ^shall be utilized for the ^zone of respective person i.e. Mr. Nand Kishore Palaha and Mr. Manish Mandila, who has borrowed the funds for ^his ^zone ^and ^any such ^act, thing and deed shall, be treated to be done for and ^on behalf of the Company" Thus, it ^is ^clear that ^the ^Board of Directors had always ^known about the said unsecured loan disbursed by ^the Applicants. However, this ^contention ^is ^now ^taken ^as ^an afterthoughtjust ^to mislead ^this ^Hon'ble Tribunal.

c)
^On ^the ^very ^same day ^i.e. ^12.10.2014, ^the Board of Respondent Company ^authorized ^the Applicant ^no.1 ^and ^Mr. ^Mandila ^to ^borrow ^money for ^their ^own Zone. Thus, it ^is clear that the Board had always authorized ^the Directors ^to infuse money for ^the working capital requirements of ^the Corporate Debtor.
d)
^In fact, ⁱⁿ ^the Board Meeting held ^on 11.5.2014 [Pg. 442/449 ^@ 448 of Reply), ^the Board unanimously authorized ^the Applicant ^no.1 ^to operate all the ^bank ^accounts of ^the Corporate Debtor. Therefore, ^the reply of ^the Corporate Dehtor ^is ^an afterthought ⁱⁿ ^as ^much ^as ^a perusal of the Board Resolutions placed by ^the Corporate ^Debtor itself ^would ^{reveal that} ^the Applicant ^no.1 ^was always ^authorized ^to ^act ^on behalf of ^the Corporate Debtor. ^It is only after ^the Applicant ^no. ¹ resigned from the Board is ^when ^the other directors ^started harassing ^the Applicant ^no.1.
e)
it ^is ^to state that the Corporate Debtor through ^its advocate ⁱⁿ the Reply ^to ^the Recall Notice (Pg.97-108) has stated ^as under:-
^"6... Finally ^you contributed the unsecured loan being ^amount of Rs. 1.15 Crores from account of yourself ^and your wife ^at ^the ^interest of 12% ^p.a. despite the fact ^that ^the Company ^was getting ^the ^said ^amount @ ^10% ^p.a. from ^other ^sources. Thus, ^you ^have deliberately created ^a liability and loss ofthe Companyfor ^your ^own benefit."
f This ^statement ^made by ^the Corporate ^Debtor through ^its advocate ^is ^an acknowledgment of ^debt by the

Corporate Debtor itself. ^It is clear that ^the only dispute raised in the Reply ^to Recall Notice is that the Applicant ^no.1 could ^have got ^unsecured ^loan ^@ 10% ^p.a. from third parties, whereas Applicant no.1 himself infused ^the funds @ 12% ^p.a. ^So ^the dispute ^was only ^with respect ^to rate of ^interest ^and not ^the disbursal of principal ^debt. Therefore, ^the contention of the Corporate Debtor that ^no unsecured ^loan ^was disbursed is completely misleading. ^Even otherwise, the Applicants have annexed their ^respective bank statements (Pg.19/36 of petition) with the petition ^to show disbursement of unsecured loan.

^The ^contention of Corporate ^Debtor ^that ^as ^the Applicant ^no.1 ^has himself signed ^the acknowledgment letters, ^the ^same ^cannot be accepted is concerned, the ^said ^contention ^is ^raised for ^the first ^time before this Hon'ble Tribunal. This contention is neither raised in the Civil Suit filed by Corporate Debtor against the Applicants ^nor ⁱⁿ various correspondences ^addressed by the Corporate Debtor to the Applicants. Therefore, it is not ^open for the Corporate ^Debtor ^to ^raise this contention ^at ^this stage ^as ^the ^letters ^are of ^the year 2013 and ^it ^is ^not ^open for ^the Corporate Debtor ^to ^raise ^any grievance regarding ^those ^letters ⁱⁿ ^the year 2024 and that ^too before this Hon'ble Tribunal. forged

The Corporate Debtor ^has raised false issue of ^documents ^and siphoning of funds because if such to allegations ^were ^true, ^the remedy would ^have ^been initiate criminal ^{action against} the Applicants. Having ^not done ^so, it ^is ^not open for ^the Corporate Debtor ^raise ^any grievance of forgery. This would reveal ^that ^the grievance of forgery ^is raised only ^with ^a ^view ^to Debtor. wriggle out from ^the liabilities of the Corporate ^The fact ^{that the Corporate Debtor} made ^no efforts ^to list the suit before this Hon'ble Tribunal which ^was for pending before ^the Registry of this Hon'ble Tribunal almost ⁴ years would reveal that all these allegations of forgery, siphoning of funds, ^etc. only afterthought ^and there ^is actually ^no substance ⁱⁿ such allegations. is that the

^2. The second objection of Corporate Debtor ^the City Civil Corporate Debtor ^had filed ^a ^civil suit before Court, Ahmedabad ^against ^the Applicants.

Response

^a. ^This contention of Corporate Debtor ^is misconceived ⁱⁿ ^as much ^as the suit ^was filed ⁱⁿ ^the year 2017 whereas the ^present petition ^was filed before ^the ^Hon'ble High ^Court of Gujarat ⁱⁿ ^the ^year 2016 i.e. ^one ^year before filing of ^the ^civil suit. ^The Civil Suit is filed by Corporate ^Debtorjust ^as ^a ^counter blast ^to the petition filed by the Applicants.

b. Even otherwise, the suit ^was transferred by City ^Civil Court, Ahmedabad to this Hon'ble Tribunal on 18.2.2019. ^The ^Corporate ^Debtor ^did ^not ^take ^any ^steps for ^a period of ⁴ years. It ^was only ^when ^the petition ^was transferred from ^the Hon'ble High Court ^to this Hon'ble Tribunal, ^is when the Corporate Debtor took steps for listing of their suit. This makes it clear that the Corporate Debtor ^was ^never interested ⁱⁿ pursuing ^its suit. ^This fact ^is recorded by this Hon'ble Tribunal ⁱⁿ its order dated 4.12.2023 passed in the present petition. ^This Hon ble ^Tribunal has recorded that though the civil ^court transferred ^the suit ^on 18.2.2019, ^the Corporate Debtor had ^made ^an application to the Registrar of ^this Hon'ble ^Tribunal for listing ^the ^suit for ^the first time only ^on 27.5.2023 and then ^on 14.6.2023. ^It ^was further ^observed by ^this Hon'ble Tribunal that ^no steps ^were taken by ^the Corporate Debtor for listing of this ^suit for ^a period of almost ⁴ ^years. This shows ^that the Corporate Debtor filed the ^suit only for delaying the hearing of present petition. Therefore, ^the submission of pendency of civil suit ^is misconceived and ^may not be accepted by this Hon'ble Tribunal.

^c. ^Even otherwise, the ^contents of the civil suit and the contents of the present petition ^are completely different ^and the Corporate Debtor ^is trying ^to mislead ^this Hon'ble ^Tribunal by mixing ^{the issues} of both ^these litigations.

^d. ^It ^is settled ^law ^that ^no set-off ^can ^be ^allowed ^until ^and unless ^the Counter Claim ^is adjudicated by ^a competent forum. ^In ^the facts of ^the present ^case, ^the so-called misconceived ^suit ^is not adjudicated by ^any ^court and ^an ^amount of Rs. 4,34,38,539/-is ^a fictitious amount ^arrived ^at by the Corporate Debtor. Even otherwise, ^the Corporate ^Debtor ^kept ^the ^{so-called suit} pending before ^this Hon'ble Tribunal for ^a period of ⁴ ^years and therefore, ^the Corporate Debtor cannot rely ^upon ^the pendency of the said suit.

that

^From the facts and documents ^on record, it ^is ^clear to there is financial debt which is disbursed by Applicants for Corporate Debtor. ^The financial ^debt is disbursed default. ^It consideration of time value of money which is ⁱⁿ Hon'ble ^is settled ^law that ⁱⁿ ^a section ⁷ petition, ^the and nothing Tribunal has only ^to ^see debt ^and default default and beyond. ^In ^the ^present ^case, there is ^debt and debt ^as that ^the ^amount of unsecured ^loan ^was disbursed The against ^the consideration for ^time value of money. and transaction has commercial effect of borrowing ^as per therefore, ^the present debt ^is ^a financial debt petition is Sec.5(8) of ^the IBC. Therefore, the present required ^to be admitted by this Hon'ble Tribunal.

The Hon'ble Supreme Court ⁱⁿ ^the ^case of Orator reported ^at Marketing ^Pvt ^Ltd. ^vs. Samtex Desinz ^Pvt. Ltd., 2021 SCC Online SC 513 has held ^as under: in

"29.
^In Jaypeelnfratech Ltd. (supra), the debts question ^were ⁱⁿ the form of third-party security, given by ^the ^Corporate Debtor ^to ^secure ^loans ^and advances obtained ^a ^third party from the Respondent Lender' and, therefore, held ^not ^to be ^a financial debt within the meaning of Section 5(8) of ^the IBC. There ^was ^no occasion for this ^Court ^to consider ^the status of ^a ^term ^loan advanced ^to ^meet the working capital requirements of ^the Corporate Debtor, ^which did ^not carry interest. Having regard ^to the Aims, no Objects ^and Scheme of ^the IBC, there ^is discernible ^reason, why ^a ^term loan ^to ^meet the financial requirements of ^a Corporate ^Debtor for its operation, which obviously ^has the be commercial effect of borrowing, should excluded from ^the purview of ^a financial debt." ^a debt

^Thus, ^it ^is ^clear ^that ^a financial ^debt ^also ^includes of ^a which ^is disbursed ^to ^meet the financial requirements effect of Corporate Debtor which has ^the commercial Applicants borrowings. ^In ^the facts of the ^present ^case, ^the Debtor ^to advanced unsecured loan ^to ^the Corporate its working enable the Corporate Debtor to meet with unsecured loan capital ^requirements ^and therefore, the within the ^advanced by ^the Applicants ^is ^covered

definition of "financial debt" ^as defined ^under ^the provisions of IBC. This fact ^is also accepted by the Advocate of ^the Corporate Debtor ⁱⁿ its ^letter dated 28.7.2016 which stated that the Corporate Debtor ^was in requirement of funds and also resolved ⁱⁿ ^its Board Meeting ^to receive Rs.1.50 ^Crores ^on interest @ 10% ^as deposit for ^mother godown. Thus, ^it ^is ^clear ^that the Corporate ^Debtor ^was ⁱⁿ ^need of funds. ^The Applicants therefore infused ^the said funds for ^the working capital requirements of ^the Corporate Debtor: ^The only grievance of ^the Corporate ^Debtor ^is ^that ^the Applicants contributed ^the unsecured ^loan ^@ 12% ^p.a. whereas ^the said ^amount ^was being given by ^other parties @10% ^p.a. Therefore, apart from ^the interest, ^there ^is ^no grievance ^with regards ^to ^the principal amount.

^The Hon'ble Supreme Court in ^the ^case of ^M. Suresh Kumar Reddy Vs. ^Canara ^Bank ^&Ors. reported ^at (2023) ⁸ SCC 387 ^has held ^as under:-

"11.
Thus, ^once ^NCLT ^is satisfied that ^the default ^has occurred, ^there ^is hardly ^a ^discretion left ^with NCLT to refuse admission of ^the application under ^Section ^7. Default ^is defined under subsection 12 of Section 3 of ^the ^IB Code which reads thus:
"3.
Definitions: ^In this Code, ^unless the ^context ^otherwise requires,
(12)
"default" ^means nonpayment of debt when whole ^or ^any part ^or instalment of the ^amount of debt has become due and payable and is not [paid] by ^the debtor ^or ^the corporate debtor, ^as the ^case ^may be;" Thus, ^even the nonpayment of ^a part of debt when it becomes due and payable will ^amount ^to default ^on ^the part ^of ^a Corporate Debtor. ^In ^such ^a ^case, ^an order of admission under ^Section ⁷ of the IB ^Code ^must follow. If the NCLT finds that there ^is ^a debt, but it ^has not become due and payable, ^the application under Section ⁷ ^can ^be rejected. Otherwise, ^there is ^no ground available ^to reject ^the application."

Thus, it ^is ^clear that ^once the Applicant ^is able ^to demonstrate that there is ^a debt which ^is due and payable, ^which ^amounts ^to default, ^then ^the petition deserves admission.

^6. ^The ^above judgment of ^the Hon'ble Supreme ^Court ^was followed by ^the Hon'ble ^National Company ^Law Appellate Tribunal ⁱⁿ ^the ^case of Shweta ^Sharma ^v. ^SREI Equipment ^Finance Limited and others, ⁱⁿ Company Appeal (AT) (Ins) No.370 of 2024, wherein ^it ^is held ^as under:-

"16.
From the above facts, it ^is clear that debt and default ^is fully established and ^even if^the arbitral award dated 04.02.2020 is not taken ^into consideration the debt and default ^is proved ^on the part of the Corporate Debtor. ^We ^may refer ^to ^the judgment of ^the ^Hon'ble Supreme ^Court ⁱⁿ ^"M. Suresh ^Kumar Reddy ^vs. ^Canara Bank ^and ^Ors. (2023) ⁸ ^SCC 387" ^where ^the Hon'ble Supreme ^Court after noticing ^the ^earlierjudgments ^had held that ^when debt and default ^is proved, the Adjudicating Authority ^has ^to ^admit the application unless ^it ^is incomplete.

Thus, ^it ^is ^clear ^that ^when ^there ^is ^a debt ^and default, the petition has ^to be admitted.

Judgments

1.2021 SCC Online SC 513 Orator Marketing Pvt. Ltd. ^vs. SamtexDesinz Pvt. Ltd.

(2023) ⁸ ^SCC 387 ^M. ^Suresh ^Kumar Reddy ^Vs. ^Canara ^Bank ^&Ors.

2018 SCC Online NCLAT 412 Rajesh Gupta ^vs. ^Dinesh ^Chand Jain

2019 SCC Online NCLAT 52 ShaileshSangani ^vs. Joel Cardoso ^and ^Anr.

^5. Company Appeal (AT) (Ins) No.370 of 2024 Shweta Sharma ^vs. SREI Equipment Finance Limited and others.

^7. In view of what is stated hereinabove, ^the Applicants pray this Hon'ble Tribunal ^to allow this petition, ^as prayed for.

^47. Respondent ^has filed ^written synopsis under diary No. ⁴⁰⁰⁹ dated 10.05.2024. ^In ^its submissions, ^the respondent states as under:

A. Legal submissions
1.
Claim of Applicant No. ^2- ^pre ^mature
^i. Ref MoU signed ^on 06.10.2012- Pg ¹ ^to 14 of convenience compilation- Clause J(1)(iii)-unsecured loans for ^a period of 5 years and payable by ^R ^company ⁱⁿ the 6th ^year ⁱⁿ ^two instalments.
^ii. Petition before the High Court filed ^on 01.10.2016
^iii. Thus, ^the ^claim of Applicant ^is ^pre-mature ^and ^no debt had arisen ⁱⁿ respect of Applicant ^No. ² ^as ^on ^the ^date of filing of ^the petition before ^the ^Hon'ble High ^Court.
II. No debt payable to Applicant No. 1
i.
P ^has placed ^on record acknowledgement ^letters ^at ^Ann H Pg 46-63.
^ii. ^Letter dated 08.12.2023 (Pg 46), ^no board ^resolution for obtaining loans.
iii.
Interest at the ^rate of 12% ^not agreed upon ^as ^on 08.12.2013.
^iv. Unsigned ^letters- Pg 56-59
^v. Forged documents Official address of ^the company changed by ^way of ^Board Resolution ^dated 11.05.2014 however the acknowledgement is ^on the letterhead based ^on ^new address ^at page ^46- Pg 46 ^rw Pg 249
^vi. Applicant ^were ⁱⁿ charge of management and affairs of ^the respondent ^at ^the ^time ^when purported debt ^was granted by respondent ^to Applicant.
^vii. Applicant ⁱⁿ behalf of respondent signed consent for obtaining ^loan from Applicant ^no.1 himself along ^with unlawful ^interest.
viii.
Conditions of ^a valid ^contract. Refer ^to Sections 10 and 11 of the Indian Contract Act.

^ix. Application of ^the principle of piercing of corporate veil.
^x. Applicant ^were withdrawing ^money from respondent under guise of repayment of ^loan. Therefore, ^nо ^existence offinancial debt ^as u/s 5(8) of ^IBC 2016.
xi.
Concept of ^corporate entity ^was evolved ^to encourage & promote trade & ^commerce but ^not ^to commit illegalities ^or ^to default.
^xii. Lifting of ^corporate veil required ⁱⁿ ^the present ^case (Pg ¹⁵⁰ ^Pr ^iv, ^v Reply)
^xiii. ^When ^corporate ^character ^is employed for ^purpose for ^purpose of committing illegality ^or for defrauding ^others, ^the ^court would ^ignore corporate character ^& would ^look ^at reality ^so ^as ^to enable it to pass appropriate orders to impart justice.
^xiv. ^As ^per ^the established principal of ^law Applicant ^cannot ^be deemed ^to be financial creditor ^as defined u/s 5(7) of ^IBC 2016.
^xu. ^Pr 26,29,30,32,34 Shree Sulphurics ^Private Limited ^vs. C M Smith and Sons Ltd. NCLT- Ahmedabad
xvi.
^Pr 48,51 Phoenix ^Arc ^Private Limited ^vs. Spade Financial Services (2021) 3 ^SCC 475
xvii.
Paragraph 4,5,14,23,24 ^and ²⁷ of ^Earth Gracia Buildcon ^Pvt. Ltd. ^vs. ^Earth Infrastructure Ltd. (08.06.2021 NCLAT)
xviii.
Paragraph 24-26- Gp. Capt Atul Jain ^vs. Hospital ^Pvt Ltd. and Ors. NCLAT- 27.07.2023
^xix. Financial mismanagement ^and embezzlement offunds by P1 (Pg 142 ^Pr ^h Reply)
^a. P1 ⁱⁿ order ^to show sales growth ^to investors caused ^the products ^to ^be indented ^to ^the stockists without actual ^sales ^to the end customers. Absence of actual retail sales, products remained ^with the stockists ^and got expired. ^Products ^returns ^to ^the ^R. ^R ^had ^to issue credit notes of Rs. 64 lakhs (143 ^Pr ^I Reply) (Pg 131-132 ^Pr ^8.51 HC)

^b. ^{Financial transaction-} siphoning off of funds from the R and misappropriating the ^same towards personal expenses/consideration. P abused his position by creating layers of transaction being ^on both sides of the ^contract for sole personal benefit. (Pg ¹⁵⁶ ^Pr ^11- Reply)
^c. Funds of the company including unsecured loans and share capital entirely ^used ^up by P1 (Pg ^126-127 Pr 8.41 High Court records)
^iv.Excess remuneration ^to the ^tune of Rs. 48,82,000/-from Respondent before Respondent commenced its operation. (Pg 141 ^Pr f- Reply)
^a. P1 entitled to 20% hike however took remuneration equivalent ^to 45%- clear ^breach of the ^terms ^and conditions of MoU. (Pg 141-142 ^Pr f Reply)
^b Board meeting- 31.08.2014- resolved that ^remuneration of P1 would ^be reduced ^to Rs. 50,000/- (Pg 144 ^Pr ¹ Reply NCLT)
^c. Salary ^taken by P1: Rs. 1,52,60,004/- ^p.a. (Ref: Pg 45)
v.
P1 unilaterally decided ^to infuse ^the funds rejecting other forms of infusing funds ^with the sole objective of withdrawing ^the ^said funds ^at ^a higher ^rate by applying ^interest ^at ^the ^rate of 12%. ^No ^reason ^as to why ^loan ^is required. Funds ^withdrawn ^at ^his ^own ^whims ^and fancies (Pg 144 ^Pr ^m Reply)
^a. P ^on behalf of Respondent ^would sign ^consent for obtaining ^the ^loan from himself. (Pg ¹⁵⁰ ^Pr ii Reply) Acknowledgement letters- Pg ^46-63 ^Ann H
^b. ^P withdrawing ^money from ^R ^under the guise of repayment of loan. (Pg 150 ^Pr ⁱⁱⁱ Reply) (Ledger: Pg 619-621 ^{Ann K} Reply) Entries made ⁱⁿ ^the books of the ^accounts of the

company ^as ^per instructions of P1 when he ^was in charge ^of ^management. (Pg ¹⁵⁵ ^Pr ⁹ Reply) (Pg ¹⁵⁶ Pr 12 Reply)

^vi. No ^consent of board of respondent/investors ^to undertake liability of taking ^and repaying director's loan ^at the stated ^rate of ^interest (Pg 144-145 ^Pr ⁿ Reply)

vii.

At the ^time of resignation of P1, huge liabilities-statutory and non-statutory ^were standing ⁱⁿ ^the ^books of ^the Respondent. ^P1 resigned w.e.f. 28.04.2015 (Pg ^{145-146 Pr} ^s Reply)

^III. Applicant ^are not financial creditors ^& ^nо financial ^debt ^as defined ^u/s 5(7) ^& 5(8) of IBС ^2016. (Pg 149-150)

^i. Applicant filed petition and ^has raised claim only ^to pre-empt legal ^action against ^him for financial mismanagement ^and ^breach of fiduciary ^duties ^and ^as ^counter blast. (Pg 154-155 ^Pr ⁸ Reply)

^ii. ^Financials of ^R- Pg ^774- Liability ^towards P ^as Contingent liability

Contingent Liability- AS 79- ^10.4 A contingent liability is: (a) ^a possible obligation ^{that arises} from ^past events and the existence of which will be confirmed only by the ^occurrence ^or ^{non-occurrence} of ^one ^or ^more ^uncertain future ^events ^not wholly within the control of the enterprise; ^or (b) ^a present obligation ^that ^arises from past ^events ^but ^is ^not recognised because: (i) ^it ^is ^not probable ^that ^an outflow of ^resources embodying ^economic benefits will be required ^to ^settle ^the obligation; ^or (ii) ^a ^reliable ^estimate of the ^amount of ^the obligation cannot be made.

iii.

Paragraph ^VI- Priyaraj Electronics Limited ^vs.

^Motorola India (Private) Limited ^CP No. ¹⁷ of ^2006. (P&H High Court)

^iv. R company is Profit making (Pg 778)

^IV. Petition ^has ^been filed for ^recovery ^& ^not for resolution of respondent. (Pg 150-151)

^i. Petition preferred by Applicant is for sole purpose of recovery ^& ^not for resolution of respondent ^& ^same ^is evident from ^legal ^notice ^dt. 12.07.2016 ^& 09.08.2016.

ii.

Evident from ^notice dt. 12.07.2016- ^Claim ^is majorly ^towards outstanding salary, ^interest ^& determination of WDV of fortuner ^Car bearing registration ^no. GJ-01-RB-8343.

^iii. Object of ^IBC 2016 ^is resolution of companies, petition ^is filed for ^recovery ^& extortion ^is not maintainable ^& ^this authority u/s ⁶⁵ of IBC 2016 ^be pleased ^to impose penalty ^on Applicant for preferring present petition.

^V. Respondent is profit making ^company. Pg 151

Present management ^has turned respondent into profit making company ^which ^was loss- making due ^to ill management ofApplicant. (Ann ^I 610-611)

^ii. ^It ^is held by Hon'ble Apex Court ^as well ^as ^various ^other ^tribunals ^& ^court ⁱⁿ ^India ^that Adjudicating Authority has consider ^matters of financial ^health ^& viability of CD before initiating CIRP ofCD.

^iii. Respondent ^is profit-making entity ^& ^claim ^is malafide ^& filed for ^sole ^purpose of harassing respondent.

iv.

Pr 59 Vidharbha Industries ^vs Axis Bank Limited 2022 SCC OnLine SC 841

^VI. ^Civil ^Suit filed by ^R against Applicants ought ^to ^be determined together.

^SPCS ^no. 193 of 2017 before Hon'ble Principal ^Civil Judge Ahmedabad ^at Mirzapur for claim of Rs.5,09,73,326/-inclusive ofinterest ^at 12% till date because Applicant ^as directors caused misappropriation offunds leading ^to ^loss ^to the ^tune of ^Rs. 4,34,38,539/- ^to respondent.

ii.

Set off/counter claim permitted: Vidharbha Industries vs Axis Bank Limited 2022 SCС OnLine SC 841

iii.

Pr 17.8, 17.11- IDBI bank Limited and Ors. ^vs. Jaypee Infratech Limited and Ors. ^NCLT ^New Delhi 07.03.2023

^48. Additional affidavit ^was filed by ^the respondent under diary No. 5301 ^dated 5.07.2024 ⁱⁿ compliance ^of order dated 21.06.2024 ^to place ^on ^record ^the complete ^assessment order of ^Income ^Tax Department dated 22.07.2017 for ^the ^assessment ^year 2014-15.

49.

Page 152 records the ^observation of ^the learned assessing officer and ^the observation of ^the assessing officer ^were ^as below:

10. UNSECURED LOANS:
^On perusal of ^the ^books of ^accounts of ^the ^assessee, it is noted that ^assessee has received money ^as unsecured ^loans amounting ^to Rs. 2,86,81,140/-from ^various parties.
10.2 Qualification/ Observation made by the auditor in the Special Audit Report:
"Ledger Account of all parties (i.e. Secured ^as well ^as unsecured loans) from whom Loans have been

^taken ^as ^well ^as repaid by the Company including ^the ^accounts ^which ^have ^been squared off during the year. For the unsecured loans taken during ^the ^year, ^you ^are requested ^to justify ^the conditions of genuineness, identity and creditworthiness of the lender from whom ^loan has been borrowed." Till 15th May, 2017, ^{the Assessee} Company has provided ^complete ^details (i.e. PAN, ^bank ^statements and ^contra confirmation) of Mr. Suresh Puri, Miss/Mrs. Abha Verma, Mr Rajesh Arora and Diabetes Thyroid ^Hormone Research Institute Private Ltd, ^out of ¹⁷ parties from ^whom ^loan accepted during ^the ^year under consideration. For the rest of the parties, the ^Assessee Company has failed ^to justify genuineness ^and ^{creditworthiness} ^both conditions specified u/s 68 ofthe ^Income ^Tax Act, 1961. The ^summary of all those 13 parties ^are ^as under: Sr Name of Additions P Incom Bank Contra Person A ^e Tax State Confir NO N Return m-ent ^ma-tion Bhavna 21,16,02 1 Mandalia 0 ^Loan A/C D. 5,00,000 2 Chafekar ^Loan A/С Jyoti Sahu 15,00,00 3 0 ^Loan A/С Lalit 10,00,00 V ⁴ Agarwal ⁰ Loan A/С Megha В. 5,00,040 5 Shukla ^Loan A/С Narendra 40 ^X 6 Prajapati ^Loan A/C

Naveen 28,00,00 7 이 Mishra Loan A/C Neerajkum 50,000 V V 8 ^ar Loan A/C Neha 9,90,000 ☑ 9 Chokshi ^Loan A/С N. K. 27,00,00 1 Pahala Ο 이 Loan A/C Parveen 61,50,00 ¹ ^X 1 Palaha 0 1 Loan A/C Rakesh 20,00,02 1 이 Gupta 2 Loan A/C Ramesh 10,25,00 ^X 1 Babu Loan 0 3 A/C Grand 2,13,31, Total 140

10.3 Opportunity provided to the assessee:
^10.3.1 ^In ^this regard, ^subsequent ^to ^the ^receipt of ^the special ^audit report, ^the ^Assessee ^was ^issued show caused dated 09/06/2017, the ^relevant para is reproduced ^as hereunder,
^"Your reference ^is invited ^to the observations made by ^the Special Auditor ^contained in Page 450 of the Special Audit Report with reference ^to expenses incurred ^on Doctors, share application ^money received and unsecured ^loan taken. ^You ^are requested to ^show ^cause why, ⁱⁿ ^view of ^the detailed findings of ^the Special Auditor, ^the ^entire ^expenses whose genuineness ^was ^not substantiated by producing ^correct PANS should ^not be disallowed."

10.4 Discussion on replies furnished by the assessee:
^10.4.1 ^In ^response, ^the ^assessee, vide ^its reply furnished ^on 07.07.2017 (erroneously mentioned ^as 07.06.2017), submitted the following:
"There is ^no ^error in ITPAN of the relevant party and ^we ^too ^are ^unaware of ^the methology adopted ^and assumptions ^made by the Auditors during Special Audit. ^The TDS has been deducted in the relevant ^cases and ^TDS certificate ^has also been issued. We shall made available TDS certificate ^as and when desire."
10.4.2
Since, the ^assessee ^was unable ^to furnish any of details and sought ^even ^more time, ⁱⁿ the ^interest provided ^to natural justice, yet ^another opportunity ^was the ^assessee vide order sheet noting dated 07.07.2016 ^and ^the ^assessee ^was requested ^to furnish ^the requisite details ^on ^or before 12.07.2017. ^It ^was also clearly to ^intimated ^to ^the ^assessee ^vide ^an ^order ^sheet noting ^this effect ^that ^no further opportunities could be granted since the ^assessee had already ^been accorded regard repeated ^and sufficient opportunities ⁱⁿ this order). (copy of ^order sheet annexed with ^assessment
10.4.3
Нowever, ^on the appointed date ^the ^assessee ^In view of the again failed ^to furnish ^any details. noting ⁱⁿ repeated failure of the assessee, ^a detailed and the ^this regard ^was made ⁱⁿ ^the order sheet why ^its ^assessee ^was specifically requested ^to explain of any inability should ^not be construed ^as absence record which is substantiating evidence, document ^or ^not be rejected ^now being created ^and therefore should the A/R of the outright. However, ^on ^the request of granted ^to ^the ^assessee yet ^another opportunity ^was ^to furnish all ^assessee and the ^assessee ^was requested of order ^sheet remaining details ^on 13.07.2017. (cоpy annexed with assessment order). furnished
10.4.4
^On the appointed date, ^the ^assessee order sheet ^certain information for which ^a detailed entry ^was made.

^10.4.5 The date of hearing ^and ^submission of details ^was fixed for 17.07.2017. ^In this regard, it is pertinent ^to ^mention ^that ^the ^assessee ^was fully ^aware ^that ^the scrutiny ^assessment proceedings ^were of time barring nature with the assessment getting time bared ^on 23.07.2017 ^and ^the ^same had ^time ^and again ^been specifically mentioned ⁱⁿ ^all notices ^and order sheet ^entries. ^On ^the appointed day, the ^assessee failed ^to ^appear ^as ^also furnished ^any ^details ^whatsoever ⁱⁿ compliance ^to ^the specific ^query raised ⁱⁿ ^this regard.
10.5 Concluding remarks and decision:
10.5.1
Before ^a discussion ^on the details furnished by the ^assessee is made, it ^is relevant to revisit the provisions u/s 68 of the Act. Section ⁶⁸ of the ^Act reads ^as hereunder,
^"Where ^any ^sum ^is found ^credited ⁱⁿ ^the ^books of ^an ^Assessee ^maintained for ^any previous ^year, ^and ^the ^Assessee offers ^no ^explanation ^about ^the ^nature and ^source thereof ^or ^the explanation offered by ^him ^is not, ⁱⁿ ^the opinion of ^the Assessing Officer, satisfactory, ^the ^sum ^so credited ^may ^be charged ^to ^Income ^tax ^as the ^income of^the ^Assessee of ^that previous ^year."
^10.5.2 ^As such, ^while analyzing ^loan ^transactions through the ^sieve of ^the provisions of ^the aforementioned section, ^any transaction has ^to ^pass the following ^tests:
^1. Identity of^{the Unsecured} ^Loan ^Parties
^2. Capacity ^or Creditworthiness of Unsecured ^Loan Parties and
^3. Genuineness of ^the transactions.
10.5.3
Needless to ^say, that all three parameters listed hereinabove have ^to be satisfied ^so ^as ^to prevent the application u/s 68 of the ^Act. Furthermore, ^the ^tests cannot be construed ^as ^mere production of dumb documents ^which ^can ^serve ^the purpose of proving ^the identity, creditworthiness and genuineness. ^The evidence furnished should be credible ^and coherent and

beyond reasonable doubt. If ^that ^is ^not ^so ^then ^any ^set of dumb documents having reference ^to ^a ^certain ^loan ^transaction ^can ^be manufactured ^and the ^purpose of ^the section defeated. ^This ^is definitely ^not the legislative ^intention behind the section.

10.5.4
When the above laid conditions ^are ^not satisfied beyond reasonable doubt, ^then ^Tax ^on ^such ^income ^is ^levied ^at the ^rate of 30% ^as ^per provision of Section 115BBE of the ^Act without ^allowance of ^any deduction ^or expenditure ^under ^any ^other ^provision of ^the ^Act.
^10.5.5 ^In ^this regard, ^on perusal of ^the details ^available ^on record, it ^is evident that the ^assessee furnished only partial ^documents ^to ^the special ^auditor during ^the ^course of ^the special ^audit. Subsequently, ⁱⁿ the ^interest of ^natural justice ^the ^assessee ^was provided ^with ^yet another opportunity during the ^course of the scrutiny ^assessment proceedings after ^the receipt of ^the special ^audit. ^In ^response, ^the ^assessee furnished ^certain ^details ^which ^were analysed ^and ^the irregularities found therein ^are discussed ^as under:

50.

The conclusion of the assessment order which is recorded ^at page -159 and 160 ^was ^as under:

10.5.8
As such the aforementioned ^loan transactions clearly fail ^the ^test ^mandated ^u/s ⁶⁸ of ^the ^Act and ^are therefore deemed to be unexplained credits ^within the ^scope u/s 68 of ^the ^Act. ^As such ^an amount of Rs. 2,47,81,140/- ^is added ^to the income of the ^assessee and taxed u/s 115BBE of the Act. ^The ^assessee shall ^also ^not be allowed ^any deduction whatsoever against such ^income ^as ^per the mandate of ^the section. Since ^the ^assessee ^is found ^to ^have furnished ^inaccurate particulars of income, penalty proceedings ^are separately ^initiated u/s. ²⁷¹ (1) (c) of ^the ^Act.

51.

^The respondent thereafter ^stated ^to have filed ^an appeal against ^order of ^the Income ^Tax assessing officer dated 22.07.2017.

^52. In compliance of the order dated 10.07.2024, ^an additional ^affidavit ^has ^been ^filed by ^the respondent ^on 18.07.2024 vide inward diary No. 5686, wherein, it is stated ^as under:

^"It ^is ^stated ^that ^the respondent ^is filing ^the ^present affidavit ⁱⁿ furtherance of ^the ^hearing ^dated 10.07.2024 ^to place ^on record ^a consolidated ^chart demonstrating the page numbers of invoices and vouchers that ^have ^been analysed by ^the assessing officer of ^income ^tax ^as having ^been approved ^and / ^or signed by ^Mr. ^N. ^K. Palaha, Applicant No. ¹ herein. It is pertinent ^to mention ^that ^the date incorporated ⁱⁿ the ^table ^has been extracted from the ^Assessment Order of ^the ^Incoте ^Таx dated 22.07.2017 for ^the ^Assessment ^Year 2014-2015 ^which forms ^a part of ^the affidavit preferred by ^the Respondent ^on 04.07.2024 ^at ^Annexure-A. The Respondent submits that ^on calculation, ^the total of such fraudulent ^expenses ^which Applicant No. ¹ had approved ^comes ^to ^Rs. 2,04,01,369/-. The respondent -I begs ^to ^annex the consolidated table ^as ^Annexure Colly ^to ^the present affidavit." of

53.

Reply ^{to the} affidavit dated 4.07.2024 and 16.07.2024 ^the respondent ^was ^filed by the Applicant ^on 29.07.2024 ^vide inward diary No. 5947, wherein, it ^is stated ^as ^under:

"Response to the Affidavit dated 04.07.2024 I say that along with this affidavit, the Corporate
Debtor has placed ^on record ^the Assessment Order dated 22.7.2017 for ^the Assessment ^Year 2014-15. in Though ^no ^averments ^are made ⁱⁿ ^the affidavit of relation ^to this Order, it ^was orgued ^on behalf

Corporate Debtor during the ^course of hearing ^held ^on 10.7.2024 that ^as ^the Assessing Officer vide order dated 22.07.2017 has added ^an ^amount of Rs. 2,47,81,140/- ^to ^the ^income of ^the Corporate ^Debtor and has ^not allowed any deduction of amount against ^such ^income, the present petition ^is liable ^to be rejected.

I ^say that in this regard, it ^is relevant ^to state and ^reiterate ^that Section 7 petition ^is required ^to be admitted the moment it is shown that there is disbursement of ^amount from the creditor ^to the debtor.
^I ^say that the stand taken by the Corporate Debtor ^on the basis of the assessment order dated 22.07.2017 is completely misconceived and ^extraneous ^to ^the ^scope of consideration of ^a Section ⁷ application. By virtue of ^Section ²³⁸ of IBC, ^any ^such defence purportedly based ^on ^the provisions of Section ⁶⁸ of ^the ^Income ^Таx ^Act ^{is liable} ^to ^be rejected.
Without prejudice ^to the above, it ^is also ^relevant ^to ^note that the order made by the Assessing Officer records that the Corporate Debtor did ^not submit documents evidencing ^the factum of ^loan advanced by ^the Applicants. The Corporate ^Debtor deliberately did ^not produce ^any documents ⁱⁿ ^so far ^as ^{the loan} ^amounts disbursed by ^the Applicants. This aspect ^is also clearly recorded ⁱⁿ ^the order. ^I ^say ^that had ^the ^Corporate ^Debtor produced ^the documents pertaining ^to ^the Applicants before ^the Assessing officer, ^the observations made by the Assessing officer could have been avoided. Be that ^as it ^may, it is the humble submission of ^the Applicants ^that ^the ^order ^made by ^the Assessing Officer ^or ^the purported violation of Section ⁶⁸ of the ^Income ^Tax Act would ^not disentitle the Applicants ^to maintain ^the present petition u/s. 7 of IBC.
Reply to Additional affidavit dated 16.07.2024
^I ^say ^that ^by ^this affidavit, ^the ^Corporate ^Debtor ^has placed ^on record ^a chart which ^shows ^{that because} of the Applicants, certain expense ^were ^made which ^were fraudulent. ^I strongly deny ^all ^the allegations made ⁱⁿ

^this additional affidavit. ^I ^state ^that ^the Corporate Debtor has made false allegations against ^the Applicants for malafide ^reasons.

^I say that for the ^very ^same purpose, the Corporate Debtor has already filed ^a ^civil suit before the Ld. Civil Court ^which ^was transferred ^to this Hon'ble Adjudicating Authority ⁱⁿ ^the ^year 2019. ^I ^say ^that ^no steps ^were ^taken for ^a period of ^almost ³ ^years for listing of ^the said ^suit before ^this Hon'ble Adjudicating Authority.

54.

^In absence of any evidence available ^to the ^company ^to justify ^the ^bogus expenditure ^debited ^by ^the Applicant ⁱⁿ but the books of the company, the company had ^no option ^to withdraw the appeals under ^the ^Vivas ^se Vishwas scheme.

55.

^We ^have heard ^the learned Counsels appearing ⁱⁿ ^the and ^matter for ^the Applicant ^as well ^as for the Respondent No. 1 is an ^Ex-also have perused the documents. Applicant No. ² ^was Director of the Corporate ^Debtor ^and Applicant one of the Promoters of the Corporate Debtor. in Applicant No. 1 was

56.

Till ^the date of his resignation, control of the Company. certain loans ^to the

^57. Applicant No. ¹ and ² have advanced amount of Rs. Corporate Debtor aggregating ^to principle W

1,74,90,000/-. ^Applicant No. ¹ resigned ^from ^the Company w.e.f. March-2015.

^58. ^Post his resignation certain allegations ^were raised by the Respondent ^on Applicant No. 1, Applicant No. ¹ and ² have filed the present ^transfer petition being Company Petition ^No. 470 ^of 2016 ^with Hon'ble High Court ^of Gujarat which ^was transferred ^to this Tribunal ^on 11.01.2022. of

59.

Before institution ^the Company Petition being No. 470 2016, notice ^was given by ^the Applicants ^to the Respondent to which ^is dated 12.07.2016 calling ^upon ^the Respondent ^to the said ^make payment ^of Rs. 2,95,76,349/-. The reply which is dated ^notice ^was addressed by ^the Respondent majority of 28.07.2016 and ^the Respondent have admitted Respondent ^have the claims of the Applicants. However, etc. against levelled ^certain allegations ^of misappropriation, the Applicant No. 1. ^a ledger

^60. The Respondent have given ^to ^the Applicant thereunder that ^account dated 31.12.2016 acknowledging ^was due and ^interest ^to ^{the tune} of ^Rs. 5,77,743/- ^which payable ^to the Applicants.

61.

Respondent ^have placed before ^us ^an ^Income ^Tax Assessment ^order stating ^that ^certain expenditure ^was added ^to ^the ^income of ^the Corporate ^Debtor ^for ^the ^assessment ^year 2014-2015. Perusal of the said ^assessment order reveals ^that ^loan of ^the Applicant No. 1 ^and ² aggregating ^to Rs. 88,50,000/- ^was ^added ^to the income ^of ^the Corporate Debtor. Against ^which the Corporate Debtor filed ^an appeal ^which ^was ^later ^on withdrawn and submitted ^to the Tax under Vivad ^se Vishwas Scheme.

62.

^It is noted ^{that the} Respondent filed Special ^Suit ^No. 193 of 2017 ^as ^a counter claim which ^was transferred from the Civil Court vide order dated 18.02.2019 ^to this Tribunal. However, it ^cannot be converted under ^the present relevant provisions of ^{the IB} Code, 2016 ^for adjudication ^before this ^{Tribunal. Neither the} Respondent took any steps ^for almost four ^years for converting this ^Civil Suit ⁱⁿ ^a ^proper form ^as shown ^{per the} provisions ^of the IBC ^for adjudication ^nor that any provisions of the IBC ^or Rules which ^states Tribunal transferred Special Civil Suit ^can be heard by this under the IBC. Learned counsel for the Respondent further

submitted that the pleas taken in that Civil Suit has already been ^taken ^care ⁱⁿ ^the reply. Hence, order IA/37(AHM)2023 ^was ^dismissed by ^this Tribunal ^vide dated 16.01.2024 ^with ^a liberty ^to ^the Respondent ^of ^seven days ^to ^take ^all pleas ⁱⁿ additional reply, ^if ^any ^is ^left ⁱⁿ ^terms of the Civil Suit. the

63.

Thereafter, ^no ^any additional reply ^was filed by assailed the order Respondent and rather the Respondent order of the of this Tribunal dated 16.01.2024 ^as well ^as Suit No. 193 of Civil Court dated 18.02.2019 passed ⁱⁿ Civil only notice 2017 ^before ^the Hon'ble High Court ⁱⁿ which of this ^was issued ^without ^any stay ^to ^the proceedings by ^the counsel Tribunal in the ^matter which ^was confirmed ^for ^the Respondent ^on record. Applicants

^64. ^On ^the ^other hand, Learned Counsel ^for the of the decision of the vehemently argued ^that ⁱⁿ ^view matter of Orator Hon'ble Supreme Court in the Designz Pvt. Ltd. Marketing Pvt. Ltd. vs. Samtex 513 and ⁱⁿ the ^case of M. reported ^at 2021 SCC ^Online SC Bank & Ors. reported Suresh ^Kumar Reddy vs. Canara need ^not ^to look into the ^at (2023) ⁸ ^SCC 387, this Tribunal

^counter ^claim ^of ^the Respondent. ^He ^further argued ^that decision in the matter of Vidarbha Industries vs. Axis Bank Ltd. is based ^on the facts and circumstances of that matter and the decision in the ^case of Innovative Industries under ^Section ⁷ ^was held ^as good ^law ^as ^per ^decision ⁱⁿ ^the Ors. matter of Suresh Kumar Reddy ^vs. ^Canara ^Bank ^&

65.

It is ^seen that present Petition is continuation of the ^was instituted Company Petition No. 470 ^of 2016 which Section 4 ^was ^when ^the pecuniary limit under Rs.1,00,000/-.

^66. Without going into controversy ^of crystalizing ^the amounts which in ^our view is payable ^to ^the Applicant No. ¹ ^and ^2, Corporate Debtor has the job of ^the IRP, ^we hold that ^the the present committed default exceeding Rs.1,00,000/-, admission. petition is complete and deserves above facts and circumstances,

67.

Accordingly, ⁱⁿ light of ^the it is, hereby ordered ^as under:-Debtor CMR Lifesciences

(i)

^The Respondent/Corporate Insolvency Private Limited is admitted in Corporate of the Code. Resolution Process under section 7

Section

(ii)

As ^a ^consequence thereof, ^moratorium under ¹⁴ of Insolvency and Bankruptcy Code, 2016 ^is of declared for prohibiting all of ^the following in ^terms ^Section 14(1) ^of the Code.

^a. ^The institution of suits ^or continuation of pending Debtor ^suits ^or proceedings against ^the Corporate or including execution of ^any judgment, ^decree order ⁱⁿ any ^court of law, tribunal, arbitration panel ^or other authority;

^b. Transferring, encumbering, alienating ^or disposing any of by the Corporate ^Debtor ^any of its ^assets ^or legal right ^or beneficial interest therein;

^C. Any action ^to foreclose, ^recover ^or enforce ^any Debtor in security interest ^created by ^the Corporate action under respect of its property including any of Financial the Securitisation and Reconstruction Act, Assets and Enforcement of Security Interest 2022; ^an ^owner ^or lessor

^d. ^The ^recovery of ^any ^property by ^or in the ^where ^such property is occupied by possession of^the Corporate Debtor.

^e. ^The provisions of sub-Section (1) shall however, as ^not apply to such transactions, agreements Government in ^may be notified by the Central ^sector regulator ^consultation with any financial to a and ^to ^a surety ⁱⁿ ^a ^contract of ^guarantee Corporate Debtor.

(iii)

^The ^order ^of ^moratorium ^under ^section ¹⁴ ^of ^the ^Code shall ^come to effect from the date of this order till the completion of the Corporate Insolvency ^Resolution Process ^or until this Adjudicating Authority ^approves ^the ^Resolution ^Plan ^under sub-section (1) of ^section 31 ^or passes ^an order for liquidation ^of ^the ^corporate debtor under Section 33 of the IBC 2016, ^as the ^case may be.

(iv)

However, ⁱⁿ ^terms ^of Section 14(2) ^to 14(3) ^of ^the Code, ^the supply of essential goods ^or services ^to ^the ^corporate debtor ^as ^may be specified, if continuing, ^shall ^not ^be ^terminated ^or suspended, ^or interrupted during ^the ^moratorium period. The ^corporate debtor ^to provide effective assistance ^to the IRP ^as and when he takes charge of the assets and management of the corporate debtor.

(v)

^As proposed by ^the ^Financial Creditor, ^we ^appoint ^Mr. ^Sunil ^Kumar ^Kabra ^as IRP having Registration No. IBBI/IPA/-001/IP-P01011/2017-18/11662 under section ¹³ (1)(c) ^of the Code ^to act ^as ^Interim Resolution Professional (IRP). ^He shall conduct the Corporate Insolvency Process ^as per the Insolvency and made Bankruptcy Code, 2016 ^r.w. Regulations thereunder.

(vi)

The IRP ^so appointed shall make ^a public ^announcement of the initiation of Corporate Insolvency

Resolution Process and call for submissions of claims ^under ^section ^15, ^as required by ^Section 13(1)(b) ^of ^the Code.

(vii)

^The ^IRP ^shall perform ^all ^his functions ^as contemplated, ^inter-alia, by ^sections 17, 18, ²⁰ and ²¹ of ^the Code. ^It ^is further ^made ^clear ^that ^all personnel connected ^with ^the corporate debtor, ^its promoters, ^or any other person associated with the management of ^the ^corporate debtor ^are ^under legal obligation ^as ^per section 19 of the Code ^to extend ^every assistance ^and cooperation ^to the IRP. ^Where ^any personnel of ^the ^corporate debtor, ^its promoters, ^or ^any ^other person required ^to assist ^or co-operate with IRP, do ^not assist ^or cooperate, the IRP is ^at liberty ^to ^make appropriate application ^to this Adjudicating Authority ^with ^a ^prayer for passing ^an appropriate order. ^the corporate

(viii)

^The IRP is expected ^to ^take ^full charge of ^any delay debtor's assets, and documents without in whatsoever. He is also free ^to take police assistance the Police this regard, and this Court hereby directs Authorities ^to render ^all assistance ^as ^may ^be required by ^the IRP in this regard.

{ix) The IRP shall ^be ^under ^a duty ^to ^protect ^and ^preserve debtor ^the value ^of the property of ^the 'corporate the corporate company' ^and ^manage ^the operations ^of ^a part of debtor company ^as ^a going ^concern ^as 20 of the Code. obligation imposed by ^section

(x)

The ^IRP ^or the RP, ^as the ^case may ^be shall submit ^to ^this Adjudicating Authority periodical ^report ^with regard ^to ^the ^progress ^of the CIRP ⁱⁿ respect of the Corporate Debtor. to pay IRP ^a ^sum of

(xi)

^We direct ^the ^financial ^creditor Rs.2,00,000/- (Rupees ^Two Lakh Only) ⁱⁿ ^advance order to within ^a period of 7 days from the date of this issuing public ^meet the ^cost ^of CIRP arising ^out of ^CoC decides notice and inviting ^claims etc. till ^the about his fees/expenses. ^to communicate this order ^to

(xii)

^The Registry ^is ^directed and ^to the the financial creditor, corporate debtor, the concerned Interim Resolution Professional, Insolvency and Registrar of Companies ^and ^the after completion ^of Bankruptcy Board of India working days and ^necessary formalities, within ^seven website immediately after upload the ^same ^on the The Registrar of pronouncement of the order. by updating ^the Companies shall update its website ^Debtor ⁱⁿ MCA portal ^Master Data ^{of the} Corporate of this specific ^mention regarding ^admission report ^to Application ^and shall ^forward ^the compliance the Registrar, NCLT.

(xiii)

The commencement of ^the Corporate Insolvency Resolution Process shall be effective from the date of this order.

^68. Accordingly, ^this Application TP/3/AHM/2022 ⁱⁿ ^CP ^No. 470 of 2016 is admitted. ^A certified ^copy of this order ^may be issued, if applied for, upon compliance with all requisite formalities.

Nand Kishore Palaha & Anr. vs CMR Lifesciences Pvt. Ltd.

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