Om Logistics Ltd. vs ... & Ors.

17.04.2023: Heard learned counsel for the Appellant. This Appeal has been filed against the order passed by the Adjudicating Authority on 30.05.2022. The Adjudicating Authority issued a show cause notice to the Appellant under Section 65 code by order dated 29.07.2021. The Appellant filed its reply on 23.11.2021 and thereafter, this order has been passed imposing penalty of Rupees one lakh on the Appellant. The Adjudicating Authority in Para 17 has passed following order:

Learned counsel for the Appellant submits that the application under Section 9 was filed for a debt of Rs.1,02,455/-. CIRP was admitted by the Adjudicating Authority on 26.09.2019 and direction was issued to the Appellant to deposit Rs.50,000/- to meet the expenses of the IRP. Appellant deposited the said amount. An order was passed on 26.11.2019 by the Adjudicating Authority wherein the Appellant’s complaint about exorbitant and unjustified fee which was being demanded by the IRP has been noticed, however, the Adjudicating Authority directed the Appellant to reimburse the IRP with the expenses incurred, which payment was made. Learned counsel for the Appellant submits that several different orders were passed by the Adjudicating Authority for making payment of fee of the IRP and as on date the Appellant has already made payment of Rs.1,23,870/- in compliance of the order dated 28.02.2020 passed by the Adjudicating Authority. It is submitted that the Appellant has already made payment of fee to the IRP which was much more than the claim for which application was filed. It is submitted that the Adjudicating Authority mere on the fact that the Appellant did not participate in the CoC meetings came to the conclusion that proceeding under Section 7 was initiated with fraud and malice. It is submitted that there was no malicious intent nor there is any material. Appellant has been raising his grievances before the Adjudicating Authority regarding exorbitant and unjustified fee asked by the IRP and in the present case which was much more than the claim amount of the Appellant. In such circumstance, there is no basis to come to the conclusion that the initiation was fraudulent or malicious.

We have considered the submissions of learned counsel for the Appellant and perused the record.

The various orders of the Adjudicating Authority which have been brought on the record does indicate that regarding the fee of the RIP several grievances were raised by the Appellant and ultimately on account of the order passed by the Adjudicating Authority on time to time an amount of Rs.1,23,000/- has been paid to the IRP by the Appellant. The fact that in the present case, the Appellant did not participate in the process and attend meetings of CoC cannot lead to conclusion that application was filed for any fraudulent or malicious intention. There is no finding that the claim of the Appellant was false or non-existent. There can be no quarrel to the proposition that if application has been filed with fraudulent or malicious intent, the Adjudicating Authority is fully empowered to impose penalty under Section 65. However, we, after considering the submission of learned counsel for the appellant and looking into the material brought on the record and various orders issued by the Adjudicating Authority regarding payment of fee to the IRP, are satisfied that that there is not fraudulent or malicious intent and Appellant was disgruntled on the account of making payment of fee to the IRP, which was even more than the his claim amount. It is further relevant to be noticed that present is not a case where anyone has filed application under Section 65 and the Adjudicating Authority had suo moto initiated the proceeding and issued show cause notice. There is no material to take any action under Section 65 and impose penalty on the Appellant. We allow the Appeal and set aside order dated 30.05.2022.