Pradeep Puri And Anr. vs Union Of India And Anr.

S.

No.",Instrument,Name

4.,Mutual Fund,"Franklin â€" India Credit Risk Fund (G)

[Folio: 4069911571345]

5.,Mutual Fund,"Franklin â€" India Dynamic Accrual Fund

(G) [Folio: 1569911826715]

6.,Mutual Fund,"ICICI Pru- Equity & Debt Fund (M) (D)

[Folio: 9669698/17]

7.,Mutual Fund,"Principal â€" Hybrid Equity Fund (M) (D)

Payout [Folio: 61096362]

8.,Mutual Fund,"HDFC â€" Balanced Advantage Fund (D)

[Folio: 11889475/27]

9.,Mutual Fund,"ICICI Pru- Balanced Advantage Fund Reg

(M) (D) [Folio: 9669698/17]

10.,"LIC Policy â€

Jeevan Shree","Policy No. 112293696 maturity on 15-09-

2022

11.,MREF Fund,"IL&FS Milestone Fund I â€" Milestone Real

Estate Fund (MREF) â€" Folio No. 12110

12.,"Piramal

Indiareit Fund

Scheme V",Folio No. 62812 (Jointly held with wife)

has been misconstrued by the asset managers to the obvious disadvantage of the Applicant.,,

Now, the Applicant is before us seeking the following Reliefs:",,

a) The order dated 27/09/2019 be modified to state that the amount of Rs. 5,00,000/- (Rupees Five Lakhs) is permitted to be withdrawn",,

every month during the pendency of the main proceedings Company Petition No. 3638 of 208 or till such time as the Applicant is discharged,,

from being a respondent in the said proceedings;,,

b) That it be clarified that the direction of this Hon’ble Tribunal in its order dated 03/12/2018 in as much as it relates to units of mutual,,

funds, does not prevent the mutual fund from making the payments to the unit holders under the terms of the scheme to the mutual fund;",,

c) That as an interim measure till the hearing and final disposal of the Discharge Application filed by him, he be permitted to withdraw an",,

amount of Rs. 5,00,000/- (Rupees Five Lakhs) per month for meeting his living expenses from the following bank account: HDFC",,

(50100030061772);,,

d) Pass any other order (s) as deemed fit and proper under the circumstances by the Hon’ble Tribunalâ€​.,,

The Respondent while seriously objecting to the prayers contended the following in its Reply to the Application. The continuous failure of IL & FS,,

and its group entities in servicing their debt burden and accompanying mismanagement induced the Respondent to initiate action under sections 241-,,

242 of the Act and to prevent the possibility of a “contagion effect†in the financial milieu. The suspended Board of Directors of IL & FS and its,,

key subsidiaries, which included the Applicant, in abuse of powers thrust upon them increased the debt burden across the IL & FS group through",,

various iniquitous acts including circuitous transactions. Thus, the Applicant cannot dissociate himself from the responsibility that led to the systematic",,

failure of ITNL. While the ship sank, the Directors including the Applicant enriched themselves through handsome remunerations and other personal",,

benefits. There were other financial irregularities as well. The SFIO in its interim report dated 30.11.2018 inter alia named the Applicant as the mind,,

and will of the company who perpetrated the fraud. The SFIO initiated prosecution against persons including the Applicant named in its report dated,,

28.05.2019 in designated special court. It is accordingly submitted that the Application seeking modification of the Order dated 27.09.2019 cannot be,,

allowed.,,

We have heard the learned Sr. Counsel appearing for the Applicant as well as the Director (Legal and Prosecution) appearing for the Respondent.,,

The learned Senior Counsel submitted that the order dated 27.09.2019 passed by this Tribunal may be modified to the effect that the amount of Rs.,,

5,00,000/- (Rupees Five Lakhs) per month may be permitted to be withdrawn. It is further submitted that the Applicant’s immovable properties",,

have been frozen by the Tribunal. Thus, the movable assets such as investments in mutual funds, LIC Policy etc. which were invested out of",,

retirement benefits of the Applicant may be defreezed, so that the Applicant can utilize the same for his financial requirement.",,

In order to buttress his plea, the learned Senior Counsel for the Applicant made the following submissions:",,

a) The Applicant has two daughters of marriageable age, for whom funds would be required.",,

b) One-time withdrawal to the extent of Rs. 5 lakhs ordered by this Tribunal is not adequate to meet the family expenses in a city like Delhi.,,

c) The Applicant’s frozen immovable property amounts to around Rs. 30 Crores. Therefore, his mutual funds may be ordered to be liquidated so",,

as to prevent further depreciation.,,

d) Because of the freeze, the Applicant has not been in a position to utilise the dividend declared by the Mutual Funds.",,

e) The other Respondents who have been charge-sheeted have not been restrained like the Applicant. While the Applicant who has not been charge-,,

sheeted is bearing the brunt of the restraint order. He had been called for the enquiry only once in January 2019.,,

Mr. Sanjay Shorey, Director (Legal and Prosecution) submitted that the movable properties could not be defreezed. However, as far as the",,

request of the Applicant for monthly payment towards the maintenance of the family, it is submitted that the Tribunal can take call on the issue based",,

on the requirement of the family towards the monthly expenses.,,

One Mr. S. Rengarajan, one of the Respondents in the Company Petition, challenged the order dated 03.12.2018 in Company Appeal No. 422 of",,

2018 before the Hon’ble NCLAT. The Hon’ble Appellate Tribunal on 19.12.2018 passed the following order:,,

“During the pendency of the appeal, we allow the appellant to withdraw a sum of Rs. Two Lakhs per month from any one of the bank",,

accounts of the appellant after intimating the Tribunal. The appellant is prohibited from withdrawing any further amount from the said or,,

any other account. This interim order will be applicable from the month of December, 2018 till further orders.â€​",,

In connection with the prayer made in the Application, it would also be beneficial to refer to the order dated 16.01.2019 of this Tribunal in MA No.",,

126 of 2019. One Roopa Kapoor wife of Vaibhav Kapoor (Respondent No. 313 in the Company Petition) moved the MA No. 126 of 2019 in the,,

Company Petition before this Tribunal. This Tribunal in terms of the order dated 19.12.2018 observed:,,

“In the above circumstances we are of the view that order passed by us on 3rd Dec 2018 stands modified to the extent of the order of,,

Hon’ble NCLAT and by implication of that order a sum of Rs. 2 lakhs per month can be withdrawn from bank account after intimating,,

the Tribunal. Hon’ble NCLAT has further prohibited from withdrawing any further amount from the said or any other account.â€​,,

Taking into consideration the concessions given to the wife of another Respondent by this Tribunal and a similarly placed Respondent by the,,

Hon’ble NCLAT almost two years before, we are of the considered opinion that the amount of Rs. 3 Lacs (Rupees Three Lakh Only) per month",,

would suffice towards the personal and family expenses of the Applicant. Under the given circumstances we however are not inclined to permit the,,

Applicant to withdraw Rs. 5 lacs every month from the aforesaid Bank Account in terms of the order dated 27.09.2019 which, as already specifically",,

indicated, was a ‘one-time measure’.",,

The mutual funds having been freezed are not earning any income. The order dated 03.12.2018 did not intend that the investments or the funds,,

etc. of the Respondents would not appreciate nor would be accorded their due benefit under the terms of the Contract with the respective,,

financial/investment institutions. Since the fund managers have freezed the funds which was never intended by the order dated 03.12.2018, it would",,

accordingly be appropriate to direct liquidation of the mutual funds etc in terms of the order infra. We however make it clear that such order would not,,

be a violation of the observation of the Hon’ble NCLAT indicated above. Hence Ordered.,,

ORDER,,

The Application be and the same is allowed in part on contest. The Applicant is permitted to withdraw Rs. 3 Lacs (Rupees Three Lakh only) per,,

month with effect from December 2020 from his Bank A/c. No. 50100030061772 with the HDFC Bank until further orders or disposal of the,,

Company Petition, whichever is earlier. The Applicant within one month hence may liquidate all or any of the mutual funds referred to above and",,

deposit the proceeds thereof in one fixed deposit in any Nationalised bank under intimation to this Tribunal with proof of liquidation and the respective,,

values of the mutual funds duly certified by the Asset Managers. It is hereby made clear that the order dated 03.12.2018 did not prevent the mutual,,

funds from appreciating in terms of their respective schemes. The fixed deposit shall be renewed every six months and no withdrawal shall be,,

permitted from the same, till disposal of the Company Petition. No costs.",,

ORDER,,

The matter is taken up on VC. Mr. Rakesh Tiwari representing the Union of India and Mr. Shah Regional Director are present. Orders pronounced,,

vide separate orders. The Application is allowed in part.,,