Sandeep Khaitan vs Suspended Board Of Directors, NPIL

“3.

The RP is not present today. The Learned Lawyer Mr A. Verma appearing for RP submits that the RP has filed all documents /papers/information on 27/04/2021 before this Registry as directed by this Bench on 24/03/2021. However, it is observed from the Documents filed, the RP has filed the document relating to point no (a) only i.e. copy of the FIR. No other documents have been filed as directed from point no (b) to (h).

6.

The RP is once directed to file related papers/documents/information from point b to h as called for in our order dated 24/03/2021 within fifteen days from today so that appropriate order may be passed to ensure the Objectives of IBC are achieved. The RP is also directed to be present in person on next hearing day for certain clarifications.’

“ 11. Inherent Powers- Nothing in these rules shall be deemed to limit or or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal.”

“ 154. Rectification of Order-

(1)

Any clerical or arithmetical mistakes in any order of the Tribunal or error therein arising from any accidental slip or omission may, at any time, be corrected by the Tribunal on its own motion or on application of any party by way of rectification....”

O R D E R

“The matter is taken up for hearing through Video Conferencing. The Learned Counsels for the Petitioner as well as for the Respondent are present. Mr. Sandeep Khaitan, Resolution Professional is also present in person. Heard both the sides. Since, the matter is pending before the Hon’ble Supreme Court, all the other related matters are adjourned today.

2.

The Learned Counsel for the Director of the Suspended Management Shri Piyush Periwal submits that the personal account of Shri Periwal maintained with HDFC Bank is still blocked and he has not been allowed to operate his personal account in spite of the Order of this Bench dated 22.02.2021. It is not clear, when the RP has submitted that he has not given any instructions to any Bank to block the operation of Personal Account of Shri Piyush Periwal, how the Personal Accounts of the Director are blocked by the Banks. The Learned Counsel for the Director of the Suspended Management has prayed for directing especially the HDFC Bank to allow operation of the Personal Account. The necessity and importance of a Personal Account in these days are known to everyone. HDFC Bank as well as other Banks, if any, with which the Director of the Suspended Management is operating his Personal Account, are hereby directed to allow operation, if blocked only in relation to CP(IB) No.9/GB/2019 immediately. Any delay in unblocking the accounts shall attract the other provisions of the IBC, besides penalty.

3.

The Learned Counsel for the Suspended Management has reiterated once again the submission made by them in their Affidavits filed before this Bench on 07.03.2021 with regard to the expenses amounting to Rs.86,27,694.00 especially the said expenses of Rs.32.50 lacs.

The Learned Counsel for the Suspended Management has stated that –

(i)

During the CIRP, the Petitioner here Learned RP stopped all trading activities with M & S Ply despite the healthy profits that the CD could have made, if it continued business as usual.

(ii)

When the CD was being managed by the Board, post the orders of the Hon’ble Supreme Court and Hon’ble Tribunal dated 20.01.2020 and 28.01.2020, the management restarted business with M & S Ply to keep the CD as a going concern. As per the Petitioner’s own admission in his layoff notice dated 28.01.2021, no one was willing to supply material to the CD during CIRP. In March 2020, the CD under the management placed an order of 10 trucks with M & S Ply and paid an advance against these supplies of Rs.25 lacs to M & S Ply between 06.03.2020 and 17.03.2020. These orders were manufactured by M & S Ply as per the specific requirements of the CD but could not be supplied due to the nationwide lockdown on 25^th March 2020 for COVID-19.

(iii)

Once lockdown was lifted, CIRP had resumed based on the order of the Hon’ble Tribunal dated 27.04.2020 and the Petitioner stopped all business of the CD. All production in the CD’s factory has been suspended by the Petitioner since 07.07.2020 and the Petitioner declared a layoff on 28.01.2021. The Petitioner also stopped all trading activities being conducted from the Delhi office of the CD, despite the orders already placed with M & S Ply. The Learned Counsel has alleged that the Resolution Professional has filed FIR against the supplier of the raw materials to the CD and therefore, no one was ready to supply raw material to the CD Production has been suspended. Layoff has been declared on 28.01.2021. On the other hand, the Learned Counsel of the RP as well as the RP in person have submitted that there is no funds available to keep the CD in operation and funds have been reportedly paid by the CD to the Associate Companies. The RP has filed IA under Section 43, 45 etc. before this Bench in this regard.

4.

Though the RP has stated that he has not filed FIR against the Promoter Director of the CD, but he has filed an Affidavit on 17.03.2021 before the Registry enclosing the copy of the orders of the Hon’ble High Court dated 04.02.2021 and the Hon’ble Supreme Court dated 23.02.2021 relating to the FIR, criminal case with a prayer for taking on record and passing appropriate orders.

5.

Part of the order of the Hon’ble High Court is reproduced below:

Order of the Hon’ble High Court dated 04.02.2021

“Case No.Crl. Pet./454/2020

ISVM Plywood Industries Ltd.

Versus

The State of Assam and Anr.

2.

Sandeep Khaitan

ORDER

Date: 04.02.2021

This interlocutory application has been filed by the petitioner praying for an interim direction to allow the petitioner to operate its bank account No.149905001306 maintained with the ICICI Bank Limited, Chandrasekharpur Branch, Bhubeneswar and to unfreeze the bank account of its creditors over which lien has been created and the accounts have been frozen pursuant to lodging of an FIR by the Respondent No.2.

Learned counsel for the petitioner submits that the petitioner company had financial relation with the National Plywood Industries Limited (NPIL) and it had supplied goods to NPIL, for which NPIL is liable to pay a huge amount to the petitioner. It is also contended by the learned counsel for the petitioner that an insolvency proceeding has been initiated in respect of the NPIL and the respondent No.2 has been appointed by the Company Law Tribunal as Resolution Professional.

An amount of Rs.32.50 Lakhs was received by the petitioner on 18.04.2020 from the NPIL towards outstanding dues through a regular banking channel and the payment confirmation made by the NPIL was also received by the petitioner. Even after receiving the said amount of Rs.32.50 lakhs from the NPIL on 18.04.2020, there was an outstanding amount of approximately Rs.39.62 lakhs as on 07.06.2020 due from the NPIL. However, in the meantime, an FIR was lodged by the respondent no.2, who has been appointed as resolution professional in respect of NPIL alleging that the suspended CMD of the NPIL siphoned of Rs.32.50 lakhs by way of transferring the same to the account of the petitioner without authority. In connection with the Margherita P. S. Case No.112/2020, which was registered on the basis of the said FIR and upon instruction from the respondent No.2, the ICICI Bank Limited, Chandrasekharpur Branch, Bhubaneswar proceeded to mark lien on the account of the petitioner. The bank account of the creditor of the petitioner company maintained with various banks to which money was transferred by the petitioner in course of business transactions were also frozen. It is also submitted that the bank account of NPIL maintained in the ICICI Bank Limited was also initially frozen and lien was created, but subsequently the lien was lifted from the bank account of the NPIL.

It is the contention of the learned counsel for the petitioner that the entire allegation made in the FIR was against the CMD of the NPIL, who was purportedly suspended after initiation of the insolvency proceeding, inasmuch as, the gravamen of the allegation was that the suspended CMD has transferred the said amount to the account of the petitioner without any authority. Mr. Chakraborty also submits that the money was deposited with the account of the petitioner towards payment of the dues which the NPIL owed to the petitioner for supplying goods and still there are outstanding amount due from the NPIL after deposit of Rs.32.50 lakhs. The lien on the bank account of the petitioner and other bank as indicated above were created illegally under the instruction of the respondent No.2, which has caused immense hardship to the petitioner company, which has more than 300 employees engaged in remote areas. Learned counsel for the petitioner further contended that the petitioner is ready to abide by any condition including execution of bond for alleged amount of Rs.32.50 lakhs.

Learned counsel for the respondent submits that the petitioner has filed another writ petition being WP(C) No.118/2020 before the Itanagar Permanent Bench of this Court relating to the same issue and as such, no interim order can be passed in the present petition, inasmuch as, the issue pertaining to the interim relief sought herein was also involved in the said writ petition. In response to the above submission, learned counsel for the petitioner submits that the petitioner is ready to give an undertaking to withdraw the said writ petition filed before the Itanagar Permanent Bench, if an interim order is made subject to the condition of withdrawal of the said writ petition.

From the material on record, it is apparent that there was business relation between the petitioner company and the NPIL, which is evident from the various documents annexed to the petition. Only question raised in this FIR is that the money was transferred by the suspended CMD without any authority, inasmuch as, the entire state of affairs of NPIL was vested with the respondent No.2, who has been appointed as resolution professional. Only incriminating allegation against the petitioner is that the suspended CMD has personal interest in the petitioner company being an associate company, which is however, a disputed fact required to be investigated by police.

But that as it may, having considered the entire gamut of the matter and the nature of accusation brought against the present petitioner, I am of the view that freezing of all the bank accounts as indicated above would certainly cause unnecessary hardship, which may not be necessary for the investigation of the present FIR in view of the nature of accusation made therein as well as in view of the offer made by the petitioner to furnish a bond. Therefore, in my considered view, the petitioner is entitled to the interim relief as sought for. Accordingly, it is provided that the lien created upon the bank account No.149905001306 maintained with the ICICI Bank Limited, Chandrasekharpur Branch, Bhubeneswar be lifted, the petitioner and its creditors shall be allowed to operate the bank account over which lien has been created and the accounts have been frozen pursuant to the instruction of the respondent No.2 in connection with Margherita P.S. Case No.0112/2020, until further order of the court.

It is however, made clear that the interim relief granted to the petitioner as above with regard to unfreezing the bank account and lifting of lien shall be subject to the condition that the petitioner shall withdraw the WP(C) No.118/2020 filed before the Itanagar Permanent Bench of this Court and furnishing an indemnity bond undertaking to refund the amount of Rs.32.50 lakhs if required, subject to final outcome of the criminal case.

I.A. stands disposed of.”

“Petition (s) for Special Leave to Appeal (Crl.) No(s). 1549/2021

Sandeep Khaitan … Petitioner(s)

Versus

JSVM Plywood Industries Ltd. & Anr. … (Respondent (s)

O R D E R

Issue notice, returnable on 09.03.2021.

Mr. C. K. Rai, learned advocate appearing for R-1 on caveat accepts notice.

Respondent No.2 – State be served through the learned Standing counsel for the State.

The affidavit in response, if any, be filed by the respondent on or before 04.03.2021.

Rejoinder, if any, be filed by 08.03.2021. The matter shall be disposed of finally on 09.032021.

In the meantime, interim relief as prayed for in Para 8(i) is granted.”

“(1)

Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of Section 29-A shall not apply to the resolution applicant in respect of corporate insolvency resolution process of any micro, small and medium enterprises”