Akshay Bhansali And Anr vs Amit Gupta

Company Appeal (AT) (Ins.) No. 686-688 of 2022 IN THE MATTER OF: Akshay Bhansali & Anr. ....Appellants

Vs.

Amit Gupta, Liquidator of Nimit Steels & Alloys Pvt. ....Respondent Ltd.

Present: For Appellants: Mr. Abhijeet Sinha, Mr. Samaksh Goyal and Mr. Saikat Sarkar, Advocates For Respondent: Ms. Pooja Mahajan and Ms. Mahima Singh, Advocates

ORDER

09.09.2022: Heard Counsel for the parties. This Appeal has been filed

against the order dated 25.04.2022 and 29.04.2022 passed by Adjudicating

Authority (National Company Law Tribunal, Mumbai Bench) in I.A. Nos.

2665/2021 & 2437/2019 in C.P. (IB) No. 1425/MB/2017.

2. I.A. 2437 of 2019 had been filed by the Resolution Professional where

following prayers have been made:

(a) That the Hon‟ble be pleased to order and direct the Respondents to reverse the amount withdrawn by them from the bank accounts of the Corporate Debtor during the CIRP period of the Corporate Debtor amounting to Rs.1,70,47,240/- (Rupees One Crore Seventy Lakhs Forty-Seven Thousand Two Hundred and Forty Only).

(b) That this Hon‟ble be pleased to order and declare that the transactions analyzed in Section 5.1, Section 5.2 and Section 5.3 of the Transaction Audit Report of the Corporate Debtor as Preferential

Company Appeal (AT) (Ins.) No. 686-688 of 2022 2

and Undervalued Transactions as envisaged in Section 43 and 45 of the Code;

(c) This Hon‟ble Tribunal be pleased to order and declare that the ex-Directors and Promoters of the Corporate Debtor have carried on the business of the Corporate Debtor with an intent to defraud the creditors of the Corporate Debtor or for a fraudulent purpose, as envisaged in Section 66 and 67 of the Code;

(d) This Hon‟ble Tribunal be pleased to order reversal of the transactions as analyzed in Section 5.1, Section 5.2, Section 5.3 and Section 5.4 of the Transaction Audit Report of the Corporate Debtor uptil the amount outstanding to the Operational and Financial Creditor or pass such order as may deem fit considering the said circumstances;

(e) That this Hon‟ble Tribunal be pleased to pass necessary orders under sections 43,45,49,50 and 66 of the Code;

(f) For Costs;

(g) For such other and further reliefs as this Hon‟ble Tribunal may deem fit in the facts and circumstances of the present case.

3. The application was filed in the year 2019 and in said application an

order was passed on 06.11.2019, where following order was passed:

"MA 2437/2019 in C.P. (IB) -1425/MB/2017

After hearing the parties for a considerable time, the counsel for the respondent after consulting his client, i.e. Mr. Akshay Bansali, the erstwhile Director of the company had agreed to return the amounts withdrawn to the extent of Rs. 1,70,47,240/- from the account of the Corporate Debtor during the CIRP period.

The Counsel for the Respondent had agreed that he shall be in a position to repay this money within 45 days, i.e. in 3 tranches of

Company Appeal (AT) (Ins.) No. 686-688 of 2022 3

15 days each from the date of this order. Respondent is directed to return the said amount in three tranches with a gap of 15 days, within a period 45 days from the date of this order as otherwise the appropriate measure can be initiated against the said person.

List on 2.1.2020."

4. An application was filed by the Appellant for modification of the order

dated 06.11.2019 where they prayed for six months time to comply the order to

deposit the amount. By a subsequent order dated 16.12.2019 the Adjudicating

Authority directed the Liquidator to approach the Station House Officer of the

concerned Police Station to lodge an FIR. In pursuance of said order an FIR is

lodged and investigation has already been undertaken.

5. We however, in the present appeal are not concerned with the direction

regarding lodging FIR and criminal investigation therein.

6. The Adjudicating Authority on 25.04.2022 noticing the submission of

Liquidator that even after agreeing to refund the amount of Rs. 1,70,47,240/-

the amount has not been refunded, the Adjudicating Authority directed both

the respondents (who are Appellants before us) to appear before the Bench on

29.04.2022. In the Appeal it has been pleaded that on 29.04.2022 both the

Appellants appeared before the Adjudicating Authority.

7. Subsequently, on 29.04.2022 another order has been passed by the

Adjudicating Authority where Adjudicating Authority recorded the following:

"Ms. Prajakta Menezes, counsel appearing for the Liquidator along

with Liquidator Amit Gupta, Mr. Neerav B Merchant, counsel

Company Appeal (AT) (Ins.) No. 686-688 of 2022 4

appearing for the Respondent No. 1 and 2 i.e. Mr. Akshay Bhansali

and Mr. Haresh Bhansali are present through physical hearing.

The matter is listed on board today for physical hearing, at the

persistent insistence of the counsel appearing for the liquidator to the

effect that the Respondents 1 & 2 Mr. Akshay Bhansali and Mr.

Haresh Bhansali respectively, having given an undertaking before

this bench on 06.11.2019 to make good the loss of an amount of Rs.

1,70,47,240/- being the amount withdrawn by them during

moratorium period did not do so. After hearing the counsel appearing

for the Liquidator and upon perusing the material available on record,

this bench thoroughly satisfied that the respondents have wilfully

disobeyed the undertaking and did not comply the same even after a

lapse of nearly three years. Today, after briefly hearing the matter,

the learned counsel appearing for the Liquidator also brought to the

attention of this bench that the Respondents preferred an appeal in

Company Appeal No. (18/ Insolvency) 154/2020 before the Hon‟ble

NCLAT which was turned down by the Hon‟ble NCLAT vide its order

dated 27.01.2020 by confirming the order of this bench. It is also an

admitted fact that no further appeal was preferred by Respondents

against the order passed by the Hon‟ble NCLAT and thus the order

and the undertaking given by the Respondents attained finality.

Since the Respondents disobeyed their own undertaking, the act of

disobedience squarely falls within the act of „Civil Contempt‟ within

the meaning of Contempt of Courts Act, 1971, apart from attracting

penal provisions under the Code.

The Respondents did not express any ready and willingness to honor

the undertaking even today before this bench and on the other hand

Company Appeal (AT) (Ins.) No. 686-688 of 2022 5

trying to defend as if they have not made such undertaking.

Therefore, under these circumstances this bench has no option except

to find the Respondents guilty under the contempt of courts Act, 1971

for the act of "Civil Contempt".

Respondents are hereby directed to be present in person before this

bench on 02.05.2022 for passing appropriate order.

Registrar is hereby directed to send appropriate requisition to the

concerned police authorities to depute at least two constables on

02.05.2022."

8. Aggrieved by the aforesaid order, this appeal has been filed.

9. Mr. Abhijeet Sinha, counsel for the Appellants submits that the

Adjudicating Authority in the order dated 29.04.2022 has held the Appellants

guilty of contempt under the Contempt of Courts Act, 1971 for act of civil

contempt without drawing any proceeding and without framing a charge and

without giving an opportunity to the Appellants to give their defence.

10. It is submitted that the application I.A. No. 2437/2019 filed by the

Resolution Professional has not yet been finally decided and even if any

contempt is alleged against the appellants, proceeding has to be drawn and

only then the appellants can be awarded punishment, if any.

11. The counsel appearing for the liquidator refuting the submissions of the

Appellant contends that there has been clear undertaking recorded in the order

of the court that appellant shall refund the amount which was withdrawn by

them during the moratorium period. Hence, the appellant having undertaken

Company Appeal (AT) (Ins.) No. 686-688 of 2022 6

before the court to deposit the amount, have not obeyed the undertaking, and

it is clear case of violation of the undertaking given to the court by the

appellant and Adjudicating Authority had no option except to ask them to

appear before the court.

12. We have considered the submissions of the counsel for the parties and

perused the records.

13. Coming to the facts on the record, it appears that Adjudicating Authority

in its order dated 06.11.2019 has recorded undertaking of the Appellant to

refund the amount which was withdrawn during the moratorium period.

14. The subsequent orders passed by the Adjudicating Authority are in I.A.

2437/2019, it was filed by the Resolution Professional praying for the relief as

noted above.

15. The Contempt of Courts Act, 1971 deals with contempt and the

procedure for awarding the punishment of a contemnor. As per the Companies

Act, 2013 Section 425, the National Company Law Appellate Tribunal can

exercise the power to punish for contempt as per the provisions of Contempt of

Courts Act, 1971.

16. When we look into the order of Adjudicating Authority dated 29.04.2022

the observations have been made by the Adjudicating Authority to the effect

that the respondents are guilty under the Contempt of Courts Act, 1971 for the

act of civil contempt.

Company Appeal (AT) (Ins.) No. 686-688 of 2022 7

17. We are of the view that findings of guilt ought not to have been recorded

before framing of charge and before giving an opportunity to the Appellant to

submit their defence.

18. Learned Counsel for the Respondent have submitted that appellant have

not been appearing also before the Adjudicating Authority and it is only after

the order was passed by the Adjudicating Authority the appellant appeared on

29.04.2022.

19. By order dated 02.05.2022 Adjudicating Authority has directed the

Appellant to be arrested and produce before the Court on 06.06.2022. This

Appeal was filed on 08.06.2022 and the matter was under consideration before

the Tribunal.

20. An affidavit has been filed before us by the Appellant No. 1 that

Appellants shall appear before the Adjudicating Authority on 27.09.2022 which

is the next date of hearing. Both the appellants are present before this

Appellate Tribunal and Counsel for the appellants submits that both of them

shall appear on the next date before the Adjudicating Authority.

21. In view of the aforesaid view, we delete the observations made in the

order in last paragraph to the following effect:

"Therefore, under these circumstances this bench has no option except to

find the Respondents guilty under the Contempt of Courts Act, 1971 for

the act of „Civil Contempt‟."

Company Appeal (AT) (Ins.) No. 686-688 of 2022 8

22. We however make it clear that as empowered by the Companies Act,

2013 Section 425 read with Contempt of Courts Act, 1971 Adjudicating

Authority shall be at liberty to initiate proceedings in accordance with law.

23. In view of the affidavit filed by the Appellant that the Appellant

undertakes to appear on next date i.e. 27.09.2022, we set aside the order dated

02.05.2022. All the appeals are disposed of as above.

24. We make it clear that we have not expressed any opinion on merits of the

case of either of the party and it is for the Adjudicating Authority to consider all

aspects and take appropriate decision accordingly.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

sa/nn

Company Appeal (AT) (Ins.) No. 686-688 of 2022