Amber Joshi, Director vs Noble Co-Operative Bank Ltd. & Anr

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) (Insolvency)No. 814-815 of 2019

IN THE MATTER OF:

Mr. Amber Joshi, Director .....Appellant Vs. Noble Co-operative Bank Ltd. & Anr. ......Respondents

Present :

For Appellant: Mr. Bhushan Kapur with Mr. A.K. Kapur, Advocates For Respondents: Mr. Anil Sharma with Mr. Anup Kumar, Advocates for R-2

29.08.2019 - The 'Noble Co-Operative Bank Ltd.' ('Financial Creditor'

(Respondent herein) filed an application u/s 7 of the Insolvency &

Bankruptcy Code, 2016 ('I&B' Code, for short) for initiation of 'Corporate

Insolvency Resolution Process' against M/s. 'Keep in Touch Clothing Pvt.

Ltd.' It was admitted by the 'National Company Law Tribunal' on 3rd July,

2019. Thereafter, an application was filed by Mr. Amber Joshi, Director to

recall the order dated 3rd July, 2019 on the ground that the settlement had

already been reached between the parties on 27th March, 2019 i.e. prior to

the order of admission and a Demand Draft for the sum of Rs. 9 lakhs drawn

on Axis Bank has been paid and encashed by 'Noble Co-Operative Bank Ltd.'

('Financial Creditor'). However, such prayer was not accepted by the

Adjudicating Authority who by impugned order dated 26th July, 2019

rejected the prayer for recall of the order of admission.

Company Appeal (AT) (Insolvency)No. 814-815 of 2019

2. Similar plea has been taken by the Appellant - Director that the

application u/s 7 of the 'I&B' Code preferred by Respondent was not

maintainable and that application u/s 7 of the 'I&B' Code preferred by 'Noble

Co-Operative Bank Ltd.' ('Financial Creditor') was heard by the Adjudicating

Authority ('National Company Law Tribunal') Principal Bench, New Delhi

and order was reserved on 18th March, 2019. However, before the judgement

was delivered on 3rd July, 2019 the parties reached the settlement on 27th

March, 2019.

3. Therefore, as on the date of admission the application u/s 7 of the

'I&B' Code was not maintainable as there was no debt payable in law and in

fact.

4. Respondent - 'Financial Creditor' - 'Noble Co-Operative Bank Ltd.' has

appeared.

5. Learned counsel for the Respondent submitted that the agreement

had not reached finality though a discussion took place pursuant to which

a draft for Rs. 9 lakhs was handed over to the 'Financial Creditor'. The

amount has been encashed and adjusted towards the loan.

6. When we asked the learned counsel for the Appellant to refer the

agreement dated 27th March, 2019 reached between the parties, he placed

reliance on a letter dated 27th March, 2019 written by the 'Noble Co-

Operative Bank Ltd.' which reads as follows:

Company Appeal (AT) (Insolvency)No. 814-815 of 2019admin 2

7. Learned counsel appearing on behalf of the Appellant referred the

Company Appeal (AT) (Insolvency)No. 814-815 of 2019admin 3 aforesaid letter dated 27th March, 2019 and submits that the Demand Draft

has been encashed and the 'Financial Creditor' was bound to withdraw the

case in terms of the said undertaking given on 27th March, 2019.

8. On the other hand, learned counsel for the 'Financial Creditor'

submitted that a Demand Draft was accepted for withdrawal of the case

subject to: -

(i) Realization of the Demand Draft; and

(ii) Approval of the proposal under One Time Settlement.

9. It is submitted that proposal for One Time Settlement has not been

given nor any one-time settlement has been reached between the 'Corporate

Debtor' and the 'Noble Co-Operative Bank Ltd.'- 'Financial Creditor'.

10. Learned counsel appearing on behalf of the Appellant in reply

submitted that the 'Corporate Debtor' has given proposal for One Time

Settlement but it is lying with the 'Financial Creditor'.

11. From the order dated 7th December, 2018 passed by the Adjudicating

Authority ('National Company Law Tribunal'), New Delhi we find that the

total amount claimed by the Bank in the application u/s 7 was Rs.

7,65,862/- as on 30th April, 2018. The 'Corporate Debtor' had shown

inclination for such settlement.

12. One opportunity was given to the 'Corporate Debtor' to settle the

matter. The order dated 7th December, 2018 reads as follows:-

Company Appeal (AT) (Insolvency)No. 814-815 of 2019admin 4 Company Appeal (AT) (Insolvency)No. 814-815 of 2019admin 5

13. Later on 3rd July, 2019 Adjudicating Authority admitted the

application u/s 7 for amount of default + Rs. 7,65,862/- as on 30th April,

2018. From the record, we find that the Adjudicating Authority has noticed

that in an application u/s 7 of the 'I&B' Code the amount shown by the

'Financial Creditor' was Rs. 7,65,862/- as on 30th April, 2018. After order

on 7th December, 2018, the 'Corporate Debtor' paid a demand draft for Rs.

9 lakhs which has been accepted and encashed by the 'Noble Co-Operative

Bank Ltd.' - 'Financial Creditor'.

14. When before admission of the application by Adjudicating Authority,

'Corporate Debtor' had paid and 'Financial Creditor' accepted amount which

was more than what was claimed, there was no more debt due and

outstanding. In the facts of present matter, the act of 'Financial Creditor',

in going on insisting that settlement is not there when even before admission

of the application, it has received more than the amount claimed must be

said to be demonstrating malicious intent and that it did not file section 7

application for purpose of resolution, which attracts section 65 of IBC.

However, we are not proceeding further on that count.

15. For the reasons aforesaid, we set aside the order dated 3rd July, 2019

and 26th July, 2019 passed by the Adjudicating Authority ('National

Company Law Tribunal' PB in IB-722(PB)/2018.

16. In effect, order (s) passed by Ld. Adjudicating Authority appointing 'Interim

Resolution Professional', declaring moratorium, freezing of account and all other

Company Appeal (AT) (Insolvency)No. 814-815 of 2019admin 6 order (s) passed by Adjudicating Authority pursuant to impugned order and

action taken by the 'Resolution Professional', including the advertisement

published in the newspaper calling for applications all such orders and actions

are declared illegal and are set aside. The application preferred by the

Respondent under Section 9 of the ''I&B Code' is dismissed. The Adjudicating

Authority will now close the proceeding. The 'Corporate Debtor' is released from

all the rigour of law and is allowed to function independently through its Board

of Directors from immediate effect.

16. The 'Resolution Professional' submits that his fees are due and he has

already incurred costs and a sum of Rs. 3,37,148/- is payable to him. The

'Corporate Debtor' will pay fee and cost of Rs. 3,37,148/- to the 'Resolution

Professional' to Mr. Anup Kumar within three weeks.

The appeal is allowed with aforesaid observations and directions.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice A. I. S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical)

ss/sk

Company Appeal (AT) (Insolvency)No. 814-815 of 2019admin 7