Ameya Laboratories Ltd(All) vs Kotak Mahindra Bank

Ameya Laboratories Ltd(ALL) A-49, Madhura Nagar, Vengalarao Nagar, Hyderbad-5 Corporate Applicant

Versus

1. Kotak Mahindra Bank, 6-3-1109/1, 1st Floor, Jewelpavani Towers, Raj Bhavan Road, Somajiguda, Hyderabad-500082

2. IDBI Bank Ltd, NPA Management Group, H.No.5-9-89/1&2, 2nd floor, Chapel Road, Hyderabad.

3. Asstt Reconstruction Company (India) Ltd, Unit No.207, Bhuvana Towers, S.D. Road, Secunderabad Respondents

For Appellant:-Ms Varsha Banerjee, Mr. Milan Singh Negi, Mr Kunal Godhwani, Advocates.

For Respondents: - Mr.Uddyam Mukherjee and Mr. Krishnayan Sen, Advocates for Respondent No.1 Mr.R.P. Agrawal with Mr. Suny Verma, Advocates for Respondent No.3.

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

M/s Ameya Laboratories Ltd, corporate applicant preferred an application

under Section 10 of the Insolvency & Bankruptcy Code, 2016 (hereinafter 2

referred to as the 'I&B Code") for initiation of corporate insolvency process in

respect of it. The Adjudicating Authority (National Company Law Tribunal)

Hyderabad Bench, Hyderabad vide impugned order dated 21st August, 2017

passed in CP (IB)No.50/10/HDB/2017 rejected the application under Section 10

of the I&B Code on different grounds including pendency of a winding up

proceedings.

2. Learned counsel appearing on behalf of the corporate applicant submitted

that there is no possibility of the revival of the appellant company. He further

submits that the application under Section 10 of I&B Code was complete having

fulfilled all the statutory requirements in terms of Section 10 of I&B Code and

Form 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority)

Rules, 2016. It was also submitted that the Adjudicating Authority has looked

into the question of revival of the appellant company and held that it cannot be

revived. According to Appellant, the Adjudicating Authority has no jurisdiction

to look into such question of revival of the Company at the stage of an admission

of application under Section 10 of I&B Code.

3. It appears that the Hon'ble High Court of Andhra Pradesh has already

passed order for winding up the appellant company under Section 433 and 434

of the Companies Act, 1956. It is informed that the order of the Hon'ble High

Court of Andhra Pradesh has been stayed by Division Bench in view of the

pendency of the matter before BIFR in Case No.85/2014. Therefore, according

to learned counsel for the appellant the Adjudicating Authority wrongly came to

conclusion that the appellant has already suffered liquidation.

4. Learned counsel appearing on behalf of respondent referred to an order

dated 20th April, 2015 passed by Hon'ble High Court of Andhra Pradesh, 3

Hyderabad in CP No.33/2013. On consideration of relevant facts in the petition

under Section 433 of the Companies Act, 1956, the Hon'ble High Court of Andhra

Pradesh has already come to a conclusion that the appellant, corporate debtor,

was unable to pay the debt and ordered to wind up the appellant company.

5. Learned counsel for the appellant submitted that against the order of

winding up the appellant has preferred an appeal before the Division Bench of

the Hon'ble Andhra Pradesh High Court wherein the Hon'ble High Court vide

order dated 19th August, 2015 passed interim order of stay. The operative

portion of the stay order is reproduced below:

"In view of the law laid down by the Supreme Court in RISHSABH

AGRO INDUSTRIES LTD, all proceedings on or after 02.07.2015

shall, in view of Section 22 of the Act, be stayed. It is made clear

that the stay would operate only from 02.07.2015 onwards and the

proceeding prior thereof shall remain in force. Needless to say that

this order shall not precludes the respondent creditor from invoking

the jurisdiction of the BIFR under the provisions of the Act."

6. According to learned counsel for the respondent the above order dated 19th

August, 2015 no manner whatsoever amounts to stay of the winding up

proceeding nor amounts to stay of appointment of liquidator. Reliance has been

placed on the Hon'ble Supreme Court decision in Shree Chamundi Mopeds Ltd

Vs Church of South India Trust Association, reported in AIR 1992 SC 1439,

wherein the Hon'ble Supreme Court held as under:

"10. "While considering the effect of an interim order staying the

operation of the order under challenge, a distinction has to be made

between quashing of an order and stay of operation of an order. 4

Quashing of an order results in the restoration of the position as it

stood on the date of the passing of the order which has been

quashed. The stay of operation of an orer does not, however, lead to

such a result. It only means that the order which has been stayed

would not be operative from the date of the passing of the stay order

and it does not mean that the said order has been wiped out from

existence. This means that if an order passed by the Appellate

Authority is quashed and the matter is remanded, the result would

be that the appeal which had been disposed of by the said order of

the Appellate Authority would be restored and it can be said to be

pending before the Appellate Authority after the quashing of the

order of the Appellate Authority. The same cannot be said with

regard to an order staying the operation of the order of the Appellate

Authority because in spite of the said order, the order of the

Appellate Authority continues to exist in law and so long as it exists,

it cannot be said that the appeal which has been disposed of by the

said order has not been disposed of and is still pending."

7. It was further contended that Section 11(d) of I&B Code bars the corporate

applicant, in respect of whom order of liquidation has already been made, from

making any petition under Section 10 of I&B Code.

8. From the facts pleaded by the parties we find that the winding up

proceeding has already been initiated against the appellant though an interim

order has been passed by the Division Bench of Hon'ble High Court of Andhra

Pradesh. However, the fact remains that the winding proceeding already initiated

by the High Court is still pending.

5

9. Similar issue fell for consideration before this Appellant Tribunal in "M/s

Unigreen Global Pvt Ltd Vs PNB & Others, Company Appeal (AT) (Insolvency)

No.81/2017". This Appellate Tribunal vide its judgement dated 01.12.2017 held

as follows:

"21. In an application under Section 10, the 'financial creditor'

or 'operational creditor', may dispute that there is no default or

that debt is not due and is not payable in law or in fact. They

may also oppose admission on the ground that the Corporate

Applicant is not eligible to make application in view of

ineligibility under Section 11 of the I & B Code. The Adjudicating

Authority on hearing the parties and on perusal of record, if

satisfied that there is a debt and default has occurred and the

Corporate Applicant is not ineligible under Section 11, the

Adjudicating Authority has no option but to admit the

application, unless it is incomplete, in which case the Corporate

Applicant is to be granted time to rectify the defects.

22. Section 10 does not empower the Adjudicating Authority to

go beyond the records as prescribed under Section 10 and the

information as required to be submitted in Form 6 of the

Insolvency and Bankruptcy (Application to the Adjudicating

Authority) Rules, 2016 subject to ineligibility prescribed under

Section 11. If all information are provided by an applicant as

required under Section 10 and Form 6 and if the Corporate

Applicant is otherwise not ineligible under Section 11, the 6

Adjudicating Authority is bound to admit the application and

cannot reject the application on any other ground.

23. Any fact unrelated or beyond the requirement under I & B

Code or Forms prescribed under Adjudicating Authority Rules

(Form 6 in the present case) are not required to be stated or

pleaded. Non-disclosure of any fact, unrelated to Section 10 and

Form 6 cannot be termed to be suppression of facts or to hold that

the Corporate Applicant has not come with clean hand except the

application where the 'Corporate Applicant' has not disclosed

disqualification, if any, under Section 11. Non-disclosure of

facts, such as that the 'Corporate Debtor' is undergoing a

corporate insolvency resolution process; or that the 'Corporate

Debtor' has completed corporate insolvency resolution process

twelve months preceding the date of making of the application;

or that the corporate debtor has violated any of the terms of

resolution plan which was approved twelve months before the

date of making of an application under the said Chapter; or that

the corporate debtor is one in respect of whom a liquidation order

has already been made can be a ground to reject the application

under Section 10 on the ground of suppression of fact/not come

with clean hand.

xxx

25. Similarly, if any action has been taken by a 'Financial

Creditor' under Section 13(4) of the SARFAESI Act, 2002 against

the Corporate Debtor or a suit is pending against Corporate 7

Debtor under Section 19 of DRT Act, 1993 before a Debt Recovery

Tribunal or appeal pending before the Debt Recovery Appellate

Tribunal cannot be a ground to reject an application under

Section 10, if the application is complete.

26. Any proceeding under Section 13(4) of the SARFAESI Act,

2002 or suit under Section 19 of the DRT Act, 1993 pending before

Debt Recovery Tribunal or appeal pending before Debt Recovery

Appellate Tribunal cannot proceed in view of the order of

moratorium as may be passed.

xxx

28. In a case where a winding up proceedings has already been

initiated against a Corporate Debtor by the Hon'ble High Court or

Tribunal or liquidation order has been passed in respect of

Corporate Debtor, no application under Section 10 can be filed by

the Corporate Applicant in view of ineligibility under Section 11(d)

of I & B Code, as quoted below:

"11. Persons not entitled to make application - The

following persons shall not be entitled to make

an application to initiate corporate insolvency

resolution process under this Chapter,

namely:--

(a) a corporate debtor undergoing a corporate

insolvency resolution process; or

(b) a corporate debtor having completed corporate

insolvency resolution process twelve months 8

preceding the date of making of the application;

or

(c) a corporate debtor or a financial creditor who

has violated any of the terms of resolution plan

which was approved twelve months before the

date of making of an application under this

Chapter; or

(d) a corporate debtor in respect of whom a

liquidation order has been made.

Explanation.-- For the purposes of this section, a

corporate debtor includes a

corporate applicant in respect of

such corporate debtor."

xxxx

32. In view of the provisions aforesaid, we hold that, if any

winding up proceeding has been initiated against the Corporate

Debtor by the Hon'ble High Court or Tribunal or liquidation order

has been passed, in such case the application under Section 10

is not maintainable. However, mere pendency of a petition for

winding up, where no order of winding up or order of liquidation

has been passed, cannot be ground to reject the application

under Section 10.

10. In the present case as we find that a winding up proceeding has been

passed and is pending against the appellant, we hold that the application 9

under section 10 of I&B code at the instance of the corporate applicant is not

maintainable in view of the bar imposed under Section 11(d) of I&B Code.

11. We find no merit in this appeal. It is accordingly dismissed. However,

in the facts and circumstances there shall be no order as to cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member (Judicial) New Delhi 12.01.2018

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