Amit Tandon vs Pramjit Singh Saini & Ors
- CitationCompany Appeal (AT) (Insolvency) No. 25 of 2019
Ratio decidendi
The rule this decision rests on
Where a Corporate Insolvency Resolution Process has been triggered by an admission order under Section 7 of the Insolvency and Bankruptcy Code, 2016, the mere allegation that the corporate debtor's funds were syphoned before initiation does not, without more, furnish a ground for recalling that admission order. Where a person alleging pre-initiation syphoning of the corporate debtor's funds has material supporting that allegation, the proper course is to place it before the Resolution Professional, who may refer the matter to the Adjudicating Authority, and the Adjudicating Authority may, on a prima facie case being made out, refer it to the Serious Fraud Investigation Office under Sections 212 and 213 of the Companies Act, 2013, rather than the insolvency process itself being disturbed. Allottees of real estate are financial creditors under the Code, and the Interim or Resolution Professional is to verify their claims from the record and nominate their representative(s) for constitution of the Committee of Creditors.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Amit Tandon ...Appellant
Vs
Pramjit Singh Saini & Ors. ....Respondents
Present: For Appellant: Ms. Meenakshi Arora, Sr. Advocate with Ms. Richa Narang and Mr. Hitesh Mankar, Advocates. For Respondents:
ORDER
07.01.2019: Appellant claims to be the allotee of real estate company - 'M/s PUMA Realtors Pvt. Ltd.' against which Corporate Insolvency Resolution Process has been initiated. He filed an application to implead him as party and with prayer to recall the order of admission dated 17th October, 2018 triggering Insolvency Resolution Process against the Corporate Debtor under Section 7 of I&B Code. It was argued that syphoning of funds has given rise to the triggering of Resolution Process or otherwise if the syphoned amount is brought back to the Corporate Debtor then the financial position of the Corporate Debtor would be solvent.
2. Learned Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi by impugned order dated 21st December, 2018 rejected the application for intervention and dismissed the same with liberty to the applicant to file appropriate application before the Interim Resolution Professional/Resolution Professional.
3. Ms. Meenakshi Arora, learned senior counsel for the Appellant submits that huge funds of the Corporate Debtor has been syphoned and forensic audit needs to be conducted.
-2- 4. The suggestion as made by learned senior counsel may be correct but on such ground triggering of the Corporate Insolvency Resolution Process cannot be recalled. We are of the view that if there is any evidence available with the Appellant to suggest that certain sums of the Corporate Debtor have been syphoned prior to initiation of Corporate Insolvency Resolution Process, the Appellant should bring it to the notice of the Resolution Professional with request to refer the matter to the Adjudicating Authority or NCLT, who may consider whether any investigation of Serious Fraud Investigation Office (SFIO) is required in terms of Section 213 r/w Section 212 of the Companies Act, 2013 to find out whether funds of the Corporate Debtor has been Syphoned or not and forensic audit needs to be conducted or not. If any such prima facie case is made out before the Resolution Professional/the Adjudicating Authority it may refer the matter to SFIO for its investigation to find out misappropriation, if any, made by the Directors and officers of the company (Corporate Debtor) and/or finances have been syphoned or not.
5. Allottees of real estate being 'Financial Creditors' in terms of the law, the Interim Resolution Professional/ Resolution Professional will also verify from the record and will nominate their representative as member(s) for Financial Creditors (Allottees), such process should be followed for the purpose of constitution of Committee of Creditors. The appeal stands disposed of with aforesaid observations and directions. No costs.
[Justice S. J. Mukhopadhaya] Chairperson
[Justice Bansi Lal Bhat] Member (Judicial) am/sk Company Appeal (AT) (Insolvency) No. 25 of 2019
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