Chaitanya Sevabhavi Sanstha vs Mr Manoj Kumar Agarwal

Chaitanya Sevabhavi Sanstha ...Appellant

Versus

Manoj Kumar Agarwal ...Respondent

Present: For Appellant: Mr. Saurabh, Advocate. For Respondent: Mr. Anand Singh Sengar, Advocate for RP. Mr. Puneet Singh Bindra, Mr. Rishabh Gupta and Mr. Someer Sethi, Advocates for SRA.

ORDER

08.11.2023: Heard learned counsel for the Appellant as well as learned

counsel for the Resolution Professional. Learned counsel for the Successful

Resolution Professional was also heard. This Appeal has been filed against

order dated 31.03.2023 by which I.A. No. 895 of 2022 filed by the Appellant -

Chaitanya Sevabhavi Sanstha has been rejected by the Adjudicating

Authority. The Appellant has filed the application where following prayers

were made:

"1. The present Interlocutory Application is filed by Chaitanya Sevabhavi Sanstha ("the Applicant"), under Insolvency Bankruptcy Code, 2016 (hereinafter referred to as "the Code") seeking the following reliefs:

a) Pass an order to condone the delay in filing claim with the Respondent;

Cont'd.../ -2-

b) Pass an order to issue directions to Respondent to treat Applicants and its members at par with secured Financial Creditors;

c) Pass an order to issue directions to Respondent to consider and admit the claim of this Applicant;

d) Pass an order to issue directions to Respondent to take necessary steps to maximise value of assets of Corporate Debtor;

e) Pass an order to issue directions to Respondent to consider interests of all stakeholders of Corporate Debtor including present Applicant and its members;

f) Pass an order to issue directions to Respondent to lift corporate veil of Corporate Debtor and investigate/ascertain validity of money invested by members of Applicant in Corporate Debtor and its group companies/firms;"

2. The Appellant's case is that members of the Appellant have deposited

their savings in the Fixed Deposit Scheme of the Corporate Debtor and group

companies and it is submitted that the funds deposited by the member of the

Appellant's Association were syphoned off by the Corporate Debtor and group

companies and proceedings under PMLA has already been initiated in which

Company Appeal (AT) (Insolvency) No.1323 of 2023 -3-

orders have been passed. It is submitted that the Adjudicating Authority

committed error in rejecting application filed by the Appellant.

3. Learned counsel for the Resolution Professional opposing the

submission of learned counsel for the Appellant contends that the members

of the Appellant Association are not creditors of the Corporate Debtor and

neither their claim has been filed or accepted. He further submitted that the

Applicant himself filed claim after approval of the plan by the Committee of

Creditors. Learned counsel for the Resolution Professional has relied on

findings of the Adjudicating Authority at Para 29 and 30.

4. We have considered the submissions of the parties and perused the

record.

5. With regard to the members of the Appellant Association who claim to

have deposited money in the Group Companies/ Partnership Firm of the

Corporate Debtor, the Adjudicating Authority has returned finding that no

deposit was made in the account of the Corporate Debtor and they have

invested the amount in the Partnership Firm which was managed by same

group.

6. The Appellant by the application claim that the direction should be

issued to treat Applicants as secured Financial Creditors. When the claims

were not filed by the members of the Association as Financial Creditor in the

Corporate Insolvency Resolution Process of the Corporate Debtor, we fail to

see that how can the Appellant can be accepted as Secured Financial Creditor

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in the CIRP. The Resolution Plan was approved by the CoC on 13.08.2021

and the application by the Applicants were filed in the year 2022. The

Adjudicating Authority in Para 29 and 30 recorded the following findings:

"29. In the present application, the members of the Applicant association submit that they have deposited an amount in the group companies/partnership firm of the Corporate Debtor on the request of the erstwhile promoters and directors of the Corporate Debtor. The Applicant has prayed for consolidated CIRP of the 'Corporate Debtor Group Companies' and accordingly during the course of oral arguments, the Respondent has relied on the judgements of the Adjudicating Authority in the cases of Lavasa and Videocon for the same. However, in the present application, the so- called group companies in which the amount was invested are partnership firms. Hence, the question of consolidated CIRP does not arise as partnership firms are not corporate entities and therefore the cases cited by the Applicant cannot be relied upon. Consequently, there cannot be any application of the doctrine of lifting of corporate veil in this application.

30. Apart from the above, we note that the maturity of the fixed deposits of the members of the Applicant with the Corporate Debtor was around the years 2013- 2014. Hence, the period of limitation/recourse as per Article 137 of the Limitation Act, 1963, began running from the date of maturity i.e. from the years 2013- 2014. However, the present claims have been filed in the year 2019. The CIRP was commenced in this case on 26.09.2019. Nothing prevented the Petitioner from

Company Appeal (AT) (Insolvency) No.1323 of 2023 -5-

taking any steps nor any steps were taken by the Petitioner against Corporate Debtor prior to commencement of CIRP against Corporate Debtor. Thus, there has been an inordinate delay in filing barred the present claims by the Applicant. Therefore, the Application is barred by limitation. We find no merits for condonation of delay. Having considered the facts stated as aforesaid and totality of the circumstances this Bench deems it fit to dismiss the present Application. As rightly contended by the RP, RP is not under any legal obligation to admit his claims of any creditors whose claims did not find place in the books of accounts of the Corporate Debtor. Even if the payments alleged to have been made by the Petitioner are true they are not binding on the Corporate Debtor as they were made into the accounts of the group company of Corporate Debtor which has separate legal existence. Therefore, this Bench did not find any illegality or irregularity in rejection of the claims of the applicant by the RP."

7. Looking to the entire facts, circumstances and sequence of events and

submissions made by the counsel for the parties, we are of the view that the

Adjudicating Authority did not commit any error in rejecting the application

filed by the Appellant to treat the Appellant Association as Secured Financial

Creditor. Further the claim of the Appellant could not have been considered

or admitted since it was filed after Resolution Plan was approved by the CoC.

Further, the amount invested was in the Partnership Firm and other Group

Companies.

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8. The submission which was much pressed by learned counsel for the

Appellant is that the amounts were invested in the Partnership Firm/ Group

Companies which were under control of same group. We are of the view that

for money invested by the Appellant Association in the Group Companies/

Partnership Firm, they are free to take up such legal proceedings as

permissible in law, however, there is no fault in the order of the Adjudicating

Authority rejecting their application. With observations as made above, we

dismiss the appeal.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No.1323 of 2023