Deepak Thukral vs Rajesh Kumar Jain

IN THE MATTER OF: Deepak Vinimay Pvt. Ltd. RP of Lakshmi Precision Screws Ltd. ...Appellant

Versus

Rajesh Kumar Jain & Anr. ...Respondents

Present: For Appellant: Ms. Pooja Mahajan, Mr. Savar Mahajan, Advocates For Respondents: Mr. Sonam Sharma, Ms. Ridhima Verma, Ms. Madhu A. Advocates

ORDER

30.09.2022: This appeal is directed against the order dated 20.10.2020

by which an application bearing CA No. 640 of 2019 filed at the instance of

Respondent No. 4 and 5, arrayed as such in C.A No. 366 of 2019, filed by the

Appellant (RP), has been allowed.

2. Shorn of unnecessary details, an application under Section 9 of the

Code was filed by M/s Hind Tradex Limited (Operational Creditor) against M/s

Lakshmi Precision Screws Limited (Corporate Debtor) which was admitted on

18.07.2018 and the Appellant was appointed as IRP and thereafter RP.

3. The present Appellant filed an application under Section 60(5), 43, 44,

45, 66 and 67 of the Code in which various prayers have been made but the

relevant prayers referred to by the Counsel for the Appellant are 'b' and 'g'

which read as under:-

"b. Direct the respondent no. 2, respondent no. 3, responded no. 4 and respondent no. 5 (being the promoters and directors of the corporate debtor, in the control and management of the corporate debtor during the relevant period) to contribute an amount of 214.95 Crores to the assets of the corporate debtor (being the shortage of inventory determined by the RP)

(g) Direct the respondent no. 2, respondent no. 3, respondent no.

4 and respondent no. 5, respondent no. 6 and respondent no. 12- 21 to contribute an amount of Rs. 81.84 Crores to the corporate debtor under Section 66 read with section 43 of the code."

4. While the said application was pending before the Adjudicating

Authority, the Respondent No. 4 and 5, the alleged erstwhile directors of the

Corporate Debtor, filed an application under Section 60(5) bearing CA No. 604

of 2019 for deletion of their name from the array of the Respondents, inter

alia, on the ground that they resigned on 29.11.2017 and their resignation

was approved by the Board of Directors on 18.12.2017 whereas the CIRP was

initiated much thereafter on 18.07.2018. The said application was contested

by the present appellant by filing their reply. The Adjudicating Authority

allowed the application vide the impugned order and hence this appeal.

5. Counsel for the Appellant has submitted that the Adjudicating Authority

has committed an error in allowing the application by pre-judging the issue,

raised in their application bearing CA No. 366 of 2019 as according to them

the Respondents were also liable in regard to the deficiencies found in the

inventory and also the loans to the related party. She has further submitted

that the Adjudicating Authority has taken a prima facie view for the purpose

of deleting the name of the Respondents whereas it was incumbent upon it to

take a decision as to whether, on the basis of the evidence available on record,

much less appended with the application bearing no. 366 of 2019, the

Respondents No. 4 and 5 are really liable or not?

6. It is also argued that the Adjudicating Authority could not make its mind

as to whether the present Respondents should be deleted finally or not because it has ultimately decided that in case it is found at any point of time

that they were involved then they can again be impleaded as party.

7. In the background of the aforesaid facts and circumstances, Counsel for

the Appellant has submitted that if the Adjudicating Authority is not sure

about the involvement of the Respondents and was taking decision only on the

basis of the resignation which came into effect from 18.12.2017, it should have

heard the application filed by the Respondents bearing CA No. 604 of 2019

alongwith application filed by the Appellant CA No. 366 of 2019 and if at that

time it is found from the appreciation of the evidence available on record that

they are really not involved despite the allegations made by the Appellant, the

application filed by the Respondent could have been allowed.

8. In reply, Counsel for Respondent has vehemently argued that there is

no error in the impugned order. He has taken a cue from the fact that CIRP

took place on 18.07.2018 whereas the Respondents resigned on 29.11.2017

and the resignation was approved by the Board of Directors on 18.12.2017,

therefore, they were not on the scene when the CIRP took place and there is

no whisper in the reply filed to their application as to how the Respondents

are involved, therefore, there is no error in the impugned order which requires

any interference by this court.

9. We have heard Counsel for the parties and perused the record with their

able assistance.

10. From the resume of the aforesaid facts and circumstances, the issue

which has arisen in this case travels in a narrow compass as to whether the

impugned order is illegal on the ground that it has prejudged the issue

involved, raised by the Appellant, in their application bearing no. 366 of 2019?

11. The facts are not in dispute that the present respondents were directors

of the listed company. It is not in dispute that they had resigned on

29.11.2017, the resignation was accepted by the Board of Directors on

18.12.2017 and the CIRP was initiated on 18.07.2018 but the fact remains

that the allegations against them of the deficiency in the inventory and the

loan given to the related party are yet to be examined. These allegations can

be decided only when the application bearing no. 366 of 2019 is decided in

one way or other. But before that date it would not be justified to allow the

Respondents to run away from the arena of contest only on the ground that

they resigned much before the triggering of CIRP. It is also a matter of concern

as to why the Respondents herein filed this application when the application

filed by the Appellant was pending adjudication. One can imagine that they

were afraid of the decision by the Adjudicating Authority, knowing fully well

that they are involved in the transaction about which the application has been

filed. In any case, the Adjudicating Authority should have heard both the

application together in order to take a decision about the involvement of the

Directors/Respondents in the affairs of the company as projected by the

Appellant. Otherwise, for instance, if the names of the Respondents are

allowed to be deleted at this stage and ultimately the Adjudicating Authority

finds the involvement of the Respondents as directors while deciding the

application CA No. 366 of 2019 then firstly the Adjudicating Authority shall

have to record a finding in that regard, allow the impleadment of the

Respondents, afford them opportunity to contest and then to take a decision

which shall be sheer waistage of the precious time of the Court and shall make

matter more complex.

12. In view of the aforesaid facts and circumstances, we are of the

considered opinion that the present appeal is meritorious and the same is

allowed and the impugned order is set aside. The matter is remanded back to

the Adjudicating Authority to restore the application 604 of 2019 and decide

the same on its merits alongwith application CA No. 366 of 2019 in accordance

with law. It is needless to mention that we have not touched the merits of the

case so far as the application bearing no. 366 of 2019 is concerned.

The parties are directed to appear before the Adjudicating Authority on

the date already fixed in the application as well as main petition.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical)

Sc/RR