Dynamix Growth Avenues Private Limited vs M/S Modern Syntex (India) Ltd. Unite ...

[Arising out of Order dated 10.05.2022 passed by the Adjudicating Authority (National Company Law Tribunal, Jaipur Bench) in I.A. No. 203/JPR/2022]

IN THE MATTER OF:

Dynamix Growth Avenues Private Limited, 305/306, Anand Building, 82/84 Kazi Road Street, Masjid Bunder, Mumbai - 400003 ...Appellant

Versus

Mr. Partha Sarathy Sarkar, Interim Resolution Professional of Modern Syntex (India) Limited, Office No. 1, Jalaram Krupa, Building No. 61, Janmabhoomi Marg, Fort, Mumbai City - 400001, Email: SARKARPARTHO@YAHOO.COM ...Respondent

Present:

For Appellant: Advocate Alok Dhir, Advocate Karan G.

For Respondents: Advocate Deeptakirti Verma.

JUDGMENT

ASHOK BHUSHAN, J.

1. This Appeal has been filed against the Order dated 10th May, 2022

passed in I.A. No. 203/JPR/2022 in IB No. 39/PB/2018.

Cont'd.../ -2-

2. The brief facts giving rise to this Appeal are as follows:

i. Corporate Insolvency Resolution Process was initiated against the

Corporate Debtor-Modern Syntex (India) Limited by Order dated

28.03.2022. By Order dated 29.03.2022, public announcement was

made by Interim Resolution Professional. The appellant claiming to

be Financial Creditor filed his claim under Form-C on 11th April,

2022. The claim submitted by the Appellant was Rs.

12893,39,03,000/-. Claim of the Appellant was received by the IRP

and certain more documents were asked for from the Appellant on

18th April, 2022, Appellant was informed that he has been declared

a related party to the Corporate Debtor. Appellant sent an Email to

the IRP to reconstitute the Committee of Creditors.

ii. On 26th April, 2022, the Appellant filed an I.A. No. 203/JPR/2022

seeking reconstitution of the CoC. The application came for hearing

before the Adjudicating Authority on 10th May, 2022. The

Adjudicating Authority noticed that three assignment deed are

placed on record of Stamp Paper of Rs. 100 in respect of amount of

12893,39,03,000/-. Certain other observations were made by the

Adjudicating Authority. The Applicant/Appellant as well as the

Resolution Professional were issued certain directions to provide

certain documents and details.

iii. Aggrieved by the Order passed by the Adjudicating Authority on

10th May, 2022, this Appeal has been filed.

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3. Mr. Alok Dhir, Learned Counsel for the Appellant challenging the

Order contends that the Adjudicating Authority by Order impugned has

initiated roving and fishing enquiry. It is submitted that the Adjudicating

Authority had no jurisdiction to ask for materials and documents as has

been enumerated in the Order impugned. The amounts claimed by the

Appellant was satisfactory explained. The Adjudicating Authority sought

the documents from the Appellant which are not in his power and

possession. The Adjudicating Authority is wrong in seeking personal

appearance of the directors of the Appellant-Company. The Appellant

does not fall in any of the provisions of Section 5(24) of IBC to be declared

as related party. Even if it is presumed that assigner company were

related parties of the Corporate Debtor, the Adjudicating Authority was

obliged to consider that assignment was made five years prior to the

initiation of the CIRP. The directions passed in the Impugned Order fall

outside the purview of the jurisdiction of Adjudicating Authority under

the IBC. No reasons have been given by the Adjudicating Authority as to

why so many documents are being called for and the Adjudicating

Authority erred in denying the interim prayer to the Appellant by which

stay of convening CoC meeting was asked for.

4. Learned Counsel appearing for the Resolution Professional refuting

the submissions of Learned Counsel for the Appellant contends that the

Adjudicating Authority has ample power under the NCLT Rules, 2016 to

call for relevant materials and documents from the Appellant. The

Adjudicating Authority has rightly entertained the doubts about the

Company Appeal (AT) (Insolvency) No. 596 of 2022 -4-

whole transactions as was claimed by the Appellant. With regard to the

assignment for huge principal amount running in hundreds of crores

purchase consideration paid is only five lakhs with regard to the Modern

Terry Towels. There is no proof of any other payment, assignment deeds

have been executed on hundred rupees stamp paper. The claim of the

Appellant was ex facie a fake claim and the Adjudicating Authority has

every right to ask the Appellant to disclose all details pertaining to the

transactions including the status of the Appellant under Section 424(2) of

the Companies Act, 2013, where a Tribunal is fully empowered to

summon and enforce the attendance of any person and examine him on

oath and also requiring the discovery and production of documents. It is

submitted that in pursuance of the Order dated 10th May, 2022, 28

documents have already been submitted. Interim Resolution Professional

has submitted a Report dated 15th November, 2022 before the

Adjudicating Authority. The Appellant has also appeared in subsequent

proceedings before the Adjudicating Authority. Order impugned having

substantially complied with, there is no reason to entertain this Appeal.

5. Learned Counsel for the Respondent submits that Appellant has

not come with clean hand in the Corporate Insolvency Resolution Process.

The Adjudicating Authority was well within its jurisdiction to ask for

documents to unearth the wholly false and fake claim of the Appellant.

6. We have considered the submissions of Learned Counsel for the

parties and have perused the record.

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7. We may first look into the jurisdiction which Adjudicating Authority

can exercise while hearing any Application under Insolvency and

Bankruptcy Code, 2016.

8. National Company Law Tribunal Rules, 2016, Rule 39 and Rule 43

which are relevant for the present case are as follows:

"39. Production of Evidence by Affidavit.-(1) The Tribunal may direct the parties to give evidence, if any, by affidavit.

(2) Notwithstanding anything contained in sub-rule(1), where the Tribunal considers it necessary in the interest of natural justice, it may order cross-

examination of any deponent on the points of conflict either through information and communication technology facilities such a video conferencing or otherwise as may be decided by the Tribunal, on an application moved by any party.

(3) Every affidavit to be filed before the Tribunal shall be in Form No. NCLT.7.

....

43. Power of the Bench to call for further information or evidence.-(1) The Bench may, before passing orders on the petition or application, require the parties or any one or more of them, to produce such further documentary or other evidence as it may consider necessary:-

(a) for the purpose of satisfying itself as to the truth of the allegations made in the petition or application;

Company Appeal (AT) (Insolvency) No. 596 of 2022 -6-

Or

(b) for ascertaining any information which, in the opinion of the Bench, is necessary for the purpose of enabling it to pass orders in the petition or application.

(2) Without prejudice to sub-rule(1), the Bench may, for the purpose of inquiry or investigation, as the case may be, admit such documentary and other mode of recordings in electronic form including e-mails, books of accounts, book or paper, written communications, statements, contracts, electronic certificates and such other similar mode of transactions as my legally be permitted to take into account of those a admissible as evidence under the relevant laws.

(3) Where any party preferring or contesting a petition of oppression and mismanagement raises the issue f forgery or fabrication of any statutory records, then it shall be at liberty to move an appropriate application for forensic examination and the Bench hearing the matte may, for reasons to be recorded, either allow the application and send the disputed records for opinion of Central Forensic Science Laboratory at the cost of the party alleging fabrication of records, or dismiss such application."

9. The Application filed by the Appellant being I.A. No. 203/JPR/2022

was essentially challenging the decision of the Resolution Professional

required to be scrutinized by the Adjudicating Authority. Learned Counsel

for the Respondent has also referred to Section 424(2) of the Companies

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Act, 2013. Section 424(2) enumerates the procedure and powers of the

Tribunal and the Appellate Tribunal are as follows:

"424 (2)- The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:-

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) subject to the provisions of Section 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any public record or document or a copy of such record or document from any office;

(e) issuing commissions for the examination of witnesses or documents;

(f) dismissing a representation for default or deciding it ex parte;

(g) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and

(h) any other matter which may be prescribed."

10. We thus are satisfied that the Adjudicating Authority had ample

jurisdiction to ask for documents from Applicant/Appellant as well as the

Resolution Professional for determination of the issues raised. The Order

of the Adjudicating Authority indicate the doubts regarding the claim of

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the Applicant especially when claim totaled Rs. 12893,39,03,000/-

arising out of three assignment deeds which were allegedly short-

stamped.

11. Learned Counsel for the Respondent has relied on the Judgment of

the Hon'ble Supreme Court in [2010 14 SCC 38] "Ramjas Foundation

and Anr. Vs. Union of India and Ors." where Hon'ble Supreme Court

laid down following in paragraph 21:

"21. The principle that a person who does not come to the court with clean hands is not entitled to be heard on the merits of his grievance and, in any case, such person is not entitled to any relief is applicable not only to the petitions filed under Articles 32, 226 and 136 of the Constitution but also to the cases instituted in others courts and judicial forums. The object underlying the principle is that every court is not only entitled but is duty bound to protect itself from unscrupulous litigants who do not have any respect for truth and who try to pollute the stream of justice by resorting to falsehood or by making misstatement or by suppressing facts which have a bearing on adjudication of the issue(s) arising in the case."

12. In the present case, we are not required to express any opinion with

regard to the merits of the claim of the Appellant especially when I.A. No.

203/JPR/2022 filed by the Appellant is pending consideration and the

Direction in the I.A. No. 203/JPR/2022 seeking various documents were

with the object of examining the veracity of the claim. In so far as the

direction of the personal appearance of the directors of the Appellant is

Company Appeal (AT) (Insolvency) No. 596 of 2022 -9-

concerned, which direction related to appearance on the next date of

hearing and the next date having already over and Appellant having also

appeared and participated in the proceeding, there is no necessity to

examine the correctness of the direction for personal appearance. We only

observe that in event there is any difficulty of the directors in personal

appearance, it is always open for them to seek exemption for any personal

appearance if specifically directed. Learned Counsel for the RP has

submitted that 28 documents which were called for have already been

submitted and on basis of which report has been submitted on 15th

November, 2022 by the RP which has been taken on record with direction

to serve copy of the Report to the Application. I.A. was directed to be

listed on 17/12/2022 which date is also over.

13. In pursuance of the Impugned Order, it appears that several

documents have been provided for, we see no reason to keep this Appeal

pending, we only observe that in event with regard to any particular

documents, there is any difficulty faced by the Appellant/Applicant, it is

always open for the Applicant/Appellant to file an appropriate application

seeking exemption giving reasons for not producing the particular

document which Application may be considered by the Adjudicating

Authority and appropriate order be placed therein to prosecute the

proceedings further. The Adjudicating Authority having jurisdiction to ask

for documents and doubts having been expressed by the Adjudicating

Authority with regard to the claim of the Appellant, and the Application

I.A. No. 203/JPR/2022 being still pending for consideration, we see no

Company Appeal (AT) (Insolvency) No. 596 of 2022 -10-

reason to entertain this Appeal, at this stage where the proceeding has

further proceeded, documents submitted, report filed.

In view of the fore-going discussions, we dismiss this Appeal

subject to observations and liberty as given above.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

[Barun Mitra] Member (Technical)

NEW DELHI

05th January, 2023

Basant

Company Appeal (AT) (Insolvency) No. 596 of 2022