Gemini Innovations Pvt. Ltd vs State Bank Of India

Gemini Innovations Pvt. Ltd. ...Appellant

Vs.

State Bank of India ...Respondent

Present: For Appellant: -Mr. Nikhil Nayyar with Ms. Madhavi Nalluri and Mr. Divyanshu Rai, Advocates

For Respondent:- Mr. P.V. Dinesh with Mr. Rajendra Beniwal, Advocates.

ORDER

16.07.2018─ The Corporate Applicant preferred an application under

Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter

referred to as 'I & B Code' 2016) which has been rejected by the Adjudicating

Authority (National Company Law Tribunal), Mumbai Bench, Mumbai Bench

by impugned order dated 6th April 2018.

2. The Adjudicating Authority noticed the Arbitration Award dated 12th

June 2017 passed by the 'sole arbitrator' against Corporate Debtor. That

award was enclosed by the Corporate Debtor to suggest that there was an

award which the Corporate Debtor failed to pay and thereby default.

3. The State Bank of India, one of the secured creditor opposed the prayer,

which was noticed by the Adjudicating Authority, who made following

observation: -

"9. The Secured Creditor State Bank of India seriously

opposed this application stating that ; this petition is

filed as an afterthought and with ulterior motives and

malafide intentions to defeat the claim of the secured

creditor; to delay the enforcement of the security and

recovery proceedings initiated by the bank under

SARFAESI Act and RDDB Act; the corporate debtor has

supressed true and correct facts, has not come up with

clean hands, the bank has got orders from the

concerned court under Section 14 of SARFAESI Act to

take possession of the secured property, for which the

date is fixed as 31.3.18 by the commissioner appointed

by CMM court, Mumbai.

10. The secured creditor State Bank of India further alleges

that the Arbitration Award dated 12.6.17 in favour of

Ms. Hetal Surendra Desai, for Rs. 30,30,57,476/- due

as on 31.03.2015 with further interest @ 2% p.a.

compounded monthly, is an award obtained in collusion

and on the face of it, it is bogus, fraudulent and obtained

with malafide intent and the petition deserves to be

dismissed on this ground alone.

11. This Bench carefully perused the Arbitration Award

dated 12.06.2017. Right from the day one, the entire

transaction of advancement of loan by Ms. Hetal Desai to Mr. Basant Talreja, who is the Director of the

Corporate of the Corporate Debtor is fishy. The

Corporate Guarantee purported to have been given by

the Corporate Debtor in favour of Ms. Hetal Desai for the

said loan advanced to Mr. Basant Talreja, is not placed

before this Adjudicating Authority. None of the

particulars regarding the payment of money by Ms.

Hetal Desai are documentarily produced and hence

cannot be believed. The very manner in which monies

were advanced and an Arbitration Award is procured

itself is very unnatural and hence cannot be believed.

Even the contention that a film training institute is

running in the premises and the students will be

disturbed cannot be taken into consideration because

there is no registration and other particulars available

on record. So the cumulative effect of all these unnatural

and make believe actions on the part of the Corporate

Debtor renders the Petition fit for dismissal."

With the aforesaid observation, the Adjudicating Authority dismissed

the application.

4. Learned Counsel appearing on behalf of the respondent State Bank of

India has taken similar plea, as noticed by the Adjudicating Authority and

recorded above.

5. Similar issue fell for consideration before this Appellate Tribunal in 'M/s

Unigreen Global Private Limited Vs. Punjab National Bank & Anr.' in Company

Appeal (AT)(Insolvency) No. 81 of 2017, wherein this Appellate Tribunal by

judgement dated 1st December 2018 observed and held as follows:-

20. Under both Section 7 and Section 10, the two factors are

common i.e. the debt is due and there is a default. Sub-

section (4) of Section 7 is similar to that of sub-section

(4) of Section 10. Therefore we, hold that the law laid

down by the Hon'ble Supreme Court in "Innoventive

Industries Ltd. (Supra) is applicable for Section 10 also,

wherein the Hon'ble Supreme Court observed as "The

moment the adjudicating authority is satisfied that a

default has occurred, the application must be admitted

unless it is incomplete, in which case it may give notice

to the applicant to rectify the defect within 7 days of

receipt of a notice from the adjudicating authority" .

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 informations 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

informations 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

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."

6. The case of the appellant being covered by the decision of this Appellate

Tribunal in "M/s Unigreen Global Private Limited" (supra) and as the

Adjudicating Authority has gone beyond the record i.e. Form 6 filed by the

'Corporate Applicant', we set aside the Order dated 6th April 2018.

7. The case is remitted to the Adjudicating Authority who after notice to

the parties will find out whether the application is complete or not. If the

application is in complete, the Adjudicating Authority will grant appropriate

time to the Corporate Applicant to remove the defect(s) and if it is in order

will admit the application.

8. We make it clear that we have not given any liberty to the respondent

Bank to raise any other issue, the matter having decided by this Appellate

Tribunal.

9. The appeal is allowed with the aforesaid observations and directions.

10. Till final decision is taken by the Adjudicating Authority on the

application under Section 10, the interim order passed by this Appellate

Tribunal on 10th May 2018 shall continue.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial) sm/uk