M/S Devi Enterprises Ltd vs M/S Gurudev Infra Projects Ltd

Devi Enterprises Ltd. ...Appellant

Versus

Gurudev Infra Projects Ltd. ...Respondent

Present: For Appellant: Mr. Santosh Kumar, Mr. Rajiv R. Mishra, Mr. Saurabh, Advocates For Respondent: Appearance not marked

ORDER

18.08.2022: Heard Learned Counsel for the Appellant and Learned

Counsel for the Respondent.

2. This Appeal has been filed against the Order dated 23rd May, 2022 by

which Order, the Adjudicating Authority has rejected the Section 7 Application

filed by the Appellant. The Adjudicating Authority while rejecting has also

imposed a cost of Rs. 05 Lakhs on the appellant referring to Section 65 of the

Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority has

returned a finding that Section 7 Application have been filed for some ulterior

motive other than the resolution of the insolvency of a Corporate Debtor.

Consequently, the Section 7 Application was rejected.

3. Learned Counsel for the Appellant challenging the Order contends that

the mere fact that Appellant and Respondent Company, the Directors are

father and son, the Directors are not common in both the Companies and in

the financial document, the amount of loan is mentioned. He further submits

that the Adjudicating Authority, there being admission of debt, ought to have

admitted Section 7 Application.

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4. Learned Counsel for the Respondent refuting the submissions of

Learned Counsel for the Appellant submits that present is a case where to

settle some dispute between the parties, Section 7 Application was filed and

the Adjudicating Authority has rightly rejected the same. Learned Counsel for

the Respondent pointed out the address of registered office of both the

Companies is the same, as reflected in the memo of Appeal.

5. We have considered the submissions of Learned Counsel for the parties

and have perused the record.

6. The Adjudicating Authority has after considering the submissions of

Learned Counsel for the parties, made following observations in Paragraph 16

and 17:

"16. Further, if the claim of the financial creditor that when there is a debt which is due and payable both in law and fact and a default occurs, then the Adjudicating Authority must admit this application subject to other conditions i.e. the amount of default should be more than the threshold limit and not barred by limitation. In our view, if this plea is accepted then the provisions of Section 65 of IBC, 2016 would become redundant as an empty provision in the statute. We are of the view that this is certainly not the purpose of legislature. The provisions of Section 65 of IBC,2016 have been brought on statute particularly to check and prevent misuse of the provisions of law, when application u/s 7 is found to have been filed for some ulterior motive other than the resolution of insolvency of a corporate debtor. The twin conditions for that is the Company Appeal (AT) (Insolvency) No. 895/2022 -3-

application u/s 7 of IBC, 2016 should have been filed with malicious intent and for nay purposes other than the resolution of insolvency.

17. In our view, this application has been filed for such extraneous considerations and to settle personal scores, which most unfortunately, is happening between a father and son."

7. From the facts which has been brought on record it does appear that

there has been a contract with NHAI between the parties where dispute arose

regarding their entitlement. When the Adjudicating Authority has come to the

conclusion that Section 7 Application was filed for some ulterior motive other

than the resolution of insolvency of a Corporate Debtor, we do not find any

error in the Order rejecting Section 7 Application.

8. Learned Counsel for the Appellant lastly contended that amount of cost

imposed is too heavy and present was not a case for imposition of such heavy

cost. Considering the above, we reduce the amount of cost to Rs. 2 Lakhs. Rest

of the Order is affirmed. The Appeal is dismissed subject to above. Learned

Counsel for the Appellant seeks and allowed four weeks' time to deposit the

above cost.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

Basant/nn

Company Appeal (AT) (Insolvency) No. 895/2022