M/S Om Logistics Ltd vs Respondents

Om Logistics Ltd. ...Appellant

Versus

--- ...Respondents

Present: For Appellant: Mr. Amar Vivek and Mr. Abhinav Tyagi, Advocates. For Respondents:

ORDER

17.04.2023: Heard learned counsel for the Appellant. This Appeal has

been filed against the order passed by the Adjudicating Authority on

30.05.2022. The Adjudicating Authority issued a show cause notice to the

Appellant under Section 65 code by order dated 29.07.2021. The Appellant

filed its reply on 23.11.2021 and thereafter, this order has been passed

imposing penalty of Rupees one lakh on the Appellant. The Adjudicating

Authority in Para 17 has passed following order:

"17. In view of the aforesaid discussion, we conclude that the CIR Process of the Corporate Debtor in the instant case was initiated with the malicious intent for any purpose, other than for the resolution of insolvency, or liquidation of the Corporate Debtor, therefore, we impose the penalty of Rs.1,00,000/- (One lakh) only on the M/s Om Logistics Limited. The same will be deposited by

Cont'd.../ -2-

the M/s Om Logistics Limited with the Ministry of Corporate Affairs. Ld. Counsel appearing for M/s Om Logistics Limited has prayed to allow time of 15 days for deposit of the penalty with the Ministry of Corporate Affairs. Time is allowed with a direction to file the receipt with the Registry within three weeks of this Order."

2. Learned counsel for the Appellant submits that the application under

Section 9 was filed for a debt of Rs.1,02,455/-. CIRP was admitted by the

Adjudicating Authority on 26.09.2019 and direction was issued to the

Appellant to deposit Rs.50,000/- to meet the expenses of the IRP. Appellant

deposited the said amount. An order was passed on 26.11.2019 by the

Adjudicating Authority wherein the Appellant's complaint about exorbitant

and unjustified fee which was being demanded by the IRP has been noticed,

however, the Adjudicating Authority directed the Appellant to reimburse the

IRP with the expenses incurred, which payment was made. Learned counsel

for the Appellant submits that several different orders were passed by the

Adjudicating Authority for making payment of fee of the IRP and as on date

the Appellant has already made payment of Rs.1,23,870/- in compliance of

the order dated 28.02.2020 passed by the Adjudicating Authority. It is

submitted that the Appellant has already made payment of fee to the IRP

which was much more than the claim for which application was filed. It is

submitted that the Adjudicating Authority mere on the fact that the Appellant

did not participate in the CoC meetings came to the conclusion that

proceeding under Section 7 was initiated with fraud and malice. It is

Company Appeal (AT) (Insolvency) No. 880 of 2022 -3-

submitted that there was no malicious intent nor there is any material.

Appellant has been raising his grievances before the Adjudicating Authority

regarding exorbitant and unjustified fee asked by the IRP and in the present

case which was much more than the claim amount of the Appellant. In such

circumstance, there is no basis to come to the conclusion that the initiation

was fraudulent or malicious.

3. We have considered the submissions of learned counsel for the

Appellant and perused the record.

4. The various orders of the Adjudicating Authority which have been

brought on the record does indicate that regarding the fee of the RIP several

grievances were raised by the Appellant and ultimately on account of the order

passed by the Adjudicating Authority on time to time an amount of

Rs.1,23,000/- has been paid to the IRP by the Appellant. The fact that in the

present case, the Appellant did not participate in the process and attend

meetings of CoC cannot lead to conclusion that application was filed for any

fraudulent or malicious intention. There is no finding that the claim of the

Appellant was false or non-existent. There can be no quarrel to the

proposition that if application has been filed with fraudulent or malicious

intent, the Adjudicating Authority is fully empowered to impose penalty under

Section 65. However, we, after considering the submission of learned counsel

for the appellant and looking into the material brought on the record and

various orders issued by the Adjudicating Authority regarding payment of fee

to the IRP, are satisfied that that there is not fraudulent or malicious intent

Company Appeal (AT) (Insolvency) No. 880 of 2022 -4-

and Appellant was disgruntled on the account of making payment of fee to

the IRP, which was even more than the his claim amount. It is further

relevant to be noticed that present is not a case where anyone has filed

application under Section 65 and the Adjudicating Authority had suo moto

initiated the proceeding and issued show cause notice. There is no material

to take any action under Section 65 and impose penalty on the Appellant. We

allow the Appeal and set aside order dated 30.05.2022.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No. 880 of 2022