Mahalaxmi Spinning & Weaving Mills Pvt. ... vs Maruti Cotex Ltd. & Ors

Mahalaxmi Spinning & Weaving Mills Pvt. Ltd. ...Appellant 103/1, Sumer Kendra Premises CHS Ltd., P.B. Marg (Original Behind Mahindra Towers, Worli Respondent Mumbai 0 400 018 No. 4) Vs 1. Maruti Cotex Ltd. & Ors. ..(Original Through Resolution Professional Ms. Sujata Corporate Chattopadhyay Debtor)- Plot T-17, Kagal-Hathkanangale Lane, Applicant Five Start MIDC, Post Talandge, Hatkanangale, District Kolhapur- 416 603

2. State of Maharashtra ..(Original Through Superintendent of Police Respondent Kasaba Bawada Main Rd, Ramanlala, No. 1) Kokhapur, Maharashtra- 416 003

3. Police Inspector ...(Original Gokul Shirgaon Police Station Respondent MIDC, Kolhapur, No. 2) Maharashtra- 416 234

4. JM financial Asset Reconstruction ...(Original Company Pvt. Ltd Respondent Regd. Office: 7, Cnergy, No. 3) 25 Appasaheb Marathe Marg, Prabhadevi Mumbai 400 025 Also at 3rd Floor, B Wingh, Suashish IT Park Plot No. 68E, Off. Dattapada Road, Opp. Tata Street, Borivali (East), .. Respondents Mumbai 400 066.

Present:

For Appellant: Mr. Sumesh Dhawan and Mr. Jaskin Dhama, Advocates For Respondents: Mr. Abhijeet Sinha and Mr. Naveen Kumar, Advocates for Respondent No. 1.

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 1 of 7 Mr. Rahul Chitwis and Mr. Aaditya Pandey, Advocates for Respondent Nos. 2 & 3 Mr. Abhishek Anand and Ms. Honey Satpal, Advocates for Respondent No. 4

ORDER

24.02.2020 Heard Advocate Mr. Sumesh Dhawan for the Appellant,

Advocate Mr. Abhijeet Sinha for Respondent No. 1-Resolution Professional,

Advocate Mr. Rahul Chitwis, who appears for State of Maharashtra- Respondent

Nos. 2 & 3 and Advocate Mr. Abhishek Anand for Respondent No. 4.

2. This Appeal arises out of order passed in M.A. No. 50 of 2020 in C.P.(IB)

241/(MB)/2018 (Annexure-1) passed by the Adjudicating Authority (National

Company Law Tribunal, Mumbai Bench, Mumbai. It is a short order which reads

as under:

"ORDER

138. MA 50/2020 in C.P.(IB) 241/(MB)/2018

This is an application seeking to retrain R! and R2

from taking any action against the RP and also seeking to

restrain R4 from communicating, publishing with the

prospective Resolution applicant without prior permission of

this Tribunal and also from creating any hindrance in the

process of CIRP.

The Counsel for the R4 is present in the court alongwith

other Counsels. This is a case where a particular property

was auctioned prior to CIRP proceedings under SARFAESI

by R3 who is the secured creditor and the cost of the

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 2 of 7 property was valued at Rs. 100 crores and R4 evinced

interest in purchasing the same and has paid an amount of

Rs. 5 crores as EMD. Subsequently when the bid was

finalized, he was asked to pay the balance amount. The R4

then backed out from paying the further payments, for

which reason R3 forfeited the EMD amount.

Under the said circumstances, the R4 approached Debt

Recovery Tribunal, and made an application in which he

clearly stated that forfeiture is barred in law and asked for

the refund of the amount. The said application is pending

before DRT. The stand of the R4 is that he is not proceeding

further to purchase the property but only seeking refund

from R3. While that being the background of the case, after

the petition has been admitted, the IRP has been appointed,

and taken over the charge of the entire assets of the

company, the resolution plan is being worked out, this R4

has lodged a police complaint against R3 and it is

understood from the communication and also from the

arguments that the police are also going beyond their brief

and threatening RP from proceeding further with CIRP.

Under Section 233 of IBC, 2016, the RP who is the officer of

the court is absolutely immune from any actions taken in

good faith and there is no locus standi on the part of the R4

to directly or indirectly influence the police, so as to threaten

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 3 of 7 the RP in any manner. Apart from that in the open court, the

Counsel has admitted that he has sought for refund of the

amount. By any stretch of imagination, can it be presumed

that R4 has a claim of any nature against the property and

the manner in which he conducted himself by exerting

influence on the police to proceed against the secured

creditor and also against RP should be taken very seriously

and we hereby direct the very same Police authorities,

Station House Officer with whom the R4 has lodged a

complaint to take strenuous action against R4 for

maliciously proceeding against the RP and to disturb the

CIRP process which amounts to Contempt of Court.

However, R4 seeks to file reply for which he is entitled to.

But in the meanwhile, R4 is restrained, injuncted in any

manner from proceeding against RP or obstructing the

proceedings of CIRP and to have any sought of

communication with the prospective Resolution Applicant. If

this court comes to know that R4 is indulged in such an un-

warranted communication or any action on his part, this

court will view very seriously. R4 has no recourse against

the RP or the assets of the Corporate Debtor. Hence his

order.

List the matter on 3.2.2020.

(Emphasis supplied - for reasons to follow)

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 4 of 7

3. Brief facts stated by the learned Counsel for the Appellant may be referred.

It is stated that Respondent No. 4 - JM Financial Asset Reconstruction Company

Pvt. Ltd., the assignee of loan of consortium of five banks, had initiated the

proceeding under The Secularization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (In short 'SARFAESI' Act) against the

Corporate Debtor and had initiated action to e-auction property of the Corporate

Debtor. In the process the bid of the Appellant was accepted and he had paid Rs.

5 lakhs earlier at the time of Application and later on paid Earnest Money Deposit

(in short 'EMD') of Rs. 5 Crores. It is stated that thereafter between the Appellant

and Respondent No. 4 differences arose with regard to the description of the

property and in the process, Respondent No. 4 forfeited the amount deposited

by the Appellant. It is stated that this led the dispute before the Debt Recovery

Tribunal (in short 'DRT') which is still pending. It is stated that thereafter

Corporate Insolvency Resolution Process (in short 'CIRP') was initiated.

4. It is stated by the learned Counsel for the Appellant that before CIRP

started, the Appellant had already filed Complaint against Respondent No. 4 on

04.06.2018 (Annexure-2). Learned Counsel says that the said Complaint is

under investigation.

5. Learned Counsel for the Respondent No. 4 states that there is a Writ

Petition pending for quashing the said Complaint.

6. Counsel for Appellant states that Appellant had not asserted any pressure

on Police to take action against Resolution Professional. Counsel for Respondent

Nos. 2 & 3 states that Police cannot and will not interfere in CIRP.

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 5 of 7

7. There is no dispute between the respective Counsel relating to the fact that

e-auction proceeding initiated has not culminated into transfer of title of the

property of the Corporate Debtor. The learned Counsel for the Appellant states

that the Appellant now does not have grievances against the last paragraph of

the impugned order but is aggrieved by the last-but-one-paragraph of the

impugned order against Appellant (Respondent No. 4 before Adjudicating

Authority) where it is recorded:

"...... we hereby direct the very same Police authorities,

Station House Officer with whom the R4 has lodged a

complaint to take strenuous action against R4 for

maliciously proceeding against the RP and to disturb the

CIRP process which amounts to Contempt of Court."

..

8. Learned Counsel for the Appellant states that earlier the Appellant had

sent communication as seen at Exhibit-G (at pages 179 & 180) of M.A. No. 50 of

2020. However, it is stated, the Appellant had no intention to interfere in the

CIRP and will not question title of the Corporate Debtor to the concerned

property. Learned Counsel states that the Appellant only wants to continue the

proceeding which the Appellant had filed with the Police and which is pending

before DRT. Learned Counsel states that he has taken special instructions from

the Appellant and states that "The Appellant will not interfere, in any manner,

with the CIRP proceeding and will not claim the property of the Corporate Debtor

to be encumbered." We record the statement of the learned Counsel for the

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 6 of 7 Appellant and in view of the same, we delete the portion from Impugned Order,

i.e.: -

"...... we hereby direct the very same Police authorities,

Station House Officer with whom the R4 has lodged a

complaint to take strenuous action against R4 for

maliciously proceeding against the RP and to disturb the

CIRP process which amounts to Contempt of Court."

9. With this modification the M.A. No. 50/2020 should not survive for further

Orders before Adjudicating Authority. However, Adjudicating Authority may pass

suitable orders, in the light of above undertaking and these orders.

The Appeal is disposed of accordingly. No costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Justice Anant Bijay Singh] Member (Judicial)

(Kanthi Narahari) Member(Technical) Akc/Mn

Company Appeal(AT)(Insolvency) No. 317 of 2020 Page 7 of 7