Mirco Dynamics vs Cosmos Cooperative Bank Ltd & Anr

IN THE MATTER OF: Mirco Dynamics ...Appellant Versus Cosmos Cooperative Bank Ltd. & Anr. ...Respondents

Present: For Appellant : Ms. Malvika Trivedi and Mr. Ishrat Ali, Advocates

ORDER

(Through Virtual Mode)

12.10.2020 Appellant - a shareholder of the 'Mirco Dynamics Pvt. Ltd.'

(Respondent No. 2), through the medium of this appeal seeks reversal of the

order of dismissal of M.A. Nos. 472/2019 and 479/2019 in terms of impugned

order dated 18th March, 2020 passed by the Adjudicating Authority (National

Company Law Tribunal), Mumbai Bench, Mumbai Court-I as a sequel to

directions passed by this Appellate Tribunal in 'Company Appeal (AT)

(Insolvency) No. 1121 of 2019' filed by Mr. Ishrat Ali against the admission

order passed by the Adjudicating Authority in regard to application under

Section 7 of the I&B Code filed by Cosmos Co-operative Bank Limited which

was held to be barred by limitation. This Appellate Tribunal while setting

aside the impugned order of admission dated 23rd September, 2019 passed

by the Adjudicating Authority dismissed the application preferred under

Section 7 of Í&B Code' and directed the Adjudicating Authority to close the

proceedings. The Adjudicating Authority, while closing the proceedings in the

main Company Petition also closed all pending applications including M.A.

472/2019 and 479/2019 which related to complaint of perjury made by a 2

Director of the Corporate Debtor. Aggrieved of the same the Appellant has

preferred the instant appeal.

2. Heard learned counsel for the Appellant. It is submitted that

notwithstanding dismissal of application under Section 7 of the I&B Code by

this Appellate Tribunal in appeal proceedings, the Adjudicating Authority

ought to have decided these M.A. Nos. 472/2019 and 479/2019 relating to

complaint of perjury emanating from a Director of a Corporate Debtor

independently. It is contended that the setting aside of admission order of

the application under Section 7 of the I&B Code by this Appellate Tribunal in

appeal does not affect the jurisdiction of the Adjudicating Authority who had

to enquire into the matter which essentially pertained to fraudulent initiation

of Section 7 of the 'I&B Code' application. We are afraid that this argument

cannot be accepted. A Five Member Bench of this Appellate Tribunal in case

of Mr. Ishrat Ali (Supra) held that the application under Section 7 of the I&B

Code filed by the 'Cosmos Co-operative Bank Limited' was barred by

limitation. The impugned order dated 23rd September, 2019 passed by the

Adjudicating Authority was accordingly set aside and the Adjudicating

Authority was directed to close the proceedings. The order impugned in this

appeal was passed in compliance to the judgment of this Appellate Tribunal

as a sequel to the dismissal of application under Section 7 of the 'I&B Code'.

Once the main application under Section 7 of the I&B Code, which was the

basic edifice for passing of order of admission at the hands of the Adjudicating

Authority, was dismissed and proceedings emanating therefrom and

consequential thereto were closed, the incidental and ancillary applications

Comp. App (AT) (Insolvency) No. 875 of 2020 3

including the MAs in which the proceedings were closed in terms of the

impugned order, did not survive for further consideration. With the closing

of case by the Adjudicating Authority in compliance to the orders passed by

this Appellate Tribunal in appeal, inquiry in initiation of insolvency resolution

process alleged to be fraudulent or with malicious intent would be

preposterous when the closure of such proceedings is a consequence of

allowing of appeal against the order of admission passed by the Adjudicating

Authority on the ground of limitation. In the given circumstances, no further

enquiry in regard to the projected issue of fraudulent or malicious initiation

of the insolvency resolution process would be warranted. The insolvency

resolution process set in motion on the basis of a flawed order of admission

which stands set aside for being hit by limitation stands terminated and all

MAs relating to this process stand dismissed on legally tenable grounds. We

find no flaw in the impugned order. The appeal is accordingly dismissed.

[ Justice Bansi Lal Bhat ] Acting Chairperson

[ Justice Anant Bijay Singh ] Member (Judicial)

[ Dr. Alok Srivastava ] Member (Technical)

/ns/gc/

Comp. App (AT) (Insolvency) No. 875 of 2020