Prayag Polytech Pvt. Ltd vs Good Marketing And Sales Pvt. Ltd

Prayag Polytech Pvt. Ltd. ...Appellant Versus Good Marketing and Sales Pvt. Ltd. ...Respondent

Present: For Appellant : Ms. Shreya Jain and Ms. Alexandra Celestine, Advocates

For Respondent : Mr. Nikhil Kohli and Ms. Gunjan Tejwani, Advocates

ORDER

25.11.2019 Learned counsel for the Appellant submits that the certified

copy of the impugned order dated 20th September, 2019 was received on 3rd

October, 2019 and the appeal was preferred on 16th November, 2019.

Having heard Ms. Shreya Jain, learned counsel appearing on behalf of the

Appellant and Ms. Gunjan Tejwani, learned counsel appearing on behalf of the

Respondent and being satisfied with the grounds, the delay of 13 days in

preferring the appeal is condoned.

I.A. No. 3767 of 2019 stands disposed of.

The Appellant preferred an application under Section 7 of the 'Insolvency

and Bankruptcy Code, 2016 (for short, 'the I&B Code') for initiation of 'corporate

insolvency resolution process' against 'M/s. Good Marketing and Sales Private

Limited' (Corporate Debtor). The Adjudicating Authority (National Company Law

Tribunal), Bench-III, New Delhi by the impugned order dated 20th September,

2019 rejected the application on the ground that the Appellant has failed to show 2

the default of any 'financial debt' and that the Adjudicating Authority cannot go

into the aspect of fraud which is within the purview of the Criminal Courts.

Learned counsel appearing on behalf of the Appellant submits that the amount

of Rs.3,45,00,000/- remains as the balance amount as on 14th March, 2016

apart from the interest amount. It is submitted that in support of the disbursal

of the amounts as well as sums paid in part payment of the 'Corporate Debtor',

the evidence was brought to the notice of the Adjudicating Authority including

the Audit Report of 31st March, 2017.

She further submits that the Adjudicating Authority failed to notice the

aforesaid fact and has gone into the merit of the claim and counter-claim of the

parties, which is not permissible. However, such submission is disputed by the

learned counsel appearing on behalf of the Respondent.

From the record we notice that the 'Corporate Debtor' opposed the prayer

and informs that in the earlier letter dated 1st October, 2018 the appellant was

informed of its obligation to undertake equity investment in the respondent

company in terms of the 'memorandum of understanding' (MoU). No reply was

received from the applicant in respect of the equity investment nor it has

consented to the applicant for receiving the encashment of the cheques which

were provided along with 'memorandum of understanding'. The 'Corporate

Debtor' requested the Appellant to provide written consent for encashment

within a period of 15 days but the appellant instead of adhering to the terms of

'memorandum of understanding' recalled notice dated 2nd January, 2019 to the

'Corporate Debtor' which wrongly claimed an amount of Rs.5,10,41,072/- from

the Respondent Company.

Company Appeal (AT) (Insolvency) No. 1307 of 2019 3

The Appellant filed a rejoinder dated 29th March, 2019 in which the

following plea was taken :

"6. The Petitioner has filed a rejoinder dated 29.03.2019

in which following things had been stated:

 The FC denies the existence of the purported loan

agreement dated March 10, 2014 and the false and

fabricated MOU dated April 3, 2017, the FC states

that the said documents are antedated, false and

fabricated made in collusion with Mr. D.K. Aggarwal,

one of the directors of the FC.

 FC stated that CD had omitted to make reference to

true and correct facts such as the FC disbursed an

amount of Rs. 3,45,00,000/- along with the interest

amounting to Rs. 1,65,41,072/- as on December 25,

2018 and in relation to this loan, CD had paid interest

and deposited the tax deducted at source in favour of

the FC.

 The CD as an afterthought, in order to take a false alibi

so as to create a frivolous defence to the CIRP, sent a

notice dated January 18, 2019 to the FC for referral of

dispute to arbitration.

 FC Counsel in response to the e-mail dated January

28, 2019 sent its letter of objections dated February 7,

2019 and February 14, 2019 to the Ld. Sole arbitrator,

objecting to the existence of the purported MOU and the

Company Appeal (AT) (Insolvency) No. 1307 of 2019 4

appointment of the Ld. Sole arbitrator in the arbitration

proceedings.

 It was pointed out by FC that Mr. Devender Kumar Aggarwal who

is the signatory to the purported MOU, purportedly on behalf of

the FC along with other co-accused is facing criminal investigation

in pursuance of a first information report registered with the

Sector 40, Gurugram police station."

The Adjudicating Authority noticed the aforesaid fact and came to the

conclusion that the default as alleged cannot be determined in absence of any

requisite document. The Adjudicating Authority also held that the fraud is the

question which cannot be decided by the Adjudicating Authority and can be

decided only by the Court of Criminal jurisdiction.

We have heard the learned counsel for the parties and find no ground to

interfere with the impugned order. However, taking into consideration the

imposition of the cost, we set aside the impugned order dated 20th September,

2019 so far it relates to the imposition of the cost of Rupees One Lakh.

The appeal stands disposed of with aforesaid observations.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

[Justice Venugopal M.] Member (Judicial)

/ns/gc

Company Appeal (AT) (Insolvency) No. 1307 of 2019