Ramesh Kumar Suneja vs Brij Mohan Sahni

[Arising out of Order dated 4th April, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench in Company Petition No. (IB)-197(ND)/2018]

IN THE MATTER OF:

Ramesh Kumar Suneja Promoter of M/s Pawan Buildwell Pvt. Ltd. Registered Office at: 59-A, Lane C5, Central Avenue, Sainik Farms, New Delhi - 110062.

...Appellant

Vs

Brij Mohan Sahni R/o: J-511A, Lane W, 16, Western Avenue, Sainik Farms, New Delhi - 110062.

....Respondent

Present:

For Appellant: Mr. Virender Ganda, Sr. Advocate with Mr. Navin Kumar, Mr. Vishwadeep Hooda and Ms. Shelly Khanna, Advocates.

For Respondent: Mr. Krishnendu Datta, Mr. A. K. Prasad, Mr. Sinha Shrey Nikhilesh and Mr. Sumit Sinha, Advocates. -2-

SUDHANSU JYOTI MUKHOPADHAYA, J.

The Appellant - 'Ramesh Kumar Suneja' (Promoter of Corporate

Debtor) challenged the order dated 4th April, 2018 passed by the

Adjudicating Authority (National Company Law Tribunal), New Delhi Bench,

in Company Petition No. (IB)-197(ND)/2018 whereby and whereunder the

application preferred by the Respondent under Section 7 of the Insolvency

and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') against

'M/s Pawan Buildwell Pvt. Ltd.' (Corporate Debtor) has been admitted, order

of moratorium has been passed and Interim Resolution Professional has

been appointed.

2. Learned counsel for the Appellant submitted that the application

under Section 7 filed by Respondent was barred by principle of res judicata.

According to him, the Adjudicating Authority failed to appreciate that for

same amount an application under Section 7 was filed by a partnership firm

- 'M/s Gay Printers', which was dismissed on 25th November, 2011 on merit.

The Review Application preferred thereafter was dismissed by the

Adjudicating Authority and appeals were also dismissed by this Appellate

Tribunal.

Company Appeal (AT) (Insolvency) No. 163 of 2018 -3-

3. In the earlier application plea was taken that Late Mr. Surinder

Mohan Sahni entered into partnership with Mr. Brij Mohan Sahni and after

death of Mr. Surinder Mohan Sahni on 2nd October, 2015, partnership

between Mr. Surinder Mohan Sahni and Mr. Brij Mohan Sahni came to an

end and firm stood dissolved. Mr. Rasik Sahni entered into partnership

with Mr. Brij Mohan Sahni on 3rd October, 2015 and the new partnership

firm took all the assets and liabilities of the old partnership firm i.e.

partnership firm between Mr. Brij Mohan Sahni and Late Mr. Surinder

Mohan Sahni.

4. Originally, 'M/s Gay Printers' a partnership firm of Mr. Brij Mohan

Sahni and (Late) Mr. Surinder Mohan Sahni granted a loan of Rs.1 crore to

the Corporate Debtor. After the death of (Late) Mr. Surinder Mohan Sahni,

the partnership firm was dissolved. Subsequently, Mr. Brij Mohan Sahani

claimed to have constituted another firm and claimed to be 'Financial

Creditor' of the Corporate Debtor with regard to loan of Rs.1 crore which

was given by 'M/s Gay Printers'.

5. In the present case we find that Mr. Brij Mohan Sahni filed an

application under Section 7 on behalf of 'M/s Pawan Buildwell Pvt. Ltd.'

(Corporate Debtor). In the impugned order following facts noticed by the

Adjudicating Authority:-

"7. Mr. Surinder Mohan Sahni, who was

unmarried and is survived only by his siblings, executed

Company Appeal (AT) (Insolvency) No. 163 of 2018 -4-

and left behind a WILL dated 17.03.2015 bequeathing

his assets to them. In terms thereof, his 50% share in

M/s Gay Printer devolved exclusively upon his partner

and brother Brij Mohan Sahni, the petitioner herein. It is

therefore submitted that all assets of the erstwhile

partnership firm M/s Gay Printers, including the loan of

Rs.1 crore given to the Corporate Debtor, now sole vest

with the petitioner. He has therefore now filed the

present petition against the Corporate Debtor for its

inability to repay the financial debt as the successor-in-

interest and the sole beneficiary of the dissolved

partnership M/s Gay Printers."

6. The objection raised by the Corporate Debtor was not accepted by the

Adjudicating Authority with following observations:-

"9. This Bench is unable to appreciate the

resistance offered by the Corporate Debtor. The

principles of res judicata would not be applicable to the

facts of this case. This is because while the earlier

petition IB No.IB-301/ND/2017 was filed by the

Partnership Firm M/s Gay Printers, the present petition

has been filed by Mr. Brij Mohan Sahni in his individual

capacity. The parties to the lis were therefore distinct

Company Appeal (AT) (Insolvency) No. 163 of 2018 -5-

and separate. Further, the rejection of the petition in

that case was not on merits but on the locus of the new

partnership firm to claim the Financial Debt. In the

absence of a decision on the merits of the case, res

judicata cannot be invoked."

7. Earlier 'M/s Gay Printers' claimed to be the Financial Creditor and

filed application under Section 7 against 'M/s Pawan Buildwell Pvt. Ltd.' in

respect to the same amount. The case was registered as Company Petition

No. (IB)-301(ND)/2017 and the Adjudicating Authority observed as follows:-

"15. As per the application in Form 1 filed in the

present case, at Part 1 the applicant Gay Printers claims

itself as the financial creditor with date of incorporation

as 1.4.1967. The applicant has failed to disclose here

that it is a different partnership firm incorporated on

03.10.2015. At Part IV of Form 1 also there is a claim

that applicant gave rupees one crore to the respondent

during April, 2014. In the application and in the brief

facts and list of dates, it was projected as if the

applicant (Gay Printers partnership firm incorporated on

03.10.2015) and the earlier partnership firm (Gay

Printers) as one and the self-same entity. The applicant

failed to disclose complete and correct facts in Form 1.

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The applicant has failed to disclose in Form 1 that it is a

separate partnership firm commenced vide partnership

deed dated 3rd October 2015. Only when objection was

raised by respondent, the applicant admitted that it is a

different entity separate from the earlier Gay printers

partnership firm, who had given loan of 1 crore to the

respondent company. The applicant has not come with

clean hands, as the disclosure in the application was

not full and true. On this count alone the application is

liable to be rejected.

16. It is further seen that the applicant has claimed

that the new partnership firm (applicant herein) has

taken over all the assets and liabilities of the old firm.

In its additional affidavit filed on 17.10.2017 applicant

has admitted that consequent upon death of one of the

two partners, the earlier firm stood dissolved on

02.10.2015. With the dissolution, the earlier

partnership firm came to an end. In normal course both

sides of the two partners are entitled to their respective

property/interest. On the date of dissolution i.e. on

02.10.2015 the share of the property in the firm of the

deceased partner devolves on his legal heirs. The other

living partner cannot take entire assets of the firm at the

Company Appeal (AT) (Insolvency) No. 163 of 2018 -7-

back of the legal heirs of the deceased partner on the

next date. There is no whisper as to how the share of

the deceased partner was transferred to the surviving

partner and his son just on the next day of the death/

dissolution. How there was transfer of the interest of

the deceased partner, has not been made clear. It has

not been made clear as to how the applicant new firm

incorporated on 03.10.2015 with father and son on the

one side took over the entire business including the

share/property of the deceased partner. Part V of Form

1 mandates requirement of documents interalia to prove

as to how the claimed financial debt, entirely belongs to

the applicant firm to the total exclusion of the legal heirs

of the deceased partner. There is absolutely no

documentary evidence to establish that the entire assets

and liability of earlier firm were transferred to the

applicant to the total exclusion of the legal heirs of the

deceased partner. Determination of legal heirs and how

their shares were to be transferred requires evidence

and trial. This is not an application by the surviving

partner of the earlier dissolved firm, for his portion of the

debt. The applicant firm could not prove that it is the

financial creditor in respect of the entire claim of

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financial debt of 1 crore with interest originally belonged

to the earlier firm. On this score also the application

deserves rejection."

8. Having heard learned counsel for the parties and taking into consideration the facts, we hold that the Adjudicating Authority has failed to take into consideration that there is a dispute as to who is the Financial Creditor, i.e., 'M/s Gay Printers' or 'Mr. Brij Mohan Sahni'? Mr. Brij Mohan Sahni filed application on behalf of 'M/s Gay Printers', therefore, subsequent application filed by himself claiming to be the Financial Creditor could not have been accepted, as different stand cannot be taken by the same person. In "Innoventive Industries Ltd. Vs. ICICI Bank and Ors." - (2018)1 SCC 407, the Hon'ble Supreme Court while dealing with application under Section 7 held:-

"28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III,

Company Appeal (AT) (Insolvency) No. 163 of 2018 -9-

particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub- section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be."

9. In the present case there is nothing on record to suggest that the

Respondent - 'Mr. Brij Mohan Sahni' had given a loan. On the contrary

claim made in two separate applications, one filed by 'M/s Gay Printers' and

Company Appeal (AT) (Insolvency) No. 163 of 2018 -10-

another by 'Mr. Brij Mohan Sahni' shows that loan was not given by Mr. Brij

Mohan Sahni, but a firm. Therefore, the present application under Section

7 filed by Mr. Brij Mohan Sahni was not maintainable. Para 7 of the

impugned order (quoted in Para 5 above) itself shows that the claim of Mr.

Brij Mohan Sahni is based on the loan given by M/s Gay Printers.

10. In this background there being a dispute as to who is the 'Financial

Creditor', we hold that the application under Section 7 preferred at the

instance of Mr. Brij Mohan Sahani was not maintainable. For the reason

aforesaid we set aside the impugned order dated 4th April, 2018 passed by

the Adjudicating Authority (National Company Law Tribunal), New Delhi

Bench, in Company Petition No. (IB)-197(ND)/2018.

11. In effect, order(s) passed by Ld. Adjudicating Authority appointing

'Resolution Professional', declaring moratorium, freezing of account, and all

other order(s) passed by Adjudicating Authority pursuant to impugned order

and action taken by the 'Resolution Professional', including the

advertisement published in the newspaper calling for applications all

such orders and actions are declared illegal and are set aside. The

application preferred by Respondent under Section 7 of the I&B Code, 2016

is dismissed. Learned Adjudicating Authority will close the proceeding. The

'Corporate Debtor' is released from all the rigour of law and is allowed

to function independently through its Board of Directors from immediate

effect.

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12. Learned Adjudicating Authority will fix the fee of the 'Resolution

Professional', and the 'Corporate Debtor' will pay the fees, and other cost

incurred by him. The appeal is allowed with aforesaid observation and

direction. No Cost.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial) NEW DELHI 7th August, 2018

AM

Company Appeal (AT) (Insolvency) No. 163 of 2018