S3 Electrical & Electronics Private ... vs Brian Lau

S3 Electrical & Electronics Private Limited ... Appellant

Versus

Brian Lau ... Respondent

Present: For Appellants: - Shri Aditya Sharma, Advocate

WITH Company Appeal (AT) (Insolvency) No. 109 of 2017

IN THE MATTER OF:

Andhra Bank .Appellant

Versus

Brian Lau & Anr. .Respondents

Present: For Appellant: Shri PBA Srinivasan with Ms. Swati Swati Seth, Advocates

For Respondent No. 2: Shri Aditya Sharma, Advocate

ORDER

02.08.2017 The respondent-Brian Lau, a resident of 18B, Tower-

2, The Marinella, 9 Welfare Road, Wong Chuk Hang, Hong Kong

claimed to be 'Operational Creditor' and preferred an application

under Section 7 of the Insolvency and Bankruptcy Code, 2016

(hereinafter referred to as 'I&B Code') with a prayer to initiate -2-

Corporate Insolvency Resolution Process against the appellant-

'Corporate Debtor'-S3 Electrical and Electronics Private Limited.

Learned Adjudicating Authority (National Company Law Tribunal),

Principal Bench, New Delhi, by judgement & order dated 28th June,

2017, admitted the application, declared 'Moratorium', appointed

Insolvency Resolution Professional and passed order in terms of

Sections 15, 16, 17, 18 and 20 of the I&B Code with certain

observations and directions. The appeal has been preferred against

the aforesaid order.

2. The same very impugned judgement & order has been

challenged by Andhra Bank in connected appeal (Company Appeal

(AT) (Insolvency) No. 109 of 2017). According to the appellant-

Andhra Bank, they are banker of 'Corporate Debtor'- S3 Electricals

& Electronics Private Limited and there is no default shown in the,

account. The Andhra Bank is satisfied with the performance of the

'Corporate Debtor'.

3. The appellant-'Corporate Debtor' has assailed the impugned

judgement mainly on the ground that:

(a) The Adjudicating Authority, Principal Bench, New Delhi

passed the impugned judgement & order without notice to the

'Corporate Debtor', in violation of the rules of natural justice; -3-

(b) The respondent, 'who claimed to be 'Financial Creditor' do not

come within the meaning of 'Financial Creditor' as defined

under sub-section (7) read with sub-section (8) of Section 3 of

the I&B Code;

(c) The respondent failed to produce any record of default or such

other record or evidence of default as specified by the

Insolvency and Banking Board of India; and

(d) The notice under Section 8 was not issued by respondent but

by his Lawyer which is not permissible.

5. Learned counsel appearing for the respondent has not

disputed the fact that no notice was issued on the 'Corporate

- Debtor' before the admission of the application i.e. before passing

of impugned order dated 28th June, 2017. He submitted that there

are other records, such as 'Unsecured Loan Agreement dated '18th

June, 2014' and communications on record to show evidence of

default. However, such documents cannot be taken into

consideration for the purpose of initiation of Insolvency Resolution

Process under Section 7 of the I&B Code in absence of the

documents as prescribed in the Code. In any case, as the impugned

order dated 28th June, 2017 has been passed without notice to the -4-

'Corporate Debtor' and in violation of the rules of natural justice,

we are of the view that the same is fit to be set aside.

6. At this stage, we have been informed by learned counsel for

the parties that during the pendency of the appeal, the parties have

settled their dispute and amount as claimed by the respondent has

been satisfied by issuing cheque(s) in his favour. However, we are

not going into such question in this appeal.

7. For the reasons as recorded above, we set aside the impugned

order dated 28th June, 2017 passed by Learned Adjudicating

Authority, Principal Bench, New Delhi in C.P. No. 1251 of 2016.

8. In effect, order(s), if any, passed by the Learned Adjudicating

Authority appointing any 'Interim Resolution Professional' or

declaring moratorium, freezing of account and all other Order (s)

passed by Learned Adjudicating Authority pursuant to the

impugned order and action, if any, taken by the 'Interim Resolution

Professional', including the advertisement, if any, published in the

newspaper calling for applications all such orders and actions are

declared illegal and are set aside. The application preferred by the

respondent(s) under Section 7 of the I&B Code is dismissed.

Learned Adjudicating Authority will close the proceedings. The

appellant(s) are released from all the rigour of law and is allowed to -5-

function independently through its Board of Directors with

immediate effect.

9. Learned Adjudicating Authority will fix the fee of 'Interim

Resolution Professional', if appointed and the appellant-'Corporate

Debtor' will pay the fees of the Interim Resolution Professional, for

the period he has functioned.

10. Both the appeals are allowed with the aforesaid observations

and directions. However, in the facts and circumstances of the

case, there shall be no order as to costs.

[Justice S.J. Mukhopadhaya] Chairperson

[Balvinder Singh I Member (Technical)

/ng/