CORPORATE LAW CORNER

9 Amira Pure Foods Pvt. Ltd. vs. Canara Bank
Ltd.

[2019] 105 taxmann.com 326
(Delhi)

W.P. (C) No. 5467/2019

Date of order: 20^th
May, 2019

Section 18 of the
Insolvency and Bankruptcy Code, 2016 – Debt Recovery Appellate Tribunal should
have recalled its order of taking control and possession of assets of corporate
debtor and handing over the same to the Insolvency Resolution Professional in
exercise of its mandate u/s. 18 of the Code – DRAT should have modified its
order as it has adequate powers to do the same

FACTS

CB (“Financial Creditor”)
had approached the Debt Recovery Tribunal (“DRT”) for recovering its dues from
A Co under the Recovery of Debts Due to Banks & Financial Institutions Act,
1993; arising from these proceedings, the matter reached the Debt Recovery
Appellate Tribunal (“DRAT”). DRAT, vide its order dated 15^th
November, 2018 appointed Joint Court Commissioners to take over the assets of A
Co including its perishable assets. Soon thereafter, CB also initiated
proceedings against A Co under the Insolvency and Bankruptcy Code, 2016 (“the
Code”) and pursuant to the same, an Interim Resolution Professional (“IRP /
RP”) was appointed on 11^th December, 2018.

Upon appointment, the IRP
approached DRAT for taking over the properties and assets of A Co and prayed
for an early hearing. CB also accorded its consent to the said application
being allowed. But DRAT did not consider the application for early hearing and
the matter was adjourned. IRP then filed a writ petition with the High Court
where an order was passed instructing DRAT to hear and dispose of the matter
within a week. Consequently, DRAT passed an order on 22^nd April,
2019 dismissing the petition filed by IRP on the grounds that as a moratorium
u/s. 14 of the Code was operational, all proceedings against A Co were to be
stalled. The IRP challenged this order of DRAT before the High Court.

HELD

It was submitted by A Co /
IRP that section 14 of the Code imposes a restriction of proceedings which are
against the corporate debtor. It does not bar undertaking of proceedings which
are not considered as being “against the corporate debtor”. Further, since IRP
is required to act in a time-bound and efficient manner, appointment and continuation
of Court Commissioners with vesting of assets was detrimental to the interest
of IRP. Since CB did not object to continuation of proceedings under IBC, the
order of DRAT was bad in law.

The High Court heard the parties and held that DRAT was not powerless
to modify its own order whereby the two Court Commissioners had been appointed
to take over control of the assets of A Co. DRAT should have recalled its order
so that the IRP / RP could take over the assets of A Co in the exercise of its
mandate under the Code. The order of DRAT was accordingly set aside and IRP was
permitted to exercise its powers in terms of the Code. The costs of
Commissioner were to be paid by the IRP.

10 Pranatpal Tradelink (P.) Ltd., In re

[2019] 105 taxmann.com 308
(NCLT – Ahd)

C.P. No.
32/441/NCLT/AHM/2018

Date of order: 28^th
March, 2019

CL: Where a company
contravened provisions of section 217 by not attaching board report with its
balance sheet while filing e-form 23AC with MCA portal, in view of fact that
alleged offence was made compoundable and could be compounded because it was
punishable with imprisonment up to six months or with fine alone or both,
application for compounding of said offence was to be allowed

FACTS

In the instant case, during
the course of technical scrutiny of the balance sheet of P-Company Pvt. Ltd.
(the applicant), the Registrar of Companies observed that the applicant
company’s Board report was not attached with the balance sheet in e-form 23AC
filed with the MCA portal for the financial year 2010-11; thus, P-Company Pvt.
Ltd. had violated provisions of section 217(1) of the Companies Act, 1956
[Section 134 of The Companies Act, 2013].

The directors of P-Company
Pvt. Ltd. admitted that such violation was unintentional and with no mala fide
intention. However, they had later on attached the Board report along with
their compounding application and, thus, they had made good the alleged lapses.

HELD

The NCLT observed as
under:

If any person, being a
director of a company, fails to take all reasonable steps to comply with the
provisions of sub-sections (1) to (3), or being the chairman, signs the Board’s
report otherwise than in conformity with the provisions of sub-section (4), he
shall, in respect of each offence, be punishable with imprisonment for a
term which may extend to six months, or with fine which may extend to twenty
thousand rupees, or with both.

• The NCLT held that the compounding application for
  the offence was to be allowed as the alleged offence could be compounded
  because it was punishablewith imprisonment up to six months or with fine alone or both.