Balkishan Shrikisan Baldawa Vs Agri-Tech (India) Limited (NCLAT Delhi)
NCLAT Delhi held that shareholders have locus standi to file appeal under section 61 of the Insolvency and Bankruptcy Code and hence the appeal is maintainable. Further, appellant has made out case of fraudulent initiation of CIRP since both Financial Creditor and Corporate Debtor are related parties.
Facts- The Appellants herein namely Balkishan Shrikisan Baldawa had filed an application under Section 60(5) read with Section 65 of the Insolvency and Bankruptcy Code, 2016 wherein the highlighted fraud perpetrated by Respondent Companies Respondent No.1 – Agri-Tech (India) Limited – Financial Creditor and Corporate Debtor – Respondent No.2 – Techindia Nirman Limited. Both of them are related party and it is claimed that in collusion with each other they filed for initiation of Corporate Insolvency Resolution Process (CIRP) proceedings.
Conclusion- Held that when Appellant has made out a case for fraudulent initiation of CIR proceedings and both the FC and the CD are related parties, we unhesitatingly conclude that Appellants are aggrieved person and have the locus to file the Appeal and the Appeal is maintainable. We also conclude that FC and CD being related parties have collusively filed the Section 7 application and got CD admitted into CIR Proceedings and this is case of a fraudulent initiation of CIR proceedings. We also conclude that the filing of Section 7 in this case is not for resolution of the Corporate Debtor but for some other purpose. Had the purpose been the resolution of the CD, the offer of settlement of Corporate Debtor could have been accepted by FC, especially when both have the same management. CD could have explored Section 10 route under the code. This is a sure way of wiping out major shareholding. We also notice pending transaction audit and PUFE application before Adjudicating Authority. This indicates a nefarious pattern. We thus conclude that the initiation of CIRP against CD has been done collusively with FC and as discussed herein earlier, it is a fraudulent initiation of CIRP and should be dealt with a heavy hand as per Section 65 of the Code.
