Case Law Details

Case Name : Nitin Suresh Satghare Vs Pancard Clubs Limited (NCLAT Mumbai)
Appeal Number : CP (IB) 4578/MB/C-I/2018
Date of Judgement/Order : 09/09/2022
Related Assessment Year :
Courts : NCLAT

Nitin Suresh Satghare Vs Pancard Clubs Limited (NCLAT Mumbai)

Held that initiation of CIRP under I&B code cannot be nullified by any order passed by SEBI nor can be a ground to reject an application.

Facts-

This Company Petition is filed under section 7 of the Insolvency and Bankruptcy Code, 2016 seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Pancard Clubs Limited.

The present Petition was filed before this Adjudicating Authority on the ground that the Respondent has defaulted in repayment of monies to the tune of Rs.1,55,12,880/- invested by the Petitioners.

The Financial Debt has arisen in respect of investments made by the Petitioners in a Collective Investment Scheme (“CIS”) operated by the Respondent under the guise of time share business.

SEBI by way of an Order dated 29.02.2016 directed the Respondent to refund monies to the tune of Rs.7035 Crore of the investors of its CIS within three months of passing of the said order and directed the CIS to be wound up. Thereafter, the Respondent herein preferred an appeal before the Hon’ble Securities Appellate Tribunal (SAT) and sought to challenge the Order dated 29.02.2016 of SEBI. SAT has upheld the Order dated 29.02.2016.

Conclusion-

On plain reading of the findings of the Hon’ble NCALT in Sobha Limited vs. Pancard Clubs Ltd. is crystal clear that an Order passed by SEBI is no bar to initiation of CIRP against the Corporate Debtor. Therefore, the contention of the Applicant i.e. SEBI in IA 1894 of 2019 that initiation of CIRP will be detrimental to recovery proceedings initiated vide order dated 29.02.2016 cannot be considered.
The application made by the Financial Creditors is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor.

FULL TEXT OF THE NCLAT JUDGMENT/ORDER

1. [This Company Petition is filed under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Mr. Nitin Suresh Satghare & 99 Ors. (“hereinafter referred to as Petitioners”), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Pancard Clubs Limited (“hereinafter referred to as Respondent”).

2. The Corporate Debtor is a Private Limited company incorporated on 24.01.1997 under Companies Act, 1956 with the Registrar of Companies, Maharashtra, Mumbai. Its registered office situated at 111­113, Kaliandas Udyog Bhavan, Near Century Bazaar, Prabhadevi, Mumbai-400025. Therefore, this Bench has jurisdiction to deal with this Petition.

3. The present Petition was filed before this Adjudicating Authority on the ground that the Respondent has defaulted in repayment of monies to the tune of Rs.1,55,12,880/- (Rupees One Crore Fifty-Five Lakh Twelve Thousand Eight hundred and Eighty Only) invested by the Petitioners.

4. The particulars of debt of the Petitioners is detailed as under:

Sr. No.

Name Address Pancard Total
members
hip
amount
Total
surre-nder
value
No. of days default
1. Nitin Suresh Satghare 402, Om Siddhi CHS Ltd. Near Ajit Park CHS LTD, Somwar Bazar, Malad
W Mumbai 400 064 9223253629
ASDPS10588 72,000 156,000 580
2. Anil Rajaram Gaikwad Narayan Nagar Chawl, Jijamat Marg, Pump House, Andheri (e) Mumbai 400093 AFQPG2319P 31,500 44,100 580
3. Ramchandra Daji Salaskar 221/25, Geet Gunjan CHS, RSC-3, Sector No.2 Charkop, Kandivali (W)
Mumbai-400067
AUFPS8710E 49,500 54,600 580
4. Uday
Vithoba
Sawant
D-301, Chandresh Shakti CHS LTD. Nr. Saibaba Temple, Shankeshwar Nagar, Achole Road, Nalasopara East. Vasai-
401209
AXHPS6331C 445,500 649,140 580
5. Sahadev Laxman Gothankar B-11, Shivkripa  Rahivasi Seva Sangh Adarsh nagar, Nr. Ganesh Chowk, Kandivali West, Mumbai 400 067 AFEPG8319K 20,700 28,980 580
6. Shivram
Krishna
Avere
39-Shivkripa Chawl, Adarsh Nagar, Nr.
Ganesh Chowk, Charkop Poisar Link road, Kandivali (W) Mumbai- 400067
AEKPA8011M 2,700 5,400 580
7. Ashok
Shivram
Birje
B-304, Ashish Co Op. Hsg. Soc. Amrut Nagar Ghatkopar W, Mumbai 400
086
AAIPB5250B 200,700 280,980 580
8. Surend-ranath Pandurangn ath Gosavi 9/107, Maratha Colony Rahivasi Sangh, Golibar Road, Near Maratha Colony Bus Stop, Santacruz East, Mumbai 400 055 ANKPG4494M 151,200 211,680 580
9 Deepak Atmaram Pawar 1/24, Maratha colony, Golibar Road, Tulas
Galli, Santacruz E, Mumbai – 400 055
BETPP5944J 35,100 70,200 580
10 Shyam
Ankush
Parab
Room No. 3, Babulnath Pandey Chawl No.6, near Jay Javan Krida
mandal, Shivtekdi Jogeshwari E, Mumbai – 400 060
APUPP3860J 459,900 674,100 580
11 Suresh M Bhoir Wamanrao Bhoir House, Wamanrao Bhoir Road, Kandar Pada, Dahisar W Mumbai 400 068 AOGPB5095Q 111,600 2,017,040 580
12 Rajendra Parshuram Mhatre B/206, Yashwant Apartment, Behind Chaitanya Nursing Home Goulwada Vasai Gaon Bassein Thane 401201 ARSPM9978Q 47,700 68,900 580
13 Varsha Vilas Kundekar Sanjivani Co.Op. Hsg. Soc., Golibar road, Near Hanuman Temple, Santacruz E, Mumbai – 400055 BEDPK7041B 36,000 48,800 580
14 Vilas Shantaram Kundekar Sanjivani Co.Op. Hsg. Soc., Golibar road, Near Hanuman Temple, Santacruz E, Mumbai – 400055 AXHPK4813F 11,700 24,300 580
15 Sujata Subhash Kulaye Room No.3, Jivdani Krupa Chawl, Chandansar, Virar, East, Thane – 401303 DFUPK0493F 36,000 48,000 580
16 Subhash Anaji Kulaye Room No. 322, 3rd Floor,
Ashtavinayak Apartment, Near Petrol Pump, Sainath Nagar, Virar E, Tal. Vasai pin 401 305
ARGPK3331F 64,260 580
17 Ajay Devendra Pandit Pandi Wadi, Near Shri Swami Samarth mandir, Vasalai , Vasai W, Dist. Thane 401 201 AZIPP6473D 10,800 15,120 580
18 Sudhakar Suresh Mali B/203, G.M. Tower, Narangi Road, Virar E, pin 401 303 EHAPM7502J 9,000 12,600 580
19 Ramchandra Gopal Hatankar B-2, mahalaxmi CHS LTD,
Cross Rd. No. 2, Near Maa Vidya mandir, Singh Estate, Kandivali East, Mumbai 400 101
ACPPH9081H 73,800 104,580 580
20 Kusum
Kishore
Patel
Room No.2 Santoshi Niwas Chawl, Opp. Saibaba Mandir, Devipada, Borivali Mumbai 400 066 ATWPP5604N 157,500 220,500 580
21 Prakash
Vasant
Patole
B/19, Sitaram Jadhav Chawl, Sevalal Nagar, Tulji road, Nalasopara E, Thane – 401209 BGNPP8797D 50,400 100,800 580
22 Shripat Suresh Mali Tulshi Tiwari Chawl, Romm No. 7, Samshan Tekdi, Pratap Nagar, JVLR, Jogeshwari E, Mumbai 400 060 ARDPM3036A 100,800 302,400 580
23 Vinita Shripat Mali Tulshi Tiwari Chawl, Romm No. 7, Samshan Tekdi, Pratap Nagar, JVLR, Jogeshwari E, Mumbai 400 060 AITPM3550E 152,200 456,300 580
24 Mangesh Dinkar Mangaonkar 23 Jankiram CHS LTD. N.S. Mankaikar Marg, Chunabhatti W, Sion, Mumbai
400 022
AACPM9185E 5,400 10,800 580
25 Digambar Mahadev Sawant 19A/603, Sarvoday CHS LTD. Bimbisar Nagar, Mhada colony Goregaon, East, Mumbai, 400 065 AMMPS2384K 141,300 282,600 580
26 Suresh Laxman Padye Dattatray Seva Mandal, Datta Nagar, Behind
Suman Nagar, V.N. Purav
Marg, Chembur, Mumbai 400 071
AUYPP2540G 20,700 28,980 580
27 Sanjay Dagadu Sapkal Laxman Murda Chawl, Hanuman Tekadi Seva
Mandal, Behind Raheja complex Tanaji nagar, Kurar Village, Malad E Mumbai 400 097
BKFPS7008L 36,000 50,400 580
28 Dattaram Mahadev Veer Room No. 4, Renuka Prasad Building, 2nd
Floor, Achalkar Compound, V.P. Road, Near Joshi High School, Pendse Nagar, Dombivali E,
421 201
ADVPV9720C 2,700 3,780 580
29 Atmaram
Bhikaji
Dhuri
4, Borchi Wadi, Shradhhanand Road, Vileparle E, near Kanhaya Bhuwan, Mumbai – 400 057 AFCPD1186R 50,400 100,800 580
30 Vilas Keshav Utekar 1/23 Santacruz Polis Line, Juhu Road, Santacruz W, Mumbai 400 054 AAHPU9231C 2,700 5,400 580
31 Vitthal Dattatray Tawde 703/A Wing, Riddhi Siddhi complex, M.G. road, Sukur Wadi, Borivali E, Mumbai – 400 066 AAMPT9141P 100,800 201,600 580
32 Sudhir Raghunath Vengulekar Siddhi vinayak Rahivashi Vikas Mandal, Devipada, Borivali E, Mumbai 400 066 AFMPV5891D 62,100 86,940 580
33 Umesh Vasant Sawant Yogeshwar, CHS Plot NO. 40, Room No. 301, RSC 19, Opp- Maratha
Sahakari Bank, Gorai, Borivali W Mumbai 400 091
AMNPS3188G 100,800 201,600 580
34 Asha Mallappa Patil A/104, Sai Ratnadeep Apt, Balkum Pada No. 2, Thane West 400 608 BADPP9853L 100,800 141,120 580
35 Kumud Sudam Lone R/6, Sunder Nagar, Swami Vivekanand Road, malad
West, Mumbai 400064
ABCPL5634J 106,200 148,680 580
36 Chhaya Chandrakant mane Darshan CHS, Plot No. 429
Room No. 20, Sector- 4
Charkop, Kandivali West Mumbai 400067
AHNPM4462A 25,200 35,280 580
37 Rutuja Rajesh Palav 17/C, 401 Shiv Kankan CHS,
Ashokvan, Borivali East, Mumbai 400066
ATDPP2752J 25,200 35,280 580
38 Sudesh Shankar Bhowar G Wing, Plot No. 302,
Gayatri Dham, Phase 2, Mira Bhayaner East, Mira Road East, Thane 401107
AEMPB3847G 50,400 70,560 580
39 Ramakant Anant Manjrekar C 201, Sulochana HSG> Soc.,
Yashwant Nagar, Vakola
Church, Santacruz ,
Mumbai 400055
ABTPM7332B 150,640 292,420 580
40 Ramesh Atmaram Nevarekar 113/A/3, Kalna Kolivery Village road,
Santacruz East, Mumbai 400098
AAYPN9898D 54,000 75,600 580
41 Rajaram Ramchandra Gade 702, Vakratund CHS, C wing, Sambhaji Nagar, Sahar
Road, Andheri East, Mumbai
400069
AJXPG7284Q 100,800 201,600 580
42 Kamini Shreekrishna Rawgol Room No.1, laxmi Nivas, Jambhli pada, Kalina, Santacruz (E),
Mumbai 400029
AOKPR9302Q 11,700 23,400 580
43 Tejaswini Tukaram Khadapkar A D Chawl, Kalina Kolivera village Road,
Santacruz East, Mumbai 400098
AREPK9508N 153,900 275,940 580
44 Kanchan
Keshav
Dhuri
B-605, Adarsh Apt, yashwant Nagar, Vakola, Santacruz East, Mumbai 400055 AUWPD7687E 36,000 50,400 580
45 Dilip Yashwant Dali Shankar Apt, A/3/304, next Sudhir Apt.
Yashwant Nagar, Santacruz East, Mumbai 400055
ALAOD9641F 126,000 252,000 580
46 Amit Ashok Bhat B 603, Adarsh Apt, Yashwant Nagar, Vakola
Pipeline Santacruz East, Mumbai 400055
ALWPB5983A 110,700 154,980 580
47 Subhash Bhagwan Pujare Hanuman Chawl, Waghri Wada, dutt Mandir Road, Vakola Bridge, Santacruz East, Mumbai 400055 AVGPP2817D 50,400 100,800 580
48 Shubhangi Subhash Pujare Shivganga Chawl, Waghari WADA, DM Road, Vakola
Bridge, Santacruz East, Mumbai-400055
AXAPP6524F 50,400 70,560 580
49 Babu Deu Gawade Plot No. 6-3-C/4, Triveni Nagar, Niwar Soc, Gen A K Vaidya Marg,
Goregaon East, Mumbai 400065
AOPG2578R 36,000 48,000 580
50 Jayram Krushna Waghe Room No. 3 Bhimrao Chawl, B/H Jagruti Mitra Mandal, Dutt Mandir Road, Vakola Bridge, Santacruz East, Mumbai 400055 AAOPW0451D 228,600 320,040 580
51 Jayshri Jayram Waghe Chawl, Jagruti Mtra Mandal, Vakola Bridge, Datt Mandir
Road, Santacruz East, Mumbai 400055
ABSPW12668 100,800 201,600 580
52 Vijay Vitthal Velonde Room No14/5, Parmar Chawl, D Mello Compound, Datt Mandir Road, Vakola Bridge, Santacruz East, Mumbai 400055 AGFPV4298L 75,600 119,880 580
53 Karishma Dilip Dali Shankar Apt, A/3/304, Next Sudhir Apt,
Yashwant Nagar, Santacruz East-Mumbai-400055
BQOPD9723N 145,800 204,120 580
54 Nita Ashok Bhat B 603, Adarsh Apt Yashwant Nagar, Vakola
Pipeline, Santacruz East Mumbai-400055
BNQPB9856H 101,700 141,180 580
55 Ketan Shrikrishna Rawool Room N0 1, Laxmi Nivas, Jambhli Pada, Kalina Santacruz (E),
Mumbai 400029
BCHPR1560C 6,300 13,500 580
56 Vinaya Dilip Dal Shankar Apt, A/3/304, Next Sudhir Apt,
Yashwant Nagar, Santacruz East, Mumbai-400055
ALUPD8746R 162,900 228,060 580
57 Vinti Dilip

Dali

Hankarapt, A/3/304, Next Sudhir Apt,
Yashwant Nagar, Santacruz East, Mumbai-| 400055
CHBPD2830F 63,000 88,200 580
58 Rajeshree
Rajaram
Gade
702, Vakratund Chs, C Wing, Sambhaji Nagar, Sahar
Road, Andheri East, Mumbai
400069
AQOPG2819H 50,400 100,800 580
59 Manisha Ramakant Manjrekar C 201, Sutochana Hsg. Soc., Yashwant Nagar, Vakola
Church, Santacruz (E), Mumbai 400055
AHDPM7364D 100,240 304,300 580
60 Vanita Sakhara Jadhav B4, Mahatma Fule Nagar Ag Khan Road, Opp. Worli Dairy Colony, Worli, Mumbai- 400018 AQOPI80116G 5,400 7,560 580
61 Namita Mahadev Rahate Sai Niketan Chawl, Near Gurudwara, Ketki Pada Dahisar East, Mumba 400068 APLPR2589H 71,100 102,780 580
62 Yogesh Pandurang Bavkar Sai Vinayak Nagar Bldg No-3, R0om No – 303, Nr Mother Mary School, Nallasopara East, Thane
401209
AWEPB6799H 101,700 143,820 580
63 Suryakannt Gangaram Ambre Om Pooja Apt, Room No A-O02, Nangindas
Pada
Nallasopara
East Thane
ADFPA6511N 55,800 78,120 580
64 Prakash Laxman Khapare Om Shiv Baba
Nagar Ganesh
Chawl No -2Room No 10,Kaju PadaOrivali East,Mumbal-400066
ALBPP8085G 7,200 10,080 580
65 Yogesh
Soma
Kanagal
Jarior Chawl, Room No 5, Old Dongri, Lane No- 1, Sahar Road, Andheri East, Mumbai – 400069 APRPKB761J 40,500 81,000 580
66 Sandeep Harischandr a Purav At Makane, Umbarpada, Tal-Dist Palghar, Safale 401102 BQHPP1716J 36,000 50,400 580
67 Vjay Yadav Patil Yashoda Bhavan Near
Lake At Post-Nandgaon Taluka –
Palghar Dist – Thane Boisar – J401501
AJUPP0975A 549,000 768,600 580
68 Vijayata Vijay Patil Yashoda Bhavan Near
Lake At Post-Nandgaon Taluka –
Palghar Dist – Thane Boisar – 401501
BRFPP6355J 10,800 15,120 580
69 Vivek

Ramnik Patil

At Post- Nandgaon Taluka – Dist. Palghar 401501 BGPPP2873L 351,000 491,400 580
70 Rekha
Rajaram
Patil
At Pasthal Naka, PO- TAPPS House No. 2180,
Shahu Maharaj Vasahat Boisar, Tal, Palghar, Thane 401 504
BDMPP1185R 75,600 105,840 580
71 Rajaram Raghunath Patil At Pasthal Naka, PO- TAPPS House No. 2180,
Shahu Maharaj Vasahat Boisar, Tal, Palghar,
Thane 401 504
ARKPP1931A 36,000 48,000 580
72 Safikulali
Sukurali
Sekh
Gini Silk Mills Plot No. G-30, Tal Palghar, Dist. Thane Boisar 401501 EFSPS4209Q 20,700 28,980 580
73 Ashish Atmaram Patil At Post- Nandgaon Taluka –
Palghar Dist – Thane Boisar – 401501
AXXPP5097Q 100,800 201,600 580
74 Kalpana Kamlakar Patil At Post Nandgaon, City Boisar Tal Palghar, Dist. Thane 401501 EEGPP2092D 35,100 105,300 580
75 Rakesh
Anant
Thakur
At Post Nandgaon Tq. Dist. Palghar
401501
AGYPT9623J 100,800 141,120 580
76 Kishor
Bhagwat
Patil
At Post Nandgaon Tq. Dist. Palghar
401501
AMVPP7846G 86,400 148,800 580
77 Prasad Omprakash Kini At Post Nandgaon Tq. Dist. Palghar
401501
AYXPK1908Q 50,400 100,800 580
78 Omprakash Harichandra Kini At Post Nandgaon Tq. Dist. Palghar
401501
ACVPK9395B 99,900 139,860 580
79 Asha Omprakash Kini At Post Nandgaon Tq. Dist. Palghar
401501
AFUPK9737P 386,100 666,540 580
80 Heramb Omprakash Kini At Post Nandgaon Tq. Dist. Palghar
401501
AXCPK3608H 150,300 210,420 580
81 Sadanand Pandurang Patil At Sagave, Post- Maswan, Tal- Palhgar, Dist. Thane 401404 AYHPP6642C 50,400 100,800 580
82 Pratik Chandrakant Gharat 1567, Near Swadhyay Temple Sarawali, Boisar Palghar, Thane 401501 AJMPG7855J 103,500 144,900 580
83 Vikas Vishnu Mali At Padghe, Post- Umroli, Tal Palghar, Dist- Thane- Boisar 401404 AVJPM1028N 5,400 10,800 580
84 Suresh Laxman Prahad At Rawate Post- Borsheti, Tal, Palghar, Boisar, 401501 BGEOPP8939N 10,800, 15,120 580
85 Sunil
Ankush
Pansare
Pragati CHS LTD RH -23 Flat No. 9, Vidya Nagar
Sarivali, Boisar Palghar 401501
AWZPP5850G 50,400 70,560 580
86 Ramchandra Bhimrao Khot B-4, Darshan Niwas, Khodram Bag, Behind State
Bank of India, Nawapur Boisar, Tal-
Palghar 401501
ATPPK0120P 50,400 100,800 580
87 Ratish
Subhash
Patil
At Post Chinchani Patil Pada, Boisar,
Tal- Dahanu 401503
BUAPP6265M 22,500 31,500 580
88 Sudhir
Tulsidas
Keni
At Post Dandi, Tal- Dist- Palghar – 401501 AVGPK2378A 51,300 73,260 580
89 Pradip Jaganth Kamali At Pasthal Near MSEB colony, Tal Palghar –
401504
AYWPK3006C 35,100 105,300 580
90 Bhupendra Dilip Patil At Post- Akkarpatti, Tal, Palghar, 401504 BCQPP7118H 18,000 24,000 580
91 Hitendra Suresh Thakur At Post- Kudan Chinchpada, Tal, Palghar,
Boisar 401502
AGOPT7474P 10,800 15,120 580
92 Sagar Bhalchandra More At post Ghivali, Tal Palghar
Boisar 401502
ATPPM4058G 25,200 76,500 580
93 Himmatrao Motiram Patil At Post Shivaji Nagar, Po-
Salwad, Boisar, 401501
CBBPP3534N 35,100 105,300 580
94 Housarao Bapu Garud At Pasthal Naka, Po- TAPPS House No. -2111,
Shahu Maharaj Vasahat Boisar, Tal- Palghar,
Thane 401504
AKUPG1110F 5,400 7,560 580
95 Ramchandra Sitaram Jadhav At New Raut Wadi Sidhivinay Society Tal-
Palghar Boisar 401502
ASPPJ5768B 36,000 48,000 580
96 Supriya Santosh Telgade At New Raut Wadi Sidhivinay Society Tal-
Palghar Boisar 401502
AEPPT2348B 25,300 50,400 580
97 Suchas Shankar Bachate Kaveri Bldg. No.1 Room No. 507, Ram
Nagar, Chincholi Bundar road Malad W Mumbai 400 064
AMXPB1838N 35,100 105,300 580
98 Dashrath Narayan Nakti R No. B/5 Ismail Rana Chawl P M Road, Vile
Parle Mumbai 400056
AGTPN1227H 21,600 30,240 580
99 Ravindra Visnupant Pawar B-606, Pavanputra CHS LTD,
Shivallabh Road, Ashokvan Dahisar E Mumbai 400 068
AUPP5972H 100,800 141,120 580
100 Neha Nitin Mohite 603, Sai Siddhi CHS, Pratap
Nagar, Vikhroli Link Road, Jogeshwari (E), Mumbai 400 060.
AKOPM0843R 200,700 280,980 580
Total 8,277,280 15,512,880

Submissions made by the learned Counsel of the Petitioner:

5. The Financial Debt has arisen in respect of investments made by the Petitioners in a Collective Investment Scheme (“CIS”) operated by the Respondent under the guise of time share business. The Petitioners collectively invested a sum of Rs. 1,55,12,880/- (Rupees One Crore Fifty-Five Lakh Twelve Thousand Eight Hundred and Eighty Only).

6. Further, the Securities Exchange Board of India (SEBI) by way of an Order dated 29.02.2016 directed the Respondent to refund monies to the tune of Rs.7035 Crore of the investors of its Collective Investment Scheme (CIS) within three months of passing of the said order and directed the CIS to be wound up. Thereafter, the Respondent herein preferred an appeal before the Hon’ble Securities Appellate Tribunal (SAT) and sought to challenge the Order dated 29.02.2016 of SEBI. SAT has upheld the Order dated 29.02.2016. (Annexure “1-3” at pages 82 to 108)

7. The Petitioners submits that upon the perusal of the Orders passed by SEBI and SAT it is abundantly clear that the investments made by over 50 lakh investors was accepted by the respondent under the guise of time share scheme for purchase of room nights in various properties and resorts owned by the Respondent. The Petitioners submit that the scheme was in fact a collective investment scheme made by the Respondent for the purpose of earning returns on their investments against a consideration for time value of money.

8. In light of the above facts, the financial debt owed to the Petitioners became due pursuant to SEBI’s order dated 29.02.2016.

IA 1894 of 2019

Submissions advanced by learned counsel for the Applicant

9. The above stated Application is filed by Securities Exchange Board of India (SEBI) seeking inter alia dismissal of the present Company Petition on the ground that the Applicant vide its Order dated 29.02.2016 declared that the schemes operated by the Corporate Debtor were in nature of CIS and directed that the amount collected from investors be refunded. The Hon’ble SAT upheld the Applicant’s Order with directions to the Corporate debtor and its directors to comply with the Order dated 29.02.2016.

10. Thereafter, recovery proceedings were initiated by the Applicant and in furtherance of the same E-Auction notices were issued for sale of various properties of the Corporate Debtor by way of E-Auction. The said E-auction notices were assailed before the Hon’ble Bombay High Court vide Order dated 09.01.2019 wherein the auction of properties was stayed until further orders.

11. The Applicant submits that since the schemes operated by the Corporate Debtor run in violation of Section 11AA of SEBI Act and CIS Regulations, the recovery proceedings are initiated by the Applicant. Therefore, the initiation of CIRP would be detrimental to recovery proceedings already on-going.

IA 668 of 2022, IA 997 of 2022 and IA 1491 of 2022

12. None present for Applicants at the time of hearing. It is observed that the above stated Applications are filed by intervenors who are supporting the cause of Financial Creditor.

Findings

13. The Respondent was served court notice dated 19.02.2019. Further, vide order dated 03.04.2019 service by way of paper publication was ordered and the same was complied with. Therefore, it is clear that the Respondent since inception has chosen not to defend the matter. Hence, the Respondent is proceeded ex-parte.

14. We have heard the Ld. counsel appearing on behalf of the Petitioner and the Ld. Counsel appearing for the Applicant in IA 1894 of 2019 and perused the records.

15. At the outset, it is noted that predecessor bench in CP No. 593 and 1085 of 2017 Shobha Limited vs Pancard Club Ltd. has in detail dealt with the nature of the scheme adopted by Respondent. Further, the said matter was filed under Section 9 of the Code and was inevitably dismissed as there was pre-existing dispute. The matter went in appeal and the Hon’ble NCLAT in Sobha Limited vs Pancard Clubs Ltd. Company Appeal (AT) (Insolvency) No. 162 of 2017, has laid down the following:

11. Having heard learned counsel for the appellant, while we agree that initiation of ‘Corporate Insolvency Resolution Process’ under ‘I&B Code’ cannot be nullified by any order passed by SEBI nor can be a ground to reject an application under Section 9 of the ‘I&B Code’ but as there is an ‘existence of dispute’ with regard to the invoices raised by the Appellant-‘Operational Creditor’, we hold that the application under Section 9 of the ‘I&B Code’ was not maintainable.”

16. On plain reading of the findings of the Hon’ble NCALT it is crystal clear that an Order passed by SEBI is no bar to initiation of CIRP against the Corporate Debtor. Therefore, the contention of the Applicant i.e. SEBI in IA 1894 of 2019 that initiation of CIRP will be detrimental to recovery proceedings initiated vide order dated 29.02.2016 cannot be considered.

17. The present Petition is filed under Section 7 of the Code. The Hon’ble Apex Court in E.S. Krishnamurthy vs Bharath Hi-Tecch Builders (P) Limited 2022 3 SCC 161 has held as under:

“24. On a bare reading of the provision, it is clear that both, Clauses (a) and (b) of sub-Section (5) of Section 7, use the expression “it may, by order” while referring to the power of the Adjudicating Authority. In Clause (a) of sub-Section (5), the Adjudicating Authority may, by order, admit the application or in Clause (b) it may, by order, reject such an application. Thus, two courses of action are available to the Adjudicating Authority in a petition under Section 7. The Adjudicating Authority must either admit the application under Clause (a) of sub-Section (5) or it must reject the application under Clause (b) of sub-Section (5). The statute does not provide for the Adjudicating Authority to undertake any other action, but for the two choices available.

25. In Innoventive Industries (supra), a two-judge Bench of this Court has explained the ambit of Section 7 of the IBC, and held that the Adjudicating Authority only has to determine whether a “default” has occurred, i.e., whether the “debt” (which may still be disputed) was due and remained unpaid. If the Adjudicating Authority is of the opinion that a “default” has occurred, it has to admit the application unless it is incomplete. Speaking through Justice Rohinton F Nariman, the Court has observed:

“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, 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 24 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. […]

30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is “due” i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise.” (emphasis supplied)

18. In the present case the documents annexed with the Petition, it is seen that the Financial Creditors have disbursed the money against time value of money which in the instant case means that the Petitioners were to receive a value higher than the invested amount, which has all the characteristics of Financial Debt. Further, the Petitioners have placed on record bank statements and financial contracts to prove the same.

19. Further, it is established by the Petitioners that the Respondent has failed to honour the contract, hence the repayable amount is in default.

20. The application made by the Financial Creditors is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor

21. The Financial Creditor has proposed the name of Rajesh Sureshchandra Sheth, Registration No. IBBI/IPA-002/IP-No1021/2020-2021/13298, as the Interim Resolution Professional of the Corporate Debtor. He has filed his written communication in Form 2 as required under rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

22. It is, accordingly, hereby ordered as follows: –

(a) The petition bearing CP (IB) 4578/MB/C-I/2018 filed by Nitin Suresh Satghare & Ors., the Financial Creditors, under section 7 of the IBC read with rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against Pancard Clubs Limited [CIN: U91900MH1997PLC105363], the Corporate Debtor, is admitted.

(b) There shall be a moratorium under section 14 of the IBC, in regard to the following:

(i) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

(ii) Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein;

(iii) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002;

(iv) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor.

(c) Notwithstanding the above, during the period of moratorium:-

(i) The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period;

(ii) That the provisions of sub-section (1) of section 14 of the IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any sectoral regulator;

(d) The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be.

(e) Public announcement of the CIRP shall be made immediately as specified under section 13 of the IBC read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

(f) Mr. Rajesh Sureshcandra Sheth, Registration No. IBBI/IPA-002/IP-No1021/2020-2021/13298, having address at,B-55, Shatdal Society, 7th Floor, Azad Lane, Off S.V Road, Andheri West, Near Shopper Stop, Mumbai-400058 is hereby appointed as Interim Resolution Professional (IRP) of the Corporate Debtor to carry out the functions as per the IBC. The fee payable to IRP or, as the case may be, the RP shall be compliant with such Regulations, Circulars and Directions issued/as may be issued by the Insolvency & Bankruptcy Board of India (IBBI). The IRP shall carry out his functions as contemplated by sections 15, 17, 18, 19, 20 and 21 of the IBC.

(g) During the CIRP Period, the management of the Corporate Debtor shall vest in the IRP or, as the case may be, the RP in terms of section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within a period of one week from the date of receipt of this Order, in default of which coercive steps will follow.

(h) The Financial Creditor shall deposit a sum of Rs.5,00,000/- (Rupees Three Lakhs only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors (CoC).

(i) The Registry is directed to communicate this Order to the Financial Creditor, the Corporate Debtor and the IRP by Speed Post and email immediately, and in any case, not later than two days from the date of this Order.

(j) IRP is directed to send a copy of this Order to the Registrar of Companies, Maharashtra, Mumbai, for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt of a copy of this order.

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