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2015 DIGILAW 2705 (MAD)

C. Mohan Ram v. Venture East Proactive Fund LLC

2015-08-03

K.RAVICHANDRABAABU

body2015
Judgment K. Ravichandra Babu, J. 1. This Application is filed under Section 9(5) of the Presidency Towns Insolvency Act, 1909 seeking to set aside the Insolvency Notice No. 57 of 2013. The Creditors, filed the Petition under Section 9(2) of the above said Act for issuing an Insolvency Notice to the Debtor who was arrayed as the Second Respondent therein. The First Respondent therein was the Company. 2. The claim of the Creditors in I.N. No. 57 of 2013 is as follows: "They invested a sum of Rs. 10,30,00,000/- in Lattice Bridge Infotech Private Limited by way of purchase of equity and compulsorily Convertible Cumulative Participating Preference shares. The Debtor is the Managing Director of the said Company. The investments made by the Creditors herein were systematically siphoned out of the Company by the Debtor, who was in control of the management of the said Company. The Debtor utilised the funds for his personal benefits. Therefore, the Creditors filed a Petition in C.P. No. 32 of 2010 before the Company Law Board, Chennai seeking various reliefs. During the course of the above said Company Petition, a Compromise was arrived at between the parties and the same was recorded by the Company Law Board in its Order dated 23.08.2012. The said Order is a Decree in terms of Company Act, 1956. As per the Decree, the Debtor shall make payment of Rs. 5,92,00,000/- to the Creditors towards investment made by them. The Debtor shall pay a sum of Rs. 20,00,000/- on accepting the said Memo of Compromise and the balance amount of Rs. 5,72,00,000/- shall be paid by him in six quarterly instalments commencing from 23.08.2012. Though the Debtor made initial payment of Rs. 20,00,000/- on 23.08.2012, he, however, failed to make further payments thereafter. The Creditors issued a Notice on 22.12.2012 calling upon the Debtor to make payment in terms of compromise. The Debtor by Letter dated 07.01.2013 accepted his liability and however, sought time to make payment. Since he failed to comply with the terms of Settlement, the entire liability becomes due and the Decree passed by the Company Law Board has become final and consequently, the Application under Section 9(2) of the said Act was filed for issuing an Insolvency Notice." 3. This Court issued Notice to the Debtor under Section 9(2) of the said Act. Since he failed to comply with the terms of Settlement, the entire liability becomes due and the Decree passed by the Company Law Board has become final and consequently, the Application under Section 9(2) of the said Act was filed for issuing an Insolvency Notice." 3. This Court issued Notice to the Debtor under Section 9(2) of the said Act. The Debtor has filed the present Application under Section 9(5) of the above said Act, seeking to set aside the Notice on the following reasons: "The Joint Memo of Compromise entered between the parties before the Company Law Board only constitutes a contract to buy and sell the shares of the Company and therefore, the relation between the parties is that of "Purchaser and Seller" and not as a "Creditor and Debtor". The Creditors are still the owners of all the shares agreed to be sold to the Debtor. The Debtor never borrowed any money from the Creditors. On the other hand, they only invested the money in the shares of the Company. The Memo of Compromise is nothing but only an Agreement to Sell. Clause 10 of the Agreement entitles the Creditors to continue Company Petition in case of any default in making payment by Debtor. The consideration agreed to be paid to purchase shares cannot be construed as a debt. Therefore, the Insolvent Notice under Section 9(2) is not maintainable. The Order passed by the Company Law Board is not a Decree as defined under Section 2(2) of the Civil Procedure Code. It is deemed to be a Decree only for the purpose of execution alone. There is no debt due and payable to the Creditors by the Debtor." 4. In this Application No. 139 of 2013, the Creditors filed Counter Affidavit, wherein they have reiterated the contentions already raised in the Insolvency Petition. They further contended that the Debtor by executing the Compromise Memo, acknowledged the liability which is ascertained and determined and the same is evident from the Order passed by the Company Law Board. The Order passed by the Company Law Board is an executable Decree. The Debtor through Letter dated 07.01.2013 accepted the amount due to the Creditors. 5. Mr. They further contended that the Debtor by executing the Compromise Memo, acknowledged the liability which is ascertained and determined and the same is evident from the Order passed by the Company Law Board. The Order passed by the Company Law Board is an executable Decree. The Debtor through Letter dated 07.01.2013 accepted the amount due to the Creditors. 5. Mr. R. Sankaranarayanan, learned Counsel appearing for the Debtor contended as follows: "The Creditors have invested in share purchase in the Company called M/s. Lattice Bridge Infotech Private Limited wherein the Debtor is the Managing Director. The Creditors filed Company Petition in No. 32 of 2010 before the Company Law Board, Chennai wherein a Joint Compromise Memo was filed which is only an Agreement to Sell and purchase shares and not an acknowledgement of liability of any debt. Therefore, there is no debt due and liable to be paid by the Debtor to the Creditors. Consequently, there is no relationship of Creditor and Debtor between the parties. If the terms of the Compromise Memo is not complied with, the Creditors can only resort to the remedy of filing a Specific Performance Suit. They cannot file Insolvency Petition under Section 9(2). The Order passed by the Company Law Board is not a Decree within the meaning under the Civil Procedure Code. Even assuming that the Order passed by the Company Law Board is a Decree, the same is not executable in view of the terms of the Memorandum of Compromise. As per the specific default clause in the Joint Memo of Compromise, the entire Agreement between the parties gets terminated and the Creditors have to only restore and pursue the Company Petition and not otherwise." 6. The learned Counsel appearing for the Debtor relied on the following decisions in support of his contentions: "(i) Paramjeet Singh Patheja v. ICDS Ltd., 2006 (5) CTC 357; (ii) D.M. Sripathy, Managing Partner v. B.S. Ramachandran, 2004 (1) CTC 718." 7. Per contra, Mr. H. Karthik Seshadri, the learned Counsel appearing for the Creditors submitted as follows: "The Debtor has accepted the liability through his communication dated 07.01.2013 and sought only for extension of time. Therefore, he cannot now turn around and say that there is no liability. The Order passed by the Company Law Board is a Decree and therefore, based on such Decree, the present Petition filed under Section 9(2) is maintainable. Therefore, he cannot now turn around and say that there is no liability. The Order passed by the Company Law Board is a Decree and therefore, based on such Decree, the present Petition filed under Section 9(2) is maintainable. None of the situations contemplated under Section 9(5) of the said Act is attracted warranting the filing of the present Application by the Debtor." 8. In support of his submission, the learned Counsel for the Creditors relied on the decision reported in Manish Mohan Sharma v. Ram Bahadur Thakur Ltd., 2006 (4) SCC 416 . 9. Heard the learned Counsel appearing on either side and perused the materials placed before this Court. 10. The point for consideration in this case is as to whether the Insolvency Notice issued under Section 9(2) of the Presidency Towns Insolvency Act is liable to be set aside. 11. The Applicant herein who was arrayed as Debtor in the Insolvency Notice, is the Managing Director of the Private Limited Company called M/s. Lattice Bridge Infotech Private Limited having its registered office at Chennai. The Respondents herein who claim to be the Creditors, have invested about 10 crores in the said Company by purchasing its equity and compulsorily Convertible Cumulative Participating Preference shares. It appears that some dispute arose between the parties with regard to the utilisation of the invested money by the Company, more particularly, by the Applicant herein who happens to be the Managing Director of the said Company. Consequently, the Respondents herein filed Company Petition No. 32 of 2010 on the file of the Company Law Board, Chennai seeking for the following reliefs: "(a) Conduct a Special Audit by appointing a reputed Chartered Accountant Firm to ascertain the extent of diversion, siphoning off funds with full powers to access all the records, books of the Company and all the related entities including the personal accounts of the Second and Third Respondents and thereafter to direct the Second and Third Respondents to bring back the funds so ascertained back to the Company. (b) Appoint a Chartered Accountants to verify the Books of Accounts and to surcharge the Respondents 2 & 3 and 5 to 8 for the loss occasioned to the Company on account of their gross mis-management. (c) Consequent upon (a) & (b) being done to formulate a scheme of exit for the Petitioners and Mr. (b) Appoint a Chartered Accountants to verify the Books of Accounts and to surcharge the Respondents 2 & 3 and 5 to 8 for the loss occasioned to the Company on account of their gross mis-management. (c) Consequent upon (a) & (b) being done to formulate a scheme of exit for the Petitioners and Mr. Ray Stata at a price as may be determined by this Hon'ble Bench. (d) Supersede the Board of Directors of the Company and appoint an Independent Board to take charge of the affairs of the Company." 12. In the abovesaid Company Petition, the present Applicant was arrayed as the Second Respondent and the Company was arrayed as the First Respondent. During the pendency of the above Company Petition, a compromise was arrived between the parties and a Joint Memo was filed before the Company Law Board. The said Joint Memo dated 23.08.2012 suggested various terms of Settlement. The relevant clauses of the said Joint Memo dated 23.08.2012 read as follows: "3. The Respondents 1 & 2 shall jointly and severally make payment of Rs. 5.92 crores to the Petitioners or their nominees/designates towards the investment made by the Petitioners herein. The Respondents 1 & 2 acknowledge that the investment made by the Petitioners is Rs. 10.30 crores. 4. The Respondents 1 & 2 shall pay a sum of Rs. 20 lakhs on accepting this Memo of Compromise on the date of the filing of the same with this Hon'ble Bench. 5. The balance payment being Rs. 5.72 crores shall be paid to the Petitioners in 6 quarterly instalments starting 60 days from the date of issue of Order taking on record the Memo of Compromise. The Schedule is given below, for e.g., if the Memo is taken or record at CLB and Orders issued on or before 31st July 2012, then the first instalment shall start from 30th September: Date Amount in Rs. Lacs 30.09.2012 100.00 31.12.2012 100.00 31.03.2013 100.00 30.06.2013 100.00 30.09.2013 86.00 31.12.2013 86.00 6. Upon full payment of INR 5.92 crores as stated above, the shares shall be transferred forthwith, by the Petitioners to the Respondents 1 & 2 or their nominees or designates, as informed by Respondent 1 or 2 in writing and shall also execute all related documents, forms and deeds to ensure the completion of the transfer. Upon full payment of INR 5.92 crores as stated above, the shares shall be transferred forthwith, by the Petitioners to the Respondents 1 & 2 or their nominees or designates, as informed by Respondent 1 or 2 in writing and shall also execute all related documents, forms and deeds to ensure the completion of the transfer. The breakup of the amount to be paid to the Petitioners and the Bank Account details are given in Annexure 1 which forms part and parcel of this Memo of Settlement. Any of the Petitioners can inform the Respondent No. 2, within 10 days before the due date of the instalment, about any assignment of rights given to any person to receive one or more instalment of dues on their behalf. 7. It is understood that the approvals from the Reserve Bank of India as laid down under FEMA Regulations are yet to be obtained for the original investments made by the Petitioners, wherever applicable. Respondent 1 shall take adequate and immediate steps to get the same regularized and the Petitioners agree to provide all such necessary documents and details to facilitate completion of the process. 8. Both the parties agree to co-operate with each other to facilitate any repatriation, as necessary. 9. Till payment of the full amount as stated above, no share held by the Petitioners shall be transferred to the Respondents 1 & 2 or their nominees and that no right shall accrue to the Respondents to shares until the payment of Rs. 5.92 crores. The Petitioners shall during the course of the compromise consider any fresh raising of capital by the Respondent-Company and exercise its voting rights at the General Meeting when such proposal is placed for consideration. 10. If there is default of one instalment, the Respondent will be given one more month or 30 days to make good the default, in case if he defaults after that extended period, the agreement shall stand terminated. The Petitioners are entitled to pursue the Company Petition being C.P. No. 32 of 2010 and that all the payments made to the Petitioners or its nominee shall be held by the Petitioners subject to the final outcome of the Petition." 13. The Petitioners are entitled to pursue the Company Petition being C.P. No. 32 of 2010 and that all the payments made to the Petitioners or its nominee shall be held by the Petitioners subject to the final outcome of the Petition." 13. Based upon the said Joint Memo dated 23.08.2012, the Company Law Board passed an Order on 23.08.2012 as follows: "ORDER The parties have filed a Joint Memo dated 23.08.2012, whereby they mutually agreed out of Court settlement as per the terms and conditions specified in the Joint Memo of Compromise. The parties requested the Bench to take the Joint Memo of Compromise on record and pass appropriate Orders. The Joint Memo of Compromise is taken on record and will be part and parcel of this Order. In view of the Joint Memo of Compromise the Company Petition is disposed of." 14. Now, the above said Order of the Company Law Board is claimed to be a Decree passed in favour of the Respondents herein to maintain the Application filed under Section 9(2) of the said Act. According to the Respondents, as the Petitioner has failed to pay the amount of Rs. 5.72 crores in six quarterly instalments, the same has become debt resulting out of the Decree passed by the Company Law Board and consequently, the Application filed under Section 9(2) of the said Act is maintainable, as the said Decree has become final and conclusive. On the other hand, the Petitioner herein contends that no such Decree for payment of money is passed by the Company Law Board and consequently, the Application under Section 9(2) is not maintainable. Therefore, this Court has to see as to whether the Respondents have satisfied the mandatory requirements contemplated under Section 9(2) of the said Act to maintain the Application for issuance of Insolvency Notice to the Petitioner herein. 15. Part II of the Presidency-Towns Insolvency Act, 1909 deals with the proceedings commencing from Act of Insolvency to discharge. Section 9 under Part II of the said Act deals with Acts of Insolvency. The question as to when a Debtor is said to have committed an act of insolvency, has been answered under the above provision of law. Sub-section (1) of Section 9 refers about the commission of various acts of insolvency by the Debtor. Section 9 under Part II of the said Act deals with Acts of Insolvency. The question as to when a Debtor is said to have committed an act of insolvency, has been answered under the above provision of law. Sub-section (1) of Section 9 refers about the commission of various acts of insolvency by the Debtor. Sub-section (2) of Section 9 states further as to when a Debtor commits an act of insolvency, without prejudice to the provisions of sub-section (1). Sub-section (5) deals with the circumstances under which an Application seeking to set aside the Insolvency Notice is to be filed. For better appreciation of the above said provision of law, the same is extracted hereunder: "9. Acts of insolvency.--(1) A debtor commits an act of insolvency in each of the following cases, namely-- (a) if, in the States or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally; (b) if, in the States or elsewhere, he makes a transfer of his property or of any part thereof with intent to defeat or delay his creditors; (c) if, in the States or elsewhere, he makes any transfer of his property or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent; (d) if, with intent to defeat or delay his creditors,-- (i) he departs or remains out of the States, (ii) he departs from his dwelling-house or usual place of business or otherwise absents himself, (iii) he secludes himself so as to deprive his creditors of the means of communicating with him; (e) if any of his property has been sold or attached for a period of not less than twenty-one days in execution of the Decree of any Court for the payment of money; (f) if he Petitions to be adjudged an insolvent; (g) if he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts; (h) if he is imprisoned in execution of the Decree of any Court for the payment of money. (2) Without prejudice to the provisions of sub-section (1), a debtor commits an act of insolvency if a creditor, who has obtained a Decree or Order against him for the payment of money (being a Decree or Order which has become final and the execution whereof has not been stayed), has served on him a Notice (hereafter in this Section referred to as the Insolvency Notice) as provided in sub-section (3) and the debtor does not comply with that notice within the period specified therein: Provided that where a debtor makes an application under sub-section (5) for setting aside an Insolvency Notice-- (a) in a case where such Application is allowed by the Court, he shall not be deemed to have committed an act of insolvency under this sub-section; and (b) in a case where such Application is rejected by the Court, he shall be deemed to have committed an act of insolvency under this sub-section on the date of rejection of the Application or the expiry of the period specified in the Insolvency Notice for its compliance, whichever is later: Provided further that no Insolvency Notice shall be served on a debtor residing, whether permanently or temporarily, outside India, unless the creditor obtains the leave of the Court therefor. (3) An Insolvency Notice under sub-section (2) shall-- (a) be in the prescribed form; (b) be served in the prescribed manner; (c) specify the amount due under the Decree or Order and require the debtor to pay the same or to furnish security for the payment of such amount to the satisfaction of the creditor or his agent; (d) specify for its compliance a period of not less than one month after its service on the debtor or, if it is to be served on a debtor residing, whether permanently or temporarily, outside India, such period (being not less than one month) as may be specified by the order of the Court granting leave for the service of such Notice; (e) state the consequences of non-compliance with the notice. (4) No Insolvency Notice shall be deemed to be invalid by reason only that the sum specified therein as the amount due under the Decree or Order exceeds the amount actually due, unless the debtor, within the period specified in the Insolvency Notice for its compliance, gives notice to the creditor that the sum specified in the Insolvency Notice does not correctly represent the amount due under the Decree or Order: Provided that if the debtor does not give any such notice as aforesaid, he shall be deemed to have complied with the Insolvency Notice if, within the period specified therein for its compliance, he takes such steps as would have constituted a compliance with the Insolvency Notice had the actual amount due, been correctly specified therein. (5) Any person served with an Insolvency Notice may, within the period specified therein for its compliance, apply to the Court to set aside the Insolvency Notice on any of the following grounds, namely: (a) that he has a counter-claim or set off against the creditor which is equal to or is in excess of the amount due under the Decree or Order and which he could not, under any law for the time being in force, prefer in the suit or proceeding in which the Decree or Order was passed; (b) that he is entitled to have the Decree or Order set aside under any law providing for the relief of indebtedness and that-- (i) he has made an Application before the Competent Authority under such law for the setting aside of the Decree or Order; or (ii) the time allowed for the making of such Application has not expired; (c) that the Decree or Order is not executable under the provisions of any law referred to in Clause (b) on the date of the Application. Explanation.--For the purposes of this section, the act of an agent may be the act of the principal, even though the agent have no specific authority to commit the act." 16. Explanation.--For the purposes of this section, the act of an agent may be the act of the principal, even though the agent have no specific authority to commit the act." 16. Thus, as per the above said provision of law, the following are the mandatory requirements to be satisfied for issuing Insolvency Notice to the Debtor: "(a) There must be a Debtor and Creditor relationship between the parties; (b) The Creditor should have obtained a Decree or Order against the Debtor for payment of the money; (c) Such Decree or Order should have become final and the execution whereof has not been stayed." 17. Let me consider as to whether the facts and circumstances of the present case would fall within the scope and ambit of Section 9(2) of the said Act. 18. I have already extracted the relevant clauses of the Joint Memo dated 23.08.2012 and the Order passed by the Company Law Board based on such Joint Memo. It is not in dispute that the said Joint Memo filed by the parties was the sole basis for the Company Law Board to pass the said Order. Therefore, the Joint Memo and the consequential Order passed by the Company Law Board should satisfy and confirm the Debtor and the Creditor relationship between the parties and that there is a Decree or Order passed against the Applicant herein for payment of money. 19. It is evident from the said Order that the Company Law Board has only taken the Joint Memo of Compromise on record and treated such Joint Memo as part and parcel of the said Order and consequently disposed the Company Petition No. 32 of 2010 without making any further Order or direction. Therefore, it is clear that the Company Law Board has not passed any independent Order directing the Applicant herein to make payment of Rs. 5.72 crores. In other words, there is no positive order enabling the Respondents herein to recover the said sum of Rs. 5.72 crores from the Applicant herein. What emerges from the said Order is that the parties should act as per the terms and conditions specified in the Joint Memo of Compromise and nothing else. 5.72 crores. In other words, there is no positive order enabling the Respondents herein to recover the said sum of Rs. 5.72 crores from the Applicant herein. What emerges from the said Order is that the parties should act as per the terms and conditions specified in the Joint Memo of Compromise and nothing else. Therefore, it has to be seen as to whether a cumulative reading of such terms and conditions of Joint Memo would enable this Court to come to a conclusion that there is a Decree or Order for payment of Rs. 5.72 crores to the Respondents herein by the Applicant. 20. Under Clause (3) of Joint Memo, it is stated that the Respondents 1 & 2 therein shall jointly and severally make payment of Rs. 5.92 crores to the Petitioners therein. Clause (4) stipulates that the Respondents 1 & 2 therein shall pay a sum of Rs. 20 lakhs on accepting the said Memo of the Compromise on the date of filing of the same before the Company Law Board. Clause (5) states that the balance payment of Rs. 5.72 crores would be made in six quarterly instalments commencing from 30.09.2012. Clause (6) stipulates that only upon full payment of Rs. 5.92 crores as referred to under Clause (5), the shares held by the Petitioners therein shall be transferred to the Respondents 1 & 2 therein. Therefore, it is evident from the reading of above clauses that the payment of Rs. 5.92 crores by the Respondents 1 & 2 therein is towards the purchase or transfer of the shares held by the Petitioners therein. Clause (9) specifically emphasise that till payment of full amount as stated above, no share held by the Petitioners therein would be transferred to the Respondents 1 & 2 therein and that no right shall accrue to the Respondents therein to shares until the payment of Rs. 5.92 crores. Therefore, a combined reading of Clause (3) to Clause (9) makes it abundantly clear that the payment of Rs. 5.92 crores agreed by the Respondents 1 & 2 therein is only towards the transfer of shares by the Petitioners therein in favour of the Respondents 1 & 2. Therefore, there is no difficulty in coming to a conclusion that the said payment of Rs. 5.92 crores agreed by the Respondents 1 & 2 therein is only towards the transfer of shares by the Petitioners therein in favour of the Respondents 1 & 2. Therefore, there is no difficulty in coming to a conclusion that the said payment of Rs. 5.92 crores agreed upon under the Memorandum of Compromise is not a debt liable to be paid by the Applicant herein to the Respondents and on the other hand, it represents only the consideration towards the purchase of shares. 21. Further, Clause (10) of the said Compromise Memo, which is the default clause, shows that in case, the Respondents therein default in making one instalment, the Agreement gets terminated automatically. For proper understanding of Clause (10), the same is once again extracted hereunder: "10. If there is default of one instalment, the Respondent will be given one more month or 30 days to make good the default, in case if he defaults after that extended period, the Agreement shall stand terminated. The Petitioners are entitled to pursue the Company Petition being C.P. No. 32 of 2010 and that all the payments made to the Petitioners or its nominee shall be held by the Petitioners subject to the final outcome of the Petition." 22. Thus, it is clear that the understanding of the parties that has been reduced in writing by way of Compromise of Memo was to the effect that the shares have to be purchased by the Applicant herein and the Company for a sum of Rs. 5.92 crores from the Respondents herein and if there is any default in making such payment, the Agreement stands cancelled and consequently, the Respondents herein are entitled to revive and pursue the Company Petition No. 32 of 2010. When that being the specific default clause of the said Memorandum of Compromise, this Court is of the view that the Respondents herein cannot go beyond the agreed Terms and Conditions of the Memorandum of Compromise and contend before this Court that there is a Decree or Order passed by the Company Law Board for recovery of a sum of Rs. 5.72 crores. 23. I have already pointed out that the Company Law Board has only recorded the said Memorandum of Compromise as part and parcel of the order. Therefore, the parties should act only in accordance with the terms of Memorandum of Compromise. 5.72 crores. 23. I have already pointed out that the Company Law Board has only recorded the said Memorandum of Compromise as part and parcel of the order. Therefore, the parties should act only in accordance with the terms of Memorandum of Compromise. If the applicant herein and the Company have not made the payment, then it is for the Respondents to pursue the Company Petition in C.P. No. 32 of 2010 only by restoring the same, by making appropriate Application, as the Agreement between the parties stood terminated automatically in view of the default committed by the Applicant herein and the Company. When that being the factual position, the Respondents are not correct in contending that there is a debt resulting a Decree or Order passed by the Company Law Board warranting filing of the present Application under Section 12(2) [(sic) Section 9(2)]. 24. Learned Counsel appearing for the Respondents submitted that the present Application filed under Section 9(5) of the said Act is not maintainable as the present Application would not fall under any of the situations contemplated under the said provision of law. 25. Section 9(5) of the Presidency-Towns Insolvency Act, 1909 reads as follows: "5. Any person served with an Insolvency Notice may, within the period specified therein for its compliance, apply to the Court to set aside the Insolvency Notice on any of the following grounds, namely-- (a) that he has a counter-claim or set off against the creditor which is equal to or is in excess of the amount due under the Decree or Order and which he could not, under any law for the time being in force, prefer in the Suit or proceeding in which the Decree or Order was passed; (b) that he is entitled to have the Decree or Order set aside under any law providing for the relief of indebtedness and that-- (i) he has made an Application before the Competent Authority under such law for the setting aside of the Decree or Order; or (ii) the time allowed for the making of such Application has not expired; (c) that the Decree or Order is not executable under the provisions of any law referred to in Clause (b) on the date of the Application. Explanation.--For the purposes of this Section, the act of an agent may be the act of the principal, even though the agent have no specific Authority to commit the act." 26. Perusal of the above said provision of law shows that an Application can be filed also on the ground that the Decree or Order is not an executable one under the provision of any law. In other words, the Decree or Order relied on by the Petitioner under Section 9(2) must be a Decree or Order capable of execution, otherwise, an Application under Section 9(5) can be filed to set aside the Insolvency Notice. 27. In this case, this Court has found that the Order passed by the Company Law Board is not an Order for payment of 5.72 crores much less capable of execution for recovery of the said sum. Therefore, I do not agree with the above submissions made by the learned Counsel for the Respondents. 28. Learned Counsel appearing for the Petitioner relied on the decisions reported in Paramjeet Singh Patheja v. ICDS Ltd., 2006 (5) CTC 357 (cited supra) and D.M. Sripathy, Managing Partner v. B.S. Ramachandran, 2004 (1) CTC 718 (cited supra), to contend that the Order passed by the Company Law Board cannot be construed as a Decree. I do not propose to go into such question and give a finding in view of the fact that this Court has already found on facts that no such an Order which is capable of execution for recovery of the said sum of Rs. 5.72 crores has been passed by the Company Law Board. When that being the factual finding, I do not think that this Court is required to make any further finding as to whether the Order passed by the Company Law Board is a Decree or not. 29. Learned Counsel appearing for the Respondents relied on the decision reported in Manish Mohan Sharma v. Ram Bahadur Thakur Ltd., 2006 (4) SCC 416 (cited supra) to contend as to what would be the effect of an Order passed by the Company Law Board. No doubt, the Hon'ble Supreme Court has observed in that case that the Order dated 19.08.1999 passed by the Company Law Board in that matter was in fact a Preliminary Decree. No doubt, the Hon'ble Supreme Court has observed in that case that the Order dated 19.08.1999 passed by the Company Law Board in that matter was in fact a Preliminary Decree. At Paragraph No. 4 of the said decision, the Hon'ble Supreme Court has extracted the Order passed by the Company Law Board dated 19.08.1999. Perusal of the same would show that the Company Law Board therein has directed both the parties therein to execute the Transfer Deeds to affect the transfer of the relevant assets. Therefore, it is evident that there is a clear and positive directions given by the Company Law Board for the parties to act. In this case, I have already pointed out that the parties have to act only as per the Joint Memo of Compromise and that the Company Law Board has not given any other direction or order except recording the said Memo of Compromise. When that being the factual position, I do not find that the above decision relied on by the learned Counsel for the Respondents is helping them in any manner. Considering the above stated facts and circumstances, this Court is of the view that the Application filed by the Respondents under Section 9(2) is not at all maintainable, as there is no debt followed by a Decree giving cause of action for the Respondents herein to file such Application. Consequently, Insolvency Notice issued is not sustainable. Accordingly, Application No. 139 of 2013 is allowed and Insolvency Notice issued in I.N. No. 57 of 2013 is set aside.