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2019 DIGILAW 980 (GUJ)

Bhuvan Madan v. Central Bureau of Investigation

2019-10-18

SONIA GOKANI

body2019
ORDER : Sonia Gokani, J. Rule. Learned APP waives service of rule for the respondent-State. 1. This application is filed by the applicant, namely Mr. Bhuvan Madan, Resolution Professional ('RP', herein after), appointed by the National Company Law Tribunal, Ahmedabad (in brief, 'NCLT') vide order dated 23.10.2018 to conduct Corporate Insolvency Resolution Process ('CIRP', herein above) of M/s. Diamond Power Infrastructure Limited (for convenience, 'DPIL' herein after) under the provisions of the Insolvency and Bankruptcy Code, 2016 (in short, 'Insolvency Code'), who is the Corporate Debtor ('CD' in brief). 2. According to the applicant, during the conduct of the CIRP of the Corporate Debtor, Mr. Amit Suresh Bhatnagar, had sent an e-mail dated 05.08.2019 to the Applicant, informing him that the Order dated 18.06.2019 has been passed by this Court in bail application being Criminal Misc. Application No. 8438 of 2019, preferred under section 439 of the Code of Criminal Procedure, 1973, by Mr. Amit Suresh Bhatnagar. The, further, information sent by the said person to the applicant was that the Court has restricted the sale of all the properties owned by DPIL and Mr. Amit Suresh Bhatnagar and Sumit Suresh Bhatnagar. 2.1. It is the say of the applicant that the properties mentioned in the bail order of this Court, include the properties, which are owned by the DIPL and are in custody and control of the applicant, as a RP of DPIL. 2.2. The applicant, therefore, seeks modification of the relevant portions of the order of this Court dated 18.06.2019, granting bail, on the ground that these are the properties of the Company and not that of the erstwhile Directors. Moreover, it is urged that the very process has to be over by 14.11.2019 and that very less time is left with the RP to proceed with CIRP. It is also urged that after taking over the control of the DPIL, the applicant was informed by the representative of Bank of India that a Provisional Attachment order dated 24.04.2018 has been passed by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 ('PMLA', in brief), whereby, the certain properties were attached. He was also informed that, by way of a subsequent order, the adjudicating Authority has confirmed the provisional attachment in the proceedings under PMLA in OC No. 977 of 2018. 2.3. He was also informed that, by way of a subsequent order, the adjudicating Authority has confirmed the provisional attachment in the proceedings under PMLA in OC No. 977 of 2018. 2.3. The applicant, therefore, preferred an appeal before the Tribunal under the PMLA, where, vide order dated 18.06.2019, the Appellate Tribunal set aside the confirmation order passed by the adjudicating authority. Hence, the provisional attachment has been set aside in respect of the DPIL. It is, further, the say of the applicant that this Court, since, has restricted the sale of the properties, held by DPIL and the entities of Mr. Amit Suresh Bhatnagar and Mr. Sumit Suresh Bhatnagar, the properties enlisted in Paragraph-14 of the order of this Court are those, in respect of which, the appellate Tribunal has passed an order under PMLA on 18.06.2019, whereby, the attachment of the properties owned by DPIL has been quashed. 3. The applicant is, therefore, before this Court, seeking following reliefs: "14. … i. This Hon'ble Court may be pleased to allow the present application. ii. This Hon'ble Court may be pleased to suitably modify the Order dated June 18, 2019 passed in Criminal Misc. Application No. 8438 of 2019 by deleting the properties enlisted in paragraph 8 of this Application and may be further pleased to clarify that the properties owned by DPIL are not covered within the ambit of the said Order dated June 18, 2019. iii. ..." 4. This Court issued notice on 13.09.2019 and learned Special P.P., Mr. Kodekar, appeared for the CBI, learned APP, Mr. Pujari, for the State and learned Advocate, Mr. Popat, appeared for both the erstwhile directors. 5. Along the line of this application, learned Advocate, Mr. Satyendra Rai, appearing with learned Advocate, Mr. Contractor, argued before this Court to modify the order dated 18.06.2019. 5.1. He urged, while taking this Court through the various orders of the Tribunal and of this Court, as a whole, that unless the order is modified, it would be impossible for the present applicant to conduct the CIRP process. Satyendra Rai, appearing with learned Advocate, Mr. Contractor, argued before this Court to modify the order dated 18.06.2019. 5.1. He urged, while taking this Court through the various orders of the Tribunal and of this Court, as a whole, that unless the order is modified, it would be impossible for the present applicant to conduct the CIRP process. It is, further, his say that the properties, which are five in numbers at Paragraphs-14 and 19 of the order of this Court dated 18.06.2019 continue to remain attached and therefore, it would be impossible for the RP to work under Section 14 of the Insolvency Code, which provides that no proceedings, adverse to the CD, Corporate Debtor, can be initiated. The Court, on one hand has observed that DIPL is going under CIRP and the RP has already been appointed and on the other hand, it imposes restrictions, while enlarging both the brothers on bail. It is urged that, while passing the order of bail, such restrictions have been imposed, inadvertently. It is, further, his say that during the process, the applicant is obligated to prepare an information memorandum, as per Section 9 of the Insolvency Code, which forms the basis of the resolution plan. He also has drawn the attention of this Court that till date, the appeal has not been preferred by the ED and since, it has not objection and the matter is not kept before the Court and since, the CBI also has no objection to this properties being deleted from the list of properties at Paragraph-14, this Court may accede to the request of the applicant. 6. Learned Special P.P., Mr. Kodekar, has urged this Court that CBI has no objection to the Court modifying its order, if, it deems it appropriate. However, he has urged that, since, the ED already has attached the properties, it would be in the fitness of the things to hear the ED and then, pass an order. According to him, CBI is not a party in the proceedings before the Tribunal in PMLA. So far as the order of this Court is concerned, while releasing both the brothers on regular bail, the restrictions have been imposed, which are reasonable. However, in wake of this subsequent development under the Insolvency Code, if, the Court deems it appropriate to modify its order, CBI will have no objection. So far as the order of this Court is concerned, while releasing both the brothers on regular bail, the restrictions have been imposed, which are reasonable. However, in wake of this subsequent development under the Insolvency Code, if, the Court deems it appropriate to modify its order, CBI will have no objection. He also, further, has urged this Court to direct the following of due procedure by the RO and let the interest of the consortium banks be kept intact. 7. Learned APP also has been heard for the State. 8. Having, thus, heard both the sides, at the outset, the request made by the learned Special PP, Mr. Kodekar, of hearing ED is concerned, which has attached the properties, would require consideration. 8.1. The RP is before this Court, seeking modification of the order passed by this Court, while releasing the accused on regular bail. So far as the attachment of the properties by ED, by way of a separate order, is concerned, the same is challenged by the RP by way of a separate proceeding. It is noticed that to the order dated 18.06.2019, passed the Dy. Director of the ED, Ahmedabad, who is the respondent, the challenge has been made to action of the ED in relation to the properties, which had been mortgaged. The Tribunal has, after the detailed discussion, held that ED has registered ECI on the basis of the provisional attachment, after moratorium order was passed by the NCLT, by holding that ED and the adjudicating authority did not understand the legal issue involved and ignored the settled law and passed the impugned order. A curious situation, therefore, has been created, whereby, the Bank, which is the complainant, has become victim. Hence, the Tribunal has set aside the order of provisional attachment, qua the appellant bank. 8.2. This reference is necessary only to point out that the parties are separately taking recourse, so far as the attachment of the order passed by the ED is concerned and that course is open to both the parties and this Court need not enter into that arena, at the time of deciding the application of the RP for modification of the order passed by this Court, at the time or releasing the accused on bail. 8.3. 8.3. This Court is conscious, as is rightly pointed out by the learned Advocate that there was already appointment of the RP, who was also required to undertake the CIRP process in relation to the DPIL. Considering the time constraint with the RP and also his appointment under the Insolvency Code, who is acting for and on behalf of the Tribunal, with the interest of the consortium banks and with no objection on the part of the CBI, except, the contention raised in relation to the giving opportunity of hearing to the ED, this Court is inclined to consider and accede to the request of the applicant. 9. Resultantly, this application is allowed and the order of this Court, Dated: 18.06.2019, passed in Criminal Misc. Application No. 8438 of 2019 is modified to the extent that the properties mentioned vide Sr. Nos. 1 to 4 in Paragraph-14 and at Sr. No. 9 in Paragraph-15 stand deleted from the said list. 9.1. While so doing, the applicant-RP is directed to keep, at every stage, CBI in the loop. The process undertaken and as that may culminate, he shall INTIMATE to the IO and his superiors, intermittently. CBI Shall also, without any interference with the work of the RP, shall be permitted to closely follow-up the proceedings, which shall be undertaken. Rule is made absolute, accordingly. Direct service is permitted.