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2021 DIGILAW 535 (GUJ)

MESSRS AFCAN IMPEX PVT. LTD. v. UNION OF INDIA

2021-07-05

ASHUTOSH J.SHASTRI

body2021
ORDER : 1. By way of this petition under Article 226 of the Constitution of India, the petitioners have prayed for the following reliefs:- a. This Hon'ble Court may be pleased to issue any appropriate writ, order or direction and be pleased to direct the Respondent no. 2 to execute the Bond cum Legal Undertaking with the concerned person(s) in view of the dispossession of the Petitioner and be further pleased to hold that the Petitioner holds no accountability towards the unit incase of any calamity/untoward incident with ill fated consequences; b. This Hon'ble Court may be pleased to issue any appropriate writ, order or direction and quash and/or set aside the arbitrary, illegal action of the respondents in cancelling the gate pass of the Petitioners and their authorized persons and be further pleased to declare that the action of the Respondent no. 2 in cancelling the gate pass of the Petitioners is ex facie illegal and arbitrary and that the Respondent no. 2 has no right or power, looking to the facts or circumstances of the present case to cancel the gate pass in this manner; c. Pending hearing and final disposal of this writ petition, this Hon’ble Court be pleased to stay the action of the respondents in cancelling the gate pass of the Petitioners and grant access of the unit to the Petitioners subject to the final outcome of the present petition; d. To grant such other and further relief/s as may be deemed fit and proper in the interest of justice. 2. The case in a summarized form, if to be looked into, would indicate that the petitioner No.1 is a Private Limited Company, inter alia, engaged in the business of manufacture of textile goods, for which the petitioner No.1 has its factory in Kandla Special Economic Zone and petitioner No.2, as asserted, is a partner of the said company. Petitioner No.2, being materially and substantially interested and responsible for conduct of the business affairs, has come with the present petition by invoking the extraordinary jurisdiction of this Court. The case of the petitioners further is that a Letter of Approval (LOA) for setting up a unit in Kandla Special Economic Zone was issued granting permission on 4.6.2003 for carrying out manufacturing of goods named as ‘Shoddy Synthetic Yarn, Shoddy Woolen Yarn, Blankets’. The case of the petitioners further is that a Letter of Approval (LOA) for setting up a unit in Kandla Special Economic Zone was issued granting permission on 4.6.2003 for carrying out manufacturing of goods named as ‘Shoddy Synthetic Yarn, Shoddy Woolen Yarn, Blankets’. Along with the said Letter of Approval, a lease deed as bond-cum legal undertaking came to be executed between Kandla Special Economic Zone and the person in charge of the unit and the said LoA is renewed from time to time and the bond-cum legal undertaking is also continued, whereby it confers full responsibility and liability on the person in charge of the unit. The petitioners have paid rent for the premises to the respondent No.2 till 31.3.2001. This LoA is also for Special Economic Zone and last renewal was upto 31.12.2020 along with execution of the bond-cum Legal Undertaking on 9.10.2020. It was also asserted in the petition that when an application for setting up of the unit was made by the petitioners by virtue of LoA dated 4.6.2003, same was allowed, but business affairs of the petitioners were run and operated in the name and style of ‘M/s. Arjee International’ and therefore, LoA dated 4.6.2003 had been allotted in favour of the petitioners with the aforesaid name. However, the said firm thereafter was converted into a Private Limited company and accordingly, the business affairs were run and operated in the name and style of ‘M/s. Arjee Rags (India) Pvt. Ltd.’ and subsequently, in the name of the petitioner, which has been changed to M/s. Afcan Impex Pvt. Ltd. and same has been recognized by the Development Commissioner and modified by the petitioners’ LoA accordingly. The business affairs of the petitioners, now according to the petitioners, is run and operated in the name and style of, as lastly stated, M/s. Afcan Impex Pvt. Ltd. According to the petitioners, the petitioners were allowed only to run business and operate upon execution of the bond-cum legal undertaking as provided for Special Economic Zone Act, 2005. 2.1. The business affairs of the petitioners, now according to the petitioners, is run and operated in the name and style of, as lastly stated, M/s. Afcan Impex Pvt. Ltd. According to the petitioners, the petitioners were allowed only to run business and operate upon execution of the bond-cum legal undertaking as provided for Special Economic Zone Act, 2005. 2.1. It is the case of the petitioners that the petitioners are still responsible and liable to procure and maintain the material already ordered to be imported and paid dues arising therefrom by virtue of the extension and renewal of the license, by narrating the challenge to the circular issued by the Ministry of Commerce and Industries, related to the guidelines in respect of SEZ Units. The subject matter after long drawn litigation is at present pending before Hon’ble the Apex Court, but, in the meantime, on 15.1.2019, respondent No.2 imposed penalty of Rs.96,33,000/- on the ground that the petitioners not able to achieve the quantum of physical export, hence the petitioners challenged the same before this Court by way of Special Civil Application No.3641 of 2021, in which the Hon’ble Court has stayed recovery from the petitioners. The petitioners were given renewal upto 31.12.2020 and thereafter, same was not extended. However, as per the circular issued by the Government of India, Ministry of Commerce and Industries, Department of Commerce (SEZ Section) and the Board of Approval vide Clause No.102.7(iii), decided to grant an extension to 47 existing units in various SEZ upto 30.6.2021, subject to clearance of all dues by the Units. 2.2. It is the assertion of the petitioners that since LoA granted to the petitioners is not renewed after December 2020, the petitioners have challenged inter alia, levying of dues and according to the petitioners, same are pending across various forums. The said challenge and various litigation which have been pending across various forums have not been placed to avoid unnecessary burden, but then it has been stated that on 26.12.2016, Bank of Maharashtra addressed a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to the petitioners and the petitioners’ account was classified as NPA as on 28.10.2016. 2.3. 2.3. It is the case of the petitioners that the matter was taken before learned Debt Recovery Tribunal, Ahmedabad by way of SA No.325 of 2018 and learned Tribunal disposed of the same vide order dated 15.3.2019 since the Bank was withdrawing the said demand notice with a liberty to proceed afresh against the petitioners. Subsequently, after such, a fresh notice came to be issued under the provisions of the SARFAESI Act and the said notice came to be challenged before the Debt Recovery Tribunal, Ahmedabad and the application was registered as SA No.44 of 2021, which is pending as on date. 2.4. It is the case of the petitioners that subsequent thereto, the respondent Bank had filed CP (IB) 289 of 2020 before the Adjudicatory Authority, i.e. National Company Law Tribunal (NCLT), Principal Bench, Ahmedabad against default dated 28.10.2016. The proceedings, according to the petitioners, conducted ex-parte, whereby, by virtue of the order dated 17.2.2021, learned Tribunal has appointed an Interim Resolution Profession (IRP) and directed him to manage the operations of the corporate debtor company, i.e. the petitioner, since going concern as part of the obligation imposed under Insolvency and Bankruptcy Code, 2016. 2.5. It the case of the petitioners that appeal against this exparte order is filed by the petitioners before the National Company Law Appellate Tribunal, New Delhi and the said appeal is awaiting admission and adjudication and is still pending. However, as a part of obligation, IRP has taken over the possession of the unit on 3.3.2021. 2.6. It is the case of the petitioners that the office of respondent No.2 issued a communication to IRP on 12.3.2021 granting permission to take over the possession of the unit and appoint security guard at the unit of the petitioners. However, the grievance of the petitioners is that no bond cum legal undertaking is executed between IRP and respondent No.2 for which the petitioners had made several representations. According to the petitioners, in view of the fact that the respondent No.2 was under an obligation to act in place of the Board of Director of the petitioners, it is the duty of IRP to execute a bond cum legal undertaking so as to remain accountable after taking over the charge from the petitioners. According to the petitioners, in view of the fact that the respondent No.2 was under an obligation to act in place of the Board of Director of the petitioners, it is the duty of IRP to execute a bond cum legal undertaking so as to remain accountable after taking over the charge from the petitioners. Apprehending certain eventualities, the petitioners informed the respondent No.2 that some unidentified persons are visible on the premises and as such, the petitioners have taken photographs of the unit premises and handed over by way of representations. On 26.4.2021, IRP vide a communication addressed to the respondent No.2, sought gate-passes for security guards with effect from 1.5.2021. The petitioners requested to issue gate-passes, but vide communication dated 18.5.2021, arbitrarily, without any opportunity, cancelled the gate-passes of the petitioner and his authorized persons thereby posing a great security risk to the unit, which may ultimately fasten the liability upon the petitioners. The apprehension is raised that if some eventuality is taking place and the properties and the goods are damaged either on account of cyclone or on account of mishandling by some persons, the ultimate liability may not cropped up of the petitioners and as such, have approached this Court by way of the present petition for the reliefs as prayed for in the petition. 3. This approach is made additionally on the ground that some persons with pouches of liquor were found in the unit but no FIR for that purpose is so far is filed. Nonetheless, the petitioners are apprehending some serious consequences on account that they executed a bond cum legal undertaking and simultaneously, no bond has been executed by IRP with respondent No.2 and for this purpose, having no alternative forum available for the petitioners, the petitioners have approached this Court by way of filing the present petition under Article 226 of the Constitution of India. 4. Learned advocate Ms. Nirali Oza appearing on behalf of the petitioners has voiced out an apprehension that if something happens untoward in the premises by virtue of the legal document executed by the petitioners, they will be held responsible and as against that, the person in charge of the unit is at present, i.e. IRP, having not executing anything with the bank or legal undertaking with the respondent No.2 will not have any future consequence. It is only on account of such circumstance, the petitioners have approached this Court by way of the afore-mentioned reliefs. 5. Learned advocate Ms. Oza has drawn the attention of this Court to Section 25 of the Special Economic Zone 2005 indicating Chapter of offences by the company and thereby has submitted that cancellation of gate-passes to the petitioners would lead to a serious consequence upon the petitioners and therefore, the relief prayed for deserves to be considered. Ms. Oza has submitted that the allegations which have been leveled against the petitioners about the threat to security guards of IRP are baseless and being used as a strategy to digress from the arbitrary action in cancelling the gate-pass without first hearing to the petitioners and therefore, has submitted that the relief be granted to the petitioners. 6. Learned advocate Ms. Oza has further submitted that a request had been made to NCLT, but having not considered the same, the petitioners are constrained to approach this Court. Basically, the grievance which has been made is that the IRP is under an obligation to execute a bond cum legal undertaking since in-charge of the affairs of the company. No other submissions have been made. 7. Having heard learned advocate for the petitioners and having gone through the documents which are attached to the petition compilation, it transpires as per the assertion of the petitioners that the controversy with regard to financial liability is very much at large before the appropriate forum and so much so, that an appeal is also pending before NCLT and as such, the petitioners are not the remedy-less. This kind of request may be made before the forum concerned from where the interim resolution person is already appointed. It is also not possible to be unnoticed by the Court that letter of approval has never been renewed in favour of the petitioners after December 2020 and undispurtedly, the charge of the affairs of the company has been taken over by the interim resolution person. It is also not possible to be unnoticed by the Court that letter of approval has never been renewed in favour of the petitioners after December 2020 and undispurtedly, the charge of the affairs of the company has been taken over by the interim resolution person. It further appears from page 50 that despite the notices have been served upon the petitioners, on more than one occasion, the corporate debtors, i.e. the petitioners, have chosen not to file any affidavit nor even Vakalatnama, which ultimately led the Tribunal, i.e. NCLT, Ahmedabad Bench, to proceed ahead ex-parte and therefore, practically, it is the petitioners who allowed such proceedings to go on ex-parte and as such, cannot raise any grievance about non-granting of any opportunity. In the order of NCLT, Ahmedabad dated 17.2.2021, certain stipulations have been provided and clause (9) on page 57 as well as Clause (10) on page 58 is the clear answer to the petitioners’ apprehension and therefore, no need to clarify in the context of the relief which has been prayed for, more particularly when the facts are serious in controversy and the challenge is made at various forums, according to the petitioners themselves. 8. This appointment of interim resolution professional is by virtue of the order of the competent forum and well within the discretion vested in law. The responsibility to manage the affairs of the company is entrusted in the interregnum period and this process of insolvency resolution is to be completed mandatorily within the time schedule as spelt out in the statutory provisions contained under the Act. The very object of IB Code 2016 is to consolidate and amend the laws relating to recognition of insolvency resolution of the corporate person in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all stakeholders including alteration in the order of priority of payment of Government dues and therefore, with this avowed object, a specified time limit is prescribed under the Statute and interference on these issues would have a direct bearing upon such and as such, the Court is not inclined to exercise any extraordinary jurisdiction, more particularly when, according to the petitioners themselves, the proceedings are pending at various forums. Whether persons with liquor have been found in the premises or some likelihood of damage to the property prejudicial in any nature is a bald assertion of the petitioners and in absence of any lawful step being taken by the petitioners of non-filing of FIR or the like steps, this Court is not inclined to accept the submission. Accordingly, no case is made out by the petitioners to call for any interference. 9. In addition to the above, the process under the IB Code 2016 has already begun by virtue of the order passed by NCLT, Ahmedabad and though the petitioners have been served, chosen not to appear and then making out all these allegations and issues is the conduct sufficient enough not to exercise equitable jurisdiction. Undisputedly, the affairs of the company are being handled by IRP, as indicated above, and the provisions are sufficient enough to take care of the situation or eventuality which is being apprehended by the petitioners, and therefore, there is no need for this Court to clarify anything in such chequered history of litigation. If any other remedy is available to the petitioners to ventilate the grievance, as agitated in the present proceedings, it would be open for the petitioners to carry out such process. Section 12 of the Code 2016 is specifying time schedule for completion of insolvency resolution process and specific steps have been provided for ultimate outcome of it, to take care of the interest of all stakeholders. Section 15 is dealing with duty of resolution professional. Section 32(A) is dealing with liability of prior offences, etc. and Chapter-III is dealing with the process of liquidation and as such, the self contained Code is not possible to be disturbed by exercising the extraordinary jurisdiction since IRP is already set in motion to take care of the interest of the petitioner company. Hence, this Court deems it proper not to exercise any discretion in favour of the petitioners. Accordingly, the petition stands DISMISSED.