ORDER : (J.M. KHAZI, J.) In Writ Petition No.46570/2019, filed under Article 227 of the Constitution of India r/w Section 482 of the Code of Criminal Procedure, accused Nos.2 and 5 and in Crl.P.No.7020/2019, filed under Section 482 of the Code of Criminal Procedure, accused No.3 are seeking quashing of criminal proceedings initiated against them vide order dated 10.07.2019 in Spl.C.No.783/2019 on the file of LIX Addl.Civil and Sessions Judge, Bengaluru, taking cognizance for the offences punishable under Sections 69 (a), 70(1)(c), 73(b) and 19(1) of the Insolvency and Bankruptcy Code, 2016 . 2. For the sake of convenience, parties are referred to by their ranks before the trial Court. 3. Since these two petitions are arising out of the same proceedings, the grounds urged by the respective accused are common and involves common discussion, they are clubbed together and disposed off by a common order. 4. In support of the petitions, the petitioners have contended that they are the former Directors of M/s. Bhuvana Infra Projects Private Ltd. ('The company' for short). By order dated 17.1.2018, The National Company Law Tribunal, Bengaluru under Section 7 of the Insolvency and Bankruptcy Code, 2016 ('IBC, 2016' for short) admitted a creditor's debtors and initiated corporate insolvency resolution process. At that stage, the Tribunal appointed Sri Pavan Kankani as Interim Resolution Professional ('IRP' for short). However, the first meeting of the committee of creditors, on the insistence of Bank of Maharashtra, one of the creditors of the company, the Committee decided to remove the IRP and to have one Smt Ramanathan Bhuvaneswari as proposed Resolution Professional ('RP' for short). Accordingly, on the application filed by Bank of Maharashtra by order dated 04.05.2018, the NCLT appointed Smt.Ramanathan Bhuvaneswari. 4.1 In the meeting of Committee of Creditors held on 06.10.2018, the RP presented false and incomplete information about the company and got the Committee to authorise her to file criminal proceedings against the Directors of the company. However, the NCLT in its order dated 24.10.2018 declined the prayer made by RP in IA.No.269/2018, for attaching the personal assets of the Directors, shareholders and other related entities with the company on the ground that there was fraudulent diversion of assets of the company. But, it observed that if the Committee of Creditor authorise the RP to file a criminal complaint, she may do so. But, it observed that if the Committee of Creditor authorise the RP to file a criminal complaint, she may do so. 4.2 However, in the meeting of Committee of Creditors dated 29.10.2018, even before receiving the certified copy of the NCLT order dated 24.10.2018, on the basis of representation of the RP that in the said order, there is an observation that no forensic audit of the company is conducted, the RP got the Committee to appoint a Forensic Auditor to carry out forensic audit of the company and within one month, she got a report dated 14.12.2018. Instead of working towards the rehabilitating the company and assisting and advising its creditors to form a Resolution Plan for the company, from the beginning, the RP was conducting herself in a vicious and vindictive manner with a very obvious objective of only finishing of the company and threatening its Directors and shareholders to repay the dues towards Bank of Maharashtra. In this regard, accused No.2 has sent her an e-mail dated 22.11.2018. RP has sent a parawise response through email, attempting to justify her conduct. 4.3 On 17.12.2018, RP filed IA.No.446/2018 as a revised application seeking very same relief. Vide order dated 16.04.2019, the NCLT castigated the RP for filing frivolous applications and observed that there is no material to establish any fraud on the part of the Directors and the RP appeared to be acting in a motivated manner on the instructions of Bank of Maharashtra. In the light of the same, the NCLT decided to entrust the investigation to Senior Fraud Investigation Officer (for short 'SFIO') and directed RP to submit all available material. Similar application filed by the Bank of Maharashtra in I.A.No.105/2019 also came to be dismissed by NCLT on 12.04.2019. Anticipating the above order, on 11.04.2019, the Bank of Maharashtra sought to Pre-empt the NCLT and submitted a complaint directly to the respondent-Board, urging it to file a criminal complaint on the basis of very same forensic audit report, which was subsequently rejected by NCLT on 16.04.2019. Without application of mind, the respondent-Board has filed the complaint. 4.4 Petitioners have challenged the same, contending that the respondent action in filing the complaint on the basis of a letter submitted by a creditor is arbitrary and illegal. Without application of mind, the respondent-Board has filed the complaint. 4.4 Petitioners have challenged the same, contending that the respondent action in filing the complaint on the basis of a letter submitted by a creditor is arbitrary and illegal. Pursuant to the order of NCLT, the petitioners actions are now subject matter of investigation by SFIO as to whether there is any fraud on the part of the petitioners. They cannot be simultaneously subjected to separate and parallel enquiry on the basis of so called forensic audit report, which came to be rejected by the NCLT. First respondent ought to act solely on the basis of information that may be submitted by a RP and not on the basis of letter submitted by a creditor. There is no application of mind by the respondent as to determine whether at all there is any fraud. It is contrary to the mandates of the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulation 2017. The entire enquiry by the Hon'ble Special Court will be a waste of time and public funds. 4.5 Accused No.3 has also pleaded that there are no allegations against him as he was neither the Director nor officer or promoter of the corporate debtor. He held 20,000 shares in the corporate debtor during 30.07.2011 to 09.01.2013. After transfer of the shares, he had no connection with the corporate debtor. The offences contemplated under various provisions are not applicable to the related parties. Respondent has exercised power under Section 236 of the IBC in a every arbitrary manner. In fact, respondent No.3 has secured the order in I.A.No.446/2018 without serving a copy to accused No.3. The Special Court has also acted without application of mind and hence the petition. 5. On the other hand, respondent-Board has filed a statement of objections stating that the petitions are not maintainable. All the accused including the petitioners have defrauded their creditors and have shown non-cooperation with the RP. On the basis of complaint made to the respondent-Board by the RP, the Board has moved the Special Court. Petitioners through this petition are trying to circumvent the law. All the accused including the petitioners have defrauded their creditors and have shown non-cooperation with the RP. On the basis of complaint made to the respondent-Board by the RP, the Board has moved the Special Court. Petitioners through this petition are trying to circumvent the law. The object of IBC inter-alia relates to reorganisation and insolvency resolution of corporate persons, partnership, firms, and individuals in a time- bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit, and balance of interest of all the stakeholders, etc. 5.1 Early and effective insolvency resolution maximizes the value of assets of the corporate debtor and is beneficial to all the stakeholders including the employees. It is beneficial to the economy as a whole. It has already shown early positive results. In cases where the stakeholders do not cooperate with the RP, or give false information or do not abide by the terms of the Moratorium/Resolution plan, the Corporate Insolvency Resolution process (CIRP) may invariably end up in liquidation, which is neither beneficial to the corporate debtor nor the creditors. It may also disrupt the industry, the market as well as the economy. A company which could have been revived, is axed, leaving thousands of people unemployed and crores of debt unpaid. 5.2 Section 236 of the code provides for procedure to be adopted and confers power on the Board, among others, to file a criminal complaint against accused persons who have committed an offence which is punishable under Chapter VII, Part-II of the code. Section 68 to 77 of the code provide for offences and penalties during CIRP. Having found fraudulent and other transactions committed by the corporate debtor as well as the petitioners punishable under Sections 69 , 70, 73 and 19 r/w 235-A, respondent-Board has filed the complaint and after taking cognizance summons is issued to the accused No.3, who is major shareholder of the corporate debtor and its connected groups of 52 companies and also Director in some of the group companies. He was a key managerial personnel. All the accused persons have defrauded the corporate debtor. The RP is doing her best to revive the corporate debtor. However, she is not getting the corporation of the officers of corporate debtor and the accused persons. In the forensic auditor report, several discrepancies are noticed. He was a key managerial personnel. All the accused persons have defrauded the corporate debtor. The RP is doing her best to revive the corporate debtor. However, she is not getting the corporation of the officers of corporate debtor and the accused persons. In the forensic auditor report, several discrepancies are noticed. Based on the same, the investigation is referred to SFIO. In exercise of power under Section 236, the respondent-Board has filed the complaint. Cognizance is taken and summons are issued. To circumvent the same the present petitions are filed and pray to dismiss the petition. 6. Heard arguments and produce the record. 7. The undisputed facts are that petitioners are the Directors of accused No.1 - M/s Bhuvana Infra Projects Private Ltd Company and their Group of companies. It is also not in dispute that they secured loan in the form of cash credit facility to the tune of Rs.5,00,00,000/- from Bank of Maharashtra under the scheme for financing trade, services, and MSE (Loan against property) and it was secured through primary security of land registered in the name of accused No.6 Sri.C.D.Sanjay Raj. At the request of the corporate creditor, the credit limit was enhanced from Rs.5 Crores to Rs.10 Crores and additional property was taken for mortgage. Once again, during April 2016, at the request of corporate creditor, the credit limit was enhanced from Rs.10 Crores to Rs.12.5 Crores, though it was allowed on provisional balance sheet, it was required to be released on the basis of audited balance sheet. 8. It was alleged that accused No.1 M/s Bhuvana Infra Projects Private Ltd, sub-contracting and construction arm of M/s Golden Gate Group of Companies engaged into business of real estate development and construction of residential properties was incorporated in 2011. In pursuance to the criminal conspiracy amongst the Directors of the company, the auditor of the company, unknown officials of the Bank and others, the company prepared audited balance sheets for the year 2014–15 and 2015–16 with inflated revenue figures and submitted the same to the Bank and got the enhanced cash credit limits sanctioned by the Bank. The said account became non- performing asset ('NPA' for short). On 27.06.2017, the Bank conducted forensic audit and unearthed several findings corroborating the above allegations. The said account became non- performing asset ('NPA' for short). On 27.06.2017, the Bank conducted forensic audit and unearthed several findings corroborating the above allegations. It is alleged that the Directors of the company, the auditor of the company, unknown officials of the Bank and others, in collusion with the group of companies, auditors, unknown public servants and others, misutilised, diverted and siphon of the loan funds out of cash credit facility of Rs.12.5 Crores sanctioned to accused No.1 company and thereby causing wrongful loss of Rs.18.44 Crores approximately to the Bank of Maharashtra and a corresponding wrongful gain to themselves and cheated the bank. 9. Based on the forensic audit report secured by the corporate creditor, in respect of the said allegations, investigation was carried out by SFIO branch of CBI and 'B' report was filed stating that the allegations of fraud, misutilisation, diversion and siphoning of the loan funds are not established. The report also state that Bank of Maharashtra has taken a commercial decision to enter into an OTS with accused No.1 company. It gave proposal of Rs.13.5 Crores. The Management Committee of the head office of Bank of Maharashtra approved OTS proposal of Rs.15 crores. In the meanwhile, NCLT raised Bank of Maharashtra claim to Rs.17.57 Crores. In response to the same, the accused No.1 company has deposited Rs.18.58 Crores to Bank of Maharashtra, on various dates. The final payment being dated 24.12.2021. The Bank of Maharashtra has recovered their full ledge balance and also unpaid interest of Rs.6.24 Crores from accused No.1 company and there is no loss to the Bank of Maharashtra. 'B' report also indicate that the forensic audit report dated 14.12.2018 is contra to the facts. 10. After the report is filed, the trial Court has issued notice to the complainant. The order dated 18.04.2022 reveal that the complainant Ravi Prahalad Bagade, AGM, Bank of Maharashtra was present before the Court and submitted that he has no objections to the closure report filed by the CBI and accordingly the trial Court accepted the 'B' report and closed the complaint. 11. It is pertinent to note that the complaint in question was lodged on 18.01.2021 and the 'B' report was submitted on 29.03.2022. 12. 11. It is pertinent to note that the complaint in question was lodged on 18.01.2021 and the 'B' report was submitted on 29.03.2022. 12. Even before filing of the said complaint, the present complaint in PCR.No.32/2019 was filed against accused Nos.1 to 5, which after cognizance came to be registered as Spl.CC.No.783/2019, alleging that: (1) Loan of Rs.4.61 Crores sanctioned to accused No.1 was transferred by the accused persons to their group of companies and thereby committed the offence punishable under Section 69 (a) of IBC 2016. (2) Accused have made false representations prior to insolvency commencement date for the purpose of fraud and thereby committed the offence punishable under Section 73 (b) of IBC 2016. (3) Accused have not delivered all the books and papers which were in their control to the statutory authority after commencement of insolvency proceedings and thereby committed the offence under Section 70 (1)(c) of IBC 2016. (4) The accused have not extended assistance and cooperation to the resolution professional and thereby committed the offence under Section 19 (1) r/w Section 235-A of IBC 2016. 13. So far as the allegations of transfer of the loan amount to the group of companies and making false representation prior to the insolvency commencement date are concerned, the 'B' report negates the same. Therefore, prosecution of petitioners for the offences punishable under Sections 69 (a) and 73 (b) cannot be continued. However, the allegations that the accused have not delivered all the books and papers which were in their control to the statutory authority after the commencement of the insolvency proceedings and they have not extended assistance and corporation to the resolution profession and thereby committed the offences punishable under Sections 70 (1)(c) and 19(1) r/w Section 235-A of IBC 2016 is to be continued. 14. In the result, the petitioner deserves to be allowed in part and accordingly the following: ORDER (i) W.P.No.46570/2019 filed by accused Nos.2 and 5 and Crl.P.No.7020/2019 filed by accused No.3 are allowed in part. (ii) The criminal proceedings in Spl.CC.No.783/2019 on the file of LIX Addl.City Civil and Sessions Judge, Bengaluru city, is hereby quashed for the offences punishable under Sections 69 (a) and 73 (b) only. (ii) The criminal proceedings in Spl.CC.No.783/2019 on the file of LIX Addl.City Civil and Sessions Judge, Bengaluru city, is hereby quashed for the offences punishable under Sections 69 (a) and 73 (b) only. (iii) The Special Court is at liberty to proceed against accused Nos.2, 3 and 5 so far as offences punishable under Sections 70 (1)(c) and 19(1) r/w Section 235-A of Insolvency and Bankruptcy Code, 2016 . (iv) This order is confirmed to accused Nos.2, 3 and 5 only and other accused who are not party to these petition are not entitled for the benefit to this order. (v) The Registry is directed to send a copy of this order to the trial Court through e-mail.