JUDGEMENT

DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER

1. The appeal has been filed by the ‘Appellant’- ‘Talha Yunus Sareshwala’, under Section 61 of the ‘Insolvency and Bankruptcy Code, 2016’ (in short ‘Code’) against the impugned order dated 04.06.2020 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal), Ahmedabad Bench in I.A. No. 300 of 2018 (under Section 65 of the Code) in CP (IB) No.161/2017. 2. It is the case of the Appellant that R3 - BMW India Financial Services Pvt. Ltd has fraudulently filed the petition before the ‘Adjudicating Authority’ and has put the ‘Corporate Debtor’ (CD) into ‘Corporate Insolvency Resolution Process’ (CIRP). It is alleged by the Appellant that the R2- BMW India Pvt. Ltd has fraudulently induced the CD in entering into the dealership agreements from 2014 -2017 and induced the CD to invest approx. Rs. 30 Crore for setting up showrooms and service center to be exclusively used only for selling and servicing BMW vehicles. At a later stage in the year 2017 while dealership agreement was enforced, the R3 being a group company of BMW asked R3 to file Section 7 of the Code petition against the CD and put the CD into CIRP to stifle the legitimate claims of the CD against the BMW group who is presently controlling the ‘Committee of Creditors’ (CoC) at 88.57% of voting power and implicitly controlling the actions of the Resolution Professional (RP). Presently, as per updated information the company has been put into liquidation.

3. The Adjudicating Authority vide its impugned order dated 04th June 2020 has made the following observations before admitting the Section 7 of the Code petition filed by R3- BMW India Financial Services Pvt. Ltd. The relevant clauses are reproduced below for ease of reference:

“18.Before pronouncement the judgment in the matter of CP (IB) 161 of 2017, this Adjudicating Authority would like to deliberate on the IA No. 300 of 2018 filed by the CD.

18.1. The IA No. 300 of 2018 has been filed by the CD on the ground that CP(IB) No. 167 of 2017 is a fraud committed by BMW India Pvt Ltd, the R2 in the IA in collusion with the Financial Creditor and filed the IA u/s 65 of the Code. Section 65 of the Code read as under:

“….If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees…..” 18.2. This Adjudicating Authority, on perusal of the records, documents and the arguments put forth by the counsels of both the parties, has observed that BMW India Pvt. Ltd., the R2 in the IA No. 300 of 2018 is not a party in the main petition no. 161 of 2017 and has no locus and cannot be impleaded in the main petition no 161 of 2017.

18.3 Further, the Petitioner of IA no. 300 of 2018/ Respondent of CP (IB) No. 161 of 2017 has vide numerous communications exchanged with the financial creditor in CP (IB) No. 161 of 2017 and has owned full responsibility for the default committed by the CD and promised on number of occasions to make payment of the defaulted amount. Moreover, no one either BMW or BMW dealer can force any customer of Gujarat to buy from the Petitioner only.

Customer is at liberty and he can purchase BMW car from any part of the country. The concept that a customer to purchase from a particular dealer is not tenable and it may be considered as an attempt to infringe on the right of a customer. Hence, we do not find any merit in the IA. Hence, the prayer made in IA No. 300 of 2018 is hereby rejected. Main Petition No. 161 of 2017 financial facilities/ debt to the Petitioner and the date of default is from 10.04.2016 and onwards as per Annexure -IV/27. The statement of accounts and the CIBIL Reports submitted by the application confirm the default committed by