Sale of pledged shares by creditor during CIRP moratorium violates Section 14 despite possession transfer on invocation; ownership remains with debtor. Sold listed shares unrestorable; debt reduces by realisation amount.

ORDER

IA (IBC) NO. 3117 OF 2023

1. This I.A. is filed by Mr. Maitreya Doshi, Ex - Director of Doshi Holdings Pvt. Ltd (“the Applicant”) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC/the Code”) with the following prayers:

a. Direct that the corporate insolvency resolution process in respect of the Corporate Debtor be set aside;

b. Direct the Respondents to declare and disclose all particulars and details of the total number of shares of Premier Ltd. sold out of the Pledged Shares, i.e. 53,01,000 (fifty-three lakhs one thousand) shares of Premier Limited as pledged by the Corporate Debtor in favour of Respondent No. 2;

c. Direct Respondent No. 2 to return the custody and control of 53,01,000 (fifty three lakhs one thousand) shares of Premier Limited as pledged in its favour, to the Corporate Debtor or such of the Pledged Shares that are unsold and remain in the possession/custody of Respondent No. 2, and to do all such other acts, deed, matters and/or thing as may be necessary for effectively effectuating the transfer of custody 53,01,000 (fifty three lakhs one thousand) shares of Premier Limited in favour of the Corporate Debtor or such of the Pledged Shares that are unsold and remain in the possession/ custody of Respondent No. 2, including transferring and/or depositing the same into the demat account of the Corporate Debtor;

d. Direct Respondent No. 2 to deposit and/or pay the Corporate Debtor sums equivalent to the proceeds realised by Respondent No. 2 from the sale of some or all of the Pledged Shares, i.e. 53,01,000 (fifty-three lakhs one thousand) shares of Premier Limited;

e. Declare that the approval of the Resolution Plan submitted by Respondent No. 2 and approved by the Committee of Creditors (which is constituted by Respondent No. 2 only) is unlawful, illegal and contrary to the provisions of the Insolvency & Bankruptcy Code, 2016 and to thereafter set aside the Resolution Plan submitted by Respondent No. 2;

f. Pending hearing and final disposal of the present Application, pass an order restraining the Respondents, its directors, employees, agents, servant, officer and/or any other persons claiming through or under them from transferring, selling alienating, encumbering and/or creating any third party right, title and/or dealing with such number of the Pledged Shares, i.e. 53,01,000 (fifty three lakhs one thousand) shares of Premier Limited, that are unsold and presently in the custody of the Respondents;

g. Pending hearing and final disposal of the present Application, stay the corporate insolvency resolution process in respect of the Corporate Debtor;

h. Ad-interim reliefs in terms of prayer clauses (f) and (g) above;

i. For costs; and j. Any other orders as this Hon'ble Tribunal may deem fit in the facts and circumstances Brief Facts as per the Application:

2. The Adjudicating Authority vide order dated 19.02.2021 in CP (IB) No. 1220/MB/2020, admitted the Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) filed by Anand Rathi Global Finance Limited (“Financial Creditor/Resolution Applicant/Respondent No. 2”) for