Judgment Summaries (NCLAT) Telha Sareshwala

  March 11, 2022

CASE SUMMARY

In the matter of Telha Sareshwala v. Parsoli Motors Works Private Limited and Others

{NCLAT, Principal Bench, New Delhi; February 28, 2022}

FACTS: The Corporate Debtor had a local dealership for BMW cars for Gujarat territory for the years 2007 and 2017. In 2017, BMW India Financial Services Private Limited (“BMW”) initiated Section 7 petition under the Insolvency and Bankruptcy Code, 2016 (“Code”) for initiating Corporate Insolvency Resolution Process (“CIRP”), and the same was admitted by NCLT, Ahmedabad. The BMW Group was controlling the Committee of Creditors because it constituted 88.57% of the voting power and implicitly controlled the actions of the Resolution Professionals.

The Corporate Debtor was gradually put into the process of liquidation.

The Appellant alleged that the BMW Group made the Corporate Debtor invest huge amounts to retain the Gujarat dealership while allowing outside sellers to sell vehicles in Gujarat which amounted to territorial violation. Later for dues of sale of BMW vehicles, Section 7 Petition was filed. The Appellant alleged that these events were fraud perpetrated by the BMW Group and led the Corporate Debtor to the process of liquidation.

HELD: The NCLAT observed that under Section 65 of the Code, the Adjudicating Authority has inherent power to restrict the perpetuation of applications motivated by fraud or malice. Further, it was observed that objective of the Code is to revive the Corporate Debtor and protect it against distortion and abuses.

The NCLAT refused from going deep in the matter and made no comments on the merits of the case. The matter was remanded back to NCLT, Ahmedabad.

Full text of the accessible here.

 

 

 

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