Case Note & Summary
The case involves an appeal filed by Akshay D. Thakkar (the Appellant/Insolvent) against an order dated 18th September, 2018 passed by a learned Single Judge of the Bombay High Court in Notice of Motion No.22 of 2018. The Appellant had been adjudicated insolvent on 22nd April, 2010 in Insolvency Petition No.5 of 2010. Subsequently, on 3rd December, 2014, the order of adjudication was annulled under Section 22(1) of the Presidency Towns Insolvency Act, 1909 (the Insolvency Act) in Notice of Motion No.52 of 2014. Respondent No.1, Kotak Mahindra Bank Limited, filed Notice of Motion No.22 of 2018 seeking recall of the annulment order, primarily on the ground that the Appellant had deliberately concealed from the Court the fact that the Bank was one of its creditors and had obtained a recovery certificate from the Debts Recovery Tribunal (DRT). The learned Single Judge allowed the notice of motion and recalled the annulment order. Aggrieved, the Appellant filed the present appeal. The Division Bench, after considering the submissions, upheld the impugned order, holding that the Appellant had suppressed material facts regarding the Bank's claim, and therefore, the annulment order was obtained by fraud and could not be sustained. The appeal was dismissed.
Headnote
A) Insolvency Law - Annulment of Adjudication - Recall of Order - Section 22(1) Presidency Towns Insolvency Act, 1909 - The Appellant was adjudicated insolvent on 22nd April, 2010. The order of adjudication was annulled on 3rd December, 2014 under Section 22(1) of the Act. Respondent No.1 Bank filed a Notice of Motion seeking recall of the annulment order on the ground that the Appellant had deliberately concealed the fact that the Bank was a creditor with a recovery certificate from the DRT. The learned Single Judge allowed the recall. The Division Bench upheld the recall, holding that the Appellant had suppressed material facts and the annulment order was obtained by fraud. (Paras 1-5) B) Insolvency Law - Duty of Disclosure - Concealment of Creditor - Section 22(1) Presidency Towns Insolvency Act, 1909 - The Appellant, while seeking annulment, failed to disclose the existence of Respondent No.1 Bank as a creditor and the recovery certificate obtained by the Bank from the DRT. The Court held that such concealment amounted to suppression of material facts, vitiating the annulment order. The recall of the annulment order was justified to protect the interests of the creditor. (Paras 3-5)
Issue of Consideration
Whether the learned Single Judge was justified in recalling the order of annulment dated 3rd December, 2014 on the ground that the Appellant had concealed the fact that Respondent No.1 Bank was a creditor with a recovery certificate from the DRT.
Final Decision
The appeal is dismissed. The impugned order dated 18th September, 2018 recalling the annulment order is upheld.
Law Points
- Concealment of material facts
- Recall of annulment order
- Insolvency proceedings
- Section 22(1) Presidency Towns Insolvency Act
- 1909
- Duty of disclosure
