Tarun Agarwala, Presiding Officer
1. We have heard the learned counsel for the parties. The present appeal has been filed against the order dated June 4, 2019 passed by the Recovery
Officer (hereinafter referred to as ‘RO’) under Section 28A of the Securities and Exchange Board of India Act, 1992 read with Section 220
etc., of the Income Tax Act, 1961.
2. The facts leading to the filing of the present appeal is, that the appellant was the director in Prism Infracon Limited. This company issued Non-
convertible Debentures (NCDs) in violation of Section 73(2) of the Companies Act, 1956 (hereinafter referred to as ‘Companies Act’) as a
result of which an ex-parte interim order was passed by the Whole Time Member (hereinafter referred to as ‘WTM’) in December 2014
restraining the company and its directors including the appellant from collecting any further monies. Subsequently, the WTM after considering the
objections passed a confirmatory order dated February 18, 2016 holding that the collection of the money through the NCDs was wholly illegal and in
violation of relevant provisions of the Companies Act. The WTM accordingly directed the company and its directors to refund Rs. 59.37 crore
alongwith interest jointly and severally.
3. This confirmatory order was challenged by the company before this Tribunal which was dismissed by an order dated August 2, 2016.
4. In so far as the appellant is concerned, he did not challenge the order of the WTM dated February 18, 2016 and consequently the said order against
the appellant has attained finality.
5. Pursuant to the order of the WTM the recovery proceedings were initiated by the RO. Attachment order was issued and thereafter after
considering the objection, the impugned order dated June 4, 2019 was passed.
6. The aforesaid facts are admitted by the appellant. The only contention raised by the learned counsel for the appellant is, that in the meanwhile
proceedings were initiated under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘IBC’) and IRP was appointed on July
3, 2018 and moratorium was issued and thereafter the official liquidator was appointed on November 8, 2019 under Section 34(4) of the IBC. It was,
thus, contended that the assets of the company are being liquidated and money realized would be sufficient to recover the refund towards NCDs and,
therefore, no amount should be recovered from the appellant till finalization of the liquidation proceedings of the AO. It was also urged that the
appellant has no mean for survival and, therefore, in the alternative some directions should be issued permitting the appellant to withdraw a certain
amount on a monthly basis from his bank account which has been seized so that he could survive.
7. Having heard the learned counsel for the appellant at some length, we find that there is an order of the WTM directing the fund of the monies to be
refunded jointly and severally. This order of the WTM has become final and is binding upon the appellant. The recovery proceedings have been
initiated pursuant to the order of the WTM. The subsequent order passed under the IBC appointing official liquidator has no effect in so far as the
present recovery is concerned. The order dated February 18, 2016 has been passed prior in point of time before the proceedings under the IBC were
initiated and therefore will not affect the recovery proceedings against the appellant.
8. We are also of the opinion that the plea of the appellant that some amount should be allowed to be taken out from his bank account for the purpose
of his survival cannot be considered by this Tribunal at this stage. It will be open to the appellant to move an appropriate application before the RO for
this purpose.
9. The appeal lacks merit and is dismissed with no order as to costs.
10. The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor
a certified copy of this order could be issued by the Registry. In these circumstances, this order will be digitally signed by the Private Secretary on
behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally
signed copy sent by fax and/or email.
