~8th NLIU NATIONAL CORPORATE LAW MOOT ~

TEAM
TEAM CODE:CODE:
112 112
BEFORE THE NATIONAL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH, NEW DELHI
BEFORE THE NATIONAL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH, NEW
APPLICATION UNDER SECTION 7 OF INSOLVENCY AND BANKRUPTCY CODE, 2016 AND SECTION
241 OF THE COMPANIES ACT, 2013. DELHI
IN THE MATTERS OF:
IN THE MATTERS OF:
C.P. NO. 666(PB)/2019
C.P. NO. 666(PB)/2019

DAEDALUS CAPITAL
DAEDALUS CAPITAL
CRETE PARTNERS
CRETE PARTNERS
HOMER …PETITIONERS

HOMER V. …PETITIONERS
PANTHEONWORKSPACE SOLUTIONS PRIVATE LIMITED
V.
ICARUS

MINOTAUR CAPITAL
PANTHEONWORKSPACE SOLUTIONS PRIVATE LIMITED
MINOS VENTURES
ICARUS
DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE, MINISTRY

OF COMMERCE
MINOTAUR AND INDUSTRY (REPRESENTED THROUGH SECRETARY)
CAPITAL
…RESPONDENT

MINOS VENTURES AND

CP 5678 (IB) / PB / 2019

DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE, MINISTRY
PANTHEONWORKSPACE SOLUTIONS PRIVATE LIMITED … PETITIONERS
OF COMMERCE AND INDUSTRY (REPRESENTED THROUGH SECRETARY)
V.
…RESPONDENT
TROY FINTECH SOLUTIONS PRIVATE LIMITED
AND
ODYSSEUS (INTERIM RESOLUTION PROFESSIONAL)

RESERVE BANK OF INDIA … RESPONDENTS

CP 5678 (IB) / PB / 2019

PANTHEONWORKSPACE SOLUTIONS PRIVATE LIMITED … PETITIONERS

V.
WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENTS
TROY FINTECH SOLUTIONS PRIVATE LIMITED

ODYSSEUS (INTERIM RESOLUTION PROFESSIONAL)

RESERVE BANK OF INDIA … RESPONDENTS

WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENTS

i
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

TABLE OF CONTENTS

INDEX OF AUTHORITY………………………………………………………………………..viii

STATEMENT OF JURISDICTION……………………………………………………………….ix

STATEMENT OF FACTS ................................................................................................................... x

ISSUES INVOLVED........................................................................................................................... xi

SUMMARY OF ARGUMENTS ...................................................................................................... xiiii

PLEADINGS .................................................................................................................................... 132

ISSUE 1 – WHETHER THE PETITIONS FILED BEFORE THE ADJUDICATING AUTHORITY

IS MAINTAINABLE OR NOT?..................................................................................13

ISSUE 2 – WHETHER THE ACT OF THE PETITIONER AMOUNTED TO OPPRESSION AND

MISMANAGEMENT U/S 241, COMPANIES ACT, 2013?.......................................16

ISSUE 3 – WHETHER THE CORPORATE INSOLVENCY RESOLUTION PROCEEDINGS

AGAINST TROY IS VALID IN LAW?......................................................................18

PRAYER
…………………………………………………………………………………………xxiii
iii

ii
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

LIST OF ABBREVIATIONS

& And

A.P. Andhra Pradesh

Addl. Additional

AIR All India Reporter

All Allahabad

ALL ER All England Law Reports

Anr. Another

Asstt. Assistant

Bom. Bombay

Bom. Bombay

Cal. Calcutta

CBDT Central Board of Direct Taxes

CIT Commissioner of Income-tax

CLB Company Law Board

Co. Company

Comp Cas Company Case

CTR Current Tax Reporter

DCIT Deputy Commissioner of Income Tax

Del. Delhi

DIT Director of Income Tax

DTAA Double Tax Avoidance Agreement

Dy. Deputy

iii
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

ed. Edition

Guj. Gujarat

Hon’ble Honourable

ICAI Institute of Chartered Accountants of India

In Re In Reference

Inc. Incorporated

Inc. Incorporated

IT Income Tax

ITA Income Tax Appeal

ITD Income-tax Tribunal Decisions

ITO Income Tax Officer

ITR Income Tax Reporter

Kant. Karnataka

Ltd. Limited

M/S Messrs

No. Number

Organization of Economic Co-operation and

OECD
Development
Ors. Others

P&H Punjab and Haryana

p. Page

para. Paragraph

Pvt. Private

iv
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

r/w Read with

RPT Related Party Transaction

SC Supreme Court

SCC Supreme Court Cases

SCR Supreme Court Reporter

SOT Select Orders of ITAT

u/s Under Section

UOI Union of India

v. Versus

v
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

INDEX OF AUTHORITY

CASES REFERRED

1. J.M. Desai v. Roshan Kumar, AIR 1976 SC 578.

2. R v. Paddington, (1966) 1 QB 380.
3. PN Kumar v. Municipal Corp of Delhi, 1988 SCR (1) 732.
4. Kanubhai Brahmbhatt v. State of Gujarat, AIR 1987 SC 1159
5. B.K. Educational Services Private Limited vs. Parag Gupta and Associates, AIR 2018 SC
5601
6. Abraham Mathew and another Vs. Sungkai Plantations Private Limited and others (2007) 135
Com Cas 563 (CLB)
7. Ram Sarup Gupta (Dead) By Lrs vs Bishun Narain Inter College & Ors, 1987 AIR 1242
8. Palgat Exports Private Limited Vs. T.V. Chandran (1994) 79 com cas 213 (Ker)
9. M.L. Arora Vs. Green Valley Frozen Food Ltd. and others (2008) 142 Comp Cas 320 (CLB)
10. Shanti Prasad v. Kalinga Tubes, AIR 1965 SC 1535.
11. Tech Corporation v. Millar, (1972) 33 DLR (3d) 282.\
12. Laxmi Narayan Rawat v. RT Udyog P. Ltd., (2005) 3 Comp LJ 342: (2005) 127 Com Cases
687
13. T.N.K. Govindaraju Chetty and Co. and other Vs. Kadri Mills (CBE) Ltd. and other (1999) 96
Com.Cas 871 (CLB)

14. Re Clive Mills Co. Ltd., 1964) 34 Com cases 731 (Cal)
15. M.M. Dua v Indian Dairy and Allied Services P. Ltd, (1996) 86 Com cases 657 (CLB)
16. Dhananjay Pande Vs. Dr. Bais Surgicaland medical Institute P. Ltd. and others (2005) 65
CLA 164 (CLB)
17. Kilpest Private Limited and others Vs.Shekar Mehra (199) 87 Comp Cas 615 (SC)
18. Ravi Shankar Taneja v. Motherson Triplex Tools (P.) Ltd. [2001] 4 CLJ 102 (CLB)
19. Serum Institute of India Limited Vs. Inderjit Properties Private Limited & Others (2005) 66
CLA 458 (CLB)
20. M.S.D.C Radharamanan Vs.M.S.D Chandrasekara Raja and Others (2008) 143 Comp cas 97
(SC)
21. M/s One Coat Plaster vs. M/s Ambience Private Limited [Company Application No. (IB)
07/PB/2017]

vi
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

22. Mobilox Innovations Private Limited vs. Kirusa Software Private Limited ,Civil Appeal No.
9405 of 2017
23. Philips India Ltd. vs. Goodwill Hospital and Research Centre Ltd. [CP No. (IB)-03(PB)/2017]
24. M/s One Coat Plaster vs. M/s Ambience Private Limited Company Application No. (IB)
07/PB/2017
25. Kirusa Software Private Ltd. vs. Mobilox Innovations Private Ltd Company Appeal (AT)
(Insolvency) 6 of 2017
26. J K Jute Mills Company Limited vs. M/s Surendra Trading Company Company Appeal (AT)
No. 09 of 2017
27. Randhiraj Thakur, Director Mayfair Capital Private Limited v. Jindal Saxena Financial
Services Private LimitedCompany Appeal (AT) (Insolvency) Nos. 32 & 50 of 2018

vii
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

BOOKS REFERRED

1. Ramaiyya, Guide To The Companies Act, Vol.2 ( 18thedn., 2015)

2. Vinod K Singhania & Kapil Singhania, Direct Taxes Law & Practice, (57th edn., 2016)

3. Chaturvedi & Pithisaria, Income Tax Law, (5th edn., 2007 )

4. Gower and Davies, Principles of Modern Company Law, (9thedn., 2012)

5. Halsbury's Laws of England, Vol.7 ( 4thedn., 1996)

6. P.B.Maxwell, The Interpretation of Statues, (12th edn.)

7. Pollock & Mulla, The Indian Contract Act , Vol. 2 ( 14th edn, 2014)

8. Pradeep S Shah & Rajesh S Kadakia, Master Guide To Income Tax Act With
Commentary on Finance Act 2016, (26th edn., 2016)

LEGAL DATABASE REFERRED

1. Manupatra Online Resources

2. Lexis NexisAcademica
3. Lexis Nexis Legal
4. SCC Online

LEGISLATIONS REFERRED

1. Insolvency and Bankruptcy Code, 2016

2. The Companies ( Amendment) Act, 2015

3. The Companies Act, 2013

viii
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

STATEMENT OF JURISDICTION

The Petitioners have approached this Hon'ble Adjudicating Authority in the present matter under Sec.
7 of the Insolvency and Bankruptcy Code, 2016 to initiate Corporate Insolvency Resolution Process
against Troy and under Sec. 241 of the Companies Act, 2013 for oppression and mismanagement in
Pantheon Workspace.

The Respondents contest the Jurisdiction in the instant case.

ix
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

STATEMENT OF FACTS

The Respondent humbly states before the Hon’ble NCLT:

1. That, Mr. Icarus is a celebrated figure and successful ventures such as Swapdeal and Foodkart.
He then founded PantheonWorkspace – ushering in a new concept of co-working spaces in the
country. PantheonWorkspace quickly garnered the attention of Indian and foreign PE/VC firms
and achieved unicorn status within 12 months of inception.
2. The investors started initiating discussions with Icarus for taking the company public through an
IPO and appointed Legal Counsels and Bankers to the Issue for the company and instructed to
begin due diligence and begin preparing the DRHP.
3. SEBI did not approve of the DRHP and to highlight and discuss these concerns, and SEBI’s
comments on the DRHP, an Extraordinary General Meeting (EGM) was convened on 19 August
2019.
4. Icarus had started another venture with a couple of other entrepreneurs – Paris and Hector called
Troy Fintech Solutions Private Limited, as a Non-Banking Financial Company with the RBI and
operated on a virtual marketplacebusiness model which brought together individuals and firms
for disbursing short-term loans and credit to other individuals and firms.
5. Just as recession and slowdown was beginning to set in the Indian economy, Troy started facing
a paucity of lenders as a credit crunch began to set in India. Troy brought a new product on its
platform called Trojan Horse – a short-term bond that lenders could purchase from Troy and
Troy would then sell Trojan Horse product to borrowers on its platform at a slightly higher rate,
thereby making profit on the difference in the rates of interest.
6. RBI issued a show-cause notice to the company and ordered seizure of all activities related to
these products till the issue is resolved as RBI regulations prohibit NBFC from lending.
Odysseus was appointed as Interim Resolution Professional.
7. A corporate insolvency proceeding has been initiated by PantheonWorkspace against Troy due
to the related party transaction of loan being granted to Troy alleged as unjust enrichment of
Troy at the expense of Pantheon Workspace by the minority and majority investors. Daedalus,
Crete have raised a petition challenging the the action of oppression-management and both the
petition have been listed for hearing.

The NCLT Bench has listed the matter for hearing on 7 December 2019.

x
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

ISSUES INVOLVED

ISSUE 1
1. WHETHER THE PETITIONS FILED BEFORE THE ADJUDICATING
AUTHORITY IS MAINTAINABLE OR NOT?

ISSUE 2

2. WHETHER THE ACT OF THE PETITIONER AMOUNTED TO OPPRESSION AND

MISMANAGEMENT U/S 241, COMPANIES ACT, 2013?

ISSUE 3

3. WHETHER THE CORPORATE INSOLVENCY RESOLUTION PROCEEDINGS

AGAINST TROY IS VALID IN LAW?

xi
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

SUMMARY OF ARGUMENTS

ISSUE 1 – WHETHER THE PETITIONS FILED BEFORE THE ADJUDICATING

AUTHORITY IS MAINTAINABLE OR NOT?

It is humbly submitted that both the petition filed before the Adjudicating Authority of NCLT is not
maintainable. The corporate insolvency petition nor the petition filed in relation to oppression
mismanagement is maintainable as they do not satisfy the grounds necessary for maintainability.

ISSUE 2 – WHETHER THE ACT OF THE PETITIONER AMOUNTED TO OPPRESSION

AND MISMANAGEMENT U/S 241, COMPANIES ACT, 2013?
It is humbly submitted that none of acts of the Respondents amounted to oppression on the
Petitioners. Giving a loan did not amount to oppression and the loan issued was not for oppressing
the Petitioner, but for, the benefit of the Respondent company. Also, Act of Respondent doesn’t
amount to mismanagement u/s of Companies Act, 2013

ISSUE 3 – WHETHER THE CORPORATE INSOLVENCY RESOLUTION PROCEEDINGS

AGAINST TROY IS VALID IN LAW?
It is humbly submitted that the corporate insolvency resolution proceedings against Troy was invalid
on the following grounds as The investigation undertaken by RBI pursuant to showcause notice
issued was still pending and would fall under the definition of dispute under the Insolvency and
Bankruptcy Code, 2016 and Troy fell under the definition of financial service provider and is
excluded from the scope of Insolvency and Bankruptcy Code, 2016.

xii
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

PLEADINGS

ISSUE 1 – WHETHER THE PETITIONS FILED BEFORE THE ADJUDICATING

AUTHORITY IS MAINTAINABLE OR NOT?

It is humbly submitted that both the petition filed before the Adjudicating Authority of NCLT is not
maintainable. 1.1. The corporate insolvency petition is not maintainable 1.2. The petition filed in
relation to oppression mismanagement is also not maintainable.

1.1. The Corporate Insolvency Petition is not maintainable

It is humbly submitted before the NCLT that the Corporate Insolvency Petition is not maintainable as
1.1.1 The Petitioners do not have the locus standi to file the petition. 1.1.2. Alternative Remedy has
not been exhausted and 1.1.3. There has been no violation of the interests of the petitioner.
1.1.1. No locus standi to file the petition

It is humbly submitted before the Hon’ble Tribunal that in the present matter, the petitioners do not
have locus standi to file application before the Adjudicating Authority of the NCLT, as any of three
propositions rules of locus standi cannot be fulfilled.

According to Black’s law Dictionary locus standi means the right to bring an action or to be heard in
given forum.1 Firstly, only he can take recourse to the writ jurisdiction whose own legal rights of
person or property are directly and substantially injured. Secondly, when a person suffers along with
other members of the public by administrative action, he cannot challenge the action in question
unless he can show some special injury to himself over and above, what others have suffered.
Thirdly, where a person challenging an administrative action is a total stranger (whom the courts call
as a “meddlesome interloper”), the court will not ordinarily entertain his petition.2 In the present case
the petitioner is not suffering any harm, as all the amount that was given was given by adequate
board approval and only then were entered by the company3.

Lord Denning in R v. Paddington4 as observed that the court would not listen, of course, to a mere
busybody who was interfering in things which did not concern him. For instance, in the present case
in order to file an application, the petitioner must first show that he or she is experiencing harm as a
result of that law. The principle of ‘locus standi’ presupposes the presence of a person or body of

1
Black’s Law Dictionary, Bryan Garner, ed., 7th edn. (Minn., USA: St. Paul, 1999), p. 952.
2
J.M. Desai v. Roshan Kumar, AIR 1976 SC 578.
3
Moot Proposition, 8th NLIU National Corporate Law Moot.
4
(1966) 1 QB 380.
13
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

persons who suffered a legal injury. Therefore, in the instant case the petitioner is not suffering from
the legal injury by the act of respondent.

1.2. Petitioner is required to exhaust the local remedy

It is humbly submitted that the petitioner should exhaust the alternative remedy before filing an
application before the NCLT. The reason for this is two-fold: first, to reduce the increasing pendency
of cases5 and second, to inspire faith in the hierarchy of Courts and the institution as a whole.6

It is submitted that there are alternative or efficacious remedies are available to the Petitioner in the
present case. In the instant case, since the matter is investigation by the RBI pursuant to the show-
cause notice issued and reply given were still pending. This falls under the definition of “dispute”.
Moreover, in the instant case a Resolution Professional was appointed. And an insolvency petition
cannot be entertained until the dispute had been settled.7 The same is also mandated by the Reserve
Bank of India.8

1.3. No violation of interest of the petitioner

It is humbly submitted that the application filed by the petitioner is not maintainable under NCLT. In
the instant case there is no violation or infringement of any interest of the petitioner by the
respondent.

After the amendment under the IBC petitioner is permitted to file an application in NCLT for
initiating corporate insolvency resolution process against a defaulting company to initiate the
insolvency resolution process under Section 7 of the IBC 9. In the instant case, Troy fell under the
definition of a “financial service provider” and hence was excluded from the ambit of the Insolvency
and Bankruptcy Code, 2016. 10

Therefore, in the instant case the there is no violation or infringement of any interest of the petitioner
and thus the application filed before the Adjudicating Authority should be dismissed.

5
PN Kumar v. Municipal Corp of Delhi, 1988 SCR (1) 732.
6
Kanubhai Brahmbhatt v. State of Gujarat, AIR 1987 SC 1159
7
B.K. Educational Services Private Limited vs. Parag Gupta and Associates, AIR 2018 SC 5601
8
RBI/2017-18/131
9
Insolvency and Bankruptcy Code (Second Amendment Act, 2018).
10
Section 227, Insolvency and Bankruptcy Code, 2016.
14
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

2.1.The petition filed in relation to oppression mismanagement is also not maintainable.

It is humbly submitted before the Hon’ble Tribunal that the impugned act of allotment of shares and
vacation of office as a director took place with full knowledge, consent and acquiescence of the
petitioner, the petition is not maintainable.11 Daedalus and Crete did not raise any objection to the
legal validity of such a post-dated approval of the related party transaction.12

When the petitioner files the petition under section 241 with undue delay and latches, the petition is
not maintainable. It is an essential prerequisite for a petitioner under section 241 of the Companies
Act, 2013 that there has been a prejudice to the interest of the members.13 In the case at hand, the
transaction was not a related party transaction and was done in ordinary course of business. 14 The
same was duly conveyed to all shareholders in the Board meeting and no objection was raised therein
and thus, it does not apply as oppression and mismanagement does not give room to doubt the past
acts which the shareholders have assented to.15 Thus, there was no oppression and mismanagement of
shareholder, thereby challenging the maintainability of the petition and declaring it non-maintainable.

Therefore, the respondents maintain that due to the reasons mentioned above, both the petitions stand
non-maintainable.

11
M.L. Arora Vs. Green Valley Frozen Food Ltd. and others (2008) 142 Comp Cas 320 (CLB)
12
Moot Proposition, 8th NLIU National Corporate Law Moot.
13
Abraham Mathew and another Vs. Sungkai Plantations Private Limited and others (2007) 135 Com Cas 563 (CLB)
14
Ram Sarup Gupta (Dead) By Lrs vs Bishun Narain Inter College & Ors, 1987 AIR 1242
15
Palgat Exports Private Limited Vs. T.V. Chandran (1994) 79 com cas 213 (Ker)
15
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

ISSUE 2 – WHETHER THE ACT OF THE PETITIONER AMOUNTED TO OPPRESSION

AND MISMANAGEMENT U/S 241, COMPANIES ACT, 2013?
1. It is humbly submitted before this Hon’ble Tribunal that none of acts of the Respondents
amounted to oppression on the Petitioners. The counsel would plead the same on two grounds,
2.1. Giving a loan did not amount to oppression and the loan issued was not for oppressing the
Petitioner, but for, the benefit of the Respondent company. 2.2. The Act of Respondent doesn’t
amount to mismanagement under Companies Act, 2013
2.1. Giving a loan did not amount to oppression and the loan issued was not for oppressing
the Petitioner
2. It is most respectfully submitted before this Hon’ble Tribunal that in the instant case, the loan
was issued to the Respondent company. It is also to be noted here that as the company’s profit
had reduced and the borrowings made. The same was discussed in the EGM meeting and it was
approved.
3. It was held in a leading case by the Hon’ble Supreme Court in Shanti Prasad v. Kalinga
Tubes,16 that for constituting oppression, there should be an element of lack of probity and fair
dealing to a member in the matter of his proprietary rights as a shareholder, however, in the
present case, there were no such elements involved in the conduct of the Respondents.
4. However, the Hon’ble Courts over the period has held that even if the majority is benefitted
from such issue, this is no ground that oppression has been done against the Petitioners.17 Further,
it should be noted that rights were issued in good faith, and for addressing the need of the
company.
5. It was held in the case of Laxmi Narayan18 that if in a quasi-partnership, the shares are issued
to meet the financial needs of the company, then even if one group is benefitted, the other group
cannot complain of oppression. The directors cannot be charged with breach of trust or can be
said to have acted mala fide merely because in promoting the interest of the company they have
also promoted their own interest.19
2.2.The act does not amount to mismanagement by the Petitioner
5. It is humbly submitted before this Hon’ble Tribunal that the acts of Respondents do not
constitute mismanagement. It is settled position that no case of oppression and

16
AIR 1965 SC 1535.
17
Tech Corporation v. Millar, (1972) 33 DLR (3d) 282.
18
Laxmi Narayan Rawat v. RT Udyog P. Ltd., (2005) 3 Comp LJ 342: (2005) 127 Com Cases 687
19
T.N.K. Govindaraju Chetty and Co. and other Vs. Kadri Mills (CBE) Ltd. and other (1999) 96 Com.Cas 871 (CLB)
16
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

mismanagement can be made out as the alleged loan was discussed in the EGM and no one
opposed it.
6. The allegation against Icarus without any corroborating evidence cannot be a cause of action
for a case on oppression and mismanagement.
7. In Re Clive Mills Co. Ltd.,20 the court has well established that in a case under
Mismanagement, if vague and general charges are made without giving any particular or
setting out any material facts, this court shall ignore charges and not proceed to investigate
them. That such nature of charges be it related to misappropriation, misapplication of funds,
mismanagement or other improper conduct in the company’s affairs do not justify the court in
making any order on such allegations.21
8. Funds of the company have not been lend off by the respondents in any manner as it is being
alleged by the petitioner. Such, allegations of the petitioner are baseless and do not come with
any substantial proof from their side. These financial transactions are being carried out so as
to assist the respondent company in its hard time as the performance of the same is
deteriorating and it is done in ordinary course of business.22
9. Petitioner have only alleged the respondents regarding various acts in which one such act is of
misappropriation of funds. However, they have failed to provide the Hon’ble Tribunal with
any substantial proof23 in order to prove the same and have thus caused harm to the
Respondent’s image.
10. The Hon’ble Board has held in the case of Ravi Shankar Taneja v. Motherson Triplex Tools
(P.) Ltd.24 that to show that in case of allegations of mismanagement, siphoning off of funds
without giving any particulars or details, no adjudication on these issues is possible on the
basis of suspicion and surmises. A mere allegation that there was misappropriation of funds
will not unless the allegation is supported by a statement of particulars.25
11. The Hon’ble Tribunal cannot take the cognizance of such alleged acts of oppression until and
unless they are being backed by valid particulars. Even, after such sufficient particulars the
satisfaction26 of the tribunal is of prime importance so as to take cognizance of such alleged
acts.

20
(1964) 34 Com cases 731 (Cal)
21
M.M. Dua v Indian Dairy and Allied Services P. Ltd, (1996) 86 Com cases 657 (CLB)
22
Dhananjay Pande Vs. Dr. Bais Surgicaland medical Institute P. Ltd. and others (2005) 65 CLA 164 (CLB)
23
Kilpest Private Limited and others Vs.Shekar Mehra (199) 87 Comp Cas 615 (SC)
24
[2001] 4 CLJ 102 (CLB)
25
Serum Institute of India Limited Vs. Inderjit Properties Private Limited & Others (2005) 66 CLA 458 (CLB)
26
M.S.D.C Radharamanan Vs.M.S.D Chandrasekara Raja and Others (2008) 143 Comp cas 97 (SC)
17
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

12. Thus, on mere suspicion the court cannot interfere in the Internal Decision making of the
company.

ISSUE 3 – WHETHER THE CORPORATE INSOLVENCY RESOLUTION PROCEEDINGS

AGAINST TROY IS VALID IN LAW?
1. It is humbly submitted before this Hon’ble Tribunal that the corporate insolvency resolution
proceedings against Troy was invalid on the following grounds 3.1.The investigation undertaken
by RBI pursuant to showcause notice issued was still pending and would fall under the definition
of dispute under the Insolvency and Bankruptcy Code, 2016 and 3.2. Troy fell under the definition
of financial service provider and is excluded from the scope of Insolvency and Bankruptcy Code,
2016.

3.1.The investigation undertaken by RBI pursuant to showcause notice issued was still pending.

2. It is humbly submitted before the Hon’ble Tribunal that in the instant matter, the matter was still
pending before the RBI. RBI had issued a showcause notice to Troy regarding the money which was
given ordered seizure of all activities related to these products till the issue is resolved. This would fall
under the scope of the word dispute as the definition of term ‘dispute’ is not an exhaustive, but
illustrative. It is evident from the expression ‘includes’ which immediately succeeds the word
‘dispute’.27

3. Section 5. (6) of Insolvency and Bankuptcy code defines dispute as:

“Dispute includes a suit or arbitration proceeding relating to –

(a) the existence of the amount of debt;

(b) the quality of goods or service; or

(c) the breach of a representation or warranty”

4. Also, The Hon’ble Supreme Court in Mobilox Innovations Private Limited vs. Kirusa Software
Private Limited28 provided much required clarity on the expression “existence of dispute” and put to
rest the confusion regarding the meaning of term ‘dispute’ and held that the term ‘dispute’ is
inclusive one and cannot be restricted to pending suit or arbitral proceedings.
27
M/s One Coat Plaster vs. M/s Ambience Private Limited [Company Application No. (IB) 07/PB/2017]
28
Civil Appeal No. 9405 of 2017
18
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

5. It was further held by Apex Court that at the initial stage of admission, NCLT is to only see
whether there is a plausible contention which requires further investigation and that the ‘dispute’
sought to be raised is not a patently feeble legal argument or an assertion of fact unsupported by
evidence.

6. In the instant case the RBI had issued show-cause notice the reply was still pending, and hence it
fell under the definition of “dispute” which meant that the insolvency petition cannot be entertained
until the dispute had been settled.29

7. In M/s One Coat Plaster vs. M/s Ambience Private Limited30 it was held that if the dispute is
ongoing before a resolution professional, the same shall not be referred to the NCLT till it has been
settled.

8. The NCLAT in Kirusa Software Private Ltd. vs. Mobilox Innovations Private Ltd.31 held that
the term ‘dispute’ is inclusive one and the definition of the term ‘dispute’ cannot be restricted to a
pending suit or arbitral proceeding.
9. NCLAT observed as under: .The scope of existence of ‘dispute’, if any, which includes pending
suits and arbitration proceedings cannot be limited and confined to suit and arbitration
proceedings only. It includes any other dispute raised prior to Section 8 in this in relation to
clause (a) or (b) or (c) of sub-section (6) of Section 5. It must be raised in a court of law or
authority and proposed to be moved before the court of law or authority and not any got up or
malafide dispute just to stall the insolvency resolution process.”
10. “ The dispute as defined in sub-section (6) of Section 5 cannot be limited to a pending proceedings
or “lis, within the limited ambit of suit or arbitration proceedings, the word ‘includes’ ought to be
read as “means and includes” including the proceedings initiated or pending before consumer
court, tribunal, labour court or mediation, conciliation etc. If any action is taken by corporate
debtor under any act or law including while replying to a notice under section 80 of CPC, 1908 or
to a notice issued under Section 433 of the Companies Act or Section 59 of the Sales and Goods
Act or regarding quality of goods or services provided by ‘operational creditor’ will come within
the ambit of dispute, raised and pending within the meaning of sub-section (6) of Section 5 read
with sub-section (2) of Section 8 of I&B code, 2016.”

29
Philips India Ltd. vs. Goodwill Hospital and Research Centre Ltd. [CP No. (IB)-03(PB)/2017]
30
Company Application No. (IB) 07/PB/2017
31
Company Appeal (AT) (Insolvency) 6 of 2017
19
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

11. Moreover, RBI in it’s Resolution of Stressed Assets – Revised Framework Circular dated 12th
February 2018 states that only if a Resolution Professional is unable to implement resolution in
180 days, they can refer the dispute to the NCLT.
12. In the instant case, while there’s been appointment of Odysseus as Interim Resolution Professional
but there’s been a further petition filed. Thus, the dispute is not maintainable till it is resolved by
the RBI or the dispute resolution professional.

3.2.Troy fell under the definition of financial service provider and is excluded from the scope
of Insolvency and Bankruptcy Code, 2016.

13. It is humbly submitted before the adjudicating authority that Troy was a financial service
provider.

14. Section 2 (17),Insolvency and Bankruptcy Code, 2016 defines financial service provider as “(17)
“financial service provider” means a person engaged in the business of providing financial services
in terms of authorisation issued or registration granted by a financial sector regulator;

15. Also, Section 2(16) defines “financial service” includes any of the following services, namely: –

(a) accepting of deposits;

(b) safeguarding and administering assets consisting of financial products, belonging to another
person, or agreeing to do so;

(c) effecting contracts of insurance;

(d) offering, managing or agreeing to manage assets consisting of financial products belonging to
another person;

(e) rendering or agreeing, for consideration, to render advice on or soliciting for the purposes of–

(i) buying, selling, or subscribing to, a financial product;

(ii) availing a financial service; or

(iii) exercising any right associated with financial product or financial service;

(f) establishing or operating an investment scheme;

(g) maintaining or transferring records of ownership of a financial product;

(h) underwriting the issuance or subscription of a financial product; or

20
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

(i) selling, providing, or issuing stored value or payment instruments or providing payment services;

15. Financial Service providers as under IBC include various participants, which facilitate smooth
functioning and play a key role in the economy. The rationale behind excluding FSPs is to
curb the impact of failure of “Systematically critical” financial institutions causing a financial
crisis, which would lead to a Domino effect in the economy.
16. The Hon’ble NCLAT in J K Jute Mills Company Limited vs. M/s Surendra Trading
Company32 while considering various time lines under the Code, held that the time period of
180 days, within which the CIRP must be completed, is mandatory.
17. In the instant case, Troy was operating an investment scheme and it was helping the Investors
invest their money which was thereafter lent by the MSMEs. Troy was registered as an NBFC
and it’s acts fell within the purview of Section 2(16) of the Insolvency and Bankruptcy Code,
2016. Thereby, making Troy a Financial Service Provider.
18. Moreover, In Randhiraj Thakur, Director Mayfair Capital Private Limited v. Jindal Saxena
Financial Services Private Limited33 , the National Company Law Appellate Tribunal
(NCLAT) held the NBFC to be a financial service provider and thus exempted from being a
debtor under the Code.
19. The NBFC was being granted a certificate of registration by RBI to commence or carry on the
business of non-banking financial institution. The MoA of the company shows the main
object of the NBFC includes carrying on the business of an investment company to carry on
all types of financial operations and all types of financial services including housing finance,
consumer finance and industrial finance etc.
20. The NCLAT noted that the NBFC had entered into “an inter-corporate deposit agreement”
with the respondent, which was the financial creditor, and thus, has undertaken a ‘financial
service’ by accepting such deposit. The amount was thus, not accepted towards public
deposit. Hence, the NBFC, being a financial service provider and thus excluded from the
definition of corporate person, an application for initiation of corporate insolvency resolution
process under the Code was not maintainable against the NBFC.
21. The NCLAT remarked that being a consolidating legislation only those acts are permitted
which are mentioned in the Code and it cannot be made applicable to ‘financial service

32
Company Appeal (AT) No. 09 of 2017
33
Company Appeal (AT) (Insolvency) Nos. 32 & 50 of 2018
21
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

providers’ including ‘non-banking financial institutions’ and MFI’s banks, which have been
kept outside the purview of the Code.
22. In the present case also, Troy, is an NBFC and is involved in similar works and runs an
Investment Scheme. Troy thereby is a Financial Service Provider and is thereby excluded
from the purview of Insolvency and Bankruptcy Code rendering the petition as non-
maintainable.

22
MEMORIAL ON BEHALF OF RESPONDENT
 ~8th NLIU NATIONAL CORPORATE LAW MOOT ~

PRAYER

In the light of the issues raised, arguments advanced and authorities cited, may this Hon’ble Tribunal
be pleased to:

1. Reject this insolvency petition on the ground that there was no violation of rights of the
petitioner
2. Reject the application filed on the ground of Oppression and mismanagement

AND/OR

Pass any other relief, that this Hon’ble NCLT may deem fit and proper in the interest of
justice, equity and good conscience.

For this act of kindness, the Respondent shall duty bound forever pray.

Sd/-

(Counsels for the Respondent)

xxiii
MEMORIAL ON BEHALF OF RESPONDENT