Delhi District Court
Suhbash Agarwal vs Ms A.R. Industries Pvt. Ltd. Ors on 22 April, 2025
IN THE COURT OF MS AUNRADHA JINDAL, ADDL.
SENIOR CIVIL JUDGE-CUM- JUDGE SMALL CAUSE
COURT-CUM-GUARDIAN JUDGE, DISTRICT: SOUTH,
NEW DELHI
DLST030001872012
Insolvency 9/16
SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT.
LTD. ORS.
CNR No. DLST03-000187-2012
Subash Agarwal
S/o Sh. Pearey Lal
R/o C1/66, Safdarjung Development Area,
New Delhi.
...PETITIONER
VERSUS
1. M/s A.R. Industries Pvt. Ltd. (In Liquidation)
14/5, Milestone, Mathura Road, Faridabad.
2. American Express Bank, (Proceeded ex-parte vide order
dated 02.05.2016)
A-Block, Hamilton House, Connaught Place, New Delhi.
3. ICICI Bank Ltd. (Deleted from the array of parties vide
order dated 11.04.2023)
Videocon Towers, Jhandewalan, New Delhi.
4. Standard Chartered Bank Ltd., (Proceeded ex-parte vide
order dated 17.07.2013)
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 1/110
1st Floor, Express Building, 9-10,
Bahadurshah Zafar Marg, New Delhi.
5. Reliance Consumer Finance Ltd.
1st Floor, H-Block, Dhirubhai Ambani Knowledge City,
Kopan Khairane, New Mumbai-400710.
6. Deutceshe Bank, (Proceeded ex-parte vide order dated
16.04.2012)
ECE House, K.G. Marg, New Delhi-110001.
7. Berclays Bank, (Proceeded ex-parte vide order dated
17.07.2013)
801/808, Ceejay House, Shasagar Estate,
Dr. Annine Basant Road, Worli, Mumbai-400018.
8. ABN Amro Bank, (Proceeded ex-parte vide order dated
17.07.2013)
Bara Khamba Road, New Delhi-110001.
9. Sh. Deepa Mittal, (Proceeded ex-parte vide order dated
17.05.2012)
A-448, Defence Colony, New Delhi.
10. Sh. R.N. Mehra, (Proceeded ex-parte vide order dated
16.04.2012)
R/o 9-A/21, WEA Karol Bagh Delhi.
11. Ms. Savina Mehra, (Proceeded ex-parte vide order dated
16.04.2012)
R/o 9-A/21, WEA Karol Bagh Delhi.
12. State Bank of India,
SBI Branch, 67, Neelam Bata Road, Faridabad.
13. Kotak Mahindra Bank Ltd.
17th Floor, Amba Deep Building, 14
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 2/110
K.G. Marg, New Delhi.
14. India Bulls Financial Services,
India Bulls House, 448-461, Udhyog Vihar
Phase-V, Gurgao-122001.
15. Yes bank Ltd.
48, Nyaya Marg, Chanakya Puri, New Delhi-21.
16. IDBI Bank, Commercial Banking,
65, M.M. Road, New Delhi-110055.
17. Chola Mandlam Bank (DBS),
Dare House No. 2 NSC Bose Road, Chennai-600001.
Also at:-
1st & 2nd floor, Plot No.6, Pusa Road,
Karol Bagh, New Delhi-110005.
18. Tata Capital Ltd., (Proceeded ex-parte vide order dated
17.07.2013)
DGP House, 4th Floor, Old Prabha Devi Road, Mumbai-
400025.
19. Citi bank, (Deleted from the array of parties vide order
dated 06.05.2013)
Card Centre No.2, Club House, Chennai-60002.
20. Abhishek Andley, (Proceeded ex-parte vide order dated
02.05.2016)
R/o A-448, Defence Colony, Delhi.
21. Deepa Mittal, (Proceeded ex-parte vide order dated
14.03.2014)
R/o A-448, Defence Colony, Delhi.
22. Dr. B.N. Agarwal (Since deceased)
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 3/110
Through Lrs.
(22a) Smt. Prem Lata Agarwal (Widow)
(22b) Smt. Neeta Deep Rastogi (Daughter)
(22c) Sh. S.K. Agarwal (Son)
All residents of 108, New Rajdhani Enclave, New Delhi-92.
23. Kanu Priya (Proceeded ex-parte vide order dated
02.05.2016)
R/o A-448, Defence Colony, New Delhi.
Also at:-
253, Sector 14, Faridabad.
24. Lalit Mittal (Proceeded ex-parte vide order dated
16.04.2012)
R/o A-448, Defence Colony, New Delhi.
25. Madhu Bala (Proceeded ex-parte vide order dated
14.03.2019)
D-5, Parwana Vihar, Sector-9, Rohini,
New Delhi-85.
26. Neeta Deep Rastogi,
108, New Rajdhani Enclave, New Delhi-92.
27. Pankaj Mittal & Sons (HUF) (Deleted from the array of
parties vide order dated 10.03.2016)
KE-47, Kaveri Nagar, Ghaziabad, U.P.
28. R. N. Bansal (Deleted from the array of parties vide order
dated 10.03.2016)
609, Block C, Sheetal Vihar, Plot No.5,
Sector 23, Dwarka, New Delhi.
29. R. N. Mehra, (Deleted from the array of parties vide
order dated 31.05.2018)
R/o 9-A/21 WEA Karol Bagh, New Delhi.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 4/110
30. Shakuntala Devi (Deleted from the array of parties vide
order dated 23.08.2012)
1012, Subzi Mandi, Delhi.
31. Shusheela Lohia, (Deleted from the array of parties vide
order dated 08.12.2017)
C-14, C Mahandru Enclave, Opp. Model Town, Delhi.
32. Sushil Bansal, (Deleted from the array of parties vide
order dated 08.12.2017)
609, Block C, Sheetal Vihar, Plot No.5,
Sector 23, Dwarka, New Delhi.
33. V.K. Gupta (HUF), (Proceeded ex-parte vide order dated
17.05.2012)
C-1/66, Safdarjung Development Area, New Delhi-16.
34. HDFC Bank Ltd.,
Worli, Kurla Mills Complex, Mumbai (M.S.)
35. ING Vyasya
East Park Road, Karol Bagh, New Delhi.
36. Smt. Prem Lata Aggarwal (since deceased through LRs)
Smt. Neeta Deep Rastogi (Daughter)
Sh. S.K. Agarwal (Son)
All Residents of 108, New Rajdhani Enclave, New Delhi-92.
.....RESONDENTS
PETITION UNDER SECTION 7, 10, 11 AND 29 OF THE
PROVINCIAL INSOLVANCY ACT 1920, FOR
ADJUDICATING THE PETITIONER SUBHASH
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 5/110
AGARWAL S/o PEAREY LAL R/o C-1/66, SAFDARJUNG
DEVELOPMENT AREA, NEW DELHI AS INSOLVENT
Date of institution : 03.01.2012
Date of reserving judgment : 24.03.2025
Date of pronouncement of judgment : 22.04.2025.
JUDGMENT
The Case
1. This case revolves around the petition for insolvency filed by Sh. Subhash Agarwal (the petitioner) under the provisions of the Provincial Insolvency Act, 1920. The petitioner seeks an order of adjudication of insolvency, asserting his inability to meet his financial obligations, particularly with respect to outstanding liabilities to various creditors. The primary issue at hand is whether the petitioner is entitled to an order of adjudication in the face of allegations from the respondent that the petition is based on frivolous grounds and an attempt to evade contractual liabilities.
2. The respondents have disputed the petition, claiming that the petitioner has acted in bad faith by concealing important financial information, including income tax returns and assets, and that the petition is part of a strategy to escape repayment obligations. The respondents further Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 6/110 asserts that the petition is vexatious and malafide, designed to avoid the lawful payment of dues under a business loan agreement that was extended to the petitioner's company, M/s A.R. Industries Pvt. Ltd.
3. The petitioner, on the other hand, counters these accusations, emphasizing that the liabilities in question pertain to a business loan taken by M/s A.R. Industries Pvt. Ltd. and that the company is under liquidation. The petitioner argues that he is personally unable to meet his financial obligations and has no means to discharge his debts, hence the filing of the insolvency petition. Moreover, the petitioner claims that the objections raised by the respondent are both baseless and aimed at delaying the proceedings.
4. At the core of the dispute lies the legal interpretation of the Provincial Insolvency Act, 1920, the legitimacy of the petitioner's insolvency claim, and the determination of whether the petition is a genuine plea for relief or an attempt to avoid financial responsibilities. The case raises fundamental questions about the balance between legal protections afforded to debtors and the rights of creditors to recover outstanding dues.
5. This Court has duly considered the final arguments advanced by the learned counsel for both parties. The Court has meticulously examined the entire record, giving Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 7/110 careful attention to the pleadings, the evidence presented, and the submissions made on behalf of the parties as well as written submissions filed on behalf of parties. Each aspect of the case has been analysed in light of the relevant facts and law, ensuring that all material brought before the Court has been fully reviewed and assessed in reaching a fair and just decision.
Petition under Sections 7, 10, 11, And 29 of The Provincial Insolvency Act, 1920, for adjudication of the Petitioner as Insolvent.
6. The Petitioner, Sh. Subhash Agarwal, residing at C-1/66, Safdarjung Development Area, New Delhi, is the erstwhile Director of Respondent No. 1, M/s. A.R. Industries Pvt. Ltd., which was incorporated under the Companies Act, 1956 on February 28, 1995. The registered office of the Respondent No. 1 company is located at 14/6, Faridabad, Haryana.
7. In addition to his directorial position in M/s A.R. Industries Pvt. Ltd., the Petitioner was also a partner in M/s Precision Castings, a partnership firm, wherein he held a 50% share of the profits and losses. The firm has been facing losses since 2006, and is currently operated with Mr. D.K. Agarwal, a co-partner, who holds the remaining 50%. The firm is located at 14/5, Mathura Road, Faridabad.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 8/110
8. The Petitioner had invested a total sum of Rs. 1,61,86,520 (One Crore Sixty-One Lakhs Eighty-Six Thousand Five Hundred and Twenty) into M/s A.R. Industries Pvt. Ltd. in a bid to revive the company, utilizing not only his personal resources but also securing loans from friends, relatives, and financial institutions.
9. In 2008, the global economic slump severely impacted the Respondent No. 1 Company, diminishing its sales and overall performance. From Rs. 35.18 Crores in the financial year 2006-07, the company's sales plummeted to Rs. 7.83 Crores in 2008-09, and ultimately to zero in 2009-
10. This led to significant losses and the cessation of operations during the 2008-09 financial year. The banks, including SBI, ICICI Bank Ltd., and HDFC Bank Ltd., unilaterally reduced the credit limits extended to the company, exacerbating the financial crisis. Due to these adverse conditions, production was curtailed, resulting in order cancellations.
10.The Petitioner's other business venture, M/s Precision Castings, also faced financial difficulties. A combination of high input costs and fixed-rate orders led to substantial losses. The firm ceased its operations by 2007-2008. Furthermore, the firm owns industrial property at 14/5 Mathura Road, Faridabad, which is mortgaged with State Bank of India to secure credit for Respondent No. 1 Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 9/110 Company. The Petitioner has personally guaranteed these loans, and the bank has already initiated proceedings before the Debt Recovery Tribunal (DRT), Delhi. In 2011, the High Court of Punjab and Haryana ordered the winding-up of M/s A.R. Industries Pvt. Ltd. in CP No. 91 of 2009. An official liquidator was appointed to take charge of the company.
11.The Petitioner has been under significant financial stress since the closure of the company in 2008. He has been subject to various legal proceedings, including civil suits for recovery filed by creditors, banks, and financial institutions associated with M/s A.R. Industries Pvt. Ltd. and M/s Precision Castings. Complaints under Section 138 of the Negotiable Instruments Act, 1881, have also been filed against the Petitioner, who had signed cheques on behalf of the company.
12.One of the financial institutions, Tata Capital Ltd., filed for the recovery of a loan granted to M/s A.R. Industries Pvt. Ltd. The Petitioner, having personally guaranteed the loan, could not repay the decreetal amount and was consequently sent to civil imprisonment in Execution Petition No. 17/09/11, before the executing Court of Sh. J.P.S. Malik, Additional District Judge, Saket Courts, on December 2, 2011. The Petitioner was released on personal bond with the undertaking to file a petition for insolvency within 30 days, which he is now doing.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 10/110
13.The Petitioner has no source of income and is wholly dependent on his children for sustenance. Since 2008, when the company ceased operations, the Petitioner has had no salary income and has been unable to repay his mounting debts. His creditors are pursuing legal actions against him, further complicating his financial situation. The Petitioner has no assets, either movable or immovable, under his control that could be liquidated to satisfy his debts. He currently resides in jointly owned accommodation, which is his only dwelling. In light of the Petitioner's financial ruin, he respectfully seeks the indulgence of this Court to declare him insolvent.
14.The Petitioner has not filed any other petition for insolvency, nor has any court adjudged him insolvent. The value of the Petition for the purposes of court fees and jurisdiction has been duly fixed, and the requisite court fees have been paid. The presentation of this petition constitutes an act of insolvency under Section 7 of the Provincial Insolvency Act, 1920.
15.In light of the above facts, it is most respectfully prayed that this Hon'ble Court may pass an order adjudicating the Petitioner, Sh. Subhash Agarwal, as insolvent under the provisions of the Provincial Insolvency Act, 1920, in the interest of justice and fairness. It is therefore prayed that Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 11/110 this Court may be pleased to pass an order adjudicating the Petitioner as insolvent, in the interest of justice.
Reply on behalf of the Respondent No. 3 (ICICI Bank Ltd.) to the Petition filed by the Petitioner
16.The petition is not maintainable and should be dismissed as no cause of action has arisen in favor of the petitioner and against the answering respondent. The petition appears to be an abuse of the process of law and has been filed with ulterior motives. The petitioner has not approached this Court with clean hands and has deliberately concealed vital facts. It is based on a concocted and false narrative aimed at declaring himself insolvent.
17.The petition lacks merit and is not supported by sufficient evidence to establish a prima facie case against the answering respondent (ICICI Bank). The petitioner's allegations are false and misleading, made to avoid legal obligations toward the answering respondent and other creditors. The petition is malicious, vexatious, and frivolous. It should be dismissed with heavy costs. The petitioner, who has benefited from personal loans, credit card facilities, and overdraft facilities from ICICI Bank, is now seeking to evade his obligations under false pretenses.
18.The breach alleged is purely contractual and depends entirely on the terms of the relevant agreements. The Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 12/110 petition is filed with malafide intentions to shield the petitioner from future financial difficulties. This indicates that the petitioner has no genuine intention to honor his obligations. The mere admission of inability to pay debts is insufficient grounds to declare a person insolvent. The petitioner must prove his inability to discharge his debt obligations under the relevant legal provisions. The petitioner is fully capable of fulfilling his financial responsibilities to the answering respondent.
19.Declaring the petitioner insolvent would result in irreparable damage to the answering respondent while unjustly benefiting the petitioner. The petitioner is fully capable of paying his debts and has filed this petition to avoid fulfilling legitimate claims. ICICI Bank Ltd. is a company incorporated under the Companies Act, 1956 and a banking company under the Banking Regulation Act, 1949, with its registered office in Vadodara and branch office in New Delhi. The bank operates subject to the guidelines and regulations of the Reserve Bank of India and is engaged in banking and financial services.
20.Sh. Anupam Singh is duly authorized by power of attorney to file, sign, verify, and pursue legal proceedings on behalf of ICICI Bank Ltd. The petitioner availed of personal loan, credit card facilities, and overdraft facilities from ICICI Bank, agreeing to the terms and conditions of the loan agreements, including repayment schedules. Despite Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 13/110 numerous reminders, the petitioner defaulted on repayments, accumulating financial liabilities. ICICI Bank extended an overdraft facility of Rs. 2,60,50,000/- (Rupees Two Crore Sixty Lakh and Fifty Thousand Only) to the petitioner in March 2004, which was subsequently enhanced in February 2005. The petitioner failed to adhere to the repayment schedule, resulting in non-payment of dues.
21.The petitioner has consistently failed to meet his financial obligations, despite repeated attempts by ICICI Bank to collect payments. As of 30.06.2008, the amount due was Rs. 1,77,23,857.99/- (Rupees One Crore Seventy-Seven Lakh Twenty-Three Thousand Eight Hundred Fifty-Seven and Paise Ninety-Nine Only). In addition to the overdraft facility, the petitioner availed credit card and personal loan facilities, defaulting on repayments. As of 27.04.2010, the petitioner owed Rs. 1,29,890.59 (credit card debt) and Rs. 5,87,103.52 (personal loan debt). These defaults led to the initiation of recovery proceedings.
22.The petitioner's statement regarding the financial losses of Respondent No. 1 is denied. The business closure was a result of the petitioner's poor financial management, including withdrawing funds without regard for the company's financial obligations. The balance sheets submitted by the petitioner are incorrect and do not reflect the true financial condition of Respondent No. 1. The Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 14/110 petitioner has made false claims regarding the closure of M/s. Precision Castings due to losses. While the firm may have faced challenges, the real reason for the firm's downfall was poor management and excessive debts. Furthermore, the valuation of the industrial property at 14/5, Furlong Mathura Road, Faridabad is significantly underestimated.
23.The petitioner claims to have no income or assets, but this is not true. He owns substantial property, including the ground and basement floors of a building at C-1/66, Safdarjung Development Area, New Delhi, which he has not disclosed. The petitioner's claim of being unable to repay debts is false. He has sufficient financial capacity and resources to meet his obligations. The petitioner is intentionally evading repayment to avoid fulfilling his financial commitments.
24.The jurisdiction of this Court to entertain the insolvency petition is disputed. The petitioner has not demonstrated any valid reason for declaring himself insolvent under the law. He continues to have the means to discharge his debts and avoid insolvency.
25.In light of the above submissions and the facts of the case, it is respectfully prayed that:
a) The petition be dismissed with heavy costs; and/or Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 15/110
b) Such other or further order(s) may be passed in favor of the answering respondent No. 3 and against the petitioner in the interest of justice.
Reply on behalf of the Respondent No. 5 (Reliance Consumer Finance Ltd.) to the Petition filed by the Petitioner
26.The petition is not maintainable and should be dismissed as no cause of action has arisen in favor of the petitioner against the answering respondent. The petition is an abuse of the process of law, as the petitioner has approached this Court with unclean hands, concealing vital facts and fabricating a false narrative in an attempt to declare himself insolvent. The petition is not maintainable as no prima facie case has been established against Reliance Consumer Finance Ltd. (respondent No. 5). The petitioner has filed the petition with ulterior motives, concealing facts and making false averments to avoid his legal dues towards the answering respondent and other creditors.
27.The petition is barred under Section 8 of the Provincial Insolvency Act, which exempts insolvency proceedings against corporations, associations, or companies registered under relevant enactments. Therefore, the petition is liable to be dismissed on this ground alone. The petition should be dismissed as the petitioner's intention from the outset appears to be fraudulent and malicious, designed to cheat Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 16/110 the respondents, including the answering respondent, as evidenced by his actions.
28.The petition is vexatious, mischievous, and filed with bad faith, and should be dismissed with costs. The petitioner has previously availed of a credit card facility from the answering respondent and started defaulting on payments after initially meeting the obligations. The petition is not maintainable as the breach alleged by the petitioner is purely contractual, governed by the terms of the contract. The petitioner has filed the petition to preemptively protect himself from future financial adversity, which indicates fraudulent intent.
29.The petitioner has misrepresented facts and approached this Court with an incorrect version of events, intending to mislead the Court. Therefore, the petition should be dismissed as the petitioner has failed to come with clean hands. The mere admission of inability to pay debts does not provide sufficient grounds for declaring someone insolvent. The petitioner has not provided any substantial evidence to prove his inability to pay his debts. The petitioner is fully capable of discharging his obligations. Declaring the petitioner insolvent would cause irreparable damage to the answering respondent and unjustly benefit the petitioner, who is capable of repaying his debts but seeks to avoid them. Therefore, the petition is liable to be dismissed.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 17/110
30.Reliance Consumer Finance Ltd. (respondent No. 5) is a banking company incorporated under the Companies Act, 1956, and is regulated by the Reserve Bank of India's guidelines and regulations. Its business is carried out through various branches, including in New Delhi. Sh. Achutya Das is duly authorized by power of attorney to file and follow up on the legal proceedings on behalf of the answering respondent.
31.The petitioner is a beneficiary of a personal loan from the answering respondent. The petitioner agreed to abide by the loan agreement's terms, including the repayment schedule. The petitioner approached the answering respondent for a personal loan, which was sanctioned under the loan account number RLPLDEL000017139. The petitioner executed personal guarantees in favor of the answering respondent for the due repayment of all outstanding amounts, including interest and other charges. Despite repeated reminders and requests, the petitioner has continuously defaulted on the repayment of dues, failing to make any payments toward the outstanding amounts.
32.The petitioner has breached the loan agreement and failed to regularize the account. This conduct is the root cause of the dispute and is contrary to the terms of the agreement between the parties. Mere admission of inability to pay debts is not sufficient for declaring a person insolvent. The Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 18/110 petitioner has not proved his inability to repay the debt, and in fact, he is fully capable of discharging his liability.
33.The petitioner's claim of business losses is denied for lack of knowledge. Even if the petitioner claims financial difficulties, it does not absolve him of his liability towards the answering respondent. The petitioner has not disclosed his full assets and properties, as required by law, to this Court. This concealment demonstrates his intention to reduce the sum to be divided among creditors. The petitioner continues to live a luxurious lifestyle, including residing in a large property in South Delhi, which he owns. The petitioner's extravagant lifestyle contradicts his claim of financial distress. The petition is a malafide attempt to avoid liabilities and should be dismissed as it lacks bona fide intentions.
34.The petitioner's statement that he exhausted all resources to revive the company is denied. The respondent denies that the company suffered losses due to non-operations and fixed expenses. The business closure was due to funds being withdrawn from the firm by the petitioner. The balance sheets provided by the petitioner are inaccurate and manipulative. These statements were not signed by the petitioner in his capacity as Director, further indicating his attempt to mislead the Court.
35.While the closure of M/s. Precision Casting is a matter of record, the value of the property at 14/5, Furlong Mathura Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 19/110 Road, Faridabad, is much higher than Rs. 6 crores, closer to Rs. 12 crores. The petitioner's claim of business losses is fabricated. No evidence supports this claim, and the petition should be dismissed. The respondent denies that the petitioner has no other source of income. The petitioner's claim of financial breakdown is false.
36.The respondent denies any knowledge of the petitioner's current income and disputes the claim that the petitioner is incapable of repaying his debts. The petitioner has not disclosed his properties accurately. This concealment demonstrates bad faith. The petitioner's claims of no income or means to pay his debts are false. The petitioner resides in an upscale property in South Delhi and is not dependent on his children.
37.The petitioner is fully capable of paying his debts and has not proven his financial breakdown. The petitioner owns the entire basement and ground floor of a building at C- 1/66, Safdarjung Development Area, New Delhi, which contradicts his claim of financial distress. The petitioner's claim regarding the court fee is incorrect. The petitioner's claim of not being able to pay debts is false. The petitioner has the means to repay his liabilities.
38.In light of the above submissions, it is prayed that this Court may graciously be pleased to:
a) Dismiss the petition with heavy costs;
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 20/110
b) Pass any other or further order/s in favor of the answering respondent and against the petitioner in the interest of justice.
Reply filed on behalf of Respondent No. 35 (ING Vysya Bank) to the Petition filed by the Petitioner.
39.The present petition is not maintainable and should be dismissed as there is no cause of action that has arisen in favor of the petitioner and against the respondent. The petitioner has approached this Court without coming with clean hands and has concealed material facts. The petitioner had availed a personal loan of Rs. 7,50,000/- from the respondent, of which only Rs. 3,37,430/- was repaid, and that too, was not paid on time. The financial arrangement agreed for repayment was never adhered to by the petitioner, and as a result, an outstanding sum of over Rs. 26,00,000/- remains due. Hence, the petition is not maintainable.
40.The petition has not been signed and verified by a competent person, making it liable to be dismissed. The petition has not been valued as per the provisions of the Court Fees Act and is undervalued. Therefore, it should be dismissed. The petition is not maintainable as the petitioner has suppressed material facts. The personal loan was taken by the petitioner in his personal capacity and has Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 21/110 no relation to the winding up of any company. Thus, the petition is liable to be dismissed.
41.The petitioner approached the respondent for a personal loan of Rs. 7,50,000/-, and the loan was sanctioned. Of the total loan amount, the petitioner has paid only Rs. 3,37,430/-, which was also delayed. The petitioner has failed to adhere to the repayment schedule, and there is still an outstanding balance of over Rs. 26,00,000/-. The financial arrangement agreed upon was not honored, and thus the petition is not maintainable.
42.The petitioner did not take personal loans to revive any company. The loan was for personal use, and the petitioner is required to provide proof to the contrary. Since the petitioner has not come with clean hands, he should not be granted any relief. It is difficult to believe that the petitioner, who was managing a company with substantial stakes, is now claiming to be dependent on his children. The petitioner must provide evidence to support this claim.
43.It is hard to believe that the petitioner has no independent source of income. The petitioner should be required to provide evidence of his claims. The petitioner does have an independent source of income, which he is concealing to avoid his liabilities. Additionally, the petitioner has admitted to being a joint owner of the property where he resides. The petition has not been valued properly, and it should be dismissed on this ground. The petitioner has Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 22/110 admitted to being a joint owner of the property in which he resides. The jurisdiction of this Hon'ble Court is not in question.
44.In light of the above submissions and the facts and circumstances of the case, it is prayed that this Court may kindly:
a) Dismiss the petition under Section 7, 10, 11, and 29 of the Provincial Insolvency Act, 1920, with exemplary costs; and/or
b) Pass any other order or further directions as may be deemed just and appropriate in the interest of justice.
Rejoinder on behalf of the Petitioner to the Reply filed by Respondent No. 35 (ING Vysya Bank)
45.The claim that the petition is not maintainable and lacks cause of action is denied. The petitioner asserts that a valid cause of action exists. The allegations of the petitioner not having approached the court with clean hands or concealed material facts are denied. The facts regarding the loan amount, repayments, and outstanding balance are disputed. The claim regarding improper signing and verification of the suit is denied. The contention that the suit has been undervalued is denied. The petitioner insists the suit is properly valued. The objection regarding suppression of material facts is also denied. The loan is related to the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 23/110 petitioner's personal capacity and the company's winding up does not affect the suit.
46.The claim that the petitioner approached the respondent for a personal loan, paid part of the loan amount, and failed to adhere to the repayment arrangement is denied. The petitioner maintains that the financial arrangements were adhered to and that the outstanding amount is not as high as stated. No further response is necessary to paragraphs 2 to 6 of the written statement. The claim regarding the petitioner's clean hands and eligibility for relief is denied. The petitioner asserts that all facts are presented transparently.
47.The allegations about the petitioner's concealed income or assets are also denied. The petitioner is fully dependent on his children for support, with no independent source of income. The claim that the suit is improperly valued or should be dismissed is denied. The petitioner requests that the Court grant the relief as prayed for in the original petition.
Reply on behalf of Respondent No. 12 (State Bank of India) to the Petition filed by the Petitioner.
48.The Answering Respondent disputes and denies all averments in the Petition as false, frivolous, and devoid of legal merit, except where expressly admitted. The Petition lacks any legal or enforceable cause and is therefore liable Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 24/110 to be dismissed. The Petition has been filed with the intent to defraud creditors. The Petitioner has failed to demonstrate his inability to pay his debts, which is a necessary condition for maintaining a petition under the Provincial Insolvency Act. Therefore, the Petition should be dismissed at the outset.
49.The Petitioner has intentionally concealed material facts and attempted to mislead the Court. The Petitioner must provide clear evidence of insolvency by showing an inability to meet current liabilities. Instead, the Petition is an attempt to delay creditor recovery actions and defraud them. The Petition fails to establish that the Petitioner's liabilities exceed his assets. The Petitioner has not disclosed his assets or provided evidence to support his claim of insolvency. Consequently, the Petition should be dismissed.
50.The Petition contains baseless and conjectural claims without supporting evidence. As such, it should be dismissed as frivolous. The Petition is a malafide attempt to delay recovery proceedings at the Debt Recovery Tribunal (DRT) and to avoid creditors' claims.
51.The Petitioner was a Director of M/s A.R. Industries Pvt.
Ltd., which had financial obligations with the Answering Respondent. The Petitioner, along with other guarantors, provided personal guarantees for the repayment of loans to the company. These guarantees form the basis of the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 25/110 dispute. The Respondent No. 1 was granted various credit facilities by the Answering Respondent. These facilities were fully utilized, and the Petitioner, as a guarantor, is liable for the outstanding debt.
52.The Respondent No. 1 and its guarantors, including the Petitioner, signed agreements and executed security documents to secure the loan. The Respondent No. 1 defaulted on repayment, and the Answering Respondent initiated recovery actions accordingly. The Respondent No. 1 violated the terms of the loan facilities, leading to defaults. Despite multiple reminders, the Petitioner and other guarantors did not fulfill their obligations, prompting the Answering Respondent to pursue legal action.
53.The Answering Respondent filed a recovery application with the DRT for the outstanding amount, which was adjudicated in favor of the Answering Respondent. The properties mortgaged in favor of the Answering Respondent were sold, and substantial recoveries were made. The Petitioner has failed to disclose his full financial position and assets. He has misused funds from the loans, living in luxury while creditors remain unpaid. The Petition is an attempt to abuse insolvency provisions and avoid rightful liability.
54.The initial statements in the Petition are denied. The Petitioner has failed to provide evidence supporting his claims regarding the financial status of M/s Precision Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 26/110 Castings. He is requested to substantiate these claims. The Petitioner's claim regarding investment in Respondent No. 1 and personal loans is unsubstantiated. There is no evidence to support the assertion that the Petitioner invested significant funds into the company or took loans from various sources for its revival.
55.The Petitioner's assertion that M/s A.R. Industries Pvt.
Ltd. faced a financial crisis and closed its operations is inconsistent with the facts. It is implausible that a profitable company would suffer such drastic losses in a short period without deeper issues, likely related to the Petitioner's actions. The claims about M/s Precision Castings and the reasons for its closure are also unsubstantiated. The Petitioner's business practices raise concerns, especially when he failed to disclose his true financial situation and assets.
56.The Petitioner's claim of no income or financial assets is not credible. Investigations have shown that the Petitioner is involved in business activities that he failed to disclose. Additionally, the Petitioner continues to live in a joint family property, suggesting that he has financial means that he has deliberately concealed. The Petitioner's failure to disclose his financial situation, assets, and the true nature of his liabilities demonstrates an attempt to misuse the Provincial Insolvency Act. This Petition is a calculated effort to delay creditor recovery and avoid liabilities.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 27/110
57.In light of the submissions made above, it is humbly prayed that this Court:
Dismiss the Petition with costs.
Grant any other relief that the Court deems fit, based on
the facts and circumstances of the case.
Reply on behalf of the Respondent No. 13 (Kotak Mahindra Bank Limited) to the Petition filed by the Petitioner.
58.The present petition filed by the petitioner is not maintainable, as the petitioner has failed to establish any valid cause of action against the answering respondent. The petition is an abuse of the process of law and must be dismissed at the very outset. The answering respondent invokes Section 8 of the Provincial Insolvency Act, 1920, which exempts companies from insolvency proceedings. The provision reads:
"No insolvency petition shall be presented against any corporation or against any association or company registered under any enactment for the time being in force."
59.Since the answering respondent is a duly incorporated company under the provisions of the Companies Act, 1956, the petition is liable to be dismissed as it does not meet the statutory requirements under the Act.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 28/110
60.The petitioner has availed a loan from the answering respondent and now, in an attempt to avoid fulfilling his liabilities, has filed this petition without any cause of action. It is well established that a person cannot be declared insolvent merely because their liabilities exceed their assets. The petitioner has not presented any evidence proving his inability to pay his debts, which is a fundamental requirement for declaring insolvency.
61.The petitioner's claim that the losses in his business entitle him to be declared insolvent is misplaced. It is crucial to note that the petitioner did not distribute any profits when his business was thriving. This suggests that the petitioner is attempting to shift the blame for his fiscal mismanagement onto external factors, including the global economy, which is not a valid justification for insolvency. His failure to meet financial obligations reflects a pattern of chronic defaulters' behavior, rather than an economic downturn.
62.The same argument holds for the petitioner's repeated assertion that the losses in his business should result in a declaration of insolvency. If the petitioner's business had been profitable, he did not share those profits or use them to offset liabilities. His claim is therefore unfounded and legally irrelevant.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 29/110
63.The petitioner has concealed material facts from this Court. He is in fact receiving income, which he has failed to disclose. He should be held to strict proof regarding his financial claims, as his petition is based on misleading information. The petitioner has similarly failed to disclose accurate and comprehensive information about his financial position. The assertion that he has no source of income is false. The petitioner has been deliberately concealing his assets and income, which further undermines the credibility of his petition.
64.The petitioner's claim of insolvency is false and frivolous.
His real financial situation is far different from the one he has presented in this petition. The petitioner has deliberately hidden his true assets and liabilities, with the clear intention of defrauding his creditors.
65.The petitioner's lifestyle, which he enjoys in a prime property located at Safdarjung Development Area, New Delhi, contradicts his claims of financial distress. He has deliberately refrained from partitioning the joint family property, suggesting an intent to shield assets from creditors. Further investigations have revealed that the petitioner and his wife are engaged in business ventures with one Mr. Satish Gupta, which the petitioner has concealed from this Court.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 30/110
66.The petitioner has not provided adequate evidence of his financial standing, and he has failed to disclose details regarding the companies in which he has been involved as a director. He has also withheld financial information about his personal guarantees and the disposal of amounts obtained through financial assistance. Based on the above facts, it is clear that the petitioner is attempting to misuse the provisions of the Provincial Insolvency Act, 1920, to evade legitimate debts. His conduct in this matter is an abuse of process, and the petition should be dismissed accordingly.
67.In light of the submissions above, the answering respondent prays that this Court be pleased to:
a) Dismiss the petitioner's application for insolvency with exemplary costs; and
b) Grant any further relief deemed appropriate by this Court in the interest of justice.
Rejoinder on behalf of the Petioner to the Reply filed by Respondent No. 13, (Kotak Mahindra Bank Ltd.)
68.The Respondent is attempting to repudiate the claim without merit. The Hon'ble Delhi High Court in S. Dalip Singh Versus U.P.F.C. (2010) 167 DLT 456 has held that Section 8 of the Provincial Insolvency Act prevents creditors of a corporation from filing insolvency petitions Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 31/110 against corporations, not against individual debtors. Therefore, this objection is irrelevant and not applicable in the present case.
69.The Petitioner reaffirms the accuracy of the corresponding paragraphs in the petition. The Respondent's claim that the Petitioner filed the petition without cause of action to escape liability is incorrect. The Petitioner has filed the petition in good faith, as he is unable to pay the debts. All necessary documentation has been provided to support the claim, and the relevant paragraph in the petition remains accurate.
70.The claim that the Petitioner is building a case based on business losses to be declared insolvent is incorrect. The Petitioner has made genuine efforts to resolve his financial difficulties but is now unable to pay his debts. The claim that the Petitioner is a chronic defaulter is without merit, and the Petitioner has acted within the bounds of the law.
71.The assertion that the Petitioner is attempting to shift the responsibility for his financial difficulties onto external factors is incorrect. The Petitioner has acted according to the law and has made every effort to resolve his debts. The Petitioner has provided all necessary information and has not concealed any material facts. The suggestion that the Petitioner is hiding his sources of income is incorrect.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 32/110
72.The claim that Section 8 of the Provincial Insolvency Act applies to the Petitioner's case is incorrect. As held in S. Dalip Singh Versus U.P.F.C., Section 8 applies to corporations but not to individuals. The Petitioner reaffirms the corresponding paragraph in the petition as correct. The claim that the Petitioner is attempting to avoid liability based on business losses is unfounded. The Petitioner has tried every means to settle his debts but is now unable to pay them. The Petitioner's actions are supported by valid grounds.
73.The Petitioner prays that the Court dismiss the written statement filed by the Respondent and grant the relief sought in the petition. The Respondent should bear the costs of the proceedings, as the claims made in the written statement are without merit. In light of the above submissions, the Petitioner prays that the Court rejects the Respondent's claims and grants the Petition for insolvency under the provisions of the Provincial Insolvency Act, 1920.
Reply filed on behalf of Respondent No. 14 (Indiabulls Financial Services Ltd.) to the Petition filed by the Petitioner.
74.M/s. Indiabulls Financial Services Ltd. has been amalgamated into M/s. Indiabulls Housing Finance Ltd., following a scheme of arrangement sanctioned by the Hon'ble High Court of Delhi, in accordance with the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 33/110 provisions of the Companies Act, 1956. As a result, all rights, titles, and interests concerning the loans extended by the former company have vested in the respondent company. Indiabulls Housing Finance Ltd., a registered housing finance company, is now fully authorized to recover the loan amounts from its borrowers as per the terms of the loan agreements, using due legal process.
75.Sh. Lalit Kumar Tiwari, is the authorized representative of M/s. Indiabulls Housing Finance Ltd. He is well-versed with the facts of the case and is authorized by a power of attorney dated 2nd April 2013 to sign and verify the present affidavit on behalf of the respondent company. It is submitted that the present petition is not maintainable. The petitioner has made false statements in the affidavit, and the respondent reserves the right to initiate appropriate proceedings against the petitioner at an appropriate stage. It is a well-established legal principle that a party approaching the court must act with honesty and fairness. The petitioner has failed to come before this Court with clean hands, and as such, the petition is liable to be dismissed on this ground alone.
76.The petition constitutes a misuse of the judicial process.
The petitioner is not insolvent and is merely attempting to declare himself insolvent to avoid repaying his dues to creditors, including the respondent. This petition is an Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 34/110 abuse of legal provisions and should be dismissed with exemplary costs.
77.The petitioner has failed to provide any details about how the loan amount he received was utilized. Despite borrowing a substantial sum, the petitioner has not accounted for the money, nor has he submitted necessary documents such as ledger accounts, income tax returns, balance sheets, or profit and loss accounts. Without these crucial documents, the petitioner's claim to insolvency cannot be substantiated. The petition mentions the petitioner's office and residential properties but fails to provide any details regarding their current status or ownership, raising further doubts about the petitioner's financial transparency.
78.In December 2006, the petitioner approached the respondent company for a loan and represented that he was capable of repaying the loan without default. Based on these representations, the respondent granted a loan of Rs. 35,00,000/- to the petitioner, which was formalized through a loan agreement dated December 22, 2006. According to the agreement, the loan was to be repaid in 48 equated monthly installments of Rs. 1,01,901/- each, beginning February 2, 2007, and concluding January 3, 2011. Despite being bound by the terms of the agreement, the petitioner failed to make 27 of the scheduled payments, resulting in a total outstanding amount of Rs. 67,64,080/-
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 35/110 as of April 23, 2015, which includes late payment penalties and cheque bouncing charges.
79.The petitioner has filed this petition in a blatant attempt to delay and frustrate the respondent's lawful efforts to recover the dues. This petition is filed in suppression and distortion of material facts to evade responsibility. The averments made by the petitioner are not accepted due to a lack of knowledge. The petitioner has failed to submit the relevant documents to substantiate the claim.
80.The petitioner claims to have suffered losses, but has not presented any evidence or documents to support this. He has also failed to specify where the loan money was spent. Moreover, despite the large sum of money borrowed, he claims insolvency without providing necessary financial records like ledger books or balance sheets. The petitioner has not disclosed details of the office and residential properties mentioned in the application, further complicating his claims. These allegations are hereby denied.
81.The list mentioned in the schedule is a matter of record and does not require further comment. The petitioner's intention in filing this petition is questioned. It is denied that the petitioner has presented the petition in good faith or with the legitimate aim of securing an orderly Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 36/110 distribution of his assets. The petition appears to be a deliberate attempt to deceive creditors and delay payments.
82.The petitioner's claims regarding his insolvency are further denied. It is not accepted that the petitioner does not have sufficient assets to pay his dues, and the jurisdiction of this Hon'ble Court to entertain this petition is also disputed. The petition filed by the petitioner is a misuse of the legal process and lacks merit. The petitioner has failed to provide necessary evidence to substantiate his claims of insolvency. Therefore, the petition should be dismissed with exemplary costs.
83.In view of the submissions made above, it is prayed that this Court may kindly:
a) Dismiss the petition of the petitioner with costs;
b) Grant any other relief that the Court deems fit in the facts and circumstances of the case.
Reply filed on behalf of the Respondent No. 15, (Yes Bank Ltd. ) to the Petition filed by the Petitioner.
84.The Respondent submits that the present petition is filed by the Petitioner with the ulterior motive of evading the repayment of the loan amount taken from the Respondent. It is clear that the Petition is an attempt by the Petitioner to evade liability by misusing the legal process and getting himself declared insolvent in order to avoid paying Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 37/110 legitimate dues to creditors, including the Respondent. Consequently, this petition is liable to be dismissed as it is a dishonest attempt to evade payment.
85.Additionally, the Petitioner himself admits that proceedings have been initiated by the State Bank of India before the Debt Recovery Tribunal (DRT). As per Section 34 of the SARFAESI Act, proceedings initiated under this Act bar the jurisdiction of civil courts, and thus, the current petition is not maintainable before this Court. The Respondent respectfully submits that, based on the provision under Section 34 of the SARFAESI Act, the present petition should be dismissed.
86.The Petition is also not maintainable against the answering Respondent in light of Section 8 of the Provincial Insolvency Act, which prohibits any insolvency proceedings against corporations, companies, or associations registered under any enactment. Since the Respondent is a registered financial institution, the Petition is liable to be dismissed.
87.Moreover, the Petitioner is deliberately evading repayment of debts he owes to various creditors, including the Respondent. This is public money, and the Petitioner should not be allowed to benefit from his own wrongdoings. The Respondent further requests that the financial accounts of the Petitioner and his family Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 38/110 members be thoroughly verified to expose the true picture regarding the Petitioner's financial actions.
88.The Petitioner, along with Respondent No. 1, had taken a business expansion loan from the Respondent amounting to Rs. 30,00,000/-. The agreed-upon rate of interest was 18%, with an EMI of Rs. 1,08,457 to be paid within 36 months. Due to the Petitioner's default in making payments, the Respondent initiated proceedings under Section 138 of the Negotiable Instruments Act. The case was decided in favor of the Respondent, but the Petitioner has filed an appeal, which is currently pending.
89.It is specifically denied that the Petitioner is struggling to meet daily expenses or is facing difficulty repaying his debts. The Respondent submits that the Petition is merely a decoy by the Petitioner to avoid repaying his dues and to enjoy the benefits of the money borrowed. The Respondent denies the Petitioner's assertion that this Court has jurisdiction to entertain the present petition. It is further denied that the Petitioner has no property to sell in order to repay the debts owed to the Respondent.
90.The Respondent denies the Prayer Clause of the Petition. It is respectfully submitted that the Petitioner should not be adjudicated as insolvent, and the Petition deserves to be dismissed with costs. In light of the submissions above, the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 39/110 Respondent prays that this Court may kindly dismiss the present petition with costs, in the interest of justice.
Rejoinder filed on behalf of the Petitioner to the reply filed on behalf of Respondent No. 15 (Yes Bank Ltd. )
91.In the rejoinder filed on behalf of the petitioner in response to the written statement by Respondent No. 15, the petitioner denies all the preliminary objections raised by the respondent. The petitioner asserts that the petition is not filed with any ulterior motive to escape the liability of repaying the loan. The respondent's claim that the petition is a means to avoid repayment is rejected. The petitioner affirms that there is no bar under Section 34 of the SARFAESI Act, as stated by the respondent, and that the present petition is valid and maintainable. Furthermore, the petitioner disputes the applicability of Section 8 of the Provincial Insolvency Act, stating that it does not apply to cases where the creditor is a corporation, as in the present case.
92.The petitioner also denies the allegations made in relation to the manipulation of accounts to get declared insolvent. They argue that there has been no such manipulation, and further challenge the claim that the petitioner owes money in the manner suggested by the respondent. The loan amount and terms, including the interest rate and repayment conditions, are disputed, as the petitioner claims Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 40/110 that these details are either incorrect or misrepresented by the respondent.
93.The petitioner reaffirms the facts presented in their original petition and rejects the respondent's contentions regarding the insolvency case. They maintain that the petition is not a decoy to avoid repayments but is made based on genuine financial difficulties. All allegations made by the respondent regarding the lack of assets and income are denied. The petitioner reiterates that they are entitled to the relief sought in the petition, and prays that the court dismiss the objections raised by the respondent.
Reply filed on behalf of Respondent No. 17 (Chola Mandalam Investment and Finance Co. Ltd.) to the Petition of the Petitioner
94.The Respondent, Chola Mandlam Investment and Finance Co. Ltd., represented through Mr. Sunil Grewal, its authorized representative, who is well-acquainted with the facts and circumstances surrounding this case.
95.The Respondent is a financial services company engaged in providing various financial facilities, including personal loans, higher purchase finance, trade finance, and lending against security. The Respondent's registered office is located at Second Floor, Plot No.6, Pusa Road, Karol Bagh, New Delhi. The Respondent has provided a personal Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 41/110 loan of Rs. 8,10,000/- at an interest rate of 18% per annum to the Petitioner, who has been irregular in making payments on this loan.
96.The loan agreement, under which the Petitioner is a co-
borrower and also serves as a guarantor, stipulates that the Petitioner repay the loan in 36 monthly instalments of Rs. 29,282/-. Despite the Petitioner's role as both a borrower and guarantor, he has failed to meet the agreed-upon payment schedule. The Respondent contends that the Petitioner should not be allowed to evade his obligations by attempting to avoid repayment of the loan amount under the guise of insolvency. Instead, the Petitioner should be directed to clear the outstanding dues.
97.The Respondent submits that the Petitioner, in his attempt to avoid repaying the loan, has filed a frivolous suit with the intent to misappropriate funds. As a co-borrower and guarantor, the Petitioner is legally obligated to pay the loan amount, and his attempts to declare insolvency should not be entertained by the Court. The Respondent has entered into a legally binding agreement with the Petitioner, and the Petitioner's actions are an abuse of legal processes. Therefore, the suit is liable to be dismissed with costs.
98.It is further submitted that the Petitioner's collusion with Respondent No. 1 in filing the suit makes this a collusive case, which should be dismissed with costs. The Petitioner Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 42/110 lacks the legal standing to file the present suit and has no right to the suit property. Therefore, the suit should be dismissed under Order VII Rule 11 of the CPC.
99.Moreover, the suit has been improperly valued, and the Petitioner has not paid the appropriate court fees. This failure renders the suit liable for dismissal. Additionally, the Petitioner has approached this Court with unclean hands, concealing material facts, and therefore, the suit should be dismissed with heavy costs.
100. The Respondent further submits that there is no cause of action in favor of the Petitioner against the Respondent. The Petitioner has invoked the jurisdiction of the civil court, despite the existence of an arbitration clause in the agreement between the Petitioner and Respondent No. 1. The Petitioner, who signed the agreement both as a director and as a guarantor, is bound by this arbitration clause. Thus, this Court lacks the jurisdiction to entertain the suit, and it should be dismissed on these grounds.
101. The Respondent reiterates its position that the Petitioner is legally bound by the loan agreement and should be compelled to repay the outstanding debt. The Respondent denies all allegations made by the Petitioner and asserts that the Petitioner's claims are unfounded and legally unsustainable.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 43/110
102. In light of the above, the Respondent prays that this Court dismiss the present suit with heavy costs, as the Petitioner is not entitled to any relief. The Respondent is entitled to the relief sought, and it is just and equitable for the suit to be dismissed in the interest of justice.
Reply filed on behalf of the Legal Heirs of Respondent No. 22 (Dr. B.N. Agrawal) to the Petition filed by the Petitioner.
103. The legal heirs of Respondent No. 22 respectfully submit the following preliminary objections, which clearly demonstrate that the petition filed by the petitioner has been made with malafide intentions and is devoid of merit. Hence, it should be dismissed with exemplary costs.
104. The petition filed by the petitioner is frivolous, vague, and vexatious. The petitioner has failed to provide essential details about his creditors, including their names and residences, as required under Section 13 of the Provincial Insolvency Act, 1920. The petition does not present any valid cause of action that would justify the intervention of this Hon'ble Court, and as such, it should be dismissed.
105. It is evident that the petitioner has filed this petition with the intention of evading his lawful financial obligations to his creditors. The petition is nothing more Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 44/110 than an attempt to escape the repayment of debts, and it should be dismissed for this reason alone.
106. The petitioner has not approached the Court with clean hands. He has failed to disclose the full extent of his properties and assets as mandated by the Act, and has concealed this information to prevent his creditors from recovering dues. The fraudulent concealment of assets is done with the intent of reducing the sum to be distributed among his creditors, which provides a valid ground for the dismissal of this petition.
107. Furthermore, the petitioner continues to live in luxury, despite claiming insolvency. He resides in an expansive property in the prestigious Safdarjung Development Area, New Delhi, worth over Rs. 40 crores. The house is lavishly furnished with multiple luxury cars. Despite owning such a high-value property and living a luxurious life, the petitioner has not partitioned the property with co-owners, thereby preventing creditors from using it to recover dues. It has also come to light that the petitioner is concealing an agreement regarding the partition of the property from this Court. If the petitioner were honest, he would have sold this property to settle his debts. Instead, he has misappropriated funds, primarily from the firm M/s. Precision Castings, and used these for his lavish lifestyle. Despite this, he has concealed these facts and is now attempting to use the law to avoid his Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 45/110 responsibilities. It is clear that allowing the petitioner to declare insolvency would be an abuse of the legal process, and a local commissioner should be appointed to visit his property to report on his living conditions.
108. Additionally, the petitioner has recklessly accumulated debt without any reasonable expectation of repaying it. The petitioner took money from Respondent No. 22 and other creditors with the premeditated intention not to return it. The petitioner, as a partner in M/s. Precision Castings, has failed to repay a deposit of Rs. 32,82,494/- with interest, which remains outstanding. A suit for the recovery of this deposit is already ongoing, and interim stay orders have been passed by the Hon'ble High Court of Delhi. The petitioner's actions demonstrate a clear intent to defraud his creditors. He should not be allowed to escape his liability by invoking the provisions of the Insolvency Act.
109. The petitioner has also intentionally misrepresented the financial status of M/s. Precision Castings, which has been manipulating its statements of accounts. The figures presented by the petitioner in his application are inaccurate and were not signed by the petitioner or any director of the company, which raises further concerns about his intent to deceive the Court. The petitioner's default in repaying his debts to Respondent No. 22 alone is sufficient grounds to dismiss the petition.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 46/110
110. Moreover, the petitioner's lavish and irresponsible spending habits have contributed directly to his current financial situation. He continues to conceal valuable movable and immovable assets that could be liquidated to pay off his debts. His failure to disclose these assets is another attempt to evade responsibility, and the petition should be dismissed on these grounds.
111. It is clear that the petitioner has filed this petition with the intention to cause wrongful gain for himself and wrongful loss to Respondent No. 22. This constitutes an abuse of the legal process, and as such, the petition should be dismissed with exemplary costs.
112. The petitioner's claims regarding his financial status are incorrect and misleading. He has failed to disclose the full details of the loans he has taken from various friends, relatives, and financial institutions. Specifically, the petitioner has omitted any mention of Respondent No. 22 in his list of creditors, further undermining the integrity of his petition.
113. Contrary to the petitioner's claims, the closure of M/s. Precision Castings was not due to any operational losses, as he asserts, but was a direct result of his misappropriation of funds. The petitioner has also misrepresented the financial condition of M/s. Precision Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 47/110 Castings by providing false and manipulated balance sheets. These documents were not signed by the petitioner or any other director of the company, further suggesting an attempt to falsify financial records in order to evade liability.
114. The petitioner has falsely claimed that his firm incurred losses, but the true reason for the closure was the diversion of funds. He has deliberately misrepresented the financial affairs of the company in order to shift the blame for the closure onto external factors, rather than his own actions.
115. Regarding the property located at 14/5, Furlong Mathura Road, Faridabad, the petitioner has underreported its value. The property is worth approximately Rs. 12 crores, not Rs. 6 crores as the petitioner has claimed. Moreover, an interim stay order has been passed by the Hon'ble High Court of Delhi concerning this property, preventing any third-party transactions. The petitioner is well aware of his financial situation but has chosen to take on more debt with the intent to defraud his creditors.
116. The petitioner has also concealed other assets that could be sold to discharge his liabilities. He continues to live in luxury while concealing valuable assets, further proving his intent to defraud his creditors. The petitioner's claims of having no income or assets are false. He Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 48/110 continues to live in an opulent residence, which he is deliberately concealing from the Court to avoid paying his creditors.
117. Finally, the petitioner's failure to disclose all the pending cases filed against him and the incorrect list of creditors further supports the argument that this petition is a deliberate attempt to avoid his debts. The petitioner should be held accountable for his actions, and this petition should be dismissed with exemplary costs.
118. In light of the above facts and circumstances, it is respectfully prayed that this Court dismiss the petition as the petitioner is not entitled to be declared insolvent. The petition is an abuse of the legal process and should be dismissed with exemplary costs.
Rejoinder to the Reply filed by the legal heirs of respondent no. 22 (Dr. B. N. Agrawal)
119. The petitioner denies the claims made by the respondent, asserting that the petition is not frivolous or lacking a cause of action. The allegations about the petitioner filing the petition with malafide intentions to escape liability are also denied. It is emphasized that the petitioner has not concealed any properties, and that the petition is filed in good faith.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 49/110
120. The claims regarding the petitioner's alleged lavish lifestyle are vigorously denied. The petitioner, an elderly individual, is entirely dependent on his children for financial support. The allegations about the value of the petitioner's property and the manner in which he lives are also contested, asserting that the petitioner's living conditions do not reflect any excessiveness that should undermine his claim for insolvency.
121. Further, the assertion that the petitioner has purposefully defaulted on debts and has engaged in fraudulent practices to evade repayment is denied. The petitioner refutes all claims regarding mismanagement of assets and intentional concealment of property. The petitioner's financial difficulties are genuine, and any claims of deliberate fraud are rejected.
122. The petitioner denies the ground that the debts were contracted recklessly or with the intention to defraud creditors. Any accusations regarding the petitioner's alleged premeditated designs to avoid repayment are strongly contested. The petitioner also denies that there is any manipulative or misleading information in the financial statements and balance sheets presented in the petition.
123. The petitioner denies the allegations that he has failed to disclose the full details of his debts and financial Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 50/110 affairs. All assertions about the petitioner's business, the financial statements, and the supposed concealment of assets are denied. The petitioner emphasizes that his financial difficulties are real and not fabricated for the purpose of avoiding repayment.
124. In conclusion, the petitioner reiterates that the allegations made by the respondent in the written statement are false and unsubstantiated. The petition is valid and should be considered on its merits, with a request for the relief sought. The petitioner further denies the prayer for dismissal and asserts that the petition is legitimate and should proceed as per the legal process.
Reply on behalf of the Respondent No. 26 (Mrs. Neeta Deep Rastogi) to the Petition filed by the Petitioner.
125. Before addressing the specific contentions raised by the petitioner in their insolvency petition, Respondent No. 26, Mrs. Neeta Deep Rastogi, wishes to lay down certain preliminary objections. These objections will demonstrate that the petition has been filed with malicious intent and should be dismissed with exemplary costs.
126. The petition filed by the petitioner is vague, frivolous, and vexatious. The petitioner has failed to provide details of all pecuniary claims against him, including the names and residences of his creditors, as Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 51/110 required under Section 13 of the Provincial Insolvency Act, 1920. Consequently, the petition does not disclose a valid cause of action and should be dismissed for this reason alone.
127. It is clear that the petitioner has filed this petition with malafide intentions to evade his legitimate liabilities and obligations towards his creditors. As such, the petition is liable to be dismissed. The petitioner has not approached this Court with clean hands. He has failed to disclose a comprehensive inventory of his assets as required by the Insolvency Act. The petitioner has concealed his properties with an ulterior motive to reduce the amount available for his creditors. This fraudulent concealment further justifies the dismissal of the petition.
128. The petitioner continues to live a lavish lifestyle, including residing in a luxurious property in the posh Safdarjung Development Area, New Delhi, valued at approximately Rs. 40 crores. Despite living in this luxury, the petitioner has not partitioned the property, which could be sold to pay off his creditors. This indicates that the petitioner is intentionally withholding assets to escape liability. Furthermore, the petitioner's claims about his business M/s Precision Castings, which allegedly suffered losses, are contested. The petitioner has siphoned off money from the business, which he has not disclosed. His luxurious lifestyle is funded by debts he has incurred from Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 52/110 various creditors, and filing for insolvency is merely a way to avoid repayment.
129. The petitioner has contracted debts without reasonable expectations of repayment. The petitioner borrowed money from Respondent No. 26 and other creditors with no intention of repaying it, and has now filed this petition to further his illegal and malafide designs. A suit for the recovery of Rs. 10,42,566/- plus interest has been filed against the petitioner in Tis Hazari Court, and an interim stay order has been passed on his property.
130. The petitioner has consistently defaulted on payments due to Respondent No. 26, further substantiating the claim that he is using this petition to escape his financial responsibilities. The petitioner has contributed to his own insolvency through unjustifiable extravagance. Despite possessing significant assets, he has failed to use them to settle his debts.
131. The petitioner has concealed movable and immovable assets that could be sold to discharge his liabilities. This deliberate concealment reinforces the argument that the petition is designed to escape repayment. The petitioner has filed this petition to gain wrongful advantages for himself while causing significant harm to Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 53/110 Respondent No. 26. This petition is an abuse of the legal process and should be dismissed with costs.
132. The petitioner has filed this petition with the intent to delay, defeat, and defraud his creditors. Such abuse of the legal process demands that this petition be dismissed with exemplary costs. The petitioner claims to have invested all his resources to revive Respondent No. 1 and took personal loans from various individuals and financial institutions. However, the petitioner has not disclosed the full details of the loans taken, particularly from Respondent No. 26, whose name is conspicuously absent from the list of creditors.
133. The petitioner alleges that Respondent No. 1 suffered significant losses due to non-operations, but the business closure was largely due to the petitioner's mismanagement. Additionally, the balance sheets of Respondent No. 1, filed with the petition, are incorrect, manipulative, and unsigned, further suggesting the petitioner's intention to mislead the court.
134. The petitioner claims that the property located at 14/5, Furlong Mathura Road, Faridabad, is worth approximately Rs. 6 crores. However, the true value of the property is closer to Rs. 12 crores. The Hon'ble High Court has passed an interim stay order on the property, Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 54/110 preventing any third-party interest, and the matter is still under adjudication.
135. The petitioner has failed to disclose the full list of cases pending against him or the creditors he owes. This omission further highlights his attempt to hide critical financial information. The petitioner's claim of having no income and being dependent on his children is false. The petitioner continues to conceal his assets, including properties that could easily be sold to pay his debts.
136. In light of the facts and circumstances outlined above, Respondent No. 26 respectfully prays that the petition be dismissed as the petitioner is not entitled to be adjudicated as an insolvent. Additionally, the petition, being devoid of merit and constituting an abuse of the legal process, should be dismissed with exemplary costs.
137. The rejoinder filed by the petitioner in response to the written statement of Respondent No. 26 denies several preliminary objections and grounds presented by the respondent. The petitioner refutes the claim that the petition is frivolous, vague, and does not disclose a valid cause of action. The petitioner asserts that they have approached the court with clean hands and denies allegations of evading liabilities or concealing assets.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 55/110
138. The petitioner specifically addresses the claims about their lifestyle, living conditions, and property holdings, denying accusations of living in luxury or concealing assets to avoid repayment. The petitioner asserts that they are financially dependent on their children and have no source of income. The allegations regarding the value of the property, the existence of debts, and the management of their business are also denied.
139. The petitioner contests the respondent's accusations about reckless borrowing and intentionally defaulting on loans. They also deny that the financial records filed with the petition are manipulated. Furthermore, the petitioner refutes allegations of intentional concealment of debts and assets and denies the claim that they are trying to defraud creditors.
140. In the conclusion, the petitioner reiterates that they are entitled to the relief sought in the petition and requests that the court dismiss the respondent's claims.
Reply on behalf of the Legal Heirs of Respondent No. 36 (Deceased Smt. Prem Lata Agrawal) to the Petition filed by the Petitioner.
141. Before addressing the specific allegations in the petition, the legal heirs of Respondent No. 36 respectfully submit the following preliminary objections, which Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 56/110 demonstrate that the present petition is filed with malafide intentions and should be dismissed with exemplary costs. The petition is frivolous, vague, and vexatious. It fails to provide the mandatory particulars of all pecuniary claims against the Petitioner, including the names and residences of his creditors, as required under Section 13 of the Provincial Insolvency Act, 1920. Consequently, the petition lacks a tenable cause of action and should be dismissed.
142. The Petitioner has filed this petition with the sole intent to evade his bona fide liabilities and legal obligations towards his creditors. The petition is an attempt to escape responsibility and is liable to be dismissed on this ground alone. The Petitioner has not approached the Court with clean hands. He has failed to disclose a correct and comprehensive inventory of his properties and assets, as required under the Act. The Petitioner has deliberately concealed his assets from the Court in an attempt to diminish the funds available for distribution among his creditors. The petition must be dismissed on this basis.
143. The Petitioner has consistently lived a lavish lifestyle, residing in an opulent house at C-1/66, Safdarjung Development Area, New Delhi, valued at over Rs. 40 crores. This house, consisting of the ground floor and basement, is fully air-conditioned, and the Petitioner owns at least six luxury cars. Despite these assets, the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 57/110 Petitioner has failed to partition the property with co- owners, preventing creditors from recovering their dues by selling the property. Additionally, the Petitioner has concealed the true state of affairs regarding this property and the actual partition arrangement between co-owners. The Petitioner has not disclosed his large income from his partnership in M/s Precision Castings, which had a turnover in the tens of crores. The Petitioner has also borrowed large sums of money from various creditors to sustain his lavish lifestyle, only to seek insolvency protection under the law. This abuse of process should not be allowed.
144. The Petitioner has recklessly contracted debts without any reasonable expectation of repayment, intending to evade responsibility. The Petitioner borrowed money from Respondent No. 36 and other creditors with the pre-meditated intent of never repaying the debts. His current petition is merely an extension of this malafide design.
145. The Petitioner maintains an interest-bearing deposit with Respondent No. 3and has deliberately defaulted in repaying it, resulting in an outstanding amount of Rs. 61,21,873/- with interest accrued at 12% per annum. A suit for recovery has been filed by the Respondent in the Hon'ble High Court of Delhi, and an interim stay order has been passed against the Petitioner's property.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 58/110
146. The Petitioner has failed to consistently repay his dues to Respondent No. 36 and contributed to his insolvency by unjustifiable extravagance in living. The Petitioner has intentionally concealed other movable and immovable assets that could be sold to discharge his liabilities. This intentional concealment should not be allowed, and the petition should be dismissed on this ground.
147. The Petitioner's filing of this petition is aimed at causing wrongful gain to himself and wrongful loss to Respondent No. 36. It is an abuse of the legal process and must be dismissed with exemplary costs. The allegations regarding the Petitioner exhausting his resources in an attempt to revive Respondent No. 1 are incorrect. The Petitioner has failed to disclose the full extent of loans taken from various individuals and institutions. Furthermore, the name of Respondent No. 36 is omitted from the list filed with the Petition.
148. It is vehemently denied that the Respondent No. 1 went into losses due to non-operation or fixed expenses. The business closure was due to funds being siphoned off by the Petitioner. The financial statements filed with the petition are incorrect, manipulated, and not signed by the Petitioner or any other director, which casts doubt on their veracity. The claim regarding the value of the property at Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 59/110 14/5, Furlong Mathura Road, Faridabad, is denied. The property is valued at approximately Rs. 12 crores, not Rs. 6 crores as alleged. A stay order has been issued by the Hon'ble High Court preventing the creation of third-party interests in this property.
149. The Petitioner has failed to disclose a complete list of pending cases, including those in the DRT. The creditor list filed with the Petition is incorrect, and the amounts payable to creditors are also misstated. The claim that the Petitioner has no source of income and is living with his children is denied. The Petitioner is intentionally fabricating these stories to avoid repaying his debts.
150. The assertion that the Petitioner holds only a 25% share in the property at C-1/66, Safdarjung Development Area, is incorrect. The Petitioner owns the entire basement and ground floor, valued at approximately Rs. 40 crores. The Petitioner could easily sell this property to pay his creditors but chooses to conceal its value. The allegations regarding the Petitioner's insolvency and business operations are denied. The Petitioner is deliberately concealing facts to defraud his creditors.
151. It is denied that the Petitioner has any justification for the insolvency claim. The Petitioner's financial mismanagement and failure to disclose assets are the primary reasons for his current financial predicament. The Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 60/110 jurisdictional objection raised in the petition is also denied. The Court has the authority to entertain and try this case.
152. In light of the above facts and circumstances, it is respectfully prayed that this Court dismiss the petition, as the Petitioner is not entitled to an order adjudicating and declaring him as insolvent. It is further prayed that since the petition is devoid of merit and is a gross abuse of the legal process, it should be dismissed with exemplary costs.
Reply on behalf of Respondent No. 34, (HDFC Bank Ltd.), to the Petition filed by the Petitioner.
153. At the outset, the Respondent No. 34 (hereinafter referred to as the "Answering Respondent") denies all allegations contained in the present Insolvency Petition, except where specifically admitted herein. The Respondent denies the claims made by the Petitioner in their entirety and states that they are baseless and without merit.
154. The Petition has been filed with malafide intentions.
It contains false averments and incorrect facts. The Petitioner is seeking equitable relief and must prove their bona fide by filing necessary documents, including Income Tax Returns and property documents related to the company and their residence. The Petitioner must approach this Court with clean hands, which they have failed to do.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 61/110
155. The Petition is based on mere conjecture and surmises, and its contents are vexatious and malicious. The sole purpose of this Petition appears to be an attempt to evade contractual liabilities to financial institutions. The Petition should be dismissed in limine with exemplary costs for wasting the Court's time and attempting to avoid legal obligations.
156. The Answering Respondent is a legitimate banking institution that provides banking services. Its registered office is at HDFC Bank House, Senapati Bapat Marg Lower Parel (West), Mumbai 400013, and it operates branches across India, including at 2nd Floor, Express Building, Bahadur Shah Zafar Marg, New Delhi 110 0021. Mr. Ashish Singh, Assistant Vice President and duly constituted attorney, is authorized to represent the Bank in legal matters.
157. The Petitioner, on behalf of Respondent No. 1 (A. R. Industries Pvt. Ltd.), approached the Answering Respondent to avail a business loan. After verifying the Petitioner's credentials and financial standing, the Answering Respondent sanctioned a loan of Rs. 30,00,000/- (Rupees Thirty Lakh Only), under the following terms: 36 equal monthly installments (EMIs) of Rs. 1,05,480/- each, starting from 07.08.2007 and ending on 07.07.2010. The loan was disbursed after deducting Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 62/110 processing fees and other charges, as per the terms of the agreement.
158. At the time of entering into the Loan Agreement, the Petitioner was fully aware of the terms, conditions, and charges related to the loan. The loan was disbursed on 13.07.2007, and the Petitioner did not raise any objections during the execution of the agreement or when appropriating the disbursed amount. It was made clear that in case of any default or delay in payment, penalties would be applied. The Petitioner, by accepting these terms, entered into the loan agreement with full knowledge and consent.
159. The Petitioner has failed to pay the agreed EMI amounts regularly. The loan was to be repaid in 36 EMIs, but the Petitioner defaulted on several occasions, and many EMIs were dishonored, as admitted in the Petition. As of 22.10.2018, the total outstanding amount is Rs. 7,461,184.00 (Rupees Seventy-Four Lac Sixty-One Thousand Eighty-Four Only), including the outstanding EMIs, late payment penalties, and cheque bouncing charges.
160. The Petitioner's grounds for filing this Petition are baseless and designed to evade contractual obligations. The Petitioner has failed to provide crucial documents, such as Income Tax Returns and property documents Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 63/110 related to both the shop and residence, and the books of accounts of the Petitioner and A. R. Industries Pvt. Ltd. As a result, the Petition is not maintainable, and the allegations made by the Petitioner are false and frivolous. The Petitioner has the means to repay the outstanding amount but is instead attempting to avoid their liabilities.
161. The Answering Respondent denies the Petitioner's allegations and submits that the Petitioner has failed to meet the necessary requirements and obligations set forth in the loan agreement. The Petitioner took a loan of Rs. 30,00,000/- (Rupees Thirty Lakh Only) from the Answering Respondent, and after the loan was disbursed, the Petitioner failed to make regular payments. The outstanding amount of Rs. 7,461,184.00/- remains unpaid.
162. The Petitioner has made false statements regarding the financial conditions of their business and their ability to repay the loan. The Petitioner has not provided the necessary documents, and as such, the Respondent denies all allegations made by the Petitioner about financial collapse or mismanagement of the business.
163. The Respondent also denies any allegations regarding the reduction of credit limits or the Petitioner being in financial distress due to circumstances beyond their control. The facts show that the Petitioner had the means to repay the loan but chose not to do so. Further, the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 64/110 Petition is not properly valued, and the Petitioner has not paid the required court fees. Therefore, the Petition is liable to be dismissed under the provisions of the Civil Procedure Code.
164. In light of the above, the Answering Respondent prays that this Court:
a) Dismiss the Petition with punitive and exemplary costs;
and
b) Pass any other appropriate order(s) and/or directions that this Court deems fit in the facts and circumstances of the case.
Rejoinder filed by the petitioner, to the Reply filed on behalf of Respondent No. 34 (HDFC Bank Ltd.)
165. The rejoinder filed by the petitioner, in response to the written statement of Respondent No. 34 (HDFC Bank Ltd.) refutes the various allegations and objections raised by the bank. The petitioner denies the claims made by the respondent regarding the malicious intent behind the filing of the petition, stating that the petition was filed bona fide and in accordance with the law. The petitioner asserts that all relevant documents were submitted, and that the present petition is not based on conjectures or frivolous grounds but on the legal right to seek an order of adjudication under the Provincial Insolvency Act.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 65/110
166. The petitioner denies that the petition was filed to evade financial liabilities or contractual obligations and asserts that the liabilities in question were related to a business loan taken by Respondent No. 1, M/s A.R. Industries Pvt. Ltd., and not the petitioner personally. The petitioner emphasizes that Respondent No. 1 is undergoing liquidation, and the present petition concerns the petitioner's personal financial condition, not the company's. The petitioner denies the allegations of not disclosing income tax returns and financial documents, asserting that the petition was filed in good faith, especially considering the petitioner's financial breakdown and dependence on his children.
167. In the rejoinder to the merits, the petitioner reaffirms the loan was taken by Respondent No. 1 and not by the petitioner personally. The petitioner also denies claims that the petition is frivolous and maintains that the relief sought is legitimate, based on the petitioner's inability to pay the debts. Furthermore, the petitioner contends that the value of the petition and the court fees were correctly applied, refuting any allegations of improper filing.
168. The petitioner concludes by reaffirming the validity of the petition and seeking the relief requested, stating that the respondent's objections are false, frivolous, and vexatious. The petition should therefore be allowed in accordance with the law.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 66/110 Issues for determination
169. From the pleadings of parties, the following issues were framed:
1. Whether the petitioner is entitled for the relief of being declared as an 'insolvent' as per the provision of the Providential Insolvency Act, 1920 as claimed in the present petition? OPP
2. Whether the present petition is within the prescribed period of limitation? OPP
3. Whether this Hon'ble Court has jurisdiction to entertain the present petition? OPD
4. Whether the present petition is maintainable as against the respondent no. 34 Le. HDFC Bank in view of the section 8 of Provincial Insolvency Act, 19207 OPD 34
5. Whether the petitioner has given the particulars of all the pecuniary claims against him together with the names and residence of his creditors as mandatory under section 13 of the Provincial Insolvency Act, 1920? OPP
6. Whether the petitioner/Debtor has fraudulently concealed his properties from the Hon'ble Court with an ulterior motive to diminish the sum to be divided among his creditors? OPD
7. Relief.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 67/110 Petitioner's Evidence PW-1: Sh. Subhash Agarwal
170. PW-1 tendered his evidence by way of affidavit, which was exhibited Ex. PW1/A and Ex. PW1/B, both bearing his signature at points A and B. He relied on the following documents:
Mark A: Details of personal bank loans of the petitioner (Ex. CW1/1 (colly)).
Ex. CW1/2: Copy of balance sheets for the year 2007 (colly, 3 pages) (OSR).
Mark B: Balance sheets for the years 2008 and 2010 (colly, 6 pages) (Ex. CW1/2 (colly)). Mark C: Copy of the Statement of Affairs of M/s Precision Castings (colly, 6 pages) (Ex. CW1/3). Ex. CW1/3: Income Tax Return for the year 2006-07 (colly) (OSR).
Mark D: Copy of the order dated 17.05.2011 (Ex.
CW1/4).
Ex. CW1/5: Last Income Tax Return filed by PW-1 for the year 2006-07 (OSR).
Ex. CW1/6: Copy of the order dated 03.12.2011 (certified copy seen and returned).
Mark E: Copy of the list of DRT cases (Ex. CW1/7).
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 68/110 Mark F: Copy of details of the assets of PW-1 (Ex. CW1/8).
Evidence by way of Affidavit of the Petitioner, Sh. Subhash Agarwal
171. The deponent is the petitioner in the above-
mentioned petition, residing at the aforementioned address, and is fully conversant with the facts of the case and competent to swear the present affidavit.
172. The deponent was one of the directors of Respondent No. 1 Company, M/s A.R. Industries Pvt. Ltd., which was duly incorporated under the Companies Act, 1956 with the Registrar of Companies, Delhi/Haryana on 28.02.1995. The registered office of Respondent No. 1 was located at 14/6, Faridabad, Haryana.
173. The deponent was also a partner in M/s Precision Castings, holding a 50% share. The office of the said partnership firm was located at 14/5 Mathura Road, Faridabad, Haryana. M/s Precision Castings ceased its operations in 2006 due to financial losses.
174. The deponent was holding equity shares and investments worth Rs. 1,61,86,520/- (Rupees One Crore Sixty-One Lakh Eighty-Six Thousand Five Hundred and Twenty Only). The petitioner exhausted all personal and Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 69/110 business resources to revive the company. Details of bank loans and personal guarantees are exhibited herewith as Ex. CW1/1 (colly) (Mark-A).
175. In 2008, the deponent's investments in Respondent No. 1 were severely affected due to the global recession and the company faced substantial financial losses. Respondent No. 1 ceased its operations during the financial year 2008-09 due to these issues.
176. The credit limits from banks such as S.B.I., ICICI Bank Ltd, and HDFC Bank Ltd. were unilaterally reduced, contributing to the financial breakdown of Respondent No.
1. The balance sheets of the relevant years (2007, 2008, and 2010), showing the financial status of Respondent No. 1, are exhibited herewith as Ex. CW1/2 (colly) and (Mark- B).
177. M/s Precision Castings incurred heavy losses and was forced to close its operations in the year 2007-08. The statement of affairs of M/s Precision Castings, along with the Income Tax Return for the year 2006-07 showing nil income, is exhibited herewith as Ex. CW1/3 (colly).
178. M/s Precision Castings owned industrial property situated at 14/5 Furlong Mathura Road, Faridabad, Haryana, measuring approximately 2500 square yards, valued at Rs. 6,00,00,000/- (Rupees Six Crores Only), Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 70/110 which was mortgaged with the State Bank of India for securing credit limits of Respondent No. 1. The deponent also stood as a guarantor for the loan/advance taken by Respondent No. 1 from the State Bank of India and other financial institutions.
179. The mortgaged property was auctioned and sold by the State Bank of India in 2015 for Rs. 4.32 Crores. The sale proceeds were adjusted against the outstanding dues of M/s A.R. Industries Pvt. Ltd.
180. M/s Indian Core Oils Pvt. Ltd. filed a company petition against Respondent No. 1, which was registered as C.P. No. 91 of 2009 before the Hon'ble High Court of Punjab and Haryana. The Hon'ble Court, by order dated 17.05.2011, ordered the winding-up of M/s A.R. Industries Pvt. Ltd. An official liquidator was appointed to manage the assets and effects of Respondent No. 1. A copy of the order dated 17.05.2011 is exhibited herewith as Ex. CW1/4.
181. The deponent was one of the directors of Respondent No. 1 and also a partner in M/s Precision Castings. In the financial years 2005-06 and 2006-07, he drew a salary of Rs. 4,80,000/- from Respondent No. 1. His total gross income in the financial year 2006-07 was Rs. 4,87,384/-. The last Income Tax Return filed by the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 71/110 petitioner for the year 2006-07 is exhibited herewith as Ex. PW1/5.
182. Since 2008, Respondent No. 1 ceased its operations, and the petitioner had no source of income for his livelihood. Creditors of the company initiated several litigations against Respondent No. 1 and its directors, including the petitioner. These proceedings included recovery suits, actions under Section 138 of the Negotiable Instruments Act, and proceedings before the Hon'ble DRT. The petitioner had also given personal guarantees for loans secured by Respondent No. 1, making him personally liable for the company's debts.
183. The deponent currently resides at C-1/66, Safdarjung Development Area, New Delhi, in a joint and undivided property with his brothers and their families. This is the only dwelling house for the petitioner.
184. The petitioner was detained in civil prison in Execution Petition No. 17/09/11 titled "Tata Capital Ltd. Vs A.R. Industries Pvt. Ltd. & Ors.," where he was a judgment debtor. He had given a personal guarantee for the loan in question. He was released on personal bond and surety, with an order dated 03.12.2011 passed by the Hon'ble Court of Sh. J.P.S. Malik, A.D.J.-04, South District, Saket Courts, New Delhi. The petitioner undertook to file a petition in the competent court to Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 72/110 declare himself insolvent within 30 days. A copy of the order dated 03.12.2011 is exhibited as Ex. CW1/6.
185. Currently, the petitioner has no source of income or means to repay the debts to his creditors. He is living with his children and is solely dependent on them for his daily needs, as he is not engaged in any business or employment. The petitioner does not have any other movable or immovable assets that can be sold to discharge his liabilities.
186. This additional affidavit is being filed in compliance with the order dated 03.09.2022 passed by the learned predecessor of this Hon'ble Court. It is in continuation of the previous affidavit of the petitioner already on record.
187. The deponent affirms that several cases were filed against Respondent No. 1 by different banks and financial institutions before the Hon'ble Debts Recovery Tribunal, in which the petitioner was made a party. A list of these cases, as of the time of filing the present petition, is attached with the petition. Some of these cases have already been disposed of by the concerned courts. The list of DRT cases is exhibited herewith as Ex. PW1/7 (Mark- E).
188. The petitioner has annexed a list disclosing his assets, which includes details of two savings bank Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 73/110 accounts. These accounts have not been in operation since 2010. The details of the petitioner's assets are exhibited as Ex. PW1/8 (Mark-F).
189. The petitioner confirms that he does not have any other assets, except those mentioned in the list attached with this affidavit. The deponent affirms that the contents of this affidavit are true and correct, and nothing has been concealed therefrom.
Cross-examination of PW-1
190. PW-1 stated that he had read both his affidavits, Ex.
PW1/A and Ex. PW1/B. He was fully aware of the facts of the case. His affidavits were prepared in his advocate's chamber at Tis Hazari Court in his presence. PW-1 knew respondents 22, 26, and 36 through a common friend but did not remember the friend's name. There was no family relation with respondents 22, 26, and 36. PW-1 had not taken any loan from respondents 22, 26, or 36 in his personal capacity. These respondents were impleaded in the case because they were creditors to his partnership firm, M/s Precision Castings, which had closed in 2006.
191. PW-1 confirmed that, as per the document Mark C, the outstanding amounts against M/s Precision Castings were Rs. 23,39,161/- against respondent no. 22, Rs. 7,42,970/- against respondent no. 26, and Rs. 43,62,550/- against respondent no. 36. The statement was undated, Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 74/110 unaudited, and pertained to 2006. PW-1 did not have information regarding any transactions after that period. He could not confirm when and how much loan was taken by M/s Precision Castings from respondents 22, 26, and
36. He was aware that these respondents had filed separate suits for recovery of the amounts against him as a partner of M/s Precision Castings.
192. PW-1 resided at C-1/66, Safdarjung Development Area, New Delhi, which was jointly owned by him, Sh. Brijesh Kumar Gupta, Sh. Satish Kumar Gupta, and Sh. Rakesh Kumar Gupta. These three individuals were his real brothers. The house had three floors (ground, first, and second), and all four owners lived in the house. There was no partition of the property. PW-1 could not comment on the value of the house or whether it exceeded Rs. 40 crores. It was incorrect to suggest that the house had been partitioned or that he was falsely deposing on this matter. They did not partition the property as there was no requirement for it.
193. PW-1 did not own any cars. It was false to suggest that he had vehicles worth more than Rs. 6 crores. He did not own any other property apart from the one in Safdarjung Development Area. It was incorrect to suggest that he was deliberately concealing other properties. He had submitted the list of creditors he was aware of in the present case. The list of cases filed against him, as Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 75/110 mentioned in the petition, was updated at the time of filing. It was incorrect to suggest that he had deliberately failed to provide a complete list of cases or creditors.
194. PW-1 had a 50% share in the partnership firm M/s Precision Castings, with the remaining 50% held by Mr. D.K. Agarwal, his elder brother. The firm was closed in 2006, and no formal dissolution deed was executed as it was a partnership at will. PW-1 currently had no income and was dependent on his children for daily needs. He had two sons, Sh. Anshul and Sh. Ayush. Sh. Anshul was settled in the US and was employed, while Sh. Ayush was not employed and did freelance work. Sh. Ayush and his family resided with PW-1.
195. PW-1 could not recall the date he became a director of respondent no. 1, A.R. Industries. As a director, he handled administrative work and procurement and was jointly responsible for finances with the Managing Director. He did not remember who approached HDFC Bank for the loan facility. It was the joint responsibility of the MD and himself. He did not recall the date when the loan was availed, nor whether he personally approached HDFC Bank for the loan. He held Rs. 1.6 crore in shares in A.R. Industries, but since the company was in liquidation, those funds were no longer forthcoming. He had not received any profits from the company, nor had he invested in other companies.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 76/110
196. PW-1 no longer filed Income Tax Returns after 2006-07. He had submitted the last ITR he filed but could not produce earlier records as they were over ten years old. It was incorrect to suggest that he intentionally failed to file his ITRs during the years he made significant returns from the company.
197. M/s Precision Castings was a partnership firm where PW-1 was a partner, alongside his brother. He did not recall the exact shareholding in the firm, as it was closed in 2006-07. He also could not recall the exact number of pending litigations.
198. The property he resided in, at C-1/66, Safdarjung Development Area, had three floors. The property was jointly owned by him, Mr. Brijesh Kumar Gupta, Mr. Satish Kumar Gupta, and Mr. Rakesh Kumar Gupta, all of whom were his brothers. They lived together in this undivided property. He could not recall the exact number of bedrooms in the property or its circle rate. It was incorrect to suggest that the circle rate exceeded Rs. 2.5 lakhs per square yard.
199. It was false to suggest that he had received significant returns from A.R. Industries or M/s Precision Castings. Currently, he was not engaged in any business Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 77/110 and was entirely dependent on his children for his daily expenses.
PW-2/ Sh. Karunakar Kumar/ Clerk at Bank of India, Hauz Khas, New Delhi.
200. PW-2, Sh. Karunakar Kumar, is a Clerk at Bank of India, Hauz Khas, New Delhi. He brought with him the statement of account for Sh. Subhash Agarwal, bearing account number 600510100019344, for the period from 01.01.2012 to 11.01.2023, which is marked as Ex. PW5/1. He stated that he did not personally receive the court summons; rather, the concerned Branch Manager had received them. He further clarified that he had not been given any authority letter to depose on behalf of the bank.
201. PW-2 confirmed that he certified the statement of account, which was done following the Branch Manager's instructions. He took the printout of the statement of account and showed it to the Administrative Officer for verification. After the verification, as per the Officer's instructions, he placed the bank's stamp on the statement, and it was subsequently signed by the Officer.
202. When asked if he had any personal knowledge of the case, PW-2 replied that he did not have any personal knowledge regarding the matter.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 78/110 PW-3, Sh. Ashutosh Pandey,
203. Sh. Ashutosh Pandey, Sr. Tax Assistant at Ward-
29(1), New Delhi, solemnly affirmed his statement and brought forth the certified copy of the Income Tax Return (ITR) of the petitioner, Sh. Subhash Agarwal, for the assessment year 2006-2007, bearing PAN No. AAKP0934D. He also submitted a certificate under Section 65-B of the Indian Evidence Act along with the forwarding/authorization letter issued by the Income Tax Officer, Ward-29(1), New Delhi, which were collectively exhibited as Ex. PW3/1 (colly).
204. In response to queries, PW-3 clarified that Ward-
29(1) only held a soft copy of the ITR, not the hard copy. He stated that the soft copy was brought in as evidence under the said exhibit. PW-3 confirmed that the certificate under Section 65-B of the Indian Evidence Act was not signed by him but was signed by the Income Tax Officer, Ms. Jyoti Prakash Jha. He mentioned that the printout of the ITR was taken as per the instructions of his senior. However, it was emphasized that the certification of the ITR was also done by his senior, Ms. Jyoti Prakash Jha, and not by him.
205. PW-3 further testified that he was not working in the Income Tax Department during the relevant assessment year, 2006-2007, as he had joined the department only in Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 79/110 2014. He also confirmed that he had no personal knowledge about the case in question.
PW-4, Sh. Aayush Kumar Agarwal, son of Sh. Subhash Agarwal
206. PW-4, Sh. Aayush Kumar Agarwal, son of Sh.
Subhash Agarwal, residing at C-1/66, Safdarjung Development Area, Hauz Khas, South Delhi, deposed on solemn affirmation. His testimony was tendered through an affidavit, marked as Ex. PW4/A, with his signature at points A and B.
207. PW-4 testified that he carefully read his affidavit, Ex. PW4/A, but stated that he was not familiar with the facts of the case. He acknowledged that the affidavit was prepared by Advocate Rajiv Ranjan, in his presence, along with other persons whom he did not know. PW-4 clarified that he had been working as a freelance marketing consultant since 2019. Before that, he was employed as a manager with a company named Medison for two years and had worked with various institutions prior to that. However, he stated that he had never been associated with Respondent No. 1, M/s A.R. Industries, or M/s Precision Castings. He further confirmed that he was unaware of his father's association with these companies.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 80/110
208. PW-4 testified that he had not filed any Income Tax Returns (ITR) for any financial year, though he volunteered to produce them if required. He confirmed that he resided with his family, including his two sons and parents, at C-1/66, Safdarjung Development Area, Hauz Khas, South Delhi. He explained that his brother, Anshul Agarwal, lived abroad with his family. PW-4 further stated that he did not have any movable or immovable assets in his name and that the property he resided in was undivided. He mentioned that his father did not possess any other assets.
209. In response to cross-examination by Ld. Counsel for Respondent No. 34, PW-4 clarified that he usually filed ITRs for amounts around Rs. 6-7 lakhs. He confirmed that the property at C-1/66 was jointly owned by his father and his uncles, but he was unsure about whether the property was self-acquired by his father or inherited. He noted that the property had three floors and there were no tenants residing in it. PW-4 further explained that there was no set room for his family within the property, as it was jointly occupied by his father, uncles, and cousins, and the family was large, comprising around six to seven cousins.
210. PW-4 could not provide details on the area of the property or the nature of work performed by his retired uncles. He also did not know the number of pending litigations involving or filed by his father, nor was he Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 81/110 aware of the amount his father paid to his legal counsel. He confirmed that he did not contribute financially to his father's legal expenses, nor did he know the source of the payments made by his father to his lawyers.
211. Further, PW-4 stated that he had provided financial support to his father for his maintenance, although he did not know whether his father's monthly expenses amounted to Rs. 30,000 to 35,000. He was also unaware of his father's monthly income when he was working and did not know when his father stopped working. PW-4, having completed his Master's in Business in 2006-2007 from the University of Findlay, mentioned that his studies were sponsored by the college.
212. When asked about the property in question, PW-4 denied suggestions that it belonged solely to his father, emphasizing that it was a joint property with his uncles. He denied having any knowledge of ancestral property and rejected the suggestion that he did not contribute financially to his father's maintenance. Lastly, he denied any allegations of false testimony and affirmed that he was testifying at the request of his father.
Evidence Affidavit of PW-4
213. In the affidavit of Sh. Aayush Kumar Agarwal, he affirms that he is the son of the petitioner, Sh. Subhash Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 82/110 Agarwal, and resides with his parents, wife, and children at their only dwelling residence located at C-1/66, Safdarjung Development Area, Hauz Khas, South Delhi. He is 40 years old and works as a freelance marketing consultant.
214. He states that his father, the petitioner, was arrested in 2012 in connection with an execution of a money decree in the case of Tata Capital Ltd. vs. A.R. Industries Pvt. Ltd. before the Court of Sh. J.P.S. Malik, ADJ-04, Saket Courts, New Delhi. The deponent further asserts that his father has not been employed for over 10 years and has no independent source of income. Both his father and mother rely entirely on him for their day-to-day needs.
215. Regarding assets, the deponent mentions that his father holds no assets in his name other than an undivided share in the jointly owned family house, which is shared by his four brothers. He confirms that the petitioner has no movable or immovable assets to his name. Finally, the deponent affirms that the contents of the affidavit are true and correct, and nothing has been concealed.
PW-5: Statement of Sh. M. S. Uniyal, Company Paid Assistant, Office of The Official Liquidator, Punjab and Haryana High Court, Chandigarh.
216. PW-5, Sh. M. S. Uniyal, Company Paid Assistant attached to the Office of The Official Liquidator at the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 83/110 Punjab and Haryana High Court, Chandigarh, testified in the present matter. PW-5 stated that, in compliance with the summons, he had brought the following record:
A copy of the order dated 17.05.2011, passed by the Punjab and Haryana High Court in C.P. No. 91 of 2009, which was marked as Ex. PW5/1.
217. PW-5 confirmed that the documents presented were true copies and the information provided was accurate based on the official records available.
Respondents' Evidence RW-26, Smt. Nita Deep Rastogi:
218. Smt. Nita Deep Rastogi, wife of late Sh. Ratan Deep Rastogi, and daughter of late Dr. B. N. Agrawal, tendered her evidence in the present case. She relied on several documents, including a copy of the plaint dated 29.03.2011 with a stay order dated 02.04.2012, a copy of an order passed by the Hon'ble High Court of Delhi dated 12.10.2011, and an original photograph of the property situated at C-1/66, Safdarjung Development Area, New Delhi-16, which was presented as Ex. RW26/1, Ex. RW26/A, Ex. RW26/B, and Ex. RW26/C. Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 84/110 Evidence Affidavit of RW-26
219. In the affidavit, Smt. Nita Deep Rastogi, the deponent, denies the claims made by the petitioner, Sh. Subhash Agarwal, and asserts that the petitioner is living a luxurious life. She claims that the petitioner resides in an expensive property at C-1/66, Safdarjung Development Area, New Delhi, which is valued at over 40 crores. She also states that the petitioner holds the entire ground floor and basement, which she alleges has been concealed from the court, preventing creditors from recovering dues.
220. She asserts that the petitioner's luxurious lifestyle is funded by funds siphoned off from the business, M/s Precision Castings, which had a turnover of tens of crores. Additionally, she claims that the petitioner borrowed large sums from various creditors, including herself, with no intention of repaying them. She mentions that these loans have gone unpaid, and she refers to the pending suits in the Tis Hazari Courts regarding the outstanding amounts.
221. The deponent further states that the petitioner has failed to disclose accurate financial details, particularly in the balance sheets filed by him. She asserts that the petitioner has intentionally withheld information about his assets, including immovable properties that could be sold to pay off his debts.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 85/110
222. The affidavit mentions the petitioner's failure to disclose cases filed against him, his source of income, and the true value of the properties he owns. She claims that the petitioner has misrepresented his financial situation, including his share in the property at C-1/66, which she asserts is worth more than six crores and closer to twelve crores.
223. Smt. Rastogi denies that the petitioner is without income or assets and refutes claims that the petitioner is financially broken or reliant on his children. Instead, she claims that the petitioner intentionally hides his wealth to avoid repaying his creditors. She also disputes the petitioner's characterization of his residential property as a shared family house, asserting that the petitioner owns significant parts of it.
224. Throughout the affidavit, Smt. Rastogi seeks to portray the petitioner as dishonest and manipulative, hiding assets and income to avoid his financial obligations.
225. The affidavit by Ms. Progoti Bose, the Authorized Officer of HDFC Bank Ltd., outlines her role and involvement in the present case. She affirms that she is competent to swear the affidavit and has been authorized by the bank to represent them in this matter. The affidavit references key documents related to a business loan obtained by Respondent No. 1 (M/s A.R. Industries Pvt.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 86/110 Ltd.) with the petitioner, Subhash Agarwal, acting as a co- borrower.
226. Ms. Bose outlines the terms of the loan agreement, including the loan amount of Rs. 30,00,000/-, the repayment schedule, and the processing fees. She confirms that the petitioner was made aware of the terms and conditions and signed the loan documents in a personal capacity, despite being a co-borrower for a business loan. The affidavit highlights that the petitioner has defaulted on the loan payments multiple times, with overdue amounts accumulating and penalties being applied. The petitioner is currently liable for a total amount of ₹23,18,540, which includes outstanding EMIs but excludes penalties for late payments and cheque bouncing charges.
227. Ms. Bose further states that the petitioner has filed this petition under frivolous grounds, seeking to be declared insolvent to avoid repaying the loan. She claims that the petitioner has not provided complete financial documents, such as income tax returns or property documents, which would prove their means to repay the debt. The affidavit concludes by asserting that no part of the affidavit is false and nothing material has been concealed.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 87/110 Cross examination of RW-26
228. During the cross-examination by the petitioner's counsel, RW-26 clarified that the value of the property at Safdarjung Development Area was more than Rs. 40 crores based on her assumptions and information available from her family relations. However, she stated that she did not have an asset valuation report to confirm this and denied that the value was around Rs. 5-6 crores. RW-26 could not provide specific details regarding the exact number of brothers and sisters of the petitioner, nor could she confirm the presence of six luxury cars at the petitioner's house. She also denied making misleading statements regarding these matters.
229. RW-26 stated that she knew the petitioner's family through familial relations and occasional visits to family functions. However, she could not recall the last time she attended such an occasion. She was unsure about the details of M/s Precision Castings' turnover or whether the petitioner had siphoned off any undisclosed funds, as she had no direct knowledge of those matters.
230. Regarding the petitioner's assets, RW-26 stated that the petitioner lived in an undivided joint property with his brothers. She denied knowing whether the petitioner owned any other movable or immovable assets that could be used to discharge his liabilities. When questioned about Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 88/110 the list of cases against the petitioner, she admitted that she did not have such a list and denied intentionally misleading the Court. She also confirmed that she was not aware of the petitioner's source of income and was unaware of his 25% undivided share in the joint property at C-1/66, SDA, New Delhi.
231. The witness further clarified that the property tax receipt shown in the proceedings (Mark RW26/PX1) referred to the petitioner's property, but she had no knowledge of the photographs marked as Ex. RW26/1C, nor could she identify who took them. RW-26 vehemently denied suggestions that the photographs were fabricated or that she was not providing accurate facts to the Court.
232. Throughout her testimony, RW-26 consistently denied allegations that she was intentionally misleading the Court or failing to disclose critical information regarding the petitioner's assets, debts, or financial transactions.
RW34W1/ Ms. Progoti Bose, the Authorised Officer of HDFC Bank Ltd.
233. RW34W1, tendered her evidence by way of affidavit, which was exhibited as Ex. RW34W1/1, bearing her signatures at points A and B. Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 89/110
234. In support of her deposition, RW34W1 relied upon the following documents:
Ex. RW34W1/A (OSR) - Copy of the Board Resolution dated 15.04.2023 (with objection on the mode of proof and filing) Ex. RW34W1/B - Certified copy of the loan application form dated 10.07.2007 Ex. RW34W1/C (colly) - Certified copies of the loan agreement dated 10.07.2007 along with the authorisation form and schedule Ex. RW34W1/D - Certified copy of the promissory note dated 10.07.2007 Ex. RW34W1/E - Certified copy of the statement of account dated 15.10.2024 Ex. RW34W1/F - Certified copy of the foreclosure letter dated 15.10.2024 (with objection on the mode of proof and filing) Ex. RW34W1/G - Certificate under Section 2A of the Bankers' Books Evidence Act Evidence Affidavit of Respondent No. 34 - HDFC Bank Ltd.
235. RW34W1, Ms. Progoti Bose, Authorised Officer of HDFC Bank Ltd., filed her affidavit in evidence affirming that she was duly authorised to represent the Bank pursuant to a Board Resolution dated 15.04.2023 (Ex. R34W1/A). She stated that a prior reply to the petition had already been filed by Mr. Ashish Singh, the then-
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 90/110 authorised officer, and that the contents of the said reply be treated as part and parcel of her affidavit.
236. It was deposed that the petitioner, on behalf of Respondent No. 1, M/s A.R. Industries Pvt. Ltd., had approached the Bank for a business loan and submitted the requisite application form. After due verification, the Bank sanctioned a loan of Rs. 30,00,000/-, which was disbursed on 13.07.2007 after deduction of processing charges, resulting in a net disbursement of Rs. 29,95,903/-. The petitioner had duly executed the loan application form (Ex. R34W1/B), the loan agreement along with schedule and authorisation form (Ex. R34W1/C colly), and a promissory note (Ex. R34W1/D). It was asserted that the petitioner had accepted all terms and conditions, including those related to interest, processing fees, and penalties.
237. RW34W1 further deposed that the petitioner committed repeated defaults in repaying the loan and failed to adhere to the repayment schedule of 36 EMIs of Rs. 1,05,480/- each, starting from 07.08.2007. It was stated that several instalments were dishonoured during the tenure and that the petitioner had admitted such defaults in the petition. As of 15.10.2024, the outstanding foreclosure amount was Rs. 23,18,540/- (Ex. R34W1/E and Ex. R34W1/F). The Bank had extended waivers totalling Rs. 75,60,110/- to the petitioner as a service gesture, including Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 91/110 waiver of overdue interest and cheque bouncing charges in accordance with RBI guidelines.
238. RW34W1 denied the petitioner's allegations and termed the present petition as frivolous and motivated. It was alleged that the petitioner was attempting to use the insolvency petition as a shield to escape contractual liability without disclosing complete financial particulars, including ITRs, property documents, or books of accounts of the company and himself. It was contended that the petitioner had not demonstrated any genuine inability to pay and had failed to substantiate claims of insolvency.
239. RW34W1 affirmed that the affidavit contained no false statements and no material facts had been concealed.
Cross-examination of RW34W1
240. RW34W1 stated that she had joined respondent no.
34 bank in July 2022 and was well acquainted with the facts of the present case. She clarified that she had not personally attended the Board Meeting held on 15.04.2023. However, upon being shown the Board Resolution exhibited as Ex. RW34W1/A, she confirmed that the resolution had been passed by the Board of Directors and certified by the Company Secretary of the respondent bank. She added that she was not in a position, at that time, to verify the exact number of Directors on the bank's Board.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 92/110
241. RW34W1 stated that she did not possess the minutes of the said meeting at the time of her testimony, but affirmed that the same formed part of the official records and could be retrieved from the bank's repository. She categorically denied the suggestion that no such board meeting had taken place or that Ex. RW34W1/A was false or fabricated.
242. With respect to the loan transaction referred to in her affidavit, RW34W1 deposed that respondent no. 1 was the principal borrower, while Mr. Subhash Aggarwal was the co-borrower. She clarified that the said transaction pertained to a business loan and the liability arising therefrom was co-extensive as between the borrower and co-borrower. She further stated that Mr. Subhash Aggarwal had signed the loan documents in his personal capacity, whereas the primary borrower remained respondent no. 1. She made reference to the loan application form already exhibited as Ex. RW34W1/B.
243. RW34W1 expressed that she had not perused any order of the Hon'ble Punjab & Haryana High Court concerning the liquidation of respondent no. 1 company. She also stated that she could not verify whether the petitioner held equity shares worth Rs. 1,61,86,520/- in respondent no. 1 company, nor was she aware of the resources allegedly expended by the petitioner in an Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 93/110 attempt to revive M/s A.R. Industries Pvt. Ltd., the said company.
244. At this stage, RW34W1 was shown a copy of the application dated 14.03.2014 filed by respondent no. 34 bank. She identified and admitted that the said application had been filed by the bank. The Court advised the learned counsel for the petitioner not to put questions relating to matters already forming part of the judicial record.
245. RW34W1 was unable to confirm whether any objection had been filed by the bank before the Official Liquidator in relation to respondent no. 1 company, in which the petitioner was a Director. She added that the bank's application itself indicated that it had been unable to trace the relevant loan account number with respect to the present proceedings.
246. With regard to the documents exhibited as Ex.
RW34W1/E, RW34W1 stated that the same were available on the bank's internal Loan Assist platform and had not been served upon the petitioner by post. She denied the suggestion that her deposition was false.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 94/110 Analysis and Findings Issue No. 1:
Whether the petitioner is entitled to be declared as an 'insolvent' under the Provincial Insolvency Act, 1920, as claimed in the present petition? OPP
247. The Onus to prove this issue was upon the petitioner.
248. The petitioner has invoked the jurisdiction of this Court under Sections 7, 10, 11 and 29 of the Provincial Insolvency Act, 1920, seeking adjudication as an insolvent on the grounds of financial collapse, inability to discharge debts, and civil imprisonment in execution proceedings against him. He pleads that despite all efforts to revive his business ventures, namely M/s A.R. Industries Pvt. Ltd. and M/s Precision Castings, he has been unable to sustain them owing to economic downturns and operational losses, culminating in winding up orders and litigation by creditors, including DRT proceedings and imprisonment under execution.
249. The respondents, comprising banks, financial institutions, private creditors, and individuals, have uniformly opposed the petition. They allege suppression of material facts, non-disclosure of properties including a Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 95/110 valuable undivided share in a prime South Delhi property (C-1/66, Safdarjung Development Area), and ongoing possession of significant assets and lifestyle inconsistent with insolvency. Several respondents assert that the petitioner owns real estate valued at several crores, has previously drawn substantial income, and has not filed adequate financial disclosure of assets and liabilities as mandated under Section 13 of the Act.
250. At the heart of every insolvency adjudication lies the principle of equity, good conscience, and honest disclosure. The Provincial Insolvency Act, 1920, does not confer an automatic right upon a debtor to seek adjudication as an insolvent merely upon assertion of inability to pay debts. The statute requires a thorough inquiry into the debtor's financial affairs, conduct, and truthfulness in disclosing all material facts. The burden lies on the petitioner to satisfy the Court, both by pleading and proof, that (a) he is unable to pay his debts; and (b) he has acted honestly and with transparency in approaching the Court. In the present case, the petitioner has pleaded that due to business failures, particularly the closure of M/s A.R. Industries Pvt. Ltd. and M/s Precision Castings, he has suffered massive financial loss and is unable to discharge his debts. He has also placed reliance upon his arrest in execution proceedings, lack of income since 2008, and his dependence upon family members for sustenance.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 96/110
251. While these facts prima facie suggest financial hardship, the Court must go beyond mere assertions and evaluate whether the requirements under Sections 7, 10, and 13 of the Provincial Insolvency Act, 1920 are duly satisfied. The evidence led by the petitioner includes balance sheets of the companies, his last filed income tax return (2006-07) etc. He also highlights litigation by various creditors, including banks and private individuals, and narrates his efforts to repay debts and the eventual closure of the business entities.
252. The petitioner has not furnished a comprehensive, current, and credible list of assets, liabilities, or income. Section 13 of the Act mandates that the debtor must disclose a full schedule of his creditors, their addresses, the debts owed, and the nature and value of his property. Several creditors, such as Respondent Nos. 22, 26, and 36, have specifically pointed out that their names and amounts owed have not been reflected in the list of creditors. Respondent No. 26 has placed on record recovery proceedings filed in Tis Hazari Courts. Despite the pendency of such cases, their exclusion from the insolvency petition constitutes a material suppression.
253. The petitioner claims that he resides in a jointly owned undivided property at C-1/66, Safdarjung Development Area, New Delhi, and has no independent income or assets. However, several respondents have Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 97/110 categorically alleged that the petitioner is in possession of the basement and ground floor of the said property, which is valued above Rs. 40 crores. While the petitioner admits joint ownership with his brothers, he denies having any separate share or income derived from it. Notably, the petitioner has not furnished any current valuation or cogent explanation as to why the said asset cannot be subjected to partition or monetization for repayment of debts.
254. In his cross-examination, PW-1 admitted that he had not filed income tax returns after 2006-07. He could not produce current audited statements or ledgers of either M/s Precision Castings or his personal finances. Furthermore, the petitioner's assertion that he has no movable assets and has been entirely dependent on his children for nearly a decade is not substantiated with consistent documentation or third-party confirmations. While PW-4 (his son) supported the claim of dependence, he too admitted lack of clarity on the property ownership, litigation expenses, or his father's earlier income. This vagueness weakens the credibility of the petitioner's assertions.
255. The nature and volume of debts, running across several institutions such as ICICI Bank, SBI, HDFC, Yes Bank, Indiabulls, Kotak Mahindra, and others, along with the petitioner's default, indicate a pattern of habitual default rather than genuine insolvency. It appears that the petitioner has neither attempted to settle dues nor proposed Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 98/110 any repayment plan but instead seeks an order of insolvency to shield himself from all liabilities under the garb of financial collapse. The petition was filed after the petitioner was taken into civil custody in execution proceedings, and the timing appears more defensive than genuine. The Court cannot be a refuge for debtors attempting to escape legal consequences through strategic invocation of insolvency law.
256. Respondents' Witnesses, as well as pleadings of other respondents, indicate that the petitioner continues to enjoy a certain standard of living and has access to family property of substantial worth. While he claims that the property is undivided and hence cannot be liquidated, no steps have been taken to seek partition or create encumbrance-free saleability. The judicial conscience of this Court cannot permit a declaration of insolvency where the petitioner continues to enjoy use and benefit of valuable immovable property without exploring legal means to generate funds for creditor repayment.
257. In conclusion, the petitioner's claim of financial collapse lacks the sincerity, completeness, and transparency required under the Provincial Insolvency Act, 1920. While there is evidence of business failure and litigation, the petitioner has not come forward with full disclosure of his financial affairs, nor has he demonstrated any credible effort to repay his debts or resolve liabilities.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 99/110 The insolvency petition, instead of being an honest disclosure, appears to be a device to obstruct creditor recovery and avoid obligations. The Court, being a court of equity, is not bound to grant relief to a litigant who suppresses facts and misrepresents his position.
258. Accordingly, this issue is decided against the petitioner.
Issue No. 2:
Whether the present petition is within the prescribed period of limitation? (Onus on Petitioner)
259. The determination of whether the present petition is within the prescribed period of limitation requires a consideration of the relevant provisions of the Provincial Insolvency Act, 1920, governing the limitation period for filing a petition for adjudication as an insolvent.
260. It is pertinent to note at the outset that the Provincial Insolvency Act, 1920 does not expressly prescribe any specific period of limitation for filing a petition under the Act. However, the application of limitation to insolvency petitions is governed by general principles under the Limitation Act, 1963, where applicable.
261. It is stated in the plaint that the petitioner was sent to civil imprisonment by the executing court in the execution petition no. 17/09/11 on 02.12.2011. The stamp on the Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 100/110 plaint by the filing section reflects the date of 02.01.2012. No substantial arguments or evidence has been led on behalf of respondents to show that the petition filed was beyond the period of limitation. The evidence led and the pleadings on record are not sufficient to state that the present petition has been filed beyond the period of limitation.
262. Accordingly, this issue is decided against the respondents and in favour of the petitioner.
Issue No. 3:
Whether this Hon'ble Court has jurisdiction to entertain the present petition? (Onus on Respondents)
263. The determination of jurisdiction in the present insolvency petition under the Provincial Insolvency Act, 1920 requires reference to Section 11 of the Act, which deals with the territorial jurisdiction of the insolvency court. As per the said section, the test for jurisdiction is based on:
Residence of the debtor, or Place where the debtor carries on business, or Place where the debtor personally works for gain.
264. In the present case, the petitioner, has clearly stated in his petition as well as in his evidence that he resides at C-1/66, Safdarjung Development Area, New Delhi, and Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 101/110 has been living there along with his family. His testimony is corroborated by the affidavit of his son, PW-4, who also confirms that the petitioner is residing at the said address, which falls within the jurisdiction of this Court.
265. Furthermore, the petitioner has averred that he is not engaged in any business or employment elsewhere and has no other current address for working or business. Even though the registered offices of the companies with which he was associated, M/s A.R. Industries Pvt. Ltd. and M/s Precision Castings, are located in Faridabad, Haryana, those businesses are now defunct, and the petitioner has not been in gainful employment since 2008. His evidence affirms that he does not currently carry on business or personally work for gain anywhere outside Delhi.
266. The residence-based test under Section 11 is therefore squarely satisfied. Once it is established that the petitioner presently resides in Delhi and the cause of action for insolvency relief arises out of his personal liability as a debtor, which attaches to his person and place of residence, and not to the location of any business undertaking.
267. In view of the above discussion, this Court finds that it has jurisdiction to entertain the present petition under the Provincial Insolvency Act, 1920, inasmuch as the petitioner resides within the territorial limits of this Court.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 102/110 The objections raised by the respondents on jurisdictional grounds are devoid of merit and accordingly rejected.
268. The issue is accordingly decided in favour of the petitioner and against the respondents.
Issue No. 4:
Whether the present petition is maintainable as against the Respondent No. 34, i.e., HDFC Bank Ltd., in view of Section 8 of the Provincial Insolvency Act, 1920? (OPD 34)
269. Section 8 of the Provincial Insolvency Act, 1920 provides as under:
"No insolvency petition shall be presented against any corporation or against any association or company registered under any enactment for the time being in force."
270. A plain reading of Section 8 shows that the bar under the provision applies to insolvency petitions presented against corporations or companies. It does not preclude an individual from presenting a personal insolvency petition where a registered company is impleaded only as a respondent/creditor for the purpose of distribution of assets or notice.
271. In the present case, the petitioner has not filed any petition against HDFC Bank Ltd. per se, nor is any relief Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 103/110 sought against the Bank under the Insolvency Act. HDFC Bank Ltd. has been impleaded merely as one of the creditors who has initiated proceedings against the petitioner for recovery of debts. The adjudication sought is against the petitioner himself and not against the corporate respondent.
272. Thus, the presence of HDFC Bank Ltd. in the array of respondents does not amount to a violation of Section 8, as the petition is not directed against the Bank, and no adjudication is sought against it under the Provincial Insolvency Act, 1920.
273. In light of the foregoing discussion, this Court finds that the bar under Section 8 of the Provincial Insolvency Act, 1920, is not attracted in the present case, as the petition is not directed against Respondent No. 34 but merely involves it as a creditor. Hence, the petition is maintainable as against Respondent No. 34, HDFC Bank Ltd.
274. Accordingly, this issue is decided in favour of the petitioner and against Respondent No. 34.
Issue No. 5:
Whether the petitioner has given the particulars of all the pecuniary claims against him together with the names and residences of his creditors as mandated under Section 13 of the Provincial Insolvency Act, 1920? (OPP) Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 104/110
275. Section 13 of the Provincial Insolvency Act, 1920 requires that every petition presented by a debtor must contain a full and true disclosure of:
The petitioner's assets and liabilities; The particulars of all debts due by the debtor, including names and residences of the creditors; and
276. The underlying objective of Section 13 is to ensure transparency, bona fides, and fairness in the process, such that the Court is not misled, and creditors are not prejudiced by concealment of material facts.
277. In the present case, the petitioner, has annexed a list of creditors along with the petition and has submitted certain annexures and documents reflecting debts due towards various financial institutions. In his cross examination, the petitioner has also made reference to individual creditors including Respondents No. 22, 26, and 36, claiming these were associated with M/s Precision Castings, where the petitioner was a partner.
278. However, upon scrutiny of the objections raised by the respondents and the testimony elicited during the cross-examination of PW-1 (the petitioner), it becomes evident that:
The list of creditors does not include all known creditors, including certain individuals who have filed recovery Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 105/110 suits against the petitioner or who are pursuing pending legal proceedings.
The details regarding the names, addresses, and exact pecuniary claims of several creditors are either incomplete or absent.
There are contradictions in the petitioner's own deposition, that he could not recall certain details of loans or amounts borrowed through M/s Precision Castings or borrowed from HDFC Bank. The statement of affairs and list of cases annexed with the petition, marked as exhibits, were found to be undated, unaudited, and lacked the requisite level of detail expected under Section 13.
279. It is also significant that the petitioner has not explained the non-disclosure of several creditors or suits pending against him, nor has he amended the list during the pendency of the proceedings despite being put to notice through the respondents' written statements and objections.
280. In view of the above discussion and having regard to the pleadings, evidence, and material on record, this Court finds that the petitioner has failed to furnish a full and true disclosure of all pecuniary claims against him along with names and residences of all creditors as mandated under Section 13 of the Provincial Insolvency Act, 1920.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 106/110
281. Accordingly, this issue is decided against the petitioner.
Issue No. 6:
Whether the petitioner/debtor has fraudulently concealed his properties from the Court with an ulterior motive to diminish the sum to be divided among his creditors? (OPD)
282. The question of fraudulent concealment of assets goes to the heart of an insolvency petition, as it touches upon the bonafides and transparency of the petitioner. Under the Provincial Insolvency Act, 1920, it is mandatory for a debtor to make a complete and truthful disclosure of all assets, movable and immovable, at the time of filing the petition. Any omission or suppression with intent to mislead the Court or deprive creditors of rightful recovery can render the petitioner disqualified from the relief sought.
283. In the present case, the petitioner, on affidavit, claimed that he possesses no movable or immovable assets apart from his undivided share in a jointly owned house located at C-1/66, Safdarjung Development Area, New Delhi. He has further stated that he is financially dependent on his children and has no source of income or commercial activity.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 107/110
284. Multiple respondents, have alleged that the petitioner owns not just a share but the entire basement and ground floor of the house located at C-1/66, Safdarjung Development Area, New Delhi and continues to reside there in apparent comfort. The value of the said property has been estimated by several respondents to be well over Rs. 40 crores, contradicting the petitioner's claim that it is his only shelter and that no partition has taken place.
285. It has been alleged and partially supported by cross-
examination that the petitioner has had business relations, including that with M/s Precision Castings. No documentary explanation has been furnished as to whether those partnerships were formally dissolved or whether any receivables or undisclosed holdings exist.
286. In cross-examination, the petitioner (PW-1) admitted to not filing Income Tax Returns after 2006-07 and claimed ignorance about the precise financials or asset holdings, which, in the Court's view, is implausible for a person who previously handled companies, held directorships, and took substantial loans. The petitioner's son (PW-4), though claiming dependency of the petitioner, also exhibited significant gaps in knowledge about the financial affairs, which raises doubts as to whether this narrative of complete dependence is credible.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 108/110
287. While claiming financial destitution, the petitioner has not submitted any independent valuation report or supporting record (e.g., circle rate certificate or municipal tax statement) to demonstrate that the house located at C- 1/66, Safdarjung Development Area, New Delhi property is not realisable or partitionable. Nor has he sought the appointment of a local commissioner to prove the factual matrix about his living conditions, which could have helped dispel doubts raised by the respondents.
288. The cumulative effect of these inconsistencies suggests that there has been a deliberate attempt to downplay or suppress the petitioner's real financial standing and asset base. Courts have repeatedly held that insolvency is a relief that must be sought with utmost candour and good faith.
289. On the basis of the pleadings, depositions, cross-
examinations, and documents on record, this Court finds that the petitioner has failed to disclose complete details of his movable and immovable properties and has suppressed material facts relating to his asset-holding and financial status. This suppression appears to be intentional and with an ulterior motive to diminish the estate available for distribution among creditors.
290. Accordingly, this issue is decided in favour of the respondents and against the petitioner.
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 109/110 Relief:
291. In view of the aforesaid analysis and findings, the Petitioner cannot be declared as insolvent under the Provincial Insolvency Act, 1920. In view thereof, the instant petition is hereby dismissed. No order as to costs. Decree Sheet be prepared accordingly.
File be consigned to Record Room after due compliance.
Digitally signed Announced in the open court by ANURADHA
on 22.04.2025. ANURADHA JINDAL
JINDAL Date:
2025.04.22
15:57:18 +0530
(ANURADHA JINDAL)
ASCJ-cum-JSCC-CUM-GJ (South)
Saket Courts, New Delhi
Insolvency 9/16 SUHBASH AGARWAL Vs. MS A.R. INDUSTRIES PVT. LTD. ORS. 110/110