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
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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
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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
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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.
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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
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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;
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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
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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
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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
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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 ActEvidence 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 recoveryInsolvency 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
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