2019 (10) TMI 1274 - Tri - Insolvency and Bankruptcy

Physical disbursement actual transfer of loan - period from 5.04.2011 to 13.08.2018 - HELD THAT - Prima facie it appears that the Bank has nothing much to add or to explain in this regard. Considering the impugned statement of account and especially considering an application under Section 75 of the Insolvency Code moved from the side of Corporate Debtor in which certain allegations are made, this Bench is of the considered view that during the entire loan process, due diligence was not carried out, So as to examine the correct position of Loan account for same be examined by the professional of this field. This Bench hereby appoints PWC Mr. Gaganpreet Singh Puri Partner, Pricewater house Coopers Services LLP, Building No-10 C, 17th Floor, DLF Cybercity, Gurugram, Haryana-122002, Email Id- [email protected] and Mobile No-9818756955 as Forensic Auditor to examine every aspect as alleged by the Corporate Debtor and submit an independent Report latest by 30.10.2019 - After the disbursement of ₹ 25 Crores, whether rest of the amount had been credited and gone out the Bank s account to the account of the Corporate Debtor so as to be used freely for the purpose of project for which loan was granted.

Summary

Issues: Examination of loan disbursement, appointment of forensic auditor, examination of loan transfer, examination of alleged forged documents, examination of allegations under Section 75 of the I & B Code, auditor's fees, cooperation with auditor, consideration of One Time Settlement Proposal.

Examination of Loan Disbursement:
The Tribunal noted that a query was raised regarding the physical disbursement of the loan amount to the Respondent Debtor's account for a specific period. While a sum of ?25 Crores was found to be physically disbursed initially, internal transfer entries were observed in other accounts maintained by the Bank post that date. The Bank was directed to provide a detailed narration of each entry for the specified period. However, as of the latest hearing, the Bank had not complied with this directive. The Tribunal expressed concerns over the lack of due diligence during the loan process and decided to appoint a Forensic Auditor to examine the matter thoroughly.

Appointment of Forensic Auditor:
In light of the concerns raised by the Corporate Debtor and the lack of satisfactory explanations from the Bank, the Tribunal appointed a Forensic Auditor from PWC to investigate the allegations. The Auditor, Mr. Gaganpreet Singh Puri, was tasked with examining various aspects, including the disbursement of the loan amount, the transfer of funds to the Corporate Debtor's account, and the authenticity of certain documents submitted by the Bank. The Auditor was required to submit an independent report by a specified deadline, adhering to professional norms and guidelines.

Examination of Loan Transfer and Alleged Forged Documents:
The Auditor was specifically instructed to determine whether the remaining loan amount had been transferred to the Corporate Debtor's account for the intended project after the initial disbursement. Additionally, the Auditor was tasked with verifying whether certain loan transfers to an Escrow account were merely internal adjustments by the Bank and not for the Corporate Debtor's use. Furthermore, the Auditor was required to investigate the authenticity of a letter alleged to be forged and submitted as evidence by the Bank.

Examination of Allegations under Section 75 of the I & B Code:
The Auditor was directed to assess the correctness of the allegations raised by the Corporate Debtor in an application under Section 75 of the Insolvency and Bankruptcy Code. The findings were to be submitted in a sealed cover to the Registry for review by the Tribunal.

Auditor's Fees and Cooperation:
The Tribunal ordered that the fees of the Forensic Auditor would be shared equally by both parties upon completion of the audit report. Both parties were instructed to cooperate fully with the Auditor by providing necessary documents and accounts promptly.

Consideration of One Time Settlement Proposal:
While awaiting the Audit Report, the Bank was permitted to evaluate a One Time Settlement Proposal put forth by the Corporate Debtor. The Bank was advised to consider the proposal that included specific financial amounts in designated accounts. The matter was scheduled for the next hearing to address any pending issues related to the settlement proposal.