9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 1572 - Tri - Companies LawTransfer of an amount (Corporate Debtor funds) within two years before commencement of CIRP - professional fee paid to R1 to organise a loan of ₹ 20 Crore for the business needs of the Corporate Debtor or not - fraudulent intent present or not - burden to prove - HELD THAT - The money was transferred from the Corporate Debtor to R1. From the records of the corporate debtor there is no material to say that these monies were transferred as commission towards the consultancy services rendered by R1. There are no supporting entries from the books of the Corporate Debtor to prove that this money was paid to R1 towards business purpose. As to the monies shown as paid to R1 by the Corporate Debtor, if at all, monies were paid in relation to the services rendered by R1, the Corporate Debtor should have deducted TDS from those amounts but no information or details reflecting TDS was deducted from the monies paid by the Corporate Debtor to R1 - Normally when an agreement is entered into, both the parties enter into agreements signed by them on behalf of themselves or on behalf of Companies or Partnerships, as the case may be. A case falls within the ambit of Sec. 43 of the Code when repayment was made to the Creditor within the look back period for putting such creditor in a beneficial position than it would have been in the event of distribution of assets made in accordance with Section 53 of the Code - RP says that R1 has not provided any consultancy services to the Corporate Debtor, it was only payments made to R1 to cause unlawful gain to R1 based on sham transactions causing loss to other Creditors. When material is absent to prove that the transaction is genuine, the Respondents shall prove that transaction is not fictitious and they must prove that R1 is entitled for commission and that entitlement was cleared by the Corporate Debtor. In this case, no material is there to prove that R1 acted as commission agent to facilitate the Corporate Debtor to secure loan from SREI and also to secure Purchase Order from Regen. As long as this aspect is not proved, it cannot be said that, the relation in between the Corporate Debtor and R1 is debtor and creditor relationship. If any money has been shown as siphoned from the Corporate Debtor Accounts, as to those monies, if the Corporate Debtor failed to show it as payment to a Creditor, then such payment has to be considered as a fraudulent transaction falling within the ambit of Section 66 of the Code - related party concept comes into existence to look into, when transaction taken place in the period beyond one year look back period and before lapse of two year look back period. As to section 66, look back period and relative or related party concepts will not come into picture, this Bench need not ascertain whether it is in compliance of Section 43 elements. In companies, management is answerable to every transaction, it has to explain and prove every transaction is based on business needs and part of business, mere oral saying will not make any transaction genuine unless supported by material proof, which normally happens in every transaction. In this case, it is shorn of such supporting material. As to the party not in the management of the Corporate Debtor, that is R2, though he is not part of the management of the Corporate Debtor, he knows that R1 has no claim against the Corporate Debtor, therefore he ought to have refunded it to the Corporate Debtor as soon as it came to the account of R1. Had it been genuine transaction, it must have reflected tax payments and tax deductions and R1 must have disclosed that it has been providing similar services to others, but no such material placed - for R3 having not stated that he is not the cause for release of the funds from the Corporate Debtor to R1 and R1 having not proved that this money has come to his partnership firm towards commission, it is held that the impugned transfer of the Corporate Debtor funds to R1 is for fraudulent purpose. R2 and R3 jointly and severally are directed to contribute ₹ 65 lac to the Corporate Debtor within fifteen days from hereof - application allowed.
Issues Involved:
1. Legitimacy of the transfer of ?65 lakhs from the Corporate Debtor to Ingenium Advisory LLP (R1). 2. Alleged fraudulent transactions under Sections 43 and 66 read with Section 60(5) of the Insolvency & Bankruptcy Code, 2016. 3. Commonality of interest between the parties involved. 4. Burden of proof regarding the genuineness of transactions. 5. Liability of the parties involved (R2 and R3). Issue-wise Detailed Analysis: 1. Legitimacy of the Transfer of ?65 Lakhs: The Resolution Professional (RP) identified that ?65 lakhs were transferred from the Corporate Debtor to R1 on various dates, with no supporting documents or contracts justifying these payments. The RP questioned the legitimacy of these transactions, as there were no records of services provided by R1 or any contract reflecting such services. The RP noted that no TDS was deducted from these payments, which further questioned the legitimacy of the transactions. 2. Alleged Fraudulent Transactions: The RP alleged that the transactions between the Corporate Debtor and R1 were fraudulent, aimed at siphoning funds from the Corporate Debtor. The RP argued that the payments were made without any legitimate business purpose and lacked supporting documentation. The Tribunal found that the transactions lacked material proof and were not conducted in the ordinary course of business, thus falling under the purview of Section 43 of the Code. The Tribunal also noted that the burden of proof was on the Corporate Debtor to demonstrate the genuineness of these transactions, which they failed to do. 3. Commonality of Interest: The RP highlighted the commonality of interest between the parties involved, noting that the directors of the Corporate Debtor and the partners of R1 had overlapping roles in another company, Udveka Engineering Services Private Limited. The Tribunal found that this commonality of interest indicated that the transactions were not genuine and were conducted to benefit R1 at the expense of the Corporate Debtor. 4. Burden of Proof: The Tribunal emphasized that the burden of proof was on the Corporate Debtor to demonstrate that the transactions were genuine and conducted for legitimate business purposes. The Corporate Debtor failed to provide any material evidence, such as contracts, invoices, or TDS deductions, to support the legitimacy of the payments made to R1. The Tribunal concluded that the absence of such evidence indicated that the transactions were fraudulent. 5. Liability of the Parties Involved: The Tribunal found that R3, the erstwhile Managing Director of the Corporate Debtor, and R2, a designated partner of R1, were knowingly involved in the fraudulent transactions. The Tribunal held R3 liable for failing to prove the genuineness of the transactions and for causing the release of funds from the Corporate Debtor to R1. R2 was also held liable for not refunding the money to the Corporate Debtor, knowing that R1 had no legitimate claim to it. The Tribunal directed R2 and R3 to jointly and severally contribute ?65 lakhs to the Corporate Debtor within fifteen days. Conclusion: The Tribunal concluded that the transfer of ?65 lakhs from the Corporate Debtor to R1 was for fraudulent purposes. The Tribunal directed R2 and R3 to jointly and severally repay ?65 lakhs to the Corporate Debtor within fifteen days, thereby allowing the MA/987/2019 filed by the Resolution Professional.
|
