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2022 (6) TMI 500 - Tri - Insolvency and BankruptcyMaintainability of Interlocutory Application - joint/several liability of Respondents to pay the amount claimed in this application - fraudulent/wrongful trading - Section 66 of IBC, 2016 - HELD THAT - The technical objection regarding the maintainability of this application is raised only for the sake of objecting and hence stands rejected. This application is thus maintainable. Joint/several liability of respondent - HELD THAT - From the Forensic Audit it is clear that this is a fit case to direct the Respondents to make good the losses caused to the creditors of the Corporate Debtor as the transactions referred to in the earlier paragraphs are fraudulent transactions, holding that the Respondents are personally liable for such deliberate and wilful default. The Respondents 1 to 6 are jointly and severally responsible to pay Rs. 2,94,77,269/- with interest @ 12% per annum to the account of the Resolution Professional of the Corporate Debtor within two weeks from the date of receipt of this order. Application disposed off.
Issues Involved:
1. Maintainability of the Interlocutory Application. 2. Joint and several liability of the Respondents to pay the claimed amount. Detailed Analysis: Issue 1: Maintainability of the Interlocutory Application The Tribunal examined Section 66 of the Insolvency and Bankruptcy Code, 2016, which deals with fraudulent trading or wrongful trading. The Tribunal referenced the decision of the Hon'ble NCLAT in Aditya Kumar Tibrewal Vs. Omprakash Pandey and Ors, which clarified that applications under Sections 43 and 45 read with Sections 66 and 60(5) of the Code should not be rejected solely on the grounds of being filed beyond the 135-day period from the Insolvency Commencement Date. The Tribunal concluded that the technical objection regarding the maintainability of the application was raised without substantial grounds and hence, the application is maintainable. Issue 2: Joint and Several Liability of the Respondents The Tribunal reviewed the forensic audit report, which highlighted several fraudulent transactions: a) Agreement for Sale of Mortgaged Land: The forensic audit revealed that the Managing Director of the Corporate Debtor entered into sale agreements for mortgaged land without the consent of the Federal Bank, which held the mortgage. The sale agreements were executed fraudulently, and the full consideration was collected without disclosing the mortgage to the buyer. The audit noted that these transactions were intended to keep the assets beyond the reach of the secured creditor. b) Diversion of Funds Accounted as Advance for Land Purchase: The audit identified Rs. 1,73,45,000 as an advance for land purchase in the financial statements. However, there was no evidence to support these payments, which were made in cash and in an unusual manner. The audit suspected a diversion of funds under the guise of land purchase advances. c) Share Purchase Agreement with M/s. Sri Ramani Resorts and Hotels Pvt. Ltd: The audit found that the Share Purchase Agreement was "void ab initio" and suspected that it was executed to deceive both the Corporate Debtor and the buyer. d) Share Purchase Agreement with M/s. Basel Products India Private Limited: This agreement was also deemed "void ab initio" as it involved the sale of shares not owned by the Corporate Debtor but by its shareholders. The audit suspected intentional violations and deceitful intentions behind this agreement. The Tribunal concluded that the transactions were fraudulent and that the Respondents were personally liable for the deliberate and willful default. The Respondents 1 to 6 were directed to jointly and severally pay Rs. 2,94,77,269/- with interest at 12% per annum to the account of the Resolution Professional of the Corporate Debtor within two weeks from the date of receipt of the order. Conclusion The Tribunal found the application maintainable and held the Respondents jointly and severally liable for the fraudulent transactions, directing them to compensate the Corporate Debtor's creditors. The decision underscores the importance of transparency and adherence to legal obligations in corporate transactions.
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