2023 (2) TMI 377 - AT - Insolvency and Bankruptcy

Violation of principles of natural justice - It is the case of the Appellant that the Adjudicating Authority erred in passing the impugned order ex-parte without hearing him and without giving any opportunity to defend his case - institution of criminal prosecution against various parties i.e including Appellant herein - Outstanding and payable dues or not. Denial of Opportunity of Being Heard/ Ex-parte Order - HELD THAT - This Appellate Tribunal do not find any error in the impugned order and find that adequate opportunities were made available to the Appellant who has chosen not to respond or defend his case and this cannot be ground of not being heard. Dues Outstanding Payable or not - HELD THAT - After detailed examination and recording reasons, the Adjudicating Authority came to conclusions that the transactions are covered under Section 66 of the I B Code, 2016 and therefore, gave directions for recovery of money from all the Respondents therein including the Appellant herein and in addition to institute a criminal prosecutions against the Respondent therein including Appellant herein under Section 69 of the I B Code, 2016 - there are no error in the impugned order on this account and the Appellant could not establish that Rs. 23 lakhs were indeed paid by him to the Corporate Debtor. This Appellate Tribunal is of the considered opinion that there is no error in the impugned order dated 13.12.2021 passed by the Adjudicating Authority - Appeal is devoid of any merit is therefore dismissed.

Summary

Issues Involved:
1. Denial of Opportunity of Being Heard/ Ex-parte Order.
2. No Dues Outstanding & Payable.

Detailed Analysis:

I. Denial of Opportunity of Being Heard/ Ex-parte Order:

The Appellant contended that the Adjudicating Authority passed the impugned order ex-parte without providing a proper opportunity to be heard. However, the Respondent countered this by presenting evidence that ample opportunities were provided to the Appellant to file a reply. The Respondent highlighted that the Adjudicating Authority had closed the right to file a reply on 13.07.2021 after multiple dates were provided from 19.09.2020 to 13.07.2021, during which the Appellant failed to respond. The Appellate Tribunal examined the records and noted that service of notice was conducted through both email and speed post. Additionally, the Tribunal reviewed an Additional Affidavit showing the dates when the Appellant's advocates appeared, confirming that the Appellant had adequate opportunities to defend the case. Therefore, the Tribunal found no error in the impugned order regarding the denial of an opportunity to be heard.

II. No Dues Outstanding & Payable:

The Appellant argued that there was no outstanding amount payable to the Corporate Debtor, claiming that Rs. 30 lakhs received from the Corporate Debtor had been fully repaid. The Appellant provided a ledger account and a letter dated 30.03.2015 from HBN Foods Limited to support this claim. However, the Respondent refuted this, stating that the Appellant failed to provide valid documents like agreements or audited financial statements to substantiate the alleged payments. The Respondent also presented a transaction audit report indicating that Rs. 33 lakhs were owed by the Appellant, of which only Rs. 10 lakhs were repaid, leaving Rs. 23 lakhs outstanding. The audit report identified the transactions as sham, concocted, and fraudulent, aimed at diverting and siphoning off funds.

The Appellate Tribunal scrutinized the impugned order and noted that the Adjudicating Authority had considered the transaction audit report and found the transactions fraudulent under Section 66 of the I & B Code, 2016. The Tribunal also questioned the authenticity of the letter dated 30.03.2015, as the Appellant could not provide convincing answers regarding its issuance and authorization. The Tribunal acknowledged the findings of the SEBI order dated 12.02.2015, which found the Promoters/Directors guilty of running an unregistered collective investment scheme and misappropriating funds.

After a thorough examination, the Tribunal concluded that the Appellant failed to establish that the Rs. 23 lakhs were repaid. Therefore, the Tribunal upheld the Adjudicating Authority's decision to direct the recovery of money and institute criminal prosecution under Section 69 of the I & B Code, 2016.

Conclusion:

The Appellate Tribunal found no error in the impugned order dated 13.12.2021 passed by the Adjudicating Authority. The appeal was dismissed as devoid of merit, and all connected pending Interlocutory Applications were closed.