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2022 (10) TMI 746 - AT - Insolvency and BankruptcyCIRP - Alllegation of fraudulent Trading to defraud creditors of the corporate dabtors - Contract executed between the Appellant / Applicant and the Corporate Debtor, wherein the Corporate Debtor undertook to develop a 49.5 MW Wind Power Project, comprising of 33 Wind Energy Converter (WEC) - categorical stand of the Appellant is that no amount is due and payable by the Appellant and that the Resolution Professional has no right to withhold one wind mill and in all fairness the same requires to be handed over to the Appellant. HELD THAT - It cannot be gainsaid that Section 23 of the Insolvency Bankruptcy Code, 2016, provides for the Role of the Resolution Professional, to conduct the Corporate Insolvency Resolution Process (CIRP), in managing the affairs of the Corporate Debtor, during the Resolution Period, and not at a later point of time. No wonder, the ingredients of Section 60 (5) of the Insolvency Bankruptcy Code, 2016, is not all pervasive Section, showering upon Jurisdiction to an Appellate Authority to decide any question / issue concerned the Corporate Debtor. The Resolution Plan was approved by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) on 01.02.2022. Taking note of the fact that the Respondent / Resolution Professional before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) had taken a stand that Rs.75.63 Crore is receivable and that the Applicant / Appellant ought to be directed to pay the said sum immediately and in the teeth of the stand taken by the Respondent / Resolution Professional that the Appellant / Applicant claim of ownership is subject to the Full Payment of the entire consideration for the Project and owing to the non-payment of the contractual sum, one WEC was not handed over to the Appellant / Applicant and in the event of payment of Full Dues, the 1 WEC will be handed over to the Appellant, the present Relief prayed for by the Appellant/ Applicant, seeking direction to the Respondent / Resolution Professional to deliver one 1500 KW WEC in working condition etc., resting on the ground, that it belongs to it, is as Ex Facie, is not maintainable in the eye of Law, as opined by this Tribunal. Appeal dismissed.
Issues Involved:
1. Applicability of Section 66(1) and 66(2) of the Insolvency and Bankruptcy Code, 2016 (IBC). 2. Allegations of fraudulent trading and wrongful trading. 3. Validity of the claim for the delivery of one Wind Energy Converter (WEC). 4. Payment disputes and entitlement to liquidated damages. Detailed Analysis: 1. Applicability of Section 66(1) and 66(2) of the IBC: The Appellant filed an application under Section 60(5) of the IBC, seeking contributions from the Respondents under Section 66(2) of the IBC. The Adjudicating Authority noted the distinction between Section 66(1) and 66(2) of the IBC. The scope of these subsections is different, and the Tribunal needed to examine if the transactions alleged by the Applicant fell under 'Fraudulent Trading' as per Section 66(1). The Tribunal referenced the Supreme Court's decision in Anuj Jain IRP for Jaypee Infratech Limited vs. Axis Bank Limited, emphasizing that specific material facts must be pleaded to bring a transaction under the mischief of Sections 45/46/47 or Section 66 of the IBC. 2. Allegations of Fraudulent Trading and Wrongful Trading: The Applicant needed to prove that the business was carried on with the intent to defraud creditors. The Tribunal found that the Applicant failed to provide documentary proof of dishonest intention by the Respondents. The allegations were not substantiated with evidence, leading to the dismissal of the application under Section 66(1) of the IBC. 3. Validity of the Claim for the Delivery of One WEC: The Appellant argued that a contract dated 24.01.2018 was executed for developing a 49.5 MW Wind Power Project, and full payment was made for 33 WECs. However, one WEC was not delivered. The Appellant claimed ownership of the undelivered WEC and sought its delivery. The Respondent contended that the Appellant had not made full payment and that Rs.75.63 Crore was still due. The Tribunal noted that the Resolution Plan was approved on 01.02.2022, and the claim of ownership by the Appellant was subject to full payment of the entire consideration. Therefore, the relief sought by the Appellant was not maintainable. 4. Payment Disputes and Entitlement to Liquidated Damages: The Appellant claimed that it had made an excess payment and was entitled to liquidated damages, which should be set off against the balance sum payable to the Corporate Debtor. The Respondent argued that the Appellant had not made full payment, and the claim for liquidated damages was not substantiated. The Tribunal found that the Appellant's claim for ownership and delivery of the WEC was subject to the full payment of the project consideration, which was not fulfilled. Conclusion: The Tribunal concluded that the application filed by the Appellant was devoid of merits and dismissed the appeal. The connected applications for exemption and direction were also closed. The Tribunal emphasized that the Appellant failed to prove fraudulent intent and did not make full payment for the project, making the claim for the WEC delivery unsustainable in law.
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