2022 (11) TMI 905 - Tri - Insolvency and Bankruptcy

Wrongful furnishing of Corporate Guarantee - seeking direction to the Respondent/ Original Petitioner to address the liabilities arising out of unauthorized Corporate Guarantee dated 09.01.2017 in favour of M/s Sourya Container Leasing Company - Applicant submits that at no point did the Respondent have appropriate authorization from Original Respondent No.1 Aranca (Mumbai) Pvt. Ltd. to execute the said Corporate Guarantee - Can orders can be passed in the present proceedings relating to Section 7 proceedings? HELD THAT - The Applicant herein, has filed the present application seeking directions against the Respondent to make payment of the amount claimed by Mr. Vikram Kumar in C.P.(IB) No. 143 of 2020 on the ground that the respondent issued the Corporate Guarantee without any authorisation from Aranca (Mumbai) Pvt. Ltd. amongst other grounds as detailed in the present Application. It is a matter of record that Aranca (Mumbai) Private Ltd. greatly suffered at the time when the respondent was in-charge of the day to day management. For instance, the Respondent entered into several related party transactions and misuse of Aranca Funds unjustly enrich himself report of the SKP Business consulting LLP in November 2017 set out in significant detail the conduct of the respondent - Pursuant to Section 7 Petition Aranca (Mumbai) Private Ltd. was exposed to the possibility of dragged into CIRP on account of the conduct of the Respondent. In any event, the Respondent is exposed to liability of at least Rs.3,94,99,355/- which is an amount claimed by Mr. Vikram Kumar in the Section 7 petition. The Respondent did not approach the NCLT with clean hands and has suppressed material information - the Respondent are directed to indemnify Aranca (Mumbai) Private Ltd. from any liability arising from signing of the unauthorised, purported Corporate Guarantee by the Respondent contrary to Section 185 of the Companies Act, 2013 that is all liabilities arising out of the purported transactions with M/s Sourya Containers leasing Company ought to be borne solely by the Respondent. Thus, there is express irregularity in issuance of the Corporate Guarantee by the respondent and provisions under section 85 and provisions under section 185 of the Companies Act, 2013, were not followed - this Bench direct the respondent herein, to deposit an amount of Rs.3,94,99,355.00/- with Registry of NCLT Mumbai Bench within 15 days from this order to secure interest of Aranca (Mumbai) Private Ltd. Application disposed off.

Issues Involved:
1. Dismissal of the company petition.
2. Unauthorized Corporate Guarantee and related liabilities.
3. Allegations of fraud and collusion.
4. Potential exposure to Corporate Insolvency Resolution Process (CIRP).
5. Criminal complaint filed by the Original Respondent.
6. Compliance with Section 186 of the Companies Act, 2013.
7. Mismanagement and related party transactions.
8. Forgery and misuse of company funds.
9. Liability and indemnification.

Detailed Analysis:

1. Dismissal of the Company Petition:
The Applicant seeks the dismissal of the company petition, arguing that the Respondent furnished an unauthorized Corporate Guarantee. The Tribunal did not provide a specific ruling on this issue but focused on the unauthorized guarantee and related liabilities.

2. Unauthorized Corporate Guarantee and Related Liabilities:
The Applicant contends that the Respondent executed a Corporate Guarantee dated 09.01.2017 without appropriate authorization from Aranca (Mumbai) Pvt. Ltd. This guarantee was to secure funds availed by Meher Miracles Pvt. Ltd. from Sourya Containers. The Tribunal found that the Corporate Guarantee was issued without proper authority and directed the Respondent to indemnify Aranca (Mumbai) Pvt. Ltd. for any liabilities arising from this unauthorized act.

3. Allegations of Fraud and Collusion:
The Applicant alleges that the transaction was a fraudulent scheme involving collusion between the Original Petitioner and Sourya Containers. The Tribunal observed that the issuance of the Corporate Guarantee without authority indicated a potential fraud against Aranca (Mumbai) Pvt. Ltd. The Tribunal highlighted the irregularities and unauthorized actions by the Respondent.

4. Potential Exposure to CIRP:
The Applicant argues that Aranca (Mumbai) Pvt. Ltd. could be exposed to CIRP due to the unauthorized Corporate Guarantee. The Tribunal acknowledged this potential risk and directed the Respondent to deposit an amount of Rs. 3,94,99,355/- with the Registry of NCLT Mumbai Bench to secure the interests of Aranca (Mumbai) Pvt. Ltd.

5. Criminal Complaint Filed by the Original Respondent:
The Applicant mentioned that a criminal complaint was filed with the police on 12.11.2020 regarding the unauthorized Corporate Guarantee. The Tribunal did not delve into the specifics of this complaint but focused on the unauthorized nature of the guarantee.

6. Compliance with Section 186 of the Companies Act, 2013:
The Applicant submits that the Corporate Guarantee lacked the necessary Board and Shareholder Resolutions as required under Section 186 of the Companies Act, 2013. The Tribunal found that the provisions under Section 185 and Section 186 were not followed, rendering the Corporate Guarantee unauthorized.

7. Mismanagement and Related Party Transactions:
The Applicant alleges that the Respondent engaged in several related party transactions and misused company funds. The Tribunal noted that Aranca (Mumbai) Pvt. Ltd. suffered due to the Respondent's mismanagement and unauthorized actions, including entering into related party transactions.

8. Forgery and Misuse of Company Funds:
The Applicant claims that the Respondent forged signatures and misappropriated loan amounts. The Tribunal observed that the Respondent had previously forged signatures and misappropriated funds, leading to his disqualification as a director under Sections 84 and 167(1)(D) of the Companies Act, 2013.

9. Liability and Indemnification:
The Tribunal directed the Respondent to indemnify Aranca (Mumbai) Pvt. Ltd. for any liabilities arising from the unauthorized Corporate Guarantee. The Respondent was ordered to deposit Rs. 3,94,99,355/- with the NCLT Mumbai Bench within three weeks to secure the company's interests.

Conclusion:
The Tribunal found significant irregularities and unauthorized actions by the Respondent, leading to potential liabilities for Aranca (Mumbai) Pvt. Ltd. The Respondent was directed to indemnify the company and deposit a substantial amount to secure its interests. The Tribunal's decision underscores the importance of proper authorization and compliance with statutory requirements in corporate transactions.

← Previous Next →