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TMI Blog2019 (5) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench. The Erstwhile IRP also reported and recorded the same in the 1st CoC meeting about the non co-operation by the Respondents/Promoters/Directors. Hence, in respect of the prayer of the Applicant seeking co-operation from ex promoters/directors of the Corportae Debtor, an order is passed under section 19(3) of the I B Code on the ex promoters/directors to comply with the instructions of the liquidator and to co-operate with him in collection of information and management of the Corporate Debtor and now in completing the liquidation proceedings as well. Application allowed. - MA 436/2018 AND CP NO. 172/IBC/NCLT/MB/MAH/2017 - - - Dated:- 7-5-2019 - MR M.K. SHRAWAT, J. For The Applicant : Ms Khushboo Shah Rajani And Ayush J. Rajani ORDER 1. The Corporate Insolvency Resolution Process of Sanaa Syntex Private Limited (the Corporate Debtor) commenced on 22.08.2017, pursuant to admission of Section 7 application (CP 172/I BP/NCLT/MB/2017) filed by a Financial Creditor State Bank of India. The Corporate Debtor could not be revived because the COC had not approved the Resolution Plan submitted for due approval of CoC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom one of the offices situated at Andheri (west), Mumbai, which belonged to son of Mr. Sohail Kathuria, Respondent No. 1 (Promoter/Director of the Company) 4. The IRP attempted to seek information about running of the operations of the Company; as also with regard to Auditors of the Company who had not completed statutory audit from the Financial Year 2016-2017. In the first COC meeting held on 26.10.2017, the IRP raised concerns over non co-operation by promoters/Directors and auditors; pursuant to which information memorandum could not be completed. The IRP informed that the operations of the company are being managed by one Mr. Anil Kathuria, Respondent No.2, on a job work basis for a related party company i.e. Vincetore Textiles Private Limited (Respondent No.7). It was found that the cash flow of this activity was not routed through Corporate Debtor bank accounts until 30.11.2017. Subsequently, it was made routed through the bank account of the Corporate Debtor w.e.f. 14.12.2017. 5. The Applicant submits that in the Second COC meeting held in 01.11.2017, the IRP was replaced by the present liquidator as RP. The RP reviewed the financial statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the corporate Debtor from the sale proceeds of such transactions. 12. The next contention of the Applicant is that there has been a grave fluctuation in the sales and other relevant figures in the financials of the Corporate Debtor from 2015 onwards. The sales turnover has reduced from ₹ 14,143.90 Lakhs in the year 2015 to ₹ 359.04 Lakhs in the year 2017. Inventories in the year 2015 were worth ₹ 1490.13 Lakhs, however, in the year 2017, there were no inventories in the company. 13. It is further submitted in support of this contention that the Corporate Debtor suffered a loss of ₹ 635 Lakhs during the financial year 2014-15. The movement of cash balances as per the audited balance sheet for FY 2014-15, FY 2015-16 and FY 2016-17 were as under: FY 2014-15 : ₹ 1,45,19,491/- FY 2015-16 : ₹ 3,09,080/- FY 2016-17 : ₹ 4,34,716/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the inventory which is hypothecated to SBI, the lenders have lost approx. ₹ 1,141 Lakhs as the Corporate Debtor received only ₹ 117 Lakhs towards loss to building, plant machinery, furniture fixtures, electrical fittings etc. 18. The Applicant further states that only partial stock of raw material was destroyed by fire, while the auditor without any verification has relied on the management's information and written on the entire stock/inventory worth ₹ 1,141 lakhs as loss by fire, whilst the final assessed loss as per the fire insurance survey report is merely ₹ 117.18 lakhs which includes damage to building, plant machinery, electrical goods, furnitures fixtures etc. 19. Therefore, the Applicant states that due to gross negligence and wilful conspiracy of the Respondent No. 1, the overall loss due to fire incident, caused to the lenders being SBI is approx. ₹ 1,141 lakhs as claimed in the audited financial statements ought to be vested back to the lenders. 20. The next contention of the Applicant is that the Corporate Debtor has shown inflated debtors and incorrect Book Debts and stock state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 lacs was the actual inflow of money which could be traced in the Bank statements, remaining ₹ 101.57 lacs were adjustment entries (JV) passed in the books of accounts (Loan account of Siddhivinayak was credited and ledger accounts of Sunil Kathuria, Sohail Kathuria, Sunita Kathuria, Sakshi Kathuria and Sales/Purchase ledgers of Siddhiniyank were debited.) b. Loans were repaid by the Corporate Debtor to Siddhivinayak amounting to ₹ 102.32 Lacs. Out of the total loans repaid, only ₹ 0.33 Lacs was actual outflow of money which could be traced in the bank statements, remaining ₹ 101.99 Lacs were shown as repaid by passing adjustment entries. (Loan account of Siddhivinayak was debited and ledger accounts of Sunil Kathuria, Sohail Kathuria, Sunita Kathuria, Sakshi Kathuria, Siddhivinayak, K.D. Fabrics and Amar Fab (Andheri) were credited). c. Debtors account of Respondent No. 5 was settled by passing two journal entries, one crediting the creditors ledger of Siddhivinayak with approx. ₹ 31 lakhs and one crediting the loan account of Siddhivinayak with approx. ₹ 20 lakhs reducing the balance to Nil in all the three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns. In fact the last transaction with Konark is reported on 24.03.2015, while the sales return is booked on 01.06.2015. Though the entire sales of ₹ 427.03 Lacs were returned, the Corporate Debtor continued book sales to Konark. Such an act is clearly to defraud the creditor i.e. SBI Global Factor. d. The Applicant also states that Konark is located on the 2nd Floor of the same commercial structure as that of the Corporate Debtor. Though Konark is an unrelated party, the possibility of collusion cannot be ignored. e. Based on the finding of the Forensic Auditor, the amounts received from SBI Global have also been siphoned off to other related parties. 25. Hence, it is stated that the total overall loss to the lenders towards misuse of bill discounting facility aggregates to ₹ 3,103.30 lakhs 26. The transactions with respect to respondent No. 3 are stated below: a. Review of the Bank statements indicate a total ₹ 26.77 Las of outflows and ₹ 14.11 Lcas of inflow to /from Sohail during the period of 1st April, 2012 to 31st March, 2016. The net outflows was ₹ 12.66 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect address etc. Total value of receivable balances as on March, 3, 2017 was ₹ 1,137.95 Lacs. d. The Applicant states that letters were also sent to certain 10 customers (details annexed in the Petition) amounting to ₹ 42.69 Lacs responded stating that all the dues were paid off and there were no outstanding payables in their books of the Corporate Debtor. e. The Applicant also states that letters were sent to two related parties namely Jade Fabrics, (Proprietorship of Sakshi Kathuria and Vincitore Textiles Pvt. Ltd.), Respondent No 7 (Varun Kathuria, Son of Respondent No.2, is a Director). * Jade Fabrics: Total balance due was ₹ 16.32 Lacs. They replied stating that since April, 1, 2017 they had made several payments on behalf of Corporate Debtor and it resulted into mere ₹ 0.16 Lac receivable from Corporate Debtor instead of the outstanding due of ₹ 16.32 Lacs. Further on the basis of reply from Jade, the Applicant requested for some more information and Jade Fabrics is yet to provide their reply. * Respondent No. 7;- Total balance due was INR 17.84 Lacs. They replied stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Corporate Debtor and now in completing the liquidation proceedings as well. 33. In respect of Para 10 of this order, it can be understood that this transaction falls under section 45(2)(b) of the I B Code, which states that: 45. Avoidance of undervalued transactions: (1) XXX XXX XXX (2) A transaction shall be considered undervalued where the corporate debtor- a. XXX XXX XXX b. enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor. 34. Hence, the transaction discussed in para 10 of this order is not done in the ordinary course of business of the Corporate Debtor as assets (stock) has been transferred and no money/payment has been received in respect of the same. Hence, exercising jurisdiction under section 48(1)(c) of the I B Code, it is ordered to Respondent No. 7 to pay a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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