9911796707
TMI Blog2019 (7) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... support of their contentions. The proceedings before this Tribunal are summary in nature and it is not possible for us to conduct an in-depth investigation and examine the veracity of these documents and averments. Without an in-depth investigation, it is not possible to arrive at a correct appraisal of the State of Affairs of the Corporate Debtor and to adjudicate upon the allegations made by the RP. The affairs of the Corporate Debtor ought to be investigated. Accordingly, the Central Government is directed to order an investigation into the affairs of the Corporate Debtor under Section 210(2) of the Companies Act, 2013 - application disposed off. - CA-64/C-II/2018 In CP (IB)-250/ND/2017 - - - Dated:- 19-7-2019 - Ms. Ina Malhotra, Member (Judicial ) And Ms. Deepa Krishan, Member (Technical) For The Petitoner : Ms. Pooja Mahajan And Mr Savar Mahajan, Advocates For The RP : M/s. Pooja Bahry For The Respondent : Mr A. Dhir, Ms. Varsha Banerjee, Mr. Milan Singh, Mr. Kunal Godhwani And Mr Rishi Kapoor ORDER MS. DEEPA KRISHAN, Member (Technical) 1. It is stated that the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (s) as this Hon ble Adjudicating Authority may deem fit and proper in the facts and circumstances of present case. 2. The following discrepancies in the accounts of the CD have been pointed out by the RP: - 2.1 Non-Existent debtors It is stated that in the application these are non-existent debtors and the latest balance sheet of the Corporate Debtor reflects debtors of approximately ₹ 191 Crores being are trade receivables. During the first COC meeting, the IRP informed the COC that the list of debtors had been extracted from the tally software ( Tally ) of the Corporate Debtor, which includes their name, address and amounts due, and in light of the huge amounts due from the debtors, it was decided by the COC that the IRP would track the debtors and send them recovery letters. Pursuant thereto, the IRP sent letters to the 50 debtors of which 33 letters were returned undelivered. Only the following three debtors replied to the IRP stating that they did not have any liability to pay the Corporate Debtor- (i) M/S Vardhman Special Steels Limited, replied vide their letter dated 30 November 2017 stated that there is zero bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , stating that no supporting documentation for the same was provided and receivable of more than ₹ 187 Crores were shown as outstanding for more than six months. 2.1.4 It was therefore inferred by the RP that the outstanding debt and debtors showing in the Tally are false. and fraudulently concocted by the erstwhile management. 2.1.5 The files pertaining to the fake debtors and transporters and other records were kept at the front office of the Corporate Debtor at Rohini. The Applicant/ RP suspected that these records relating to fake debtors etc. were fabricated by the suspended Directors after the Applicant/ RP started making investigation in respect of the same. It is further stated that while the legal counsels of the Applicant/ RP were in the process of drafting this Application against the Corporate Debtor, using some of the evidence/ records/documents lying at the Rohini offices, the applicant/ RP received a call on 12th February 2018 at 08.27 am from ASI, Police Station, Samaypur Badli that, in the early morning, there was a fire on the ground floor of the office of the Corporate Debtor at Rohini, which was extinguished by the fire brigade. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor against the IT order. 2.4 Falsification of Books of accounts, namely, Fake suppliers and fraudulent operational creditors, including the Operational Creditor who initiated the CIRP of the Corporate Debtor; Inflated stock statements to dishonestly get credit from banks by showing them a false picture about operations of the Corporate Debtor; * Unauthorized rice trading; Failure to maintain proper books of account, which, if maintained properly as per rules, could have given correct picture about the financial health of Corporate Debtor. Voluminous documents by way of affidavit have been filed to support the above contentions. The Resolution Professional has pointed out the following 3 contraventions of the Code: (1) Breach of Section 65 of the Code which provides that if any person initiates the Insolvency Resolution Process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, penalty prescribed in the said Section may be imposed. It is stated that in this case, the CIRP applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expected of a person carrying out the same functions as are carried out by such director in relation to the corporate debtor. It is stated that in the case of the Corporate Debtor, losses were being incurred and financial constraints were being faced. Even the Appeal Order passed by CIT (Appeals), which pertains to the A. Y. 2010-11 records that the stock statements were inflated by the erstwhile management due to financial constraints. Therefore, it is evident that instead of taking steps for minimizing the financial liabilities of the Corporate Debtor, the Suspended Directors took on more liabilities on the basis of inflated stock statements. It is stated that, in January 2014, the business operations of the Corporate Debtor were suspended and no further steps were taken by the Suspended Directors to either present a viable turn around plan or to minimize the losses to the creditors. It is also submitted that if the trade receivables worth almost ₹ 200 Crores were indeed genuine, then it is inexplicable why the Suspended Directors did not take any steps for their recovery as would have been taken by any prudent person in their place, especially when the net wort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Corporate Debtor and are thus, liable to be punished under Sections 71 and 72 of the Code. Section 73 of the Code provides inter alia that where any officer of the corporate debtor, prior to the insolvency commencement date, has made any false representation or committed any fraud with respect to the creditors, such person shall be liable to punishment as prescribed under the said Section. * It is submitted that for the above contraventions, jointly and/or severally, all the three Suspended Directors are liable for contravention of Sections 66, 67, 70, 71, 72, 73 and 235A of the Code, having carried on the business of the Corporate Debtor in a fraudulent manner, dishonestly indulging in fraudulent/ wrongful trading, falsification and destruction of books and records of the Corporate Debtor and wilful and material omissions from statements relating to affairs of the Corporate Debtor, defrauding creditors and making false representations to them and deliberately refusing to disclose information required by the Applicant/ RP with respect to state of affairs of the Corporate Debtor. It is submitted that the evidence discovered by the Applicant/ RP and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uable assets of the Corporate Debtor, by not deploying adequate security in the factory premises. It is stated that pursuant to admission of CIRP and once the possession of the factory was taken over by the Resolution Professional, the members of suspended Board of Directors of the Corporate Debtor would have no role to play in so far as the security of the factory of the Corporate Debtor is concerned. Therefore, the onus of securing the valuable assets of the Corporate Debtor is completely upon the Resolution Professional and the same cannot be shifted on the Respondents herein on such baseless and vague allegations. 4.6 Respondents 1, 2 and 3 have denied the allegations of fraudulent or malicious initiation of proceedings and have stated that there was no mala fide intention on part of the answering respondents in conceding the default amount qua the petitioner namely Shree Ram Lime Products Private Limited. 4.7 It is further stated in the reply that pursuant to the financial distress of the Corporate Debtor, it had already defaulted towards its repayment obligations to its lenders and the lenders had already taken action under the SARFAESI Act. The factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been held by the Hon ble NCLAT. Further the observation of the Hon ble NCLAT in M/S Unigreen Global Pvt Ltd Vs. PNB and Ors. has been quoted as follows: That there is nothing on record to suggest that the Corporate Applicant has suppressed any fact or has not come with the clean hand. The Adjudicating Authority has also not held that the application has been filed by the A location audient or with malicious intent or an purpose other than for the resolution process or liquidation or that the voluntary liquidation proceedings have been initiated with the intent to defraud any. person. In absence of any such reasons recorded by the Adjudicating Authority the impugned order cannot be upheld. 5.3 It has further been stated that in the same judgment, namely M/S Unigreen Global Pvt. Ltd. v. PNB and Ors, it is held that if any action has been taken by a Financial Creditor under Section 13(4) of the SARFAESI Act, 2002 against the Corporate Debtor or suit is pending against Corporate Debtor under Section 19 of DRT Act, 1993 before a Debt Recovery Tribunal or appeal pending before the Debt Recovery Appellate Tribunal, cannot be a ground to reject an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed as liquidator. The liquidation order was passed during the pendency of CA-64/C-II/2018 and in that sense the present application CA-64/C-II/2018 filed under Section 60(5), 65, 66, 67, 70, 71, 72, 73 and 235(A) merges with the liquidation order. However, we find that the application CA-64/C-II/2018 is also listed for disposal separately. Accordingly, the same is being adjudicated upon. 8.2 As discussed above, there are serious allegations made by the Resolution Professional in the instant CA and supporting evidence for the same was shown to us during the multiple hearings in the case. In their reply, Respondent 1, 2 and 3 have countered these allegations and filed documents in support of their stand. Respondent 4, being the Operational Creditor on whose application the CIRP was initiated, has also filed reply countering the allegations made by the RP in the instant application. It is also seen that there have been two unsavory incidents at the premises of the CD namely fire at the factory premises on 12.02.2018 and subsequent attack on the security guard at the office of the CD on 15.03.2018. 8.2.2 Voluminous documents and vouchers have been filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
