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TMI Blog2020 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... f the directors that this application is not at all maintainable is devoid of any merit. A prudent law obedient man never expected to do this kind of disobedience and breach of their own undertaking. What is attempted on the side of the directors is that they are willing to pay back the amount less ₹ 2 crore allegedly paid to the suppliers of raw materials as stated above and that for payment they need some more time due to disruption of bank transactions due to lock down. Neither the proposals discussed above seems to have genuine nor it would be workable. The conduct and approach of the directors indicates that they were willfully evading repayment on lame excuse under the guise of the lock down due to COVID-19. The directors were guilty of willful disobedience of the orders of the appellate Tribunal. The ingredients to be satisfied under section 74(1) of the Code stand proved - Being found guilty of violating the moratorium under section 14 of the code, the directors are punishable with imprisonment for a term which shall not be less than three years, but may extend to five years or with fine which shall not be less than one Lakh rupees, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble NCLAT in Company Appeal (AT) (Insolvency) No. 1113 of 2019. It is further submitted that the said amount withdrawn by the Directors of the suspended board of corporate debtor,(hereafter to be referred as directors) has not been deposited back despite giving the undertaking to the Hon ble NCLAT which has resulted in to the said Appeal being dismissed in default vide the Final Order. Hence, the present application has been filed by the Resolution Professional Applicant seeking the following directions:- I. To ensure restoration of the remaining amount from the Respondents to the bank account of the Corporate Debtor, II. Initiating appropriate proceedings. 3). The applicant prayed for an urgent hearing of the application, because the applicant/RP apprehends that the directors may take steps so as to make him impossible to recover the illegally withdrawn amount from the two defaulting directors namely Mr. Deepak K. Daga and Mr. Manoj Daga. The urgency sett up being found satisfactory this case was listed for hearing by given advance notice from the Registry of the NCLT, Kolkata Bench to the Directors and directions were also issued to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al quickly due to lock down and limited functioning in view of Covid -19 pandemic. Upon the above said contentions he is attempting to show that the fund he was withdrawn was for genuine purposes in connection with the operation of the business of the corporate debtor. However, no materials or documents to corroborate the above said contentions brought to my notice or to the notice of the RP. 7). Today when this case was again heard through VC, the Ld. Advocate Mr. Sandeep Bajaj and Ld. Advocate Ms. Aakanksha Nehra were represented for the Resolution Professional and Ld. Advocate Ms. Prachi Johri represented for Mr. Manoj K. Daga and Deepak Daga/Directors of Corporate debtor. Both directors were also allowed to join in the room for virtual hearing. 8). Ld. Counsel for the RP submits that the Corporate Debtor has a running business and the RP is facing with immense difficulty due to paucity of funds as the amount illegally withdrawn by the directors was required to be used for the business of the Corporate Debtor. Despite initiating contempt proceedings by the Hon ble NCLAT and the directors filed undertaking affidavit before the NCLAT that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for he RP submits that the application is perfectly maintainable that Pack Power and Pooja Trading is not at all a necessary or proper party. According to him money transferred from the current account of the CD during the period of CIRP is in violation of the order of moratorium under section 14 and the auctions of the directors comes within the purview of section 66(1) and section 74 (1) of the Code. He also submits that the Hon ble Appellate Tribunal directed the RP to approach RP for appropriate relief and therefore, filing of this application is perfectly maintainable. Regarding the submission that the directors are attempting to avail loan from HSBC bank and because of the lock down they could not collect the DD and hence could not pay the amount is also a false submission. He would say that a copy of DD dated 19.02.2020 was shown to Appellate Tribunal and that the copy of the DD shown to RP shows that the amount was payable not to the CD but to a third party. More than two months time had been given to the directors too for settlements with the creditors, but that too was not done alleging lame excuse of lock down. Argued by the Ld. Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the respondents/directors the Hon ble NCLAT observed: The Affidavits and undertakings of both these Respondents are accepted and taken on record. These Respondents shall comply with the Undertakings given. The Ld. Counsel for IRP accepts that ₹ 5,50,12,146/- (Rupees Five Crore Fifty Lakh Twelve Thousand One Hundred Forty Six Only) needs to be returned . It is understood that the respondents undertook to returned the money on or before 05.03.2020. 13). On 12.03.2020, the matter was again came to the consideration before the Hon ble NCLAT. Till then the money withdrawn by the directors was not remitted back. The Hon ble NCLAT dismissed the appeal. I am extracting para 22 to to 26, for the better understanding of the order of the Hon ble Appellate Tribunal. Para 22. Taking conspectus of whole developments in the CIRP proceeding and this Appeal, we are of the view that the Directors acted wholly illegally once moratorium had been applied, in going ahead and withdrawing monies from the accounts at the back of IRP by even issuing cheque4s self . Such acts cannot be justified in any manner. The appellant and Deepak Daga kept tell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawn from the accounts of the Corporate Debtor so as to trace the money and get it back in the Company accounts. Prima facie, it appears to us that the illegal withdrawals can, inter alia, be treated as criminal misappropriation and criminal breach of trust. Para 24: The Appellant Manoj K. Daga is present. The other Respondent Deepak Daga is stated to be not present, as not well. Para 25: Copy of this judgment and record of Appeal will be treated as Contempt Case to be registered as State vs. Manoj K. Daga and Deepak Daga as these Directors who will face the contempt case. The Registry will give it a Contempt case number and the same is listed on 7 th April, 2020. Counsel for the Appellant states that on that date, Manoj K Daga and Deepak Daga would both attend this Tribunal. Para 26: The CIRP proceedings will continue in terms of provisions of IBC. The IRP would be at liberty to examine the accounts and evidence and may place before the Adjudicating Authority all particulars and facts including evidence showing violation of Sections 14, 17 and 19 of IBC, after impugned Order dated 27.09.2019 was passed and during pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bedient man never expected to do this kind of disobedience and breach of their own undertaking. What is attempted on the side of the directors is that they are willing to pay back the amount less ₹ 2 crore allegedly paid to the suppliers of raw materials as stated above and that for payment they need some more time due to disruption of bank transactions due to lock down. Neither the proposals discussed above seems to have genuine nor it would be workable. The conduct and approach of the directors indicates that they were willfully evading repayment on lame excuse under the guise of the lock down due to COVID-19. None of the submissions seen corroborated with any reliable materials on their sides. 18). So the directors are persons neither has any regard for the prices of law nor for the orders issued by the Hon ble NCLAT. Repeated directions were disobeyed. Breached there own undertakings. Not even cared to refund the money despite receipt of notice asking why action for contempt of Tribunal should not be taken against them. The directors are aware of violation of moratorium ordered under section 14 of the Code. The above said facts proved t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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