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TMI Blog2021 (3) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not tenable as during course of Corporate Insolvency Resolution Process, there are going to be deposits and payments from the Bank Account of the Corporate Debtor in the normal course of the business, wherein the monies will be credited to bank account of the Corporate Debtor in normal course of business, and debit entries can be effected by the Bank on the instructions received from the Authorized signatory of the bank account only. The order of this Court is to be complied within 15 days by the Respondent No.4 Bank. However, since a fraud has been committed against the Respondent No.4 Bank, the Respondent No.4 Bank is free to initiate Criminal/Civil actions against the other Respondents and/or against any other persons involved in committing fraud against the Respondent No.4 Bank. The compliance be reported by the Respondent No.4 Bank by way of an affidavit to this bench. - IA 1299/MB-IV/2020 IN CP (IB)/3176/MB-IV/2019 - - - Dated:- 15-3-2021 - Rajesh Sharma, Member (Technical) and Suchitra Kanuparthi For the Applicant/RP : Ms.Tania Sharma a/w Mr.Anup Rawat, IRP For Respondent No.1 : Mr.Ravneet Singh, Advocate For Respondent No.2 3 : Mr.Prateek Gupta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Process(CIRP)and breached the undertaking signed by them for the same. vi. The Applicant/Resolution Professional has terminated the employments of the Suspended Board of Directors with immediate effects due to their conduct as mentioned above. The Applicant also instructed them to cooperate in the Corporate Insolvency Resolution Process(CIRP) proceedings and revival of business and conveyed the same via email dated 05.09.2020. vii. The Applicant/ Resolution Professional has issued letters and emails dated 05.08.2020, 29.08.2020, 15.08.2020, 19.08.2020, 27.07.2020 and 23.07.2020 requesting for furnishing the Book of Accounts and other information. The Suspended Management has only replied to the emails but failed to provide the same. viii. The Suspended Management has also failed to handover the Fixed Assets belonging to the Corporate Debtor situated in Mumbai and Bangalore despite various reminders from the end of Applicant/ Resolution Professional. ix. The Corporate Debtor had hypothecated Eight (8) Bolero vehicles of which charge was also registered on the ROC Website. During the Corporate Insolvency Resolution Process(CIRP) Proceedings, the Suspended Management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority had to comply with the technicalities for pursuing the said transaction from the Bank Account held with Respondent No.4 for ensuring the ongoing concern of the Corporate Debtor. vii. The Respondent No.1 submitted in his reply that the said fraudulent transaction has been committed in connivance by Respondent No.2, 3 4. Also, he has vehemently alleged that Resolution Professional has not intimated Respondent No.1 from the very instance of initiation ofCorporate Insolvency Resolution Process(CIRP). 5) The Respondent No.2 has submitted in his reply as follows: i. The Respondent No.2 has submitted in the reply that Respondent No.2 was brought in the Company of the Corporate Debtor as a director in August 2019 for extending specific Technical Support to the Corporate Debtor. Respondent No.2 further claims of having no Financial decisionmaking authority and was not involved in the financial affairs of the Corporate Debtor Company unless specifically involved by Respondent No.1. ii. The Respondent No.2 submits thathe was notinvolved in the transaction relating to the withdrawal of ₹ 44.90 Lakh from the Bank Account held with Respondent No.4 and he had not is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany controlling its functions. The same fact was also raised at the time of admission of Section 7 Application and recorded in the Order dated 26.02.2020. xi. Respondent No.2 has further submitted that four out of total eight vehicles, are in the custody of UP Police, for which the applicant has not taken possession till date. One Vehicle has been handed over to the Resolution Professional by Respondent No.1. The rest of three vehicle are in possession of Mr. Sanjay Bhatti as alleged by the Respondent No.2. xii. Respondent No.2 has further relied on the Section 70 of the IBC 2016 and since he is not in possession of the said vehicles, he is not in a position to hand over the same. xiii. Respondent No.2 has submitted that he has fulfilled his commitment as given in the undertaking dated 03.07.2020 in regards to the bearing of CIRP cost by the Corporate Debtor and the same cannot be construed to be fulfilled by the Suspended Directors personally. xiv. Respondent No.2 has submitted that in respect of the statement of accounts for F.Y. 2018-19 and F.Y. 2019-20, Respondent No.3 has duly submitted its response to the Applicant/RP which is being misrepresented by the Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r he had any knowledge of such transactions due to onset of restriction due to COVID-19 pandemic nor he had attempted to carry out same through other mediums. vi. Respondent No.3 has corroborated that Section 66(1) of IBC 2016 clearly casts liability only on persons who were knowingly parties and therefore, he can t be made liable for the said transaction as he had no knowledge of the same and there is absolute absence of mens rea in his case. vii. The Respondent No.3 has clearly alleged and relied on the apparent admission of Respondent No.1 on hearing dated 11.01.2021 wherein he submitted that the transaction carried out without signed cheques, which according to Respondent No.3 is against the banking regulations and Respondent No.4 Bank is responsible for the same. viii. The Respondent No.3 has also submitted that vide letter 11.08.2020 Respondent No.4 Bank has caused some of the Suspended Directors of Corporate Debtor regarding the said transaction but Respondent No.4 Bank didn t even array Respondent No.3 in the notice. ix. Respondent No.3 has also submitted that no document has been placed on record to indicate Respondent No.3 active or passive involvement in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther it was submitted that the management of the company was not permitted to enter into its own office on 31.08.2019 by one, Dr. B.N. Tiwari and the same was reported via police complaint. xviii. Respondent No.3 has further submitted that even after the clarification from the office of Enforcement Directorate via letter dated 01.09.2020, the applicant has not taken steps in regards to getting access the documents from the said office at H-67 office. xix. Respondent No.3 has stated that they have provided digital copies of all major available documents and has arranged for the preparation of audited financial records of the Corporate Debtor for F.Y. 2018-19 along with designated auditors to keep Corporate Debtor as a going concern. 7) The Respondent No.4 Bankhas submitted in its reply as follows: i. Respondent No.4 has alleged in its reply that if the Applicant/RP has shown thatSuspended Management was co-operating with him then why did he not insist upon them to revert back the amount so debited in the account at the instance of the said Directors. Respondent No.4 has further claimed that the present application has been filed with ulterior motives against the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il 2020 which was remitted throughRTGS on 4th April 2020 as per instructions of Company s Directors in the normal course of Bank s business in the morning itself as the Bank s working hours starts at 10:00 AM. vi. Respondent No.4Bank has alleged that even the Directors/officials of the Corporate Debtor Company failed to inform/reveal to the Bank that CIRP process has been initiated and this Tribunal has passed an order dated 26.02.2020 restricting Bank from debiting the transactions and freezing the current account. vii. Respondent No.4 has claimed in their reply that management of the Company failed to inform the bank on 3rd or 4th April 2020 when they came for transaction and Respondent No.4 had no knowledge of the said order as well as Applicant/RP informing them till 4 th April 2020. 8) Respondent No.4 has made further submissions through Additional Affidavit filed on 12.01.2021as under :- i. Respondent No.4 has submitted that they have dealt with the account of the Respondent No.1/Corporate Debtor as per norms and as per mandate so given to Respondent No.4 Bank by RBI from time to time and never encouraged any corrupt practices in Respondent No.4 in any manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that on receipt of objection on 30.07.2020 with regard to the said transaction between 20.03.2020 and 04.04.2020 from Applicant/RP for the first time, they sent a reply to the Applicant/RP for the same, which are on record. And they further issued letter dated 11.08.2020 to all the Directors and authorized signatory of the Corporate Debtor and intimated about sending such communication to the Applicant/RP also. viii. Respondent No.4Bank finally has submitted that the Bank has also filed their response to the query so received from RBI on reference of a complaint by Applicant/RP in this regard wherein the allegation could not be proved/found. ORDER The Bench has heard learned counsel of Applicant/RP and Respondents. Resolution Professional (RP) and Respondents were also present on few occasions. After hearing all the parties and after careful perusal of documents submitted before this tribunal, the Bench is pleased to pass the following order :- 1. In this case, the Corporate Insolvency Resolution Process(CIRP) was initiated by the Order of this Bench w.e.f. 26.02.2020. As per the submissions made by the Resolution Professional, he communicated to Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other Respondents and/or against any other persons involved in committing fraud against the Respondent No.4 Bank. The compliance be reported by the Respondent No.4 Bank by way of an affidavit to this bench. 5. The Resolution Professional (RP) is at liberty to initiate Criminal/Civil actions against the Respondents No. 1, 2, 3 and/or against any other persons involved in committing fraud of making unauthorized payment. 6. Further Respondent No.1,2 3 are hereby directed to give possession of all the assets including Bolero Vehicles of the company to Resolution Professional, if not done already, and to confirm compliance by way of an affidavit to this Bench ofthe same within 15 days of this order. 7. The Respondent No.1, 2 3 are also directed to provide absolute cooperation to the Resolution Professional in discharging his duties. 8. The registry is directed to immediately communicate this order to the Resolution Professional and Respondents even by way of email. 9. The registry is also directed to immediately communicate this order to the RBI, it being the regulatory authority of the banking sector; even by way of email. 10. Compliance report of the order by design ..... 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