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TMI Blog2021 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... for arranging the long term working capital loan from SREI Equipment Finance Limited and ₹ 26,00,000/- as part of commission for getting business order from M/s. Regen Powertech Private Limited - Corporate Debtor released the third tranche of payment on 31.03.2018 amounting to ₹ 10,00,000/- as balance commission amount for getting business order from M/s. Regen Powertech Private Limited. There is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order. The impugned order passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Special Bench, Chennai is hereby affirmed - Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 349 of 2020 - - - Dated:- 21-9-2021 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical For the Appellant : Gaurav Mitra, Sr. Advocate, Akshat Singh and Bhanu Gupta, Advocates For the Respondents : Vijay Kumar, Mohit D. Ram and Goutham Shivshankar, Advocates JUDGMENT Justice Anant Bijay Singh; This Appeal has been preferred by the Appellants namely Deepak Parasuraman and Ingenium Advisory LLP both are aggrieved and dissatisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor and as per Clause 3.2 of the said contract, the Appellant No. 2 was entitled to receive 5.5% commission on the amount of the purchase orders and ₹ 5 Lacs towards travelling, legal and other expenses. v) Further case is that pursuant to the Agreement dated 16.08.2016, the Appellant herein facilitated a meeting between a potential buyer and the Corporate Debtor. Subsequent to the facilitation of the meeting by the Appellant, the meeting of the Corporate Debtor with a potential buyer (M/s. Regen Powertech Private Limited) was finalized in the first week of December 2016. As per the contract dated 16.08.2016 the Appellant No. 2 was entitled to get commission @ 5.5% on this purchase deal which amounted to ₹ 52,25,000/- and ₹ 5,00,000/- towards travelling, legal and other expenses, thereby amounting to ₹ 57,25,000/-. vi) The Corporate Debtor made the first tranche of payment on 19.12.2016 of ₹ 25,00,000/- including the advance of ₹ 5,00,000/- as a part payment of the initial contract of 2015 for facilitation of securing long term working capital loan for the Corporate Debtor. vii) The Appellant No. 2 fulfilled the contract dated 16.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements dated 12.10.2015 (Annexure A-2 at page 58 to 61 of the Appeal Paper Book) and 16.08.2016 (Annexure A-3 at page 62 to 65 of the Appeal Paper Book) respectively. The said communications cannot be disregarded without going into the merits of the letters. 4. It is further submitted that as per the Agreement dated 12.10.2015, the Appellant No. 2 agreed to provide consulting on business and restructuring on behalf of the Corporate Debtor that included arranging for Long Term and Working Capital Debt for the Corporate Debtor. For its services, the Appellant No. 2 agreed to charge 3% commission fee on the loan amount raised, out of which, ₹ 5 Lacs was required to be paid in advance for facilitating the arrangement. 5. It is further submitted that the Corporate Debtor and the Appellant No. 2 herein entered into another agreement dated 16.08.2016 wherein the Appellant No. 2 was required to facilitate the procurement of purchase order/supply contract from windmill manufacturing companies for supply of tubular steel towers of the Corporate Debtor and as per Clause 3.2 of the said contract, the Appellant No. 2 was entitled to receive 5.5% commission on the amount of the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority failed to appreciate that the total amount of ₹ 65 Lacs have been received by the Appellant No. 2 from the Corporate Debtor in three tranches on 19.12.2016, 26.06.2017 and 31.03.2018 respectively. Thereafter, Respondent No. 1 herein preferred an Application bearing No. MA/987/2019 before the Adjudicating Authority under Section 43 and 66 of the Insolvency and Bankruptcy Code, 2016 alleging the aforesaid transfer of payments made by the Corporate Debtor as part of ordinary course of business to be preferential and fraudulent in nature. 13. It is further submitted that the Ld. Adjudicating Authority has failed to appreciate that to prefer an application under Section 43, the Resolution Professional is required to be of an opinion that the Corporate Debtor at the relevant time has given a preference in such transaction as laid down in the Act. 14. It is further submitted that Resolution Professional - Respondent No. 1 herein has formed an opinion against a particular transaction to be preferential in nature and for the said purpose the Resolution Professional must have obtained a forensic report or Transaction Audit Report of the alleged transaction. However, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residence of the Respondent No. 2; b. The Appellants and the Respondent No. 2 have common interest in a company called as Udveka Engineering Private Limited where Respondent No. 2 and his wife are directors since 22.08.2016 and 26.09.2018 respectively. The Appellant No. 1 and 2 hold 500 and 9500 equity shares respectively in Udveka Engineering Pvt. Ltd. with balance 250 shares held by the Respondent No. 2. Therefore, the Appellants are shareholders and Respondent No. 2 is Director acting on instructions of the Appellants; c. No details were disclosed by the Appellants or by the Respondent No. 2 despite repeated requests about the payments and transactions to the Resolution Professional. 21. It is further submitted that the Appellant No. 2 was incorporated on 12.01.2015 and the Appellant No. 1 and his wife are partners of the Appellant No. 2 are engaged in investment advisory and business consultancy services. The payment was made pursuant to two letters of engagement viz. 12.10.2015 and 16.08.2016. The engagement letter dated 12.10.2015 entered between Respondent No. 2 in personal capacity with Appellant No. 2 wherein Appellant No. 2 agreed to arrange long term loans withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Appellants have now produced various engagement letters with various customers to show that they had substantial business in 2015-16 and 2016-17 is contrary to their own financial statements. The financial statements for 2016-17 shows NIL income from operations. Since consultancy is the main business of Appellant No. 2, such income ought to have been accounted by the Appellant No. 2 which is not seen from the financial statements of Appellant No. 2. 23. It is further submitted that the Resolution Professional sought for Invoice as the payment has been made toward 'business consultancy services' which is liable to service tax. Further as the amount paid is much in excess of threshold limit of ₹ 10 lacs applicable for registration of Service Tax, such Invoice is mandatory. In this regard reference is drawn to rule 4A of the Service Tax Rules, 1994 which was then applicable- Every person providing taxable service [not later than [thirty] days from the date of [completion of] such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier shall issue an invoice, a bill or, as the case may be, a challan signed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements one is dated 12.10.2015 (Annexure A-2 of the Appeal Paper Book) and another is dated 16.08.2016 (Annexure A-3 of the Appeal Paper Book). 29. It is further submitted that the Ld. Adjudicating Authority, in paragraph 8 of the impugned order wrongly finds that there was no material to say that the payments made were transferred as payment for consultancy services. It further holds that there were no supporting entries in the books of account of the Corporate Debtor to demonstrate that these payments were made for business purpose. These factual findings are erroneous and contrary to the record. 30. It is further submitted that the Ld. Adjudicating Authority has given finding is completely contrary to well settled principles of law that fraud has to be proved by the person alleging it by leading cogent evidence. Fraud must be pleaded and proved. It cannot be presumed. 31. It is further submitted that the Ld. Adjudicating Authority has failed to note the essential requirements of Section 66 of the IBC have not at all been proved by the Resolution Professional in the present case. Under Section 66(1), the Resolution Professional is to demonstrate that the business of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Professional during the course of CIRP while reviewing the books of accounts of the Corporate Debtor came to notice across the aforesaid payments made by the Corporate Debtor to the Appellant. The details of payments were sought from the Respondent No. 2 through email but there was no response or justification in support of such payments made to the Appellants. The books of accounts reflected this money as advance to the Appellants. It is also admitted fact that the Office of the Appellant No. 2 is located at the residence of the Respondent No. 2. It is also admitted fact that the Respondent No. 2 have common interest in a company called as Udveka Engineering Private Limited where Respondent No. 2 and his wife are directors since 22.08.2016 and 26.09.2018 respectively. It is also admitted fact that the Appellant Nos. 1 and 2 hold 500 and 9500 equity shares respectively in Udveka Engineering Pvt. Ltd. with balance 250 shares held by the Respondent No. 2. Therefore, the Appellants are shareholders and Respondent No. 2 is Director acting on instructions of the Appellants. It is also admitted fact that the Appellant No. 2 was incorporated on 12.01.2015 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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