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TMI Blog2022 (5) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellants herein did not operate the Bank Account or were not involved in any Bank Transaction, post their resignation, is untenable. These Bank Transactions post resignation, squarely fall within the ambit of Section 66(1) i.e., it is found that the business of the Corporate Debtor has been carried on with an intent to defraud Creditors . Amounts written off as bad debts only because they could not be recovered - HELD THAT:- A perusal of the scanned copy of the Bank Statement evidences that the Adjudicating Authority has rightly concluded that there are no reasons given for how an amount of Rs.42,33,304/- has been settled for a mere payment of Rs.3 Lakhs/-. This fraudulent transaction took place during the time the Appellants were Directors of the Corporate Debtor and squarely falls within the ambit of Section 66 of the Code. The debts written off to defraud the Creditors, the cash transaction post their resignation evidencing their financial control in the affairs of the Corporate Debtor , clearly establish that they are fraudulent transactions done with a wilful intention of financial gain at the cost of negatively effecting the Creditors - Appeal dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IRP; that they have not been sharing important documents and information on account of which, the Transaction Auditor was not able to submit his Report and that no supporting Report from the Transaction Auditor has been annexed only on account of this non-cooperation; that the Report has been based on the IRP s analysis of the data and the information available. 6. It was stated that the ex-Directors assisted by one Mr. Manish Kumar Gupta and one Ms. Eva Srivastava sold their shareholding to defraud the Creditors; that the share sale details and the correct address of the new Shareholders were not being shared with the IRP; that Mr. Shiv Kumar Chaturvedi, the new Director, has not been making any transactions and was the only Director on the board; that the four Promoters sold their 100% shareholding to a related concern namely Committed Cargo Care Limited on 20/10/2017; the four Promoters are also the Promoters/Directors of this Committed Cargo Care Limited and that on 31/03/2018, about five months later, Committed Cargo Care Limited sold a part of its shareholding in the Corporate Debtor , (Stock Flow Express Private Limited), back to these four Promoters/Directors and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued between 08/01/2019 and 29/06/2019 subsequent to 31/12/2018, though the Appellants herein claimed that they did not have any control of the Corporate Debtor Company and denied issuing any cheques after 31/12/2018. It was stated by the IRP that the signatures on the cheques matched those with the letters of resignation of the four Promoters. It was stated that the IRP sought information from ICICI Bank which Bank informed that during 02/04/2019 and 19/10/2019, similar cheque transactions had taken place. 10. The Appellants had in their reply dated 29/09/2020 before the Adjudicating Authority denied that they had indulged in any such fraudulent transaction; that the sale of the shareholding does not fall within Section 66 of the Code; that they had resigned from the Company on 31/12/2018 itself and the management and control of the Corporate Debtor was under the control of Mr. Sujeet Kumar Choudhary (now deceased) and Mr. Shiv Kumar Chaturvedi. It was further stated that the IRP had not brought on record any Report or document to substantiate that they had been issuing cheques after the Company was taken over by Mr. Sujeet Kumar Chaudhary. It was also observed that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e written off during the financial year 2016-17, 2017-18 and 2018-19, the respondent no. 9 is directed contribute Rs.2377952/- (2012383+2220651) and respondent no. 10 is directed to contribute Rs. 2377952/- (1071250+ 1306702) and if the amount shown in the order is not paid by the respondent Nos. 9 and 10, in that case same shall be recovered from the respondent Nos. 1 to 4 jointly or severally. The Respondent No. 1 to 4, 9 and 10 are directed to contribute the aforesaid amount in the account of Corporate Debtor through the Liquidator within 3 months from the date of order, failing which same shall be realised through the process of Court. Apart from that the applicant is also directed to institute a prosecution under Section 69 of the IBC, 2016 in accordance with the provision of law against respondent Nos. 1 to 4, 9 and 10. 14. Learned Counsel for the Appellant strenuously contended that the Adjudicating Authority has erroneously allowed the Application in the absence of any Transaction Audit Report as no Audit was ever conducted on any of the alleged transactions of the Corporate Debtor ; and that the Appellants have been held liable under Section 66 of the Code solely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by such director or partner, as the case may be, in relation to the corporate debtor. 67. Proceedings under section 66.-(1) Where the Adjudicating Authority has passed an order under sub-section (1) or sub-section (2) of section 66, as the case may be, it may give such further directions as it may deem appropriate for giving effect to the order, and in particular, the Adjudicating Authority may- (a) provide for the liability of any person under the order to be a charge on any debt or obligation due from the corporate debtor to him, or on any mortgage or charge or any interest in a mortgage or charge on assets of the corporate debtor held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf; and (b) from time to time, make such further directions as may be necessary for enforcing any charge imposed under this section. Explanation.-For the purposes of this section, assignee includes a person to whom or in whose favour, by the directions of the person held liable under clause (a) the debt, obligation, mortgage or charge was created, issued or transferred or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority; (g) to perform such other duties as may be specified by the Board. Explanation.-For the purposes of this [section], the term assets shall not include the following, namely:- (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; (b) assets of any Indian or foreign subsidiary of the corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31-03-2016 Less than 6 months 47749407 12816088 More than 6 months 25632177 Total receivables 24470625 47749407 38448265 34757837 Bad debts written off 12537262 636143 194857 20. The Adjudicating Authority has given noted detail the Bank Transactions done by the ex-Directors/Promoters after resigning as Directors. It appears from the material on record that the total transactions done after the Directors resigned on 31/12/2018 upto 26/07/2019 is Rs.19,98,602/-. It is further seen from the record that as per the reply sent by the ICICI Bank to the IRP, it is recorded that during 02/04/2019 till 19/10/2019, authorised signatories were none other than the Appellants themselves. Therefore, the contention of the Learned Counsel for the Appellant that the Appellants herein did not ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his fraudulent transaction took place during the time the Appellants were Directors of the Corporate Debtor and squarely falls within the ambit of Section 66 of the Code. 23. Keeping in view, the copy of the Bank Statements, amounts written off as bad debts during the Financial Year when the Appellant/Promoters were the Directors, the circuitous sale of shares, this Tribunal is of the earnest view that the contention of the Learned Counsel for the Appellant that there was no Transaction Audit and hence the Adjudicating Authority ought not to have given a finding of fraudulent transaction under Section 66 of the Code is unsustainable. If the IRP/RP has prima facie suspicion of any fraudulent transactions, as defined under the Code, have a recourse to approach the Adjudicating Authority for necessary action. At the cost of repetition, it is specifically averred by the IRP that there was no cooperation from the Appellant/Promoters and hence an Affidavit was filed by him with a detailed analysis. We find merit in the submission that not having cooperated in giving information to the IRP, the contention of the Appellants that the Adjudicating Authority has in the absence of any Aud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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