9911796707
TMI Blog2023 (6) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Standard of Proof, which is attached to a Fraudulent Intent. A Director, of a Company, may be proceeded against for a Wrongful Trading, because of the reason of Negligent Failure of Management. Besides this, a person, knowingly a Party to a Fraudulent Trading, by the Company concerned, may be subject to the proceedings - The Appellant has a duty, to establish to the satisfaction of this Tribunal, that a person, is knowingly carrying on the business with the Corporate Debtor, with an dishonest intention, to defraud, the Creditors. For a Fraudulent Trading / Wrongful Trading, necessary materials are to be pleaded by a Litigant / Stakeholder, by furnishing Requisite Facts, so as to come within the purview of the ingredients of Section 66 of the I B Code, 2016. Suffice it, for this Tribunal, to pertinently point out that the ingredients of Section 66 (1) and 66 (2) of the I B Code, 2016, operate in a different arena. It is crystalline clear that the transaction of Transfer of Assets, among / within the Group Companies, ex-facie, will not come within the umbrage of the Fraudulent Trading, as per Section 66 (1) of the Code, as opined by this Tribunal. Furthermore, in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having a common Directorship and is represented by the 4th to 6th Respondent Directors. However, on the contrary the Learned Counsel for the Respondent has submitted that the money for the lands that were purchased by the 3rd Respondent were given by RPPL to the Corporate Debtor which in turn provided that money to the 3rd Respondent which is one of the SPVs created by the Regen Group. It was submitted that the RPPL has funded the Corporate Debtor for the development of the project and that the transaction has happened within the group. It is required to be noted that a transfer of assets within the group companies per se would not constitute fraudulent trading as stipulated under Section 66(1) of IBC, 2016. In the present case, the reason given by the Respondent in respect to transfer of assets among its group companies appears to be plausible and cannot be brought under Section 66(1) of IBC, 2016. 37. Further, the Hon ble High Court of Himachal Pradesh in the matter of Hypine Carbons Limited -Vs- J.C. Bhatia and others , decided on 13.11.1998, had held that; 34. Mere failure on the part of the Respondents to initiate legal steps against the debtors would not bring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the Respondents, together with the overwhelming documentary evidence, substantiating the same, only, the Respondent Nos. 1 and 2, had filed a Counter, before the Adjudicating Authority / Tribunal , and that the Respondent Nos. 3 to 8, had not filed any Counter, before the Adjudicating Authority . 6. The Learned Counsel for the Appellant contends that although the Respondent Nos. 1 and 2, had filed their Counter Affidavit , before the Adjudicating Authority / Tribunal , no documents were filed along with the said Affidavit , and in fact, the only defence, projected by the Respondent Nos. 1 and 2, was that, the money for the lands, were given by RPPL to RISPL , which inturn, provided the Funds , to the 3rd Respondent. As a matter of fact, not a shred of documentary evidence was produced , to substantiate this Claim . Moreover, despite the fact it is claimed that the 3rd Respondent is a Special Purpose Vehicle , floated by the Regen Group of Companies, but again, not a shred of documentary evidence, is furnished to substantiate this Claim . 7. The grievance of the Appellant is that, the Adjudicating Authority , had accepted the unsubstantiated defenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany , who are also not related to RISPL or RPPL , in any manner, whatsoever. 12. According to the Appellant, the RISPL and the 3rd Respondent , do not form a Group Company , since the facts of the present case, do not satisfy the threshold , specified in Explanation (b) to Section 5 (b) of the Competition Act, 2002, which runs as under: (b) group means two or more enterprises which, directly or indirectly, are in a position to- (i) exercise twenty-six per cent or more of the voting rights in the other enterprise; or (ii) appoint more than fifty per cent of the members of the board of directors in the other enterprise; or (iii) control the management or affairs of the other enterprise. 13. It is the plea of the Appellant that even assuming without admitting that the 3rd Respondent , is a Related Party / Group Company of RPPL and RISPL , it is mandatory for a Board Resolution , to be passed under Section 188 of the Companies Act, 2013 , before the lands, belonging to RISPL , could be sold to a Related Party . In fact, the Transactions , impugned by the Appellant , are not on arms length basis, as RISPL , received no consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of Immovable Properties for a total extent of 16.02 Acres in favour of the 3 Respondent M/s. Lakshmiranga Perumal Renewable Energy (P) Ltd., (LPREPL) as fraudulent, null and void and consequently, direct that the said Immovable Properties as detailed below are transferred and vested with the Corporate Debtor M/s. Regen Infrastructure and Services (P) Ltd., (a) Sale Deed Doc. No.174 / 2017 dated 30.03.2017 executed by Shri. Jayantilal Amarshibhai Kaila in respect of 1.65 Acres (00.66.77 Hectares) in Location PVKH61, S.No.92 / 1, Part 1, Khakharechi Village, Maliya (MI) Taluk, Morbi Registration District in Gujarat State. (b)Sale Deed Doc. No. 163 / 2017 dated 28.03.2017 executed by Shri. Hardasbhai Manjibhai Tentiya in respect of 2.90 Acres (1.17.36 Hectares) in Location PVKH64, S.No.106/1, Part 1, Khakharechi Village, Maliya (MI) Taluk, Morbi Registration District in Gujarat State. (c) Sale Deed Doc. No. 162 / 2017 dated 28.03.2017 executed by Shri. Labhuben Maganbhai and Shri. Kantaben Maganbhai in respect of 1.65 Acres (00.66.77 Hectares) in Location PVKH65, S.No.1102, Part 1, Khakharechi Village, Maliya (MI) Taluk, Morbi Registration District in Gujarat State. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Document No., Name in which registered, Name / Address and Related Document of the Power of Attorney if the Land is not yet registered in Companies Name, Book Value, Details of Right to Way with documents; (iii) Lands in Inventory and Manual Assets of RISPL and its Wholly Owned Subsidiaries Original Documents. 19. On behalf of the Appellant / Resolution Professional, it is pointed out before this Tribunal that the Balance Sheet of the Corporate Debtor, as on 31.03.2019, reflects the details of Land Assets of the Corporate Debtor as (i) Land in Fixed Assets Category at Rs.7,71,98,398/- (ii) Land in Inventory and Manual Category at Rs.44,11,76,094/- and that the break up for the Lands in Inventory and Manual reveal that numerous lands situated within the different locations of Tamil Nadu, Gujarat, Maharashtra and Madhya Pradesh, were purchased by the Corporate Debtor . 20. It is the version of the Appellant that in the Registration District of Morbi, in Gujarat, the Corporate Debtor, had purchased lands at 9 Locations from the Farmers and in fact, 21.35 Acres of Land, was purchased with the funds of the Corporate Debtor of Rs.1,97,97,187/- (inclusive of Stamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales, were brough to the notice of the Committee of Creditors , in its 6th Meeting dated 02.02.2021. 25. The Learned Counsel for the Appellant points out that the 1st Respondent through email dated 19.02.2021, had stated that a sum of Rs.9,12,49,999/- was received from M/s. Regen Powertech Private Limited ( RPPL ), the Holding Company of the Corporate Debtor, to pay the Farmers, in regard to the purchase of land and the lands so purchased are held by one of the Special Purpose Vehicle ( SPV ) of RPPL , but no evidence / proof, was produced by the 1st Respondent, for such transfers. 26. The other plea taken on behalf of the Appellant is that, no explanation was offered on the side of the 1st and 2nd Respondents, as to why the said Assets , are reflected in the Corporate Debtor s Books, when the Assets are in the 3rd Respondent s name. Also that, the 3rd Respondent s Balance Sheet for the Financial Year ended 2018-2019, had not reflected, any Land Fixed Assets . 27. The Learned Counsel for the Appellant projects an argument that the Onus of Proof , to substantiate a Plea of Fraud , is upon the shoulders of a Resolution Professional , especially when an Application , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion , to push it under Section 66 of the Code. In this connection, the Learned Counsel for the Appellant falls back upon the Judgment dated 04.05.2022 in Comp. App (AT) (INS.) No. 454 of 2022, between Mr. Nitin Bharal (Ex-Director / Promoter, New Delhi) and 3 Ors., v. Stockflow Express Private Limited, through Liquidator Mr. Sanjay Gupta, New Delhi, wherein at Paragraphs 22 and 23, it is observed as under: 22. 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 Company Appeal (AT) (Insolvency) No. 454 of 2022 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Wind Energy , a vital crucial element , in sustaining the Corporate Debtor s Operations , as a Going Concern , and the very fact, that these Assets , are sold at a Higher Amount than at which, the same was purchased, indicate, that the Respondent Nos. 1 and 2, were carrying on the Corporate Debtor s business , with the main intent of defrauding , its Creditors , with the Respondent Nos. 3 to 8 , colluding and being a Beneficiary of the same. 32. Before the Adjudicating Authority , the Respondent Nos. 1 and 2, took a stand that they had not gained personally anything, from any transaction, with the 1st Respondent and the Appellant / Applicant , had not produced any material / proof, to substantiate the allegations, so made. 33. To be noted that, the expression Party to the carrying on business , indicates taking positive steps , in carrying on company s business , in a fraudulent manner . The intent to defraud , is to be judged, by its effect on a Person , who is the object of conduct , in question. 34. A preponderance of probability suffices , but the degree of probability must be such that the Tribunal , is satisfied and further that under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p petition, without disclosing the pendency of the proceedings, should by itself be presumed to be fraudulent. Mr. Vyasan Potti argued that where such presentation is actually followed by a winding-up order, even if it be nearly four years later as in this case, the effect of it is to hold that the company was unable to pay its debts at the time the petition was presented, and that the directors should be presumed to know even at that time that there was no reasonable prospect of repayment. A proposition so wide has not received judicial recognition so far. A company may actually be insolvent at a given time; but its directors may bona fide hold a different view. Even in a case where they are aware of the true position, they may still think that all was not lost and that they would be able to stem the rot by further borrowings and improving the business. In re F.L.E. Holdings Ltd. [1967] 1 WLR 1409 ; [1968] 38 Comp Cas 214 (Ch D) is a case in point. Mr. Brown who was in de facto control of the company had borrowed some amounts from a bank in July, 1965, by deposit of title deeds. But the mortgage was not registered. By September, 1965, two other creditors had obtained decrees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case, the Appellant / Applicant , has made an fervent endeavour, to converse the transactions, allegedly made by the Respondents , as per Section 66 of the Code. 42. Be that as it may, in the light of qualitative and quantitative discussions, this Tribunal , on a careful consideration of the contentions, advanced on behalf of the Appellant , and keeping in mind of the facts and circumstances of the case, in an integral manner, and also on going through the impugned order of dismissal , in IA(IBC)/487(CHE)/2021 in IBA/1424/2019, passed by the Adjudicating Authority ( National Company Law Tribunal , Division Bench II, Chennai), comes to a conclusion that the Appellant / Applicant , had not established the Aspect of Fraud or Dishonest Intent , on the Respondents side, to the subjective satisfaction of this Tribunal . As such, the view taken by the Adjudicating Authority ( National Company Law Tribunal , Division Bench II, Chennai), preferred by the Appellant / Applicant , in dismissing the IA(IBC)/487(CHE)/2021 in IBA/1424/2019. is free from any legal errors . Consequently, the Appeal , fails. Result: In fine, the instant Comp. App (AT) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
