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TMI Blog2022 (9) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... on Professional subsequently appointed as Resolution Professional. The applicant filed an application I.A.No.82 /CTB/2019 for liquidation of corporate debtor the said application was ordered by this Adjudicating Authority on 16.12.2019 and the applicant is appointed as liquidator. 3. After the admission of corporate debtor into CIRP, with the approval of 6th COC the applicant appointed Rajvanshi & Associates as the forensic auditor and it submitted its final report on 11.03.2019. After considering the forensic report the applicant determined that there are certain transactions falling within the purview of preferential, undervalued, and fraudulent transactions then filed this application on 07.02.2020. 4. The applicant filed this application in three parts. Part I preferential transactions, Part II fraudulent transactions, and wrongful transactions and Part III undervalued transactions. There are five respondents arrayed as parties in this application. The 1st ,2nd, & 5th respondents appeared and filed their replies, respondents 3 & 4 not appeared despite of service of notice hence the respondents 3 & 4 are set ex-parte. 5. On the respondents side stated that an application file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e old debts payable to 4th respondent in preferential manner. It is stated that for the work carried out by the Create Business Inc in the financial year 2014-2015 an excess payment of Rs.42,94,693/- was made by the corporate debtor, the said amount was kept an advance payment in the account of Create Business inc. Certain amount was due by the corporate debtor to L&T Limited towards the purchase of earthing cables. The respondents 1 & 2 in the financial year 2015-2016 assigned the debt of Create Business Inc Rs. 42,94,693/- in preference to other creditors, by this the 3rd respondent was benefited. 8. On the 1st respondent side admitted the assignment of debts of Create Business Inc to creditor L & T Limited, the said assignment was made as settlement of dues in ordinary course of business. 9. The 4th respondent is not related party to the corporate debtor; this transaction had taken place in the financial year 2015-2016. The CIRP commenced against the corporate debtor on 26.04.2018. As per section 43(4)(b) any transaction made within a year prior to the date of commencement of insolvency termed as preferential transaction. In this case the disputed transaction happened in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 35 (1) (n) of Insolvency and Bankruptcy Code, 2016 empowers the Liquidation to apply to the Adjudicating Authority for necessary orders or directions in respect of liquidation process. 12. The section shall be interpreted by adopting the Rule of purposive Interpretation of Statute. The Supreme court held in Nathi Devi vs Radha Devi Gupta (2005) 2 Section 271 of IBC ,2016 as follows: Even if there exists some ambiguity in the language or the same is capable of two interpretations, it is trite the interpretation which serves the object and purport of the Act must be given effect to. In such a case the doctrine of purposive construction should be adopted. 13. Accordingly, section 66 of IBC 2016 shall be interpreted, that if the fraudulent acts of the corporate debtor are detected/found during the insolvency resolution process the Resolution professional may file an application before the Adjudicating Authority, similarly if the fraudulent acts of the corporate debtor are detected/found during the Liquidation process then Liquidator may file an application to the Adjudicating Authority. The omission of word Liquidator in the latter part of section 66(1) will not debar the liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinary course of the business. Further there is no material to show that the suspended directors of the corporate debtor reasonably knew that the commencement of insolvency proceeding against the corporate debtor was inevitable and the suspended directors failed to take due diligence to minimise the potential loss to the creditors. The purchase was made in the year 2015, the look back period exceeded three years from the date of commencement of CIRP. The Vendors who supplied rice husk are not arrayed as respondents. In the scenario it is answered that the fraudulent transaction alleged against the corporate debtor is not proved. (II) Interest free Advance to Ashirwad Trading Company, Kamal Associates and Parsa Kente Collieries Limited: 17. The applicant complaints that the erstwhile directors of the corporate debtor given interest free advances to M/s Ashirwad trading Company, M/s Kamal Associates and M/s Parsa Kente Collieries Limited. In contra on the respondent side stated that advances were paid to the supra companies for supply of coal for the power plant as per the purchase orders. The purchase order raised and advance amounts were paid in view of medium-term power supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies no fruitful order can be passed. Further fails to recover the outstanding amounts will not amounts to fraud, at most it can be termed as negligence act. In these circumstances it is concluded that on the applicant side failed to establish these transactions are fraudulent transactions as alleged. (III) Fraudulent write off of Debtor from the Books of the Corporate Debtor. 19. The applicant states that in the financial year 2016-2017 the erstwhile directors of the corporate debtor without making any attempt to recover the due amount of Rs.8.91 Lakhs from the Om Astha Construction Private Limited write off the debt. The said amount was showing as an outstanding from 01.04.2014 the said amount was written off on 31.03.2017. It appears that the loan was write off on the expiry date of limitation. Further, the case of the applicant is the respondents written off the debts but not waived of debts. There is major difference exist between a loan is waived off and write off. If the loan is waived off thereafter no action can be taken to recover the said loans but if the loan is write off, the loan can be recovered through legal process. In short, write off will not extinguish th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the amount was written off because of the cancellation of coal allotment order in pursuance of the order of Hon'ble Apex court. This was an unforeseen incident, there is no elements of fraud and there is no allegation that the suspended board of directors acted with knowledge that there was no reasonable prospect of avoiding the commencement of CIRP in respect of corporate debtor. There is a difference between wrongful trading and fraudulent trading, the element of negligence exists in wrongful trading but element of deceit will not there. On the applicant side not explained how the above transaction is termed as fraudulent transaction. In the circumstances it is concluded that since the incident taken much before the commencement of corporate insolvency resolution process date and in the absence of elements of deceit, the applicant failed to prove this transaction is a fraudulent transaction. (V) Excess Payment made to various suppliers but Receipt of payment, Goods or services not booked: 22. On the applicant side alleged that the payments were made by the corporate debtor to the parties shown in column 1 in excess the amount mentioned in column No.2, and not taken any step ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent responded to this that the M/s Thermo systems Pvt Ltd is supplier of fire detection and firefighting equipments. The corporate debtor for thermal power project placed purchase order on 02.06.2011 for supply of fire detection and firefighting equipments (annexure A12). Two invoices raised by M/a Thermo system dated 30.09.2011 for total sum of Rs.1,15,65,951/, (Annexure 13 unreadable) by mistake instead of showing Rs.11,63,539/- in credit balance the amount was shown in the debit balance. 26. It is averred in the application in respect of SERIAL No.4 the corporate debtor paid an excess amount of Rs.8.41 lakhs to the M/s Advance Ventilation Pvt Ltd the same should be recovered from the supplier. The said supplier is not arrayed as a party to this application. The 1st respondent in his reply stated that the supplier supplied goods following the purchase order dated 05.06.2013 placed for Rs.61,39,279/-from July 2013 to September 2013. A total sum of Rs.60.13,833/- was paid as an advance, on different dates from 10.06.2013 to 19.11.2013, the materials were supplied on different dates from 11.07.2013 to 27.09.2013 and invoices raised to the value of Rs.51,72,829/- the supplier has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Dehu Engineers (India) Ltd supplied Streight Tube on 19.01.2015 to the value of Rs.8,59,080/- and raised invoice the said amount was credited. M/s Dehu Engineers (India) Ltd subsequently supplied Streight Tube for the amount of Rs. 7,04,456/- but due to certain quality issue the invoice is not passed, hence the amount is shown as debit balance. 30. It is stated in the application in respect of SERIAL No.8 the M/s Hbl power system Limited is a company specialised in manufacturing specialised batteries. The corporate debtor purchased certain materials from the company but still a sum of Rs.19,35,686/-needs to be recovered from the supplier. The 1st respondent replied that the corporate debtor placed purchase order dated 28.06.2010 for the value of Rs.10,05,741/-, Purchase order dated 28.06.2010 to the value of Rs.4,41,78,953/- and purchase order dated 28.06.2010 to the value of Rs.2,15,306/- for supply of 220 V DC NICD Battery & Charger etc. Payment of Rs.6,74,81,538/- was made during June 2010 to September 2013. Bill for Rs.6,55,45,852/- raised by the company on 01.04.2014. The balance amount of Rs.19,35,686/- still remains in the debit balance of accounts of M/s Hbl power sys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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