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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 ..... 2016, hence the transaction referred here is not a preferential transaction. Fraudulent Transactions - HELD THAT:- The Section 66 (1) of Insolvency Bankruptcy Code, 2016 should read along with Section 35 (1) (n) of IBC, 2016. If the contention of the respondent is accepted then there will not be any avenue available to the Liquidator who found the fraudulent transactions of the corporate debtor during liquidation process, to proceed against them, this will not the intention of the statue, hence it is held that this petition filed by the liquidator alleging certain fraudulent transactions against the corporate debtor is maintainable. Purchase of Rice husk from Related parties at a reasonably High Price - HELD THAT:- 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 arraye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceit, the applicant failed to prove this transaction is a fraudulent transaction. Excess Payment made to various suppliers but Receipt of payment, Goods or services not booked - HELD THAT:- In the case of fraudulent transactions, the person or persons who were benefited because of the fraudulent acts of the suspended directors of corporate debtor also to be added as party to arrive just and correct conclusion and also if the guilt is proved to get back the benefit acquired by them. In this case five vendors of Rice husk are not arrayed as parties to this application, this amounts to non-joinder of necessary parties - the transactions under the caption of fraudulent transactions are not proved. Undervalued Transactions - HELD THAT:- As per section 46(1)(ii) of IBC 2016, the transactions made with related party within period of two years preceding the insolvency commencement date is the under-value transaction. In this case look back period exceeded two years from the date of commencement of CIRP against the corporate debtor hence, the transactions referred in the application does not fall under value transactions. Thus, the transactions styled as preferential, fraudu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent side relies upon the Apex court citation Anuj Jain, Interim Resolution professional for Jaypee Infratech Limited vs Axis Bank Limited etc., On the applicant side submitted that since this application was filed prior to the pronouncement of said Apex court citation, the applicant filed this petition in composite manner. It is true the Apex court in the supra judgment observed that it would be expected of any resolution professional to keep such requirements in view while making a motion to the Adjudicating Authority. The objection raised on the respondents side have merit, however in the given situation it is concluded that the filing of this petition in composite manner is of course irregular but not fatal. 6. On the respondents side also argued that this application is not maintainable since the applicant not adhered the time line stipulated under the Regulation 35A of Insolvency and Bankruptcy Board of India (Insolvency Resolution process for corporate persons) Regulations 2016.The respondents also relies upon order of NCLT-Kolkata passed in Suraj Fabrics India Limited Vs Santosh Choraria. It is true as per the said regulation application under sections 43,45,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this part the applicant referred certain transactions as fraudulent transactions committed by the respondents, they are covered under section 66 of IBC 2016. Respondents side argued that the applicant/liquidator is not authorised to file an application under section 66 of IBC 2016, since it only permits a resolution professional to file such an application and not a liquidation In support of this contention respondent relies upon section 66(1) of the Act. It runs as follow: 66. Fraudulent trading or wrongful trading. (1) If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit. In section 66(1) of IBC 2016, the section begins with, if during the corporate resolution process or a liquidation process it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator who found the fraudulent transactions of the corporate debtor during liquidation process, to proceed against them, this will not the intention of the statue, hence it is held that this petition filed by the liquidator alleging certain fraudulent transactions against the corporate debtor is maintainable. (I) Purchase of Rice husk from Related parties at a reasonably High Price: 14. The applicant states that the suspended directors of the corporate debtor purchased the Rice Husk from the related parties at higher rates to gain unlawfully. The applicant fixed, the average rate of rice husk during the relevant period at Rs.2,400/- Per metric ton, based on the previous purchases made and found that the following persons supplied Rice Husk to the corporate debtor in excess rates. Name of the Related party vendors Average Rate Price at which rice husk supplied Difference between Average rate and Actual Amount paid Premchand Agarwal, Raipur Rs. 2400 3400 68,19,788 Chandersen Agarwal, Raipur Rs. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited. 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 agreement entered with Andhra Pradesh power distribution Company for supply of power. The corporate debtor could not commence the distribution of power supply due to heavy congestion in power transmission grid. When the corporate debtor could not start the plant as planned has given letter dated 25.02.2015 to M/S Ashirwad not to start supply of the supply of coal. In respect of M/s Kamal Associates the corporate debtor have taken delivery of coal from time to time and adjusted the advance payment. By letter dated 01.11.2015 the corporate debtor asked M/s.Kamal Associates to hold the supply of coals due to shut down of power plant. In respect of amount paid to M/s Parsa Kente Collieries Limited is concern it is explained on the respondent side that the amount of Rs.9,50,000/- was paid towards tender fees for participation of tender floated by M/s Parsa Kente Collieries Limited for sale of dust coal. 18. On the respondent side submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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 the rights of the lender to recover the amount, it is only for audit purposes write of is made. In this regard Hon ble Apex Court Salim Akabarali Nanji Vs Union of India Ors. The write off is only an internal accounting procedure to clean up the balance sheet, and it does not affect the right of the creditor to proceed against the borrower to realize his dues. Moreover, it does give some benefit to the Bank under the Income-Tax Law because after write off is payable only on the amount recovered as and when recovery is made The above citation made clear the right to recover the loan is not put an end by the respondents. Thus, the write off of debt will not amounts to fraudulent Transactions. (IV) Advance Payment Made to Fatehpur East Coal Pvt. Ltd. A potentially Related Party and Later on adjustment of the said payment by way of purchase of shares. 20. The applicant compliant that the corporate debtor had mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 steps to recover the said excess paid amount. Sr. No. Name of the suppliers/parties Advance amount given 1. Ray Electrica 6,33.224 2. Shree Conveyor System Pvt. Ltd. 5,61,00,000 3. Thermo System Pvt. Ltd. (Supply) 11,49,651 4. Advance Ventillation Pvt. Ltd. 8,41,004 5. Amitec Fab Engineers Pvt. Ltd. (Phase ii) 5,00,00,000 6. Automach Industries 6,92,000 7. Dehu Engineering (India) Pvt. Ltd. 7,04,000 8. HBL Power System Limited (supply) 19,35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 raise invoices for the remaining amount hence there is a debit balance. 27. It is averred in the application in respect of SERIAL No.5 that the corporate debtor without any justification made payment of Rs.5 crores to Amitec Fab Engineering Pvt Ltd a chemical manufacturing company. The 1st respondent in his reply explained that Amitec Feb Engineers Pvt Ltd was engaged for erection and fabrication of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 system Limited. 31. In the case of fraudulent transactions, the person or persons who were benefited because of the fraudulent acts of the suspended directors of corporate debtor also to be added as party to arrive just and correct conclusion and also if the guilt is proved to get back the benefit acquired by them. In this case five vendors of Rice husk are not arrayed as parties to this applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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