9911796707
TMI Blog2024 (1) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.12.2023, but orders could not be pronounced on that day as the applicant has not unequivocally clarified the plea of fraudulent transactions. At the request of the learned counsel for the applicant, 10 days time was granted till 20.12.2023 to file brief synopsis/ submissions, as last chance. The applicant as well as the respondents have filed Synopsis in compliance of our directions vide order dated 11.12.2023. However, no new facts were added. In view of the same we are unable to decide the transactions of Rs.3.87 crores as tabulated at page 40, whether the same are Preferential Transactions or otherwise. As far as the vehicles are concerned, according to the respondents the same were sold by the husband of R/1 as he was looking after the affairs of the Company even before initiation of CIRP. It is found that the value of these assets is also not verified and even the applicant has not made any plea to treat them as fraudulent transactions, except one vehicle, the ownership of which has been transferred after initiation of CIRP. Thus, in absence of the requisite information, the transaction of Rs.3.87 crores cannot be classified at a preferential transaction - As regards Innov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,585/- for the book value of Innova Crysta, under section 66(1); The Applicant : The applicant herein is the Resolutions Professional of ICOAT Projects Private Limited/ Corporate Debtor. He was appointed as IRP by this Tribunal vide order dated 23.03.2022 in CP (IB) No.157/9/HDB/2021, and later appointed as Resolutions Professional in CoC Meeting dated 13.07.2022. The respondents : Respondents no.1 and 2 are directors of the Corporate Debtor / company. Whereas, respondent no.3 is the company owned by Ballari Srinivasa Rao, a former Director of the applicant/ Corporate Debtor. 2. AVERMENTS MADE BY THE APPLICANT: 2.1 This Tribunal has admitted the Corporate Debtor into CIRP vide order dated 23.03.2022 passed in CP (IB) No.157/9/HDB/2021. Having received the said order on 27.04.2022, the Resolutions Professional has issued public announcement on 30.04.2022. On verification of claims received up to the last date stipulated, viz. 11.05.2022, the IRP had constituted CoC and filed report dated 20.05.2022 as per Regulation 17(1) of IBBI (Insolvency Resolution Process for the Corporate Persons) Regulations, 2016. 2.2 The Resolutions Professional had appointed Shri K. Kiran Kumar as Transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no extortionate credit transactions. (4) Section 66 : Fraudulent trading or wrongful trading transaction. Auditor s conclusion: The company appears to be involved in fraudulent transactions as the company has not maintained proper books of accounts and not followed proper accounting procedures and no valid explanation is provided to us for the observations made by us from the Corporate Debtor with respect to fund diversion (as explained section 43), various adjustments made in debtors/ creditors/ loans balances and settlement of accounts without actual payments with regard to above observations made. Also, no proper care taken in protecting the fixed assets of the company especially vehicles. 2.4 The Resolutions Professional, on analysis of Transaction Audit Report, has observed that since 01.04.2020, there were various unexplained transactions by the Corporate Debtor with the following entities: Sl. No. Name of entity Constitution Relationship with Corporate Debtor 1. Shuklaam Exim (P) Ltd. Private Limited Company. Not established 2. I City Constructions Proprietorship Owned by ex- Director of the Corporate Debtor, who is working for Corporate Debtor after exiting as director. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on during the period from 01.04.2022 to 30.04.2022 (Rs in lacs) No. Name of unit Opening balance of Asset to the CD as 31.04.2022 Transactions during the period Balance of asset ought to be as on 31.04/2022 Balance of asset shown in the Books after internal transfers (unaudited) Difference Remark s Debit Credit 1 ICity Constructions -56.07 42.15 13.17 -27.09 -27.09 0.00 Shown as creditor in the CD s books Remarks: v) Balances with (-) denote that amount is debt owed by the Corporate Debtor to the entity concerned. Other wise they are assets to the CD. vi) No funds outflow is discernible. 2.6 The applicant submitted that the above transactions would reveal that the Suspended Board of Directors of ICOAT Project Pvt Ltd have conducted various preferential transactions prohibited u/s 43 and 66(2) of the IBC, 2016, with the following entities: ICity Constructions, a proprietorship concern owned by Ballari Srinivas Rao, ex- Director of Corporate Debtor, who is working for Corporate Debtor after his exit as Director. M/s Padma Electricals, a partnership firm belonging to family of Smt. D. Pranitha, Member of Suspended Board. The applicant prefers this application on the following grounds: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izing the potential loss to the creditors of the corporate debtor. 2.10 The applicant has reproduced the transactions carried out by the Directors of the Corporate Debtor for the FY 2020-21, 2021-22 and transactions for the period from 01.04.2022 to 30.04.2022. Copies of Statement of Accounts of the above companies are enclosed to this application as under: Statements of Accounts of Lorven for the FY 2020-21 and 2021-22 are at ANNEXURE-2. Statements of Accounts of Shuklaam Exim for the FY 2020-21 and 2021-22 are at ANNEXURE-3. Statements of Accounts of Padma Electrical for the FY 2020-21 and 2021-22 are at ANNEXURE-4. Statements of Accounts of ICity Constructions for the FY 2020-21 and 2021-22 are at ANNEXURE-5. By way said Statements of Accounts the applicant endeavored to demonstrate how funds were siphoned off to other accounts, zeroized with other debtors, identified as Preferential Payment to ICity Constructions. It is further submitted by the applicant that the Directors of the Corporate Debtor had siphoned off a total amount of Rs.387.48 lacs to the credit of M/s ICity Constructions. Said amount of Rs.387.48 lacs includes an amount of Rs.27.09 lacs for which the Operational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany to the extent of Rs.5,07,358/- under section 66(2) of the IBC, 2016. 3. COUNTER DATED 12.01.2023 FILED BY THE RESPONDENTS : 3.1 The respondents contend that this application is time barred. If a transaction coming in purview of sections 43, 45, 50 or 66 of IBC, 2016 is to be challenged, it should be done within 135 days from the date of commencement of CIRP. In the present case, CIRP has commenced vide order dated 23.03.2022, whereas the present IA is filed on13.09.2022. Thus, the IA is filed after 135 days of CIRP commencement order. 3.2 It is further submitted by the respondents that husband of R.1 was taking care of the company. After his death respondents no.1 and 2 could not gather knowledge of affairs of the company. 3.3 The respondents offered para wise reply as under: Paragraph number of IA No.962 of 2022 in CP IB No.157/9/HDB/2021. Reply given by the respondents Para III (4) : Upon initial review of documents and statement of accounts, the RP vide appointment letter dated 28.06.2022 had appointed Transaction Auditor . Observation of the applicant does not qualify for appointment of Transaction Auditor. His appointment is uncalled for and against law. Report submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I (13) : As per section 66(2) of IBC, 2016, if any director knew that there was no reasonable prospect of avoiding commencement of CIRP .. As stated by applicant notices issued in the Company Petition were returned. Therefore, there is no chance for the Corporate Debtor to know the contents of the said notice. The Tribunal has treated the same as deemed service . That would not demonstrate that the directors were aware of the contents of notice. Para III (14) : Web transactions carried out by directors of Corporate Debtor from 01.04.2020 to 30.04.2022 .. are reproduced ... Said transactions were done during the course of regular business. The same are bona fide ones and they do not qualify to be Preferential Transactions or fraudulent transactions. Paras III(15), (16) and (17) : Paras III(15), (16) and (17) : It is evident from the transactions mentioned above that the suspended directors of the Corporate Debtor had siphoned off total amount of Rs.387.48 lacs to the credit of ICity Constructions The respondents refute the allegation that the suspended directors of the Corporate Debtor had siphoned off total amount of Rs.387.48 lacs to the credit of ICity Constructions. Said transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l transactions and for, one or more of the orders referred to in section 44. (2) A corporate debtor shall be deemed to have given a preference, if (a) there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor; and (b) the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with section 53. (3) For the purposes of sub-section (2), a preference shall not include the following transfers (a) transfer made in the ordinary course of the business or financial affairs of the corporate debtor or the transferee; (b) any transfer creating a security interest in property acquired by the corporate debtor to the extent that (i) such security interest secures new value and was given at the time of or after the signing of a security agreement that contains a description of such property as security interest, and was used by corporate debtor to acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these transactions have been furnished in para 43 of the application. Total value of these transactions is estimated at Rs.3.87 crores. The applicant submitted that these transactions are done to favour one of the creditors, viz. M/s ICity Constructions, by putting other creditors at a disadvantage position. In the result, these Preferential Transactions can be treated as transactions covered under section 43 of the IBC, 2016. The respondents have vehemently denied the arguments advanced by the applicant and submitted that all these transactions are bona fide ones and have been done during normal course of business. 9. The applicant further submitted that eight vehicles, viz. two-wheelers and four-wheelers, are shown in the Books of the Corporate Debtor as on 31.03.2022, but are not available physically. The applicant further contended that one Innova Crysta Car having book value of Rs.13,74,585/- was transferred to a third person, named Potuluri Rajasekhar vide No Objection Certificate (NOC) dated 26.05.2022, viz post commencement of Corporate Insolvency Resolution Process (CIRP). Therefore, the applicant vehemently submitted that these transactions are covered under section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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