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TMI Blog2025 (3) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... No.2 and Respondent No.3 to the Company Petition to restore the amount of Rs.24,29,874/- Rs.25,53,233/-and Rs.11,50,000 respectively correct in law, is contrary, to what has been attempted to be argued by the learned counsel for the Appellant based upon the grounds taken by them in the Memorandum of Appeal, to the effect that the findings which had been recorded are perverse and contrary to the record and based upon wrong appreciation of the statement and evidence, which was place by the Respondent and particularly the Forensic Audit Report of 09.11.2020 and the additional Forensic Audit Report of 03.11.2021. The question of law which the learned counsel for the Appellants has attempted to argue before this Appellate Tribunal was from a very limited perspective, that, whether the learned Adjudicating Authority could have at all allowed the application under Section 43, without considering the objections filed by the Appellant and secondly, whether in the absence of the material particulars being placed before the learned Adjudicating Authority, it should have gone ahead to hold conclusively that the transactions were preferential transactions under Section 43 of the I & B Code. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Evidence Act. iii) Since the Impugned Order is based upon a sound logical reasoning upon considering the statement and evidences on record, the observations made therein does not suffer from any perversity or misappreciation of evidence by the learned Adjudicating Authority which would call for any interference.
Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2016, which prescribes that "every appeal has to be accompanied with a certified copy of the Impugned Order under challenge". The said Application thus preferred, seeking exemption from filing a certified copy remained pending and no endeavour was made by the Appellant ever, to press upon the appeal to override the implications of Rule 22(2) of the NCLAT Rules, 2016, and thus, the appeal would be treated to have been preferred without supplying the certified copy of the Impugned order. But owing to the fact that, the statute under the I & B Code, 2016, and particularly that as contained under the rules, as framed under Section 469 of the Companies Act, 2013, provides for a complete exemption from filing the certified copy of a document as contemplated under Rule 31 of the NCLAT Rules, 2016, we grant an exemption to the Appellant from producing the certified copy of the Impugned Order and proceed to hear, the Appeal on merits. Accordingly, IA No. 421/2022 would be treated to have been disposed of. 4. The brief facts on the merits of the matter are, that the Corporate Debtor (CD) M/s. Right Engineers and Equipment India Private Limited, are said to have availed financial assistanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor, in order to meet the expenses had to avail an additional financial assistance by way of term loan of Rs.10,40,00,000 (Rupees Ten Crore Forty Lakhs) and a secured cash credit of Rs.4,40,00,000 (Rupees Four Crore Forty Lakhs) in the month of October, 2016. 7. It is the case of the Corporate Debtor that, owing to the fact that there had been a business slump and economic downturn in the economy, of the country, he faced financial crunches and hence could not make repayments as scheduled under the terms of agreement for the amount of financial assistance taken on 17.10.2016 and, the additional term loan and secured cash credit taken on October 2016, in a timely manner. As a consequence thereto, the Financial Creditor had issued a repayment notice of the agreed installments as per the terms and conditions contained in the loan agreement of 17.10.2016, which was expected to be paid by the Appellant from time to time. 8. The Corporate Debtor and its erstwhile Directors i.e. the Appellant No. 1, 2, and Appellant No. 3 herein, had acceded and have accepted the fact that, they have committed a default and breach of loan agreement in remittance of the debt taken by them. 9. As a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audulent transaction under Section 66 for an amount of Rs.78.81 lakhs. It is on the basis of this report which has been submitted in compliance of the decision, taken in the Committee of Creditors (CoC) meeting on 09.11.2020, the Respondent is said to have filed an Interlocutory Application, being IA No. 482/2020, invoking the provisions contained under Section 43 of the I & B Code, 2016. The plea as raised in the aforesaid IA thus preferred by the Respondent, under Section 43 was based upon the final Forensic Audit Report dated 20.11.2020, which apparently showed that, there had been a flagrant violation of Section 43 and Section 66 of the I & B Code, 2016, as some of the identified transactions were found to be classified as preferential transaction with which we would be concerned in the instant appeal. In the report that was submitted on 20.11.2020, it was observed by the Chartered Accountant that, during the course of a Forensic Audit they, based on available material have identified some preferential transactions carried out and certain in non-compliances, which was apparent from the general review of the Financial Statements and Books of Accounts of the Corporate Debtor, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Upon the contest being put in by the Appellants herein, the Resolution Professional in order to override and to respond to the argument extended by the Appellants in their objection, had filed an additional affidavit on 08.11.2021, seeking to restore an amount of Rs.11,50,000 (Rupees Eleven Lakh and Fifty Thousand) against Appellant No. 3 in addition to the amount of Rs.49,83,107.90 (Rupees Forty Nine lakh Eighty Three Thousand and One Hundred and Seven and Ninety Paisa) as initially claimed against the Appellant No. 1 & 2 in IA No. 482/2020. 14. It was submitted by the Respondent before the Ld. Adjudicating Authority that on noticing certain related party transactions in the Audited Balance Sheet up to 2018, he had appointed M/s. Nagadheep Satyanarayana, the Chartered Accountant, and upon his resignation M/s. Hegdde Raj & Ullody, the Chartered Accountants, Bangalore to conduct forensic audit of the accounts and to review the accounts for a period of two years in the case of related parties, and for a period of one year in other cases before the commencement of the CIRP. The forensic audit report thus prepared was deliberated upon in the meeting of CoC on 09.11.2020 and based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l transactions, were actually carried during the ordinary course of business of the Corporate Debtor, the burden of proof under Section 101 of Evidence Act, to prove to the contrary, had shifted upon the Appellants to show that the transactions identified in the Forensic Audit Report, were not the transaction, which will be falling under Section 43 of the I & B Code. They having failed to do so, the conclusion, which has been arrived at by the learned Adjudicating Authority, declaring the transactions, as to be the preferential transactions and the consequentially directing Respondent No.1, Respondent No.2 and Respondent No.3 to the Company Petition to restore the amount of Rs.24,29,874/- Rs.25,53,233/-and Rs.11,50,000 respectively correct in law, is contrary, to what has been attempted to be argued by the learned counsel for the Appellant based upon the grounds taken by them in the Memorandum of Appeal, to the effect that the findings which had been recorded are perverse and contrary to the record and based upon wrong appreciation of the statement and evidence, which was place by the Respondent and particularly the Forensic Audit Report of 09.11.2020 and the additional Forensic Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er will show that the Ld. Adjudicating Authority has considered all material placed before it. Thus the second question too is answered against the Appellant. Under Section 43 of the I & B Code, 2016, the basic parameters which are required to establish a transaction to be a preferential transaction, as envisaged under Section 43(1), is that the grounds as contemplated under Section 43(2)(a) and Section 43(2)(b) are to be satisfied which provides that, if there is any transfer or even a marginal transfer of interest by the Corporate Debtor, to the benefit of a creditor or a surety or a guarantor on account of an antecedent financial debt or operational debt or other liabilities owned by the Corporate Debtor and secondly, if such transfer under clause (a) has an effect of putting such creditor or surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assests made in accordance with Section 53 of the Code, would be deemed to be a transaction, which is preferential in nature and having not been carried under normal course of business. In section 43(3) of the Code, certain exception have been provided. 18. The transactions, which have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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