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2021 (8) TMI 1240 - Tri - Companies LawService to Respondents Through Joint Director - Preferential transactions under Section 43 of the Code - Undervalued transactions under Section 45 of the Code - Extortionate credit transactions under Section 50 of the Code - Fraudulent transactions under Section 66 of the Code - HELD THAT:- The contentions raised by the parties are one and the same and the transaction audit report is also more or less point out fraudulent conduct of erstwhile management. There has been thorough leakages taken place which has got a recurring effect until this day. This Bench is very cautiously making this statement and emphasising on the fact of the legal position that the transaction audit reports reveal for fraudulent conduct in the companies mentioned in the cause title and their affect felt till this date of filing the petition. The UoI has taken initiative to curtail the acts of preferential and fraudulent transactions in the best possible manner and the public interest could be better served. Whether to pass any order under Section 242(2)(m) of the Companies Act, 2013, to intervene or not since the Respondent Counsels are making submissions on the maintainability of the Petition in view of the provisions of Section 14 and 238 of the IBC? - HELD THAT:- The argument advances by the Ld. Counsels for the Respondents that the Petitioners have no power under Section 242 has no bearing for the reasons that the provision is very clear which shows that in the event the Central Government is of the opinion that the affairs of the company are been conducted in the manner provided and to protect the public interest it may itself be applied to the petitioner for the order under this chapter. Thus provisions of section 241(2)(m) of the Act are independent and have wide import as evident from IL&FS orders passed by this Bench and the Hon'ble NCLAT. The cover under moratorium and the same could not be instituted or proceeded with. This is not a proceedings against the Corporate Debtor but for the Corporate Debtor. We certainly agree that the contention that no suit or proceeding can be instituted against the Corporate Debtors. But here the efforts made by the Union of India is to secure or restore the assets back to the ultimate victims of fraud and it is not any adversarial proceeding that is the proceeding in rem which has initiated by the Government of India to catch hold all the wrong doers and the fraudulent persons - It is to be considered that the CIRP process is still on and it means that the company operations would continue under the control of RP. If at all an interim order as sought by the Union of India is not passed, the devastating effect would be that the wrong doers, fraudulent persons would get away and the valuable assets of the companies would get depleted, bringing the irreparable loss to the stakeholders. This Bench is surprised with the manner in which the financial institution has come forward to grant loans to a sinking ship and again come forward to file petition under Section 7 of IBC and again supports this petition - As this Bench is cautious that Union of India is taking steps and also carrying out investigation through SFIO, i.e. Serious Fraud Investigation office to unearth the fraud. List the matter on 22.09.2021.
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