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2022 (1) TMI 1241 - Tri - Insolvency and BankruptcyFraudulent trading or wrongful trading - Seeking directions be issued to the respondents to provide for and make good to the corporate debtor for the losses caused due to the respondent's indulgence in fraudulent transactions - seeking reference of matter to IBBI in view of the provisions under section 236 of the Insolvency and Bankruptcy code, 2016 - section 66 of the Insolvency and Bankruptcy code, 2016 - HELD THAT:- The contention of the respondent Nos. 1 to 4 is that these shareholding transfer never come within the purview of Section 66 of the IBC, 2016. In terms of Section 66, there are two ingredients, which constitute the fraudulent trading or wrongful trading; first one is the business of the Corporate Debtor has been carried on, the creditors are intended to be defrauded of the Corporate Debtor or second one for any fraudulent purpose. On consideration of averments and the reply of respondent Nos. 1 to 4 in terms of Section 66, then it is found that the respondent Nos. 1 to 4 have not explained any reason to sell their shares to a Company, which is own and managed by them and they have also not explained the reason, why the said Committed Care Kargo Limited again resold the shares to these respondents. If the respondent Nos. 1 to 4 claims that these transactions do not come within the purview of Section 66 of the IBC, 2016 then onus is upon them to establish that said transaction was not with intent to de-fraud the creditors. But the respondent Nos. 1 to 4 have failed to establish this, therefore, these shareholding transactions were made with intent to defraud the creditors of the corporate debtor comes under the purview of Section 66 of the IBC, 2016. On the basis of this bank statement, the respondent Nos. 1 to 4 had although tendered their resignation but still they were having their control over the management and finance of the Corporate Debtor and the resignation was tendered only with intent to de-fraud with the creditors or for the fraudulent purposes. And that is the reason, the bad debts were written off at the instance of Respondent No. 1 to 4 even after their resignation. The cash transactions receiving cash from debtors admittedly Vyke Logistics and Vyke International, the respondent No. 9 owes the debts and they have debtors of the Corporate Debtor, as per the books of Corporate Debtor, total amount is of Rs. 20,12,383/- and Rs. 22,20,651/- and the claim of these respondents are they have settled the amount on full and final payment after making payment of Rs. 3 lakhs as cash. A total debt of Rs. 42,33,034/- was settled only after making payment of Rs. 3 lakhs that has not been disclosed either by the respondent Nos. 1 to 4 and respondent No. 9 - The respondent Nos. 9 and 10 by filing their reply claimed that they never owe any debt and they are not the debtor of the Corporate Debtor. The respondent No. 9 further claimed that the amount had already been settled after making the payment of Rs. 3 lakhs. We failed to understand how the Rs. 42,33,304/- will be settled only on the payment of Rs. 3 lakhs. Therefore, these transactions also comes under the category of the fraudulent transactions. The cash transactions and the written off debt made with respondent Nos. 9 and 10 comes under the category of fraudulent transaction and same was done during the tenure of Respondent No. 1 to 4 and even after their resignation, they were having financial control in the affairs of the corporate debtor, therefore they are liable for these transactions - the respondent Nos. 1 to 4, the Suspended Board of Directors/Promoters of the Corporate Debtor have been carried on business with intent to de-fraud the creditors of the Corporate Debtor or with fraudulent purpose and in this way, they have written off the debt of respondent No. 9 & 10 and also settled the amount on the payment of Rs. 3 lakhs against the total debt of Rs. 42,33,304/-. Hence, they are liable to make contributions the amount which was misuse or misappropriated by the Suspended Board of Directors/Promoters with intent to de-fraud the Creditors. Application allowed.
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