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2022 (8) TMI 231 - Insolvency & Bankruptcy
Preferential Transactions or not - documents being “Transaction Audit Report” and “Forensic Audit Report” were not provided to the Appellants - whether the impugned transactions fall within the ambit of Sections 43, 45 or 66 of the Code? - NCLT admitted the claim - HELD THAT:- For comprehensive and fair scrutiny of books of accounts by an expert person, the Respondent in exercise of powers under Regulation 7 of IBBI (Liquidation Process) Regulations, 2016 appointed professional Chartered Accountant/Auditor to conduct a detailed and thorough transaction audit of the Corporate Debtor - The objectives of the audit is to identify preferential transactions, undervalued transactions, transactions defrauding creditors, identify extortionate credit transactions and fraudulent trading or wrongful trading. The auditor has given the report on all the above observations. However, the Adjudicating Authority confined to only preferential transactions of an amount of Rs.1,38,78,397/-.
The Auditor also gave his observations and conclusions on avoidance of undervalue transactions, defrauding creditors and fraudulent trading or wrongful trading. At the end of the report, it is seen that the Auditor addressed letters to Shri Reji Sivankutty, Shri Tinu Jose (Suspended Director) and Giriraj & Associates previous Auditor requesting them to provide books of accounts for carrying out the audit. In the report at page 156 under the caption limitation of scope it is mentioned that “the Corporate Debtor had discontinued their operations from August 2018. Presently, they neither have a registered office nor employees from who we could extract documents and information for the purpose of our audit - in the present case, though the Respondent/Liquidator mentioned various provision of the I&B Code, however a specific relief sought praying the Adjudicating Authority to hold that the loan of Rs.42,50,397/- repaid to the Director during the Financial Year 2017-18 is in preference to trade payables, statutory dues and salary to staff, during that year. Further, it is prayed that to hold that Rs.6,28,000/- paid to Mrs. Revathy Radhakrishnan w/o Suspended Managing Director on 01.07.2018 as loan to be repaid to the Corporate Debtor with interest and cost thereof.
This Tribunal is of the view that the Respondent/Liquidator made the application before the Adjudicating Authority after having sufficient evidence/material to establish the case of the Appellants beyond reasonable doubt. The basis for the application before the Adjudicating Authority is the report of the auditor and the observations and conclusions arrived at by the auditor. Therefore, the ratio arrived at by the Adjudicating Authority is free from any legal infirmity, hence no interference is called for - this Tribunal comes to an irresistible conclusion that the Appeal sans merit - Appeal dismissed.