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TMI Blog2019 (5) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... them from the Corporate Debtor as the Hon'ble Tribunal may direct; c. Pass appropriate directions/orders in terms of section 48,67,70, 71,72 and 73 of the Code including for recovery/restoration of legitimate amounts due to the Corporate Debtor". 2. It is worth to note that during the course of Corporate Insolvency Resolution Process, the RP noticed certain transactions which appeared to be fraudulent or preferential in nature, therefore, this application was filed by the RP during the period of Corporate Insolvency Resolution Process. The Company could not be revived, therefore, Liquidation order was passed for the Corporate Debtor and the Liquidator was appointed. Now keeping in view the fact that if there is a syphoning off of funds of the Corporate debtor, it is important that the money be brought back for the completion of liquidation proceedings. Section 43 & 45 start with the phrase "Where the liquidator or the resolution professional.......", hence it can be understood that the avoidance or preferential or undervalued transactions can be handled even at the stage of Liquidation. Therefore, the Code leaves no iota of doubt with respect to the idea that the defaulte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated with State Bank of India against which the loans were availed was lost/damaged. 7. Therefore, the primary concern of the applicant is that the registered office of the Corporate Debtor has been changed without following the due process as prescribed by law. 8. The books of accounts of the Corporate Debtor are kept at Gujarat and not at the regd. Office of the Corporate Debtor thus violating the provisions of section 128(1) of the Companies Act, 2013 which clearly prescribes that the books of accounts of the company are to be kept at the registered office of the company. 9. Therefore, in view of above, the Applicant seeks an order u/s 19 of the Code for a direction for the promoters/directors of the Corporate Debtor to co-operate in completion of Corporate Insolvency and Resolution Process, (now liquidation) process of the Corporate Debtor. 10. The Applicant further states that an order under section 43 of the Code is to be passed because some undervalued transactions have been seen as per the Forensic Audit Report of April, 2018. It is mentioned that in Unit III in Gujarat, which is being operated by Respondent No. 2, some job work is being undertaken since June 2015 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the Applicant prays for recovery of Rs. 135 Lakhs being preferential transaction with Respondent No. 1, the same needs to be vested into the Corporate Debtor. Further, recovery of amount of Rs. 132.50 Lakhs being loan taken by the Corporate Debtor diverted into the accounts of Respondent No. 1 needs to be vested into the Corporate Debtor. 17. It is submitted that when on 22.10.2015 fire broke out in the factory premises of the Corporate Debtor, the entire loss of goods/inventory of Rs. 1,142 lakhs and plant & machinery worth Rs. 31 Lakhs was reported. The insurance policy expired on 05.10.2015, and was not renewed by the promoter directors of the Corporate Debtor. The inventories were not covered by the insurance policy. Consequently, there was no insurance policy to cover the inventory which is hypothecated to SBI, the lenders have lost approx. Rs. 1,141 Lakhs as the Corporate Debtor received only Rs. 117 Lakhs towards loss to building, plant & machinery, furniture & fixtures, electrical fittings etc. 18. The Applicant further states that only partial stock of raw material was destroyed by fire, while the auditor without any verification has relied on the management& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lacs from Siddhivinayak. Out of the total loans received, only Rs. 0.75 lacs was the actual inflow of money which could be traced in the Bank statements, remaining Rs. 101.57 lacs were adjustment entries (JV) passed in the books of accounts (Loan account of Siddhivinayak was credited and ledger accounts of Sunil Kathuria, Sohail Kathuria, Sunita Kathuria, Sakshi Kathuria and Sales/Purchase ledgers of Siddhiniyank were debited.) b. Loans were repaid by the Corporate Debtor to Siddhivinayak amounting to Rs. 102.32 Lacs. Out of the total loans repaid, only Rs. 0.33 Lacs was actual outflow of money which could be traced in the bank statements, remaining Rs. 101.99 Lacs were shown as repaid by passing adjustment entries. (Loan account of Siddhivinayak was debited and ledger accounts of Sunil Kathuria, Sohail Kathuria, Sunita Kathuria, Sakshi Kathuria, Siddhivinayak, K.D. Fabrics and Amar Fab (Andheri) were credited). c. Debtors account of Respondent No. 5 was settled by passing two journal entries, one crediting the creditors ledger of Siddhivinayak with approx. Rs. 31 lakhs and one crediting the loan account of Siddhivinayak with approx. Rs. 20 lakhs reducing the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales of Rs. 427.03 Lacs were returned, the Corporate Debtor continued book sales to Konark. Such an act is clearly to defraud the creditor i.e. SBI Global Factor. d. The Applicant also states that Konark is located on the 2nd Floor of the same commercial structure as that of the Corporate Debtor. Though Konark is an unrelated party, the possibility of collusion cannot be ignored. e. Based on the finding of the Forensic Auditor, the amounts received from SBI Global have also been siphoned off to other related parties. 25. Hence, it is stated that the total overall loss to the lenders towards misuse of bill discounting facility aggregates to Rs. 3,103.30 lakhs 26. The transactions with respect to respondent No. 3 are stated below: a. Review of the Bank statements indicate a total Rs. 26.77 Las of outflows and Rs. 14.11 Lcas of inflow to /from Sohail during the period of 1st April, 2012 to 31st March, 2016. The net outflows was Rs. 12.66 Lacs to Sohail. No justification is made available for such outflow. b. A bank transaction dated 30, March, 2015 wherein Rs. 9.10 Lac was transferred to Sohail Kathuria. Books of accounts indicate the same as loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant also states that letters were sent to two related parties namely Jade Fabrics, (Proprietorship of Sakshi Kathuria and Vincitore Textiles Pvt. Ltd.), Respondent No 7 (Varun Kathuria, Son of Respondent No.2, is a Director). * Jade Fabrics: Total balance due was Rs. 16.32 Lacs. They replied stating that since April, 1, 2017 they had made several payments on behalf of Corporate Debtor and it resulted into mere Rs. 0.16 Lac receivable from Corporate Debtor instead of the outstanding due of Rs. 16.32 Lacs. Further on the basis of reply from Jade, the Applicant requested for some more information and Jade Fabrics is yet to provide their reply. * Respondent No. 7;- Total balance due was INR 17.84 Lacs. They replied stating that the balance dues was not matching with the balance as per their books and requested for detailed ledger to confirm the balance. Subsequently, ledgers were provided and Vincitore are yet to provide their reply. f. Responses for the confirmation letter sent to 17 other parties are still awaited. The above indicates that the collections from debtors might have been diverted to other beneficiaries and not recorded as collections. g. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor." 34. Hence, the transaction discussed in para 10 of this order is not done in the ordinary course of business of the Corporate Debtor as assets (stock) has been transferred and no money/payment has been received in respect of the same. Hence, exercising jurisdiction under section 48(1)(c) of the I&B Code, it is ordered to Respondent No. 7 to pay an amount of Rs. 3,31,56,980/- in respect of benefit received, to the Liquidator. 35. The transactions stated in paras 15, 18, 20, 22, 24, 26 & 28 of this order are covered under section 43(1)(a) of the I&B Code, which states as follows: "43. Preferential transactions and relevant time: 1. XXX XXX XXX 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 li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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