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TMI Blog2019 (7) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors and for fraudulent purposes by the erstwhile management of the Corporate Debtor. It is stated that the Applicant/ RP also has grounds to believe that the CIRP of the Corporate Debtor has been initiated fraudulently and/or with malicious intent for a purpose other than for the resolution of insolvency or liquidation of the Corporate Debtor. It is further stated that the directors (currently in suspension) of the Corporate Debtor have intentionally not disclosed/ withheld information required from time to time by the Applicant/ RP in relation to the state of affairs of the Corporate Debtor, and have indulged in falsification and destruction of books and records of the Corporate Debtor and made willful and material omissions from statements relating to its affairs and have also defrauded the creditors of the Corporate Debtor. The Applicant/RP has filed the present Application under Sections 60(5), 65, 66, 67, 70, 71, 72, 73 and 235A of the Insolvency and Bankruptcy Code, seeking the following reliefs: a. allow the present application under Sections 60(5), 65, 66 and 67 of the Insolvency and Bankruptcy Code, 2016; b. grant leave to the Applicant/ RP to approach the Insolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al payables during the years 2008-09 to 2011-12 and that "since 2011-12 neither there is any demand/ correspondence from the company nor any new dealing with it". It is further stated that when the Applicant/ RP took over as the resolution professional, the COC and the Applicant/ RP got suspicious of the veracity of the debtors and the receivables, in light of the non-delivery ofthe letters to the debtors. Pursuant to the investigation carried out, the Applicant/ RP was shocked to find that most of the addresses of the debtors as showing in the Tally either did not exist or even if they existed, then no such companies/ firms were found at the given addresses. 2.1.2 It is mentioned that the investigation carried out by the Applicant/ RP reflects falsification of accounts and fraudulent transactions with respect to the affairs of the Corporate Debtor, as despite sending representatives to various debtors, 90% of the addresses either did not exist or the firms were non-existent at the addresses given in the Tally. On the basis of financial audited balance sheets for FY 2012-13 and the discrepancies pointed out therein it is clear that there has been falsification of accounts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant/ RP filed a complaint regarding the said fire incident with the SHO, Police Station, Samaypur Badli, New Delhi. On the basis of this complaint an FIR bearing no. 0138/2018 has been registered by the police authorities on 12th February 2()18 under Section 435 and 452 of the Indian Penal Code, 1860. As per the FIR, the window of the abovesaid office was found to be broken into by removing the grill. 2.2 Sales Tax Proceedings It is stated that during the course of investigation, the Applicant/ RP retrieved from the corporate office of the Corporate Debtor, a show cause notice dated 28th August 2012 ("SCN-I") issued by the Office of the Commissioner, Central Excise Commissionerate, Rohtak, on the Corporate Debtor in respect of availment of Cenvat credit by the Corporate Debtor on the basis of fake invoices issued to the Corporate Debtor by certain dealers. 2.2.2 It is evident from SCN-I and SCN-2 and especially from the recorded statement of Mr. Krishan Basia as noted in SCN- 1, that there was a pattern to the manner in which the business of the Corporate Debtor was conducted by the erstwhile management, that is, even on ongoing basis, the Corporate Debtor indulged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the claim. The Resolution Professional also reported that the Operational Creditor was not able to provide any documents or evidence showing actual delivery of goods by it to the Corporate Debtor. It is further stated that the Operational Creditor along with the Suspended Directors are liable under Section 65 of the Code, for dishonest initiation of CIRP, for purposes other than resolution of insolvency of the Corporate Debtor. (ii) Breach of Section 66(1) of the Code which provides that if during CIRP or a liquidation process, it is found that any business of the corporate debtor has been carried on with the intent to defraud creditors of the corporate debtor or for fraudulent purpose knowingly, then the parties carrying on the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as the Adjudicating Authority may deem fit. It is stated that the Applicant/ RP has discovered several instances of defrauding by the erstwhile management of the Corporate Debtor. These are mentioned in detail in Para 2 above. (iii) Breach of Section 66(2) of the Code. Section 66(2) of the Code inter alia provides that if before the CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding fraudulently availing CENVAT credit, have met with either no or at best evasive responses, and the Suspended Directors have intentionally not disclosed information required from time to time by the Applicant/ RP in relation to the state of affairs of the Corporate Debtor and instead, directed her to the office of the Corporate Debtor, simply stating that all records were kept there and that the Applicant/ RP was free to retrieve whatever she required. It is stated that the office of the Corporate Debtor contained unarranged records and files. While the Applicant/ RP had made all efforts to go through the said records, it was not possible without the assistance of the erstwhile management to comprehend minute details regarding the functioning and past transactions o t e Corporate Debtor. * Section 71 of the Code provides inter alia that on and after the insolvency commencement date, where any person destroys, mutilates, alters or falsifies any books, papers or securities belonging to the corporate debtor with intent to defraud or deceive any person, such person shall be punishable with imprisonment as prescribed in the said Section. Further Section 72 of the Code provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and filed voluminous documents and vouchers in support of their contention. It is also alleged that "the Resolution Professional might have indulged in the incident of letting fire in the Corporate Office." 4.3 It is further stated that the proceedings have been settled between the Corporate Debtor and the Excise Department. Similarly, CIT (Appeals) orders has been set aside by the ITAT but this fact has been suppressed by the RP in her application. Regarding the allegations of unauthorized rice trading, it is stated that Clause 38 of the Memorandum of Association of the Corporate Debtor permits the same. The allegations of assets stripping have also been denied. 4.4 It is stated that the bona fides on part of the Respondents may be corroborated from the FIR bearing No. 0477 dated 17.11.2015 duly lodged with the Police, wherein the instances of assets stripping were duly complained of with the police authorities. In pursuance of the said FIR, the Police had arrested 4 accused persons and their respective statement/ confessions were taken on record. A perusal of the said statements/confessions would disclose that the assets stripping was done by the said accused persons who were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiated the proceedings under the IBC under its entitlement. 4.8 It is stated in the reply that the present application has been mala fidely filed, with vested interests of the Resolution Professional, to harass and prejudice the Answering Respondents herein, who have denied the illegitimate, unethical and illegal demands of the Applicant. It is submitted that prayers (b), (c), (d) and (e) are not maintainable and thus, no relief can be granted. Further, in the facts and circumstances of the instant case, no relief is warranted even under Sections 65, 66 and 67 of IBC. It is stated that the Answering Respondents have laced sufficient material on record to prove beyond doubt that there is no occasion for invoking the jurisdiction of Section 65, 66, 67, 70, 71, 73 and 235(A) of the IBC. Being so, the instant Application deserves to be dismissed with exemplary cost. 5. Respondent 4 has filed their reply countering the allegations made by the Resolution Professional. They have also enclosed copies of the GR receipts showing actual transactions and delivery of the goods purchased from the Operational Creditor. 5.2 It is stated that no penalty under Section 65 can be imposed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event transpired at the Rohini Office of the Corporate Debtor on 15th March, 2018, when around 5:00 am, the Security Guard, Mr. Hava Singh deployed at the said office was attacked by three miscreants. with knife-like sharp metal and was wounded/ injured at four places below both his eyes and on his chest and was bleeding profusely. The miscreants snatched the guard's mobile and purse containing come money and identity cards. Thereafter, the neighbors and nearby people gathered and called the police. The police and ambulance reached the spot and the wounded guard was taken to the hospital, were he received four stitches below both his eyes and treatrnent for wounds in his hands and chest. It is submitted that the statement of the guard has been recorded by the police and FIR has been lodged. As the area is crime prone and keeping in mind recent incidents at the site, the number of security guards deployed have been increased from 1 to 2 in each shift. 7. Written submissions have also been filed by the Resolution Professional applicant and Respondent 1, 2 and 3. A separate reply has been filed by Respondent No. 4 namely the Operational Creditor. 8. Heard the parties and perused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pended Directors of the Corporate Debtor as well as the Operational Creditor on whose application CIRP was initiated have made allegations of mala fide intentions on part of the RP (now Liquidator) in filing the instant application. The Insolvency and Bankruptcy Board of India (IBBI) under Section 217 of the IBC Code reads as follows: - "Any person aggrieved by the functioning of an insolvency professional agency or insolvency professional or an information utility may file a complaint to the Board I such form, within such time and in such manner as may be specified". 8.3.2 Accordingly, the Respondents impleaded in the instant application, namely, the Suspended Directors of the Corporate Debtor and the Operational Creditor on whose application the CIRP was initiated, may, if they consider necessary, refer their grievances against the Insolvency Professional to IBBI under section 217 of the Code. 8.4 Respondent 4 has prayed in its reply that the COC may be directed to reimburse the amount paid by the Operational Creditor to the IRP during the admittance of the petition under Section 9 of the Code. As the company already in liquidation the claim of Respondent-4 will be conside ..... 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