TMI Blog2018 (8) TMI 1936X X X X Extracts X X X X X X X X Extracts X X X X ..... tire CIRP process could be a mockery. However, on going through the list of transfer of fund in the name of the creditors it is understood that certain transfers are related to payment of professional fees to one of its employee of the corporate debtor to whom allegations also leveled by the financial creditors and the audit fee payable to the auditor. Being satisfied that transfer of fund by the corporate debtor is illegal the interim relief as sought for is to be allowed in the case in hand - Accordingly interim relief as prayed for is allowed. - C. A. (IB) NOS. 430 & 605/ KB/2018, CP (IB) NO. 695/KB/2017 - - - Dated:- 24-8-2018 - Jinan K.R., Judicial Member Jitendra Lohia, RP Sourav Jain, Adv., MS. Manju Bhuteria, Ms. Sanchari Chakraborty, Ms. Debaleena Ganguly, Ms. Sounak Chakroborty, Advs., Rajesh Kr. Agarwal, Domingo Gomes, Adv., A. Dutta, Adv., Shiv Chandra Prasad, Adv., Urmila Chakraborty, Adv., Aashish Chowdhry, Adv., Dr. D. R. Agarwal FCA and Bharat Sood, Adv. for the Appearing Parties. ORDER 1. Both these I.As are pertain to violation of section 17 of the Code and moratorium declared under section 14 of the Code by the RP and the directors of suspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Directors of the corporate debtor on behalf of the erstwhile Resolution Professional Mr. Jitendra Lohia (RP) prays for passing an interim relief to recall the money already transferred by he Directors during the period of Moratorium for enabling him to continue the CIRP and to prepare Information Memorandum so as to enable him to identify a resolution applicants, who can takeover the corporate debtor. 5. In the facts and circumstances, it would be convenient to decide both interim applications, under sections 14 and 17 of the l B, Code,2016 by a common interim order. 6. Pending CA(IB) No. 430/KB/2018, 19 (nineteen) financial creditors who have submitted their claim to the erstwhile Resolution Professional filed CA(IB) No. 605/KB/2018 alleging serious allegations against the erstwhile Resolution Professional, viz., Mr. Rajesh Kumar Kejriwal and contended that transfer of funds mainly to the Promoter Directors of the corporate debtor by the directors themselves and to their near relatives and associates and is in violation of declaration of Moratorium and in collusion with the Resolution Professional and prays for recalling the fund diverted by the Directors and for an injunc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of the claims as per Regulation 13(1) of the CIRP Regulations, 2016 and shall file report certifying constitution of Committee of Creditors (In short, CoC) to the Adjudicating Authority on or before 30 days from the date of his appointment as per Regulation 17(1) of the CIRP Regulations, 2016. So also he has to appoint 2 valuers within 7 days of his appointment as per Regulation 27 of the CIRP Regulations. It has come out in evidence that none of the said provisions were adhered to in order to eliminate delay or mistake by the erstwhile RP. 11. It is submitted on behalf of the financial creditors who filed the application CA(IB) No. 605/KB/2018 that all these Regulations were flagrantly violated by the IRP, Mr. Rajesh Kumar Kejriwal and issued public announcement in the Echo of India English Newspapers and Arthik Li pi Vernacular Newspaper, which according to the Ld. Counsel appearing for the financial creditors not at all a publication in compliance of Regulation 6(2)(i). She also submits that both the newspapers are not widely circulated newspapers in the locality where the corporate debtor's company is situated and none of the financial creditors other than on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments were made by the corporate debtor between 15/01/2018 to 17/03/2018 as Annexure R-6 and prays for recalling the fund transferred in the name of the creditors shown in the list as referred above. 14. The reply affidavit has been filed by the corporate debtor. According to the Ld. Pr. Chartered Account appearing for the corporate debtor the corporate debtor being a Non-Banking Financial Institution (In short, NBFC) entitled to continue its operation as if it is an on-going concern and the corporate debtor's endeavor is to make payment to its creditors to liquidate their dues and thereby there is no violation of declaration of Moratorium in the case in hand. He also would submits that the RP permitted the directors to do the day-to-day operation and the lending and borrowing money amounts to day-to-day operation and therefore, on that ground also it would not violate the Moratorium and does not amount to disobedience of the directions of RP. On the other hand he would further submit that the RP either ignorant of provisions of CIRP permitted the corporate debtor to do the operation and thereby the fund already transferred could not be directed to refund by the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts to day-to-day operation of the corporate debtor and whether the directors can continue the operation without the consent of the RP and whether the transfer of fund violate the moratorium. 18. As per section 17(1) of the Code the management of the affairs of the corporate debtor shall vest in the IRP. It is good to read section 17 of the Code. It read as follow. - 17(1) From the date of appointment of the interim resolution professional,- (a) the management of the affairs of the corporate debtor shall vest in the interim resolution professional; (b) the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional; (c) the officers and managers of the corporate debtor shall report to the interim resolution professional and provide access to such documents and records of the corporate debtor as may be required by the interim resolution professional; (d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of transfer of fund it appears to me that what is done by the corporate debtor is not lending money or borrowing money but paid the amount allegedly due to certain creditors and to certain statutory authorities. According to the Ld. Counsel for the financial creditors funds have been mostly diverted to group companies of Mr. Bijay Kumar Garodia the promoter director of corporate debtor and some payments have been to the statutory authorities merely as an eye wash. A screening of the list of transfer of fund (Annexure R6 in reply by RP) by the corporate debtor after the date of declaration of moratorium add strength to the submission of the Ld. Counsel for the financial creditors. Therefore, the transactions of fund as shown in the Annexure R-6 is found funds of the corporate debtor has been paid in preference to the creditors who has preferred its claim and not amount to rendering expenditure for day-to-day operation of the company. The transfer is amount to preferential payment to the creditors subsequent to the date of declaration of Moratorium by the corporate debtor and therefore the transfer of fund is illegal and improper. The creditors who had received the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery. However, on going through the list of transfer of fund in the name of the creditors it is understood that certain transfers are related to payment of professional fees to one of its employee of the corporate debtor to whom allegations also leveled by the financial creditors and the audit fee payable to the auditor. So the creditors who have received the amount from the corporate debtor between 15/01/2018 and till the management of the affairs of the corporate debtor has been taken over by the present Resolution Professional is liable to be refunded to the account of the corporate debtor. Being satisfied that transfer of fund by the corporate debtor is illegal the interim relief as sought for is to be allowed in the case in hand. Accordingly interim relief as prayed for is allowed upon the following among orders: (i) Creditors named in the Annexure R-6 list (except employees and auditor) are hereby directed to refund the money to the account of the corporate debtor which have been received by them within 15 days of receipt of the order, failing which the Resolution Professional is directed to take immediate steps to get it refunded from them so as to continue with the CIRP p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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