TMI Blog2021 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor has trans-ferred its fixed assets just before the initiation of CIRP by the way of books entries - However, on scrutinizing the details of all the documents placed on record, the Directors of the Corporate Debtor were well aware of the fact that an application has been filed on 25.01. 2019 and the same is pending for initiation CIR process against the Corporate Debtor, therefore the Directors of the Corporate Debtor deliberately entered into an undervalued transaction - These facts support that there was an intention to defraud the creditors by keeping these assets of the Corporate Debtor beyond the reach of the Creditors or any such person who is entitled to make a claim against the Corporate Debtor. These transactions are covered under the provisions of the Section 49 and 66 of the Code - the sale of plant and machinery of the Corporate Debtor to the Respondent no. 3 stands cancelled - these transactions are covered under the provisions of the Section 49 and 66 of the Code - application allowed. - I.A. No. 2277/2020 IN (IB)-241/(ND)/2019 - - - Dated:- 24-3-2021 - DR. DEEPTI MUKESH MEMBER (JUDICIAL) AND SMT. SUMITA PURKAYASTHA MEMBER (TECHNICAL) For the Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 079 Para 2.2 SALE OF PLANT AND MACHINERY TO RADICO TRADING CO. Para 2.2.1 The corporate debtor has transferred almost all the fixed assets Just before the initiation of CIRP by the way of books entries, no physical transfer of such assets has been taken place. Further the said transfer/transaction has been. done without the prior approval of the financial creditor i.e. Punjab National bank. Para 2.2.2 It was observed that the CD has received an unsecured loan of ₹ 4.80 core before 01.04.2017 and made payment of ₹ 4.09 core against the said unsecured loan during the period under audit. Para 2.2.3 Further, during the FY 2018-19 the CD has sold/transferred Its plant and machinery to Radico Trading Co having the book value of ₹ 1.56 core for ₹ 20.80 lakh by making loss on sale of plant and machinery. No details of assets sold/transfer or valuation report of such assets is available on record. Its seems that Its mere a books entry to exclude such assets from the reach of secured creditors. Pg. 082. Para 3. TRANSACTION WHICH MAY BE COVERED UNDER SECTION 66 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 Para 3.1 As per our review and to the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Machinery. The Applicant vide his email dated 21.02.2020 and 28.02.2020 had sent a questionnaire to Respondent No.1 and Respondent No.2 (herein the suspended Director/Promoter and Additional Director of the Corporate Debtor) inquiring about any Agreement executed between the Respondent No.,3 (Radico Trading Co.) and the Corporate Debtor however, there was no response. 7. The Respondent No.1, Respondent No. 2 and Respondent No. 3 filed their replies and stated that Respondent No.3 is not a related entity of the suspended directors. There is no common director and no common shareholding between the two companies. It is submitted by the Respondent no.1 and no.2 that no Corporate Guarantee has been invoked against the Respondent No.3. That an amount of ₹ 5.24 Crore were arranged by Respondent No. 3 that is M/S Radico Trading Limited who sold 76 Kanal and 17 Marla for a consideration of ₹ 4,54,00,000/- out of which ₹ 4,51,46,000/- was deposited by M/S Radico Trading Limited in PNB Bank directly during 08.11.2016 to 02.03.2017 in the account of the Corporate Debtor, which was accounted in the books of the Corporate Debtor Company through book entry. The PNB bank ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l make an order- (i) restoring the position as it existed before such transaction as if the transaction had not been entered into; and (ii) protecting the interests of persons who are victims of such transactions: Provided that an order under this section- (a) shall not affect any interest in property which was acquired from a person other than the corporate debtor and was acquired in good faith, for value and without notice of the relevant circumstances, or affect any interest deriving from such an interest, and (b) shall not require a person who received a benefit from the transaction in good faith, for value and without notice of the relevant circumstances to pay any sum unless he was a party to the transaction. 10. Further the provision of Section 66 deals with fraudulent trading or wrongful trading, therefore, intent to defraud the creditors is essential as it is imperative to prove that the business is conducted or a transaction has been made in a fraudulent manner in order to intentionally defraud the creditors of the Corporate Debtor. The provision applies when the person knowingly carries out the fraudulent activity. Section 66(1) states that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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