TMI Blog2021 (9) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashok Kumar Mishra) Member(Technical) For the Appellant : Ms. Gaurangi Patil, Ms. Anjali Shahi, Mr. Mayur Khandeparkar and Mr. Niranjan, Advocates For the Respondents : Mr. Sandeep Bajaj, Ms. Aakanksha Nehra, Ms. Aditi Gupta and Mr. Siddhartha Shukla, Advocates for Respondent No.1. JUDGMENT DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER 1. The present appeal has been filed by the Appellant' Ramkrishna Electricals Ltd under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short Code ) against the impugned order dated 11.09.2020 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai in I.A No. 1109 of 2020 in Company Petition (IB) No. 2925 /MB/2018. 2. The Appellant has sought the reliefs of setting aside the impugned order as stated above and also that Respondent No.2 3 i.e. erstwhile Directors of the Corporate Debtor in Corporate Insolvency Resolution Process (CIRP) to deposit the money etc. 3. The Appellant is in the business of manufacturer and distributor of transformers, fabrications etc., for more than 3 decades. The Appellant has supplied to the Corporate Debtors (in CIRP) in the normal course of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Section 66 of the Code is similar to Section 339 of the Companies Act, 2013 and cited the Hon ble Supreme Court judgment in Usha Ananthasubramaniam Vs. Union of India in Civil Appeal No. 7604 of 2019 and held that connotation to the carrying on of the business refers to the business of the Company which is mismanaged and not to business of another company or other person . Section 339 of the Companies Act, 2013 as enumerated below: Liability for Fraudulent Conduct of Business. 339. (1) If in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, may, if it thinks it proper so to do, declare that any person, who is or has been a director, manager, or officer of the company or any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em as ex parte. 5. The Respondent No.1- Mr. Atul Rajwadkar is the Liquidator for Corporate Debtor- EEL as substantiated the order passed by the Adjudicating Authority. He has also stated that it is an admitted position that funds were withdrawn during the CIRP of Corporate Debtor by the Appellant. He has also cited that during CIRP no fund can be withdrawn from the Corporate Debtor s bank account and to supplement this he has cited the following judgments: a. UCO bank Vs. Ramachandran in CA(AT) (Ins) No. 761 of 2020 dated 03.11.2020 in IA No. 2038 of 2020 b. Tata Motors Finance Vs. Jadoun International Pvt. Ltd Ors. In CA(AT)(Ins) No. 1149 of 2019 dated 06.11.2019 c. SREI Equipment Finance Ltd. Amit Gupta 2019SCC On Line nclat693 d. Indian Overseas Bank Vs. Mr. Dinkar T. Venkatasubramaniam in Company Appeal (AT)(Ins) No. 267 of 2017 dated 15.11.2017 All these judgments in one way or the other bans withdrawal of money from the bank accounts of the Corporate Debtor during the CIRP under Section 14 of the Code. He has also presented the movement of funds of the Corporate Debtor s Cooperative Bank account from which the Appellant has withdrawn the money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... q. 15.10.2019 Cash(self)- Cheque- 29348 9,121.00 Total 2,42,54,481. 2,42,54,481/- He has also stated that since no claim has been filed by the Appellant with the Resolution Professional in the capacity of the Operational Creditor clearly convinces the fact that there exists no claim of the Appellant against the Corporate Debtor and hence transactions are fraudulent transactions. Hence, as per the Respondent No.1 the order passed by the Adjudicating Authority is in order and requested the Appellant Tribunal to stand by the same. 6. The Adjudicating Authority has rightly considered the movement of funds of the Corporate Debtor in the said cooperative bank which was opened for the limited period from 19.07.2019 to 15.10.2019. The Adjudicating Authority has elaborately explained the process of CIRP and the operation of the Ex-Director of the Company allowing withdrawal of money by the operational creditor (Appellant) and has passed the order in terms of the Section 66(1) of the Code in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be e. No doubt certain fund flow reflects that as soon as the money received by the Corporate Debtor in that cooperative bank immediately cheque used to be presented to the same bank, this is a grey area for generating a doubt and also involving connivance by the suspended directors of the Corporate Debtor. f. In the changing world business scenario, the time has come when we should accept that smiling with a vendor is always not a corrupt practice . g. For ease of convenience Section 66 67 of the Code is reproduced herein below: Section 66. (1) If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the directions have been made. (2) Where the Adjudicating Authority has passed an order under sub-section (1) or sub-section (2) of section 66, as the case may be, in relation to a person who is a creditor of the corporate debtor, it may, by an order, direct that the whole or any part of any debt owed by the corporate debtor to that person and any interest thereon shall rank in the order of priority of payment under section 53 after all other debts owed by the corporate debtor. h. It is pertinent to mention here that the Operational Creditor has collected all its dues and, therefore, has not filed claimed before the Insolvency Professional. i. The wrong done by the Operational Creditor - Appellant is that they have withdrawn the money when the CIRP was on and hence violated provisions of Section 14 of the Code and accordingly, the directions of the Adjudicating Authority to deposit ₹ 2,42, 54,121/- to the account of the Corporate Debtor at the specified bank is in order. Accordingly, we are in agreement with the order passed by the Adjudicating Authority to the extent of refund of money and the same is in order. Accordingly, we do not feel any need to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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