9911796707
TMI Blog2021 (11) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... ode) against Dnyaneshwar Chaudhari, Suspended Director of E & G Global Estates Limited, Respondent and others, and sought inter alia, the following prayers: - i. Direct removal of Respondent Nos. 3 to 7 from the CoC as there is neither any default nor any debt is owed since their respective infusion of funds were returned back to them/their related parties/relatives on the same day by Respondent Nos. 1 and 2. ii. Allow the Applicant to reconstitute, cancel entire voting rights of Respondent Nos. 3 to 7 and undertake appropriate changes to the present voting rights of the rest of the CoC members in view of the said fraud perpetrated by the Respondents with an intent to defraud the creditors and misleading the Applicant to believe that the Respondents 3 to 7 are "financial creditors" by filing fraudulent claims which otherwise never existed as on the date of commencement of insolvency process. 2. This Bench vide an order dated 24.06.2020 admitted the petition resulting into initiation of Corporate Insolvency Resolution Process. 3. The Applicant states that during the course of CIRP, forensic auditor viz. Mazars Business Advisors Pvt. Ltd. were appointed to undertake the forensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al bank account, subsequently, proceeded to return these exact amounts of funds back to the "related parties" of Respondent Nos. 3 to 7 either on the same day or immediate next working day. Thereby effectively creating the following false impression that the Respondent Nos. 3 to 7 are "home-buyers" who based on such mis-representation were made part of the CoC of the Corporate Debtor, while they continued to enjoy this position without having invested any penny since the entire investment was routed back to the account of their respective related parties by Respondent Nos. 1 and 2. 9. Thereafter on 12.01.2021, the Applicant sent emails to each of the beneficiaries i.e. respective related parties of Respondent Nos. 3 to 7 to whom the funds were refunded by the Respondent Nos. 1 and 2 through their individual personal account inquiring and seeking confirmation of having received such funds. These related parties of Respondent Nos. 3 to 7 also reverted vide individual emails dated 13.01.2021 in affirmation and agreeing to have received the said funds back into their accounts. 10. The Applicant submits that it is also clear that the Respondent No. 1 to 7 had clear intent to defraud t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forensic report cannot be relied upon by the Applicant as it is an incomplete report as the same is prepared without considering the audited financial statements of the 2016-17 to 2019-20 of the Corporate Debtor. The auditor has prepared the forensic report without considering the purchase contracts, ledgers, year wise fixed asset register and secretarial records of the Corporate Debtor. Further the forensic report cannot be relied upon as the auditor in the said report states that the auditor has not conducted a detailed review of the operations of the Corporate Debtor and the observations in the forensic report are on the basis of the limited review as per the scope of work. Therefore, it is submitted that the forensic report cannot be relied upon and ought to be dismissed in limine. 14. The Respondent No. 1 and 2 mention that it is a mere allegation that the Respondents in collision on 06.09.2019 transferred an amount of Rs. 30,00,000/- from the account of the Corporate Debtor to the proprietary firms managed by the husband of Respondent No. 7, arises from the forensic report. However, it is pertinent to note that the Forensic Report states that "While reviewing the villa sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. The Respondent 1 and 2 mentions that the content of the Applicant that there is a clear collusion between the Respondents to defraud the creditors is not correct. The Applicant states that an email dated 12.01.2021 was sent by him, enquiring and seeking confirmation from the respective "related party" of the Respondent Nos. 3 to 7, who were alleged receivers of the purported fund transfer made by Respondent No. 1 and 2. To which the Applicant received a revert from the respective "related parties" of Respondent No. 3 to 7 on 13.01.2021, affirming and agreeing to have received the said purported funds. The Respondent 1 and 2 contends that a perusal of the emails show that they are only confirmations from related parties of respondent No. 3 to 6. There is no confirmation or admission with respect to Respondent No. 7. Respondent No. 7 denies the allegation of the existence of any "related party". The same can be inferred from the email trails annexed to the Application which evidently show that although, there are email trails exchanged between the Applicant and the alleged related parties of the Respondent No. 3 to Respondent No. 6, there are no emails on record that show any co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The total value of such circuitous related party transaction amounts to Rs. 70 lacs. In all these cases, Respondent No. 1 and 2 upon withdrawal of said funds from the accounts of the Corporate Debtor company transferred into their own personal account and thereafter returned the exact amount of the fund back to the related party either on the same day or next working day. Thereby effectively creating false impression that Respondent No. 3 to 7 are homebuyers. It is as a result of this misrepresentation that they became home buyers and part of the CoC. All these fraudulent homebuyers became part of the CoC of the Corporate Debtor when having invested no money since the entire investment was rooted back to the account of respective related Party by Respondent No. 1 and 2. 23. The Bench notes that Resolution Professional (RP) after discovering such act has sent an Email on 12th January, 2021 to each of the beneficiaries of Respondent No. 3 to 7 to whom the funds were refunded from Respondent No. 1 and 2 and each of these related parties have agreed to have received the said fund back into their account. 24. The Bench notes that vide this IA, the RP has brought to fore Five such fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and R 6 on 26th August 2019 for an amount of Rs. 10 lacs each wherein effectively R5 and R6 have received back the alleged Financial debt of Rs. 10 lacs on the same day i.e. on 26 August 2019. Transaction between Respondent No. 2 and Respondent No. 7: 32. The Bench notes that there has been circuitous transaction between R2 and R7 on 6th September 2019 where R 7 has infused Rs. 30 lacs into the accounts of Corporate Debtor and on the same day R2 and R7 in collusion transferred the said Rs. 30 lacs to two proprietary firms of the husband of R7 i.e. Asha Accounting Services and VM Associates, there by R 7 effectively received back the financial debt of Rs. 30 lacs on the same day. 33. It is very clear to the Bench that R1 and R7 in the above-mentioned transactions have defrauded the Corporate Debtor Company and such an act is squarely covered under Section 66 (1) and 66 (2) of the Code. 34. R1 and R2 who are the suspended directors in their defense have mentioned that the forensic report is incomplete and that the auditors have not conducted detailed review of the operations of the Corporate Debtor company. The Bench notes that the Respondent Number 1 and 2 who are the suspende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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