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TMI Blog2022 (6) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... ode, 2016 read with Rule 11 of the NCLT Rules, 2016 by Mr. K. Parameswaran Nair, (Resolution Professional of M/s. Sree Bhadra Parks and Resorts Private Limited) against Mr. K. N. Narayanan Namboodiripad & Others (hereinafter referred as "Directors of Corporate Debtor") seeking the following reliefs: - (i) Pass an order against Respondent No. 1 to 6 jointly and severally to contribute Rs. 10,74,654/- obtained through the sale agreement executed by the Respondents to sell the 3.63893 Acres of land with interest at the rate of 15% per annum till the date of payment. (ii) Pass an order against Respondents No. 1 to 6 to finish an indemnity bond for Rs. 3.64 Crore to the Corporate Debtor towards the market value of the land as a security till disposal of all pending litigation arising out of the bogus sale agreements and power of attorneys with respect 3.63893 Acres of land owned by the Corporate Debtor. (iii)Pass an order against Respondent No. 1 to 6 jointly and severally to contribute Rs. 66,70,200 being the amount withdrawn from the Corporate Debtor by the directors from the amount received against the share purchase agreement executed with Sri. Ramani Resorts and Hotels Privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the Respondent No.1, Managing Director of the CD entered into a bogus agreement to sell the land admeasuring 3.63893 Acre with one Mr.Vetha Selvaraj on 25.10.2005 for a total consideration of Rs.30,74,654/-. The said agreement of sale was renewed on 11.09.2009. In the said unregistered sale deed the entire money of Rs.30,74,654/- was received by the Corporate Debtor. 5. It is stated that a General Power Attorney was executed on 28.09.2007 by the Corporate Debtor appointing Mr.Vetha Selvaraj as the Power of Attorney of Corporate Debtor. However later on 14.05.2009, vide a registered deed the Corporate Debtor cancelled the above POA. On 25.10.2010 using the cancelled POA executed on 28.09.2007, Mr. Vetha Selvaraj fraudulently sold the property to Mr. M Alexander by a registered sale deed. The Corporate Debtor filed a suit before Principal District Munsiff Court, Nagercoil to declare the above-registered sale deed as null and void, which is pending before the Principal Munsiff Court in OS 127/2011. 6. It is stated that as per the accounts the Corporate Debtor, only Rs.20,00,000/- is accounted for in the name of the Corporate Debtor out of the total receipt of Rs.30,74,654/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders of the Company. Submissions by Respondent Nos. 1 to 5. 10. Respondent Nos. 1 to 5 filed reply statement and stated that based upon the Agreement dated 11.09.2009 there was a receipt of only Rs.20 lakh and the same was credited in the account of the company and thereafter it was paid to Federal Bank to pay off a portion of the liability. On receipt of the said amount, as deemed Power of Attorney has been executed in favour of Mr. Vetha Selvaraj. However, the power of attorney executed in favour of Vetha Selvaraj was cancelled. Though a subsequent agreement was executed that was with a different intention and as the Federal Bank did not release the document as agreed upon orally, the transaction did not take place. Since the power of attorney holder who had executed a document without the authority of law on his power having been cancelled, on the basis of which no title over the properties will pass and has agreed that Mr. Vetha Selvaraj did not make claim for any amount and the said liability became an unenforceable liability causing no burden to the Company. Under law no liability can be created in respect of the said transaction and the property is still in possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the side of the national highway and is also attached to the park. The properties were purchased for an average cost of Rs.2.5 lakh percent. The valuation of the said property obtained from the Registered Valuer of the year 2010 has been produced, wherein the value shows 3.5 Lakh percent. The law is to the effect that under Section 92 of the Evidence Act when the question arises regarding the differentiating amount actually paid or covered by the transaction and that stated in the documentary evidence can be let into show that the real transaction and consideration passed is not as stated in the document. Moreover, the agreement copies of 3 items of properties are available with the Respondents and they have produced before this Tribunal. By such transaction, no fraud was played upon so as to warrant any interference by this Tribunal. As regards cash payments there were withdrawals which are stated in the said paragraph itself. Moreover, at a distant point of more than 10 years, it may not be possible to keep and produce the vouchers. 14. It is further stated that all the shareholders are aware of the decision taken in the Annual General meeting. The Balance amount was also utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount towards commission, the amount was paid and the said payment was also included in the account maintained. The payment to the directors was effected as it was necessary due to the fact that the entire assets were going to be sold. When agreements were drawn for the purchase of the entire assets of the company and advance payments were made and thereafter no-fault of the Corporate Debtor the purchaser is not willing to come forward to honour the obligation, he is not entitled even to file a suit for specific performance of the contract. The contract for the purchase of property under the Indian Contract Act, 1872 did not differentiate between a company contract and a contract made by individuals. Hence the relief prayed for by the RP may not be granted by this Tribunal. Submissions by Respondent No.6. 17. Respondent No. 6 filed his reply statement and stated that he is not a party in IBA/13/KOB/2020 on the files of this Tribunal. Though in Annexure A2, he has been given the status of a Director of M/s. Sree Bhadra Parks and Resorts Ltd he has no active role to play in the day-to-day affairs of the said Company. He has been working in Gulf Countries from 1981 onwards and eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri. Vijay V. Paul and Shri. Biju Balakrishnan appearing for the Respondents and perused the entire case records/documents. We have also gone through the evidence on record. In order to arrive at a decision in the matter, we have framed the following issues: i. Whether this Interlocutory Application is maintainable? ii. Whether the Respondents are jointly/severally liable to pay the amount claimed in this application? 21, Issue number (i):- To arrive at a concrete conclusion of this issue, we have gone through Section 66 of IBC, 2016 which is quoted hereunder:- Section 66:- Fraudulent trading or wrongful trading: - (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 make such contributions to the assets of the corporate debtor as it may deem fit. (2) on an application made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority also in paragraph 30 of the Impugned Order as noted above, has observed that RP has not substantiated his allegation that execution of Lease deed amount to fraudulent transaction. Whether in the Application filed by the RP, there were sufficient pleadings to the effect that the transaction under Section 49 and 66 are to be found out from the pleadings in the Application. The Application filed by the RP I.A. No. 742/2020 is on the record of the Appeal. We have also extracted Paragraph xv of the Application where there was specific pleading that the lease transaction was carried out to defraud the creditors under Section 49 and 66 of the Code. The Application filed by the RP also pleaded that schedule of lease property has been hypothecated to the Bank obtaining credit facility in the year 2013. Paragraph xiii(c) and xiii(h) are to the following effect:" 23. From the above, it is clear that the technical objection regarding the maintainability of this application is raised only for the sake of objecting and hence stands rejected. This application is thus maintainable. 24. Issue Number (ii): - It is seen from the records that this IA is filed on the basis of the report file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gopal T M, The COO of CD, for entering into such an agreement is Suspected to deceive the Corporate Debtor and the buyer. d) Share Purchase Agreement with M/s. Basel Products India Private Limited to sell 100% shares of the Company. This Share Purchase Agreement executed by the Corporate Debtor is also "void ab initio" as in this agreement also the CD agreed to sell the shares not owned by it but by the shareholders of the company. Entering into another SPA when a SPA (though "void ab initio) was existing and active on the date with M/s Sri Ramani Resorts and Hotels Pvt. Ltd is an intentional violation of the clauses of the original SPA. The intention of K.N.Narayanan Namboodiripad, the suspended Managing Director for entering into such an agreement is suspected to deceive the Corporate Debtor and the buyers 25. From the Forensic Audit it is clear that this is a fit case to direct the Respondents to make good the losses caused to the creditors of the Corporate Debtor as the transactions referred to in the earlier paragraphs are fraudulent transactions, holding that the Respondents are personally liable for such deliberate and wilful default. The Respondents 1 to 6 are jointly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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