TMI Blog2022 (6) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... ful default. The Respondents 1 to 6 are jointly and severally responsible to pay Rs. 2,94,77,269/- with interest @ 12% per annum to the account of the Resolution Professional of the Corporate Debtor within two weeks from the date of receipt of this order. Application disposed off. - IA(IBC)/196/KOB/2021 IN IBA/13/KOB/2020 - - - Dated:- 2-6-2022 - Hon ble Mr. Ashok Kumar Borah, Member (Judicial) And Hon ble Mr. Anil Kumar. B, Member (Technical) For the Applicant : Shri Vinod P.V., Shri. Reetha D., Advocates. For the Respondent Nos 1 to 5 : Shri. Vijay V. Paul, Shri. Aivan Raj, Shri. Sheryl Elizabeth, Shri. Ananda Padmanabhan, Advocates. For the Respondent : No. 6 : Shri. Biju Balakrishnan, Shri. Anjana Kannath, Shri. Ajmal P., Shri. Raakhe V.S., Shri. Parvathy, Advocates. ORDER Per : Ashok Kumar Borah, Member (J) 1. This Application IA(IBC)/196/KOB/2021 has been filed under Section 66 of the Insolvency and Bankruptcy Code, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation that there are fraudulent and voidable transactions occurred in the Company, which attract Section 66, 43,45,49 and 50 of the Insolvency and Bankruptcy Code, 2016. Accordingly, the RP with the concurrence of the Committee of Creditors appointed Mr. Vibin Vincent, FCA of SVAR Associates, Chartered Accountants to conduct a transaction and forensic audit of the Corporate Debtor. Mr. Vibin Vincent submitted his report on 12.10.2021. 4. It is stated that the Corporate Debtor has availed credit facility from Federal Bank Limited since 30.05.2002 and among other properties, the Corporate Debtor has also mortgaged property admeasuring 3.63893 Acre in Agasteeswaram Village, Kanyakumari District as security towards granting the said credit facility. The Federal Bank has assigned the said debt in favour of Phoenix ARC Private Limited on 14.07.2017. Phoenix ARC Private Limited has raised a claim of Rs. 33,13,66,889. It is further stated that when the mortgage was in existence, 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/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any evidence of receipts for such payment or land purchase agreements or documents to prove that the payment has been made for the said purpose. The transaction is a fraudulent diversion of the fund by the management to defraud the creditors and the directors are jointly and severally liable to reimburse such amount to the corporate debtor with interest @ 15%. 9. It is stated that the Corporate Debtor through its Managing Director has executed a share purchase agreement with Sri Ramani Resorts and Hotels Private Limited on 21.11.2012 to sell 100% of its share in the company for a total consideration of Rs. 30 Crore. However, shareholders are not a party to the said share purchase agreement. As an advance towards the said share purchase agreement CD has received an amount of Rs.1,00,00,000/- from Sri Ramani Resorts and Hotels Private Limited. The Forensic auditor observed in its Report in Annexure 3 that out of the said amount Rs.66,70,200 is withdrawn by the directors and shareholders 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they are lying at the rear side and lying as a separate plot without having any continuity with the main property. In such a situation the statement that the Respondents are liable to answer for the difference in the market value is a phenomenon not known to the commercial arena. Only because of the fact that the said Vetha Selvaraj came with an interest to develop the property by carrying out agricultural operations such a value was agreed to him otherwise no value as entered in the agreement will not be fetched. The present value cannot be taken for the purpose of arriving at the market value on the date of entering into the agreement. 13. It is further stated that there was no purchase of land during 2018-2019. The property was purchased in the years 2007, 2008, and 2009 and the said property was inevitably needed for the approval of the newly constructed buildings from the town planning department. The said property was having high commercial value and also potential, and it lies along 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 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due and the Respondents have not caused any act or contributed any act for claiming such an exorbitant amount by Ramani Resorts. If they would have acted as per the agreement, all the liabilities of the company could have been paid off including profit to the shareholders. It was at a time when other establishments were willing to purchase the assets and shares of the company Ramani Resorts has come forward and the Respondents have fallen into their agreement. Thus, the Respondents have not received any amounts other than what was accounted for. So, the Respondents are not liable to pay Rs. 66,70,200/- as the payments were effected to discharge the liability which is also evident from the records kept in the office of the RP. The Respondents are not liable to pay interest at the rate of 24% as there was no contract agreeing to pay interest and there was no demand for interest under law. 16. All such payments are covered by documents and they are in the possession of IRP. It is true that out of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted time limit of 135 days as per Regulation 35(3) of IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016. 19. It is stated that the Respondents have not denied the transaction in the land deal and also not denied the execution of Power of Attorney dated 28.09.2007 in favour of Mr.Vetha Selvaraj to sell the land consisting of 3.63 acre owned by the Company and also the execution of Agreement for Sale executed on 11.09.2009 with Mr. Vetha Selvaraj. It is further stated that the issue is pertaining to loss of land at the hands of third parties and balance consideration of Rs.10,74,654/- received in the name of the Company but not accounted for. When the Managing Director has acknowledged the receipt of the said amount on behalf of the Company, it is the responsibility of the management to compensate the Company for such losses that occurred as a result of such fraudulent and illegal transactions. FINDINGS 20. We have heard Shri Vinod P.V., the learned counsel for the Resolution Professional, and 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 evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case as to whether there are genuine reasons to consider the Application on merits even filed beyond 135th day. Answer II The expression shall in regulation 35A (1), 35A(2) and 35A(3) is not mandatory and requirement of forming an opinion under Section 35A(1) make a determination under Section 35A(2) and shall apply to the Company Appeal (AT) Ins. No. 583 of 2021 Adjudicating Authority for appropriate relief on or before 135th day of the Insolvency Commencement Date are only directory. Answer III Application questioning the transactions covered by Section 49 and 66 of the Code are not to be rejected on the ground that Application has been filed beyond the period prescribed under Section 46 of the Code. The timeline prescribed for transactions under Section 46 does not cover the transactions covered by Section 49 and 66 of the Code. Answer IV V Learned Counsel for the Respondent No. 1 emphatically submitted that there were no pleading in the Application filed by the RP of fraud or any fraudulent transaction. Learned Adjudicating Authority also in paragraph 30 of the Impugned Order as noted above, has observed that RP has not substantiated his allegation that execution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Attorney, and other documents were not provided during the process of audit. b) Suspected diversion of funds accounted as advance paid for land purchase. An amount of Rs. 1,73,45,000 is outstanding as land purchase advance in the audited financial statements as on 31st March 2021. There is no evidence available in the office to prove that the payments have been made for such a purpose. Rs. 1,00,000 each have been paid continuously from 31st January 2009 to 31st March 2009, which is an unusual method of payment in a normal land sale. Moreover, all these payments have been made by cash. There is a suspected diversion of fund by accounting as advance for purchase of land. There were no land properties made for this advance paid. c) Share Purchase Agreement with M/s. Sri Ramani Resorts and Hotels Pvt. Ltd to sell 100% shares of the Company. Based on the observations mentioned above, the Share Purchase Agreement executed by the Corporate Debtor is void ab initio and the intention of KN Narayanan Namboodiripad, the suspended Managing Director, and Mr. Venugopal T M, The COO of CD, for entering into such an agreement is Suspected to deceive the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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