TMI Blog2021 (12) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of Sections 43, 45 and 66 of the Code as suspicious and vulnerable, firstly, Rs. 42,50,397 repaid to the director during the F.Y. 2017-18, is in preference to trade payables. Secondly, Rs. 6,28,000 paid to Mrs. Revathy Radhakrishnan Director of the Corporate Debtor. Thirdly, an amount of Rs. 90,00,000 is receivable from Sabkaa Payments Limited. Looking at the broad features of Section 43 of the Code, it is noticed that as per Sub-Section (1) thereof, when the liquidator or the resolution professional, as the case may be, is of the opinion that the Corporate Debtor has, at a relevant time, given a preference in such transactions and in such manner as specified in Sub-Section (2), to any person/persons as referred to in sub-Section (4), he is required to apply to the adjudicating authority for avoidance of preferential transactions and for one or more of the orders referred to in Section 44. If twin conditions specified in Section 43(2) are satisfied, the transaction would be deemed to be of preference - The relevant time is reckoned, as per Section 43(4) of the Code. in two ways: (a) if the preferences given to a related party (other than an employee), the relevant ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 in MA/05/KOB/2020 in TIBA/1/KOB/2019 - - - Dated:- 21-12-2021 - Ashok Kumar Borah, Member (J) and Anil Kumar B., Member (T) For the Appellant: Party-in-Person For the Respondent: Simod Sivan ORDER Ashok Kumar Borah, Member (J) 1. This IA(IBC)/51/KOB/2021 has been filed by the Liquidator in the matter of M/s. Acharya Techno Solutions (INDIA) Private Limited under Sections 35(1)(n), 43, 44, 45, 46, 48, 49, 60(5) 66 of Insolvency and Bankruptcy Code, 2016 [hereinafter referred to as 'I B Code, 2016'] seeking the following reliefs:- i. To hold that the loan of Rs. 42,50,397/- repaid to the director during the FY 2017-18, is in preference to trade payables statutory dues and salary to staff, during that year. ii. To hold that Rs. 6,28,000/- paid to Mrs. Revathi Radhakrishnan, wife of suspended managing director, on 01st July 2018 as loan to be repaid to the Corporate Debtor with interest and cost thereof. iii. To direct the suspended directors and Sabkaa Payments Limited to settle the interest and cost of the balance outstanding with respect to the SMS Server Maintenance charges of Rs. 90,00,000/-, which is still pending to be received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sabka payments as for services rendered. It is considered as disposal and transfer of inventory balance to the subsidiary company, sabka payments limited. Since, the incorporation of the sabka payments limited on 10.02.2016. No record is there to show any such transaction in the normal course of business. Undervalued Transactions 5. It is stated that the assets with a written down value of Rs. 48,55,750/- is existing as per the audited balance sheet as at 31st March 2018. Out of which a car was sold during the FY 2018-19 at a profit and Computers and the accessories, LCD monitors and telephones were handed over to the over to Liquidator. However, whereabouts of balance of assets with a written down value of Rs. 33,12,921/- have not been provided by the management. No fixed assets register is maintained by the Corporate Debtor nor the assets have been numbered making all the assets less prone to identification upon inspection. The Liquidator found all the assets of the Corporate Debtor either missing or not found. 6. It is further stated that Rs. 1,09,550 had been spent by the corporate debtor as the preliminary legal expenses for the incorporation of its subsidiary Sabk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment vide FIR No. 0026/2017 filed before the Cyber Crime Police, Trivandrum. However, the Liquidator found that, there are no documentation of fraud reported to Government as required by the Companies Act 2013 or any other incidental or ancillary documents that corroborate such fraud being conducted on the Corporate Debtor. Based on verification of available bank accounts and confirmations the Liquidator could compile a total of Rs. 62,43,693/- received from customers as advance to wallet which is still not paid back, as on date of the liquidation order (19.02.2020). The suspended directors of the Corporate Debtor were duty bound to pay back such wallet advances to its customers. No claims were received against such wallet advances except an e-mail from Mr. Amit Shah dated 01.05.2020. 11. Further, there are no information to comprehensively corroborate the information supplied by the suspended directors against Rs. 62,43,693/- with the records recovered from the Corporate Debtor. According to the Memorandum of Association of the Corporate Debtor, permit for taking such advances from customers and using it for the operations of the Corporate Debtor is not explicitly found men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expected of a person carrying out the same functions as are carried out by such director, as the case may be, in relation to the Corporate Debtor. 15. It again stated that was fraud and data theft by employees of the Corporate Debtor as submitted by the suspended directors of the Corporate Debtor, the EPF Department is a decree holder for a demand liability of Rs. 22,67,261/-. Sabkaa Payments Limited, a subsidiary of the Corporate Debtor is still in operation, loans and recovery that drive sources of income are unclear, not uniform pattern of financial statement preparation that indicate different treatment in different years, a completely software based system of business that came to an abrupt stop and ledger management system is argued to be not found or lost with no back-up. An initiative was taken to recreate the ledger management system physically with human acumen. 16. Respondent No. 1 filed the counter and submitted that application filed by the liquidator will not stand in accordance with law and also with facts. The application was filed against the corporate debtor company (Achariya Techno Solutions India Pvt. Ltd) which is within the jurisdiction of this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... let system cannot be used as a money transfer medium between the corporate debtor company and its customers. No money transactions can be carried out using this so-called Wallet . Since the wallet is only a virtual data space used to track business transactions. The liquidator contention regarding the wallet payment is a misrepresentation of the fact, the wallet balance given by the company to the liquidator is only the list of customers to whom the corporate debtor is obliged to pay money towards non delivery of services. i.e. it is the list of the customers whom the company received money but failed to provide the service due to financial crisis and thereafter insolvency. The amount paid by the customers is received in the corporate debtor company bank accounts where proper accounting was done. During the normal course of business, the deficiency in service is rectified by providing the service against which the amount is paid by the customers. However, refunds were not done by the corporate debtor company as the customers requested to provide the service rather than processing refunds. 20. The Debtor Company was having a yearly transactions of 200 to 500 crore approximately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and got an order to file the dues in monthly instalments, and the debtor company started paying the monthly instalments for a period of 2 months after which the payments were stopped due to financial crisis and the bank accounts of the corporate debtor company were marked as lien by the EPFO. 23. The chartered accountant of the corporate debtor company received a notice dated 01.02.2021 06.03.2021 from the Income Tax department, Mumbai division in connection with an investigation pertaining to company M/s. Maheshwari Techno Travels, since all the documents asked by the investigation agency is with the liquidator the summons was forwarded to the liquidator for necessary action, instead of providing necessary documents and explanation the liquidator tried to convince the investigation agency that the corporate debtor is under liquidation and highlighted various fact suppressed by the suspended directors. 24. The books of account which was kept in one of the hard disk and are already given to the liquidator during the handover process. The hard disk was inaccessible during that time due to the fraudulent activities and data theft done by Mr. Sujith an employee of the Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Payments Limited. The Limited company Sabkaa Payments already called for a Board meeting with the directors and the liquidator is also made a party in the meeting to sort out the matters pertaining to the corporate debtor company. Moreover, the company M/s. Sabkaa Payments Ltd. is not arrayed as a party in this case so legally no orders can be passed against them. 30. Respondent No. 3 filed the counter stating that when the Corporate Debtor Company was facing financial crisis, as per the instructions received from the Managing Director, Respondent No. 3 transferred certain amounts to the Corporate Debtor company which was repaid by the company on 24th July 2018. Hence, the claim of the liquidator that Rs. 6,28,000/- paid to Respondent No. 3 on 01.07.2018 as loan is wrong. FINDINGS 31. We have heard the arguments advanced by the Liquidator as also the learned counsel Respondents and had gone through the contentions taken by both the parties in this Application. Before proceeding further, we may draw a brief outline of the CIR Process initiated in this matter. This Tribunal vide order dated 13.09.2019 in TIBA/1/KOB/2019 filed by the Operational Creditor M/s. V-Con Integra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet the day to day expenses, salaries and for buying stocks. Later the amount was repaid to the director when the company got from its on-going business. 35. Further it is stated that an amount of 6,28,000/- was paid to Mrs. Revathi Radhakrishnan, wife of suspended Managing Director and present Director of Sabka Payments Limited in the capacity of an employee, on 1st July 2018 as loan, when no such balance of loan outstanding was found in the audited financials of the Corporate Debtor. To this the contention of the respondent is that the amount was paid as a loan by Respondent No. 3 as per the direction of Respondent No. 2 and the same was repaid by the company later on. 36. Looking at the broad features of Section 43 of the Code, it is noticed that as per Sub-Section (1) thereof, when the liquidator or the resolution professional, as the case may be, is of the opinion that the Corporate Debtor has, at a relevant time, given a preference in such transactions and in such manner as specified in Sub-Section (2), to any person/persons as referred to in sub-Section (4), he is required to apply to the adjudicating authority for avoidance of preferential transactions and for one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Based on our analysis of audited financial statements, various bank statements and other explanations provided to us, we have observed preferential transactions for an amount of Rs. 1,38,78,397 during the relevant period. Details are as follows:- Sl No. Party Name Amount 1 Mr. Reji Sivankutty (Suspended Managing Director) 42,50,397.00 2 Mrs. Revathi Radhakrishnan (Wife of Mr. Reji) 6,28,000.00 3 Sabka Payments Limited (Subsidiary Co) 90,00,000.00 Total 1,38,78,397.00 A loan of Rs. 42,50,397 has been repaid to the director during the FY 2017-18, in preference to trade payables, statutory dues and salary to staff, which were increased by Rs. 3,46,43,987.44 during the FY 2017-18. A preferential loan of Rs. 6,28,000/- paid to Mrs. Revathi Radhakrishnan, wife of suspended managing director, on 01st July 2018. Inventory balance/SMS server maintenance of worth Rs. 90,00,000 (Invoiced value) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,17,797 57203 3,75,000 SM1718/113 12.11.2018 SMS SERVER MAINTENANCE 3,17,797 57203 3,75,000 SM1718/114 20.11.2018 SMS SERVER MAINTENANCE 3,17,797 57203 3,75,000 SM1718/115 29.11.2018 SMS SERVER MAINTENANCE 3,17,797 57203 3,75,000 SM1718/116 03.12.2018 SMS SERVER MAINTENANCE 3,17,797 57203 3,75,000 SM1718/117 11.12.2018 SMS SERVER MAINTENANCE 3,17,797 57203 3,75,000 SM1718/118 20.12.2018 SMS SERVER MAINTENANCE 3,17,797 57203 3,75,000 SM1718/119 31.12.2018 SMS SERVER MAINTENANCE 3,17,797 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts they sold during the relevant period which amounted to Rs. 77,500/-, However, supporting documents for these sale or receipts were not provided for verification by the management. Fixed asset register and evidence for the physical verification of assets were also not made available to us for verification. 41. Further it appears from the records that the transaction auditor also identified transaction that are defrauding creditors. The report of the transaction auditor is as under:- We observed that, Rs. 1,09,550 had been spent by the corporate debtor for the preliminary and legal expenses for the incorporation of its subsidiary Sabkaa Payments Limited during the financial year 2016-17. However, this investment has not been reflected in the financial statements of corporate debtor, whereas the same has been shown as a liability in the balance sheet of Sabkaa Payments Limited as long-term borrowings. During the FY 2017-18, an amount of Rs. 13,34,818 had been invested in the share capital of Sabkaa Payments Limited for 65.99% holding in the company. However, it is noted that, neither consolidated financial statements are prepared and filed nor this investment presented ..... X X X X Extracts X X X X X X X X Extracts X X X X
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