TMI Blog2022 (9) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on with an Intent to Defraud the Creditor - One cannot remain oblivious of the candid fact that, if the Directors of a Company had acted on a bonafide belief that the Company would recover from its Financial Problems / Difficulties, then, they will not be held liable for the act / offence of Fraudulent Trading. The aspect of Fraudulent Trading requires a very High Degree of proof, which is attached to the Fraudulent Intent. To put it emphatically, a more compelling Material / Evidence is required to satisfy the conscience of this Tribunal, on a preponderance of probability. Apart from that, an isolated/ solo fraud case, against the person, then, action in tort can be resorted to, as opined by this Tribunal. No wonder, a Creditor, who was defrauded, will have recourse to an alternative remedy, under Civil Law. In the instant Case on hand, the Appellant / Applicant before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) had filed application under Section 66 (1) of the Insolvency and Bankruptcy Code, 2016. In this connection, this Tribunal significantly points out that in respect of an Application (Filed under Section 66 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the Respondents would fall within the confine of Fraudulent Trading that is to say that whether the business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose. In this context, it is significant to refer to the decision of the Supreme Court, in the matter of Anuj Jain IRP for Jaypee Inrfatech Limited Vs Axis Bank Limited Etc., In Civil Appeal No.8512 8527 of 2019; 29.1. However, we are impelled to make one comment as regards the application made by IRP. It is noticed that in the present case, the IRP moved one composite application purportedly under Sections 43, 45 and 66 of the Code while alleging that the transactions in question were preferential as also undervalued and fraudulent. In our view, in the scheme of the Code, the parameters and the requisite enquiries as also the consequences in relation to these aspects are different and such difference is explicit in the related provisions. As noticed, the question of intent is not involved in Section 43 and by virtue of legal fiction, upon existence of the given ingredients, a transaction is deemed to be of giving preference at a relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to defraud the creditors. Only allegations has been made by the Applicants in respect of the amount which is due and payable by the Respondents and no documentary proof has been filed in support of the same, to show that the business of the Corporate Debtor was carried out by the Respondents with an dishonest intention and to defraud the creditors. Under the said circumstances, the reason given by the respondent appears to be plausible and cannot be brought under Section 66 (1) of IBC, 2016. 34. Hence for the aforestated reasons, we find no merits in the present Application. and finally, dismissed the Application , without Costs. Appellant s submission 3. Questioning the order of dismissal of IA(IBC)/489(CHE)/2021 in IBA/1099/2019, passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) an Appeal before this Tribunal filed under Section 66 (1) of the Insolvency Bankruptcy Code, 2016, the Learned Counsel for the Appellant / Applicant submits that the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) had committed an error in not appreciating the Conduct of the Respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of the Corporate Debtor to the Current Account of the 1st Respondent with YES Bank Ltd., bearing No.041985700000247 on various dates from April 2018 to June 2018. The Learned Counsel for the Appellant points out that the impugned order is an erroneous and unacceptable one, in Law . 9. The Learned Counsel for the Appellant takes a stand that the Respondents are liable to contribute a sum of Rs.75.63 Crore together with 18% interest to the Assets of the Corporate Debtor and the said amount are Receivables , exclusively charged to the Financial Creditors of the Corporate Debtor and, therefore, the Appellant / Applicant is duty bound to prefer this Application , with a view to recover the said amount and to safeguard the interests of all the Creditors of the Corporate Debtor . 10. The clear cut stand of the Appellant / Applicant , is that the Respondents had colluded fraudulently and knocked off the Receivables , charged to the Financial Creditors of the Corporate Debtor , by paying the amounts to the unsecured Operational Creditors and Third Parties , squarely fall under the purview of the Preferential Transactions , carried on with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 173 99866632 26/02/2018 339717712.50 05/04/2018 106643558.50 09/03/2018 181062820.50 05/05/2018 201 106526632 16/03/2018 283604898.50 19/05/2018 51768072.50 23/05/2018 306 99439896 23/05/2018 245 51750000 05/06/2018 352 350629896 1210283370.00 858762161.50 708213056 14. According to the Appellant / Applicant a total sum of Rs.206,90,45,531.50 Paise was brought into Bank A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to get away, with the aspect of Fraud and Cheat the Financial Creditor . Therefore, the Appellant / Applicant had filed IA(IBC)/489(CHE)/2021 in IBA/1099/2019 before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) praying for passing an order (1) in directing the Respondents jointly and severally to contribute to the Assets of the Corporate Debtor by paying a sum of Rs.75.63 Lakh along with 18% interest from 05.06.2018 till the date of Realisation in Full . (2) to Declare that the Applicant has got an unpaid vendor s lien over the Assets of the 1st Respondent supplied by the Corporate Debtor for a sum of Rs.75.63 Crore along with 18% interest from 05.06.2018 till the date of Realisation in Full . 20. Before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai), the 1st Respondent / M/s. Wind Construction Private Limited had filed a Reply to IA(IBC)/489(CHE)/2021 in IBA/1099/2019, wherein at Paragraph (iv) , it is mentioned as under:- The Balance payment of the Project cost was to be paid after commissioning of all 33 Machines on permanent connectivity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication . 26. Continuing further, it is the stand of the Respondent Nos.2 and 3 before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) in IA(IBC)/489(CHE)/2021 in IBA/1099/2019, that out of the consideration for the Wind Turbines purchased by the 1st Respondent, the 1st Respondent had paid a sum of Rupees about INR 121 Crores to the HDFC Bank Account of the Appellant / Applicant and a sum of Rupees about INR 86 Crore was paid to the Karur Vysya Bank Account of the Appellant / Applicant , aggregating to a sum of Rs.207 Crore was paid to the Appellant / Applicant . Moreover, the 1st Respondent has claimed the Liquidated Damage from the Appellant / Applicant , amounting to about INR 23 Crore, which was adjusted in the Receivables of the Appellant / Applicant . Also, that a sum of INR 130 Crore was paid directly to the Vendors of the Appellant / Applicant subsidiary RISPL, in relation to 33 Wind Turbines purchased by the 1st Respondent. In addition, a sum of INR11 lakh was paid by the 1st Respondent, on behalf of the Appellant / Applicant, for the right of way , directly to the respective land owners and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 18 of 22 (c ) adequate means for supervising its implementation. [(d) provides for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the approval of the resolution plan and the manner in which the proceeds, if any, from such proceedings shall be distributed. Provided that this clause shall not apply to any resolution plan that has been submitted to the Adjudicating Authority under sub-section (6) of section 30 on or before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022.] (Inserted by Notification No.IBBI/2022-23/GN/REG084, dated 14th June, 2022 (w.e.f. 14-06-2022). 30. It is not in dispute that the Corporate Debtor Insolvency Resolution Process ( CIRP ) had attained finality and that the Resolution Plan became Functus Officio and he cannot file / pursue any Petition / Application on behalf of the Company . 31. The ingredients of Section 23 of the Insolvency Bankruptcy Code, 2016 pertains to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Tribunal, Division Bench II, Chennai) had filed IA(IBC)/489(CHE)/2021 in IBA/1099/2019 under Section 66 (1) of the Insolvency and Bankruptcy Code, 2016. In this connection, this Tribunal significantly points out that in respect of an Application (Filed under Section 66 of the Insolvency and Bankruptcy Code, 2016) Fraudulent Trading / Wrongful Trading , by the Applicant / Resolution Professional is concerned, Tangible Materials / Relevant Facts are to be pleaded in an Unambiguous and Unequivocal Terms , by supplying the necessary details / facts as the case may be. 37. It transpires that the Appellant / Applicant in IA(IBC)/489(CHE)/2021 in IBA/1099/2019 that the Appellant / Applicant had prayed for issuance of Direction to the Respondent jointly and severally to contribute to the Assets of the Corporate Debtor , by paying a sum of Rs.75.63 Crore along with 18% interest from 05.06.2018, till the date of Realisation in Full and sought for a relief of Declaration that the Appellant / Applicant has got an unpaid vendor s Lien over the Assets of the 1st Respondent, supplied by the Corporate Debtor for a sum of Rs.75.63 Crore alo ..... 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