TMI Blog2022 (11) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the Corporate Debtor cannot deny these documents at the threshold itself. There is no provision in the Code for the Appellant to invoke the clause concerning relevant period of two years solely on the ground of denying documents/information directed to be given to the Liquidator - this Tribunal, is of the earnest view that the Adjudicating Authority has rightly invoked its Inherent Power under Rule 11 of the Company Law Rules, 2016 in the interest of justice to direct the Promoters to provide the relevant information. On an Application preferred by the Liquidator, seeking clarification as to whether the Liquidator was allowed to investigate the Transactions executed or entered into by the Corporate Debtor , beyond two years from the ICD and relevant records can be asked for from the Promoters, the Adjudicating Authority has affirmed that the Promoters should give the necessary documents to the Liquidator and cooperate to enable the Forensic Auditors M/s. KPMG to complete the Audit - there is no illegality or infirmity in the Order of the Adjudicating Authority having exercised its Inherent Powers under Rule 11 of NCLT Rules, 2016 and hence this Appeal fails. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rces India Limited vide his reply dated 14.08.2018 has informed to the Liquidator that he has also received email from KPMG, the Forensic Auditor of Asian Natural Resources India Limited seeking all documents/papers etc from 01.04.2008 for completion of Forensic Audit. However, Mr. Khalid Baigh, has mentioned that they shall extend their full cooperation to arrange and provide information/data only for the period two years prior to the insolvency commencement date i.e., 23.05.2017 and requested the Liquidator to modify the mandate given to KPMG. to conduct the forensic audit from April 01, 2015. 9.5. It is also observed that KPMG, the Forensic Auditors appointed by the Liquidator has also asked for required data and information from the Suspended Management of Corporate Debtor from 01.04.2008. 9.6. It is observed in the application filed by the Operational Creditor, Vitol SA for execution of the Arbitral Award, the unequivocal findings of fact by the Ld. Division Bench of the Bombay High Court in Judgment dated 29th September 2016 in Appeal (L) No. 797 of 2015 and the Ld. Single Judge of the Bombay High Court vide judgment dated 54 October, 2015 in Chamber Summons (L) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance to the Liquidator as may be required by him in managing the affairs and completion of Liquidation Process of the Corporate Debtor in time. If the Suspended Management/Directors of the Corporate Debtor do not cooperate, handover the papers, documents etc. available with them, the Liquidator is at liberty to approach this Adjudicating Authority for issuing necessary consequential orders as it deems fit and proper. 10.4. The Forensic Auditors M/s. KPMG are also directed to complete the Forensic Audit within a period of 90 days and submit the report to the Liquidator so that the Liquidation Process is completed in time. 10.5. Since the other major company of the Suspended Management M/s. Bhatia Global International is now ordered to be liquidated as resolved by the CoC and the Liquidators of both the Companies Shri Abhishek Nagori for Asian Natural Resources (India) Limited and Shir Nitin Hasmukh Parikh Bhatia Global Trading Limited, are different, both the Liquidators are directed to coordinate with each other, if felt necessary and required, to complete the Liquidation Process in time. 10.6. More than 2 years have been passed since the initiation of Liquidation P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As the Liquidator cannot investigate a Corporate Debtor beyond two years from the ICD, the personnel of the Corporate Debtor under Section 19 of the Code cannot be expected to cooperate to provide documents for a period beyond this time. It is submitted that vide Order dated 01.07.2019, the Adjudicating Authority had earlier observed that as per the provisions of Section 43(4) of the Code, Forensic Audit beyond two years is not allowed. 4. It is also submitted that as per Section 35(1)(l) of the Code, the Liquidator can investigate the Financial Affairs of the Corporate Debtor to determine Undervalued or Preferential Transactions which having a lookback period of two years prior to the ICD. 5. It is the case of the Respondent/Liquidator that Sections 43 of the Code indicate that the Liquidator or the Resolution Professional shall apply to the Adjudicating Authority, if in the opinion of the Liquidator or the Resolution Professional, the Corporate Debtor, has at the relevant time given a preference in such transactions; that the definition of preference is given in Section 43(2) and the definition of relevant time is in Section 43(4); that the Liquidator will ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Affairs of the Corporate Debtor and does not specify any time period. 7. It is submitted that pursuant to the appointment of M/s. KPMG, Forensic Audit of the Corporate Debtor , certain documents were requested by KPMG from the Liquidator. As these documents were not in the possession of the Liquidator, but were in the possession of the suspended Directors, and other personnel of the Corporate Debtor , they were sought for from the Corporate Debtor . The Liquidator has also filed the details which they had sought for from the Corporate Debtor but was not receiving any cooperation. Assessment: 8. Section 43 of the Code which refers to Preferential Transactions is reproduced as hereunder: 43. Preferential transactions and relevant time. (1) Where 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 laid down in sub-section (2) to any persons as referred to in sub-section (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y commencement date. (Emphasis Supplied) 9. For ready reference, Sections 45 46 which deals with avoidance of Undervalued Transactions is also reproduced as hereunder: 45. Avoidance of undervalued transactions. (1) If the liquidator or the resolution professional, as the case may be, on an examination of the transactions of the corporate debtor referred to in sub-section (2) determines that certain transactions were made during the relevant period under section 46, which were undervalued, he shall make an application to the Adjudicating Authority to declare such transactions as void and reverse the effect of such transaction in accordance with this Chapter. (2) A transaction shall be considered undervalued where the corporate debtor (a) makes a gift to a person; or (b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor. 46. Relevant period for av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution to the assets of the corporate debtor as it may deem fit, if- (a) before the insolvency commencement date, such director or partner knew or ought to have known that the there was no reasonable prospect of avoiding the commencement of a corporate insolvency resolution process in respect of such corporate debtor; and (b) such director or partner did not exercise due diligence in minimising the potential loss to the creditors of the corporate debtor. (3) Notwithstanding anything contained in this section, no application shall be filed by a resolution professional under sub-section (2), in respect of such default against which initiation of corporate insolvency resolution process is suspended as per section 10A.] Explanation. For the purposes of this section a director or partner of the corporate debtor, as the case may be, shall be deemed to have exercised due diligence if such diligence was reasonably expected of a person carrying out the same functions as are carried out by such director or partner, as the case may be, in relation to the corporate debtor. 12. There is no look back period specified under Section 66, which refers to Fraudulent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain it. 15. This Tribunal, is of the earnest view that the Adjudicating Authority has rightly invoked its Inherent Power under Rule 11 of the Company Law Rules, 2016 in the interest of justice to direct the Promoters to provide the relevant information. 16. Section 213 of the Companies Act 2013, reads as follows: 213. The Tribunal may,- (a) on an application made by- (i) not less than one hundred members or members holding not less than one-tenth of the total voting power, in the case of a company having a share capital; or (ii) not less than one-fifth of the persons on the company s register of members, in the case of a company having no share capital, and supported by such evidence as may be necessary for the purpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or (b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that- (i) the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013, empowers the Tribunal on an Application made to it by any other person or otherwise, and if it is specified that there are circumstances suggesting that the business of the Company was conducted with an intent to defraud its Creditors, the Tribunal can pass an Order after given a reasonable opportunity of being heard, that the affairs of the Company ought to be investigated by an Inspector or Inspectors appointed by the Central Government and where such an Order is passed, the Central Government shall appoint one or more competent person as Inspector to investigate into affairs of the Company 19. The Judgement cited by the Learned Counsel for the Appellant in Anuj Jain, IRP for Jaypee Infratech (Supra), is not relevant to the facts of the present case as in that case, the Adjudicating Authority has already passed an Order under Sections 43, 45 66 of the Code that certain transactions were Preferential / Undervalued . 20. On an Application preferred by the Liquidator, seeking clarification as to whether the Liquidator was allowed to investigate the Transactions executed or entered into by the Corporate Debtor , beyond two years from the ICD and relevant records ..... X X X X Extracts X X X X X X X X Extracts X X X X
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