TMI Blog2023 (10) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... uriously, this document was neither filed before the RoC nor was it a part of the Section 7 Application filed earlier or even part of the present Application, but was only filed along with the Rejoinder . It is clear that there was an interim direction given by the three Member Bench of the Principal Bench, NCLAT dated 17/11/2020 that any action taken during the CIRP would be subject to the outcome of this Appeal. This Order was not challenged and the interim direction stands as of today. Having regard to the chequered history of the case, the Investigative Auditors Report which is dated 01/08/2018 and immediately a week thereafter the second Section 7 Application was filed before the Adjudicating Authority and C.A. 162/130/HDB/2019 seeking reopening of the Books of Accounts under Section 130 of the Companies Act, 2013 was filed by the Appellant on 26/11/2018 and the Order of the Admission under Section 7 of the Code was passed on 13/02/2020, which Impugned Order does not refer to adjudication of C.A. 162/130/HDB/2019, this Tribunal is of the considered view that the issues raised by the Appellant regarding transactions and entries in the Financial Books require Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretarial Due Diligence Report and Financial Due Diligence Report of 2015, that the Petitioners, who were part of the Board of Directors of the Corporate Debtor at relevant time have committed financial fraud and that they are not owed any money by the Corporate Debtor. They claimed that no shred of evidence has been filed by the Petitioners to establish the debt claimed. 11. The Petitioner s counsel filed a memo dated 22.08.2019, wherein it has been submitted that the Corporate Debtor have themselves admitted by way of publication of their Balance Sheet as on 31.03.2016 that total unsecured loan taken from related parties stands at Rs.3,86,42,365/- and that the break-up of the same clearly indicates that the Petitioners are owed a total sum of Rs.2,39,58,045/- by the Corporate Debtor. A copy of the ledger account unsecured loans group summary for the period of 01.04.2015 to 31.03.2016 has also been filed by the Petitioner as evidence, which has not been disputed by the Corporate Debtor. 12. However, a petition under section 131 of the Companies Act, 2013 has been filed by the Corporate Debtor for revision of accounts, the maintainability of which is under challenge. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against them for recovery of the misappropriated sums of Rs. 4,77,02,727/-. Respondent Nos. 3 to 6 relied upon the Financial Statements for the Financial Years, 2012-2013, 2013-2014, 2014-2015, 2015-2016 which reflects the fraudulent entries as explained in the Investigative Auditors Report dated 01/08/2018 which shows that the Claim is fraudulent and that the Respondents are liable to pay Rs. 4,77,02,727/- to the Corporate Debtor. It is further submitted that after completing the Pleadings on both sides, the Respondents submitted a Resolution dated 07/11/2011 and 08/11/2011 which was not part of the Registrar of Companies ( RoC ) records and do not establish any contractual relation of lending. Without considering Investigative Audit Report dated 01/08/2018 and pendency of C.A. 162/130/HDB/2019, filed for reopening of the Books of Accounts of the Corporate Debtor for the Financial Years 2012-2016 on the ground of fraud, the Section 7 Application was erroneously allowed on 13/02/2020, mainly on the ground that the balance sheets are valid acknowledgement of Debt. The fact that they show liability due to the fraud played by the Respondents was not considered by the Adjudicating Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Chengalvaraya Naidu v. Jagannath reported in [(1994) 1 SCC 1] in which it is held that the issues of fraud go to the root of the matter and that fraud vitiate every solemn act. In Asset Reconstruction Company (India) Limited v. Bishal Jaiswal reported in [(2021) 6 SCC 366], it is held that balance sheets should be read with Audit Reports and in this case, the Adjudicating Authority has erred in not reading the same with the Investigative Audit Report, dated 01/08/2018 and keeping C.A. 162/130/HDB/2019 pending prior to the admission of the Section 7 Application. 7. The Learned Practicing Company Secretary appearing for the Respondents submitted that the Board Resolution was passed by the Company giving power to the Managing Director to borrow Rs. 5 Crores and immediately borrow Rs. 4 Crores from time to time depending on the needs of the Company. The balance sheets for the year 2014-2015 reveals that the following amounts are due :- Name Amount G.Madhusudhan Rao (R-3) 2,10,28,045 K.Jaya Reddy (R-4) 15,80,000 K. Subba Reddy ( R- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2019 in which the Hon ble Supreme Court in Para 39 held as under:- 39....Disputes as to whether the signatures of the respondents are forged or whether records have been fabricated can be adjudicated upon evidence including forensic evidence in a regular suit and not in proceedings under Section 7 of the IBC. 10. The Learned Practicing Company Secretary also placed reliance on the Judgment of this Tribunal in the matter of Indo Allusys Industries Limited v. SMW Metal Private Limited in Company Appeal (AT) (Ins) No. 409/2019, wherein paras 8 and 9, it was observed as follows: 9. We also find that there was a pre-existing contested dispute and the Adjudicating Authority rightly held that it could not quantify the liability, which would be matter of trial. Appellant calculated dues keeping in view MoU contents of which Respondent disputed before Notice under Section 8 of IBC was sent. 10. We do not find any reason to interfere with the impugned order. There is no substance in the Appeal. The Appeal is dismissed. No order as to costs. Evaluation : 11. It is the main case of the Appellant that C.A. 162/130/HDB/2019, filed under Section 130 of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the Petitioners and also issue of share certificates. Shri. A. Nagaraj Kumar, Learned Counsel for the Petitioners, after hearing all the contentions of the Respondent, decided to withdraw the present Company Petition bearing CP(IB)81/7/HDB/2017, requesting to file a fresh application after complying with all the defects and also sought liberty to file a fresh application. 14. Heard Shri A. Nagaraj Kumar, Learned Counsel for the Petitioners and Shri Y. Suryanarayana, Learned Counsel for the Respondent and perused all the documents submitted by the counsels filed in the above Company Petition bearing CP No. CP(IB)/81/7/HDB/2017. 15. In the above facts and circumstances of the case and as prayed by the Learned Counsel for the Petitioners, we permit the Petitioners to withdraw present Company Petition with a liberty to file afresh in accordance with the law. Accordingly the CP No. CP(IB)/81/7/HDB/2017 is disposed off as withdrawn. 16. No order as to costs. 12. A brief perusal of the Pleadings in the earlier Application shows that the Corporate Debtor had raised the very same contention that the amount of Rs. 2,10,28,045/- which is alleged to be unsecured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give notice to the Central Government, the Income-tax authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned and shall take into consideration the representations, if any, made by that Government or the authorities, Securities and Exchange Board or the body or authority concerned before passing any order under this section. (2) Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under sub-section (1) shall be final. (Emphasis Supplied) 15. The reliefs sought in this C.A. 162/130/HDB/2019 was to direct the Company to reopen the Accounts for Financial Years 2012-2013, 2013-2014 and 2014-2015. In this Interim Application filed by the Suspended Director, the discrepancies in the Financial Statements were referred together with the Investigative Audit Report conducted by an independent Chartered Accountant Firm, M/s. NSVR and Associates (LLP), which Report shows the acts of the Respondents to be fraudulent and states that there is falsification of the Books of Accounts. The Learned Counsel for the Appellant drew our attention to the claim made by Mr. G. Madhu Mohan, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation Audit Report clearly demonstrates that the claim is fraudulent and fictitious documents have been relied upon. Issue notice upon Respondents. Appellant to provide mobile Nos./e-mail address of the Respondents. Notice be issued through e-mail or any other available mode. Requisites along with process fee be filed within three days. Prayer made in I.A. No. 2678 of 2020 for summoning of documents does not fall within the provisions of I B Code and same is declined. I.A. No. 2678 of 2020 stands disposed of. I.A. No. 2680 of 2020 seeking exemption from filing typed copies of the documents is disposed of with direction to the Appellant to file typed copies within two weeks. I.A. No. 2681of 2020 seeking exemption from filing certified copy of the impugned order is disposed of with direction to the Appellant to file certified copy of the impugned order within two weeks. I.A. No. 2676 of 2020 is disposed of with interim direction that any action taken during the Corporate Insolvency Resolution Process will be subject to outcome of this appeal. List the matter for admission (after notice) on 7th January, 2021. (Emphasis Supplied) 19. It is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
