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TMI Blog2023 (10) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... in this Appeal is to the Impugned Order dated 13/02/2020 passed in C.P.(IB) No. 454/7/HDB/2018 by the National Company Law Appellate Tribunal, Hyderabad Bench, by which Order the 'Adjudicating Authority' has admitted the Application preferred by the Respondents / Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'the Code') against M/s. Aayusiddhi Life Sciences Private Limited / the Appellant / the Corporate Debtor. 2. The 'Adjudicating Authority' while admitting the Application has observed as follows: "9. It is the case of the Petitioners that they provided finances to the Corporate Debtor on the basis of the request received from the Managing Director of the Corporate Debtor vide letter dated 08.11.2011 for sustaining the operation of the Corporate Debtor, and that Funds to the tune of Rs. 5 Crores were sought for. These funds were having time value of money and interest @ 12% was to be paid by the Corporate Debtor. The funds were made available in various tranches by the petitioners either by way of discharge of liabilities of the Corporate Debtor or lending directly to the Corporate Debtor by way of cheques/bank tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Statements of the Corporate Debtor for the Financial Years from 2008-2009, 2009-2010, 2010-2011, 2011-2012 and 2012-2013 at one go on 28/03/2014 and on 29/03/2014. Thereafter, Mrs. K. Vijaya Reddy resigned and the first Appellant who was availing Tax Consultancy Services from third and fourth Respondents Firm was made to invest in the Corporate Debtor Company and named as a Managing Director. Respondent Nos. 3 & 4, later joined as Directors. 4. It is vehemently contended by the Learned Counsel for the first Appellant that the first Appellant in blind belief, has signed the balance sheets in one go and blindly believed Respondent Nos. 3 & 4 continued to manage the affairs of the Company. The Investigative Auditors Report dated 01/08/2018 given by M/s. NSVR and Associates (LLP) for the Financial Years 2012-2013, 2013-2014 and 2014-2015 reveal that Respondent Nos. 3 & 4 in collusion has misappropriated a sum of Rs. 4,77,02,727/-. Subsequently, Respondent No. 3 to 6 conspired with each other and had initially filed a Section 7 Application, namely C.P.(IB) No. 81/7/HBD/2017 on 16/05/2017, which was contested by the Corporate Debtor but was subsequently withdrawn where the 'Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Securities Pvt. Ltd. CA (AT) (Ins) No.251 of 2020, NCLAT, Principal Bench, New Delhi 6. It is continuously argued by the Learned Counsel that there is no contract and hence no breach under Section 3 (6) (b) of the Code and there is no right to make a Claim and therefore, there is no Debt with obligation to repay under Section 3 (11) of the Code and the Respondents, hence, are not Creditors under Section 3 (!0) of the Code. The amount does not become due and payable and hence there is no Default under Section 3 (12) of the Code. There is no consideration received from the Respondent Nos. 3 to 6 and they are not Financial Creditors under Section 5 (7) of the Code as no amount was borrowed nor was any amount paid by Respondent Nos. 3 to 6 to the Corporate Debtors. The Claim is based only on the figures reflected in the balance sheets which was caused due to fraud played by Respondent Nos. 3 and 4 in collusion with the other Respondents. Acknowledgement of Debt should also be free from limitation and the Learned Counsel placed reliance on the Judgment in the matter of 'Jignesh Shah and another v. UoI and another' reported in [(2019) 10 SCC 750] and in the matter of 'Reliance Asset Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the Respondents is detailed as hereunder: 9. It is submitted that the Ledger Account on unsecured outstanding as on 31/03/2016 shows Rs. 2,39,58,045/- and therefore, the 'Adjudicating Authority' was right in taking into consideration this amount which was mentioned in the balance sheet of 31/03/2016. The total unsecured loan taken from related Parties in the balance sheet is at Rs. 3,86,42,365/- and the break-up of the same clearly indicates that the Petitioners owe a total sum of Rs. 2,39,58,045/- by the Corporate Debtor and therefore based on the ratio of the Hon'ble Supreme Court in the matter of 'Innovative Industries Ltd. Vs. ICICI Bank & Anr' reported in [(2018) 1 SCC 407] at Para 27, the 'Adjudicating Authority' has rightly seen the date of Default and has admitted the Section 7 Application. It is further submitted that the IBC Proceedings are summary Proceedings and fraud and other interrogative remedies can be awarded only by a Civil Court. The Learned Practicing Company Secretary placed reliance on the Judgment of the Hon'ble Supreme Court in the matter of 'M/s. Radha Exports (India) Pvt limited Vs. K.P. Jayaram & Anr', in Civil Appeal No. 7474 of 2019 in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for the Respondent and requested one week time to file his reply. The Learned Counsel for the Petitioners was also directed to submit necessary documents on legal position as per Central Government Rules dated 07.12.2016, and case was posted/adjourned on various occasions as requested by the Counsels on 28.06.2017, 30.06.2017 and 04.07.2017. 10. During the hearing held on 04.07.2017, the Learned Counsel for the Corporate Debtor, Shri. Y. Suryanarayana, submitted that he was going to file reply on same day and on request of both the Counsels, matter was posted on 06.07.2017, and again on request of both the Counsels on 06.07.2017, case was posted on 24.07.2017. 11. During the hearing held on 24.07.2017, the Learned Counsel for the Petitioners wanted to file a Rejoinder and same was allowed and matter was posted on 28.07.2017, and again the matter was posted on 02.08.2017 and 04.08.2017. 12. During the hearing held on 04.08.2017, it was recorded that the objection raised by the Registry was not complied with and matter was posted on 08.08.2017. 13. During the hearing held on 08.08.2017, Shri Y. Suryanarayana, Learned Counsel for the Respondent disputed about the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either 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'. 14. Be that as it may, the Appellant had filed C.A. 162/130/HDB/2019 under Section 130 of the Companies Act, 2013 seeking reopening of the Books of Accounts on the Order of the Tribunal. For better understanding of the case, the relevant portion of Section 30 of the Act is reproduced as hereunder:- "130. (1) A company shall not re-open its books of account and not recast its financial statements, unless an application in this regard is made by the Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that- (i) the relevant earlier accounts were prepared in a fraudulent manner; or (ii) the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements: Provided that the court or the Tribunal, as the case may be, shall give notice to the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order made by a Court of Competent Jurisdiction or the Tribunal, but in the instant case, there was no Order by the NCLT. 18. There is no denial that the Resolution dated 07/11/2011 and letter dated 08/11/2011 were subsequently filed in the second round of litigation as part of the 'Rejoinder' after the completion of the 'Pleadings'. At the time of admission of the Appeal, it is significant to mention that vide Order dated 17/11/2020, a three Member Bench of the Principal Bench, NCLAT has observed as follows: "...Apart from other questions the issue raised in this appeal against admission of application under Section 7 of the I&B Code by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench in terms of the impugned order dated 13th February, 2020 is that the Investigation 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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