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TMI Blog2025 (2) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... Sarda, Ms. Sagrika Joshi & Mr. Ronak Sharma, for SRA JUDGMENT Per : Justice Rakesh Kumar Jain : This order shall dispose of two appeals bearing CA (AT) (Ins) No. 645 of 2024 "Saturn Ventures & Advisors Pvt. Ltd. Vs. S. Gopal Krishan & Anr." (Herein after referred to as 'the first appeal') whose intervention application no. 12 of 2023 filed in I.A No. 787 of 2023 by the RP for the CD, namely, Saturn Rings and Forgings Pvt. Ltd., has been dismissed. CA (AT) (Ins) No. 839 of 2024 "Satish Gopinath Vs. S. Gopal Krishnan" (hereinafter referred to as the second appeal) has been filed by Satish Gopinath, suspended director of the CD who is also aggrieved against the dismissal of the intervention application no. 12 of 2023 and against the approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed I.A No. 12 of 2023 and allowed I.A No. 787 of 2023 vide its impugned order. It is categorically mentioned that in both these appeals filed by Saturn Ventures & Advisors Pvt. Ltd. (first appeal) and Satish Gopinath (second appeal) the issue is the same as to whether the machinery is the asset of the CD and can form part of the plan submitted by the SRA. 6. In the first appeal, Counsel for the Appellant has submitted that the machinery was purchased on 05.07.2012 vide invoice no. 0012040867 and 0012040868 from National Engineering Industries Limited (NEI) and has been declared as capital work in progress in the audited financial statement of the Appellant. The Intervenor also obtained a loan from IndusInd Bank on the security of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Financial Creditor appointed a CA firm for transaction audit report of the CD and it was during the exercise it came to the knowledge of the RP and the FC that in the financial year 2019 - 20, as per note 2.8 the net block of total tangible assets was Rs. 58.92 Cr. but as per balance sheet the total was Rs. 52.45 Cr., therefore, there was an impairment reversal of an amount of Rs. 6.48 Cr. The books of accounts of the CD as maintained by the CD in Tally was checked by the transaction auditors as appointed by the FC and it was revealed that plant and machinery worth Rs. 6.48 Cr. was transferred to the Appellant and it was stated in the narration that "repossession of assets as per management decision dated 31.03.2020". It is further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of machines in the hypothecation agreement with FC. It has been found that neither there is any lease deed of the machinery executed between the Appellant and the CD nor the lease amount has been shown in the books of the CD to substantiate the issue raised by the Appellant that the machinery was given on lease to the CD. 14. It has further been found that initially the machine was not included in the IM by the RP but it was later on included in the IM before the plan was submitted. Initially it was not included because of the journal entry of 31.03.2020 by which the machinery was taken out from the books of the CD but when it was realised that the journal entry dated 31.03.2020 was a fraudulent transaction because it has the effect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eversed, the application I.A No. 787 of 2023 is allowed and IVN. P No. 12 of 2023 was dismissed. 17. It is pertinent to mention that CD had already executed hypothecation cum loan agreement on 06.06.2014 with the FC whereby the machinery alongwith other machines were hypothecated. The FC had created charge over machinery much prior to the hypothecation in favour of IndusInd Bank by the Appellant which is otherwise not permissible much less without making intimation or taking approval from the FC because such hypothecation was clearly bad in law. It is also pertinent to note that application under Section 7 for initiation of CIRP had been filed by FC on 04.02.2019 and after its filing, the Appellant designedly included a journal entry dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lease deed nor the amount of lease has seen the light of the day rather the CD had hypothecated the machinery with the FC while securing the loan in terms of the loan agreement dated 06.06.2014 and in terms of clause 5(a)to(c) of the said hypothecation agreement, CD has created charge in respect of the machinery and a declaration has been made by the CD that the machinery has already been acquired and shall form part of prompters contribution to the loan sanctioned by FC. 19. The last but not the least, the CD had admittedly claimed depreciation on the machinery as an owner because a lessee cannot claim depreciation and in this regard, reference may be had to a decision of the Hon'ble Supreme Court in the case of Mother Hospital Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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