Forensic audit material may justify SFIO referral, but it is not conclusive proof for direct recovery or attachment.

A Section 66 IBC application was treated as maintainable despite an earlier similar disposal because it relied on additional forensic audit material not previously before the Tribunal, so it was not rejected at the threshold on res judicata alone. The Tribunal also held that allegations of diversion of funds and irregularities shown in the forensic report were insufficient, by themselves, to justify direct recovery or attachment of the alleged amount. As the report was not conclusive and the affected parties had not had full opportunity to respond, the matter was referred for further investigation by the SFIO in accordance with natural justice and the statutory investigative framework.

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Issues: (i) Whether the application under Section 66 of the Insolvency and Bankruptcy Code, 2016 was maintainable notwithstanding the earlier disposal of a similar application and the plea of res judicata; (ii) whether the forensic audit material was sufficient to order direct recovery/attachment of the alleged fraud amount or whether the matter required further investigation by the SFIO.

Issue (i): Whether the application under Section 66 of the Insolvency and Bankruptcy Code, 2016 was maintainable notwithstanding the earlier disposal of a similar application and the plea of res judicata;

Analysis: The application was treated as a revised or fresh attempt on the basis of forensic audit material that was not before the Tribunal earlier. Although a prior application had been disposed of and the respondents relied on finality and res judicata, the Tribunal declined to reject the matter at the threshold merely on technical grounds, considering that the later application rested on additional material and called for a merits-based examination.

Conclusion: The application was held maintainable for consideration on merits and was not dismissed solely on the ground of res judicata.

Issue (ii): Whether the forensic audit material was sufficient to order direct recovery/attachment of the alleged fraud amount or whether the matter required further investigation by the SFIO.

Analysis: The Tribunal found that the forensic audit report and the surrounding pleadings disclosed allegations of diversion of funds and other irregularities, but also noted shortcomings in the report, lack of full opportunity to the affected parties, and the need for a more complete inquiry. It held that the report could not by itself be treated as conclusive proof for ordering recovery of the alleged sums and that the disputed transactions required further investigation by the statutory investigating agency, with opportunity to the parties in accordance with natural justice. The Tribunal therefore invoked the investigative framework under the Companies Act and directed referral to the SFIO.

Conclusion: Direct recovery or attachment was declined, but the matter was ordered to be referred for further investigation by the SFIO.

Final Conclusion: The application was disposed of by issuing investigative directions, granting only limited relief to the applicant and leaving the parties to pursue remedies based on the SFIO's findings.

Ratio Decidendi: A forensic audit report indicating possible fraud may justify referral for further statutory investigation, but it is not by itself conclusive evidence for ordering recovery or attachment without a fuller inquiry and observance of natural justice.

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