Tribunal appoints PWC for loan investigation under I&B Code, mandates cooperation.

The Tribunal expressed concerns over the lack of due diligence in a loan disbursement process and appointed a Forensic Auditor from PWC to investigate. The Auditor was tasked with examining the loan disbursement, transfer of funds, alleged forged documents, and allegations under Section 75 of the I & B Code. The Auditor's fees were to be shared equally by both parties, and cooperation with the Auditor was mandated. The Bank was allowed to consider a One Time Settlement Proposal while awaiting the Audit Report, with the matter scheduled for further discussion in the next hearing.

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Issues: Examination of loan disbursement, appointment of forensic auditor, examination of loan transfer, examination of alleged forged documents, examination of allegations under Section 75 of the I & B Code, auditor's fees, cooperation with auditor, consideration of One Time Settlement Proposal.

Examination of Loan Disbursement:
The Tribunal noted that a query was raised regarding the physical disbursement of the loan amount to the Respondent Debtor's account for a specific period. While a sum of Rs. 25 Crores was found to be physically disbursed initially, internal transfer entries were observed in other accounts maintained by the Bank post that date. The Bank was directed to provide a detailed narration of each entry for the specified period. However, as of the latest hearing, the Bank had not complied with this directive. The Tribunal expressed concerns over the lack of due diligence during the loan process and decided to appoint a Forensic Auditor to examine the matter thoroughly.

Appointment of Forensic Auditor:
In light of the concerns raised by the Corporate Debtor and the lack of satisfactory explanations from the Bank, the Tribunal appointed a Forensic Auditor from PWC to investigate the allegations. The Auditor, Mr. Gaganpreet Singh Puri, was tasked with examining various aspects, including the disbursement of the loan amount, the transfer of funds to the Corporate Debtor's account, and the authenticity of certain documents submitted by the Bank. The Auditor was required to submit an independent report by a specified deadline, adhering to professional norms and guidelines.

Examination of Loan Transfer and Alleged Forged Documents:
The Auditor was specifically instructed to determine whether the remaining loan amount had been transferred to the Corporate Debtor's account for the intended project after the initial disbursement. Additionally, the Auditor was tasked with verifying whether certain loan transfers to an Escrow account were merely internal adjustments by the Bank and not for the Corporate Debtor's use. Furthermore, the Auditor was required to investigate the authenticity of a letter alleged to be forged and submitted as evidence by the Bank.

Examination of Allegations under Section 75 of the I & B Code:
The Auditor was directed to assess the correctness of the allegations raised by the Corporate Debtor in an application under Section 75 of the Insolvency and Bankruptcy Code. The findings were to be submitted in a sealed cover to the Registry for review by the Tribunal.

Auditor's Fees and Cooperation:
The Tribunal ordered that the fees of the Forensic Auditor would be shared equally by both parties upon completion of the audit report. Both parties were instructed to cooperate fully with the Auditor by providing necessary documents and accounts promptly.

Consideration of One Time Settlement Proposal:
While awaiting the Audit Report, the Bank was permitted to evaluate a One Time Settlement Proposal put forth by the Corporate Debtor. The Bank was advised to consider the proposal that included specific financial amounts in designated accounts. The matter was scheduled for the next hearing to address any pending issues related to the settlement proposal.

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