2019 (9) TMI 1390 - Tri - Companies Law

Tribunal denies recall of order due to fund transfers and SFIO investigations. Emphasizes need for restraining orders.

The Tribunal rejected the applications seeking the recall of the order dated April 26, 2019, emphasizing the necessity of the applicants' involvement due ... Impleadment of necessary parties - restraint / freezing of assets and bank accounts pending investigation - wilful disobedience of interim restraining orders - operation of jointly held lockers during a freeze - beneficial receipt of proceeds of misfeasance - Order 1 Rule 10 CPC - discretion to add parties necessary for effective reliefImpleadment of necessary parties - Order 1 Rule 10 CPC - discretion to add parties necessary for effective relief - Whether the applicants' impleadment as respondents and attendant restraint orders should be recalled - HELD THAT: - The Tribunal examined the timing and nature of transfers from R. C. Bawa to the applicants and the operation of jointly held lockers contemporaneous with the application to freeze assets. Having regard to the evidence placed on record, including transfers on December 3, 2018 and subsequent movements and the SFIO material indicating transfers to companies linked to the applicants, the Bench found that the applicants are necessary parties because without their impleadment effective relief (freezing and recovery of proceeds) cannot be secured. The power under Order 1 Rule 10 CPC is discretionary and must be exercised in light of facts showing that the presence of the party is necessary for a complete and effective adjudication. On that basis the earlier order adding the applicants and imposing restraints was held not to warrant recall. [Paras 43, 45, 46, 47, 48]Applications to recall the order of impleadment and to vacate the restraint orders are rejected.Wilful disobedience of interim restraining orders - operation of jointly held lockers during a freeze - restraint / freezing of assets and bank accounts pending investigation - Whether the applicants acted in wilful defiance of the Tribunal's interim orders by operating lockers and thereby removing or attempting to remove assets - HELD THAT: - The Tribunal noted that both lockers were operated on dates coinciding with the filing of the application for freezing and that substantial transfers from R. C. Bawa to the applicants were made on December 3, 2018. The coincidence of dates, the tabulated locker operations, and the circumstances of transfers led the Bench to conclude that the operations were not innocuous coincidences but indicated removal or attempted removal of assets in contravention of the restraining orders. The applicants' explanations (stating the locker contents were 'Stree Dhan' or that transfers were for wedding expenses) were found insufficient in the absence of detailed particulars, corroboration of sole ownership, or satisfactory proof of source and use of funds. [Paras 23, 24, 25, 26, 36]Findings record that the locker operations and transfers contemporaneous with the freeze indicate wilful disobedience and support continuation of the restraints.Beneficial receipt of proceeds of misfeasance - SFIO findings relied upon in support of impleadment and restraints - restraint / freezing of assets and bank accounts pending investigation - Whether the material collected by SFIO and the pattern of transfers establish a direct link between the applicants and proceeds allegedly siphoned from IFIN/IL&FS - HELD THAT: - The Tribunal considered the SFIO letter and related material showing sizable transfers from R. C. Bawa to Mrs. Asha Kiran and to companies in which the applicants were directors, and a transfer to Ms. Aakansha Bawa on December 3, 2018. The SFIO communications that no income-tax returns were filed by Ms. Aakansha Bawa and the analysis of bank statements demonstrating transfers were taken as indicia of beneficial receipt. Given the ongoing SFIO investigation and criminal complaint against R. C. Bawa, the Bench held that the SFIO material, when read with the transactional chronology, establishes a sufficient link to justify impleadment and maintenance of interim restraints to prevent dissipation of alleged proceeds of misfeasance. [Paras 33, 34, 35, 38, 39]SFIO's material and the transactional evidence suffice to demonstrate a direct link between the applicants and alleged proceeds, supporting their impleadment and continuation of freezing measures.Final Conclusion: The applications to recall the Tribunal's order dated April 26, 2019 are dismissed. The Tribunal upheld the impleadment of the applicants as necessary parties and sustained the interim restraints in view of contemporaneous transfers, locker operations, and SFIO material indicating beneficial receipt of proceeds linked to the alleged misfeasance. Issues Involved:1. Recall of order dated April 26, 2019, allowing impleadment and imposing restrictions.2. Alleged wilful disobedience of Tribunal orders by transferring funds.3. Operation of lockers allegedly containing 'Stree Dhan' in violation of restraining orders.4. Alleged mala fide actions by the Central Government.5. Investigation and findings by the Serious Fraud Investigation Office (SFIO).Issue-wise Detailed Analysis:1. Recall of Order Dated April 26, 2019:The applicants, Ms. Aakansha Bawa and Mrs. Asha Kiran Bawa, sought the recall of the Tribunal's order dated April 26, 2019, which allowed their impleadment in Company Petition No. 3638 of 2018 and imposed restrictions. The Tribunal noted that the National Company Law Appellate Tribunal had directed the applicants to seek vacation or modification of the interim order from the Tribunal itself. The Tribunal found no justification for recalling the order, emphasizing that the applicants were necessary parties to the case due to the significant amounts transferred to their accounts from Ramesh C. Bawa, ex-director of IFIN.2. Alleged Wilful Disobedience of Tribunal Orders:The Tribunal observed that substantial amounts were transferred from Ramesh C. Bawa's account to his daughter Ms. Aakansha Bawa on December 3, 2018, after the knowledge of the application and the order passed by the Tribunal. The Tribunal noted that these transfers were made despite the restraining order dated December 3, 2018, and January 16, 2019. The Tribunal concluded that the transfers were attempts to siphon off funds from the company, thus constituting wilful disobedience of the Tribunal's orders.3. Operation of Lockers Allegedly Containing 'Stree Dhan':Mrs. Asha Kiran Bawa claimed that the lockers contained her 'Stree Dhan' and were operated without any wrongful intention. However, the Tribunal found it unbelievable that 'Stree Dhan,' which is the absolute property of the wife, would be kept in lockers jointly held with her husband, Ramesh C. Bawa. The Tribunal noted that the lockers were operated on dates coinciding with the filing of applications seeking to freeze Bawa's properties, indicating an attempt to remove contents related to the proceeds of misfeasance.4. Alleged Mala Fide Actions by the Central Government:The applicants contended that the Central Government's actions were infested with mala fide intentions to harass them. However, the Tribunal found that the transfers and operations of lockers were not mere coincidences but deliberate actions to surreptitiously remove proceeds of misfeasance. The Tribunal emphasized that the restraining orders were necessary to prevent further dissipation of misappropriated funds.5. Investigation and Findings by the Serious Fraud Investigation Office (SFIO):The SFIO's investigation revealed that Mrs. Asha Kiran Bawa received approximately Rs. 27.67 crores from Ramesh C. Bawa, which were further transferred to companies where the applicants were directors. Ms. Aakansha Bawa received Rs. 4.84 crores on December 3, 2018, and had no other source of income. The SFIO highlighted the beneficial interest of both applicants in the fraud perpetrated on IL&FS and IFIN. The Tribunal noted that the SFIO's findings demonstrated the fraudulent manner in which Ramesh C. Bawa conducted the affairs of IFIN and justified the restraining orders.Conclusion:The Tribunal rejected M.A. Nos. 2006 and 2007 of 2019, finding no justification for recalling the order dated April 26, 2019. The Tribunal emphasized that the applicants were necessary parties to the case due to the significant amounts transferred to their accounts and the ongoing SFIO investigation into the misappropriation of funds in IL&FS and IFIN. The restraining orders were deemed necessary to prevent further dissipation of misappropriated funds.