Tribunal nullifies fraudulent transactions, holds liable under IBC. SEBI supports findings. Compliance required or face property seizure.

The Tribunal found transactions between the Corporate Debtor and respondents fraudulent and sham, nullifying them. Promoters/directors were held liable under Section 66 of the IBC for diverting funds. SEBI's findings supported the fraudulent nature of transactions. Despite a legal impediment under Section 33(5) of the IBC, respondents were directed to contribute Rs. 2687.27 Lakhs to the Corporate Debtor. Failure to comply would lead to property seizure. The RP was instructed to pursue criminal prosecution under Section 60 of the IBC against the respondents.

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Issues Involved:
1. Fraudulent and Sham Transactions
2. Liability of Promoters/Directors
3. Application of Section 66 of the Insolvency and Bankruptcy Code (IBC), 2016
4. Legal Impediment under Section 33(5) of IBC
5. SEBI's Findings and Legal Proceedings
6. Transaction Audit Report

Detailed Analysis:

1. Fraudulent and Sham Transactions
The Resolution Professional (RP) filed an application under Sections 66, 68, 69, 70, and other relevant provisions of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to declare transactions between the Corporate Debtor and various respondents from 01-03-2013 to 21-10-2019 as sham and fraudulent, thus null and void. The RP appointed M/s. Gaurav J. & Co. to conduct a transaction audit, which revealed that approximately Rs. 1527.82 Lakhs were transferred to related parties and Rs. 982.12 Lakhs were withdrawn by the erstwhile directors without proper documentation, indicating fraudulent intent.

2. Liability of Promoters/Directors
The RP argued that the Corporate Debtor deviated from its main objective and collected Rs. 36.73 Crores from the public through a collective investment scheme. Out of this, Rs. 15.27 Crores were siphoned off to related parties, and Rs. 9.82 Crores were withdrawn by the ex-directors. The RP sought to hold the promoters/directors liable under Section 66 of the IBC. The Tribunal noted that SEBI had already found the promoters/directors guilty of running an unregistered scheme and misappropriating funds.

3. Application of Section 66 of the Insolvency and Bankruptcy Code (IBC), 2016
The Tribunal emphasized that Section 66 of the IBC allows for holding individuals liable if it is found that the business was conducted with intent to defraud creditors. The Tribunal found that the transactions mentioned in the audit report fell under Section 66, as they were carried out with fraudulent intent. Consequently, the Tribunal directed the respondents to contribute Rs. 2687.27 Lakhs to the assets of the Corporate Debtor.

4. Legal Impediment under Section 33(5) of IBC
The Liquidator of Respondent No. 1 argued that under Section 33(5) of the IBC, no suit or legal proceedings could be initiated against the Corporate Debtor once a liquidation order is passed. However, the Tribunal clarified that while proceedings under Section 66 could not continue against the Corporate Debtor in liquidation, the promoters and related parties could still be held liable.

5. SEBI's Findings and Legal Proceedings
SEBI had previously found the promoters/directors guilty of running an unregistered investment scheme and misappropriating funds, a finding upheld by the Securities Appellate Tribunal (SAT). The Tribunal noted that SEBI had attached assets worth more than Rs. 1000 Crores, reinforcing the fraudulent nature of the transactions.

6. Transaction Audit Report
The Transaction Audit Report, conducted by M/s. Gaurav J. & Co., was crucial in identifying the fraudulent transactions. The report highlighted the transfer of funds to related parties and the withdrawal of large sums by the ex-directors without proper documentation. The Tribunal relied heavily on this report to conclude that the transactions were fraudulent and to direct the respondents to make contributions to the Corporate Debtor's assets.

Conclusion:
The Tribunal allowed the application, directing the respondents to contribute Rs. 2687.27 Lakhs to the Corporate Debtor's assets within two months. Failure to do so would result in the amount being realized from their properties. Additionally, the Tribunal directed the RP to institute criminal prosecution against the respondents under Section 60 of the IBC.

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