Adverse inference over missing records can render related-party asset transfers and business arrangements fraudulent and voidable.

Failure to produce original records, statutory filings, and board approvals can justify an adverse inference where management alone controls the evidence. The note concerns share transfers in subsidiaries, trademark assignment, and a master reseller arrangement, treated as transactions that stripped the corporate debtor of assets and business control. The tribunal reasoning rejects the claim that they were ordinary-course dealings because no lawful approval, disclosure, or registration was shown, and the non-joinder objection did not bar relief. On that basis, the transactions are described as fraudulent and avoidable, with consequential restoration of assets and assessment of loss.

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Issues: (i) Whether the transfer of shares in subsidiary companies, assignment of the trade mark, and execution of the master reseller arrangement were avoidable, undervalued, or fraudulent transactions liable to be declared void. (ii) Whether objections based on non-production of original documents, alleged ordinary-course character of the transactions, and non-joinder of one subsidiary barred the reliefs sought.

Issue (i): Whether the transfer of shares in subsidiary companies, assignment of the trade mark, and execution of the master reseller arrangement were avoidable, undervalued, or fraudulent transactions liable to be declared void.

Analysis: The transactions were held to have been undertaken without production of the original supporting documents, without proper board approvals, without statutory filings, and without credible disclosure to the regulatory authorities. The relevant facts were treated as being within the special knowledge of the management, and the failure to produce records or prove compliance led to an adverse inference. The trade mark assignment for a nominal consideration, the transfer of shares in the subsidiaries, and the diversion of the business through the master reseller arrangement were found to have stripped the corporate debtor of valuable assets and business control.

Conclusion: The transactions were held to be not in the ordinary course of business and were declared void as fraudulent and avoidable transactions, in favour of the petitioner.

Issue (ii): Whether objections based on non-production of original documents, alleged ordinary-course character of the transactions, and non-joinder of one subsidiary barred the reliefs sought.

Analysis: The failure to produce originals and the absence of contemporaneous statutory compliance records were treated as fatal to the respondents' version. The plea that the transactions were ordinary-course dealings was rejected because the record did not show lawful approval, disclosure, or proper registration. The objection regarding non-joinder of the subsidiary was not accepted as a bar to the reliefs.

Conclusion: The procedural and evidentiary objections were rejected and did not prevent the grant of relief.

Final Conclusion: The applications were allowed in substance, the impugned transfers and assignments were set aside, and consequential directions were issued for restoration of the corporate debtor's assets and assessment of loss.

Ratio Decidendi: Where the management alone is in possession of the relevant records and fails to produce them or show statutory compliance, the burden shifts to it to prove that the questioned dealings were genuine, duly authorised, and in the ordinary course of business; failing that, the transactions may be treated as fraudulent and voidable.

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