Tribunal Orders Payment to Liquidation Estate with Interest, Action Against IRP

The Tribunal directed the first to third respondents to pay Rs. 79,65,070 to the liquidation estate managed by the applicant, along with interest. The IBBI was instructed to take suitable action against the fourth respondent (IRP) for his failures. The application was allowed with these directions.

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Issues Involved:
1. Contribution to the assets of the corporate debtor.
2. Recovery of unauthorized transactions.
3. Punishment under sections 68 and 74 of the IBC.
4. Jurisdiction and maintainability of the application.
5. Responsibilities and actions of the Interim Resolution Professional (IRP) and Committee of Creditors (CoC).
6. Role and actions of the bank (third respondent).
7. Fraudulent trading and wrongful trading under section 66 of the IBC.

Detailed Analysis:

Contribution to the Assets of the Corporate Debtor:
The applicant sought an order directing the respondents to contribute Rs. 79,65,070 to the assets of the corporate debtor. The Tribunal noted that the corporate debtor filed for CIRP on June 14, 2017, and the moratorium under section 14 of the IBC came into effect. Despite the moratorium, the first and second respondents diverted the entire amount of an Income-tax refund credited to the corporate debtor's account. The Tribunal concluded that the respondents violated the moratorium and were liable to contribute the diverted amount to the corporate debtor's assets.

Recovery of Unauthorized Transactions:
The applicant requested an order to recover unauthorized transactions made after the initiation of the moratorium. The Tribunal found that the first and second respondents illegally transferred the Income-tax refund amount from the corporate debtor's account, violating section 14 of the IBC. The Tribunal directed the respondents to repay the amount to the liquidation estate managed by the applicant.

Punishment Under Sections 68 and 74 of the IBC:
The applicant sought punishment for the first and second respondents under sections 68 and 74 of the IBC for concealing the bank account and swindling the Income-tax refund. The Tribunal observed that the respondents' actions constituted fraudulent trading under section 66(1) of the IBC, as they knowingly transferred funds during the moratorium period. The Tribunal held the respondents accountable for their fraudulent actions.

Jurisdiction and Maintainability of the Application:
The first and second respondents argued that the application was ultra vires the liquidator and not maintainable. They claimed that the IRP and RP never filed an application against them for non-cooperation during the CIRP. The Tribunal dismissed these arguments, stating that the respondents' actions during the moratorium period were clear violations of the IBC, making the application maintainable.

Responsibilities and Actions of the IRP and CoC:
The fourth respondent (IRP) claimed he could not perform his duties due to non-cooperation from the CoC. The Tribunal found this argument unconvincing, noting that the IRP failed to notify the bank about his appointment, leading to unauthorized transactions. The Tribunal held the IRP responsible for not diligently performing his duties and directed the Insolvency and Bankruptcy Board of India (IBBI) to take suitable action against him.

Role and Actions of the Bank (Third Respondent):
The third respondent (Bank of India) argued that it was unaware of the CIRP initiation and allowed usual banking operations. The Tribunal found the bank equally culpable, as it should have acted on the instructions of the IRP once the CIRP commenced. The bank's failure to do so contributed to the unauthorized transactions, making it liable to contribute to the corporate debtor's assets.

Fraudulent Trading and Wrongful Trading Under Section 66 of the IBC:
The Tribunal invoked section 66(1) of the IBC, which addresses fraudulent trading during the CIRP or liquidation process. The Tribunal cited the Supreme Court's decision in Embassy Property Developments P. Ltd. v. State of Karnataka, affirming that fraudulent transactions during the insolvency resolution process can be inquired into by the Adjudicating Authority. The Tribunal concluded that the first and second respondents' actions amounted to fraudulent trading, making them liable to contribute to the corporate debtor's assets.

Conclusion:
The Tribunal directed the first to third respondents to pay Rs. 79,65,070 to the liquidation estate managed by the applicant, along with interest. The IBBI was instructed to take suitable action against the fourth respondent (IRP) for his failures. The application was allowed with these directions.

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