2022 (9) TMI 1294 - AT - Insolvency and Bankruptcy

Tribunal affirms recovery from Company, separates liability from Directors

Fusebase Eltoro Pvt. Ltd., Mr. Anuj Gupta Director, Fuse Base Eltoro Pvt. Ltd., Mr. Ankur Goyal Director, Fuse Base Eltoro Pvt. Ltd., Mr. Vineet Kumar Sharma Director, Fuse Base Eltoro Pvt. Ltd. Versus Ms. Shalu Khanna Partner, Luthra and Luthra Restructuring and Insolvency Advisors LLP Interim Resolution Professional M/s. Saubhagya Ornaments Pvt. Ltd.

Fusebase Eltoro Pvt. Ltd., Mr. Anuj Gupta Director, Fuse Base Eltoro Pvt. Ltd., Mr. Ankur Goyal Director, Fuse Base Eltoro Pvt. Ltd., Mr. Vineet Kumar ... Issues Involved:1. Whether Rs. 50 lakh is outstanding and recoverable from Appellant No. 1 Company.2. Whether the claim of Rs. 50 lakh is barred by limitation.3. Whether the recovery of Rs. 50 lakh can be sought jointly and severally against Appellant Nos. 2, 3, and 4.Detailed Analysis:Issue 1: Whether Rs. 50 lakh is outstanding and recoverable from Appellant No. 1 Company.The Tribunal examined the records and financial statements of the Corporate Debtor and found that Rs. 50 lakh was outstanding and due for payment from Appellant No. 1 Company. The Resolution Professional (RP) had sent multiple communications to the Appellant No. 1 Company and its Directors to recover the amount along with 18% interest per annum. Appellant No. 3 admitted receiving Rs. 50 lakh from the Corporate Debtor but claimed it was used for a share purchase transaction with SRS Ltd. However, the Share Purchase Agreement (SPA) did not mention the Corporate Debtor, and there was no authorization for using the advance for the share purchase. The Tribunal agreed with the RP's findings that the Rs. 50 lakh remained outstanding and recoverable from Appellant No. 1 Company.Issue 2: Whether the claim of Rs. 50 lakh is barred by limitation.The Appellants argued that the claim was barred by limitation as the three-year period expired on 17.02.2019. However, the Tribunal found that there was no specific timeline for repayment, making the amount payable on demand. The RP issued demand notices in April and May 2019, within the Corporate Insolvency Resolution Process (CIRP) timeline, making the claim valid. The Tribunal held that the limitation period did not apply in this case, as the actionable claims must be brought back into the Corporate Debtor's corpus during CIRP.Issue 3: Whether the recovery of Rs. 50 lakh can be sought jointly and severally against Appellant Nos. 2, 3, and 4.The Tribunal noted that Appellant No. 1 Company is a separate legal entity from its Directors. The Adjudicating Authority did not provide reasons for holding the individual Directors jointly and severally liable. The Tribunal emphasized that liability cannot be automatically fastened on individual Directors without piercing the corporate veil and providing reasons. Therefore, the Tribunal held that the outstanding amount along with interest is recoverable only from Appellant No. 1 Company and not jointly and severally from Appellant Nos. 2, 3, and 4.Conclusion:The Tribunal affirmed the Adjudicating Authority's decision that Rs. 50 lakh along with 18% interest is due and recoverable by the Resolution Professional. However, it set aside the part of the order that held the amount recoverable jointly and severally from Appellant Nos. 1 to 3. The Tribunal directed Appellant No. 1 Company to pay the amount along with interest within four weeks from the date of the order. The appeal was partly allowed and disposed of with no costs.