Appellate Tribunal affirms Adjudicating Authority's decision, directs money recovery, and initiates criminal prosecution.

The Appellate Tribunal upheld the Adjudicating Authority's decision in the case, dismissing the appeal as lacking merit. The Tribunal found that the Appellant failed to prove the repayment of Rs. 23 lakhs to the Corporate Debtor, leading to the direction for money recovery and initiation of criminal prosecution under Section 69 of the I & B Code, 2016. The Tribunal concluded that the impugned order was valid, denying the Appellant's claims of no dues outstanding and the denial of an opportunity to be heard.

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Issues Involved:
1. Denial of Opportunity of Being Heard/ Ex-parte Order.
2. No Dues Outstanding & Payable.

Detailed Analysis:

I. Denial of Opportunity of Being Heard/ Ex-parte Order:

The Appellant contended that the Adjudicating Authority passed the impugned order ex-parte without providing a proper opportunity to be heard. However, the Respondent countered this by presenting evidence that ample opportunities were provided to the Appellant to file a reply. The Respondent highlighted that the Adjudicating Authority had closed the right to file a reply on 13.07.2021 after multiple dates were provided from 19.09.2020 to 13.07.2021, during which the Appellant failed to respond. The Appellate Tribunal examined the records and noted that service of notice was conducted through both email and speed post. Additionally, the Tribunal reviewed an Additional Affidavit showing the dates when the Appellant's advocates appeared, confirming that the Appellant had adequate opportunities to defend the case. Therefore, the Tribunal found no error in the impugned order regarding the denial of an opportunity to be heard.

II. No Dues Outstanding & Payable:

The Appellant argued that there was no outstanding amount payable to the Corporate Debtor, claiming that Rs. 30 lakhs received from the Corporate Debtor had been fully repaid. The Appellant provided a ledger account and a letter dated 30.03.2015 from HBN Foods Limited to support this claim. However, the Respondent refuted this, stating that the Appellant failed to provide valid documents like agreements or audited financial statements to substantiate the alleged payments. The Respondent also presented a transaction audit report indicating that Rs. 33 lakhs were owed by the Appellant, of which only Rs. 10 lakhs were repaid, leaving Rs. 23 lakhs outstanding. The audit report identified the transactions as sham, concocted, and fraudulent, aimed at diverting and siphoning off funds.

The Appellate Tribunal scrutinized the impugned order and noted that the Adjudicating Authority had considered the transaction audit report and found the transactions fraudulent under Section 66 of the I & B Code, 2016. The Tribunal also questioned the authenticity of the letter dated 30.03.2015, as the Appellant could not provide convincing answers regarding its issuance and authorization. The Tribunal acknowledged the findings of the SEBI order dated 12.02.2015, which found the Promoters/Directors guilty of running an unregistered collective investment scheme and misappropriating funds.

After a thorough examination, the Tribunal concluded that the Appellant failed to establish that the Rs. 23 lakhs were repaid. Therefore, the Tribunal upheld the Adjudicating Authority's decision to direct the recovery of money and institute criminal prosecution under Section 69 of the I & B Code, 2016.

Conclusion:

The Appellate Tribunal found no error in the impugned order dated 13.12.2021 passed by the Adjudicating Authority. The appeal was dismissed as devoid of merit, and all connected pending Interlocutory Applications were closed.

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