2026 (2) TMI 1220 - AT - IBC

Unauthorised dealing with estate property: proceeds treated as estate funds and ordered restored to preserve creditor interests.

Unauthorised dealing with estate property during moratorium that produced receipt by related parties was treated as proceeds of the liquidation estate and ... Transactions affecting liquidation estate - void ab initio dealings during moratorium - restoration of funds to liquidation estate - jurisdiction u/s 60(5) IBC - section 66 IBC - avoidance of fraudulent transactions - related party transaction / family nexus - allegations of forgery in insolvency proceedings - separate legal personality and limited liability - HELD THAT:- It is an admitted position on record that the Agreement to Sell is dated 13.12.2019. It is also not disputed that pursuant to this Agreement, a sum of Rs. 1 crore was received, by the M/s SSMP Agro Export Private Limited, a company controlled by Mr. Sagar Kunwar and Mr. Shrey Kunwar, the sons of Mr. Manoj Kunwar, the promoter and ex-director of the Corporate Debtor, M/s SSMP Industries Ltd. These facts are not denied by the Appellants. It is also relevant to note that the Corporate Debtor had already entered CIRP and subsequently entered in liquidation w.e.f. 31.07.2019. The liquidator was in charge of the CD during the period when the aforesaid agreement to sell was executed by the Respondent No.2. At the relevant point of time, Respondent No.2 had no authority to sell or dispose of any asset of the CD which was in moratorium. The Liquidator, in the course of discharging his statutory duties, examined transactions affecting the liquidation estate and filed I.A. No. 3827 of 2022 before the Learned NCLT questioning the legality of the Agreement to Sell and the receipt of Rs. 1 crore. Even at this stage, while contesting the application before the Adjudicating Authority, the Appellants did not contemporaneously pursue any criminal remedy alleging forgery with urgency or seriousness. From a reading of the police complaint dated 12.12.2023 (Annexure- F), it is clear that the grievance raised therein relates to alleged coercion, intimidation, and forcible extraction of cheque and cash amounts by the accused persons. The complaint refers to offences under Sections 384/386/34 IPC and narrates allegations of threats, forced signatures on a cheque of Rs. 20,00,000, seizure of mobile phones, and removal of cash. Importantly, there is no specific allegation in the complaint that the Agreement to Sell dated 13.12.2019 was forged or fabricated, nor is there any averment stating that the Agreement itself is fraudulent. The complaint does not even refer to the Agreement to Sell as being void, manipulated, or forged. The entire narration is confined to alleged coercive acts on 12.12.2023 and the demand for money. Thus, the police complaint does not contain any explicit assertion that the Agreement of Sale is a forged document, which further weakens the subsequent plea that the Agreement itself is fraudulent. We are conscious that allegations of forgery are serious and fall within the domain of criminal courts. However, in insolvency proceedings, the conduct of the parties, their timing, and their consistency are crucial factors in evaluating the credibility of such defences. The Adjudicating Authority was not called upon to decide criminal guilt, nor has it done so. It confined itself to examining whether an unauthorised transaction affecting liquidation estate property had resulted in receipt of money which ought to be restored to the estate. It is also important to emphasise that the impugned order of Ld. Adjudicating Authority does not get into the matter of determination of fraud if any. The Ld. AA proceeded on a simpler and legally correct premise that once liquidation has commenced, no person, whether related or otherwise, can deal with property of the liquidation estate, without authority of the Liquidator. Any money received pursuant to such a transaction cannot be retained, irrespective of whether the underlying document is valid or forged. Therefore, even if the criminal complaint ultimately results in an independent inquiry or prosecution, it does not dilute the statutory consequence under the Insolvency and Bankruptcy Code. The post-order filing of a criminal complaint cannot be permitted to undermine the liquidation process or to defeat the protection afforded to creditors. Accepting such a course would allow parties to frustrate insolvency proceedings by raising criminal allegations only after adverse orders are passed. It is also to note here that the appellants have now claimed that the amount of Rs. 1 Crore was received as initial funding and shown as an unsecured loan in the books of account. However, if this was the case, they should have taken this plea before the Adjudicating Authority in the first place. The records on the contrary shows that no such plea was taken by the appellant in their submissions/ reply before the Adjudicating Authority. This plea has been taken for the first time before us. It is true that learned counsel for the Appellants has submitted that the amount of Rs. 1 crore is reflected in their balance sheet as an unsecured loan. However, a mere accounting entry cannot by itself determine the true nature of a transaction. No loan agreement with the creditor, no board resolution, no repayment schedule, no interest clause, and no correspondence have been placed on record to show that the amount was advanced as a genuine unsecured loan. In the absence of supporting documentation, a subsequent book entry cannot override the surrounding facts, which consistently connect the payment with the Agreement to Sell dated 13.12.2019 relating to the Corporate Debtor’s land. Therefore, the plea that the amount was merely an unsecured loan appears to have been developed subsequently in this Appellate Forum. Thus, we note that the transaction under question is related party transaction, as CD is a family business of Father, Mother and grandmother of the appellant No. 2 and 3, who are the owners of Appellant No.1. We further note that the allegation of forgery, raised belatedly, lacks credibility at this stage and appears to be an afterthought adopted as a defensive measure. The Learned AA was therefore justified in proceeding on the material before it and in directing restoration of Rs. 1 crore to the liquidation estate in order to safeguard creditor interests. The impugned orders of the Adjudicating Authority directing deposit of Rs. 1 crore with interest into the liquidation estate were upheld. The Tribunal found no jurisdictional infirmity in ordering restorative relief to protect the liquidation estate; the NCLT did not determine criminal guilt or conclusively decide forgery and acted within the Code to safeguard creditors. Issues: Whether the Adjudicating Authority was justified in directing the appellants to deposit Rs. 1 crore with interest into the liquidation estate on the basis that the sum received by the appellant company was part of sale consideration for estate property sold during liquidation without the authority of the Liquidator.Analysis: The Tribunal examined the factual matrix showing (i) commencement of CIRP and liquidation of the corporate debtor prior to the alleged Agreement to Sell dated 13.12.2019, (ii) receipt of Rs. 1 crore by the appellant company on the date of the Agreement, and (iii) close family and business nexus between the corporate debtor's promoter and the appellant entities, indicating that the transaction affected the liquidation estate. The Tribunal considered the scope of Sections 60(5), 33 and 66 of the Insolvency and Bankruptcy Code, 2016 and authorities on what issues are suitable for summary treatment in insolvency proceedings. It noted that the Adjudicating Authority did not decide criminal guilt or finally determine forgery; rather it addressed whether an unauthorised dealing with estate property during moratorium resulted in monies that ought to be restored to the liquidation estate. The timing, conduct, and belatedness of allegations of forgery and the absence of contemporaneous criminal proceedings weakened the appellants' defence that the amount was an independent unsecured loan. The Tribunal found the Adjudicating Authority's restorative approach, to protect creditor interests and preserve the liquidation estate, legally sustainable within the Code's framework.Conclusion: The impugned direction to deposit Rs. 1 crore with interest into the liquidation estate is upheld and the appeal is dismissed; the decision is in favour of the Respondent (liquidator).