TaxTMI 
TaxTMI 
2019 (4) TMI 1772
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....ode. 2. Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows: 1) The Corporate Debtor M/s. Bhuvana Infra projects is incorporated in the year 2011 and it is the sub-contracting Arm of its Group Companies and undertakes work contracts exclusively for its group Companies. The Group consists of M/s. Golden Gate Properties Ltd., (GGPL), M/s. Prisha Properties India Pvt. Ltd.(PPIL) and M/s. Commune Properties Pvt. Ltd., (CPIL) New Age Properties LLP and other Companies. This is visible from the complete Turnover of the Corporate Debtor with billing break-up to the Group is as below: Sl. No. Year Respondent 7 M/s. Prisha Properties India Pvt. Ltd. (Rs.) Respondent 6 M/s. Commune Properties (Rs.) Respondent 8 M/s. Golden Gate Properties (Rs.) Total as per Audited Financials (Rs.) 1. 2011-12 39,178,307 Nil Nil 39,178,307 2. 2012-13 177,757,510 Nil Nil 177,757,510 3. 2013-14 368,183,037 43,211,743 46,021,782 457,416,562 4. 2014-15 500,076,670 155,746,475 344,831,376 1,000,654,522 5. 2015-16 95,241,321 210,422,00....
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....a. Related Parties' and Individuals behind these Companies: i. Corporate Debtor M/s. Bhuvana Infra Projects (BIPPL). M/s. Golden Gate Properties Ltd. (GGPL), M/s. Prisha Properties India Pvt. Ltd. (PPIL) and M/s. Commune Properties Pvt. Ltd.(CPIL), New Age Properties LLP are part of the 56 Group Companies, which are 'Related Parties'. ii. Mr. Pratap Kunda and Mr. Sanjay Raj are the individuals related to all the above Group / Related Entities. iii. Loan from HDB Financial Services being serviced by GGPL and PPIPL, also showing Group Company relationship between the entities and Corporate Debtor. iv. Mr. Sanjay Raj is the 'Benami' Individual in whose names the properties are being purchased by the Group Companies. b. Loans availed from Bank of Maharashtra (BOM) in a fraudulent manner and mis-utilisation of Cc facility: i. Few months Directorship to impress the Bank with Credentials of Group Entities Mr. Sanjay Raj, the Director cum KMP of the Group became director of Corporate Debtor (BIPPL) for a period of five months only during which period the first tranche of CC limit of INR 500 Lakhs was ....
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....o and cash withdrawals of INR 165.81 Lakhs from the bank accounts of BIPPL. The transactions pattern indicates that these could potentially be diversion of funds for generation of unaccounted cash. ii. Identified purchases of INR 1,881.55 Lakhs from non-OEM, small time vendors and traders, which appears to be suspicious. iii. Parking of funds of INR 346.66 Lakhs with contractors through potentially fictitious suspense account in F.Y. 2013-14 and subsequently written-off the books of account of BIPPL in F.Y. 2016-17. d. Round Tripping Transaction: i. Identified round tripping transactions from the bank accounts of BIPPL for INR 779.00 Lakhs which could potentially be accommodation entries. e. Asset Stripping: i. Inventory worth INR 941.23 Lakhs written-off during F.Y. 2017-18 without any documentation and/or revenue being recognized. ii. Fixed assets sold to scrap dealers, resulting in INR 579.00 Lakhs of fixed assets being written-off in the books of BIPPL during F.Y. 2016-17. f. Anomalies in Accounting and Audited Financial Statements: i. Revenue for F.Y. 2014-15 inflated....
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....anipulated Financials to ensure loan sanction d. Increased the losses in 2016-17 through fictitious transactions to reduce the statutory liability and also to justify default to banks. e. Liquidated Assets/Inventory in a planned manner in 2016-17 to make the Company a Shell. f. Facilitated to file u/s. 7 of the Code with the sole aim to liquidate the CD: Mr. Sanjay Raj, one of the common Directors in all the group Companies resigned from directorship of all the customers of BIPPL i.e. GGPL, PPIPL, CPIPIL and from New Age Properties LLP in 2017, the year when New Age Properties LLP filed an application on BIPPL under Section 7 of the IBC. Planned Resignation of original Shareholder cum Directors: To avoid responsibility on loans becoming NPA all Directors of CD resign around the same time in Feb/March2017 and Dummy Directors were brought in to meet MCA requirement. g. Statutory Auditors of the Group-Companies used for the entire Modus Operandi: The Director cum Statutory Auditor of the Group Companies Mr. Rajashekar and Mr. Jayatheertha, the Statutory Auditor have been used for their expertise to facilitate t....
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.... Receivables and value of Assets and Inventory distributed to the Group Companies, to pave way for the Resolution Plan under CIRP. 3. The application is opposed by the Respondent No.3 by filing separate reply dated 20.03.2019 by inter alia contending as follows: 1) The instant application is not maintainable either in law or on facts, and thus it is liable to be dismissed in limine on this ground alone. 2) It is true that the Company M/s. Bhuvana Infra Projects was incorporated in the year 2011. However, it is not correct to state that it is a sub-contracting arm of its group Companies. The Companies has its own objects and functions within the ambit of objects as stated in the Memorandum 85 Article of Association. Hence, it is denied that the Company M/s. Bhuvana Infra Projects (herein after referred to as Company for brevity) exclusive for the group Companies obviously RP has not looked into the records and has made bald and frivolous allegations. It is asserted that the Applicant is the New Age Properties LLP itself is not a Group Company belied this claim. However, the RP is put to strict proof of the allegations made in this paragraph. 3) It....
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.... 4) The Learned Counsel for Respondent No.4 has relied upon the judgments given by the Apex court in Arcelor Mittal v. Satish Kumar Gupta and Ors., Rajputana Properties (P.) Ltd. v. Ultratech Cement Ltd. & Ors., Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors., K. Sashidhar v. Indian Overseas Bank & Ors., Innovations Private Limited v. Kirusa Software ( P.) Ltd. And the object of the Code is to maximize the value of the Corporate Debtor. It shall be the endeavour of the RP to conduct the entire process with a view to find a resolution and maximize the value of the Corporate Debtor. However, in the instant case, the effort, focus and sole objective of the RP was to witch hunt the erstwhile promoters of the Corporate Debtor. 5) The RP has miserably failed to perform the acts and take the steps as required under the CIRP Regulations within the prescribed timelines. The RP has not taken a single step which can be seen as a step towards insolvency resolution of the Corporate Debtor. Therefore, they sought to dismiss this Application. 5. The Respondent No.6 has filed objection in this application dated 11.04.2019, by inter alia contending as follows: 1) T....
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....ntations. 6. The Respondent No.9 has filed statement of objections dated 16.02.2019, by inter alia contending as follows: 1) The present application is filed with the sole intention of harassing the Respondent No. 9. It lacks bona fides and is liable to be dismissed in limine. 2) The present application has been filed seeking reliefs attachment of assets of Respondents No. 1,2,3,6,7 and 8 under section 66 of the I&B Code, 2016 and thus no relief was asked for against him. 3) The Forensic Auditor has relied upon data, documentations, information and explanation that has been provided till 30th November, 2018 whereas substantial discussion and replies were given to the queries of the Auditor on 4th of December 2018 by this Respondent which has been ignored by the Auditor and finds no reference in the FAR. The FAR was conducted based on the information provided by alleged information provided by the Resolution Professional and the alleged information has not been verified independently or based on any documentation. The FAR is completely based on hearsay information and is inconclusive due to absence of adequate supporting documents. Thu....
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....l for Respondent No.6, Shri Tarunn Surana, and learned Counsel for Respondent No.9. We have carefully perused the pleadings of the parties along with extant provisions of Code and the law on the issue. 8. Shri G.S. Kannur, the Learned Senior Counsel for the Applicant, while reiterating the various averments made in the pleadings and also relied upon the following judgments in support of his case: Bikram Chatterji v. Union of India 2018 SCC Online SC 1371 Bikram Chatterji v. Union of India 2018 SCC Online SC 3132 Pushpak Ranjeetmal Singhvi v. Icon Builders and Developers 2017 SCC Online Bom. 2571 Subrata Chattoraj v. Union of India Manu/Sc/0453/2014:(2014)8 SCC 768 IDBI Bank Ltd. v. Jaypee Infratech Ltd. [C.A. No. 26 of 2018] Ajith Kunimal Venugopal v. Oil Tools International Services (P.)Ltd. [Company Appeal (AT) No. 338 of 2017] Birla Cotsyn (India) Ltd. v. BSE Ltd. [Appeal No. 228 of 2018] UCO Bank v. M. Venu Ranganath [2007] 13 SCC 251 Vaish Aggrawal Panchayat v. Inder Kumar 2015 SCC Online SC 751 He has further contended that the case is not barred by principles of res-judicata as alleged by ....
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.... made out any prima facie case so as to take cognizance of the alleged discrepancies under Section 66. There cannot be parallel proceedings before the Tribunal and Criminal Court. Moreover, appropriate forum for initiating fraudulent actions is Criminal Court. Therefore, it is for the RP to initiate appropriate Criminal Proceedings as per the decisions of COC as states supra." The above order stated to become final as it was not carried to Hon'ble NCLAT. However, again the present application is filed stated to be revised Application of earlier IA No. 269 of 18 dated September, 2018, under same Sections by seeking same relief, after adding some other respondents, by inter alia seeking to attach personal assets of Respondents No. 1 to 3 without disclosing as what are properties to be attached basing the finding of Forensic Audit report. 12. It is true that once an application/petition is disposed of finally, normally another application/petition is not maintainable on the same issue basing on the principles of res-judicata. However, basing on the material evidence like Forensic Audit Report submitted by the Applicant, we are not inclined to throw the application on technical g....
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....ranted that concerned parties are given sufficient opportunity to defend themselves. Therefore, we are of the prima facie view that Forensic Audit Report in question cannot be taken as conclusive evidence to order recovery of the alleged amount involved in the impugned transactions. 13. It is also to be noted that it is M/s. New Age Real Properties, which has initiated CIRP proceedings against Corporate Debtor on the ground that it had committed default for Rs. 65,00,000. Surprisingly, Bank of Maharashtra, which is leading member of COC by holding 93%, has not come forward on its own with any details of investigation report on the alleged irregularities stated to have been committed by the Respondents. Bank of Maharashtra is thus only encouraging and assisting the learned Resolution professional to take action sitting on back seat. Therefore, it is also further necessary to investigate the role of Bank of Maharashtra in sanctioning the loan in question and its failure to detect the alleged diversion of funds by the Corporate Debtor. 14. The Learned Resolution professional has not placed any substantial material before the Tribunal to show as what course of action she has take....
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.... aside the impugned order dated 04.02.2019 with following observations: a) Learned Counsel appearing on behalf of the SFIO submits that Section 212 of the Companies Act is independent to Section 213 of the Companies Act. Even if such submission is accepted that the Central Government order for SFIO enquiry, the Adjudicating Authority cannot direct the same, except in terms of Section 213 of the Companies Act. b) This apart, in the present case we find that the Adjudicating Authority has not given any reason to form opinion whether it is a case for investigation by SFIO or not. The Appellant and others were also not given notice, asking them to state as to why the matter be investigated through SFIO. Merely on the request of the 'Resolution Professional' Impugned order has been passed. c) For the reasons aforesaid and in view of the development as noticed above, we set aside the impugned order. However, it is made clear that we have not gone into the question as to whether transaction in question was proper or not. The question of law is left open for determination in an appropriate case. The appeals are allowed with aforesaid observations. 18. As state....