TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 690
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....19 and moratorium under section 14 of IBC was declared by the Adjudicating Authority, and Corporate Insolvency Resolution Process (CIRP) was initiated. 2. Against the Order of admission of Application under section 9, present Appeal came to be filed by the Appellant - Manoj K. Daga as Director of the Company. When the Appeal came up before this Tribunal on 23rd October, 2019, Notice was issued to the Respondent No. 1 - Operational Creditor and the Respondent No. 2 - Resolution Professional of the Corporate Debtor. At that time, this Tribunal had passed the following interim Order:- "In the meantime, the 'Interim Resolution Professional' will not constitute the 'Committee of Creditors', if not yet constituted. However, the 'Interim Resolution Professional' will ensure that the company remains a going concern and will take assistance of the (suspended) Board of Directors and the officers/Directors/employees. The person who is authorised to sign the bank cheques may issue cheques but only after approval of the 'Interim Resolution Professional'. The Bank Account of the 'Corporate Debtor' be allowed to be operated for day-to-day functioning of t....
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....t. Ltd. 13-11-2019 35,000/- CSPDCL 14-11-2019 1,46,00,101/- Total Amount 4,54,76,516/- " 5. The IRP attached bank statements in support. The IRP pointed out that on 17-11-2019, the balance left in the bank account was of mere Rs. 6315.27 paise. Learned Counsel for IRP states that this relates to the account in Vijaya Bank. IRP referred to various letters issued for meeting with Directors after the Application was admitted by Adjudicating Authority on 27-9-2019 and their non-cooperation; not providing of details and then IRP learning about Bank Account in Vijaya Bank. The IRP referred to the steps IRP took in the given circumstances and stated that the bank account of the Corporate Debtor was being used without prior approval of the IRP in breach of directions passed by this Tribunal. 6. The IRP prayed that the interim Orders should be modified. 7. Our Order dated 5th December, 2019 reads as under:- "05-12-2019 1. Counsel for Appellant wants to file Rejoinder. Rejoinder may be filed within a week. 2. The learned Counsel for the IRP refers to I.A. 3878/2019 Application filed by the IRP vide Diary No. 16314. It is stated that after the admission of the Section 9 Applica....
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....19." 8. The matter was then posted to 17th December, 2019. On that date, the learned Counsel for the Appellant referred to Replies (Diary Nos.17047 and 17048) filed by Manoj K. Daga and Deepak Daga to I.A. No. 3878 of 2019. The Replies tried to justify that management was vehemently contesting the initiation of CIRP and that there was uncertainty in employees; that withdrawals made were only for running of the Company. Counsel for Appellant stated and we observed as under:- "6. Learned Counsel for the Appellant and Mr. Deepak Daga (Respondents in I.A.), fairly states that as per the order dated 23-10-2019, the authorised person could sign the Bank Cheques but only after the approval of the IRP, but approval was not taken while making the withdrawals. Learned Counsel is trying to refer to the Affidavits filed to state that the withdrawals were justified withdrawals for making payments to the suppliers, workmen and electricity bills to keep Corporate Debtor as going concern. It is accepted fairly by learned Counsel that as per orders passed by this Tribunal and keeping in view the provisions of Insolvency and Bankruptcy Code, 2016 management of Corporate Debtor after admission of ....
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....thdrawals made by the (Suspended) Board of Directors from 25-11-2019 (Date of Filing of I.A. 3878 of 2019) till 17-12-2019 (Date of Modification of the Interim Order dated 23-10-2019) Sl. No. Name of the recipient Date Amount transferred (in Rs.) 1. Cholamandalam-Investme 25-11-2019 70,000/- 2. Charges for NEFT Customer Payment: SO1146735196 25-11-2019 1.40/- 3. Chhattisgarh State Power 25-11-2019 4,00,930/- 4. Charges for RTGS Customer Payment: VIJBH19329020733 25-11-2019 7.22/- 5. Lokesha Chourasia 25-11-2019 2,17,886/- 6. Charges for RTGS Customer Payment: VIJBH19329020101 25-11-2019 7.22/- 7. Deepak Kumar Daga 26-11-2019 5,80,000/- 8. SMS Charges 19-12-2019 29.50/- Total Amount 12,68,861.34/- " 10. Counsel for IRP stated that the total amount withdrawn or transferred was Rs. 6,72,12,146/-. He also pointed out that after the Order of this Tribunal, the Directors had returned back amount of Rs. 40/- Lakhs and again of Rs. 50 Lakhs, only. Our Order dated 3-2-2020 reads as under:- "03-2-2020 Heard Learned Counsel Ms. Prachi Johri in I.A. No. 469 of 2020. This application is filed for modification of order dated 17th December, 2019, wherein ....
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....e that these Respondents have understood the Affidavits which are tendered and after understanding the Undertakings they have signed the same. The Affidavits and Undertakings of both these Respondents are accepted and taken on record. These Respondents shall comply with the Undertaking given. The learned Counsel for IRP accepts that Rs. 5,50,12,146/- needs to be returned. The learned Counsel for the Appellant states that the Appellant is taking steps to settle the dispute with the Original Operational Creditor as well as sole Financial Creditor - State Bank of India and will make efforts to settle with other Operational Creditors also. The Counsel makes request to continue the Interim Order not to constitute COC (Committee of Creditors) for short period to give time to the Appellant to settle with all the debtors. For reasons stated, one opportunity is given. List the Appeal in 'Orders category' on 26thFebruary, 2020 before which date the Appellant must ensure settlement as stated by the learned Counsel. In default, we will proceed to vacate the direction with regard to constitution of COC." 12. The undertakings given were thus accepted. Counsel for IRP did not remin....
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....020 Rs. 50,00,000/- 28-1-2020 Rs. 25.00,000/- TOTAL Rs. 1,22,00,000/- 15. The proceeding dated 26th February, 2020 shows the further developments as under:- "26-2-2020 Learned Counsel for the Appellant states that the Appellant has settled with the original Operational Creditor and is also making efforts to settle with the only Financial Creditor- State Bank of India and making efforts to settle with the other Operational Creditors who have responded to the IRP. Appellant may continue with the efforts stated being made with the Financial Creditor and Operational Creditors. It is stated that the Appellant and the Directors are taking steps to ensure that they comply with the undertaking given on 4-2-2020 accepted on 05-2-2020 for which the time would be over on 4/5-3-2020. Learned Counsel for the IRP states that the order dated 23-10-2019 had directed the IRP "not to constitute 'Committee of Creditors' (in short 'CoC'), if not yet constituted". It is stated that before this order was passed, CoC was already constituted on 16-10-2019 and this was brought to the notice of this Tribunal on 18-11-2019. At that time, it was stated that meeting of the CoC as su....
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....he CIRP itself would get stranded or stayed and given the fact that the amounts withdrawn were withdrawn in an illegal manner after moratorium had been imposed, no further time needs to be given. Learned Counsel states that the IRP is under the responsibility under the provisions of IBC to keep the Corporate Debtor a going concern and if almost the whole money which was in the bank account, has been withdrawn, the IRP has been rendered helpless in the situation. 19. The learned Senior Counsel for the Appellant states that although the money was withdrawn, it was for the purpose of keeping the business a going concern. 20. The learned Counsel for IRP in Reply states that the IRP has verified each and every entry of the amounts which were withdrawn and according to the IRP, except for an amount of Rs. 8,95,412.22 paise which could be considered as CIRP costs, the rest of the amount withdrawn and spent cannot be treated as CIRP costs or expenses and which would be serious violation of provisions of IBC as to how past debts are to be treated and CIRP conducted. The learned Counsel for IRP has handed over to us a statement at Bar which is taken on record and marked 'X' for ide....