TaxTMI 
TaxTMI 
2019 (8) TMI 1609
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....nd Forty Six Only) receivable from the Respondent No.4 etc. 2. Brief facts of the case, as mentioned in the Application, which are relevant to the issue in question, are as follows: (1) The present Application is filed by Shri Amit Chandrakant Shah (IP Registration No. IBBI/IPA-001/IP-P00821/2017-2018/11397), the Resolution Professional of M/s. BCIL Red Earth Developers India Private Limited ('Corporate Debtor') under Section 66 of the IBC, 2016, inter alia seeking appropriate directions from this Adjudicating Authority in respect of identified transaction wherein the Corporate Debtor has written off an amount of Rs. 1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) against the receivables from Respondent No.4, a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group companies including the Company undergoing CIRP under the common order i.e. M/s. Biodiversity Conservation India Private Limited ('BCIL') before the commencement of the Corporate Insolvency Resolution period. (2) The main Company petition filed by M/s. Reliance Nippon Life Asset Management Limi....
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..../-(Rupees Two Crores Seventeen Lakhs Only) to the Respondent No. 4 between April 2014 to September 2014 as an advance, in tranches, as reflected in the books of the accounts of the Corporate Debtor. Subsequently, an amount of Rs. 92,54,954/-(Rupees Ninety Two Lakhs Fifty Four Thousand Nine Hundred and Fifty Four Only) was transferred from Respondent No.4 to the Corporate Debtor between February 2015 and September 2016, leaving a balance of Rs. 1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only). (6) It is stated that the Applicant further noticed the above-mentioned amount of Rs. 1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) was written off in the Corporate Debtor's books of accounts in Financial Year 2015-16. The Applicant during internal investigation did not find any documents evidencing effort and/or measures taken by the Respondent Nos. 1 to 3 for recovery of the abovenamed amount of Rs. 1,25,45,046/-(Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) due and payable to the Corporate Debtor by the Respondent No.4. (7) It is stated that an amount of Rs. ....
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.... 23.08.2016 10,00,000 Respondent No.5 to Respondent No.4 24.08.2016 10,25,000 Respondent No.4 to Corporate Debtor 29.08.2016 6,40,000 Respondent No.5 to Respondent No.4 30.08.2016 6,40,000 Respondent No.4 to Corporate Debtor 01.09.2016 26,00.000 Respondent No.4 to Corporate Debtor 01.09.2016 26,10,000 Respondent No. 5 to Respondent No.4 06.09.2016 14,99,954 Respondent No.4 to Corporate Debtor 06.09.2016 15,05,000 Respondent No.5 to Respondent No.4 26.09.2016 33,00,000 Respondent No.5 to Respondent No.4 27.09.2016 3,15,000 Respondent No.4 to Corporate Debtor 92,54,954 Total from Respondent No.4 to Corporate Debtor 1,13,55,000 Total from Respondent No.5 to Respondent No.4 (9) It is stated that the Applicant vide email dated 20.12.2018 wrote the R-4. The Applicant vide email informed the R-4 that the CIRP process for the Corporate Debtor has commenced and this Adjudicating Authority vide its order dated 09.08.2018 (received by the Applicant on 11.08.2018) appointed the Applicant as IRP and that the Applicant's appointment as the RP is confirmed and/or app....
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.... The R-4 also shared its ledger accounts for R-5 and the Corporate Debtor. (11) The Applicant further called upon R-l to 3 to provide explanations/ information and/or clarifications in regard to amount of Rs. 1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) receivable from the R-4. The Respondent No. 1 via emails dated 08.01.2019 and 25.01.2019 failed to provide a satisfactory response /explanation with regard to writing off, in question, The writing off in question receivable from the R-4 as per the books of accounts of the Corporate Debtor in the absence of any valid explanation/ clarifications by the R-1 to 3 indicates an overstatement of loss in the books of the Corporate Debtor. It is alleged that the impugned write off was done in order to settle the accounts between the group company of the Corporate Debtor and the R-4. In the event that Corporate Debtor was taking on the liability of a group Company, the journal entries should have been made accordingly and R-5 should be reflecting as a debtor in the books of the Corporate Debtor. (12) It is stated that the Corporate Debtor is the Compaq which has been. funded by th....
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....tive to defraud the creditors or conduct business fraudulently as alleged by the Resolution Professional. (3) The averment that the RP carried out an exercise to determine if transactions could be classified as fraudulent under Section 66 of the Code is incorrect as the RP has till date not disclosed the manner in which the alleged finding out made out. Furtiier, the RP has not even confirmed whether the Respondent Director 2 and 3 were even Directors at the time of the transactions and whether the Directors had any role in the transactions. The averment o the RP is refuted as false and are made with mala fide intent. 4. The Respondent No. 2 namely Ms. Kanchan Kaur anc Respondent No. 3 namely Shri Sanjay Ramanujam, have filec common Statement of Objections dated 16.07.2019, by intei alia contending as follows: (1) It is stated that the Corporate Debtor was engaged in the business of reals estate and development of a villa project in Bengaluru. In view of the nature of business, the Corporate Debtor had to incur cost and make payments for the purpose of securing approvals from various approva bodies including the Local Panchayat. Further, the Corporate Debtor al....
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.... the Creditors, they would not have paid substantial payments subsequent to the transaction in 2014. Further, for the purposes of Section 66 of the Code, the Answering respondents ought to have undertaken any action with a view to defraud the creditors and knowing the Corporate Debtor would go into the liquidation. However, admittedly, the Corporate Debtor continued its business and also continued to discharge its liabilities towards the creditors and therefore, Section 66 of the Code would not apply to the present transaction as the transaction with the Respondent No.4 was done on arm's length and during the ordinary course of business. This fact is further corroborated from the Petitioner's approval for disbursement/transfer of funds from the escrow account. (6) Notwithstanding the fact that the transactions between the Corporate Debtor and the Respondent No.4 were made in good faith and in the ordinary course of business, all of the said transactions happened even before Respondent No.3 was appointed as the Executive Director of the Corporate Debtor effective 1st December 2014. Further, as mentioned in para 9 above, all transfers from Corporate Debtor to R-4 wer....
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.... It is stated that this Respondent No.4 i.e. M/s. Promptech Incorporated is a partnership firm having its office at 436/20, 1st Floor, A-Cross, 2nd Main Mathikere, Bangalore-560054 represented herein by its partner, Shri Ramachandran Venu. The Respondent No. 4 is a contractor/vendor, who undertook works with regard to club houses for the Corporate Debtor and its group Companies including the Company undergoing CIRP i.e. M/s. Biodiversity Conservation India Pvt. Ltd. CBCIL') much before the commencement of the CIRP since the year 2011 to be precise. (2) It is denied that the Respondent No 4 not carried out nor is a party to any fraudulent transaction and all the transactions carried out with the Corporate Debtor and the R-5 have been duly accounted in the books of this Respondent. This Respondent's scope of work was mainly by way of supplies related to construction, and also undertaking the internal finish work along with labour supply, for which purchase and work orders were issued from time to time by both M/s. Biodiversity Conservation India Private Limited (BCIL) and M/s. BCIL Red Earth Developers India Private Limited ('RED') and a consolidated ledger a....
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....amount of Rs. 1,33,90,000/- (Rupees One Crore Thirty Three Lakhs Ninety Thousand Only) that was due to this Respondent from BCIL for the aforesaid Mysore project, that was adjusted towards advances received from RED by way of a transfer entry in the ledger, as mutually agreed with the management of the Companies at that point of time. This Respondent has provided copies of the relevant ledgers and other documents to the RP and undertakes to produce the same if so required by this Adjudicating Authority. (5) It is further stated that an Indemnity Bond was executed by the Chairman and Managing Director of BCIL, Mr. Chandrasekhar Hariharan on 30.03.2016, confirming the adjustment stating that "it was agreed by both the parties (BCIL & Promptech) that the Sale Agreement will be terminated and that advances paid by M/s. Promptech Incorporated will be adjusted against other transactions between both Parties." It was only pursuant to this Agreement that the advances received form RED were adjusted against the dues from BCIL to this Respondent. (6) It is denied that an amount of Rs. 1,25,45,046/- (Rupees One Crore Twenty Five Lakhs Forty Five Thousand and Forty Six Only) ....
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.... Rs. 2,17,00,000/-to the R-4 between April 2014 to September 2014 as an advance, as reflected in the books of accounts of the Corporate Debtor. However, an amount of Rs. 92,54,954/- was transferred from R-4 to the Corporate Debtor between February 2015 and September 2016; leaving a balance of Rs. 1,25,45,046/-. There is no record to show that whether any efforts made by the R-1 for recovery abovementioned amount. 8. It is further noticed that an amount of Rs. 2,50,25,000/- was transferred from the R-4 to R-5 between April 2014 and September 2014 towards purchase of plots. The R-5 has paid Rs. 1,13,55,000/- as a refund upon cancellation of abovementioned plots between June 2016 and September 2016. However, the balance of Rs. 1,36,70,000/- still reflects as a liability in the books of R-5 Company. 9. The Applicant submits that Ms. Nidhi Seksaria then RP has engaged S.P.R. & Co. (Chartered Accountants) vide engagement letter dated 23.10.2018 to conduct a review as requires them to identify and report which reads as under: "A: Avoidance Transactions Preferential transactions, if any, by the Corporate Debtor in terms of Section 43. Transactions, if any, ....
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....800 1,54,80,489 14,05,311 60 Rajendra 01.09.201 5 3303 5,300 1,75,05,900 1,61,91,720 13,14,180 55 Venkatesh Prasad 27.10.201 5 3186 5,300 1,68,85,800 1,27,42,719 41,43,081 39A Manika Gera & Anubhav Gera* 01.11.201 5 3311 5,300 1,75,48,300 1,72,29,839 3,18,461 31 Mahesh Kumar BS* 01.10.201 6 3667 5,300 1,94,35,100 1,93,68,000 67,100 Total Shortfall 1,66,90,010 Apart from the above, on perusal of the review report, the Bench points out the following points for resolving the issue which reads as under: Sl. No. Related Party Opening 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Closing 1 Hariharan -3,036 9,000 5,964 2. Sonjoy Ramonujam -9,59,110 -1,76,270 -10,25,023 -12,86,054 13.97,583 -20,48,874 3 Biodiversity Conservation India Pvt. Ltd. 24,06,15,043 2,00,54,041 2,31,93,420 2.44,26,057 2,72,83,454 45,28,711 -2,20,323 29,34,93,563 4 BCI....
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....013, the "National Company Law Tribunal" has inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016. Therefore, in public interest, it is always open to the "National Company Law Tribunal" after giving a reasonable opportunity of being heard to the parties concerned refer the matter to the Central Government for investigation, if the Tribunal/Adjudicating Authority forms a prima facie opinion that acts of fraud have been committed by Company or group of companies or its Director(s) or officers. In the present case 'Forensic Audit Report' alleged that the members of the 'Corporate Debtor' and its 'Group Companies' along with officers of the 'Bank of Maharashtra' have committed certain fraud, which, inter alia, suggest that a sum of Rs. 3,172.25 Lakhs are receivable by the 'Corporate Debtor'. The Appellant and others were given reasonable opportunity of hearing by Adjudicating Authority. As such no interference is called for against the impugned order. In absence of any merit, the appeal is dismissed. No cost. 11. In view of above facts and circumstance of the case and the law as cited, we are of the considered opinio....