TaxTMI 
TaxTMI 
2021 (10) TMI 83
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal) Special Bench, Chennai has allowed the MA No. 987/2019 filed by the Resolution Professional (Respondent No. 1 herein) under Section 43 and 66 read with 60(5) of the Insolvency and Bankruptcy Code, 2016 (for short IBC). The Ld. Adjudicating Authority has held that the impugned transfer of the Corporate Debtor funds to Respondent No. 1 (Appellant No. 2 herein) is for fraudulent purpose and further directed to Respondent No. 2 (Appellant No. 1 herein) and Respondent No. 3 (Respondent No. 2 herein) jointly and severally to contribute Rs. 65 lacs to the Corporate Debtor within fifteen days from hereof. 2. The facts giving rise to the instant Appeal is as under: i) That the Appellant No. 2 - 'Ingenium Advisory LLP' is incorporated as a Limited Liability Partnership Firm registered under the LLP Act, 2008 for carrying on the business of providing business consultancy, global management consulting, advisory services, corporate restructuring and financial advisory. ii) That the Appellant No. 1 - 'Deepak Parasuraman' is the Designated Partner of Appellant No. 2. iii) That the Corporate Debtor - 'Perfect International Private Limited&#....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsulting by way of getting the loan sanctioned from SREI Equipment Finance Limited on behalf of the Corporate Debtor for Rs. 3,00,00,000/- in June 2017. ix) Further case is that the Corporate Debtor released the second tranche of payment of Rs. 30,00,000/- to the Appellant No. 2 which included Rs. 4,00,000/- as balance commission amount for arranging the long term working capital loan from SREI Equipment Finance Limited and Rs. 26,00,000/- as part of commission for getting business order from M/s. Regen Powertech Private Limited. x) That on 31.03.2018, the Corporate debtor released the third tranche of payment amounting to Rs. 10,00,000/- as balance commission amount for getting business order from M/s. Regen Powertech Private Limited. xi) That the transactions amounting to Rs. 65 Lacs have been received by the Appellant No. 2 from the Corporate Debtor in three tranches. xii) The Ld. Adjudicating Authority vide order dated 29.04.2019 admitted the company petition bearing No. IBA/330/2019 as contained in Annexure A-6 (at page 74 of the Appeal Paper Book) on an Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by M/s. J....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rporate Debtor. Subsequent to the facilitation of the meeting by the Appellant, the meeting of the Corporate Debtor with a potential buyer (M/s. Regen Powertech Private Limited) was finalized in the first week of December 2016. As per the contract dated 16.08.2016 the Appellant No. 2 was entitled to get commission @ 5.5% on this purchase deal which amounted to Rs. 52,25,000/- and Rs. 5,00,000/- towards travelling, legal and other expenses, thereby amounting to Rs. 57,25,000/-. 7. It is further submitted that the Corporate Debtor made the first tranche of payment on 19.12.2016 of Rs. 25,00,000/- including the advance of Rs. 5,00,000/- as a part payment of the initial contract of 2015 for facilitation of securing long term working capital loan for the Corporate Debtor. 8. It is further submitted that the Ld. Adjudicating failed to appreciate that the Appellant No. 2 fulfilled the contract dated 16.08.2016 by getting the purchase order from M/s. Regen Powertech Private Limited for the value of Rs. 9,50,00,000/- (Annexure A-4 at page 66 to 68 of the Appeal Paper Book). 9. It is further submitted that the Appellant No. 2 fulfilled the Agreement dated 12.10.2015 as part of Busin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her submitted that these facts have not been considered by the Ld. Adjudicating Authority and without considering all these facts and provisions of law have erroneously held that these transactions amounting to Rs. 65 Lacs are fraudulent transactions and passed the impugned order which cannot be sustained in the eye of law and the impugned order is fit to be set aside. Submissions on behalf of the Respondent No. 1 16. The Respondent No. 1 was the Resolution Professional of Corporate Debtor viz. Perfect International Fabricators Private Limited and is presently the Liquidator of the Corporate Debtor. 17. The Learned Counsel for the Respondent No. 1 during the course of argument and his Reply Affidavit as well as Written Submissions submitted that while reviewing the books of accounts of the Corporate Debtor came across payments made by the Corporate Debtor to the Appellants. The total payment made is Rs. 65 Lacs and these payments have been made on: a. 19.12.2016 - Rs. 25,00,000/- b. 27.06.2017 - Rs. 30,00,000/- c. 31.03.2018 - Rs. 10,00,000/- 18. It is further submitted that the Respondent No. 2 is Managing Director and Promoter of the Company....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Debtor is not a party to the said engagement; b. There is no invoice raised by Appellant No. 2 on the Corporate Debtor for such payment; c. There is no service tax charged for such invoice; d. There is no TDS deducted by the Corporate Debtor for the payment; e. This letter of engagement is valid for 6 months from 12.10.2015 and commission is payable for loans arranged in excess of Rs. 20 crores. Whereas Respondent No. 1 alleges of having arranged loan of Rs. 3 crores from SREI to claim its commission, SREI loan was sanctioned on 19.06.2017 whereas this agreement expired on 11.04.2016; f. Similarly, apart from arranging loan and receiving commission for the same, the Appellant alleges that the Appellant obtained purchase order for benefit of Corporate Debtor from Regen Powertech Private Limited for supply of wind mill turbines and that commission was paid to Appellant as per letter of engagement dated 16.08.2016. The Resolution Professional in their reply pointed out that the said submission is false and these documents have been produced as an afterthought for the reasons mentioned below; g. This letter of engagement dated 16.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- (i) the name, address and the registration number of such person; (ii) the name and address of the person receiving taxable service; (iii) description and value of taxable service provided or agreed to be provided; and (iv) the service tax payable thereon." Further penalty is payable under Section 76 and 77 of Finance Act for failure to pay Service Tax and for contravention of rules respectively. Punishment is also prescribed under Section 89 of the Finance Act for knowingly failing to pay service tax which includes imprisonment for a term which may extend up to three years. 24. It is further submitted that till date no invoice has been produced by the Appellants or by the Respondent No. 2 and there has no deduction of Tax at source which is the required for payments made towards consultancy services in terms of Section 194J of the Income Tax Act, 1961. No explanation has been provided for such failure to deduct tax. 25. It is further submitted that based on these submissions the Ld. Adjudicating Authority has rightly passed the impugned order and there is no merit in the Appeal, the Appeal is fit to be dismissed. Submissions on beh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....only if, before the insolvency commencement date, such director "ought to have known there was no reasonable prospect of avoiding the commencement of a Corporate Insolvency Resolution Process" and such director 'did not exercise due diligence in minimising potential loss to the creditors of the Corporate Debtor". The Ld. Adjudicating Authority has not clearly stated whether liability is being fastened on the Appellant under Section 66(1) or 66(2) and has also not discussed the specific elements of each sub-section. So, based on these submissions the impugned order cannot be sustained in the eye of law and fit to be set aside. FINDINGS 32. After hearing the Learned Counsel for the parties and going through the pleadings as also Written Submissions, we are of the considered view that the following facts are admitted in the instant Appeal. * The Corporate Debtor -'Perfect International Private Limited' and the Appellant No. 2 entered into two Agreements viz. Agreement dated 12.10.2015 (Annexure A-2 at page 58 to 61 of the Appeal Paper Book) and 16.08.2016 (Annexure A-3 at page 62 to 65 of the Appeal Paper Book) respectively. * The Corporate Debtor m....