AI Drafter 
TaxTMI 
TaxTMI 
2022 (1) TMI 1241
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....losses caused due to the respondent's indulgence in fraudulent transactions and refer to the matter to IBBI in view of the provisions under section 236 of the Insolvency and Bankruptcy code, 2016. 2. Brief facts of the case are as follows: i. The applicant was appointed as as Interim Resolution Professional on 26.11.2019 in (IB)-2414/ND/2019 dated, and which was communicated to him on 28.11.2019. ii. The Corporate Debtor is in the courier business and was earlier known as Committed Worldwide Express Pvt. Ltd. The corporate debtor changed their name of Stock flow Express Pvt. Ltd. on 26-07-2019. iii. Prior to Dec 2018, there were five directors in the company viz, 1. Mr. Nitin Bharal 2. Mr. Narendra Bisht 3. Mr. Rajeev Sharma 4. Mr. Yashpal Arora 5. Mr. Sujeet Kumar Chaudhary iv. That the persons mentioned at Sl. No. 1 to 4 were also the promoters and collectively 100% share-holders in Stockflow Express Pvt. Ltd. On 27-12-2018, Mr. Shiv Kumar Chaturvedi was appointed as a director in company. On 31.12.2018, persons at s. No. 1 to 4 above resigned as directors. In the month of August 2019, Mr. Suj....
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....ditor has been annexed. This report has been prepared on the basis of the IRP's own analysis of the data and information available. Due to non-co-operation from the ex-directors/director, the IRP has been able to list only a limited number of transactions under specific sections of the IBC 2016. xi. That after the commencement of the CIRP, the applicant met Mr. Nitin Bharal (ex-director/promoter) to understand about the corporate debtor. Mr. Shiv Chaturvedi, though a director, claims to not have much information of business with him. Sometime later IRP met Mr. Narendra Bisht (ex-director/promoter) to seek help for appointment of second director as certain MCA compliance were pending, which needed to be completed. Mr. Bisht informed that the promoters have sold their shareholding and they are no more the shareholders, but this fact was not disclosed by Mr. Nitin Bharal earlier. Mr. Bisht also informed about Mr. Manish Kumar Gupta, who helped complete the share sale deal but Mr. Manish Gupta, refused to share any information asking to get the information from Mr. Bisht only. The company Secretary Ms. Eva Srivastava too has not been sharing information. xii. That....
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....s not been any response from the four ex-directors. xiv. There has been another share sales transaction where the four promoters sold their 100% share-holding to a related concern Committed Cargo Care Ltd. on 20-10-2017. The four promoters are also the promoter/directors of Committed Care Cargo Ltd. xv. That on 31-03-2018, about five months later, Committed Cargo Care Ltd. sold a part of its share-holding in the corporate debtor, Stockflow Express Pvt. Ltd., back to these four promoter directors. That on query, the four promoters/ex directors of the corporate debtor failed to explain the objective of making these round-about share sale transaction between companies where they are common promoters/directors, which shows that the share-sale transactions has been carried on to defraud the creditors. Also, the ex-directors were in a hurry to get rid of their responsibilities (while still keen on enjoying status as signing authority in the banks) as directors and made inefficient arrangements by appointing another director with far lesser capabilities to replace the four ex-directors. Moreover, the ex-directors did not surrender their authorization as signing authority....
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....in the same market, they have come to know that the promoters have started doing the courier business in the related entity and this would impact the receivable prospects of the corporate debtor-On query on this issue, one of the ex-director/promoter, Mr. Nitin Bharal informed that it is the right of related entity to pursue any business mentioned in the articles of the company. The CoC members informed the IRP that DHL could be one common customer and they could provide information if the related entity has commenced courier business. The IRP had written to the concerned person at DHL, Ms. Simi Chopra. However, Ms. Chopra only replied on a telephonic call that she has sent the enquiry to DHL's legal department. However, she has not replied back since then. xviii. The IRP is of the view that the respondent ex-directors/promoters of the corporate debtor have started this courier business through the related entity Committed Cargo Care Pvt. Ltd. to influence the debtors of the corporate debtor and misuse the amount receivables for the benefit of the related entity. This would severally affect the interests of the creditors of the corporate debtor. The quantum of this imp....
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.... 2016. The ex-directors/promoters are not co-operating with the IRP to provide required information and documents. 3. The IRP in his affidavit dated 21.10.2020 submitted that: i. The Hon'ble Bench V. NCLT New Delhi had, vide its order dated 12-10-2020, directed the IRP to file a supplementary affidavit to submit supporting documents for banking transactions mentioned on page numbers 52 and 53 of the IA/2153/2020. ii. That on 12-10-2020, the IRP wrote to the three Banks (Yes Bank, ICICI Bank and Axis Bank) with the respective list of specific bank transactions from the list given on page 52 and 53 of the IA/2153/2020. These transactions included cheques as well as online transfer debit transactions. The banks were asked to provide the names of the cheque signatories, authorised signatories during the period these transactions happened. iii. Two of these Banks, Yes Bank and ICICI Bank have replied to the IRP with details. The number of transactions pertaining to these two banks is 78 out of a total of 80 transactions. The Axis Bank had to reply for two number transactions. However, the Axis bank has not replied to the IRPs queries. iv. The R....
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.... x. The directors named by the respondents R1-R4, in their reply, Mr. Sujeet Kumar Chaudhary (now deceased on 12-08-2019) and Mr. Shiv Kumar Chaturvedi, who are advised by the respondents R1-R4 to be holding control of the corporate debtor at that time, neither signed any of these cheques nor have been named by the bank as the cheque signing authorities or the online transactions authorising persons. xi. The respondents R1 to R4 have denied that they were operating the bank accounts of the Corporate Debtor after resigning as directors on 31-12-2018. The above information received from the Banks supports the IRP's observations in the application IA/2153/2020, that the Respondents 1-4 were indeed operating the bank accounts of the Corporate Debtor. 4. The Respondents No. 1 to 4 in their reply dated 29.09.2020 denied the contentions made in the application and contended that: i. The respondent referred the judgment of the Hon'ble Supreme Court in the matter of "Bishundeo Narain and another us. Seogeni Rai and Jagernath" 1951 SCR 548 : AIR 1951 SC 280. ii. That none of the transactions in question as in the application under reply fall with....
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.... vii. That the bad debts amounts to debt which bad in law or cannot be collected in future. The IRP have not placed on record any documents to substantiate its contention regarding write-off of bad debts. viii. That there is no restriction over the answering respondent from doing any business. Starting of identical business does not come under any fraudulent transaction u/s. 66 of the IBC. ix. That the answering respondents had surrendered their authorization as signing authority in banking transactions even after selling their shareholding and not kept operating the bank accounts of the C.D. x. That the answering respondents are not aware or privity of transaction of Rs. 3 Lac cash payment by Mr. Jasoria, as the same was after taken over of Management from them, accordingly, cannot comment on the same. xi. That there is no evidence to the fact that the Respondents No. 1-4 while being employed as the directors of the Corporate Debtor did not exercise due diligence in minimising the potential loss to the creditors of the corporate debtor. 5. The Respondent No. 5 in his reply dated 29.09.2020 denied the contentions made in the application and c....
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....company and much less seek information regarding the same and therefore the IRP's query to the answering Respondent and/or DHL was completely without jurisdiction. vi. Further, the reliefs as sought in the application under reply is no maintainable as against the answering Respondent, since she is neither a partner nor a director of the Corporate Debtor especially when admittedly, there exists no transaction between DHL and the Corporate Debtor. 7. The Respondent No. 9 in his reply dated 09.10.2020 denied the contentions made in the application and contended that: i. the answering respondent is proprietorship firm running the courier services at Agra, UP. The answering respondent firm had an oral and mutual understanding with the firm namely "Committed Worldwide Express Pvt. Ltd." wherein the international couriers received by the answering Respondents used to be sent to the "Committed Worldwide Express Pvt. Ltd.," situated at New Delhi and the profit arising out of the same used to be shared by both the companies as per agreed terms and conditions. ii. the answering Respondents were in commercial business transaction with the "Committed Worldwide ....
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....y after 12.4.2019, much prior to the initiation of present proceedings by M/s. Argus Global Logistic Pvt. Ltd. against M/s. Stockflow Express Pvt. Ltd. viii. arraying the answering respondent as party respondent on the basis of alleged statement of current director of M/s. Stockflow Express Pvt. Ltd., to the effect that the No Objection Certificate dated 12.04.2019 is forged one and is totally illegal and untenable. ix. the answering respondent also referred the definition of "transaction" Section 3(33) of IBC and Regulation 4(f) of IBBI Regulations, 2016. On a combined reading of Section 3(33) of IBC and Regulation 4(f) of IBBI Regulations, 2016, the IRP can look into the transactions qua the Corporate debtor alone and not its associated company and much less seek information regarding the same and therefore the IRP's query to the answering Respondent and/or DHL was completely without jurisdiction. x. The application is not maintainable in view of bar of pecuniary jurisdiction of this Hon'ble Tribunal being a sum of Rs. 1 crore. 8. The Respondent No. 10 in his reply dated 10.12.2020 denied the contentions made in the application and contended ....
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....able in the eyes of law. vi. the answering Respondent herein has sent an email dated 21.3.2020 to Mr. Randhir Singh, representative of M/s. Committed Worldwide Express Pvt. Ltd. and demanded the outstanding amount of Rs. 6,59,800.24/- which was due and payable by them to the answering Respondent as its ledger. vii. the answering Respondent has received email dated 27.3.2020 from the Applicant IRP showing the alleged debt against the answering Respondent. The answering Respondent herein has replied the said email by sending an email on the same day and on 28.3.2020 whereby it has been made clear that nothing was/is due and payable by the answering Respondent to M/s. Committed Worldwide Express Pvt. Ltd. And the account details have already been sent to M/s. Committed Worldwide Express Pvt. Ltd. viii. the answering Respondents have never done or entered into any business or commercial transaction with M/s. Stockflow Express Pvt. Ltd., at any point of time, after its constitution and particularly after December, 2019, much prior to the initiation of present proceedings by M/s. Argus Global Logistic Pvt. Ltd. against M/s. Stockflow Express Pvt. ix. t....
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....Rs.) Cheque details Cheque Amount (Rs.) Credit details 1 Nitin Bharat Ripu Sadan Tiwari 250000 No. 000008 dated 15.03.2019, IDFC Bank 50000 Deposit slip Dated 03.05.2019 2. Narendra Singh Bisht Abhay Kumar Mishra 250000 No. 000035 dated 15.03.2019 50000 Bank statement credited on 31.05.2019 3. Rajeev Sharma Ripu Sadan Tiwari 250000 No. 000008 dated 15.03.2019 50000 Deposit slip dated 31.05.2019, Bank Statement credited on 01.06.2019 4 Yashpal Arora Abhay Kumar Mishra 250000 No. 000034 dated 30.03.2019 50000 No Information shared Still the details of shareholding transfer have not been disclosed fully in terms of number of share transferred. The correct contact details of the new shareholders have still not been shared. It is pertinent to mention that the paid-up capital of the Corporate Debtor is Rs. 10,00,000/-. As informed by the respondents, the total shareholding has been sold for Rs. 200000/- at a steep discount. The sale of the share ownership at a substantially low amount of Rs. 200000/-, as informed by the respondents now, only raises further questio....
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.... activities under IBC 2016. It may be noted that there is no denial on part of the respondents that they are indulging in an identical line of business. The IRP has mentioned in his application that this could have been done with ulterior motives and would cause irreparable damage to the corporate debtor. There is a possibility that the respondents would influence the debtors of the corporate debtor and the debt recovery would get severely impacted thus causing damage to the prospects of the creditors of the corporate debtor and to the corporate insolvency resolution process/liquidation in toto. This activity of starting an identical business line and that too with the same service partners (respondent No. 8) of the corporate debtor, along-with inordinate bad debt write-offs has resulted into severe damage to the recovery prospects of the creditors of the corporate debtor and has been carried out consciously by the respondents to benefit themselves at the expense of the creditors of the corporate debtor. This falls under the provisions of the Section 66(1) of the IBC 2016. iv. Cash Transactions and receiving cash from debtors - The IRP has been informed verbally b....
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....uld be taken care of. It may be noted that the address of both the Respondent No. 6 and Respondent No. 7 are same. viii. Respondent No. 8-The Respondent number 8 is a large corporation and was a service supplier to the corporate debtor. In the memo of parties, the IRP has mentioned Ms. Simi Chopra as representing the organization DHL Express (India) Pvt. Ltd. The IRP has mentioned in his application that Respondent No. 8 has started an identical line of business with the associated concern of the corporate debtor. Before filing the application, the IRP called the concerned officer of the respondent DHL Express (India) Pvt. Ltd., Ms. Simi Chopra to share information on this aspect of identical business with associate concern of the corporate debtor. Ms. Chopra mentioned that she has asked her legal department. There was no response to further reminders. After this application was filed by the IRP before Hon'ble NCLT and a copy was served to Ms. Chopra, she replied. She has replied that DHL 'recovered' entire outstanding from the corporate debtor and that business has been under a new name 'Committed Cargo Care Ltd. with effect from 04-02-2020. She further ad....
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....which were less than 6 months old. The receivable to the tune of Rs. 1,25,37,262/- were written off during the F.Y. 2018-19, when the company was already facing financial distress. The contention of the Respondents, more specifically R1 to R4 is the write offs were done in order to utilize tax benefits, however, the said respondents may be put to strict proof as to how they have utilized tax benefits. The Respondents i.e. R1 to R4 failed to provide any reasoning against such write off upon the query being raised by the Applicant. x. It is submitted on behalf of the Applicant that despite resigning from the post of director, the ex-directors have signed cheque on behalf of the corporate debtor. The indulgence of this Hon'ble Tribunal is sought towards Affidavit in support of the bank transactions undertaken on behalf of the ex-directors after the date of resignation i.e. 31.12.2018. xi. It is further stated that against large outstanding amounts from the debtors, there are irregular write offs being made on behalf of the corporate debtor. As per the book of the corporate debtor referred to at page No. 54 of the application, the corporate debtor had around Rs. 2....
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....ettlement of account, much prior to commencement of the proceedings before this Tribunal. Mere perusal of allegations made in the application against the Respondent No. 9, it would be clear that the said allegations does not fall within the scope and ambit of Section 66 of the Code in a manner whatsoever. ii. It is an admitted position that no transaction ever existed between the Corporate Debtor and the Respondent No. 9 and there is no examination and determination of the allegations in terms of section 66 of the Code, 2016. It is submitted that the application filed by the Applicant does not even fulfill the basic ingredient of section 66 of the Code and thus deserves to be dismissed at threshold. iii. The issuance of No Objection Certificate as full and final settlement cannot be said to be fraudulent in any manner whatsoever, particularly when it has been issued by the duly authorized the then Director of the Company. It is respectfully submitted that the IRP in the entire application has failed to point out that as to how the issuance of NOC dated 12.4.2019 are fraud over the creditors and fraudulent in nature. It is well settled law that one has to establish....
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....He further contended that similarly another debtor by the name of RJ Logistic Services LLP with Mr. Rohit Jasoria also owes Rs. 10,71,250/- to the Corporate Debtor but the said debt was also written off. 14. On the other hand, Ld. Counsel for the respondent Nos. 1 to 4 raised all the facts mentioned in their reply and submitted that the applicant has failed to establish that there was any fraudulent transaction. He further contended that transfer of the share is immovable property and transfer of share do not come within the purview of Section 66 of the IBC, 2016. He further submitted that the respondent Nos. 1 to 4 are ex-directors of the Company and they had handed over the management to one Mr. Sujit Kumar Chaudhary and on his advice; on 27.12.2018, Mr. Shiv Chaturvedi respondent No. 5 was appointed as a director. He further contended that after rendering their resignation they had never issued any cheque. He further contended that there is a possibility that an advance or post dated cheques were issued by these respondents, which might have been encashed after their resignation from the Company. 15. The other respondents have filed their reply and also submitted that they....
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....he resignation on 31.12.2018 and respondent No. 5 alongwith Mr. Sujit Kumar Chaudhary were appointed as directors on 27.12.2018. 18. On perusal of Annexure-A at page 23 of the application, we notice that as on 31.03.2018, the respondent Nos. 1 to 4 were the directors of Committed Care Kargo Limited and there is also shareholder as on 31.03.2019. The scanned copy of the Annexure A is reproduced below:- 19. And this fact has also not been denied by the respondent Nos. 1 to 4 that they are the directors in the Committed Care Kargo Limited. It is also not denied by the respondent Nos. 1 to 4 that they have sold their shares to Committed Care Kargo Limited and again the Committed Care Kargo Limited sold the shares to the respondent Nos. 1 to 4. In other words, transfer or shareholding between the respondent Nos. 1 to 4 and Committed Care Kargo Limited, was originally managed by these four respondents. 20. The contention of the respondent Nos. 1 to 4 is that these shareholding transfer never come within the purview of Section 66 of the IBC, 2016. As we referred to the provision of Section 66 IBC and in terms of Section 66, there are two ingredients, which constitute the fraudule....
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....f receivables Which are not yet into a difficult category of more than 6 months ageing. This indicates that the corporate debtor has written-off these debts to defraud the creditors. The respondents Mr. Nitin Bharal, Mr. Narendra Bisht, Mr. Rajeev Shurma and Mr. Yashpal Arora were promoter/directors at the time these amounts were written off. A list of receivables totaling to Rs. 12,537,262/- written off during the year 2018-19 is attached as Annexure A-2. 22. On perusal of this table, we notice that as on 31.03.2017, Rs. 1,94,857/-, as on 31.03.2018, Rs. 6,36,143/- and as on 31.03.2019 of Rs. 1,25,37,262/- debts were written off and So far the debt written off till 31.12.2018 are concerned, respondent Nos. 1 to 4 were the directors of the Company. And so far the debt written off as on 31.03.2019 is concerned though the respondent Nos. 1 to 4 had tendered their resignation on 31.12.2018 but at this juncture, we would like to refer Annexure-A4 at Page 52 and 53 of the application. The scanned copy of the Annexure-A4 is reproduced below:- 23. These bank transactions shows that even after the resignation, the ex-directors/promoters were operating the bank transactions. The last ....
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....It is also because of this facts, as per the prevalent banking business procedure, the moment, the directors or signatory of the bank account have/had tendered their resignation, the Company is required to send the name of director and the signature of the present directors to the concerned bank for the purpose of operating the bank account, which is in the name of a Company and even if any post dated cheque was issued by the previous director after the change of management that cannot be encashed because the signatory of the account have already been changed. But here in the case Respondent No. 1 Nitin Bharal, was added as a signatory in ICICI bank account of the corporate debtor after their resignation, therefore, we are unable to accept this contention of the respondent Nos. 1 to 4 that the post dated cheques were encashed after their resignation, even after 7 months of their resignation. On the basis of this bank statement, we are of the considered view, the respondent Nos. 1 to 4 had although tendered their resignation but still they were having their control over the management and finance of the Corporate Debtor and the resignation was tendered only with intent to de-fraud w....
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.... 4, the Suspended Board of Directors/Promoters of the Corporate Debtor have been carried on business with intent to de-fraud the creditors of the Corporate Debtor or with fraudulent purpose and in this way, they have written off the debt of respondent No. 9 & 10 and also settled the amount on the payment of Rs. 3 lakhs against the total debt of Rs. 42,33,304/-. Hence, they are liable to make contributions the amount which was misuse or misappropriated by the Suspended Board of Directors/Promoters with intent to de-fraud the Creditors. Accordingly, the respondent Nos. 1 to 4 are directed to make the contribution of Rs. 13368262/- (12537262 + 636143 + 194857), the amount which were written off during the financial year 2016-2017, 2017-2018 and 2018-2019, the respondent No. 9 is directed to contribute Rs. 4233040/- (2012383 + 2220651) and respondent No. 10 is directed to contribute Rs. 2377952/- (1071250 + 1306702) and if the amount shown in the order is not paid by the respondent Nos. 9 and 10, in that case same shall be recovered from the respondent Nos. 1 to 4 jointly or severally. The Respondent No. 1 to 4, 9 and 10 are directed to contribute the aforesaid amount in the account of....
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.... 10-06-2019 20656 164405000048 13-06-2019 15000 3530 Self EPFO EPFO EPIO 10451 Royal Stationer Prakash Kumar 27 KOCI Bank 164405000048 25-06-2019 2411 Yes Bank Credit Card 28 OCI Bank 164405000048 24-07-2019 4589 Yes Bank Credit Card 29 OCI 30 31 Bank AXIS Bank 278010200003216 04-01-2019 AXIS Bank 278010200003216 29-04-2019 164405000048 19-10-2019 6480 90000 40000 32 YES Bank 6684000000685 04-01-2019 200000 JP Sharma & Co Transfer Transfer Netbanking 33 YES Bank 34 YES Bank 6684000000685 08-01-2019 6684000000685 09-01-2019 12960 3980.41 VOSUive Technologies Vodafone Mobre Services 35 YES Bank 6684000000685 09-01-2019 12960 36 YES Bank 6684000000685 11-01-2019 100000 VOSUve Technologies Bhikaji Cama 37 YES Bank 6634000000645 19-01-209 6480 JP Sharma & Co 38 YES Bank 6684000000685 30-01-2019 16979 39 YES Bank 6684000000685 30-01-2019 25050 40 YES Bank 41 42 43 44 45 46 YES Bank 47 YES Bank 45 49 YES Bank YES Bank ....