AI Drafter 
TaxTMI 
TaxTMI 
2021 (12) TMI 1374
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....10.2019 as sham and fraudulent transactions, therefore null and void; c. direct the respective Non-Applicants/Respondents to contribute to the assets of the Corporate Debtor in terms of Section 66 of the Code by reimbursing/refunding the amount with an interest @ 12% as mentioned in ANNEXURE A - 4 (Colly.) till the date of payment. d. direct the erstwhile/suspended board of Directors i.e. Non-Applicants/Respondent Nos. 15 to 20, to provide the details and addresses of the independent parties; e. pass appropriate order against the erstwhile/suspended board of Directors i.e. Non-Applicants/Respondent Nos. 15 to 20 under the relevant provisions of the Code; f. pass appropriate orders against the Non-Applicants/Respondents under Section 68, 69, 70 and other relevant provisions of the Code and; g. pass any other order(s) as this Hon'ble Tribunal may deem fit in the facts and circumstances of the present case. 2. The facts mentioned in the application in brief are as follows;- (i) That on perusal of balance sheet as on 31.03.2013 of the Corporate Debt....
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....nd Rs. 982.12 Lakhs have been withdrawn by the erstwhile/suspended board of directors i.e. Respondent Nos. 15 to 20 during Financial Year 2013-14 to 2018-19. The nature of withdrawal is not ascertainable and also questionable in absence of any documents/information. (v) That it was further noticed that the Corporate Debtor has transferred money to the related parties which was identified only after examining the audited balance sheets (ABS) as on 31.03.2015 of those related parties and on comparing the same with the Corporate Debtor's ledger account as on 21.10.2019 (date of initiation of CIRP), there's mismatch of the outstanding amounts. 3. That, vide additional affidavit dt. 13.09.2021. the Applicant submitted the copy of ledger and a tabular representation depicting the period in which the bank account transactions were entered and cash withdrawals were made by the Respondent No. 1 to 21, and the details are provided hereunder: 4. That the right to file the reply on behalf of the Respondents was closed vide order dt. 13.07.2021. 5. That the Applicant has filed written submissions and submitted the following: i. That t....
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....ode (IA 1128 of 2019) was also filed against the promoters/directors of the HBN Group Company but they did not provide any assistance to the RP/Liquidator of Respondent No. 1, regarding the books of accounts, list of assets, list of creditors, and amount of creditors, etc. vi That an application being IA No. 3535 of 2020 was filed wherein this Adjudicating Authority ordered a direction to the Chhattisgarh Police administration for providing the liquidator a copy of server/Hard Disk seized during investigation of fraud. vii. That in the absence of cooperation/records, the Liquidator of Respondent No. 1 is not in a position to reply on the merit of alleged allegations made against Respondent No. 1, Moreover, as per Section 33(5) of the Code, when a liquidation order has been passed, no suit or legal proceedings can be initiated by or against the Corporate Debtor. viii. That SEBI vide its order dt. 12.02.2015 has found the Promoters/Directors (Respondent Nos. 15 to 20) guilty of running an unregistered scheme and misappropriation of funds collected from lakhs of people. The said order was upheld by SAT on 28.06.2017 and....
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.... the decision of Hon'ble Supreme Court reported in AIR 2021 SC 1308 in the matter of P. Mohanraj Vs. M/s. Shah Brothers Ispat Pvt. Ltd., in which; the Hon'ble Supreme Court has considered the provision of Section 138 of the NI Act and held that "The legal impediment contained in Section 14 of the IBC would make it impossible for such proceeding to continue or be instituted against the corporate debtor. Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act". The Hon'ble Supreme Court further held that Section 138/141 proceeding against the Corporate Debtor is covered by Section 14(1)(a) of the IBC. 14. Applying this principle, after the initiation of CIRP in ter....
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....he corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not-- (i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or &....
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....trovert the pleadings of the applicant We further notice that the prayer of the applicant is based upon the Transaction Audit conducted by the Chartered Accountant for the period from 01.03.2013 (date of Incorporation of the Corporate Debtor) to 21.10.2019 (date of order of Initiation of CIRP against the Corporate Debtor). Therefore, at this juncture, we would like to refer to the Transaction Audit Report submitted by the Auditor, placed at Page 33 to 65 of the application. The scanned copy of the Transaction Audit Report is reproduced below:- 19. A bare perusal of the internal page 42-43 of the Audit Report shows that, the Auditor has referred to the list of members of the family members of the Corporate Debtor. At the cost of repetition, the scanned copy of the same is reproduced below:- 20. It is further seen that at the internal Page 13, 14 & 15, the Auditor has referred to the amount collected from the public at Urge through its scheme dated 01.08.2013 and withdrawal of total cash of Rs. 9.82 cores during the Financial Year 2013-14 to 2018-19. At the cost of repetition the scanned copy of the amount collected and transfer is reproduced below:- 21. It is further seen t....
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.... the assets of the corporate debtor as it may deem fit (2) On an application made by a resolution professional during the corporate insolvency resolution process, the Adjudicating Authority may by an order direct that a director or partner of the corporate debtor, as the case may be, shall be liable to make such contribution to the assets of the corporate debtor as it may deem fit, if-- (a) before the insolvency commencement date, such director or partner knew or ought to have known that the there was no reasonable prospect of avoiding the commencement of a corporate insolvency resolution process in respect of such corporate debtor; and (b) such director or partner did not exercise due diligence in minimising the potential loss to the creditors of the corporate debtor. (3) Notwithstanding anything contained in this section, no application shall be filed by a resolution professional under sub-section (2), in respect of such default against which initiatio....
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....ment 1 RESPONDENT TRANSACTION VALUE (in Rs.) PERIOD OF TRANSACTION 1. HBN Dairies and Allied Ltd. 1,07,98,564 24.04.2013 to 21.09.2017 2. HBN Home Colonisers Pvt. Ltd. 4,66,05,001 10.07.2013 to 07.07.2017 3. Complete News and Broadcasting (P) 2,00,42,817 01.08.2013 to Ltd. 11.07.2016 4. HBN Entertainment 2,07,80,336 30.07.2013 to and Broadcasting (P) 04.05.2016 Ltd. Document 2 5. Exotic Eats (P) Ltd. 1,29,03,606 6. Viraman Buildcon & 19,87,740 Developers (P) Ltd. 7. Fusion Taste (P) Ltd. 48,88,231 09.05.2013 to 29.01.2016 12.08.2013 to 31.08.2018 02.08.2013 to 29.03.2014 8. True Blue Finlease Ltd. 23,00,000 13.03.2014 to 15.09.2014 9. HBN Hospitality Pvt. 18,10,052 10.08.2013 to Ltd. 24.03.2014 10. Shuvam Colonisers 12,06,590 Pvt. Ltd. 07.08.2013 to 29.08.2014 11. Ambreen Project & 1,21,178 Infrastructure Pvt. 01.04.2016 to 31.03.2015 Ltd. 12. Smriti Buildcon Pvt. 20,01,000 Ltd. 01.04.2015 13. HBN Credit Co- operative Society Ltd. 2,12,19,352 24.04.2013 to 27.07.2018 14. Prosper Housing Fin....
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....tended to be should not be used by any other party without the prior written approval of the Interim Resolution Professional. We assume no responsibility to any user of the report other than Interim Resolution Professional. Any other person who choose to resy on this report, will do so entirely at his own lik We would like to take this opportunity to thank you and your tearn for the cooperation and assistance received by us in the execution of this assignment. Should you require any darification or information, please feel free to contact us at +91- 8506055724 For Gaurav 3 & Co. Chartered Accountant CA. Gaurav M. No. 535913 FRN-034259N UDIN 20535913AAAAAS6713 Place-New Delhi Document 5 Disclaimer 1. The observations identified in this report are based on our analysis and resnow of available audited financial statements upto F.Y. 2012-13 and other related documents/ records availab in the public domain or Statement of Bank Accounts or other documents as obtained from the Interim Resolution Professional, 2. Our work was constrained on account of limited inadequate incomplete informasi and non- reconollable dala made availa....
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.... by the Hon'ble NCLT under Insolvency and Bankruptcy Code 2016 vide its order dated 21 On 2019, Thereafter, Mr 35 Noin Interim Resolution Professional appointed us to conduct Transaction Audici has appointment letter dated 23" Nov 2019 under the Insolvency and Bankruptcy Coder, 2016 34. 35. 36- 37. Document 6 3. INTRODUCTION As per Memorandum of Association, the main object of the HBN Foods Limited is "Manufacture of food products and beverages". Corporate Debtor launched an Investment Scheme vide circular dated 01.08.2013 to collect the money from the public without obtaining certificate of registration from SEBI. (Circular dated 01.08.2013 is attached as per Annexure- "A") Corporate Debtor vide its scheme dated 01.08.2013 collected the money from the public at large, Scheme was abruptly stopped without repayment of depast collected under the scheme On an application of one of its Financial Creditor Mr. Ashoksing L Rajput, represented and authorized by group of Financial Creditors namely "Ashoksing L Rajput & Ors as applicant (total claim amount as per scheme Rs. 74,31,447/-), the company is subjected to Corporate Insolvency Res....
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....artic As per Section 5(24) of Insolvency & Bankruptcy Code' 2016, "related party", in relation to a corporate debtor, means. (a) a director or partner of the corporate debtor or a relative of a director or partner of the corporate debtor: (b) y managerial personnel of the corporate debtor or a relative of key irunagerial person of the corporate det (c) a limited ability partnership or a partnership firm in which a director, partner, or manager of the corporate debtor or his relative is a partner; (4) a private company in which a director, partner or manager of the corporate debtor is a director and folds along with his relatives, more than two pot cent of its share capital (e) a public company in which a director, partner or manager of the corporal estar and holds along with relative more than two per cent of as paid- up share capita ) any sody corporate whose board of directors, managing director or manager, in the ordinary ourse of business, acts on the advice, directions or instructions of a director, partner or manager of the corporate decor, ful any timed tability partnership or a partnership firm which partners or employees in t....
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.... partnership firm whose partners or employees in the ordinary course of business, act on the advice, directions or Instructions of the individual (h) a person on whose advice, directions or instructions, the individual is accustomed to 01) a company, where the individual or the individual along with its related party, own more than fi per cent of the share capital of the company or controls the appointment of the board of directors of the company. Explanation for the purposes of this cause, - (a) "velative, with reference to any person, means anyone who is related to another, in the following manner, namely:- (i) members of a Hind Undivided Family, (i) husband. (i) wife, (v) father, (V) mother, (v) son, (vi) daughter, (via) son's daughter and son (x) daughter's daughter and son, (x) grandson's daughter and son (x) granddaughter's daughter and son (4) brother, (x siber (iv) brother's son and daughter, ()ster's son and daughter, boy father's father and mother, Dol) mother's father and mother, [) father's brother and sister, (x) mother's brother and sister; and (b) wherever the relation is that of a so....
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....ent Assets Current Assets 21 2.89 Total Assets 3.22 No Financials Available after 31.03.2013. 43. पप Document 10Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py", line 19, in from google_doc_api import process_single_document File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\google_doc_api.py", line 345 elif mime_type in ["image/gif"]: IndentationError: expected an indented block after 'if' statement on line 341 Document 11 E Corporate Debtor has withdrawn total cash of Rs. 9.82 Cranes during the period F.Y. 2013-14 t 2018-19 over, Litration of Cash withdrawal could not be ascertained due to non city of infomation and hence cannot be com (Amount in Lars) 2014-15 2015-16 2016-17 2017-18 2018-19 Financial Amount 2013-14 8553 237.06 620.02 38.50 Total 982.12 1. On the bens of reconstructed account, Not disposal of Cash collected under the scheme is given Particulars Cash Depost Net Cash (Amount in Lacs) Amount 1672.79 909.12 3,690.6....
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....tive Society Ltd 332.79 Received Amt. 120 60 1. Suspense (Unidentified Transactions) 179.27 301.25 Not Amt. 212.19 -121.98 3. Biria Financial Distribution P Ltd 125.00 125.00 4. Mahadev Traders 70.00 70.00 NS Enterprise 70.00 70.00 SHREE GANESH EN 60.00 60.00 HBN Housing Finance Ltd (Prosper Housing Finance Ltd) 32.00 6.00 24.00 # Good Day Foods and Beverage 28.00 28.00 9. Panchwari Nitrients 27.00 27.00 10. Pankaj Oswal and Co. 25.00 25.00 Total 949.06 429.85 $19.21 *Relationship could not be identified in absence of any information or documents The nature or purpose of these transaction could not be wanted ascertained in absence of avala of information or documents Therefore, we are not able to comment upon the commercial or ordinary husness aspects of these transactions. Detailed summary of the Funds transferred to related and other parties are already attached as per Annexure-"C" G3. A 1st of the loan reflecting in the Audited Balance Sheet of related parties of Corporate Dettori produced below. Corresponding to this we h....
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....vency and Bankruptcy Code 2016 Section 43 - Preferential transactions and relevant time (1) Where the liquidator or the Interim Resolution Professional, as the case may be, is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions and in such manner as id down in sub-section (2) to any persons as referred to in sub-section (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred to in section 44. (2) A corporate debt shall be deemed to have given a preference, i (a) there is a transfer of property or an interest theroof of the corporate debtor for the benefit of a creditor or a sunty or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilties owed by the corporate debtor and (b) the transfer under cause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial poution than it would have been in the event of a distribution of assets being mude in accordance with section 53. (3) For the purposes of sub-section (2), a preference shall not inclu....
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....not taken place in the ordinary course of business of the corporate debtor. In the absence of information or records or limited information available in public domain, we are not able to identity and comment upon the undervalued transactions. so. SI. Document 14Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py", line 19, in from google_doc_api import process_single_document File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\google_doc_api.py", line 345 elif mime_type in ["image/gif"]: IndentationError: expected an indented block after 'if' statement on line 341 Document 15 That Corporate Debtor has apparently not obtained any security for money given to the related and other parties and has provided loans without charging any interest on the loan. Corporate Debtor has failed to use the money for the purpose for which the nas given to the investor or public That Corte Debtor has operated the scheme without permission of the SEBI or other 23 That the modus operandi of Corporate Debtor was to collect....
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....000 400 1320 2100 48750 40000 500 1515 2530 510+3430 50540 3540 0470441508 74125 1000 5000 12180 PLAN Roads 5-101 Months (years) Half tyls YO Expected 20 Value of R 12000 200 2100 34000 2 15000 1740 3490 5000 100 2330 4600 48000 30000 500 1678 2900 3140 60000 10002950 3800 11500 Document 181770 FREE OF COST 58. Document 19 Co. Name Schedule of Directorship Name of Director Date of Appointment Family Members Ambreen Projects & Infrastructure P Ltd. Harmender Singh Stan 01-10-24 Harjeet Kaur San 91-10-24 Annexure-"0" Date of Cessation Farnly Herbers Complete News and Entertainment Broadcast Amandeep Singh Sra 01-10-14 Harmeet Kaur 29-01-00 91-10-14 Brinderiget Kat Stan 29-01-07 01-10-14 Family Members Derika Devi Agarwal Estates PL Amandeep Singh Sran Fily Hembers Exotic Eats P Ltd Amandeep Srich Sco 26-00-11 Manjeet Kaur Scan 01-19-14 Family Nembers Fusion Taste Ltd Harmender Singh Son 17-15-11 Manyet Kaur Stan 01-10-14 Oshers Hardeep Singh....
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.... its related party, own more than fifty per cent of the share capital of the company or controls the appointment of the board of director of the company, Explanation, For the purposes of this clause, (a) "relative, with reference to any person, means anyone who is related to another, in the following manner, namely () members of a Hindu Undivided Family, () husband, (wife, (iv) father, (v) mother, (v) son, (vi) daughter (vi) son's daughter and son (i) daughter's daughter and son () grandson's daughter and son, (xi) granddaughter's daughter and son, (a) brother, (xv) brother's son and daughter, (AV) sister's son and daughter, (x) father's father and mother, bow) mother's father and mother, (xwill father's brother and sister, (x) mother's brother and sister; and (b) wherever the relation is that of a son, daughter, sister or brother, their spouses shall also be included;] A list of Members of the Family members of Corporate Debtor who are significantly related with each other is given below:- Harmender Singh Sran Promoter of HBN Foods Limited Relatives of Harmender Singh Sran Soh Daughters....
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....3 0120100013499 3273521693 6166303250 7255201100004128 Current Account Current Account Closed Current Account Current Account Closec Current Account Closeo Current Account - Closed Current Account-Closed Current Account Onsed Current Account Current Account Closed Current Account 7. Observations in Brief A Interim Resolution Professional hasprovided us with the following Statement of Bank Accounts maintained by the Corporate Debtor: 5. No. Bank Name Punjab National Back Canara Bank Account No. 1503002100104483 $632201000089 Account Type Current Account Current Account Balance 40,780.79 11,721.00 5,954.00 75,367 75 1.21,383 96 5,933.10 Bank of India 466720110000228 15 Benk of Inda 20 Punjab National Bank 60252011000454 15030000039024 21 ICICI Bank 008714196544 23 Bank of India 602345110009992 23 Bank of India 607345110010078 24 Bank of India 607345110010052 Current Account 25.009.35 Current Account #.654.00 Current Account 5,510.00 Current Account 9.396.36 Cument Account 23,631.91 Curr....
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....ing P Ltd. 207-80 Fotic Fat P. Ltd 12-9.04 Varnas dooon & Developsins, P. Ltst 19.88 23.00 19.95 11.47 12.07 2.16 Bac Finleine Limited Bannender Singh Sran HW Honphary Fu nomp Singh Sean Shumen Corensers PLd Other Parties HN Cat Cupparative Society L Molodoy Traders NS Enterpenet SHEF GANESH ENE 1,419.76 212.19 70.00 70.00 dentified Transactions Others Oncluding Solery & Expenses) Total Utilization 60.00 (121.90) 1129.54 3,587.57 3.41 G. Schedule of Related Party and other Transactions G. On the basis of reconstructed accounts, it has been observed that Net Funds amount 1,267.5 Lacs has been transferred to the related parties during the period F.Y. 2012-13 to 2010-19 (Amount in Lacs) Name of Related Party Paid Amt. NO Received Amt. 2,635.15 Not Amt 107.99 HEN Hope Colonners P Ltd 559.33 406.15 3. Complete fiews and Broadcasting P Ltd 236.53 36,10 200.43 • HIN Entertainment and Broadming P 232.80 25.00 207.60 Exotic Cat Pad 132.60 3.56 129.04 B. Vaman Budcon & Developers P Ltd 65.65 45....