TaxTMI 
TaxTMI 
2022 (9) TMI 172
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....pplication filed under Section 7 of IB Code which was filed by both the Appellants herein. The Appellants demanding Corporate Debt against the Respondent/Corporate Debtor had filed an application under Section 7 of IB Code which was registered as CP (IB)No.964/KB/2020. On the date of filing of the application under Section 7 of the IB Code it was admitted position that the Corporate Debtor/Burnpur Cement Limited's Management had already changed in a Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'SARFEASI Proceeding'). With effect from 1.10.2019 the Management of the Company was taken over by UV Asset Reconstruction Company Ltd. The said knowledge of the appellants is reflected from the reply given by Corporate Debtor which is at page 64 Volume 1 of the Memo of Appeal. Both the appellants had claimed for alleged corporate debt after almost four years lapse of a so called claim 2. The facts gathered from the Memo of Appeal and record depicts that on 14.04.2014 Prarthana Sales Pvt Ltd, Appellant No.1 and Narsingh Mercantile Pvt Ltd, Appellant No.2 had provided Burnpur Cement Ltd, sole respondent Inte....
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.... completion of audit and due diligence the Management to take adequate legal steps regarding the same. To reply letters sent on behalf of the corporate debtor, reminder was also sent by the appellants and without waiting for receipt of special audit report, it appears that the appellants filed joint application under Section 7(1) of the IB Code before the NCLT on 10th August, 2020. Before the NCLT, the appellants asserted that total amount claimed Rs.2,97,82,697/- was inclusive of Rs.2,10,00,000/- Principal amount (Rs. 55 lakh- Prarthana Sales Pvt Ltd, Rs. 50 lakhs-Active Commercial Pvt Ltd and Rs.1.5 crore Nikita Vyapar Ltd and Rs.87,82,687/- being interest charged @ 10% per annum till 31.07.2020. As per the Memo of Appeal on 18.01.2021 the Respondent/corporate Debtor filed an affidavit in reply which was replied by filing of rejoinder on 15.02.2021. Further on 09.05.2021 the Respondent/corporate debtor filed a supplementary affidavit. After hearing the parties and examining the issue as to whether there was an existence of default or not the Learned NCLT finally dismissed the application filed by the appellants by its impugned order dated 13.06.2022 which has been assailed in the....
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....cantile Pvt Ltd (appellant No.2). The contents of agreement dated 13.10.2014 and 15.12.2014 are in verbatim same except change of names of the second party in the agreement and their address. Similarly agreement dated 14.04.2014 is also same. However, this agreement does not contain the facts mentioned in para 5 of aforesaid two agreements. In paragraph 5 of agreement dated 13.10.2014 and 15.12.2014 same fact has been mentioned which is reproduced hereinbelow:- "The Lender company has filed an application for amalgamation of its company named 'Active Commercial Pvt Ltd' into Narsingh Mercantile Pvt Ltd. The re-payment of loan shall be made: a) If the demand is raised by the Lender prior to the order of amalgamation of the company-the repayment of loan shall be made to respective companies from which the loan has been disbursed to the borrower. b) If the demand is raised by the Lender after the order of amalgamation is passed the payment shall be made to the amalgamated companies bank account i.e. in the bank account of Narsingh Mercantile Pvt Ltd. Except contents of only paragraph 5 of aforesaid two agreements is missing otherwise entire contents of tw....
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....Net Banking/banking channels or any other mode as mutually agreed between the Lender and Borrower. 7. Both parties represent covenants and warrant to each other that; (a) They have read all the terms and conditions of this given agreement. (b) They unconditionally agree to abide by the terms and conditions contained in this agreement. (c) The information and financial details submitted by the Borrower to the Lender are true, correct and best of his knowledge. 8. In case of death of the Lender/Borrower, the Loan amount shall be receivable/payable by his legal heir as per the terms and conditions as given in this Loan Agreement. 9. If any provision of this agreement is illegal, invalid or unenforceable for any reason, it will be severed from the remaining provisions which will remain unaffected. IN WITNESS WHEREOF the parties hereto have hereunder set and subscribed their signatures with their respective hands, on the 14th day of April, 2014 year first hereinabove witness, both at Kolkata. 1 Signed by the Borrower Sd/- for Burnpur Cement Ltd 2. Signed by the Lender For Prarthana Sales P....
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....demand is raised by the Lender after the order of amalgamation is passed the payment shall be made to the amalgamated companies bank account i.e. in the bank account of Narsingh Mercantile Pvt Ltd. 6. The amount of Rs.50,00,000/- shall be repaid on demand from the Lender in the manner specified in para 5 of this Agreement. The Borrower will be allowed 10 days time from the date of receipt the demand letter from the Lender to repay the loan amount along with interest. 7. The mode of transfer of the Loan amount and shall be made either in NEFT/Net Banking/banking channels or any other mode as mutually agreed between the Lender and Borrower. 8. Both parties represent covenants and warrant to each other that; (a) They have read all the terms and conditions of this given agreement. (b) They unconditionally agree to abide by the terms and conditions contained in this agreement. (c) The information and financial details submitted by the Borrower to the Lender are true, correct and best of his knowledge. 9. In case of death of the Lender/Borrower, the Loan amount shall be receivable/payable by his legal heir as per the terms an....
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....l year 2015-16 ended on 31st March, 2016. Subsequently, suddenly after lapse of about four years the Appellants came out of their slumber and issued demand notice in the year 2020. Obviously the said claim was barred by law of limitation. It is not only a case that after 4 years the appellants started claiming their dues but it is also a fact that in the month of October, 2019 the Management of Burnpur Cement Ltd (Corporate Debtor) was taken over by UV Asset Reconstruction Co Ltd under a SARFEASI Proceeding. From the said conduct of the Appellants many things can be inferred, particularly serious doubt regarding the so called lending by the appellants to the corporate debtor can be raised. Besides aforesaid facts which creates serious doubts in respect of the claim raised by the appellants, in the minds of this Tribunal, on going through the impugned order the Court is of the considered opinion that the Learned NCLT has examined several aspects and has reasonably observed that in exercise of summary jurisdiction under the Code it is difficult to conclude that a bona fide financial debt exists. 11. For initiating Corporate Insolvency Resolution Process (CIRP) under Section 7 (4) ....
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....ng to the correct decision has also by reference has taken note of the assessment order passed by the Income Tax Department. Those facts have been elaborately discussed in paragraph 26 to 28 of the impugned order which are reproduced hereinbelow:- "26. The above analysis takes us to the Assessment Order dated 31.12.2018 passed by the Income Tax department against the Corporate Debtor. As detailed above, the income tax department had carried out a raid in the premises of Corporate Debtor which led to seizure of material which showed the assessee i.e., Corporate Debtor had inter alia received an unsecured loan of Rs 2,70,00,000from Prarthna. The assessment order further records that the assessee was asked to produce all details of the loan taken from Prarthana however, the assessee had failed to provide any information. The income tax department on its own investigation unearthed that the directors of Prarthana were Mr. Anand Prakash Kejriwal and Ms Jyoti Kejriwal. Mr. Anand Prakash Kejriwal and Ms. Jyoti Kejriwal were also the directors of Narsingh, Active and Nikita. After noting the above details, the assessment order in para 6.3 (b) notes as under:- It will be a....
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....le to the department in the normal circumstances during assessment proceedings. The result of these transactions was designed in such a way that in this transaction unaccounted money was to be brought in the business by the assessee. The Legislature cannot take care of every device and scheme misused to evade taxation. It is for the implementing authorities to investigate the nature of the sophisticated legal devices adopted by the taxpayer to evade or avoid tax and consider whether the situation created by the devices could be related to the avoidance of the payment of taxes. The modus operandi adopted by the assesse has been found to be a method of evading taxes being non-genuine transactions without being verifiable. 7.c These are, by nature 'make believe transactions which do not deserve to be accepted as genuine. The truth or genuineness of such transactions must prevail over the smoke screen, created by way pre- meditated series of steps taken by the assessee, with a view to imparting a colour of genuineness and character of commercial nature, to such unsecured loan transactions. 7.d The unsecured loan was taken by the assessee from companies who did not....
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.... granting such loans, and as such could not have provided the loans. No explanation on this count has also come forth from the Financial Creditors. (iv) The Financial Creditors have also not provided any details of their operations, business and other relevant credentials despite adverse observations made against Prarthana in the Income tax assessment order to the effect that it is a shell/paper company involved in giving of collusive loans as accommodation entries. (v) All four companies involved namely Prarthana, Active, Nikita and Narsingh had common directors at the relevant point of time. The registered office of both financial creditors is also the same. (vi) No explanation has come forward from the Financial Creditors about the disbursements made by Prarthana on 16.04.2014 and 17.10.2014 which were immediately paid back by Corporate Debtor in a day or two. This factum of receipt and immediate payback has been taken notice by income tax department as "commonly known modus operandi of converting the unaccounted funds by different companies by taking unsecured loan from willing dubious entities". (vii) Another unexplained fact is that even th....