TaxTMI 
TaxTMI 
2023 (1) TMI 455
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.... with the direction of the Adjudicating Authority to direct the appellant to pay an amount of Rs.8.95 crores outstanding in the ledger of the Corporate Debtor (hereinafter referred to as 'CD') to the CD and he is further aggrieved with the feeling of the Bench for defrauding the Corporate Debtor (CD) for carrying out business with dishonest intents to defraud creditors and, therefore, has to make the contribution to the assets of the CD. 3. To substantiate his claim the appellant has provided list of dates and events to prove that the Resolution Professional in the garb of the said application has attempted to unlawfully recover the money which are not even due and outstanding. The appellant has also taken the stand that mere noting of the transaction in the ledger account cannot be the basis to decide that the said amount was outstanding and liable to be repaid. As also the outstanding amount of the CD was forfeited by the appellant in terms of mutual agreement that took place between the two parties which has never been questioned or challenged. There is absence of any material evidence of fraud against the appellant and the Resolution Professional has failed to substantiate h....
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.... Further the Corporate Debtor agreed to make a total investment of Rs.20 crores for the said project. That an event of default would authorise the Appellant to forfeit the amount already invested by Corporte Debtor i.e. outstanding loan amount. 07.06.2019 The Appellant in terms of the agreement repaid a sum of Rs.45,00,000/- to the Corporate Debtor. Accordingly, the balance loan amount was adjusted as investment towards the said redevelopment project. Thereafter, the Corporate Debtor failed to fulfil his obligations under the agreement thereby constraining the Appellant to call upon the Corporate Debtor to make the requisite investment. Further, despite the repeated reminder the Corporte Debtor failed to make the promised investment and Appellant after due intimation forfeited the balance amount. 13.11.2019 The Corporate Insolvency Process was initiated for the Corporate Debtor by the Ld. Adjudicating Authority. 21.11.2019 A public announcement was made in Form A in pursuance to Regulation 6 of the CIRP Regulations, 2016. 13.02.2020 An intimation was filed before the Ld. Adjudicating Authority confirming the appointment of Interim Resolution Professional as ....
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....he entire exercise indeed smacks of connivance, misrepresentation and fraud. This Court would be failing in its duty, if the necessary inference is not drawn from the evidence on record. Present is a clear cut case of an unsuspecting sister being defrauded by her own step brothers/bhabi in whom she had reposed implicit trust. It is a clear case of misuse and abuse of the position of confidence held by the step brothers of the plaintiff. ..." The requirement regarding shifting of burden onto the defendants had been succinctly discussed in Anil Rishi v. Gurbaksh Singh10, wherein this Court had held that for shifting the burden of proof, it would require more than merely pleading that the relationship is a fiduciary one and it must be proved by producing tangible evidence. The relevant extract of the said decision is reproduced as thus: "8. The initial burden of proof would be on the plaintiff in view of Section 101 of the Evidence Act, which reads as under: "101. Burden of proof.-Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person....
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....efendantappellant, the burden would lie on him as he had alleged fraud. The trial court and the High Court, therefore, in our opinion, cannot be said to be correct in holding that without anything further, the burden of proof would be on the defendants. (emphasis supplied)" 3. Anil Rishi Vs Gurbaksh Singh (reported in (2006) SCC 558) (para 8 to 16) @ page 153-240 of Appeal Memo. "8. The initial burden of proof would be on the plaintiff in view of Section 101 of the Evidence Act, which reads as under: "101. Burden of proof.-Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person." 9. In terms of the said provision, the burden of proving the fact rests on the party who substantially asserts the affirmative issues and not the party who denies it. The said rule may not be universal in its application and there may be an exception thereto. The learned trial court and the High Court proceeded on the basis that th....
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....ppellant submitted that the material facts pertaining to the dispute are briefly summarized as under: a) On 13.11.2019, CIRP was initiated against one Royal Refinery Pvt Ltd, where Mr. Nandkishore V Despande was appointed as the Resolution Professional. The CD is now under liquidation, which order was passed during the pendency of this Appeal. b) The Appellant is a real estate developer who intended to develop a society by the name of Kirti CHSL, in Santacruz Mumbai. The Appellant was given loans by the CD in the year 2017 much prior to any CIRP being initiated. It is pertinent to highlight that the loans were received by way of bank transfers which are reflected in the ledger accounts maintained by both the CD and the Appellant. Part of these loans were repaid from time to time. c) The Appellant has no relation with the CD or its business. At no point in time has any allegation been made to that effect that the Appellant has colluded with the CD either by RP or by any investigating agency. d) In the year 2018, the Appellant was not being in a position to repay the loan, requested the CD to convert into the loan into an investment into the projec....
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....mmenced in 2011) even in 2017 or 2019, when the CD had transferred the said funds to the Appellant, purportedly as an 'investment' for development of the project. 10. It was also stated by the learned Counsel for the Respondent No.1 that the impugned order has duly reached the correct conclusion after considering all available material and the directions issued on the Appellant are justified in view of Section 66 of the IBC 11. We have gone through the pleading of the parties, submissions made by the learned counsel of Respondent and appellant and are having following observations: i) It is not in dispute that the appellant and the respondent company are not a related party. ii) It is also not in dispute that an amount of Rs.8.95 crores is due and outstanding for recovery from the Apellant to the CD as both the parties agreeing that this is existing in their Balance Sheet as per accounting norms. iii) It is the law laid down that fraud unravels of acts. In some way it is a deception to gain by another loss. iv) It is also well settled law that the establishment of fraudulent conduct does not require the same standard of proof as in criminal....
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....oss. It is a cheating intended to get an advantage. Jagannath was working as a clerk with Chunilal Sowcar. He purchased the property in the court auction on behalf of Chunilal Sowcar. He had, on his own volition, executed the registered release deed (Ex. B-15) in favour of Chunilal Sowcar regarding the property in dispute. He knew that the appellants had paid the total decretal amount to his master Chunilal Sowcar. Without disclosing all these facts, he filed the suit for the partition of the property on the ground that he had purchased the property on his own behalf and not on behalf of Chunilal Sowcar. Non-production and even non-mentioning of the release deed at the trial is tantamount to playing fraud on the court. We do not agree with the observations of the High Court that the appellants- defendants could have easily produced the certified registered copy of Ex. B-15 and non-suited the plaintiff. A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on....
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....f fraud in the discharge of their duties towards the company, its shareholders and creditors, would have generally resorted to such conduct. Traits of greed and dishonesty amongst men are known to manifest whenever the opportunity presents itself. This is even more true, when such conduct is displayed by the relatively affluent members of society, as their conduct is not driven by their need or undertaken in desperation. The pattern that emerges from the conduct of Mr. & Mrs. Shakt shows that their actions were focused on collecting funds in the company from the public by promising huge returns, and then siphoning them out in one way or another. That seems to have been the true "business activity" of the promoter Directors and managers of the company. No other business appears to have been conducted by the company with a view to earn profits for the company, its shareholders and creditors. In the aforesaid process, the entity of the company has been misused and exploited." 14. Section 66 of the IBC Cod reads as follows: 66. Fraudulent trading or wrongful trading- (1) If during the corporate insolvency resolution process or a liquidation process, it is found tha....