TaxTMI 
TaxTMI 
2023 (7) TMI 772
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....d by the Adjudicating Authority (NCLT, New Delhi) in Company Application C.A. No. 1682/2019 filed by Shri Debashis Nanda, Liquidator of J.V. Strips Limited in C.P. (IB) No. 452/ND/2017. 2. The Appellant is aggrieved by the Impugned Order in that certain transactions of the Appellant with the Corporate Debtor J.V. Strips Limited have been held as undervalued transactions by the Impugned Order and further that the Appellant has been directed to make payment of an amount of Rs. 31,00,475.00 which is shown against its name in the table included in paragraph 26 of the Impugned Order. 3. Shorn of unnecessary detail, the Appellant's case is that it supplied certain raw materials to the Corporate Debtor starting from September, 2017 and had a running account of payments being made to the Corporate Debtor against these supplies. 4. According to the Appellant, it had supplied certain raw materials to the Corporate Debtor for which an amount of Rs.31,00,474.60 was the balance remaining to be paid to the Corporate Debtor as on 31.03.2018. After an RTGS payment of Rs. 16,36,223.40 made by the Appellant to the Corporate Debtor on 29.01.2018. 5. The Appellant has further submitted tha....
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....in which total amount of Rs. 30,92,710.00 has been shown as the amount for which debit notes were issued. The minutes of both the meetings are attached by the Appellant at pp. 153 - 154 of the appeal paper book. On the basis of the decisions taken in both these meetings, the learned Counsel for Appellant has argued that a total amount of Rs. 30,92,710.00 was decided to be recovered by the Appellant from the Corporate Debtor. The Learned Counsel has also argued that the two meetings and the decisions taken therein were done in the ordinary course of business and discussion of issues and decision about poor quality of raw material and discounts due to processing cost and rate difference were also done in connection with the ordinary course of business. Therefore, the order passed by the Adjudicating Authority whereby the Appellant has been asked to refund an amount of Rs. 31,00,475.00 in the bank account of the Corporate Debtor is not correct and should be set aside. 10. The Learned Counsel for Respondent / Liquidator has argued that the Corporate Insolvency Resolution Process (in short "CIRP") against the Corporate Debtor commenced on 13.04.2018 and later order for liquidation of....
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....ng any payments on account of such supply, the Corporate Debtor never raised any objection or demur regarding the poor quality of the raw material and any other deductions/discounts that were desired by him, but when the final order for initiation of CIRP was imminent, the Corporate Debtor and the Appellant decided on the above stated discounts in meetings held on 03.04.2018, which was just ten days before the commencement of CIRP. He has argued that in these circumstances, the discounts allowed to the Appellant amounting to a total of Rs.30,92,710.00 cannot be considered to be given in the ordinary course of business. Moreover, when the raw material was received by the Appellant, there is no contemporaneous document presented by the Appellant to show that he had objected to the poor quality of the raw material or of any other charges, and claimed any discount at that time. Therefore, the decisions taken in the meeting held on 03.04.2018 arouse suspicion which in the absence of cogent and reasonable explanation, are clearly meant to provide unreasonable and illegal benefit to the Appellant. 13. We first look at the ledger account of the Appellant submitted by the Liquidator (att....
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....5. From a perusal of the ledger account submitted by the Liquidator, who has access to the records of the Corporate Debtor, the Corporate Debtor appears to have given a discount of Rs.6,19,273.00 for C/Y sale, Rs. 13,76,320.00 for poor quality of raw material, Rs. 10,00,960.00 for labour and other charges due to material problem and Rs. 7,15,430.00 for rate difference. 16. We are of the view that the ledger account maintained by the Corporate Debtor correctly depicts that amounts of discounts given to the Appellant and the amount due and payable by the Appellant to the Corporate Debtor, since the Corporate Debtor would not have any ostensible reason not to record the entries relating to Appellant incorrectly and further no reason has been given by the Appellant why this Corporate Debtor's Ledger Account should not be relied on. We therefore, place reliance on the ledger account produced by the Liquidator which is attached at pg. 206 of the appeal paper book. 17. The main issue in contention is whether the abovementioned discounts were given by the Corporate Debtor for the benefit of the Appellant in the ordinary course of business. In this regard, we look at the recording of ....