TaxTMI 
TaxTMI 
2024 (10) TMI 827
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....t 'Code') has been allowed with a direction that "(a) the Respondents except Respondent No. 6 are hereby directed to pay the aforementioned amounts as explained in para 5, 6 and 7 to the Corporate Debtor within 30 days from the date of pronouncement of this order (b) the Applicant is hereby directed to initiate penal proceedings as per law against the suspended directors and other parties". 2. In brief, CP (IB) No. 241/ND/2019 was filed under Section 9 of the Code by M/s Bhupindra Agro Pvt. Ltd. (Operational Creditor) against M/s Shri Vardhman Rice Mills Pvt. Ltd. (Corporate Debtor). It was admitted on 04.12.2019 and Vikas Garg was appointed as the Interim Resolution Professional (in short 'IRP'), however, in the first meeting of the Committee of Creditors (CoC) held on 15.01.2020 Tarun Batra (Respondent No. 1) was appointed as Resolution Professional (RP) and his appointment was approved by the Adjudicating Authority on 24.01.2020. During the insolvency process, the total admitted claim was Rs. 2351.97 Lakhs including claim of the financial creditors of Rs. 2277.80 Lakh and claim of the Operational Creditor of Rs. 74.17 Lakhs. 3. The CoC in its second meeting held on 14.02.2....
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.... total amount paid, payment of Rs. 10.29 lakh has been made under the period 04.12.2017 to 04.12.2019 which will be covered under section-43 as Preferential Transaction. The said transaction with the suspended director is not done in ordinary course of business and considered as preferential transactions Copy of Ledger Account of the party is attached at Annexure A-8. Total Amount considered under Preferential Transaction = Rs. 10.29 Lakh Radico Trading Limited (Related party and Corporate guarantor of the CD) It was observed by the Transaction auditor that Rs. 5.25 Cr. were payable to the party as on 01.04.2017. During the period under audit the CD has received Rs. 20.85 Lakh from the party and Rs. 4.08 Cr. has been paid against the opening payable balance. However due to time limit under section 43, out of total amount paid, payments of Rs. 2.86 crore will be covered under section 43 (for the period 04.12.2018-04.12.2019) and payment of Rs. 4.07 crore for the period 04.12.2017 to 04.12.2019. The said transactions with the are not done in ordinary course of business and considered transactions. as preferential. Copy of Ledger Account of the party is attached at Anne....
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....uintal of Rice at average sales rate of Rs. 775.78 per quintal amounting to Rs. 164.41 Lakh. The Corporate Debtor has booked loss of Rs. 781.78 Lakh by selling 21192.35 quintal of Rice. The cost value of stock was Rs. 4464. 76 per quintal. The amount of undervalue transactions is Rs. 781.78 Lakh, without considering the profit element. The bank transactions with this party are also made in a single month to adjust the balance. The enquiry letter issued by the Applicant /Resolution Professional are also returned undelivered due to non-existence of the party at address The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions with the party is not done in ordinary course of business and considered as undervalue transactions under section 45. Copy of Ledger Account of the party is attached at Annexure A-12 Total Amount considered under undervalue Transaction = Rs. 781.78 Lakh R.K. International The Corporate Debtor during the review period has made sales of 20234. 90 quintal of Rice at average sales rate of Rs. 787.37 p....
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....element. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions with the party is not done in ordinary course of business and considered as undervalue transactions under section 45. Copy of Ledger Account of the party is attached at Annexure A-15. Total Amount considered under undervalue Transaction = Rs. 11.30 Lakh Saraswati Foods The Corporate Debtor during the review period has made sales of 502.23 quintal of Rice at average sales rate of Rs. 1534.25 per quintal amounting to Rs. 7.71 Lakh. The Corporate Debtor has booked loss of Rs. 14.72 Lakh by selling 502.23 quintal of Rice. The cost value of stock was Rs. 4464.76 per quintal. The amount of undervalue transactions is Rs. 14.72 Lakh, without considering the profit element. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions with the party is not done in ordinary course of business and considered as u....
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....opy of Ledger Account of the party is attached at Annexure A-17 Total Amount considered under fraudulent Transaction = Rs. 1118.55 Lakh (total of sales and purchase transactions) Cap Commodities House The Suspended directors during the review period has made sales of Rs. 156.75 Lakh and Purchase of Rs. 96.31 -Lakh during the review period. The amount adjusted in the sale / purchase is Rs. 21.75 Lakh without any bank transactions. The sales and purchase transactions are entered by the suspended directors. without any movement of goods and only for purpose of inflating the sales /purchase and also write off the non-existence stock from the books of corporate debtor. The suspended director has purposely done these fraudulent transactions with the intent to defraud the creditors. Copy of Ledger Account of the party is attached at Annexure A-18 Total Amount considered under fraudulent Transaction = Rs. 253.06 Lakh(total of sales and purchase transactions) Bharat Agro Foods The Suspended directors during the review period has made sales of Rs. 205.50 Lakh during the review period. The sales transactions are entered by the suspended directors without any movement o....
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....carried out with self-owned vehicles of the CD at the time of execution of sale. The suspended director has purposely done these fraudulent transactions with the intent to defraud the creditors. Copy of Ledger Account of the party is attached at Annexure A-14 Total Amount considered under fraudulent Transaction = Rs. 32.63 Lakh(total of purchase transactions) Shivoham Enterprises It was observed that the CD has made purchases of Rs. 5.80 lakh during the month of April-2017, and Rs. 2.72 lakh has been paid against the purchases made. It was also observed that the CD has made sales of Rs. 3.08 lakh and no amount has been received against the sales made. Further it was observed that the CD has adjusted the total sales against the purchases made during the period. No GST number has been mentioned as per the books of accounts The suspended director has purposely done these fraudulent transactions with the intent to defraud the creditors. Copy of Ledger Account of the party is attached at Annexure A-22 Total Amount considered under fraudulent Transaction = Rs. 8.88 Lakh (total transactions) Kundan Trading Co It was observed by the Transaction * Co Auditor that ....
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.... Lakh Undervalue Transactions under section 45 of the Code Rs. 1721.19 Lakh Fraudulent Transactions under section 66 of the Insolvency and Bankruptcy Code, 2016 Rs. 2384.32 Lakh 5. Notice in the application was issued on 24.07.2020 and the said order read as under:- "CA No. 2445 of 2020 application filed under Section 25(j) and their provisions of the Code with respect to the preferential transactions by the Corporate Debtor. Issue notice to Respondent No. 1 to 11. Let the service be completed through all possible modes and service affidavit be filed. List on 01.09.2020" 6. On 01.09.2020 the following order was passed:- "I.A. No. 2445/2020: Application filed by RP. Learned Counsel for Respondent No. 6 states that reply has been filed and copy received by applicant. As per service affidavit filed on 20.08.2020 and 25.09.2020 alongwith the proof of service, service of Respondents No. 1 to 5 and 9 to 11 is complete in person or through counsel. Learned Counsel for the Applicant states that with respect to Respondent No. 7 and 8 seeks one more opportunity to endeavour to serve them. Rejoinder, if any, to the reply to respondent no. 6 within ten days.....
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....6. Though the Respondent No. 1 and 2 have not filed reply and they have been proceeded ex-pare. Today Mr. Rajeev Gupta, Learned Counsel for the Respondent No. 1 and 2, the ex-directors makes a statement that in the 8th CoC meeting they have forwarded an OTS proposal in pursuance of the Resolution plan submitted by the R1 And R2/Ex-management to the sole CoC member PNB and the same is being considered. Copy of minutes of said meeting is annexed. List on 14.04.2021." 15. On 10.09.2021 the following order was passed:- "Application filed by the RP under Sections 43, 44 and other provisions of the Code. Learned Counsel for the Respondents sates that except Respondent No. 6, no other respondents have filed reply. There are total 11 respondents, out of which 2 respondents have been dropped, so 9 respondents are there as on date. Mr. Gupta, Learned Counsel for the Respondent No. 1 and 2 seeks time to file reply. Learned Counsel for the RP vehemently objects stating that they have already been proceeded ex-parte. We reject the request of filing reply. Pleadings are complete. Learned counsel for the respondent no. 6 is present. List for hearing on 22.10.2021." 16. On 18.04.202....
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....ion of the Hon'ble Supreme Court rendered in the case of Anuj Jain (Supra) in which it has been held that "in the present case, it is noticed that NCLT in its detailed and considered order essentially dealt with the features of the transaction in question being preferential at a relevant time but recorded combined findings on all these three aspects that the impugned transactions were preferential, undervalued and fraudulent. Appropriate it would have been to deal with all these aspects separately and distinctively." It is contended that though there was one application but ingredients under Section 43, 45 & 66 were differently put by the RP under different heads and in this regard, the Respondent has relied upon a two members decision of this Court rendered in the case of GVR Consulting Services Pvt. Ltd. Vs. Pooja Bahry, CA (AT) (Ins) No. 405 of 2022 decided on 24.04.2023 in which this Tribunal has referred to the decision of the Anuj Jain (Supra) and then held that "what has been emphasized by the Hon'ble Supreme Court is that ingredients of Section 43, 45 and 66 are different and Resolution Professional is expected to keep such requirement in view while making motion to the Adj....
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....ors. Further, no substantial documentary evidence to justify the same is available on record. d) In our opinion it is evident that the corporate debtor has deliberately made the above said transactions to defraud the creditors. The Corporate Debtor has not been able justify the sale of goods/ stock at lower prices by stating that the sock was old/obsolete and simultaneously knowingly using the same for drawing power calculation year by year." 24. The RP then filed the application under Sections 25(2)(j), 43, 45, 66 and 235A of the Code in which the details of the preferential, undervalued and fraudulent transactions were given under separate heads. The application had to be filed because of the aforesaid transactions the total admitted claim of Rs. 2351.97 Lakh of the creditors became unrecoverable. The RP also gave the summary of avoidance transactions in which preferential was of Rs.502.46 Lakh, undervalued was of Rs. 1721.19 Lakh and Fraudulent was of Rs. 2384.32 Lakh. The present Appellants, who are arrayed as Respondent No.1 and 2 in the application bearing 2445 of 2020, did not choose to appear at the first instance despite service but later on they were allowed t....