TaxTMI 
TaxTMI 
2021 (10) TMI 1458
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....etition was heard by this Tribunal on 10th July, 2019 and the Order was delivered on 22nd July, 2019. The Respondents Company was represented by Counsel and was fully aware of the proceedings and the Order contemplated and finally passed and delivered on 22nd July, 2019. 3. Three unauthorized debits/withdrawals from the Bank Account of the Corporate Debtor is reflected in Bank statements which is Annexed as Exhibit 1 Page 4, 5 and 6 in the Affidavit of Rejoinder filed by the Applicant summarized as follows: In gross violation of the IBC, the Respondent Directors proceeded to carry out the above 3 unauthorized transactions which makes them liable for appropriate action in law. 4. The subject of unauthorized withdrawals/unauthorized transactions was discussed at 7th CoC Meeting dated 17th January 2020 which is at Page No. 131 of the IA and after deliberation the CoC Members unanimously passed and directed the RP to take appropriate action and file the present IA. 5. The Applicant is relying upon Case Law of Manoj K. Daga Vs. ISGEC Heavy Engineering Private Limited and has annexed all the requisite Judgments passed by Hon'ble NCLAT and Hon'ble Supreme Court as '....
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....ity bills to keep Corporate Debtor as going concern. It is accepted fairly by learned Counsel that as per orders passed by this Tribunal and keeping in view the provisions of Insolvency and Bankruptcy Code, 2016 management of Corporate Debtor after admission of Section 9 application is with the IRP/RP. The order dated 23.10.2019 required IRP of the Company to keep the Company as a going concern and the Board of Directors, Officers and employees were only expected to assist the IRP but in the present transaction the Directors have taken actions without involving the IRP. We are not happy with the Affidavits filed by Manoj Daga and Deepak Daga. 8. The above two Respondent Directors shall remain present personally on next date. They need to deposit the money withdrawal/transferred without approval of the IRP in the Account from which it is withdrawn and state why further action be not taken against them. 22. Taking conspectus of the whole development in this CIRP proceeding and this Appeal, we are of the view that the Directors acted wholly illegally once moratorium had been applied, in going ahead and withdrawing monies from the accounts at the back of IRP by even i....
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....pursue the matter with regard to money illegally withdrawn from the accounts of the Corporate Debtor so as to trace the money and get it back in the Company accounts. Prima facie, it appears to us that the illegal withdrawals can, inter alia, be treated as criminal misappropriation and criminal breach of trust. 8. On 31st August, 2020 the Hon'ble NCLAT proceed to register contempt proceedings against the directors - see 'Exhibit 4' Para 25 and continued in 'Exhibit 5' Page N. 32 of the rejoinder. Accordingly, the Applicant states that the present Respondents ought to be held guilty for violating of Section 14(1)(b) of Insolvency Bankruptcy Code, 2016 and approximate action ought to be initiated as prayed. 9. Further Applicant submits that the Respondent have taken stand that they have infused a sum of Rs. 19,75,000/- from their own funds on 16th August, 2019 and accordingly withdrawals were made from the funds infused by them for running the CD. The Applicant respectfully submits the total debits aggregating to Rs. 21,33,405/- and not Rs. 19,75,000/- as alleged by the Respondent. In any event the justification provided by the Respondents is not reflected i....
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....ing the said amount towards procuring diesel for Corporate Debtor's plant at Wada. [See averments at para 5.11 @ page 8 of Reply]. 14. Admission Order though dated 22-07-2019 was available/communicated for the first time to Respondents on 17-08-2019. 14.1. The Admission Order though dated 22-07-2019 was available/communicated for the first time to Respondents on 17-08-2019 [See averments at para 5.1 and Anx-1 @ page 39 of Reply]. Respondents had no prior knowledge of the Admission Order before 17-08-2019. For that matter even the IRP & CoC did not have any knowledge. 14.2. The impugned transactions/debits were effected by Respondent No. 1 bona fide as Director of the Corporate Debtor on 16-08-2019 when he was in charge of the management of affairs of the Corporate Debtor. Since the Admission Order was not communicated/available till 17-08-2019, the Board of Directors of the Corporate Debtor continued to be in charge of the management from 22-07-2019 till the Admission Order was available on 17-08-2019 and the IRP took charge of the Corporate Debtor after 17-08-2019. 15. Thus, not only was the amount of Rs. 19,75,000/- infused by the Respondents out of their own pers....
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....ribunal for excluding the 25 days from the CIRP period and the same was allowed by the Hon'ble Tribunal vide its order dated 16-01-2020 [See Anx-6 @ page 48 of Reply]. Thus, the period of 25 days, from 22-07-2019 till 16-08-2019 has been excluded from the CIRP period by this Hon'ble Tribunal at the request of the Applicant. 18.2. The impugned debit entries were effected on behalf of the Corporate Debtor during the period which was excluded from CIRP i.e. prior to 17-08-2019, and hence there has been no violation and/or contravention of moratorium for this reason as well. 18.3. The RP cannot be permitted to blow hot and cold, approbate and reprobate. Having taken the benefit of exclusion of 25 days from the CIRP for seeking extension of time, the Applicant cannot now take a contradictory stand to include transactions effected during the excluded period and treat them as if they were carried out during the CIRP. 18.4. By virtue of the fact that the RP has procured order of exclusion of 25 days starting from 22-07-2019 till the Admission Order was available on 16-08-2019, the Applicant and CoC members ought to have extended the same benefit to the Corporate Debtor and....
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....f "self" cheque withdrawals. In our case, the admission order was not available and not communicated, the Directors were in charge when the transactions were effected and payments made to employees, security, procurement of diesel i.e. towards operational costs for running the business of the Corporate Debtor (and not self- withdrawal) and only thereafter the IRP took charge. Besides this, in our case, the IRP sought explanations from the Respondent Directors and was satisfied with their explanations and ratified the bona fide actions of the Respondent Directors. 21.2. More importantly, ours is a case where personal funds were first infused by the Director for operational expenses of the company for meeting operational expenses of the Corporate Debtor (not self withdrawals), which is clearly distinguishable from the facts in Manoj Daga's case where cash was withdrawn after IRP had taken over the company. 22. Case-laws relied upon by Respondents: 22.1. Velamur Anand v. UBI & Anr. - NCLAT judgment dated 16-05-2018 on exclusion of CIRP period; 22.2. Assistant Transport Commissioner v. Nand Singh (1979) 4 SCC 19 on the law that an order operates agains....