TaxTMI 
TaxTMI 
2026 (8) TMI 526
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....nt No. 2 Company as fraud and when it has already undergone a successful Corporate Insolvency Resolution Process and a Resolution Plan has already been approved for it by the NCLT vide its Order dated 10th September 2025. Notwithstanding the aforesaid, and so that the Petitioners do not raise any grievance regarding being non-suited in the present Writ Petition, we have heard them on merits. FACTS : 2. On 22nd June 2020, Respondent No. 1 took over from SBI credit facilities aggregating to Rs.23.01 Crores granted to Respondent No. 2. 3. On 17th November 2022, Respondent No. 2 clandestinely opened a Bank account with Nashik Merchant Co-operative Bank Limited ("NMCB") without informing Respondent No. 1. This is admitted by Petitioner No. 1. 4. Respondent No. 2 defaulted in servicing the loans and therefore Respondent No. 1 declared the account of Respondent No. 2 as a Non Performing Asset ("NPA") in accordance with the RBI guidelines. 5. On 5th May 2023, Respondent No. 1 recalled the loan. On 19th May 2023, Respondent No. 1 issued a fresh recall Notice. 6. On 3rd March 2024, Respondent No. 2 was admitted into the Corporate Insolvency Resolution Process ("CIRP") under....
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....he discrepancies. (emphasis supplied) 9. On 1st October 2024 and 2nd October 2024, Respondent No. 2's office was kept open for the Petitioners to access the same in order to submit the required information but neither the Petitioners nor their Authorised Representatives visited the office. 10. On 11th October 2024, the 8th Meeting of the CoC of Respondent No. 2 was held. In this meeting, it was recorded as follows: 1. While members from the RP's team and the Transaction Auditor's team visited Respondent No. 2's office on 01.10.2024 and 02.10.2024, none from the Suspended Board of Directors ("SBoD") was present. 2. At the SBoD's request, the RP had granted 1 TB of cloud space for them to upload documents and information. However, the RP did not receive any documents. (emphasis supplied) 11. On 30th October 2024, the final draft of the Transaction Audit Report was prepared by the Auditors. 12. On 6th November 2024, the 9th Meeting of the CoC of Respondent No. 2 was held. Petitioner No. 1 was present at the said Meeting. The findings of the draft Transaction Audit Report were discussed with Petitioner No. 1. Petitioner No. 1 ....
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....for Respondent No. 2. 17. By an email dated 24th September 2025, Petitioner No. 1 sought a further four weeks time till 22nd October 2025 to respond to the Show Cause Notice citing unspecified "family issues and medical emergency". By an email dated 14th October 2025, Respondent No. 1 refused Petitioner No. 1's request for extension. 18. By an Order dated 16th October 2025, Respondent No. 1's Fraud Identification Council classified Respondent No. 2's account as fraud. The said Order was sent to the Petitioners on the same day. 19. On 23rd October 2025, Petitioner No. 1 sent an email to Respondent No. 1 stating that he was sharing the same documents as were previously shared with the Auditor and the Resolution Professional. 20. On 27th October 2025, Respondent No. 1 filed a complaint against Respondent No. 2 and the Petitioners with the Economic Offences Wing, Nashik Police, for misappropriation of funds and criminal breach of trust. 21. It is in these circumstances that the present Petition was filed on 17th November 2025. SUBMISSIONS OF THE PETITIONERS. 22. Mr. Nishant Chotani, the learned Counsel appearing on behalf of the Petitioners, submitted that the impu....
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.... of the Show Cause Notice. The same grounds, including opening of undisclosed NMCB account, diversion of funds, discrepancies in accounts, were in the draft Transaction Audit Report discussed with Petitioner No. 1 at the 7th CoC Meeting. Mr. Bhogle submitted that Petitioner No. 1 provided limited information to the Resolution Professional and no information to the Auditors. Petitioner No. 1 was first given an opportunity to access the documents in Respondent No. 2's office on 1st October 2024 and 2nd October 2024 but wilfully remained absent. Mr. Bhogle submitted that this is admitted in the 8th and 9th Meetings of the CoC. Further, Mr. Bhogle submitted that Petitioner No. 1's excuse of his and his father's health issues were completely vague and without any details. 29. Further, Mr. Bhogle submitted that the Petitioners had admitted to the main issue i.e. opening the undisclosed NMCB account and also had no answer to the other issues. Mr. Bhogle submitted that the failure to disclose the NMCB account and routing transactions from there amounts to fraud under Clause 6.1 (iv) of the Fraud Master Circular and is also per se fraudulent. 30. Finally, Mr. Bhogle submitted that....
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....ld be noted that, on 18th May 2024, Respondent No. 1 appointed M/s. JKJS & Company LLP as Auditors to audit the accounts of Respondent No. 2. On 10th September 2024, the Auditors submitted a draft Transaction Audit Report dated 7th September 2024 which was provided to the Petitioners. 35. On 16th September 2024, at the 7th Meeting of the CoC of Respondent No. 2, Petitioner No. 1 requested for access to the office premises of Respondent No. 2 in order to submit the required information in response to the draft Transaction Audit Report. For that purpose, Respondent No. 2's office was kept open on 1st October 2024 and 2nd October 2024. However, neither the Petitioners nor their Authorised Representatives visited the office premises. 36. Thereafter, on 30th October 2024, a final draft of the Transaction Audit Report was prepared by the Auditors. At the 9th Meeting of the CoC of Respondent No. 2 held on 6th November 2024, the findings of the draft Transaction Audit Report were discussed with Petitioner No. 1. At that time, Petitioner No. 1 submitted that the Tally data was on a Antraweb server and the backup had been deleted. He further submitted that he had hired an accountant an....