Yashwant Lalchand Sangla Vs Manish Baldeva (NCLAT Delhi)
Summary: NCLAT, Principal Bench, New Delhi dismissed the appeal filed by the suspended directors of Linkson International Ltd. against the NCLT Mumbai order which had partly allowed the liquidator’s application and directed the appellants to contribute, jointly or severally, ₹437.02 lakhs to the Corporate Debtor. The Corporate Debtor had entered CIRP on a petition filed by Punjab National Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016. Manish Baldeva, initially appointed IRP and subsequently RP, was appointed liquidator on 20.07.2018. Exercising powers under Section 35, the liquidator appointed ADB and Associates, Chartered Accountants, to conduct a forensic audit into the status of the assets and genuineness of certain transactions. The forensic audit report dated 04.10.2019 resulted in IA No.1568 of 2020 being filed under Section 60(5) read with Sections 35, 36, 66 and 68 to 72 of the Code.
The liquidator alleged, on the basis of the forensic audit, siphoning and misappropriation of funds of about ₹527.06 lakhs, unlawful and fictitious cash expenses of ₹103.15 lakhs, unreliable supporting documents, non-production of various bank statements and incomplete books of account. The principal transactions concerned properties in Shri Gopal Complex and Megh Complex, Nagpur. The Corporate Debtor had acquired properties for stated considerations substantially exceeding their stamp-duty/market values and had obtained loans from Nagpur Nagrik Sahkari Bank. The forensic material showed that significant amounts paid by the bank to the vendors subsequently travelled back to the Corporate Debtor or its related entities. Properties purportedly purchased by the Corporate Debtor remained in the possession of vendors, tenants treated the vendors as landlords, rents were allegedly collected by them, and mutation in favour of the Corporate Debtor had not been effected. The NCLT treated the transactions as designed to defraud creditors and directed contribution of ₹437.02 lakhs. It separately found that fictitious cash expenses of ₹103.15 lakhs fell within Section 66 of the Code.
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