State Bank of India Vs Sidharth Bharatbhushan Jain (NCLT Ahmedabad)
NCLT Ahmedabad held that before commencement of insolvency, the assets of the corporate debtor are stripped many a times by the management. The suspended management conceals the data from RP during CIRP process. Amount directed to be deposited with Corporate Debtor as the transaction is hit by provisions of section 43 of the Insolvency and Bankruptcy Code.
Facts- The present application is filed by the Resolution Professional (RP) of Sysco Industries Ltd. (Corporate Debtor). It is stated that vide order dated 08.09.2021 Corporate Debtor was admitted to CIRP and applicant was appointed as IRP and was later confirmed as RP by the COC. It is submitted that draft transaction audit report pointed out numerous unexplained and suspicious transactions conducted by the suspended management.
It is stated that suspended management has not given latest financials and the Applicant had filed IA 807 of 2021 u/s. 19 of the Code wherein order dated 8.12.2021 was passed directing the suspended management to submit the documents desired by RP within 7 days and in case of failure RP is free to approach local police to give assistance to RP. The RP has already filed Police complaint on E portal having request no. 20220128. However, despite efforts suspended management failed to provide latest financials of Corporate Debtor.
Conclusion- It is common practice that before commencement of insolvency, the assets of the corporate debtor are stripped many a times by the management. The suspended management conceals the data from the RP during the CIRP process. In the present matter too S. 19 (2) application was filed by the RP.
The present case falls squarely within the ambit of S. 43 of the Code so far as transactions with Pratap Associates is concerned. As such we have no hesitation to hold that transactions are hit by provisions of S. 43 of the Code.
Accordingly, R-1 to R-3 are directed to deposit the said amount of Rs. 7.78 Crores within a period of 15 days from the date of the order with the Corporate Debtor who in turn should distribute the same to the erstwhile members of COC immediately in their respective share.
FULL TEXT OF THE NCLT AHMEDABAD ORDER
1. This is an application filed by the Resolution Professional (RP) of Sysco Industries Ltd. (Corporate Debtor) seeking the following prayers: –
a. That this Hon’ble Adjudicating Authority may be pleased to allow enhancement of period specified in Section-46 for a period of 5 years since financials data is only made available until financial year ending March, 2019, in interest of justice.
b. That this Hon’ble Adjudicating Authority may be pleased to pass appropriate orders or directions under Section 43 of the Code against the respondents to contribute an amount of Rs. 7,78,31,555/- being outstanding towards related party, in the interest of justice.
c. That this Hon’ble Adjudicating Authority may be pleased to pass appropriate orders or directions under Section-43 of the Code against the respondents to contribute an amount of Rs. 1,10,95,066/- towards debtor shown outstanding in the books who informs that they have already cleared the account of the Corporate Debtor, in the interest of justice.
d. That this Hon’ble Adjudicating Authority may be pleased to pass any further necessary orders as the Hon’ble Tribunal deems fit in the interest of justice.
2. It is stated that vide order dated 08.09.2021 Corporate Debtor was admitted to CIRP in CP 62 of 2021 and applicant was appointed as IRP and was later confirmed as RP by the COC.
3. It is submitted that draft transaction audit report pointed out numerous unexplained and suspicious transactions conducted by the suspended management. Copy of final transaction audit report place at Annexure C.
4. Upon pointed out to COC, approval was given in COC meeting held on 14.12.2021 for filing the present IA under Section 43.
5. It is stated that suspended management has not given latest financials and the Applicant had filed IA 807 of 2021 under Section 19 of the Code wherein order dated 8.12.2021 was passed directing the suspended management to submit the documents desired by RP within 7 days and in case of failure RP is free to approach local police to give assistance to RP. The RP has already filed Police complaint on E portal having request no. 20220128. However, despite efforts suspended management failed to provide latest financials of Corporate Debtor.
6. The applicant submits that from the records available to the applicant and according transaction audit report following acts have been committed by the suspended management with an intent to defraud the creditors of the Corporate Debtor: –
I. Outstanding towards related party: –
i) The applicant submits that in the books of the Corporate Debtor for the year ending 31.03.2019 there is outstanding of Rs.7,78,31,555/- from M/s Pratap Associates who is the HUF Firm of Respondent No.3 herein.
ii) The applicant submits that no amount is received from M/s Pratap Associates after 31.03.2019 and that no reply is received from the respondents with regards to the same outstanding. The applicant has annexed communications made to the suspended management and the auditor at ANNEXURE-F-.
iii) It is stated that the said transaction is questionable transaction thus, falls within the ambit of Section-43 of the Code.
II. Transactions with Debtors
i. The applicant submits that apart of Pratap Associates there are three other debtors in the books of Corporate Debtor which were traceable wherein amount receivables was shown outstanding. These outstanding’s are as under –
