Dushyant Dave vs Bijaya Kushasan Behera & Ors

i.

This Hon’ble Tribunal may be pleased to allow the present Application.

ii.

This Hon’ble tribunal may be pleased to pass an order under Section 19(2) read with Section 34(3) of the Code directing the Respondents to comply with the instruction of the applicant herein and to co-operate with him in the collection of information and documents as required by the transaction auditors for conducting transaction audit for the review period of 01.4.2011 to 31.03.2018.

iii.

This Hon’ble Court may be pleased to pass an order under Section 19(2) of the Code directing the Respondent to supply copies of the relevant documents/ details/ information as annexed in Annexure E.

iv.

This Hon’ble Court may be pleased to grant other and further relief as may be deemed fit and proper in the interest of justice.

1.

Identification of fraudulent transactions involving the Corporate Debtor during the Review Period.

2.

Review of these transactions, including the antecedents, genuineness, proposed and actual end uses of the transactions, including whether such transactions are with related parties or not and whether requisite approvals were obtained. Review of onward project related transactions of the project contractor and related party "Sintex Infra" to the extent data is provided.

3.

Conduct background checks on the select entities involved in the transactions mentioned in (a) and (b) above and identify if such entities are "related parties" of the Corporate Debtor as defined under the Code and identify the promoters and current directors of such entities.

4.

Provide proof as may be required by Liquidator or under the IBC to establish that the identified transactions are fraudulent transactions involving the Corporate Debtor and provide relevant details of the entities identified in (a) and (b) above.

V. It is stated that soon after their appointment, the transaction auditors had sought for a consolidated list of documents required by them to conduct the transactions audit for the said review period. The said list of documents was shared by the auditors with Respondent No. 7 and Respondent No. 18 vide email dated 15.12.2021. It is stated that no reasonable or satisfactory answer was provided by Respondent No. 7 and Respondent No. 18 as a result of which the documents as required by the transaction auditors were not provided by them. The email communication dated 15.12.2021 as addressed by the auditors to the Respondent No. 7 and Respondent No. 18 and the reply provided by them both dated 15.12.2021 are attached hereto and marked as "ANNEXURE-E (Colly.)". The list of documents as required by the auditors as shared vide email dated 15.12.2021 is placed at "ANNEXURE-F" of the Application.

VI. It is stated that to provide the required documents to the transaction auditors as requested by them, the liquidator/liquidator's team visited the registered office of the Company on 20.12.2021. It is stated that the liquidator/liquidator's team was not allowed entry initially and then later was told that the required documents are not available at the registered office of the company. Thereafter, it was informed to the liquidator/liquidator's team that the required documents relating to the company shall be available at a different location i.e. the Kalol office of Sintex Group of Companies, following which the liquidator/liquidator's team had visited the said Kalol office. It is stated that the liquidator/liquidator's team was once again thwarted and not provided the required documents at the said office as well. It is stated that the Respondent No. 16, had promised to provide full support and co-operation to the liquidator and confirmed that all the requested documents shall be provided either by him or by Respondent No. 7 or Respondent No. 18 within a period of one week from 20.12.2021. It is stated that when the liquidator/liquidator's team approached Respondent No. 7, he redirected them to the Respondent No. 16 due to which the Liquidator approached him to which no satisfactory response was provided by him. It is stated that whenever the liquidator/liquidator's team tried to contact Respondent No. 18, he informed that he shall work only under the instructions of Respondent No. 7 who, as mentioned here, has now stated that the satisfactory response may be expected from Respondent No. 16.

VII. It is stated that the liquidator of the Company had also addressed various emails requesting for information, and records as required by the transaction auditors of the Company. The said Email communication as addressed by the Liquidator of the Company dated 04.01.22 and 06.01.2022 is placed at "ANNEXURE-G" of the IA. It is stated that the required response was not provided by the Respondents to the said requests of the liquidator.

VIII. Despite such repeated efforts, no co-operation and/or requisite documents and or details and/or information is received by the liquidator from the Respondents herein till date.

IX. It is submitted that the aforementioned facts pertaining to the non-cooperation from the end of suspended management were put forward before the SCC meeting on January 07, 2022 and the SSC had taken a serious note of the same. That after due discussion, it was decided that an Application under Section 19 of the Code be preferred before this Adjudicating Authority.

X. It is submitted by the Applicant that to the best of the knowledge of the Applicant the Respondents are in possession of all or substantial documents which the Applicant has been repeatedly asking for but the Respondents herein have repeatedly failed to provide the requisite essential documents and or details and/or information to the liquidator herein thereby creating hindrance in the liquidation process and thereby have failed to adhere to the provisions of Section 19 of the Code.

XI. It is further submitted that the aforementioned documents and/or details and/or information is vital for valuation of the assets of the company in Liquidation and for completion of the Liquidation process in a time bound manner.

XII. It is stated that in view of the aforementioned facts and circumstances of the case, it is clear that the liquidator/liquidator's teams have fulfilled the prerequisite as mentioned in Regulation 9(2) Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 by making all the efforts for obtaining essential information and documents from the suspended management but have failed to obtain due to non-cooperation of the respondents.

XIII. It is stated that the applicant was constrained to prefer the present Application before this Adjudicating Authority seeking an order/direction under Section 19(2) of The Code against the Respondent to comply with the instructions of the Applicant and to co-operate with him in collecting the required information.

a. It is stated that the respondents are not cooperating with the applicant in providing any information or documents. That, the documents which were in the possession or knowledge of the respondents have already been handed over to the Resolution Professional.

b. It is stated that this Hon'ble Adjudicating Authority had admitted the Corporate Debtor into CIRP vide order dated 04.03.2020 and thereafter under liquidation vide order dated 10.03.2021 which is annexed with the captioned application at Annexure-A and B respectively.

c. It is stated that the captioned application u/s 19(2) of the Insolvency and Bankruptcy Code, 2016 ("Code") a/w other relevant provisions have been filed for the first time after two years of initiation of CIRP and one year after initiation of liquidation. That, the application seeking direction under section 19(2) of the Code was not filed at any point of time since the commencement of the CIRP which shows that the suspended management and all the concerned personnel have always cooperated with the Resolution Professional and the Liquidator.

d. It is stated that Pursuant to Section 17 of the code, Resolution Professional has taken over the management of affairs of Corporate Debtor w.e.f. 04.03.2020 (date of initiation of CIRP) and pursuant to Section 18 of the code Resolution Professional performed his duties. During the entire 330 days of CIRP period, Resolution Professional has not filed application u/s 19 of the Code which shows that the suspended management and all the concerned personnel have always cooperated with the Resolution Professional.

e. It is stated that the documents which are sought by the applicant is for conducting the transaction audit of the corporate debtor. That, the time duration for which the transaction audit is to be conducted i.e., from 01.04.2011 to 31.03.2018, a forensic audit for the same period has already been conducted by the banks who are also a part of the Stakeholders Consultation Committee ("SCC").

f. It is stated that the applicant has appointed BDO LLP as the transaction auditor for conducting the transaction audit for the period from 01.04.2011 to 31.03.2018, however, it is worthwhile to note that the forensic auditor which was appointed by the Banks for conducting the forensic audit of the corporate debtor for the same period was Haribhakti & Co. LLP. That, it would not be out of place to mention that Haribhakti & Co. LLP and BDO LLP had joint venture and were jointly working at that point of time and that, the team of BDO LLP which is now conducting the transaction audit of the corporate debtor is same as that was in Haribhakti & Co. LLP which conducted forensic audit of Corporate Debtor. Therefore, the Applicant can very well ask the Banks (members of the SCC) to share the said forensic audit report with the applicant.

g. It is stated that the applicant has only targeted and raised allegations against respondent no. 7, 16 and 18 with respect to non-cooperation and there are no allegations raised against other respondents. Further, the allegations in the captioned interlocutory application are baseless and without any merit. It may be noted that the applicant has annexed with the application only the email communications which were done with respondent no. 7 and 18 and not with any other respondents. That, the other respondents have been roped in only with the intention to harass them and/or with some ulterior motive.

h. It is stated that as per the application, the respondent no. 7 had been shown as the erstwhile Director and CFO, however, it is pertinent to note that respondent no. 7 was never a director of the corporate debtor and was only the CFO. Further, as per the email communication dated 19.01.2022 made by respondent no. 7 to the applicant herein, which is at Page No. 60-61 of the application, the respondent no. 7 has categorically stated that he is an ex-employee of the corporate debtor and his employment and services have been terminated with the Corporate Debtor w.e.f. 01.03.2018 and in spite of the same, he has provided all due cooperation and documents to the extent available with him as an ex-employee in order to assist the lenders, Valuers, Resolution Professional and the Liquidator for smooth conduct of CIRP and Liquidation Process.

i.

It is stated that the respondent no. 18 is also an ex-employee of the corporate debtor and his employment and services have been terminated with the corporate debtor w.e.f. 01.03.2018 and in spite of the same, he has provided all due cooperation and documents to the extent available with him as an ex-employee in order to assist the lenders, Valuers, Resolution Professional and the Liquidator for smooth conduct of CIRP and Liquidation Process.

j. It is stated by R16 that the applicant has relied upon the WhatsApp communication dated 29.04.2021 and 30.04.2021 with respondent no. 18 which is annexed at Annexure- C, Page No. 47-48 of the application. That, it can be seen from the communication that the respondent no. 18 was ready and willing to provide/handover the documents to the applicant. However, it seems that due to the issue with respect to cost of the photocopy of the said documents, the applicant did not take charge of the said documents. It can also be seen that no response was given by the applicant on 29.04.2021 and it was respondent no. 18 who again reminded the applicant about the same on 30.04.2021.

k. It is stated by R16 that the photos of the documents which were shared by respondent no. 18 were lying at the Kalol office during April 2021 whose premises are shared by other group companies of the Corporate Debtor out of which, few are now undergoing CIRP and are in control of the respective Resolution Professionals (RP). That, the Applicant can very well enter the said premises with the due permission of other RPs. Further, as on current date i.e., after 11 months from April 2021, respondents are not aware whether documents are lying at Kalol office or not as, the premises of such office are now under the control of respective Resolution Professionals of group companies.

l. It is stated that though Respondent No. 7 and 18 are ex-employees of the Corporate Debtor they have all the time cooperated with the Resolution Professional and now with the Liquidator to the extent possible.