Medekar Intisar Mohamed vs K.Muruganandan (Liquidator of Samaara Leathers Private Limited)

Per: Justice Sharad Kumar Sharma, Member (Judicial)

The Company Appeal has been preferred by the Appellant agitating his grievances being aggrieved as against the Impugned Order dated 06.03.2025, as it has been passed in IA(IBC)/1592(CHE)/2022, as preferred in CP/141/IB/2019, which was passed by the NCLT, Chennai, by virtue of which, Ld. NCLT has issued the directions to the Appellant to file an affidavit confirming the accuracy of transactions as shown in the ledger account for the period pertaining to the financial year 2017-2018 & 2018-2019.

The Company Appeal is accompanied with a Condone Delay Application being IA No.777/2025, where the Appellant has sought the condonation of 14 days of delay, which has chanced in preferring the Appeal. The details of, and the reasons for the delay has been given by the Appellant in para 3 of the application. He has stated that the order itself was uploaded on 10.03.2025, and the Appellant had applied for the Certified Copy of the Impugned Order and consequently e-filed the appeal on 23.04.2025, and that the time taken for filing the appeal from the date of uploading the order is 44 days and thus there is a delay of 14 days which is within the condonable period of 15 days as per the provisions of section 61(2) of the I&B Code. He submits that the delay occurred owing to the fact that he had to seek advice from various professionals prior to preparing the appeal papers which caused the above delay which is neither intentional nor wanton and hence it should be condoned.

It is seen that the Order was rendered on 06.03.2025, and the same was uploaded on 10.03.2025. The appellant claims that the limitation should be computed from the date of uploading of the order only. Normally the limitation is computed from the date of pronouncement of the order, but in specific cases it can be computed from the date of uploading of the order as per the ratio laid down by Hon’ble Apex Court in the matter of Sanjay Pandurang Kalate Vs. Vistra (India) Ltd in its judgement dated 04.12.2023. In this case, if the limitation is determined from the date of the uploading of the Judgment, i.e., from 10.03.2025, when the Judgment came into the public domain, the delay in filing the appeal will be 14 days and the same would be falling well within the upper limit of 15 days as prescribed under the proviso to Sub-Section (2) of Section 61 of I & B Code, 2016. Hence, the delay which has chanced in preferring the appeal would stand condoned. Accordingly, IA No.777/2025 would stand disposed of.

The Appellant in the instant appeal questions the propriety of the Impugned Order of 06.03.2025, the particulars of which have been given herein above. The facts, that emerges from the records is that the accuracy of the transactions as per the ledger entries in the accounts of the Corporate Debtor for the years 2017-18 and 2018-19, of which the Appellant is the erstwhile director, has been disputed by forensic audit and this was brought before the Ld. NCLT by the liquidator and accordingly Ld. NCLT issued directions that in order to overcome any doubt with regards to the truthfulness of the entries made into the books of account of the Corporate Debtor, the Appellant is to file an Affidavit.

In this case, proceedings were drawn by the Respondent under Section 66 of the I & B Code, alleging commission of a certain fraudulent transactions by the Appellant inter alia, and a prayer for a direction to the Appellant to repay to the liquidation Estate a sum of Rs. 27,07,470/- inclusive of Rs. 20,44,411/- being underreported in ledger balances and Rs. 6,63,059/- being missing cash balance, based on the findings of the forensic audit. The Appellant had denied the said allegations before Ld. NCLT on the grounds that the said allegations are unsubstantiated, that there is a flaw in the methodology adopted in the said audit, that the CD’s statutory independent auditors will attest the legitimacy of the transactions and the aforesaid transactions were done in the ordinary course of business.

The Tribunal, on hearing both sides, had observed that the disputed entries are not in with the accounting standards and that the statutory auditor’s affidavit also states that the ledger entries for the aforesaid financial years have been changed. In order to override the inconsistency, the Ld. Tribunal by virtue of the Impugned Order, directed the Appellant herein, to file an affidavit confirming the accuracy of the transaction which has been recorded in his ledger account for the aforesaid period. The relevant direction which has been issued by the Tribunal is extracted hereunder: -

As a matter of fact, the nature of the direction, which has been issued by the Tribunal was exclusively a fact-finding direction only for the purpose of ensuring the truthfulness of the ledger entries pertaining to the Financial Year 2017-2018 and 2018-2019, which was attempted to be established by filing of an affidavit by the Appellant for the purposes of confirming the accuracy of the transaction in the ledger. The nature of the order, which has been challenged in the instant appeal, is only procedural in nature; it neither impinges upon any right of the Appellant or the opposite party to the proceedings, nor it creates any obstacle of any right of either of the parties to the proceedings. Rather the nature of the order is meant to ensure the sanctity of the ledger entries, which were appearing into the accounts of the Appellant which was sought to be confirmed by filing of an affidavit on the directions issued by the Learned Adjudicating Authority.

Since the order takes the shape of being a procedural order in nature, and the implication flowing from the affidavit which has been directed to be filed is yet to be considered by the Tribunal to be decided on merits, this appeal is not required to be ventured into while exercising our Appellate Jurisdiction under Section 61 of the I & B Code, 2016. However, it is made clear that we have not examined the merits of the case with respect to the allegations on the ledger entries and therefore the dismissal of this Company Appeal and its consequential implication of the Appellant filing the required affidavit in respect of the ledger entries, to overcome the inconsistency of the entries made in the ledgers for the Financial Year 2017-2018 and 2018-2019 will not have any impact on the case before Ld. NCLT and that, the affidavit thus ordered to be furnished will be considered by the Tribunal independently based upon the entries made in the Books of Accounts and the Forensic Audit Report so as to arrive at a reasoned conclusion pertaining to the correctness of the transactions entered into the ledger account of the Appellant for the aforesaid period.

Subject to the aforesaid exception, this Appellate Tribunal declines to venture into the appeal on merits qua the propriety of the Impugned Order, and the same would stand affirmed, with the dismissal of the appeal.