Mrs. Ashu Gupta vs Mr. Sunil Tangri & Anr.

- To direct the respondent no.1 & 2 to return the sum aggregating to Rupees 29,75,73,550/-(Rupees twenty Nine Crore Seventy Five Lacs Seventy Three Thousand Five Hundred Fifty Only), which has been misappropriate/embezzled and deposit to the account of the corporate debtor.

- To prosecute the Respondent No. 1 & 2 as per law.

- To pass any further order as this Tribunal may deem fit and proper under the facts and circumstances of the present application.

"70.

An avoidance application for any preferential transaction is meant to give some benefit to the creditors of the Corporate Debtor. The benefit is not meant for the Corporate Debtor in its new avatar, after the approval of the Resolution Plan. This is clear from a perusal of Section 44 of the IBC, which sets out the kind of orders which can be passed by the NCLT in case of preferential transactions. The benefit of these orders would be for the Corporate Debtor, prior to approval of the Resolution Plan. Any property transferred or sum acquired in an order passed in respect of a preferential transaction would have to form part of the final Resolution Plan."

"During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in the India, we have neither come across any instance of fraud by the company or on the company by its officers or employees noticed or reported during the course of our audit nor have we been informed of any such instance by the Management."

iii.

The applicant has also placed reliance upon the Hon'ble Supreme Court's judgment in the case of "Surendra Trading Company Versus Juggilal kamlapat Jute Mills Company Limited & ors., in civil appeal no. 8400 of 2017" and also in PT. Rajan Vs. T.P.M. Sabir and Ors. (2003) 8 sec 498, wherein it was observed that where Adjudicating Authority has to perform a statutory functions like admitting or rejecting an application within a time period prescribed, the time period would have to be directory and not mandatory.

iv.

That the applicant has been continuously chasing the Respondent No. 1 & 2 for providing the requisite information and documents including tally data, the books of accounts and other information. Vide reminder e-mail dated 07.09.2019, wherein the applicant requested the Respondents to provide the information/ documents which she had been asking in her earlier communication (s) and also asked about the whereabouts of the registered office of the Corporate Debtor as the existing one was under demolition and the address where books of accounts and other records are kept. However, no co-operation was made by the Respondents. Thus Applicant field an application under Section 19(2) vide C.A No. 1531/2019 for seeking necessary directions against the respondent.

v.

That Statutory auditor of CD on 13.08.2020 provided Financial Statements of the corporate debtor for the financial years 2016-17, 2017-18 and 2018-19 with draft Audit Report, and applicant instantly shared all the Financial Statements/documents were signed on 21.09.2020 and the forensic audit report was finalised on 22.9.2020. Thus, the delay in filling the present application has occurred due to non-co-operation of the Respondents.

1.

The present written submission is being filed on behalf of the ex-directors/promoters of the Corporate Debtor in I.A. No. 102/2021 in I.B. No. 984/2019. At the very outset it must be brought out that the scope of engagement of the Forensic Auditor was solely with regard to F.Y. 2016-17, 2017-18 & 2018-19. However the Forensic Auditor vide its Forensic Audit Report (FAR) has unilaterally extended the same to already duly audited previous years and the same has been done without any basis and completely lacks significant findings, evidence in the engagement years and has been done just to harass the suspended directors of the CD (who is also the Resolution Applicant herein with a duly approved Resolution Plan) resulting in significant CIRP cost burden for the Small Scale Unit CD emanating from the prolonged process thereof.

2.

Furthermore it must be pointed out herein that the Applicant RP has failed to consider the conclusion of the Independent Statutory Auditor's Report wherein it has been stated that,

"During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in the India, we have neither come across any instance of fraud by the company or on the company by its officers or employees noticed or reported during the course of our audit nor have we been informed of any such instance by the Management."

Yet the RP in complete disregard of the same has blindly followed the flawed assumptions of the FAR and prepared without having carried out any due diligence as to the nature of the CD's business or having carried out actual site visit and/or physical/virtual meeting with the Respondents herein to ascertain facts. In fact the Forensic Auditor has raised only a single query that too via email and despite the same having been duly answered it has proceeded ahead with its own unjustified conclusions and assumptions vis-a-vis the FAR in scant regard for the norms governing the same.

3.

Further the RP has given a contradictory finding vis-à-vis preferential transactions as per the report. The FAR concludes clearly that no 'preferential transactions' have been found by way of the audit so conducted. Yet the Applicant RP ignoring the same has come to the conclusion that 'related party transactions' amounting to Rs. 24,02,726/- exists. However the RP has completely failed to provide any cogent evidence on basis of which the same has been alleged so against the CD.

4.

The following must be taken into consideration vis-à-vis the FAR herein:

i.

There is no evidence in the FAR of any diversion of funds invested outside the company or of any assets created by the promoters/directors in the country or abroad ii. There is no evidence in the FAR of any diversion of fund taken in or through any other subsidiary/sister concern in the country or abroad.

5.

Again to add further, the value of the property stated to be undervalued by the RP cannot be / and is never considered in isolation and only on the basis of stamp duty cost of the building structure which is a depreciating factor. In the present case the ownership of the land is on a leasehold basis from UPSIDC and was sold separately by issuing a transfer letter in the name of the Buyer.

i.

In fact the Respondents herein have paid the balance amount of Rs. 1,75,00,060/- from the distress sale of mortgaged property was paid to the Axis Bank load account of the CD. In fact the Respondent Promoters herein have further paid the balance amount of Rs. 1,39,99,940/- as received from the sale as above in compliance of DRT order by selling of their Residential flat and internal accruals of the CD. There is a net contribution to the CD account by the Promoter in the year preceding the CIRP date to pay off the debts. The said values are in accordance with the 'Realisable Value' as outlined by the registered valuer appointed by Axis Bank and heavily relied upon by the Applicant RP. ii. The above facts clearly exhibit deliberate ignorance and malafide intent on part of the RP in filing a baseless petition and burdening the CD, a Small Scale Unit, by wasting time & increasing the CIRP costs.

6.

Another crucial aspect that ought to be considered herein pertains to the fact that RP has alleged excessive remuneration. However the said issue pertains to FY 2012-13, 2013-14 and 2014-15 and is as such beyond the purview of the FAR. In any case it is beyond the purview of the RP or even of the Forensic Auditor to question the remuneration paid to the suspended directors in these years when the CD small scale unit was making profit and the same is clearly reflected in the books of account duly audited by the Statutory Auditor. Furthermore, the Applicant RP in cohorts with the FAR has deliberately failed to report non-payment of any salaries to the suspended directors of the CD in the years of losses.

7.

Notably, the revised tally data provided to the RP after corrections in accounting errors in these years and as per the laid down accounting norms which clarified all the queries raised by the RP was never considered. The suspended directors of the CD have signed these financial reports for onward submission to the ROC subject to corrections due to accounting errors and the detailed replies to the queries of the auditor.

8.

Recently new standards for conducting forensic audit, known as Forensic Audit and Investigation Standards (FAIS), have been proposed by the Digital Accounting and Assurance Board (DAAB) of the Institute of Chartered Accountants of India (ICAI) whereby the existing standards will be rendered untenable, especially where ambiguous and inconclusive reports are used to classify borrower loan accounts as fraud as is the case herein.

- Furthermore, as per the new standards, the FAR is required to be precise and unambiguous in nature backed by reliable evidence and relevant documents collected by the auditor. However as is evident in the matter at hand, the FAR is purely based on conjectures and surmises and only raises red flags without drawing any conclusions. In fact the RP has also not applied his mind at all to the said report and blindly reported the same vide its application without having determined any such allegation indecently.

- The FAIS further prescribes that the FAR shall not express any opinion or pass any judgement on guilt or innocence, whereas herein the report clearly seems based on a predisposed opinion of the auditor towing the line of the RP. In fact the tenets of natural justice have not been followed at all by the auditor and views of the CD have not been incorporated at all vide the present report.

- It is to be noted that currently, there are no standards or guidelines prescribed by any regulator or authority to monitor or regulate the functions of forensic audit. In the absence of such regulations, any and every self-acclaimed forensic audit expert/firm is appointed to conduct forensic audit as per their own rules and procedures and present reports based on their own judgements and in most such cases, the reports are inconclusive, ambiguous and devoid of reliable evidence.

9.

In fact, in the matter at hand, the conduct of the RP must be taken note of by this Hon'ble Tribunal in driving the CD towards liquidation rather than resolution despite there being a viable and duly approved (by 100% voting share of the CoC) Resolution Plan before this Hon'ble Tribunal.

10.

Not only is the present application grossly time barred and not in line with the stated intention of the IBC, it is an underhanded effort on part of the RP to scuttle the present Resolution Plan of a Small Scale MSME Unit.

1)

The present Short synopsis is being filed by the Resolution Professional in the above-referenced application, I.A No. 102/2021 under section 66 of the IBC Code, 2016 for the Fraudulent Trading and Wrongful Trading etc. on the basis of forensic report prepared by Mr. Vaibhav Gupta C.A.

2)

At the outset, it is submitted that Reply of the Ex-Management of the Corporate Debtor is without merit and ought to be rejected in its entirety as the erstwhile directors did not made any denial of the allegations/issues raised in the forensic audit report/Application except seeking rejection of the said application on the sole ground of that application is barred by limitation.

3)

That the applicant/R.P submits that the present application is very much maintainable itself on the ground that the time line mentioned in Regulation 40A of the IBC (Resolution Process for corporate persons) Regulation, 2016, read with Regulation 35A is not mandatory in nature and it is only directory in nature. It is further stated that the so far deciding or rejecting the application is concern, the time line is directory in nature.

The applicant is also relying upon by The Hon'ble Supreme Court's judgment in case of "Surendra Trading Company Versus Juggial kamlapat Jute Mills Company Limited & ORS. in civil appeal no. 8400 of 2017" and also in PT. RajanVe. T.P.M. Sahir and Ore. (2003) 8 SCC 498, which observed that where Adjudicating Authority has to perform a statutory function like admitting or rejecting an application within a time period prescribed, the time period would have to be directory and not mandatory.

Further, in the other judgment of The Hon'ble Supreme Court judgment in case of "Brilliant Alloys Private Limited Vs MR. S. Rajagopal & Ors." the Hon'ble Court observed that the regulations 30A states that withdrawal cannot be permitted after issue of invitation for Expression of Interest. According to us, the regulation has to be read along with the main provision section 12A which contains no such stipulation. Accordingly, this stipulation can only be construed as directory depending on the facts of each case. Accordingly, we allow the settlement that has been entered into and annul the proceedings.

4)

That the Applicant/R.P further continuously chasing the Respondent No. 1 & 2 for providing the requisite information and documents including tally data, the books of accounts and other information vide reminder e-mail dated 07/09/2019, wherein requested to Respondents to provides the information/ documents which she had been asking in her earlier communication(s) and also asked about the whereabouts of the registered office of the Corporate Debtor as the existing one was under demolition and the address where books of accounts and other records are kept. However, no co-operation was made by the Respondent thus Applicant/R.P approach to this Hon'ble Court under Section 19(2) vide C.A No. 1531/2019 for seeking necessary directions against the respondent. However, even after repeatedly requesting for finalization and audit of the balance sheets of the corporate debtors for the financial year 2016-2017, 2017-2018 & 2018-2019 and till the date of CIRP, the ex-management have not co-operated to the applicant/R.P as well as their auditor.

5)

That Statutory auditor of CD, on 13.08.2020 provided Financial Statements of CD for the financial years 2016-17, 2017-18 and 2018-19 with draft Audit Report, and R.P instantly shared all the Financial Statements/ documents were signed on 21/09/2020 and the forensic audit report was finalised on 22/9/2020 thus the delay in filling the present application has occurred due to non co-operation of the Respondents.

"[35A. Preferential and other transactions.

(1)

On or before the seventy-fifth day of the insolvency commencement date, the resolution professional shall form an opinion whether the corporate debtor has been subjected to any transaction covered under sections 43, 45, 50 or 66.

(2)

Where the resolution professional is of the opinion that the corporate debtor has been subjected to any transactions covered under sections 43, 45, 50 or 66, he shall make a determination on or before the one hundred and fifteenth day of the insolvency commencement date, under intimation to the Board.

(3)

Where the resolution professional makes a determination under sub-regulation (2), he shall apply to the Adjudicating Authority for appropriate relief on or before the one hundred and thirty-fifth day of the insolvency commencement date.]

[40A. Model time-line for corporate insolvency resolution process.

The following Table presents a model timeline of corporate insolvency resolution process on the assumption that the interim resolution professional is appointed on the date of commencement of the process and the time available is hundred and eighty days:

Section / Regulation	Description of Activity	Norm	Latest Timeline
Section 16(1)	Commencement of CIRP and appointment of IRP	...	T
Regulation 6(1)	Public announcement inviting claims	Within 3 Days of Appointment of IRP	T+3
Section 15(1)(c) / Regulations 6(2)(d) and 12(1)	Submission of claims	For 14 Days from Appointment of IRP	T+14
Regulation 12(7)	Submission of claims	Up to 90+ day of commencement	T+90
1) Regulation 13(1)	Verification of claims received under regulation 12(1)	Within 7 days from the receipt of the claim	T+21
	Verification of claims received under regulation 12(2)		T+97]
Section 21(6A)(b) / Regulation 16A	Application for appointment of AR	Within 2 days from verification of claims received under regulation 12(1)	T+23
Regulation 17(1)	Report certifying constitution of CoC		T+73
2) Section 22(1) / Regulation 19(2)	1st meeting of the CoC	Within 7 days of filing of the report certifying constitution of the CoC, but with five days' notice.	T+30]
Section 22(2)	Resolution to appoint RP by the CoC	In the first meeting of the CoC	T+30
Section 16(5)	Appointment of RP	On approval by the AA	...
Regulation 17(3)	IRP performs the functions of RP till the RP is appointed	If RP is not appointed by RP* day of commencement	T+40
3) Regulation 27	Appointment of valuer	Within 7 days of appointment of RP, but not later than 47th day of commencement	T+47]
Section 12(A) / Regulation 38A	Submission of application for withdrawal of application admitted	Before issue of Eol	W
	CoC to dispose of the application	Within 7 days of its receipt or 7 days of constitution of CoC, whichever is later	W+7
	Filing application of withdrawal, if approved by CoC with 90% majority voting, by RP to AA	Within 3 days of approval by CoC	W+10
Regulation 35A	RP to form an opinion on preferential and other transactions	Within 75 days of the commencement	T+75
	RP to make a determination on preferential and other transactions	Within 115 days of commencement	T+115
	RP to file applications to AA for appropriate relief	Within 135 days of commencement	T+135
Regulation 36(1)	Submission of IM to CoC	Within 2 weeks of appointment of RP, but not later than 54th day of commencement	T+54
Regulation 36A	Publish Form G		T+75

	Invitation of Eol	Within 75 days of commencement
	Submission of Eol	At least 15 days from issue of Eol (Assume 15 days)	T+90
	Provisional List of RAs by RP	Within 10 days from the last day of receipt of Eol	T+100
	Submission of objections to provisional list	For 5 days from the date of provisional list	T+105
	Final List of RAs by RP	Within 10 days of the receipt of objections	T+115
Regulation 36B	Issue of RFRP, including Evaluation Matrix and IM	Within 5 days of the issue of the provisional list	T+105
	Receipt of Resolution Plans	At least 30 days from issue of RFRP (Assume 30 days)	T+135
Regulation 39(4)	Submission of CoC approved Resolution Plan to AA	As soon as approved by the CoC	T+165
Section 31(1)	Approval of resolution plan by AA		T+180

AA: Adjudicating Authority; AR: Authorised Representative; CIRP: Corporate Insolvency Resolution Process; CoC: Committee of Chakrav; Eol: Expression of Interest; IM: Information Memorandum; IRP: Interim Resolution Professional; RA: Resolution Applicant; RP: Resolution Professional; RFRP: Request for Resolution Plan.

IBC Section 12- Time-limit for completion of insolvency resolution process.

(1)

Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.

(2)

The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of sixty-six per cent. of the voting shares.

(3)

On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days:

Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once.

Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor:

Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.

IBC Section 66 - Fraudulent trading or wrongful trading.

(1)

If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit.

(2)

On an application made by a resolution professional during the corporate insolvency resolution process, the Adjudicating Authority may by an order direct that a director or partner of the corporate debtor, as the case may be, shall be liable to make such contribution to the assets of the corporate debtor as it may deem fit, if—

(a)

before the insolvency commencement date, such director or partner knew or ought to have known that the there was no reasonable prospect of avoiding the commencement of a corporate insolvency resolution process in respect of such corporate debtor; and

(b)

such director or partner did not exercise due diligence in minimising the potential loss to the creditors of the corporate debtor.

(3)

Notwithstanding anything contained in this section, no application shall be filed by a resolution professional under subsection (2), in respect of such default against which initiation of corporate insolvency resolution process is suspended as per section 10A.

Explanation.—For the purposes of this section a director or partner of the corporate debtor, as the case may be, shall be deemed to have exercised due diligence if such diligence was reasonably expected of a person carrying out the same functions as are carried out by such director or partner, as the case may be, in relation to the corporate debtor.

VMRS & ASSOCIATES

Private & Confidential

CHARTERED ACCOUNTANTS

4 EXECUTIVE SUMMARY

FACTS IN BRIEF

The Resolution Professional Mrs. Ashu Gupta (IP, Registration Number (BELSPA-002/IP-N00336/2017-2018/10941), (IP) had approached VMRS & Associates for conducting a Forensic audit of the company named as Web Tech Packagings (India) Private Limited (in short the "Company" WPPL (Corporate Debtor) which is a Private limited company incorporated on 5th Feb, 1998 under the provisions of the Companies Act, 1956

During the course of Corporate insolvency Resolution Process, need was felt by Resolution Professional to appoint a Forensic Auditor to facilitate investigation into the financial affairs of WPPL Primarily to ascertain Existence of any preferential Transaction's, under -valued Transactions, diversion of funds and Resultant creations of assets in India or abroad etc.

As per the information available to the Resolution Professional & based on possible resources, the audit is conducted. The Corporate Debtor is Irregular in complying the provisions of different applicable laws and irregular in making payment to creditor is a big red flag for showing guilty mind of directors and siphoning of funds.

Under these circumstances, it was felt necessary to conduct a Forensic audit of the Company and the team of the undersigned were appointed vide an Engagement Letter was signed between IP and VMRS & Associates dated 14.07.2020.

The Summary of Findings are as under:-

KEY Findings

Sections 43 & 44 - Preferential Transactions

NIL

Sections 45 to 49 Undervalued Transactions

Exst

Section 50 - Extortionable credit Transactions

No Such Transaction noticed

Section 66 & 69 Fraudulent and wrongful trading and Transactions Defrauding Creditors

FINDING NO.1 Diversion of Stock Worth Rs 5,48,50,624/-

FINDING NO.2 Fund Misappropriation Worth Rs 24,02,776/- Under Related Party Transactions

FINDING NO.3 Debtor Analysis - Recovery from Debtors Is Doubtful

FINDING NO.4 Electricity Expenses is Overstated Worth Rs 21,70,949/-

FINDING NO.5 Excessive Remuneration Charged Worth Rs 1,89,14,000/- and Employee Benefit Expenses Worth Rs 1,72,615/- is recoverable

Finding No.6 Excessive Charged Other Expenses Worth Rs 5,91,60,261/-

Finding No.7 No Change in Shareholding Pattern

Finding No.8 Eroded Net Worth is a Red Flag

Finding No.9 Unsecured Loan from Directors and their Relatives on Progressive Trend is a Red Flag

Finding No.10 Trade Payable Outstanding Since Long is also a Red Flag

Finding No.11 Continuous Sale Purchase of Tangible Assets for Last Seven Years is a Red Flag

Finding NO.12 Negative Balance of Cash in Hand reveals a Red Flag and Amount is Recoverable Worth Rs 15,92,574/-

FINDING NO.15 Suspense Accounts: Stock Sale & Amount credited in Banks, not identifiable but accounted in books as suspected during FY 16-17 Worth Rs 14.88,975/- is Recoverable FINDING NO.16 Miscellaneous Balances Written Off Worth Rs 1.65,31,875/- (Period 01.04.2017 to 02.09.2019) FINDING NO.15 Indirect Income: Earned Under Financials is also a Red Flag (Period 01.04.2017 to 02.09.2019) Finding No.16 Commitment of Statutory Dues Worth Rs 1.25,11,964/- FINDING NO.17 Email Exchange Summary Between Resolution Professional and Director of Corporate Debtor FINDING NO.18 Causable Target - Director Son of Corporate Debtor Account Adjustment Worth Rs 17.22,476/- (01.04.2017 to 02.09.2019) FINDING NO.19 Sunil Kumar Tangri Current Account Adjustment Worth Rs 313,175/- is Red Flag Finding No.20 Sunil Kumar Tangri Loan Account Adjustment Account - Red Flag for RS 1.24,99,000/- FINDING NO.21 Sunil Tangri Interest Account Worth Rs 57.18,641/- is Red Flag FINDING NO.22 Ramani Tangri Adjustment Under Account is recoverable Rs 54.54,000/- FINDING NO.23 Azhya Tangri 41.48,500/- Opening Balance as on 29.09.2017 FINDING NO.24 Payments made post-CIRP Date: Cash Payments and Receipts Under Corporate Debtor Account is a Red Flag FINDING NO.25 Extras Post-CIRP Date is a Red Flag FINDING NO.26 Sewa Rani & Sona Inter Transfer of Rs 25.15,000/- - Red Flag FINDING NO.27 Fund Diversion Through Non-Shoan of Actual Sales Consideration and Liable For Recovery from Corporate Debtor Worth Rs 1.15 Crores FINDING NO.28 fund diversion towards sale of Land and Building Worth Rs 50 Lacs Finding No.29 Reconciliation of Bank Statement is a Red Flag WILFUL AND MATERIAL OMISSIONS Finding No.1 application of deemed dividend under section 202(a) of Income tax act, 1961 & rules Share of Finding No. 2 Non-Compliance of Applicable Laws to Corporate Debtor Finding No.3 Income Tax Proceedings Pending before Income Tax Department is a Red Flag Finding No.4 Red Flags in Books of Accounts Finding No. 5 Financial Statements Are Misleading Finding No.6 Reproductive Audit Report for the Period 11.01.2019 & 11.01.2018 & 11.03.2017 Finding No. 7 Civil and Criminal Cases Filed Against Corporate Debtor and Their Directors Under Miscellaneous Provisions of Law Finding no.8 personal credit card of directors used for business purpose and payment made from corporate debtor account FINDING NO.9 comments on the statutory auditor communication to corporate debtor and reply by corporate debtor those of Finding No.10 non-maintenance or registered office by corporate debtor by their directors (red flag) FINDING NO.11 Non-Competition of Elections of Corporate Debtor and First Given Physical Documents and Undergoing Assets in Audited Financials of Corporate Debtor to Resolution Professional

7. FINDINGS IN BRIEF (Period Covered in Financial Year 01-04-2019 to CIRP Date)

A) Sections 43 & 44 - Preferential Transactions

B) Sections 45 to 48 Undervalued Transactions

C) Section 50 Extortionate (red) Transactions No Such Transaction noticed.

D) Section 65 fraudulent and wrongful trading read with section 69 Transactions defrauding creditors

FINDING NO.1 DIVERSION OF STOCK WORTH RS 1.48,50,524/-

The main assertions in the financial statements relating to inventory are existence, ownership, completeness, valuation and audit procedures should be designed and performed with the objectives of verifying such assertions.

It appears from the Audited Financials that the corporate Debtor manipulated the stock valuation and Material Consumption including their Opening and Closing Stock which consists of Work in Progress (Significant Material) and rest is Finished Stock Inventory. The Conclusion of Stock Manipulation Drawn on the basis of Following points which is evident from books of Corporate Debtor and Audited Financials as under:-

1.

The Trend Analysis of Cost of Raw Material Consumption to Sales Ratio is Abnormal (Refer Table 1.1)

2.

The Inventory maintained from the Financial Year 2015-14 ended Wot Rs 2.61.46,062 which is maintained upto Financial 2015-16 and thereafter it is adjusted gradually from the financial year 2016-17 to 60 date of CIRP. (Refer Table 1.2)

3.

The Stock Register maintained under tally books by corporate debtor did not reconcile with the audited financial statement and the comparative analysis is also not linked with the figures shown under audited stock statement and Tally Books Extract (Refer Table 1.3)

4.

The Invest outward of stock is also had not reconciled with purchase and sales shown under audited books from financial year 2015-16 to till date of CIRP.

5.

The Statutory auditor also shared the information towards corporate debtor misdeeds where Under Notes of Accounts from Financial Year 2016-17 Inwards shown that the fair quantity of inventory and their value is not available with the corporate debtor. (Refer Table 1.4)

6.

The Statutory Audit Report also stated that the corporate debtor intentionally made a willful attempt to divert the stock from their factory -Refer Table 1.5 where disclaimer of opinion of statutory auditor reproduce thereof.

7.

Under Table 1.5 & 1.2 the Inventory is presented under audited financial in two parts: one is Raw Material and Second is Work in Progress and Finished Stock. The Manipulation of each Inventory is done by the corporate debtor.

8.

The Trend of Inventory also shows high material consumption and low value realization which is apparent from the audited financial statement.

9.

Table 1.7 Extract of Management Representation Letter which is pending for signature till date of reporting As At 31.03.2019 also confirmed the said figures of inventory shown under Table 1.1 to 1.15.

10.

Table 1.8 Showing Sales Register Extract where figures are not comparable under audited financials.

11.

Table 1.9 Showing Purchase Register Extract where figures are also not comparable under audited financials.

12.

Table 1.10 shows the valuation of inventory rate which is not comparable for Financial Year 2016.

13.

The Raw Material Stock is the financial year ended 2017 at 4.67.51.722 and stock in progress and furnished stock worth Rs 2,76.55,713 is an adjustment under books of accounts gradually made by the corporate debtors on yearly basis to settle down the stock which is evident also as a qualification in statutory audit report.

14.

Table 10.1.10.2015 is also state towards physical presence of stock and their existence in that period.

Conclusion: On the basis of above points, it appears that the Stock manipulation conducted as the underlying stock as on 31.03.2016 at WIP and Finished Goods Worth Rs 2,76,55,713/- and as on 31.03.2017 of Raw Material Worth Rs 4,67,51,722/- is sold by corporate debtors including their directors in Cash and the Amount Pocketed in Cash hence a willful attempt made by the corporate debtors to learn the various stakeholders. The Final Figure of Stock Diversion in our opinion may be computed as follows:

S.No.	Particulars	As On	Amount	Computed Figure	Remarks
1	Raw Material Stock	31.03.2017	4,67,51,722	3,27,28,205	30% Stock assumes to be realized in books in view of bond analysis and 70% Stock Divested by corporate debtors
2	WIP and Finished Stock	31.03.2018	2,76,55,713	2,21,24,618	Being an old inventory (after closing) 20% interest reduction thereof booked to get marketable value
	Total		7,44,67,493	5,48,56,824

Statements Showing Cost of Raw Material Consumed Vs Revenue from Operations

A	B	C	D	E	F	G
Financial Year	Revenue from operations (net)	Cost of raw materials consumed	Ratio (C/B)	Changes in inventories of finished goods and stock-in-process	Ratio (D/B)	D-F
As 31st March, 2016	96.04.229	1.81.18.632	193%	91.28.622	97%
As 31st March, 2016	1.97.13.171	1.44.05.464	73%	43.88.042	22%	93%
As 31st March, 2017	7.09.58.954	5.59.61.186	79%	1.47.40.109	19%	98%
As 31st March, 2016	10.95.74.113	9.04.51.447	70%	3.63.627	0%	70%
As 31st March, 2015	15.17.58.528	12.49.25.652	82%			82%
As at 31st March, 2014	15.00.13.014	14.10.13.596	72%	1.40.75.733	-1%	92%

		Year ended 31.03.2017		Average Rate	Year ended 31.03.2016		Average Rate
Type of Materials	Units	Quantity	Value	Value/Qty	Quantity	Value	Value/Qty
Paper / board	Kgs	4,53,120	3,47,78,029	34.00	6,24,385	4,12,27,019	65.94
BOPP films	Kgs	2,66,939	88,67,493	36.40	3,06,840	3,51,14,900	111.80
Foil Stamping Roll	Sqm	18,558	1,68,487	5.00	6,16,161	24,34,948	5.82

HANDING NO.3 FUND MISAPPROPRIATION WORTH RS 24,02,726/- UNDER RELATED PARTY TRANSACTION

TRANSACTION - WEBTECH SOLD GOODS TO ARTHUR TRADING CO AND RECOVED FUNDS

Arthurs Trading Company: The Firm is owned by Mr. Auditys Tangri (Ex-Director of Corporate Debtor) son of Mr. Sudi Tangri (Director of Corporate Debtor) and registered office showing under Tally Records is 163,2nd Floor, Kalach Hill, New Delhi which is a common address of Corporate Debtor (Webtech Packaging India Private Limited) & Arthurs Trading Company.

The Proprietorship firm is a related party under the provisions of Companies Act, 2013 which is owned by the Promoter Cum Ex-Director of Corporate Debtor.

The Audited Financials up to Financial Year 2016-17 was not having been up of Survey Debtors and Sundry Creditors. The Tally Records submitted to us showing for Such Ledger up to Financial Year 2016-17 but the opening balance as on 01.04.2017 was Worth Rs 11,582.76.24 Credit Balance (Treasury RA-Copy of Tally Ledger) showing under books which means liability payable by Corporate Debtor to said related party. Further A Suspense Entry Passed into Tally Books of Account as on 01.04.2017 Worth Rs 5,000.00 extending liability under books of corporate debtor. The Liability Payable is further extended by transferring funds into said related party bank account or paid by such related party to third party on account of expenses and payment of trade which is settled under books passing sale of goods to corporate Debtor, Bank Accounts. On the basis of such peculiar transactions made between two related parties is Suspense and red flag for funds misappropriation. The Summary of Tally Books as under:

Extract Summary of Tally Books-Ledger Arthurs Trading Co. FY 2017-18

Raw Labels	Sum of Debit	Sum of Credit
Bank of India as 602820100030256		3,92,000.00
Electricity Expenses		97,000.00
Report	31,18,000.00
OET Interstate Sales	21,06,873.50
W/S Prepaid Publications	7,34,000.00
Network Agro Funds		3,92,000.00
CRC Bank A/C 1201112000155	25,76,000.00	11,62,116.00

Opening Balance		11.58,706.84
Surprise A/C		12.43,000.00
Capital Financial Services (Interest)		120,000.00
3M Carbon PA-1M Retail Debit		58,311.00
Grand Total	85.15,912.84	82.47,938.54

9.

Appears that from Tally Banks, Banks were manipulated by Corporate Debtor through their directory/from/own. To Quantify the Impact of Fund Misappropriation the Opening Balance as on 01.04.2017 and Suspense Account Credit Balance accumulates (11.59.726-12.45.000) Rs 54.88.726/-for Reference (Copy of Tally Ledger Enclosed As per Annexure 8A)

Financial Year 2018-19: Total Sale of Rs 37.43.194 made by Corporate Debtor to Arthur Trading Co. and Payments against such sale made by them Rs 75.85.000/-. The Closing Balance stands as on 31.03.2019 is Rs 11.48.915/- (Annexure 8B)

Financial Year 2018 to CBP Date: The Amount Rs 6 Lakh. Recovered from them dated balance 8B: stand as recoverable under books in Rs 5.48.915/- (Annexure 8C)

FINISHED NO. 2 DIETOR ANALYSIS - RECOVERY FROM DIETORS IS COUNTER

1.

A 5 Equipment Private Limited: Office at 41, Airport 1, 23 Rajendra Place, New Delhi-0374-07A/AC/AM/AT/LEC

Advance Payment made by Corporate Debtor in the month of April 2018 (Month Rs 44.031/- against which a Purchase Amount Worth Rs 25.854/- booked in the month of April 2018 & Amount Rs 3443 booked in the Month of August 2018 and till the time cost amount Worth Rs 1.4804/- is pending for recovery. (Copy of Ledger Enclosed Annexure 8D)

2.

Recorder Breweries Private Limited: Amount Worth Rs 1.57.025/- is pending for recovery since April 2016. More than 4 Years passed till recoverable. (Copy of Ledger Enclosed Annexure 8E)

3.

Creative Graphics: An Amount Worth Rs 7.44.489/- credit balance stands in Corporate Debtor Account as on 01.04.2017 thereafter a Article and Discount entered as on 31.03.2018 (Month Rs 5.00.000/- to decrease the liability due to Rs 2.44.489/- as on 31.03.2018 thereafter a Payment of Rs 7.52.995/- made to said by party by Corporate Debtor against which no purchase made by him and hence said amount Worth Rs 5.08.461/- is recoverable as on CBP Date 02.09.2019 (Copy of Ledger Enclosed Annexure 8F)

4.

Crown Art Printers: Under the Books of Corporate Debtor, the balance stands worth Rs 38.03.865/- which is settled between A/C Goal Paper Distributing Company Private Limited and said party vide communication to RP dated 22.01.2020/40 Balance is Recoverable. It appears that the transaction passed under books is suspected in view of non-submission of communication by Crown Art Printers getting out of COVID-19 (Copy of Communication Enclosed - 8G)

The Small Communication is not Reply by the said party to us towards their settlement of account.

5.

Eske Graphics PTI Limited: Amount Recoverable Rs 53.443/- Since April 2016.

6.

Thea Image Graphic Private Limited: Amount Worth Rs 5.09.016/- stands as on 01.04.2019 where corporate debtor recovered a sum of Rs 5.01.000/- in the Month of April, May 2019 and only nominal Amount Worth Rs 2016 is recoverable now. (Copy of Communication Enclosed - 8H)

7.

Larkin JLL Amount Worth Rs 6.742/- pending for recovery as on 01.04.2017 where corporate Debtor makes advance payment Rs 18.951/- in the Month of May 2018 and the purchased Worth Rs 13.192/- hence balance recoverable is increased to Rs 8.496/- which is not recoverable yet (Copy of Ledger Enclosed - 8I)

8.

Laxmi Dying and Printing Works Amount Recoverable Rs 2.75.219/- Since April 2016.

9.

Modern Trading and Manufacturing: A Total Asset Transferred by Corporate Debtor under their Books of Accounts Worth Rs 1.77 Crores against a Receipt of Rs 1.75 Crores. A Nominal Balance needs to settle Rs 1.95.940/- as on CBP Date. The Actual Transactions and entry passed under books also not reconciled each other which is covered under report separately (Copy of Ledger Enclosed - 8J)

10.

Pine Pharma Private Limited: The Corporate Debtor sold Goods Worth Rs 14.18.065/- against receipt of Rs 13.99.900/- during FY 2017-18 to CBP date. A nominal Amount Rs 18.165/- is recoverable. (Copy of Ledger Enclosed - 8K)

11.

R.L. CARDO & COUNER: Amount Recoverable Rs 43.073/- Since April 2016.

12.

Suspense Account Debit Balance: As on CBP Date the Amount of Rs 34.05.966/- is recoverable from directors/presenters of corporate debtor.

Extract of Statutory Auditor Comments:

The balances in accounts receivables & payables are subject to confirmation in majority of the cases as on 31.03.2019.

The Company has trade receivables of Rs 1.43.42.274/- as at 31st March 2019. All are outstanding for a period exceeding 6 (Six) Months from due date and approx. 70% of total receivables as at 31st March 2019 are outstanding for more than 2 years from their due date.

Debtors, Loans and Advances

The following items appearing in the books as at 31.3.2019 are considered good and fully recoverable.

Particulars	Description	Amount in Rs.
Trade Receivables	Outstanding for a period exceeding 6 Months from Due Date	1,43,42,274/-
	Outstanding for a period upto 6 Months from Due Date	Nil
Loans and Advances	Advance to Suppliers	13,47,475/-
	Other Advances	2,52,621/-

The Company has trade receivables of Rs. 2,20,46,314/- as at 31st March 2018, out of which 95% (Approx) are outstanding for a period exceeding 6 (Six) Months and in our opinion their recoverability is doubtful. The company has not made any provision against these doubtful debts, effect of which may be material.

The Company has trade receivables of Rs. 2,19,96,790/- as at 31st March 2017, out of which 90% (Approx) are outstanding for a period exceeding 6 (Six) Months and in our opinion their recoverability is doubtful. The company has not made any provision against these doubtful debts, effect of which may be material. The Directors of corporate debtor is responsible for non-recovery of the said outstanding in Books of Accounts.

FINDING NO.4 Electricity Expenses is Overstated Worth Rs 21,70,948/-

The Manufacturing Expenses is linked in production as per General Accounting Principles. The Extract of Profit and Loss account of Corporate debtor showing abnormal trends and appears the minibeds made by directors willfully to overstate the expenses in their books. To conclude the Abnormal Behavior of Manufacturing Expenses, 3i Comes to our notice that Corporate Debtor overstated the electricity expenses in the financial year 2017-18 & 2018-19 which is Rs 21,70,948/- (17,56,939+4,14,410) Refer Table 1.11 & 1.12

Extract of Statutory Auditor Comments.

In addition to above, the reliability of Company's books of account, produced before us for audit, in absence of supporting evidence is in question with glaring errors like total Salary & Wages being only Rs 1.72 Lakhs against sale of Rs. 94 Lakhs from manufacturing activities, even electricity expenses of more than 4 Lakhs are not justified. There are no other Labor or Job work expenses to support this sale.

Table 1.11 Statement Shows the Ratio of Manufacturing Expenses to Revenue

A	B	C	D
Financial Year ended	Revenue operations (net)	Manufacturing expenses	Ratio (C/D)
As at 31st March, 2019	94,04,229	5,33,344	5%
As at 31st March, 2018	1,97,15,371	17,86,123	9%
As at 31st March, 2017	7,00,50,914	27,48,920	4%
As at 31st March, 2016	12,05,74,113	41,14,525	4%
As at 31st March, 2015	15,11,59,524	28,50,194	5%
As at 31st March, 2014	16,95,11,614	115,55,180	2%
As at 31st March, 2013	13,81,67,858	95,05,097	1%
As at 31st March, 2012	14,61,05,758	75,44,873	1%
A	B	C	D
Financial Year ended	Revenue operations (net)	Electricity Expenses	Ratio (C/D)
As at 31st March, 2019	94,04,229	4,14,410.00	4%
As at 31st March, 2018	1,97,15,371	17,56,939.00	9%
As at 31st March, 2017	7,00,50,914	26,27,885.04	4%
As at 31st March, 2016	12,05,74,113	16,26,282.00	2%
As at 31st March, 2015	15,17,59,524	54,41,478.00	4%
As at 31st March, 2014	16,95,11,614	24,53,560.00	2%
As at 31st March, 2013	13,81,67,858	34,54,877.75	2%
As at 31st March, 2012	14,61,05,758	25,72,533.00	2%

Table 1.12 Statement Shows the Ratio of Electricity Expenses to Revenue

FINDING NO.5 Excessive Remuneration Charged Worth Rs 1,88,14,600/- and Employee Benefit Expenses Worth Rs 1,72,415/- is recoverable.

During Our detailed analysis of Audited Finance Statement, it appears that the Key Managerial Personnel including their relatives diverted money from the corporate Debtor Account in the name of Remuneration Whereas per Written Statement of Mr. Sunil Tangri posted as via email on 02.08.2020 (Annexure A) where he stated that his Wife is a sleeping partner and that one Mr. Barnekin and Aaditya Tangri no role played in the affairs of corporate debtor than how the board of corporate debtor booked the remuneration into financials of corporate debtor. It is nothing but a secret of withdrawal of money in the name of different family members. Further to drop down the profit under books of corporate debtor and profit withdrawal from books of corporate debtor, Mr. Sunil Tangri (Director of Corporate Debtor) charged excessive remuneration which is inadvertent figure in our opinion. In Our Opinion the Reasonable figure as per Industry Notes and the corporate debtor turnover is 36 Lakhs Per Annum and over and above is excessive charged.

The Table 1.13, 1.14, 1.15 is prepared to calculate the excessive figure of remuneration to Mr. Sunil Tangri and their Family Members is Rs 1.88 Crores hence liable for recovery. Further Statutory Auditor under their report also comment the monitoring of employee overhead to the turnover of corporate debtor. Hence it appears that the figure of Rs 1.72,415/- charged in the financial year ended 31/03/2019 is excessive booklet under accounts.

			(1)	Remuneration to Directors	(2)	Remuneration to Relatives
Financial Year Ended	Revenue from operations (net)	Employee benefits expense	-	Mr. Sural Kumar Tangri	Mrs. Narayan Tangri	Mr. Saurabh & Audity Tangri	Total
31 March 2016	94.04.229	1,72,851
31 March 2016	1,87,13,371
31 March 2017	2,09,50,914	2,32,980
31 March 2016	12,96,74,113	23,56,573
31 March 2015	15,17,58,028	36,01,067
31 March 2014	19,90,31,614	2,11,82,191	54,00,000.00	12,00,000	13,80,000	76,80,000.00
31 March 2013	13,91,67,858	1,82,91,425	40,00,000.00	12,00,000	13,80,000	45,80,000.00
31 March 2012	14,61,09,758	1,51,34,747	17,56,000.00	12,00,000	13,32,000	45,54,000.00
			1,11,56,000	56,00,000	41,52,000	1,89,14,000.00

Table 1.15 Calculation of Excessive Remuneration Paid to KMP and their Relatives

Extract of Statutory Auditor Comments.

In addition to above, the reliability of Company's books of account, produced before us for audit, in absence of supporting evidence is in question with giving errors like total Salary & Wages being only Rs 1.72 Lakhs against sale of Rs. 94 Lakhs from manufacturing activities, even electricity expenses of more than 4 Lakhs are not justified. There are no other Labor or job work expenses to support this sale.

Finding No. 8 Excessive Charged Other Expenses Worth Rs 1,91,50,2017/-

The Trend Analysis of Other Expenses to Sales is abnormal and Doubtful Remedies' Which indicates And Bag of Validity of Such Expenses. To find the abnormality we have study the pattern on each year basis. The Reasons of abnormal behavior is overshaped of expenses in the different account head and production of false vouchers and records before statutory auditor.

The Bad Debts Written off is negligence of Corporate Debtor Directors (Period 31.03.2012 to 31.03.2019) is Rs 38,86,240/- and Computer expenses Worth Rs 96,32,264/- (31.03.2017). The decision making of Capital Expenditure (Computer Expenses) is negligence or willful attempt of Corporate debtor including their directors. The Miscellaneous Balances Written off is also point out as negligence of director of Corporate debtor which is Rs 1,23,848/- (Period 31.03.2012 to 31.03.2019).

It Appears that The Discount and Rebate Expenses head under other expenses is significant figure and internally fabricated and manageable by corporate debtor including their directors which is willful attempt. The expenses are booked in the three financial year ended on 31.03.2016, 31.03.2015 & 31.03.2014. The Accumulated Figure worked out Rs 4,31,62,765/-

There is no activity occurs in the Financial Year Ended as on 31.03.2019 except audit fees, the other expenses booked under Tally Notes and audited Financial Statement appears bogus booking and excessive booked by the corporate debtor hence said excessive may be recoverable Worth Rs 21,35,113/-

The detailed Chart Prepared and Shown as per Annexure B:

A	B	C	D
Financial Year ended	Revenue from operations (net)	Other expenses	Ratio (C/D)
As at 31st March, 2015	94.04.229	22.56.069	24%
As at 31st March, 2016	1,87,13,371	2.09.631	1%
As at 31st March, 2017	7,09,50,914	1,11.55.106	18%
As at 31st March, 2018	12,95,74,113	1,28.41.103	10%
As at 31st March, 2015	15,17,58,028	1,22.94.841	21%
As at 31st March, 2014	19,90,31,614	1,06.58.711	5%
As at 31st March, 2013	12,91,67,858	1,05.21.279	2%
As at 31st March, 2012	14,61,09,758	98.59.481	7%

Extract of Statutory Audit Report as on 31.03.2019

During the year under consideration, the company has written off Rs. 1,05,28,827/- by crediting to unclaimed credit balance written off against Trade payables and outstanding loan accounts balances, for which no clarification or supporting evidence was available from the management. Further supplier's outstanding balance at Rs. 49,82,402/- has been written off by crediting to Rebate and Discount for which too no clarification or supporting evidence was available from the management. 15524982/-

It Appears from the trend analysis that the Financial Cost to Sales Rates is abnormal during 2013-14 and 2012-13. To find out the reason we make a table of loans where the fund provided under audited financials taken and interest booked under financial are taken thereof. The Size of Loans are significantly high in the financial year 2013-14 compare to financial year 2012-2013 & 2011-2012. The Interest Charged during financial year 2011-2013 is overshaped comparing to loans value which accumulates Rs 68,43,173/-. However company is less making in the financial year 2013-14 onwards too hence the Interest charged by the Directors of Corporate debtor is inappropriate and not justified in our opinion. To apply this Head of Expense, Directors withdraw huge amount of fund and diverted in their personal account which is a loss to private and public authorities. The Comprehensive Figure of Rs 1,55,64,972/- is also to be recoverable. (Refer Table 1.17 & 1.18)

A	B	C	D
Financial Year ended	Revenue from operations (net)	Financial costs	Ratio (C/D)
As at 31st March, 2018	94,04,229	3,56,566	2%
As at 31st March, 2018	1,97,13,371	33,420	0%
As at 31st March, 2017	7,09,50,938	68,97,903	7%
As at 31st March, 2016	12,95,14,119	57,39,751	4%
As at 31st March, 2015	15,17,59,528	82,40,657	5%
As at 31st March, 2014	19,95,11,614	3,09,02,138	11%
As at 31st March, 2013	11,91,67,658	1,10,29,113	6%
As at 31st March, 2012	14,61,09,758	76,85,371	5%

Table 1.17 Statement Showing Financial Cost Trend over Revenue

A	B	C	D	E	F
Financial Year ended	Revenue from operations (net)	Interest Unsecured Loans	Ratio (C/D)	Loan Directors and Related Parties	Rate of Interest (C/D)
As at 31st March, 2018	94,04,229	Nil	0%	4,15,13,162	0%
As at 31st March, 2018	1,97,13,371	Nil	0%	3,00,18,162	0%
As at 31st March, 2017	7,09,50,938	Nil	0%	3,92,12,024	0%
As at 31st March, 2016	12,95,14,119	12,79,178.07	1%	4,01,04,524	2%
As at 31st March, 2015	15,17,59,528	20,34,818.67	2%	3,87,20,158	1%
As at 31st March, 2014	19,95,11,614	44,07,823.67	2%	3,67,02,567	1%
As at 31st March, 2013	12,91,67,658	33,79,256.15	2%	30,86,147	1%
As at 31st March, 2012	14,61,09,758	34,63,786.97	2%	14,92,627	1%
Total		1,55,64,975.48

Table 1.18 Statement showing the Loan Provided by Directors and Interest Charged Ratio

Finding No.7 No Change in Shareholding Pattern

There is no change in Shareholding from 2012-13 to 5% date of CRP.

	A	B
Swell Kumar Tangri	60%	2,99,800
Ramaud Tangri	40%	2,00,100

Finding No.8 Ended Net Worth is a Red Flag

The Net Worth is Completely Ended by the Corporate Debtor Directors specifically during the period 01.04.2016 to 02.09.2017. Transactions covered under IBC Period & the period under which Financials were not prepared and audited of corporate debtors, the timeline is covered under IBC Code, 2016. The costs shown under books of accounts and deferred the audit of books and frequent change of consultants is red flag towards affairs of corporate debtors.

Financial Year Ended	Share Capital	Reserves and Surplus	Net Worth
1	2	3	4 (2,13)
As at 31st March, 2019	50,00,000	-	-
As at 31st March, 2018	50,00,000	1,59,13,721	1,48,53,321
As at 31st March, 2017	50,00,000	-	-
As at 31st March, 2016	50,00,000	1,72,69,496	1,72,69,496
As at 31st March, 2015	50,00,000	1,69,14,278	2,09,74,278
As at 31st March, 2014	50,00,000	2,11,15,483	2,61,15,483
As at 31st March, 2013	50,00,000	1,64,69,916	4,14,69,916
As at 31st March, 2012	50,00,000	1,67,89,737	3,97,09,737

Table 1.19 Extract of Net Worth from Audited Financials

Finding No.9 Unsecured Loan from Directors and their Relations on Progressive Trend is a Red Flag

It Appears that the Directors of corporate debtor using Family Network withdraw the money from company and litigate entries booked under financials of corporate debtor to make adjustment on account of loans, the fuel of such suspected entries could not be established due to complete set of losses of accounts of corporate debtor in physical form not available.

A	B	C
Financial Year ended	Revenue from operations (net)	Loan from Directors and Related Parties
As at 31st March, 2019	94,04,229	4,15,13,162
As at 31st March, 2018	1,97,13,371	3,00,18,162
As at 31st March, 2017	7,09,50,938	1,92,12,024
As at 31st March, 2016	12,95,14,119	6,67,66,524
As at 31st March, 2015	15,17,59,528	1,87,20,158
As at 31st March, 2014	19,95,11,614	1,87,60,567
As at 31st March, 2013	11,91,67,658	10,86,147
As at 31st March, 2012	14,61,09,758	14,92,627

Table 1.20 Extract of Unsecured Loans from Audited Financials

Finding No.10 Trade Payable Outstanding Since Long is also a Red Flag

It Appears that corporate debtor Directors willfully holds the creditors long in length and do not interested to make payment and settle the dues which resulted into the Court Cases and Irrecovery Process had down against the directors and corporate debtor. The Corporate Debtor Directors held liable for such misdeeds done towards private and public authorities (Refer Annexure C)

Finding No.11 Continuous Sale Purchase of Tangible Assets for Last Seven Years is a Red Flag

It Appears from the Audited Financial Statement that Statutory Audit Report specially for the period ended 31.03.2019, 31.03.2016, 31.03.2017 where the sale purchase of assets is a continuous exercise by the directors of corporate debtor since 01.04.2012. The said Transactions revealed a red flag towards effect of corporate debtor whether the said Transactions deal in appropriate manner or not. There is negligible profits loss located under audited financials during the period 01.04.2012 to 31.03.2019.

Further the audited financials shown a figure of Rs. 52,74,076/- at the name of Profit on sale of assets at period ended 31.03.2019 which is a red flag and appears clear remain of misappropriation of Corporate Debtor Assets through their directors. The Sale of Assets posted to withdraw the fund from company to sale of underlying assets and erode the assets of corporate debtor. The Evidence of Interests is Audited Financials of corporate debtor only which is prime facts enough for wrongful doings and non-availability of physical documents by directors of corporate debtor reverts further investigation of said transactions which could not be done at present circumstances. The Both Documents supports Auditor Report and Financials nor may towards the sale purchase of assets. Refer Annexure C and Fixed Assets Chart Enclosed as per Annexure D

Extract of Annexure - "A" to Independent Auditors' Report

Annexure referred to in our report of even date to the members of WEB TECH PACKAGINGS (INDIA) PRIVATE LIMITED on the accounts for the year ended 31st March 2019, 2018, 2017, we report that:

(a)

We have not been provided any fixed assets register (except fully fixed), containing full particulars, including quantitative details and situation of fixed assets. (b)We have not been provided any report / confirmation which assure that the fixed assets were physically verified during the year by the Management. Therefore we are unable to comment on discrepancies, if any in fixed assets. (c)According to records available for audit, there was no immovable property held by the company at the end of the year. (d)We have not been provided with any report/ document which may confirm / assure that the physical verification of inventory was conducted at reasonable intervals by the management. Therefore we are unable to comment on the available and discrepancy in inventory.

Extract of notes to financial statements for the year ended 31st March, 2019, 2018, 2017

1.3 Fixed assets

Fixed Assets are stated at historical cost including freight, duties (list of MODVAT), taxes and other incidental expenses relating to acquisition and installation less accumulated depreciation.

1.4 Depreciation

Depreciation on fixed Assets is provided to the extent of depreciator amount on written down value (WDV) method. Depreciation is provided based on useful life of the assets as prescribed in schedule B to the Companies Act, 1913. Assets up to Rs. 3,000/- is depreciated fully by the year of acquisition itself without

Extract of Statutory Auditor Comments

The balance of Cash in hand was negative throughout the year. The balance was Rs. 2,99,996/- as at 31st March 2019. No clarification was available from the management as to why this negative balance and how this was funded, these discrepancies again cast a question on reliability of Company's books of account.

Considerable discrepancies were observed in Cash and Bank balances, having negative cash balance of Rs. 9,42,976/- as at 31st March 2018 with no clarification was available from the management, these discrepancies again cast a question on reliability of Company's books of account.

FINDING NO.13 Suspense Accounts - Debit Sale # Amount credited in Books not identifiable and accounted in Books at expense during FY 16-17 Worth Rs 14,88,876/- is Recoverable

The Audited Financials Reveals a Debit Balance under Suspense Account Head from the period ended 31.03.2016 to fill date of CRP where No Clarification is given by the Corporate debtor. Refer Annexure D for Audited Financials Extract

FINDING NO.14 Miscellaneous Balances Written Off Worth Rs 1,85,31,876/- (Period 01.04.2017 to 02.09.2019)

It Appears from the audited Financials and Tally Books for the period 01.04.2017 to CRP Date 02.09.2019 that the corporate debtor is to receive provisions written off the expenses and balances outstanding towards debtors and creditors under their books Worth Rs 7,85,31,876/- which means that the state of trust is guilty of directors of corporate debtor. It means that either they passed the entries in their books of accounts decided to lapse any of their objective due to cheat the public at large. The Financials were not audited after 31.03.2019 before CRP.

After continuous communication with Resolution Professional and Statutory Auditors, they have submitted to the copy of audited financials via email where the corporate debtor own cooperation is recorded which also reveals bad intention to non-produce of date and physical books is also red flag. The Controlled Purchase made by the corporate debtor through their directors never further whom is apparently proven record of non-payment of statutory auditor fee which is Rs 5,75,000 and written off the same under the same head below it is strictly a longer and finished record made and needed to hide the diversion effects of corporate debtor.

To Quantify the Impact of such about Transactions we have taken value Worth Rs 1,06,58,827/- which is also reported by the statutory auditor too. Refer Annexure E - Extract of Tally Books

Extract of Statutory Audit Report as on 31.03.2019- Unclaimed Credit Written Back

During the year under consideration, the company has written off Rs. 1,06,58,827/- by crediting to unclaimed credit balance written off against Trade payables and outstanding from accounts balances, for which no clarification or supporting evidence was available from the management. Further supplier's outstanding balance of Rs. 49,82,402/- has been written off by crediting to: Website and Discount for which no clarification or supporting evidence was available from the management.

Extract of Statutory Audit Report as on 31.03.2017

Considerable discrepancies were observed in reconciliation of Bank accounts, even though the necessary notification system have been incorporated in financial statements as per the information available as no clarification was available from the management, these discrepancies again cast a question on reliability of Company's books of account.

FINDING NO.15 Indirect Incomes Booked Under Financials is also a Red Flag (Period 01.04.2012 to 02.04.2019)

The following words were shown under books of Tally where such invoices were booked, and figure mentioned under audited financials as under:

1.

Deferred Tax

2.

Freight

3.

Government Subsidy

4.

Interest Accrued on Fixed Deposits

5.

Interest on Fixed Deposits

6.

Loan Waiver

7.

Miscellaneous Salaries Written off

8.

Profit on Sale of Assets

9.

Rebate and discount

The figures mentioned on account of rebate and discount and Misc. Salaries Written off is doubtful income which is never sold but booked and appears a fictitious balance nothing else.

Finding No.18 Concealment of Statutory Dues Worth Rs 1,29,11,964/-

On failing verification of records via online portal of Income Tax and other statutory dues in view of books of accounts worth Rs 1,29,11,964/- which is outstanding at present. The Assessment in connection with pending with Income Tax and Service Tax Department and other allied departments. The Corporate Debtor is non compliant of Income Tax Provisions Under Income Tax Act, 1961 and other allied provisions too from financial year 2016-17 onwards.

S. No.	Dues Towards	Amount
1	US Payable (As Per Tally Books CBR Date)	15,413
2	Income Tax Demand Website of IT (Annexure 1)	63,64,895
3	Sales Tax (As Per Tally Books CBR Date)	30,14,354
4	IDS Payable (As Per Tally Books CBR Date)	4,84,887
5	Excise Duty Payable (As Per Tally Books CBR Date)	8,53,875
6	UST Payable (As Per Tally Books CBR Date)	14,55,887
7	Provident Fund Payable (As Per Tally Books CBR Date)	92,852
	Total	1,29,11,964

Name of Statute	Nature of Dues	Amount on Rs.	Period to which relates	Due Date	Remarks if any
Employees Provident Fund & Miscellaneous Provisions Act, 1952	US Payable	92,852/-	Earlier years		Rs. 7,60,000/- against opening outstanding has been written off during the year
Employees State Insurance Act, 1948	USC	65,413/-	Earlier years
Income Tax Act 1961	TDS	4,84,887/-	Earlier years		Rs. 8,93,171/- against opening outstanding has been written off during the year
The Central Excise Act and VST Act	Central Sales Tax and Excise Duty	36,00,666/-	Earlier years
UST Act	UST Payable	7,46,000/-	Earlier years		Earlier Year Rs. 5,46,774/- Current Year Rs. 1,60,000/-

FINDING NO.17 Summarized Email Exchange between Resolution Professional and Director of Corporate Debtor

It appears from overall Conversation that the Corporate Debtor deferring facts on one ground to another and delayed process of IBC and recorded as noncooperation and an application of noncooperation is also filed under 19 (2) of IBC Code.

I do not Summary as Under:

Date	Correspondence	Particulars	Remarks
01.12.2019	Ms Abha Gupta to Mr. Sunil Tangri	Info Asked for Anthem Trading Co
01.01.2020	Ms Abha Gupta to Mr. Sunil Tangri & Mr. Sunil Tangri	Balance Confirmation
02.07.2020	Ms Abha Gupta to Mr. Sunil Tangri	Risk Response Account and Employee Entries and Registers
		Certification Regd
02.07.2020	Mr. Sunil Tangri to Ms Abha Gupta	Asa Saha Regd
03.07.2020	Mr. Sunil Tangri to Ms Abha Gupta	Forward Reply of Sound

14.12.2019	Ms Ashu Gupta to Ms Sush Tangri	Reply Awaited of 15.12.2019 Email
14.12.2019	Ms Mohd Gupta to Ms Ashu Gupta	Towards Response accident data is not available with him FY 18.17
14.12.2019	Ms Mohd Gupta to Ms Ashu Gupta	Data FY 16-17 Refer to 98. Rahab and Associates
02.09.2019	Ms Ashu Gupta to Webtech	Info towards appointment
05.09.2019	Ms Ashu Gupta to Webtech	Info towards appointment
06.09.2019	Webtech to Ms Ashu Gupta	Meet decide on 09.09.2019
07.09.2019	Ms Ashu Gupta to Webtech	Info Asked Primary and flagd office is demolished
11.09.2019	Ms Ashu Gupta to Webtech	Info Asked Primary
13.09.2019	Ms Ashu Gupta to Webtech	Info Asked Primary and flagd office is demolished/Non-Cooperation
04.10.2019	Ms Ashu Gupta to Webtech	Info Asked for Safe Deeds and Website of Company
10.10.2019	Ms Ashu Gupta to Webtech	Info Asked for Safe Deeds and Website of Company
11.10.2019	Ms Ashu Gupta to Webtech	Possession of Machines taken and data asked for
21.10.2019	Ms Ashu Gupta to Webtech	Information asked
23.10.2019	Ms Ashu Gupta to Webtech	Information asked
11.11.2019	Ms Ashu Gupta to Webtech	Non Cooperation
12.11.2019	Ms Ashu Gupta to Webtech	Non Cooperation

HINDING NO.18 Saurabh Tangri - Director Son of Corporate Debtor - Account Adjustment Worth Rs 57,32,478/- (01.04.2017 to 02.06.2019)

It Appears that the material amount adjustments deliberately made in the accounts of corporate debtor to misappropriate the funds of corporate debtor made between director of corporate debtor and their son. Hence the said entries is a red flag towards the reliability on books of corporate debtor and we as a auditor have reasons to believe due to this red alert that wrongdoings exist but could not be traced due to complete set of documents in physical form and fair clarification hence RED FLAG, the below tables are posted as screen shot of books of corporate debtor.

FINDING NO.19 Sush Kumar Tangri Current Account Adjustment Worth Rs 51,3,178/- to Red Flag

It Appears that directors of corporate debtor use the company fund for their personal expenses and because the same line company which reveals diversion of fund and said amount adjusted through current accounts and England Account and related party share hence a red flag. The complete documents is unavailable with us to establish the audit trail and recovery. Below Table are given for reference.

Hinding No.20 Sush Kumar Tangri Loan Account - Adjustment Account - Red Flag for R$ 1,24.00 only/-

It Appears that directors withdraw the fund from corporate debtor using his authority in the month of Jan 2020 and four months back of 2020 over. The directors knows very well towards the situation of Corporate Debtor affairs and management of the company. They have veiled interest in their amount only and withdraw a significant amount in priority of other and hence it said to be recoverable because they have right to get fund back if any at SRO basis not NFO basis hence said amount to be recoverable and must be deposited into accounts of corporate debtor. The below table is a screen shot of Tally Books for reference and record:

FINDING NO.21 Sunil Tangri Imprest Account Worth Rs 37,18,641/- is Red Reg

Another Account of Director shows adjustments and again doubtful as per adjustments made by them which is significant and impact on the corporate debtor financial statement in large. Given table for reference:

FINDING NO.22 Account Tangri Adjustment Under Account is recoverable Rs 54,54,000/-

It appears that Directors obtain the fund on the basis of future loan dated 31-01-2019 & 30-06-2019 along with other debit and credits of significant amount. It appears that directors withdraw the fund from corporate debtor using his authority in the month of 04/2020 just few months back of CHF date. The Directors knows very well towards the situation of Corporate Debtor affairs and nonpayment of public money. They have visited interest in their amount very and withdraw a significant amount in priority of other and hence it said to be recoverable because they have right to get fund back if any at LIFO have not FIFO been hence said amount to be recoverable and must be deposited into accounts of corporate debtor. The below table is a screen shot of Tally Books for reference and record.

FINDING NO.23 Aditya Tangri-8168500/-Opening Balance as on 29.09.2017

It appears that a fictitious amount balance is created to get fund from corporate debtor and Paid Gradually from CD account Worth Rs 6,61,000/- & Settled business Loan 1,31,720/- and rest is unpaid. Hence the balance outstanding is fictitious and non-faith for recovery. Further the amount paid is to be recoverable worth Rs 6,61,000/- & Rs 1,31,720/-

Foreman NO.24 Payments cards and CBRP Date Cash Payments and Receipts Under Corporate Debtor Account is a Red Flag

The CBRP Date is 02.09.2019 and the entries entered Tally Books of Corporate Debtor is made on 30.09.2019 and 31.10.2019 in cash which is to be settled back by the directors of corporate debtor since as per law the card amount to be return immediately. The Sum of Rs 16,700/- Rs each withdraws in the name of Fayette Financial Services India Limited hence to be recoverable.

Further Where the avoidance of cash facility and impact on cash banking the corporate Debtor intentionally not uses the card channel out collect money from customers and the TDC provision is not consigned and also the receipts in cash and not entered by which such cash collected hence a log red flag and clear remark of misappropriation of cash.

The Salary Payable in cash and other expenses appears to be begun without any time. If you entered for withdrawing the money it is also appearing that the Family Business is there except few people on contract basis not truly known the things which entered accounts.

Refer Annexure G

FINDING NO.25 Articles Pass CBRP date is a Red Flag

It appears from the Tally Books of Corporate Debtor that the assets were manipulated and ordered by CD on receivable intervals where from Date of CBRP the complete control towards affairs of corporate debtor tax into the hand of Resolution 1978/66/2001.

FINDING NO.28 Seva Ram & Sune Inter Transfer of Rs.25,11,002/- - Red Flag

The said firm is related party of a corporate debtor and Receipts and payments were made to settle the opening balances hence said the tactics of diversion of fund. The Audit trial of said documents is unavailable with up doing with BankView Professional Standing Auditor Force a red flag

S.No.	Mode of Payment	Date	Amount INR
1	RTGS Vide Cheque No "000511" Drawn on Kolar Mahindra Bank Limited Club Road, Punjab Bagh,Delhi	06/04/2018	20.00.000
2	RTGS Vide Cheque No "000852" Drawn on Kolar Mahindra Bank Limited Club Road, Punjab Bagh,Delhi	06/04/2018	10.00.000
3	Cash Payment	06/04/2018	20.00.000
4	Cash Payment	20/04/2018	15.00.000
5	Cash Payment	15/05/2018	25.00.000
6	Cash Payment	20/07/2018	10.00.000
7	Through Cheque	10/07/2018	1.25.00.000
	Total Sum Paid to Corporate Debtor		2.25.00.000/-

FINDING NO.27 FUND DIVERSION THROUGH NON-SHOWN OF ACTUAL SALES CONSIDERATION AND LIABLE FOR RECOVERY FROM CORPORATE DEBTOR WORTH RS 1.75 GROSS

MOU Agreement to sell (Extract of Payment) Final Under Reply CA No.327 of 2020 (MOU DMM)

S.No.	Mode of Payment	Date	Amount INR
1	RTGS Vide Cheque No "000511" Drawn on Kolar Mahindra Bank Limited Club Road, Punjab Bagh,Delhi	06/04/2018	20.00.000
2	RTGS Vide Cheque No "000852" Drawn on Kolar Mahindra Bank Limited Club Road, Punjab Bagh,Delhi	06/04/2018	10.00.000
3	Cash Payment	06/04/2018	20.00.000
4	Cash Payment	20/04/2018	15.00.000
5	Cash Payment	15/05/2018	25.00.000
6	Cash Payment	20/07/2018	10.00.000
7	Through Cheque	10/07/2018	1.25.00.000
	Total Sum Paid to Corporate Debtor		2.25.00.000/-

Payment Table as per MOU dated 16.02.2019

S.No.	Mode of Payment	Date	Amount INR
1	RTGS Vide Cheque No "000511" Drawn on Kolar Mahindra Bank Limited Club Road, Punjab Bagh,Delhi	06/04/2018	20.00.000
2	RTGS Vide Cheque No "000852" Drawn on Kolar Mahindra Bank Limited Club Road, Punjab Bagh,Delhi	06/04/2018	10.00.000
3	Cash Payment	06/04/2018	20.00.000
4	Cheque Payment vide Cheque No 000885 including TDS	25.07.2018	20.00.000
5	Cash Payment	25.07.2018	20.00.000
6	RTGS including TDS	31.01.2019	1.00.00.000/-
	Total Sum Paid to Corporate Debtor		2.00.00.000/-

The two table of payment are not reconciled each other and it appears that the cash and cheque payment are also not matched which is legally stated by the Buyer Mr. Neeraj Goane Proprietor of Aikaram Trading & Adip Co situated at 78/70 West Main Bagh Near Ashida Delhi 0257 Number 0748/4/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0/0

It appears that the sale FORENSIC between corporate debtor and buyer is over and above Rs 2.25 Crores and hence it is said to be under value shown by the corporate debtor and buyer.

To Quantify the impact of wrongdoings is the payment made between under table 1 from 30.04.2018 to 31.01.2019 as per agreement dated is not reconciled with table 2 and hence taken as diversion of fund apparently which is Rs 1.75 Crores and actual sales consideration is Rs 4 Crores and hence this non-shown amount under books of corporate debtor is also liable for recovery worth Rs 1.75 Crores.

FINDING NO.28 fund diversion towards sale of Land and Building Worth Rs 50 Lakhs

MOU Agreement to sell (Extract of Payment) Final Under Reply CA No.327 of 2020 (MOU DMM)

S.No.	Mode of Payment	Date	Amount INR
1	RTGS Vide Cheque No '000051' Drawn on Kotak Mahindra Bank Limited Club Road, Purpak Bagh Delhi	06/04/2018	20.00.000
2	RTGS Vide Cheque No '000052' Drawn on Kotak Mahindra Bank Limited Club Road, Purpak Bagh Delhi	06/04/2018	10.00.000
3	Cash Payment	06/04/2018	20.00.000
4	Cash Payment	20/04/2018	15.00.000
5	Cash Payment	15/05/2018	25.00.000
6	Cash Payment	30/07/2018	10.00.000
7	Through Cheque	30/07/2018	1,25.00.000
	Total Sum Paid to Corporate Debtor		2,25.00.000/-

Payment Table as per MOU dated 16.02.2019

S.No.	Mode of Payment	Date	Amount INR
1	RTGS Vide Cheque No '000051' Drawn on Kotak Mahindra Bank Limited Club Road, Purpak Bagh Delhi	06/04/2018	20.00.000
2	RTGS Vide Cheque No '000052' Drawn on Kotak Mahindra Bank Limited Club Road, Purpak Bagh Delhi	06/04/2018	10.00.000
3	Cash Payment	06/04/2018	20.00.000
4	Cheque Payment vide Cheque No. 000885 including TDS	25.07.2018	20.00.000
5	Cash Payment	25.07.2018	30.00.000
6	RTGS including TDS	31.01.2019	1,00.00.000/-
	Total Sum Paid to Corporate Debtor		2,36.04.000/-

The two table of payment are not reconciled each other and it appears that the cash and cheque payment are also not matched which is legally vetted by the Buyer Mr. Neeraj Gupta, Proprietor of Modern Trading at Mfg Co. alluded at 16/73, West Moni Bagh, Sarat Kohila Delhi (GST Number 074BAP0352641/2).

The Corporate Debtor under their books shown a total transfer of Assets Worth Rs 1.75 Crores in place of actual sales. Consideration Worth Rs 2.25 Crores by the Buyer, it clearly appears that Corporate Debtor diverted the money is Rs 50 Lakhs which is evident from the records and said sum diverted into cash made by the directors of Corporate Debtor and hence recoverable.

Table 2.1 Modern Trading & Mfg Account

WEB TECH PACKAGINGS (INDIA) PRIVATE LIMITED

Cash Flow Statement for the period ended March 31, 2018
	Year ended March 31, 2018	(Amount in Rupees) Year ended March 31, 2018
A. CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit/(Loss) before tax	(83,40,478)	(78,90,488)
Adjustment for:
Interest Income	(10,573)	(45,725)
Depreciation	73,51,000	80,34,000
Loss (Profit) on sale of Cash Assets	(92,74,576)
Interest & Other Borrowing Cost	1,64,504	32,420
Operating Profit before Working Capital Changes	(1,09,00,002)	(10,78,540)
Decrease / Increase in Trade and Other Securities	1,13,52,551	70,58,452
Decrease / Increase in Inventories	3,74,90,001	1,00,35,781
(Decrease) / Increase in Trade, Other Facilities and Provisions	(2,91,19,950)	(58,87,242)
Cash Generated from Operations	(10,50,294)	1,45,72,201
Stock Sales Paid	-	-
Cash Inflow (outflow) from Operating Activities	(10,50,294)	1,45,72,201
B. CASH FLOW FROM INVESTMENT ACTIVITIES
(Purchase) / Sale Proceeds of Fixed Assets	1,04,00,000	1,50,000
Interest Income	55,573	48,738
Cash Outflow from Investing Activities	1,64,10,573	7,98,738
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds (Repayment) from Second Loans	(2,91,61,358)	(64,00,400)
Proceeds (Repayment) from Unsecured Loans	1,14,48,824	(81,02,050)
Interest & Other Borrowing Cost Paid	(1,44,000)	(32,400)
Cash Outflow from Financing Activities	(1,88,70,101)	(1,27,06,043)
Net Increase/(Decrease) in Cash and Cash Equivalents	5,10,178	(3,37,802)
Cash and Cash Equivalents at the beginning of the Year	2,39,743	8,77,380
Cash and Cash Equivalents at the end of the Year	7,48,921	2,98,743

Comments:

Profit on Sale of Assets Plus Sale Proceeds of Fixed Assets - 2,74,74,076

The Statutory Auditor had verified and confirmed the sale FORENSE of Land and Building Worth Rs 1.55 Crores dated 11.01.2019 and profit on sale of Assets booked is Rs 93,67,612/- over and above book value of Rs 81,52,168/-

Further a Plant and Machinery also held worth Rs 22,00,000/- on book Value where no profit/loss is booked on that.

A note on sale of Furniture and Fixtures Book Worth Rs 93,73/-

Valuation Report dated 08.01.2018 issued by In-Birendra Prasad Singh -Office at 147-Amal Chambar R.A.Bishop Kama Place, New Delhi-110066

Highlights

3 No	Particulars	Amount
1	Fair Market Value of Property	2,16,00,000
2	Business Value of Property	1,84,00,000
3	Real estate Value of Property	1,73,00,000
4	Circle Rate Value	2,24,00,000
5	Insurance Value	1,12,00,000
6	Land Area	1038 Sq. Meter

Further the same values record their record on request of AIN Bank Limited SME Of GSCentre Delhi-Likad Fort Capital, Parramah Tower, 2nd Floor, Gate Market, New Delhi-110001 for market value of property is Rs 2.16 Crores.

Agreement to Sell for Building Structure held at Plot No. F-21, Site C, Surajpur Industrial Area, Greater Haldia, Uttarpradesh Saving Total Area is 412,515 Square Meters vide Certificate Number IN-UP054110026186320 dated 06.04.2018

The Highlights for Building Structure is as under:

3 No	Particulars	Amount
1	Strong Duty Paid on:	1,87,44,000
2	Safe Consideration	1,00,00,000
3	Advance Payment	20,00,000
4	Balance Payment	80,00,000- through bank loan before 30.07.2018
5	Boundary Wall & Gate	1,00,000
6	L. Sizing Paper	3,50,000
7	Stamp Paper	25,000
8	Total Stamp Duty Paid	3,75,000

A separate MOD card Agreement to sell is being signed for the transfer of land in which first party will surrender this land to UPSDC Limited for its allotment and transfer the land land in favour of second party.

Board Resolution Highlights which is passed on by corporate debtor on 31.01.2019

Mailing Reference to transfer the Building Structure dated 08.04.2018 March 30 1.75 Crores

Transfer of Electrical Accessories to Buyer

Corporate Debtor Award a GST Invoice for transfer of Electrical Accessories, Panels, Cables, Panels Worth Rs 21,000/00/- (including GST) to Buyer Mr. Ming Gupta Proprietor of Modern Trading & Mfg Co. situated at 18/15 West Mall Singh Sani Kshida Delhi GST Number IPABAN/20264 1241

Sale Direct for Plot No. F-21, Site C, Surajpur Industrial Area, Greater Haldia, Uttarpradesh Saving Total Area is 412,515 Square Meters vide Certificate Number IN-UP054110026186320 dated 07.02.2019

WELFUL AND MATERIAL OMISSIONS

FINDING NO.1 APPLICATION OF DEEMED DIVIDEND UNDER SECTION 2(225) OF INCOME TAX ACT, 1961 & RULES THERE OF

Share holding pattern in the holding company is of utmost importance. Similarly, ascertaining the profit ratio in a concern where shareholder is a member or partner to have substantial interest is also equally important. In the present Case Mr. Sunil Tangri and Ramani Tangri is beneficial owner of shares i.e. holding not less than 10% of the voting power or to any concern in which such shareholder is a member or partner. He is holding more than 10% shares in the Web tech Packaging India Private Limited which is covered under the ambit of provision of deemed dividend which could not be identified by the auditors too. The Non-Compliance of relevant provision is noticed.

FINDING NO. 2 NON-COMPLIANCE OF APPLICABLE LAWS ON CORPORATE DEBTOR

It is observed that the corporate debtor is non-compliant towards applicable provisions from the financial year 2016-17 onwards with an intention to defraud the private and public authorities. Following are list of non-compliances:

1.

Non-Filing of Income Tax Return to Income Tax Department from Financial Year 2016-17 to till date (filed but shown INVALID)

2.

Non-Submission of Income Tax Audit Report from Financial Year 2016-17 to CBP date (Submitted by Other Consultant but withdraw their report)

3.

Non-Submission of Annual Return of Company from Financial Year 2016-17 onwards.

4.

Non-Audit of Accounts of Company from Financial Year 2016-17 to CBP date. (It is Completed by the Auditors upto 2016-19 but sign off is pending till date of reporting)

5.

Non-Filing of I/S Return from Financial Year 2016-17 to CBP date

6.

Non-Filing of TDS Return from Financial Year 2016-17 to CBP date.

7.

Non-Filing of EMF Return from Financial Year 2016-17 to CBP date

8.

Non-Deposit of Income Tax/Advance Tax from Financial Year 2016-17 to CBP date

9.

Non-Deposit of TDS from Financial Year 2016-17 to CBP date

10.

Non-Filing of GST Return

Finding No.3 Income Tax Proceedings Pending before Income Tax Department is a Red Flag

It is observed that the Income Tax Proceedings are pending for the financial Year 2015-16 & 2012-13 and non-filing of Accounts from 2016-17 onwards reveals a red flag. (Refer Annexure F)

FINDING NO.4 SIX FLAGS IN BOOKS OF ACCOUNTS

Exception Reports includes Negative Stock, Negative Ledgers, Overdue Receivables, Overdue Payables, Negative Ratios, Negative Fund Flow Statement Under Tally Books of Corporate Debtor also reveals a red flag

FINDING NO. 5 FINANCIAL STATEMENTS ARE MISLEADING

It Appears that the Financial Statement do not provide the correct information in terms of non-reconciliation of bank accounts. Simplicious Shares Passed without Clarification. Going Concern

Qualification, Suspense Accounts, Material Accounts Written off and Moreover negative cash balances and negative Stock Statement under Books of Tally and non-availability of Quarterly and Material and Significant Disclaimer of Quorum by the Statutory Auditors reveals a Misleading View of Financial Statement of Corporate Debtor

FINDING NO.6 Reproduced Audit Report for the Period 31.01.2019 & 31.02.2019 & 31.03.2019

Statutory Auditor Details

It Appears that Corporate Debtor Financial Statements do not provide fair picture in terms of audit repercussions to accounts, financial statement and books of Tally. The Disclaimer and Qualification raised by the auditors as under :-

Independent Auditors' Report As at 31.02.2019

TO THE EXCERPTS OF WEB TECH PACKAGINGS (INDIA) PRIVATE LIMITED

REPORT ON THE FINANCIAL STATEMENTS

We are engaged to audit the accompanying financial statements of WEB TECH PACKAGINGS (INDIA) PRIVATE LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March, 2019, the Statement of Profit and Loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENT

The Company's Board of Directors is responsible for the matters stated in section 1(4)(1) of the Companies Act 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of appropriate accounting policies, making judgments and