True Blue Finlease Limited vs Jagdish Singh Nain

NARESH SALECHA, MEMBER (TECHNICAL)

The Present Appeal is filed against the ‘impugned order’ dated 13.12.2021 passed in CP (IB) 1359 (ND)/2019 in IA/2844/2020 by the ‘Adjudicating Authority’ (National Company Law Tribunal, New Delhi Bench), whereby, the ‘Adjudicating Authority’ has allowed an Interlocutory Application bearing No. 2844 of 2020 filed by Respondent passing directions against the Appellant. Aggrieved by the same, the appeal has been filed before this Appellate Tribunal under the Insolvency & Bankruptcy Code, 2016 (in short ‘I &B Code, 2016).

An application No. 2844 of 2020 was filed by the Respondent under Section 66 (Fraudulent trading or wrongful trading) of the I & B Code, 2016 against several parties including the Appellant herein/ Respondent No. 8 therein. It has been alleged that certain transactions have been entered into between Appellant herein and the Corporate Debtor i.e. HBN Foods Limited (under CIRP) fraudulently to defraud the Creditors of the Corporate Debtor. The Appellant was aggrieved as he was not given a proper opportunity of being heard and that the Adjudicating Authority issued the ‘impugned order’ on 13.12.2021.

Counsel for the Appellant submits that there is no outstanding amount which is due and payable to the Corporate Debtor being represented by Respondent herein. Counsel for the Appellant assailed the ‘impugned order’ dated 13.12.2021 wherein the Adjudicating Authority has directed the Respondent Nos. 2 to 21 (Appellant being Respondent No. 8 therein) to make contribution of Rs. 2687.27 lakhs jointly or severally to the asset of Corporate Debtor within a period of two months from the date of the ‘impugned order’ failing which same shall be realised from their properties.

Counsel for the Appellant stated that in the financial year ending 31.03.2015, the Corporate Debtor has advanced a sum of Rs. 30 lakhs and the Appellant paid complete amount of Rs. 30 lakhs in the same financial year. In support of his argument, he reproduced a brief ledger account statement as under :-

Counsel for the Appellant stated that he has received Rs. 20 lakhs from the Corporate Debtor on 06.05.2014 and Rs. 10 lakhs on 29.08.2014. Counsel for Appellant further stated that out of these, Rs. 10 was returned by the Appellant to Corporate Debtor on 15.09.2014 vide UTR Transaction No. NTBLR520140915000002 and again Rs. 20 lakhs Corporate Debtor instructed Appellant to adjust dues as under :-

Counsel for the Appellant submitted that he has been wrongly made party to I.A. No. 2844 of 2020 by the Respondent when there was no outstanding against him.

It is the case of the Appellant that the Adjudicating Authority erred in passing the ‘impugned order’ ex-parte without hearing him and without giving any opportunity to defend his case.

Counsel for the Appellant further assailed the ‘impugned order’ wherein it has been ordered to institute a criminal prosecution against various parties i.e including Appellant herein, under Section 69 of the I & B Code, 2016.

Concluding his arguments, Counsel for the Appellant urged this Appellate Tribunal to set aside the ‘impugned order’ and allow his appeal.

Counsel for the Respondent denied all averment of the Appellant being false, misleading and with the sole intent to derail the process of recovering the money from the various parties including Appellant herein arising out of illegal and fraudulent transactions done by the Corporate Debtor and various parties including Appellant herein.

Counsel for the Respondent empathetically denied that the Adjudicating Authority did not give any opportunity to Appellant to represent his case thereby violating principal of natural justice. Counsel for the Respondent stated that right to file Reply by the Appellant in I.A. No. 2844 of 2020 was closed by the Adjudicating Authority vide its order dated 13.07.2021 after noticing that even after applicating listed on multiple dates from 19.09.2020 to 13.07.2021, no Reply has been filed by the Respondents therein including Appellant herein. Counsel for the Respondent further pointed out that the Adjudicating Authority had directed answering Respondent herein and the Appellant therein to furnish documents regarding Respondent therein vide service of notice by filing Additional Affidavit which was filed on 10.07.2021 by the Respondent herein/ Appellant therein and then only the Adjudicating Authority on 13.07.2021 had closed the right of the Appellant to file Reply by the Appellant.

Counsel for the Respondent refuted that Appellant had made the payment and stated that the Appellant had not placed any valid document on record like agreements, audited financial statement to ascertain that the payment of Rs. 23 lakhs has been made to the Corporate Debtor.

Counsel for the Respondent stated that as per ledger account and transaction audit report dated 21.12.2019, the Appellant owed Rs. 33 lakhs to Corporate Debtor and the Appellant had returned back only Rs. 10 lakhs on 15.09.2014 and remaining Rs. 23 lakhs were due and payable. Counsel for the Respondent stated that transaction audit conducted by independent Chartered Accountants brought out clearly that there was no documentary evidence to establish payments and transaction between the Corporate Debtor and the Appellant are in improper nature in violation of applicable laws and identified as Sham, concocted and fraudulent which was done purely for purpose of diverting and siphoning of the money.

Counsel for the Respondent strongly refuted the alleged return/ adjustment of outstanding balance amount through so-called adjustment which were completely bogus in nature and without any documentation. 15. Counsel for the Respondent denied the claim of the Appellant that one Mrs. Manjeet Kaur Sran without any approval of Board of Director/ Shareholders, on its own, instructed the Appellant to adjust amounts and termed alleged letter manufactured by the Appellant in connivance with Mrs. Sran as afterthought by the Appellant to fraudulently validate its alleged adjustment of outstanding dues.

Concluding his arguments, Counsel for the Respondent stated that impugned order was delivered after due care taking into account various facts, provisions of law and independent transaction audit and therefore, the appeal need to be set aside being devoid of any merit with heavy cost.

Heard Learned Counsel for the ‘Appellant’ and the ‘Respondent’ and also perused record made available to us. The Appellant has raised two main points. We will examine them in following discussions:-

➢ It is noted from above statement that Mr. DS Sobti/ Mr. Vaibhabh Sahani appeared on behalf of the Appellant as seen from order dated 14.08.2020, 19.08.2020, 21.08.2020, 02.09.2020, 14.09.2020, 28.10.2020 & 02.12.2020.

➢ Therefore, this Appellate Tribunal do not find any error in the ‘impugned order’ and find that adequate opportunities were made available to the Appellant who has chosen not to respond or defend his case and this cannot be ground of not being heard.

➢ Admittedly, Rs. 30 lakhs were taken by the Appellant from the Corporate Debtor in two tranches i.e. Rs. 20 lakhs on 06.05.2020 and Rs. 10 lakhs on 19.08.2014. It is a case of the Appellant that he had repaid Rs. 10 lakhs on 15.09.2014 vide UTR Transaction No. NTBLR520140915000002. Appellant has tried to make out case that he was given instructions to adjust remaining Rs. 20 lakhs by way of car loans etc., and reproduced the following letter of HBN Foods Limited dated 30.03.2015.

➢ On a pointed query by this Appellate Tribunal to the Appellant as to whom this letter has been issued, reason for issuing this letter, Board of Director’s Resolution Authorising Mrs. Sran to issue such letter etc., non- availability of any company seal on above alleged letter, the Appellant could not give any direct and convincing answers.

➢ We have perused carefully the ‘impugned order’ where this point has been considered. The ‘Adjudicating Authority’ has stated that the Respondent Nos. 1 to 20 therein including Appellant herein are related parties of the Corporate Debtor.

➢ This Appellate Tribunal also take into consideration the following para recorded in the ‘impugned order’ dated 13.12.2021 by the Adjudicating Authority.

➢ The ‘Adjudicating Authority’ had also referred to Transaction Audit Report conducted by M/s Gaurav J & Company, Chartered Accountants, who were appointed to carry out transaction audit of the accounts of the Corporate Debtor from 01.03.2013 to 21.10.2019 (upto date of order initiation of CIRP against the Corporate Debtor).

➢ This Appellate Tribunal notes following ledger account prepared by the independent transaction auditor whereby, amount of Rs. 23 lakhs outstanding has been established.

After detailed examination and recording reasons, the Adjudicating Authority came to conclusions that the transactions are covered under Section 66 of the I & B Code, 2016 and therefore, gave directions for recovery of money from all the Respondents therein including the Appellant herein and in addition to institute a criminal prosecutions against the Respondent therein including Appellant herein under Section 69 of the I & B Code, 2016.

Therefore, this ‘Appellate Tribunal’ is of the considered opinion that there is no error in the ‘impugned order’ dated 13.12.2021 passed by the ‘Adjudicating Authority’. Appeal is devoid of any merit is therefore dismissed. No costs. The connected pending `Interlocutory Applications’, if any, are also Closed.