NCLT Mumbai (2019.05.07) Mr. Ram Ratan Kanoongo Applicant in the matter of SBI Global Factors Ltd. Vs. Sanaa Syntex Private Limited . [MA 436/2018 in CP No.172/IBC/NCLT/MB/MAH/2017] held that;
Now keeping in view the fact that if there is a syphoning off of funds of the Corporate debtor, it is important that the money be brought back for the completion of liquidation proceedings. Section 43 & 45 start with the phrase “Where the liquidator or the resolution professional…….”, hence it can be understood that the avoidance or preferential or undervalued transactions can be handled even at the stage of Liquidation. Therefore, the Code leaves no iota of doubt with respect to the idea that the defaulters should not go scot free, if the funds have been syphoned away.
Excerpts of the order;
# 1. The Corporate Insolvency Resolution Process of Sanaa Syntex Private Limited (the Corporate Debtor) commenced on 22.08.2017, pursuant to admission of Section 7 application (CP 172/I&BP/NCLT/MB/2017) filed by a Financial Creditor State Bank of India. The Corporate Debtor could not be revived because the COC had not approved the Resolution Plan submitted for due approval of CoC, therefore, liquidation order was passed on 19.07.2018. Consequently, Mr. Anuj Bajpai was appointed as the Liquidator. The liquidator/Applicant in this application seeks the following prayers :
“a. Consider and allow this MA 436/2018 in terms of section 19(2), 45, 66 read with Section 26 of IBC, 2016;
b. Require the persons as detailed in this above, to pay such sums as stated above in respect of benefits received by them from the Corporate Debtor as the Hon’ble Tribunal may direct;
c. Pass appropriate directions/orders in terms of section 48,67,70, 71,72 and 73 of the Code including for recovery/restoration of legitimate amounts due to the Corporate Debtor”.
# 2. It is worth to note that during the course of Corporate Insolvency Resolution Process, the RP noticed certain transactions which appeared to be fraudulent or preferential in nature, therefore, this application was filed by the RP during the period of Corporate Insolvency Resolution Process. The Company could not be revived, therefore, Liquidation order was passed for the Corporate Debtor and the Liquidator was appointed. Now keeping in view the fact that if there is a syphoning off of funds of the Corporate debtor, it is important that the money be brought back for the completion of liquidation proceedings. Section 43 & 45 start with the phrase “Where the liquidator or the resolution professional…….”, hence it can be understood that the avoidance or preferential or undervalued transactions can be handled even at the stage of Liquidation. Therefore, the Code leaves no iota of doubt with respect to the idea that the defaulters should not go scot free, if the funds have been syphoned away. Therefore, it is important to decide this application so that the doubtful transactions be undone and the money be brought back to the Corporate Debtor. Henceforth, the Liquidator shall take due action as prescribed under law.
# 34. Hence, the transaction discussed in para 10 of this order is not done in the ordinary course of business of the Corporate Debtor as assets (stock) has been transferred and no money/payment has been received in respect of the same. Hence, exercising jurisdiction under section 48(1)(c) of the I&B Code, it is ordered to Respondent No. 7 to pay an amount of ₹3,31,56,980/- in respect of benefit received, to the Liquidator.
# 36. The transactions stated above are not made in the ordinary course of business or financial affairs of the Corporate debtor and satisfy the criteria of section 43 of the I&B Code to be labelled as preferential transactions. Therefore, the prayers of the Applicant at para 15, 18, 20, 22, 24, 26 & 28 of this order are also allowed being preferential transactions and the power is exercised under section 44(1)(d) of the I&B Code to require the aforesaid respondents to pay such sums in respect of the benefits received by them from the Corporate Debtor
# 37. In view of these observations and considering the totality of facts & circumstances of this case, this MA is allowed in its entirety. The Respondents are directed to return the syphoned sums as stated above in this order. The Respondents are also directed to revert back an equal amount of benefits received by them from the Corporate Debtor. Failure to comply with this order will push this Bench to take penal actions under sections 70-73 of the Code.
# 38. MA 436 of 2018 Allowed. Ordered Accordingly.
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Blog ; Avoidance Proceedings during Liquidation Process
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