NCLT Chennai-II (01.07.2022) in M/s. Regen Powertech Pvt. Ltd. Represented by RP Ebenezar Inbaraj Vs. Veeral Controls Pvt. Ltd. [IA(IBC)/491(CHE)/2021 in IBA/1099/2019 ] held that;
It is also seen that after the approval of the Resolution Plan, the RP will become functus officio and hence he cannot prosecute the present Application under Section 66 of IBC, 2016.
Excerpts of the order;
The present Application is filed by the RP of M/s. Regen Powertech Private Limited under Section 66(2) of the Insolvency and Bankruptcy Code, 2016 seeking relief as follows;
(i) to direct the Respondents jointly and severally contribute to the assets of the Corporate Debtor by paying a sum of Rs.1,56,51,772/- (Rupees One Crore Fifty Six Lakhs Fifty One Thousand Seven Hundred and Seventy Two Only) alongwith 12% interest from 12.02.2018 till the date of realization in full; and
(ii) to pass such other orders or further orders this may be deemed to be fit and proper in the interest of justice.
# 2. The Learned Counsel for the Applicant submitted that the CIRP in respect of the Corporate Debtor was initiated by this Tribunal vide its order dated 09.12.2019 and the Applicant herein was appointed as the Interim Resolution Professional (IRP). Thereafter, as per the decision of the COC in its 2nd meeting, the IRP was confirmed as Resolution Professional and this Tribunal also vide its Order dated 21.10.2020 confirmed the same.
# 3. It was submitted that the in the course of business, M/s.Regen Powertech Private Limited (hereinafter referred to as the Corporate Debtor) has issued a Purchase Order to the 1st Respondent supply of materials vide PO Number: R9/4518000654, dated 29.01.2018. Thereafter, the 1st Respondent is said to have supplied the following materials:
a) IGBT Stack, SkiiP4 with Fuse Air Cooled, Item Code 30000640 ProdSrNo.17M0444 to 17M0479, 482 to 505, (60 Nos.), vide Invoice No.84, dated 12.02.2018, for a sum Rs.91,35,000/-; i) IGBT Stack, SkiiP4 with Fuse Air Cooled, Item Code 30000640. ProdSrNo.17M0506 to 17M0511, (6 Nos.);and
b) ii) DIODE Module Stack, Item Code 30000141 Prod Sr. No.D17A0534 to D17A0537, 539 TO 552, 559 to 564, 573 to 578, (30 Nos.), vide Invoice No.85, dated 12.02.2018, for a sum Rs.38,13,075/-;
c) IGBT Stack, SKIP4 with Fuse Air Cooled, Item Code 30000640 ProdSrNo.17M0276 to 17M0288, (13 Nos), vide Invoice No.1028 dated12.02.2018, for a sum Rs.20,44,177/
d) IGBT Stack, SKIP4 with Fuse Air Cooled, Item Code 30000640 ProdSrNo.17FL0025 to 17FL0033, 19 Nos), vide Invoice No.105A, dated 12.02.2018, for a sum Rs.13,77,720/-;
e) IGBT Stack, SkiiP4 with Fuse Air Cooled, Item Code 30000640 ProdSr. No.17FL0001 to 17FL0024, (24 Nos.), vide Invoice No. 106A, dated 12.02.2018, for a sum Rs.36,73,920/-;.
IGBT Stack, SkiiP4 with Fuse Air Cooled, Item Code 30000640 Prod SrNo.17M0318 to 17M0332, (15 Nos.), vide Invoice No.107A, dated 12.02.2018, for a sum Rs.23,48,550/
g) IGBT Stack. SKP4 with Fuse Air Cooled, Item Code 30000640 ProdSr No.17M0306 to 17M0317, (12 Nos.), vide Invoice No.108A, dated 12.02.2018, for a sum Rs.18,78,840/-;
h) IGBT Stack, SkiiP4 with Fuse Air Cooled, Item Code 30000640 ProdSrNo.17M0294 to 17M0307, (17 Nos.), vide Invoice No.111A, dated 12.02.2018, for a sum Rs.26,47,875/-;.
i) IGBT Stack, SKIIP4 with Fuse Air Cooled, Item Code 30000640) ProdSrNo.17M0444 to 17M0479, (11 Nos.), vide Invoice No.112A, dated 12.02.2018, for a sum Rs.16,80,690/;
# 4. Thereafter, it was submitted that the Corporate Debtor has made payment to the tune of Rs.2,85,99,847/ (Rupees Two Crore Eight Five Lakh Ninety-Nine Thousand Eight Hundred and Forty Seven Only) to the 1st Respondent, availing a Letter of Credit No. 001LMO2180340004, from its Banker Yes Bank Limited, Worli Branch, Mumbai.
# 5. It was submitted that after the Applicant took charge of the affairs of the Corporate Debtor, the Applicant has reviewed the Stocks and Entries of the Corporate Debtor. After review, the Applicant found that as per SAP viz., Systems, Applications and Products in Date Processing, the Purchase Order quantity is 150 EA. however, only 3 Goods Receipt Notes were made against the said Purchase Order for 78 EA, for 2 invoices alone, as against the 9 Invoices mentioned above. Evidently, apart from the materials supplied by the 1st Respondent under Invoice Bill Nos.84 and 85, the other Invoice Bill Nos. 102B, 105A, 106A, 107A, 108A and 112A to the tune of Rs.1,56,51,772/- (Rupees One Crore Fifty Six Lakhs Fifty One Thousand Seven Hundred and Seventy Two Only) are fake and no materials were supplied under the said Invoice Bills. The 1st Respondent in connivance with Respondents 2 to 4 have raised fake invoices without supplying any materials and fraudulently encashed the Letter of Credit and siphoned off funds, defrauding the Creditors.
# 6. In the circumstances, it was submitted that the Applicant through various emails has required the 1st Respondent to furnish particulars regarding the materials supplied and raised queries regarding the falsification of Invoice bills and fraudulent receipt of payment. The 1st Respondent has issued a Reply dated 12.03.2021, duly admitting that Invoices were manipulated on the specific request of the Corporate Debtor and giving an untenable justification for creating fake Invoice Bills. It may be seen that even as per the details given by the 1st Respondent in the said Reply, the most of the Invoice Bills mentioned therein have not reflected in the Ledger Account submitted by the 1st Respondent alongwith the Claim to the Applicant. The said conduct of the Respondents are far from bonafide. It was submitted that the Respondents acting in concert have siphoned off the funds paid by the Creditors raising fake invoice bills and said conduct would squarely fall under the ambit of fraudulent transaction under Section 66 (1) of the Code.
# 7. It was submitted that the Respondents are liable to contribute a sum of Rs.1,56,51,772/ (Rupees One Crore Fifty Six Lakhs Fifty One Thousand Seven Hundred and Seventy Two Only) alongwith interest to the assets of the Corporate Debtor. The Applicant is duty bound to file the present Application to recover the said amount and safeguard the interest of all the Creditors of the Corporate Debtor. As submitted above, after verification and scrutiny of various documents and records of the Corporate Debtor, it is evident to the Applicant that the Respondents have acted in pursuance of their evil design to defraud the Stakeholders/Creditors of the Corporate debtor and are also guilty of carrying out fraudulent transactions. The Respondents cannot be allowed to get away by playing fraud and cheating the Creditors. Unless, the Respondents are directed to contribute to the assets of the Corporate Debtor, the said Creditors would suffer irreparable loss and injury. In the circumstances, it was submitted that it is just and necessary that the relief sought hereunder is granted.
# 8. The 1st Respondent has filed counter and it was submitted that a Resolution Plan approved by the CoC of the Corporate Debtor was submitted before this Adjudicating Authority and as a result vide Order dated 01.02.2022, this Adjudicating Authority had approved the Resolution Plan. Under such circumstances, it was submitted that the erstwhile Resolution Professional of the Corporate Debtor, the Applicant herein, lacks the locus standi to further the present Application filed under Section 66(1) of IBC. This is in consonance with the legal rational that the Role of a Resolution Professional comes to halt once the Resolution plan is approved by the Adjudicating Authority. This view was emphasized and upheld by the Delhi High court in the matter of M/s. Venus Recruiters Private Limited Vs. Union of India & Ors. W.P.(C) 8705/2019) & CM APPL. 36026/2019 (annexed as Annexure 1) wherein the High Court of Delhi held, in Para 51, as follows:
“Once a Resolution Plan is approved, the moratorium order under Section 14 shall cease to have effect and the RP shall forward all the records relating to the CIRP and the Resolution Plan to the Board to be recorded on it database. Thus, the role of a RP comes to an end here. “
# 9. It was submitted that there is a START line and FINISH line for the Resolution process. Section 23 clearly stipulates that the role of the RP is to manage the affairs of the Corporate Debtor 'during the resolution process and NOT thereafter. The RP merely conducts and manages the operations of the Corporate Debtor, during the CIRP process and not beyond. Any other interpretation could lead to a situation where an RP could be an "RP or a 'Former RP for years together without any definite end date. Infact a perusal of the Resolution Plan approved by this Adjudicating Authority (relevant pages of which is annexed as Annexure 2) reveals the following lines under the heading "5.2.10 Litigations, Inquiries, Investigations etc.":
"For avoidance of doubt, it is clarified that, during the CIRP Period, the Resolution Professional will be entitled to file or initiate applications or relevant proceedings in respect of preferential transactions, undervalued transactions, extortionate credit transactions and transactions involving fraudulent trading or wrongful trading under Section 43 to 51 and section 66 of the IBC ("RP Applications"). Post the Approval Date, any cost or expenses incurred in continuing the RP Applications (including in connection with any appeal or recovery there shall be borne by the CoC/Secured Financial Creditors and the Creditors shall endeavour to take the said applications to their logical end in their name."
# 10. It was submitted that therefore, under the light of the above precedent and the current scenario where the Resolution Professional today as per the plan submitted by the Resolution Applicant can no more further this application and this being the case the present petition deserved to be dismissed at maintainability stage itself on account of the fact that it is directly contrary to the resolution plan approved by this AA, it was submitted that the present Application cannot be advanced by the Applicant under the status of a Resolution Professional. It was submitted that as of today the plan is approved and it is to be noted that Hon'ble NCLAT vide its order dated 09-03-2022 had only deferred the implementation of Plan without interrupting on the approval granted by this NCLT. Thereby only implementation of Resolution plan is deferred and as at the current stage, the plan stands approved. And as per the Resolution plan submitted from the approval date, the COC/Financial Creditors shall endeavour to take the said applications to their logical end in their name and therefore the Resolution Professional has no locus standi in this matter.
# 11. It was submitted that the Application filed by the Applicant fails to meet the pre-requisites detailed under Section 66(1) of IBC to initiate a proceedings against "Fraudulent Trading".
# 12. It was submitted that upon clear reading of the above section, it is evident that the said section is triggered when the business of the Corporate Debtor is carried on with intent to defraud the creditors or for any fraudulent purpose. Further upon proving the above, the Adjudicating Authority may make "any persons" liable to contribute to the assets of the Corporate Debtor, if at all such persons "were knowingly involved" in carrying the business of the Corporate Debtor in a fraudulent manner.
# 13. It was submitted that the Applicant herein has failed to establish that the business of the Corporate Debtor was carried in a fraudulent manner and that R1 was a party who was knowingly involved in such a fraudulent business. Rather, the Applicant has come up with allegations which have no relevance in order to attract the provisions of section 66 of IBC. The applicant has absolutely failed to prove Ri's mens rea to defraud the creditors of the Corporate Debtor.
# 14. The 2nd and 3rd Respondent has filed counter and it was submitted that the answering Respondents are not necessary parties in the Application since the 1st Respondent is the right party liable to provide for any explanation pertaining to the present Application. It was submitted that the 1st Respondent is a vendor who had a running account with the Corporate Debtor and any amounts that were due were always adjusted in the subsequent invoices or by way of encashment of letters of credit. Further, it is false to state that the invoices raised are fake and that no materials were received. It was submitted that the IGBT stacks that were purchased by the Corporate Debtor from the 1st Respondent were utilized for wind turbines supplied by the Corporate Debtor and each product was provided with GR Number which is very much available at the site records and the Applicant can corelate the products supplied by the 1st Respondent at the sites in order to understand that the 1st Respondent indeed supplied all materials for the invoices raised by it. The Applicant deliberately concealed this information for the purpose of the present application.
# 15. It was submitted that the Applicant allegedly raised various queries regarding the above and that the 1st Respondent allegedly replied admitting that the said invoices were manipulated by the Corporate Debtor at that point of time. Therefore, based on the alleged reply the Applicant assumed that the invoices are fake and unnecessarily accuses the answering Respondents stating that funds have been siphoned off by raising fake invoices.
# 16. Moreover, it was submitted that the claim of the 1st Respondent against the Corporate Debtor was rejected by the RP of the Corporate Debtor and it is evident that the 1st Respondent has stated contrary to the facts in collusion with the RP of the Corporate Debtor. Therefore, the present Application is liable to be dismissed as against the answering respondents.
# 17. Heard the submissions made by the Learned Counsel for both the parties. It could be seen that the Learned Counsel for the 1st Respondent has submitted that the present Application is not maintainable in view of the fact that the Resolution Plan in respect of the Corporate Debtor has been approved by this Tribunal and that the Applicant herein can no more contest the present application since he becomes functus officio. It was also submitted that as per the Resolution Plan, the CoC is required to take the present Application to its logical end in their name and the Applicant in the present case has no locus to maintain the present Application.
# 18. Admittedly in the present case, it could be seen that the cause title of the Application has not been changed or amended. It is also seen that after the approval of the Resolution Plan, the RP will become functus officio and hence he cannot prosecute the present Application under Section 66 of IBC, 2016. Under said circumstances, the present Application sans merit and liable to the dismissed and accordingly stands dismissed. No costs.
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