Alok Tripathi vs Mohit K Gupta

IN THE MATTER OF: Alok Tripathi, Suspended Director 1F 903 Raheja Vedanta Sec. 108 Dwarka Express Way Gurugram - 122008 aloktripathi@hotmail.com ...Appellant

Versus

Mohit K Gupta, Liquidator Benchmark Supply Chain Solutions Pvt. Ltd. 15 (Basement) Paschim Vihar Extension New Delhi - 110063 Mohitgupta1112@yahoo.co.in ...Respondent

Present: For Appellant : Mr. P. K. Sachdeva, Advocate

For Respondent : Mr. Arvind Nayar, Sr. Advocate with Mr. Rajiv Malik, Advocate

ORDER

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

The present Appeal is filed by the Appellant, the Suspended Director,

under Section 61 of the Insolvency and Bankruptcy Code, 2016 ("IBC")

against the Order dated 05.06.2024 passed by the Hon'ble National Company

Law Tribunal (Adjudicating Authority), New Delhi, Bench in I.A. No.

5166/2023 in CP (IB) /223/2020 whereby the said I.A. was allowed and the

Appellant was directed to deposit a sum of Rs. 3,67,900/- (Rupees Three

lakhs, sixty-seven thousand and nine hundred only).

2. The Corporate Debtor was incorporated on 04.04.2013, with a paid-up

capital of Rs 66 lakhs only. It is claimed that the Corporate Debtor was doing

good business but it faced a financial crunch in 2019 and started looking for

financial assistance from Banks and NBFCs. During this process, it is

claimed that the Appellant/Director of the Corporate Debtor met with one

Mr. Vijay Thapar, who assured the Director to get him a big loan and took

hefty amounts of money as service charges. However, he turned out to be a

con and never arranged for the assured loan for the Corporate Debtor. After

paying the money to him, the finances of the Company went into doll-drum

and resulted into the collapse of the Company.

3. Due to the inability of the Corporate Debtor to pay its Creditors, they

approached the Hon'ble Adjudicating Authority, and the Corporate Debtor

was placed under CIRP on 17.05.2022 and subsequently under liquidation

on 12.10.2022.

4. The Liquidator filed I.A. No. 5166 of 2023 under Section 43 of the IBC

based upon the Transaction Audit Report.

5. It is contended by the Appellant that the amount under contention in

the Transaction Audit Report was withdrawn by the Appellant against the

amount payable by the Corporate Debtor to him and the amount was utilised

for the benefit of the Corporate Debtor to keep it running and protected from

the rigors of CIRP.

Company Appeal (AT) (Insolvency) No. 1817 of 2024 2 of 8

6. Appellant contends that the Liquidator had failed to form his

independent opinion about the existence of the preferential transaction.

Appellant contends that as per the provisions of Section 43, the Application

by the Resolution Professional or the Liquidator, as the case may be, is to be

filed after forming his opinion in this regard. The Adjudicating Authority

failed to consider the fact that the Applicant has not submitted his opinion

in the Application and was supposed to submit his opinion and grounds

thereof as per the provisions of Section 43 of the IBC.

7. It is claimed that the Impugned Order is liable to be set aside as the

Adjudicating Authority has passed an Order, without due Application of mind

and cogent reasons in respect of its conclusion/findings in the Impugned

Order. It has therefore sought for the following relief(s):

a) Allow the present Appeal;

b) Set aside the Impugned Order dated 05.06.2024 passed by the

Hon'ble Adjudicating Authority;

c) Pass any other order/direction in the facts and circumstances of

the present Appeal and in the interest of the justice.

Appraisal

8. Heard Learned Counsel for both the parties and perused documents

on record.

Company Appeal (AT) (Insolvency) No. 1817 of 2024 3 of 8

9. There is a delay in re-filing of 50 days beyond the statutory period of 7

days in the Appeal explanation given in I.A. No. 6635 of 2024 at paragraph

4. Cause shown is found sufficient and re-filing delay is condoned.

10. In this case, the Corporate Debtor was admitted into CIRP on

17.05.2022 and, subsequently, into liquidation on 12.10.2022.

11. In order to ascertain the details of transactions conducted on the said

Corporate Debtor's account in the period preceding the commencement date

of Liquidation and for further scrutinizing the documents of the Corporate

Debtor relating to transactions which were preferential, defrauding and

undervalued during the "look-back period" of 5 years prior to commencement

of the CIRP, the Liquidator appointed M/s KRA & Co., to conduct the

Financial Transaction Audit on 03rd February, 2023.

12. M/s KRA & CO. submitted its Transaction Audit Report to Liquidator

on 30.05.2023, wherein it pointed out that there were some financial

irregularities in the Financial management of the Corporate Debtor in terms

fraudulent transaction without any documentation or reasons by and on

behalf of the Corporate Debtor and also some transactions (preferential

transaction) which violated the provisions of the Code.

13. The Transaction Audit Report had given categorical findings with

respect to preferential transactions to the tune of about Rs. 3,67,900/-

(Rupees Three lakhs, sixty-seven thousand and nine hundred only) in favour

of the Appellant/ Mr Alok Tripathi, reportedly against the outstanding Company Appeal (AT) (Insolvency) No. 1817 of 2024 4 of 8 secured loan. As the payment has been made in preference to the other

creditor of the CD, this is a preferential transaction under Section 43. This

transaction was conducted within the look-back period and unjustly

enriched certain creditors. On the basis of the Transaction Audit Report, the

Liquidator/Respondent filed an Application under Section 43 of the IBC,

2016 before the NCLT on 19.07.2023. Therefore, it was prayed that the

amount of Rs. 3,67,900/- (Rupees Three lakhs, sixty-seven thousand and

nine hundred only) received by the unsecured creditor of the Corporate

Debtor be vested in the Corporate Debtor for the reason of such payment

being preferential in nature and in contravention of Section 43 of IBC.

14. The Adjudicating Authority also gave sufficient opportunity to the

Appellant/ Mr Alok Tripathi to file a Reply against the Transaction Audit

Report. However, the Reply was not filed by the Appellant/ Mr Alok Tripathi.

Thereafter, the Adjudicating Authority forfeited their right to file a Reply on

02.05.2024. Further, the Appellant filed another I.A. for recalling of Order

dated 02.05.24. On 05.06.2024, before the Adjudicating Authority, Appellant

also argued that they may be given adjournment and asked for listing of their

Application for recall of the Order dated 02.05.2024. On the same date, the

Appellant/ Mr Alok Tripathi simultaneously argued that they did not have

funds available to pay.

Company Appeal (AT) (Insolvency) No. 1817 of 2024 5 of 8

15. Based on this facts of the case and in such situation the Hon'ble NCLT

decided for reversal of preferential transactions on 05.06.2024, as per the

following orders:

"In view of the aforementioned, particularly with reference to the Transaction Audit Report, we allow the present application and direct Mr. Alok Tripathi to pay back Rs. 3,67,900/- to the Liquidation amount of the Corporate Debtor.

It goes without saying that while distributing the assets/funds/properties of the Corporate Debtor, the Liquidator shall take into account the claim of aforementioned amount of Mr. Alok Tripathi also and would distribute the amount due to him against the aforementioned amount, as per waterfall mechanism, viz. Section 53 of IBC, 2016".

16. Section 43 (2) (a) of the Code clearly provides as follows:

"(2) A corporate debtor shall be deemed to have given a preference, if--

(a) there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor;

and

(b) the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with section 53."

17. From the records we note that the Liquidator had got a Transaction

Audit Report made, which had various findings, and in one such finding it

was noted that Rs. 3,67,900/- (Rupees Three lakhs, sixty-seven thousand

and nine hundred only) had been paid to the Suspended Director i.e. Alok

Company Appeal (AT) (Insolvency) No. 1817 of 2024 6 of 8 Tripathi and was found to be a preferential transaction. The Adjudicating

Authority has rightly noted that the Appellant/ Mr Alok Tripathi was put in

a beneficial position when aforesaid payment was made against his

unsecured loan as in terms of the provisions of Section 53 of the Code, the

secured Creditors and workmen get precedence over unsecured Creditors

against the payment of dues.

18. It is claimed by the Appellant that, as per Section 43 of the Code, the

Liquidator should have found an opinion based on the Transaction Audit

Report. He relies upon the word 'opinion' in Section 43, as reproduced below:

"43. Preferential transactions and relevant time. -

(1) Where the liquidator or the resolution professional, as the case may be, is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions and in such manner as laid down in sub-section (2) to any persons as referred to in sub-

section (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred to in section 44."

19. It is to be noted that even if any amount was payable to the Appellant/

Mr Alok Tripathi qua its outstanding unsecured loan could have staked his

claim before the Liquidator and could have got his share in terms of the

provisions of Section 53 of the Code. It is worth noting that the Adjudicating

Authority noted that the Liquidator shall look into the claim of the amount

of the Appellant/ Mr Alok Tripathi while distributing the

assets/funds/properties of the Corporate Debtor as per the waterfall

mechanism under Section 53 of the Code.

Company Appeal (AT) (Insolvency) No. 1817 of 2024 7 of 8 Conclusion and Order

20. When the Liquidator has got a Transaction Audit Report done and

basis that has come to a conclusion that this is a preferential transaction,

after which he filed an I.A. before the Adjudicating Authority, in such

conditions, we cannot agree with the submissions of the Appellant that the

Liquidator has not formed an opinion. We reject the submissions of the

Appellant accordingly. The Appeal is dismissed. No orders as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) New Delhi.

08.11.2024.

pawan

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