Ashok Kumar Agarwal vs Narayan Chandra Saha

IN THE MATTER OF: Ashok Kumar Agarwal ...Appellant Versus Narayan Chandra Saha & Ors. ...Respondents

Present: For Appellant : Present but appearance not marked.

For Respondents : Mr. Abhijeet Sinha, Sr. Advocate with Mr. Santosh Kumar, Mr. Abhijeet Sarkar, Mr. Artira Basu and Mr. Saikat Sarkar, Advocates.

ORDER

(Hybrid Mode)

20.02.2025 : Heard Counsel for the Appellant as well as Counsel for the

Respondent.

2. This Appeal has been filed against an Order dated 10.12.2024 passed

by the Adjudicating Authority (National Company Law Tribunal, Division

Bench, Court - II, Kolkata) in I.A. No. 790/2021 which was filed by the

Liquidator under Section 66 of the Insolvency and Bankruptcy Code, 2016

(for short 'The Code' or 'The IBC'). Adjudicating Authority by the Impugned

Order has rejected the Application. Aggrieved by the Order, Appellant has

come up in this Appeal.

3. Counsel for the Appellant submits that the Adjudicating Authority has

noticed the fact that Corporate Debtor was to receive a sum of Rs.37.50 Lakhs

from Orient Export Pvt. Ltd. and said Orient Export Pvt. Ltd. purportedly

settled the dues of the Corporate Debtor by transferring shares held by it in another group Company called Imperial Commercial Pvt. Ltd. It is submitted

that even Transaction Audit Report the said transaction was held to be a

Preferential Transaction, hence the Adjudicating Authority ought not to have

rejected the Application.

4. We have considered the submissions of Counsel for the Appellant and

perused the record.

5. Adjudicating Authority has returned following finding in Paragraphs 7.2

to 7.5, which are as under:

"7.2. It has been stated that the corporate debtor was to receive a sum of Rs. 37.50 lakhs from Orient Exports Pvt. Ltd. and the said Orient Exports Pvt. Ltd. purportedly settled the due of the corporate debtor by transferring shares held by it in another group company called Imperial Commercial Pvt. Ltd. All these companies are not listed.

7.3. Since the amount due from Orient Exports Pvt. Ltd. is for a long period, the corporate debtor instead of writing it off in the books of account as not recoverable, has chosen to settle it with the transfer of shares in its favour, in respect of shares held by Orient Exports Pvt. Ltd. in Imperial Commercial Pvt. Ltd.

7.4. The liquidator has claimed the book value of shares of the said Imperial Commercial Pvt. Ltd., is around Rs. 10/- without providing any valuation report. Obviously, he has arrived the value based on net asset value method.

7.5. No adverse remarks have been placed by the statutory Auditor of the company of this transaction though he may be the Auditor of all the three companies. No remark/enquiry has been made by any other statutory authorities with regard to the transaction in question. Nothing has been placed on record to show that the shareholders of the companies have raised this issue in any meetings."

6. The fact that Corporate Debtor who was to receive the sum of Rs.37.50

Lakhs has settled with the Orient Export Pvt. Ltd. by transferring shares of

Comp. App. (AT) (Ins.) No. 139 of 2025 2 of 3 another group Company cannot lead to conclusion that the transaction was

fraudulent. Adjudicating Authority has clearly held that mere possibility of

fraud without any specific finding of fraud is not legally sustainable.

Liquidator's presumption of under valuation and fraud without any

circumstantial evidence even, if not direct evidence, cannot be a basis for

allowing the Application under Section 66 of the Code.

7. The submission of the Appellant that Transaction Auditor has referred

to transaction as preferential also cannot be a ground to hold the transaction

within meaning of Section 66 of the Code.

8. We thus are of the view that Adjudicating Authority has not committed

any error in rejecting the Application filed by the Liquidator under Section 66

of the Code.

Appeal dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) himanshu/nn

Comp. App. (AT) (Ins.) No. 139 of 2025 3 of 3