Sandeep Sood vs Atul Kumar Kansal & Amp .Ors

Sandeep Sood ... Appellant Director of M/s. Seitz India Private Limited A-6/4, DLF, City-1, Near Qutab Plaza, Gurgaon-122002. Presently residing at R/0 73, New Manglapuri, Mehrauli, New Delhi-110030.

Versus

1. Seitz GmbH ... Respondent No. 1 Gutenbergstr 103, 65830 Kriftel, Germany

2. Atul Kumar Kansal ... Respondent No. 2 Resolution Professional of Seitz India Pvt. Ltd., SCO-61, 3 Floor, Old Judicial Complex, Sector - 15. Civil Lines, Gurgoan-122001.

3. LOTUS IMPORTS ... Respondent No. 3 Prop. Mr. Sandeep Sood, 73, New Manglapuri, Near Andheria Mor, MG Road, New Delhi-110030.

4. SIMRAN TECHNOLOGIES PVT. LTD. ... Respondent No. 4 Prop. Mr. Sandeep Sood, 73, New Manglapuri, Near Andheria Mor, MG Road, New Delhi-110030/

5. PARUL SOOD ... Respondent No. 5 W/o Sandeep Sood, A-6/4, DLF City-1, Near Qutab Plaza, Gurgaon- 22002

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 1 of 13 Present:

For Appellant: Mr. Abhishek Kaushik, Mr. Ritesh Khatri, Advocates.

For Respondents: Mr. Swapnil Gupta, Advocate for R-1. Mr. R.K. Gupta, Ms. Swarlipi Deb Roy, Advocates and Mr. Arun Kumar Kansal, CA for R-2.

ORDER

(Date:05.05.2022) (Virtual Mode)

[Per.: Dr. Alok Srivastava, (Member Technical)]

This appeal has been filed under Section 61 of the Insolvency

and Bankruptcy Code, 2016 (in short called 'IBC') challenging the

order dated 12.1.2022 passed by the Adjudicating Authority

(National Company Law Tribunal, New Delhi) in CA No. 574 of 2019

in CP (IB) No. 252/ND/2019 (hereinafter called the impugned

order). The Adjudicating Authority has allowed CA No. 574/2019

and directed that the Appellant, an ex-Director of the Corporate

Debtor, Seitz India Private Limited to transfer the money stated in

CA No. 574/2019 back to the Corporate Debtor's account within two

weeks.

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 2 of 13

2. The facts of the case, in brief are that an application under

section 9 of IBC filed by the Operational Creditor M/s. Seitz GmbH

was admitted vide order of Adjudicating Authority on 8.8.2019 and

Mr. Atul Kumar Kansal was appointed as Interim Resolution

Professional (IRP), who was confirmed as Resolution Professional (

in short RP) by the Committee of Creditors on 26.9.2019. As the

suspended Board of Directors was not cooperating with the RP in

providing details of bank accounts and other financial transactions,

the RP sought bank statements relating to the corporate debtor from

the banks concerned. He also filed an application under section

19(2) of the IBC bearing IA No. 349/2019 regarding non-cooperation

of the ex-Directors of the Corporate Debtor. Based on details

provided by the concerned banks of the Corporate Debtor, the RP

filed CA No. 574/2019 under sections 43, 45 and 66 of the IBC

praying for the transfer of money is taken out by Mr. Sandeep Sood,

ex-Director of the Corporate Debtor, back into the accounts of the

Corporate Debtor within two weeks of the Impugned Order.

3. It is stated by the Appellant that certain transactions were

carried out by the Corporate Debtor with Respondent No. 4/Simran

Technologies, a company in which Mr. Sandeep Sood and his wife

Mrs. Parul Sood are Directors and shareholders and also between

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 3 of 13 the Corporate Debtor with the company Lotus Imports, which is a

sole proprietorship firm of Mr. Sandeep Sood. All these transactions

amounting to Rs.63,50,000 with Lotus Imports, Rs.32,75,000 with

Simran Technologies, Rs. 68,000 with Mrs. Parul Sood and

Rs.17,64,785 to sundry beneficiaries was done during the period

5.2.2018 till 10.7.2018, which are within a period of 2 years prior to

initiation of the CIRP on 8.8.2019 and therefore they being

preferential transactions are liable to be returned to the Corporate

Debtor.

4. We heard the arguments submitted by the Learned Counsel

for Appellant and Learned Counsels for Respondent No. 1 and

Respondent No.2 and also perused the record.

5. The Learned Counsel for Appellant has submitted that the

case was proceeded ex-parte against the Appellant (who was

Respondent in CA No. 574 of 2019 before the Adjudicating

Authority) even though the Appellant had valid reasons regarding

his absence before the Adjudicating Authority and could file his

written reply detailing how the transactions were genuine and

carried out in the ordinary course of business vide reply affidavit

dated 10.2.2021 which was not taken on record and the matter was

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 4 of 13 thereafter listed on 26.2.2021 and subsequently on 8.4.2021 when

the Adjudicating Authority recorded that 'pleadings are complete,

List for hearing on 8.4.2021'. Thereafter the matter was taken up

on 22.7.2021, which was during the second wave of Covid-19

pandemic, whereafter order was reserved without affording an

opportunity to Appellant to make submissions regarding his

defense.

6. The Learned Counsel for Appellant has argued that the Seitz

GmbH provided technical knowhow, and information about the

products and materials to Seitz India Private Limited. Seitz GmbH

also entered into a confidentiality agreement with Simran

Technologies Pvt. Ltd. under which it provided data, materials,

products and technologies etc. to Simran Technologies Pvt. Ltd.

Seitz GmbH as Operational Creditor filed a section 9 application

against Simran Technologies Pvt. Ltd., wherein the Adjudicating

Authority vide order dated 3.7.2019 in CP(IB) No. 293/ND/2018

rejected the application of Seitz GmbH. Thereafter the appeal of

Seitz GmbH bearing CA AT(INS)No. 776 of 2019 was also rejected on

the basis of pre-existing dispute between Seitz GmbH (Operational

Creditor) and Simran Technologies Pvt. Ltd. (Corporate Debtor). He

has, therefore, argued that there are disputed transactions and

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 5 of 13 payments and the monies sought to be returned from Mr. Sandeep

Sood and his companies Lotus Imports and Simran Technologies

Pvt. Ltd. are covered by valid business transactions and without

considering the reply of Mr. Sandeep Sood in CA No. 574/2019, the

correct position would not come out. He has further stated that in

CA (AT) (INS) No. 776/2019, this Tribunal, the NCLAT has found

that there are various business transactions between the Seitz

GmbH and Simran Technologies Pvt. Ltd., which need to be looked

into and are the basis of the dispute between the parties, and

therefore Mr. Sandeep Sood should not be burdened with returning

the money as prayed for by the RP in CA No. 574/2019.

7. The Learned Counsel for Respondent No 1 has submitted that

the RP had addressed an e-mail on 13.9.2019 to Mr. Sandeep Sood

and (attached at pp. 152-153 of the appeal paper book) and Mr.

Alexander Seitz requesting for information regarding transactions

mentioned in e-mail, which had also been sought vide RP's e-mail

dated 17.8.2019 and which covered 25 transactions amounting to

Rs.1,14,57,785. He has stated that Mr. Alexander Seitz through his

Legal Counsel, sent a reply dated 20.9.2019 (attached at pp. 156-

157 of the appeal paper book), wherein he has clearly stated that

since 5.2.2018 all records, documents, assets etc. of Seitz India Pvt.

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 6 of 13 Ltd. are in the sole custody and possession of Mr. Sandeep Sood.

He has also stated that the bank transactions carried out by Mr.

Sandeep Sood during the period 5.2.2018 till 10.7.2018 involving

M/s. Lotus Imports, Simran Technologies Pvt. Ltd. and Mrs. Parul

Sood were challenged in a suit before the Delhi High Court in CS

(COMM)/513/2018, IA No. 8701/2018 wherein the Hon'ble Delhi

High Court vide order dated 10.7.2018 had restrained Mr. Sandeep

Sood (Defendant No. 2) from withdrawing money from the two bank

accounts, namely A/c no. 11450500598 and A/c no.

103705000218 (order of Hon'ble Delhi High Court attached at pp.

158-159 of the appeal paper book). He has mentioned that the order

of Delhi High Court shows that Mr. Sandeep Sood had been

withdrawing monies amounting to Rs.1,14,57,785 covering 25

transactions from the bank accounts of the Corporate Debtor Seitz

India Pvt. Ltd. and upon receiving a restrained order of Hon'ble Delhi

High Court, he stopped withdrawing monies from the said accounts.

Thus, it is clear the monies were withdrawn by Mr. Sandeep Sood

for which he has not provided complete and satisfactory information

about their being related to business dealings. The Learned Counsel

for Respondent No. 1 has also mentioned that the Appellant's

Learned Counsel sought two weeks' time from the Adjudicating

Authority to file his reply in CA No. 574/2019 vide order dated

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 7 of 13 16.12.2020 (attached at pp. 177-178 of appeal paper book), but did

not submit the reply on time. He later submitted the reply after the

case had been ordered to be heard ex-parte vide order dated

21.1.2021 (attached at page 179 of the appeal paper book). He has

argued that in the absence of permission neither sought from the

Adjudicating Authority nor granted, the said reply was not taken on

record and vide order dated 22.7.2021 (orders were reserved in the

case which were pronounced on 12.1.2022).

8. The Learned Counsel for Respondent No.1/RP has referred to

the e-mail dated 19.9.2019 (attached at page 160 of the appeal

paper book) to show that he had given ample opportunity to the

Appellant Mr. Sandeep Sood to explain debited amounts

communicated vide e-mail dated 13.9.2019 (attached at pp.152-153

of the Appeal paper book). He has also argued that the ledger

account of Seitz India Pvt. Ltd. maintained by Simran Technologies

Pvt. Ltd. (attached at pp 163-164 of the appeal paper book) show

that monies were debited from the account of Corporate Debtor, but

the purpose is not clear. He has also stated that Mr. Sandeep Sood

has kept a genset purchased by the Corporate Debtor at his own

and no proof of consideration paid for acquiring the genset from the

Corporate Debtor has been submitted by Mr. Sandeep Sood. He has

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 8 of 13 finally argued that in the absence of any satisfactory explanation

provided by Mr. Sandeep Sood regarding the transactions in

question, it is clear that he debited these amounts from the bank

accounts of the Corporate Debtor into his companies M/s. Lotus

Imports and Simran Technologies Pvt. Ltd. and also his wife Mrs.

Parul Sood and these amounts were certainly not transacted in the

normal course of business as has been claimed by the Appellant.

9. The Learned Counsel for Respondent No. 2 has adopted the

arguments presented by the Learned Counsel for Respondent No. 1

and urged that the money is siphoned off by the Appellant from the

accounts of the Corporate Debtor should be justly returned to the

Corporate Debtor as has been directed by the Adjudicating Authority

vide the Impugned Order..

10. A perusal of the records submitted by the Appellant shows

that vide e-mail dated 13.9.2019 addressed by the RP to Mr.

Sandeep Sood and Mr. Alexander Seitz, information was sought for

a list of 25 transactions amounting to Rs.1,14,57,785 whose details

were given in the said e-mail (attached at pp. 152-153 of the appeal

paper book). The reply from Mr. Alexander Seitz dated 20.9.2019

(attached at pp. 156-157 of the appeal paper book) states that since

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 9 of 13 5.2.2018, all records, documents, assets etc. of Seitz India Pvt.

Ltd.(Corporate Debtor) are in the custody and possession of Mr.

Sandeep Sood. He has also admitted that a few laptops and mobile

phones submitted to Mr. Seitz by the employees of Seitz India Pvt.

Ltd. who were fired by Mr. Sandeep Sood are in Mr. Alexander

Seitz's custody, which he is ready to return to the RP. Mr. Sandeep

Sood has not clearly replied to the e-mail dated 13.9.2019 of the RP,

but has asked a counter question vide his e-mail dated 19.9.2019

(attached at pg. 154 of the appeal paper book) asking as to whom

the Demand Draft for Rs.3,64,785 dated 13.12.2017 and the RTGS

dated 7.5.2018 for Rs.1,400,000 were issued. He has again sent a

short reply vide e-mail dated 27.9.2019 to the RP (attached at pg.

160 of the appeal paper book) submitting a ledger showing

statement of accounts related to withdrawals and stating that these

payments were received against supplies of goods. It is noted that

the ledger submitted by Mr. Sandeep Sood was maintained by

Simran Technologies Pvt. Ltd. (attached at pp.163-164 of the appeal

paper book), which do not make it clear as to the purpose for which

such transactions were made. Moreover, Mr. Sandeep Sood has not

given any proof or evidence to the RP to establish that these

payments were made against supply of goods. Similarly his e-mail

dated 4.10.2019 (attached at pp.167-168 of the appeal paper book),

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 10 of 13 he has stated that the Genset lying at his home has been purchased

by him against value consideration from Seitz India Pvt. Ltd., but

there is no mention about the consideration or any proof thereof.

11. Regarding the non-submission of reply by Mr. Sandeep Sood,

we note that the proxy Counsel undertook to file reply within two

weeks, when the matter in CA No. 574/2019 was taken up on

16.12.2020. But the reply was not filed and the case was listed for

ex-parte hearing on 16.2.2021. While it is correct that a copy of the

reply was sent to Mr. Alexander Seitz, it is clear from the order-sheet

dated 22.7.2021 that the case had already been proceeded ex-parte

vide order dated 21.1.2021 and no reply has come on record nor any

relief is sought from the court. Thus, it is clear that the Appellant

was completely remis in seeking permission of the Adjudicating

Authority for taking its reply on record and hence the matter was

finally adjudicated ex-parte.

12. The Learned Counsel for the Appellant has referred to the

judgment of NCLAT in the matter of CA(AT)(INS) No. 776 of 2019,

with Seitz GmbH as Appellant and Simran Technologies Pvt. Ltd. as

Respondent to urge that there was a confidentiality agreement dated

23.3.2012 under which Seitz GmbH agreed to disclose all data,

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 11 of 13 material, product, technology etc. to Simran Technologies to enable

it to manufacture and market the sale of chemical products for dry

cleaning, industrial and commercial laundry etc. and it was as a

result of this agreement that a settlement of accounts inter-se Seitz

India Pvt. Ltd., Seitz GmbH and Simran Technologies Pvt. Ltd. was

entered into through an MoU dated 25.4.2017 and thus there were

certain business dealings and transactions, which were sought to

be settled through this MoU. Therefore, he has urged that the

monies debited from the accounts of Seitz India Private

Limited/Corporate Debtor are in relation to the supplies of goods

and business dealings between Seitz GmbH and Simran

Technologies Pvt. Ltd. and Lotus Imports. While it is correct that

the NCLT has held in CA No. 776 of 2019 that there was a pre-

existing dispute between the Operational Creditor Seitz GmbH and

the Corporate Debtor Simran Technologies Pvt. Ltd., it is also true

that the monies taken out from the accounts of the Corporate Debtor

in the present appeal were done by Mr. Sandeep Sood after 5.2.2018

when Mr. Alexander Seitz had handed over the management of the

company and taken over by Mr. Sandeep Sood. The transactions

that are the subject of Impugned Order were all done after 5.8.2018

and therefore, in the absence of any reply/clarification/ explanation

by Mr. Sandeep Sood to explain the transactions. We do not think

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 12 of 13 that the Adjudicating Authority has committed any error in inferring

that the said transactions were hit by section 46 of the IBC.

13. We, therefore, come to the conclusion that the Adjudicating

Authority has correctly directed Mr. Sandeep Sood, ex-Director of

the Corporate Debtor to transfer the monies which are stated in

paragraph 4 of the Impugned Order back to the Corporate Debtor

account. He shall do so within two weeks from the date of this

judgment.

14. In view of the aforesaid discussion, we find that the appeal is

devoid of any merit and is, therefore, dismissed. There is no order

as to cost.

(Justice Ashok Bhushan) Chairperson

(Dr. Alok Srivastava) Member (Technical)

(Ms. Shreesha Merla) Member (Technical

New Delhi 05th May, 2022

/aks/

Company Appeal (AT) (Insolvency) No. 417 of 2022

Page 13 of 13