True Blue Finlease Limited vs Jagdish Singh Nain

[Arising out of Order dated 13.12.2021 passed by the Adjudicating Authority/National Company Law Tribunal, New Delhi Bench in (IB) 1359 (ND)/2019 in IA/2844/2020]

IN THE MATTER OF: True Blue Finlease Limited Ansal Utility, Commercial Complex, S-2-A, 2nd Floor, Paschim Vihar - West, New Delhi - 110063. ...Appellant

Versus

Jagdish Singh Nain Resolution Professional, HBN Foods Limited Office at: 3rd Floor, 8-28, WEA, Abdul Aziz Road, Karol Bagh, New Delhi - 110005. Email : cirp.hbnfoods@gmail.com ...Respondent

Present: For Appellant : Mr. Manu Bansal & Mr. Dhruv Gupta, Advocates.

For Respondent : Mr. Abhishek Naik, Ms. Gulafsha Kureshi, Mr. Mrigank Kumar & Ms. Gauri Swarup Bansal, Advocates.

(Virtual Mode) (09.02.2023)

NARESH SALECHA, MEMBER (TECHNICAL)

The Present Appeal is filed against the 'impugned order' dated 13.12.2021

passed in CP (IB) 1359 (ND)/2019 in IA/2844/2020 by the 'Adjudicating

Authority' (National Company Law Tribunal, New Delhi Bench), whereby, the

Company Appeal (AT) (Ins.) No. 1083 of 2022 1 of 13 'Adjudicating Authority' has allowed an Interlocutory Application bearing No.

2844 of 2020 filed by Respondent passing directions against the Appellant.

Aggrieved by the same, the appeal has been filed before this Appellate

Tribunal under the Insolvency & Bankruptcy Code, 2016 (in short 'I &B

Code, 2016).

Brief Facts:

2. An application No. 2844 of 2020 was filed by the Respondent under

Section 66 (Fraudulent trading or wrongful trading) of the I & B Code, 2016

against several parties including the Appellant herein/ Respondent No. 8

therein. It has been alleged that certain transactions have been entered into

between Appellant herein and the Corporate Debtor i.e. HBN Foods Limited

(under CIRP) fraudulently to defraud the Creditors of the Corporate Debtor.

The Appellant was aggrieved as he was not given a proper opportunity of

being heard and that the Adjudicating Authority issued the 'impugned order'

on 13.12.2021.

Appellant Submissions:-

3. Counsel for the Appellant submits that there is no outstanding

amount which is due and payable to the Corporate Debtor being represented

by Respondent herein. Counsel for the Appellant assailed the 'impugned

order' dated 13.12.2021 wherein the Adjudicating Authority has directed the

Respondent Nos. 2 to 21 (Appellant being Respondent No. 8 therein) to make

contribution of Rs. 2687.27 lakhs jointly or severally to the asset of

Company Appeal (AT) (Ins.) No. 1083 of 2022 2 of 13 Corporate Debtor within a period of two months from the date of the

'impugned order' failing which same shall be realised from their properties.

4. Counsel for the Appellant stated that in the financial year ending

31.03.2015, the Corporate Debtor has advanced a sum of Rs. 30 lakhs and

the Appellant paid complete amount of Rs. 30 lakhs in the same financial

year. In support of his argument, he reproduced a brief ledger account

statement as under :-

Date Transaction Amount Amount (Rs.) (Rs.) 06.05.2014 CD to Appellant 20,00,000 29.08.2014 CD to Appellant 10,00,000 15.09.2014 Appellant to CD 10,00,000 31.03.2015 Appellant to CD's Car 12,40,412 Loan upon its instructions 31.03.2015 Appellant to CD's 7,59,588 Related Party upon its instructions TOTAL 30,00,000 30,00,000

5. Counsel for the Appellant stated that he has received Rs. 20 lakhs from

the Corporate Debtor on 06.05.2014 and Rs. 10 lakhs on 29.08.2014.

Counsel for Appellant further stated that out of these, Rs. 10 was returned

by the Appellant to Corporate Debtor on 15.09.2014 vide UTR Transaction

No. NTBLR520140915000002 and again Rs. 20 lakhs Corporate Debtor

instructed Appellant to adjust dues as under :-

"That towards balance amount of Rs.20,00,000/- Iying outstanding, on 30.03.2015 Corporate Debtor instructed the Appellant adjust the said dues as under:

Company Appeal (AT) (Ins.) No. 1083 of 2022 3 of 13 a. Sum of Rs.12.40.412/- towards adjustment of dues in car loan a/c taken by Corporate Debtor from the Appellant. In this regard it is pertinent to mention that Corporate Debtor had obtained a Car Loan to the extent of Rs. 12,00,000/- from the Appellant in April 2014 vide agreement no. TBO5018 and as on 30.03.2015 there was an outstanding to the tune of Rs.12,.40,412/- in said loan account.

b. Corporate Debtor has required to adjust balance sum towards settlement of various other loan obtained by other related parties of Corporate Debtor as under:

NAME PARTICULARS AMOUNT (INR) Fusion Taste Against loan of Rs. 4,15,120/- 61,320/- Pvt. Ltd. taken vide agreement no. HP04788 in March, 2012 Exotic Eats Against loan of Rs. 4,15,120/- 72,715/- Pvt. Ltd. taken vide agreement no. HP04783 in January, 2012 Exotic Eats Against loan of Rs. 4,14,700/- 2,51,693/- Pvt. Ltd. taken vide agreement no. HP04798 in April, 2012 Tirupati Infra Against loan of Rs. 36,570/- Projects Pvt. 11,35,121/- taken vide Ltd. agreement no. HP04749 in May, 2011 R. Devika Against loan of Rs. 3,37,290/- 22,00,000/- taken vide agreement no. HP04748 in April, 2011 TOTAL 7,59,588/-

6. Counsel for the Appellant submitted that he has been wrongly made

party to I.A. No. 2844 of 2020 by the Respondent when there was no

outstanding against him.

Company Appeal (AT) (Ins.) No. 1083 of 2022 4 of 13

7. It is the case of the Appellant that the Adjudicating Authority erred in

passing the 'impugned order' ex-parte without hearing him and without

giving any opportunity to defend his case.

8. Counsel for the Appellant further assailed the 'impugned order'

wherein it has been ordered to institute a criminal prosecution against

various parties i.e including Appellant herein, under Section 69 of the I & B

Code, 2016.

9. Concluding his arguments, Counsel for the Appellant urged this

Appellate Tribunal to set aside the 'impugned order' and allow his appeal.

Respondent Submission:-

10. Counsel for the Respondent denied all averment of the Appellant being

false, misleading and with the sole intent to derail the process of recovering

the money from the various parties including Appellant herein arising out of

illegal and fraudulent transactions done by the Corporate Debtor and various

parties including Appellant herein.

11. Counsel for the Respondent empathetically denied that the

Adjudicating Authority did not give any opportunity to Appellant to represent

his case thereby violating principal of natural justice. Counsel for the

Respondent stated that right to file Reply by the Appellant in I.A. No. 2844

of 2020 was closed by the Adjudicating Authority vide its order dated

13.07.2021 after noticing that even after applicating listed on multiple dates

from 19.09.2020 to 13.07.2021, no Reply has been filed by the Respondents

therein including Appellant herein. Counsel for the Respondent further

Company Appeal (AT) (Ins.) No. 1083 of 2022 5 of 13 pointed out that the Adjudicating Authority had directed answering

Respondent herein and the Appellant therein to furnish documents

regarding Respondent therein vide service of notice by filing Additional

Affidavit which was filed on 10.07.2021 by the Respondent herein/ Appellant

therein and then only the Adjudicating Authority on 13.07.2021 had closed

the right of the Appellant to file Reply by the Appellant.

12. Counsel for the Respondent refuted that Appellant had made the

payment and stated that the Appellant had not placed any valid document

on record like agreements, audited financial statement to ascertain that the

payment of Rs. 23 lakhs has been made to the Corporate Debtor.

13. Counsel for the Respondent stated that as per ledger account and

transaction audit report dated 21.12.2019, the Appellant owed Rs. 33 lakhs

to Corporate Debtor and the Appellant had returned back only Rs. 10 lakhs

on 15.09.2014 and remaining Rs. 23 lakhs were due and payable. Counsel

for the Respondent stated that transaction audit conducted by independent

Chartered Accountants brought out clearly that there was no documentary

evidence to establish payments and transaction between the Corporate

Debtor and the Appellant are in improper nature in violation of applicable

laws and identified as Sham, concocted and fraudulent which was done

purely for purpose of diverting and siphoning of the money.

14. Counsel for the Respondent strongly refuted the alleged return/

adjustment of outstanding balance amount through so-called adjustment

which were completely bogus in nature and without any documentation.

Company Appeal (AT) (Ins.) No. 1083 of 2022 6 of 13

15. Counsel for the Respondent denied the claim of the Appellant that one

Mrs. Manjeet Kaur Sran without any approval of Board of Director/

Shareholders, on its own, instructed the Appellant to adjust amounts and

termed alleged letter manufactured by the Appellant in connivance with Mrs.

Sran as afterthought by the Appellant to fraudulently validate its alleged

adjustment of outstanding dues.

16. Concluding his arguments, Counsel for the Respondent stated that

impugned order was delivered after due care taking into account various

facts, provisions of law and independent transaction audit and therefore, the

appeal need to be set aside being devoid of any merit with heavy cost.

Findings

17. Heard Learned Counsel for the 'Appellant' and the 'Respondent' and

also perused record made available to us. The Appellant has raised two main

points. We will examine them in following discussions:-

(I) Denial of Opportunity of Being Heard/ Ex-parte Order:-

➢ As regards, above point we have noted from the averments made by

the Respondent that enough opportunities were given by the

Adjudicating Authority and an Additional Affidavit was filed by the

Respondent herein and Appellant therein before the Adjudicating

Authority whereas full details were given to establish service of notice,

proof by e-mail as well as by the speed post. After perusal of the same,

we note that service of notice was done by both modes.

Company Appeal (AT) (Ins.) No. 1083 of 2022 7 of 13 ➢ In addition to service of notice, this Appellate Tribunal also take into

account from the Additional Affidavit placed before the Adjudicating

Authority in which details of date wise appearance of the Advocate on

behalf of the Respondents have been provided which reads as under:-

"List depicting Advocate Appearances on behalf of Respondent in IA 2844/ 2020 in Response/ Pursuance to service of notice by the Advocate of the Resolution Professional PARTICULARS ADVOCATE APPEAREANCE ON BEHALF OF RESPONDENTS HBN Dairies and Allied Mr. Abhishek Parmar/ Mr. Ltd. Rohit Sehgal (Order dated 14.08.2020; 19.08.2020;

21.08.2020; 02.09.2020;

14.09.2020; 12.10.2020;

28.10.2020) HBN Home Colonies Pvt. Mr. Mohit Nandwani/ Ms. Ltd. Kritika (Order dated 14.08.2020; 19.08.2020; 21.08.2020; 02.09.2020; 08.09.2020; 14.09.2020; 12.10.2020; 28.10.2020) Complete News & Entertainment Broadcast Pvt. Ltd. HBN Entertainment & Broadcasting Pvt. Ltd. Exotic Eats Pvt. Ltd. Viraman Buildcon & Mr. D.S. Sobti/ Mr. Vaibhabh Sahni Developers Pvt. Ltd. (Order dated Fusion Taste Pvt. Ltd. 14.08.2020; 19.08.2020; 21.08.2020; 02.09.2020; True Blue Finlease Ltd. 14.09.2020; HBN Hospitality Pvt. Ltd. 28.10.2020; 02.12.2020)

Company Appeal (AT) (Ins.) No. 1083 of 2022 8 of 13 HBN Hospitality Pvt. Ltd. Amreen Projects & Infrastructure Pvt. Ltd. Smriti Buidcon Pvt. Ltd. HBN Credit Cooperative Society Ltd. Prosper Housing Finance Ltd. Mr. Amandeep Singh Sran Mr. Harmender Singh Sran Mrs. Manjeet kaur Sran Mr. Bohar Singh Dhillon Mr. Jagrup Singh Sandhu Mr. Gurpreet Singh Gill Birla Financial Mr. Lalit Joshi (order dated 14.08.2020, 21.08.2020; Distribution Ltd. 14.09.2020)

[emphasis supplied]

➢ It is noted from above statement that Mr. DS Sobti/ Mr. Vaibhabh

Sahani appeared on behalf of the Appellant as seen from order dated

14.08.2020, 19.08.2020, 21.08.2020, 02.09.2020, 14.09.2020,

28.10.2020 & 02.12.2020.

➢ Therefore, this Appellate Tribunal do not find any error in the

'impugned order' and find that adequate opportunities were made

available to the Appellant who has chosen not to respond or defend his

case and this cannot be ground of not being heard.

Company Appeal (AT) (Ins.) No. 1083 of 2022 9 of 13 (II) No Dues Outstanding & Payable :-

➢ Admittedly, Rs. 30 lakhs were taken by the Appellant from the

Corporate Debtor in two tranches i.e. Rs. 20 lakhs on 06.05.2020 and

Rs. 10 lakhs on 19.08.2014. It is a case of the Appellant that he had

repaid Rs. 10 lakhs on 15.09.2014 vide UTR Transaction No.

NTBLR520140915000002. Appellant has tried to make out case that

he was given instructions to adjust remaining Rs. 20 lakhs by way of

car loans etc., and reproduced the following letter of HBN Foods

Limited dated 30.03.2015.

Company Appeal (AT) (Ins.) No. 1083 of 2022 10 of 13 ➢ On a pointed query by this Appellate Tribunal to the Appellant as to

whom this letter has been issued, reason for issuing this letter, Board

of Director's Resolution Authorising Mrs. Sran to issue such letter etc.,

non- availability of any company seal on above alleged letter, the

Appellant could not give any direct and convincing answers.

➢ We have perused carefully the 'impugned order' where this point has

been considered. The 'Adjudicating Authority' has stated that the

Respondent Nos. 1 to 20 therein including Appellant herein are related

parties of the Corporate Debtor.

➢ This Appellate Tribunal also take into consideration the following para

recorded in the 'impugned order' dated 13.12.2021 by the Adjudicating

Authority.

" It is further contended that SEBI vide it's order dated 12.02.2015 has found the Promoters/ Directors guilty of running an unregistered collective investment scheme and misappropriating funds collected from lots of people and the said order is upheld by SAT on 28.06.2017.

Further recovery officer SEBI has assessed worth more than Rs. 1,000 crores. It is further contended that since the Promoters/ Directors has siphoned off the hard-

earned money therefore, they should be held liable and prosecuted."

➢ The 'Adjudicating Authority' had also referred to Transaction Audit

Report conducted by M/s Gaurav J & Company, Chartered

Accountants, who were appointed to carry out transaction audit of the

Company Appeal (AT) (Ins.) No. 1083 of 2022 11 of 13 accounts of the Corporate Debtor from 01.03.2013 to 21.10.2019

(upto date of order initiation of CIRP against the Corporate Debtor).

➢ This Appellate Tribunal notes following ledger account prepared by the

independent transaction auditor whereby, amount of Rs. 23 lakhs

outstanding has been established.

18. After detailed examination and recording reasons, the Adjudicating

Authority came to conclusions that the transactions are covered under

Section 66 of the I & B Code, 2016 and therefore, gave directions for recovery

of money from all the Respondents therein including the Appellant herein

Company Appeal (AT) (Ins.) No. 1083 of 2022 12 of 13 and in addition to institute a criminal prosecutions against the Respondent

therein including Appellant herein under Section 69 of the I & B Code, 2016.

We do not find any error in the 'impugned order' on this account and

the Appellant could not establish that Rs. 23 lakhs were indeed paid by him

to the Corporate Debtor.

19. Therefore, this 'Appellate Tribunal' is of the considered opinion that

there is no error in the 'impugned order' dated 13.12.2021 passed by the

'Adjudicating Authority'. Appeal is devoid of any merit is therefore dismissed.

No costs. The connected pending `Interlocutory Applications', if any, are also

Closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Naresh Salecha] Member (Technical) Simran

Company Appeal (AT) (Ins.) No. 1083 of 2022 13 of 13