2024 Supreme(Online)(NCLT) 14
NATIONAL COMPANY LAW TRIBUNAL
HARNAM SINGH THAKUR, L.N. GUPTA, JJ
sarish mittal – Appellant
Versus
NIPAN BANSAL – Respondent
IA(I.B.C) - 560/2023
Advocates:
For the Petitioner:sandeep suri
The court upheld that previously addressed allegations of forgery and conflict of interest lacked merit, affirming the technical nature of the lapses without justification for re-examination.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - Applications filed by suspended Director challenging the authenticity of transaction audit reports and the appointment of transaction auditor - Allegations of forgery and conflict of interest raised against the Resolution Professional and auditors - The court found no merit in the allegations as they had been previously addressed and deemed technical lapses. (Paras 9, 10, 12, 13)
(B) Maintainability - The court ruled that the issues raised were already under consideration in a prior application and thus dismissed the current applications. (Paras 9, 10, 12)
Facts of the case:
The applicant, a suspended Director, alleged that the transaction audit reports were forged and that the appointment of the transaction auditor was invalid due to prior relationships with the Corporate Debtor. The applicant sought to set aside these reports and prevent actions based on them.
Findings of Court:
The court concluded that the allegations had been previously investigated and found to be technical in nature, with no justification for re-examination.
Issues: The main issues included the authenticity of the transaction audit reports and the validity of the transaction auditor's appointment.
Ratio Decidendi: The court emphasized that the allegations had been previously addressed and found to be technical lapses, thus lacking merit for further examination.
Result: Applications dismissed.
ORDERI.A. No. 560 of 2023 and M.A. 05 of 2023, being interconnected, are taken up together for adjudication.
I.A. No. 560 of 2023 The instant application has been filed by Sarish Mittal, the suspended Director of the Corporate Debtor (hereinafter referred to as “the Applicant”)
against Nipan Bansal (Resolution Professional), Kansal Singla and Associates (Chartered Accountants) and others, collectively referred to as “the Respondents," under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code"), seeking the following reliefs:
a. for setting aside the transaction audit dated 09.07.2020 and 01.05.2020 and declaring FTTR dated 01.05.2020 and 09.07.2020 as forged, arbitrary, and illegal; and b. to direct RP to place on record a list of assets, books of accounts, and documents prepared by it on the day of taking possession as per NCLT order dated 17.12.2019; and c. an interim order may be passed holding that no action be taken against the applicant based on said transaction reports.
2. The applicant has leveled the following allegations against the Respondents:
Conflict of interest in respect of the Ld. counsel, Mr. Harsh, who is representing the financial creditor, as well as the RP.
Non-sharing of photographs in respect of all such portions of the factory, wherein the stocks, finished goods, and goods in production were stored; the doctrine of video recording of the plant and machinery, non-maintenance of the list of stocks and assets.
Failure to produce support list of inventory of all current, fixed assets and books of accounts/records/documents, correspondence, and other belongings of the Corporate Debtor lying at units of the Corporate Debtor, taken into possession and physical control by Respondent No.1/RP on 20.12.2019. iv.
Appointment of M/s Kansal Singla & Associates as a forensic and transaction review report (FTRR) auditor for 7 years, i.e., from 01.04.2013 to 16.12.2019, instead of initially appointing only transaction review auditor for two years prior to CIRP admission as per IBC, 2016.
Non-sharing of the FTRR Report dated 01.05.2020 with the applicant, taken on record in the 4th CoC meeting held on 19.06.2020, alleged to be unsigned, forged, fabricated, and antedated, supported by a Metadata Report, annexed to the application as Annexure A-17, which states that the FTRR Report dated 01.05.2020 was created on 23.07.2020, when the UDIN number was generated and was signed by the auditor also on the same day, which is subsequent to the meeting dated 19.06.2020 of the COC.
3. It is averred that vide email dated 09.10.2020 from R-1/Bank of India, the account of the applicant was declared fraudulent based on the FTRR Report dated 09.07.2020. The applicant submitted that it is mentioned in the FTRR Report that the said report has been prepared without accessing any books of accounts for the relevant period of 6 years and 9 months. Hence, the report is neither conclusive nor complete nor has any locus standi, and it is submitted by the auditor in the report that the result of the FTRR audit should be considered only as a guide and can change upon access and examination of data.
4. The applicant made several requests to the lenders to arrange and allow access to the documents/books of accounts of Corporate Debtor lying at the unit of Corporate Debtor under the control of R-1 for the purpose of filing reply to the FTRR report, but received no response to the same.
5. The Applicant has submitted a short note on the maintainability of the present application, in pursuance of the reply given in I.A. No. 366/2020 which was filed vide diary no. 00537/4 dated 24.07.2023 and further vide diary no. 00537/7 dated 11.03.2024, in which the Applicant has stated that the present application could not be filed earlier as the Applicant was in custody until May, 2022 on account of a false FIR filed by the unsuccessful resolution applicant. The applicant has further submitted that the issue involved i
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