Fraudulent conduct under Insolvency and Bankruptcy Code mandates proving intent to defraud; not all alleged actions constitute fraud.

ORDER

Per: Prabhat Kumar, Member (Technical)

1. This Application bearing IA No. 5197/2023 is filed by Mr. Vijay P. Lulla, the Resolution Professional of Perpetual Capital & Servicing Private Limited (“Applicant”) in the Coprorate Insolvency Resolution Process (“CIRP”) of Perpetual Capital & Servicing Private Limited (“Corporate Debtor”) under Section 66 of the Insolvency and Bankruptcy Code, 2016 (“Code”) r/w Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016 (“CIRP Regulations”) seeking the following reliefs :

a) To declare that the Respondents have been carrying out business of Corporate Debtor with an intent to defraud the creditors with a fraudulent purpose and accordingly the Respondents be directed to make appropriate contributions to the assets of the Corporate Debtor & pass necessary orders under Section 66 of the Insolvency and Bankruptcy Code, 2016 r/w Regulation 35A of the CIRP Regulations.

b) To direct the Respondent No. 3 to disclose the investments made by it from the amounts received by it from the Corporate Debtor.

c) To direct Respondent Nos. 1,2 & 3 to make contributions of Rs. 228.75 Crores along with interest @12% amounting to Rs. 195.90 Crores aggregating to Rs. 424.65 Crores as admitted & as per Form C as submitted by Religare Finvest Pvt. Ltd. and as admitted by the Resolution Professional as on ICD date.

d) To direct the Respondent Nos. 4,5 & 6 to make contributions of Rs. 443 Crores by the difference reflected in the Balance Sheet of FY 2015-16 & FY 2016-17 in the books of Accounts.

e) To pass an order thereby directing the Registrar of Companies and/or any other responsible officer of this Tribunal or any governmental agency, to take appropriate steps, in accordance with law, for initiating prosecution under Section 68 (i)(c), 68(i)(d), 68(i)(g), 71, 72 and 73 of the Code against the concerned parties who are involved in the commission of the aforesaid offences. Alternatively, this Tribunal be pleased to direct the SFIO/MCA, or such other agency as it deems fir to investigate into the entire matter and launch appropriate prosecution under (c), 68(d), 72 and 73 of the Code against the wrongdoers.

Brief Facts

2. The Tribunal had passed an Order dated 12.08.2022, initiating the Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor u/s 7 of the Code. Mr. Suresh Baburao Shingte was appointed as the Interim Resolution Professional (“IRP”). However, Mr. Suresh Baburao Shingte could not take up the assignment, therefore, the Financial Creditor filed an Application for appointing Mr. Vijay P. Lulla as IRP and this Tribunal vide Order dated 07.11.2022, appointed Mr. Vijay P. Lulla as the IRP. Thereafter, the IRP proceeded with the public announcement and other ancillary requirements under the Code. At the 1^st CoC meeting held on 08.12.2022, it was resolved to continue with Mr. Vijay Pitamber Lulla as the Resolution Professional ("RP").

3. The Applicant issued a letter dated 19.11.2022 & 23.11.2022 to the suspended Directors i.e., Respondent Nos. 1 & 2 herein, the aforesaid Order passed by this Tribunal declaring moratorium, requesting them to hand over entire assets, books of accounts, financial statements and other records of the Corporate Debtor. However, the letters were returned unaccepted due to incomplete addresses. The Applicant also sent an email to the addresses available.

4. The erstwhile management did not respond to the multiple emails sent by the RP, and therefore an Interlocutory Application under Section 19 (2) of the Code bearing IA No. 249/2023 was filed on 30.12.2022. On 23.01.2023, the Advoca