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2025 Supreme(Online)(NCLT) 2545
NATIONAL COMPANY LAW TRIBUNAL
Shri Prabhat Kumar, Shri V.G. Bisht, JJ
Shri. Bhaskar Gopal Shetty – Appellant
Versus
Shri.DushyantD Mehta & others – Respondent
I.A. 2490 OF 2024 | C.P.(IB) No. 1817/MB/2019
For the Appellants/Petitioners: Adv. Avinash R. Khanolkar, Adv. Surekha Yadav, Adv. Khushbu Bhanushali
For the Respondents: Adv. Rohit Gupta, Adv. Sahil Saiyed, Adv. Afrin Dalal
Transactions conducted in the ordinary course of business are not preferential under the Insolvency and Bankruptcy Code, and unilateral write-offs without evidence of fraudulent intent are not actionable.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 43, 44, and 66 - Liquidation proceedings initiated against corporate debtor for preferential and fraudulent transactions - Applicant sought reversal of transactions and declarations of preference - Court ruled transactions did not constitute preferential payments under Section 43, nor were they fraudulent under Section 66 due to lack of evidence of intent to defraud. (Paras 1, 7, 10, 11, 14, 16)
(B) Fraudulent Trading - The court found that the write-off of stocks was indicative of misappropriation, ordering the directors to contribute to the corporate debtor's assets. (Paras 14, 16)
Facts of the case:
The liquidator filed an application alleging preferential and fraudulent transactions by the directors of the corporate debtor, seeking reversal of transactions amounting to significant sums.
Findings of Court:
The court found insufficient evidence to support claims of preferential payments and fraudulent transactions, except for the write-off of stocks, which indicated misappropriation.
Issues: The main issues included whether transactions were preferential or fraudulent under the Code.
Ratio Decidendi: The court determined that transactions conducted in the ordinary course of business do not constitute preferential payments and that unilateral write-offs without evidence of intent to defraud are not actionable.
Result: IA 2490 of 2024 is partly allowed and disposed of accordingly.
| Table of Content |
|---|
| 1. introduction of the case and parties involved. (Para 1 , 2 , 3 , 4) |
| 2. procedural aspects and representation of parties. (Para 5 , 6) |
| 3. analysis of preferential payments and statutory exceptions. (Para 7 , 8 , 9 , 10) |
| 4. write-off of debts and implications of fraudulent transactions. (Para 11 , 14) |
| 5. legal standards for fraudulent trading and liability. (Para 12 , 15) |
| 6. court's directive for contribution by directors. (Para 16) |
| 7. final order and conclusion of the application. (Para 17 , 18) |
ORDER
1. This Interlocutory Application IA 2490 of 2024 is filed by Shri. Bhaskar Gopal Shetty, Liquidator (Applicant/Liquidator) of M/s. Mediaman Infotech Private Limited (“Corporate Debtor”) under Section 43 r.w.s. 44 and Section 66 of Insolvency & Bankruptcy Code, 2016 (“Code”) seeking following reliefs :
(a) Admit and Allow the present Application;
(b) Pass an Order declaring the transactions amounting to 2473.11/- Thousand carried out with the R1 as preferential transaction U/s. 43 of the Code and direct the R1 to remit the said amount to the kitty of the Corporate Debtor;
(c) Pass an Order declaring the transactions amounting to 11,122.71/- Thousand carried out with the R3 as preferential transaction U/s. 43 of the Code and direct the R3 to remit the said amount to the kitty of the Corporate Debtor;
(d) Pass an Order declaring the transactions amounting to 4118.05/- Thousand for writing-off debt of the Sundry Debtors as fraudulent transaction U/s. 66 (1) of the Code and be pleased to reverse the effect of the said transaction in the books of the CorporateDebtor;
(e) Pass an Order declaring the transactions amounting to 84162.56/- Thousand for writing-off debt of the Sundry Debtors as fraudulent transaction U/s. 66 (1) of the Code and be pleased to reverse the effect of the said transaction in the books of the CorporateDebtor;
(f) Pass any other Order in the interest of Equity, Justice and good conscience.
2. Respondent No. 1 and 2 viz. Shri Dushyant D Mehta and Smt. Aditi Dushyant Mehta are the Director (with suspended powers) of the Corporate Debtor and are alleged to have knowingly participated in preferential and fraudulent transactions in managing the affairs of the Corporate Debtor. Respondent No. 3 viz. Aionthefly Technologies Private Limited is a private limited company incorporated under the provisions of the Companies Act, 2013 in the year 2019 having CIN U72900MH2019PTC323292 and is a related party to the Corporate Debtor. It is alleged to have been benefitted from the Preferential transaction carried out by the CorporateDebtor.
3. The CIRP as against the Corporate Debtor commenced vide an Order dated 18.11.2022 of this Bench passed in C.P. (IB) 1817 (MB) 2019, wherein this Bench appointed Shri. Satish Anand Sharma as Interim Resolution Professional to conduct the Corporate Insolvency Resolution Process of the Corporate Debtor and was later confirmed as Resolution Professional. The Liquidation of the Corporate Debtor commenced vide an Order dated 10.11.2023 passed by this Bench appointing the applicant herein as the liquidator.
4. During the CIRP the Resolution Professional appointed M/s. Tyagi V P & Co., Chartered Accounts (“Transaction Auditor”) to conduct the Transaction Audit of the CorporateDebtor vide engagement letter dated 05.03.2023. The Transaction Auditor was asked to conduct an audit of the transactions of the Corporate Debtor for the period from 18.09.2019 till 17.11.2022. The Transaction Auditor submitted its Report in November, 2023. On account of commencement of liquidation process, the Applicant reviewed the Report submitted by the Transaction Auditor and has filed the present application in relation to following four transactions :
i. Preferential repayment of loan to Respondent No. 1, a related person, other than secured creditors amounting to Rs. 793.24 thousand (37.20+388.42+367.62) through bank and Rs. 1679.87 thousand (155+1524.87) through debit adjustment (ie. setting of other party ledger);
ii. P
