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2025 Supreme(Online)(NCLT) 8027
NATIONAL COMPANY LAW TRIBUNAL
VENKATARAMAN SUBRAMANIAM, MEMBER (TECHNICAL), SANJIV JAIN, MEMBER (JUDICIAL)
DBS Bank India Ltd – Appellant
Versus
Gonglu Agro Pvt Ltd – Respondent
MAIN PETITION NUMBER : CP/IBC/61/CHE/2022 | APPLICATION NUMBERS IA(IBC)/309(CHE)2023
For the Applicant: R. Sailesh
For Respondent 1: Akshayaa
For Respondent 2: None
For Respondent 3: Mayan Jain
For Respondent 4: A.G. Sathyanarayanan
For Respondents 5, 6, 7: Vikram P Jain
Evidence of fraudulent intent required for directors' liability under IBC; mere directorship does not imply responsibility without clear proof of dishonesty.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 66(1) - Fraudulent trading - Application dismissed as the applicant failed to establish that the former directors engaged in fraudulent trading with intent to defraud creditors. The liquidator's claims were based on audit reports without sufficient evidence of dishonest intent by the directors. (Paras 10.1, 10.3, 10.11, 10.14)
(B) Section 66(1) criteria - Liability can be fixed upon any person who knowingly carries on business with intent to defraud creditors - Mere directorship and failure to supervise does not imply intent to defraud unless beneficial intent is evident. (Paras 10.6, 10.8)
Facts of the case:
The liquidator accused former directors of Gonglu Agro Private Limited of conducting fraudulent transactions to defraud creditors, resulting in a claim of approximately Rs. 61.26 crores. Audits identified several suspect transactions but lacked direct involvement evidence against the directors.
Findings of Court:
The Tribunal held that the liquidator could not sufficiently establish fraudulent intent or responsibility on the part of the directors, particularly in the absence of the deceased managing director's involvement, thus leading to a dismissal of the application.
Issues: The court examined whether fraudulent intent could be proven against the directors of the corporate debtor and if the liquidator's claims were sustainable under Section 66(1) of IBC.
Ratio Decidendi: The court indicated that mere directorship does not equate to liability for fraudulent conduct unless clear evidence of dishonest intent exists, which was lacking in this case. Further transactions categorized as fraudulent were largely attributed to the deceased director's actions.
Result: Application dismissed.
| Table of Content |
|---|
| 1. court announces parties present. (Para 1) |
| 2. liquidator's application under ibc. (Para 3) |
| 3. respondents present their replies. (Para 4 , 5 , 6 , 7 , 8) |
| 4. court's analysis of fraudulent trading. (Para 10) |
| 5. application dismissed. (Para 11 , 12) |
ORDER
(Heard through Hybrid Mode)
1. This application has been filed under Section 66 of Insolvency and Bankruptcy Code, 2016 (hereinafter, IBC, 2016) by the Liquidator of Gonglu Agro Private Limited (Corporate Debtor) seeking the following reliefs:
(a) To direct Respondent No. 1 to contribute to the assets of the Corporate Debtor an amount equivalent to the sum of Rs.38,58,94,406/- towards reversal of fraudulent transaction (as detailed in para 15-23);
(b) To direct Respondent No. 1 and 2 to contribute to the assets of the Corporate Debtor an amount equivalent to the sum of Rs.1.22 crore towards reversal of fraudulent transaction (as detailed in para 24-29);
(c) To direct Respondent No. 5 to 7 to contribute to the assets of the Corporate Debtor amounts of Rs.3,34,07,629/-, Rs.9,18,82,958/-and Rs.8,93,03,190/- respectively and adjustment of the liability shown as standing in books of the CD towards its related party and holding company being Respondent No. 4 a sum of Rs.36,20,21,356/- towards reversal of fraudulent transaction (as detailed in para 30-36)‛
3. BRIEF FACTS
3.1. It is alleged that the Promoter Directors of the Corporate Debtor did certain transactions with intent to defraud the creditors. This opinion was based on a review of the Transaction Audit Report dated 12.12.2022 for the period between 01.04.2018 and 30.05.2022 annexed as Annexure – A1. It is stated that Respondent No. 1, namely, Suchi Jain was a director in the Corporate Debtor. She was in the control and management of the Corporate Debtor from the date of her appointment i.e. from 17.04.2013 till 25.03.2021. She held 0.001% of shareholding in the corporate debtor as per audited balance sheet as on 31.03.2022. Copy of the Form filed before MCA reflecting appointment and cessation of Respondent No.1 is annexed as Annexure – A2. It is stated that Respondent. No. 2, namely, Parag Gholap was also a director in the Corporate Debtor. He was in the control and management of the Corporate Debtor from the date of his appointment i.e. 25.03.2021 till the date of suspension of powers of the Board of the Corporate Debtor on the commencement of CIRP on 30.05.2022.
3.2. It is stated that Rahoul Jain was the Managing Director of the Corporate Debtor. He was in the control and management of the Corporate Debtor from the date of his appointment i.e. 17.04.2013 till the date of suspension of powers of the Board of the Corporate Debtor on the commencement of CIRP on 30.05.2022. He held 0.001% of shares in the corporate debtor as per audited balance sheet as on 31.03.2022. It is stated that due to his death on 19.11.2022, he is not made party in the present application. Copy of the MCA record reflecting the details of Board of Directors of the Corporate Debtor is annexed as Annexure – A3. It is stated that Respondents No. 3 to 7 are the entities with whom the fraudulent transactions were entered into by the Corporate Debtor.
3.3. It is stated that on a petition filed by DBS Bank India Ltd. under Section 7 of the IBC, 2016. CIRP was initiated against the Corporate Debtor vide an order dated 30.05.2022. The Applicant was appointed as the IRP / RP. It is stated that as per Regulation 35A of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Applicant perused the audited financial statements of the corporate debtor for the Financial Years 2020-21 and 2021-22 with the other relevant documents and formed a prima facie opinion that the Corporate Debtor was indulged into certain transactions covered under section 43, 45, 49 and 66 of IBC. It is stated that the Applicant with the assistance of staff and directors of the corporate debtor got the financials updated till th
