Shalabh Kumar Daga Liquidator of Silver Proteins Pvt Ltd V/s Himanshu J Domadia
IA/154(AHM)2022 in CP(IB) 554 of 2018
Facts:
1. CIRP was initiated against M/s. Silver Proteins Pvt. Ltd on an application filed by the financial creditor i.e. Central Bank of India, from 29.06.2020 in CP (IB) 554 of 2018. Liquidation order was passed on 27.01.2021.
2. On Verification of books of account (Tally Data) and other documents, it was observed by the auditor that the company had made payment of Rs.89.77 lakhs in the name of repayment of unsecured loans to directors/related parties two years prior to CIRP. It was also found that unsecured loans outstanding from 2014-15 were repaid during 2018-19. So there are probable chances that these are preferential transactions as per Section 43 of IBC.
3. Application is filed under Sections 60(5), 43, 45 and 49 of the IBC, 2016.
Issue: Whether the application can be allowed ?
Arguments:
Applicant:
1. Counsel submitted that there is related party transaction of corporate debtor with proprietorship firm of director Mr. Himanshu J Domadia i.e. Silver Proteins Pvt. Ltd, it was total debit of Rs.303.75 lakhs and total credit was Rs.236.44 lakhs. Some discrepancies were also found in the record. The company has also made payment to directors in the name of remuneration amounting to Rs.54.91 lakhs during F.Y.2013-14 to 2018-19 though the corporate debtor was suffering losses.
2. Counsel further submitted that company has not implemented any standard pricing policy and the rates have been changed from customer to customer. According to applicant, all these are undervalued transactions covered under Section 45 of the Code.
Respondent:
1. Counsel denied all the allegations leveled against them. The respondents contended that as per Regulation 35A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Resolution Professional/Liquidator has to form an opinion whether transactions are covered under Section 43, 45 and 49 of the IBC, 2016 of the Code, then to take a decision to file application.
2. It was submitted that forensic auditor report is ex facie, vague, speculative and indefinite. The applicant has filed combined application for avoidance transactions which is not permissible. They have also failed to produce documents to substantiate the allegations leveled against respondents. The respondents have given detailed explanation on all the transactions alleged by the applicant.
3. It was further submitted that since the account of the Corporate Debtor had turned NPA, the suppliers & customers were not inclined to carry out their business with the Corporate Debtor. Therefore, the proprietorship firm Silver Proteins – Jamnagar used to purchase unfiltered oil from suppliers and same was supplied to the Corporate Debtor at market rate and the purchase-sale transactions with Silver protein proprietorship firm were at arm’s length and within the knowledge of the Financial Creditor.
Decision: NCLT dismissed the application.
Rationale:
1. NCLT noted that respondent submitted that a separate IA bearing No. 154 of 2022 is also filed by the applicant alleging this transaction as preferential transactions. Thus, the applicant himself is not clear whether the transaction is preferential in nature or fraudulent. He cannot seek same reliefs in two applications.
2. It held that Only because the auditor suspected these transactions, the applicant filed this application. The argument of respondent is that the applicant himself is not sure whether the transaction is preferential or fraudulent holds water.
Order:
