BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL
HYDERABAD BENCH
I.A. NO. OF 2023
IN
C.P. (IB) 269/9/HDB/2018
BETWEEN:
MONITORING COMMITTEE THROUGH
STATE BANK OF INDIA
SAM Branch, Secunderabad, H No.5-9-76,2nd
Floor, Prabhat Towers, Opp. Amaravathi LHO,
Chapel Road, Gunfoundry, HYDERABAD-
500001
…Applicant
AND
MR. GHANSHYAM SURAJBALI KUMRI
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 1
MR. SANDEEP KUMAR VERMA
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 2
APPLICATION FILED BY THE APPLICANT UNDER SECTION 60 (5) OF THE
INSOLVENCY AND BANKRUPTCY CODE, 2016 R/W SECTION 66, 67 AND 69 OF
THE INSOLVENCY AND BANKRUPTCY CODE, 2016.
Filed on:
Filed by:
Counsels for the Applicant
JURIS PRIME LAW SERVICES
V V S N RAJU
A V P REDDY
PRAVEEN JAIN
SRIKANTH RATHI
ABHAY TRIPATHI
AISHWARYA N.
ADVOCATES
Office at Plot No. 33, J K Enclave, Rao and Raju Colony, Near Lucid Diagnostics, Road
no 2,
Banjara Hills, Hyderabad- 500034
Ph: - 9866446467; Email: [email protected]
BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL
HYDERABAD BENCH
I.A. NO. OF 2023
IN
C.P. (IB) 269/9/HDB/2018
BETWEEN:
MONITORING COMMITTEE THROUGH
STATE BANK OF INDIA
SAM Branch, Secunderabad, H No.5-9-76,2nd
Floor, Prabhat Towers, Opp. Amaravathi LHO,
Chapel Road, Gunfoundry, HYDERABAD-
500001
…Applicant
AND
MR. GHANSHYAM SURAJBALI KUMRI
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 1
MR. SANDEEP KUMAR VERMA
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 2
APPLICATION FILED BY THE APPLICANT UNDER SECTION 60 (5) OF THE
INSOLVENCY AND BANKRUPTCY CODE, 2016 R/W SECTION 66, 67 AND 69 OF
THE INSOLVENCY AND BANKRUPTCY CODE, 2016.
INDEX OF DOCUMENTS
S. No. Date Particulars Annexure Page No.
1. Application filed by the Applicant under
Section 60 (5) of the Insolvency And
Bankruptcy Code, 2016 R/W Section 66,
67 and 69 of the Insolvency and
Bankruptcy Code, 2016.
Affidavit verifying the Application
2. Copy of the Transaction Audit Annexure 1
Report
3. Copy of the order of Hon’ble Annexure 2
Tribunal dated 08.09.2021
4. Copy of the order of Hon’ble Annexure 3
Tribunal dated 17.09.2021
5. Copy of the order of Hon’ble Annexure 4
Tribunal dated 07.10.2021
6. Copy of the Order of the Hon’ble Annexure 5
Appellate Tribunal dated 08.03.2022
7. Copy of the Order of the Hon’ble Annexure 6
Appellate Tribunal dated 10.10.2022
DATE:
PLACE:
COUNSEL FOR THE APPLICANT
BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL
HYDERABAD BENCH
I.A. NO. OF 2023
IN
C.P. (IB) 269/9/HDB/2018
BETWEEN:
MONITORING COMMITTEE THROUGH
STATE BANK OF INDIA
SAM Branch, Secunderabad, H No.5-9-76, 2nd
Floor, Prabhat Towers, Opp. Amaravathi LHO,
Chapel Road, Gunfoundry, HYDERABAD-
500001
…Applicant
AND
MR. GHANSHYAM SURAJBALI KUMRI
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 1
MR. SANDEEP KUMAR VERMA
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 2
APPLICATION FILED BY THE APPLICANT UNDER SECTION 60 (5) OF THE
INSOLVENCY AND BANKRUPTCY CODE, 2016 R/W SECTION 66, 67 AND 69 OF
THE INSOLVENCY AND BANKRUPTCY CODE, 2016.
Most Respectfully Showeth:
I. PARTICULARS OF THE APPLICANT
The Application is filed by the Monitoring Committee of the Corporate Debtor
through State Bank of India having its office at SAM Branch, Secunderabad, H No.
5-9-76, 2nd Floor, Prabhat Towers, Opp. Amaravathi LHO, Chapel Road,
Gunfoundry, Hyderabad - 500001.
II. PARTICULARS OF THE RESPONDENTS
The Respondent No. 1 i.e., Mr. Ghanshyam Surajbali Kumar is the suspended
director of the Apex Drugs Limited (Corporate Debtor) having its registered office
at 210, 2nd Floor, Ram’s Enclave, Erragadda, Hyderabad – 500018, Telangana.
The Respondent No. 2 i.e., Mr. Sandeep Kumar Verma Kumar is the suspended
director of the Apex Drugs Limited (Corporate Debtor) having its registered office
at 210, 2nd Floor, Ram’s Enclave, Erragadda, Hyderabad – 500018, Telangana.
III. JURISDICTION
The present Interlocutory Application is being preferred under Company
Application bearing C.P. (IB) No. 269/9/HDB/2018 which was filed under Section
9 of the IB Code, 2016. It is submitted that as the said Company Petition was filed
before this Hon’ble Tribunal, hence, this Hon’ble Tribunal has the Jurisdiction to try
the instant I.A.
IV. LIMITATION
The Applicant submits that the present I.A. is not battled by the provisions of the
Limitation Act or any other provisions of law and is well within the period of
limitation.
V. FACTS OF THE CASE
1. It is submitted that M/s Zheijang Tongxiang Foreign Trade (Group) Co. initiated
CIRP proceedings against the Corporate Debtor under Section 9 of the IB Code,
2016 and the same was admitted by the Hon’ble Tribunal vide Order dated
06.09.2018 and the Hon’ble Tribunal appointed Mr. Maligi Madhusudhana Reddy
as the Interim Resolution Professional.
2. It is submitted that in the 2 nd CoC meeting the said Interim Resolution Professional
was replaced by Mr. Kapil Dev Taneja as the Resolution Professional and the
Hon’ble Tribunal vide order dated 26.11.2018 along with the confirmation letter of
IBBI dated 10.12.2018 confirmed the appointment of Mr. Kapil Dev Taneja as the
RP.
3. It is submitted that the RP in discharge of its duties perused the books of accounts
of the CD and found that certain transactions of irregular nature were carried out
by the CD before the commencement of the CIRP. It is submitted that for carrying
out audit in order to facilitate the Applicant to report such transactions to the
Adjudicating Authority they appointed professional services.
4. It is submitted that in the 8th CoC Meeting held on 07.05.2019, the members of the
CoC changed the transaction auditor from M/s J. Singh & Associates to M/s Ganta
and Associates for determining the transactions under section 66 of the IB Code,
2016. It is submitted that the Transaction Auditor submitted the transaction audit
report on 29.05.2019 and the same was placed before the CoC by the RP in the 10 th
CoC Meeting held on 31.05.2019 and the transactions carried out by the CD were
held as preferential, undervalued and fraudulent. The CoC directed the RP to file
an appropriate application before the Tribunal. The copy of the Transaction Audit
Report is attached herewith as Annexure 1.
5. It is submitted that in the Transaction Audit Report following was reported-
a) During the Financial Year 2015-2016, CD has written off assets worth Rs. 140,
65, 13, 323/-.
b) During the Financial Years 2016-2017 and 2017-2018 it was reported that the
assets were written off worth Rs. 5,03, 24, 200/- (short term loans and
advances) and Rs. 11, 70, 829/- (cash and bank balances) respectively.
c) It is also observed that the stock reports which has been written off were not
available before and during the audit period.
d) It is observed that the Corporate Debtor due to unavailability of the list of
debtors (receivables) and their ageing, but from total receivable figure they
have written off 95% as non-recoverable.
6. It is also noted that the book of accounts of the CD have not reconciled with the
Bank Accounts and some bank accounts are not supported with the bank
statements to review the transaction under the scope of audit. The CD’s books of
receivables are not maintained and the list is not available.
7. It is submitted that as per the Transaction Audit Report, it is demonstrated that
such transactions, as carried out by the Corporate Debtor, have been identified as
fraudulent. The said transactions appear to have been entered with an intent to
defraud the creditors of the Corporate Debtor. Moreover, in case of such
transaction, the applicability of look back period does not arise. It is submitted that
therefore the RP filed I.A. No. 531 of 2019 in the instant Company Petition against
the preferential, wrongful and fraudulent transactions done by the CD under
Section 66 of the IB Code, 2016. It is submitted that Section 25(2)Q) read with
Section 66,67 and 69 read with Section 60(5) of the IBC, 2016 provides for
fraudulent or wrongful trading and consequences thereof. It is submitted that if
during the CIRP or liquidation process, it is found that any business of the
Corporate Debtor has been caried on with an intent to defraud creditors of the
Corporate Debtor or for any fraudulent purpose, this Hon'ble Tribunal may, on an
application pass an order that any person who were knowingly parties for
carrying on such business, shall be liable to make such contributions to the assets
of the Corporate Debtor, as this Hon'ble Tribunal may deem fit.
8. It is submitted that the RP in I.A. No. 531 of 2019, prayed before the Ld.
Adjudicating Authority to declare the Transactions, as reflected in the Audit
Report as Fraudulent/wrongful trading and for passing appropriate order under
Section 66 of IBC, especially directing the Respondents to make such contribution
towards the assets of the Corporate Debtor.
9. It is submitted that the Hon’ble Tribunal vide Order dated 08.09.2021 in I.A. No.
531 of 2019 held that as per the Transaction Audit Report the financial year 2015-
2016, the corporate debtor has written off assets worth Rs. 140,65,13,323/- which
resulted the corporate debtor in huge loss and the same was continued in the
following financial years, i.e., 2016-2017 and 2017-2018, which reported the written
off of the assets to the tune of Rs. 5,03,24,300/- only to defraud the creditors. The
Hon’ble Tribunal held that the Corporate Debtor indulged inwritten off in the
financial year 2015-2016 to the tune of 95% of the assets and further the books of
account/records of the Corporate Debtor in respect of the assets written off was
also not maintained. It was also recorded that no worthwhile record was
maintained by the Corporate Debtor to prove that those transactions were genuine
transactions. The Hon’ble Tribunal in para 14 of the Order dated 08.09.2021 held
that that the written off done by the Respondents during the relevant period is for
defrauding the creditors of the CD. The copy of the order dated 08.09.2021 is
attached herewith as Annexure 2.
10. It is submitted that the Hon’ble Tribunal vide corrigendum dated 17.09.2021 under
Rule 154(1) of the NCLT Rules, 2016, held that in respect of para 14 of order dated
08.09.2019, it was read as "Although it is contended by the Resolution Professional
that an amount of more than Rs. 145 Crores appears to be siphoned off by the
Respondents but during submission the learned counsel for the Resolution
Professional restricted prayer of contribution to the extent of Rs. 5,14,95,129/- only
stating that this much is the amount due and payable to the creditor of the
Corporate Debtor. We appreciate and accept his gesture. Hence, although we
noted that an amount of more than Rs- 145 Crores appears to be siphoned off, we
pass following order subsidizing contribution amount to the extent of Rs.
5,14,95,129/-." It is submitted that the Counsel for the RP during the hearing of I.A.
No. 531 of 2019 never made any such submission before the Hon’ble Tribunal as
recorded in corrigendum dated 17.09.2021. It is submitted that the RP filed a memo
dated 01.10.2021 before the Hon’ble Tribunal wherein he submitted that he prayed
for the whole amount, i.e., Rs. 145,80,08,452 to be contributed by the Respondents
in the absence of any look back period under Section 66 of IBC. The copy of the
order dated 17.09.2021 is attached herewith as Annexure 3.
11. It is submitted that the Hon’ble Tribunal vide additional corrigendum order dated
07.10.2021 held that it has no hesitation in accepting the claim made by the
Resolution Professional that the written off done by the Respondents during the
relevant period is fraudulent and it is for defrauding the creditors of the corporate
debtor. It also held that although it is contended by the Counsel for the Resolution
Professional that an amount of more than Rs. 145 Crores appears to be siphoned
off by the Respondents, they pass following order subsidizing contribution
amount to the extent of Rs. 5,14,95,129. The copy of the Order dated 07.10.2021 is
attached herewith as Annexure 4.
12. It is submitted that the Applicant filed an appeal before the Hon’ble NCLAT,
Chennai vide Company Appeal (At) (Ch) (Ins) No. 71 of 2022 against Order dated
07.10.2021 of the Hon’ble NCLT, Hyderabad in I.A. 531 of 2019 which was later
withdrawn by the Applicant vide Order dated 08.03.2022 with the leave of the
Hon’ble Appellate Tribunal to freshly challenge the Order dated 07.10.2021. The
copy of the Order of the Hon’ble Appellate Tribunal dated 08.03.2022 is attached
herewith as Annexure 5.
13. It is submitted that the Applicant filed an appeal before the Hon’ble NCLAT,
Chennai vide Company Appeal (At) (Ch) (Ins) No. 338 of 2022 against Order dated
07.10.2021 of the Hon’ble NCLT, Hyderabad in I.A. 531 of 2019 which was
dismissed as withdrawn vide Order dated 10.10.2022 with the Hon’ble Appellate
Tribunal granting the leave to the Applicant to approach the Hon’ble NCLT,
Hyderabad for seeking redressal of grievances, in the manner known to the law
and in accordance with the law, if the Applicant desires for the same. The copy of
the Order of the Hon’ble Appellate Tribunal dated 10.10.2022 is attached herewith
as Annexure 6.
14. It is submitted that under Section 66 of the IB Code, 2016 there is no lookback
period for identifying transactions which could be considered wrongful
trading/fraudulent trading. As per section 66, if it found during CIRP that any
business of the Corporate Debtor has been carried out with the intention to
defraud its creditors or for any other fraudulent purpose, the Hon’ble Tribunal is
empowered to pass any appropriate order under Section 67 of the IB Code, 2016.
Section 66 is reproduced here for the perusal of the Hon’ble Tribunal –
Section 66: Fraudulent trading or wrongful trading.
*66. (1) If during the corporate insolvency resolution process or a liquidation
process, it is found that any business of the corporate debtor has been carried on
with intent to defraud creditors of the corporate debtor or for any fraudulent
purpose, the Adjudicating Authority may on the application of the resolution
professional pass an order that any persons who were knowingly parties to the
carrying on of the business in such manner shall be liable to make such
contributions to the assets of the corporate debtor as it may deem fit.
(2) On an application made by a resolution professional during the corporate
insolvency resolution process, the Adjudicating Authority may by an order direct
that a director or partner of the corporate debtor, as the case may be, shall be liable
to make such contribution to the assets of the corporate debtor as it may deem fit, if
(a) before the insolvency commencement date, such director or partner knew or
ought to have known that the there was no reasonable prospect of avoiding the
commencement of a corporate insolvency resolution process in respect of such
corporate debtor; and
(b) such director or partner did not exercise due diligence in minimising the
potential loss to the creditors of the corporate debtor.
[(3) Notwithstanding anything contained in this section, no application shall be
filed by a resolution professional under sub- section (2), in respect of such default
against which initiation of corporate insolvency resolution process is suspended as
per section 10A.]
Explanation—For the purposes of this section a director or partner of the corporate
debtor, as the case may be, shall be deemed to have exercised due diligence if such
diligence was reasonably expected of a person carrying out the same functions as
are carried out by such director or partner, as the case may be, in relation to the
corporate debtor.
15. It is submitted that since from the transaction audit report it is clear that the
Corporate Debtor has written off assets worth Rs. 145,80,08,452/- which has
resulted in huge loss to the creditors of the Corporate Debtor, the Respondents
should be ordered to contribute the entire amount to the Corporate Debtor in the
absence of a lookback period under section 66 of the IB Code, 2016. It is further
submitted that the Hon’ble Tribunal has already accepted the fact that the written
off done by the Respondents is fraudulent and was for defrauding the creditors of
the CD.
VI. PRAYER
In view of the following facts, the Applicant prays for the following reliefs-
a) Direct the Respondents to jointly contribute sum of Rs. 145,80,08,4521/-
towards the assets of the Corporate Debtor.
b) Any other relief(s) as this Hon'ble Tribunal may deem fit in the facts and
circumstances of the present case.
DATE:
PLACE:
COUNSEL FOR THE APPLICANT
BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL
HYDERABAD BENCH
I.A. NO. OF 2023
IN
C.P. (IB) 269/9/HDB/2018
BETWEEN:
MONITORING COMMITTEE THROUGH
STATE BANK OF INDIA
SAM Branch, Secunderabad, H No.5-9-76, 2nd
Floor, Prabhat Towers, Opp. Amaravathi LHO,
Chapel Road, Gunfoundry, HYDERABAD-
500001
…Applicant
AND
MR. GHANSHYAM SURAJBALI KUMRI
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 1
MR. SANDEEP KUMAR VERMA
(Director - powers suspended) Apex Drugs
Limited, 210, 2nd Floor, Ram’s Enclave,
Erragadda, Hyderabad – 500018, Telangana.
…Respondent No. 2
AFFIDAVIT VERIFYING THE PETITION
I, Prakash Singh Bisht, S/o Mr. D.S. Bisht, aged about 47 years, having office at Chappel
Road, Gunfoundry, Hyderabad, the authorized signatory of the Monitoring Committee,
of the Apex Drugs Limited (Corporate Debtor), do hereby solemnly affirm and say as
follows:
1. I am the authorized signatory of the Monitoring Committee, of the Apex Drugs
Limited (Corporate Debtor) appointed in the instant case and am to affirm the
present affidavit and move the instant application before this Hon’ble Tribunal.
2. I say that I am fully aware of the facts and circumstances of the said case.
3. That the statements made in paragraphs I-VI of the petition are true to my
knowledge and I state that the present Petition has been drafted as per my
instructions and no part of it is false and nothing material has been concealed
therefrom.
4. I state that the contents of the accompanying Interim Application are true and
correct to my knowledge. I state that the present petition has been drafted as per
my instructions and no part of it is false and nothing material has been concealed
herein.
5. I state that Annexures enclosed herewith are the true copies of their respective
originals.
Sworn and signed before me on
this the
Identified by me:
DEPONENT
ADVOCATE/HYDERABAD
VERIFICATION
I, Prakash Singh Bisht, S/o Mr. D.S. Bisht, aged about 47 years, having office at Chappel
Road, Gunfoundry, Hyderabad, the authorized signatory of the Monitoring Committee,
of the Apex Drugs Limited (Corporate Debtor) do hereby solemnly affirm and state on
oath that the contents of the above Affidavit are true and correct to best of my
understanding and knowledge and I do hereby verify the same on this the day of
2023.
DEPONENT
DATE:
PLACE:
COUNSEL FOR APPLICANT
BEFORE THE HON’BLE NATIONAL COMPANY
LAW TRIBUNAL
HYDERABAD BENCH
I.A. NO. OF 2023
IN
C.P. (IB) 269/9/HDB/2018
BETWEEN:
MONITORING COMMITTEE THROUGH STATE
BANK OF INDIA
…Applicant
AND
MR. GHANSHYAM SURAJBALI KUMRI
…Respondent No. 1
MR. SANDEEP KUMAR VERMA
…Respondent No. 2
APPLICATION FILED BY THE APPLICANT UNDER
SECTION 60 (5) OF THE INSOLVENCY AND
BANKRUPTCY CODE, 2016 R/W SECTION 66, 67
AND 69 OF THE INSOLVENCY AND
BANKRUPTCY CODE, 2016.
Filed on:
Filed by:
Counsels for the Applicant
JURIS PRIME LAW SERVICES
V V S N RAJU
A V P REDDY
PRAVEEN JAIN
SRIKANTH RATHI
ABHAY TRIPATHI
AISHWARYA N.
ADVOCATES
Office at Plot No. 33, J K Enclave, Rao and Raju Colony,
Near Lucid Diagnostics, Road no 2,
Banjara Hills, Hyderabad- 500034
Ph: - 9866446467; Email: [email protected]
