Transactions of giving huge amount without any security interest or bank guarantee and subsequently writing off the same from the book can only be termed as fraudulent transactions – Shri Baiju Trading and Investment Pvt. Ltd. Vs. Mr. Arihant Nenawati (Liquidator for Royal Refinery Pvt. Ltd.) & Ors. – NCLAT New Delhi
NCLAT observes that in 2019 such huge loan was all of a sudden written off by the Respondent Nos. 2 & 3 from the books of the Corporate Debtor and evidently the Appellant is the principal/sole beneficiary. The plea of the Appellant made before us that it is a Corporate Debtor who has written off and not by the Appellant and therefore the Appellant should not be held liable for fraudulent transactions under Section 66 is not convincing at all. It is a matter of common prudence that if the money is written off from the books of the Corporate Debtor, there is hardly any chance for the management/ successor/ Resolution Professional to recover the same from the Appellant. There is no explanation which we can take into account either from the submissions of the Appellant or Respondent Nos. 2 & 3 as to why such write off was necessary and circumstances which led to this write off. Such transactions of giving huge amount to unconnected/unrelated parties and apparently without any security interest or bank guarantee as collateral security in favour of the Corporate Debtor and subsequently writing off the same from the book can only be termed nothing else but as fraudulent transactions done with the intent to defraud the creditors of the Corporate Debtor. From the averments as well from the records made available, this Appellate Tribunal tend to agree with the Adjudicating Authority that the nature of the transactions are covered squarely under Section 66 of the Code, 2016.
