Corporate Debtor entered into a Tripartite Agreement with a related party between CIRP admission order reserved date and pronounced date is total violation of Section 66 of the Code – Vikas Prakash Gupta, RP, Man Tubinox ltd. Vs. Vinod Kuwadia & Anr. Dena Bank – NCLT Mumbai Bench
October 22, 2021
The Adjudicating Authority observed that the Respondent No.1 to 4 who are suspended Directors of the Corporate Debtor Company were aware that the Petition was Reserved for Orders and just before the Insolvency commencement date, when they knew that there is no reasonable prospect of avoiding the CIRP in respect of the Corporate Debtor Company, carried on with the intent of defrauding the creditors of the Corporate Debtor Company by sub-leasing a large chunk of the only asset of the Corporate Debtor to a related party who happens to be the son-in-law of one of the suspended Directors. The Bench has no doubt in its mind that the suspended Directors were fully aware of the impending CIRP and also knew that restrictions under Section 14 of the Insolvency Code would kick in. Therefore, just before the commencement of the CIRP, in total violation of Section 66 of the Code, entered into a Tripartite Agreement with a related party, Maan Tubes Ltd. It is also important to note that when the sub-lease was granted on 29.06.2019, they did not inform the Madhya Pradesh Industrial Development Corporation that the Sub-lease is null and void as the Corporate Debtor which has Sub-leased the property is no longer with the original promotors but with the Interim Resolution Professional/ Resolution Professional. It is also, therefore, clear that M/s Maan Tubes Ltd has concealed information from the Madhya Pradesh Industrial Development Corporation in defrauding the creditors of the Corporate Debtor Company.