17 January 2017
SPL [Complainant] is a private company established in 2003 and they are engaged in manufacturing Iron bars etc. Whereas, M/S. AML [ Accused] is engaged in Manufacture of Steel with Registered office at Hyderabad. M/S. AML have been purchasing the Sponge Iron- Lumps from M/s. SPL since several years on credit facility. Over the years the accused have gained the trust and by misusing such trust, it had purchased the Iron ore for its factory under various invoices by placing orders to them. The details of the total supplies made during the period for 01.04.2015 to 31.03.2016 under various invoices.
In-spite of Acknowledgement of receipt of the goods in good condition, M/S.AML has defaulted in making payment against overdue amount and Yet to issue the C-Form for submitting to the Sales Tax Department. The complainant raised invoice against the Purchasing Orders placed by accused, the following three Invoices, are in respect to the three cheques which has been returned un-paid by the Accused. (Cheque Bounced)
AML (accused) in its letter dated 5th March 2016 it had written a letter stating that the Company is a sick company and its case is registered duly with H'ble BIFR (Board for Industrial & Financial Reconstruction), NewDelhi. Under the defence of reference to BIFR requested the complainant not to present the cheques against the material supplied.
According to accused, BIFR, while registering the reference of company dated 17.11.2015 has restrained the accused from disposing of or alienating in any manner any assets of the company without the consent of the Board. The accused is a sick company and presently running the unit at low capacity hence not able to realize the pending amount. And hence, the accused cannot be forced to honour the post dated cheques.
The Management of the Complainant have gone ahead and filed the case under Section 138 of Negotiable instrument Act stating the criminality of dishonour of cheques. But, Contention of Accused seems to be that the restraint order passed by BIFR remains operative based on facts and circumstance, for instance, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of BIFR under section 22-A was passed against the company then it cannot be said that the offence under section 138 NI Act was completed.
Here, It is evident from the action of the accused, that there is mala-fide intention to commit fraud on the complainant(supplier) as the accused initiated the above purchases of materials despite the knowledge of filing case with BIFR. Whereas, the accused is actually economically wealthy person and owning huge properties and owning various companies with same management. The accused have proved to be habitual offender as accused has indulged in to same modus-operandi with other material supplier company.
What could be the remedy for ensuring the recovery of money and C-Form. Filing a case of corporate Fraud or can the liability be fixed on group company or can BIFR approval be obtained as a Interim Relief for allowing the accused to release the fund(accused does not seems to be interested in payment).
18 January 2017
Mr. Gurudath from your quarry i understand that you want to know that under these circumstances whether you have any remedy under companies act. Yes you have an remedy to file an application under the provision of Insolvency and Bankruptcy code but the problem is that in the application you have to name an insolvency resolution professional. To the best of my knowledge resolution professional are yet to be notified. Now coming to your facts, sec 22A of SICA do not give protection against criminal act. Proceedings under 138 of N I Act are criminal in nature,. Moreover the proceedings are against the directors and the protection under SICA is available to company and the guarantor of loan not to individual director of the company
The challenge is as follows: It is apparent from the act of accused company by placing purchase order intentionally after BIFR initiative by that company. Hence, it is evident that the company wanted to take the materials from the vendor and to hide under the BIFR restrain order.
Therefore, can a vendor plead for making the liability of the directors unlimited and extent to the sister concern also.
Basically vendor wants to recover the money & C forms from the accused company. can NCLT be approached or remedy is only by criminal suits.
18 January 2017
18 January 2017
Wishes of the vendor cannot prevail over the provisions of law.
Question arises, why the vendor restricts his efforts only under the provision of section 138, why not implicate the directors also for their attempt to cheat him?
My query is whether any provision of law is available for the Vendor under the NEW company law to approach NCLT and expose the corporate fraud of placing purchase order despite the case of reconstruction of the organization and later denying the payment stating BIFR restrain order.
18 January 2017
Mr.Gurudath Perhaps you follow the reply very shallowly. You quarry has already been replied by me.The remedy to operational creditor is provide is recently passed Insolvency and Bankruptcy CODE but the thing is that it has not become operational yet hence no immediate remedy is available to recover the money fro the director and other sister concerns. I would like to suggest you again to file a criminal complaint against directors. you have enough materiel to prove their fraud