BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL,

ALLAHABAD BENCH, PRAYAGRAJ

I.A. NO. ________ OF 2022
IN
COMPANY PETITION (IB) NO. 07(ALD) OF 2021

IN THE MATTER OF:

ANJALI CAPFIN PRIVATE LIMITED … FINANCIAL CREDITOR
VERSUS
PRIMUSS PIPES & TUBES LIMITED
(FORMERLY KNOWN AS PREMIER PIPES LIMITED)
… CORPORATE DEBTOR

AND IN THE MATTER OF

SANYAM GOEL
RESOLUTION PROFESSIONAL
PRIMUSS PIPES & TUBES LIMITED
(FORMERLY KNOWN AS PREMIER PIPES LIMITED)
… APPLICANT
VERSUS

AJAY JAIN … RESPONDENT NO. 1

NAMO NARAYAN DUBEY … RESPONDENT NO. 2

HARBHAJAN KAUR … RESPONDENT NO. 3

SANTOSH JAIN … RESPONDENT NO. 4

PRAVEEN CHAUHAN … RESPONDENT NO. 5

APPLICATION ON BEHALF OF THE RESOLUTION PROFESSIONAL OF

PRIMUSS PIPES & TUBES LIMITED (A COMPANY UNDERGOING

CORPORATE INSOLVENCY RESOLUTION PROCESS) UNDER SECTION 66

OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 FOR SEEKING

AVOIDANCE OF THE FRAUDULENT TRANSACTIONS AS DETERMINED

BY THE RESOLUTION PROFESSIONAL ALONG WITH AFFIDAVIT IN

SUPPORT

MOST RESPECTFULLY SHOWETH:

A. DETAILS OF THE APPLICATION AND PARTIES BEFORE THIS

HON’BLE ADJUDICATING AUTHORITY

1. That the Applicant herein is Mr. Sanyam Goel being the Resolution Professional

for M/s Primus Pipes & Tubes Limited (“Corporate Debtor”) as appointed by this

Hon’ble Adjudicating Authority vide order dated 13.06.2022 to carry out the

Corporate Insolvency Resolution Process (“CIRP”) in terms of the provisions of

the Insolvency and Bankruptcy Code, 2016 (“Code”). The instant Application is

being filed by the Resolution Professional for seeking avoidance of fradulent

transactions entered into by the Corporate Debtor. The office of Applicant is

situated at Unit no. 110 Unit no. 110, First Floor, JMD Pacific Square Sector 15,

Part II, Gurgaon, Haryana-122001

2. That the present Application is being filed against the beneficiaries and Suspended

Board of Directors of the Corporate Debtor for seeking avoidance of the

fraudulent transactions done by the Suspended Directors/ Respondents.

3. That Respondent No. 1 is Mr. Ajay Kumar Jain, Member of the Suspended Board

of Directors of the Corporate Debtor who is in jail at present. The Respondent No.

1 is a resident of 21, 28/10, H-1 Block, Kidwai Nagar, Kanpur-208011, Uttar

Pradesh, India. The service to Respondent No. 1 is served through the Jail

Superintendent having its address at: Kanpur Central, Kanpur.

4. That Respondent No. 2 is Mr. Namo Narayan Dubey, Member of the Suspended

Board of Directors of the Corporate Debtor having its address at: MMIG 67,

BHA. HARI. Ward, Sector A, Sitapur Road, Yojna, Behta, Lucknow Uttar

Pradesh-226021.

5. That Respondent No. 3 is Ms. Harbhajan Kaur, Member of the Suspended Board

of Directors of the Corporate Debtor having its address at: 10/492, Chak No. 10,

Khalasi Lines, Kanpur-208002.

6. That Respondent No. 4 is Mr. Santosh Jain, Member of the Suspended Board of

Directors of the Corporate Debtor having its address at: H-1/10, Kidwai Nagar,

Kanpur-208011, Uttar Pradesh, India.

7. That Respondent No. 5 is Mr. Praveen Chauhan, Member of the Suspended Board

of Directors of the Corporate Debtor having its address at: A-159, Ground Floor,

Sector-47, Noida Gautam Buddha Nagar, UP-201301.

B. JURISDICTION OF THIS BENCH

8. That the subject matter of the Application filed by the Applicant before this

Hon’ble Adjudicating Authority is within the jurisdiction of this Hon’ble

Adjudicating Authority on the following grounds:-

i. That the Registered Address of the Corporate Debtor is situated at

9/225-A, 2nd Floor, Arya Nagar, Kanpur – 208002, Uttar Pradesh

which is within the territorial jurisdiction of this Hon’ble

Adjudicating Authority.

ii. That this Hon’ble Adjudicating Authority vide order dated

13.06.2022 was pleased to initiate the Corporate Insolvency

Resolution Process in respect of the Corporate Debtor.

iii. Furthermore, this Hon’ble Adjudicating Authority has the

jurisdiction under Section 66 read with Section 60(5) of the Code

to decide the matters which relate to the fraudulent transactions

done by the Suspended Board of Directors of the Corporate

Debtor.

C. LIMITATION (IF APPLICABLE)

9. That in view of Regulation 35A of the CIRP Regulations, the Applicant is

required on or before the seventy-fifth day of the insolvency commencement date,

to form an opinion whether the Corporate Debtor has been subjected to any

transaction covered under sections 43, 45, 50 or 66 and if the Applicant is of the

opinion that the Corporate Debtor has been subjected to any transactions covered

under sections 43, 45, 50 or 66, the Applicant shall make a determination on or

before one hundred and fifteenth day of the insolvency commencement date,
under intimation to the Board and further, if the Applicant makes a determination

under sub-regulation (2) of Regulation 35A of the CIRP Regulation, the Applicant

shall file an application before this Hon’ble Adjudicating Authority for

appropriate relief on or before one hundred and thirtieth day of the insolvency

commencement date.

10. Even otherwise, the said Regulation 35A of the CIRP Regulations, 2016 has been

held to be a “directory” in nature. That the Hon’ble National Company Law

Appellate Tribunal (“NCLAT”) in a recent judgment, Aditya Kumar Tibrewal v.

Om Prakash Pandey & Ors., Company Appeal (AT) Insolvency No. 583 of 2021

formed following question of law for determination, i.e.,

“10. i. Whether an Application by the Resolution Professional relating to

a Transaction covered under Section 43, 45, 49 and 66 is mandatory to
be filed within the period of 135th Day of the Insolvency
Commencement Date and in event the Application is filed beyond such
period, the same is liable to be rejected due to non-compliance of
Regulation 35A of CIRP Regulations, 2016?

ii. Whether time period prescribed under Regulation 35A of the CIRP
Regulations, 2016 is mandatory or directory?

That after hearing both the parties in details and analysing settled principles

of law, the Hon’ble NCLAT opined as follows:

11. Questions I & II -

(iii). Regulation 35A prescribed a period during which Resolution

Professional has to form an opinion whether corporate debtor has
been subjected to any transaction covered under Section 43,45, 50
or 66 and the period during which he shall make a determination
and a period of one hundred thirty-fifth day of insolvency
commencement date during which he shall apply to the
Adjudicating Authority. The expression used in Regulation 35A
“shall form an opinion” “shall make a determination” and he
“shall apply to the Adjudicating Authority”. The question which
has come up for consideration before us is as to whether the time
period prescribed for taking different measures under Regulation
35A are mandatory and Resolution Professional is not competent
to take any action beyond the timeline prescribed and due to non-
compliance of timeline prescribed in Regulation 35A, the
Application deserves to be dismissed?
v. What is intend and purpose of using the expression “shall” in
Regulation 35A of the CIRP Regulations has to be looked into for
coming to a conclusion as to whether non-compliance of time
period prescribed in Regulation 35A of the CIRP Regulations
vitiates all actions taken by Resolution Professional. In the present
case, the case of the Appellant is that he came to know about the
fraudulent transaction i.e. lease deed dated 30th November, 2016
only on 15th January, 2020 when Respondent No. 1 shared lease
deed with the Resolution Professional and thereafter the
Application I.A. 742/2020 was filed. The Application filed being
I.A. No. 742/2020 was obviously filed beyond the period of 135th
Day of Insolvency Commencement Date. The rules of statutory
interpretation for finding out true nature of statutory provision,
whether the mandatory or directory, are well settled […]
vi. The I&B Code, 2016 contains timeline for different actions the
time period prescribed under Regulation 35A of the CIRP
Regulations is time period which casts a duty on the Resolution
Professional to take measures as prescribed in Regulation 35A of
the CIRP Regulations. The Privy Council in ‘Montreal Street
Railway Vs. Normandin’ AIR 1917 PC 142 had laid down
following principles of statutory interpretation:
“When the provisions of a statute relate to the performance
of a public duty and the case is such that to hold null and
void acts in neglect of this duty would work serious general
inconvenience, or injustice to persons who have no control
over those who are entrusted with the duty, and at the same
time would not promote the main object of the Legislature,
it has been the practice to hold such provisions to be
directory only.”

viii. Regulation 35A of the CIRP Regulations imposes a duty on

the Resolution Professional to take measure within the timeline
as prescribed. In performance of such duty the public in general
has no control including the Corporate Debtor. In event it is held
that any action taken by Resolution Professional beyond the time
prescribed in Regulation 35A of the CIRP Regulations is
prohibited, it shall cause serious general inconvenience or
injustice to the Corporate Debtor. One of the objective of the
Code is to maximise the assets of the Corporate Debtor. In event
the actions taken by the Resolution Professional after the
timeline prescribed in Regulation 35A of the CIRP Regulations
are to be annulled, the undervalued and fraudulent transactions
will go out of the reach of Resolution Process, reach of the Court
and shall cause great inconvenience and injustice to Corporate
Debtor. Hence, we are of the view that timeline prescribed in
Regulation 35A of the CIRP Regulations is only directory and
any action taken by the Resolution Professional beyond the time
prescribed under Regulation 35A of the CIRP Regulations
cannot be held to be non-est or void only on the ground that it is
beyond the period prescribed under Regulation 35A of the CIRP
Regulations. There may be genuine and valid reasons for
Resolution Professional not to file application for avoiding the
transactions within time prescribed which are question relating to
each case and has to be examined on case-to-case basis and if
there are reasons due to which Resolution Professional could not
file the Application within time the same has to be examined on
merit.

13. We thus answer Question Nos. I, II & III in following words:

Answer I The Application filed by the Resolution Professional

relating to Sections 43 and 45 read with Sections 66 and 60(5) of
the Code is not to be rejected filed beyond the period of 135th Day
of Insolvency Commencement Date only on the ground of non-
compliance of Regulation 35 A of the CIRP Regulations, 2016. It
shall depend on the facts of each case as to whether there are
genuine reasons to consider the Application on merits even filed
beyond 135th day.

Answer II The expression “shall” in regulation 35A (1), 35A(2)

and 35A(3) is not mandatory and requirement of “forming an
opinion” under Section 35A(1) “make a determination” under
Section 35A(2) and “shall apply to the Adjudicating Authority for
appropriate relief on or before 135th day of the Insolvency
Commencement Date” are only directory.

D. BRIEF FACTS OF THE CASE:

11. That this Hon’ble Adjudicating Authority vide its order dated 13.06.2022 was

pleased to admit the captioned petition, i.e., Company Petition (IB)

No.07/ALD/2021 filed on behalf of the Financial Creditor, i.e., Anjali Capfin

Private Limited against the M/s. Primuss Pipes & Tubes Limited (formerly known

as Premier Pipes Limited) (hereinafter referred to as ‘Corporate Debtor’) for

initiating the Corporate Insolvency Resolution Process (hereinafter referred to as

‘CIRP’) under Section 7 of Insolvency and Bankruptcy Code, 2016 (hereinafter

referred to as ‘Code’). Copy of order dated 13.06.2022 passed by this Hon’ble

Adjudicating Authority is annexed herewith and marked as ANNEXURE A-1.

12. That vide an order dated 13.06.2022, this Hon’ble Adjudicating Authority whilst

admitting the application and declaring the moratorium inter-alia, appointed Mr.

Sanyam Goel/ Applicant as an Interim Resolution Professional (hereinafter

referred to as ‘IRP’) of the Corporate Debtor.

13. That in terms of Regulation 6(1) of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) Regulations 2016

(hereinafter referred to as ‘CIRP Regulations, 2016’), the Interim Resolution

Professional made a public announcement in FORM A. In terms of Regulation 6

(2) (c) of CIRP Regulations, 2016, the last date for submission of proof of claim

was specified as 27.06.2022. A copy of the public announcement was duly

uploaded on the website of the Insolvency and Bankruptcy Board of India (IBBI).

Copy of Public Announcement in Form-A dated 14.06.2022 is annexed herewith

and marked as ANNEXURE A- 2.

14. That on 16.06.2022, the Applicant through his team visited the registered office of

the Corporate Debtor which is located in Kanpur. However, it was found that the

registered office of the Corporate Debtor does not exist at the address provided in

the records of MCA. Thereafter, a visit was made to the Factory premises of the

Corporate Debtor located at Harisnghpur, Bindki Road, P.O. Mauhar, Distt

Fatehpur, Uttar Pradesh-212665. The Resolution Professional through his team

also affixed a copy of the Public Announcement as well as the copy of the order

passed by this Hon’ble Adjudicating Authority at the factory premises.

15. Pursuant to the public announcement, the Applicant received claims from the

Financial Creditors in FORM – C, as stipulated in Regulation 8 of the CIRP

Process of the Corporate Debtor and the Applicant has constituted the Committee

of Creditors (hereinafter referred to as ‘CoC’) in compliance with Section 21 of

the Code, 2016. The Applicant has constituted the CoC with the following

financial creditors:

SR. FINANCIAL CREDITOR VOTING SECURED/

NO. % UNSECURED

1. Anjali Capfin Private Limited 20.18 Unsecured

2. Bank of Baroda 0.72 Secured

3. Kotak Mahindra Bank Limited 79.10 Secured

Total 100.00
16. That the Applicant convened the 1st meeting of the CoC on 12.07.2022 wherein

the CoC in compliance with Section 22(2) of the Code resolved to appoint the

Applicant as the Resolution Professional (hereinafter referred to as ‘RP’) in terms

of the provisions of the Code.

17. That during the 1st CoC meeting, the Applicant proposed the agenda for the

appointment of Transaction Auditor. However, the representative of Anjali Capfin

Pvt. Ltd. being a Financial Creditor suggested that in the previous CIRP of the

Corporate Debtor, information was collected by the previous RP of the Corporate

Debtor, and a lot of information can also be provided by the major lender of

Corporate Debtor being the Kotak Mahindra Bank. Accordingly, the CoC

members requested the RP to write emails to both the previous RP as well as

Kotak Mahindra Bank for seeking information from them and gather as much as

information related to the Corporate Debtor before taking a decision on the

appointment of a forensic Auditor and corresponding costs. Thereafter, at the

request of the CoC members, the aforesaid agenda was deferred to the next CoC

meeting. Copy of 1st meeting of the Committee of Creditors dated 12.07.2022 is

annexed herewith and marked as ANNEXURE A-3.

18. That the Applicant convened the 2nd meeting of the CoC on 19.08.2022, wherein

the Applicant placed the agenda before the CoC members to ratify and approve the

appointment of KRA & Co. – Chartered Accountant as Transaction Auditor. That

it is submitted that the Authorised Representative of the Kotak Mahindra Bank

raised the concern about the fees of the Forensic Auditor, in response to that, the

RP apprised the CoC members that the earlier Forensic Auditor prosed its fees Rs.

3,00,000 for conducting the audit of the Corporate Debtor, however, after having

negotiation with the Forensic Auditor and they agreed for Rs. 1,57,000 plus

applicable taxes. The RP further apprised the CoC members that the period of the

audit will be covered for three years, however, RP would request Transaction

Auditor to cover the Audit Period for 5 (five) years on which the CoC members
agreed. The relevant excerpts of the resolution are reproduced herein for the ready

reference of this Hon’ble Adjudicating Authority:

“7. TO RATIFY AND APPROVE THE APPOINTMENT AND

REMUNERATION OF KRA & CO. CHARTERED
ACCOUNTANT APPOINTED AS TRANSACTION AUDITOR

As per discussion, following resolution was passed with 99.28%

voting share.

“RESOLVED THAT pursuant to the applicable provisions of

Insolvency and Bankruptcy Code, 201 read with rules and regulations
made thereunder the appointment and remuneration of KRA & Co.
Chartered Account as Transaction cum Forensic Auditor be and is
hereby ratified and approved at Professional fees of Consolidated
amount for 5 years as Rs. 1,25,000 (Rupees One Lakh Twenty Five
Thousand) plus applicable taxes and out of pocket expenses.
RESOLVED FURTHER THAT Resolution Professional be and is
hereby authorized to do all such acts, deed and things as may be
required or considered necessary or incidental thereto.”

The CoC was pleased to resolve and appoint KRA & Co. as the Transaction cum

Forensic Auditor to conduct the transaction audit as per the provisions of the

Code, 2016 based on the financial data/ records made available by the erstwhile

management. Copy of minutes of 2nd meeting of the COC dated 19.08.2022 is

annexed herewith and marked as ANNEXURE A- 4.

19. Subsequently, the Applicant issued an engagement letter on 20.08.2022 to M/s.

KRA & Co. (Transaction Auditor) to perform Transactional Auditing of accounts

of the Corporate Debtor for the lookback period from 01.04.2017 to 13.06.2022 as

prescribed under the Code, 2016.

20. That sub-section (1) of Section 25 casts a duty upon the Resolution Professional to

preserve and protect the assets of the corporate debtor, including the continued

business operations of the corporate debtor. For this purpose, clause (j) of sub-

section (2) of section 25 casts a duty upon the Resolution Professional to file an

application for the avoidance of transactions, if any, before the Adjudicating

Authority in accordance with Chapter III of the Code. Sections 43, 45, 49, 50, and

66 of Chapter III deal with preferential transactions, undervalued transactions,

transactions defrauding creditors, extortionate credit transactions, and fraudulent

and wrongful trading.

21. That in view of the duty casted upon the Applicant under the Code, whilst

examining the transactions of the Corporate Debtor investigated from the

information/data/documents obtained by the Applicant from various sources as

abovesaid, the Applicant has observed that certain business transactions of the

Corporate Debtor as enumerated hereinafter have been carried out with an

intention to give undue advantages to some parties and also to cause loss to the

Financial Creditors.

22. That the Transaction Auditor appointed to review the accounts of the Corporate

Debtor submitted its final report to the Applicant on 07.11.2022 and based on the

findings of the Transactional Auditor, the Applicant determined various

transactions which fall under the scope of Section 43 & 66 of the Code, 2016.

Upon receiving the final transaction audit report, the Applicant is filing the present

application. Moreover, the timelines prescribed under Regulation 35A are

directory and not mandatory, however, the Applicant has taken all precautions to

frame an opinion, to determine the transactions, and to file the present application

as early as possible without any delay.

23. That it is submitted that the Forensic Auditor as appointed by the Applicant herein

completed the Transaction Audit Report and submitted the final report dated

07.11.2022, wherein, the Auditor has observed that based on the review conducted

of the data available for the period 01.04.2017 to 13.06.2022, certain transactions

falls within the purview of Section 43 & 66 of the Code. Copy of Transaction

Audit Report dated 07.11.2022 is annexed herewith and marked as ANNEXURE

A-5.
24. That for the convenience of this Hon’ble Adjudicating Authority and in

compliance with the directions issued by the Hon’ble Supreme Court of India in

the matter of Anuj Jain Interim Resolution Professional for Jaypee Infratech

Limited versus Axis Bank Limited etc in Civil Appeal Nos. 8512-8527 of 2019, the

Applicant is filing separate Applications for reporting transactions falling under

Sections 43, and 66 of the Code, 2016. The relevant excerpts of the judgment

passed by the Hon’ble Supreme Court are reproduced below for ready reference:

29.1. However, we are impelled to make one comment regards the

application made by IRP. It is noticed that in present case, the IRP
moved one composite application purportedly under Sections 43, 45
and 66 of the Code while alleging that the transactions in question
were preferential as also undervalued and fraudulent. In our view, in
the scheme of the Code, the parameters and the requisite enquiries as
also the consequences in relation to these aspects are different and
such difference is explicit in the related provisions. As noticed, the
question of intent is not involved in Section 43 and by virtue of legal
fiction, upon existence of the given ingredients, a transaction is
deemed to be of giving preference at a relevant time. However,
whether a transaction is undervalued requires a different enquiry as
per Sections 45 and 46 of the Code and significantly, such
application can also be made by the creditor under Section 47
of the Code. The consequences of undervaluation are contained in
Sections 48 and 49. Per Section 49, if the undervalued transaction
is referable to sub-section (2) of Section 45, the Adjudicating
Authority may look at the intent to examine if such
undervaluation was to defraud the creditors. On the other hand,
the provisions of Section 66 related to fraudulent trading and
wrongful trading entail the liabilities on the persons responsible
therefor. We are not elaborating on all these aspects for being
not necessary as the transactions in question are already held
preferential and hence, the order for their avoidance is required
to be approved; but it appears expedient to observe that the
arena and scope of the requisite enquiries, to find if the
transaction is undervalued or is intended to defraud the
creditors or had been of wrongful/fraudulent trading are entirely
different. Specific material facts are required to be pleaded if a
transaction is sought to be brought under the mischief sought to
be remedied by Sections 45/46/47 or Section 66 of the Code. As
noticed, the scope of enquiry in relation to the questions as to whether
a transaction is of giving preference at a relevant time, is entirely
different. Hence, it would be expected of any resolution professional
to keep such requirements in view while making a motion to the
Adjudicating Authority.

25. That the instant application is being filed to bring the fraudulent transactions to the

notice of this Hon’ble Adjudicating Authority, so that appropriate orders may be

passed for the avoidance of such transactions. The Applicant submits that the

object of the Code inter-alia is to maximize the assets of the Corporate Debtor,

which has wrongfully dissipated on account of the avoidable transactions being

elucidated hereinafter.

26. Under section 66 (1) of the Code, fraud shall be deemed to have been committed

by the Corporate Debtor when the business of the Corporate Debtor has been

carried out with an intention to defraud the creditors of the Corporate Debtor or

for any fraudulent purpose. The Applicant is duty bound to report to this Hon’ble

Adjudicating Authority about the fraudulent transactions as determined where the

persons who were knowingly parties to carry on the business in such a manner and

to hold them liable to make such contributions to the assets of the Corporate

Debtor. Under the provisions of Section 66(2) of the Code, the Director or partner

of the Corporate Debtor shall be held liable to make a contribution to the assets of

the Corporate Debtor if such Director or Partner knew or ought to have known that

there was no reasonable prospect of avoiding the commencement of CIRP and if

such Director or Partner did not exercise due diligence in minimising the potential

loss to the creditors of the Corporate Debtor.

27. That the Corporate Debtor was under the twilight zone when an application was

filed under Section 7 by the Financial Creditors for the initiation of the CIRP.

Instead of protecting the interest of the Financial Creditors, the Respondents have

removed the property i.e., Plant and Machinery from the land of the Corporate

Debtor and have fraudulently sold them and also withdrew a significant amount
from the bank account of the Corporate Debtor and also misappropriation of the

assets held by the Corporate Debtor in order to gain undue advantage from the

public money lent by the Financial Creditors. Therefore, such an act of the

Respondents attracts Section 66 of the Code. The excerpts of section 66 of the

Code, 2016 are reproduced hereinbelow for ready reference:

66. Fraudulent trading or wrongful trading:

(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) b) such director or partner did not exercise due diligence

in minimising the potential loss to the creditors of the
corporate debtor.

(3) 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.
28. At the very outset, the Applicant submits that the fraudulent transaction discussed

hereinunder, has been carried out by the erstwhile management/ Respondents with

the sole intention to defraud the creditors and thus, to leave little for distribution

among the creditors of the Corporate Debtor after commencement of CIRP in

terms of section 53 of the Code, 2016. All such beneficiaries have been referred to

as “Beneficial Creditor(s)” for the purpose of the transactions reported.

29. That the summary of the fraudulent transaction reported in the present application

is reproduced below for the convenience of this Hon’ble Adjudicating Authority:

Transaction Particulars Amount

Nos. (Rupees)

1. Siphoning of funds by the promoters through

the sale of Plant & Machinery

2. Suspected siphoning of funds through cash 39,55,000

withdrawal

3. Suspected misappropriation of assets held by 38,01,76,697

the Corporate Debtor

TOTAL 38,41,31,697

30. That the Applicant submits that the monies transferred under fraudulent

transactions is amounting to Rs. 38.41 Crores which is being prayed to be

returned/ contributed to the assets of the Corporate Debtor along with interest.

31. The details of the transactions determined by the Applicant as well as by the

Transactional Auditor as summarized hereinabove are provided below for the

proper adjudication of the present Application.

TRANSACTION NO.1: SIPHONING OF FUNDS BY THE

PROMOTERS/DIRECTORS THROUGH THE SALE OF PLANT &
MACHINERY WITH THE INTENTION TO DEFRAUD THE CREDITORS

32. That after the initiation of the CIRP in the captioned matter, the Applicant visited

the premises of the Corporate Debtor situated at Harsinghpur, Bindki Road, P.O –

Mauhar, District – Fatehpur, Uttar Pradesh – 212665 wherein the Applicant

observed that the Plant and Machinery situated at the said plot has been

completely removed prior to the initiation of the CIRP.

33. That it is submitted that the erstwhile Resolution Professional, Mr. Nitin Jain had

conducted the inspection on the said property only in the last month of December

2021 that is just six (6) months prior to the commencement of CIRP in the

captioned matter and while the captioned company petition was pending for order,

the Respondents had fraudulently siphoned off the Plant and Machinery which

were hypothecated to the Financial Creditors against loan facilities availed from

them.

34. That the Respondents have deliberately kept the assets of the Corporate Debtor

away from the reach of the Financial Creditors despite knowing that the Section 7

Application is filed against the Corporate Debtor. When an application under

Section 7 or 9 is filed by any creditor of the Corporate Debtor it becomes a

fiduciary duty of the Director of the Corporate Debtor to safeguard such assets to

protect the interest of the Financial Creditor from financial loss.

35. That it is submitted that the Applicant has already filed an application bearing I.A.

No. 299 of 2022 under Section 66 of the Code, 2016 against the Respondent

before this Hon’ble Adjudicating Authority for seeking directions that the

transaction whereby the plant and machinery of the Corporate Debtor has been

removed and sold by the Respondents being the assets of the Corporate Debtor

and declare such transaction as null and void and accordingly reverse the effect of

the said transaction.

36. That it is worthwhile to mention here that this Hon’ble Adjudicating Authority

vide order dated 21.09.2022 was pleased to issue notice to the Respondents in the

application bearing I.A. No. 299 of 2022. It is submitted that the Application

bearing I.A. No. 299 of 2022 is listed on 07.12.2022. Copy of order dated

21.09.2022 passed by this Hon’ble Adjudicating Authority is annexed herewith

and marked as ANNEXURE A-6.

TRANSACTION NO. 2: SIPHONING OF FUNDS THROUGH CASH

WITHDRAWAL OF RS. 39,55,000/-.

37. That it is submitted that the Directors of the Corporate Debtor made a significant

cash withdrawal from the bank accounts maintained with the State Bank of India

having account number 00000030820915900 during the Financial Year 2019-

2020. It is further submitted that there was no large cash withdrawal from the State

Bank of India accounts for the period prior to the Financial Year 2019-2020.

38. That it is pertinent to mention here that the Respondents have made a withdrawal

of the total amount of Rs. 39.55 Lacs (Rupees Thirty Nine Lakhs Fifty Five

Thousand), and all the withdrawals are made by only one person named Vivek

Dewidi.

39. That it is submitted that the Corporate Debtor did not file any financial statements

after the period of 31.03.2019. It is submitted that the Resolution Professional and

the Transaction Auditor had no financial records of the Corporate Debtor available

during which these suspicious cash withdrawals have taken place.

40. The details of the cash withdrawals done by Vivek Dewidi on behalf of the

Respondents during the Financial Year 2019-2020 from the bank account opened

in State Bank of India are as follows:

Transaction Value Description Ref. No./ Debit

Date Date Cheque No.

03.08.2019 03.08.2019 Cash Cheque – 808648 6,00,000.00

Vivek Dewidi –
808648
05.08.2019 05.08.2019 Cash Cheque – 808647 7,00,000.00
Vivek Dewidi –
808647
13.08.2019 13.08.2019 Cash Cheque – 808650 8,50,000.00
Vivek Dewidi –
808650
14.08.2019 14.08.2019 Cash Cheque – 808649 1,80,000.00
Vivek Dewidi –
808649
17.08.2019 17.08.2019 Cash Cheque – 358262 1,50,000.00
Vivek Dewidi –
358262
20.08.2019 20.08.2019 Cash Cheque – 358252 1,00,000.00
Vivek Dewidi –
358252
21.08.2019 21.08.2019 Cash Cheque – 358263 5,00,000.00
Vivek Dewidi –
358263
30.08.2019 30.08.2019 Cash Cheque – 358251 5,00,000.00
Vivek Dewidi –
358251
02.09.2019 02.09.2019 Cash Cheque – 358253 2,00,000.00
Vivek Dewidi –
358253
04.09.2019 04.09.2019 Cash Cheque – 808646 25,000.00
Vivek Dewidi –
808646
05.09.2019 05.09.2019 Cash Cheque – Transfer From 1,50,000.00
Vivek Dewidi – 3199678044303
358264
TOTAL 39,55,000.00

TRANSACTION NO. 3: MISAPPROPRIATION OF ASSETS HELD BY THE

CORPORATE DEBTOR

41. That it is submitted that the balance sheet of the Corporate Debtor was last audited

in the Financial Year 2018-2019, and the audit was conducted by M/s Amit Goyal

& Co., Chartered Accountants.

42. That it is submitted that the Companies Act, 2013 cast a duty upon the directors of

the Company to submit the audited financial statement every year to the Ministry

of Corporate Debtor.

43. That it is submitted that as per the Balance sheet of the Financial Year 2018-2019,

the Corporate Debtor was holding a significant amount of assets in its books of

account. However, the Resolution Professional has no information available in

respect of these assets.

44. The details of the assets held by the Corporate Debtor as on 31.03.2019 are as

follows:

S. No. PARTICULAR AS ON 31.03.2019

1. Tangible Fixed Assets 7,24,26,096

2. Investments 1,00,000
3. Security Deposits 1,17,10,884
4. Loans and Advances 17,48,900
5. Inventories 15,88,97,970
6. Trade Receivables 11,39,61,338
7. Security Deposits 13,27,736
8. Cash and Cash Equivalent 1,69,70,889
9. Other Current Assets 16,19,30,854
Total Assets 38,01,76,697

45. That it is submitted that evidently the said transactions have been done with intent

to play fraud upon the creditors of the Corporate Debtor. It is submitted that said

transaction on the face of it, is done with a clear intent to defraud its creditors and

to keep the assets of the Corporate Debtor beyond the reach of the creditors and

thus falls within the purview of Section 66 of the Code.

46. From the perusal of the above, it is evidently clear that under no circumstances the

said transactions can be considered in the normal course of business by any

company, which leads to only one conclusion that the above said transactions were
carried out by the directors are not only fraudulent but the same have been carried

with an intent to defraud its creditors.

47. That the aforesaid transaction as mentioned above, has been entered by the

promoters and directors of the Corporate Debtor and has been carried out with the

intent to defraud the creditors so that the asset of the Corporate Debtor can be kept

beyond the reach of the creditors of Corporate Debtor in the event of imminent

default and therefore, the same falls within the purview of Section 66 of the Code.

48. That the solitary ingredient of Section 66(1) is that if any business of the

Corporate Debtor has been carried on with an intent to defraud creditors of the

Corporate Debtor or for any fraudulent purpose then on an application by the

Liquidator, this Hon’ble Adjudicating Authority can pass an order for contribution

by the persons who were knowingly parties to the carrying on of the business in

such manner. That the said fraudulent transactions shall imply that while the

creditors of the Corporate Debtor are struggling with their recovery process and

will have to undertake significant write-off on their stakes, the funds of the

Corporate Debtor have been diverted through transactions assailed in this

application to the prejudice of the financial creditors and other stakeholders.

49. That any transaction which has an adverse bearing on the financial health of a

distressed corporate person has to be viewed with considerable disfavour. It is

worthwhile to refer to the decision of the Hon’ble Supreme Court in the matter of

Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited V. Axis

Bank Limited passed in Civil Appeal No. 8512-8527 wherein the Hon’ble

Supreme Court held as below:

Coming now to the corporate personalities, it is elementary that by

the very nature and legal implications of incorporation, ordinarily,
several individuals and entities are involved in the affairs of a
corporate person; and impact of the activities of a corporate person
reaches far and wide, with the creditors being one of the important
set of stakeholders. If the corporate person is in crisis, where either
insolvency resolution is to take place or liquidation is imminent; and
the transactions by such corporate person are under scanner, any
such transaction, which has an adverse bearing on the financial
health of the distressed corporate person or turns the scales in favour
of one or a few of its creditors or third parties, at the cost of the other
stakeholders, has always been viewed with considerable disfavour.

50. In view of the above, the Applicant has formed an opinion that the said

transactions as detailed above have been carried out by the Respondent No. 1 to 5

with the intent to defraud the creditors of the Corporate Debtor.

51. It is most pertinent to submit that the present Application is filed in terms of

Regulation 35A of the CIRP Regulations, 2016, the Applicant submits that the

fraudulent transactions discussed hereinunder, have been carried out by the

Respondents with the sole intent of siphoning off the assets hypothecated to the

Financial Creditors from the Corporate Debtor and by thus dissipating the assets

of the Corporate Debtor, to leave little for distribution among the creditors of the

Corporate Debtor.

52. That in view of the aforesaid facts and circumstances and in view of the duty

casted upon the Resolution Professional in terms of Section 25(2)(j) of the Code,

the Applicant is filing the present application under Section 66 of the Insolvency

& Bankruptcy Code, 2016 seeking appropriate directions against the Respondents

for balancing the interest of stakeholders by restoring the funds diverted and

maximization of value of the Corporate Debtor as the said fraudulent transactions

have saddled the Corporate Debtor with the liabilities.

53. That the instant application is bona fide and is being filed in the interest of justice

and to advance the objectives of the Code.

54. The balance of convenience and inconvenience and the prima facie case are in

favour of orders as prayed for herein.

PRAYER

In the premises, it is most respectfully prayed that this Hon’ble Adjudicating

Authority may graciously be pleased to:

a. Allow the present application;

b. Pass an order declaring the transaction entered into by Respondent No. 1

to 5 being the directors of the Corporate Debtor as summarized in

paragraph No. 29 and detailed in paragraph Nos. 32 to 44 as fraudulent

transactions within the meaning of Section 66 of the Code, and declare

the transaction as null and void and reverse the effect of the said

transaction;

c. Pass consequential directions against Respondent No. 1 to 5 i.e.

Directors and Promoters of the Corporate Debtor to contribute an amount

equivalent to the transaction as summarized in paragraph No. 29 for

deliberately defrauding the creditors of the Corporate Debtor and

diverting funds of the Corporate Debtor along with interest at the rate this

Hon’ble Adjudicating Authority deems fit to award;

d. Pass such other or further Order/ Order(s) as may be deemed fit and

proper in the facts and circumstances of the instant case.

APPLICANT
MR. SANYAM GOEL
RESOLUTION PROFESSIONAL
PRIMUSS PIPES & TUBES LIMITED
(FORMERLY KNOWN AS PREMIER PIPES LIMITED)

FILED THROUGH

LAW OFFICES OF A. ANAND

E-192-193, FIRST FLOOR
AMAR COLONY, LAJPAT NAGAR –IV
NEW DELHI – 110024
+91-8800343000, 9811003550
EMAIL: [email protected]
DATE: .11.2022
PLACE: NEW DELHI
BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL,
ALLAHABAD BENCH, PRAYAGRAJ
I.A. NO. ________ OF 2022
IN
C. P. (IB) NO. 07(ALD) OF 2021
IN THE MATTER OF:

ANJALI CAPFIN PRIVATE LIMITED … FINANCIAL CREDITOR

VERSUS
PRIMUSS PIPES & TUBES LIMITED
(FORMERLY KNOWN AS PREMIER PIPES LIMITED)
… CORPORATE DEBTOR

AFFIDAVIT

I, Sanyam Goel, S/o Sh. Rajesh Kumar Goel, aged about 38 years acting as Resolution

Professional for Primuss Pipes & Tubes Limited, having its office at Unit No. 110, First

Floor, JMD Pacific Square, Sector 15, Part II, Gurugram – 122001, presently at New

Delhi, do hereby solemnly affirm and declare on oath as under:-

1. That I have been appointed as the Resolution Professional for Primuss Pipes &

Tubes Limited, by Hon’ble NCLT, Allahabad Bench vide order dated 13.06.2022

and am duly authorized under the provisions of the Insolvency and Bankruptcy

Code, 2016, to file this Application on behalf of for M/s. Primuss Pipes & Tubes

Limited. Even otherwise, I am well conversant with the facts and circumstances of

the case and hence competent to swear the present affidavit.

2. That I have read and understood the contents of the Application which has been

drafted by the Counsel under my instructions and I say that the facts stated therein

are true and correct to my knowledge based on the records, contents whereof are

not repeated for the sake of brevity and may be read as part and parcel of this

affidavit. No part of it is false and nothing material has been concealed therefrom.

DEPONENT

VERIFICATION
Verified at New Delhi on ____ Day of November, 2022 that the contents of
paragraphs stated above are true and correct to my knowledge. No part of it is
false and nothing material has been suppressed or concealed therefrom.
DEPONENT
BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL

ALLAHABAD BENCH, PRAYAGRAJ

I.A. NO. OF 2022
IN
COMPANY PETITION (IB) NO.07/ALD OF 2021

IN THE MATTER OF:

ANJLALI CAPFIN PRIVATE LIMITED ….FINANCIAL CREDITOR

VERSUS

PRIMUSS PIPES & TUBES LIMITED

(FORMERLY KNOWN AS PREMIER PIPES LIMITED) …CORPORATE DEBTOR
VAKALATNAMA
Know all to whom these presents shall come that I, Sanyam Goel, Resolution
Professional of Primuss Pipes & Tubes Limited. do hereby appoint: Abhishek
Anand, Nipun Gautam, Mohak Sharma, Prateek Kushwaha, Karan Kohli, Viren
Sharma, Pathik Choudhury, Nikhil Jain, and Sahil Bhatia ADVOCATES of Law
Offices of A.Anand, hereinafter called to be our Advocates in the above-noted case and
authorise them.
To act, appear and plead in the above-noted case in this Court or in any other Court in
which the same be tried or heard and also in the appellate Courts.
To sign, file verify and present pleadings, replications, appeals, cross-objections, or petitions for
executions, review, revision, restoration, withdrawal, compromise or other documents as may be
deemed necessary or proper for the prosecution of the said case in all its stages.
Revisor restoraries.
To file and take back documents.
To take out execution proceedings, to deposit, draw and receive money, cheques and grant
receipts thereof or and to do all other acts and things which may be necessary to be done for the
progress and in the course of prosecution of the said case.
To appoint, instruct any other Legal practitioner authorising him to exercise the power and
authorities hereby conferred upon the Advocates whenever he or they may think fit to do so and
sign, the power of attorney on my/our behalf.
IN WITNESS WHEREOF, We do hereunto set our hand to these present the contents of which
have been understood by us this ____ day of November, 2022.

Accepted: Abhishek Anand Nipun Gautam Mohak Sharma Prateek Kushwaha CLIENT
Advocate Advocate Advocate Advocate
(D/1171/2010) (D/6326/2017) (D/3586/2018) (D/4032/2018)

Karan Kohli Viren Sharma Pathik Choudhury Sahil Bhatia Nikhil Jain
Advocate Advocate Advocate Advocate Advocate
(D/2571/2018) (PH/4976/2019) (D/3383/2019) (D/5275/2021) (D/3884/2020)

DELHI OFFICE: CHANDIGARH OFFICE:

E-192-193, FIRST FLOOR HOUSE NO. 1600
AMAR COLONY, LAJPAT NAGAR –IV, SECTOR, 18-D
NEW DELHI – 110024 CHANDIGARH – 160 018
Mob: +91-8800343000, 9811003550 Mob: 9501019920
Email: [email protected]