Corporate Law Daily
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Today’s newsletter analytically summarizes the top Corporate Law stories reported at?taxmann.com.
The Employee Provident Fund Organisation (EPFO) has granted an extension for the mandatory linking of Aadhaar with the Universal Account Number (UAN) of EPF members for filing of ECR (Electronic Challan cum Return) up to 31.03.2024.
The extension applies to certain classes of establishments, including Beedi making, Building and Construction and Plantation Industries and to the North Eastern Region comprising of States of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland & Tripura.
In the instant case, the Respondent (i.e. financial creditor) had sanctioned loan facilities in favour of the appellant (i.e. suspended director of the corporate debtor), wherein the corporate debtor had given a corporate guarantee.
Thereafter, the corporate debtor was admitted into the CIRP, and a Resolution Professional (RP) was appointed and invited claims. The Respondent submitted its claim; however, the same was rejected by RP on the ground that it could not be verified as per the books of account and documents available with the corporate debtor.
Consequently, aggrieved by the action of RP, the Respondent filed an application before the Adjudicating Authority (NCLT) seeking directions for the RP to admit its claim and to include it in the Committee of Creditors (CoC) of the corporate debtor as a financial creditor.
The NCLT, by the impugned order, directed the RP to admit the claim of the Respondent as a financial creditor, holding that if the guarantee is given over the money borrowed by the principal debtor from the creditor and the same is supported by the guarantee agreement, it will suffice to admit the claim as 'financial debt'.
Further, since the Respondent had not only filed the documents reflecting the transfer of money, and creation of obligation by way of Corporate Guarantee but also furnished security by way of the mortgage; therefore, the RP should have admitted the Respondent’s claim as 'financial debt'.
Thereafter, the appellant challenged the said order before the National Company Law Appellate Tribunal (NCLAT).
The appellant contended that the corporate guarantee was not given by the corporate debtor for the loan amount taken by the director as the same was barred u/s 185 of the Companies Act, 2013, and hence invalid under the law.
The NCLAT observed that the available record reflects that the board resolution had been passed guaranteeing/mortgaging the property.
The NCLAT held that, in view of facts and circumstances, including the law available on the subject, no error was found in the impugned order passed by the NCLT. Therefore, the appeal was to be dismissed.
In the instant case, the applicant filed a bail application u/s 439 of the Code of Criminal Procedure, 1973, seeking regular bail for an offence punishable u/s 447 of the Companies Act, 2013.
An investigation by the Serious Fraud Investigation Office (SFIO) into the affairs of the accused company 'PPPL' revealed that the director of 'PPPL' i.e. 'S' used to procure plastic granules from large-scale public sector undertakings as well as from local suppliers. These granules were then sold in cash to local vendors without any tax invoices.
Whereas, tax invoices for these cash sales were issued to various entities, including many related parties, to adjust purchases. Similarly, tax invoices without any underlying goods were also issued to non-related parties who required them to avail of the credit of duty (VAT).
Further, in order to carry out the said deception, several sham entities were formed by 'S' in the name of his relatives and employees.
The petitioner was the proprietor of one of the entities in which funds were routed by ‘S. The allegation against the petitioner was that he arranged documents and people in whose name fake entities and bank accounts were opened, which were subsequently used to route funds of 'PPPL'.
Thus, the SFIO filed a complaint against the petitioner for committing an offence u/s 447 of the Companies Act, 2013 and the petitioner was taken into custody.
The High Court observed that the co-accused, the director of the accused company, had already been granted bail, and there was no allegation that the petitioner could either intimidate any witnesses or tamper with evidence. Further, it was not the case of the prosecution that the petitioner did not join or cooperate in an investigation.
The High Court held that considering the aforesaid discussion, and the fact that the petitioner was in judicial custody since 25-5-2022, the petitioner was to be released on bail upon furnishing a personal bond in the sum of Rs. 50,000/- with one surety of like amount to the satisfaction of the Trial Court.
Accordingly, the present bail application stands disposed of.
That’s it from us for today! Stay Tuned for more updates from?Taxmann.com.
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