NCLAT Upholds ₹4.37 Crore Liability On Linkson International Suspended Directors Over Round-Tripping

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has upheld a ₹4.37 crore contribution ordered against suspended directors of Linkson International Ltd., finding that money raised through property loans was routed back to the company and its related entities.

“It appears to be a crystal-clear case of round-tripping of money, and the sole purpose of it was to defraud the creditors,” the tribunal observed.

Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Arun Baroka heard an appeal by Yashwant Lalchand Sangla and others against the NCLT, Mumbai order directing the appellants to contribute ₹4.37 crore to the corporate debtor.

Liquidator Manish Baldeva commissioned a forensic audit. The audit flagged transactions involving properties at Shri Gopal Complex and Megh Complex in Nagpur and ₹103.15 lakh in unsupported cash expenses.

At Shri Gopal Complex, Linkson International purchased 12 flats for ₹3.5 crore, while the stamp-duty value was around ₹1.50 crore. Nagpur Nagrik Sahkari Bank sanctioned a ₹2.45 crore loan, transferred to vendor Sudhir Hiranwar on March 30, 2013.

Hiranwar subsequently transferred ₹1 crore to Linkson Ispat and Energy Private Limited, a related company with Yashwant Sangla as a common director. He transferred ₹10 lakh to Linkson Coal and Minerals and ₹6 lakh to Linkson International.

A similar pattern emerged at Megh Complex. Loan amounts of ₹1.68 crore and ₹1.12 crore were transferred to the vendor, who then transferred ₹1.50 crore to Linkson Ispat and Energy and ₹7 lakh to Linkson International.

The tribunal noted that the properties remained in the sellers' possession and some mortgages were not redeemed.

The suspended directors argued that the transactions were genuine and had been financed and approved by the bank. They contended that the forensic auditor relied on ready-reckoner values that did not reflect market prices. They also argued that the audit report was only an expert opinion and could not be treated as conclusive evidence.

While the forensic report was not conclusive by itself, the tribunal held that it assumed significance because the erstwhile management had not provided relevant documents and account books. It was supported by sale deeds, bank records, Sub-Registrar records and title-verification reports.

The tribunal found the appellants had failed to discredit the report. It agreed with the NCLT that the sales were “nothing but an accommodation transaction” enabling the corporate debtor to raise loans and receive the money back through the sellers.

The NCLAT dismissed the appeal.