The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra was hearing an Appeal on Monday and held the transactions by the Corporate Debtor in favour of the Appellants as preferential transactions and directed them to refund the respective amount.
In the present case, there are three Appeals have been filed against the same Order passed by the National Company Law Tribunal, New Delhi, allowing I.A. filed by the Resolution Professional under Section 43 of the Insolvency and Bankruptcy Code. The Adjudicating Authority by the Impugned Order held the transactions by the Corporate Debtor in favour of the Appellants as preferential transactions and directed them to refund the respective amount.
CIRP against the Corporate Debtor commenced by Order dated 27.08.2019. On 16.09.2019 and 27.09.2019 public announcement was made. In the CoC meeting dated 30.10.2019, Pooja Bahry was appointed Resolution Professional of the Corporate Debtor. Resolution Professional appointed a Transaction Auditor. Transaction Auditor submitted a report on 09.09.2020 containing findings regarding certain transactions undertaken by the Corporate Debtor which report was placed before the CoC. On the Avoidance Application filed by the RP for avoiding various transactions in favour of Respondents 1 to 7 to the Application I.A. No. 5768 of 2020. Notices were issued by the Adjudicating Authority on 16.02.2021. The Adjudicating Authority heard the arguments in the avoidance application and reserved the order on 05th August 2021. The Order was delivered on 2nd March, 2022 by the Adjudicating Authority holding the transactions by the Corporate Debtor entered into with Respondent No. 1 to 7 as preferential transactions within Section 43 of the Code.
In the avoidance application, the RP has also prayed for declaring certain transactions undervalued and fraudulent. The Adjudicating Authority in so far as prayers made in Application under Section 45 and 66 did not accept the prayers and allowed the application only in so far as Section 43 prayers were concerned and declared the transaction in favour of the Respondent No. 1 to 7 as preferential transactions and directed to refund the amount. Aggrieved by this Order, these Appeals have been filed.
In the present case, the submissions of the Appellant on the ground that the transaction was entered into by the Corporate Debtor due to pressure put on it have no relevance and shall not change the nature of the transaction from the preferential transaction. The Hon’ble Supreme Court emphasized that the ingredients of Sections 43, 45 and 66 are different and Resolution Professional is expected to keep such requirements in view while making motion to the Adjudicating Authority. In the present case, the Resolution Professional has in the avoidance application in his application has dealt with preferential transactions undertaken by the Corporate Debtor and undervalued transactions undertaken by the Corporate Debtor as well as a fraudulent transaction in different heads i.e. ‘i’, ‘ii’ and ‘iii’ thus allegations and averments were separately made and filing of a composite application does not lead to any infirmity in the Application. The Appellate Authority has not accepted the submission of the Appellant that since the composite Application was filed it ought to have been rejected.
The NCLAT observed that the Adjudicating Authority has rightly allowed the Application filed by the Resolution Professional and declared the preferential transactions undertaken in favour of the Appellants and directed the Appellants to refund the amount within three months. All the Appeals were dismissed.
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