The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Rakesh Kumar, Judicial Member and Dr. Alok Srivastava, Technical Member was hearing an appeal by respective Appellants against the same Respondent and held that the Preferential transactions cannot be said to be part of the common flow of business. The Appellate Bench observed these two transactions as preferential transactions and ordered the Appellants to refund the said amounts to the corporate debtor.
In Appeal-I, the Appellant has stated that the Transaction Auditor and the Resolution Professional have incorrectly classified the said refund of the security deposit as repayment of an unsecured loan, which is to the detriment of the Appellant, and which has been held as a preferential transaction, and by the Impugned Order, this transaction has been reversed and the Appellant has been directed to return the money paid by the corporate debtor to the Appellant. As to the facts in Appeal-II, the Appellants have claimed that the Appellant booked a studio apartment with the corporate debtor on 8.1.2015 for which Rs. 5,00,000/-was paid as booking amount and this amount was refunded by the corporate debtor on 29.8.2018 to Appellant on account of cancellation of the booking of the studio apartment. The Appellants have also stated that a similar booking amount of Rs. 5,00,000/- was paid by the Appellant towards another unit booked with the corporate debtor, which was cancelled and the booking amount of Rs. 5,00,000/- was returned to the Appellant on 7.6.2018. The Appellants have further submitted that these refunds, given to them upon cancellation of their units, were transactions made in the regular course of business of the corporate debtor and therefore, they will not qualify as preferential transactions. Since the Impugned Order has classified these two transactions as preferential transactions and ordered the Appellants to refund the said amounts to the corporate debtor, the appellants who are aggrieved by the said order have filed Appeal-II.
In the present case, the Appellate Tribunal observed that the transactions were not part of the common flow of business, which should have been evidenced by any letter or communication requesting cancellation of the booking of the unit and through a request by the appellants for a refund of the booking amount which is not the case in the instant matter. The Appellate Authority noted these transactions are preferential transactions with the support to the contention of the RP that the ‘ordinary course of business’ should mean a common flow of transactions.
The Appellate Authority noted that Preferential transactions cannot be said to be part of the common flow of business. The Appellate Bench observed these two transactions as preferential transactions and ordered the Appellants to refund the said amounts to the corporate debtor
The Appellate Tribunal observed that the Impugned Order did not suffer from any infirmity regarding the reversion of the amounts repaid to the Appellants back into the account of the corporate debtor, and the RP has, therefore, been correctly directed to recover the said amounts from the Appellants.
The Appeals were dismissed.
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