44

Repayment of borrowings during look back period, after classification of account of Corporate Debtor as NPA, falls within the exception provided in Section 43(3) of IBC – Mr. Anish Niranjan Nanavaty RP of Reliance Communications Ltd. Vs. RPL Aditya Power Ltd. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that:

(i) Section 43(3) of the Code provides certain exceptions, whereby even a transaction falling within the mischief of Section 43(2) read with Section 43(4) of the Code are excluded from the scope of section 43 calling for orders u/s 44 of the Code.
(ii) Ordinarily, every borrower makes sure that the amounts borrowed are paid as and when it becomes due or with least delay. The loans taken from Respondents are stated to be paid in multiple tranches of odd amounts and the loan was repayable on demand.
(iii) Hence, such repayment of loan was in Ordinary Course of financial affairs of the Corporate Debtor as well. Since, the impugned transaction was in Ordinary Course of financial affairs of Corporate Debtor and the Respondent, we are of considered view that it squarely falls within the exception provided in Section 43(3) of the Code.

Repayment of borrowings during look back period, after classification of account of Corporate Debtor as NPA, falls within the exception provided in Section 43(3) of IBC – Mr. Anish Niranjan Nanavaty RP of Reliance Communications Ltd. Vs. RPL Aditya Power Ltd. – NCLT Mumbai Bench Read Post »

Transaction of set off receivables from wholly owned subsidiary of stepdown subsidiaries of Corporate Debtor with payable to stepdown subsidiaries in the books of Corporate Debtor does not fall in section 43 of IBC as Preferential Transactions – Dr. Mamta Binani RP Vs. Rolta Middle East FZ LLC and Others – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench observes that in this case, the Rolta Saudi Arabia is a wholly owned subsidiary of Rolta Middle East and Rolta Middle East is a stepdown subsidiary of the Corporate Debtor (Rolta India Ltd.). The receivables from Rolta Saudi Arabia which is the wholly owned subsidiary of the Rolta Middle East has been set off against the payable to Rolta Middle East. In other words, the set off has resulted into NIL impact on the considered basis qua corporate debtor which is the ultimate holding company. Accordingly, we do not find any case of preference having been given to third party by way of such adjustment because the liability and assets of subsidiary and further stepdown subsidiaries are reflected in the value of investments held by the Corporate Debtor of the asset side.

Transaction of set off receivables from wholly owned subsidiary of stepdown subsidiaries of Corporate Debtor with payable to stepdown subsidiaries in the books of Corporate Debtor does not fall in section 43 of IBC as Preferential Transactions – Dr. Mamta Binani RP Vs. Rolta Middle East FZ LLC and Others – NCLT Mumbai Bench Read Post »

Whether Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan – Kunwer Sachdev Vs. Su-Kam Power Systems Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) It is the Resolution Professional or Liquidator who are empowered to come to opinion and file an application for avoidance of the transaction.
(ii) Any assets or their value recovered through proceedings for avoidance of transactions shall form the liquidation estate. There can be no dispute to this legal position that proceeds of the avoidance application are part of the liquidation estate.
(iii) The Regulation 44A deals with treatment of transaction avoidance which itself contemplates that there can be a position regarding prosecution of avoidance application even after resolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed.
(iv) In the present case it is not a case that avoidance application has been filed by the Successful Auction Purchaser, The Insolvency Law Committee Report does not in any manner help the Appellant.
(v) The issue as to whether the Successful Auction Purchaser can prosecute the avoidance application in place of Resolution Professional by substituting its name was not subject matter of the issue in the aforesaid case of 63 Moons Technologies Ltd. (2022) ibclaw.in 95 NCLAT hence we are of the view that on the ground that civil appeal is pending before the Hon’ble Supreme Court, hearing of the matter need not be deferred.

Whether Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan – Kunwer Sachdev Vs. Su-Kam Power Systems Ltd. – NCLAT New Delhi Read Post »

When Erstwhile Management indulged into fraudulent trading or unlawful trading which may also include any preferential transactions, order to make contribution by the Erstwhile Directors is very well contemplated under Section 66 of the Code, Section 44(1)(d) of IBC contemplates a direction requiring any person to pay such sums in respect of benefits received by him from the Corporate Debtor – Mr. Saptarshi Nath Vs. Kapil Dev Taneja, RP of Exit 10 Marketing Pvt. Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) Essential conditions need to be fulfilled for issuing direction under Section 44(1)(d). (i) The Adjudicating Authority may require any person to pay and (ii) Such sums in respect of benefits received by him from the Corporate Debtor. Thus as observed above, the provision of Section 44 is aimed at reversing the effects of preferential transactions when the effects of preferential transaction are, reversed the person who has received benefits from the transactions, can be required to pay the sum which is the power given under Section 44(1)(d) of the Code.
(ii) When Erstwhile Management indulged into fraudulent trading or unlawful trading which may also include any preferential transactions, order to make contribution by the Erstwhile Directors is very well contemplated under Section 66 of the Code.
(iii) Present is not a case where the Adjudicating Authority has returned any finding under Section 66 or exercised power and issued an order under Section 66 of the Code. The Adjudicating Authority has only issued direction under Section 44(1)(d) of the Code.

When Erstwhile Management indulged into fraudulent trading or unlawful trading which may also include any preferential transactions, order to make contribution by the Erstwhile Directors is very well contemplated under Section 66 of the Code, Section 44(1)(d) of IBC contemplates a direction requiring any person to pay such sums in respect of benefits received by him from the Corporate Debtor – Mr. Saptarshi Nath Vs. Kapil Dev Taneja, RP of Exit 10 Marketing Pvt. Ltd. – NCLAT New Delhi Read Post »

Can Successful Resolution Applicant be substituted in the place of Administrator/RP subsequent to approval of Resolution Plan – Nippon Life India Asset Management Ltd. Vs. Piramal Capital & Housing Finance Ltd. & Ors. – NCLAT New Delhi

These two Appeals have been filed against the order dated 09.02.2023 passed by the NCLT, Mumbai Bench, Court II by which applications filed by Successful Resolution Applicant to substitute itself in the place of Administrator who had filed application under Section 43, 44 and 66 of the Code has been allowed.

Can Successful Resolution Applicant be substituted in the place of Administrator/RP subsequent to approval of Resolution Plan – Nippon Life India Asset Management Ltd. Vs. Piramal Capital & Housing Finance Ltd. & Ors. – NCLAT New Delhi Read Post »

Transaction entered by Corporate Debtor voluntary or due to pressure or threat has no relevance while coming to the conclusion whether the transaction is preferential or not, the intent of Corporate Debtor is not relevant since Section 43 of IBC envisages statutory/deeming fiction – GVR Consulting Services Pvt. Ltd. Vs. Pooja Bahry – NCLAT New Delhi

NCLAT held that:
(i) The submissions of the Appellant on the ground that the transaction was entered into by the Corporate Debtor due to pressure put on it has no relevance and shall not change the nature of transaction from preferential transaction.
(ii) The expression “ordinary course of business” or “financial affairs of the Corporate Debtor” has to be read “ejusdem generis”. The expression “financial affairs of the Corporate Debtor” cannot be given an extended meaning.
(iii) The intent of the Corporate Debtor is not relevant since the Section 43 envisages statutory fiction. Whether the Act is voluntary or not has no relevance while coming to the conclusion whether transaction is preferential or not.
(iv) Judgement of the Hon’ble Supreme Court in “Anuj Jain” has clearly laid down about the irrelevance of the motive in such transaction.
(v) Filing of composite application under Section 43, 44, 45, 46, 66, 67 and 60(5) of the Code does not lead to any infirmity in the Application.
(vi) In Section 43(3), certain exception has been provided. Thus those transactions which fall as exception under Sub-Section (3) can be taken out of sub-section 2 of Section 43, rest shall be covered by deeming fiction.

Transaction entered by Corporate Debtor voluntary or due to pressure or threat has no relevance while coming to the conclusion whether the transaction is preferential or not, the intent of Corporate Debtor is not relevant since Section 43 of IBC envisages statutory/deeming fiction – GVR Consulting Services Pvt. Ltd. Vs. Pooja Bahry – NCLAT New Delhi Read Post »

By way of book entry, setting of one receivable from the related party with the liability of another related party results into transfer of property in form of its Debtors is in nature of preferential transaction u/s 43 of IBC – Chetan T. Shah Vs. Mr. Jayesh Vinod Valia (Ex-MD & Promoter of the CD) – NCLT Mumbai Bench

The Adjudicating Authority held that in view thereof, we agree with the contention of Applicant that the sum of Rs. 1,15,17,707/- is preferential transaction u/s 43 of the Code and the Respondents are liable to refund this money to the Corporate Debtor u/s 44(1) of the Code. As regards amount realized from sales of assets, it is held similarly as the Applicant has identified this transaction with the repayment made to the related party. At last, the book entry has effect of setting of one receivable from the related party with the liability of another related party results into transfer of property in form of its Debtors and its makes the other party (debtor) of the Corporate Debtor as creditor of such related party (creditor) and the same is also in nature of preferential transaction, even though the same is represented by the book entry.

By way of book entry, setting of one receivable from the related party with the liability of another related party results into transfer of property in form of its Debtors is in nature of preferential transaction u/s 43 of IBC – Chetan T. Shah Vs. Mr. Jayesh Vinod Valia (Ex-MD & Promoter of the CD) – NCLT Mumbai Bench Read Post »

Whether application under Section 43, 44 and Section 66 of IBC would survive in absence of Transaction Audit Report/ Forensic Audit Report – Mrs. Vaishali Arun Patrikar, RP, M/s Panama Systems Pvt. Ltd. Vs. Mr. Hemant Khinvasara, Director (Suspended) of M/s Panama Systems Pvt. Ltd. – NCLT Mumbai Bench

NCLT held that it is necessary to observe that at this advanced stage, the process of Liquidation has attained its finality wherein the running of business has come to an end. Further, the Applicant with the information available with her, distributed all the assets and balances to the respective stakeholders as per Section 53 of the Code and the Liquidation Account of the Corporate Debtor is already closed on 27.01.2023. Thus, while dealing with the contention of non-co-operation by the Respondent, the Applicant has taken her steps to complete the process with whatever information she had. Also, with regards to concealment of information pertaining to the missing assets (phone, laptops, desktops) the Applicant/Liquidator has not provided any concrete proof with respect to the evaluation of the amount claimed for the concealed property/missing assets or conducted any audit to conclusively show the value of missing assets as claimed. Therefore, in view of the above facts and circumstances, the Bench is of the considered opinion that the Applicant has failed to furnish the requisite details or provide any concrete proof with regards to the contentions raised, hence the bench is refraining from taking any action on the conduct of the Respondent in absence of any clinching evidence.

Whether application under Section 43, 44 and Section 66 of IBC would survive in absence of Transaction Audit Report/ Forensic Audit Report – Mrs. Vaishali Arun Patrikar, RP, M/s Panama Systems Pvt. Ltd. Vs. Mr. Hemant Khinvasara, Director (Suspended) of M/s Panama Systems Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Scroll to Top