The definition of preferential transactions as per Sec. 43 of the Code refers to an opinion of a Liquidator or a Resolution Professional, that was reached during the Resolution stage – K. L. Jute Products Private Limited Vs. Tirupti Jute Industries Ltd. – NCLAT
February 28, 2020
NCLAT held that the definition of ‘preferential transactions’ as per Section 43 of the Code refers to an opinion of a ‘Liquidator’ or a ‘Resolution Professional’, that was reached during the ‘Resolution stage’. An action under Section 43 of the Code can lie only when the ‘Liquidator’ or ‘Resolution Professional’ arrived an opinion that an ‘undue preference’ was given to a particular ‘Creditor’ or ‘Guarantor’ or ‘Surety’ with a view to place a beneficiary in a profitable pedestal in regard to other creditors position in regard to other ‘Creditors’ when the Corporate Debtor entered into transaction with any individual. Section 43 of the Code speaks of ‘avoidance of preference’ given by a Corporate Debtor in the run up to ‘Insolvency’. Section 43 (2) of Code mentions the circumstances when a Transactions entered into by a Corporate Debtor shall be treated as a deemed preference on a fiction of Law. The ‘Term’, ‘Transfer’ includes ‘sale’, ‘Relinquishment’, ‘Exchange’, and an Adjudicating Authority under Section 49 of the Code can restore a status quo ante in a given matter by protecting a person’s interest. Section 49 of the Code prescribes no time limit for securing an order in respect of a transaction entered into which were meant for defrauding the ‘creditors’.