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2021 (12) TMI 1325 - Tri - Insolvency and BankruptcySeeking transfer of shares - if the shares have been disposed of by the Respondents then the proceeds of the same be directed to be credited to the account of the Corporate Debtor - preferential transaction - HELD THAT - The scope and nature of transactions enumerated under Section 43 45 50 and 66 of IBC 2016 are independent and distinct. As to the present case it is seen that the RP has moved the MA/731/2019 under Section 43 and 44 of IBC 2016 and hence there is no ambiguity in the Application being filed by the RP and the scope of examination of the present Application will revolve around the tenets of Section 43 of IBC 2016. Section 43 of IBC 2016 deals with the what is Preferential Transaction and Section 44 of IBC 2016 deals with the orders to be passed in case of preferential transaction. A cursory reading of Section 43 of IBC 2016 in terms of the Judgment of the Hon ble Supreme Court in the matter of Anuj Jain 2020 (2) TMI 1259 - SUPREME COURT contemplates that where the liquidator or the resolution professional is of the opinion that the corporate debtor has at a relevant time given a preference in such transaction and in such manner as laid down in sub-section (2) to any persons as referred to in sub-section (4) he shall apply to the Adjudicating Authority for avoidance of preferential transaction and for one or more of the orders referred to in Section 44. Thus the preliminary enquiry which this Adjudicating Authority is required to do is to first ascertain as to whether the Corporate Debtor has given any preference. Only thereafter the Adjudicating Authority is required to examine as to whether the scope of enquiry of giving preference has happened within and during the specified time referred to as relevant time . The transaction sought to be impugned by the Resolution Professional does not pertain to Corporate Debtor giving preference over other creditors however it relates to a creditor who is invoking the pledge on account of default by the Corporate Debtor and under no stretch of imagination the said transaction can be brought under the confines of preferential transaction as defined under Section 43 of IBC 2016 - During the course of arguments and even in the rejoinder it is stated that pending admission of Section 7 Application the Corporate Debtor has paid a sum of 1 Crore to Union Bank of India over the total default amount of 10 Crore. It is also seen from the record of proceedings that no direction was given by this Adjudicating Authority to pay any amount to the Financial Creditor. The Corporate Debtor during the pendency of Section 7 Application has paid a sum of 1 Crore to the Financial Creditor and if we apply the definition of Section 43 of IBC 2016 only the said transaction made by the Corporate Debtor would attract preferential transaction . However it is seen that the RP has not moved any Application seeking to bring the said amount paid to the Financial Creditor during the pendency of Section 7 Application to the tune of 1 Crore as preferential transaction . The Adjudicating Authority is vested with the scope of enquiry into the transactions which have happened prior to the Insolvency Commencement Date only in respect of transactions covered under Section 43 45 49 and 66 of IBC 2016 - thus it is seen from the Information Memorandum that the above extracted excerpt was the information provided to the successful Resolution Applicant and as such the successful Resolution Applicant cannot now come and claim that since he has paid a sum of 80 Crore more in the Resolution Plan he is entitled to get this transaction reversed. The Resolution Applicant has given the Resolution Plan based upon the information as given in the Information Memorandum and upon perusal of the Information Memorandum it seen that pledge of shares of the Corporate Debtor in the 2nd Respondent Company has been invoked by Apollo Distilleries and Breweries Private Limited and as such the said shares were not part of the Information Memorandum however the successful Resolution Applicant cannot now strengthen his case by referring to the clauses in the Resolution Plan by stating that they are entitled to the said proceeds. In any case it is held that the impugned transaction does not even fall under Section 43 of IBC 2016. Thus the alleged transaction filed by the Resolution Professional in respect of the Corporate Debtor does not constitute preferential transaction in terms of Section 43 of IBC 2016 - application dismissed.
Issues Involved:
1. Maintainability of the application filed under Section 43 and 45 of IBC, 2016. 2. Determination of the transaction as a 'preferential transaction' under Section 43 of IBC, 2016. 3. Validity and implications of the share pledge agreement and its invocation. 4. Rights and claims of the successful Resolution Applicant regarding the disputed shares. Issue-wise Detailed Analysis: 1. Maintainability of the Application: The application filed by the Resolution Professional (RP) under Section 43 and 45 of IBC, 2016 was challenged on the grounds of maintainability, citing the judgment in Venus Recruiters Private Limited vs. Union of India and Others. It was argued that after the approval of the Resolution Plan, the RP becomes functus officio and cannot prosecute the application. However, the Tribunal found that the application was filed before the approval of the Resolution Plan, thus distinguishing it from the Venus Recruiters case. Therefore, the Tribunal overruled the objection on maintainability. 2. Determination of the Transaction as a 'Preferential Transaction': The Tribunal examined whether the invocation of the share pledge agreement by the 1st Respondent constituted a 'preferential transaction' under Section 43 of IBC, 2016. The Supreme Court's interpretation in Anuj Jain's case was considered, which clarified that for a transaction to be deemed preferential, it must involve the corporate debtor giving a preference at a relevant time, and such preference must benefit a creditor over others in case of asset distribution under Section 53 of IBC, 2016. The Tribunal noted that the impugned transaction did not involve the corporate debtor giving preference but rather the 1st Respondent invoking a security interest due to loan default. Hence, the transaction did not qualify as a 'preferential transaction.' 3. Validity and Implications of the Share Pledge Agreement and Its Invocation: The share pledge agreement dated 26.02.2016 between the Corporate Debtor and the 1st Respondent was scrutinized. The RP did not challenge the validity of this agreement, which was beyond the two-year period stipulated under Section 43(4)(a) of IBC, 2016. The Tribunal emphasized that the invocation of the pledge by the 1st Respondent was a consequence of the Corporate Debtor's default and not a preferential act by the Corporate Debtor. The Tribunal concluded that the invocation of the pledge was a legitimate action by the secured creditor and did not fall within the scope of Section 43 of IBC, 2016. 4. Rights and Claims of the Successful Resolution Applicant: The successful Resolution Applicant argued that the Resolution Plan included provisions for the takeover of all assets, including the disputed shares. However, the Tribunal noted that the Information Memorandum had already disclosed the invocation of the pledge and transfer of shares. The Tribunal held that the successful Resolution Applicant could not claim the shares based on the Resolution Plan since the shares were not part of the assets available at the time of the plan's approval. The Tribunal also dismissed the argument that the Resolution Applicant paid an additional ?80 Crore based on an assurance of reversing the share transfer, as such an assurance could not be given while the matter was sub-judice. Conclusion: The Tribunal concluded that the transaction in question did not constitute a 'preferential transaction' under Section 43 of IBC, 2016. Consequently, MA/731/2019 filed by the Resolution Professional was dismissed, and all connected applications (MA/769/2019, IA/04(CHE)/2021, and MA/114(CHE)/2021) were closed.
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