2023 (8) TMI 259 - AT - Insolvency and Bankruptcy

Fraudulent transaction - Sale Deed executed by the Corporate Debtor in favour of the Respondent, with regard to the immovable property - evidence existed to establish that the sale deed was Fraudulent Transaction or not - HELD THAT - Having regard to the facts and circumstances of the case and the Recitals in the Sale Deed dated 11/08/2008, this Tribunal is of the considered view that merely because the Sale Agreement is dated 15/05/1989 and the Sale Deed is executed on 11/08/2008, it cannot be a ground for establishing that the said transaction is a Fraudulent one. Now, we address to the contention of the Learned Counsel for the Appellant that there is no documentary proof to establish that Rs. 50,00,000/- was indeed transferred to the Corporate Debtor by the Respondent. Apart from the fact that the Financials of the Respondent Company record that the said Consideration was paid on its behalf by M/s Shivalika Leasing and Finance Limited , this Tribunal is conscious of the fact that the amount has been paid by Cheque. This Tribunal finds it a fit case to place reliance on the Judgment of the Principal Bench of NCLAT in the matter of JAGDISH KUMAR PARULKAR, LIQUIDATOR FOR KAPIL STEELS LTD. VERSUS M/S INDORE STEEL ALLOYS PRIVATE LIMITED, SUBHASH KUMAR JAISWAL, MANISH MALVIYA, M/S RUPENDRA JAISWAL KUMAR, MADHYA PRADESH INDUSTRIAL DEVELOPMENT CORPORATION LIMITED 2023 (3) TMI 1388 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI in which this Tribunal had addressed in detail, regarding the role of Liquidator and observed The negligence on the part of the Corporate Debtor not to have executed the lease deed cannot be overlooked and cannot be allowed to become a ruse for fraudulent transaction. Mere possibility of a potential collusion without material on record is not sufficient to persuade, this Bench to record any finding on preferential or fraudulent transaction. It is settled position of law that there is a presumption that a Registered Document is validly executed. The burden of proof, thus would be on the person who leads the evidence to rebut the presumption. In the instant case, this Tribunal does not find any documentary evidence on record to establish that the said Transaction is a Fraudulent one. Appeal dismissed.

Summary

Issues involved:
The judgment involves the dismissal of an appeal by the Liquidator of a company, challenging the validity of a sale deed as a fraudulent transaction under Section 66 of the Insolvency and Bankruptcy Code.

Summary:
1. The Liquidator of the company appealed against the dismissal of the application seeking to declare a sale deed as a fraudulent transaction. The Adjudicating Authority found the Liquidator failed to prove the sale was fraudulent.

2. The Liquidator argued that the sale deed, executed between the company and the respondent, was fraudulent due to lack of valid parties and delayed execution. The parties were related, and no consideration flow was proven, challenging the validity of the sale.

3. The Liquidator contended the sale deed was executed by an unauthorized person, Mr. R.N. Yadav, and lacked proof of payment or appreciation of property value. Allegations of siphoning assets and lack of consideration were raised, questioning the validity of the sale.

4. The Liquidator referenced a Supreme Court judgment on essential elements of a valid sale, emphasizing the need for payment. The delay in registration was attributed to tenancy issues, and reliance was placed on the company's financial records.

5. The respondent argued that the sale consideration was paid through a registered sale deed and financial records. The balance sheet for 2008 was filed, and payment details were recorded in the company's books, disputing the fraudulent transaction claim.

6. Encroachments on the property were cleared in 2003, and the respondent maintained peaceful possession since the sale in 1989. The respondent's continuous possession was highlighted as evidence of the genuine transaction.

Appraisal:
7. The Tribunal evaluated the evidence and concluded that the delay in registration was justified due to prior encumbrances. The sale deed's recitals and payment evidence supported the validity of the transaction, dismissing the fraud claim.

8. The Tribunal addressed the lack of tangible reasons for delay and found no evidence to establish the transaction as fraudulent. The payment evidence and recitals in the sale deed were deemed sufficient to uphold the validity of the sale.

9. Citing a NCLAT judgment, the Tribunal emphasized the Liquidator's responsibilities and the need for substantial evidence to prove fraudulent transactions. The payment evidence and bank statements supported the validity of the sale, leading to the dismissal of the appeal.