2024 (3) TMI 601 - AT - Insolvency and Bankruptcy

Undervalued/preferential/fraudulent transactions - Failure to adjudicate about the ingredients of Section 43, 45, 49 and 66, specifically - Adjudicating Authority in the impugned order has only noticed the opinion of the Resolution Professional - Need for separate consideration of preferential, undervalued, and fraudulent transactions, each requiring distinct scrutiny and evidence - HELD THAT - The Adjudicating Authority has recorded only its conclusions and that too without considering the preferential, undervalued and fraudulent, each transaction separately and there is general observation that the transactions are undervalued transactions as well as preferential and fraudulent transactions. The ingredients of preferential, undervalued and fraudulent transaction are entirely different and there has to be application of mind to the ingredients of each transaction to come to conclusion that ingredients are satisfied and the transaction falls in the said category adverting to the given pleadings in the application. The Adjudicating Authority ought to have adverted to the said pleadings and returned the finding regarding the fulfilment of ingredients of each provision. The Adjudicating Authority has only in two paras i.e. 27 and 28 has recorded his conclusion without giving any reason and without adverting to any pleadings or materials on record. The order passed by the Adjudicating Authority cannot be sustained. Order impugned is set aside - Application revived before the Adjudicating Authority to be heard afresh and decided in accordance with law. Appeal disposed off.

Summary

Issues:
The judgment involves an appeal against an order passed by the Adjudicating Authority in I.A. No.314/KB/2022 under Sections 43, 45, 49, and 66 of the IBC Code regarding relief sought by the Resolution Professional.

Section 43, 45, 49, and 66 Application:
The Appellant challenged the order, contending that the Adjudicating Authority did not adjudicate on the specific ingredients of Section 43, 45, 49, and 66 as per the judgment in "Anuj Jain vs. Axis Bank Limited and Ors." The Resolution Professional's application was based on a Transaction Audit Report, and the Adjudicating Authority accepted the details without a proper examination of the ingredients.

Consideration of Supreme Court Judgment:
The Adjudicating Authority referenced the law laid down by the Supreme Court in "Anuj Jain vs. Axis Bank Limited and Ors." regarding preferential, undervalued, and fraudulent transactions. The Authority's findings only appeared in two paragraphs without a detailed analysis of each transaction separately, failing to consider the distinct ingredients of preferential, undervalued, and fraudulent transactions.

Decision and Revival of Application:
The Appellate Tribunal set aside the impugned order, reviving the application to be heard afresh by the Adjudicating Authority for a proper examination and decision in accordance with the law. The Appellant was granted the opportunity to file a reply within two weeks before the Adjudicating Authority.