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2023 (5) TMI 445 - AT - Insolvency and BankruptcyPreferential Transaction or Fraudulent Transaction - charge on the property of the corporate debtor with respect to the two Agreements in form of Bajaj Finance Ltd. - defrauding the creditors of the corporate debtor or not - ultimate beneficiaries of the two loans are related parties of the corporate debtor or not. Whether the creation of the security interest by way of mortgage of the Mortgaged Property located at Noida is a preferential transaction under section 43 or a transaction intended to defraud the creditors of the corporate debtor which is covered under section 66 of the IBC? - HELD THAT - Section 43 of the IBC stipulates that if there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for on an account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor, such a transaction would be considered a preferential transaction. Moreover, if the transaction is with a related party then the lookback period will be two years and if it is a party other than a related party the lookback period would be one year preceding the insolvency commencement date as per sub-section 4 of section 43. The Hon ble Supreme Court has held in the matter of Anuj Jain, PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. 2020 (2) TMI 1259 - SUPREME COURT that mortgage deeds entered by the corporate debtor JIL should be considered alongwith the fact as to who are the real beneficiaries of the transaction - The Hon ble Supreme Court has thus held that if there is a transfer of property or interest thereof of the corporate debtor for the benefit of related parties and not necessarily be the corporate debtor, then the look back period would be two years and such a transaction will be considered as a transaction which infringes sub-section (2) of section 43. The Adjudicating Authority erred in holding that the security interest created in the Mortgaged Property was correct and we accordingly set aside this part of the Impugned Order and hold that the mortgage created on the Mortgaged Property and which is registered by Form CHG-1 shall be cancelled and the said property shall become a part of the assets of the corporate debtor in an unencumbered form, available in the liquidation estate of the corporate debtor for the benefit of its creditors. Ultimate beneficiaries of the two loans are related parties of the corporate debtor or not - Transfer of Rs.1,02,09,360/- by the corporate debtor in favour of SAKS Developers LLP - HELD THAT - An MoU was signed between the corporate debtor and SAKS Developers on 30.08.2018. Notably, Mr. Ramesh Kumar Suneja as director of the corporate debtor and Mr. Pankul Suneja as managing partner/partner of SAKS Developers signed this MoU who are father and son respectively. Moreover, this MoU was executed on a non-judicial stamp paper purchased in Uttar Pradesh (where stamp papers in hard copy as against e-stamp paper could be purchased) even though the corporate debtor and SAKS Developers have their registered offices in New Delhi. It is also noted that in New Delhi only e-stamp papers can be purchased. Moreover the MOU is neither notarized or registered. Therefore the veracity about the signing of the MoU on the date claimed cannot be firmly established. A close perusal of the recital and profits sharing clauses of the MoU reproduced above shows that while on one hand the Developer had ostensibly shared with the Collaborator the relevant details of project including architectural plans, estimated cost of land and constructions etc. and after due consideration the Collaborator had agreed to invest in the proposed project, the clauses in the Profit Sharing section as extracted above show that the plans and final project cost etc. are not yet clear and therefore the actual profit sharing ratio and the total cost of the proposed project are not indicated in the MoU. The absence of these details in the MoU shows that the MOU was perhaps executed in a hurry. The intention of the Developer and Collaborator for development of the proposed project also then appears either half-baked or suspicious - Thus, it is clear that when the corporate debtor was experiencing insolvency, it still chose to transfer an amount of Rs.1,02,09,360/- to a related party SAKS Developers LLP and which is also a family concern of Mr. Ramesh Kumar Suneja to siphon off the said amount from the corporate debtor to SAKS Developer LLP even though it could have used the said amount to pay off its debtors and resolve its insolvency. The amount of Rs.1,02,09,360/- which was transferred by the corporate debtor to the related party SAKS Developers LLP during the lookback period of two years was in clear violation of section 43 of the IBC. Therefore, the order made by the Adjudicating Authority directing SAKS Developers LLP to repay/refund the amount of Rs.1,02,09,360/- to the corporate debtor is correct and does not require any interference. Appeal allowed.
Issues Involved:
1. Whether the creation of security interest by mortgaging the property was a preferential transaction under Section 43 or a fraudulent transaction under Section 66 of the IBC. 2. Whether the transfer of Rs.1,02,09,360/- to SAKS Developers LLP was a preferential transaction under Section 43 of the IBC. Summary: Issue 1: Creation of Security Interest by Mortgaging Property The appeals challenged the order dated 30.07.2021, which concluded that the charge on the corporate debtor's property in favor of Bajaj Finance Ltd. was not created with intent to defraud creditors and was not a fraudulent transaction. The corporate debtor mortgaged property No. K-3, 5th Floor, Brahm Datt Tower, Sector 18, Noida, to secure loans for the benefit of certain individuals and companies, which did not benefit the corporate debtor itself. The liquidator argued that the transactions were preferential and should be avoided under Section 43 of the IBC, citing the Supreme Court judgment in Anuj Jain, which emphasized the importance of examining the ultimate beneficiaries of transactions. The tribunal concluded that the mortgage was for the benefit of related parties and within the two-year look-back period, thus infringing Section 43. The tribunal set aside the adjudicating authority's decision and canceled the mortgage, making the property part of the corporate debtor's unencumbered assets. Issue 2: Transfer of Rs.1,02,09,360/- to SAKS Developers LLP The transfer of Rs.1,02,09,360/- to SAKS Developers LLP was deemed a preferential transaction. The MoU between the corporate debtor and SAKS Developers was signed during a period when the moratorium was not in force, but the tribunal found that the transaction was intended to siphon off funds to a related party. The tribunal held that the transfer was within the two-year look-back period and violated Section 43 of the IBC. The tribunal upheld the adjudicating authority's order directing SAKS Developers LLP to refund the amount to the corporate debtor. Conclusion: 1. The order holding that the security interest created in the mortgaged property was not a violation of Section 43 of the IBC was erroneous. The mortgage on the property should be canceled, and the property should revert to the corporate debtor's assets. 2. The transfer of Rs.1,02,09,360/- to SAKS Developers LLP was correctly held as a preferential transaction, and the order directing the refund was upheld. The appeal was allowed with the above modifications, and no order as to costs was made.
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