2023 (9) TMI 1026 - AT - Insolvency and Bankruptcy

CIRP - Preferential Transaction - transactions infringing section 43 of the IBC - HELD THAT - A plain reading of sub-section (2) of section 43 makes it clear that if the transfer of a property or an interest of the corporate debtor is made for the benefit of a creditor or a surety or a guarantor, such transaction would be preferential transaction , if it puts such creditor or surety or guarantor in a beneficial position and if such transactions are made within the relevant period - the transactions which are the subject of the Impugned Order were made during the period 18.11.2019 to 30.9.2021. Out of these, the transactions made between 22.6.2021 to 30.9.2021 which total Rs. 7,81,352 were all made within a period of two years immediately preceding the insolvency commencement date which is 6.10.2021. Therefore, and quite clearly, all these transactions are within the relevant period . In the background of the report of Forensic Audit of the Corporate Debtor , it is quite clear that the said transactions amounting to Rs.7,81,352 are preferential transactions , as defined under section 43 of the IBC - the Impugned Order does not suffer from any infirmity - there are no reason to interfere with the said order - appeal dismissed.

Summary

Issues involved:
The appeal under section 61 of the Insolvency and Bankruptcy Code, 2016 against the Impugned Order in IA (IBC) 182/KOB/2022 passed by the Adjudicating Authority (NCLT, Kochi Bench).

Summary:

Background:
The Corporate Insolvency Resolution Process was initiated against the corporate debtor, leading to a forensic audit revealing certain transactions as preferential under section 43 of the IBC. The Liquidator filed an application seeking orders regarding these transactions.

Appellant's Argument:
The Appellant claimed that the transactions were in the ordinary course of business and not preferential. He highlighted the amounts due to him from the corporate debtor and the transfers made, arguing that they did not meet the criteria of section 43 of the IBC.

Legal Analysis:
The Tribunal examined the provisions of section 43 of the IBC, emphasizing the conditions for a transaction to be considered preferential. It noted the lack of clarity in the Appellant's explanations and concluded that the transactions in question fell within the definition of preferential transactions.

Decision:
The Tribunal upheld the Impugned Order, ruling that the transactions were preferential as per section 43 of the IBC. The Appellant was directed to pay the specified amount to the corporate debtor, with interest calculated at 12% per annum. The appeal was dismissed for lack of merit.

Conclusion:
The Tribunal found no reason to interfere with the Impugned Order, emphasizing the legal provisions and the lack of justification provided by the Appellant. The decision was made in line with the requirements of the IBC, and no costs were awarded in the matter.