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TMI Blog2021 (6) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... r was initiated on 14.06.2017 and it is presently under liquidation. At the instance of Corporate Debtor itself, based on an Application filed u/s. 10 of IBC, 2016 CIRP was initiated in CP/467/(IB)/CB/2017. At the time of initiating CIRP in relation to the Corporate Debtor, vide order dated 20.09.2017, the Applicant came to be appointed as the Resolution Professional. Since the Corporate Insolvency Resolution Process did not yield any Resolution of the Insolvency of the Corporate Debtor, in IA/66/2017, this Tribunal vide order dated 11.01.2018 had brought the Corporate Debtor under liquidation and the Applicant was appointed as the Liquidator. 3. As a Liquidator, while taking into custody or control of all assets, properties, effects and maximum utilization of the assets of the Corporate Debtor by virtue of Section 35 of IBC, 2016, the Applicant, it is averred came across several transactions in the Books of Accounts of the Corporate Debtor requiring an investigation of financial assets of the Corporate Debtor with the determination of either undervalued or preferential transactions, as the case may be. 4. In furtherance to the same, the Books of the Corporate Debtor including th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Application being the Bank Statement as maintained by the Company under liquidation prior to CIRP being initiated with the Karur Vysya Bank Ltd. is sought to be relied on by Learned Liquidator in relation to the transaction of the value of Rs. 80,000/- being NEFT transfer to M/s. Kirtilal Kalidas on 11.11.2016 and again Rs. 49,790/- on 21.11.2016. Taking into consideration all the above, the avoidable transactions in relation to the 1st Respondent, it is averred in the Application aggregate to a sum of Rs. 5,26,99,936/-. 9. In relation to the 2nd Respondent, it is found that the same is a Trust' being managed by the daughter and son-in-law of the 1st Respondent, who had acted as Director of the Company under liquidation/Corporate Debtor. In relation to the said Trust' as per the Ledger Account maintained in the Books of the Company under liquidation a sum of Rs. 11,55,142/- is reflected in the said Ledger Account which falls under the category of avoidable transactions u/s. 45 of IBC, 2016. 10. Upon perusal of the Account it is seen that certain sums of Rs. 50,000/- and Rs. 11,05,142/- have been debited on 15.05.2015 and 09.03.2016 respectively, which are found i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, as filed by the Liquidator, have been filed. 15. Perusal of the reply statement of Respondent Nos. 1, 4 and 5 wherein it is contended that taking into consideration the decision of the Hon'ble Supreme Court as reported in (2020) 8 SCC 401 in Civil Appeals Nos. 8512-27 of 2019 with Nos. 6777-97 of 2019 and 9357-77 of 2019 decided on February 26, 2020 in the matter of Anuj Jain (supra), the Application per se seeking to invoke Section 35(b)(k) and (I) of the Code and also seeking to impugn the alleged undervalued transactions u/s. 45, 46 and 48, is not permissible since the parameters and requisites in relation to each of the Sections of the Code, as evident from the provisions itself are distinct. 16. It is also further contended on the part of these Respondents viz., R1, R4 and R5 that the Application as filed by the Liquidator is barred by limitation taking into consideration the Regulation as framed by IBBI under Regulation 40 A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 wherein time lines have been fixed being model timelines which the Hon'ble Supreme Court itself had extracted while ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o case has been made out by the Applicant for grant of any relief and also in view of various objections taken by these Respondents, the Application is required to be dismissed with exemplary cost. 20. In relation to 2nd and 3rd Respondents as stated earlier, counter statements have been filed individually and Learned Counsel for these Respondents viz., 2nd and 3rd contends therefrom that under the definition of related party as provided under IBC, 2016 "Trust" cannot be considered as a related party and in the circumstances the sunset period available for the Liquidator is in as much as non-related party is limited to a period of one year as compared to a related party wherein the provision itself provides for two years prior to the date of initiation of the CIRP. 21. In relation to the transactions as reflected in the ledger statement of the Company under liquidation/erstwhile Corporate Debtor as pointed out by the Applicant at Page No. 16 in support of the avoidable transactions incurred, it is pointed out that no specific request was made by the Trust for the transfer of funds in a sum of Rs. 50,000/- on 15.05.2015 and a sum of Rs. 11,05,142/- on 09.03.2016 to the parties as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the relevant provisions of the Act, which the Applicant sought to invoke in the present Application i.e. Section 45, 46, 48 and 49 of IBC, 2016; 45. Avoidance of undervalued transactions.- (1) If the liquidator or the resolution professional, as the case may be, on an examination of the transactions of the corporate debtor referred to in sub-section (2) determines that certain transactions were made during the relevant period under section 46, which were undervalued, he shall make an application to the Adjudicating Authority to declare such transactions as void and reverse the effect of such transaction in accordance with this Chapter. (2) A transaction shall be considered undervalued where the corporate debtor- (a) makes a gift to a person; or (b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor 46. Relevant period for avoidable transactions.- (1) In an application for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faith, for value and without notice of the relevant circumstances to pay any sum unless he was a party to the transaction. 27. A perusal of the above four sections which are extracted supra would manifest the following position; (i) There are two types of Undervalued transactions one contemplated under clause (a) of sub-section (2) of Section 45 of IBC, 2016 and the other under clause (b) of sub-section (2) of section 45 of IBC, 2016. (ii) Section 46 of IBC, 2016 deals with the period/duration within which the transactions are required to be examined, i.e. for two years in case of related party and one year in case of any other person, preceding the Insolvency commencement date as defined in Section 5(12) of IBC, 2016. (iii) Section 48 and 49 deals with the orders that can be passed by the Adjudicating Authority in case the transactions as provided under sub-section (1) or subsection (2) of Section 45 of IBC, 2016 stands proved; similarly 28. Coming to the facts of the present case, from the averments made in the Application in so far as 1st Respondent is concerned, the Liquidator has alleged that the 1st Respondent has carried out undervalued transactions to the tune of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion in relation to negotiation with banks, thereby the policy decisions and covered by Section 5(24) (m), more particularly of clause (i) and (ii) of said section of IBC, 2016. It is also required to be noted that section also do not specify the 'related party' in relation to the Corporate Debtor or Individual being a Director of the Corporate Debtor, as both the definitions under Section 5(24) and 5(24-A) fall under Part-II concerning Insolvency Resolution and Liquidation for Corporate Persons. 30. Also, the Respondents sought to contend that the Liquidator has filed a composite Application and in view of the Judgment passed by the Supreme Court in Anuj Jain (supra), this Application being a composite Application, is not maintainable. However it is seen that the present Application was filed by the Liquidator, much before the judgment rendered by the Supreme Court in Anuj Jain and also the Liquidator, as already alluded in paragraph supra, during the course of submissions, in all fairness, taking into consideration the decision of the Hon'ble Supreme Court in Anuj Jain, has sought for withdrawal of the relief portion as reflected in clause (b) of para VII of the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made in favour of those documents and hence the burden of proof lies upon the Respondent to rebut the same. Unless the contrary is proved, it is presumed the Court may presume that the same is true and in the present case, the Respondents have miserably failed to rebut the same. 33. Next, coming to the aspect of the transactions in question, the same falls within the parameters as laid down under Section 45 of IBC, 2016 in relation to Respondents 1 to 3, for the reasons stated above. Thus, after conscientious perusal of the documents, we come to an irresistible conclusion that the impugned transactions as alleged by the Liquidator in relation to Respondents 1 to 3 constitute undervalued transactions as envisaged under Section 45 of IBC, 2016 and in the circumstances, the relief as sought for by the Applicant in clause (a) of Para VII is granted. The 1st, 2nd and 3rd Respondents are directed to repay the sum of Rs. 5,26,99,936/-, Rs. 11,55,142/- and Rs. 1,00,000/- respectively along with interest chargeable at bank rates to the Applicant/Liquidator within a period of 60 days from the date of this order. Accordingly, MA/581/2019 stands disposed off. Order pronounced under Rule 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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