9911796707
TMI Blog2021 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... Application - Further, the Resolution Professional need to see whether the property belongs to the Corporate Debtor or not? In the present case, admittedly the property belongs to the Corporate Debtor as evident from the sale agreement and there is no dispute with regard to the same. The vital point is whether the transaction is preferential one and whether the said transaction is beneficial to such creditor (Appellant herein) by discriminating the distribution of assets as per Section 53 of the I B Code in case of liquidation. The Ld. Adjudicating Authority at Para 23 drawn a table where the claims have been lodged and the waterfall mechanism need to be adopted in the case of liquidation. From the perusal of the table, the Operational Creditor stands at Serial No.7 under the waterfall mechanism. In the case of liquidation, the criteria as enumerated under Section 53 need to be followed. If the said principle is followed, the Appellant stands at Serial No.7. Certainly, it amounts to preferential treatment over other Creditors and the distribution of liquidation assets namely (a) Insolvency Resolution Process Costs, Liquidation Costs and the debts which shall rank equally be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the sale agreement was fixed at ₹ 88,54,790/-. During CIRP which was commenced on 04.02.2019, the Appellant submitted a claim in Form (B) dated 02.04.2019 for an amount of ₹ 5,06,51,128/- after adjusting for the consideration of the sale agreement. (4) While matters stood thus, the Respondent herein filed an Application on 03.07.2019 seeking to set aside the aforementioned sale agreement dated 22.06.2018 on the ground that the said sale agreement in favour of the Appellant being a preferential transaction within the meaning of Section 43 of the IBC 2016. (5) The Hon ble Adjudicating Authority allowed the said Application by passing the above Impugned Order and set aside the sale agreement dated 22.06.2018. (6) The Learned Counsel submitted that apart from the facts, the Appeal is filed for the following grounds as stated in Para 9 of the grounds of Appeal. The Learned Counsel submitted that the Adjudicating Authority failed to take note of the fact that the Appellant herein has been supplying cotton to the Corporate Debtor since 2012 and there were accumulated dues which were to be settled by the Corporate Debtor. The Corporate Debtor was undergoing liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant, perused the pleadings and documents filed along with the Appeal Paper Book(s). The only issue fell for consideration is whether the Transaction i.e., the sale agreement entered between the Appellant and the Corporate Debtor dated 22.06.2018 is a transaction that are preferential in nature between the Appellant and the Corporate Debtor as under Section 43(1) of the I B Code 2016. The Ld. Adjudicating Authority after noting the facts in detail and relying upon the Judgment of the Hon ble Supreme Court in the matter of Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. -Vs- Axis Bank Ltd., Etc. in Civil Appeal Nos. 8512-8527 of 2019 with Civil Appeal Nos. 6777-6797 of 2019 and Civil Appeal Nos. 9357-77 of 2019 allowed the Application filed by the Respondent herein and set aside the sale agreement holding that the transaction falls within the provisions of Section 43 of the IBC, 2016 and set aside the sale agreement by accepting the prayers as made by the Respondent herein. (10) It is an admitted fact that the Appellant had entered sale agreement dated 22.06.2018 with the Corporate Debtor i.e., M/s. Sholingur Textiles Limited, whereby the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PR-2019 be admitted for the revised amount of ₹ 5,95,05,918/-, by reversing the entry passed on 22-JUN-2018 in the Books of CD, giving credit to the 1st Respondent to the extend of ₹ 88,54,790/- being the transfer declared as voidable as above. 6. Impose costs to the extent of ₹ 50,000/- on the 1st Respondent to be paid as recompense to the Resolution Professional under Regulation 18, for having filed the claim in Form B knowingly claiming credit for a transaction voidable under Section 45 of the Code. 7. For such further orders, as this Hon ble Adjudicating Authority may deem fit and proper in the circumstances of the case and render justice. (12) The Ld. Adjudicating Authority while allowing the Application observed as under- 28. We are of the view that taking into consideration the Sale Agreement and the recitals contained therein the transaction cannot be considered to be in the ordinary course of business or in relation to the financial affairs of the Corporate Debtor. 29. In view of all the six steps as formulated by the Hon ble Supreme Court of India in relation to consideration of the transaction as a preferential transaction have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security interest secures new value and was given at the time of or after the signing of a security agreement that contains a description of such property as security interest and was used by corporate debtor to acquire such property; and (ii) such transfer was registered with an information utility on or before thirty days after the corporate debtor receives possession of such property: Provided that any transfer made in pursuance of the order of a Court shall not, preclude such transfer to be deemed as giving of preference by the corporate debtor. Explanation.- For the purpose of sub-section (3) of this section, new value means money or its worth in goods, services, or new credit, or release by the transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the liquidator or the resolution professional under this Code, including proceeds of such property, but does not include a financial debt or operational debt substituted for existing financial debt or operational debt. (4) A preference shall be deemed to be given at a relevant time, if- (a) It is given to a related party (other than by reason onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party/parties with each sub-set requiring different analysis. The sub-set concerning unrelated party/parties shall further be trimmed to include only the transactions of preceding one year from the date of commencement of insolvency. 3. Having thus obtained two sub-sets of transactions to scan, the steps thereafter would be to examine every transaction in each of these sub-sets to find: (i) as to whether the transaction is of transfer of property or an interest thereof of the corporate debtor; and (ii) as to whether the beneficiary involved in the transaction stands in the capacity of creditor or surety or guarantor qua the corporate debtor. These steps shall lead to shortlisting of such transactions which carry the potential of being preferential. 4. In the next step, the said shortlisted transactions would be scrutinised to find if the transfer in question is made for or on account of an antecedent financial debt or operational debt or other liability owed by the corporate debtor. The transactions which are so found would be answering to clause (a) of sub-section (2) of Section 43. 5. In yet further step, such of the scanned and scrutinised transactions that are fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the present case. Further, the Resolution Professional need to see whether the property belongs to the Corporate Debtor or not? In the present case, admittedly the property belongs to the Corporate Debtor as evident from the sale agreement and there is no dispute with regard to the same. Therefore, the criteria as prescribed by the Hon ble Supreme Court in the above Judgment is fulfilled and the Adjudicating Authority rightly allowed the Application of the Resolution Professional. (18) Keeping in view of the above parameters, the vital point is whether the transaction is preferential one and whether the said transaction is beneficial to such creditor (Appellant herein) by discriminating the distribution of assets as per Section 53 of the I B Code in case of liquidation. The Ld. Adjudicating Authority at Para 23 drawn a table where the claims have been lodged and the waterfall mechanism need to be adopted in the case of liquidation. From the perusal of the table, the Operational Creditor stands at Serial No.7 under the waterfall mechanism. In the case of liquidation, the criteria as enumerated under Section 53 need to be followed. If the said principle is followed, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
