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TMI Blog2021 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... wed a sum of Rs. 5,95,05,918/- for the supply of cotton. While so, the Corporate Debtor i.e., M/s. Sholingur Textiles Limited was admitted by the Adjudicating Authority, National Company Law Tribunal on 04.02.2019 in CP(IB)/1037/2018 in an Application filed under the Insolvency and Bankruptcy Code, 2016. The Respondent herein was appointed as Resolution Professional by the Learned 'Adjudicating Authority'. (3) The Appellant and the Corporate Debtor entered into a sale agreement on 22.06.2018 for transferring the land belonging to the Corporate Debtor to the Appellant towards partial settlement of the debt owed to the Appellant. By the aforesaid sale agreement, the Corporate Debtor offered to settle the said debt partially. The value of the land which was mentioned in the sale agreement was fixed at Rs. 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 Rs. 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was a bonafide transaction entered into by two parties in good faith and for a consideration and in the absence of any moratorium or prohibitory orders from any Adjudicating Authority. Further, the Hon'ble Adjudicating Authority ought not to have imposed the costs of Rs. 50,000/- on the Appellant that the claim in Form (B) was for the amount that was over and above the settlement of the land valued at Rs. 88,54,790/-. (8) In view of the grounds as mentioned above the Learned Counsel prayed this 'Tribunal' to set aside the Impugned Order dated 26.02.2021 passed by the Adjudicating Authority, National Company Law Tribunal, Chennai in MA/709/2019 in CP(IB)/1037/2018. Appraisal/Analysis :- (9) Heard the Learned Counsel for the 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid Sale Agreement dated 22-JUN-2018 in favour of the 1st Respondent, as aforesaid and require the property (ies) so transferred to vest in the Corporate Debtor and thus restore position as it existed before such transfer as if the transaction (s) has not been entered into. 3. Declare that the 1st Respondent has no right, title or interest in the subject matter properly, consequently. 4. Direct the 1st Respondent to surrender all the original documents pertaining to the said transfer including the original document found in Annexure 2, held Preferential as aforesaid, to the Resolution Professional, Applicant herein. 5. Direct that the claim filed by the 1st Respondent in Form B dated 02-APR-2019 be admitted for the revised amount of Rs. 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 Rs. 88,54,790/- being the transfer declared as voidable as above. 6. Impose costs to the extent of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational debt or other liabilities owed by the corporate debtor; and (b) the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with Section 53. (3) For the purposes of sub-section (2), a preference shall not include the following transfers- (a) transfer made in the ordinary course of the business or financial affairs of the corporate debtor or the transferee; (b) any transfer creating a security interest in property acquired by the corporate debtor to the extent that- (i) such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons involved in such transactions and of putting them in two categories; one being of the persons who fall within the definition of 'related party' in terms of Section 5(24) of the Code and another of the remaining persons. 2. In the next step, the resolution professional ought to identify as to in which of the said transactions of preceding two years, the beneficiary is a related party of the corporate debtor and in which the beneficiary is not a related party. It would lead to bifurcation of the identified transactions into two sub-sets: One concerning related party/parties and other concerning unrelated 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction is preceding one year from the date of commencement of Insolvency. (17) In the present case, from the documents it is crystal clear that the Appellant is not a related party and the transaction is preceding one year from the date of admission of the application by the Adjudicating Authority on 04.02.2019. The sale agreement dated 22.06.2018 and the Application was admitted on 04.02.2019, is well within one year preceding the admission of Application. Therefore, the criteria as enunciated under the Code and the Law laid down by the Hon'ble Supreme Court, squarely applicable to the facts 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 'preferenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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