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TMI Blog2021 (2) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court of India in Anuj Jain case, in relation to consideration of the transaction as a preferential transaction have been satisfied from the facts and circumstances of the case, we are of the view that the transaction indeed falls within the provisions of Section 43 of the IBC, 2016 and the transaction cannot be considered to be excepted from the ambit of transactions as provided under the said Section itself. The 1st Respondent also not being the related party, it is also seen that the transaction under consideration in this Application has been carried as between the parties within one year period being the prescribed period for an unrelated party i.e., the 1st Respondent - application allowed. - MA/709/2019 in CP (IB)/1037/2018 - - - Dated:- 26-2-2021 - R. Varadharajan and Anil Kumar B., JJ. For Appellant: Ravi Rajagopalan, Advocate For Respondent : None appeared ORDER R. Varadharajan, J. 1. Under consideration is an Application which has been filed by the Resolution professional of the Corporate Debtor viz., M/s. Sholingur Textiles Limited under Section 43 (1) of the Insolvency Bankruptcy Code 2016 (IBC, 2016) alleging that the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,39,541/- to the 1st Respondent. b) On 13.04.2018 and 04.05.2018 a sum of ₹ 23,00,000 was paid by way of DD / bank remittance by the CD. c) On 04.07.2019, the land belonging to the CD was sold by the 2nd Respondent in favour of the 1st Respondent Operational Creditor for a recorded sum of ₹ 1,69,07,520. d) On the very same day the said sum of ₹ 1,69,07,520/- was credited to the account of the 1st Respondent thus extinguishing the liability in full which stood as due and outstanding on the said date. 6. It is the allegation of the Applicant that a sum of ₹ 1,69,07,520/- was settled by the Corporate Debtor represented by the 2nd Respondent by executing the Sale Deed dated 04.07.2018 and that the said transaction having been carried out within a period of 12 months prior to the CIRP commencement dated being 04.02.2019 and the property transaction having been effected preferentially to an Operational Creditor in relation to an antecedent operational debt as defined within the scope of Section 43 (2) of IBC, 2016, thereby putting the 1st Respondent in an advantageous position. Preference has been given and that the preferential transactions as carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged on the following grounds, viz., a) Prior to the Application being filed before this Tribunal, the Resolution Professional has not put the 1st Respondent on notice in relation to the transaction and sought for explanation thereby in effect violating the principles of natural justice as it seeks to condemn the 1st Respondent without hearing that the present Application has been filed on the presumption that the Respondents were aware of the proceedings pending before this Tribunal and despite the same the transactions as alleged is stated to have been carried on in violation of the provisions of the Code and that the transaction has been done knowingly to frustrate the consequences emanating from the initiation of the Insolvency proceedings, which is not correct. b) No material has been placed on record to demonstrate that the transaction impugned has been entered into in violation of the provisions of the IBC, 2016 with the hidden intent to violate the provisions of the Code (IBC, 2016) which does not prohibit the activity of the nature undertaken by the 1st Respondent as at that time the transaction took place an order of moratorium was not in place as declared by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain directions as per order dated 20.01.2020. Pursuant to the same it is seen that the 1st Respondent is a proprietorship firm represented by its proprietor Mr.Sunil Trilokchand Jain, however no documents as such has been filed by the 1st Respondent. 10. In relation to the Applicant on its part a memo has been filed dated 20th December 2019 bringing to the notice of this Tribunal the particulars of the claim. Thereafter the matter was listed on 22.09.2020 as in between due to Covid-19 Pandemic being prevalent the matter was not able to be listed. 11. On 22.12.2020, this Tribunal taking into consideration the absence of the Respondents either in person or through its Counsels issued an order that this Tribunal would be constrained to proceed with the matter in the absence of the Respondent if they are not present for enquiry on 03.02.2021. 12. On the hearing date of 03.02.2021 none was present on the part of the Respondents. In the circumstances, this Tribunal heard the submissions of Learned Counsel for the Applicant. This Tribunal has carefully considered the rival pleadings filed in this matter as well as the documents filed by the Applicant in support of the averments c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 263 1200 22 264 2400 23 272 1200 24 273 1824 25 274 1779 26 275 1734 27 276 1689 28 290 2400 29 291 1200 30 292 1200 31 293 1200 32 294 1200 33 295 1200 34 296 1200 35 297 1088 36 298 1033 37 299 1200 38 300 1200 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant is the RP and hence competent to file this Application on behalf of the Corporate Debtor. 15. The Account Statement filed along with the Application also reflects from the ledger of the Corporate Debtor that the consideration towards the sale of land has been reflected therein to the extent of ₹ 1,69,07,520/- and the date given thereof is 04.07.2018. 16. In order to ascertain the transaction as to whether it is falling under the provisions of Section 43 of IBC, 2016 as a preferential transaction, the Hon ble Supreme Court has dealt in detail as to how the Resolution Professional is required to approach the transaction as preferential before filing an Application before this Tribunal impugning the said transactions as between the parties as a Preferential Transaction in the matter of Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. Vs- Axis Bank Ltd., Etc. 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. 17. After a detailed discussion by the Hon ble Supreme Court of India in relation to the provisions of Section 43 of IBC, 2016 the following has been culled out at Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt 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 subsection (2) of Section 43. 5. In yet further step, such of the scanned and scrutinised transactions that are found covered by clause (a) of subsection (2) of Section 43 shall have to be examined on another touchstone as to whether the transfer in question has the effect of putting such creditor or surety or guarantor in a beneficial position than it would have been in the event of distribution of assets per Section 53 of the Code. If answer to this question is in the affirmative, the transaction under examination shall be deemed to be of preference within a relevant time, provided it does not fall within the exclusion provided by sub-section (3) of Section 43. 6. In the next and equally necessary step, the transaction which otherwise is to be of deemed preference, will have to pass through another filtration to find if it does not answer to either of the clauses (a) and (b) of sub-section (3) of Section 43. After the resolution professional has carried out the aforesaid volumetric as also gravimetri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,33,405 Unsecured Financial Creditors 2,37,10,120 Total of Financial Creditors 62,23,43,525 Employees and Workmen 2,17,48,279 Trade Creditors 5,18,71,198 Statutory Creditors 33,91,657 Total of Operational Creditors 7,70,11,134 Other Claimants - Total admitted Claims 69,93,54,659 23. Taking into consideration the waterfall mechanism, in relation to the claim as lodged above and also taking into consideration the liquidation value of the Corporate Debtor as assessed by a valuer to the extent of ₹ 20,69,00,000/-, under the waterfall mechanism as prescribed under Section 53 of IBC 2016 in relation to the settlement of claims, the Applicant has given the following tabulation which reads as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that such transfers had been in the ordinary course of their business, the question would still remain if the transfers were made in the ordinary course of business or financial affairs of the corporate debtor JIL so as to fall within the exception provided by clause (a) of sub-section (3) of Section 43 of the Code. 25.6.1. Thus, the enquiry now boils down to the question as to whether the impugned transfers were made in the ordinary course of business or financial affairs of the corporate debtor JIL. It remains trite that an activity could be regarded as business if there is a course of dealings, which are either actually continued or contemplated to be continued with a profit motive. As regards the meaning and essence of the expression ordinary course of business , reference made by the appellants to the decision of the High Court of Australia in Downs Distributing Co (supra), could be usefully recounted as under:- As was pointed out in Burns v. McFarlane the issues in sub-s. 2(b) of s. 95 of the Bankruptcy Act 1924-1933 are (1) good faith; (2) valuable consideration; and (3) ordinary course of business. This last expression it was said does not require an investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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