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TMI Blog2022 (3) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... and we do not find any error in the decision of the Adjudicating Authority holding the transaction as undervalued transaction. However, handing over the possession by the Directors of the Corporate Debtor to the Appellant before even payment indicates the nature of transaction which transaction was preferential transaction as well as undervalued transaction. Transaction was a transaction to defeat the rights of the creditor of the Corporate Debtor - Direction in the Impugned Order is only to hand over the possession of the plant to the Resolution Professional which is consequential action on account of reversal of the transaction. The Order passed by the Adjudicating Authority thus cannot be said to be beyond Section 45(1). However, when transaction is treated to be void it loses all its legal effect and submissions of Learned Counsel for the Appellant that since application for declaring the transaction void being Application No. 1304 of 2020 pending no direction could have been issued by the Adjudicating Authority as has been issued in the Impugned Order cannot be accepted. Respondent has also brought on record relevant materials to indicate that both Mohd Nasira Begum and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional Auditor after initiation of Insolvency Resolution Process. Transactional Auditor submitted a Report dated 02nd July, 2020 where reference of several preferential and undervalued transactions was enumerated. The Resolution Professional filed an Application being I.A. No. 3175 of 2020 praying for reversing the preferential transactions, undervalued transactions and vesting into the assets of the Corporate Debtor. In the Application, details of various transactions including the sale of Plot M-6, Taloja Industrial Area, Village Pale Khurd, Taluka Panvel, Distt Rajagd, Maharashtra was also mentioned. In the Application, notices were issued to Suspended Board of Directors namely Mohd. Shakeel Ahmed, Mohd, Kamil and Mohd Nasira Begum. The Application was opposed by the Suspended Directors of the Corporate Debtor. The Adjudicating Authority after hearing the parties and after relying on the Transaction Audit Report passed an Order for cancelling the sale of Plot M-6, Taloja Industrial Area, Village Pale Khurd, Taluka Panvel, Distt Rajagd, Maharashtra and directing the possession of the said Plant to be handed over to the Resolution Professional. 2. The Appellant aggrieved by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution was itself void and inoperative and all actions taken in pursuance of the said Board Resolution has no legal status and liable to be ignored. It is further submitted that the said Taloja Industrial Area Plot is mortgaged with the Yes Bank and Yes Bank has issued conditional NOC on 01st August, 2019 for sale of the property for value at least INR 17.86 Crore. The sale which is claimed to be obtained for only 11 Crore out of which only an amount of ₹ 0.63 Crore have been deposited by the Appellant in the Bank Account of the Yes Bank itself indicates that the transaction was not bona fide transaction and was undervalued transaction. It is submitted that Appellant was present before the Adjudicating Authority and was also heard in Application I.A.No. 699 of 2020. 5. We have considered the submissions of Learned Counsel for the parties and perused the record. 6. The Adjudicating Authority has placed reliance on Transaction Audit Report of the Transaction Audit dated 2nd July, 2020. Paragraph 5(i), (ii) and (iii) of the Impugned Judgment where transaction audit report has been referred pertaining to property in question are as follows: 5. The observations made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof ₹ 17.23 Crore. The relevant extract of the ledger, CERSAI Search report, copy of the conditional NOC from YES Bank and copy of the sale Agreement has been annexed under para 16.2 of the report annexed with this application. iii. It is further submitted that sale of the above mentioned property was cancelled as the buyer paid ₹ 62.25 lakh and YES Bank kept such amount under lien till the balance amount of ₹ 10.37 crore is received and due to initiation of the CIRP the buyer failed to pay the consideration in full. Hence, the amount was forfeited and necessary entry was passed in the books of account. The application to that affect for treating the sale as NIL and recovery of possession is pending before the Hon ble Tribunal as C.A. No. 1304/2020. 7. The Application was filed by the Resolution Professional being I.A. No. 1731 of 2019 praying for an order under Section 43 and 45 of the Code regarding preferential transaction and undervalued transaction done by the Corporate Debtor. Section 45 of the Code is as follows: 45(1) If the liquidator or the resolution professional, as the case may be, on an examination of the transactions of the corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich clause 4 is as follows: 4. On receipt of demand cum NOC from Yes Bank the repayment by Purchaser/Assignee directly to Loan Account in of Seller/Assignor in Yes Bank thereafter peaceful possession of the said plot on as is where basis is shall also be handed over the Purchaser/Assignee on or before execution this present. 10. There is one more reason due to which the Transaction dated 05.08.2019 has to be held to be undervalued. The Agreement for Assignment cum Transfer of Lease-cum-Sale mentions the consideration of ₹ 11 Crores. In Paragraph 3, 3(A) and 3(B) payments schedule are mentioned. The Purchaser/Assignee already paid ₹ 25 Lacs and has agreed to pay ₹ 10,75,00,000/- to Yes Bank but in Paragraph 3 (A) and (B) ₹ 10,75,00,000/- which contains heading Payment Schedule there is no period mentioned for payment of ₹ 10,75,00,000/-. The Transaction was entered for ₹ 11 Crores on payment of only ₹ 25 Lacs itself. Thus, total consideration paid was 1/44 of the transaction of the sale consideration. However, as noted above in Paragraph 4 of the Agreement it was mentioned that on receipt of demand cum NOC from Yes Bank the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f non-payment of balance consideration and entry made by the Bank in its books of accounts. Direction in the Impugned Order is only to hand over the possession of the plant to the Resolution Professional which is consequential action on account of reversal of the transaction. The Order passed by the Adjudicating Authority thus cannot be said to be beyond Section 45(1). However, when transaction is treated to be void it loses all its legal effect and submissions of Learned Counsel for the Appellant that since application for declaring the transaction void being Application No. 1304 of 2020 pending no direction could have been issued by the Adjudicating Authority as has been issued in the Impugned Order cannot be accepted. The factum of pendency of Application being 1304 of 2020 under Section 25 read with Section 60(5) is not subject application for declaration of sale deed as null and void have no bearing on Application filed under Section 43 and 45 of the Code thus pendency of I.A. No. 1304 of 2020 has no bearing on disposal of the Application 3175 of 2020. Another submission of the Appellant is that I.A. No. 699 of 2020 which was filed by the Appellant seeking direction to restrai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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