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TMI Blog2021 (2) TMI 1286X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority on or before on hundred and thirty-fifth day. In the present case, although the RP submits that he has formed his opinion and determined that the lease deed dated 30.11.2016 amounted to preferential and undervalued transaction, he has not apprised us of the timeline in which he did so; except for the fact that he pointed it out to the CoC on 06.02.2020. The present application was filed on 04.09.2020, which is after three hundred and thirty-three days from the date of initiation of CIRP. The CIRP Regulations envisage no role to the CoC in respect of determination to be arrived at in the case of avoidance transactions. It is a duty cast solely on the RP. The reasons for not complying with the timeline as envisaged under regulation 35A of the CIRP Regulations by the RP are not satisfying, even if the reasons were to be accepted, these reasons, section 46 of the Code binds the hands from proceeding further inasmuch as we cannot look into transactions that were entered into during the period of two years preceding the date of commencement of CIRP. It is the RP s own case that the lease deed was entered into between the Corporate Debtor and Respondent No. 6 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e premises and demanded for the documents, however, due to heavy resistance and complete non-cooperation from the suspended board of directors, the Applicant/RP had to file an application under section 19 (2) of the Insolvency and Bankruptcy Code, 2016 (Code) on 06.12.2019. 4. The said application was decided by the Adjudicating Authority on 09.12.2019. The Adjudicating Authority had directed the said directors to provide assistance to the Applicant/RP. Even after direction from the Adjudicating Authority, the said directors did not extend any cooperation to the Applicant/RP. 5. Upon numerous requests and reminders, it was only on 15.01.2020 that the Respondent No. 1 shared a lease deed dated 30.11.2016 executed by and between the Corporate Debtor and Respondent No. 3. Upon examination of the lease deed dated 30.11.2016, the Applicant/RP opined that the lease consideration was undervalued. Therefore, he informed the same to the Committee of Creditors (CoC), in its meeting dated 06.02.2020. 6. It appears from the lease deed that the equitable mortgage of landed property along with factory sheds/structure/building and plant and machinery were given to the Bank of India fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and end on 31.12.2019 in the first table and ends on 18.10.2019 in the second table, the second table has been reproduced below: Name of the Related Party Relation Transaction from 01.04.2017 to 31.12.2019. Shree Ram Saw Mill Private Limited Om Prakash Pandey is the common director Opening- ₹ 6,69,481.00 Receipt- ₹ 3,02,944.00 Payments-₹ 11,10,000.00 Closing- ₹ 14,76,537.00 Shova Properties Private Limited (Advance Given) OmPrakash Pandey is the common director Opening- ₹ 85,985.21 Payments- ₹ 5,50,000.00 Closing- ₹ 6,35,985.21 Dr. Bal. Total Payments Total-₹ 16,60,000/- 11. The Applicant submits that despite there being an order from this Adjudicating Authority, the members of suspended board have still not provided the Applicant with the crucial financial and accounting documents such as bank books, vouchers, cash books, journal books, details of other bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and compensation to the Corporate Debtor for infringement of the copyright. 15. Notice of the said application was issued on 05.10.2020 and Respondents were directed to file their reply affidavits within 4 weeks, however, the Respondents have chosen not to file their reply in the matter. 16. The Financial Creditor has filed an affidavit supporting the Applicant/RP s application and has submitted that on 11.02.2015, a notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 was issued to the Corporate Debtor and the members of suspended board with respect to the property in question. On failure to repay the loan upon demand, the Financial Creditor had taken symbolic possession of the asset on 09.08.2016. The law clearly prohibits any transfer or sale of secured assets once symbolic possession is taken by the Financial Creditor-Bank. The Financial Creditor-Bank, in the capacity of the mortgagor has never given any consent at any point of time to the Corporate Debtor or the members of suspended board to enter into any such lease deed. 17. We have heard the learned counsel appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envisage no role to the CoC in respect of determination to be arrived at in the case of avoidance transactions. It is a duty cast solely on the RP. 23. Further, the RP submitted that there were numerous related party transactions and mentions two of them cumulating to ₹ 16,60,000/- (Rupees sixteen lakh sixty thousand only). These transactions were entered into by the Corporate Debtor and Respondent Nos.6 and 7 between 01.04.2017 and either 18.10.2019 or 31.12.2019. These too are preferential transactions in his opinion. However, he has not made a determination in that regard. 24. The RP submits that the reason for delay in filing the present application was first due to the non-cooperation from the members of suspended board of the Corporate Debtor and second, due to the lockdown imposed due to Covid-19. So far as non-cooperation is concerned, the RP submitted that no document was being provided by the members of the suspended board despite there being an order under section 19(2) and in that regard by this Adjudicating Authority. The Adjudicating Authority had also directed the RP to take the assistance from the local police authorities if the members of the suspended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese fall within the bounds of section 46 of the Code. In any case, as mentioned earlier, the RP has only formed an opinion and not made a determination that these two transactions are preferential transaction. 30. The facts and circumstances of the present application do not inspire our confidence that it is maintainable ex facie. The application is first hit by regulation 35A of the CIRP Regulations and then by section 46 of the Code. We are also not satisfied that the lease deed was entered into to defraud the creditors of the Corporate Debtor. 31. Under the aforementioned circumstances, we are not inclined towards granting the prayers. Resultantly, we dismiss the IA No. 742/KB/2020. 32. Needless to say, the findings mentioned herein, and the result of this IA, shall not bind or dissuade the Financial Creditor from taking any steps under any other law before the appropriate judicial forum, if the same is found applicable. The findings mentioned herein are only in the context of the present application filed under the provisions of the Insolvency Bankruptcy Code, 2016. 33. The Registry is directed to send e-mail copies of the order forthwith to all the parties and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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