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TMI Blog2024 (10) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Mr Keith Varghese, Advocate. For the Respondent : Mr. Harshit Khare, Mr Prafful Saini, Advocates for R1. Mr Nishant Chothani, Mr. Pranjit Bhattacharya, Mr Niyati Shah, Advocates for R2. JUDGEMENT JUSTICE YOGESH KHANNA, MEMBER ( JUDICIAL ) This appeal is against an impugned order dated 09.11.2023 whereby an application filed under Section 43 of the Code was allowed by the Ld. NCLT. The Learned counsel for the appellant submits the Corporate Debtor had supplied certain goods to M/s Pratap Associates, an HUF firm of Appellant No.3 herein and hence a related party. Such goods were supplied before 23.05.2018 and the amount outstanding against Pratap Associates as on 23.05.2018 was of Rs.7,78,31,555/-. M/s Pratap Associates (HUF) coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the code against the respondents to contribute an amount of Rs.7,78,31,555/- being outstanding towards related party, in the interest of justice. 5. Now, section 43 of the Code read as under:- (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 only of being an employee)} during the period of two years preceding the insolvency commencement date; or (b) a preference is given to a person other than a related party during the period of one year preceding the insolvency commencement date. 6. The Ld. NCLT on this application under Section 43 of the Code had passed the following impugned order:- 17. The said section refers to property which has very wide meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 7. It is the submission of the learned counsel for the appellant such prayers ought not to have been allowed as there cannot be an extension of look back period beyond two years as is envisaged in sub-section (4) of Section 43 of the Code. Heard. 8. In Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd Vs Axis Bank Ltd and Others, (2020) 8 Supreme Court Cases 491, the Hon'ble Supreme Court held as follows:- 21.2 However, merely giving of the preference and putting the beneficiary in a better position is not enough. For a preference to become an offending one for the purpose of Section 43 of the Code, another essential and rather prime requirement is to be satisfied that such event, of giving preference, ought to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsolvency commencement date whereas it is one year in relation to the person other than a related party. The conceptions of, and rationale behind, such provisions could be noticed in the excerpts from the interim report of Law Reforms Committee, as referred on behalf of the appellants. We may usefully extract the same as under: - 9. Thus for reasons aforesaid, the outstanding being of more than 2 years prior to CIRP commencement date, the relief under Section 43 of the Code would not be available. The respondent, however, shall be at liberty to take alternative action(s) as may be allowed under the Law (inclusive of Section 66 of the Code). 10. In the circumstances we set aside the impugned order passed by Ld. NCLT, with liberty aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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