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2021 (9) TMI 30 - AT - Insolvency and BankruptcyPreferential transaction or not - sale agreement for transferring the land belonging to the Corporate Debtor to the Appellant towards partial settlement of the debt owed to the Appellant - Section 43 of the IBC 2016 - HELD THAT:- If the Adjudicating Authority is of the opinion that the said transaction is preferential in nature and is within the period of one year preceding the Insolvency commencement date, the said transaction can be declared as void and reverse the effect of such transaction in accordance with Section 45 sub-section (1) of the I & B Code and in accordance with the Chapter III of the I & B Code, 2016. 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 - 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. The vital point is whether the transaction is ‘preferential one’ and whether the said transaction is beneficial to such creditor (Appellant herein) by discriminating the distribution of assets as per Section 53 of the I & B Code in case of liquidation. The Ld. Adjudicating Authority at Para 23 drawn a table where the claims have been lodged and the waterfall mechanism need to be adopted in the case of liquidation. From the perusal of the table, the Operational Creditor stands at Serial No.7 under the waterfall mechanism. In the case of liquidation, the criteria as enumerated under Section 53 need to be followed. If the said principle is followed, the Appellant stands at Serial No.7. Certainly, it amounts to preferential treatment over other Creditors and the distribution of liquidation assets namely (a) Insolvency Resolution Process Costs, Liquidation Costs and the debts which shall rank equally between and among the following namely viz. workmen’s dues, debts owed to secured creditors, wages to employees, debts to unsecured creditors, dues to the Central Government, State Governments etc. This Tribunal is of the view that the said transaction is a preferential transaction and not in the ordinary course of business - the said transaction entered between the Appellant and the Corporate Debtor by way of sale agreement dated 26.06.2018 certainly prejudice the interest of other Creditors who have precedence in relation to the claim being settled ahead of the Appellant or even in relation to other ‘Operational Creditors’ who are similarly placed like the ‘Appellant’. Appeal dismissed.
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