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2021 (4) TMI 522 - Tri - Insolvency and BankruptcyRelated party transactions or not - Preferential transactions - seeking directions to the related parties to pay back the amount to the Company - Section 43(1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the impugned transactions are between the Respondents [erstwhile Directors of the Corporate Debtor] and Corporate Debtor. The Applicant’s case is that these transactions are preferential in nature because the amount was advanced by the Corporate Debtor to the Respondents and Land Sale Agreement was also made between them. However, the Applicant failed to prove that these transactions made by the Corporate Debtor were preferential in nature, by producing any document. According to the Applicant SVAR and Associates conducted Audit and filed a Report, but that was not produced along with the Application. Similarly, in order to prove the time period of transaction held prior to two years from the date of commencement of CIRP, nothing was placed on record to that extent also. Thus the contention of the Applicant as to this transaction being preferential transaction, under Section 43 of I&B Code, cannot be accepted. Even otherwise, while relying on Regulation 35 A of CIRP Regulations a specific timeline has been provided, by which the Resolution Professional has to form an opinion if the Corporate Debtor has been subjected to any of the objectionable transactions - The objectionable transactions including preferential transactions cannot be an unending process. The examination has to commence on the insolvency commencement date. The Resolution Professional has to form an opinion by the 75th day of commencement of CIRP. If the Resolution Professional comes to the conclusion that the Corporate Debtor has been subject to preferential transactions, the determination has to be made by the 115th day commencement of CIRP. On verification of the records, it is seen that even though an Application for avoidance of preferential transactions has been filed by the Applicant on 04.01.2021 [after curing the defects], he did not press for the same on 08.01.2021 the date when the Resolution Plan was approved. Once a Resolution Plan is approved, the Corporate Debtor is managed by a new management and the Resolution Professional becomes functus officio - not taking timely action in the matter of avoidance of Preferential Transactions is a fault on the side of the Resolution Professional, because without insisting for orders in the Application for avoidance of Preferential Transactions, the Resolution Professional agreed to proceed the matter and obtained approval of the Resolution Plan. Now at this belated stage, without following the timeline prescribed in Regulation 35 A, the former Resolution Professional cannot seek any relief in respect of preferential transaction that too without providing any documents with reference to Preferential Transactions. This Tribunal cannot entertain the prayers of the former Resolution Professional for a direction to the related parties to pay back the amount to the Company - Application dismissed.
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