Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2021 (5) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 322 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - RP has filed an application alleging preferential, undervalued and fraudulent transactions - alleged transactions in favour of related parties - HELD THAT:- To file an application alleging preferential, undervalued and fraudulent transactions, the RP has to adhere to sections 43 and 46 of the Code read with regulation 35A of the CIRP Regulations. Section 43 and 46 envisage that the alleged transactions in favour of related parties should be within two preceding years, while in the case of non-related parties it should be within one year. Further, under regulation 35A the RP has to form an opinion whether there has been any avoidable transaction in the Corporate Debtor company on or before seventy-fifth day of the CIRP commencement date. Thereafter, on or before one hundred and fifteenth day of forming such opinion, the RP shall make a determination that the Corporate Debtor has been subjected to avoidable transaction. In the case at hand, the Applicant has failed to provide any date on which the purported avoidable transactions were made. Without any such date being mentioned, no conclusion can be given on whether such alleged transactions were made within the lookback period of two years, as envisaged under sections 43 and 46 of the Code, or beyond the said period. The determination to be made by the RP in terms of regulation 35A(2) is an independent determination to be made on the basis of the transactional auditor's report, and the CoC has no role to play in this. Therefore, to that extent, the act of the RP in placing the transactional auditor's report for discussion at the ninth meeting of the CoC was not proper. The IBC and the regulations envisage no such role for the CoC. The CoC's role is limited to granting approval for the appointment of the auditor and fixing the fee, and not to an analysis of the transactions. The latter, being a creditor of the corporate debtor, will be an interested party. Therefore, any resolution by the CoC will have the effect of influencing the RP in determining whether the transactions fall within the boundaries of avoidance transactions fit enough to file applications before the adjudicating authority for consideration. The RP cannot be permitted to ride piggyback on the CoC's decision. The facts and circumstances of the present application point only to one inescapable conclusion, that the application has been filed by the RP only to avoid any adverse scrutiny by the IBBI. That reason is not good enough to overcome major lacunae that the present application suffers from - The application does not deserve any consideration. Application dismissed.
|