TMI Blog2020 (3) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... e been in the event of a distribution of assets being made in accordance with section 53 - As per sub-section (3) of section 43, transfer made in the ordinary course of the business or financial affairs of the corporate debtor or the transferee be not included within the meaning of preferential transactions . Whether in such case, the transactions, in question, can be claimed to be a transfer made in the ordinary course of business? - HELD THAT:- It is not the case of the appellants that apart from the appellants, all other creditors were paid their dues during the ordinary course of business. It is only in the case of the appellants that the amounts were released and repaid just before a period of one year from the date of the insolvency commencement date, i. e., July 18, 2017 - This apart, as it is not in dispute that the promoters of the corporate debtor hold 99.4 per cent. shareholding in Excello Fin Lea Ltd. and 50 per cent. shareholding in Tirumala Balaji Alloys P. Ltd. and rest of the 50 per cent. shareholding of the Tirumala Balaji Alloys P. Ltd. is with the relatives of the promoters of the corporate debtor , i. e., Rungta Family , we are of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel appearing on behalf of the appellants submitted that the appellants were engaged in the business of extending loans in the forms of ICD to various companies. The corporate debtor is one such company, to which loans were extended by Tirumala Balaji Alloys P. Ltd. on October 8, 2015 and October 9, 2015. Despite the transaction between appellants and the corporate debtor being in the usual course of business, the Adjudicating Authority has held that it was a preferential transaction and directed to refund the amount. 5. It was submitted that the corporate debtor was facing financial stress for some years, the lenders implemented the SDR in the corporate debtor in August, 2015 and converted ₹ 350 crores of their dues into equity to hold 51 per cent. equity (controlling stake) in the corporate debtor . Owing to the heavy financial stress, the corporate debtor was unable to source funds from its existing lenders, as the lenders did not provide any additional line of credit, for the purpose of meeting its financial obligations including working capital requirements. 6. According to learned counsel for the appellants, the transactions, in question, were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Current Account 7,50,00,000 5-10-2016 2554002100002680 PNB RPR (Punjab National Bank Current Account 7,50,00,000 5-10-2016 2554002100002680 PNB RPR (Punjab National Bank Current Account 5,00,00,000 6-10-2016 65254133186 SBI (erstwhile SBOP) Current Account 3,00,00,000 Total 23,00,00,000 Tirumala Balaji Alloys Pvt. Ltd. Date Bank account number of corporate debtor Bank name Type of account Received 8-10-2015 278640000025 HDFC Current Account 4,00,00,000 9-10-2015 278640000025 HDFC Current Account 1,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Current Account 2,50,00,000 28-10-2016 2554002100002680 PNB RPR Current Account 2,50,00,000 31-3-2017 65254133186 SBI (erstwhile SBOP) Current Account 34,00,274 Total 5,68,38,355 13. According to the resolution professional , the promoters of the corporate debtor hold 99.4 per cent. shareholding in Excello Fin Lea Ltd. , and 50 per cent. shareholding in Tirumala Balaji Alloys P. Ltd. . Regarding remaining 50 per cent. in Tirumala Balaji Alloys P. Ltd. , it has been held by the close relatives of the promoters of the corporate debtor , i. e., Rungta Family , therefore, according to the resolution professional , both the aforesaid companies fall within the definition of related party as defined under section 5(24) of the I and B Code . 14. Further, according to the resolution professional , since these two transactions having taken place within two years before the insolvency com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feree of property previously transferred to such transferee in a transaction that is neither void nor voidable by the liquidator or the resolution professional under this Code, includ ing proceeds of such property, but does not include a financial debt or operational debt substituted for existing financial debt or operational debt. (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 commence ment date. 16. From the aforesaid provisions, it is clear that if there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor is transferred, then it comes within the meaning of preferential transactions . The preferential transactions has the effect of putting such creditor or a surety ..... X X X X Extracts X X X X X X X X Extracts X X X X
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