TMI Blog2021 (3) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... of regulation 35A(3) of the CIRP Regulations is missing in the present case, i.e., the determination to be made by the RP that there are preferential transactions. The fact cannot be avoided that the RP had filed an application for approval of the Resolution Plan on 14.07.2020 and thereafter filed an application under Section 43 of the Code on 24.07.2020. The Resolution Plan was approved on 12.08.2020. On perusal of the order dated 12.08.2020, it is apparent that the RP had prayed for urgent hearing of the application for approval of the Resolution Plan. The RP was duty bound to file the application for preferential transaction within time and also seek for urgent hearing of the application before the plan is approved. Once the Resolution Plan is approved, the Corporate Debtor is managed by a new management and the RP becomes functus officio. An application for avoidance of preferential transaction cannot be carried on by the Resolution Professional on behalf of the Corporate Debtor. Whether this application can survive after the Resolution Plan is approved? - HELD THAT:- The feeling is inescapable that the RP has filed the application under section 43 read with section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 01.04.2012 to 30.06.2019. 7. The Forensic Audit submitted a report dated 10.01.2020, certain clarifications were sought by the CoC from the auditor. Thereafter, the Forensic Auditor submitted its detailed report on 12.03.2020 dated 11.03.2020. Issues 8. The following issues are to be taken into consideration: a. Whether the Resolution Professional has filed the application is in consonance with the Code and Regulations governing Corporate Insolvency Process? b. Whether this application can survive after the Resolution Plan is approved? Submission of the Resolution Professional 9. The Ld. Counsel for the RP submits that the forensic audit report was discussed at the CoC meeting held 20.03.2020 and from the perusal of the said report, it appeared that there have been certain transactions which are preferential in nature. The Corporate Debtor had repaid unsecured loans/advances/outstanding balances, details of which are as below: Entity Amount Remark Bengal Recyclers Fabrications Private Limited ₹ 7,35,000/- ---- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporate Debtor had taken an unsecured loan from the Respondent No. 6 in 2012-13 which was payable on demand. That the Corporate Debtor paid ₹ 10,88,95,000/- to the Respondent No. 6 through the Respondent No. 7 and ₹ 24,00,000/- was repaid directly in the financial years 2017-2018 and 2018-19. 16. The Respondent No. 7 is an NBFC and the Corporate Debtor has taken advances from the Respondent No. 7 in years prior to the review period which were repayable on demand. The Corporate Debtor repaid the amount in 2018-19. 17. State Bank of Bikaner and Jaipur assigned the debt of the Corporate Debtor to Phoenix ARC Private Limited. Payment of ₹ 2,84,60,123/- was made by the Respondent No. 5 from the year 2015-16 to Phoenix ARC Private Limited on behalf of the Corporate Debtor. The Corporate Debtor made a payment of ₹ 35,82,330/- to the Respondent No. 5 on 03.07.2018. Such payment was in the nature of reimbursement done in the usual course of business and done as per agreement between the Corporate Debtor and the Respondent No. 5. 18. The Corporate Debtor made the said payments after receiving demand notices from the Respondent Nos. 5, 6 and 7 to avoid leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Application for approval of Resolution Plan ----- ----- 14.07.2020 379 days 8. Application under section 43 filed on 01.07.2019 + 135 days 13.11.2019 24.07.2020 389 days 9. Approval of Resolution Plan ---- ----- 12.08.2020 408 days Findings 21. Before entering into the merits of the case, it is important to examine whether the RP has adhered to the timeframe in bringing the application for avoidance of preferential transactions under section 44 of the Code. From the above table, it is clear that the timeline as provided in regulation 35A CIRP Regulations have not been adhered to. That RP has filed the application on the 389th day of the CIRP period. Moreover, the most vital essence of regulation 35A(3) of the CIRP Regulations is missing in the present case, i.e., the determination to be made by the RP that there are preferential t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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