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TMI Blog2021 (4) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ptcy Code,2016 [hereinafter referred to as 'I&B Code,2016'] seeking a declaration that the transactions held from 29.11.2017 to 28.11.2019 as related party transactions and direct the related parties to pay back the amount to the Company. 2. It is stated that the Applicant made an opinion in the Second CoC meeting dated 15.02.2020, that the Company involved in various related party transactions and entered into a Land Sale Agreement in 2019. 3. The Applicant further stated that SVAR and Associates [Chartered accountants] conducted a limited transaction review and submitted a Report that the following payments from 29.11.2017 to 28.11.2019 are considered as Preferential Transactions as loan repayments to related parties. Sl. No Party Nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal vide order dated 08.01.2021 in I.A. No. 202 of 2020 in IBA/21/KOB/2020 had approved the Resolution Plan submitted by the Successful Resolution Applicant. 7. At this juncture, it is pertinent to note the provision of Section 43 of the I&B Code that deals with the Preferential Transactions as under: - (1) Where the liquidator or the resolution professional, as the case may be, is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions and in such manner as laid down in sub-section (2) to any persons as referred to in sub-section (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred to in section 44. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of sub-section (3) of this section, "new value" means money or its worth in goods, services, or new credit, or release by the transferee 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, including 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 perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o preferential transactions, the determination has to be made by the 115th day commencement of CIRP. The Resolution Professional also has to apply to the NCLT for appropriate relief on or before the 135th day commencement of CIRP. The prescription of the above timelines has a purpose. However, what is significant is the fact that under Regulation 39, the Applicant has to submit, along with the Resolution Plans, details of all the objectionable transactions including preferential transactions. In this respect Regulation 39(2) may be referred to which is as under: - Regulation: 39. Approval of Resolution Plan xxx (2) The resolution professional shall submit to the committee all resolution plans which comply with the requirements of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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