TMI Blog2021 (9) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... the Law laid down by the Hon ble Supreme Court in Anuj Jain, Interim Resolution Professional [2020 (2) TMI 1259 - SUPREME COURT], squarely applicable to the facts of the present case. Further, the Resolution Professional need to see whether the property belongs to the Corporate Debtor or not? In the present case, admittedly the property belongs to the Corporate Debtor as evident from the sale deed and there is no dispute with regard to the same. Therefore, the criteria as prescribed by the Hon ble Supreme Court in the Judgment is fulfilled and the Adjudicating Authority rightly allowed the Application of the Resolution Professional. This Tribunal is of the view that the said transaction is a preferential transaction and not in the ordinary course of business. Further, this Tribunal is of the considered opinion that the said transaction entered between the Appellant and the Corporate Debtor by executing sale deed dated 04.07.2018 certainly prejudice the interest of other Creditors who have precedence in relation to the claim being settled ahead of the Appellant or even in relation to other Operational Creditors who are similarly placed like the Appellant . Appeal dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following reliefs- a. Declare the said transfer, executed by way of Sale Deed dated 04-JUL-2018 registered as Document bearing No. 1812 of 2018 on the file of Office of the Sub Registrar, SH128, Shankar Nagar, Sholingur, Tamil Nadu 631102 as evidenced by the copy of the said document found in Annexure 2, executed on behalf of the CD by the 2nd Respondent, as granting preference to the 1st Respondent and thus being in contravention to Section 45(1) of the Code. b. Set aside the said transfer, executed by way of the aforesaid Sale Deed dated 04-JUL-2018 registered as Document bearing No. 1812 of 2018 in favour of the 1st Respondent, as aforesaid and require the property (ies) so transferred to vest in the Corporate Debtor and thus restore position as it existed before such transfer as if the transaction (s) has not been entered into. c. Declare that the 1st Respondent has no right, title or interest in the subject matter properly, consequently. d. Direct the 1st Respondent to surrender all the original documents pertaining to the said transfer including the original document found in Annexure 2, held Preferential as aforesaid, to the Resolution Professional, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the debt owed to the Appellant. Instead the Corporate Debtor directly transferred the property to the Appellant. The Hon ble Adjudicating Authority erroneously passed the Impugned Order, failing to appreciate that the Impugned Transaction falls within the ambit of exception provided by Clause (a) of Sub Section (3) of Section 43 of the Code, being a transfer made in the ordinary course of business. The Learned Counsel submitted that the expression ordinary course of business has not been defined in the IBC 2016 or under the Companies Act 2013. (7) The Hon ble Adjudicating Authority ought to have considered that the said Transaction was a bonafide transaction entered into by two parties in good faith and for a consideration and in the absence of any moratorium or prohibitory orders from any Adjudicating Authority. (8) In view of the grounds as mentioned above the Learned Counsel prayed this Tribunal to set aside the Impugned Order dated 26.02.2021 passed by the Adjudicating Authority, National Company Law Tribunal, Chennai in MA/745/2019 in CP(IB)/1037/2018. Appraisal/Analysis :- (9) Heard the Learned Counsel for the Appellant, perused the pleadings and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as Document bearing No. 1812 of 2018 on the file of Office of the Sub-Registrar, SH128, Shankar Nagar, Sholingur, Tamil Nadu 631102 as evidenced by the copy of the said document found in Annexure 2, executed on behalf of the CD by the 2nd Respondent, as granting preference to the 1st Respondent and thus being in contravention to Section 45 (1) of the Code. 2. Set aside the said transfer, executed by way of the aforesaid Sale Deed dated 04-JUL-2018 registered as Document bearing No. 1812 of 2018 in favour of the 1st Respondent, as aforesaid and require the property (ies) so transferred to vest in the Corporate Debtor and thus restore position as it existed before such transfer as if the transaction (s) has not been entered into. 3. Declare that the 1st Respondent has no right, title or interest in the subject matter properly, consequently. 4. Direct the 1st Respondent to surrender all the original documents pertaining to the said transfer including the original document found in Annexure 2, held Preferential as aforesaid, to the Resolution Professional, Applicant herein. 5. Direct the Sub-Registrar, SH128, Shankar Nagar, Sholingur, Tamil Nadu 631102 to cancel t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have given a preference, if- (a) 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; and (b) the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with Section 53. (3) For the purposes of sub-section (2), a preference shall not include the following transfers- (a) transfer made in the ordinary course of the business or financial affairs of the corporate debtor or the transferee; (b) any transfer creating a security interest in property acquired by the corporate debtor to the extent that- (i) such security interest secures new value and was given at the time of or after the signing of a security agreement that contains a description of such property as security interest and was used by corporate debtor to acquire such property; and (ii) such transfer was registered with an information utility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... major but district steps. One shall be of sifting through the entire cargo of transactions relating to the property or an interest thereof of the corporate debtor backwards from the date of commencement of insolvency and up to the preceding two years. The other distinct step shall be of identifying the persons involved in such transactions and of putting them in two categories; one being of the persons who fall within the definition of related party in terms of Section 5(24) of the Code and another of the remaining persons. 2. In the next step, the resolution professional ought to identify as to in which of the said transactions of preceding two years, the beneficiary is a related party of the corporate debtor and in which the beneficiary is not a related party. It would lead to bifurcation of the identified transactions into two sub-sets: One concerning related party/parties and other concerning unrelated party/parties with each sub-set requiring different analysis. The sub-set concerning unrelated party/parties shall further be trimmed to include only the transactions of preceding one year from the date of commencement of insolvency. 3. Having thus obtained two sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Supreme Court in the above paragraphs. Broadly the Resolution Professional need to evolve :- (1) Whether the transaction is between the related party as defined in Section 5(24) of the Code and another is non-related party. (2) If the party is non-related, the Resolution Professional has to see whether the transaction is preceding one year from the date of commencement of Insolvency. (17) In the present case, from the documents it is crystal clear that the Appellant is not a related party and the transaction is preceding one year from the date of admission of the application by the Adjudicating Authority on 04.02.2019. The sale deed dated 04.07.2018 and the Application was admitted on 04.02.2019, is well within one year preceding the admission of Application. Therefore, the criteria as enunciated under the Code and the Law laid down by the Hon ble Supreme Court, squarely applicable to the facts of the present case. Further, the Resolution Professional need to see whether the property belongs to the Corporate Debtor or not? In the present case, admittedly the property belongs to the Corporate Debtor as evident from the sale deed and there is no dispute with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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