TMI Blog2022 (8) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... sue the present application. There is no dispute that the Resolution Plan was approved by the NCLT on 25.06.2021 and thereafter corrigendum was also approved on 10.07.2021. The contention with regard to this aspect by the Applicant is that this application as filed even before the Resolution Plan was approved by this Tribunal and hence, the said limitation does not apply to this Application. But the rationale underlying the ruling that an avoidance application cannot be entertained after the approval of the Resolution Plan by the NCLT holds good even if the avoidance application is pending prior to the approval of the Resolution Plan and is not decided till the approval of the Resolution Plan by the Tribunal. The contention that the avoidance applications would be pending at the stage when the RP files the plan was also appreciated and it was held that though at the first blush the said submission may appear attractive a closer analysis reveals that Form-H seeks to achieve what is mandated in Regulations and it is merely a format prescribed to provide the said details. Under the Scheme of IBC in so far as avoidance applications are concerned the RP has to collect the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and deliberated upon the CoC. Thereafter, final report was submitted by the Auditor on 21.05.2021. The report inter alia, sets out a list of preferential and undervalued transactions entered into by the Corporate Debtor during the review period as identified in accordance with Section 43 and 45 of IBC, 2016. As per auditor's report a sum of Rs. 13,54,55,000/- receivable from the Respondents in accordance with Section 43 45 of the IBC, 2016. Hence, this Application. 3. Respondent Nos. 1 to 8 filed a common counter. Respondent Nos. 9 and 12 filed a common counter. Respondent No. 11, 13 and 15 filed a common counter. Respondent Nos. 14, 16 to 20 filed individual counter. a) The contentions made in the counter filed by the Respondent Nos. 1 to 8 can be considered as they are the contentions raised by the other Respondents also basically. The Respondents contend that during the year 2005-2006 the Corporate Debtor was taken over by M/s. Nandi Group of Companies and they have taken up modernization of the plant and enhanced the capacity of Klin No. 1 and started commercial production from 10.08.2011. There were no transport vehicles for the Corporate Debtor and purchasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Properties Private Limited and also a supplemental agreement on 30.01.2006, as per the terms of which the Corporate Debtor got entitled to 20% of the saleable area etc. e) The Corporate Debtor sold their rights pertaining to an area of 6000 Sq. Feet to one C.S. Vidya Sagar Rao in the year 2007-2008 through registered agreement for a consideration of Rs. 1.10 Crores and an area of 13,500 Sq. Feet to SKP Labs Private Limited for Rs. 2.53 Crores one of the clauses of the said agreement is that in the event of failure to develop and deliver within time the purchasers are at liberty to approach the appropriate forum for specific performance of the agreement. f) Due to delay in handing over of the possession by the developer the said C.S. Vidya Sagar approached the Corporate Debtor for settlement and a settlement was agreed for Rs. 1.97 Crores, so also with regard to agreement with SKP Labs Private Limited. As the possession pertaining to the saleable area is not handed over by the developer and due to pending litigation with SKP Labs the Corporate Debtor sold the apartments on as it is basis for a consideration which is less than the market price even though the Development A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file any documents with regard to the transactions which are allegedly preferential transactions. The Auditor's report cannot be taken as a proof of what is stated in the said report unless it is supported by the material on the basis of which the said conclusion or opinion were arrived at. The auditor's report with regard to the observations pertaining to the related parties is concerned is only based on the information that is furnished to the auditor. Whether they are related parties in the first instance and whether the transactions with them is hit by Section 43 has to be looked into based on the other supporting material. Section 43(2) as under: A corporate debtor shall be deemed to 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 distributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor during the Resolution Process and not thereafter. Until the proviso to Section 23 which was introduced with effect from 28.12.2019 was enacted the Resolution Professional (RP) mandate concluded with the CIRP. The proviso extended the mandate of the Resolution Professional (RP) till the approval of the Resolution Plan under Section 31(1) appointment of the Liquidator under Section 34. The continuation of a Resolution Professional (RP) and file an application for the purpose of prosecuting an avoidance application as a former RP is beyond the contemplation of the IBC. 7. The Resolution Professional (RP) ceases to be the one after an order under Section 31 is passed. The Resolution Professional (RP) does not have any connection whatsoever with the new management which takes over the erstwhile Corporate Debtor, after the approval of the Resolution Plan. Any other interpretation could lead to a situation where a Resolution Professional (RP) could be a former RP for years together without any definite end date. Under Section 23 the CIRP period is a specific period and cannot be read as a perpetual period or an indefinite period. The working of the proviso in fact makes it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely a format prescribed to provide the said details. Under the Scheme of IBC in so far as avoidance applications are concerned the RP has to collect the details, form an opinion, make a determination and submit the same to the NCLT within the prescribed timelines. This is independent of the various other steps which are part of the CIRP. The activities in respect of objectionable transactions which the RP has to conduct would run parallel with the other steps of the CIRP. Finally the RP would submit all the details to the NCLT along with the Resolution Plan. The provision cannot be interpreted in a manner so as to say that the Applications can survive the CIRP itself. Section 26 of IBC also cannot be read in a manner so as to mean that an Application for avoidance of transactions under Section 25(2)(j) can survive after the CIRP process. Once the CIRP process itself comes to an end an application for avoidance of transactions cannot be adjudicated. This part of the above judgment would answer the contention raised by the Applicant's Counsel that the application has been pending before the Resolution Plan was approved. Hence, in view of the above this application cannot be ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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