TMI Blog2023 (5) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... the IBC stipulates 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 on an account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor, such a transaction would be considered a preferential transaction. Moreover, if the transaction is with a related party then the lookback period will be two years and if it is a party other than a related party the lookback period would be one year preceding the insolvency commencement date as per sub-section 4 of section 43. The Hon ble Supreme Court has held in the matter of Anuj Jain, PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [ 2020 (2) TMI 1259 - SUPREME COURT ] that mortgage deeds entered by the corporate debtor JIL should be considered alongwith the fact as to who are the real beneficiaries of the transaction - The Hon ble Supreme Court has thus held that if there is a transfer of property or interest thereof of the corporate debtor for the benefit of related parties and not necessarily be the corporate debtor, then the look back period would be two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either half-baked or suspicious - Thus, it is clear that when the corporate debtor was experiencing insolvency, it still chose to transfer an amount of Rs.1,02,09,360/- to a related party SAKS Developers LLP and which is also a family concern of Mr. Ramesh Kumar Suneja to siphon off the said amount from the corporate debtor to SAKS Developer LLP even though it could have used the said amount to pay off its debtors and resolve its insolvency. The amount of Rs.1,02,09,360/- which was transferred by the corporate debtor to the related party SAKS Developers LLP during the lookback period of two years was in clear violation of section 43 of the IBC. Therefore, the order made by the Adjudicating Authority directing SAKS Developers LLP to repay/refund the amount of Rs.1,02,09,360/- to the corporate debtor is correct and does not require any interference. Appeal allowed. - COMPANY APPEAL (AT) (INSOLVENCY) NO. 747 of 2021 & I.A. Nos. 1983 & 1984 of 2021 WITH COMPANY APPEAL (AT) (INSOLVENCY) NO. 748 of 2021 & I.A. Nos. 2125, 2126 & 3016 of 2022 - - - Dated:- 9-5-2023 - [ Justice Rakesh Kumar Jain ] Member ( Judicial ) And [ Dr. Alok Srivastava ] Member ( Technical ) For the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the creation of the said security interest in favour of Bajaj Finance Ltd. is not a preferential or fraudulent transaction and the liquidator is aggrieved by this part of the said Impugned Order. 5. The Appellant has stated that the corporate debtor along with some individual co-borrowers, who are Mr. Ramesh Kumar Suneja, Mrs. Savitri Suneja and Mr. Pankul Suneja and also the companies Skyland International Private Ltd. and S. Kumar and Company Private Ltd. took two loans, namely (i) Loan Account No. 401 FSP 35751847, for an amount of Rs.3,46,62,656/-; and (ii) Loan Account No. 401 FSP 35716264, for an amount of Rs.5,81,32,553/- vide two separate loan agreements dated 28.02.2017 and the corporate debtor created security interest by mortgaging his property No. K 3, 5th Floor, Brahm Datt Tower, Sector 18, Noida ( Mortgaged Property ) in favour of Bajaj finance Ltd. (Respondent No. 4 in Appeal I). He has further stated that the mortgage on this immovable property was created for the benefit of the three individuals Mr. Ramesh Kumar Suneja, Mrs. Savitri Suneja, Mr. Pankul Suneja who actually benefited from the said loans even though the property was in the ownership of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28.02.2017, the lookback period should be one-year period as stipulated under Section 43(4)(b) of the IBC, and therefore such a transaction would not come under the category for preferential transaction as it pertains to a date that is earlier than the lookback period. He has argued that the Beneficiary Respondents are related parties to each other and also to the corporate debtor and therefore a transaction done for their benefit with Respondent No. 4 whereby security interest was created in the Mortgaged Property for the benefit of the Beneficiary Respondents and hence look back period ought to have been two years as stipulated in Section 43(4)(a) of the IBC. 10. In the above connection, the Learned Counsel for the Appellant/Liquidator has cited the judgement of Hon ble Supreme Court in the matter of Anuj Jain, Interim Resolution Professional for Jaypee Infratech Vs. Axis Bank Ltd. Ors., [(2020) 8 SCC 401] to contend that, in the present case, even though the lender (Bajaj Finance Ltd.) in whose favour the security interest was created, is not a related party of the corporate debtor, the decisive question is whether the ultimate beneficiaries of the two loans are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest in I.A. No. 367 of 2019, wherein it was held that if the security offered by the corporate debtor is sought to be released, then the RP has to take into consideration the claim of Bajaj Finance Ltd. before the security can be released, and this order which was not appealed against has achieved finality. He has pointed out that the judgement in the Anuj Jain (Supra) case came on 26.02.2020 which was after the order of the Adjudicating Authority in I.A. 367 of 2019 and hence the ratio of Anuj Jain judgment would not apply in the present case. 14. The Learned Counsel for Beneficiary Respondents has referred to the judgement of Hon ble Delhi High Court dated 17.08.2021, wherein after placing reliance on the order dated 03.01.2020 of the Adjudicating Authority the matter regarding security interest was firmly and finally settled, and the Appellant/Liquidator cannot now raise this issue again through I.A. No. 2699 of 2020. He has also pointed out that for section 43 of the IBC to be attracted, there has to be an antecedent debt, but there is no antecedent debt regarding which the said security interest has been created, and therefore the transaction relating to the Mortga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that Bajaj Finance Ltd. is not a related party of the corporate debtor and since the two said loans given on 28.02.2017 were loans given to various co-borrowers along with the corporate debtor, Bajaj Finance Ltd. committed no wrong in accepting mortgage of the corporate debtor s property located in Sector 18, Noida ( Mortgaged Property ). He has further argued that the adjudication provided by the adjudicating authority in I.A. 367 of 2019 dated 03.01.2020 is quite clear about the correctness of the security interest created in favour of Bajaj Finance Ltd. and since the resolution professional did not accept the claim of Bajaj Finance Ltd. as a financial creditor, the security interest should be considered as valid and to be protecting the interest of Bajaj Finance Ltd. vis- -vis the two said loans given on 28.02.2017. He has argued out that Bajaj Finance Ltd. is not a related party of the corporate debtor, and therefore the lookback period for the transaction regarding creation of security interest would be one year, and as the said mortgage took place on 28.02.2017, it is clearly outside the one-year period from the date of initiation of CIRP which is 04.04.2018. 17. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference by the corporate debtor. Explanation. For 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 person other than a related party during the period of one year preceding the insolvency commencement date. 19. Section 66 of the IBC, which is regarding fraudulent trading or wrongful trading, is as follows: 66. Fraudulent trading or wrongful trading. - (1) If during the corporate insolvency resolution process or a liquidation process, it is found that any business of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that for the two loan accounts as stated above the corporate debtor provided security charge on its said property located at No. K-3, 5th Floor, Brahm Datt Tower, Sector 18, Noida. 23. The Hon ble Supreme Court has held as following in the Anuj Jain (Supra) case: 22.2.1. As noticed, 9-8-2017 is the insolvency commencement date in this case. The transactions in question, even if of putting the properties concerned under mortgage with the lenders, carry the ultimate effect of working towards the benefit and advantage of the borrower i.e. JAL who obtained loans and finances by virtue of such transactions. It is true that there had not been any creditor-debtor relationship between the lender banks and corporate debtor JIL but that will not be decisive of the question of the ultimate beneficiary of these transactions. The mortgage deeds in question, entered by the corporate debtor JIL to secure the debts of JAL, obviously, amount to creation of security interest to the benefit of JAL. 25.3. Needless to reiterate that if the transfer is examined with reference to the ordinary course of business or financial affairs of the transferee alone, it may conveniently get exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a transaction would be considered a preferential transaction. Moreover, if the transaction is with a related party then the lookback period will be two years and if it is a party other than a related party the lookback period would be one year preceding the insolvency commencement date as per sub-section 4 of section 43. Further, as stated in the previous paragraph, the Hon ble Supreme Court has held in the matter of Anuj Jain (Supra) that mortgage deeds entered by the corporate debtor JIL should be considered alongwith the fact as to who are the real beneficiaries of the transaction. 25. The Hon ble Supreme Court has thus held that if there is a transfer of property or interest thereof of the corporate debtor for the benefit of related parties and not necessarily be the corporate debtor, then the look back period would be two years and such a transaction will be considered as a transaction which infringes sub-section (2) of section 43. Moreover, the said creation of security charge is not in the ordinary course of business nor the corporate debtor through the two loan agreements dated 28.02.2017 has benefitted for the said loans. Admittedly the said loans were utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also of the opinion that the corporate debtor, working through the Respondents No. 1, 2 and 3, did not take any corrective action on the basis of the Independent Auditor s Report as they stood to derive advantage from the security charge created through the Mortgaged Property being beneficiaries of the two said loans. 29. Therefore, it is amply clear that the transaction relating to creation of security charge on the Mortgaged Property by the corporate debtor was clearly and unambiguously for the benefit of its related parties, namely Mr. Ramesh Kumar Suneja, Mrs. Savitri Suneja, Mr. Pankul Suneja, Skyland International Pvt. Ltd. and S. Kumar and Company. The relevant time with regard to look back period is two years for the date of initiation of CIRP i.e., 04.04.2018 and therefore a creation of security charge on 28.02.2017 is well within the two years look back period. Therefore, the said transaction of creation of security interest on mortgaged property in favour of Bajaj Finance Ltd. infringes section 43 for which an order can be made under section 44 of the IBC. 30. We, therefore, come to the conclusion that the Adjudicating Authority erred in holding that the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand the Developer had ostensibly shared with the Collaborator the relevant details of project including architectural plans, estimated cost of land and constructions etc. and after due consideration the Collaborator had agreed to invest in the proposed project, the clauses in the Profit Sharing section as extracted above show that the plans and final project cost etc. are not yet clear and therefore the actual profit sharing ratio and the total cost of the proposed project are not indicated in the MoU. The absence of these details in the MoU shows that the MOU was perhaps executed in a hurry. The intention of the Developer and Collaborator for development of the proposed project also then appears either half-baked or suspicious. It stands to reason as to why the Collaborator would agree to invest a sizeable amount in the Project when the details including the actual cost of the project are not clear to him. We are therefore inclined to accept the contention of the Learned Counsel for the Liquidator that the MoU was entered into in a hurried manner, during a small window of time that was available to the corporate debtor fortuitously, when after the NCLAT order setting aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 43. 37. In order to rebut the argument of the Respondents Ramesh Kumar Suneja and Others that there is no specific pleading of fraud, the Learned Counsel for Appellant has cited the judgment of this Tribunal in the matter of CA(AT)(Insolvency) No. 405, 369 and 412 of 2022 to rebut the contention of the Respondents. In the said judgment, it is held as hereunder:- 54. What has been emphasized by the Hon ble Supreme Court is that ingredients of Section 43, 45 and 66 are different and Resolution Professional is expected to keep such requirement in view while making motion to the Adjudicating Authority. When we look into the Application which has been filed in the present case the Resolution Professional has in the avoidance application in his application has dealt with preferential transaction undertaken by the Corporate Debtor and undervalued transaction undertaken by the Corporate Debtor as well as fraudulent transaction in different heads i.e. i , ii and iii thus allegations and averments were separately made and filing of composite application does not lead to any infirmity in the Application. We are not persuaded to accept the submission of the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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