The Mumbai Bench of the National Company Law Tribunal ( NCLT ) held that fraudulent intent is not necessary to prove preferential transaction under Section 43 of the Insolvency and Bankruptcy Code, 2016 ( IBC ).
The Application was filed by the Resolution Professional, Mr. Ankur Kumar, of M/s Mahavir Roads and Infrastructure Private Limited ( Corporate Debtor ) on 18.07.2020 seeking reliefs against the Respondents named in each of Applications for transactions in terms of section 43 of Insolvency & Bankruptcy Code, 2016.
It was submitted that the Corporate Insolvency Resolution Process ( CIRP ) of Mahavir Roads & Infrastructure Pvt. Ltd. ( Corporate Debtor ) was commenced by an Order of the Bench, pursuant to insolvency petition filed by the Financial Creditor under Section 7 of the Code, wherein the Applicant was appointed as the Interim Resolution Professional, and was later on appointed as Resolution Professional of Corporate Debtor by the Committee of Creditors ( COC ).
The applicant further submitted that sub regulation 35A of the IBBI ( Insolvency Resolution Process of Corporate Persons ) Regulations. 2016 requires the Resolution professional to form an opinion whether the Corporate Debtor has been subjected to any transaction covered under section 43. 45. 50 or 66 of the Code. Section 43 of the chapter III deals with the preferential transactions and Section 44 casts duty upon the Resolution Professional to apply to the Adjudicating Authority under section 43(1) of the Code, in respect of preferential transactions carried out by the Corporate Debtor under sub-section (4) of section 43 of the IBC.
Section 43 (4) of the IBC provides that a Corporate Debtor shall be deemed to have given preference if it is given to a related party. In the instant case, the Corporate Debtor has benefitted its related parties. The Applicant states that sub-section (1) of Section 25 of the Code casts a duty upon the Resolution Professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the Corporate Debtor.
A Two-Member Bench comprising Prabhat Kumar Member ( Technical ) and Justice V.G. Bisht Member ( Judicial ) observed that “The Section 43(3) of the Code, inter-alia, provides that the transactions undertaken in ordinary course of business shall remain out of the scope of section 43 of the Code. Further, the transaction should be in ordinary course of business of both the parties i.e. the Corporate Debtor as well as recipient of the preference. In the present case, it can not be said that it is in ordinary course of business of the recipient of the preference to realise their debts, particularly when the Corporate Debtor, a related party, is under financial stress.”
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