Resolution Professional can only File Application for Avoidance of Preferential Transactions u/s 43 of IBC: NCLAT [Read Order]

The National Company Law Appellate Tribunal (NCLAT) in New Delhi ruled that, in accordance with Section 43 of the Insolvency and Bankruptcy Code, 2016 (Code), only the Resolution Professional may file an application for the avoidance of preferential transactions.

The Corporate Insolvency Resolution Process (CIRP) was initiated by order dated 07.03.2024 in response to an application submitted by Santosh Ananda Shetty and 66 other homeowners as Financial Creditors in class against the Corporate Debtor, Snehanjali and S.B. Developers Private Limited.

The e-voting ended on October 10, 2024, after four resolution options were discussed at the 6th CoC meeting on September 25, 2024. La Mer Developers Ltd. and Neel Builders & Developers' idea received 83.46% of the vote. The date of the letter of intent was October 12, 2024. IA (IBC) (Plan) No. 102/MB/2024 was submitted by the RP for approval of the plan.

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Ramprasad Vishvanath Gupta, the appellant, filed IA No. 22/MB/2025 under Section 43 of the IBC alleging preferential transactions and IA No. 24/MB/2025 objecting to the plan. The applications were rejected on January 24, 2025, and January 28, 2025, respectively. On February 12, 2025, the adjudicating authority approved the resolution plan. The three orders listed above are contested in these appeals.

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The appellant argued that procedural improperness, noncompliance with statutory provisions, fraudulent conduct, and collusion between the Resolution Professional and Successful Resolution Applicant (SRA) taint the approval of the resolution plan of La Mer Developers Limited and Neel Builders & Developers.

In contrast, the Respondent argued that the Appellant had no right to contest the Resolution Plan's approval because he was a single homebuyer. Since the appellant is a single homebuyer, they are not permitted to contest the Resolution Plan, which was approved by the CoC with the required voting share of 83.46%.

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The Tribunal observed that the order dated 24.01.2025 denied the appellant's request to replace the Resolution Professional and Authorized Representative. This order has reached finality because it was not contested. Therefore, there is no need to take the Appellant's accusations against the Resolution Professional any further.

The bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member ) observed that the Adjudicating Authority rightly held that the Appellant, being one among 600 homebuyers, falls within the class of Financial Creditors. While individual dissent may exist, the vote of the majority prevails.

The tribunal held that, the Resolution Plan was approved by 83.46% voting share of the CoC. The Adjudicating Authority, having examined the compliance with Section 30(2) of the IBC, rightly approved the plan. No error was found in the order dated 12.02.2025 allowing IA (IBC)(Plan)/102(MB)/2024.

To Read the full text of the Order CLICK HERE

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