Tribunal Declares Transactions Non-Est: Compliance with Insolvency Code Emphasized The Tribunal ruled in favor of the Applicant in an application under Section 60(5) of the Insolvency and Bankruptcy Code, declaring certain transactions ...
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Tribunal Declares Transactions Non-Est: Compliance with Insolvency Code Emphasized
The Tribunal ruled in favor of the Applicant in an application under Section 60(5) of the Insolvency and Bankruptcy Code, declaring certain transactions as non-est in law. Respondents were directed to refund amounts received from the corporate debtor on specified dates. The judgment emphasized compliance with the Code's provisions and the role of the IRP/RP in managing the debtor's affairs during the CIRP process.
Issues: Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 for declaring transactions as non-est in law and seeking refund from Respondents.
Analysis: 1. Appointment of IRP: The Applicant, appointed as an IRP in a matter under the Insolvency and Bankruptcy Code, filed an application seeking orders to declare multiple transactions as non-est in law and requesting refunds from Respondents.
2. Background and CIRP: The Applicant took over the affairs of the corporate debtor as per Section 17 of the IB Code and CIRP Regulations, confirmed as the RP in the 1st COC meeting. The payments in question were made to creditors before the Applicant's charge, for services availed prior to the CIRP period.
3. Details of Transactions: Payments made by the corporate debtor to various creditors on 19.08.2020 and 20.08.2020 were detailed, including amounts and descriptions. The Applicant found these payments to be in violation of the Code and sought recovery of the same.
4. Service of Notice and Replies: Respondents were served via courier and email, with Respondent No.1 contesting the application and filing a reply. Respondents 2 to 5 were proceeded ex-parte due to non-appearance despite being served.
5. Respondent's Contentions: Respondent No.1 argued against the application, mentioning deductions for TDS and the significance of their services for the debtor's business continuity. They contested the reversal of only one transaction, citing procedural issues and the ongoing use of their services.
6. Judgment and Orders: The Tribunal, considering the Code's provisions, ruled in favor of the Applicant. It directed all Respondents to refund the amounts received from the corporate debtor on specified dates. The bench emphasized that the operational creditors must file claims with the IRP/RP as per the Code's provisions.
7. Conclusion: The application was allowed and disposed of, with specific refund orders issued to each Respondent. The judgment highlighted the importance of complying with the Code's provisions and the role of the IRP/RP in managing the affairs of the corporate debtor during the CIRP process.
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