Tribunal dismisses preferential transaction claim, upholds share pledge agreement validity.

The Tribunal ruled that the transaction in question was not a 'preferential transaction' under Section 43 of IBC, 2016. As a result, the application filed by the Resolution Professional was dismissed, and all related applications were closed. The Tribunal found that the share pledge agreement's invocation was valid and not considered preferential, and the successful Resolution Applicant could not claim the disputed shares as they were not part of the assets available during the plan's approval.

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Issues Involved:
1. Maintainability of the application filed under Section 43 and 45 of IBC, 2016.
2. Determination of the transaction as a 'preferential transaction' under Section 43 of IBC, 2016.
3. Validity and implications of the share pledge agreement and its invocation.
4. Rights and claims of the successful Resolution Applicant regarding the disputed shares.

Issue-wise Detailed Analysis:

1. Maintainability of the Application:
The application filed by the Resolution Professional (RP) under Section 43 and 45 of IBC, 2016 was challenged on the grounds of maintainability, citing the judgment in Venus Recruiters Private Limited vs. Union of India and Others. It was argued that after the approval of the Resolution Plan, the RP becomes functus officio and cannot prosecute the application. However, the Tribunal found that the application was filed before the approval of the Resolution Plan, thus distinguishing it from the Venus Recruiters case. Therefore, the Tribunal overruled the objection on maintainability.

2. Determination of the Transaction as a 'Preferential Transaction':
The Tribunal examined whether the invocation of the share pledge agreement by the 1st Respondent constituted a 'preferential transaction' under Section 43 of IBC, 2016. The Supreme Court's interpretation in Anuj Jain's case was considered, which clarified that for a transaction to be deemed preferential, it must involve the corporate debtor giving a preference at a relevant time, and such preference must benefit a creditor over others in case of asset distribution under Section 53 of IBC, 2016. The Tribunal noted that the impugned transaction did not involve the corporate debtor giving preference but rather the 1st Respondent invoking a security interest due to loan default. Hence, the transaction did not qualify as a 'preferential transaction.'

3. Validity and Implications of the Share Pledge Agreement and Its Invocation:
The share pledge agreement dated 26.02.2016 between the Corporate Debtor and the 1st Respondent was scrutinized. The RP did not challenge the validity of this agreement, which was beyond the two-year period stipulated under Section 43(4)(a) of IBC, 2016. The Tribunal emphasized that the invocation of the pledge by the 1st Respondent was a consequence of the Corporate Debtor's default and not a preferential act by the Corporate Debtor. The Tribunal concluded that the invocation of the pledge was a legitimate action by the secured creditor and did not fall within the scope of Section 43 of IBC, 2016.

4. Rights and Claims of the Successful Resolution Applicant:
The successful Resolution Applicant argued that the Resolution Plan included provisions for the takeover of all assets, including the disputed shares. However, the Tribunal noted that the Information Memorandum had already disclosed the invocation of the pledge and transfer of shares. The Tribunal held that the successful Resolution Applicant could not claim the shares based on the Resolution Plan since the shares were not part of the assets available at the time of the plan's approval. The Tribunal also dismissed the argument that the Resolution Applicant paid an additional Rs. 80 Crore based on an assurance of reversing the share transfer, as such an assurance could not be given while the matter was sub-judice.

Conclusion:
The Tribunal concluded that the transaction in question did not constitute a 'preferential transaction' under Section 43 of IBC, 2016. Consequently, MA/731/2019 filed by the Resolution Professional was dismissed, and all connected applications (MA/769/2019, IA/04(CHE)/2021, and MA/114(CHE)/2021) were closed.

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