Avoidance applications under the IBC must meet statutory timelines, and fraud claims require specific pleading and proof.

An avoidance application must be filed within the Regulation 35A timeline and confined to the statutory look-back period under Section 46 of the Insolvency and Bankruptcy Code. Here, the tribunal found the application time-barred, as the resolution professional did not satisfactorily show when the required opinion and determination were formed, and the lease deed relied on fell outside the two-year period before commencement of CIRP. A separate plea of fraudulent transaction under Section 66 also failed because fraud was not specifically pleaded or supported by material, and the allegation appeared to be raised to bypass the statutory timeline. The application was therefore not maintainable and was rejected on merits as well.

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Issues: (i) Whether the application alleging avoidance transactions was maintainable in view of the timeline under Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and the two-year look-back period under Section 46 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the allegation that the lease deed constituted a fraudulent transaction under Section 66 of the Insolvency and Bankruptcy Code, 2016 was made out on the pleadings and material placed on record.

Issue (i): Whether the application alleging avoidance transactions was maintainable in view of the timeline under Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and the two-year look-back period under Section 46 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The application was filed well beyond the timeline contemplated by Regulation 35A, and the Resolution Professional did not satisfactorily demonstrate when the required opinion and determination were formed. The Tribunal also held that it could not examine transactions outside the two-year period preceding commencement of the corporate insolvency resolution process, and the lease deed relied upon was beyond that period. The Tribunal further noted that the Resolution Professional cannot undertake a roving inquiry beyond the statutory timeframe.

Conclusion: The application was held to be hit by Regulation 35A and Section 46 and, on this ground, was not maintainable.

Issue (ii): Whether the allegation that the lease deed constituted a fraudulent transaction under Section 66 of the Insolvency and Bankruptcy Code, 2016 was made out on the pleadings and material placed on record.

Analysis: The allegation of fraud was not substantiated by particulars or supporting material. The Tribunal reiterated that fraud must be specifically pleaded and proved, and found that the plea appeared to have been raised to overcome the statutory timeline rather than on demonstrated facts.

Conclusion: The allegation of fraudulent transaction was rejected.

Final Conclusion: The avoidance application failed on both maintainability and merits, and the reliefs sought were refused.

Ratio Decidendi: An avoidance application under the Insolvency and Bankruptcy Code must comply with the statutory timeline and look-back period, and a plea of fraud cannot be accepted without specific pleading and proof.

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