2019 (6) TMI 134 - AT - Insolvency and Bankruptcy

Authority dismisses Resolution Professional's claims of fraudulent transactions, finding no evidence of preferential transfers.

Anup Kumar, Resolution Professional of M/s Shivkala Developers Pvt. Ltd. Versus BDR Builder & Developers Pvt. Ltd., M/s Chharia Holding Pvt. Ltd. and M/s Vipul Motors Pvt. Ltd.

The Adjudicating Authority dismissed the Resolution Professional's applications under various sections of the Insolvency and Bankruptcy Code, 2016, ... Setting aside the transaction entered into by the Corporate Debtor - Preferential or undervalued - transfer carried out with a view to defraud the creditors - HELD THAT:- The Respondents are not a related party nor the transactions were made with any person during one year preceding the insolvency commencement date and in fact were made about 8-9 years back, the application under Section 45 r/w Section 46 preferred by Resolution Professional was uncalled for. It is not the case of the Resolution Professional that it is an extortionate credit transaction involving the receipt of financial or operational debt during the period within two years preceding the insolvency commencement date. Therefore, the Resolution Professional cannot allege violation of Section 50. In the present case, no case is made out by the Resolution Professional that any business of the Corporate Debtor has been carried out with the intent to defraud the creditors of the Corporate Debtor or for any fraudulent purpose. A so called alleged violation of Section 43 or Section 45 or Section 46 cannot be termed to be made for fraudulent purpose - the Adjudicating Authority has found that transactions were made in the year 2009-10 and the purchasers also taken possession and perusal of the documents reflects that agreements for sale are duly registered documents with adequate stamp duty paid. Appeals dismissed. Issues involved:- Preferential transfer under Section 45, 49, 50(5) and 66 r/w Section 25(2) of the Insolvency and Bankruptcy Code, 2016.- Allegations of fraudulent transactions and undervalued sale considerations.- Dispute regarding possession handover without proper NOC or completion certificate.- Adjudicating Authority's rejection of applications CA No. 293/2018, 294/2018, and 295/2018.- Examination of transactions related to M/s Shivkala Developers Pvt. Ltd.- Allegations against Promoters and Directors for wrongful transactions under Section 66.- Application of Sections 43, 45, 46, 50, and 66 of the I&B Code.- Relevant time for preferential transactions and undervalued transactions.- Extortionate credit transactions within two years preceding the insolvency commencement date.- Fraudulent trading or wrongful trading during insolvency resolution process.Analysis:The Resolution Professional filed applications under various sections of the Insolvency and Bankruptcy Code, 2016, to set aside transactions by the Corporate Debtor, alleging preferential transfers to defraud creditors. The Adjudicating Authority rejected these applications, leading to the appeals. The Resolution Professional argued that sale considerations were undervalued, possession was handed over without proper documentation, and transactions were fraudulent. However, the Respondents disputed these claims, and the Authority found no evidence of preferential, undervalued, extortionate credit, or fraudulent transactions.The Corporate Debtor, a real estate developer, was allotted land by Noida Authority for a Commercial Complex, later sold to various purchasers. Registered agreements confirmed transactions in 2009-10. Allegations in different cases involved transactions by Promoters and Directors for various areas within the Commercial Complex, all of which were contested by the Respondents. The Adjudicating Authority concluded that no preferential, undervalued, or fraudulent transactions were proven.Sections 43, 45, 46, 50, and 66 of the I&B Code were examined. Section 43 deals with preferential transactions, Section 45 with undervalued transactions, Section 46 with the relevant period for avoidable transactions, Section 50 with extortionate credit transactions, and Section 66 with fraudulent trading. The Resolution Professional failed to establish any violations under these sections due to the lack of evidence supporting preferential, undervalued, extortionate, or fraudulent transactions.The Adjudicating Authority determined that the transactions occurred in 2009-10, with purchasers having taken possession and registered sale agreements with proper stamp duty. As there was no evidence of fraudulent intent or wrongdoing by the Corporate Debtor, the appeals were dismissed. The Resolution Professional's claims were not substantiated, leading to the rejection of the appeals without costs.