Preferential transaction test failed as regular business dealings and loan repayments did not justify avoidance under insolvency law.

The Tribunal held that the resolution professional failed to prove the statutory ingredients of a preferential transaction under the Insolvency and Bankruptcy Code, 2016. It noted that the respondent had earlier advanced unsecured loans to the corporate debtor, repayments had been made over time, and the impugned payment was treated as a refund linked to an earlier advance for booking office premises. As the record showed regular business dealings and no sufficient material that the respondent was placed in a beneficial position contrary to the avoidance framework, the payment was not avoided and the application was rejected.

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Issues: Whether the payment of INR 47,26,000/- made by the corporate debtor to the respondent was a preferential transaction under the Insolvency and Bankruptcy Code, 2016 and liable to be avoided.

Analysis: The Tribunal found that the resolution professional had not produced sufficient material to establish that the impugned payment satisfied the ingredients of a preferential transaction. On the record, the respondent had earlier extended substantial unsecured loans to the corporate debtor, repayments had occurred over time, and the impugned amount was treated as a refund linked to an earlier advance used for booking office premises. The Tribunal accepted that the transaction formed part of regular business dealings between the parties and was not shown to have placed the respondent in a beneficial position contrary to the statutory framework governing avoidance of preferential transactions.

Conclusion: The payment was not a preferential transaction and the application for avoidance was rejected.

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