Preferential transfer analysis under insolvency law turns on forensic evidence and proof of ordinary-course business exceptions.

Transactions were examined under Section 43 of the Insolvency and Bankruptcy Code to determine whether they constituted preferential transfers in favour of related parties. Forensic audit material and the record before the adjudicating authority showed a preferential effect, and the appellants failed to produce documents proving that the payments were made in the ordinary course of business or otherwise fell within the statutory exceptions, including Section 43(3). The record also showed that the relevant objections and evidence had been considered, with no perversity or misappreciation demonstrated. On that basis, the transactions were treated as preferential under Section 43.

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Issues: Whether the identified transactions were preferential transactions under Section 43 of the Insolvency and Bankruptcy Code, 2016 and whether the appellants had rebutted the forensic audit findings by showing that the transactions were in the ordinary course of business or within the statutory exceptions.

Analysis: The appeal challenged the adjudicating authority's finding that the impugned payments conferred an advantage on related parties and were not made in the ordinary course of business. The decision rested on the forensic audit reports, the materials considered by the adjudicating authority, and the absence of rebuttal evidence from the appellants. Once the respondents relied on the audit material to show a preferential transfer, the appellants bore the burden of establishing that the transactions fell outside Section 43, including the exceptions under sub-section (3), but they produced no supporting documents to prove ordinary-course dealings. The finding was also that the adjudicating authority had considered the relevant objections and evidence, and no perversity or misappreciation of material was shown.

Conclusion: The transactions were correctly treated as preferential transactions under Section 43, and the challenge to the impugned order failed.

Ratio Decidendi: A transaction may be upheld as preferential where forensic and record-based material shows preferential effect, and the party resisting the finding fails to prove that the transfer was in the ordinary course of business or within the statutory exceptions.

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