TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 245
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....hort 'IBC') assailing the common order dated 3.6.2022 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai) in IA 3155/2019 in CP(IB)-4190(MB) of 2018 (in short 'Impugned Order'). Both the appeals are being disposed of by this common judgment. 2. The Appellants in the two appeals are aggrieved by the Impugned Order whereby the claims lodged by both the Appellants in the Corporate Insolvency Resolution Process (in short 'CIRP') of the corporate debtor Mayurpankh Properties Private Limited (in short 'MPPL') have been held as preferential, undervalued and fraudulent transactions under sections 43, 45 and 66 of the IBC and thereby they are not binding on the corporate debtor. 3. In brief, the Appellant Pray Projects Private Limited (in short 'Pray Projects') has stated that in 2014, it gave an unsecured loan amounting to Rs. 5 crores to Sunshine Housing Infra Pvt. Ltd. (in short 'SHIPL') on which interest was being paid by SHIPL till October, 2016, but thereafter it stopped paying interest to the Appellant. The Appellant Pray Projects has further stated that to reduce the burden of loan and interest that SHIPL was carrying, it offered in the year 2018 to arrang....
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....rate of Rs.26,923 per sq. ft. in the "Chambers" project located at Andheri (West) in Mumbai. The Appellant Fervent Securities has stated that the sum of Rs. One crore was advanced to the corporate debtor and in consideration of the same, Option Agreement -II was executed with the corporate debtor. The Appellant Fervent Securities has also stated that it was not aware of the on-going proceedings relating to section 7 application against the corporate debtor and therefore the Options Agreement was signed by it as a purely commercial transaction at arm's length. 6. Both the Appellants have stated that the corporate debtor was admitted into insolvency vide order of the Adjudicating Authority dated 18.12.2018 and the Respondent Rajender Kumar Girdhar was appointed as Interim Resolution Professional (IRP) for conducting the CIRP. They have further stated that the Respondent appointed Sharma Goel & Co. LLP as transaction auditor of the corporate debtor by a decision taken in the 3rd meeting of the Committee of Creditors (in short 'CoC') held on 15.4.2019 and the transaction auditor submitted its report on 26.7.2019, but this Transaction Audit Report (in short 'TAR') was not shared with t....
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....tion to purchase some space in the "Chambers" real estate project being developed by MPPL/corporate debtor, which is a related party of SHIPL against adjustment of the said loan. Since this project of the corporate debtor was expected to be completed before the project undertaken by SHIPL, Pray Projects decided to go with the project of the corporate debtor and in this connection, it signed an Option Agreement-I dated 1512.2018 by which an area of 1325 sq.ft. was to be placed as option for purchase in the 'Champers' project with the Appellant. He has further submitted that the Appellant Pray Projects filed a claim of Rs. 5 crores, which was admitted by the Respondent/Resolution Professional after due verification and Pray Projects was also made part of the CoC as an unsecured financial creditor being unrelated party of the corporate debtor. 11. In relation to the transaction entered into by the Appellant Fervent Securities, the Learned Counsel for Appellant Fervent Securities has explained that the Appellant Fervent Securities advanced a sum of Rs. 1 crore to the corporate debtor on 17.12.2018 and another Option Agreement -II was signed between the Fervent Securities and the corpo....
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....Appellant Pray Projects has filed bank account statement of its account No. 00000033568472338 maintained in State Bank of India, Ghatkopar (East Branch), Mumbai (attached at pp.53-54 of appeal paperbook, Vol. I in CA (AT)(Ins) No. 938 of 2022). The bank account statement shows that an amount of Rs.1,00,00056/- was remitted to SHIPL on 24.1.2014 and another amount of Rs.4,00,00,056 was remitted to SHIPL on 29.1.2014. There is no record or document submitted by the Appellant to show the purpose for which this amount was remitted by Pray Projects to SHIPL. We also note from the bank account statement submitted by Pray Projects that it gave 4 cheques viz. cheque no. 444061 dated 10.12.2018 for an amount of Rs. 1 crore, cheque no. 444062 dated 11.12.2018 for an amount of Rs. 1 crore, cheque no. 444063 dated 12.12.2018 for an amount of Rs. 1 crore, cheque no. 444064 dated 13.12.2018 for an amount of Rs. 1 crore, all in favour of Mayurpankh Properties Private Limited and a 5th cheque no. 444065 dated 14.12.2018 for an amount of Rs. 1 crore in favour of Mayurpankh Private Limited. Thus, a total amount of Rs. 4 crores was transferred to MPPL between 10.12.2018 to 13.12.2018 and an amount of....
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.... full Occupation Certificate of the Project from the development authorities ("the Option Period"). xx xx xx xx ARTICLE 2 OPTION CONSIDERATION 2.2 On or before execution of this Agreement, the Option Holder has advanced / Loan a sum of Rs.5,00,00,000/- (Rupees Five Crore only) ("the Option Advance") to the Company to be dealt with in the manner set out hereinafter;" 18. The Option Agreement-II signed between the Fervent Securities and the corporate debtor MPPL is attached at pp.65-70 of the appeal CA 938/2022 Vol.I. The relevant parts in the recital and clauses in this Option Agreement are as follows:- "OPTION AGREEMENT THIS OPTION AGREEMENT made at Mumbai on this 17th day of December in the Christian Year Two Thousand Eighteen. BETWEEN M/S. MAYURPANKH PROPERTIES PRIVATE LIMITED....... AND M/S. FERVENT SECURITIES PRIVATE LIMITED........ xx xx xx xx WHEREAS : xx xx xx xx B. The Parties hereto have agreed that the Company would grant to the Option Holder an option to purchase Option Area (as defined hereinafter) in the Project on the terms to be mutually agreed between the Parties; C. The Company is now desirous to grant to the Option Holder an irrevoc....
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....t Securities to the corporate debtor on 17.12.2018 and an amount of Rs. 1 crore was immediately thereafter transferred by the corporate debtor to STPL on the same day i.e. 17.12.2018. These transactions are shown in Flow chart-II as following:- 23. Admittedly, SUIL and STPL are related parties of the corporate debtor since they all belong to the same group of companies and therefore the amounts received by the corporate debtor from Pray Projects i.e. Rs. 5 crores and from Fervent Securities i.e. Rs. 1 crore were transferred to the corporate debtor's related parties between 10.12.2018 to 17.12.2018 as is evident from the summary of option agreements in the TAR which is extracted earlier in this judgment and Flow Charts I & II. It is thus clear that amounts paid by Pray Projects and Fervent Securities were not retained by the corporate debtor, but were transferred to two entities viz. SUIL and STPL which are companies in the same group as the corporate debtor. While the interest in the property 'Chambers' project was created in favour of Pray Projects and Fervent Securities through the two option agreements dated 15.12.2018 and 17.12.2018 respectively, the consideration amounts were....
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....hich were undervalued, he shall make an application to the Adjudicating Authority to declare such transactions as void and reverse the effect of such transaction in accordance with this Chapter. (2) A transaction shall be considered undervalued where the corporate debtor- (a) makes a gift to a person; or (b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor. 46. Relevant period for avoidable transactions. - (1) In an application for avoiding a transaction at undervalue, the liquidator or the resolution professional, as the case may be, shall demonstrate that - (i) such transaction was made with any person within the period of one year preceding the insolvency commencement date; or (ii) such transaction was made with a related party within the period of two years preceding the insolvency commencement date. (2) The Adjudicating Authority may require an independent expert to as....
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.... signed on 15.12.2018. This fact is included in "Summary of Option Agreements" in TAR (attached at page 205 of Vol.II appeal paperbook CA 938/2022). (iv) The TAR also makes it clear that out of Rs. 5 crores received by the corporate debtor from Pray Projects, Rs. 3,33,60,000/- were transferred to SUIL between 10.12.2018 and 14.12.2019 and an amount of Rs.1,66,22,000/- to STPL between 13.12.2018 to 15.12.2018. (v) The Appellant Fervent Securities signed Option Agreement-II on 17.12.2018 and transferred Rs. 1 crore to corporate debtor MPPL as option advance on 17.12.2018, and this amount was in turn transferred by the corporate debtor to the related company from the same group STPL on the same day i.e. 17.12.2018. 26. An analysis of the various transactions which are included in the bank account statements and TAR and which has been shown in the Flow Charts makes it abundantly clear that whatever amount was paid by Pray Projects and Fervent Securities as option advance were immediately transferred on receipt to the SUIL and STPL (which are related parties of the corporate debtor and also companies in the same group) and thus these amounts were not retained by the corporate debto....
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....the Corporate Debtor admits the date (debt) as well as default. Reserved for orders." It is clear from the above order that the corporate debtor admitted the debt and default and thus the admission of section 7 application was almost certain. Such transactions which were entered into when the matter had been heard and reserved for order, and when the order would have, in all likelihood, resulted in initiation of CIRP, are not only suspect, but they are avoidance transactions. 30. Pray Projects and Fervent Securities have claimed that they were not aware of the insolvency related proceedings against the corporate debtor MPPL. It is a fact that the corporate debtor MPPL which entered into such agreements with Pray Projects and Fervent Securities was very much aware that the matter relating to admission of section 7 application against the corporate debtor had been reserved for orders on 10.12.2018 and the corporate debtor had admitted the debt and default. It makes the two Option Agreements related transactions suspect as avoidance transactions and this fact is further strengthened by findings in the TAR. It is necessary that the assets of corporate debtor should not be interfered ....
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....-mail ID 'Vimal Savla [email protected]' respectively. Further, the minutes of the 7th meeting of the CoC held on 28.8.2019 show that the TAR was considered as item 5 in the agenda and the Resolution Professional informed the CoC members that he was in the process of filing an application before the Adjudicating Authority for avoidance transactions identified under sections 43, 45 and 66 of the IBC, which information was noted by the CoC (pp.15-16 of the additional affidavit filed by the Respondent/Resolution Professional). 33. The Learned Senior Counsel for Appellant has referred to the judgment of this Tribunal in the matter of Regen Powertech Pvt. Limited vs. Wind Construction Pvt. Ltd. [CA (AT) (Ins) No. 349 of 2022], wherein the following is held:- "38. Barring the aforesaid 'Reliefs' / "Directions' being sought for, by the "Appellant' / 'Applicant' in IA(IBC/489(CHE)/2021 in IBA/1099/ 2019, there are no 'Convincing Tangible' / 'Documentary Materials' to fortify the 'Plea' of the 'Appellant / "Applicant' that the 'Business of the 'Corporate Debtor was carried out by the Respondents with a 'Dishonest Inte....
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....also is clearly fraudulent in that they seek to put the actual creditors of the corporate debtor at clear disadvantage by keeping out certain assets from the overall asset base of the corporate debtor. 36. The Learned Senior Counsel for Appellants has cited the judgment of this Tribunal in the matter of Renuka Devi Rangaswamy vs. Regen Powertech Pvt. Ltd. (CA (AT) (INS.) No. 357 of 2022), wherein the following has been held: "35. It is the 'Obligatory Duty', on the part of the 'Appellant' to prove the subjective satisfaction of this 'Tribunal' that 1) 'An Individual', must be knowingly carrying on the business with the 'Corporate Debtor', 2) Such an 'Individual', ought to have a 'Dishonest Intent', to 'Defraud' the 'Creditors'. 36. No wonder, the ingredients of Section 66 (1) and 66 (2) of the Insolvency & Bankruptcy Code, 2016, operate in a different field. It must be borne in mind, that for 'Fraudulent Trading' / Wrongful Trading', Relevant Facts* / 'Acceptable Materials', are to be pleaded by a 'Party', by providing requisite 'details' / adequate 'facts, to fall w....