TaxTMI 
TaxTMI 
2023 (5) TMI 445
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....Mr. Harsh Sinha with Mr. Abhishek Sharma, Advocates for R-4 For the Appellant : Mr. Pulkit Deora and Mr. Sanjay Visen, Advocates For the Respondents : Mr. Abhishek Anand and Mr. Nipun Gautam, Advocates Mr. Harsh Sinha with Mr. Abhishek Sharma, Advocates for R-2 JUDGEMENT [Per : Dr. Alok Srivastava, Member (T)] 1. Two Appeals, namely Company Appeal (AT) (Ins.) No.747/2021 ("Appeal - I") and Company Appeal (AT) (Ins.) No.748/2021 ("Appeal - II"), are being disposed of through this common judgement. 2. The above-stated Appeals have been filed under Section 61 of the Insolvency and Bankruptcy Code ("IBC"), assailing order dated 30.07.2021 ("impugned order") passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi), whereby I.A. No.2499/2020 and I.A. No.2496/2020, both filed in the Company Petition No. (IB) - 197(ND)/2018 preferred under section 7 of the IBC. 3. The impugned order has concluded that the charge on the property of the corporate debtor with respect to the two Agreements in form of Bajaj Finance Ltd. (Respondent in both the Appeals) has not been created with an intent to defraud the creditors of the corporate debtor and hence the s....
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.... of the corporate debtor. 6. Insofar as the facts of Appeal - II are concerned, the Appellants Mr. Ramesh Kumar Suneja, Mrs. Savitri Suneja and Mr. Pankul Suneja have claimed that a Memorandum of Understanding ("MoU") was executed between the corporate debtor and SAKS Developers Pvt. Ltd. (Respondent No. 3 in Appeal - II) on 30.08.2018 at which time no moratorium on account of section 14 of the IBC was in force, and on the basis of the MoU, an amount of Rs.1,02,09,360/- was transferred by the corporate debtor to SAKS Developers Private Limited, which was in the ordinary course of business and not a preferential transaction as held in the impugned order. He has further submitted that this transaction was for the benefit of the corporate debtor as, according to the MOU, 50% of the funds to be infused by the corporate debtor would result in profits for the corporate debtor once development of the project took place. 7. We heard the arguments advanced by the Learned Counsels for all the parties and also perused the records of both the Appeals. 8. The issue about impleadment of the financial creditor was taken up by this bench and an order was passed on 29.08.2022 by this tribu....
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....at the security interest was created in the ordinary course of business. In support he has referred to the judgement of the Hon'ble Supreme Court in the matter of Anuj Jain (Supra) to point out that one should look at the scheme and intent of the provisions of the IBC and purposive interpretation to come to the correct conclusion. He has further argued that the transaction was for the benefit of the "Beneficiary Respondents" and as the proceeds of the loan were siphoned off/diverted to their advantage, Respondents No. 1, 2 and 3, namely Mr. Ramesh Kumar Suneja, Mrs. Savitri Suneja & Mr. Pankul Suneja have defrauded the creditors of the corporate debtor, a fact which has also been highlighted in the report of the Independent Statutory Auditor wherein it is recorded that the amount of guarantee provided by the corporate debtor was in excess of 60% of the share capital, reserve and surplus as stipulated under section 185 and 186 of the Companies Act, 2013. He has also pointed out that in the matter of Anuj Jain (Supra) it is held that any such transaction which has an adverse bearing on the financial health of the corporate debtor or which turns the scales in favour of one or few of i....
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....have been made regarding any fraudulent transactions by the Appellant/Liquidator. He has added that the mortgage created for the Noida Property was for a fresh loan and is not in continuation with respect to any past loan. He has also contended that in the instant case neither the "Beneficiary Respondents" nor Bajaj Finance Ltd. have been put in any beneficial position due to creation of security interest and therefore the related transaction of mortgage of property is not a preferential transaction. 15. With regard to Appeal - II, the Learned Counsel for Appellants has argued that the relief granted by the Adjudicating Authority through the impugned order goes out of the scope of section 43 of the IBC since the said transaction regarding Rs.1,02,09,360/- was done in the ordinary course of business. In clarification, the Learned Counsel has pointed out that the order admitting the section 7 application was passed by the NCLT on 4.4.2018, whereafter the NCLAT passed order in appeal on 07.08.2018 setting aside the order the initiation of CIRP, and Hon'ble Supreme Court vide order dated 30.11.2018 set aside the order of NCLAT and restored the order of NCLT and thus the moratorium c....
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.... K-3, Brahm Datt Tower, Sector 18, Noida) is a preferential transaction under section 43 or a transaction intended to defraud the creditors of the corporate debtor which is covered under section 66 of the IBC. 18. We note section 43 of the IBC, which is as follows: "43. Preferential transactions and relevant time. (1) Where the liquidator or the resolution professional, as the case may be, is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions and in such manner as laid down in sub-section (2) to any persons as referred to in sub-section (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred to in section 44. (2) A corporate debtor shall be deemed to have given a preference, if- (a) there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor; and (b) the transfer under clause (a) has the effect of putt....
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....rporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit." 20. We note the fact that Respondent No. 4 in Appeal - I, Bajaj Finance Ltd. gave two loans viz. Loan Account No. 401 FSP 35751847 for a loan amount of Rs.3,46,62,656/- and Loan Account No. 401 FSP 35716264 for a loan of Rs.5,81,32,553/- in favour of the following borrowers, namely (i) Mr. Ramesh Kumar Suneja, (ii) Mrs. Savitri Suneja. (iii) Mr. Pankul Suneja, (iv) Skyland International Pvt. Ltd., (v) Pawan Buildwell Pvt. Ltd., and (vi) S. Kumar and Company Pvt. Ltd. 20. We also note that information was sent by the corporate debtor by letter dated 28.02.2017 (attached at page 166 of Appeal Paper Book in Comp. App. (AT) (Ins.) No.747/2021) regarding the mortgage of property with details No. K-3, 5th Floor, Brahm Datt Tower, Sector 18, Noida - 201301 as security interest debtor in favour of Bajaj Finance Limited for the two loans as mentioned abo....
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....nding within the scope of ordinary course of business or financial affairs of the corporate debtor. Such had never been the scheme of the Code nor the intent of Section 43 thereof. It has rightly been contended on behalf of the appellants that for the purpose of exception under clause (a) of sub-section (3) of Section 43, the intent of legislature is required to be kept in view. If the ordinary course of business or financial affairs of the transferee (lenders of JAL in the present case) would itself be decisive for exclusion, almost every transfer made to the transferees like the lender banks/financial institutions would be taken out of the net, which would practically result in frustrating the provision itself. 25.5. Looking to the scheme and intent of the provisions in question and applying the principles aforesaid, we have no hesitation in accepting the submissions made on behalf of the appellants that the said contents of clause (a) of sub-section (3) of Section 43 call for purposive interpretation so as to ensure that the provision operates in sync with the intention of legislature and achieves the avowed objectives. Therefore, the expression "or", appearing as disju....
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....a and Mr. Pankul Suneja. 26. It is thus clear that while the corporate debtor was in default of its financial creditors, it entered into the said transaction of mortgaging its property for the benefit of the "Beneficiary Respondents", and these "Beneficiary Respondents" who are all related parties of the corporate debtor stood to benefit by creation of such security interest even though the corporate debtor did not revive any benefit out of the loan agreements. 27. Moreover, the creation of security interest, particularly in the light of para 12(d) points the Form CHG-1, uploaded on the website of Ministry of Corporate Affairs by the corporate debtor makes it clear that the Respondent Bajaj Finance Ltd. has 'first and exclusive charge' over the mortgaged property and 'the loan shall in all circumstances run superior to any subsequent mortgage/charge on the mortgaged property'. It is thus clear that by creation of the mortgage on the property of the corporate debtor and in the event of default, the mortgaged property would have provided benefit to all the related parties of the corporate debtor to the detriment and disadvantage of the actual creditors of the corporate debtor b....
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.... accordingly set aside this part of the Impugned Order and hold that the mortgage created on the "Mortgaged Property" and which is registered by Form CHG-1 shall be cancelled and the said property shall become a part of the assets of the corporate debtor in an unencumbered form, available in the liquidation estate of the corporate debtor for the benefit of its creditors. 31. With regard to the transfer of Rs.1,02,09,360/- by the corporate debtor in favour of SAKS Developers LLP, we note that an MoU was signed between the corporate debtor and SAKS Developers on 30.08.2018 (attached at pp 121 - 127 of the appeal paper book, Comp. App. (AT) (Ins.) No.747 of 2021). Notably, Mr. Ramesh Kumar Suneja as director of the corporate debtor and Mr. Pankul Suneja as managing partner/partner of SAKS Developers signed this MoU who are father and son respectively. Moreover, this MoU was executed on a non-judicial stamp paper purchased in Uttar Pradesh (where stamp papers in hard copy as against e-stamp paper could be purchased) even though the corporate debtor and SAKS Developers have their registered offices in New Delhi. It is also noted that in New Delhi only e-stamp papers can be purchased.....
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....n'ble Supreme Court vide its order dated 30.11.2018. We find that the MoU was executed on 30.08.2018 in this 'small window of time' that luckily got available to the Developer/SAKS Developers LLP and the Collaborator/ Pawan Buildwell Pvt. Limited primarily to siphon off the R. 1,02,09,360/- from the corporate debtor to another family concern SAKS Developers LLP. 34. From the above, it is clear that when the corporate debtor was experiencing insolvency, it still chose to transfer an amount of Rs.1,02,09,360/- to a related party SAKS Developers LLP and which is also a family concern of Mr. Ramesh Kumar Suneja to siphon off the said amount from the corporate debtor to SAKS Developer LLP even though it could have used the said amount to pay off its debtors and resolve its insolvency. This act of transferring the said amount to SAKS Developers LLP is clearly to the disadvantage of the creditors of the corporate debtor and a definite violation of section 43(2) of the IBC. 35. We are therefore in agreement with the observation of the Adjudicating Authority made in paragraph 46 of the impugned order and hold that even though the said MoU was signed and the transfer of Rs.1,02,09,360/....
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.... was filed it ought to have been rejected." 38. While following the above judgment, we note that the Appellants had specifically pleaded the issue of fraud in paragraphs 18, 20 and 27 of IA No.2499/2020 and again in IA No. 2496/2020 in paragraphs 12, 13 and 14. 39. We also note the argument of the Learned Counsel for the Appellants (in Appeal - II) that this MoU was signed in the 'ordinary course of business'. Regarding this argument, we are of the view that when the corporate debtor itself was under the throes of insolvency and was unable to take care of its debts, it is certainly curious as to why it would decide to get into an MOU for development of land that was owned by another party SAKS Developers and parting with a handsome amount of Rs.1,02,09,360/- without even being clear about the various parameters of the project. This act of the corporate debtor arouses suspicion which is strengthened by the fact that both SAKS Developers LLP and the corporate debtor are owned and run by members of the same family, and which have their registered offices at the same address which is 59 - A, Lane C-5, Central Avenue, Sainik Farms, New Delhi - 110062. 40. On the basis of the de....