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TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 117
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....thority has allowed the Application filed by the Respondent. Through the Impugned Order, the Adjudicating Authority has directed that the Appellants herein shall be jointly and severally liable to refund an amount of Rs. 91,00,000/- to Satra Properties (India) Limited ("Corporate Debtor"). 2. Appellant's prayer is to set aside and quash the Impugned Order dated 2nd January 2024 and further, hold and declare that the Appellants are neither jointly nor severally liable to pay the sum of Rs. 91,00,000/- or any part thereof to the Respondent. Submissions on behalf of the Appellants 3. Appellant No. 1 is M/s Darshan Developers, a sole proprietorship concern, carrying on its business through its Sole Proprietor, Mr. Pravin Viram Satra ("Appellant No. 2"). Appellant No. 1 is engaged in the business of real estate, construction and development of residential and commercial properties. A Company Petition bearing No. 1632 of 2019 ("Company Petition") was filed by one Vistra ITCL (India) Limited against Satra Properties (India) Limited (the "Corporate Debtor") before the National Company Law Tribunal, Mumbai ("Adjudicating Authority"), for initiation of Corporate Insolvency Resolutio....
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.....2020 Supplemental Deed executed between M/s Shreeniwas Developers and Corporate Debtor. 25.07.2011 Deed of Confirmation executed between M/s Shreeniwas Developers and Corporate Debtor. 17.12.2019 Memorandum of Understanding executed between Shreeniwas Developers and the Corporate Debtor. 31.07.2020 Corporate Debtor issued two cheques dated 31.07.2020 to Appellant No. 1 amounting to Rs. 91,00,000/-. 03.08.2020 Corporate Debtor admitted into CIRP; moratorium came into effect under Section 14 of the Insolvency and Bankruptcy Code, 2016 ("IBC"). 14.09.2018 - 12.11.2020 Bank statement of the Corporate Debtor of accounts maintained at RBL Bank and IndusInd Bank. Ledger accounts of the Corporate Debtor of RBL Bank and IndusInd Bank respectively reflecting the balance and payments made to the Appellant No. 1. 23.08.2021 Email addressed by the erstwhile Resolution Professional of the Corporate Debtor to Appellant No. 2 (in the capacity of a partner of Shreeniwas Developers) forwarding the ledger account of the Corporate Debtor wherein the entries reflect that the amounts by the Corporate Debtor were paid to Appellant No. 1 on behalf of Shreeniwas D....
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....circumstances of the aforementioned decision squarely apply to the present proceedings. The Respondent has attempted to carve out a fictious exception to what is now a settled position in law. The Respondent contends that the date of payment cannot relate back to the date of the cheque if the funds in the account were insufficient on the date of the cheque. In the event of dishonour of the cheque, no payment will be said to have been made; it is immaterial whether the dishonour takes place on the date of the cheque or thereafter. A creditor would never have access to information on whether the account of the issuer of a cheque would have sufficient balance. Therefore, if there is any increase in the balance of the Corporate Debtor between the date of the cheque and date of clearance, it is completely immaterial. 6. Adjudicating Authority failed to consider this well-settled principle, thereby passing an ex-facie arbitrary, erroneous and unreasoned Order that the payments made were in violation of the moratorium under Section 14 of the IBC. 7. Appellant also claims that the transactions were made in the ordinary course of business and there has been violation of natural justic....
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....ted both the cheques on 04.08.2020 in the respective bank accounts of the Corporate Debtor. (d) Both cheques were encashed on 06.08.2020 i.e., during the CIRP period. 10. The Respondent contends that these funds, credited after the commencement of CIRP, were improperly utilized to honour the cheques, violating the moratorium under Section 14 of the Code. Respondent contends that the encashment of cheques during moratorium violates Section 14 of the code. Section 14(1)(c) of the Code prohibits any recovery or enforcement of a payment obligation from the assets of the Corporate Debtor during the CIRP period. Reliance is placed upon SREI Equipment Finance Ltd. v. Amit Gupta, Company Appeal (AT) (Ins.) No. 298 of 2019 wherein this Appellate Tribunal observed that any payment made after the commencement of CIRP, irrespective of the instrument's date, contravenes Section 14 of the Code. It is submitted that the utilization of funds credited post-moratorium to honour cheques issued prior to the CIRP commencement date constitutes dissipation of the Corporate Debtor's assets and undermines the interests of its creditors. 11. The Appellants' reliance on the doctrin....
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....hether payments made by cheque prior to CIRP initiation constitute violation of Section 14 moratorium? The Appellants contend that the two cheques dated 31st July 2020, totalling Rs. 91,00,000/- (Cheque No. 791035 for Rs. 41,00,000 and Cheque No. 37 for Rs. 50,00,000), were issued prior to the initiation of the CIRP on 3rd August 2020. 18. The case of the Appellants is that even though both the cheques were encashed during the CIRP period (i.e., on 06.08.2020), however, since the date of issuance of cheques is prior to the CIRP commencement date it would not amount to violation of Section 14 of the Code. Appellant's argument is premised on the doctrine of relation back the date of payment (i.e., 06.08.2020) would relate back to the date of issuance of cheques (i.e., 31.07.2020). As such, Appellants contend encashment of cheques dated prior to the commencement of CIRP does not violate moratorium period under Section 14 of the Code. To support their contention, Appellants have heavily relied upon the judgments passed in Pratim Bayal, RP v. Tata Motors Finance Solution, Company Appeal (AT) (Insolvency) No. 1309 of 2023, CIT Bombay v. Ogale Glass Works Ltd. AIR 1954 SC 429, and ....
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....During the day on 31.07.2020, an amount of Rs. 88,00,000/- was received by RTGS transaction in the bank account of the Corporate Debtor, however, payments of Rs. 88,00,000/- (in four tranches) were made and the amount was debited from the Corporate Debtor's account on 31.07.2020 itself. b. Another payment of Rs. 11,00,000/- was received via RTGS transaction in the bank account of the Corporate Debtor on 31.07.2020, and the said amount was debited on 31.07.2020 itself. Resultantly, credit balance at the end of 31.07.2020 was Rs. 9,151.56/. c. On 04.08.2020, the Corporate Debtor received an amount of Rs. 41,00,000/- from Bruhad Mumbai Gujarati Samaj Bhavan (Tender). Credit balance being Rs. 41,03,960.56/-. d. More importantly, on 06.08.2020, cheque bearing No. 791035 for an exact sum of Rs. 41,00,000/- was encashed by the Appellants. Credit balance being Rs. 3,960.56/-. 23. Thus, we find that both the cheques dated 31.07.2020 were cleared on 06.08.2020 out of the proceeds credited in the bank account of the Corporate Debtor on 04.08.2020 which is post commencement of CIRP on 03.08.2020. Moreover, the Corporate Debtor's bank account did not have a....
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....the binding NCLAT decision in Pratim Bayal, which clarified the doctrine cannot apply where insufficient funds exist, as in this case. 26. Respondent has relied upon the judgment of this Appellate Tribunal in Sunil Gutte Vs. Avil Menezes & Ors. (Judgment dated 30th May, 2025 in Company Appeal (AT) (Insolvency) No. 515/2025. Respondent claims that in paragraph 27 of this judgment, it has observed "..Since the encashments of the cheques were post-moratorium, the Adjudicating Authority had concluded that the cheques were deliberately ante-dated only to conjure the impression that they were handed over before commencement of CIRP" and in this case no such finding of facts has been arrived at by the Adjudicating Authority in the facts of the present case. The Adjudicating Authority has not returned the finding that the cheques were deliberately anti-dated, as they were done in the case of Sunil Gutte. Therefore, since there was a finding in Sunil Gutte that cheques were deliberately anti-dated, the general law as applicable was found to be not of any assistance. The decision in Sunil Gutte cannot be cited as a precedent for a situation where cheques have not been deliberately anti- d....
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....record to show that the cheques were handed over on the same date as was recorded on the cheque. 29. We also find force in the contention of the Respondent that since the cheques were encashed after 10.09.2018 by which date the moratorium had become effective, it amounted to breach of moratorium. In support of their contention, the Respondent has relied on judgment of this Tribunal in SREI Equipment Finance Ltd. Vs Amit Gupta in CA (AT) (Ins.) No. 298 of 2019 wherein it has been held that even if the cheque dates back to the date of handover it cannot be encashed after moratorium kicking in. We now look at the relevant portion of the said judgement which reads as under: "6. Clause (b) of Section 14(1) prohibits transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein. As per Clause (c) of Section 14(1) any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under SARFAESI Act, 2002 is also prohibited. Clause (d) of subsection (1) of Section 14 prohibits the recovery of any property by an ....
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....oteworthy that the two cheques were issued while the orders were reserved under C.P. (IB) No. 1632/MB/2019 by the Adjudicating Authority. In the facts and circumstances of the case, Adjudicating Authority had directed the Appellants to jointly and severally refund an amount of Rs. 91,00,000/- to the Corporate Debtor i.e., Satra Properties (India) Private Limited and cannot find any infirmity in that order. 29. Thus, we find that in the facts and circumstances of the case of absence of sufficient funds, the fact that the payment date cannot be backdated, and cheques honoured during CIRP violate the moratorium, we can conclude that doctrine of relation back is not applicable in this case. 30. Lastly, we also look into another argument raised by the Appellant that there was an existence of pre-existing understanding or agreement regarding payments. We dwell into this issue whether it can support the case of the Appellants. The Appellants assert that the payments represented fulfilment of obligations pursuant to a pre-existing understanding between Appellants, the Corporate Debtor, and M/s. Shreeniwas Developers. They claim documentary evidence including a Joint Venture Agreement....