AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 283
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....n favour of respondent as void and fraudulent, was dismissed. 3. M/s Atlanti(c) Spinning and Weaving Mills Ltd. i.e., Corporate Debtor [CD] was brought under Corporate Insolvency Resolution Process [CIRP] vide order dated 9.10.2018. CIRP was not successful. As a result, vide order dated 09.01.2020, NCLT ordered for liquidation of CD, and appointed a liquidator (i.e., the appellant). 4. The liquidator filed an application to declare the sale transaction dated 11.8.2008 executed by CD in favour of respondent as void and fraudulent, inter alia, on the following grounds: (a) Sale was to a related party. (b) Sale was without consideration. (c) Sale was fraudulent to defraud creditor. 5. The materials placed on record, inter alia, revealed that the subject matter of impugned sale transaction was purchased for Rs. 50 lacs by CD in an auction held in the year 1989. The sale deed executed on 11.08.2008 by the CD in favour of respondent recited that sale was being executed to honour the agreement of 1989 whereunder entire sale consideration was paid to and received by the CD. Upon consideration of the materials placed before it, NCLT concluded that liquida....
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....g in Dahiben versus Arvindbhai Kalyanji Bhanusali (Gajra), through LRs and others, 2020 SCC Online, wherein it was held that, "In view of the law laid down by this court, even if the averments of the plaintiffs are taken to be true, that the entire sale consideration had not in fact been paid, it could not be a ground for cancellation of the sale deed. The plaintiffs may have other remedies in law for recovery of the balance consideration but could not be granted the relief of cancellation of the registered sale deed." squarely applies to this case. (ix) Declaration of the Account of the borrower as Non- Performing Asset (NPA) and issuance of notice under section 13(2) of the SARFAESI Act, cannot be termed as the acts in contemplation of insolvency of the borrower, as the purpose of a notice under section 13(2) of the SARFAESI Act, is the recovery whereas the object of IBC is not recovery but time bound resolution. While a borrower on receipt of a notice under section 13(2) of the SARFAESI Act, can always get over from the status of NPA either by pumping necessary funds or by seeking restructuring of the facilities, besides the charged assets can also be alienated....
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....closed mobile number of CD, when, in 1989, no mobile phones existed in India. Thus, letter was forged and this fact escaped notice of NCLAT. In absence of any other documentary evidence, payment of sale consideration was not proved. Once such was the position, the sale on the face of it was fraudulent and, therefore, both NCLT and NCLAT erred in not declaring it void. (b) The balance sheet of respondent for 2008-09 though discloses purchase of land at Goa (i.e., subject matter of impugned sale) but it was a self-serving document to show that Rs. 50 lakhs was borrowed in financial year 2008-09 from Shivalika Leasing & Finance Ltd. If that was so, then how money was paid to CD in 1989 as mentioned in the receipt dated 25.5.1989. This clearly shows that no sale consideration passed from respondent to CD. (c) Admittedly, receipt of payment of auction price of the property was issued in favour of CD; the available record of CD indicated that it had the financial capacity to pay, therefore the case set up by respondent that it funded the purchase is bogus. (d) As all the aforesaid circumstances were not properly discussed and analyzed either by NCLT or NCLAT, t....
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....as declared NPA much after the sale transaction. Moreover, that account was secured by other assets of CD as is clear from Bank's notice issued to CD under Section 13(2) of SARFAESI Act. The aforesaid aspects were noticed by NCLT in paragraphs 19 (iv) and (v) of its judgment extracted above and learned counsel for the appellant could not point out any material on basis whereof the correctness of those observations could be doubted. Admittedly, CIRP proceedings commenced in 2018, therefore, in absence of cogent material on record, it is difficult to conceive that in the year 2008 the sale was made to defraud the creditors. To prove that sale was with a view to defraud the creditors very heavy burden was on the liquidator which, according to NCLT and NCLAT, he failed to discharge. 12. No doubt learned counsel may be right in pointing out that letter dated 28.5.1989 acknowledging receipt of Rs. 50 lakhs by CD appears doubtful because it reflects mobile number when, by that time, mobile telephony might not have commenced. But this alone cannot be a ground to hold that no consideration was paid particularly, when CD in its prospectus issued in 1994 for raising funds acknowledged tran....
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....ction 62 of IBC. The appeal is, accordingly, dismissed. 16. Pending application(s), if any, shall stand disposed of. ------------------------- Notes: 1 Appeal to Supreme Court.- (1) Any person aggrieved by an order of the National Company law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such an order under this Code within forty-five days from the date of receipt of such order. (2) The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within forty-five days, allow the appeal to be filed within a period not exceeding fifteen days. 2. Section 66. Fraudulent trading or wrongful trading. - (1) If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate 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 ....