Pooja Bahry vs Praveen Gupta & Ors.

a. Direct Respondent No. 1 to refund the sum of INR 1,97,50,000 on account of preferential transactions under section 43 of the Code;

b. Direct Respondent No.2 to refund a sum of INR 90,00,000 to the Corporate Debtor on account of preferential transactions under section 43 of the Code;

c. Direct Respondent No.4 to refund the sum of INR 1,00,00,000 to the Corporate Debtor on account of preferential transactions under section 43 of the Code;

d. Direct Respondent No.5 to refund the sum of, INR 2,49,338 to the Corporate Debtor on account of preferential transactions under section 43 of the Code;

e. Direct Respondent No.6 to refund the sum of INR 1,57,29,987 to the Corporate Debtor on account of preferential transactions under section 43 of the Code;

f. Direct Respondent No.7 to refund the sum of INR 90,00,000 to the Corporate Debtor on account of preferential transactions under section 43 of the Code;

g. Direct the Respondent No. 1, 2 and 3 to justify the undervalued transaction undertaken by the Corporate Debtor in terms of Section 45 of the Code and pass appropriate directions against those persons to whom assets were sold in case it is determined that the said transaction is undervalued;

h. Direct the Respondent N o.1, 2 and 3 to pay INR 20,00,000 in the account of the Corporate Debtor towards the fraudulent transactions under Section 66 of the Code.

i. That vide an order dated 27.08.2019, corporate insolvency resolution process ("CIRP") of the Corporate Debtor was initiated and Ms. Preeti Jaiswal was appointed as the Interim Resolution Professional ("IRP").

ii. That during the first meeting of the Committee of Creditors ("CoC") held on 30.10.2019, Ms. Preeti Jaiswal was replaced by the Applicant as the RP of the Corporate Debtor by 100% voting share and same is confirmed by this Adjudicating Authority vide order dated 18.12.2019.

iii. That after receiving the order on 27.12.2019, the Applicant took the management and control of the Corporate Debtor.

iv. That the Applicant has appointed Pipara & Co. ("Transaction Auditor") as the Transaction/Forensic Auditor to review the books and records of the Corporate Debtor for the period from 01.04.2016 till 27.08.2019.

That the Transaction Auditor has conducted the transactional audit of the Corporate Debtor for the period from 01.04.2016 till 27.08.2019 based on the data/documents provided by the employees and management of the Corporate Debtor, documents available in public domain and documents provided by the lenders of the Corporate Debtor and submitted its final report to the Applicant on 9.09.2020. vi. That on review of the Transaction Auditor Report (herein after referred to as TAR), examination of the books and other relevant records of the Corporate Debtor, certain transactions undertaken by the Corporate Debtor were discovered, which in the opinion of the Applicant fall within the scope of the preference transactions, undervalued transaction and fraudulent or wrongful trading within the meaning of the provisions of the Code. vii. TAR highlighted that during the relevant period provided in Section 43 (4) of the Code, the following repayment/transfer were made by the Corporate Debtor to its related parties from 27.08.2017 to 27.08.2019 and to non-related parties from 27.08.2018 to 27.08.2019 to discharge its antecedent liability:

The details of the transaction undertaken by the Corporate Debtor with each party is set out below.

On examining of the ledger account of Respondent No.1, Mr. Praveen Gupta, maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, it was observed by the Applicant that the Corporate Debtor had a payable balance of INR 4,10,00,000 as on 27.08.2017 towards unsecured loan given by the Respondent No. 1 to the Corporate Debtor. This payable balance increased to INR 17,41,12,032 as on 30.07.2019.

The antecedent liability of the Corporate Debtor towards Respondent No. 1 (as on 27.08.2017) was discharged by the Corporate Debtor by making repayment of the loan in the following manner:

Respondent No.2, Mr. Arun Gupta:

On examining of the ledger account of Respondent No.2, Mr. Arun Gupta, maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, it was observed by the Applicant that the Corporate Debtor had a payable balance of INR 70,00,000 as on 27.08.2017 towards unsecured loans given by the Respondent No.2 to the Corporate Debtor. This payable balance increased to INR 16,02,92,084/- as on 30.07.2019.

The antecedent liability of the Corporate Debtor towards Respondent No. 2, Mr. Arun Gupta (as on 27.08.2017) was discharged by the Corporate Debtor by making repayment of the loan in the following manner:

Respondent No.4, GVR Consulting Services Pvt. Ltd.-

The Corporate Debtor entered into a Loan Agreement dated 17 August 2017 with Respondent No.4, GVR Consulting Services Pvt. Ltd. wherein Respondent No.4, GVR Consulting Services Pvt. Ltd. agreed to lend an amount of INR 2,00,00,000 to the Corporate Debtor at an interest of 8% per annum. The said loan was secured by way of issuance of postdated cheques of the principal amount equivalent to the total loan outstanding. The term of the Loan Agreement was 2 years.

On examining of the ledger account of Respondent No. 4, GVR Consulting Services Pvt. Ltd. from 27 August 2017 to 27 August 2019 maintained by the Corporate Debtor, it was discovered that the antecedent liability was discharged by the Corporate Debtor in the following manner:

Respondent No.5, Keshika Exports Private Limited

On examining of the ledger account of Respondent No.5, Keshika Exports Private Limited maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, it was observed by the Applicant that the Corporate Debtor had a payable balance of INR 3,20,02,688, as on 27 August 2017, towards unsecured loans given by the Respondent No.5, Keshika Exports Private Limited to the Corporate Debtor.

The antecedent liability of the Corporate Debtor towards Respondent No. 5, Keshika Exports Private Limited (as on 27.08.2017) was discharged by the Corporate Debtor by making repayment of the loan in the following manner:

Respondent No.6, Dyna RasavanUdyog Private Limited:

The Corporate Debtor had entered into a Loan Agreement dated 5.12.2015 with Respondent No.6, Dyna Rasayan Udyog Private Limited, wherein Respondent No.6 agreed to lend an amount of INR 3,00,00,000 to the Corporate Debtor at an interest of 10% per annum. The term of the Loan Agreement was 1 year.

As per the ledger of Respondent No.6, Dyna Rasayan Udyog Private Limited maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, the Corporate Debtor had a payable balance of INR 2,04,48,767 as on 27.08.2017. The aforesaid antecedent liability of the Corporate Debtor towards Respondent No. 6 (as on 27.08.2017) was discharged by the Corporate Debtor by making repayment of the loan in the following manner:

Respondent No.7, GVR Electronics Pvt. Ltd.-

Corporate Debtor had entered into a Loan Agreement dated 17.08.2017 with Respondent No.7 wherein Respondent No.7 agreed to lend an amount of INR 2,00,00,000 to the Corporate Debtor at an interest of 8% per annum. The said loan was secured by way of issuance of post-dated cheques of the principal amount equivalent to the total loan outstanding.

On examining of the ledger account of Respondent No.7, GVR Electronics Pvt. Ltd. maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, it was observed by the Applicant that the Corporate Debtor had a payable balance of INR 1,00,00,000 as on 27.08.2017 towards unsecured loans given by the Respondent No.7, GVR Electronics Pvt. Ltd. to the Corporate Debtor.

The antecedent liability of the Corporate Debtor towards Respondent No. 7 (as on 27.08.2017) was discharged by the Corporate Debtor by making repayment of the loan in the following manner:

That upon inquiring from Mr. Praveen Gupta/Respondent No. 1, Mr. Arun Gupta/Respondent No. 2 and Mr. Udal Singh/Respondent No.3 about the aforesaid transactions, the above Respondents Mr. Praveen Gupta/Respondent No. 1, Mr. Arun Gupta/Respondent No. 2 responded stating the following:

In the year 2015-2016, the company started facing financial constraints as it was unable to operate at minimum level. To ensure the company is run as a going concern, they arranged for unsecured loans from various parties including their friends and relatives.

Such loans were received to support the functioning of the company in the normal course of business and financial affairs of the company. Moreover, there were commitment cheques issued by the company under their signature against these kinds of loans, in the form of Post-dated Cheques, which is not honoured would have created criminal breach of trust on the company.

The usage of the money (s) so borrowed was for the business purposes of the company and these were customary intercorporate deposits which are generally raised by the companies in their normal course of business to meet business requirements.

The repayment of unsecured loan availed from non-related parties was funded by them, out of their own sources to safeguard the credibility of the company and ourselves. The fact may be reverified upon analysis of the ledger accounts and bank accounts of the promoter (Mr. Praveen Gupta) which demonstrates that any repayment towards unsecured loan made to any party (whether related or not) was first funded to NTL and then repayment was made.

That the auditor have considered only the debit transactions while reporting the repayment of unsecured loans taken from them viz. Praveen Gupta and Arun Gupta and the amount introduced by them into the company during the period under review has not been taken into consideration. They had introduced funds into the company whenever required in order to ensure that the company is kept as a going concern in the interest of all the stakeholders and funds are available to meet the expenses and towards working capital.

the Corporate Debtor made a transfer of its assets (by making repayments) to its related parties (Respondent No. 1, Respondent No. 2 and Respondent No. 5) and non-related parties (Respondent No. 4, Respondent No. 6 and Respondent No. 7);

the aforesaid repayment were made by the Corporate Debtor on account of the antecedent financial debt/liability owed by the Corporate Debtor its related parties (Respondent No. 1, Respondent No. 2 and Respondent No. 5) and non-related parties (Respondent No. 4, Respondent No. 6 and Respondent No. 7);

the aforesaid repayment were made to related parties (Respondent No. 1, Respondent No. 2 and Respondent No. 5) at a relevant time as per Section 43 (4) (a) of the Code i.e. during the period of two years preceding the insolvency commencement date, i.e. 27.08.2019;

the aforesaid repayment were made to non-related parties (Respondent No. 4, Respondent No. 6 and Respondent No. 7) at a relevant time as per Section 43 (4) (b) of the Code i.e. during the period of one year preceding the insolvency commencement date, i.e. 27.08.2019;

Such payment had the effect of putting related parties (Respondent No. 1, Respondent No 2 and Respondent No 5) and non-related parties (Respondent No. 4, Respondent No. 6 and Respondent No. 7) of the Corporate Debtor in a beneficial position then it would have been in the event of distribution of assets of the Corporate Debtor being made in accordance with Section 53 of the Code.

a. On examining the financial statements of the Corporate Debtor for the FY 2018-2019 and the documents related to sale/purchase of assets provided by the ex-management, it was noticed that the assets owned by the Corporate Debtor (Plant and Machinery and Furniture and Fittings) having gross value of INR 17,40,49,410/- were sold to various parties from 25.10.2018 to 15.12.2018.

b. It is imperative to note that as per financial statements for the FY 2018-2019, the written down value/net value of the assets were INR 12,04,000,00/-. However, as per the chart provided by the ex-management showing sale of assets and bills issued by the Corporate Debtor, the assets were sold to various parties for INR 9,11,95,979/ causing a loss of INR 2,92,04,021/- to the Corporate Debtor.

c. On making enquiry and questioning, Mr. Praveen Gupta/Respondent No. 1, Mr. Arun Gupta/Respondent No. 2 and Mr. Udal Singh, Respondent No. 3 about the aforesaid transaction, the above Respondents Mr. Praveen Gupta/Respondent No. 1 and Mr. Arun Gupta/Respondent No. 2 responded stating that the transactions/sale were made at arm's length price to ensure actual realisable value. It was stated that as such the disposal of the assets was made on arm length price and the same was not significantly lower than the price at which the company sold the same and the availing pricing/tentative values. Further, it was stated that the assets were sold on the basis of quotation received from various parties and the tentative values of the assets provided by the expert.

That the Respondents were related to the Corporate Debtor in a financial and employment capacity prior to the commencement of the Corporate Insolvency proceedings. ii. The said Application intends to redistribute the collected monies as per the waterfall mechanism under section 53 of the Insolvency and Bankruptcy Code, 2016 for the benefit of Committee of Creditors (CoC) of the Corporate Debtor who have already been paid the outstanding debt under the repayment scheme of the approved Resolution Plan. iii. That after the approval of resolution plan, the corporate insolvency proceedings stand completed. iv. The fact of the present case filed by the RP is identical to M/S Venus Recruiters Private Limited v. Union of India and Ors. [2020]159CLA 533 (Delhi), wherein, the Hon'ble Delhi High Court made a detailed note about the lack of maintainability of a avoidance application though filed prior to the approval of the resolution plan, yet pending past approval of a resolution plan.

A bare perusal of the section 60(1), (2), (5) read with sections 10, 12, 14, 16, 31 of the IBC, 2016 makes it clear that the Adjudicating Authority is only empowered to take up and conclusively adjudicate an insolvency application in a stipulated statutory time frame, thereby past the approval of the Resolution Plan, this Hon'ble Court can't pursue this matter. vi. The Said Applicant has no locus standi to appear as a former RP of the Corporate Debtor after the approval of a resolution plan. It is submitted that on a bare perusal of section 23(1) and provision to the section 23(1) of the IBC '16, it is clear that the RP is only empowered during the insolvency process and can't continue to manage the operations after an order approving the Resolution Plan is passed under section 31(1) of IBC 2016, therefore the perusal of the present avoidance application is bad in law. vii. That a bare perusal of section 35A (3) of IBC, 2016 shows, the RP has to register an avoidance application by the (135^{\text{th}}) day from the commencement of the insolvency process, which this matter has exceeded, as the CIRP commences on 27.08.2019 and the Said Application, was filed on 24.08.2020. It is also submitted that the RP, Said Applicant, can't further pursue the Said Application without abiding, mentioning the statutory timeline about the Auditing Report, Reporting, Opinion of the RP, and the registration of the Avoidance Application in the Approved Resolution Plan. It is submitted that Hon'ble Delhi High Court in the case M/S Venus Recruiters Pvt. Ltd. (Supra) observed that a statutory timelines shall be strictly followed by the RP because speeding up of insolvency process is the ethos of the IBC, 2016.

That prima facie, the falsely alleged objectionable transactions can't be found to be apart of the repayment fund for the CoC under the approved Resolution Plan, as per regulation 17 (b), IBBI (Insolvency Resolution Process For Personal Guarantors To Corporate Debtors) Regulations read with section 30 of IBC, 2016, to the NCLT, thereby making the Said Application beyond the scope of the provisions under the IBC, 2016 and other related regulations thereto.

Even if the false allegations about the objectionable transactions are merely presented on Form H, an internal compliance form, attached while submission of the Resolution Plan to the NCLT, the same would lack any court recognition, legal sanction, or eminence in execution of funds for outstanding debts as per the approved Resolution Plan.

Section 43, 45, 49, 66 of the IBC, 2016 have different legal enquire that can't be read in a homogeneous manner even if they result in similar liability. Thereby each of said section shall be presented by filing separate application to the NCLT. The Apex Court in the matter, Anuj Jain Interim Resolution JAL vs Axis Bank Limited (2020) 155 CLA 139 (SC) covers similar observation.

That the Respondent No.4, 5 and 7 ('Respondents') were related to the Corporate Debtor in a financial capacity prior to the commencement of the CIR Process. ii. No cause of action for preference transactions arises in particular against the Respondent No.4, who had sanctioned loans backed by post-dated cheques for two years, in the course of a regular business dealing, prior to the commencement of the corporate insolvency process. It is submitted that these loans are deemed to be secure loans and therefore prima facie any default or pendency in payment would have either attracted criminal liability or deemed the said Respondents as secured creditors having the highest priority under the waterfall mechanism as per section 53 o1 the IBC during the corporate.

It is submitted that the Supreme Court in M/s Innoventive Industries vs. ICICI Bank & Ors. bearing citation [(2018) 1 sec 407] observed that one of the important objectives of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process. However filing of present application by the Resolution Professional way beyond the timelines as prescribed in Regulation 35A(3) of the CIRP Regulations is not only an attempt to derail the process beyond his jurisdiction but also an attempt to abuse the court proceedings. ii. The allegations made in the present application qua the answering respondent does not fulfil the ingredients as specified in Section 43 of the I&B Code. iii. The transactions between the Corporate Debtor with the answering Respondent was made in the ordinary course of the business as defined in Section 43 (3) (a) as the Corporate Debtor had admittedly availed a loan of Rs.3,00,00,000/- out of which only Rs. 2,00,00,000/- was disbursed to the Corporate Debtor by the answering Respondent vide Loan Agreement dated 5.12.2015 at an interest rate 10% p.a. for the period of 2 years. It was the Corporate Debtor who failed to pay the loan amount back to the Corporate Debtor. The transaction between the period 27.08.2018 to 29.08.2018 was just a repayment of loan amount alongwith interest that was borrowed by the Corporate Debtor in the year December 2015and the same was already done on 4thDecember, 2017 and the same is covered by Section 43(3)(a) of the I&B Code and cannot be stated to be preferential transactions.

Further on bare perusal of section 43(2), it can be seen that the transactions referred to by the Resolution Professional in its application is neither related to transfer of any property or an interest thereof of the corporate debtor for the benefit of the answering respondent for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor nor the said transfer puts the answering respondent in any beneficial position as the transactions were towards the repayment of Loan advanced by the answering respondent and the answering respondent ceased to be the creditor of the Corporate Debtor as the loan amount was repaid back by the Corporate Debtor.

The Hon'ble Supreme Court in the case titled "Jaypee Infratech Limited Vs Axis Bank Limited & Ors." bearing Civil Appeal No. 8512- 8527 of 2019 held that only if twin conditions specified in sub-section (2) of Section 43 are satisfied, the transaction would be deemed to be of preference. The Hon'ble Supreme Court of India further held that merely giving of the preference and putting the beneficiary in a better position is not enough. For a preference to become an offending one for the purpose of Section 43 of the Code, another essential and rather prime requirement is to be satisfied that such event, of giving preference, ought to have happened within and during the specified time, referred to as "relevant time".

It is submitted that the payment made on 27.08.2018 and 28.08.2018 would not come within the meaning of 'relevant time'.

It is submitted that in the present case the Resolution Plan was approved by the Hon'ble Adjudicating Authority vide its order dated 28.01.2021 and as such the present application cannot be prosecuted by Resolution Professional since his mandate has come to an end.

The Respondent No. 6 in its Preliminary submissions submitted that:

a. During December, 2015 the Corporate Debtor had approached the respondent No.6 for financial aid representing that the Corporate Debtor shall return the same with interest that shall be paid quarterly within 2 years. Based on the representation of the Corporate Debtor a loan agreement dated 05.12.2015 was executed between the Corporate Debtor and respondent No.6 wherein the respondent No.6 advanced a loan of Rs.2,00,00,000/- out of Rs.3,00,00,000/- to the Corporate Debtor at an interest rate 10% p.a. for the period of 2 years.

b. The Corporate Debtor started defaulted in paying the loan amount back to the Corporate Debtor within the period of 2 years. It is submitted that various meetings were held between the parties with respect to the outstanding of more than Rs.2 Crores on part of the Corporate Debtor. During these meetings the officials of the Corporate Debtor assured respondent No.6 that the outstanding dues

That the Resolution Plan was approved vide order dt. 28.01.2021 passed in I.A No. 4588 of 2020, and same is rectified on 11.03.2021

That the Section 43, Section 45, Section 51 and Section 66 of the Code, empowers the resolution professional to report certain preference transaction, undervalued transaction, extortionate transaction and fraudulent and wrongful trading with the Adjudicating Authority. In the event, the Adjudicating Authority determines that the corporate debtor has been subjected to any such transactions, it may pass an order under Section 44, Section 46 and Section 51, Section 66 and Section 67 of the Code for reversal of such transactions and/or seeking contribution for such transactions. Notably, the Code and the underlying regulations do not provide any time frame within which the Adjudicating Authority is required to adjudicate such applications.

That Section 26 of the Code provides that the pendency of an avoidance application will not affect any of the proceedings of the corporate insolvency resolution process ("CIRP"). The adjudication of avoidance transaction are separate and independent proceedings and shall not affect any proceedings of the CIRP including but not limited to

As far as Venus Judgment is concerned, the facts of the Venus Judgment are distinguishable from the present case. In that case, the avoidance application was filed by the resolution professional after the application for approval of the resolution plan was filed under Section 30 (6) of the Code. Whereas, in the present case, the Applicant filed the avoidance application on 24.09.2020 i.e. prior to the application for approval of the resolution plan which was filed on 28.09.2020.

The resolution plan in the present case provides that the benefit from such applications will be passed through to the Financial Creditors and therefore, the application is not for the benefit of the Corporate Debtor.

The resolution plan was approved by this Adjudicating Authority after considering and examining the above clause related to avoidance transaction and the same is binding on all the creditors, stakeholders, ex-management of the Corporate Debtor.

The Hon'ble Supreme Court of India, in the case of Arcelor Mittal India Private Limited v. Satish Kumar Gupta & Ors.,

In case of Brilliant Alloys Private Limited v. Mr. S. Rajagopal & Ors, 2018 SCC Online SC 3154, the question which arose for consideration before the Hon'ble Apex Court was whether withdrawal is permissible after the issuance of invitation for expression of interest in light of Regulation 30A of the CIRP Regulations. The Hon'ble Supreme Court held that "According to us, this Regulation has to be read along with the main provision Section 12A

That the Code does not prescribe any time period within which the application for avoidance has to be filed by the resolution professional of the corporate debtor. The time period within which the application has to be filed by the resolution professional is prescribed under Regulation 35A of the CIRP Regulation. However, in light of the above Judgement of Hon'ble Supreme Court, the regulation must be read along with the Code which does not prescribe any time period within which the application has to be filed by the resolution professional for avoidance of certain transaction.

The Applicant would also like to place on record certain facts to explain as to why the present Application could not be filed within the 135th day timeline:

During the first meeting of the Committee of Creditors ("CoC") held on 30.10.2019, it was proposed to replace Ms. Preeti Jaiswal (the IRP) and appoint the Applicant as the RP of the Corporate Debtor. The Applicant was confirmed as an RP by this Hon'ble Adjudicating Authority vide order dated 18.12.2019 which was received by the Applicant on 27.12.2019. Therefore, the Applicant could take control over the Corporate Debtor only on 27.12. 2019, i.e. the 122nd day.

Pursuant to her duties under Section 25 (2) (j) of the Code, the Applicant took steps to determine if the Corporate Debtor has undertaken any preferential, undervalued, extortionate or fraudulent transactions. For such purpose, given the technical nature of the transactions, it was

In the meanwhile, due to outbreak of Covid 19, lockdown was imposed by the Central Government which caused hindrance in the CIRP of the corporate debtor, including the audit process.

The draft TAR was submitted by the Transaction Auditor only on 06.07.2020, which was reviewed by the Applicant to form an opinion and determine whether the Corporate Debtor is subject to any avoidance transaction under Regulation 35A of the CIRP Regulations. On review of the TAR, examination of the books and other relevant records of the Corporate Debtor, certain transactions undertaken by the Corporate Debtor were discovered, which in the opinion of the Applicant fall within the scope of the preference transactions, undervalued transaction and fraudulent or wrongful trading within the meaning of the provisions of the Code.

Thereafter a copy of the TAR was also shared with the Respondents Nos. 1, 2 and 3, for them to submit their responses for the transactions identified by the Transaction Auditor. The Respondents Nos. 1, 2 and 3 from time to time submitted their response on 13.07.2020, 12.08.2020, 30.08.2020, 31.08.2020 and 01.09.2020.

After taking into account the responses of Respondents Nos. 1, 2 and 3, and further

The Applicant upon receiving the final TAR proceeded with filing the present Application on 24.09.2020.

No separate applications are required to be filed for each transaction under different sections.

The Applicant on review of the TAR, financial statements and books of account of the corporate debtor came to know about the following transaction:

The Corporate Debtor had entered into a Loan Agreement dated 17.08.2017 with Respondent No. 4, GVR Consulting Services Pvt. Ltd. wherein Respondent No.4, GVR Consulting Services Pvt. Ltd. agreed to lend an amount of INR 2,00,00,000 to the Corporate Debtor at an interest of 8% per annum. The said loan was secured by way of issuance of post-dated cheques of the principal amount equivalent to the total loan outstanding. The term of the Loan Agreement was 2 years.

On examining the ledger account of Respondent No. 4, GVR Consulting Services Pvt. Ltd. from 27.08.2017 to 27.08.2019 maintained by the Corporate Debtor, it was discovered that the antecedent liability was discharged by the Corporate Debtor by making repayment of INR 1,00,00,000/- from 04.09.2018 to 12.10.2018. The Applicant is of the opinion that the Corporate Debtor has given

No separate applications are required to be filed for each transaction under different sections. iii. All the ingredients of section 43 and section 44 are met. iv. Further the transaction undertaken by the Corporate Debtor was not in the ordinary course of the business or financial affairs of the Corporate Debtor towards the repayment of the loan amount and therefore, does not fall in any of the exceptions set out in Section 43 (3) of the Code. It is submitted that since Respondent No. 4 is not a related party of the Corporate Debtor, the relevant period for the purpose of Section 43 (4) of the Code is one year period prior to the insolvency commencement date (from 27.08.2018-27.08.2019).

Applicant on review of the TAR, financial statements and books of account of the corporate debtor came to know about the following transaction:

On examining the ledger account of the Respondent No. 5, Keshika Exports Private Limited maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, it was discovered that the Corporate Debtor had a payable balance of INR 3,20,02,688/- as on 27.08.2017 towards the unsecured loans given by the

The antecedent liability of the Corporate Debtor towards Respondent No. 5, Keshika Exports Private Limited was charged by the Corporate Debtor by making payment of interest of INR 2,49,338/-. The Applicant is of the opinion that the Corporate Debtor has given preference to Respondent No. 5, Keshika Exports Private Limited in the relevant period to its related party. Further, such payment had the effect of putting Respondent No. 5 in a beneficial position than it would have been in the event of distribution of assets of the Corporate Debtor being made in accordance with Section 53 of the Code.

No separate applications are required to be filed for each transaction under different sections.

All the ingredients of section 43 and section 44 are met.

the Applicant on review of the TAR, financial statements and books of account of the corporate debtor came to know about the following transaction:

The Corporate Debtor entered into a Loan Agreement dated 5.12.2015 with Respondent No. 6, Dyna Rasayan Udyog Private Limited, wherein Respondent No. 6 agreed to lend an amount of INR 3,00,00,000 to the Corporate Debtor at an interest of 10% per annum. The term of the Loan Agreement was one year.

As per the ledger of Respondent No. 6, Dyna Rasayan Udyog Private Limited, maintained by the Corporate Debtor from 27.08.2017 to 27.08.2019, the Corporate Debtor had a payable balance of INR 2,04,48,767 as on 27.08.2017. The aforesaid antecedent liability of the Corporate Debtor towards Respondent No. 6 (as on 27.08.2017) was discharged by the Corporate Debtor by making repayment of INR 1,57,29,987 from 27.08.2018 to 29.08.2018.

Since Respondent No. 6, Dyna Rasayan Udyog Private Limited, is not a related party of the Corporate Debtor, the relevant period for purpose of Section 43 (4) of the Code is one year period prior to insolvency commencement date (from 27.08.2018 – 27.08.2019). Further, such payment had the effect of putting Respondent No. 6 in a beneficial position than it would have been in the event of distribution of assets of the Corporate Debtor being made in accordance with Section 53 of the Code.

No separate applications are required to be filed for each transaction under different sections.

M/s Venus Recruiters Private limited v. Union of India and Ors. is not applicable to the present case.

The Applicant on review of the TAR, financial statements and books of account of the corporate debtor came to know about the following transaction:

The Corporate Debtor entered into a Loan Agreement dated 17.08.2017 with Respondent No. 7, wherein Respondent No.7 agreed to lend an amount of INR 2,00,00,000 to the Corporate Debtor at an interest of 8% per annum. The said loan was secured by way of issuance of post-dated cheques of the principal amount equivalent to the total loan outstanding. The term of the Loan Agreement was 2 years.

On examining the ledger account of Respondent No. 7 from 27.08.2017 to 27.08.2019 maintained by the Corporate Debtor, it was discovered that the antecedent liability was discharged by the Corporate Debtor by making repayment of INR 90,00,000/- from 27.08.2018 to 04.09.2018.

The Applicant is of the opinion that the Corporate Debtor has given preference to Respondent No. 7 in the relevant period. Further, such payment had the effect of putting Respondent No. 4 in a beneficial position than it would have been in the event of distribution of assets of the Corporate Debtor being made in accordance with Section 53 of the Code.

Further the transaction undertaken by the Corporate Debtor was not in the ordinary course of the business or financial affairs of the Corporate Debtor towards the repayment of the loan amount and therefore, does not fall in any of the exceptions set out in Section 43 (3) of the Code. It is submitted that since Respondent No. 7 is not a related party of the Corporate Debtor, the relevant period for the purpose of Section 43 (4) of the Code is one year period prior to the insolvency commencement date (from 27.08.2018-27.08.2019).

Vide an order dated 14.07.2021, The Applicant was directed to place on record the status of the corporate insolvency resolution process ("CIRP") of the Corporate Debtor along with the submissions distinguishing the facts of the present case from the facts of M/s Venus Recruiters Private Limited v. Union of India and Ors. 2020 159 CLA 533(Delhi).

Status of the CIRP: The list of dates and events relevant for the adjudication of the present case are as follows:

As per the Plan Approval Order read along with the Resolution Plan; and upon my confirmation, the Applicant was appointed as the Monitoring Professional of the Corporate Debtor for the purposes of the implementation of the Resolution Plan. iv. The Resolution Plan specifically dealt with the treatment of Avoidance Application and the proceeds, if any, received from the same.

In accordance with the provisions of the Resolution Plan, the Successful Resolution Applicants made a total payment of INR 22 Crores ("Resolution Amount") between 04.02.2021 to 13.04.2021 towards the CIRP Cost and payments to the creditors under the Applicant's supervision as the Monitoring Professional. Though the complete payments had been made by the Successful Resolution Applicants, payments to some creditors had been returned due to changes in the bank details/incorrect bank details/merger of various banks due to which the IFSC Codes had changed, though those payments were also subsequently made. Further, certain payments made towards the dues of foreign entities had also not been credited (till the meeting of the Monitoring Committee) to the concerned accounts due to technical issues and close of market, though those payments were also subsequently made. It is reiterated that the payments had been made from the end of the Successful Resolution Applicant.

Further as per the Resolution Plan, the existing board of directors have been removed and been reconstituted. As on date, Mr. Onkar Nath Aggarwal, Smt. Saroj Aggarwal and Mr. Vipin Kumar Aggarwal have taken over as the new board of directors of the Corporate Debtor. After payment of the complete Resolution Amount. The Applicant have also handed over the Original Share Certificate of investments made by the Corporate Debtor, copy of all records/documents available with me in pen drive and physical possession of the assets of the Corporate Debtor, along with all movables/inventory/machines, to the Successful Resolution Applicant. As on date, the Resolution Plan stands implemented.

The 5th meeting of the Monitoring Committee of the Corporate Debtor was held on 15.04.2021. During the meeting, discussions were held regarding who would pursue the Avoidance Application.

While the role of the RP comes to an end with the passing of the order approving the Resolution Plan, the Venus Judgement itself carves an exception to the rule.

A reading of the Venus Judgement reveals that the rationale for holding that avoidance applications cannot continue beyond plan approval is that as per the Hon'ble Delhi High Court, the avoidance applications are meant to give some benefit to the creditors of the corporate debtor and the same is not meant for the corporate debtor in its new avatar. The Court noted that any property which is subject to such applications would have to form part of the final resolution plan and the resolution plan would have to take into consideration such amounts and benefits which can be given to the corporate debtor for the benefit of the CoC. The benefit of avoidance application is not meant for the corporate debtor, after the resolution plan is considered by the CoC and approved by the NCLT.

In the present case, the details regarding avoidance transactions were duly placed before the CoC at the time of consideration of the Resolution Plan and the CoC specifically directed the Resolution Applicant to include the above provision in the Resolution Plan. It is but obvious that the CoC was cognizant that the Avoidance Application may continue beyond plan approval and therefore, directed provision to be made for any realization in future. Further, it is also obvious that the CoC desired that these Avoidance applications should continue so that any future benefit could be distributed to the Financial Creditors.

The Respondent's submissions are contrary to the Code and the approved Resolution Plan. The total value of the Avoidance Application is INR 9,49,00,000, which the Resolution Plan proposes to distribute amongst the financial creditors of NTL. In case the Avoidance Application is held to be infructuous, the erstwhile promoters and relevant counter-parties would be unjustly enriched at the expense of the financial creditors of NTL. Further, CoC would not be able to get the benefit of the proceeds of the Avoidance Application in future, which the CoC had kept in mind while approving the Resolution Plan. This would be contrary to the approved Resolution Plan and would negate the commercial wisdom of the CoC while approving the Resolution Plan. Further, it would defeat the objective of the Code in balancing the interest of the stakeholders as the parties to the avoidance transaction will benefit at the expense of the financial creditors.

The timelines for filing such avoidance applications are directory and not mandatory and the applicant has place reliance upon the following decisions:

The RP had received the final audit report on dated 09.09.2020 pursuant to which filed the aforesaid application for avoidance transactions on 24.09.2020. The resolution professional after filing of the said application in the (20^{\text{th}}) COC meeting held on 25.09.2020 had merely informed the COC about the present application, however as such no explicit voting or consent of the CoC was taken prior to filing of the said application. ii. The resolution professional deliberately kept the present application pending for a period of three months from 24.09.2020 till the resolution plan was approved by this Tribunal on dated 28.01.2021. iii. As such no clause explicitly has been mentioned in the resolution plan wherein the pendency of the said application was mentioned or the same was not brought in the knowledge of the adjudicating authority before approval of the said resolution plan. In light of the said fact the Resolution Professional does not have the locus standi to pursue the aforesaid application. iv. The respondents rely upon the observations made in the case of M/S Venus Recruiters Pvt. Ltd. wherein the Hon'ble Delhi High Court has specified that the NCLT lacks the jurisdiction beyond the CIRP that has come to an end after the resolution plan is approved.