Admission Of Claim By RP Is No Defence To Preferential Transaction U/S 43 of IBC: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Shri K. R. Saji Kumar (Judicial Member) & Shri Anil Raj Chellan (Technical Member) held that just because the claim had been submitted and accepted by the Resolution Professional, it does not negate preferential transaction under section 43 of the IBC. It held that “submission of a claim by a person with the resolution professional or admission of its claim as unsecured financial creditor by the resolution professional is no defence in an application for preferential transaction under Section 43 of the IBC.” Background: The present application was filed by Mr. Jayanti Lal Jain, the Interim Resolution Professional (IRP) of Windals Auto Pvt. Ltd under section 43 of the Insolvency and Bankruptcy Code, 2016(IBC) seeking directions against Divyagyan Trading Pvt. Ltd. (Respondent No. 3) — an unsecured financial creditor who was alleged to have entered into a preferential transaction within the look-back period. The transaction came to light when a Transaction Audit Report dated 15 March 2024 concluded that the Respondent No. 3 benefited at the expense of secured creditors. The Corporate Insolvency Resolution Process (CIRP) commenced against the corporate debtor which was later ordered to be liquidated. The Applicant submitted that suspended directors opened an account without authorisation from the secured creditors and made a payment of Rs. 1.10 crore after existing accounts were frozen. It was further submitted that the payment was made within one year from the Insolvency Commencement Date thereby attracting section 43 of the IBC. It was further submitted that the transaction conferred undue benefit on unsecured creditor which violated priority envisaged under section 53 of the IBC. Per contra, the Directors submitted that the payment of ₹1.10 crore was made in the ordinary course of business as part repayment of an on-call loan of ₹2 crore received from Respondent No. 3, carrying 12% annual interest. It was further argued that the payment was made to avoid a criminal complaint under section 138 of the Negotiable Instruments Act. Respondent No. 3 submitted that we merely received repayment of our financial loan. There was no obligation upon us to inquire into how the Corporate Debtor managed its funds, and we cannot be held responsible for its internal conduct. Findings: The Tribunal after examining the audit report and bank statements observed that the payment was made within the look-back period. It further noted that the said payment was made to an unsecured creditor while secured creditors remained unpaid. It further observed that there was no contemporaneous business relationship between the corporate debtor and the Respondent No. 3 to demonstrate that the transfer was done in the ordinary course of business. It held that “the only probable inference that can be arrived at is that the transaction in question is not in the ordinary course of business and that there was no occasion for the Corporate Debtor to make any repayment of loan to Respondent No. 3.” The Tribunal while rejecting the plea that admission of claims by the RP negated the liability held that “Submission of a claim by a person with the resolution professional or admission of its claim as an unsecured financial creditor is no defence in an application for preferential transaction under Section 43.” The Tribunal relied on the Supreme Court's judgment Anuj Jain where it was held that there is no need to prove a fraudulent intent for a transaction to be considered preferential. What matters is whether the transaction has the effect of putting the beneficiary in a better position than it would have under section 53 of the IBC. It held that “Since sub-sections (4) and (2) of Section 43 are deeming provisions, in the present matter, the legal fiction would come into play and the transaction entered into by the CD should be regarded as preferential with the attendant consequences under Section 44 of the IBC, irrespective of whether the transaction was in fact intended to be preferential or even anticipated to be so.” Accordingly, the Tribunal directed the Respondent No. 3 to deposit the amount into the liquidation account of the corporate debtor within 30 days. Case Title: Jayanti Lal Jain (IRP) v. Abdulla Sahebkhan Dalwai & Ors. Case Number: I.A. No.3099 of 2023 IN C.P. (IB) No. 503/MB/2021 Order Date: 27/10/2025 For Applicant : Adv. Mitali Bhatt i/b. AKR Legal. For Respondents 1 & 2 : Adv. Jhalak Kaji i/b. Adv. Sarosh Damania. For Respondent 3 : Adv. Jugal Anjana Bhatia. Click Here To Read/Download The Order

Admission Of Claim By RP Is No Defence To Preferential Transaction U/S 43 of IBC: NCLT Mumbai

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Admission Of Claim By RP Is No Defence To Preferential Transaction U/S 43 of IBC: NCLT Mumbai

Mohd Malik Chauhan

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