Only Resolution Professional Is Empowered To File Application For Avoidance Of Preferential Transactions U/S 43 Of IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that an application for avoidance of preferential transactions under Section 43 of the Insolvency and Bankruptcy Code, 2016 (Code) can be filed only by the Resolution Professional. Hence, the application filed by a single homebuyer was rightly rejected by the Adjudicating Authority. Brief Facts: On an application filed by one Santosh Ananda Shetty and 66 other homebuyers as Financial Creditors in class, Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - Snehanjali and S.B. Developers Private Limited commenced by order dated 07.03.2024. In the 6th CoC meeting on 25.09.2024, four resolution plans were considered, and e-voting concluded on 10.10.2024. The plan submitted by La Mer Developers Ltd. and Neel Builders & Developers was approved with 83.46% votes. A letter of intent was issued on 12.10.2024. The RP filed IA (IBC) (Plan) No. 102/MB/2024 for plan approval. The Appellant, Ramprasad Vishvanath Gupta, filed IA No. 24/MB/2025 objecting to the plan and IA No. 22/MB/2025 under Section 43 of the IBC alleging preferential transactions. Both applications were dismissed on 24.01.2025 and 28.01.2025 respectively. The Resolution Plan was approved by the Adjudicating Authority on 12.02.2025. These appeals challenge the three aforementioned orders. Contentions: The Appellant submitted that approval of resolution plan of La Mer Developers Limited and Neel Builders & Developers is vitiated by procedural impropriety, non compliance of statutory provisions, fraudulent conduct and collusion between the Resolution Professional and Successful Resolution Applicant (SRA). Per contra, the Respondent submitted that the Appellant being a single homebuyer is not entitled to challenge the approval of Resolution Plan. The Resolution Plan has been approved by the CoC with requisite voting share of 83.46% and Appellant being a single homebuyer cannot be allowed to challenge the Resolution Plan. Observations: The Tribunal noted that the Appellant's application for replacement of the Resolution Professional and Authorised Representative was rejected by the order dated 24.01.2025. As this order was not challenged, it has attained finality. Consequently, the Appellant's allegations against the Resolution Professional require no further consideration. The Appellant has pressed IA No. (IB) 269/MB/2025 based on the same claims. It further added that Section 43 of the Code deals with preferential transactions. Section 43(1) provides that where the liquidator or the resolution professional is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions, he shall apply to the Adjudicating Authority for avoidance of preferential transaction. The Tribunal noted that Application under Section 43 was filed by the Appellant who is a single homebuyer. The Adjudicating Authority by the impugned order has rejected the application holding that under Section 43 Appellant has no authority to file an application. It held that we fully concur with the Adjudicating Authority's view that the application under Section 43 filed by the Appellant, a homebuyer, is not maintainable. The statutory scheme empowers only the Resolution Professional to initiate proceedings for avoidance of preferential transactions. Accordingly, no infirmity is found in the rejection of IA No. 22/MH/2025. The Tribunal further observed that the Adjudicating Authority rightly held that the Appellant, being one among 600 homebuyers, falls within the class of Financial Creditors. While individual dissent may exist, the vote of the majority prevails. It further added that the Authorised Representative cast the vote in line with the mandate of 50% of the homebuyers, and 83.46% of the creditors in the class voted in favour of the Resolution Plan, as noted in Para 4.4 of the order. Accordingly, the rejection of IA No. 24/MB/2025, filed by a dissenting individual homebuyer, does not warrant interference. The Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. vs. NBCC (India) Ltd. & Ors., (2022), held that a single homebuyer cannot challenge an approved Resolution Plan. The Authorised Representative of creditors in a class is mandated to vote based on the majority decision of the homebuyers. It further said that Learned counsel for the Respondents rightly relied on the judgment of the Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd., (2022), to submit that an appeal by a single homebuyer challenging an approved Resolution Plan is not maintainable. In light of the above discussion, the Tribunal concluded that in the present case, ...

Only Resolution Professional Is Empowered To File Application For Avoidance Of Preferential Transactions U/S 43 Of IBC: NCLAT

Mohd Malik Chauhan

Tags