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The appellants argued that the NCLT had only considered the opinion of the Resolution Professional and had not adjudicated on the ingredients of Sections 43, 45, 49, and 66 specifically
The National Company Law Appellate Tribunal has recently observed that the National Company Law Tribunal (NCLT) must consider the ingredients of Fraudulent, Undervalued, and Preferential Transactions separately and refrain from making general observations.
“The Adjudicating Authority ought to have adverted to the said pleadings and returned the finding regarding the fulfilment of ingredients of each provision. The Adjudicating Authority has only in two paras i.e. 27 and 28 has recorded his conclusion without giving any reason and without adverting to any pleadings or materials on record,” the order reads.
The NCLAT bench in Delhi, comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra, was hearing an appeal against the NCLT's order concerning an application under Sections 43, 45, 49, and 66 of the IBC.
The Resolution Professional had filed an application for avoidance transaction, and a transaction audit report was submitted, providing all details separately in the application.
The appellants argued that the NCLT had only considered the opinion of the Resolution Professional and had not adjudicated on the ingredients of Sections 43, 45, 49, and 66 specifically.
They pointed out that the NCLT relied on the opinion of the Resolution Professional and proceeded to allow the application without returning any finding that the ingredients were proven.
The NCLAT observed that the NCLT had recorded only its conclusion without considering each transaction separately.
“When we look into the aforesaid paras, it is clear that the Adjudicating Authority has recorded only its conclusions and that too without considering the preferential, undervalued and fraudulent, each transaction separately and there is general observation that the transactions are undervalued transactions as well as preferential and fraudulent transactions” the order states.
Therefore, the NCLAT set aside the order of NCLT while recording that there has to be application of mind to the ingredients of each transaction.
“The ingredients of preferential, undervalued and fraudulent transaction are entirely different and there has to be application of mind to the ingredients of each transaction to come to conclusion that ingredients are satisfied and the transaction falls in the said category adverting to the given pleadings in the application,” the order reads.
For Appellants: Mr. Nishant Kishore and Mr. Sandeep Choudhary, Advocates.
For Respondents: Mr. Videh Vaish, Mr. Lalit Mohan and Ms. Aakansha, Advocates with Mr. Lovkesh Batra, PCS for SRA
Case title: Md Sadique Islam & Ors vs Niraj Kumar Agarwal & Ors
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