SC set aside NCLAT order in the matter of Jaypee Infratech Vs Axis Bank

By Editor Corporate Law Judiciary February 29, 2020

TaxGuru Citation: 2020 taxguru.in 246
Case Name: Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited Vs Axis Bank Limited Etc. (Supreme Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: Supreme Court of India

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Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited Vs Axis Bank Limited Etc. Etc (Supreme Court)

While setting aside the judgment dated 1^st August, 2019 of the NCLAT on avoidance of certain transactions under section 43, 45 and 66 of the Code whereby CD had mortgaged its properties for the financial assistance to JAL (holding company), the Hon’ble Supreme Court settled several issues and made important rulings as under:

Sl. No.

Issue/ Theme

Rulings

Para / Page
No.

Analysis of sections 43 and 44.

a. Provisions of sections 43 and 44 need to be strictly construed towards achieving the object of these provisons.

18/65

b. For a transaction to fall within the mischief sought to be remedied by sections 43 and 44 of the Code, it ought to be a preferential one answering to the requirements of sub-section (2) of section 43; and the preference ought to have been given at the relevabnt time, as specified in sub-section (4) of section 43.

18.2/67

c. A CD shall be deemed to have given preference at a relevant time if the twin requirements of clauses (a) and (b) of sub-section (2) coupled with either clause (a) or clause (b) of sub-section (4), as the case may be, are satisfied.

19/68

d. Since sub-sections (2) and (4) of section 43 are deeming provisions, upon existence of the ingredients stated therein, the legal fiction would come into play; and such transaction entered into by a corporate debtor would be regarded as preferential transaction with the attendant consequences as per Section 44 of the Code, irrespective whether the transaction was in fact intended or even anticipated to be so.

19.3/72

e. In order to find as to whether a transaction, of transfer of property or an interest thereof of the corporate debtor, falls squarely within the ambit of Section 43 of the Code, ordinarily, the following questions shall have to be examined in a given case: