NCLAT Rules, Only Resolution Professional Is Empowered To File Application For Avoidance Of Preferential Transactions U/S 43 Of IBC
Pranav B Prem
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that an application for avoidance of preferential transactions under Section 43 of the Insolvency and Bankruptcy Code, 2016, can be filed only by the Resolution Professional (RP) or Liquidator, as the case may be. The Appellate Tribunal observed that no other stakeholder, including individual homebuyers, is authorized under the statutory scheme to initiate such proceedings. The decision came in appeals filed by a single homebuyer, Mr. Ramprasad Vishvanath Gupta, challenging multiple orders passed by the Adjudicating Authority (NCLT, Mumbai Bench) in the insolvency resolution process of M/s Snehanjali and S.B. Developers Private Limited.
Background of the Case
The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated on 07.03.2024, based on an application filed by Santosh Ananda Shetty and 66 other homebuyers classified as financial creditors in a class. After public announcement and constitution of the Committee of Creditors (CoC), four resolution plans were considered. In the sixth CoC meeting held on 25.09.2024, the plan submitted by La Mer Developers Limited and Neel Builders & Developers received 83.46% of the votes and was approved. Following the issuance of a Letter of Intent on 12.10.2024, the RP filed an application seeking approval of the resolution plan.
While this application was pending, the appellant, a single homebuyer, filed two separate applications—IA No. 24/MB/2025 objecting to the resolution plan and IA No. 22/MB/2025 under Section 43 of the IBC, alleging preferential transactions by the Corporate Debtor. Both applications were dismissed by the Adjudicating Authority on 28.01.2025 and 24.01.2025 respectively. The NCLT subsequently approved the resolution plan on 12.02.2025.
Key Observations by the Tribunal
The Appellate Tribunal thoroughly examined the statutory scheme under Section 43 of the Code. It pointed out that as per Section 43(1), only the Resolution Professional or Liquidator is empowered to apply to the Adjudicating Authority for avoidance of preferential transactions. Referring directly to the legislative language, the Tribunal noted: “A plain reading of Section 43 of the Code makes it amply clear that an application under that Section can only be filed by an Insolvency Professional while acting as a Resolution Professional or Liquidator and none else.”
Since the application under Section 43 was filed by an individual homebuyer, the Tribunal concurred with the NCLT's view that the application was not maintainable. Although the Adjudicating Authority had imposed a cost of Rs.50,000 on the Appellant for filing a frivolous application, the NCLAT deleted the cost considering the Appellant's status as a single homebuyer.
Allegations Against the RP and the SRA
The appellant had also raised serious allegations of fraud, procedural impropriety, and collusion between the Resolution Professional and the Successful Resolution Applicant. However, the Tribunal declined to entertain these allegations, noting that a previous application (IA No. 269/MB/2025) for replacement of the RP and Authorised Representative had already been dismissed on 24.01.2025. As that order had attained finality, the Tribunal held there was no need to revisit these claims.
Challenge to the Resolution Plan
The Appellant’s challenge to the approved resolution plan was also rejected. The Tribunal reiterated that homebuyers form a distinct class of financial creditors, and once the Authorised Representative casts the vote in line with the majority decision of that class, individual homebuyers cannot claim the status of dissenting creditors. In this case, the resolution plan had received 83.46% votes, and the Authorised Representative had voted in accordance with the mandate of more than 51% of homebuyers.
The Tribunal relied on the Supreme Court's judgment in Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. [(2022) 1 SCC 401], which held that: “Once a decision is taken, either to reject or to approve a particular plan, by a vote of more than 50% of the voting share of the financial creditors within a class, the minority... are bound by that decision.” Accordingly, it held that a single homebuyer cannot challenge an approved resolution plan when the majority has voted in its favour.
Verdict
Having found no legal infirmity in the impugned orders, the Appellate Tribunal dismissed all three appeals. The order dated 24.01.2025 rejecting the Section 43 application was upheld, except for the deletion of the cost imposed. The challenge to the resolution plan and its approval were also dismissed, with the Tribunal affirming that the resolution plan met the requirements of Section 30(2) of the Code and was rightly approved by the Adjudicating Authority.
Appearance
For Appellant: Mr. Diwakar Singh, Advocate along with Mr. Ramprasad Gupta, Appellant in person.
For Respondents: Mr. Rahul Chitnis and Mr. Niyati Merchant, Advocates for R-1. Mr. Ishwar Nankani, Advocate for R-2.
Cause Title: Mr. Ramprasad Vishvanath Vs Mr. Dinesh Kumar Deora and Ors.
Case No: Company Appeal (AT) (Insolvency) No. 442 of 2025
Coram: Justice Ashok Bhushan [Judicial Member], Mr. Arun Baroka [Technical Member], Mr. Barun Mitra [Technical Member]
[Read/Download order]
