The Insolvency and Bankruptcy Board of India vide Circular dated 8th May, 2020 has clarified the Role of Resolution Professional/Liquidator in respect of Avoidance Transactions. The Circular directs to refer to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the indicative Charter issued on 1st March, 2019 and the Supreme Court judgments to determine the responsibilities of an insolvency professional in corporate insolvency resolution process (CIRP) and liquidation process.
Referring to judgements Mr. Ram Ratan Kanoongo Applicant Vs. Mr. Sunil Kathuria & Others and ) Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited Vs. Axis Bank Limited Etc., the IBBI has clarified that once transactions are held as preferential; it is not necessary to examine whether these are undervalued and/or fraudulent. In preferential transaction, the question of intent is not involved and by virtue of legal fiction, upon existence of the given ingredients, a transaction is deemed to be of giving preference at a relevant time, while undervalued transaction requires different enquiry under sections 45 and 46 where the AA is required to examine the intent, if such transactions were to defraud the creditors.
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