# Hira Cotton vs. T.V. Balasubramanian

> NCLAT judgment dated 2021-08-27. Citation: TCN-2021-NCLAT-00426. The appeal was filed challenging the Impugned Order dated 26.02.2021 passed by the…

- **Court:** NCLAT
- **Order date:** 27 Aug 2021
- **Citation:** TCN-2021-NCLAT-00426
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-chennai/hira-cotton-vs-tv-balasubramanian-jur8tcdo

## Summary

### Background

The appeal was filed challenging the Impugned Order dated 26.02.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench-I, Chennai) in MA/709/2019 in CP(IB)/1037/2018, whereby the Adjudicating Authority allowed the Miscellaneous Application filed by the Resolution Professional. The appellant is an operational creditor to whom the corporate debtor owed money for the supply of cotton. The corporate debtor was admitted into insolvency on 04.02.2019. The appellant and corporate debtor had entered into a sale agreement on 22.06.2018 to transfer land belonging to the Corporate Debtor to the Appellant towards partial settlement of the debt. The respondent filed an application to set aside the sale agreement dated 22.06.2018 on the ground that

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## Facts

The Appellant, Hira Cotton, is an Operational Creditor to whom the Corporate Debtor, Sholingur Textiles Limited, owed money for the supply of cotton.

The Corporate Debtor was admitted into insolvency on 04.02.2019 by the Adjudicating Authority.

A sale agreement was entered into between the Appellant and the Corporate Debtor on 22.06.2018 for transferring land belonging to the Corporate Debtor to the Appellant towards partial settlement of the debt.

The Resolution Professional filed an application seeking to set aside the sale agreement, arguing that it was a preferential transaction under Section 43 of the IBC 2016.

The Adjudicating Authority allowed the application and set aside the sale agreement dated 22.06.2018.

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## Issues and analysis

### Issue 1: Whether the sale agreement between the Appellant and the Corporate Debtor constitutes a …

**Ratio:** Section 43 of the IBC defines preferential transactions and outlines conditions under

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**Reasoning:** The Adjudicating Authority relied on the Supreme Court's judgment in Anuj Jain, Interim

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**Interpretation:** The court interpreted Section 43 to mean that a transaction is preferential if

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**Application:** The court found that the sale agreement was indeed a preferential transaction

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## Parties

- **Judges:** M. Venugopal…; Kanthi Narahari…
- **Appellants:** M/s. Hira Cotton…
- **Respondents:** Sholingur…; T.V. Balasubramani…
- **Other parties:** T.V. Balasubramani…; M/s. Hira…; +1 more
- **Advocates:** Rahu…

## Timeline

- **2018-06-22 — Sale Agre…**: Appellant and Corporate Debtor entered into…
- **2019-02-04 — CIRP Comm…**: Corporate Insolvency Resolution Process…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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