# In the matter of Tirumala Balaji Alloys Private Limited Vs. Sumit Binani CA(AT)(Insolvency) No. 600 of 2018

> NCLAT judgment dated 2019-11-13. Citation: TCN-2019-NCLAT-00150. The case involves two company appeals (600 and 601 of 2018) against a common impugned order…

- **Court:** NCLAT
- **Order date:** 13 Nov 2019
- **Citation:** TCN-2019-NCLAT-00150
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/tirumala-balaji-alloys-private-limited-vs-sumit-binani-ca-8f06a461

## Summary

### Background

The case involves two company appeals (600 and 601 of 2018) against a common impugned order dated August 6, 2018. The appeals challenge the order of the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, which directed 'Excello Fin Lea Limited' and 'Tirumala Balaji Alloys Pvt. Ltd.' to refund certain amounts to the 'Corporate Debtor', Monnet Ispat & Energy Limited, under the 'Corporate Insolvency Resolution Process'. The Resolution Professional had filed a Miscellaneous Application under Sections 43 and 44 of the Insolvency and Bankruptcy Code, 2016, alleging that the payments made by the 'Corporate Debtor' to the Appellants were preferential transactions.

## Facts

Monnet Ispat & Energy Limited ('Corporate Debtor') underwent a 'Corporate Insolvency Resolution Process'. The Resolution Professional filed a Miscellaneous Application alleging 'preferential transactions' against 'Excello Fin Lea Limited' and 'Tirumala Balaji Alloys Pvt. Ltd.' ('Appellants'). 'Excello Fin Lea Limited' received Rs.23,48,40,274/- and 'Tirumala Balaji Alloys Pvt. Ltd.' received Rs.5,68,38,355/- from the 'Corporate Debtor'. The Adjudicating Authority directed the Appellants to refund these amounts, along with interest. The Appellants argued that they were in the business of extending loans and the transactions were in the ordinary course of business. They also stated that the 'Corporate Debtor' was facing financial stress and the lenders had

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## Issues and analysis

### Issue 1: Whether the transactions between the 'Corporate Debtor' and the Appellants qualify as 'preferential …

**Ratio:** Section 43 of the Insolvency and Bankruptcy Code, 2016 defines 'preferential

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**Reasoning:** The court reasoned that the transactions were not in the ordinary course of business

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**Interpretation:** The interpretation of Section 43 hinges on whether the transactions were at

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**Application:** The court applied the ratio to the facts by noting that the Appellants were

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## Parties

- **Judges:** S.J. Mukhop…; A.I.S. C…; +2 more
- **Appellants:** Tirumala Balaji…
- **Respondents:** Monnet Ispat &…; Sumit B…

## Timeline

- **2016-10-05 — Loan from Excello Fin…**: Excello Fin Lea Limited provided a loan of…
- **2015-10-08 — Loan from Tirumala…**: Tirumala Balaji Alloys Pvt. Ltd. provided a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 43 — Preferential transactions and relevant time](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-43)

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