# In the matter of Phadnis Resorts & Spa India Ltd. MA 3031/2019 in C.P.(IB)-3603-(MB)-2018

> NCLT judgment dated 2020-03-20. Citation: TCN-2020-NCLT-01429. The case involves an application (MA 3031/2019) filed by the Interim Resolution Professional…

- **Court:** NCLT
- **Order date:** 20 Mar 2020
- **Citation:** TCN-2020-NCLT-01429
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/phadnis-resorts-spa-india-ltd-ma-30312019-in-cpib-3603-mb-2018-6a1aaa52

## Summary

### Background

The case involves an application (MA 3031/2019) filed by the Interim Resolution Professional (IRP) in a Corporate Insolvency Resolution Process (CIRP) against Phadnis Resorts & Spa India Limited (Corporate Debtor). The CIRP was initiated by Union Bank of India (UBI) under Section 7 of the Insolvency and Bankruptcy Code (IBC). The IRP sought directions from the National Company Law Tribunal (NCLT) regarding taking possession of the Corporate Debtor's assets, obtaining assistance from the Economic Offences Wing (EOW), directing past directors to assist in the proceedings, allowing public announcements, facilitating meetings with a director in judicial custody, releasing attachments on the Corporate Debtor's property, and declaring a lease agreement between the

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## Facts

Union Bank of India (UBI) initiated Corporate Insolvency Resolution Process (CIRP) against Phadnis Resorts & Spa India Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code (IBC). The Corporate Debtor had mortgaged its property in Lonavala to UBI in 2015 for a loan. Subsequently, in 2016, the Corporate Debtor entered into a lease agreement with Marathe Hospitality for the same property at a monthly rent of Rs. 25,000 for 10 years, with a renewal option. The IRP alleged that this lease was a preferential and fraudulent transaction because it was executed without UBI's consent, the rent was significantly undervalued (property valued at Rs. 12 crore), and Anup Naik, a partner in Marathe Hospitality, was also the Tax Advisor to the Corporate

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## Issues and analysis

### Issue 1: Whether the lease agreement between the Corporate Debtor and Marathe Hospitality is a preferential …

**Ratio:** A transaction is considered preferential if it benefits a related party at the expense of

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**Reasoning:** The NCLT found that the lease agreement was entered into with a related party (Anup Naik

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**Interpretation:** Section 43 and 44 of the IBC deal with avoidance of preferential transactions.

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**Application:** The NCLT applied the principles of preferential and fraudulent transactions to

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## Parties

- **Judges:** SUCHITRAKAN…; Chandra Bha…
- **Appellants:** Mahesh S…
- **Respondents:** Phadnis Resorts…; Marathe Hospitalit…

## Timeline

- **2015-06-30 — Mortgage Deed…**: Phadnis Resorts & Spa India Ltd. mortgaged property to Union Bank of India for a loan of…
- **2016-05-18 — Lease Agreement…**: Phadnis Resorts & Spa India Ltd. entered into a lease agreement with Marathe Hospitality…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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