# In the matter of Birla Cotsyn (India) Limited

> NCLT judgment dated 2023-11-20. Citation: TCN-2023-NCLT-00711. The case involves an application filed by the Liquidator of Birla Cotsyn (India) Limited,…

- **Court:** NCLT
- **Order date:** 20 Nov 2023
- **Citation:** TCN-2023-NCLT-00711
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/birla-cotsyn-india-limited-3cf99cba

## Summary

### Background

The case involves an application filed by the Liquidator of Birla Cotsyn (India) Limited, seeking to declare certain transactions as preferential under Section 43 of the Insolvency and Bankruptcy Code (IBC), 2016. The liquidator initially alleged that several transactions were preferential, including those with related parties. However, based on legal advice, the liquidator dropped the allegation of related parties, resulting in a reduction of the look-back period and the amount claimed. The transactions under scrutiny include loans, advance payments, and purchases of goods and services. The Corporate Debtor, Birla Cotsyn, faced financial difficulties and was admitted into Corporate Insolvency Resolution Process (CIRP) following an application by Edelweiss Asset

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## Facts

Birla Cotsyn (India) Limited, the Corporate Debtor (CD), was incorporated in 1941 and faced significant losses in 2012-13, leading to its accounts being declared non-performing assets (NPA) by banks. Edelweiss Asset Reconstruction Company Limited initiated Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, which was admitted on 20.11.2018. Ms. Sujata Chattopadhyay was appointed as the Interim Resolution Professional (IRP) and later as the Resolution Professional (RP). The RP appointed M/s IIRIS Consulting as the Forensic Auditor, who submitted a report on 15.04.2019. The CIRP failed, and liquidation was initiated on 24.09.2019, with the applicant appointed as the Liquidator. The liquidator identified

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## Issues and analysis

### Issue 1: Whether the transactions undertaken by the Corporate Debtor with Rohstoffe International Private …

**Ratio:** Section 43 of the IBC defines preferential transactions and provides an exception for

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**Reasoning:** The court reasoned that the Corporate Debtor (CD) was engaged in the business of

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**Interpretation:** The interpretation of Section 43 hinges on whether the transaction was part of

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**Application:** The court applied the principle that the purchase of raw materials necessary

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## Parties

- **Judges:** LAKSHMI G…; Charanjeet Singh…
- **Appellants:** Anil…
- **Respondents:** Birla Cotsyn…; Sona Cotsyn…

## Timeline

- **1941-09-24 — Incorporation of…**: M/s Birla Cotsyn (India) Limited was…
- **2012-01-01 — Financial Diff…**: Huge losses were incurred during…

## 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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