# In the matter of Him Steel Pvt. Ltd.

> NCLT judgment dated 2023-09-14. Citation: TCN-2023-NCLT-01616. The application was filed under Section 43(1) read with Section 66(1) of the Insolvency and…

- **Court:** NCLT
- **Order date:** 14 Sept 2023
- **Citation:** TCN-2023-NCLT-01616
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/him-steel-pvt-ltd-1939933f

## Summary

### Background

The application was filed under Section 43(1) read with Section 66(1) of the Insolvency and Bankruptcy Code, 2016, by the Resolution Professional (Ms. Reshma Mittal) of the Corporate Debtor, HIM Steels Pvt Ltd, reporting preferential and fraudulent transactions done by the Respondents. The RP sought reliefs including declaring transactions as preferential under Section 43(1) and fraudulent under Section 66(1), directing respondents to pay Rs. 3.82 crores and contribute Rs. 96.19 crores to the corporate debtor's assets, respectively. The Corporate Insolvency Resolution Process (CIRP) was initiated on 15.07.2019. The RP appointed VMRS Associate as Transaction Auditor on 07.10.2019. The ex-directors of the Corporate Debtor did not cooperate in handing over records,

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## Facts

The Corporate Insolvency Resolution Process (CIRP) of HIM Steels Pvt Ltd was initiated on 15.07.2019. Ms. Reshma Mittal, the Resolution Professional (RP), filed an application under Sections 43(1) and 66(1) of the Insolvency and Bankruptcy Code, 2016, alleging preferential and fraudulent transactions by the ex-management. The RP appointed VMRS Associate as Transaction Auditor on 07.10.2019. The ex-directors failed to provide necessary records, leading to an application under section 19(2) of the Code. The Transaction Auditor's report revealed manipulation of books, mismatch of Tally Books and Bank Statements, diversion of money through suspense accounts, and misappropriation of cash and stocks. The RP reported preferential transactions of Rs. 3.82 Cr. from 24.08.2017

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## Issues and analysis

### Issue 1: Whether the transactions conducted by the ex-management of HIM Steels Pvt Ltd constitute …

**Ratio:** Section 43 of the IBC defines preferential transactions as those where a corporate debtor

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**Reasoning:** The Tribunal observed that the transfer of money was made to related parties without

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**Interpretation:** Section 43 aims to prevent debtors from unfairly favoring certain creditors

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**Application:** The Tribunal applied Section 43 to the facts, noting that preferential payments

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## Parties

- **Judges:** BACHU VENKAT…; RAHUL BHA…
- **Appellants:** Reshma M…
- **Respondents:** Him Steel Pvt.…; Ashok…

## Timeline

- **2019-07-15 — CIRP Init…**: The Tribunal admitted the petition and initiated the Corporate Insolvency Resolution…
- **2019-08-09 — RP Appoin…**: The Interim Resolution Professional (IRP) was appointed as Resolution Professional (RP)…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 43(1) — Preferential transactions and relevant time](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-43)

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