Introduction
In IDBI Bank Ltd. v. Jaypee Infratech
Ltd1, the Allahabad Bench of the National
Company Law Tribunal ("NCLT") has held
that certain mortgages created by Jaypee Infratech Ltd.
("JIL") in favour of the lenders of its
holding company Jaiprakash Associates Ltd.
("JAL") amounted to
preferential, undervalued and fraudulent
transactions under the Insolvency and Bankruptcy Code, 2016
("Code").
In reaching its decision, the NCLT also held that the
transactions fell within the look back period of two years
prior to the commencement of insolvency proceedings, as prescribed
for preferential and undervalued transactions between related
parties under the Code.
Accordingly, the NCLT reversed these transactions and ordered
the lenders of JAL to release and discharge the security interest
created through the mortgages, thereby directing that the
properties so mortgaged be deemed to be vested in JIL
henceforth.
