NCLT Declares Sale Deed and Asset Transfers Void for Violating IBC Moratorium

Ahmedabad NCLT rules against preferential transactions under Insolvency and Bankruptcy Code, orders restitution to corporate debtor.

In a significant ruling, the National Company Law Tribunal (NCLT) at Ahmedabad has declared a sale deed and asset transfer executed by the corporate debtor, Decent Laminates Pvt. Ltd., as void due to violations of the moratorium under the Insolvency and Bankruptcy Code (IBC), 2016. The judgment, delivered on December 8, 2025, pertains to transactions involving the transfer of office premises and gold coins on the insolvency commencement date, May 3, 2021.

The tribunal, comprising Member (Judicial) Shammi Khan and Member (Technical) Sanjeev Sharma, adjudicated the case between Rare Asset Reconstruction Limited and Mukundkumar Dahyabhai Patel, among others. The court examined the applicability of Sections 14 and 43 of the IBC, which govern moratorium and preferential transactions.

The primary issue arose from the execution of a sale deed for office premises in Harikrupa Towers, Ahmedabad, to Rohitbhai Sonagara and Dharmisthaben Sonagara for Rs. 30,00,000. Despite the transaction being initiated before the corporate insolvency resolution process (CIRP) commenced, the legal title was transferred post-admission of insolvency, contravening the Section 14 moratorium prohibiting asset transfers.

The tribunal also scrutinized the transfer of gold coins valued at Rs. 1,70,500 to an employee, Ashok K Patel, against pending salary dues. This transfer was deemed preferential, providing the employee a full recovery of operational debt, contrary to the equitable distribution principle under Section 53 of the IBC.

The NCLT ordered the respondents to restore the assets or their monetary equivalent to the corporate debtor, with interest, to counter the erosion of asset value. The tribunal underscored that transactions violating the moratorium are void and emphasized the importance of maintaining the integrity of the CIRP process.

The ruling has significant implications for stakeholders in insolvency proceedings, reinforcing the strict compliance required under the IBC to prevent asset depletion and ensure equitable treatment of creditors.

Bottom Line:

Insolvency and Bankruptcy Code - Transactions executed on the insolvency commencement date in violation of the moratorium under Section 14 of IBC are void and unenforceable. Preferential transactions under Section 43 must meet specific statutory requirements.

Statutory provision(s): Section 14, Section 43, Section 44 of the Insolvency and Bankruptcy Code, 2016

Rare Asset Reconstruction Limited v. Mukundkumar Dahyabhai Patel, (NCLT)(Ahmedabad) : Law Finder Doc Id # 2820991