NCLT Orders Return of Rs. 1.1 Crore in Preferential Transaction Case

Windals Auto Pvt. Ltd. Directed to Reverse Preferential Payment to Unsecured Creditor

In a significant judgment, the National Company Law Tribunal (NCLT) Mumbai Bench, comprising Members Anil Raj Chellan and K.R. Saji Kumar, has ruled against Windals Auto Pvt. Ltd., requiring it to return Rs. 1.1 crore to its liquidation account. The judgment, delivered on October 27, 2025, addresses a preferential transaction issue under the Insolvency and Bankruptcy Code, 2016 (IBC).

The case was brought forward by Mr. Jayanti Lal Jain, the Interim Resolution Professional (IRP) for Windals Auto Pvt. Ltd., against Mr. Abdulla Sahebkhan Dalwai and others, including Divyagyan Trading Private Limited, an unsecured financial creditor. The dispute centered around a transaction made on February 24, 2023, where Rs. 1.1 crore was transferred to Divyagyan Trading Private Limited, reportedly as repayment for an on-call loan.

The Tribunal identified this transaction as preferential under Section 43 of the IBC, as it occurred within the look-back period and favored an unsecured creditor over secured creditors, contrary to the equitable distribution intent under Section 53 of the Code. The judgment emphasized that no fraudulent intent is required to establish a preferential transaction, referencing the Supreme Court's decision in Anuj Jain (IRP of Jaypee Infratech Limited) v. Axis Bank Limited.

The Tribunal directed that the sum be deposited back into the liquidation account within 30 days, allowing the appointed Liquidator to distribute it according to the law. This decision underscores the IBC's strict stance on ensuring fairness in creditor repayments during insolvency proceedings.

Additionally, the Tribunal permitted the Applicant to refer the matter to the Insolvency and Bankruptcy Board of India (IBBI) or the Central Government for potential violations under Section 236 of the IBC.

Bottom Line:

Insolvency and Bankruptcy Code - Preferential transactions under Section 43 of the IBC - Repayment made to an unsecured financial creditor by the corporate debtor within the look-back period deemed preferential - Preferential transactions must be set aside to ensure equitable distribution under Section 53 of the IBC.

Statutory provision(s): Section 43, Section 44, Section 53, Section 236, Insolvency and Bankruptcy Code, 2016

Mr. Jayanti Lal Jain v. Mr. Abdulla Sahebkhan Dalwai, (NCLT)(Mumbai) : Law Finder Doc Id # 2804958