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Mortgages made in favour of bank in ordinary course of business for giving loan to Group Co. weren’t fraudulent

August 2, 2019[2019] 108 13 (NCL-AT)

IBC : Where mortgage(s) were made in favour of 'banks and financial institutions' by 'corporate debtor' i.e., 'Jaypee Infratech Ltd.' (JIL), in ordinary course of business of 'corporate debtor' as appellant-banks and financial institutions had given loans to holding company namely 'Jaiprakash Associates Ltd.' (JAL) and 'corporate debtor' being one of group company, like a guarantor, executed mortgage deed(s) in favour of appellants-banks and financial institutions, mortgage deed were not made to defraud creditors of corporate debtor or for any fraudulent purpose and, therefore, transactions were not 'fraudulent trading' or 'wrongful trading' under section 66 and appellant banks were entitled to exercise their rights under 'I&B Code'

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