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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 taxmann.com 13 (NCL-AT)
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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, it was held that transactions were not 'preferential transaction' or 'undervalued transaction' and were not made to defraud creditors of corporate debtor or for any fraudulent purpose and, therefore, mortgage deeds, in question, could not be said to be made by way of transactions which came within meaning of 'fraudulent trading' or 'wrongful trading' under section 66 and appellant banks were entitled to exercise their rights under 'I&B Code'

[IDBI Bank Ltd. v. Jaypee Infratech Ltd. [2018] 93 taxmann.com 308 (NCLT - Allahabad) - set aside.]

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