Authority: National Company Law Tribunal, Hyderabad Bench - II

Order Date: 18 June 2026

Case Overview

This application was filed by Dr. Kondapalli Venkat Srinivas, the Liquidator of Sai Bhaskar Irons Ltd (Corporate Debtor), under Sections 45 and 46 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) on 24 April 2023 pursuant to a petition filed by Steel Exchange India Ltd under Section 9 of IBC.

The Liquidator sought cancellation of two sale deeds (No. 1679/2023 and 1680/2023 both dated 10.04.2023) through which the Corporate Debtor had transferred immovable properties to Respondent No. 3 (Late S. Bhaskar Rao) and Respondent No. 4 (S. Suresh) for considerations of ₹28,16,000 and ₹24,00,000 respectively. These transactions occurred merely 14 days before the commencement of CIRP.

The properties involved were:

  • 4,259.2 square yards (0.88 acres) with government guideline value of ₹51,12,000, sold for ₹28,16,000
  • 3,630 square yards (0.75 acres) with government guideline value of ₹43,56,000, sold for ₹24,00,000

Total transaction value: ₹52,16,000 against total guideline value of ₹94,68,000 (approximately 45% discount).

The Respondents contended that the guideline value did not reflect actual market value, that the transactions were in ordinary course of business, and that the application was barred by limitation under Regulation 35A of IBBI Regulations. They also claimed to be bona fide purchasers without knowledge of pending insolvency proceedings.

The Tribunal examined whether the transactions qualified as undervalued transactions under Section 45(2)(b) of IBC, requiring proof of: (1) transfer of corporate debtor's assets, (2) receipt of significantly lower consideration, and (3) transaction not in ordinary course of business.

Final Outcome

The NCLT allowed the application and declared both sale deeds invalid. The properties were ordered to be vested in and restored to the liquidation estate of Sai Bhaskar Irons Ltd. Respondent Nos. 3 and 4 (through legal representatives) were directed to hand over possession of the properties to the Liquidator and extend full cooperation.

The Tribunal held that:

1. The transfers were established and occurred within the relevant period

2. The transactions were not in ordinary course of business given their timing (14 days pre-CIRP) and lack of business necessity

3. The consideration was significantly lower than asset value, based on government guideline values which the respondents themselves used for stamp duty payment

4. Respondents failed to provide credible evidence of actual market value being lower

Topics: Insolvency Proceedings, Undervalued Transactions, Asset Recovery