Section 45
Avoidance of undervalued transactions.
The Insolvency and Bankruptcy Code, 2016.
About this Act
An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.
(1) If the liquidator or the resolution professional, as
the case may be, on an examination of the transactions of the corporate debtor referred to in
sub-section (2) 1
*** determines that certain transactions were made during the relevant period under
section 46, which were undervalued, he shall make an application to the Adjudicating Authority to
declare such transactions as void and reverse the effect of such transaction in accordance with this
Chapter.
(2) A transaction shall be considered undervalued where the corporate debtor—
(a) makes a gift to a person; or
(b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor,
and such transaction has not taken place in the ordinary course of business of the corporate debtor.
(2) A transaction shall be considered undervalued where the corporate debtor—
(a) makes a gift to a person; or
(b) enters into a transaction with a person which involves the transfer of one or more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor,
and such transaction has not taken place in the ordinary course of business of the corporate debtor.
Notes
1. The words and figures “of section 43” omitted by Act 26 of 2018, s. 28 (w.e.f. 6-6-2018).