Fraudulent Transactions: What To Keep In Mind

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In light of the worldwide Covid-19 pandemic and the resulting financial slump in the country many  companies are likely to find modes to ring fence their assets for better security and protection. Some  distressed companies may also look at ring fencing their assets to secure them from any corporate  insolvency resolution process (“CIRP”) that these distressed companies may be at the brink of. While  doing so, the companies have to ensure that such transfers are in their ordinary course of business  and such transfers are not undertaken with an intent for tax evasion or for constituting a fraud or  preferential treatment to the creditors. The Insolvency and Bankruptcy Code, 2016 (“the Code”), the  Companies Act, 2013 and Transfer of Property Act, 1882 provides for provisions for setting aside  any transfers that have been effected with an intent to defraud the creditors of a company. This  article enlists various kinds of fraudulent transactions that can be set aside by the Court under the  above-mentioned enactments…

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