Avoidance preferential undervalued transactions section 43 45 ibc requires specific pleadings formal application natural justice

An Adjudicating Authority cannot suo motu or through summary proceedings invalidate a transaction as preferential or undervalued under Sections 43 and 45 of the Insolvency and Bankruptcy Code, 2016 without a formal application setting out cogent material facts. The statutory scheme mandates threadbare scrutiny and procedural fairness, requiring that the party against whom avoidance relief is sought be put on explicit notice of the specific allegations. Invalidating an assignment agreement as undervalued or preferential as a side issue while deciding a third-party intervention application violates fundamental principles of natural justice and exceeds the statutory scope of inquiry where no proper avoidance application was moved by the resolution professional or eligible parties. (Gloster Limited v. Gloster Cables Limited & Ors. | 2026 INSC 81)