James Baldwin, to me, seems to be in a state of perpetual rage. Anger informs his writing, is a constant in those ferocious eyes, and when he stands and makes a speech, he makes you shiver. I wanted to pick up Giovanni’s Room, and before I could start, I wanted to get a little more feeling for him, so I did a little digging.
A black man born in America in the 1920s, Baldwin’s early life was far from easy. Wikipedia tells me that his mom left his biological father because of his drug abuse, and that his stepfather wasn’t a very kind man either.
He famously said, ‘to be a Negro in this country and to be relatively conscious is to be in a rage almost all the time.‘ If you want to get a little more sense for what he means, I urge you to watch the legendary Baldwin-Buckley debate. You can find the link here.
There is arrogance in Baldwin’s voice. It is as if he is containing a mighty rage so it wouldn’t spill out and destroy us all. But there is also, strangely, a lot of love. He suggests that what you think and conceive is based on ‘your system of reality’ and that different people can have different systems of reality based on where they find themselves in the world – where they are born into and how they have been raised. If that doesn’t rock your world, I don’t know what will. I, for once, am shattered that my world view may not be as objective as I would like it to be.
I am an Indian and I am not an ardent follower of American politics. But what Baldwin touches here is universal. What if you found yourself poorer, struggling and exploited by a political system that forever refuses to give you your basic human dignity? Would the world still be the same place?
Baldwin makes a case that racial injustice fundamentally alters a black man’s perception of himself, that they are deep down made to believe that they are not equal. Just the idea of it makes me cold with fear. But I know this happens in my country as well, in myriad different ways.
After satisfying myself with some more of his ideas, I finally moved on to reading Giovanni’s Room – his second book. This utter doom of a novel, although very short, was not something I could breeze through. It tells the story of an American man in Paris, both in search of and in flight from himself. The protagonist grapples with his sexual orientation, unable to let himself be seen for who he is. It is very easy to miss this, but this is very much a political novel, written at a time when the gay movement had barely grown roots.
The razor sharp prose portrays the inner lives of its characters with an unnerving rawness. I can’t describe the number of times I had to stop, reeling from stunning verses such as this –
“And no matter what I was doing, another me sat in my belly, absolutely cold with terror over the question of my life.”
I have to add that I’ve never before seen Paris come alive like the way it does here – it’s almost like the city is a character in the novel, its presence magical.
This story must have also been a deeply personal work for Baldwin – him being a black, gay man who ultimately moved to Paris.
For all his anger, Baldwin can articulate human emotions in all its rawness and tenderness, sometimes giving the sensation of being in free-fall. I’ll leave you with this quote of his which once again, made me cold with fear – “love takes off the masks that we fear we cannot live without and know we cannot live within.”
When insolvency is imminent, it is not uncommon for companies to transfer its properties to known associates, create fraudulent encumbrances or devise transactions that would keep the asset base beyond the reach of its creditors. Traditionally, for such transactions to be struck down, it had to be established that they were made with an intent to defraud the creditors. Certain provisions of the Insolvency and Bankruptcy Code, 2016 (s. 43 and s.45 in particular) however do away with such requirements of having to establish ‘intent’. The Supreme Court was particularly concerned with s. 43 of the Code in Anuj Jain v Axis Bank Limiteddecided on 26.2.2020.
The corporate debtor in this case was Jaypee Infratech Limited (JIL/corporate debtor), a subsidiary of Jaiprakash Associates Limited (JAL) which held 71.64% shares in the corporate debtor. Soon after the CIRP commenced, the IRP filed an application before the NCLT for setting aside of certain mortgage deeds by which nearly 858 acres of JIL’s properties were given as security to various banks and financial institutions for loans disbursed to its parent company, JAL.
While the NCLT allowed the application, the NCLAT set aside NCLT’s order and held the mortgages to be valid. Before the Supreme Court, the IRP, lenders of the corporate debtor and home buyers who had invested in projects of the corporate debtor made submissions supporting the NCLT’s order, while JAL and the lenders/bankers of JAL submitted that the NCLAT had rightly held the mortgage deeds to be valid.
S. 43 of the Code
43(1) lays down that a transaction can be struck down if it is found to be ‘preferential’ within the meaning of 43(2) and if it is entered into during the ‘relevant period’ as defined in 43(4). What will not constitute a preferential transaction is set out in 43(3) and the transactions therein constitute the exceptions.
43(4) defines ‘relevant period’ (popularly known as ‘look-back period’ or ‘suspect period’) to mean a period of one year preceding the commencement of CIRP if the transaction is with an unrelated party; and a period of two years preceding the commencement of CIRP if it is made with a related party. As to who is a ‘related party’ is defined in 5(24) of the Code. For the purpose of this case, suffice it to say that a related party includes the holding company of the corporate debtor.
43(2) creates a legal fiction by which certain transactions are deemed to be preferential. If it is a transfer (i) for the benefit of a creditor (ii) on account of an antecedent debt (iii) by way of which such creditor is put in a beneficial position than it otherwise would have been when assets of the corporate debtor are distributed under the Code, then such a transfer is deemed to be preferential. By way of an illustration, a transaction by which a new security is provided for an existing debt would be hit by 43(2).
43(3) lays down that a transaction would not be considered as preferential if it is made in the ordinary course of business or if it is a transfer creating a security interest for ‘new value’. Such new value would include a fresh loan/credit. In other words, it should not be an existing debt.
Reading these provisions together, if a transaction is deemed to be preferential as per 43(2) and is entered into during the relevant period as defined under 43(4), it is then liable to be struck down unless it falls within the exception mentioned in 43(3).
On whether the mortgages were during the look-back period
Some of the mortgage deeds in question were executed more than one year prior to the commencement of CIRP and the lenders of JAL therefore argued that they being an ‘unrelated party’, the said mortgage deeds would not attract s. 43 of the Code. The Supreme Court however held that the true beneficiary of the said mortgages was JAL, the parent company of the corporate debtor. The relevant look-back period was therefore held to be two years preceding the commencement of CIRP for the reason that JAL was a related party to the corporate debtor.
On whether the mortgages were preferential
The lenders of JAL argued that there was no antecedent debt or liability for which the corporate debtor created the mortgages. Rather, the securities were given in respect of loans and advances made to JAL. They submitted that the said mortgages were disclosed in the books of accounts/annual report of the corporate debtor. Further, s.43 being an expropriating provision that unsettles concluded transactions, they urged the Court to construe its ambit strictly.
The Supreme Court, while accepting that s. 43 would have to be strictly construed, held that the plain mandate of s. 43 cannot be ignored. It concluded that by way of s. 43, a legal fiction has been created whereby preferences are deemed to have been given. Even the question of ‘intent’ behind the transaction is irrelevant. Once the transaction falls within the ambit of s. 43(2) and is within the relevant period, it necessarily follows that it is a preferential transaction (unless an exception is made out under 43(3)). The Court further held that whether the transaction has been disclosed in the annual reports/books of accounts is irrelevant for the purpose of what constitutes a preferential transaction under s. 43.
As regards there being no antecedent debt for which the mortgages were executed, the Court held that even though there was no creditor-debtor relationship between the lenders of JAL and the corporate debtor, the mortgages were ultimately created to secure the debts of JAL. Taking note that JAL was an operational creditor in respect of the corporate debtor and had also regularly provided finances to the corporate debtor, the Court held that the mortgages were indeed created on account of antecedent debts owed by the corporate debtor to JAL.
Whether the mortgages were made during the ordinary course of business
The lenders of JAL argued that accepting securities from third parties is in ordinary course of their business and that the mortgages therefore fall within the exception provided in s.43(3). To this end, they pointed out that s. 43(3)(a), which exempts ‘transfer made in the ordinary course of the business or financial affairs of the corporate debtor orthe transferee’, would apply even if it is not established that the transaction was made in the ordinary course of business of the corporate debtor.
The Supreme Court however held that the or in s. 43(3)(a) would have to be read as and in order to give effect to the true objectives of the Code. In view thereof, to avail the exception in s. 43(3)(a), it has to be established that the transaction was made in the ordinary course of business of the corporate debtor.
As to what would constitute ‘ordinary course of business’, the Supreme Court read out from the High Court of Australia’s judgment in Downs Distributing Co Pty Ltd v. Associated Blue Star Stores Pty Ltd (in liq) that it ‘means that the transaction must fall into place as part of the undistinguished common flow of business done, that it should form part of the ordinary course of business as carried on, calling for no remark and arising out of no special or particular situation.’ Taking the said observations into account, the Supreme Court held that creating high valued securities cannot be said to be in the ordinary course of business of the corporate debtor.
In conclusion, the Supreme Court held that the mortgage deeds were void in view of the legal fiction created by s. 43 of the Code.
I wonder what would happen if a large settlement is made in an insolvency petition and the matter is closed and within months thereafter in another petition, the insolvency is commenced. Would the settlement be set aside because it was in respect of an antecedent debt or would it be in the ordinary course to do so? To think there could be several such transactions that could be set aside if entered into in the twilight of insolvency can surely give the jitters to creditors. But while s. 43 can upset genuine transactions that were entered into in the months preceding the insolvency, it also has to be seen as a necessary evil to ensure all creditors get a fair chance at realizing their debts.
 The erstwhile Presidency – Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920,
Section 328, 329 of Companies Act, 2013, Transfer of Property Act
 Civil Appeal Nos. 8512-8527 Of 2019 With Civil Appeal Nos. 6777-6797 Of 2019
Civil Appeal Nos. 9357-77 Of 2019 (Arising Out Of Diary No. 32881 Of 2019)
I’m writing this as the Corona Virus continues its assault around the world and of course, this makes me think about death and I wonder if the next book would be my last book – in which case, please God – let it be a cozy mystery. And this book is exactly that!
First published in 1913, this book features Trent, an artist who almost accidentally becomes a detective and writes for a publication The Record. The murder is that of an evil stock-market genius – Sigsbee Manderson. Trent goes about his business and soon arrives at certain conclusions about who the murderer is. We later see that while the facts he discovered were right, his inferences, the supposed motive and his conclusions about the murderer are all wrong. This is a twist (and a good one at that) that upends Trent’s theory and raises more questions. It doesn’t help that Trent falls in love with Manderson’s now widowed wife – who could still be a suspect.
The final chapter however did not sit well with me. You know what they say about how the climax of a good whodunit must be surprising, but should also make you feel there couldn’t have been any other way, that surprising as it is, it is also the inevitable? This was not nearly as perfect – but still is amusing in that it keeps throwing multiple versions of a single event that has you guessing till the end.
To not say anything about how stylish the prose is would be a disservice – the humor, the droll observations and the sheer confidence of the verses feel nothing short of being hit by a storm.
I will surely recommend this to fans of whodunits, but a better book that I can think of is Magpie Murders by Anthony Horowitz. If you have a recommendation for a fellow lover of detective-fiction, do let me know!