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Insolvency and Bankruptcy - Case Laws
Showing 21 to 40 of 149 Records
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2021 (1) TMI 1220 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - respondent has taken a defence that the Director who has entered into an agreement with the applicant had obtained the amount without the approval of the Board of Director and without having special resolution passed by the board of Director - HELD THAT:- Mere plain reading of the provision shows that under this provision any person may inspect the documents, which are kept in the office of Registrar regarding the incorporation of the company, which includes the Article of Association and Memorandum of Association. 'The documents which a person is entitled to get from the office of Registrar u/s 399 of the Companies Act and if he fails to see and verify it prior to entering with a contract with the company then the company is not liable for that act, if it is done by the Director, because it comes under the doctrine of constructive ' notice. But the question is "does the doctrine of constructive notice allow the outsiders to have notice of internal affairs of the company", the answer is no, because doctrine of constructive notice is subject to exception i.e Indoor Management and that is the reason petitioner has taken this plea.
In view of Section 179(3) (d) the Board of Director of Company shall exercise its powers subject to the provision contained in the Act or in the memorandum or articles and one of the power which is referred in Section 179 (3)(d) of the Companies Act, 2013 is also to borrow the money, of course, in view of Section 180(1)(c) that is subject to special resolution passed by the Board of Directors and in view of Section 180(5) of the Companies Act, 2013 no debt incurred by the company in excess of the limit imposed by Clause C of Sub Section 1 shall be valid or effectual unless the lender proves that he advanced the loan in good faith without knowledge that the limit imposed by that clause had been exceeded but herein the case in hand, we notice that it is not the case of respondent that the debt incurred by the company is in excess of the limit imposed by Section 180(1) (c) of the Companies Act 2013 rather the claim of the respondent is that the Director who signed the loan agreement had not been authorized by the special resolution passed by the Board of Directors as required under Section 180 of the Companies Act, 2013, therefore, Section 180(5) of the Companies Act is not applicable.
The receiving of the amount has been not denied by the respondent and it is also admitted by the respondent that amount has not been paid because the director who entered into an agreement was not authorized by the special resolution as required under Section 180(1) of the Companies Act to borrow the loan and in view of Section 7(5) of the IBC the moment the Adjudicating Authority came to the conclusion that default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional then the Adjudicating Authority has no option but to admit the application filed under Section 7 of the IBC.
The applicant has succeeded to establish that there is a financial debt and Corporate Debtor is in default in making the payment of that financial debt, the application is complete - Application admitted - moratorium declared.
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2021 (1) TMI 1219 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - advance payment paid by the Operational Creditor and not refunded by the Corporate Debtor - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is an admitted position that in the instant case, it is the corporate debtor who is the service provider and not operational creditor and operational creditor has only filed the present petition on the basis of an advance payment paid by the Operational Creditor and not refunded by the Corporate Debtor. The said advance does not fall within the four corners of Operational Debt. Therefore, we are of the opinion that the alleged debt is not an "Operational Debt" as defined u/s 5(21) of IBC, 2016.
The Present Petition is dismissed without any cost.
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2021 (1) TMI 1211 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Anti-competitive agreements - Predatory pricing - dominance of Ola in the relevant market of radio taxi services in Bengaluru and its consequent abuse within the provisions of section 4 of the Act - possibility of more than one dominant party in the relevant market - abuse of position of dominance and matter remanded back for investigation against Uber - HELD THAT:- The below cost pricing by Ola was not predatory pricing with a view to dislodging any competitor from the market but towards establishing itself as an effective and reliable brand in the market and also opening up a latent market to its advantage through awareness generation about its brand and network/platform through promotional initiatives like discounts and incentives and attracting new customers and gaining riders’ confidence. As Ola started from a low market share of about 20%, we cannot agree that it was at that initial time in a dominant position in the market and was trying to push out competitors from the market by employing below-cost, predatory pricing. Increase in its market share over a period of time, we feel, was due to a combination of factors, of which below–cost pricing was one.
Since this pricing strategy was combined with other actions like ease of booking using a smooth and functional technology platform accessible on mobile phones, visible branding, riders’ security, benefits to drivers, all of which were quite effective in earning the riders’ and drivers’ confidence, Ola could become their radio taxi service of preference.
The agreements that Ola has with drivers covers many aspects, which concern welfare measures for drivers and helping them source credit for buying vehicles. It does stand guarantee for the loans thus there is no binding for the drivers to remain loyal to Ola because of financial lock-in. The incentives provided to drivers are dynamic and not constant in time. The drivers have the option to shift to other network depending on their requirement and convenience. Hence the driver’s agreement that Ola has with drivers with entirely optional and does not in any way bind the drivers to Ola’s network in any way. The option to move away from Ola’s network is always there in case the drivers so want - there are no drivers agreements anti-competitive in violation of section 3 of the Act.
Looking to the market behavior of Ola, a clear view is derived that Ola was providing a mobile-app based solution to the riders and drivers in a new and easy way for taxi rides which includes taxi booking and payment. It was not enjoying a dominant position in the relevant market in violation of Section 4 of the Act as it was itself a new entrant in the market. It employed a pricing strategy to establish its brand and network to provide much more efficient and user-friendly services to customers in real time at any place and anytime, to edge out the competitors who were already present in the radio taxi market in Bengaluru, which cannot be faulted as being predatory pricing.
Moreover since Ola is not in dominant position the question of abuse of dominant position through predatory pricing also does not get attracted - appeal dismissed.
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2021 (1) TMI 1209 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Application for closure of its Fixed Deposit on the ground that since Corporate Insolvency and Resolution Process has been initiated against the Corporate Debtor - redemption of fixed deposits to the Account of the Corporate Debtor - whatever the assets belonging to the Corporate Debtor have to come under the control and custody of the RP as per I&B Code - whether or not the fixed deposits lying with the Respondent Bank are to be construed on par with Performance Bank Guarantee covered by the proviso to Section 3(31) of the Code? - HELD THAT:- A performance guarantee is issued to one party of a contract as a guarantee against the failure of the other party to perform the obligations specified in the contract, it is usually provided by a Bank to make sure a contract completes designated project, in the case of financial guarantee, it reassures repayment of money in the event of non completion of repayment. We cannot attribute any logic to it, we only can say performance guarantee alone is exempted by the Code, therefore unless the guarantee has attributes of performance guarantee, it cannot be said that it is exempted by the Code.
The case of the Respondent Bank is, it falls under the proviso to Section 3(31) of the Code, whereas the RP case is it will not fall under the exemption mentioned above. In the present case, it is nether Performance Guarantee, nor a fixed deposit linked to performance guarantee, it is like any other security given against loan facility availed, under this Code, the security interest covered by loan facility is also hit by section 14 of the Code, therefore the fixed deposit given as security against loan facility cannot be equated with the performance guarantee, and the right of lien or set off ordinarily available to the Respondent Bank is not available during CIRP initiated under the Code.
The Respondent Bank is directed to transfer the amount payable (including interest accrued thereon) on closure of Fixed Deposits held by the Corporate Debtor - Application allowed.
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2021 (1) TMI 1208 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH
Seeking direction to Respondents to cooperate with the Applicant (Resolution Professional) and to not restrain the Company and the Applicant from accessing, dealing with, taking over possession of and relocating the assets and records of the Company present at the premises - seeking direction to local administration including police authorities to facilitate the Applicant in accessing, dealing with, taking over possession of and relocating the assets and records of the Company present at the Premises - effectiveness of Lease Deed and Maintenance Agreement - seeking waiver of the Lease Rent and Maintenance Charges payable under the Lease Deed and Maintenance Agreement, respectively, for the entire Lockdown Period - seeking deduction or adjustment of any amounts from the Security Deposit and/or Maintenance Advance available with them towards the admitted claims of the Respondents as admitted by the applicant at the commencement of the CIRP of the Corporate Debtor - HELD THAT:- It is clear from the facts of the case and undisputed by the Respondents that they have repeatedly prevented the Applicant from accessing and removing the assets and records of the Corporate Debtor located at the office premises of the respondent company. This action on the part of the Respondents is not correct as there is no provision of law which entitles the Respondents to hold on to the assets and records of the Company and to prevent the Applicant from accessing and removing the same. Rather it is contravening the provisions of the Code which empowers the RP to take into possession all the assets of the Corporate Debtor.
It is believed that the Respondents are seeking several directions against the RP vide their reply filed in this application which itself is filed by the RP seeking recourse against the land lords. If they had grievances against the RP, they should have filed appropriate proceedings against the RP either before this Tribunal or before any other competent authority to seek redressal of their grievances. But they have not filed any application in any court of law to prevent the Applicant from accessing and removing the assets and records of the Company from the office premises rather they left it as it is so as to continue the increase of rent on the Corporate Debtor for the reasons best known to them.
The amount due and payable to the Respondents is the Operational Debt and with a view to put an end to this matter, it is advisable to the Respondents that they may file their claim before the RP as soon as possible and this Bench will direct the RP for verification of claim and determination of amount of claim in terms of Regulation 13 and 14 of the (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and pay the Respondents as and when the funds are available with him as per the waterfall mechanism provided under Section 53 of the Code - the Respondents cannot henceforth withhold the assets of the Corporate Debtor and thus are directed to allow the RP to vacate the premises within 30 days from the date of this Order.
Application disposed off.
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2021 (1) TMI 1207 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Date of operation (coming into effect) of order passed by the Adjudicating Authority - whether the order becomes operative from the date it is pronounced or the order become operative only when it is uploaded on the website? - HELD THAT:- From the fact which has been brought on record, it is clear that the order dated 09.03.2018 was pronounced by the Adjudicating Authority, which was duly shown in the cause list for the date 09.03.2018 at Item No. 1 under the heading ‘pronouncement of the order’ - It is also apparent from the record that the order was uploaded on the website on 22.06.2018 which fact has been noticed in the subsequent order of the Adjudicating Authority dated 30.07.2018. The fact that order has not been uploaded till 22.06.2018 whether it shall be treated to have taken away the implementation of the order dated 09.03.2018, is the question to be answered.
In the present case, we have already noticed that the Application under Section 7 was filed in the year 2017. Notices were served on the Corporate Debtor as recorded by the Court on 15.01.2018. Application under Section 7 was heard on 30.01.2018 and order was pronounced on 09.03.2018. It is not permissible either the Corporate Debtor or any other stakeholders to contend that the order shall not become operative on 09.03.2018 when it was pronounced - It is the case of the Appellant that vide Memorandum of Understanding dated 19.04.2018 he has been allotted 20 units in lieu of the outstanding debt on account of legal services rendered to Corporate Debtor. When Section 7 petition already admitted on 09.03.2018 and Moratorium has kicked in, there was no authority in the Corporate Debtor to enter into a Memorandum of Understanding with regard to its property and assets.
Appeal dismissed.
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2021 (1) TMI 1202 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - HELD THAT:- The Applicant/Financial Creditor has placed on record sufficient documentary evidence, based on which it is ascertained that the Corporate Debtor has committed default in making payment to the Applicant/Financial Creditor. The Applicant/Financial Creditor has fulfilled all the requirements under law.
The scheme is approved - application allowed.
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2021 (1) TMI 1195 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI
Resolution Professionals seeking peaceful handover of property - Section 25(2)(a) of I&B Code - HELD THAT:- It is very clear that the Respondents are not co-operating with the RP and therefore, we direct the Respondents to co-operate with the RP in handing over the property to him. After going through the documents, it is clear that the property is the asset of the Corporate Debtor over which the Respondents have a possession which is needed to be handed over to the RP. The RP is directed to obtain the possession at the earliest and is at a liberty to take assistance from the local police if at all needed.
Appeal allowed in part.
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2021 (1) TMI 1191 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - fulfilment of conditions laid down under Section 10 of the Contract Act - HELD THAT:- It is the duty of the Adjudicating Authority to decide in conformity with the pleadings and the proofs i.e. to say “jus decere”, and non “jus dare” to administer the justice and not to make the law.
It is well established rule of law that- “all contracts and agreement but all agreements are not contract”. This is so because for a contract to be valid, it needs to fulfil all the essential ingredients mentioned under Section 10 of the Indian Contract Act, 1872 (hereinafter referred to as Contract Act). Even if it is assumed that MoU fulfils all the ingredients of the Contract Act but in that case the MOU so relied upon by the petitioner is bad in the eye of law inasmuch as it does not fulfil the condition of Section 10 of the Contract Act, as the date is not given, and in number of places the vital information and details are blank as is apparent from page no 218 and 220 of the application (Exhibit-H). The enforceability of a MoU depends upon the principle governing legislation, I.e. the Contract Act.
The Petitioner, admittedly has shown the date of default as the date of filing of the commercial suit number 782 of 2017 filed somewhere in July 2017 as reflected from Form I, part IV at page no 6 of the Application. It is to be mentioned herein that, the word “Creditor”, “Debt”, and “default” are used at many places in Insolvency Code and hence are very important. “Default” means non-payment of debt when whole or any part of instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor, as the case may be, Section 3(12) of the IB Code. Therefore, the date of filing of the commercial suit i.e. dated 12.07.2017, cannot be, in any manner be called as date of default, as per IB Code. Thus, due to want of “date of default”, the petition is bad in eye of law and not maintainable.
On going through the records and documents produced by both the sides it is amply clear that, the arrangement between the parties are in the nature of business sharing and there is no 'financial debt' - the records show that even after receiving letter dated 03.06.2011(Letter of Intent), the petitioner has never raised any objection and has accepted and admitted the conditions drawn by the respondent. Under such circumstances, even if we assume and consider the petitioner as "financial creditor", then even the claim so filed by the petitioner stands time barred.
The Adjudicating Authority is of the considered view that the instant petition is not maintainable - Petition dismissed.
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2021 (1) TMI 1190 - SUPREME COURT
Grant of Interim Bail - petitioner was enlarged on interim bail on medical grounds pending the consideration of the main bail petition - HELD THAT:- This is really a problem of his own making in having pursued the matter for the mail bail petition rather than seeking extension of interim bail on medical grounds. Be that as it may, we permit the petitioner to move the High Court seeking interim bail on medical grounds and since the petitioner would have to surrender today, we grant time till Friday to obtain orders, if any, from the High Court and providing interim protection till that time to surrender.
SLP dismissed.
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2021 (1) TMI 1189 - NATIONAL COMPANY LAW TRIBUNAL PRINCIPAL BENCH NEW DELHI
Liquidation of Corporate Debtor - Corporate Debtor has not been working since long and the last Balance Sheet i.e., found in the MCA Portal is for the year 2012-2013 - Corporate Debtor Directors are also not traceable - section 33(2) of IBC - HELD THAT:- Though this Company Petition was admitted on 03.01.2020, for the application for appointment of Authorized Representative remained pending for long time, the RP could not get home buyers approval until before 2nd CoC meeting. Of late the AR being appointed, the CoC held meeting on 12.12.2020 and e-voted on with 96.7% approval on 14.12.2020 for liquidation of the Corporate Debtor, accordingly the RP filed this Application proposing liquidation of the Corporate Debtor. It is also pertinent to mention that RP having given consent to be appointed as a Liquidator, the same has been filed along with this application for appointment of RP as Liquidator.
As the company has not been working since long and the Directors of the company are also not traceable, the CoC has taken a right decision proposing for liquidation of the Corporate Debtor - liquidation is ordered subject to conditions imposed.
Application allowed.
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2021 (1) TMI 1177 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Fixation/ratification of the fees of IRP/RP - Commercial wisdom of COC - HELD THAT:- Fixation of fee is not a business decision depending upon the commercial wisdom of the Committee of Creditors - going by the aforesaid rationale it is amply clear that fixation of the fees of IRP/RP does not come within the domain of the Commercial wisdom of COC and, hence is justiciable. The aspect of ascertaining fees of IRP/RP is strictly guided by the mandate and parameters provided by the IBBI vide its circular dated 12.06.2018 bearing number IBBI/IP/013/2018.
The fixation of fee is not a commercial wisdom of the CoC. Hence, respondent no. 2 is directed to ratify the IRP fee claimed by the applicant/IRP to the tune of ₹ 2,10,000/- and reimburse the same - Application allowed.
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2021 (1) TMI 1173 - MADRAS HIGH COURT
Seeking direction to first respondent to pay a sum of ₹ 168,85,00,000 being the sum admitted as payable to the petitioner - bills raised for the electricity supplied on a monthly basis to the first respondent - unilateral and frivolous deductions or not - demand notice under section 8(1) of the Insolvency and Bankruptcy Code, 2016, read with rule 5 of the Insolvency and Bankruptcy Rules, 2016 - HELD THAT:- It is not in dispute that the petitioner is a Power Generating Company and is in the business of supplying power to the first respondent and a major portion of the income depends on the clearance of the payments from the first respondent. From the year 2016, the first respondent had stopped making payments to the petitioner, hence, the petitioner approached the National Company Law Tribunal to start corporate insolvency resolution process against the first respondent, however, the National Company Law Tribunal dismissed the petition.
The payments made by the first respondent after May 24, 2018 itself would establish that they treated the petitioner-company as a separate entity and not along with the other two companies. The first respondent having partly complied with the memorandum of settlement dated May 24, 2018 now they cannot take a different stand and contend that since the other two companies are liable to pay the amounts to the first respondent, the petitioner-company is not entitled to claim the amount as per the memorandum of settlement dated May 24, 2018.
After deducting the sum of ₹ 135,00,00,000 paid by the first respondent to the petitioner from the total sum of ₹ 208,85,00,000 the balance payable by the first respondent is ₹ 73,85,00,000. Therefore, the first respondent is liable to pay the balance sum of ₹ 73,85,00,000 to the petitioner - the first respondent is directed to pay the balance sum of ₹ 73,85,00,000 to the petitioner within a period of eight weeks from the date of receipt of a copy of this order.
The writ petition is partly allowed.
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2021 (1) TMI 1165 - NATIONAL COMPANY LAW TRIBUNAL, KOCHI BENCH
Jurisdiction - authority of Resolution Professional to file an appeal before the Joint Commissioner, GST, as part of the verification and determination of a claim submitted by the GST department in Form B - seeking clarifications as to whether the judgement, decree or order, if any, passed by the Appellate Authority under CGST Act pursuant to the Appeal, against the Corporate Debtor shall be binding on Corporate Debtor when the moratorium declared by the Hon'ble National Company Law Tribunal Bench by virtue of section 14 of the Insolvency and Bankruptcy Code is in effect or not - seeking clarification whether the requirement of the pre-deposit mandated under Section 107 of the GST Act, shall be prejudicial to the interest of the Corporate Insolvency Resolution Process, as the said Section is inconsistent with Regulation 13 and 14 of the CIRP Regulations due to the overriding effect of Insolvency and Bankruptcy Code, 2016 over the Goods and Service Tax Act, 2017.
HELD THAT:- After considering the entire gamut of the matter, this Tribunal disposed of application directing the Resolution Professional to file an appeal before the Joint Commissioner, that too on the submission of the Resolution Professional before this Tribunal that the CoC resolved to file an appeal before the GST Commissioner for revisiting the claim amount of the applicant.
There is no error in the Order in application to be clarified by this Tribunal - application dismissed.
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2021 (1) TMI 1162 - NATIONAL COMPANY LAW TRIBUNAL JAIPUR BENCH (RAJASTHAN)
Seeking setting aside of the rejection of claim of the Applicant - financial debt or not in view of intercorporate deposits - seeking to declare the Applicant as a Financial Creditor - HELD THAT:- It is an undisputed fact that the Applicant has provided the amount in terms of letter dated 01.04.2014 and 01.04.2015 and such amount along with interest is due from the Corporate Debtor. The documents filed by the Applicant show that in order to avail the services from the Applicant, the Corporate Debtor has appointed Applicant as sales promoter and accepted security deposit. Deposit is not the mainstay of the agreement for any funds in respect of business purposes.
It is only an incidence of the agreement for services, Unlike as stated in order passed by a bench of this Adjudicating Authority in IA No, 02/JPR/2018 dated 28.09.2018, it is not even related to agency agreement. It is evident that the agreement between the party is not for time value of money as the crux and essence of the agreement. Interest paid by the Corporate Debtor is incidental to the blocking of deposit amount and is a resultant consequence. Also, the claim of the Applicant to be considered a financial debt in terms of the code must fall under any of the category mentioned Section 5(8) (a) to (i).
After analysing Form 26 AS annexed by the Applicant vide dairy no. 1967/2019, it is noted that the Corporate Debtor had deducted tax under Section 194A and 194H of the Income Tax Act, 1961 for FY 2013-14 and 2014-15 and for FY 2015-16 tax was deducted under Section 194A and 194J. Section 194A deals with interest other than interest on securities. Section 194H deals with income by way of commission or brokerage and Section 194 J deals with fees for professional or technical services - The above observation shows that the Corporate Debtor had deducted tax against the interest on the amount provided by the Applicant. On the other hand, the Applicant has failed to submit sufficient documents to establish that the amount was borrowed by the Corporate Debtor for commercial purpose, as it is nowhere mentioned in the letters dated 01.04.2014 and 01.04.2015 that the corporate debtor is in need of money or the said deposit will be used for its business activities.
Merely intercorporate deposit does not make it a financial debt, amidst the background and facts stated by the Applicant. Just because the interest component may have resulted in a larger income for the Applicant, or the Corporate Debtor may have acknowledged interest payable does not make it a core financial deal.
It can be concluded that the RP has rightly considered the claim of the Applicant as operational debt - Application dismissed.
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2021 (1) TMI 1159 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD BENCH
Seeking grant of refund of Bank Guarantee and deposit the same in the Bank Account - amounts received during CIRP, during moratorium period - amounts forming part of the assets of the Corporate Debtor or not - violation of provisions of Section 14 of the Code - HELD THAT:- It is noted that Bank Guarantee was issued on 14.07.2016 for ₹ 3,34,90,458/- in favour of the customer of the Corporate Debtor, which was valid upto 31.08.2019. The Bank Guarantee was invoked by the Customer, Indian Navy on 22.08.2019 for warranty obligations before the commencement of the CIRP date i.e on 15.01.2020. The amount paid by the Respondent Bank on invocation of Bank Guarantee from its own funds on account of non-availability of Funds in Corporate Debtor's Accounts before the commencement of CIRP amounts to grant of credit facility to the Corporate Debtor before CIRP. The amount retained by the Customer, Indian Navy by invoking Bank Guarantee was released by Indian Navy on 28.09.2020. The amount was released by the customer, Indian Navy after the date of commencement of CIRP when the moratorium is in force to the Corporate Debtor.
As per Section 14 of 1B Code, the amount received during the CIRP when the moratorium is in force, is the asset of the Corporate Debtor and RP has to deal with the same as per the provisions of the 1B Code. The Respondent is not entitled to adjust the same when the moratorium is in force. If, he has any dues pending from the Corporate Debtor on the date of commencement of CIRP, it is open for him to file his claim before the RP.
Application allowed.
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2021 (1) TMI 1158 - NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD
Removal form CoC - Related party or not - seeking restoration of voting percentage of the applicant to 100% as earlier existed - removal of Resolutions passed in 7th, 8th and 9th CoC Meetings - whether TSTPCL is a related party as claimed by the applicant or not and its inclusion in the CoC as a Financial Creditor to the Corporate Debtor is as per the IBC? - HELD THAT:- Respondent no. 3 squarely fits into the definition of 'related party' under section 5(24) (a), (h), (j), (1) and (m) of the Code. From the record submitted to the Tribunal it is observed that out of four directors of the Board of Directors, two directors are nominated by respondent no. 3. The role and responsibility of the Directors is to protect the interests of the Corporate Debtor and not to merely sit in the Board meetings of the corporation. They have a fiduciary role to protect the interests of the Corporate Debtor and are responsible for shareholders of the Corporate Debtor at all times. The Board is responsible to the shareholders of the Corporation. Therefore, the claim of the Resolution Professional that they are only nominated members and they do not have much say in the functioning of the company is untenable. Every director has responsibility to protect the interests of shareholders. Accordingly the Directors nominated by the corporation have to oversee the functioning of the Corporate Debtor.
We are not in agreement with the views of the Resolution Professional as well as respondent no. 3 in this regard that they are only nominee-directors and that they do not have much say in the functioning of the Corporate Debtor. Further on a close perusal of the Companies Act, Listing Regulations, it is evident that disentitling of a shareholder, who is a related party from exercising his voting rights in respect of any resolution relating to any contract or arrangement to which such a related party is a party. Therefore, we are not in a position to accept the contention of respondents no. 1 and 3 that nominee-director does not have significant influence on the functioning of the Corporate Debtor as untenable and not acceptable.
When we juxtapose and read the Articles of Association as well as the definition of 'related party' as given in the I&B Code, it is evident that two nominee-directors of respondent no. 3 have significant influence in decision making process of the Corporate Debtor. The Articles of Association clearly mention that action on important matters should be taken only by affirmative vote of 3 (three) or more directors, but there must be included in the qualified majority at least one director nominate by APTPCL - Article 62 plays vital role in deciding the subject matter in this case. From reading of Article 62 it is clearly evident that nominee-directors of respondent no. 3 have significant influence in the functioning of the Corporate Debtor and they cannot now claim that they are only nominee-directors and they do not have much role in the Corporate Debtor. Such a claim is untenable.
Thus, TSTPCL falls within the meaning of 'related party' as given in the I&B Code and Articles of Association of the Corporate Debtor - the Resolution Professional shall reconstitute the CoC treating the TSTPCL as a 'related party' - application disposed off.
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2021 (1) TMI 1157 - THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - loan were provided to Corporate Debtor along with Doshi Holdings Pvt. Ltd. (Doshi) as Co-borrower under three different Loan-cum-Pledge Agreements with the subsequent addendums - Financial Creditors - invocation of pledged shares, amounts to recovery of amounts or not - two separate Applications can be filed simultaneously under Section 7 or not - HELD THAT:- Since the “debt” and “default” is admitted by the Corporate Debtor, the Bench would examine the admissibility of the Petition based on the outcome regarding the two issues mentioned by the Corporate Debtor, i.e., Premier Limited against the Petitioner. This Bench notes that invocation of pledged shares does not amount to said monies recovered - it is clear that it is a step which has to be followed with the enforcement of security whereby the shares are transferred into the Pledgee’s account. Only after this, the Pledgee, i.e., in this case the Petitioner, would be in a position to choose to sell or to hold on to the shares as per its discretion. Therefore, this Bench finds that the contention of the Corporate Debtor that since the Pledge was invoked on 02.07.2020, it amounts to the value of debt being reduced to the extent of the existing price of the shares in the stock markets on 02.07.2020 which is about ₹ 2.06 crores in this case as not tenable.
It is entirely at the discretion of Pledgee which is the Petitioner to sell the shares in case the Pledger makes the default. However, in the event the pledgee does not exercise the discretion, no blame can be put on the pledgee. It is therefore clear that the Pledgee has the discretion to decide if he wants to sell the pledged security, when to sell it and how much to sell it. The Pledger cannot dictate terms to the Pledgee on how to exercise his right.
Two separate Applications can be filed simultaneously under Section 7 or not - HELD THAT:- As per the Judgment of Piramal, [2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] two separate Applications can be filed simultaneously under Section 7 against Premier Limited as well as Doshi Holdings Private Limited who is Coborrower. However, under Section 7, if the claim against Premier Limited (Corporate debtor herein) is “Admitted” then for the same set of loans, arising under the same loan documents, the same debt/ claim against Doshi will not be permissible in terms of the NCLAT Judgment of Dr. Vishnu Kumar Agarwal Vs. Piramal Enterprises Limited [2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI].
This Bench, on perusal of the documents filed by the Financial Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed. The existence of debt and default is reasonably established by the Petitioner as a major constituent for admission of a Petition under Section 7 of the Code. Therefore, the Petition under sub-section (2) of Section 7 is taken as complete - Petition admitted - moratorium declared.
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2021 (1) TMI 1155 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH
Seeking stay of the further proceeding of the Company Petition - termination of Power Purchase Agreement (PPA) - HELD THAT:- The Application is intended to deflect the attention of the Tribunal from the blatant default in repayment of its debts. The Code is an independent legislation that provides effective resolution of debts. The Tribunal has exclusive jurisdiction in such matters. The objective of the CIRP under the Code is to ensure maximization of the value of the Corporate Debtor - the plea that the admission of the Company Petition would be prejudicial to the Corporate Debtor cannot a ground to stay the further proceeding of the Company Petition. The present Application is intended to delay the disposal of the Company Petition, which from the averments made in the Application deserves to be admitted. The Application therefore does not merit consideration and is liable to be rejected.
The observation would indicate that no other extraneous matter should come in the way of expeditiously deciding a Petition either under Section 7 or under Section 9 of the Code. The inability of the Corporate Debtor in servicing the debts or the reason for committing a default is alien to the scheme of the Code. The averments made in the instant Application would indicate that various factors apparently hindered the Corporate Debtor from carrying on its business. There were disputes between the Corporate Debtor and the recipient of energy as well as the change in supply chain management of the recipient of the energy may also have contributed to the lack of confidence between the entities - The decision in the matters pending before the Hon'ble Apex Court and other authorities would hardly have any bearing and impact on the issues involved in the present Company Petition under Section 7 of the Code.
This Authority is required only to see whether there has been a debt and the Corporate Debtor defaulted in making the repayments. These two aspects when satisfied would trigger Corporate Insolvency - there has been a considerable delay in disposal of the Company Petition.
The Application be and the same is rejected on contest.
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2021 (1) TMI 1153 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI PRINCIPAL BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in paying the claim despite after receipt of Section 8 notice served upon the Corporate Debtor - Operational creditors - suppression of documents seminal to decide the penalty and correspondence exchanged long prior to issuing section 8 notice - it is claimed that the amount retained by the Corporate Debtor is largely on account of penalty against the short supplies, and thus cannot be released to Operational Creditors - pre-existing between the parties before issual of Section 8 notice or not.
HELD THAT:- It is an admitted fact that from the Operational Creditor side that the Corporate Debtor replied to its Section 8 notice dated 12.04.2020, on 21.04.2020 i.e. within 10 days from the date of receipt of notice, in the reply, the Corporate Debtor has again disputed that the Operational Creditor is liable to pay penalty, therefore it could not be decided who is liable to pay whom, because if the penalty is more than the unpaid invoice amount retained by the Corporate Debtor, the Operational Creditor would be liable to pay the penalty remained due and payable by the Operational Creditor - the Operational Creditor counsel has filed rejoinder setting up a new case that since the Performance Bank Guarantee has not been retained, it is to be construed that no dues are outstanding against the Operational Creditor, therefore whatever defence taken up by the Corporate Debtor, the operational creditor says, could not be considered as dispute is in existence before receipt of Section 8 notice by the Corporate Debtor.
On record it is evident that final bill has not been prepared, penalties not discounted, the operational creditor has not deputed its authorized representative for finalization of final bill, therefore due itself cannot be assumed unless final bill is prepared, therefore question of default will not arise, in any event, dispute is preexisting between the parties as on the date section 8 notice the corporate debtor received, therefore it is a clear case hit by pre-existing dispute.
From the Operational Creditor side contention is dispute is frivolous, from the Corporate Debtor side contention is dispute is pre-existing - the Petition shall be dismissed on the ground that Petition is hit by pre-existing dispute - petition dismissed.
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