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Insolvency and Bankruptcy - Case Laws
Showing 61 to 80 of 149 Records
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2021 (1) TMI 936 - NATIONAL COMPANY LAW TRIBUNAL BENGALURU BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Respondent has failed to comply with the order passed by the Hon'ble K-RERA and are in default of financial debt - HELD THAT:- It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT], has inter alia, held that I&B Code, 2016 is not intended to be substitute to a recovery forum.
In the instant case, it is seen that the Petitioners have already obtained an order from the relevant forum under the RERA Act and the same can be executed before any relevant forum. This Tribunal cannot be used as a recovery forum when orders of the K-RERA or any other forum are not complied with. Merely because the other courses may be cumbersome, as pleaded, cannot be a ground for taking recourse to the I&B Code when no case is even otherwise made out for admission, since the Petitioners do not admittedly meet the minimum threshold of 10% etc. of Financial Creditors of the same class. For this reason, the Ld Counsel for the Petitioner's plea that liberty may be granted to file a fresh petition also cannot be acceded to. The petition is clearly an attempt at forum shopping and deserves to be dismissed.
Petition dismissed.
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2021 (1) TMI 935 - NATIONAL COMPANY LAW TRIBUNAL, KOCHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - debt, limited by time or not - Financial Creditors or not - debt due is a Financial Debt or not - HELD THAT:- In view of the law laid down by the Hon'ble Supreme Court in ITC LIMITED VERSUS BLUE COAST HOTELS LTD. & ORS. [2018 (3) TMI 932 - SUPREME COURT], we hold that the WhatsApp communication dated 23-5-2019 annexed by the Financial Creditor along with the rejoinder constitutes an acknowledgement of liability, where the debtor who sent such a message has no intention of paying so long as he can avoid payment, and nothing before his mind but a desire, somehow or other, to gain time and avert pressure and falls within the meaning of Section 18 of the Limitation Act, 1963. Therefore, this Tribunal holds that the Application filed by the Financial Creditor is within the limitation period.
From the definition of Financial Creditors, Section 5(8) of the 'I&B Code', it is clear that a 'financial debt' is a debt along with interest which is disbursed against the consideration for the time value of money and may include any of the events enumerated in sub-clause (a) to (i). Therefore, this Tribunal is to see whether the amount paid by the Applicants to the Corporate Debtor, fulfil the other condition of "disbursement against consideration of time value and money", in order to come within the definition of "Financial Creditor."
There is a 'Financial Debt' as defined in Section 3(11) of IBC; there is a default within the meaning of Section 3(12) of IBC. Therefore, the application filed by the Financial Creditors is complete in all respects as required by the law. Therefore, the default stands established and there is no reason to deny the admission of the application. Hence, this Adjudicating Authority Admits this Petition and orders initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - Application admitted - moratorium declared.
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2021 (1) TMI 934 - NATIONAL COMPANY LAW TRIBUNAL, KOCHI BENCH
Seeking directions to dismiss the proceedings in the instant matter since no quorum has been reached in accordance with Section 408 and 410 of Companies Act, 2013 - HELD THAT:- A bare reading of the provisions of Section 419(3) of the Companies Act as well as the order of the NCLT, Principal Bench, which has been issued with the approval of Hon'ble President, makes it clear that even though the Bench of NCLT consists of two members, it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench, by a Single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may by general or special order specify. In regard to constitution of special Bench for NCLT, Kochi the Hon'ble President has issued the order under Section 419(3) of the Companies Act, 2013 authorising the Judicial Member to function as such. It may also be mentioned that by the aforesaid order, no direction is issued that the Special Bench of Member (Judicial) is not empowered to take up cases under the I.B. Code, 2016.
The contentions raised by the applicant herein that a Single Member Bench cannot hear the IBC matters has no foots to stand and is liable to be dismissed - Application dismissed.
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2021 (1) TMI 933 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Permission for withdrawal of petition - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Since the Company Petition is not yet admitted, and the Petitioner has itself filed the above joint memo praying for withdrawal of the the instant Company Petition, we are inclined to permit the Petitioner to withdraw the instant Company Petition.
Petition is hereby disposed of as withdrawn by granting liberty to the Petitioner to file a fresh petition in case of non-adherence to the agreed terms of payment by the Corporate Debtor.
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2021 (1) TMI 932 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - pre-existing dispute or not - HELD THAT:- After the reply of Corporate Debtor, Operational Creditor has filed its rejoinder, in its rejoinder the Operational Creditor states that, on 27-10-2018, the Operational Creditor issued a Demand Notice against the Corporate Debtor which the Corporate Debtor responded to vide its response letter dated 6-11-2018. The Corporate Debtor issued a show cause notice dated 29-10-2018 after almost 3 months of termination of the Consultancy Agreement of the Operational Creditor w.e.f 4-8-2018 and also replied to the Demand Notice on 6-11-2018 creating a false/moonshine dispute to avoid the payment of the operational debt due to the Operational Creditors.
The Operational Creditor further states that, aforementioned handover is being portrayed by the Corporate Debtor as a moonshine dispute whereas this has no relation with the contract, the 6 months notice period and even the termination of the Operational Creditor's contract which was terminated for convenience and not misconduct - In M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] the Hon'ble Supreme Court held that pre-existing dispute is the dispute raised before demand notice or invoices was received by the 'Corporate Debtor'. Any subsequent dispute raised while replying to the demand notice under section 8(1) cannot be taken into consideration to hold that there is a pre-existing dispute.
It is made clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy and the right of the applicant before any other forum shall not be prejudiced on account of dismissal of the instant application - application dismissed.
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2021 (1) TMI 931 - NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD BENCH
Seeking to direct the Resolution Professional to accept the claim of the Applicant under the category of Financial Creditor and reconstitute the Committee of Creditors by including the name of Applicant - nature of the debt - Financial Debt or Financial debt - HELD THAT:- In the instant case, the amount in claim is arising out of the judgment of XIII Additional District and Sessions Judge cum Commercial Court, Ranga Reddy District, Hyderabad and the said judgment arose out of the issue regarding payment of entire amount as advance by the Applicant towards the purchase orders placed with the Corporate Debtor and further on account of non-supply of goods.
The transaction entered into between the Applicant and Respondent squarely falls within clause 2(c)(xviii) supra and therefore the Commercial Court had jurisdiction over disputes arising out of such commercial transactions. As a result, the above said Court could entertain the claim of the Applicant herein and duly adjudicated upon the same. In fact, if the said transaction was not a commercial transaction but was financial in nature, the Commercial Court could not have adjudicated upon the same. Therefore, it is obvious that the claim made by the Applicant herein pertains to a commercial transaction between the parties - It is an admitted fact that pursuant to the agreement in the form of purchase order the Applicant has paid the money as an advance for supply of goods and not as a disbursement of debt for time value of money. In the Purchase Order between the Appellant and the Respondent, nowhere it is mentioned that the amount paid by the Appellant to the Respondent will be repayable by the Respondent along with interest over a period of time in a single or series of payments in future.
The Appellant has not disbursed any money against the consideration for the time value and hold that the claim of the Appellant is not a Financial Debt within the meaning of section 5(8) of the Code - this Adjudicating Authority does not find any infirmity in the decision of the RP.
Application dismissed.
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2021 (1) TMI 901 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority who was required to pass the order of admission or rejection of the application being satisfied about the completion of the application and proof of debt and default as mandated under Section 9(5) has failed to provide opportunity of rectifying the defect as noticed and allowing the applicant to bring it in conformity with the requirements of law. Dismissal of application as being non-maintainable for such technical defect is not warranted.
The impugned order is set aside and matter remanded back to the Adjudicating Authority to allow the Appellant/Applicant opportunity of rectifying the defect, if any, in the application and thereafter pass order of admission or rejection in regard to initiation of Corporate Insolvency Resolution Process on merit.
Appeal disposed off.
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2021 (1) TMI 900 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - time limitation - Whether there is an operational debt exceeding ₹ 1 lac as defined under Section 4 of the I&B Code? - HELD THAT:- In the application under Section 9 of the I&B Code, it is mentioned that appellant has supplied ready-mix concrete material to respondent for their various construction sites from 30/09/2012 to 20/10/2014 for which various invoices were issued from time to time as against the total outstanding payment of ₹ 02,29,94,288/-. The respondent (Corporate Debtor) has paid a sum of ₹ 02,09,30,948/- and balance of ₹ 20,63,340/- is outstanding as on 11/11/2015 - The respondent denied this fact and according to him as per the ledger, the outstanding amount is only ₹ 70,165/-. In support of this contention, the respondent filed ledger account of appellant maintained by the respondent for period of 01/04/2012 to 20/03/2018. (See Page 97-102 of Appeal Paper Book) The respondent has produced its statement of accounts which clearly shows that the total amount outstanding against the appellant is ₹ 70,165/- which is less than ₹ 1 lac. The appellant has not pointed out any error in the statement of account filed by the respondent.
Also, it is established that as on 31/03/2017, operational debt ₹ 19,89,130/- was due and payable and has not yet been paid - Hon’ble Supreme Court, in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] held that what is the scope of ascertaining the existence of a dispute at the time of admitting the Application, which is as follows:- “it is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the “existence” of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence.”
Pre-existing dispute or not - HELD THAT:- As per the respondent, the appellant has delivered goods to Mayfair Corporate Park but erroneously sent invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 amounting to ₹ 05,33,120/- and 05,16,460/-. The respondent has no connection with Mayfair Corporate Park, therefore they have returned the invoices to the appellant. According to the appellant, the Mayfair Corporate Park is a construction project developed by Mayfair Spaces Ltd. (respondent) and thus they are associated entities. Therefore, the disputed invoices were rightly sent to the respondent - the appellant is relying on the ledger account maintained by the respondent. In this ledger account the amount of disputed invoices are not shown. Therefore, we hold that there is no dispute between the parties in regard to the aforesaid invoices. Thus, the finding of ld. Adjudicating Authority that there is a pre-existing dispute between the parties, cannot be agreed upon.
Time Limitation - HELD THAT:- The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of ₹ 12 lacs to appellant and from this date of acknowledgment within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation.
As the respondent has failed to pay more than ₹ 1 lac and in absence of any pre-existing dispute and the record being complete, we hold that the application under section 9 of I&B Code preferred by the appellant was fit to be admitted - the impugned order is set aside and the case remitted to the Adjudicating Authority for admitting the application under Section 9 of I&B Code after notice to the Corporate Debtor to enable the Corporate Debtor to settle the matter prior to admission - appeal allowed by way of remand.
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2021 (1) TMI 899 - NATIONAL COMPANY LAW TRIBUNAL KOCHI BENCH
Seeking extension of time period of Corporate Insolvency Resolution Process - seeking Audit and close the Accounts of the Corporate Debtor for the Financial Year 2015-2016 to 2019-2020 with the available records - avoiding examination of transactions covered under Sections 43, 45, 50 and 66 of I&B Code, 2016 - approval of eligibility of Resolution Applicant [Celestial Garden Owners Association] and participation of Resolution Applicant in voting of Resolution Plan - HELD THAT:- Considering Section 30(4) of the I&B Code, instead of going for liquidation of the Corporate Debtor, accepting the Resolution submitted by the Resolution Applicant is more viable. Section 31 of the IBC only bestowed the NCLT with the power to reject a Resolution Plan when the conditions in Section 30(2) have not been adequately met. Hence this Tribunal is only having a “hands off” role in the entire process of Corporate Insolvency Resolution Process - The proviso to the aforesaid Section mandates that Resolution Applicant does not have the voting right at the CoC while considering the Resolution Plan. The Resolution Applicant herein is the Home Buyers (52 Numbers) who are Financial Creditors with 3.91% voting rights in the CoC formed an association called ‘Celestial Garden Owners Association’.
This Tribunal extend the period of CIR Process for a further period of 90 days from 11.12.2020 with a direction to the Resolution Professional to meticulously adhere to the Rules and Regulations issued by IBBI in this regard from time to time - application allowed.
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2021 (1) TMI 897 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Seeking declaration that the letter issued by Collector of Usmanabad and the withdrawal of ₹ 76,75,000/- done by Respondent as illegal / non-est in law - seeking direction to Respondent (GST Department, Nashik) to forthwith refund the amount of ₹ 76,75000/- along with an interest @18% p.a. to the Bank Account of the Corporate Debtor - HELD THAT:- This bench is of the view that the liability towards Sales Tax due is not towards the Corporate Debtor but it is the due payable by M/s Sheelaatul Sugar Tech Private Limited. Even assuming that the Corporate Debtor is liable to pay that amount, the collection of due by the Respondent during CIRP is prohibited by moratorium under Section 14 of the Code. The Judgments referred by the Respondents is not relating to the issue involved in this Application and will not come to the aid of the Respondent.
The submission of the counsel for the Respondent that previously the Corporate Debtors agreed to pay the Sales Tax due of M/s Sheelaatul Sugar Tech Private Limited, from and out of the Sales Tax refund receivable by the Corporate Debtor is unenforceable during CIRP. Hence, the submission of the Counsel for the Respondent that the Corporate Debtor has received refund of ₹ 80,00,000/- from the sales tax department and from the said amount only this recovery is made cannot be accepted.
In view of the fact that the amount has been debited when the CIRP is in progress and the same is hit by the provisions of Section 14 of the Code. The Respondent is liable to repay the amount to the Corporate Debtor and accordingly the Respondent is directed to refund the amount of ₹ 76,75,000/- to the Applicant within 30 days of this order - application allowed.
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2021 (1) TMI 863 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute - HELD THAT:- It is noticed that the Petitioner Corporate Applicant has submitted all relevant particulars and information, supported by document, to meet the requirement of the I B Code. Hence the present Petition is found complete and its filing is found in order in all respect.
Application admitted.
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2021 (1) TMI 862 - NATIONAL COMPANY LAW TRIBUNAL INDORE BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - no information regarding Financial Creditor who has classified the account of the Corporate Debtor as NPA - existence of debt and dispute or not - HELD THAT:- It is noted that Corporate Debtor has not participated in this proceeding and, therefore, we proceed to decide this application after hearing the learned counsel Mr. Tirth Nayak for the Operational Creditor and material on record. From the perusal of MCA data, it is noted that there are open charges on the assets of the Corporate Debtor which are of significant value. Thus, non participation of Corporate Debtor leads to an inference that Corporate Debtor in fact wishes to be admitted into CIRP. We, as Adjudicating Authority, have got limited options in such situations. The Corporate Debtor is not MSME; hence, any attempt by the management/ owners of the Corporate Debtor to complete in a hidden manner needs to be prevented. No data has been provided to us as to whether there is any Financial Creditor who has classified the account of the Corporate Debtor as NPA and, if so, then from which date? This is particularly important from the aspect that management of the Corporate Debtor should not come back indirectly. The role of COC would be clearly important to prevent the misuse of provisions of Section 29A of the CODE.
The application is liable to be admitted as there is a debt which is due and payable i.e. not barred by limitation and there is no pre-existing dispute. The application is otherwise complete and defect free and complies with the all requirements of provisions of IBC, 2016 r. w. relevant Regulations - application admitted - moratorium declared.
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2021 (1) TMI 812 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability od application - initiation of CIRP - borrower defaulted in its repayment obligations to the financial creditor - Existence of debt and default or not - Whether Rule 7 of Adjudicating Authority Rules empowers the Adjudicating Authority to examine the documents filed with the application under section 10 of I&B Code? - HELD THAT:- The Adjudicating Authority is satisfied that there is a debt and a default has occurred, the application must be admitted unless it is incomplete. Section 10 of I&B Code does not empower the Adjudicating Authority to go beyond the records as prescribed under Section 10 and the information as required to be submitted in Form 6 of Adjudicating Authority Rules.
Rule 7 provides the procedure for filing the application under Section 10 of I&B Code. It does not empower the Adjudicating Authority to examine the financial statements annexed with the application - The applicant being a guarantor has filed the application under Section 10 of I&B Code hence the Adjudicating Authority has drawn an inference that the corporate applicant has filed the application under Section 10 with an intention to defeat the SARFAESI measures initiated by the financial creditor. Thus the application is filed with an ulterior motive. We are unable to agree with the finding of ld. Adjudicating Authority and hold that this fact is unrelated and beyond the requirement under I&B Code or forms prescribed under the Adjudicating Authority Rules. Therefore, the application cannot be rejected on this ground.
The existence of debt and default is established and no winding up proceedings against the appellant and appellant is not covered by the ineligibilities provided under Section 11 of the I&B Code. However, the adjudicating authority has rejected the application on extraneous grounds. Therefore, the impugned order is set aside.
The case is remitted back to the adjudicating authority (NCLT, Chennai) to admit the application under Section 10 after notice to the parties if there is no defect. In case of any defect, appellant may be allowed time to remove the defects - Appeal allowed.
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2021 (1) TMI 811 - NATIONAL COMPANY LAW TRIBUNAL KOCHI BENCH
Liquidation of Corporate Debtor - Section 33 (1) & (2) of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- Considering the fact that the 2nd CoC with 100% voting right resolved to approach the Adjudicating Authority for liquidation under Section 33(2) of IBC, this Tribunal can pass an order for liquidation as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of subsection (1) of IBC.
The Corporate Debtor M/s Goodwin Packpet Private Limited is hereby put under liquidation with immediate effect under Section 33(2) of IBC, 2016 - Application disposed off.
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2021 (1) TMI 810 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Issuance of the Corporate guarantee - creation of second charge on all assets - admission of COC in the capacity of being a financial creditor of the Corporate Debtor - Resolution Professional submits that such uninvoked Corporate Guarantee holder cannot form part of the Creditors of the Company - HELD THAT:- The orders were reserved on 27.11.2020 by this bench, the order was pronounced today, the lead judgement was rendered by Shri Chandra Bhan Singh, Member, technical and the dissenting judgement is passed by Member Judicial.
The members are divided on two legal issue:
a. Whether the issuance of the Corporate guarantee in favour of Respondent No. 1(being a Creditor of Related party/Holding Company) and creation of second charge on all assets including moveable, immoveable assets and oil blocks of the Corporate Debtor in favour of Respondent No. 1 is a preferential transaction under section 43 of IBC.
b. Whether the Respondent No. 1 UTI can be admitted to COC in the capacity of being a financial creditor of the Corporate Debtor.
The Registry is directed to place the record before the Hon’ble Acting President for constituting appropriate 3rd member for his opinion, so that the order in application is rendered in accordance with the opinion of majority.
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2021 (1) TMI 809 - INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
Contraventions of section 208(2)(a) and (e) of the Insolvency and Bankruptcy Code, 2016 (Code), Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2017 (CIRP Regulations) and Regulation 7(2)(a) and (h) of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) and clause 1, 2, 3, 10 and 14 of the Code of Conduct under regulation 7(2) thereof. Mr. Kamalesh Kumar Singhania replied to the SCN vide letter dated 15thJune, 2020.
Claims and admission of PNB's revised claim by Mr. Singhania during CIRP - HELD THAT:- The DC notes that one of the core duties of the IP is to receive, collate and verify claims. His conduct have a substantial bearing on his performance and outcome of the processes under the Code, i.e., in resolution or liquidation. He, therefore, is expected to function with diligence - The DC notes the submission of Mr. Singhania that for claim after the commencement of CIRP, he relied upon the proviso to section 29A of the Code and that under the Code applicable at that time, guarantors had the option to submit the resolution plan after making payment of overdues and interest thereon. However, DC is of the opinion that this submission of Mr. Singhania still does not explain the rationale behind accepting the interest post CIRP commencement period as revised claim. Claims can be accepted only as on insolvency commencement date.
Allegation of providing amount of ₹ 10.38 crore to PNB as against the revised claim of ₹ 1.27 crore - HELD THAT:- The DC noted that the revised claim was a new claim for the interest amount from 1st June, 2017 to 10th April, 2018. However, Mr. Singhania did not give extra voting rights to PNB on account of new claim. Therefore, DC finds that acceptance of claim in respect of the interest for the period from 1st June, 2017 to 20th September, 2017 is as per Regulation 13 of the CIRP regulations. However, acceptance of any claim for the post CIRP period i.e. 21st September, 2017 to 10th April, 2018 is in violation of Regulation 13 of the CIRP Regulation.
Deferment of publication of EoI by Mr. Singhania - HELD THAT:- The DC notes that the provisions of section 208(2), Regulations made under the Code require an IP to follow, at all times, the provisions of the Code and Regulations and the bye-laws of Agency of which the IP is a member - In the present matter, the DC notes that the submission of Mr. Singhania in his reply that in the 4th CoC meeting dated 9th February, 2018, it was proposed by him that the advertisement inviting EOI be published in the newspapers by 13th February, 2018 and the last date of submission be kept at 28th February, 2018. During this meeting, CD/Mr. Mintri has submitted a proposal to Punjab National Bank to settle and pay outstanding dues of the Bank, Mr. Mintri has requested to defer the date of publication - In the meeting, it was decided that if Mr. Mintri's proposal for OTS is not accepted by the Bank within 20th February, 2018, the advertisement shall be published on 23rd February, 2018 and the last date of submission of EoI shall be 10th March, 2018. DC further notes the submissions of Mr. Singhania that the decision to defer publication of EoI after 23rd February, 2018 was taken at the 4th meeting by CoC and not by Mr. Singhania and that too in the context of limited purpose of the outcome of settlement proposal submitted by the promoter of the CD. Therefore, regarding deferring of the publication of EoI in that context, the DC is of the opinion that lenient view may be taken.
Incorrect statements made by Mr. Singhania in the Information Memorandum - HELD THAT:- The Code has clearly outlined the duties which must be performed by RP during the insolvency resolution process. One of the key functions of RP with respect to conduct of CIRP include preparation of IM. An IM is a very crucial document and provides a financial position about the Corporate Debtor. Section 25(2)(g) of the Code clearly provides that the resolution professional shall prepare the information memorandum in accordance with section 29. Section 29 of the Code provides that the resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan - It is RP's duty to provide an updated and verified IM to all resolution applicants. In this regard, DC takes on record the submission of Mr. Singhania that he had not suppressed any material information and that the error in the date mentioned in page no. 17 as on 20th September, 2017 is an inadvertent typographical error. He acted in the interest of the CD to save it from going into liquidation. The DC notes that the non-cooperation from the KMPs of the CD is evident from the orders of AA in that regard. Hence, DC takes a lenient view.
Making public announcement of initiation of CIRP at the place of principal office - HELD THAT:- The DC notes that when a corporate debtor undergoes corporate insolvency resolution process, an IP is vested with the management of its affairs and he manages its operations as a going concern. He complies with the applicable laws on behalf of the corporate debtor. He conducts the entire CIRP. Such responsibilities of an IP require the highest level of professional excellence and integrity. Section 15(2) of the Code provides for the Public announcement of corporate insolvency resolution process to be made in such manner as may be specified - In the present matter, the DC notes that the submission of Mr. Singhania who acted on the information of the Advertisement agency that the Financial express and Dainik Statesman (vernacular daily) were circulated across West Bengal including Siliguri, where the corporate office is located. Mr. Singhania has also produced the report of the Audit Bureau of Circulations for July to December, 2017 certifying publication of the Dainik statesman in Kolkata and Siliguri. Thus, the DC notes that the Public Announcement in Form A was in compliance to section 13(2) of the Code.
Failure to provide details of Land and Building etc. to the one of the Registered valuers - HELD THAT:- The DC notes that regulation 27 of the CIRP regulations provides that the resolution professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with regulation 35 - In the instant matter, the DC has noted that Mr. Singhania accepted the Report of M/s Adroit Tech Services Pvt. Ltd. with the limitation that in the absence of the details pertaining to the Land and Building and Plant and Machinery we haven't added any such value to the vauation. This shows that Mr. Singhania has not taken care of the observations made by the valuer. However, Mr. Singhania has clarified that the Reports of valuers were based on internationally accepted valuation standards and the promoter directors did not cooperate with him in providing the details of the assets.
DC notes that since there being no significant variation in the two reports, it appears that the limited details as available with Mr. Singhania were provided to both the valuers. Mr. Singhania should have made some more efforts to get the details of the assets. However, in view of his submissions that due to non-cooperation of the directors of the CD, the details of individual assets were not available with Mr. Singhania. Therefore, the clarification given by Mr. Singhania is accepted.
The DC finds that Mr. Kamalesh Kumar Singhania, as an RP, has contravened section 208(2)(a) and (e) of the Code read with Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2017 and Regulation 7(2)(a) and (h) of the IBBI (Insolvency Professionals) Regulations, 2016, and clause 1, 2, 3, 10 and 14 of the Code of Conduct under regulation 7(2) thereof - the SCN is disposed off with following directions:
(i) Mr. Kamalesh Kumar Singhania shall undergo pre-registration educational course from the IPA of which he is a member.
(ii) Mr. Kamlesh Kumar Singhania shall not take any new assignment/process under the Code without compliance of the above direction.
(iii) Mr. Kamlesh Kumar Singhania shall, however, continue to conduct and complete the assignments/processes he has in hand, if any, as on the date of this order.
(iv) This order shall come into force on expiry of 30 days from the date of its issue.
(v) A copy of this order shall be forwarded to the ICSI institute of Insolvency Professionals where Mr. Kamalesh Kumar Singhania is enrolled as a member.
(vi) A copy of this order shall also be forwarded to the Registrar of the Principal Bench of the National Company Law Tribunal, New Delhi, for information.
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2021 (1) TMI 808 - INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
Undertaking of assignment by IP without holding a valid Authorisation for Assignment (AFA) - contraventions of sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a), 7(2)(h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct contained in the First Schedule of the IP Regulations - HELD THAT:- It is clear from Regulation 7A of IP regulations that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye laws of ICSI Institute of Insolvency Professionals defines in para 4(1)(aa) the expression "authorisation for assignment" as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. An application for grant of AFA can be made to the IPA under para 12A of said bye-laws.
The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP/Liquidator during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with mala fide or with negligence.
In the present matter, the DC notes that, Mr. Somani had given his written consent to CoC in its meeting held on 22nd November 2019 to act as Liquidator in terms of Section 34(4) and accordingly the same was filed with NCLT on 28th November 2019 prior to the requirement of AFA for accepting or undertaking assignment under Regulation 7A of the IP Regulations which came into effect from 1st January 2020, i.e., after 31st December 2019. The Hon'ble NCLT, Principal Bench, had passed the Liquidation.
Order dated 14-1-2020 due to failure of CIRP in this matter. Mr. Somani's appointment was confirmed as Liquidator based on his "Written Consent to act as Liquidator" and also on the recommendation of CoC.
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2021 (1) TMI 807 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues to Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is apparent that no resolution has been passed as regard to proceeding with the liquidation of Corporate Debtor which is required in terms of Regulation 39C of Corporate Insolvency Resolution Process Regulations, 2016. Even percentage of voting has not been mentioned though this may not be of much significance as there is a sole Financial Creditor but still it is a requirement of law. It is apparent that no efforts at all have been made to find resolution Applicant as within period of less than two months from the insolvency commencement date, the application for liquidation of the Corporate Debtor has been filed and that too without bringing any material on record in support of its claims. Even from other business conducted in the said meeting of COC, nothing appears which could throw light for necessity of liquidation at first meeting of Committee of Creditors (COC) itself.
Further, as per the explanation of Section 33(2) of Insolvency and Bankruptcy Code, 2016, Committee of Creditors (COC) is empowered to take decision to liquidate the Corporate Debtor at any time after its constitution but the relevant material and resolution is required in that regard - application dimissed.
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2021 (1) TMI 802 - SUPREME COURT
Validity of Sections 3, 4 and 10 of the Insolvency and Bankruptcy Code (Amendment) Act 2020 - petitioners are allottees under real estate projects - calculation for number of allottees - Is the total number of the allottees, to be calculated qua the Units promised? or Is it to be based on the number of units constructed or is it to be the number of units allotted or units where the agreement to sell is entered into?
HELD THAT:- The instant case, it is necessary to analyse the limbs of Section 11. Sections 7, 9 and 10, read with Section 5, provide for the procedure to be adopted by the Adjudicating Authority in dealing with applications for initiating CIRP by the financial creditor, operational creditor and corporate debtor. It is after that Section 11 makes its appearance in the Code. It purports to declare that an application for initiating CIRP cannot be made by categories expressly detailed in Section 11. Section 11(a) vetoes an application by a corporate debtor, which is itself undergoing a CIRP. An argument sought to be addressed by the petitioner is that the purport of the said provision is that it prohibits not only a corporate debtor, which is undergoing a CIRP, from initiating a CIRP against itself, which, but for the fact, it is undergoing a CIRP, would be maintainable under Section 10 of the Code, but it also proscribes an application by a corporate debtor for initiating a CIRP against another corporate debtor. It appears to be clear to us, and this will be corroborated by the further provisions as well, that the real intention of the Legislature was that the prohibition was only against the corporate debtor, which is already faced with the CIRP filed by either a financial creditor or operational creditor, jumping into the fray with an application under Section 10.
Finally, coming to Section 11(d), it disentitles the making of an application to initiate CIRP by a corporate debtor in respect of whom a liquidation order has been made. We have already noticed the scheme of the Code. The Legislature intends to have a two-stages approach to the problem of insolvency as regards the corporate debtor. On the basis of an application by the eligible person, a CIRP is initiated. If it is admitted, a Committee of Creditors is constituted before the curtains are wrung down on the insolvency resolution process by the inexorable passage of time, which is fixed under Section 12. If a resolution plan finds approval at the hands of the Committee of Creditors and also the Adjudicating Authority, liquidation is staved off. Should there be no resolution plan within the time limit or the resolution plan is not approved, the curtains rise for the process of liquidation process to be played out in terms of the Code. The first act of the drama consists of the order of liquidation to be passed under Section 33 of the Code. It is this order which is referred to in Section 11(d). There is also an order of liquidation permissible earlier, under Section 33(4). No doubt after the introduction of the explanation to Section 33(2), an order of liquidation may be passed in terms thereof. Once, this order is passed, the Legislature intended that a corporate debtor, in regard to whom the CIRP was initiated and which has culminated in the order of liquidation being passed after no resolution of the insolvency took place, cannot again initiate a fresh CIRP, putting under the carpet, as it were, a whole process in the recent past - to use the words “recent past” may not be correct for unlike Section 11(b) and 11(c), in a case, where there is an order for liquidation under Section 33, then, an application under Section 10, would not be maintainable. The person disentitled under Section 11(d) would be the corporate debtor and the disentitlement is qua itself.
Apparently, interpreting Section 11, there appears to have been some cleavage of opinion. This is apparent from the case set up on behalf of the petitioners and the case set up on behalf of the Union of India. The intention of the Legislature was always to target the corporate debtor only insofar as it purported to prohibit application by the corporate debtor against itself, to prevent abuse of the provisions of the Code. It could never had been the intention of the Legislature to create an obstacle in the path of the corporate debtor, in any of the circumstances contained in Section 11, from maximizing its assets by trying to recover the liabilities due to it from others. Not only does it go against the basic common sense view but it would frustrate the very object of the Code, if a corporate debtor is prevented from invoking the provisions of the Code either by itself or through his resolution professional, who at later stage, may, don the mantle of its liquidator. The provisions of the impugned Explanation, thus, clearly amount to a clarificatory amendment. A clarificatory amendment, it is not even in dispute, is retrospective in nature. The Explanation merely makes the intention of the Legislature clear beyond the pale of doubt. The argument of the petitioners that the amendment came into force only on 28.12.2019 and, therefore, in respect to applications filed under Sections 7, 9 or 10, it will not have any bearing, cannot be accepted. The Explanation, in the facts of these cases, is clearly clarificatory in nature and it will certainly apply to all pending applications also.
We must record our understanding of the efforts of the petitioner in the light of the application which is pending and the appeal also which is preferred by the petitioner in NCLAT. We are really concerned and can be called upon only to pronounce on the vires of the Statute on the score that it is unconstitutional on any ground known to law. The only ground which is urged before us is the violation of Article 14. This ground does not merit acceptance. The challenge is repelled.
Is Section 32A unconstitutional? - HELD THAT:- No case whatsoever is made out to seek invalidation of Section 32A. The boundaries of this Court’s jurisdiction are clear. The wisdom of the legislation is not open to judicial review. Having regard to the object of the Code, the experience of the working of the code, the interests of all stakeholders including most importantly the imperative need to attract resolution applicants who would not shy away from offering reasonable and fair value as part of the resolution plan if the legislature thought that immunity be granted to the corporate debtor as also its property, it hardly furnishes a ground for this this Court to interfere.
It must be remembered that the immunity is premised on various conditions being fulfilled. There must be a resolution plan. It must be approved. There must be a change in the control of the corporate debtor. The new management cannot be the disguised avatar of the old management. It cannot even be the related party of the corporate debtor. The new management cannot be the subject matter of an investigation which has resulted in material showing abetment or conspiracy for the commission of the offence and the report or complaint filed thereto. These ingredients are also insisted upon for claiming exemption of the bar from actions against the property. Significantly every person who was associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of the offence in terms of the report submitted continues to be liable to be prosecuted and punished for the offence committed by the corporate debtor - As to what priority must be accorded to which interest must remain a legislative value judgement and if seemingly the legislature in its pursuit of the greater good appears to jettison the interests of some it cannot unless it strikingly ill squares with some constitutional mandate suffer invalidation.
Vested Right; Retrospectivity; 3rd proviso in section 7 - HELD THAT:- The third proviso is a one-time affair. It is intended only to deal with those applications, under Section 7, which were filed prior to 28.12.2019, when, by way of the impugned Ordinance, initially, the threshold requirements came to be introduced by the first and the second impugned provisos. In other words, the legislative intention was to ensure that no application under Section 7 could be filed after 28.12.2019, except upon complying with the requirements in the first and second provisos. The Legislature did not stop there. It has clearly intended that the threshold requirement it imposed, will apply to all those applications, which were filed, prior to 28.12.2019 as well, subject to the exception that the applications, so filed, had not been admitted, under Section 7(5) - the Legislature intended that in every application, filed under Section 7, by the creditors covered by the first proviso and by the allottees governed by the second proviso, should also be embraced by the newly imposed threshold requirement for which, it was intended, should be complied within 30 days from the date of the Ordinance. However, this restriction was not to apply to those applications which stood admitted as on the date of the Ordinance. It is also clear that the consequence of failure to comply with the threshold requirement, in regard to applications, which have been filed earlier, was that they would stand withdrawn.
Whether the right under the unamended Section 7 was a vested right of the financial creditors or allottees covered by the provisos 1 and 2, respectively? - HELD THAT:- Legal rights are, in a wider sense, of four distinct kinds. They are rights, liberties, powers and immunities. Duty is the correlative of a right, while, no rights correspond to liberties. Liabilities have a nexus with the power exercised by another person, with regard to whom, the liability exists in another party. When somebody has an immunity against another, it disables the latter, and thus, it constitutes a disability for him. Salmond notes further that the term right is often used in the wide sense to include liberty by which it is meant to have one left free to do as he pleases - It may be asked whether a right of action is a right or a power. Is there a duty with anyone in the case of a right to an action? We need not probe this further as a power is also a right in the wider sense. The right to sue and right to appeal has been so recognized as we will notice.
It is clear that the institution of a suit leads to the inference that the right of appeal is preserved. There is a vested right of appeal. The vested right of appeal accrues to the litigant and exists from the day of the institution of the lis (suit). Therefore, while the remedy of an appeal may be provided under the statute that right becomes a vested right only from the point of time that the suit is filed either by the appellant or the opposite party. All of this undoubtedly is subject to a subsequent enactment not interfering with the right of an appeal - Thus, what is relevant, this Court went on to find under the Saurashtra Act, there was no requirement of any notice to terminate the tenancy. It was found that the landlord was entitled to recover the possession under the said Act, if there was subletting. In other words, the Court went on to hold that a right accrued to the landlord under the Saurashtra Act upon the appellant subletting the premises. It was during the pendency of the Saurashtra Act. This right survived the repeal of the Saurashtra Act and thus the suit under the Saurashtra Act was maintainable.
This Court also held that the application filed in 2016 or 2017 cannot suddenly revive a debt which is no longer due as it is time barred. Apparently, the petitioners are seeking to lay store by the principle that a new law cannot extinguish a vested right of action even if it be pertaining to the period of limitation - The right to sue clearly could be said to arise, immediately upon the condition being broken. We may, in this context also, notice that one of the five characteristics for a legal right to exist, is that every legal right has a title. It is further stated, in Salmond on Jurisprudence that every legal right has a title, which are apparently the facts or events by reason of which the right has become vested in its owner. Now, it must be noticed also, at this stage that the Limitation Act, in fact, contemplates the time, within which the suit must be brought, beginning necessarily on the supposition, that at least, on the very first day of the period of time, from which a plaintiff can sue, the right is already vested in him. This would reinforce us in our view that a vested right to sue could be said to accrue, and it would always precede the institution of the suit. At any rate, it could be said to exist from the very first day, on which the time begins to run, under the Limitation Act. Thus, a vested right to sue could be tested with reference not to the date on which the suit is filed as would be the case where a question arises, whether a right of appeal exists.
Thus, a right to sue is not created by the statute. It is an inherent right unless is barred by some law. Therefore, the principle that a right to take advantage of a statute not being an accrued right may not apply - We are unable to accept the stand of the learned ASG, that a vested right to emerge still require an order under Section 7(5) of the Code. It is no doubt a stage, when the authority finds there is default and takes the matter forward including appointing to begin with the IRP and ordering a moratorium. In this regard, it is to be noted that in the scheme of the Code, what takes place before admission, is that the applicant tries to establish the debt and default. This is akin to the stage of a trial in a suit. No doubt, this happens only if the application is free from defects. But this is a far cry from saying that a vested right of action did not inhere even on the version of the ASG upon the act of the creditor invoking the Code.
Section 6 of General Clauses Act, 1897 - HELD THAT:- No support can be drawn from Section 6 of the General Clauses Act, 1897. Section 6 makes it clear that the rights or privileges which may be asserted are subject to the law not being couched contrary to such rights/privileges. In this case it is precisely because the 3rd proviso covers the applications filed prior to the amendment which had not been admitted, that the petitioners have challenged the provision.
It is open to the Adjudication Authority to reject the application but that does not mean that the applicants had no vested right of action. The possibility of a plaint being rejected under Order VII Rule 11 or an appeal being dismissed under Order XLI Rule 11 without notice being issued to the respondent or the fact that the suit can be dismissed at later stages, cannot detract from the right of the plaintiff or the appellant, being a substantive right. The same principle should suffice to reject the contention, based on admission under Section 7(5) alone, giving rise to the vested right in regard to an applicant under Section 7 of the Code - A vested right is not limited to property rights. A right of action should conditions otherwise exist, can also be a vested right. Such a right can be created by a Statute and even on a repeal of such a Statute, should conditions otherwise exist, giving a right under the repealed Statute, the right would remain an accrued right.
When a Statute made by the sovereign Legislature is found to have retrospective operation and the challenge is made under Article 14 of the Constitution, (i) the Court must consider whether the law, in its retrospectivity, manifests forbidden classification. (ii) Whether the law, in its retrospectivity, produces manifests arbitrariness, (iii) if a law is alleged to be violative of Article 19(1)(g), firstly, the Court, in an action by a citizen, would, in the first place, find whether the right claimed, falls, within the ambit of Article 19(1)(g). The Court will further enquire as to whether such a law is made, inter alia, by way of placing reasonable restrictions by looking into the public interest. In the case of law, which is found to be not unfair, it would also not fall foul of Article 21 - Where the law is challenged on the ground that it is violative of Fundamental Rights under Article 14, necessarily the Court must enquire whether it is a capricious, irrational, disproportionate, excessive and, finally, without any determining principle.
As far as the nature of the right in question is concerned, which would include the value of the rights, it is a right of action. The right of action is, undoubtedly, a vested right. The role of the applicant essentially fades out after the admission of the application is made under Section 7(5). The scheme of the Code has been unraveled by us. The right, which is given, is a right in rem. It is not a mere personal right, in the sense that it is right in rem. The applicant is not even required to plead the default qua him as the default to any financial creditor, in the requisite sum, provided it is not barred under Article 137, suffices. The consequences of the application would be that it may land the applicant and also all the stakeholders, in liquidation of the corporate debtor - The only area where any ambiguity can be said to exist – is the effect of the application being treated as withdrawn. The further aspect, which is to be borne in mind, is the circumstances in which the legislation is created. It is here that the mischief rule and the aspect of public interest looms large. At the end of the day, the tussle is between the individual right versus the public interest. Now, public interest is a concept, which is capable of embracing, within its scope, the interest of different sections of the public. This would include the sections of the public to which the applicant himself belongs. Public interest would, undoubtedly, also encompass, the economy of the country, which can be understood in terms of all the objects, for which the Code was enacted. They would include the speed with which the Code is worked. It would include, also, safeguarding the interests of all the stakeholders. This may necessarily include the corporate debtor as a stakeholder, being protected from applications, which are perceived as frivolous or not representing a critical mass.
Clarity regarding 'withdrawal' under the third proviso - HELD THAT:- The third proviso does not indicate as to whether a fresh application after complying with the requirement of the ingredients of the first and second proviso is maintainable. It does not also indicate what would be the position even if such application is maintainable by the same applicant, with regard to the periods spent in the context of ruling of this Court that the Limitation Act applies and the relevant Article is Article 137 and therefore, any application filed beyond the period of three years from the date of the default is barred - the other way of looking at these issues is that Order XXIII(1) applies only in the case of a civil suit. In regard to the application under Article 137 which is what an application under Section 7 of the Code is, it could it be said that Order XXIII(1) is inapplicable. Secondly, could it not be said that it is not a case of a voluntary withdrawal by the applicant and the withdrawal of the application is declared by the Legislature, and therefore, Order XXIII(1) would not apply.
The application made under Rule 4 is the application under Section 7 by the financial creditor. However, rule 8 is silent as to any similar prohibition as is contained in Order XXIII(1)4(b). Unless the principle of Order XXIII Rule 1 which is based on public policy, is applied, a fresh application, compliant with the first two provisos in Section 7, may not be barred. In this regard, since under the Explanation in Section 7(1), default occurs when default qua any financial creditor is made out, the cause of action can become different, in which case, even the principle of Order XXIII Rule 1, may not apply - since withdrawal is ordained by the third proviso, it would not be a withdrawal under Rule 8 on request. Secondly, even for the principle based on public policy to apply to a withdrawal under Rule 8, there must be a request and withdrawal. We do not pronounce on the effect of the same, viz., withdrawal on request. Suffice it to conclude and hold that the withdrawal under the third proviso would not bar a fresh application by the same party after complying with the provision of the first or second proviso as the case may be on the same default.
Limitation - HELD THAT:- Having regard to the Explanation in Section 7, it will always be open to the applicant to set up a different default to any financial creditor and move afresh. This unique feature of the Code is highly relevant in determining the validity of the Amendment. The application under Section 7 is not meant to be a recovery mechanism. The Code, as is clear from its title, deals with insolvency resolution, to begin with. If there is insolvency, the application, with reference to any of the large number of creditors, suffices.
Withdrawal under the third proviso would not be bar a fresh application even on the same cause of action. It can, at any rate, be condoned under Section 5 of the Limitation Act. It is here we would also exercise our power under Article 142 to direct that if fresh applications are filed by the petitioners after complying with the first and second proviso, then on applications being filed under Section 5, of the Limitation Act, in regard to the period of pendency of applications, the authority shall condone the delay - Finally, the actual time provided. Is it manifestly unfair? Would not six weeks, two months or even more lengthier periods, be more fair? Undoubtedly, it would be, from the point of view of the applicants. Another way to approach the problem is, was it impossible for the creditor/creditors to seek information, get into touch with the other creditors and persuade them to join him/them. As far as court fees is concerned, there is no extra liability as the amount remains the same, viz., ₹ 25,000/-, irrespective of the number of applicants. If the condition in the third proviso was impossible to comply with, then, it would also be manifestly arbitrary.
If there is insolvency and it affects creditors, ordinarily, self-interest would guide them into following the best course available to them. We have also seen the presence of plural remedies. No doubt, calculation of one-tenth in a case, may, undoubtedly, require the quantification of total number of creditors. This would be necessary, no doubt, only if hundred creditors cannot be found to support the application.
The withdrawal under the third proviso, will not stand in the way of the applicant, invoking the same default and filing the application and even the principle of Order XXIII Rule 1 of the CPC will not apply and will not bar such application. As far as limitation is concerned, we have explained as to what is to be the impact. The nature of the vested right and the impact of the law, the public interest, the sublime objects, which would be fulfilled, would, in the facts of this case, constrain us from interfering, even though, this Court may have a different view about the period of time, which is allowed to the applicant.
Court fees - HELD THAT:- The time limit of two months is fixed only for conferring the benefits of exemption from court fees and for condonation of the delay caused by the applications pending before the Adjudicating Authority. In other words, it is always open to the petitioners to file applications, even after the period of two months and seek the benefit of condonation of delay under Section 5 of the Limitation Act, in regard to the period, during which, the applications were pending before the Adjudicating Authority, which were filed under the unamended Section 7, as also thereafter.
Petition dismissed.
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2021 (1) TMI 760 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of appeal - time limitation - claim filed by ex-employee of the Corporate Debtor/ORG Informatics Ltd. for recovery of arrears - time barred debts or not - HELD THAT:- It is clear that the writers of law were conscious that there could be situation where time-barred debts are claimed before the IRP/RP. In the present matter, it does not appear that before the IRP/RP claim was filed. At the stage of Liquidation, the Appellant suddenly woke up to make a claim of salary of 2012, without showing as to how it is within limitation - it does not appear that the Adjudicating Authority erred in rejecting the Application of the Appellant.
Appeal dismissed.
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