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Insolvency and Bankruptcy - Appellate Tribunal - Case Laws
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2023 (3) TMI 1477
Seeking Leave, to prefer an Appeal, against the Impugned Order - Person, who is not a Party, to the Original Proceedings, can prefer an Appeal or not - petitioner contends that in deciding, whether a Leave, must be granted, an Application / Appeal, ought to be taken on Demurrer, and the merits of the matter, cannot be gone into, for the sake of determining an Application, praying for Leave? - Section 61 (3) of the I & B Code, 2016 - HELD THAT:- It is pertinently pointed out that the 1st Respondent / Petitioner, had filed an application, before the Adjudicating Authority (‘Tribunal’), as per Section 60(5) of the I & B Code, 2016, read with Regulations 32A (e), seeking Sale’ of the ‘Corporate Debtor, as a Going Concern, through a Private Sale, along with other Reliefs. Indeed, the 2nd Respondent (G C Logistics India Private Ltd. / Buyer), is arrayed as a Party, in the said Application.
It transpires that the Petitioner / Shareholder of the Corporate Debtor, was not part of the Stakeholders Consultation Committee, and in fact, there is no obligation, on the part of the 1st Respondent / Liquidator, to consult the Petitioner / Appellant, for any reason - It cannot be ignored, that the Petitioner / Appellant, had not filed any Claim Form, in Form – G, during Liquidation Period. In terms of Regulation 20 of the IBBI (Liquidation Process) Regulations, 2016, the Petitioner, has no connection to the Liquidation Process, and later to the Sale of the Corporate Debtor.
In the instant case, the Petitioner / Appellant, was not in a position to prove that he is an Individual, eligible to regain control of the Corporate Debtor, there being no disqualification, as per Section 29A of the I & B Code, 2016 - As a matter of fact, a Scheme, was put before the Stakeholders Consultation Committee Members, in their 9th Meeting, dated 30.10.2021 and a Secured Creditors meeting, was conducted by the 1st Respondent / Liquidator, to consider the Proposal, as per Section 230 of the Companies Act, 2013. In fact, the Petitioner / Appellant, was informed that the Proposal Terms, were not acceptable, by the Stakeholders Consultation Committee and the Secured Creditors.
Keeping in mind of a candid fact that the Petitioner / Appellant, is not, a Stakeholder in the Liquidation Process of the Corporate Debtor, and has no vested interest in the Corporate Debtor, taking note of the fact that the Payment Consideration of Rs.44,64,00,000/- and the same was distributed, as per Section 53 of the I & B Code, 2016, comes to a conclusion that the Leave, prayed for, by the Petitioner / Appellant, to prefer the present Company appeal is not accorded to, by this Tribunal, based on the facts and surrounding circumstances of the case, which float on the surface.
Appeal dismissed.
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2023 (3) TMI 1476
Auction of the Corporate Debtor as a going concern - lease deed continues in the name of Corporate Debtor - sale of shares of corporate debtor - HELD THAT:- There is no dispute between the parties that there was a lease by the Chandigarh Administration and the auction of the Corporate Debtor was proposed as going concern. The letter dated 06th May, 2019 referred to by the Learned Counsel for the Appellant was issued by the Chandigarh Administration where mention was made regarding the amount chargeable on account of transfer fees.
Respondent submits that present is a case where lease deed continues in the name of Corporate Debtor hence what is sold is the shares of the corporate debtor - There are no error in the carrying out auction of the corporate debtor as going concern.
Further submission is that under Regulation 32A sub-clause 4, auction did not take place within 90 days. It is not denied that auction sale notice was issued initially prior to the insertion of provision of Regulation 32A, hence the auction, regulation 32A sub-clause (4) cannot be pressed in service.
Thus, no ground has been made to interfere with the Impugned Order - appeal dismissed.
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2023 (3) TMI 1411
Seeking grant of relief to file main appeal - Approval of Resolution Plan - privy to resolution Plan - Petitioner/Appellant submit that he is a Third Party, to the impugned order passed by the Adjudicating Authority (Tribunal) - also, Prospective Resolution Applicants, who had suffered, due to the 'Resolution Process' - HELD THAT:- This Tribunal keeping in mind of a vital fact that the Petitioner/Appellant, being an Unsuccessful Resolution Applicant, has no Locus, to assail a Resolution Plan or its implementation, coupled with a candid fact that he is not a Stakeholder, as per Section 31 (1) of the I & B Code, 2016, in relation to the Corporate Debtor, this Tribunal, without any haziness, holds that the Petitioner/Appellant, is not an Aggrieved Person, coming within the ambit of Section 61 (1) of the I & B Code, 2016, especially, when he is not a Privy, to the Resolution Plan.
Application dismissed.
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2023 (3) TMI 1388
Fraudulent/Preferential transaction - Validity of application filed by the Liquidator of the Corporate Debtor - direction not to disturb the possession or interfere with the leasehold right of M/s Indore Steel & Alloys Pvt. Ltd. (present Respondent No.1) and Tin shed on the leasehold land - whether the transfer of subject land by MPIDCL to Respondent No.1 has been executed in accordance with law? - whether there is any merit in the claim of the Appellant that the transaction was not done in good faith but was a fraudulent and a preferential transaction?
HELD THAT:- The Adjudicating Authority has returned the finding that in terms of the sale deed executed by MPFC in favour of the Corporate Debtor, the latter was required to get the lease executed in its favor within a period of six months from the date of execution of the sale deed failing which MPIDCL would have the right to cancel the lease and allot the subject land to other applicants. Cognizance has also been taken by the Adjudicating Authority of MP Rules, 2019 providing for automatic cancellation of the lease if the purchaser after purchase of the land fails to get the lease executed in its favor - The Adjudicating Authority has held that ISAPL has thus legally and validly acquired leasehold ownership rights and possession over the subject land directly from the MPIDCL and not from the corporate debtor. Holding that ISAPL is the perpetual lessee of the subject land, the impugned order also notes that this transaction between ISAPL and MPIDCL does not fall within the purview of Sections 43, 49, and 66 of the IBC.
It is noticed from the facts of the present case that the corporate debtor in spite of being aware that it was under obligation to get the lease deed of 23.02.2010 executed in its favour, failing which MPIDCL was free to further allot the subject land, never got the lease deed executed by MPIDCL despite lapse of 10 years. Hence, in terms of para 6 of the sale deed, the leasehold right of the corporate debtor over the subject land had clearly lapsed. We do not find any mala-fide or perversity on the part of Respondent No.6 in their understanding or appreciation of MP Rules and application of Clause 6 of the sale deed executed with the Corporate Debtor. In the given circumstances, MPIDCL being a wholly owned subsidiary of the State Government of Madhya Pradesh and bound by the MP Rules, 2019, there is no error in the findings of the Adjudicating Authority that MPIDCL was fully authorized, being the owner of the subject land, to execute the lease deed in favour of Respondent No.1.
It has also been contended by the Learned Counsel for the Appellant it is not MPIDCL which had cancelled the lease or re-auctioned on its own but it was occasioned by a joint application filed by PTL and ISAPL before MPIDCL. The role of suspended management in aiding, abetting and prompting the transfer of subject land and that PTL was used by them as an illegal conduit to commit fraud on the creditors of the Corporate Debtor has also been raised by the Appellant - the contention of the Respondents agreed that the transaction between ISAPL and PTL related to purchase of Tin shed while the transaction between ISAPL and MPIDCL was for lease rights over the subject land and that both transactions were separate and not connected.
It has also been contended by the Respondents that the fact that the corporate debtor did not acquire ownership rights over the said land is substantiated by the fact that the lease deed entered into between Respondent No.1/ISAPL and MPIDCL was an amendment of the original lease deed of PCPL dated 07.02.1987 for the remaining lease period. This clearly shows that MPIDCL had never executed any lease deed in favour of the corporate debtor or else it would have had to modify or amend the lease deed signed with them and not with PCPL while transferring the leasehold rights for the remaining period to Respondent No.1.
This brings us to the contention of the Appellant that the ex-management by not getting the name changed in the lease deed in favour of the Corporate Debtor in 2010 used this fact as a loophole to transfer the leasehold rights in favour of Respondent No.1 and that this amounts to conducting fraudulent transaction - The negligence on the part of the Corporate Debtor not to have executed the lease deed cannot be overlooked and cannot be allowed to become a ruse for fraudulent transaction. Mere possibility of a potential collusion without material on record is not sufficient to persuade this Bench to record any finding on preferential or fraudulent transaction. The present transaction between MPIDCL and the ISAPL/Respondent No. 1 not being illegal nor suffering from any procedural or material irregularities, we are satisfied with the findings of the Adjudicating Authority that it is not open to the Appellant to unsettle or derail the transaction by raising the bogey of Section 43, 49 and 66 of IBC or to disturb the possession or interfere with the leasehold right of ISAPL.
There are no illegality in the impugned order of the Adjudicating Authority which may warrant any interference in the exercise of our appellate jurisdiction. There is no merit in the appeal - appeal dismissed.
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2023 (3) TMI 1333
Initiation of CIRP - Priority of consideration and admission of application - Effect of Interim Moratorium - It is the main case of the Appellant that the Section 95 Application was filed by them three days prior to the date when the State Bank of India, had filed their Application and therefore their Application, ought to have been admitted first - whether Interim Moratorium, ought to have commenced from the date of filing of the defective Application, as it would amount to violation of natural justice?
HELD THAT:- It is seen from the Record that the Adjudicating Authority, has not yet admitted or rejected the Application, filed by the State Bank of India, under Section 95.
It is seen from the record that the Section 95 Application has not been admitted against the said Personal Guarantor. Liberty has also been given in accordance with law to the Appellant/Union Bank of India in the Impugned Order dated 07.06.2022 in the event that the Section 95 Application filed by SBI is admitted, the Adjudicating Authority under Section 102 of the Code would issue a Public Notice within 7 days of passing of the Order inviting Claims from all the Creditors. The Appellant in the instant case namely Union Bank of India, can also file their Claim under Section 103 of the Code with the RP. Hence, no prejudice would be caused to the Appellant herein. Further, it is seen from the Impugned Order that though both the Counsels were present, it was not brought to the notice of the Bench that the Application, filed by the Appellant/Union Bank of India, was three days prior to the Application, filed by the SBI.
This Tribunal, is of the considered view that indeed, the Date of Filing of the Application, under Section 95 is, what is to be taken into account and not the date when the Application is numbered. There is no appreciable evidence on record to state that the said Application was defective - in the present case, though the Section 95 Application was filed on 31.12.2021 and was assigned a Registration No. and SBI had filed an Application on 03.01.2022, the Registry, had registered the Section 95 Application of SBI, on 12.01.2022 and that of Union Bank of India on 09.02.2022. Though the Appellants’ Section 95 Application came up ‘for Hearing’ on 04.03.2022, 01.04.2022, 02.05.2022 and on 07.06.2022, a perusal of the Order copies establishes that the Appellant/Union Bank of India, had never brought to the notice of the Bench that another Application, was also filed by SBI. The case of the Appellant that they had no opportunity, to bring to the notice of the Bench that the Appellant’s Section 95 Application was filed in prior point of time i.e., three days prior to the SBI’s Application, is untenable.
Section 96(1)(a) provides that an interim-moratorium, shall commence on the date of the Application, in relation to all the debts. Section 96(1)(b) of the Code, also specifies that during the Moratorium period (i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and (ii) the Creditors of the Debtor, shall not initiate any legal action or proceedings in respect of any debt - when an Insolvency Resolution Process, commences against the Personal Guarantor, all Creditors of the Personal Guarantor, are taken care of in the proceedings under Chapter-III. The Code does not contemplate multiplicity of Applications, against the same Personal Guarantor. This Tribunal, is of the earnest view that when the Insolvency Resolution Process, commences against a Personal Guarantor, Claims of all Creditors, are taken care of under the scheme of the I & B Code, 2016.
Keeping in view that the Order of Admission, has not yet been passed by the Adjudicating Authority, and also that no prejudice would be caused to the Appellant herein, as they can file their Claim, with the Resolution Professional, and also having regard to the fact that they were given Liberty, in accordance with Law by the Adjudicating Authority, this Tribunal, is not inclined to set the clock back on this ground.
Application dismissed.
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2023 (3) TMI 1284
Seeking release of pending amount (for work done prior to CIRP period or not) - it is construed that the Company, had received the money from the Employer and the same is due to be transferred to the Appellant herein - whether the work was executed prior to the initiation of CIRP? - HELD THAT:- As per the terms of the I & B Code, 2016, for any work done prior to the CIRP period, and for amounts pending in relation to the same, the Creditor, is required to file its Claim, with the Resolution Professional or the Liquidator, as the case may be. In the instant case, the Appellant, had filed the Form C for Admission of the Claim, in relation to the pending amount 26.08.2019, one day after the last date for submission of the claim. The Liquidator had sent an email that the claim submitted by the Appellant, cannot be considered by the Liquidator as it is filed after the expiry of the last date for submission of the ‘Claim’.
The Application I.A. No. 454 of 2020 pertains to release of the Pending Amount, and not in relation to the Admission of the Claim, filed by the Appellant, for the Condonation of the Delay. Therefore, this Tribunal, is of the considered view that there are no substantial grounds to interfere with the impugned Order dated 27.08.2021, whereby and whereunder, the Adjudicating Authority, had directed the Liquidator, to admit the Appellant’s Claim and make the payment as per Section 53 of IBC, 2016.
Appeal dismissed.
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2023 (3) TMI 1283
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - date of default - main case of the Appellant is that the previous Order of this Tribunal is dated 09.09.2021, whereby and whereunder six months time was granted and the same ended on 09.03.2022 and this date of 09.03.2022, cannot be taken as the Date of Default - HELD THAT:- It is seen from the record that there is correspondence dated 14.01.2022 and OTS Letter dated 27.11.2019. Apart from the fact that the issue of Limitation, is already answered in the previous Order and has attained finality, this Tribunal, is of the considered view that, it is not the Date of NPA, which is 30.09.2015, which is to be taken into consideration, keeping in view the facts of the attendant case, but rather, it is the Date of Default, which is six months, subsequent to the time given by this Tribunal, in the Order dated 09.09.2021, that is to be considered.
This Tribunal, does not have any Equity Jurisdiction, and also conscious and alive to the candid fact that more than sufficient/ ample time, was extended to the Corporate Debtor. Besides that, the Debt and Default, are clearly demarcated in Para-IV of the Section 7 Application of the I & B Code, 2016, in CP (IBC) 46/KOB/2022, and the available material on record establishes the same. Viewed in that perspective, this Tribunal, does not find any ground, much less a valid ground, to interfere in the well considered and reasoned order of the Adjudicating Authority / Tribunal.
Appeal dismissed.
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2023 (3) TMI 1282
Approval of Resolution Plan - actions of the Resolution Professional and the CoC are consistent with the NCLAT order or not - HELD THAT:- On looking into order dated 18.01.2023 passed by this Tribunal, it is clear that this Tribunal directed the Resolution Professional to initiate fresh voting process on the Resolution Plans received in the process which was to be completed within a month. The Adjudicating Authority has noticed that in pursuance of the order dated 18.01.2023, all the Resolution Plans were put before the CoC in its meeting dated 25.01.2023 and voting result was declared in its meeting dated 10.02.2023 where all plans were rejected by voting share of 89.10% and it was decided by the CoC to issue fresh RFRP.
Consideration of all Resolution Plans and voting on the plans by the CoC as per direction of this Tribunal dated 18.01.2023 cannot be said to be non-compliance of order of this Tribunal. When none of the Resolution Plans was approved, the CoC under the CIRP Regulations was empowered to issue fresh RFRP. There are no error in the order of the Adjudicating Authority refusing the prayers of the Appellant to reissue RFRP and reinitiate the voting process.
The present Appeal arise out of the order dated 20.02.2023 by which I.A. No. 602/2023 was rejected, by which Appellant was challenging the RFRP issued on 10.02.2023. Subsequent events which took place after 10.02.2023 are not subject matter of this Appeal and needs no consideration by this Tribunal. Learned counsel for the Appellant submitted that Resolution Professional has already filed an I.A. No. 791/2023 before the Adjudicating Authority for approval of a Resolution Plan. It is open for the Appellant to file an appropriate application/objection in I.A. No. 791/2023, the issues raised by the Appellant subsequent to 10.02.2023 need no consideration.
Appeal dismissed.
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2023 (3) TMI 1281
Condonation of delay for four days in filing of the appeal - Appellant was in jail and was not keeping well and admitted in the jail hospital - Sufficient cause for delay or not - whether the delay caused in filing of the appeal much beyond the period of 45 days can be condoned by this Tribunal? - HELD THAT:- Section 61(1) provides for a right of appeal to an aggrieved person. Section 61(2) provides a period of limitation 30 days for preferring an appeal in terms of Section 61(1) before the Appellate Authority. Section 61(2) proviso provides another period of 15 days which can be extended in case the Appellant satisfies the Appellate Authority about the existence of a sufficient cause for not filing the appeal in time. There is no further provision in the Code for looking into the aspect of condonation of delay beyond the period of 15 days much less 45 days.
In the case of NATIONAL SPOT EXCHANGE LIMITED VERSUS MR. ANIL KOHLI, RESOLUTION PROFESSIONAL FOR DUNAR FOODS LIMITED [2021 (9) TMI 1156 - SUPREME COURT] the Hon’ble Supreme Court has held that considering the statutory provisions which provide that delay beyond 15 days in preferring the appeal is uncondonable, the same cannot be condoned even in exercise of powers under Article 142 of the Constitution.
Thus, it is clear that there is no scope for condonation of delay beyond the period of 15 days much less 45 days as there is no window available for this Tribunal to exercise its jurisdiction for condonation of delay - application dismissed.
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2023 (3) TMI 1279
Payment of Electricity dues during CIRP period - application rejected since the electricity Department cannot use the non-payment of pre-CIRP dues for disconnecting the electricity - HELD THAT:- There can’t be any dispute that the Appellant/Monitoring Professional/Resolution Professional were liable to make the payment of the dues during the CIRP period, which according to Appellant stood paid.
It is observed that in the event any amount is still due with regard to the electricity dues during the CIRP, it shall be open for the Department to issue bill and realise the same. It is further made clear that R-1 having not filed any claim in the CIRP regarding pre-CIRP dues, it is not entitled to recover the pre-CIRP dues and on non-payment of the said amount, to disconnect the electricity. The prayers made in the application does not require any consideration.
Appeal disposed off.
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2023 (3) TMI 1278
Condonation of delay of 15 days (beyond the period of entire 45 days) in filing appeal - delay caused on medical grounds - sufficient cause or not - HELD THAT:- As per Section 61(1) any person aggrieved by the order of the Adjudicating Authority under this part may file an appeal to the Appellate Tribunal. As per Section 61(2) every appeal which is to be filed under Section 61(1) has to be filed within 30 days before the Appellate Tribunal. As per 61(2) proviso the Appellate Tribunal has the jurisdiction to extend the period of 15 days if it is satisfied that there is a sufficient cause for not filing the appeal within the prescribed time - The present appeal has been filed beyond the period of 45 days i.e. a period of 30 days provided in Section 61(1) and 15 days provided in proviso to Section 61(2).
Reliance placed upon two judgments of the Hon’ble Supreme Court in the case of V. Nagarajan Vs. SKS Ispat and Power Limited [[2021 (10) TMI 941 - SUPREME COURT]] and National Spot Exchange Limited Vs. Mr. Anil Kohli, RP for Dunar Foods Limited [[2021 (9) TMI 1156 - SUPREME COURT]], where it was held that considering the statutory provisions which provide that delay beyond 15 days in preferring the appeal is uncondonable, the same cannot be condoned even in exercise of powers under Article 142 of the Constitution.
Thus, even if, the Appellant has submitted that a fraud has been played, in so far as, the delay is concerned, it cannot be condoned by this Tribunal because of lack of jurisdiction - The application is thus dismissed and as a consequence of dismissal of the application for condonation of delay, the main appeal is also dismissed.
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2023 (3) TMI 1213
Initiation of CIRP - Financial Creditors or Operational creditors - receivables sold or discounted on a non-recourse basis - financial debt or not.
Whether the Appellants in the second appeal (Financiers) are the Financial Creditors as against the Corporate Debtor or have stepped in to shoes of the Seller as an Operational Creditors and as such application filed by the Appellants in the second appeal under Section 7 of the Code has rightly been held to be not maintainable and were rightly relegated to avail their remedy of filing the application under Section 9 of the Code?
HELD THAT:- The Agreement (COR) was entered into between the Seller, Financier and the Corporate Debtor (As customer). As per the agreement, the Seller had agreed for discounting of invoice of the customer (CD) for the creation of the right and interest in the invoice receivables in favour of the Financier (Appellant). Upon execution of agreement of COR, the Appellant as a Financier discounted the invoice and deposited the amounts into an escrow/nodal account maintained by KredX with an escrow/nodal agent, namely, Yes Bank Limited who further transferred the said amount to the account of the Seller and on receiving, the Seller transferred its right to receive the money under the invoices in favour of the Financiers/Appellants.
In this transaction, the money was never disbursed much less for the time value as a financial debt to the Corporate Debtor and by virtue of discounting the invoice of the Seller of an amount of Rs.3,42,03,903/- for amount of Rs.1,75,23,133/- the Financiers/Appellants entered into shoes of the Seller and had become Operational Creditors in terms of Section 5(20) as well as 21(5) and Section 5(7) and 5(8)(e) of the Code is not at all applicable.
There is no error in the order of the Adjudicating Authority who has though rejected the application filed under Section 7 of the Code but relegated the Appellants (Financiers) to avail their remedy under Section 9 of the Code in accordance with law.
Appeal dismissed.
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2023 (3) TMI 1175
Effect of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - should be limited to the same project i.e Winter Hills only or not - seeking appropriate direction to the Ld. IRP/ Respondent to effect the moratorium limited to the real estate project Winter Hills only and not to enlarge the effect of the moratorium against the other assets of the Corporate Debtor or against the entire company of the Corporate Debtor - as per applicant role of IRP/ Respondent should be confined only with respect to project Winter Hills-77 instead of whole company of the Corporate Debtor.
HELD THAT:- The intent of Section 7 of the I & Code, 2016 is pretty clear and the role of Adjudicating Authority has been clearly defined to examine the existence of debt and subsequent default on payment on due date by the Corporate Debtor and also meeting the threshold criteria. Admittedly, in the present case no error was found in the order of the Appellate Tribunal contained in order dated 04.02.2020, thereby there was no case of the Appellant therein to set aside the order dated 20.08.2019 - This Appellate Tribunal, taking the support of the ratio as laid down by the Hon’ble Supreme Court of India in the case of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT], regarding economic experimentation, took on challenge for finding new dynamic solution and laid down for the first time the concept of ‘Reverse CIRP’ along with other aspect related to the case in Para Nos. 13, 15, 20, 21, 25, 26, 29, 30 & 31 of (04.02.2020) as discussed in preceding paragraphs.
Similarly, Section 14 of the I & B Code, 2016, is explicit and without any ambiguity which prescribes that once CIRP has been admitted, the entire Corporate Debtor is placed under management of the IRP who shall conduct day to day affairs of the Corporate Debtor and moratorium automatically find its place. The balance has been placed on the rights and obligations of various stakeholder during this calm period as per Section 14 of the I & B Code, 2016 and this has been primarily done to protect the assets of the Corporate Debtor so that by suitable Resolution Plan of Resolution Applicant the Corporate Debtor can be continued on going concern basis and not push the Corporate Debtor towards Insolvency/ Liquidation.
The intent of order of this Appellate Tribunal dated 04.02.2020, therefore, seems to restrict the scope of the Reverse CIRP to only project Winter Hills-77, whose two allottees, namely, Rachna Singh and Ajay Singh, filed an application asking for the CIRP of the Corporate Debtor and who not only got the possession of their flats but also received sale deeds and were able to get these registered in their favour. Thus, technically the grievances of the Original Applicants/ Movers of Section 7 application have been satisfied.
This Appellate Tribunal consciously notes that Section 14 of the I & B Code, 2016 recognise moratorium of the Corporate Debtor implying that under such moratorium all assets and liabilities are covered by provision of moratorium and protected from any detrimental action against the Corporate Debtor by way of any fresh/continuation of any suit or litigation etc., to protect the Corporate Debtor’ in the difficult times and give temporary respite to overcome difficulties and revive itself by other means including by the ‘Successful Resolution Plan’ of third party - It is pertinent to note that the concept of Reverse CIRP was also allowed to the specific project and without touching or commenting on other projects and assets of the ‘Corporate Debtor’ and without any specific direction/observation regarding continuation of moratorium on other projects for the Corporate Debtor.
Thus, it becomes evident that the order is confined to only Winter Hills-77 and not to other projects of the Corporate Debtor and consequently and logically the moratorium in the present case can deemed to have been confined to only project Winter Hills-77 and not to other projects of Corporate Debtor. This clarification is being given looking to peculiar and extraordinary circumstance of the case and detailed rational along with elaborate directions contained in its order dated 04.02.2020. This Appellate Tribunal also takes into account an important fact that in its earlier order dated 04.02.2020, for the first time, the concept of Reverse CIRP was introduced and as such this is evolving process needing such clarification.
This Appellate Tribunal will like to amplify that above clarification is on specific request of the Appellant in present appeal and cannot be treated as general guidance or interpretation regarding moratorium on the Corporate Debtor - moratorium on Corporate Debtor as a whole is a normal, basic and fundamental law as laid down in Section 14 of the I & B Code, 2016 and need to be read accordingly.
Application disposed off.
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2023 (3) TMI 1076
Winding up of company - Section 241 and 242 of the Companies Act, 2013 - HELD THAT:- Reliance has been placed by Ld. Counsel for the Respondent No. 2 in the case of MSDC RADHARAMANAN VERSUS M. SD CHANDRASEKARA RAJA [008 (3) TMI 471 - SUPREME COURT], wherein the Hon’ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company. The ratio laid down in the aforesaid case is applicable in the facts of the instant case.
The Consent Terms entered between the parties in the past, pursuant thereto, the Original Petition was disposed off, thereafter, violation of Consent Terms, applications were filed before the NCLT, therefore, the NCLT appointed Observer cum Facilitator to settle the disputes, to revive the company etc. however, the parties could not arrive at any amicable settlement despite several opportunities given by the NCLT - the order passed by the NCLT is correct in nature to meet ends of Justice and in the interest of the Company, winding up order was passed.
Keeping in view of the aforenoted background, there are no merit in the instant appeal. The impugned order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) is hereby affirmed.
Appeal dismissed.
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2023 (3) TMI 1075
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of discernible pre-existing dispute surrounding the debt claimed to be due and payable by the Operational Creditor or not - HELD THAT:- The Corporate Debtor in its reply dated 08.08.2020 to the Section 8 demand notice had disputed both the quantum of operational debt and also deficiencies in respect of discharge of contractual obligations by the Operational Creditor.
There are no material to have been placed on record by the Operational Creditor wherein the Corporate Debtor can be said to have unambiguously admitted the operational debt claimed by the Appellant - the Adjudicating Authority has rightly observed in the impugned order that the Corporate Debtor had raised an issue with regard to the existence of amount claimed by the Operational Creditor and asked for reconciliation of accounts.
Deficiencies in respect of discharge of contractual obligations by the Operational Creditor as raised by the Corporate Debtor - whether there was a plausible dispute supported by the materials raised by the Corporate Debtor in Reply to Demand Notice? - HELD THAT:- On looking into the contents of allegations made in the Reply to the Demand Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor’s amount due.
The issue of deficiency in terms of defects and delays in respect of supplies received from the Operational Creditor was raised by the Corporate Debtor prior to issue of demand notice of 29.07.2020 as borne out from a series of emails placed at pages 432-437 of APB. Concisely put, the email dated 10.10.2017 from the Corporate Debtor raises issues about repair/replacement of supplies made; email dated 18.10.2017 relates to complaint about oil drums having been sent without sealing; email dated 18.05.2018 is about non-supply of oil; email dated 29.11.2018 is about oil drums sent without sealing; email dated 23.02.2019 is about repair of leaking power transformers; email dated 15.10.2019 and 26.11.2019 are about repair of power transformers. These emails which are on record clearly substantiate that the Operational Creditor was put to notice regarding non-supply of goods, delay in supplies, supply of defective goods which are clear signs of pre-existing disputes.
The Adjudicating Authority having noted that the arbitration proceedings were kick-started by the Corporate Debtor starting September 2020, also observed that these arbitration proceedings were clearly initiated after the issuance of the demand notice in July 2020. Hence, it has been rightly held by the Adjudicating Authority that the invocation of the arbitration proceedings being subsequent to the issue of the demand notice cannot be treated as a pre-existing dispute.
There exists a pre-existing dispute with respect to the existence of amount due and payable and quality of goods and services supplied by the Operational Creditor to the Corporate Debtor. Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. The ratio of judgment by the Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT] is indeed squarely applicable in the present case and has been correctly applied by the Adjudicating Authority.
The Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute. There is no merit in the Appeal - Appeal dismissed.
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2023 (3) TMI 1017
Initiation of CIRP - Financial Creditors or not - unsecured loan - Financial Debt within the meaning of Section 5(8) of IBC or not - time value of money is an essential ingredient in classification of Financial Debt - HELD THAT:- The findings given by the Adjudicating Authority are agreed upon, that the Appellant has not produced any agreement between the Appellant and the Respondent that any interest would be payable by the Respondent/Corporate Debtor against the alleged loan. Further, the Adjudicating Authority rightly come to the conclusion that in order to qualify the debt to be a ‘financial debt’, it is necessary that the amount advanced to the Corporate Debtor is against the time value of money, which is totally absent in the present matter. Further, it was held that since the Appellant is not a financial creditor as the Appellant has not disbursed money against the consideration for the time value. Accordingly, the claim of the Appellant is not a ‘financial debt’ within the meaning of Section 5(8) of the IBC.
There are no merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority - appeal dismissed.
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2023 (3) TMI 954
Liquidation of Corporate Debtor - non-execution of decrees - Section 33 of I&B Code - HELD THAT:- Admittedly, the Appellant is an Association ventilating its grievance against appointment of the Respondent as Liquidator. The fact remains that the RP has not challenged the appointment of this Respondent as Liquidator and this Tribunal does not find any allegations against this Respondent. No one aggrieved against the appointment of this Respondent as Liquidator except the Appellant and no genuine cause or reason shown neither any illegality or irrational has been pointed out by the Appellant except mere appointment as Liquidator by the Adjudicating Authority. Moreover, the Appellant failed to explain that the Adjudicating Authority lacks jurisdiction in appointing the Respondent as Liquidator. Furthermore, the CoC it its 4th meeting held on 07.08.2018 passed a Resolution and decided to appoint the Respondent as Liquidator. It is to be presumed that the CoC in its commercial wisdom has taken a decision and reposed its confidence in the Respondent to act as Liquidator.
Further, this Tribunal in SANDEEP KUMAR GUPTA VERSUS STEWARTS AND LLOYDS OF INDIA LTD. AND ANR. [2018 (4) TMI 276 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, KOLKATA] held that the observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the ‘Resolution Professional’, we hold that the Adjudicating Authority was well within its jurisdiction to engage another person as ‘Resolution Professional’ or ‘Liquidator’.
Without going into the other aspects of the case this Tribunal is of the view that the order under challenge was passed by the Adjudicating Authority on 01.09.2020 and till passing of this order, if the period is taken into consideration from the date on which the impugned order was passed i.e. 01.09.2020, much time has passed i.e. more than 2½ years and it would be a futile exercise if the order is interfered with, keeping in view of the time bound proceedings of the IBC.
This Tribunal comes to a resultant conclusion that the Appellant has not made out a prima-facie case to be interfered with the order passed by the Adjudicating Authority - appeal dismissed.
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2023 (3) TMI 837
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of disputes between the parties prior to the issuance of the Demand Notice - HELD THAT:- It is observed that the emails dated 07.08.2014, 27.03.2015, 01.02.2016, 25.03.2016 and 08.04.2016 sent by the Respondent to the Appellant shows that there was pre-existence dispute between the parties before issuance of Demand Notice which is not permissible in IBC to initiate the Corporate Insolvency Resolution Process. Therefore, the reasons assigned by the Adjudicating Authority in the impugned order is fully agreed upon.
Keeping in view of the facts, there are no merit found in the Appeal to interfere with the order impugned passed by the Adjudicating Authority. The impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Court No. IV, New Delhi) is hereby affirmed.
Appeal dismissed.
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2023 (3) TMI 836
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors (Homebuyers) - minimum threshold as required under Section 7 of the I & B, Code, 2016 (regarding minimum number of allottees), met or not - Respondents stated that total 39 Financial Creditors file the original application filed under Section 7 of the I & B Code, 2016 who were allotted 20 Real Estate Units of a Phase II having 170 units and therefore met the threshold limits.
Whether, the Application under Section 7 of the I & B Code, 2016 was complete and without defects and the same was considered accordingly, by the Adjudicating Authority? - HELD THAT:- From the reading of the ingredients of Section 7 of the Code, it is obvious that, if an Application, filed under Section 7 of the I & B Code, 2016, is found to be incomplete, then the Adjudicating Authority, in compliance of proviso to Section 7 of the I & B Code, 2016 is required to issue Notice, and provide an opportunity to rectify the Defects, within seven days, failing which, the Petition, can be rejected. An incomplete or improper authorisation, may vitiates, the entire proceedings, rendering Legal Action, Devoid of Authority. It is therefore, felt that the rectification of defects, if any, is of utmost importance and cannot be ignored.
This Tribunal, aptly points out the decision of the Hon’ble Supreme Court of India in M/S. SURENDRA TRADING COMPANY VERSUS M/S. JUGGILAL KAMLAPAT JUTE MILLS COMPANY LIMITED AND OTHERS [2017 (9) TMI 1566 - SUPREME COURT], wherein it is observed and held that the time provided for rectifying the Defective Application, under Section 9 (5) of the I & B Code 2016, is directory in nature, and in the given circumstances, the Adjudicating Authority (Tribunal), can provide more than 7 days’ time, to rectify the defect.
The requirement of Section 7 of the Code, is that the Application, should be complete in all respects and in case of defects, the Adjudicating Authority (Tribunal), should provide an opportunity, to the Applicant, for rectifying these defects, before Accepting/ Rejecting of the Application - The Finding in the impugned order, is cryptic, bereft of any qualitative or quantitative discussions, smacks of any reasoned speaking order, is therefore, clearly Unsustainable. Even, the Respondents herein, have not brought out any details, to allay the doubts raised, by the Appellant herein, either in the Appeal or in the Reply/ Rejoinder in the Original Petition, before the Adjudicating Authority.
This Tribunal, relevantly points out that it is not expressing its opinion on the merits or demerits of the case, and hence, remits back the case to the Adjudicating Authority (Tribunal), with directions to look into all factual and legal aspects and decide the Petition Denovo, on merits, by providing, adequate opportunity of Hearing, to the respective Parties, and also, by adhering to the Principles of Natural Justice.
Appeal disposed off.
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2023 (3) TMI 805
Seeking leave for filing an appeal - locus standi - concept of Sufficient Cause, is alien to the maintaining of an Appeal, under Section 61 (1) of the I & B Code, 2016 or not - the plea of the Petitioner / Appellant is that, there is no need to prove any Sufficient Cause, to prefer an Appeal - Validity of Process of Sale and Realisation - Sale of the Corporate Debtor, as a Going Concern, by means of a Private Sale.
HELD THAT:- In the instant case, consequent to the Order dated 19.01.2023, passed by the Adjudicating Authority, the Sale as a Going Concern for the Corporate Debtor, was allowed by the Adjudicating Authority, a Sale Agreement, was executed by the 2nd Respondent with the Corporate Debtor and the 2nd Respondent, took over the Whole Management and the Sale Proceeds, were distributed to the Stakeholders, as per Section 53 of the I & B Code, 2016.
In the light of foregoings and this Tribunal, bearing in mind a prime fact that the Petitioner / Appellant, is not a Stakeholder in the Liquidation Process, and in any event, has no vested interest, in the Corporate Debtor, comes to a resultant conclusion that the appeal, filed by the Petitioner / Appellant, is an Otiose one, and the same is filed, only to disrupt, the Liquidation Process of the Corporate Debtor, because of the fact that the entire Sale Proceeds, were distributed to the Stakeholders, as per ‘Section 53 of the I & B Code, 2016. Looking at from any angle, the Leave, prayed for by the Petitioner / Appellant, to file the instant Comp. App, is not assented to, by this Tribunal, cementing upon the facts and circumstances of the instant case.
Appeal dismissed.
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