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IBC - Case Laws
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2023 (1) TMI 1473
Admission of Application under Section 7 of Insolvency and Bankruptcy Code, 2016 - existence of financial debt or not - no loan agreement entered into between the Corporate Debtor and the Respondents - service of demand notice - time limitation - HELD THAT:- From the Reply given by the Corporate Debtor, the conclusions are inescapable, firstly, the Corporate Debtor admitted grant of loan. The plea taken in the Reply was that loan was granted for a tenure of 5 years. The second conclusion which may be drawn from the Reply is that the claim of interest which was claimed by the Demand Notice was not refuted. Corporate Debtor did not take any plea that no interest is payable.
In Section 7 Application, the Financial Creditors have also brought on record Form 16-A for the financial year ending 31st March, 2018 which Form 16-A indicates that TDS was deducted by the Corporate Debtor and deposited under Section 194-A of Income Tax Act, 1961.
It is true that deduction of TDS and deposit by the Corporate Debtor does not itself prove that there is any financial debt but deduction of TDS and deposit in Form 16-A under Section 194-A of Income Tax Act clearly proves that the deduction which was deposited was TDS relating to “Interest other than interest on securities”. Form 16-A which was filed by the Financial Creditor along with Section 7 Application at least support the case of the Financial Creditors that loan which was granted to the Corporate Debtor was with interest.
Loan was granted by the Financial Creditors to the Corporate Debtor which was proved from the materials brought on record by the Financial Creditors.
Submission of Learned Counsel for the Appellant that the Respondents Financial Creditors has no license under Section 22 of Banking Regulation Act, 1949 hence no Financial Facility could have been extended by the Financial Creditors - HELD THAT:- Section 22 contains the prohibition that no Company shall carry on banking business unless it holds a license issued on behalf of bank. Section 22 of the Banking Regulation Act, 1949 prohibits banking business. Present is not a case that Respondents are carrying on any banking business hence advancing a loan by the Respondents to the Corporate Debtor is not prohibited by Section 22 of the Banking Regulation Act - The definition of Financial Debt as contained in Section 5(8) of the Code is expansive definition and use of the expression “any other transaction” is a wide enough to cover the loan advanced by the Respondents to the Corporate Debtor and we are satisfied that loan advanced by Respondents cannot be disregarded relying on Section 22 of the Banking Regulation Act, 1949.
The Adjudicating Authority after considering the materials on record and submissions of parties rightly came to the conclusion that the Financial Debt as claimed by the Respondents were disbursed against the consideration for the time value of money.
Conclusion - The definition of Financial Debt as contained in Section 5(8) of the Code is expansive. The loan advanced by Respondents cannot be disregarded relying on Section 22 of the Banking Regulation Act, 1949. The ingredients of financial debt were fully proved in the facts of the present case.
There are no error in the Order of the Adjudicating Authority warranting any interference in this Appeal. There is no merit in the Appeal, the Appeal is dismissed.
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2023 (1) TMI 1421
Revival of Section 7 application - Admission of Section 7 application filed by the Financial Creditor - default in settlement agreement - HELD THAT:- Present is a case where application under Section 7 was filed by the Financial Creditor claiming its financial debt. On said application, Corporate Debtor entered into settlement due to which the application was withdrawn with liberty to revive if any default is committed. The revival of the application under Section 7 was consequent to the liberty granted by the Court.
When application was revived, the application which was filed initially by the Financial Creditor was restored and treated to be the original Section 7 application. It cannot be said that what is to be considered was only the default under the settlement agreement. Default in settlement agreement is only a by-product which has permitted revival of Section 7 application but in no manner affect the claim in the original application which is financial debt under Section 7 application.
In the present case Application under Section 7 was filed claiming financial debt and it was not initiated on the basis of any settlement agreement. Settlement agreement which was entered during the pendency of the insolvency proceedings was breached, hence, what is revived is original application.
The Adjudicating Authority has considered in detail the facts and circumstances before coming to conclusion that there is debt and default on part of the Corporate Debtor - there is no ground to interfere with the impugned order - Appeal dismissed.
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2023 (1) TMI 1388
Dismissal of Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - application barred by Section 10-A of IBC - HELD THAT:- There being clear categorical statement in Part-IV that date of default is 15.12.2020 which is a period during which Section 10-A had operation thus no error has been committed by the Adjudicating Authority rejecting Application filed under Section 10-A. However, ends of justice will be served in giving liberty to the Appellant to file fresh Application in accordance with law.
Appeal dismissed.
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2023 (1) TMI 1366
Condonation of delay in filing appeal - assets of the land holding companies, i.e., subsidiary of the Corporate Debtor can be treated to be assets of the Corporate Debtor or not - lease lands could have been dealt and the Resolution Plan could legally contain a clause for transfer of the lease hold rights by the Appellant or not - assets of the subsidiary companies can be dealt with in Corporate Insolvency Resolution Process of holding Company or not - Appellant was required to be made party to the CIRP proceedings and heard before approval of any resolution plan dealing with the Project land or not - Resolution Professional acted within the ambit of I & B Code in giving a certificate that Resolution Plans submitted by Roma Unicon Designex Consortium and Alpha Corp Development Private Limited are in accordance with the provisions of the Code or not - Appellant was aware of the development carried out by the Corporate Debtor on the lease land before commencement of the CIRP of the Corporate Debtor or not.
Time Limitation - HELD THAT:- Reference made to the Judgement of Hon’ble Supreme Court passed in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2022 (1) TMI 385 - SC ORDER]. By the said order, the Hon’ble Supreme Court held that in computing the period of limitation for petitions/applications/appeals/suits, the period from 15/03/2020 to 28/02/02022 shall stand excluded. Hon’ble Supreme Court further held that in case where the limitation would have expired during the period 15/03/2020 to 28/02/2022 notwithstanding the actual balance period of limitation, all person shall have a limitation period of 90 days i.e. from 01st March, 2022 to 29th May, 2022. As per the judgement of the Hon’ble Supreme Court, the period of limitation for filing the Appeal expiring between 15th March, 2020 to 29th May, 2022 and appeal having been filed within 90 days period as provided by the said order, the Appeal Company Appeal (AT) (Insolvency) Nos.180, 629 & 630 of 2022 55 cannot be held to be barred by time. The objection regarding the limitation is overruled.
Whether in the CIRP proceedings of the Corporate Debtor, i.e. Earth Infrastructures Limited, the assets of the land holding companies, i.e., subsidiary of the Corporate Debtor can be treated to be assets of the Corporate Debtor? - Whether, in the Resolution Plans submitted by the Successful Resolution Applicants, i.e., Roma Unicon Designex Consortium and Alpha Corp Development Private Limited, the assets of the subsidiary, i.e., lease lands could have been dealt and the Resolution Plan could legally contain a clause for transfer of the lease hold rights by the Appellant in favour of Successful Resolution Applicant without there being any prior permission from the Appellant? - Whether assets of the subsidiary companies can be dealt with in Corporate Insolvency Resolution Process of holding Company? - HELD THAT:- The Judgement of this Tribunal in NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS MR. NILESH SHARMA RESOLUTION PROFESSIONAL OF DREAM PROCON PVT. LTD., VICTORY ACE SOCIAL WELFARE SOCIETY [2022 (3) TMI 600 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI] does not help the Respondents in the present case. In Nilesh Sharma case, the Adjudicating Authority directed the NOIDA Authority to participate in the CIRP Process and file its claim in the Insolvency Resolution Process whereas in the present case neither the Appellant were asked to participate in the CIRP nor file their claim rather they were informed by the Resolution Professional only after approval of the Resolution Plan. It is further to be noted that the Judgement do not consider the provisions of Section 18 hence can not be held to be a binding precedent holding that assets of a subsidiary can be included in the assets of holding company.
The Judgement of this Tribunal in “Nilesh Sharma” case thus is still under scrutiny by the Hon’ble Supreme Court. However, Hon’ble Supreme Court has granted liberty to Resolution Professional including Resolution Applicant and Others, if required, so as to find out some amicable solution between all parties including the lessee within the ambit of IBC.
The law is well settled that subsidiary company and the holding company are separate entities. Learned Counsel for the Appellant in the above reference has relied on Judgement of the Hon’ble Supreme Court in MRS. BACHA F. GUZDAR, BOMBAY VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY [1954 (10) TMI 2 - SUPREME COURT]. It was held by the Hon’ble Supreme Court that shareholder does not acquire any interest in the assets of the company by purchasing shares of company.
Thus the Corporate Debtor, who was lead member of the Special Purpose Company, was contemplated to be separate entity and the contention of the Respondent that both should be treated to be one entity cannot be accepted. It is further relevant to notice that Learned Counsel for the Respondents have also contended that Corporate Veil of the land holding company be pierced and should be lifted in the facts of the present case which will make it clear that it is the corporate debtor which is behind the land holding companies. Lifting of Corporate Veil between the subsidiary and parent company have been legally accepted proposition.
The Judgement of the Hon’ble Supreme Court in JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. VERSUS NBCC (INDIA) LTD. & ORS. [2021 (3) TMI 1143 - SUPREME COURT] is also to be noticed on another aspect of the matter. In the above case, the Corporate Debtor was granted lease of the land by Yamuna Expressway Industrial Development Authority which was also constituted under Section 3 of Uttar Pradesh Industrial Area Development Act, 1976. It has provided land for execution of various projects by JAL/JIL under the concession agreement. It was observed by the Hon’ble Supreme that Resolution Plan could have modified the terms of contract but the same could not have been carried out without the approval and consent of the authority concerned - the judgement of the Hon’ble Supreme Court fully supports the view which we are taking in the present matter that without the approval of the Appellant, the leased land could not have been included in the Resolution Plan nor there could have any direction by the Adjudicating Authority to transfer the lease land without the approval of the Appellant.
The transfer of land thus is statutorily governed and terms and conditions lays down by authority are statutorily protected. Resolution Plan which contains provisions for transfer of the project of the land contrary to the terms and conditions of the lease deed under which the project land was leased out to the land holding company is contrary to the terms and conditions of the lease deed as well as Section 7 of the UP Industrial Area Development Act, 1976. Resolution Plan thus was clearly in breach of the provisions of the 1976 Act which can not be sustained - Explanation to Section 18(1)(f) clearly contemplates that assets of subsidiary company are entirely different from assets of the holding company and principle of lifting of veil cannot be invoked contrary to statutory prescription as in the present case that is Section 18(1)(f).
Resolution Plan could have contained the provision obligating the Appellant to transfer lease hold right in favour of SRA or any third entity or not - HELD THAT:- Resolution Plan could not have contained clause for transfer of land without there being any approval of the Appellant for such transfer. Further direction to the Appellant to transfer while waiving of its entitlement and charges is clearly contrary to the terms and conditions of the lease and not in a public interest - In the present case, in the Information Memorandum, it clearly gives the details of status of the project land which indicates that no project is complete. The apartment as contemplated in 2010 Act are not even in existence in the facts of the present case hence there is no question of applicability of Section 5 - The present is not a case where any apartment has been transferred in favour of the allottees. The submission made on behalf of the SRA relating to 2010 Act are misconceived.
Whether the Appellant was required to be made party to the CIRP proceedings and heard before approval of any resolution plan dealing with the Project land? - HELD THAT:- The Appellant’s case in these Appeals are that Appellant was not issued any notice by the Adjudicating Authority for participation in the CIRP Process. From the facts, it is clear that the Resolution Professional wrote a letter asking certain information from the Appellant and thereafter only informed about the approval of the Resolution Plan, at no point of time the Appellant was asked to participate in the CIRP Process of the Corporate Debtor. The Resolution Plan which was approved by the Committee of Creditors on 26.08.2019 clearly has dealt with the lease land of the NOIDA Authority. Resolution Professional was well aware that Appellant has its dues on the lease land which have not been paid so far. It was incumbent on the Resolution Professional to inform the Appellant about the Resolution Plan which have been received in the CIRP Process of the Corporate Debtor - It is to be noted that the Corporate Debtor was lead shareholder of the land holding company in case of Earth Towne Infrastructures Pvt. Ltd. it being 98% shares and with regard to other two land holding companies it had 100% shareholding. In the CIRP Process of such corporate debtor, the Appellant was necessary party and without they being before the CIRP Process the land leased out by them could not have been made subject matter of the Resolution Plan - Appellant was required to be made party to the CIRP Process before approval of any resolution plan dealing with project land.
Whether, Resolution Professional acted within the ambit of I & B Code in giving a certificate that Resolution Plans submitted by Roma Unicon Designex Consortium and Alpha Corp Development Private Limited are in accordance with the provisions of the Code? - HELD THAT:- The Resolution Professional was well aware that the project land is a leased out land which has been leased out by the Appellant to the land holding companies which fact has been clearly mentioned in the Information Memorandum. Information Memorandum also mentions few facts regarding the lease rent. Resolution Professional in his submission has also submitted before us that Resolution Professional has shared the details of the dues of the Appellant to the Resolution Applicants. When the Resolution Professional is aware that project land does not belong to the Corporate Debtor how he permitted the said lease land to be part of resolution plan is question which is unanswered.
The development right in the project under which the developer is entitled to carry on development is not akin to any ownership/lease hold right in the leased land. Resolution Professional has certified the Resolution Plan that it is in accordance with I&B Code which clearly deals with the project land that is lease land in its entirety. The Resolution Professional did not communicate to the appellant about the receiving of the Resolution Plan and the nature of resolution plans which have been received nor invited attention of the Appellant that Appellant’s dues are not being taken care in resolution plan.
The Resolution Professional did not act within the ambit of the Code while certifying that Resolution Plan submitted by Roma Unicon Designex consortium and Alpha Corp Development Private Limited is in accordance with the provisions of the Code - Registry is directed to forward the Copy of this Order to IBBI to examine the work and conduct of RP and take such action as it may deem fit and proper.
Whether Appellant was aware of the development carried out by the Corporate Debtor on the lease land before commencement of the CIRP of the Corporate Debtor? - HELD THAT:- The lease deed clearly cast an obligation on the Appellant to monitor the implementation of the project. It has been the case of the association of allottees that they have time and again brought to the notice of the Appellant about the misdeeds of the corporate debtor. Reference to BuilderBuyers meeting held on 20th May, 2016 has also been made - The allottees has brought into the notice of the Appellant about the grievances which they were facing due to delay in the project causing financial distress and mental distress to them.
The Appellant was well aware that the development on the project land is being carried out by the Corporate Debtor. Further it is observed that the fact that appellant was aware that the corporate debtor is carrying out development in the project land is not akin to their knowledge of terms and conditions of Resolution Plan which was submitted in the resolution process of the corporate debtor - The knowledge by the Appellant of carrying out development by the corporate debtor cannot be read as their consent to transfer the land in favour of the Successful Resolution Applicant or any other person.
What is the way out in the facts and circumstances of the present case? - HELD THAT:- Looking to the stage at which the projects are as on date and looking to the fact that allottees have paid hundreds of crores rupees in the above three projects to the Corporate Debtor and waiting for possession of the flat for last several years, we have to find out ways and means to save the interest of the allottees as well as the interest of the Appellant - It shall be open for the Appellant to enter into an arrangement with the Resolution Applicant and Flat Buyer Associations for payment of dues and thereafter it may permit transfer of the land so ultimately allottees be given rights and the projects can be developed by the SRA.
The Appellant shall recalculate the dues and communicate to the Resolution Professional and Flat Buyers Associations without charging any penal interest within 15 days. Fresh Resolutions Plans so submitted will be considered and examined by the RP and be submitted before CoC for fresh consideration and approval. The application of Resolution Plan may be filed for approval of the plan, thereafter.
Appeal disposed off.
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2023 (1) TMI 1363
Permission for withdrawal of appeal - Appellant submits that he may be permitted to withdraw since he has filed the appeal questioning the order of the Adjudicating Authority which prohibited him to proceed with the challenge process - HELD THAT:- The prayer is accepted and the Appellant is permitted to withdraw the appeal without prejudice to any of the contention of either of the parties.
Appeal dismissed as withdrawn.
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2023 (1) TMI 1353
Approval of Resolution Plan - plan has not been allocated any amount - no consideration in the plan about the claim of the Appellant – Operational Creditor - HELD THAT:- The Para 30(ii) extracts Form H submitted by the Resolution Professional which clearly indicate that the Liquidation value of the Appellant is Nil. Even the Operational Creditors that is Government whose verified claim is Rs.295.18 Crores ware paid Nil. We do not find any error in the order by which no amount was allocated to the Appellant. The requirement for the obligation for payment of amount to the Operational Creditor is under Section 30(2)(b). It is not shown that there is any breach of provisions of the Section 30(2)(b).
As per the law as exist today, the Operational Creditors are only entitled for minimum of the liquidation value and there being no breach of any of the provisions of the Code - There are no reason to interfere with the impugned order - appeal dismissed.
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2023 (1) TMI 1296
Approval of Resolution Plan - It is submitted that for the mere fact that Appellant did not file its claim, Appellant shall not be disentitled from distribution as Secured Creditor - HELD THAT:- From the facts brought on the record, there is no dispute that at the time when claim was filed by the Appellant on 01.06.2022, the CoC has already approved the Resolution Plan. The judgment of Hon’ble Supreme Court in State Tax Officer (1) vs. Rainbow Papers Ltd. [2022 (9) TMI 317 - SUPREME COURT] was considering a claim which were invited on 05.10.2017 which was much prior to amendment in the Regulation, as has been noted in the judgment.
In the facts of the present case, the plan approved has also been implemented and the amount received has been disbursed to the Financial Creditors and other claimants as per the Resolution Plan. The submission of learned counsel for the Appellant that the Appellant being a Secured Creditor as per the law laid down by the Hon’ble Supreme Court in State Tax Officer (1) vs. Rainbow Papers Ltd. he ought to have been allocated amount as per Section 53 at par with the Secured Financial Creditors cannot be accepted in the facts of the present case.
When there is no claim filed by the Appellant within time, no error has been committed by the Adjudicating Authority in approving the Resolution Plan, which was approved by the CoC much prior to filing of the claim by the Appellant.
Thus, no relief can be granted to the Appellant in the facts of the present case - appeal dismissed.
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2023 (1) TMI 1278
Validity of demand notice issued in terms of Section 8 of IBC - case of appellant is that the ‘Demand Notice’ was defective because it was sent by Jignesh Ajit Ganatra, who was subsequently appointed as IRP by the impugned order and the said IRP was a related party in terms of Section 5(24)(h) of the Code - HELD THAT:- A close scrutiny of the Section 5(24)(h) of IBC would show, firstly, that it relates to the Corporate Debtor and not to the Operational Creditor and secondly the Appellant was to lead evidence that the Director, Partner or Manager was accustomed to act on the directions or instructions of the said IP. Therefore, Section 5(24)(h) of the Code is not at all applicable to the facts and circumstances of the present case and thus the arguments raised in this regard, is hereby rejected - the provision is not applicable because the dispute is between two corporate entities and not in respect of the individuals.
Whether an application under section 9 of the Code cannot proceed in view of fact that the principal amount has already been paid and only the component of interest is remaining? - HELD THAT:- It is to be seen at the time of the threshold when the application is filed under Section 9 of the Code as to whether it is pertaining only to the component of interest - the second contention is hereby rejected.
It is pertinent to mention that this court was of the view that in order to help the Corporate Debtor to remain a going concern, some time be provided to the Corporate Debtor for the purpose of settling its ‘debts’ before the CoC is constituted but despite taking so many dates and even on 06.01.2023, a specific order was passed but the Appellant has failed to consolidate funds for the purpose of discharging his liability not only towards the Respondent who is the Operational Creditor but also towards various Interveners who had filed applications during the pendency of this Appeal.
There are no merit in the present appeal and the same is hereby dismissed.
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2023 (1) TMI 1273
Rejection of Section 9 application - default in payment of the interest amount - Appellant had filed earlier an Application under Section 9 in the year 2017 which was withdrawn on settlement entered into between the parties - appellant contends that liberty was granted in the consent terms/settlement agreement that in event any breach is committed, the Application be revived - HELD THAT:- The Adjudicating Authority did not commit any error in rejecting Section 9 Application. It has been laid down by the Hon’ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT], IBC is not a recovery proceeding and the Application which has been filed by the appellant in the present case is only the application for recovery of balance amount of the interest and application was not filed for resolution of any insolvency of the Corporate Debtor.
Thus, no error has been committed by the Adjudicating Authority in rejecting Section 9 Application filed by the Appellant. There is no merit in the Appeal, the Appeal is dismissed.
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2023 (1) TMI 1272
Condonation of delay of 38 Days in refiling of the Appeal against approval of Resolution plan - ground in application is Appellant is a government body and there are number of formalities involved in the preparation, filing and refiling of the Appeal - HELD THAT:- The delay in filing the Appeal is beyond 15 days and the Application itself mentions the delay of 29 days in filing the Appeal. Jurisdiction is limited only to 15 days under Section 61(2) proviso of the IBC, 2016 hence the delay in filing the Appeal cannot be condoned.
The law is well settled that limitation for filing the Appeal shall begin on the date when order is pronounced and the mere fact that Appellant became aware on 14.09.2022 is not relevant for purposes of limitation - There being delay of more than 15 days, Application for condoning the delay is dismissed.
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2023 (1) TMI 1257
Necessity of going into the merit of the claim made by the petitioner - in respect of the same Corporate Debtor, another petition admitted - HELD THAT:- Corporate Insolvency Resolution Process cannot be initiated against a Corporate Debtor that is undergoing a corporate insolvency resolution process. However, needless to add, the Petitioner would be entitled to file its claim before the Insolvency Professional, namely, Mr. Shaikh Nafis Anjum (Email Id – [email protected]), Reg. No: IBBI/IPA-003/IP-N00211/2018- 2019/12363 in accordance with law which shall be duly considered.
Petition disposed off.
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2023 (1) TMI 1245
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and default or not - time limitation - Respondent neither appeared nor filed its reply and, therefore, it was proceeded ex-parte - HELD THAT:- It is seen from the record that the date of default relied in the present application is 01.04.2017 and the present application has been filed on 15.12.2020, which is well within the limitation period after considering the directions by the Hon’ble Supreme Court regarding the extension of limitation issued in the Suo Motu Writ Petition (C) No. 3 of 2020 [2021 (11) TMI 387 - SC ORDER].
Since there has been no representation on behalf of the Respondent and it has been proceeded ex-parte, it is presumed that it has nothing to say in the matter.
In the given facts and circumstances, the Operational Creditor has established the default on the part of Corporate Debtor in payments of the operational debt, the amount of which is higher than the minimum threshold prescribed under the IBC 2016. The present petition filed under Section 9 is complete and fulfills all the requirements of law. Therefore, the petition is admitted in terms of Section 9(5) of the IBC. Accordingly, the CIRP is initiated and moratorium is declared in terms of Section 14 of the Code.
Petition admitted.
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2023 (1) TMI 1191
Seeking restraint order against respondent no. 2 to 5 except seeking direction to deposit their passport - whether the Appellant has locus to file application or not - whether the objection filed in application were valid? - HELD THAT:- It is clear that the Adjudicating Authority has observed that Application filed by the Applicant i.e. I.A. No. 287 of 2018 is not maintainable he being the Operational Creditor. I.A. No. 287 of 2018 was not listed for consideration and which Application is still pending and was not disposed of. In I.A. No. 287 of 2018, the Appellant has raised various issues and has prayed for several reliefs and without adverting to the said application and without giving opportunity to the Appellant on the said application it was not open for the Adjudicating Authority to make observations as noted above. When an Application is not listed before the Court nor the Adjudicating Authority heard the parties on the said application, any observations made in reference to the said application is bound to prejudice the rights of the Applicant.
The Order impugned dated 05.05.2022 thus proceeded on misconception that I.A. No. 287 of 2018 was dismissed vide Order dated 14.02.2019 whereas on 14.02.2019 neither the I.A. No. 287 of 2018 was listed nor heard and nor decided.
The Adjudicating Authority committed error in rejecting application - appeal allowed.
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2023 (1) TMI 1190
Maintainability of application filed under sections 33 and 34 of the IBC in relation to a previously sanctioned scheme for rehabilitation of the sick company JKSL under SICA - Whether the Adjudicating Authority was correct in giving liberty to the operational creditors to file application under section 33(3) of IBC? - HELD THAT:- The judgment in Pramod Kumar Pathak [2022 (12) TMI 613 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] has clearly noticed the judgment of Hon’ble Supreme Court in the matter of Spartek Ceramics India Ltd. [2018 (10) TMI 1660 - SUPREME COURT] where it was held that Judgment of NCLAT holding that the appeal filed by the Central Government in that case not maintainable in view of the fact that the Notification dated 24.05.2017 travels beyond the scope of the removal of difficulties provision is correct - Thus, it is amply clear that the notification dated 24.5.2017 issued by Central Government goes beyond the remit of removal of difficulties provision of IBC.
Thus, liberty given by the Adjudicating authority in the Impugned Order to the operational creditor to file an application under section 33(3) of IBC is erroneous. While holding such a view we also note that the Adjudicating Authority in passing the Impugned Order has not noticed the law laid down by the Hon’ble Supreme Court in the matter of Spartek Ceramics India Ltd.
Whether the operational debt claimed by the appellants Surendra Singh Hada and Ors.is an ‘operational debt’ as defined in IBC and whether it is in default and due for payment by the corporate debtor? - HELD THAT:- Whether the operational debt claimed by the appellants Surendra Singh Hada and Ors.is an ‘operational debt’ as defined in IBC and whether it is in default and due for payment by the corporate debtor - the claims of workers were being paid under the monitoring and supervision of retired Hon’ble Justice Mr. N.N. Mathur appointed by the State Government of Rajasthan.
The substance of these public notices is that those workers/employees who have not received their past payment as admissible under the Tripartite Labour Settlement Agreements dated 9.10.2002 and 22.10.2002 should contact the Personnel Department of APPL, Kota, Acrylit Plant to receive the cheques of their due payments on any day between 1.6.2008 and 31.5.2009. Obviously, the issue of payment of past dues of former workers/employees of JKSL was being honoured by APPL and also overseen by the State Government of Rajasthan through Hon’ble Justice Mr. N.N. Mathur.
When we take a holistic view of the matter of payment of past dues to ex-employees, it is clear that there is no clarity about the past dues as to what was paid and what remained unpaid and also the default on the part of the corporate debtor APPL is not established, since right from 2007 onwards the corporate debtor and earlier JKSL has continued to make sincere efforts to pay such past dues. We are, therefore, quite clear that the default in payment of past dues as claimed by the Appellants Surendra Singh Hada and Others is not established in the present case.
The Impugned Order insofar as it gives liberty to the purported operational creditor Surendra Singh Hada and 125 other employees to file application under section 33(3) of the IBC is not in accordance with law - It is thus concluded that in their application under section 9 the appellants Surendra Singh Hada & Ors. have not been able to establish that the corporate debtor APPL committed a default which is ascribable to APPL in payment of any past dues of the ex-workers.
Appeal disposed off.
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2023 (1) TMI 1147
Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - demand notice was defective or not - service of demand notice - existence of debt and dispute or not.
Whether the demand notice was defective? - HELD THAT:- The rival contention of the Operational Creditor is that the acronym “LI” stands for Lex Innova and the Corporate Debtor have themselves used the word Lex Innova in the letter-head of the Appointment Letter dated 02.08.2018 issued by them to the Operational Creditor. Thus, the Corporate Debtor is also clearly associated with the name “LexInnova" - even in the Settlement slip at page 117 of Appeal Paper Book (APB), the word Lexinnova has been used by the Corporate Debtor Company. Further the forwarding email from the HR Team of the Corporate Debtor to the Respondent No.1 also uses the word Lexinnova as may be seen at page 116 of APB - thus there are no cogent reasons to disagree with well-considered findings of the Adjudicating Authority that there was no deficiency in the Demand Notice with regard to nomenclature of the Corporate Debtor Company.
Effective service of the Demand Notice - HELD THAT:- This aspect has also been dwelled upon at length by the Adjudicating Authority and that after taking due cognisance of the address mentioned on the Letter-head of the Settlement Slip issued by the Corporate Debtor to the Operational Creditor it has been correctly held in the Impugned Order that the said slip clearly depicts that the aforesaid address 4th Floor, Plot No.30, STPI Building, Electronic City, Udyog Vihar, Sector 18, Gurgaon-122015 belongs to the Corporate Debtor. The postal tracking report has also been perused by the Adjudicating Authority and thereafter it has been rightly held at Paras 28 and 29 of the Impugned Order that the service having been done on the Gurgaon address, the demand notice has been correctly serviced without defects. In the circumstances, the reasoned findings of the Adjudicating Authority are agreed upon that the Demand Notice was not defective and that it had been both despatched and serviced properly.
Existence of pre-existing dispute or not - HELD THAT:- A plain reading of the FIR reveals that the Operational Creditor does not appear to figure in the list of the accused. Going by the contents of the said FIR, the inference drawn by the Adjudicating Authority after perusing the said FIR that the Operational Creditor was not an accused party in the FIR and that no consequential investigation was going on against him is factually in order and stands to reason. Moreover, the clear admission of operational debt as evidenced in the revised Full and Final Statement of settlement of dues as sent by the Corporate Debtor to the Operational Creditor on 21.11.2019 which notably is post filing of FIR also corroborates that there was no pre-existing dispute at the time of admission of liability of the operational dues. It is pertinent to add here that the issue of the Settlement Slip has not been denied by the Appellant - there are no hesitation in observing that in the present case, all the requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled with operational debt having been acknowledged and a default having been committed thereto; demand notice served but remained un-replied; and there being no real pre-existing dispute discernible from the given facts.
The Adjudicating Authority has not committed any error in admitting the Section 9 Application for initiation of CIRP of the Corporate Debtor. We are satisfied that the impugned order does not warrant any interference - Appeal dismissed.
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2023 (1) TMI 1146
Seeking to condone the delay of 17 days in preferring the instant Appeal - Rule of Construction - HELD THAT:- It is latently and patently quite clear that the period of Limitation as per Order of this Tribunal dated 21.10.2022, shall be calculated from the presentation of the Appeal, in the instant case, the Appeal, having been presented by the Appellant, (submission of Appeal papers, through physical mode (on 12.12.2022), on the 47th day, which is beyond the 45 days (30 + 15 days), clearly barred by Limitation - the further delay of 2 days, after 45 days, is beyond a period of Limitation (30 + 15 days), which cannot be condoned, by this Appellate Tribunal, and in this regard, this Tribunal has no power to excuse the same.
This Tribunal, on a careful consideration of divergent contentions advanced on either side, and also taking into account of the facts and circumstances of the present case in an encircling manner, comes to a consequent conclusion that the instant Comp. App (AT) (CH) (INS.) No. 13 of 2023, is barred by time, and further that the IA No. 34 of 2023 in CA (AT) (CH) (INS. No.) 13 of 2023, seeking to condone the delay of 14 days, in filing the instant Appeal, is per se, not maintainable, and the delay in question, is not a condonable one.
Application dismissed.
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2023 (1) TMI 1145
Seeking refund to the Corporate Debtor’s Account in the Corporate Insolvency Resolution Process - existence of sufficient cause and non-appearance of the parties or not - the grievance of the Appellant / Bank / Petitioner is that the Application came to be dismissed by the Tribunal on 18.10.2022 without taking into consideration Rule 49 of the NCLT Rules, 2016 - HELD THAT:- Rule 49 (2) of the NCLT Rules, 2016 under the caption, Ex parte Hearing and Disposal points out that if a Notice was not duly served or the concerned person was prevented by any sufficient cause for appearing at the time when the Petition / Application was called for Hearing, the Tribunal (Adjudicating Authority) can pass an Order, by setting aside the Ex parte Hearing, as against it / him or them, (after being satisfied with the reason (s) assigned, of course) on such terms, as it thinks fit.
In the instant case, although the Appellant / Bank, has come out with a specific plea that only due to Covid-19 Pandemic, the Appellant / Bank / Petitioner had skeletal staff operation, both at the Corporate Office, Branch Office, etc. and that were the only reasons for the Petitioner / Appellant / Bank was not quite enough to enter its appearance in the subject matter of the case before the Adjudicating Authority (Tribunal).
Although the Plea of Covid-19 Pandemic, appears to be a persuasive one, at the first blush, on acceptable one, on going through the spirit and tenor of the Counter filed by the Respondent, this Tribunal without any haziness, comes to an inevitable and inescapable conclusion that there is no Sufficient Cause / Good Cause for Allowing the application - this Tribunal is in Complete Agreement with the Conclusion, arrived at by the Adjudicating Authority (Tribunal) in the impugned order which is free from any Legal Flaws.
Application dismissed.
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2023 (1) TMI 1144
Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - pre-existing dispute or not - Appellant has contended that the Section 9 application was wrongly admitted by the Adjudicating Authority on the sole ground that there was no ground for pre-existing dispute between the parties though there was strict evidence proving the contrary and that aggrieved by the impugned order.
Whether the operational debt claimed by the Operational Creditor was admitted by the Corporate Debtor as due and payable and not surrounded by pre-existing disputes?
HELD THAT:- The Adjudicating Authority while noting that the Corporate Debtor has denied their obligation to pay pending dues to the Operational Creditor, it has further held that the disputes raised by the Corporate Debtor in denying the claims is an after-thought and that there is no evidence presented to demonstrate their dissatisfaction with the work done by the Operational Creditor.
The very fact that the Operational Creditor had issued a Legal Notice is suggestive of a pre-existing dispute between the two parties. That the contentions raised in the Legal Notice were countered by the Corporate Debtor reinforces the existence of dispute between the parties. It is also pertinent to note that the Legal Notice was issued much before the issue of Demand Notice. That the reply to Legal Notice clearly predates the Section 8 Demand Notice by nearly five months has somehow managed to escape the attention of the Adjudicating Authority. Thus to hold that the disputes raised in the reply to the Legal Notice is an ‘after-thought’ is fallacious and hopelessly misplaced on the part of the Adjudicating Authority.
It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. What has to be looked into is whether the defence raises a dispute which needs further adjudication by a competent court.
The Corporate Debtor having raised genuine disputes in their detailed replies to the Legal Notice and the Demand Notice, the Adjudicating Authority ought not to have admitted the Section 9 application - the impugned order are set aside - appeal allowed.
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2023 (1) TMI 1106
Recall of order - power to review - CIRP initiated - Corporate Debtor failed to make repayment of its dues - Operational Creditors - HELD THAT:- It is clear that the Corporate Debtor had appeared on both the dates and that the copy of the Petition and the supporting documents were served on them on 02.11.2022, hence the Adjudicating Authority had closed the opportunity to file the Counter; the matter was posted For Hearing on 05.12.2022 and thereafter on 05.01.2023, the CIRP was initiated. When the matter came up For Hearing on 05.12.2022, the Corporate Debtor could have been present and submitted his arguments. Though, his right to file the Counter was closed, he was not set Ex Parte as on the date 21.11.2022 and therefore he could have appeared on 05.12.2022 when the matter was posted For Final Hearing and having been present as on 11.12.2022, the Counsel was very much aware that the matter was posted For Hearing on 05.12.2022. Though, the Adjudicating Authority does not have the Power of Review it can, based on the facts and circumstances of the case, Recall the ‘Order’ - In the instant case, this Tribunal, sitting in Appeal, does not find any tangible / substantial grounds to interfere with the impugned order.
The Appellant, has challenged the Admission Order, dated 05.01.2023 on merits, on the ground that there was an Arbitration Clause, in the C & F Agreement, and that the Respondent, ought to have invoked this Clause. There is no embargo on the Operational Creditor, to file a Section 9 Petition, under I & B Code, 2016, even if there is an Arbitration Clause, in the Agreement. The scope and objective of the Code is Resolution, and not a Recovery Mode / Forum - In the instant case, the Adjudicating Authority, based on the material on record, had arrived at a conclusion that there were recurring defaults on behalf of the Corporate Debtor and that the Operational Creditor, has requested for full and final payment of the outstanding dues.
This Tribunal, does not find any illegality or infirmity, in the Order dated 05.01.2023, passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench – I), in petition, and this Appeal is dismissed.
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2023 (1) TMI 1053
Seeking directions against the Respondents 2 & 3 for malicious and frivolous initiation of CIRP - HELD THAT:- Having regard to the fact that the CIRP Process is over, the Liquidation Process is almost complete as on the date of Impugned Order i.e., 12.03.2021 and the Assets were sold at a good price and sale proceeds were distributed amongst the Shareholders, we do not see any ground to set the clock back or to interfere with the Orders of the Adjudicating Authority dated 27.02.2020 and 12.03.2021 respectively.
Furthermore, a perusal of the material on record shows that the Appellant and Respondents 2 & 3 entered into a Memorandum of Settlement on 15.03.2016 and the Petition was disposed of vide Order dated 17.03.2016 - It is seen from the aforenoted Order that the remedy available for the Appellants was to file appropriate Proceedings before the Civil Court instead of trying to enforce the decree by way of an Application under Section 65 of the Court. The Adjudicating Authority has, rightly after going through the Prayers of the Appellants and material on record, and also considering the stage of the Liquidation Process, dismissed the Application.
Appeal dismissed.
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