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Insolvency and Bankruptcy - Case Laws
Showing 21 to 40 of 177 Records
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2021 (5) TMI 898 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Exclusion of time from CIRP process - covid-19 lockdown pandemic situation - HELD THAT:- The prayer of the IRP to exclude to 154 days to continue CIRP till 17/07/2020 has already been allowed by this Bench. So, this prayer of the applicant has become infructuous in view of the order dated 11.02.2021 passed by this Bench.
Stay on proceeding not provided - HELD THAT:- Since the proceeding was not stayed by the Hon'ble NCLAT, therefore, the prayer of the applicant to exclude the period commencing from 27.07.2020 to 04.09.2020(39 days) on the ground that Hon'ble NCLAT has stayed the proceeding is not liable to be accepted. Accordingly, this prayer of the applicant/Resolution Professional is hereby rejected.
Exclusion of Covid-19 period exclusion for the period beyond 17.07.2020 to 27.07.2020 for the situs of office of RP (as registered with Insolvency and Bankruptcy of India) being in Containment Zone - HELD THAT:- Mere plain reading of the Rule 15 and 153 shows that the time appointed or fixed by or under these rules can be extended but herein the case in hand, the time for completion of the CIRP is not fixed under the NCLT rules rather it is fixed under the IBC, 2016. Section 12 of IBC, 2016 makes a provision for completion of CIRP and in view of second proviso of Section 12 Sub Section 3 of the IBC, 2016, the Insolvency Resolution Process shall mandatorily be completed within the period of 330 days from the insolvency commencement date - this Adjudicating Authority is not empowered to extend or exclude the period under Rule 15 and 153 of the NCLT Rules, 2016 - The period of 11 days commencing from 17.07.2020 to 27.07.2020 is excluded on the ground that the Registered office of The Resolution Professional was situated within the Containment Zone at Vaishali Sector-1, Ghaziabad.
Seeking further exclusion of 60 days period for lockdown and Covid-19 Pandemic in view of infection in employees intermittent during the period of lockdown - HELD THAT:- The applicant has failed to produce any document to show that two employees whose Covid-19 reports have been enclosed by the applicant were the employees of the applicant and they played a vital role in completing the CIRP period and in their absence, it could not be possible to proceed further in the CIRP. Therefore, on the ground of infection to the employees during the period of lockdown, the prayer of the applicant to exclude the period of 60 days is not liable to be accepted.
Application disposed off.
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2021 (5) TMI 875 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI
Validity of application admitted for initiation of CIRP - pre-existing dispute or not - contravention of Rule 152, Rule 150 and Rule 89 of the NCLT Rules 2016.
Whether there is any pre-existing dispute? - HELD THAT:- Upon a bare reading of e-mail dated 03.11.2016, it is clear that the Corporate Debtor stated that the supplied coal is not as per specification and due to that nozzle bent and boiler has become damaged which would lead to heavy production losses. Hence, it was requested that delivery of the coal be stopped. It is also mentioned that if more losses occurred due to poor/inferior quality of coal they may debit the same amount in the account of Operational Creditor - Corporate Debtor has neither issued any debit note nor has returned the supplied coal but consumed the same. It means that after receiving the e-mail dated 04.11.2016 the Corporate Debtor was satisfied and kept quiet for about 15 months. It is only when they received a statutory notice that they filed a Civil Suit against the Operational Creditor.
It cannot be held that there was any dispute in regard to the transaction in question. It seems that in order to avoid the liability, the Corporate Debtor through its reply to notice, tried to impress that there was a pre-existing dispute.
The Civil Suit has been filed after receipt of statutory notice, therefore, such Civil Suit cannot be treated as existence of dispute - the Corporate Debtor has failed to prove any pre-existing dispute in regard to transaction in question.
Whether the impugned order is passed in contravention of Rule 152, Rule 150 and Rule 89 of the NCLT Rules 2016? - HELD THAT:- It is an admitted fact that the NCLT Bench, Ahmedabad consisted of Shri H. P. Chaturvedi Member (Judicial) and Shri Prashanta Kr. Mohanty Member (Technical) who heard the application and reserved for orders on 20.11.2019. Thereafter, the parties have filed their written submission on 06.01.2020 and the impugned order was pronounced by the same Bench on 28.05.2020. Meanwhile, vide order dated 12.05.2020 and 30.04.2020 these members have been transferred. However, due to lockdown they were unable to join their new place of posting. Since the members were physically present at Ahmedabad. Therefore, in public interest vide order dated 21.05.2020, a special Bench was constituted to pronounce the orders reserved by the erstwhile Bench as per Section 419 (3) of the Companies Act, 2013 for the period of 22.05.2020 to 29.05.2020. Thus, it cannot be said that the members have pronounced the impugned order in contravention of Rule 152 of the NCLT Rules, 2016.
The Appellant has failed to establish that there was a pre-existing dispute and in pronouncing the impugned order, the Adjudicating Authority committed any illegality - there are no merits in the appeal - appeal dismissed.
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2021 (5) TMI 873 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditor - time limitation - existence of debt and dispute or not - HELD THAT:- The Application under Section 7 (Annexure A-2 Page 77) is stated to have been filed before the Adjudicating Authority on 21st May, 2018. It appears that effort at restructuring did not give desired result and the NPA was declared with back date of 29th June, 2012. Thus there are documents on record even subsequent to 29th June, 2012 like Second Amendatory Agreement dated 13th March, 2014. The Application under Section 7 shows Demand Notices being issued under SARFAESI Act on 31st January, 2015 and 19th June, 2016. It appears that O.A. 150/2016 was also filed before the DRT - The reply which was sent in response to the SARFAESI Notice is within three years of date of NPA dated 29th June, 2012. Then there is document filed with the Reply at Page 177 which is letter from Corporate Debtor to the Andhra Bank dated 05th April, 2016 where there is reference to the OTS Proposal and that the Corporate Debtor proposed to pay the outstanding and due balances as on date of NPA, excluding reversal of interest, penal interest, other charges etc., if any.
The Learned Counsel for the Appellant has argued that before the Adjudicating Authority there was only balance sheet of 2016-17 and not the balance sheet of 2017-18 or the balance sheet of 2015-16. These are technical grounds raised. The authenticity of such balance sheets has not been questioned and for technical reasons, we do not think it to be in the interest of justice to ignore such documents.
There are no financial debt due and in default was time barred or that Adjudicating Authority committed any error when the Application under Section 7 was admitted - appeal dismissed.
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2021 (5) TMI 859 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Seeking Extension of the Liquidation Process of the Corporate Debtor - Regulation 44(2) of The IBBI (Liquidation Process) Regulations, 2016 r/w Rule 11 of NCLT Rules, 2016 - HELD THAT:- The prescribed period for completing the Liquidation Process needs to be extended. The present IA deserves to be allowed partly.
Consequently, the liquidation period is extended by six months from the date of the Order. Further the period consumed during the lockdown period has to be excluded/exempted from counting the period prescribed for Liquidation period by following the suo moto decision of Hon’ble Supreme Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [2021 (5) TMI 564 - SC ORDER] by extending/exempting the period from 15th March 2020 till 14th March 21 and again now until further order.
Application allowed in part.
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2021 (5) TMI 855 - NATIONAL COMPANY LAW TRIBUNAL , CHENNAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Reliance can be placed in the case of Mobilox Innovations Private Limited vs. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT] where it was held that There is a pre-existing dispute between the parties which is evident from the email correspondence between the parties which was produced before this Adjudicating Authority by the Corporate Debtor along with its Counter. The Corporate Debtor had duly replied to the demand notice of the Operational Creditor and the disputes between them are pointed out in its reply.
In view of the Apex Court's observation and the existence of dispute between the parties, this Adjudicating Authority has to reject the application - application dismissed.
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2021 (5) TMI 823 - NATIONAL COMPANY LAW TRIBUNAL , KOLKATA BENCH
Approval of Resolution Plan - HELD THAT:- There is no communication from the RP to the Applicant rejecting the claim. It is no defence to argue that the list of creditors was uploaded on the website of the corporate debtor, and therefore, there is constructive notice to the world at large. Be that as it may, as soon the Applicant came to know of it, he filed an application under section 60(5) of the Code on 03.02.2020, seeking judicial intervention in the matter. It cannot be the fault of the applicant that the application which was filed on 03.02.2020, could not come up for hearing before the application for approval of the Resolution Plan came up on 04.02.2020.
It cannot now be contended that the Adjudicating Authority denuded of jurisdiction to deal with the present application only because the Resolution Plan has been approved - the answering Respondent's objections on the maintainability of the applications on the sole ground that such applications cannot survive after the Resolution Plan has been approved, is hereby overruled.
The applications be listed for arguments on merits on 09.06.2021, since the Resolution Plan is currently being implemented and any delay will defeat the ends of justice.
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2021 (5) TMI 819 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - HELD THAT:- The date of default relied upon by the Operational Creditor is 29.11.2019 - In the instant case, the nature of transaction is such that it was necessary to annex the invoices for proving the existence of default. Since the invoices bearing no. 1056 to 1059 were not annexed by the Operational Creditor with the Demand Notice, its reliance on 29.11.2019 as the date of default is erroneous. This defect is of such a nature that it cannot be allowed to be rectified at this stage by exercising our power as stipulated under the Proviso to Section 9(5)(ii) of IBC 2016.
The Hon'ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [2018 (10) TMI 777 - SUPREME COURT] inter-alia, held that the Limitation shall be computed from the date of default. In the instant case as discussed earlier, the date of default relied upon by the Operational Creditor as 29.11.2019 has been found to be erroneous. Therefore, basing on the date of default of 29.11.2019, the question of computing of limitation does not arise.
Whether a different date of default could be adopted basing on the other invoices and other dates relied upon by the Operational Creditor? - HELD THAT:- From the perusal of the invoices, it is observed that the last invoice annexed in the petition is of 17.02.2014. If we assume 17.02.2014 as the date of default for calculating Limitation, it is contended by the Operational Creditor through its rejoinder that the present petition is not barred by Limitation since the Corporate Debtor has made a part payment of ₹ 5,00,000/- on 06.01.2017 through cheque and the Petition has been filed on 31.12.2019, which is within 3 years from the date of encashment of cheque.
In the instant case, the Operational Creditor has relied upon the invoices pertaining to the period from 14.01.2014 to 11.11.2019 in its main Petition as well as in the demand notice under Section 8 of IBC, 2016 to compute the Operational Debt amounting to ₹ 63,76,9474/-. The details of the unpaid invoices are given in the Para 10 of this order. Therefore, in the light of the aforesaid Judgment, we cannot cut short invoices till 17.02.2014 for deriving a date of default for computing the period of limitation.
The Demand Notice issued by the Operational Creditor under Section 8 of the IBC 2016 is defective. Further, this Tribunal does not have a discretion to cut short the invoices to derive a date of default for the purpose of computing the period of Limitation - Petition dismissed.
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2021 (5) TMI 785 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - time limitation - HELD THAT:- The applicant issued a demand notice under section 8 in Form 4 of I&B Code (Under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 on 18.09.2019. The said notice was sent by Speed Post at the registered address of the corporate debtor as reflected in the master data, which is duly delivered to the Corporate Debtor on 19.09.2019. The tracking report is filed, which mentions 'Shipment Delivered' at the registered address as per master data. The Corporate Debtor has neither raised any dispute to the aforesaid notice nor made any payment towards the outstanding dues - The Corporate Debtor has neither filed any reply nor appeared before the bench. The corporate debtor was proceeded ex-parte on 03.12.2020.
Time Limitation - HELD THAT:- As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of ₹ 1,55,79,348/-. Though the specific mention about the date of default is not mentioned in part IV, the last invoice is of 26.06.2019 and as per the terms of the invoice the payment was to be made within ten days which is on or before 06.07.2019. The present application was filed on 12.12.2019, hence the debt is not time barred and the application is filed within the period of limitation.
The Applicant has filed an affidavit under section 9(3)(b) dated 12.12.2019 affirming that no notice of dispute has been given by the Corporate debtor relating to dispute of the unpaid operational debt - registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - the present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9 (5) of IBC, 2016.
Application admitted - moratorium declared.
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2021 (5) TMI 784 - NATIONAL COMPANY LAW TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Liability of Purchaser of corporate debtor under liquidation under auction - Certain demand raised by the liquidator - Levy of interest on the balance sale consideration paid for sale of assets of Corporate Debtor as a going concern - seeking exemption and waiver off of interest being charged on the Applicant - applicability of TDS being charged on the Applicant - seeking Liquidator to handover peaceful possession to the Applicant of the Corporate Debtor's factory, building and machinery - HELD THAT:- After going through all the facts and documents as produced by the Applicant/Auction Purchaser is of the view that, it is matter of record that the Applicant has made made the entire payment towards the sale consideration of ₹ 18,72,00,000/- and it is only after the entire payment being made by the Applicant that the Liquidator has issued the sale certificate - Hence, now post the execution of the Sale Certificate, the demand raised by the Liquidator to the Applicant for the Interest as well as TDS is not maintainable. The Liquidator is at liberty to file for refund with the Income Tax department for the refund of TDS, if any, applicable to this case. The Liquidator is also directed to hand over the possession of the Corporate Debtors assets as per Schedule I of the Sale Certificate to the Applicant.
Application disposed off.
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2021 (5) TMI 780 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Seeking replacement of Financial Creditors - Assignment of debt by Financial Creditors to applicant - Applicant seeking to continue prosecuting the instant proceedings against the Respondents/Personal Guarantors, in place of the Respondent No. 1/Financial Creditor etc - Section 60(5)(C) of the IBC, 2016, R/w Rule 11 of the NCLT Rules, 2016 - HELD THAT:- The learned Counsel for the Respondent No. 1/Financial Creditor has submitted that the debt in question has been assigned to the Applicant i.e. Assets Care & Reconstruction Enterprise Ltd. in place of Respondent No. 1/Financial Creditor i.e. M/s. Altico Capital India Ltd. against the Respondent No. 2 and 3/Corporate Debtors i.e. Mr. Vinay K Mehta and Mr. Prateek K Mehta respectively. He has also submitted in his Memorandum dated 22.04.2021 that the Respondent No. 1/Financial Creditor has no objections to the Applicant being substituted in the place of the Respondent No. 1/Financial Creditor.
Respondent Nos. 2 and 3 against whom the Petition has been filed u/s. 9 of the Code have no objection. In view of the foregoing the application deserves to be allowed.
Application is allowed by substituting the Applicant, namely, M/s. Assets Care and Reconstruction Enterprise Ltd. in place of Respondent No. 1/Financial Creditor, namely, M/s. Altico Capital India Ltd. and also permitting the Applicant to continue prosecuting the instant proceedings against the Respondents/Personal Guarantors, in place of Respondent No. 1/Financial Creditor.
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2021 (5) TMI 778 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI
Seeking to exclude the time consumed on account of time loss due to the lockdown imposed by the Government of India and State Government and time consumed due to pendency of application - HELD THAT:- he Adjudicating Authority rejected the prayer with regard to period seeking exclusion of time consumed in judicial intervention on the ground that the Appellant has not shown the exceptional circumstances for excluding the time. It is unequivocal that the country faced pandemic situation namely Covid -19 and due to the said pandemic the whole nation suffered and regular activities have come to a stand still. The Learned Adjudicating Authority ought to have considered the situation as exceptional circumstances for the reason of prevailing pandemic in the country and the CIRP process was still at nascent stage. It is an admitted fact that only 3 meetings have been convened from the date of commencement of CIRP till August, 2020. However, an Application is filed for replacing the RP.
From the Judgment of the Hon'ble Supreme Court in Essar Steel India Ltd. Vs. Satish Kumar & Ors. [2019 (11) TMI 731 - SUPREME COURT] that the Adjudicating Authority and/or this Tribunal may extend time beyond 330 days in exceptional cases. The Appellant had shown the exceptional circumstances one is the imposition of lockdown and pendency of the judicial proceedings before the Adjudicating Authority. Apart from the above, the Hon'ble Supreme Court in a number of cases clearly held that the liquidation is the last resort. In the present case as discussed above the CIRP is at nascent stage and the Resolution Professional has to take forward duly complied with the procedure as prescribed under the Code for the purpose of Resolution of the Corporate Debtor instead of pushing the Corporate Debtor into liquidation.
A total period of 92 days is excluded whereby the time lost due to judicial intervention from the total time period of 330 days - A total period of 160 days is excluded the time lost on account of imposition of lockdown from 25.03.2020 to 31.08.2020 - Further the time spent in filing this Appeal i.e. from 12.04.2021 to 04.05.2021 is also excluded.
Appeal disposed off.
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2021 (5) TMI 754 - NATIONAL COMPANY LAW TRIBUNAL , GUWAHATI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The CD has defaulted in making repayment of the credit facilities to the Petitioner Bank due on 31.03.2018 and 06.04.2019. The Total Debt as per the Statement of Accounts and the Affidavit filed on behalf of the Petitioner Bank confirms the defaulted amount of ₹ 32,59,99,856.25 - Further, the CIBIL/CRILIC Reports submitted by the Petitioner Bank confirm the existence of liability to the Financial Creditor and default committed by the Corporate Debtor.
Time Limitation - HELD THAT:- The Petitioner Bank has filed the petition within the period of limitation, as the last payment into the account has come on 04.03.2019 and the amended petition has been filed on 30.12.2020.
It is a settled legal position that the pendency of SARFAESI proceeding or other dispute does not prevent a Financial Creditor to trigger the CIRP because the nature of remedy being sought for under the provisions of the IB Code is “Remedy in Rem” in respect of the CD - present IB Petition is filed by the duly authorised official of the Petitioner Bank in a prescribed format under Section 7 of the IB Code annexing copies of loan documents confirming the existence of debt due, payble and defaulted and proposed a name of a Resolution Professional to act as an Interim Resolution Professional (IRP).
Petition admitted - moratorium declared.
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2021 (5) TMI 743 - SUPREME COURT
Insolvency proceedings against the Personal Guarantors - Vires and validity of a notification dated 15.11.2019 issued by the Central Government - petitioners contend that the power conferred upon the Union under Section 1(3) of the Insolvency and Bankruptcy Code, 2016 could not have been resorted to in the manner as to extend the provisions of the Code only as far as they relate to personal guarantors of corporate debtors - HELD THAT:- The notification of 30.11.2016 brought into force certain provisions that hadthe effect of operationalizing the enactment in respect of four distinct categories, i.e. companies incorporated under the Companies Act, companies governed by special Act, LLPs and other bodies incorporated under any law which the Central Government could by notification specify. These provisions triggered the application of the Code to corporate debtors as well as LLPs and other companies and corporations - It is quite evident that the method adopted by the Central Government to bring into force different provisions of the Act had a specific design: to fulfill the objectives underlying the Code, having regard to its priorities. Plainly, the Central Government was concerned with triggering the insolvency mechanism processes in relation to corporate persons at the earliest. Therefore, by the first three notifications, the necessary mechanism such as setting up of the regulatory body, provisions relating to its functions, powers and the operationalization of provisions relating to insolvency professionals and agencies were brought into force. These started the mechanism through which insolvency processes were to be carried out and regulated by law.
The Adjudicating Authority for personal guarantors will be the NCLT, if a parallel resolution process or liquidation process is pending in respect of a corporate debtor for whom the guarantee is given. The same logic prevails, under Section 60(3), when any insolvency or bankruptcy proceeding pending against the personal guarantor in a court or tribunal and a resolution process or liquidation is initiated against the corporate debtor. Thus if A, an individual is the subject of a resolution process before the DRT and he has furnished a personal guarantee for a debt owed by a company B, in the event a resolution process is initiated against B in an NCLT, the provision results in transferring the proceedings going on against A in the DRT to NCLT.
It is clear that Parliamentary intent was to treat personal guarantors differently from other categories of individuals. The intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee. The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity.
The impugned notification is not an instance of legislative exercise, or amounting to impermissible and selective application of provisions of the Code. There is no compulsion in the Code that it should, at the same time, be made applicable to all individuals, (including personal guarantors) or not at all. There is sufficient indication in the Code- by Section 2(e), Section 5(22), Section 60 and Section 179 indicating that personal guarantors, though forming part of the larger grouping of individuals, were to be, in view of their intrinsic connection with corporate debtors, dealt with differently, through the same adjudicatory process and by the same forum (though not insolvency provisions) as such corporate debtors - It is held that the impugned notification was issued within the power granted by Parliament, and in valid exercise of it. The exercise of power in issuing the impugned notification under Section 1(3) is therefore, not ultra vires; the notification is valid.
The other question which parties had urged before this court was that the impugned notification, by applying the Code to personal guarantors only, takes away the protection afforded by law; reference was made to Sections 128, 133 and 140 of the Contract Act; the petitioners submitted that once a resolution plan is accepted, the corporate debtor is discharged of liability - The rationale for allowing directors to participate in meetings of the CoC is that the directors’ liability as personal guarantors persists against the creditors and an approved resolution plan can only lead to a revision of amount or exposure for the entire amount. Any recourse under Section 133 of the Contract Act to discharge the liability of the surety on account of variance in terms of the contract, without her or his consent, stands negated.
The sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor’s liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this court has indicated, time and again, that an involuntary act of the principal debtor leading to loss of security, would not absolve a guarantor of its liability.
Thus, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract - the impugned notification is legal and valid. It is also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors).
The writ petitions, transferred cases and transfer petitions are accordingly dismissed.
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2021 (5) TMI 734 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Condonation of delay in filing application - Liquidation of Corporate Debtor - Section 42 of IBC - HELD THAT:- ‘Debt’ is defined u/s 3(11) of the Code as a liability or obligation is respect of a claim which is due from any person and inter alia includes an operational debt. ‘Operational Debt’ defined u/s 5(21) of the Code inter alia means a claim in respect of provision of goods or services. For the present purpose ‘claim’ would mean right to remedy for breach of contract under any law for the time being in force if such breach gives right to payment. The breach on the part of the Corporate Debtor gave rise to a right to the Applicant to payment. Meanwhile however, the Corporate Debtor issued another cheque dated 15.12.2002 for the balance amount of ₹. 4,62,066/-. It was dishonoured by the bank on 05.06.2003. The said claim amount of ₹. 4,62,066/- thus became due and payable with effect from 05.06.2003. It could only be realized in terms of Article 31 of the Limitation Act, within three years thereof. The Applicant did not take any action/step for realization of the amount within that period nor did he issue any demand for the said amount.
Considering the broad sentiments expressed by the Hon’ble Courts with respect to adjudication of claim on merits and the fact that the Applicant was a retired employee, it was possible that he could not pursue for recovery of his claim from the Corporate Debtor in right earnest. We feel it appropriate that the interest of justice would be best served by invoking the inherent powers of this Authority available under Rule 11 of the NCLT Rules, 2016.
Application allowed.
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2021 (5) TMI 732 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Penalty proceedings against Corporate Debtor - contravention of the moratorium or not - submission of claim towards the Customs duty and Estate dues after initiation of CIRP - HELD THAT:- It is settled that the Code is a ‘complete code’ in itself as recognized by the Hon’ble Apex Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT]. Section 238 of the Code mandates that the provisions of the Code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having the effect by virtue of any such law. The message set out by this salutary provision is loud and clear that the provisions of the Code would come into operation notwithstanding anything inconsistent therewith contained in any other law and such law shall cease to have any effect till such time the provisions of the Code remains applicable.
A plain reading of section 14 of the Code would inter alia indicate that neither any suit or proceedings can be instituted or continued before any other Authority. Sub-section (1)(d) provides that no property by an owner or lessor can be recovered which is under occupation of the Corporate Debtor. Explanation to the Section makes it abundantly clear that all the rights and privileges granted in respect of such possession shall continue and cannot be curtailed by any authority including the Central and the State Governments. All the dues claimed under the show cause notices and the consolidated notice dated 11.02.2019 admittedly relate to a period preceding the declaration of CIRP.
In any case the Respondent has already presented a claim before the IRP in respect of the outstanding duty and dues. The Respondent accordingly shall stay his hands from seeking any action in terms of the notices indicated above. No order u/s 74(2) of the Code can be passed, the same being of a penal nature - application allowed.
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2021 (5) TMI 731 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Time limitation of Resolution Plan - timelines set out in the Resolution Plan not adhered - HELD THAT:- The new management of the Corporate Debtor could not be held liable and responsible for the malfeasance and misfeasance committed by the former promoters / directors of the Corporate Debtor. It could not be saddled with the repercussions of reprehensible actions of the erstwhile management.
Though the present predicament faced by the Applicant is not in respect of any new claim, the principle and sentiment echoed by the Hon’ble Court can be applied to resolve the present imbroglio. Rules of procedure are but handmaidens of justice. The Hon’ble Court in Sardar Amarjit Singh Kalra v. Pramod Gupta [2002 (12) TMI 607 - SUPREME COURT] observed that laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on merits of substantial rights of citizens under personal, property and other laws. Procedure has always been viewed as the handmaid of justice and not meant to hamper the cause of justice or sanctify miscarriage of justice.
The present management of the Corporate Debtor shall be permitted to approve the Accounts and Returns of the Corporate Debtor for the period prior to 16.10.2019 in its next meeting. The Applicant shall file the relevant Returns and Statements for the period within three months hence - Application allowed.
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2021 (5) TMI 728 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - non-issuance of NOC by the Banks, to which the assets of the Corporate Debtor is hypothecated - existence of debt and dispute or not - HELD THAT:- The Bench understands that the whole substratum of the Petition is based on an Agreement between the parties of 20.12.2018 which is broadly an Agreement for sale for which money has been given by the Petitioner by way of an inter corporate loan. This Agreement has a clear-cut clause that in the event of non-issuance of NOC by the Banks, to which the assets of the Corporate Debtor is hypothecated and the final asset purchase transaction not materializing between parties, the amount will be treated as Inter Corporate Loan carrying an interest of 18% per annum.
NOC was required from the Bank to acquire the assets of the Corporate Debtor by the Petitioner and only thereafter an Agreement was to be executed for purchase of assets. The Bench also notes that it was abundantly clear that both the parties had agreed to treat the amount as a 'loan' with an agreed rate of interest to be paid - The obtaining of an NOC by the Corporate Debtor from the Banks to which the assets were hypothecated was the primary and only major condition before executing the sale transaction as per the Agreement arrived between the Parties. It is for the non-obtaining of NOC by the Corporate Debtor that the sale transaction could not be executed and, therefore, the agreement was terminated as per the relevant clause of the agreement and demand was raised vide letter dated 09.01.2020 for paying the default amount along with interest within 30 days. The Bench also notes that the Corporate Debtor in its financial statement has recorded and admitted that it to be a financial debt.
The Petitioner has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Petitioner, this Petition deserves 'Admission'.
Petition admitted - moratorium declared.
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2021 (5) TMI 718 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH
Liquidation of Corporate Debtor - section 33 of the IB Code, 2016 - HELD THAT:- Recently the Hon'ble Supreme Court of India in its judgment passed in Civil Appeal No. 8766-67 of 2019-Committee of Creditors of Essar Steel India Limited through Authorised Signatory vs. Satish Kumar Gupta & Ors. [2019 (11) TMI 731 - SUPREME COURT] observed that the commercial wisdom has been exercised by the CoC after taking into count all the factors leading to maximisation of asset value of the Corporate Debtor, but the ultimate discretion of what to pay and how to pay each class or sub-class of creditors lies with the CoC.
The moratorium declared under Section 14 of the IB Code shall cease to have effect from the date of the order of liquidation - liquidation order is passed.
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2021 (5) TMI 715 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH
Direction upon the Resolution Professional to accept the claim of the applicant in full by condoning delay in filing the claim before the Resolution Professional - HELD THAT:- Admittedly, the applicant has filed its claim beyond the stipulated time i.e. near about after 8 months when the liquidator has filed its final list of stakeholder before the Adjudicating Authority on 13.05.2019 as per regulation 31(2) of the Insolvency Bankruptcy Board of India (Liquidation Process) Regulation, 2016. Moreover, the claim has originated on 30.11.2019, these were not in existence as on the liquidation commencement date. The said fact has already been informed to the applicant and acceptance, if any, shall be against the Rule 16 of the IBBI (Liquidation Process) Regulations, 2016. However, on perusal of the record it is found that liquidator has already accepted the original claim for ₹ 97,95,135/- lodged by the applicant and the same is duly accepted and admitted.
Under such circumstances, if any claim is accepted, in that event, the liquidator has to revise their stakeholders list but in contravention of Regulation which may further delay the process of liquidation and very objective of the Insolvency and Bankruptcy Code will be frustrated.
Application dismissed.
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2021 (5) TMI 713 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Seeking to consider the decision taken by the CoC of the Corporate Debtor for exclusion of the Corporate Insolvency Resolution Process by a period of 60 days under the proviso of Section 12(3) with effect from 20.02.2021 - HELD THAT:- Although non-cooperation of the Corporate Debtor cannot be construed as exceptional circumstances so as to seek exclusion/extension of time, we are mindful of the fact that with the police help, as ordered by this Tribunal, the CIRP has made considerable headway and is likely to reach a logical conclusion, in a few weeks' time, as informed by the learned Counsel for the RP. The RP has been making sincere efforts in this direction. The overall time after extension would be within 330 days. If not allowed the Corporate Debtor would slip into liquidation, which would be the last and avoidable option. Hence, in exercise of the inherent powers conferred upon us by Section 60 of the Code.
Exclusion of 60 days from the timeline of CIRP process period of the Corporate Debtor, which ended on 20th February, 2021, is hereby granted - Application allowed.
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