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Insolvency and Bankruptcy - Case Laws
Showing 61 to 80 of 147 Records
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2019 (12) TMI 1398 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed top make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Balance Sheet dated 31.03.2016 of Corporate Debtor reflects the liability of ₹ 21,262,499/-against the secured loan in the name of IARC restructuring loan as annexed in Annexure-X. Further, the Corporate Debtor in its reply stated that he has filed the last Balance Sheet for the financial year 2017-18 on 09.09.2019 and not filed the Balance Sheets for the year 2015-16 and 2016-2017. On perusal of the documents filed by the Financial Creditor, it is observed by this Hon'ble Tribunal that the financial statements are true and correct and it appears that futile attempt is sought to be made at the behest of the Corporate Debtor that he had not filed the financial statement for the year 2015-2016 and 2016-2017. Hence, the Corporate Debtor is liable to pay the amount of ₹ 21,262,499/-.
Also, it is further observed that the Corporate Debtor and guarantors signed and executed a Balance Confirmation letter confirming a sum of ₹ 2,45,71,976/- was due and payable by the Corporate Debtor to the Financial Creditor as on 31.01.2015. The Corporate Debtor has not replied in its reply for the allegation made by the Financial Creditor regarding execution of Balance Confirmation letter dated 31.01.2015 - It is clear from the letter dated 31.01.2015 that the Corporate Debtor acknowledges and confirms that ₹ 2,45,71976/-was due to the Financial Creditor as on 31.01.2015. Hence, the Corporate Debtor is held liable for the same.
The Hon'ble Tribunal, on perusal of the documents filed by the Financial Creditor, is of the view that the Corporate Debtor defaulted in payment of restructured acquired loan and Financial creditor placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore, the Application Section 7 is taken as complete and within the limitation.
Petition admitted - moratorium declared.
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2019 (12) TMI 1397 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Approval of the resolution plan - section 30(6) and 31 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Bench being satisfied with the valuation given by the registered valuers, estimation of turnover during the resolution period, repayment schedule to all the creditors, the approval of resolution plan as approved by the CoC with 87.62% voting, approves the resolution plan - this Resolution Plan approved by the COC with the required majority satisfies all the criteria required for approval of Resolution Plan and accordingly the Resolution Plan is approved.
The Resolution Applicant, on taking control of the Corporate Debtor, shall ensure compliance under all applicable law for the time being in force.
The resolution plan has necessary provisions for its effective implementation - The resolution applicant shall obtain the necessary approval required under any law for the time being in force within one year from the date of this order or within such period as provided for in such law, whichever is later.
The resolution plan is approved, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors, Resolution Applicant and other stakeholders involved in the resolution plan.
This Bench hereby discharges the RP from duties of the RP by submitting all the records maintained by him to the Insolvency and Bankruptcy Board of India as provided under the Insolvency and Bankruptcy Code, 2016 and the regulations thereunder - Application allowed.
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2019 (12) TMI 1396 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has stated that the claim of the Operational Creditor is not valid, inter alia on the ground that there is a preexisting dispute. The Operational Creditor had filed Special Civil Suit No. 209/2013 against the Corporate Debtor, and the same constitutes "prior dispute" as laid down by the Hon'ble Supreme Court in Mobilox Innovations Private Limited vs. Kirusa Software [2017 (9) TMI 1270 - SUPREME COURT] - This argument is untenable, because the remedies under the IBC are in addition to, and not in derogation of, the remedies available to the Operational Creditor under any other law. In any case, that suit has been filed by the Operational Creditor and not by the Corporate Debtor, and hence cannot constitute a case of "prior dispute."
Differing stands of Corporate Debtor - HELD THAT:- There is no explanation for the differing stands taken by the Corporate Debtor in the letter dated 24.05.2012 and in the reply to the Demand Notice dated 12.12.2018 and in the reply to the Petition dated 03.06.2019. If the material was custom-made, then it could not have been diverted to any other customer. If it was, then it could not have been sold as scrap - So, the contradictory stands taken by the Corporate Debtor is not tenable and therefore deserves to be rejected.
Refund of advance amounts paid - HELD THAT:- The claim has to be in connection with the provision of goods or services including employment, or a debt in respect of the payment of dues arising under any law for the time being in force. In the present case, payment of advance by the Operational Creditor would not satisfy the definition of "Operational Debt" under the IBC - In the present case also, the claim relates to non-payment of advance money and hence the same is not covered under the definition of "Operational Debt".
Time Limitation - HELD THAT:- Since the date of default even according to the Operational Creditor is 22.09.2014, and applying the principles laid down by the Hon'ble Supreme Court in B.K. Educational Services Private Limited [2018 (10) TMI 777 - SUPREME COURT], the present petition under the IBC is barred by limitation.
The application fails the twin tests of merit and limitation - application dismissed.
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2019 (12) TMI 1395 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - existence of debt and dispute or not - HELD THAT:- It is found that the applicant had issued reminders calling upon the respondent to make payment of the outstanding. It appears that having failed to get any reply from the respondent, the applicant was compelled to issue demand notice under section 8 of I & B Code on 27.03.2019. Record also shows that the respondent has not raised any reply/dispute against the demand notice so issued by the applicant. Record also shows that pursuant to order dated 16.07.2019, the petitioner had made paper publication in Financial Express on 05.10.2019.
This adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of IB Code. That, Applicant is an Operational Creditor within the meaning of Section 5 sub-section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force.
It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Petition admitted - moratorium declared.
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2019 (12) TMI 1394 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI BENCH
CIRP Process - claim was lodged in Form CA as already brought forth on 08.10.2018 and the Resolution Professional acknowledged the said lodging of the claim by an email dated 13.11.2018 - HELD THAT:- It is seen that the document bearing 572/2011 is registered with Sub-registrar, T. Nagar, which is sought to be relied upon for the purpose of conveyance of undivided share of land as prescribed in the Schedule of property in the said registered documents. In addition, the Memorandum of Agreement as entered into between the parties dated 15.03.2011 is also sought to be relied on by the Applicant to establish that the monies which are figuring in the respective Sale Agreement or Memorandum of Agreement have been duly paid to the Corporate Debtor, and in the said circumstance, the Claim cannot be rejected and that the payment which is also extracted hereinabove by way of tabulation in Para supra are in relation to the purchase of properties, and hence, it is appropriate that the Applicant should be categorised as 'Home Buyer' and that the Resolution Professional was wrong in not entertaining the Claim as filed under Form CA meant for the Home Buyers.
In any case, it is also pointed out by the Learned Counsel for the Resolution Professional that in relation to the T Nagar property it is not the asset of the Corporate Debtor presently as the same has been allotted and sold a long time back much prior to the initiation of CIRP. Hence, the claim also seems to suffer from delay and laches on the part of the Applicant in enforcing the claim. In the circumstance, on this count also, the delay on the part of the Applicant to exercise its remedy as against the Corporate Debtor also disentitles the Applicant to lodge the claim. From all the documents filed, it is seen that it is of the year 2011 and if at all any action based on the said documents for consideration is taken, should have been taken within a period of three years from the date of the said agreement which the Applicant has miserably failed.
Application dismissed.
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2019 (12) TMI 1393 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH
Liquidation of the Corporate Debtor - section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is found that no viable and feasible Resolution Plan has been received so far and Corporate Debtor is also not operational. Therefore, the CoC has decided to recommend for liquidation of the Corporate Debtor vide its 7th meeting dated 02.08.2019. It is also to be noted that this Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC.
Application filed by the RP under Section 33 of the IB Code, 2016 is allowed and the Adjudicating Authority passes an order for initiation of liquidation of the Corporate Debtor viz., M/s. Gupta Dyeing and Printing Mills Pvt. Ltd. Mr. Manish Kumar Bhagat shall act as the Liquidator for the purpose of liquidation of the Corporate Debtor.
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2019 (12) TMI 1392 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The applicant has attached the copy of Bank statements issued by M/s. Punjab National Bank, in compliance with the requirement of Section 9(3)(C) of the IBC 2016 - The registered office of respondent is situated in New Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.
On perusal of the record it is clear that the default has occurred on 25.07.2016 when the last invoice fell due. Hence, the claim is not time barred and the present application is well within the limitation period.
The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, more so when the debt has remained undisputed in spite of service of section 8 notice and the present application. Requirements under section 9(5) of the Code are fulfilled. Hence, the present application is admitted.
Application admitted - moratorium declared.
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2019 (12) TMI 1391 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - HELD THAT:- The petition is barred by limitation. The Tribunal observed that "The right to sue" expired in the year 2018 as the last installment of the unsecured loan was made on 29.12.2015. Hence, the present petition being filed in August, 2019 is barred by limitation, not being within three years from the date of the cause of action.
This Bench is of the view that the prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable as the present application is barred by limitation - Petition dismissed.
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2019 (12) TMI 1390 - NATIONAL COMPANY LAW TRIBUNAL , CHENNAI BENCH
Maintainability of petition - initiation of CIRP - failure on the part of the Corporate Debtor in making payment of the amount claimed under the Demand Notice - Operational Creditor - HELD THAT:- In relation to the franchise agreement under which the claim is made herein, already it is up for consideration before the Hon'ble High Court of Judicature at Madras and taking into consideration the provisions of IBC, 2016, where there is an existence of a dispute between the parties in regard to the claim amount prior to the filing of the Petition, this Tribunal will not be in a position to entertain and go into the same.
Petition dismissed.
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2019 (12) TMI 1389 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Permission for withdrawal of petition - non-constitution of CoC - Applicant submits that claims no claims were received and hence COC is not constituted - Amicable Settlement - HELD THAT:- The Hon'ble Supreme Court in the matter of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT] where it was held that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case.
This case is a fit case for the Adjudicating Authority to invoke Rule 11 of NCLT Rules and accordingly the Order of CIRP passed in this Petition is recalled and the IRP is discharged from his duties - Petition disposed off.
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2019 (12) TMI 1382 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- A debt in the first instance, should arise/based on legal enforceable covenant, under the provisions of the Code, the proceedings under the Code are summary in nature. Therefore, the Adjudicating Authority cannot go into roving enquiry about the enforceability of the Agreement in question. As rightly pointed by the Respondent, since the Petitioner claims that the Agreement in question is binding on the parties, he can settle the issue, through Arbitration, instead of invoking provisions of the Code to recover the alleged outstanding amount. It is a settled position of law that aggrieved party, in the instant first instance, has to exhaust alternative remedy, like making representation, issuing notices, invoking arbitration as per Agreement(s) in vogue. And in case, no alternative remedy is available, aggrieved party can knock the doors of justice. And proceedings under the provisions of Code is no exception for the same, in the normal course. Moreover, the facts and circumstances of the case would justify for the Petitioner to invoke Arbitration Clause since several issues to be resolved.
Time Limitation - HELD THAT:- The impugned claim relates to the period for 2015-16, 2016-17 and 2017-18, totalling for an amount of ₹ 1,75,16,250/-. For all these years, the Petitioner got issued the Statutory Demand Notice in question only on 11.10.2018. The Petitioner has not explained to the satisfaction of Adjudicating Authority as to how he is entitled for the amount, as per Agreement in question, since the Petitioner is entitled for payment in proportion to amount received by the Respondent and for the delay-in initiating recovery proceedings before these proceedings.
The Petitioner has failed to make out any case so as to initiate CIRP against the Corporate Debtor and thus the Petition is liable to be dismissed.
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2019 (12) TMI 1381 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - HELD THAT:- The Real Estate (Regulation And Development Act), 2016 is an act brought in force to protect the interest and to regulate the working and functioning of the real estate sector, so as to ensure that the buyers are not cheated by the developers and to ensure that the projects falling under RERA are completed within time and that amount(s) may be refunded to the buyers, when demanded by them in terms of the agreement entered into between the parties, whereas the purpose of the Insolvency & Bankruptcy Code, 2016 is to ensure that the companies that are in financial distress either have a change in management or are liquidated depending upon the interest gathered by it in the market. Further, the relief(s) demanded by the applicants in the instant matter before the Ld. RERA, Noida are sperate from the relief claimed by the applicants before this Hon'ble Tribunal.
The application is complete as per the requirements of section 7 of the code. Further the date of default occurred from 19.12.2018 and hence the debt is not time barred and the application is filed within the period of limitation - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the financial debt beyond doubt. In the light of facts and records the present application is admitted.
Application admitted - moratorium declared.
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2019 (12) TMI 1377 - NATIONAL COMPANY LAW TRIBUNAL , CHANDIGARH BENCH
Termination of tender - imposition of penalties - forfeiture of performance of bank guarantee, security amount, and penalty towards risk and purchase cost - Section 42 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- Admittedly, the CIRP proceedings in respect of the respondent company were initiated and moratorium was declared by an order of this Tribunal passed on 06.07.2017. As on the said date, the common award dated 29.06.2015 passed by the Sole Arbitrator Mr. Yad Ram Meena holding that the applicant is liable to pay an amount of ₹ 7,72,86,109/- with 18% interest per annum on the said amount w.e.f. the date of filing of the arbitration till actual payment was in force as the objections filed by both the sides were dismissed and the said common award was upheld by the Commercial Court, Jaipur vide its common order dated 28.09.2016, though two separate appeals were filed by the applicant, which were pending before the Hon'ble High Court of Rajasthan. Further, admittedly on 10.05.2018, on which date the Hon'ble Rajasthan High Court, Jaipur Bench passed a judgment in the appeals preferred by the applicant, quashing the judgment of the Commercial Court, Jaipur as well as the arbitration award, the moratorium declared under Section 14 of the Code was very much in operation and the said moratorium finally came to an end only on 17.05.2018 on which date, this Tribunal passed the order of liquidation of the respondent company.
It is the settled principle of law that any order passed or any action taken in respect of any of the issues covered under Section 14 of the Code, during the period of moratorium are non-est in the eye of law.
Since the order dated 10.05.2018 passed in the appeals filed by the applicant, was admittedly passed during the moratorium period, the applicant's claim which was based on the said order dated 10.05.2018, is inadmissible - Appeal dismissed.
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2019 (12) TMI 1376 - NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, CHENNAI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of uts debt - existence of debt and dispuyte or not - HELD THAT:- It is a fact that as to claim amount is concerned, differences are in existence in between the parties and it is also evident on record that the Operational Creditor terminated rendering services to the Corporate Debtor before completion of the tenure of their agreement, whereby unless it is finally determined and agreed between the parties as to how much is to be paid to the Operational Creditor by the Corporate Debtor, it cannot be called as, the Applicant has proved the existence of debt and existence of default between the parties.
It is not the case of either of them, questioning veracity of the correspondence passed between the parties. By looking at the entire correspondence in totality, it is clear that the claim amount raised by the Operational Creditor has been disputed which is falling within the compass of definition u/s.5(6)(a) with regard to the existence of amount on debt as well as with regard to the services rendered by the Operational Creditor because in the Corporate Debtor correspondence, it has been mentioned that because of frequent tripping, the Corporate Debtor was forced to take services from the TANGEDCO at higher price and also mentioned that supply of services by the Operational Creditor were terminated before completion of tenure as agreed between the parties and also assessed some amount to be deducted from the claim of the Operational Creditor towards stoppage as well as tripping, therefore, we cannot hold that the claim mentioned by the Operational Creditor is devoid of existence of dispute between the parties.
The Corporate Debtor having already raised issues with regard to not only on the notices returned but also on the claim amount - this Petitioner claim is hit by existence of dispute - petition dismissed.
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2019 (12) TMI 1375 - NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD BENCH
Permission for withdrawal of petition - It is the case of the Interim Resolution Professional that this Tribunal admitted the petition filed under Section 9 of IBC, 2016 on 04.10.2019 for initiation of CIRP, granting moratorium and appointment of IRP - HELD THAT:- This Application is filed under Section 12A of I & B Code, 2016, Read with 30 A (1)(a) of the Insolvency and Bankruptcy (Corporate insolvency Resolution process) Regulations, 2016. The Petition filed under Section 9 by the Operational Creditor was admitted by this tribunal on 04.10.2019 and ordered Corporate Insolvency Resolution Process against Corporate Debtor. Interim Resolution Professional reported to the Tribunal that Parties settled the matter and requested the tribunal to withdraw the Petition - IRP has stated that he has enclosed the copies of DD's acknowledged by operational creditor and copy of settlement including Form FA. Thus the procedure prescribed under Regulation 30A (1) (a) of IBBI (Insolvency Resolution Process for Corporate Persons), 2016 has been followed. This Adjudicating Authority has power under Section 12A Read with Regulation 30A (1)(a) of IBBI (Insolvency Resolution Process for Corporate Persons) 2016 to permit for withdrawal of the application even after admission of the Petition.
Application allowed.
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2019 (12) TMI 1374 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor faield to make repayment of its debt - existence of debt and dispute or not - whether NCLT can order possession of the property of Corporate Applicant to facilitate the CIRP process and allow the Resolution Professional to take possession of the assets of Corporate Applicant, pending adjudication of pending suit filed by Corporate Applicant seeking possession of the shed from the applicant? - HELD THAT:- Section 60(5) and (b)(c) of the Code empowers NCLT to entertain the dispute raised in the suit, section 63 of the Code further bars the jurisdiction of the civil court in matters pertaining to the NCLAT, section 231 of the Code also bar the jurisdiction of the civil court from granting any injunction in respect of any action taken or in pursuance of any order passed by the Adjudicating authority under this Code. This code is a self-contained legislation conferring the supervisory powers on the NCLT over CIRP process right from the stage of application being made for initiation of the CIRP process to the completion of the CIRP/ Liquidation as the case may be - Upon conjoint reading of section 60(5), section 63, section 231 and section 238, the jurisdiction of Civil Court is excluded related to the matters related to I & B code. Therefore, it can be held that NCLT can order possession of the property of Corporate Applicant to facilitate the CIRP process and allow the Resolution Professional to take possession of the assets of Corporate Applicant.
It is the case of Corporate Applicant that he is seeking possession in the suit, whereas the Applicant is only claiming recovery of monies in his suit. There are no restraint orders passed in both the cases. Therefore, the Resolutions Professional's claim for possession of shed before the adjudicating authority in view of CIRP order, can be entertained under the I & B Code.
In view of the overriding powers under section 238 of the Code and Rule 11 of NCLT Rules 2016, and it is directed that Resolution Professional/ Liquidator shall be allowed to take possession of the Shed from the Applicant - Application disposed off.
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2019 (12) TMI 1369 - NATIONAL COMPANY LAW TRIBUNAL , CHENNAI BENCH
Liquidation of the Corporate Debtor - Section 33(2) of the IBC, 2016 - HELD THAT:- At the time of hearing, there was an objection by the suspended director before this Tribunal. The suspended director has submitted that he is willing to settle the entire dues of the Bank of India, who constitute more than 90% of the total value of credit. However, this Tribunal has granted ample time to the suspended director to settle of its dues to the Financial Creditor and then approach this Tribunal by filing an application under Section 12A of the IBC, 2016, but it never fructified - Since there was no invitation for Expression of Interest was issued, the CoC based on commercial considerations has decided to liquidate the Corporate Debtor.
Taking into consideration the provisions of Section 33 of IBC, 2016 and also guided by the decision of the Hon'ble Supreme Court in the matter of Mr. K. Sasidharan -Vs- Indian Overseas Bank [2019 (2) TMI 1043 - SUPREME COURT] this Tribunal orders for the liquidation of the Corporate Debtor.
Application allowed.
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2019 (12) TMI 1368 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The corporate debtor is entitled to point out to the Adjudicating Authority that a default has not occurred; in the sense that a debt, which may also include a disputed claim is not due i.e. it is not payable in law or in fact. However, it is not the case of respondent that the entire loan or the entire OTS amount has been paid. Bank loan having not paid in its entirety, the default of debt is apparent - It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the outstanding loan amount.
In the facts it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional - the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt.
Application admitted - moratorium declared.
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2019 (12) TMI 1366 - NATIONAL COMPANY LAW TRIBUNAL , KOLKATA BENCH
Re-constitution of Committee of Creditors - Corporate Guarantee not invoked - whether the amount of uninvoked corporate guarantee could be considered as claim as per the provisions of Insolvency & Bankruptcy Code, 2016? - HELD THAT:- The action of RP is not correct in law. Moreover, having regard to the general importance of the issue, we consider it pertinent to discuss few aspects which have got a great bearing on such types of matters.
Unless a claim becomes due only then it gets converted into debt. Further, debt must be due and payable in law or fact for occurrence of event of default. Thus, there is a marked difference between both the terms i.e. "claim" and "debt". Both have got different implications on various aspects/process which are undertaken under the Insolvency and Bankruptcy Code, 2016 - an uninvoked corporate guarantee or counter corporate guarantee is of the nature of contingent liability which may or may not arise. As per established accounting practices as well as accounting standard in some cases where principal borrower might have defaulted but if the guarantee holder has not invoked such guarantee, then a provision fair valuation on the basis of prudence or as per accounting standard AS 29 or Ind AS 37 may be made. Therefore, even accounting and business practice do not recognise uninvoked corporate guarantee as a debt due or ascertained liability as on a particular date. Hence, when viewed from this angle uninvoked corporate guarantee cannot be considered as debt due and payable.
Admittedly, corporate guarantee has been issued by the corporate debtor and it cannot be considered as a debt due and payable then the question arises as to whether this can be ignored at all? In our considered view, this cannot be done for the simple reason that some financial commitment exists in law which may have implications for viability and implementation of resolution plan. Resolution applicant has to submit a plan which should be prepared on the basis of information memorandum provided to him by the resolution applicant in consultation/after approval of CoC. If details uninvoked corporate guarantee(s) are not disclosed, then a situation may arise in future whereby the resolution applicant may not implement the resolution plan and back out in case guarantee is invoked.
Meaning of the term financial debt owed - HELD THAT:- This term has been used in Sec. 5(7) which defines who will be a financial creditor. Similarly, in Sec. 5(20) operational creditor has been meant as a person to whom an operational debt is owed. In Sec. 3(11) debt has been defined as a liability obligation in respect of a claim which is due. Sec. 3(12) prescribes a situation of default on non-payment of debt which has become due and payable. Thus, the rights of a person are obligations to other persons to that transaction, hence, debt due and payable by a person is debt owed to a person. Thus, when the scheme of the Code is read as a whole, it can be safely concluded that voting rights are to be determined only on the basis of financial debt owed.
A complete mechanism has been provided in the Insolvency and Bankruptcy Code, 2016 as to how and when claims become due and payable/debt owed and, consequently how voting share of a financial creditor is to be determined. As stated earlier, in the present case, there is a violation of this mechanism - even if uninvoked corporate guarantee is found to be considered as claim, the same cannot be taken into consideration for determining the voting share of a financial creditor.
Whether the decision of the RP can be said to be in line with the scheme and objects of Insolvency and Bankruptcy Code, 2016? - HELD THAT:- The role of IRP/RP is very crucial. IRP has to constitute CoC as per the provisions of Sec. 18(1)(c) of Insolvency and Bankruptcy Code, 2016. The IRP is also obliged to make every endeavour to protect and preserve the value of property of the corporate debtor and manage the operations of corporate debtor as a going concern. The RP is required to conduct CIRP and convene the meeting of CoC as well as to chair the same. As per Sec. 24(6) each creditor is required to vote with the voting share assigned to him based on the financial debt owed to such creditor. As per Sec. 24(7) the resolution professional has been given authority to determine the voting share to be assigned to each creditor in the manner specified by the Board. If resolution professional assigns higher voting share to any creditor, then such creditor gets an added advantage. In the present case, the facts have already been narrated and findings have been given as regard to both contentions of the applicant in his favour which also refers to mode and manner of process which has been adopted. The other facts are that in one of the meetings of the CoC, this issue was discussed and it was agreed that for assigning voting shares one of rights, RP would take a legal opinion which he has not done till date.
The uninvoked corporate guarantee cannot be considered a claim as per the provisions of Code, 2016, hence, not to be concluded in the list of claims maintained and updated by the RP - Uninvoked corporate guarantee would also not be considered as a debt due and payable or financial debt owed to financial creditor, hence, the same would not be taken into consideration in determining voting share of financial creditor. This remains so assuming that a view is taken that uninvoked corporate guarantee is categorised as a claim.
Application disposed off.
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2019 (12) TMI 1364 - NATIONAL COMPANY LAW TRIBUNAL , HYDERABAD BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Debt - existence of debt and dispute or not - HELD THAT:- In the instant Petition, the Petitioner has proved its case by placing documentary evidence viz., Copies of Facility Agreements and sanction letters, date and details of all disbursements of the facilities etc., and copies of entries in Bankers Book in accordance with the Bankers Books Evidence Act, 1891 (18 of 1891) which proves that a default has occurred for which the present Corporate Debtor was liable to pay. In their counter affidavit, the Respondents have not denied the facts regarding the existence of 'financial debt' and 'default' committed by the Corporate Debtor - the learned counsel for the Corporate Debtor had sought time for settling the debt with the Financial Creditor. It is a different matter that settlement talks have not fructified, but the very attempt by the Corporate Debtor to get it settled, establishes the 'debt' and 'default'.
In the present case, this Adjudicating Authority is satisfied with the submissions put forth by the Petitioner/Financial Creditor regarding existence of 'financial debt' and occurrence of 'default'. Further, the Financial Creditor has fulfilled all the requirements as contemplated under IB Code - instant petition is hereby admitted and this Adjudicating Authority Orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed as per the time line stipulated in section 12 of the IB Code, 2016, reckoning from the day this order is passed.
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