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Insolvency and Bankruptcy - Case Laws
Showing 41 to 60 of 86 Records
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2020 (11) TMI 727
Entertainment of claims made by creditors after approval of Resolution Plan - whether after approval of Resolution Plan by the Adjudicating Authority, the claims made by the creditors can be entertained? - HELD THAT:- Once the Resolution Plan is finalized and approved, it shall be binding upon all the stakeholders and nobody shall have the power to change it. Even the Adjudicating Authority will not have a binding say on the approval of the Resolution Plan or on the commercial wisdom of the COC. The dues and liability as mentioned in the Resolution Plan as on the commencement of the Corporate Insolvency Resolution Process (CIRP), which is the day on which the Plan is approved by the Adjudicating Authority, shall be binding on every stakeholder and the Resolution Applicant shall be bound to pay only those which are mentioned in the Resolution Plan.
The reason for invitation of the claims as on the date of commencement of CIRP is that the claims of any of the creditors are not left out while making of the Resolution Plan and hence claiming of the money after the passing of the Resolution Plan seems unjustifiable and unreasonable as sufficient opportunity has already been provided to submit the claims earlier, after admission of the application and ordered Corporate Insolvency Resolution Process - This was done to ensure that no further such of this kind of dispute would arise in the future. Hence, in a situation where the claims submitted by the creditors, inclusive of the operational creditors, have been duly met by the applicant, no question of reclaiming the full amount or a part of it or some different amount arises which pertains to a period prior to commencement of CIRP.
A Successful Resolution Applicant is not to be burdened with undecided claims at the stage of implementation of the Resolution Plan. The Successful Resolution Applicant is to be provided with a company free from past liabilities. It has been rightly understood that a Successful Resolution Applicant cannot be saddled with past liabilities indefinitely. Such an act will make it impossible for the Successful Resolution Applicant to run the business of the Corporate Debtor effectively. In fact, saddling a Resolution Applicant with past claims will defeat the entire purpose and mechanism set out under the I&B Code, mainly when all claims have been appropriately dealt under the Resolution Plan itself - Further, Section 32A of the Code grants immunity to a Corporate Debtor from the liabilities arising out of the acts committed prior to the CIRP once the Resolution Plan is approved. Hence, drawing an analogy, one can very well presume that the restructured company will not be forced or liable for paying out the dues of the period prior to CIRP which have already been taken care of in the Resolution Plan. This will make the revamped company do its business effectively and efficiently and will achieve the objective for which the Code was enacted.
From a plain reading of Sub-Section (21) of Section 5, this Tribunal finds that there is no ambiguity in the said provision and the legislature has not used the word ‘and’ but chose the word ‘or’ between ‘goods or services’ including employment and before ‘a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, and State Government or any local authority’. ‘Operational Debt’ in normal course means a debt arising during the operation of the Company (‘Corporate Debtor’). The ‘goods’ and ‘services’ including employment are required to keep the Company (‘Corporate Debtor’) operational as a going concern. If the Company (‘Corporate Debtor’) is operational and remains a going concern, only in a such case, the statutory liability, such as payment of Income Tax, Land Tax etc., will arise. As the ‘Income Tax’, ‘Value Added Tax’ and other statutory dues arising out of the existing law, arises when the Company is operational, we hold such statutory dues has direct nexus with operation of the Company.
All statutory dues including ‘Water Charge’, ‘Electricity Charge’, “Commercial Taxes’, “Land Revenue’ etc. come within the meaning of ‘Operational Debt’.
The other contention raised by the respondents is that the impugned order dated 23.01.2019 protects the interest of these respondents, as the relevant demands raised by Merchem against these respondents were not accepted, for the reason that they were not provided any individual notice of the insolvency proceedings commenced against the Corporate Debtor by the RP, and therefore, the statutory liabilities are bound to be paid - it is evident that the Resolution Plan as approved by the Committee of Creditors is by and large sanctioned by the Order dated 23.01.2019.
It has been held that the Adjudicating Authority is not required to go into the merits or reasoning of the decision taken by the COC for approval or rejection of a Resolution Plan. The only benchmark which is set up to be determined by the Adjudicating Authority is to see whether the plan has been approved by 75% voting of the COC or not? Therefore, it is clear that the commercial wisdom of CoC is not allowed to be interfered with.
The ‘Central Government’, State Government’ and ‘local authority’, who are entitled for dues arising out of the existing law are ‘Operational Creditor’ within the meaning of Section 5(20) of the ‘I&B Code’. As the statutory dues are operational debts, and once a Resolution Plan has been approved by the Adjudicating Authority, the treatment of all stakeholders, including Operational Creditors, is to be determined as per the terms of the CoC approved Resolution Plan. A stakeholder cannot afford to sleep over his claims and fail to submit it on time and come forward after the approval of Resolution Plan by the Adjudicating Authority.
The approved Resolution Plan approved vide order dated 23rd January, 2019 by the NCLT, Chennai Bench is binding on the stakeholders including the statutory authorities who failed to file claims before the said approval - The amounts shown in the books of the respective Respondents, antecedent to the date of approval of Resolution Plan, still being shown as on date as due and payable by the Respondents in their books of account, stands discharged in full and consequently be reversed or written off in the books of the respective Respondents in accordance with the approved Resolution Plan.
Application rejected.
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2020 (11) TMI 678
Winding up of Company - whether the Company Court would retain jurisdiction to hear the winding up petition? - HELD THAT:- It is clear from the Judgment that the learned Judge was of the view that the Company Court retains jurisdiction over winding-up petitions which were filed before the IBC came into force. In that view of the matter, the Court held that the Official Liquidator acting as the Provisional Liquidator could retain the symbolic possession of the assets and properties of the Company (in liquidation). It was also decided that questions of title to the flats, etc. were declaratory in nature and could hence only be decided by this Court. The important part of the Judgment however is the point of time when this Court reasserts its jurisdiction for deciding the issues related to the Company (in liquidation). This Court is informed that the Corporate Insolvency Resolution Professional (CIRP) commenced in March, 2019. An order of the NCLT, Kolkata Bench dated 12th February, 2020 records that the CIRP period of 330 days was completed on 5th February, 2020 and that one more opportunity for resolution of the corporate debtor [the Company (in liquidation)] was being given and 90 days was excluded from the CIRP period.
The Resolution Plan has admittedly not seen the light of the day. More than six months have passed since the 90 days extension given to the RP in terms of the order dated 12th February 2020 of the NCLT. It is evident therefore that no Resolution Plan is forthcoming in the near future. However, since the application of the RP is due to be listed on 15th December, 2020, this Court is inclined to pass final order only after 16th December, 2020.
List this matter on 16th December, 2020.
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2020 (11) TMI 677
Maintainability of petition - availability of alternate remedy of appeal provided under Section 61 of the I.B. Code - Whether notification issued under Section 4 of the MPID Act and consequent attachment of the property including the bank account of the corporate debtor can be challenged by approaching NCLT under Section 60(5) of the I.B. Code?
HELD THAT:- Full Bench of this Court in the case between Vijay C. Pulijal vs. State of Maharashtra [2005 (9) TMI 303 - HIGH COURT OF BOMBAY] held that the provisions of MPID Act are ultravires for want of legislative competence of the State legislature. The Full Bench of this Court took a view that the MPID Act transgressed into the field reserved for Parliament. The Full Bench held that the subject matter covered by the MPID Act squarely falls within the ambit of section 58-A and 58-AA of the Companies Act.
Thus, it is clear that MPID Act is a complete Code and enacted to protect the interest of depositors in Financial Establishments. The Respondent, i.e. IRP, was mainly aggrieved by the issuance of notification dated 19/10/2018 under Section 4 of the MPID Act. As set out hereinabove Section 7 of MPID Act provides a remedy to the aggrieved person including the present Respondent, i.e. IRP, to approach the Designated Court pointing out the objection to the attachment of any property of the Financial Establishment or any portion thereof. The Designated Court is empowered to either make the order of attachment passed under sub-Section 1 of Section 4 absolute or varying it by releasing a portion of the property from attachment or cancelling the order of attachment entirely. Thus, it is clear that the Respondent-IRP is having a remedy to approach the Designated Court under Section 7 of the MPID Act. A bare reading of the provisions of the MPID Act clearly demonstrates that action taken under the MPID Act is to be challenged before the Designated Court under the MPID Act and the order passed by the Designated Court can be challenged in appeal before the High Court under section 11 of the MPID Act.
Thus it is clear that Section 18 of the I.B. Code specifying duties of interim resolution professional, although provides in sub-Section 18(f) that he shall take control and custody of any asset over which the corporate debtor has ownership rights, however the same is subject to the determination to the ownership by a Court or Authority. In this particular case, such Court will be the Designated Court as per the provisions of the MPID Act.
The appropriate forum to challenge the attachment of the account of the Respondent is the Designated Court under MPID Act where the Respondent can raise all contentions on merits and also can point out the provisions of I.B. Code and the effect of the same on the steps taken under the MPID Act. It will be for the MPID Court to consider the interplay of the provisions of the MPID Act and the I.B. Code and rule on the matter. Such ruling would obviously include even the aspect of prior appointment of IRP by NCLT and subsequent attachment of the said account by notification dated 19.10.2018 issued under Section 4 of the MPID Act.
The Respondents can approach the Designated Court under section 7 of the M.P.I.D. Act seeking appropriate reliefs - Petition disposed off.
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2020 (11) TMI 676
Direction to 2nd Respondent to release the machinery in possession with the 1st Respondent/Corporate Debtor and transfer the possession of the same to the Applicant - HELD THAT:- In the statement, in regard to payment for the security arrangements of the Corporate Debtor it is stated that even though three securities have been arranged to guard the Corporate Debtor premises to keep the machineries, the Resolution Professional has limited it into two securities charges and claimed the six months charges of ₹ 1,90,080. Since the applicant undertake to make payment of ₹ 75,000/- in addition to ₹ 38,414/- already paid by them, the Resolution Professional should accept that amount, as the Corporate Debtor property is still under the possession of the Resolution Professional, the Resolution Professional has also to bear a part of the payment, without shouldering the full responsibility on the applicant as the CIR Process is not yet completed.
Regarding the other payments, since the applicant has agreed to bear the CGST payment provided the Bristo Foods Pvt.Ltd. cooperate in signing the documents and that they are ready to pay the upfront amount of ₹ 2,95,400/- provide the Bristo Foods Pvt.Ltd allow them to lift the machineries, there will not be any further dispute in those matters. They have also undertook to remove the machineries without causing any damage to the property of the Corporate Debtor.
The applicant shall pay the CGST liability of ₹ 19,40,892/- demanded by the CGST Department and the Corporate Debtor Bristo Foods Pvt.Limited or Resolution Professional, as the case may be, sign the communications to be submitted to the Department, as the registration number is with the Bristo Foods Private Limited - applicant shall pay the upfront amount of ₹ 2,95,400/- towards the outstanding dues to the Bristo Foods Pvt.Limited.
Application disposed off.
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2020 (11) TMI 675
Permission to applicant/State of Kerala to use the Corporate Debtor Hospital, RIMS Hospital, Erattupetta as Covid Hospital for Covid patients with immediate effect - Section 33(1)(b) of IBC, 2016 - HELD THAT:- The request of the applicant District Collector seems to be reasonable in view of the pandemic condition in the State of Kerala, due to Covid-19. Hence this M.A is allowed with the following conditions: -
I. A detailed inventorisation of the subject property be carried out in the presence of the officials of the Applicant, the representative of the Liquidator prior to handing over of the premises to the applicant.
II. During the acquisition of the Corporate Debtor (Hospital)the applicant cannot change or make any permanent structure in the aforesaid premises.
III. The subject property (Hospital) be taken over by the Applicant on ‘as is where is basis” without any further liability/expenditure on the part of Respondent, including but not limited to Electricity charges, Water usage, cleaning Sanitisation, Repair and maintenance of building and repairs and maintenance to machineries and equipment’s, etc. till the date of returning possession. (in this connection GO(MS) No.21/2020 Disaster Management Department dated 25.06.2020 may be referred to).
IV. that any amount that is spent by the applicant for using the Hospital cannot be claimed from the Respondent herein.
V. the Applicant shall not allow the Promoters or their representatives to enter the Hospital premises or engage in the management of the Hospital during the period when the Applicant is utilising the property.
VI. On receipt of the letter based on this Order, the Liquidator will immediately hand over the premises to the applicant District Collector, for a period of Two months (60 days).
VII. The Applicant will return the premises to the Liquidator after expiry of two months (60 days) from the date of taking over the premises from the Liquidator, without any wear and tear and on “as is where is” basis. In case the purpose for which the premises taken by the applicant is not completed, the applicant District Collector is at liberty to approach this Bench for further orders. If no request for extension is received it would be presumed that the applicant is no more interested to continue the purpose for which the Corporate Debtor is taken and the Liquidator can proceed to procure back the Corporate Debtor (Hospital) for Liquidation purpose.
VIII. The premises shall be used only for Covid Treatment under Covid 19 and that it should not be used for any other purpose, whatsoever.
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2020 (11) TMI 674
Exclusion of lockdown period w.e.f. 25.03.2020 to 30.06.2020 from the CIRP period - Section 60(5) of the IBC Code, 2016 read with Regulation 40(C) of the IBBI (IRP for Corporate Persons) Regulations, 2016 and read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- The Hon'ble Supreme Court of India in Suo Motu Writ Petition (Civil) No(s). 3/2020 in Re: cognizance for extension of Limitation, vide order dated 23.03.2020, [2020 (5) TMI 418 - SC ORDER] observed as under:-"This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State).
The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 has held Special provision relating to time-line Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.
Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 held that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process.
In the circumstances and for the reasons mentioned in the application and in view of the orders of the Hon'ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, the instant application is allowed.
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2020 (11) TMI 673
Permission for withdrawal of Resolution Plan post CoC's approval - HELD THAT:- It is very interesting to note that the factors which Adjudicating Authority is now capable to consider for limited judicial view are not mentioned in Section 30(2). This is a significant departure in judicial approach whereas earlier it was generally held that the role of NCLT was limited to see that Resolution Plan confirms to the requirements of Section 30(2) on the assumption that both RP and CoC had already seen aspects mentioned therein and merits of the Commercial wisdom of CoC could not be interfered with
The CoC must take into consideration interest of all stakeholders in the best possible manner and for that purpose, it should follow the principle of fair play and reasonableness while supervising CIRP and approving the Resolution Plan. Consequently, the process adopted by Resolution Professional and CoC should not only be in accordance with the provisions of IBC, 2016 but should also not be arbitrary or unreasonable. The above proposition has also been statutorily recognized by way of amendment of Regulation 39(3) of CIRP Regulations. It is also noteworthy provision of simultaneous voting on Resolution Plan has been brought in this regulation which also goes to show the legislative intent as regard to transparent process be followed by RP/CoC.
There appears to be a certainty in the mind of RP/CoC that irrespective of delays to any extent such application is not required as Resolution Applicant cannot withdraw itself from such process.
The Resolution Applicant is granted permission to withdraw its Resolution Plan - Application disposed off.
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2020 (11) TMI 672
Dissolution of the Corporate Debtor - Section 54 of the IBC - Whether the pendency of any Investigation on the Corporate Debtor creates a bar for passing on order of dissolution of a Company?
HELD THAT:- When a company gets dissolved under Section 248, it will cease to operate except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company. Though the Legislature has specifically made such a provision when dissolution takes place by virtue of Section 248 of Companies Act 2013, such exception cannot be presumed to be available as a thumb rule in situations when dissolution takes place via other modes especially under the I & B Code, 2016, where no such provision is expressly available.
It is evident that the pendency of an Investigation creates a bar for RoC to strike off the name of the Company from the register of companies, as well as for making an application for removal of the name of the Company - That it is an established fact that the moment the dissolution of a Company takes place, its legal entity ceases to exists, neither it can sue nor it can be sued in its own name.
Thus, it is clear that the dissolution puts an end to the legal existence of a Company. Once a company is dissolved, it becomes a non-existent party and therefore, no action can be brought in its name. Further, the Liquidator shall also not be able to represent the non-existent Corporate Debtor before any of the investigating forum.
In order to facilitate completion of investigation, maximisation of assets and the value thereof and to ensure smooth distribution of the proceeds arising out of such investigation amongst various stakeholders of the Corporate Debtor, the judicial propriety demands that the Corporate Debtor should not be dissolved at this stage when the investigation as ordered by Hon'ble NCLAT is pending - the pendency of an investigation creates a bar in ordering dissolution of the company.
Application dismissed as premature.
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2020 (11) TMI 671
Liquidation order - no privity of contract - financial debt - Applicant Bank has claimed that it has got absolute right to file claim Petition before the Liquidator and the said claim is squarely falling within the purview of "financial debt" and alleged that the Liquidator has erroneously rejected the claim Petition on the ground that there is no privity of contract between 1st and 2nd Respondents - HELD THAT:- The Appellant Bank has filed its claim in relation to the dues pending from COGIL before the Liquidator of NOCL. However, COGIL had filed its claim before the Liquidator, which stood rejected and against the said order of rejection, no appeal seems to have been preferred by COGIL before this Tribunal. Since COGIL has filed its claim before the Liquidator of NOCL, it will not in any way entitle the Appellant Bank to make a claim in relation to the COGIL vis-avis the company under liquidation with the Liquidator of the NOCL. The recourse if at all can be only against the COGIL in relation to the debts owed to the Appellant and not against NOCL, unless the said company, namely NOCL has stood as a guarantor/surety to the loan and financial facilities by the Appellant to COGIL. From a careful perusal of the pleadings as contained in the Appeal nothing comes to the fore to the said effect.
Further, it is also required to be seen, eventhough a valiant effort was made by the Learned Counsel for the Appellant to bring in the aspect of privity and proximity of NOCL to the debts of COGIL owed to the Appellant in relation to the aspect of security by way of mortgage of lands sub-let by NOCL to COGIL with the concurrence of SIPCOT of the leased portion, however even from the said angle, the 1st Respondent Company under liquidation through its Liquidator and its creditors cannot be bound in terms of Section 125 of the Companies Act, 1956 or under Section 77 of the Companies Act, 2013 in view of the absence of Registration of charge with the concerned Registrar of Companies in relation to the assets charged, even assuming if there is any, in the absence of any privity to the contract as between COGIL and the Appellant.
It is seen that a charge of Equitable Mortgage by deposit of title deeds was created by COGIL in favour of the Appellant Bank in respect of the properties which were leased out by NOCL to COGIL. However, from the claim form filed in Form D by the Appellant Bank with the Liquidator on 10.01.2019, in relation to the details of debt incurred, it is stated that COGIL had availed term loan disbursed on 02.09.2011. In relation to dates giving rise to cause of action, if assuming if there is any, as against NOCL, nothing more has been specified as to when the debt of the Appellant Bank has become due and payable - Further, from the records, it is evident that the Appellant Bank has relied on the letter of rejection of the Liquidator dated 11.05.2020. As per Section 42 of IBC, 2016, an Appeal against the order of Liquidator has to be filed within a period of 14 days from the date of decision of the Liquidator. Apparently, it is seen that the Appellant Bank has filed the present Appeal via email before the Registry of this Tribunal on 11.06.2020 and there has been a delay of 17 days on the part of the Appellant Bank in filing the present Appeal before this Tribunal and also it is evident from the records that no Application seeking for condonation of delay has been filed by the Appellant Bank before this Tribunal.
In absence of any specific Application seeking for condonation of delay having been filed by the Applicant in approaching this Tribunal by way of an Appeal against the Order of rejection of its claim by the Liquidator beyond the prescribed period of 14 days - The Appeal as filed by the Appellant Bank under Section 42 of IBC, 2016 is liable to be dismissed.
Appeal dismissed.
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2020 (11) TMI 670
Exclusion of time period from time period for completion of CIRP of Corporate Debtor - extension of 120 days from 01.07.2020 to 28.10.2020 for completion of CIRP of Corporate Debtor - HELD THAT:- In this case, the CIRP period of 180 days has already been extended by another 90 days vide this Adjudicating Authority's order dated 05.11.2019 and by virtue of section 12 of IBC, 2016, a period another 60 days was extended vide order dated 11.02.2020. The period of 270 days + 60 days came to an end on 09.02.2020 and 09.04.2020 respectively. Now that the Applicant herein is seeking exclusion of period lost due to outbreak of Covid-19 pandemic.
Considering the submissions, facts and circumstances of case, interest envisaged by the Prospective Resolution Applicant for resolution of Corporate Debtor and in view of the decision of CoC in its 17th meeting dated 29.06.2020, as well as the economic scenario emerging due to COVID-19 pandemic and it's fall out, this Adjudicating Authority observes that exclusion of time period for completion of CIRP lost due to lockdown imposed by Central Government and State Government from time to time would be in the interest of all stakeholders, to allow the completion of CIRP rather than going for liquidation of the Corporate Debtor which should only be initiated as a last resort. Accordingly, this Adjudicating Authority hereby approve the exclusion of another period of 97 days from calculation of CIRP period.
This exclusion is granted on having considered the steps already been taken by the RP, approval by the CoC with 81.11% and the current stage of CIRP in the case of the present Corporate Debtor i.e., M/s. Athena Chhattisgarh Power Limited. Further, upon considering the aspect of exclusion of period of 97 days, this Adjudicating Authority is of the view that a sufficient time is already been granted for completion of CIRP - petition disposed off.
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2020 (11) TMI 669
Approval of Resolution Plan - Directions to the Committee of Creditors (CoC) requiring the CoC to consider Final Resolution Plan - directions to amend the Request For Resolution Plan (RFRP) issued by the Resolution Professional - main contention of the learned counsel for the applicants is that certain clauses in the RFRP are in contravention of the provisions of the SARFAESI Act and the RBI Guidelines.
HELD THAT:- The Resolution Plan was rejected on the ground that M/s. Prudent ARC will not invest in equity and will not become a shareholder of the Corporate Debtor. RFRP provides that in case of Consortium, all the parties in the Consortium to be jointly and severally liable for implementation of the Plan. This objection has been raised by the Resolution Professional from time to time. However, the Plan was not amended to include M/s. Prudent ARC to share the responsibility of implementing the Resolution Plan jointly and severally with other Resolution Applicants in the Consortium. The plan is not in conformity with the RFRP. The RFRP is duly approved by the CoC. When the Plan is in conformity with the RFRP, then only the Resolution Professional is expected to place such Resolution Plan with CoC.
The Adjudicating Authority cannot decide viability or feasibility of the requirements in RFRP. The CoC in its wisdom has formulated RFRP in their own interest. The Resolution Plan is inevitably to be complied with the requirements before placing the same at CoC for its consideration. M/s. Prudent ARC joined in the Consortium only to satisfy the requirements of networth. It is the requirement of RFRP that the Resolution Applicant cannot unilaterally change/withdraw Resolution Plan once it is submitted to the Resolution Professional. According to the Resolution Plan filed by the Resolution Applicants, M/s. Prudent ARC, they will not participate in the equity as per the extent of RBI Guidelines.
It is very clear from the arguments of the learned counsel for the Resolution Professional that the Plan submitted by the applicants is contrary to the conditions laid down in RFRP. Interestingly, the Resolution Professional had given three chances to the applicants to make amendments to the Resolution Plan so as to make it compatible with requirements of the RFRP. Instead of complying with the requirements of the RFRP, M/s. Prudent ARC is voicing its difficulty in complying with the RFRP requirements. The personal difficulties of M/s. Prudent ARC have nothing to do with the requirements of RFRP. The requirements of RFRP bind on all the Resolution Plans. The Resolution Professional is expected to place Resolution Plans which are in conformity with the requirements of RFRP. There is no need to place the Resolution Plans which are not in conformity with the RFRP requirements.
Section 30(3) of the I&B Code provides that if the Plan confirms the requirements contained in section 30(2) of the I&B Code, then the same to be placed before the CoC. There is nothing wrong in not placing the Resolution Plan of the applicants before the CoC since the Plan is not conforming to the requirements of the RFRP. Further it is not satisfying the requirements of Section 30(2)(c) and (d). Therefore, there is no irregularity committed in not placing the Resolution Plan of the applicant before the CoC and rejecting the same by the Resolution Professional.
Application dismissed.
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2020 (11) TMI 668
Exclusion of certain time from the CIRP period in view of the time lost in replacing the Interim Resolution Professional and also the lockdown imposed due to Pandemic Covid-19 - HELD THAT:- The Hon'ble Supreme Court of India in Suo Motu Writ Petition (Civil) No(s). 3/2020 in Re: cognizance for extension of Limitation, vide order dated 23.03.2020, [2020 (5) TMI 418 - SC ORDER] observed as under:-"This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State).
The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 has held Special provision relating to time-line Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.
Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 held that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process.
In the circumstances and for the reasons mentioned in the application and in view of the orders of the Hon'ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, the instant application is allowed.
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2020 (11) TMI 627
Restoration of name of a Company in the register of companies - requirement of pending Financial Statements and Annual Returns with the Registrar - HELD THAT:- It is to be remembered that Rule 12 of Companies (Registration Offices and Fees) Rules, 2014 says that the documents required to be submitted, registered or recorded or any fact or information required or authorised to be registered under the Companies Act shall be submitted, filed, registered or recorded on payment of the fee or on payment of such additional fee as applicable
An ‘Appeal’ can be filed by a ‘person’ aggrieved by the ‘Registrar of Companies’ ‘Order’ notifying the dissolution of the Company, within three years from the date of order of the ‘Registrar of Companies’ communicating the reasons thereto - In Law, the dissolution of a Company will not result in removing the ‘Debtors’ liability of the Company for the purpose of discharging the dissolved Company’s obligations / liabilities /payment(s) it can carry on its operations.
Direction issued to the Appellant / ROC, West Bengal to restore the name of the Company (M/s Goouksheer Farm Fresh Pvt. Ltd.) (First Respondent - in Appeal) for completion of ‘Corporate Insolvency Resolution Process’ effectively in the register of Companies cannot be found fault with. However, the further direction issued by the Tribunal, to the Appellant ‘not to levy any fee / penalty’ to the Company because Company is in ‘Corporate Insolvency Resolution Process’ is legally untenable - appeal allowed.
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2020 (11) TMI 626
Stay on Liquidation proceedings - validity of Liquidation Order - continuation of CIRP - bringing back the money belonging to the corporate debtor - HELD THAT:- An appeal against a liquidation order passed under Section 33 may be filed on the grounds of material irregularity or fraud committed in relation to liquidation order. We find no material irregularity or fraud committed in relation to impugned order - The I&B Code, 2016 is not meant for initiating proceedings for prevention of oppression and mismanagement but is armed with provisions under part -II Chapter – III for initiation of actions against wrong doers/illegal transactions etc.
There are no reason to interfere with the liquidation order passed by the Adjudicating Authority dated 29.07.2020 - the order passed by the Adjudicating Authority is upheld.
Appeal dismissed.
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2020 (11) TMI 620
Recovery of amounts from Bank Guarantees - Whether respondent no. 1 is in order in invoking Bank Guarantees when O.M. dated 12.04.2017 (EXHIBIT A5), provides time period for Provisional Mega Projects, for furnishing Final Mega Certificates to the Tax authorities to 120 months, viz. by which validity is available upto 2021, for the applicant to avail benefit of exemption from payment of customs duty? - HELD THAT:- We agree with the contention of the applicant as regards the issue as the Corporate Debtor was given time to submit Final Mega Power Project Certificate within the period of 120 months and in the instant case the Corporate Debtor has imported machinery in the year 2011 and it enjoys benefit of exemption from payment of customs duty for 120 months till 2021. We therefore, have no hesitation in accepting the contention of the applicant that respondent no. 1 is estopped from recovering any amounts whatsoever upto the said period of 120 months from the date of import. Accordingly, Issue No. 1 is answered in affirmative. Respondent no. 1 cannot invoke Bank Guarantee before expiry of 120 months from the date of import.
Whether the impugned Bank Guarantees can be termed as PBGs and are exempted from the moratorium under section 14(a)(1) of the IBC as amended by Insolvency and Bankruptcy Code (Amendment) Act, 2020? - HELD THAT:- The important question to decide is whether the impugned Bank Guarantees issued by Corporate Debtor are PBGs or NBGs. When we go into the purpose for which the impugned Bank Guarantees are issued, we understand that these were issued for availing the benefits of exemption from payment of customs duty. Even though the underlying action is to furnish final Mega Power Project Status Certificate in time, then only this exemption is available to the Corporate Debtor. The basic object of this Bank Guarantee is to avail exemption only, not for completion of the project. Therefore, these Bank Guarantees cannot be termed as PBG. These can be termed as NBGs only. As such these guarantees are covered under security interest under section 14(1)(c) of the Code, and not under section 14(3)(b) of the Code, which was amended by Insolvency and Bankruptcy Code (Second Amendment) Act, 2018.
The invocation of Bank Guarantee in question will result in decreasing value of the Corporate Debtor and it dissuades participation of prospective applicants from submitting their bids and increase cost of power as there will be substantial impact on the capital cost of the project - issue is answered that the impugned Bank Guarantees are NBGs and are covered by rigor of moratorium under section 14 of the Code.
Whether it is in order for respondent no. 1 to invoke Bank Guarantees when, respondent no. 1 has filed its claim with the Resolution Professional for the amount due from the Corporate Debtor for which these Bank Guarantees are issued? - HELD THAT:- As on one hand respondent no. 1 has filed its claim with Resolution Professional for consideration and on the other hand respondent no. 1 tried to invoke Bank Guarantee to recover its dues, thereby putting itself on a higher pedestal than other creditors. The objective of the Code emphasizes on revival and resolution of the Corporate Debtor in a time bound manner while aiming for optimization of value of assets keeping in view the interest of all stakeholders. By indulging in the above act, respondent no. 1 has attempted to better its position and to place itself on a higher pedestal than the other creditors of the same class. Therefore, we are of the view that respondent no. 1 has already filed its claim with the RP, invoking Bank Guarantees, which is not in the spirit of the IBC, viz. maximization of value of assess of the Corporate Debtor and protection of interest of all the stakeholders.
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2020 (11) TMI 586
Remuneration of Liquidator - Applicability of Regulation 4(2) and (3) of the Liquidation Process Regulations, 2016 or Regulation 39D? - HELD THAT:- The Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh was of the view that Regulation 39D provides for fixation of the fees separately by the Committee of Creditors for the three periods given in Section 39D and the fees in the instant case was not governed by Section 39D as the order of liquidation came to be passed under Section 33(1) (a) of the ‘I&B Code’. Be that as it may, the order of liquidation has been passed and the Corporate Debtor is undergoing liquidation process. It is immaterial which provision of the ‘I&B Code’ squarely governs the passage of order of liquidation. The fact remains that the Committee of Creditors has taken a decision in regard to the liquidation costs, expenses and the remuneration payable to the liquidator which in the light of the recommendation of the Committee of Creditors with the requisite percentage brings it within the ambit of Regulation 39D. Therefore, it is not permissible to take resort to any other provision which would be attracted only if the action of the Committee of Creditors would fall beyond the purview of Regulation 39D.
The remuneration of liquidator falling within the realm of the Committee of Creditors in terms of Regulation 39D, we find that the impugned order cannot be sustained.
The impugned order is accordingly set aside to the limited extent of remuneration of the liquidator and it is directed that the liquidator’s remuneration will be governed in accordance with the recommendation of the Committee of Creditors - Appeal disposed off.
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2020 (11) TMI 585
Maintainability of application - sale of paratments - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - provisional allotment of an under construction of apartments - Whether in view of the I&B Code (Amendment)Ordinance 2019/Amendment Act, 2020, the Application under Section 7 of the I&B Code by one allottee is not maintainable? - HELD THAT:- The provision of Section 7 of the I&B Code, as is obtained prior to the date of Amendment occupies the field as of now. Thus, we hold that there is no effect of the I&B Code, Amendment Ordinance 2019 which was replaced by the I&B Code Amendment Act, 2020, on the present Application under Section 7 of the I&B Code. Therefore, it is not required to be considered whether in the light of the aforesaid Amendment whether the Respondent No. 1 has modified the Application under Section 7 of the I& B Code, or not.
Whether MOU dated 06.04.2016 is an agreement for sale the apartments or an agreement for buyback the apartments? - HELD THAT:- It is apparent that MOU is an irrevocable contract and the Respondent No. 1 is duty bound for execution of buy back. There is a provision in the event of failure of the Respondent No. 2 to complete the buy back by the end of 12 month. On completion of all buy back of apartments by the Respondent No. 2, the Respondent No. 1 have no right, claim & interest in the apartments. As per clause 8 of the MOU, the Respondent No. 2 ensures the Respondent No. 1 that in the event of dishonor of any cheques (one cheque of ₹ 65 lacs and another cheque of ₹ 35 lacs), the Respondent No. 1 shall take possession of the apartments on the basis of MOU and no possession letter or any further act or deed would be required. The Respondent No. 1 shall be free to sell/deal with the same in any manner and no demand shall be payable by the Respondent No. 1. Thus, we hold that the MOU is an agreement to buyback the apartments.
Whether the Respondent No. 1 is a genuine allottee or a speculative investor? - HELD THAT:- The allottee has made attempt to get back the amount of ₹ 1,00,00,000/- by way of this coercive measure i.e. under Section 138 of the Negotiable & Instrument Act - the Respondent No. 1 is a speculative investor and not a person who is genuinely interested in purchasing the apartments. Therefore, she cannot be termed as a allottee as per the explanation attached to clause (f) of Section 5(8) of the I&B Code - The Respondent No. 1 is not a genuine allottee, therefore, the amount of ₹ 35 lacs paid to the Respondent No. 2 is not a Financial Debt and the Respondent No. 1 is not a Financial Creditor.
The Application preferred by the Respondent No. 1 under Section 7 of the I&B Code, is dismissed. The Respondent No. 2 is released from rigours of the moratorium and is allowed to function through its Board of Directors from immediate effect - Appeal allowed.
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2020 (11) TMI 551
Implementation of the approved Resolution Plan - Resolution Plan was rejected on the ground that he could not provide for lump sum time bound payment within 30 days of the approval of its Resolution Plan - HELD THAT:- The Appellant has no locus to question the implementation of the approved Resolution Plan of the Successful Resolution Applicant. Admittedly, appeal preferred against approval of the Resolution Plan of the Successful Resolution Applicant stands dismissed by this Appellate Tribunal. Direction given in terms of the impugned order on the application filed under Section 60(5) of the ‘I&B Code’ to the Successful Resolution Applicant follows as a necessary corollary to the dismissal of appeal filed against approval of Resolution Plan of the Successful Resolution Applicant to implement the approved Resolution Plan on or before the extended date of 30th September, 2020. Once the Appellant is out of the fray, it has neither locus to call in question any action of any of the stakeholders qua implementation of the approved Resolution Plan nor can it claim any prejudice on the pretext that any of the actions post approval of the Resolution Plan of Successful Resolution Applicant in regard to its implementation has affected its prospects of being a Successful Resolution Applicant.
It is not a case of alleged material irregularity in the Corporate Insolvency Resolution Process which is in final stages with the approved Resolution Plan being under implementation. Outbreak of COVID-19 pandemic has slowed down the economic activity and operations have been adversely impacted. Viewed in that context some necessary changes in the agreed terms and extension of time for implementation would not be uncalled for.
Appeal dismissed.
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2020 (11) TMI 550
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - acknowledgment on the part of the Corporate Debtor in the form of revival letter extending the period of limitation which is said to have been overlooked by the Adjudicating Authority while passing the impugned order - HELD THAT:- In the application to Adjudicating Authority filed in prescribed format the date of default is recorded as 10th June, 2014 whereas the application under Section 7 came to filed on 19th September, 2018 i.e. more than four years after the default occurred. The time, for purposes of reckoning limitation in terms of Article 137 of the Limitation Act, would commence from the date of default i.e. 10th June, 2014 which would neither be shifted not extended once a default has occurred. On the basis of such default the Financial Creditor, in the instant case, has approached Debts Recovery Tribunal on 20th October, 2015. In the given circumstances, it cannot lie in the mouth of the Appellant that the date of default gets extended on account of acknowledgment made in the OTS proposal emanating from the Corporate Debtor. There cannot be two defaults in respect of the same debt, one for the purpose of claim filed before the Debts Recovery Tribunal and the other for purposes of ‘I&B Code’ based on OTS proposal, more so when in application filed before the Adjudicating Authority in prescribed format date of default has unambiguously been reflected as 10th June, 2014.
The application having been filed before the Adjudicating Authority beyond three years of occurrence of default is hopelessly time barred and it is not permissible for Appellant to take recourse to Section 18 of the Limitation Act for triggering Corporate Insolvency Resolution Process under Section 7 of the ‘I&B Code’ against the Corporate Debtor - Appeal dismissed.
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2020 (11) TMI 545
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - arrears of rent - Operational Debt or not - pre-existing dispute - HELD THAT:- The words and expressions used in IBC which have not been defined but which have been defined in the Acts mentioned above can be directly imported. However, the Consumer Protection Act, 2019 and Central Goods and Services Tax Act, 2017 do not appear to have been covered under the Section 3 (37) and thus definition of “Service” and “Activities” to be treated as supply of service cannot simply be lifted and applied in IBC.
It is clear that the legislature was conscious regarding liabilities arising from lease but although for particular types of lease, as mentioned in above sub-clause (d), legislature made specific provision to even make it Financial Debt, while dealing with Operational Debt, no such provision has been made. Thus, even on the parameters of interpretation of statutes, we are not in a position to hold that the rents due could be treated as Operational Debt.
Even if the Debt was said to be Operational Debt from the email dated 12th September, 2017 which was sent subsequent to the email dated 18th August, 2017 (at Annexure A-1 (Colly) Diary No. 22971) it is clear that the Corporate Debtor had referred to Financial Stress and terminated the lease which had lock in period. Whether or not the said termination of lease was legal would be an issue of trial between the parties - the findings of the Adjudicating Authority regarding Rent not to be Operational Debt, and that even if looked at in the alternative, there is a pre-existing dispute is upheld.
Appeal dismissed.
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