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Insolvency and Bankruptcy - Case Laws
Showing 101 to 120 of 149 Records
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2021 (1) TMI 572 - GAUHATI HIGH COURT
Criminal breach of trust and cheating - dishonest misappropriation and conversion of the assets and properties of M/S Meghalaya Infratech Pvt. Ltd. for its own purpose in violation of the provision of law - Illegal finalization of the resolution plan/bid forwarded by other bidders at a lower price - allegation against the petitioner was that the revised offer of resolution applicant, viz., the PPIPL was not considered or placed before the committee of the creditors and the committee of creditors approved the plan/bid of another resolution applicant, who was found to be the highest bidder - HELD THAT:- Admittedly the request of the respondent No. 2 for extension of time and the revised offer was rejected by the committee of creditors and the petition filed by the PPIPL to direct the petitioner to consider the revised offer of the respondent was also turned down by the learned NCLT, Guwahati Bench.
In the instant case from the admitted facts as revealed from the order of NCLT, it is apparent that the NCLT directed the petitioner to resume the CIRP for taking a fresh decision by the committee of creditors regarding the resolution plan, and as such, there was no delivery of property. It is also evident from the record that on 14-02-2020 the e-mail was addressed by the PPIPL to all the members of the committee of the creditors regarding his revised offers and as such, there was also no question of deception by the petitioner. From the materials, it is apparent that though the revised offer of the PPIPL was not placed before the committee of the creditors, members of the committee of creditors were aware about the said offer, and as such, there was no question of deception or fraud practiced by the petitioner. The Hon'ble NCLT observed that the revised offer ought to have been placed before the committee. Such observation, per-se, can by no stretch of imagination be construed as motive or practicing fraud or deception on the part of the petitioner. Therefore, the ingredients to constitute an offence u/s 420 IPC is also absent in the FIR.
Evidently the petitioner was discharging his official duty as per the direction of the NCLT under the provision of the Insolvency Code and the respondent No. 2 after exhausting all other forums to ventilate his grievance lodged the FIR only when a favorable order was passed by the NCLT. Therefore, the lodging of the FIR after exploring all the avenues and the facts and circumstances of the present case, as discussed hereinbefore, the FIR or the criminal proceeding appears to be attended mainly with the ulterior motive of wrecking vengeance on the accused petitioner - Petition disposed off.
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2021 (1) TMI 571 - NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD BENCH
Direction to Respondent to admit the claim of the applicant as Financial Creditor - direction to not to conduct any meeting in absence of the applicant - seeking declaration that any meeting of Committee of Creditors convened by the Respondent, in absence of the applicant herein as illegal and void apart from other prayer - Section13(1)(b) read with Section 15 of the Code and Regulations - HELD THAT:- It is a matter of record that the loan was not reflected in the Income Tax record of the Corporate Debtor that apart the RP has also raised objection with regard to the invalid agreement. In view of the fact that the stamp paper was issued in 2014 and the agreement was entered on 25.01.2017.
Maharashtra and Gujarat are the two states which have provisions stating that if stamp is not used or surrendered back within 6 months of the date of issue, then they will be treated as expired. Section 52B(b) of the Maharashtra Stamp Act and Section 52 C of Bombay Stamp (Gujarat Amendment) Act, 2016 states that if any Stamp have been purchased and it is neither used nor any allowances are claimed on it within the period of six months, it will be treated as invalid - Admittedly, the agreement was entered in the State of Maharashtra. On perusal of the Non-Judicial paper (page 106 of the application), it is found that the same was issued on 2014 and the agreement was executed on 25.01.2017. So, in view of the Maharashtra Stamp Act, the said agreement is invalid.
Application dismissed.
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2021 (1) TMI 570 - NATIONAL COMPANY LAW TRIBUNAL , KOLKATA BENCH
Non-cooperation by the directors of the suspended board, and the statutory auditor of the Corporate Debtor - Section 19(2) of I & B Code, 2016 - HELD THAT:- The documents produced on the side of the applicant satisfy that the respondents are not caring about her demands by providing the books of account, the information about the CD current status and the keys of various offices and factories. Physical possession of the Immovable Assets and vehicles, documents as well as other records pertaining to the Corporate Debtor are all retained with the Respondents without any legitimate excuse. The respondents are responsible for delaying the progress of CIRP even if works of all are disrupted due to Covid-19 pandemic. Only because the RP can exclude the unutilised period from the timeline to be completed by her, due to lockdown issued by the respective Government, it doesn't mean that the respondents can cause deliberate delay in handing over the information, documents, assets of the CD and books of account which are essential for continuing the CIRP.
The respondents are to be directed to assist or cooperate the RP for completion of the process keeping the timeline as mandated under the Regulations - respondents/directors of the suspended board of the Corporate Debtor and R5 auditor, are directed to provide immediate cooperation and assistance to the RP by providing the information, documents and handing over possession of the assets as detailed in a list of inventory to be prepared by the RP and issued to the respondents - Respondents are directed to provide/handover all the details to be requested by the RP within ten days of the date of receipt of the Inventory/list of documents/assets etc.
Petition disposed off.
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2021 (1) TMI 512 - NATIONAL COMPANY LAW TRIBUNAL JAIPUR BENCH
Maintainability of application - initiation of CIRP - alleged default on part of the Respondent in settling an amount - Operational debt - existence of debt and dispute or not - HELD THAT:- The Respondent has sent an email on 02.06.2018, complaining about the quality of the goods supplied by the Operational Creditor. That on perusal of the e-mails sent by the Respondent to the Operational Creditor on 02.06.2018 and 19.06.2018 before the issuance of demand notice, it can be seen there is a preexisting dispute between the parties with respect to quality of material supplied by the Applicant. It is evident that the Respondent had meetings with the Operational Creditor in Mumbai and Banswara, where the complaints regarding the quality of the goods supplied by the operational creditor were made by the Respondent. Also arrangement regarding payment of outstanding debt was made where the Applicant would waive the amount of ₹ 33,00,000/- out of the total of ₹ 83,00,000/- and it was also discussed that the balance overdue amount of ₹ 50,00,000/- would be settled.
It is evident from the WhatsApp Communications between the Applicant and the Corporate Debtor held on date 31.07.2018 and 27.08.2018 that above arrangement was made between the parties in relation to clearance of outstanding debt. The Applicant in the WhatsApp communication between the parties duly admitted the arrangement proposal and specifically stated that it will supply best quality in future. The documentary evidences submitted by both the parties clearly establishes the preexistence of dispute between the parties prior to the issuing of notice by the Applicant.
Application dismissed.
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2021 (1) TMI 511 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Referring matter to larger bench - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - demand notice was not served before passing of the admission order - time limitation - order of reference - relevancy of binding judicial precedent or a patent error - HELD THAT:- Application under Section 7 of I&B Code filed by M/s Stressed Assets Stabilization Fund (SASF) – Financial Creditor came to be admitted by the Adjudicating Authority (National Company Law Tribunal), Single Bench Chennai in terms of order dated 21st November, 2019 which was assailed in Company Appeal (AT) (Insolvency) No. 57 of 2020 primarily on the ground that demand notice was not served before passing of the admission order otherwise the Appellant would have shown that the application was barred by limitation as the account of Corporate Debtor had been declared as NPA in the year 2009 and decree came to be passed in the year 2013.
In V. PADMAKUMAR VERSUS STRESSED ASSETS STABILISATION FUND (SASF) & ANR. [2020 (3) TMI 1244 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] IDBI had advanced financial assistance of ₹ 600 Lakhs by way of Term Loan Agreement dated 2nd March, 2000 to the Corporate Debtor and the loan was duly secured. The account of Corporate Debtor was classified as NPA on 29th May, 2002. IDBI Bank initiated recovery proceedings by filing OA No. 289 of 2003, later renumber as OA No.413 of 2007. It was decreed on 19th June, 2009 leading to issuance of Recovery Certification on 31st August, 2009 which was reflected in the Balance Sheet dated 31st March, 2012 - The Appellant, basing its plea on the aforestated facts, raised the contention that the application filed under Section 7 of I&B Code in the year 2019 was barred by limitation. This Appellate Tribunal noticing the judgments delivered by Hon’ble Apex Court in JIGNESH SHAH & ANOTHER VERSUS UNION OF INDIA & ANOTHER [2019 (9) TMI 1121 - SUPREME COURT], GAURAV HARGOVINDBHAI DAVE VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LTD. AND ANR. [2019 (9) TMI 1019 - SUPREME COURT], VASHDEO R BHOJWANI VERSUS ABHYUDAYA CO-OPERATIVE BANK LTD AND ANR. [2019 (9) TMI 711 - SUPREME COURT], and decision of this Appellate Tribunal in V HOTELS LIMITED, TULIP STAR HOTELS LTD. & ANR. VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED [2019 (12) TMI 1273 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], was of the view that for the purpose of computing the period of limitation for application under Section 7 the date of default is NPA and hence a crucial date.
It is manifest that the findings arrived at by the five Member Bench were based on consideration of the latest judgments of the Hon’ble Apex Court wherein the remedy available across the ambit of I&B Code was recognized as distinct from the recovery mechanism in civil jurisdiction. It is not in controversy that the I&B Code was enacted to achieve the objective of resolving insolvency and bankruptcy issues for which timelines were laid down. It is now well settled that the remedy available under the I&B Code is a remedy distinct from remedy available in civil jurisdiction/ recovery mechanism and since the I&B Code is not a complete Code, provisions of Limitation Act are attracted to proceedings under it before NCLT and NCLAT as far as applicable i.e. in regard to matters not specifically provided for in I&B Code. The whole mechanism of triggering of Corporate Insolvency Resolution Process revolves round the concept of ‘debt’ and ‘default’. Once debt and default are established, the Financial Creditor, the Operational Creditor or the Corporate Person can initiate the CIRP by filing application respectively under Section 7, 9 or 10 of I&B Code in prescribed format before the Adjudicating Authority. It is well settled now that proceedings under I&B Code are not in the nature of recovery proceedings and being an independent remedy same can be had recourse to by the aggrieved person seeking triggering of CIRP by establishing debt and default and complying with the procedural requirements laid down under the Code.
Thus, the order of reference which, in letter and spirit, is more akin to a judgment of an Appellate Court appreciating the findings and judgment in ‘V. Padmakumar’s Case’ is incompetent and deserves to be rejected.
Following of the judicial precedent of a Bench of equal strength and of a Larger Bench as in the instant case, is a matter of judicial discipline. The Referral Bench, where such reference is competent, can make a reference for matter being placed before a Larger Bench for reconsideration in the circumstances indicated in the aforesaid judgments after recording its opinion. It is not open to the Referral Bench to appreciate the judgment rendered by the earlier Bench as if sitting in appeal to hold that the view is erroneous. Escaping of attention of the earlier Bench as regards a binding judicial precedent or a patent error is of relevance but not evaluation of earlier judgment as if sitting in appeal - We are sad to note that the Referral Bench has overlooked all legal considerations. Such misadventures weaken the authority of law, dignity of institution as also shake people’s faith in rule of law. We hope and trust that the Hon’ble Members of the Referral Bench would exhibit more serious attitude towards adherence of the binding judicial precedents and not venture to cross the red line.
As a sequel to the rejection of order of reference as being incompetent, let the Company Appeal (AT) (Insolvency) No. 385 of 2020 be listed for regular hearing before Court No. IV on 11th January, 2021.
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2021 (1) TMI 510 - NATIONAL COMPANY LAW TRIBUNAL — KOLKATA BENCH
Liquidation of the corporate debtor - liquidation sought on the ground that there is no possibility for resolution of the corporate debtor - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the corporate debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating authority of the decision of the CoC approved by not less than sixty-six per cent. of the voting share, to liquidate the corporate debtor. In the present case, the CoC has resolved by 100 per cent. voting share to liquidate the corporate debtor.
Application is allowed and the corporate debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof.
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2021 (1) TMI 509 - NATIONAL COMPANY LAW TRIBUNAL — MUMBAI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repayment of outstanding dues - existence of debt and dispute or not - HELD THAT:- In view of the categorical admission made by the corporate debtor as regards to the debt and the default and further proposal that he made with the petitioner, the petition can be admitted if they do not settle the matter with the bank amicably, time is granted for a period of 3 weeks to afford a last chance to the corporate debtor. It is made very very clear to the corporate debtor that no further adjournments will be granted and if the petitioner does not report to the court that the matter has been amicably settled between the parties, the orders will be pronounced in the open court on the very same day forthwith. List this matter on July 16, 2019.
A categorical statement made by the corporate debtor that an investor, i. e. Prudent ARC Ltd., is prepared to invest ₹ 100 crores and prepared to settle the dues - HELD THAT:- In view of the failure on the part of the corporate debtor to make payment the investment of ₹ 5 crores made by the said Prudent ARC Ltd., has to be repaid by the applicant-bank. Counsel representing the applicant-bank submits that in the event the petition is admitted they shall refund the said amount of ₹ 5 crores forthwith to the said Prudent ARC Ltd. - In view of the clear admission made by the corporate debtor towards debt and default, the petition requires to be admitted. The matter is reserved for further detailed order.
The corporate debtor despite availing number of adjournments has neither filed reply nor advanced any arguments. Therefore, it is very clear from the conduct of the corporate debtor that the corporate debtor has no arguable case in the above company petition. Therefore the main company petition is reserved for orders - It is very clear from the above orders and the conduct of the corporate debtor that the corporate debtor is clearly admitting the debt and default in the above company petition and has no arguable defence. Even otherwise the financial creditor produced all the documents establishing the debt and default. The financial creditor also furnished the name of Mr. Sunil Kumar Chaudhari as the proposed interim resolution professional along with his letter of consent and also his undertaking that there are no disciplinary proceedings pending against him.
This Tribunal has no hesitation in holding that the financial creditor has proved all the necessary legal ingredients for admitting the above company petition and the above company petition is liable to be admitted.
Initiation of CIRP ordered - petition allowed.
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2021 (1) TMI 508 - NATIONAL COMPANY LAW TRIBUNAL, HYDERABAD BENCH
Seeking to participate in the CIR process of the corporate debtor - section 60(5) of the Insolvency and Bankruptcy Code, 2016 Read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- It is interesting to note that original date fixed for submission of EOI was on 01.01.2020 and later it was extended from time to time and last date for submission of EOI was 06.03.2020. The last date for submission of Resolution Plan was 06.04.2020 which was extended till 20.05.2020. It is interesting to note that applicant has not submitted any EOI though the period was extended till 06.03.2020. Even the time for filing resolution plan was extended from time to time and last date was 20.05.2020 for filing resolution plan - The applicant has not submitted either EOI or resolution plan in the extended period. The applicant claimed to have submitted the EOI long after the date fixed for EOI. Regulation 36(A)(6) provides if EOI received after due date shall be rejected. No resolution plan to be received by RP after the due date.
Hon'ble NCLAT has held in the decision reported in KOTAK INVESTMENT ADVISORS LIMITED VERSUS MR KRISHNA CHAMADIA (RESOLUTION PROFESSIONAL IN THE MATTER OF RICOH INDIA LIMITED) MR KALPRAJ DHARAMSHI, MS REKHA JHUNJHUNWALA [2020 (8) TMI 389 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] that Resolution Plans received after due date can't be placed before COC by the RP and COC can't consider the same. The applicant is simply asking for direction for participation of applicant in the CIRP and to submit resolution plan. Such a request can't be granted in favour of applicant because the time line prescribed for EOI and for receiving resolution plan was expired.
Application dismissed.
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2021 (1) TMI 507 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Seeking a direction to the Committee of Creditors represented by 100% voting power by Petitioner - M/s. Suryawanshi Garments LLP to appoint Resolution Professional replacing the IRP at the earliest or withdraw the application and pay the Professional charges for IRP - Rule 11 of the NCLT Rules, 2016 r/w Sec. 60(5)(c) of the I&B Code, 2016 - HELD THAT:- The CoC, comprised of only the Petitioner has not carried out its duties as required by the I&B Code, 2016. When the IRP's resignation has been accepted in the first CoC meeting, it was duty bound to replace the IRP by filing an application before this Adjudicating Authority for appointment of the RP, in terms of Section 22(3)(b) of the Code. This has not been done. The CIRP cannot move forward unless this step is taken, as all such duties as are listed in section 25 of the Code are required to be carried out by the RP.
The CoC is directed to immediately, and not later than 30 days from the date of this Order, convene a meeting and pass a resolution for appointing a Resolution Professional, and file an application before this Adjudicating Authority for the appointment of the proposed RP in terms of section 22(3)(b) of the Code - All fees due and payable to the IRP, as agreed to in the CoC, shall be paid forthwith.
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2021 (1) TMI 506 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Seeking to condone the delay in filing claim before the Resolution Professional - seeking direction to Resolution Professional to admit the claim of the Applicant - Section 60(5) of IBC, 2016, R/w Rule 11 of the NCLT Rules, 2016 - HELD THAT:- It is settled position of laws that Court/Tribunal cannot reject a meritorious claim at the threshold, on the ground of delay and laches, provided a litigant has substantiated reasons for delay. In the instant case, the Applicant is an Operational Creditor, and the record shows that admitted claims made by the Financial Creditors of CD were amounting to hundreds of Crores. In terms of Code and the Rules made thereunder, the Secured Financial Creditors are entitled for prior consideration in the matter of settlement of their claims in Resolution Plan as well as in the Liquidation Proceedings. And the Operational Creditors hardly have any say on the question of settlement of their claims. As per the report submitted by the RP, Prospective Resolution Applicant submits Resolution Plan for mere ₹ 71 Crores, whereas the claims of secured Creditors run hundreds of Corers -
It is also relevant to point out here that the claim in question start from the year 2014. It is settled position of law that proceedings under provisions of Code should be concluded in a time bound manner and allowing the instant claim would not serve any purpose, rather it would unnecessarily delay the process. Moreover, the Resolution Plan is already in the final stage, and is going to be decided very soon by the COC as per the submissions made on behalf of Respondents.
Application disposed off.
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2021 (1) TMI 505 - NATIONAL COMPANY LAW TRIBUNAL — MUMBAI BENCH—COURT-I
Approval of the resolution plan - section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- By virtue of mandatory contents of resolution plan, the same is in accordance with sections 30 and 31 of the Code, and also complies with the requirement of regulations 38 and 39 of the CIRP Regulations.
The resolution applicant has sought certain reliefs and concessions in the resolution plan. This Bench is not inclined to allow any of the said reliefs and concessions prayed by the resolution applicant. Therefore, the resolution applicant may apply to the relevant regulatory authorities for said reliefs and concessions and the relevant authorities may consider it as per relevant applicable laws - The resolution applicant, on taking control of the corporate debtor, shall ensure compliance under all applicable laws for the time being in force. It is made clear that the resolution applicant shall take over the corporate debtor with all its assets and liabilities as per terms of the approved resolution plan.
The resolution plan shall be approved with modifications, which shall be binding on the corporate debtor and its employees, members, creditors, guarantors, resolution applicant and other stakeholders involved in the resolution plan.
Resolution plan is approved - application allowed.
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2021 (1) TMI 447 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt ad dispute or not - service of demand notice - Appellant submits that in the instant case no Demand Notice was ever served on the ‘Corporate Debtor’ / Second Respondent as per section 8 of the ‘I&B’ Code - allegation that the said Demand Notice was knowingly addressed to the wrong address of the ‘Corporate Debtor’ by the First Respondent - HELD THAT:- An ‘Operational Creditor’ shall deliver to the ‘Corporate Debtor’ a Demand Notice in Form-3 or a copy of an invoice attached with a notice in Form-4 as per Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Demand Notice or the copy of the invoice demanding payment referred to in sub-section 2 of section 8 of the code may be delivered to the ‘Corporate Debtor’ at the registered office by hand, registered post or speed post with acknowledgement due or by electronic mail service to a whole time Director or designated partner or key managerial personnel, if any, of the ‘Corporate Debtor’. Besides these, a copy of Demand Notice of invoice demanding payment shall also be filed with an information utility.
Be it noted, that only if a ‘Demand Notice’ / Invoice demanding payment under the code is issued, the ‘Corporate Debtor’ will appreciate in right earnest the consequences flowing on account of failure to pay the ‘operational debt’. Also, that, after transfer of the case from Hon’ble High Court to the Tribunal (in respect of the winding up petition) an ‘Operational Creditor’ is required to submit all information including the details of the proposed Insolvency professional - An application filed u/s 9 of the ‘I&B’ Code, 2016 without serving notice u/s 8 of the code is not maintainable. Indeed, a mere failure to serve the ‘Demand Notice’ is not a curable defect. A ‘Bankruptcy’ notice sets in motion the entire process leading to ‘Bankruptcy’ and it is to be rigidly and narrowly construed.
Thus, serving of ‘Demand Notice’ together with the ‘Rejoinder’ filed by the First Respondent/’Operational Creditor’ before the ‘Adjudicating Authority’ is not the requirement of ‘Law’ - It cannot be lost sight off that the amount shown in ‘Bank Certificate’ is proof of the ‘Dues’.
Waiver / Approbation and Reprobation - HELD THAT:- In the instant case the Adjudicating Authority while passing the impugned order had admitted the application without there being service of demand notice to the Second Respondent / ‘Corporate Debtor’ which is admitted by the First Respondent/Operational Creditor in its ‘Reply’ filed before this Tribunal and a plea of the registered address of the Second Respondent / Corporate Debtor being changed by the debtor Company will not hold water for the failure of the First Respondent / Operational Creditor to send a notice u/s 8 of the Code. In this regard, even the Adjudicating Authority in the impugned order at paragraph 5(i) had mentioned that the ‘Operational Creditor’ had stated in para 8 of its ‘Rejoinder’ that the ‘Demand Notice’ was returned unserved and that the said Authority had not adverted to about the aspect of sufficiency of service of ‘Demand Notice’ to the Second Respondent / Corporate Debtor which is mandatory as per Section 8 of the code and as such it is held by this Tribunal that the impugned order is not a valid one in the eye of Law -
It cannot be forgotten that the proceedings under section 138 of NI Act, 1881 pertain to criminal liability for dishonour of cheques issued and do not bar an application u/s 9 of the code as opined by this Tribunal. Likewise, the pendency of proceedings under Or.37 of the Civil Procedure Code will not prohibit an application under Section 9 of the Code.
Even though on behalf of the First Respondent it is contended that the Second Respondent/Corporate Debtor had mentioned that they will be making payment all outstanding amount of ₹ 79,76,937/- as per letter of the Second Respondent dated 08.07.2014 against the purchase and the same being an admission of the debt, this Tribunal is of the considered view that since the ‘Service of notice’ at the registered address of the ‘Corporate Debtor’ was not established to the subjective satisfaction of this Tribunal and the admitted fact being that the notice sent to the Second Respondent at its registered office got returned, the said admission of debt and the reference made to the NI Act, 1881 in regard to the presumption that a ‘Holder of Cheque’ received the cheque for the discharge either in whole or in part of any debt or other liability will not in any way heighten or improve the case of Appellant any further.
Thus in the instant case Section 8 notice under ‘I&B’ Code was not served upon the Second Respondent / Corporate Debtor and admittedly the same got returned as mentioned Supra, this Tribunal comes to a consequent conclusion that the impugned order dated 01.01.2020 passed by the Adjudicating Authority in admitting the petition is not legally tenable and the same is accordingly set aside by this Tribunal to secure the ends of justice. As a logical corollary, this Tribunal declares illegal the order passed by the ‘Adjudicating Authority’ in appointing the ‘Interim Resolution Professional’, declaring moratorium and all other orders passed by the ‘Adjudicating Authority’ pursuant to the impugned order and action, if any, taken by the ‘’Interim Resolution Professional’ (including the advertisement, if any, published in the newspaper calling for applications and all such orders) and that the petition/application filed by the First Respondent is dismissed as abated. The Adjudicating Authority is required to close the CIRP proceeding.
Appeal allowed.
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2021 (1) TMI 446 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Liquidation of Corporate Debtor - section 61 of the Insolvency and Bankruptcy Code - HELD THAT:- Section 29A (b) of I&B Code shall be applicable in the instant case. According to this provision of the code, a person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person is a willful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949. The Appellant had been declared as a willful defaulter in terms of Reserve Bank of India both by Respondent No. 1 bank i.e. OBC and Respondent No. 3 viz. SBI. Therefore, the Appellant has no locus standi to challenge the impugned order dated 8th November, 2019. The Appellant submitted a resolution plan pursuant to the order of Hon’ble High Court of Karnataka, which was placed before the COC which was rejected by the COC on the ground that it did not conform to the requirement of the code being Section 29A (b). The order of the Karnataka High Court only permitted the Appellant to submit its resolution plan to the RP. However, it did not in any way takes away the right of COC to reject the resolution plan on the ground that it is in contravention of the various provisions of law.
It can be concluded that a limited judicial review is available in respect of an approved resolution plan. The grounds under Section 30(2) or 61(3) of the IBC are regarding testing the validity of the approved resolution plan by COC and not for approving the resolution plan which has been disapproved by the COC in exercise of its business decision.
The Appellant cannot take plea that he was not given the statutory time period of 30 days to place his resolution plan as he had submitted his resolution plan well within time as agreed in the COC meeting i.e. on or before 16th September, 2019. The contention of the Appellant that COC abruptly decided not to seek extension of time for CIRP process from the Adjudicating Authority is invalid as it is the commercial wisdom of the COC whether they want to seek extension of time or not after considering the feasibility and viability of the submitted resolution plan.
Appeal dismissed.
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2021 (1) TMI 445 - NATIONAL COMPANY LAW TRIBUNAL KOCHI BENCH
Seeking permission to appellant to work out his remedies through the process of Labour Court and to get an award from the Labour Court in terms of the provisions contained in the Industrial Disputes Act and other parental enactments and to keep the appeal filed under Section 42 of IBC - Section 60(5) of the IBC - HELD THAT:- The claims of about 65 workmen are pending before this Tribunal for consideration. The appellant along with others already approached before the Labour Court when the Corporate Debtor declared a lock out of its factory and the Labour Court, Ernakulam passed an award of December, 21, 2015 in tune with the settlement agreement dated December, 02, 2015 made between the Union and the Management of the Corporate Debtor. Now the claim put forward by the appellant is barred by Limitation as the appellant sought to have raised an industrial dispute and raised his claims before 2.12.2018. Now the appellant’s approaching the Labour Court is nothing but a futile exercise, with an intention to delay and stop the entire process of recovering pending dues from the Corporate Debtor. Since the appellant has not produced any order of the Labour Court or such authorities, it is true that the Liquidator on his own cannot decide on disputed liabilities in the absence of a Civil Court decree or award.
It is not for this Tribunal to give permission to a party to approach any statutory authority or any other forum. If the appellant is aggrieved by any order passed by the Liquidator, he is at liberty to approach this Tribunal under Section 42 of the IBC - After exhausting the remedy by filing appeal under Section 42 of the IBC, and this Tribunal is seized of the matter, the present IA is filed by the appellant with the stipulation that “in the event this Tribunal is not inclined/proposed to decide the lis disputes arising in the appeal, the appellant may be permitted to approach the Labour Court under the Industrial Disputes Act”, is only a delaying tactics in disposing of the Appeals pending before this Tribunal and also to delay the CIR Process. If the appellant is aggrieved by the order of this Tribunal, he is at liberty to approach the appropriate forum for redressal.
Application dismissed - Dated the 8th day of January, 2021.
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2021 (1) TMI 444 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - service of notice - HELD THAT:- Though the case was filed on 12th December, 2019, the Petitioner could not attend office objection in time. Therefore, the case was listed on 12.03.2019 for compliance of office objections. It was subsequently listed for hearing on 18.03.20, 15.06.20 and 18.06.20 but none appears for the Petitioners on these dates. So the Tribunal ordered notice to the Respondent on 22.06.20. However, service of notice could not be effected on the Respondents till date and resultantly none appears for the Respondents. And the notices sent through Registry of the Tribunal returned un-served. The Petitioner also failed to serve notices on the Respondent till date.
The Respondent has broadly admitted the debt in question, though they have raised dispute by way of its Reply. In order to consider for admission of a case filed under the provisions of Code, it is necessary to establish not only debt and default in question but also Corporate Debtor has become insolvent by virtue of its financial position. However, the Petitioner, even not pleaded that the Corporate Debtor has become insolvent except pleading that the Respondent failed to pay their outstanding dues. However, the Petitioner plead with the Respondent to clear their outstanding amount as they are small entrepreneurs and fulfilled their commitment to their staff. The Petitioner could not service notice on the Respondent even though sufficient time was granted to it - Therefore, instead of keeping it pending on the file of this Tribunal for service of notice and to furnish financial status of Corporate Debtor, it would be just and proper to dispose of the instant Company Petition with a direction to the Respondent to settle the issue, instead of prosecuting the litigation, in their own interest.
It is directed that the Respondent/Corporate Debtor to settle the issue in question by taking into consideration of the status of Operational Creditor, being a small entrepreneur - In case, the Respondent/Corporate Debtor failed to settle the issue in question, within a period two months from the date of receipt of a copy of this order, the Petitioner is at liberty to file fresh case in accordance with law for the same cause of action - petition disposed off.
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2021 (1) TMI 443 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Seeking to order for distribution of the unsold Intangible Assets- Intellectual Property available with the Corporate Debtor - Section 35(1)(n) of Code R/w Regulation 38(1) of IBBI( Liquidation Process) Regulations, 2016 - HELD THAT:- The assets of the Corporate Debtor have been completely liquidated and only intellectual Property in question, on which TDB has charge, remains with Corporate Debtor. The Applicant has also explored the possibility of selling it but in vain. And the amount realised out of liquidation of assets was only ₹ 2,26,000/- which was utilised for CIRP costs, and no further funds will be available even for CIRP costs, if it is further permitted to continue. Therefore, instead of permitting the Applicant to file another Application U/s 54 of the Code, and the extant Regulations of IBBI (Liquidation Process) Regulations, 2016, to seek dissolution of the Company, it would be just and proper for the Adjudicating Authority to exercise its discretionary powers to dissolve the Company, in the interest of justice.
The Applicant is permitted to assign absolute rights over Unsold Intangible Assets- Intellectual Property available with the Corporate Debtor, Virtual Logic Systems Private Limited, to Technology Development Board, Secured Financial Creditor, towards their liability, immediately after receipt of a copy of this order and complete the remaining liquidation process - Subject to above distribution to TDB, the Corporate Debtor, namely M/s. Virtual Logic Systems Private Limited is hereby dissolved with immediate effect - petition disposed off.
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2021 (1) TMI 442 - NATIONAL COMPANY LAW TRIBUNAL , BENGALURU BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Petitioner is stated to have continued the services inspite of failure to pay outstanding amount - Agreement has clearly provided terms of payment and service to be utilised and also alternative mechanism for any dispute arise out of implementation of terms and conditions of it - existence of debt and dispute or not - HELD THAT:- The Agreement has clearly provided terms of payment and service to be utilised and also alternative mechanism for any dispute arise out of implementation of terms and conditions of it. If the dues are not paid, the Petitioner has the right to suspend services until all undisputed invoices are paid. However, for the reasons best known to the Petitioner is stated to have continued the services inspite of failure to pay outstanding amount. The Petitioner failed to take any of the actions as mentioned in the Licence Agreement.
The claim made in the instant Company Petition is for the period from 20.08.2016 to 19.02.2018, however the Petitioner has not initiated any legal course of action to recover the alleged outstanding amount till impugned the legal notice dated 06.06.2019 issued under the provisions of the Code. Except showing some uncorroborated e-mails made with the Respondent, the Petitioner failed to substantiate its claim even prima facie. In the Licence Agreement, there is a clause by name Force Majeure, which exempts the parties for delays, failure or omissions due to any cause beyond its reasonable control, due to labour disturbances, riots, fires, earthquake, floods, EPIDEMIC etc. For the cause of action arise in the year 2016, the Petitioner got issued demand notice only on 6.6.2019, however, the instant Petition was filed before the Tribunal only on 29th January 2020. Therefore, invoking the provisions of Code for the nature of causes of action arise in the instant is nothing but abuse the provisions of the Code.
It is also relevant to point out here that Section 4 of Code underwent amendment, wherein minimum amount of default is enhanced to Rupees One Crore from existing amount of Rupees One Lakhs (Amended as per the Gazette of India notification issued by the Ministry of Corporate Affairs dated 24.03.2020). Every Act or it amendment, will normally have prospective effect unless it is made retrospective. However, Courts/Tribunal, will have to examine the issue with reference to cause of act in arise in particular cases, and to decide the case by applying Law as available at the time of admission of a particular case - the Petitioner failed to make out even prima facie case with regard to claim made in the instant Company Petition, which is misconceived. Therefore, instant Company Petition is liable to be rejected.
Petition dismissed.
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2021 (1) TMI 389 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Liquidation of the Corporate Debtor - Liquidation order is challenged mainly because the Resolution Professional had not laid the Resolution Plans before the CoC for voting and based on discussion and deliberations Plans were rejected - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The CoC was empowered to decide to liquidate the Corporate Debtor at any time before confirmation of the Resolution Plan, including any time before the preparation of Information Memorandum.
It also appears that when CoC noticed that both the Resolution Plans were not feasible and viable, and are being non-compliant which Section 30 of the Code read with Regulation 37 of CIRP Regulation thus. The same could not be considered the Resolution Plans per se within the Code and Regulations' meaning framed thereunder. Consequently, the CoC decided to propose the liquidation of the Corporate Debtor and on voting the same was passed by a majority of 87.30% of voting share of the Members of CoC.
Both the Appeals sans merit hence dismissed-no order as to costs.
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2021 (1) TMI 388 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Seeking direction for consideration of its Resolution Plan which is 12% more than the offer of the successful Resolution Applicant - power of Adjudicating Authority to judicial scrutiny and statutory provision to interfere with the commercial wisdom of the COC.
What are the powers of the Adjudicating Authority under Section 31 of the I&B Code? - HELD THAT:- The Adjudicating Authority has a very limited power of judicial scrutiny under Section 31 of the I&B Code and the statutory provision does not permit the Adjudicating Authority to interfere with the commercial wisdom of the COC. Even for maximization of value of assets of the Corporate Debtor. In the impugned order Ld. Adjudicating Authority erroneously assumed that it is the duty of the Adjudicating Authority to satisfy itself that the price offer is reasonable and adequate. For this purpose, considered the liquidation value and fair value of the Corporate Debtor and price offered by successful Resolution Applicant and reached a conclusion that the Respondent No. 1’s offer is around 12% more than the offer of successful Resolution Applicant - Thus, Ld. Adjudicating Authority has exceeded his jurisdiction and indulge in quantitative analysis which is not permissible under Section 31 of the I&B Code.
Whether the Adjudicating Authority can direct the COC to consider the Resolution Plan of a person who was not part of CIRP? - HELD THAT:- The Respondent No. 1 is not part of CIRP. The Respondent No. 1 has filed Application directly before the Adjudicating Authority. The Adjudicating Authority in the guise of maximization of the value of assets of the Corporate Debtor directed that the Respondent No. 1’s Application and Resolution Plan be put up before the COC for consideration. There is no provision in the code or regulation which provides that while exercising the power under Section 31 of the I&B Code the Adjudicating Authority can direct the COC to consider the Resolution Plan of such person who has not been part of CIRP. Otherwise also if such procedure is adopted then the CIRP will be frustrated. Once the Resolution Plan has been opened and fundamentals and financials of the Plan and offer made therein were disclosed to all the participants including RP. Then anyone can enhance its offer before the Adjudicating Authority in the guise of maximization of realisation. Therefore, no further fresh bid or offer could have been accepted or considered as held by this Appellate Tribunal in the case of KOTAK INVESTMENT ADVISORS LIMITED VERSUS MR KRISHNA CHAMADIA (RESOLUTION PROFESSIONAL IN THE MATTER OF RICOH INDIA LIMITED) MR KALPRAJ DHARAMSHI, MS REKHA JHUNJHUNWALA [2020 (8) TMI 389 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] - Thus, Ld. Adjudicating Authority has erroneously entertained the Application and Resolution Plan of the Respondent No. 1 and directed the RP to put up the same before the COC for consideration.
Whether the conduct of the Appellant during the pendency of the CIRP can be considered in this Appeal? - HELD THAT:- The order passed by the Adjudicating Authority on 22.10.2019 has no relevance with this Appeal. Therefore, there are no force in the objection raised by Learned Counsel for the Respondent No. 1.
Thus, when the Application for approval of Resolution Plan is pending before the Adjudicating Authority at that time the Adjudicating Authority cannot entertain an Application of a person who has not participated in CIRP even when such person is ready to pay more amount in comparison to the successful Resolution Applicant. If a Resolution Plan is considered beyond the time limit then it will make a never-ending process. Thus, impugned order is not sustainable in law as well as in fact. The impugned order is hereby set aside.
The Adjudicating Authority is directed to proceed with the Application filed by the RP for approval of Resolution Plan as per law - appeal allowed.
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2021 (1) TMI 387 - NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD BENCH
Recovery of Arrears by Invocation of Bank Guarantee - non-repair of transformers, which were under warrantee - additional cost incurred due to non-supply of transformers as per work order - HELD THAT:- Admittedly, out of total claim of ₹ 26,63,344/-, the Liquidator has accepted ₹ 12,13,371/- i.e. for non-repair of transformers, which were under warrantee, as the same is legitimate claim of the Applicant, subject to the approval of Adjudicating Authority - As regard the claim of ₹ 14,49,973/- is claimed against non-supply of transformers as per work order, which is already recovered by invocation of Bank Guarantee, however, the Applicant is further claiming additional cost, which is incurred by DGVCL due to non-supply of transformers as per work order.
It is also admitted by the Applicant that he has already invoked the Bank Guarantee for ₹ 27,58,498/- for non-supply of transformers, therefore, another amount i.e. ₹ 14,49,973/- is unreasonable as the same is recovered from Bank Guarantee.
The instant application is not maintainable and stands dismissed.
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