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Insolvency and Bankruptcy - Case Laws
Showing 61 to 80 of 128 Records
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2021 (2) TMI 887
Validity of CIRP order - ex-parte order - Section 60(5) of the Insolvency & Bankruptcy Code, 2016 r.w. Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The Applicant could not produce any material on record to justify its claim for setting aside the Exparte order. Further, it is evident from the conduct of the Applicant that since beginning they remained absent and did not participating at all whish shows that the Applicant was never vigilent. Further, the applicant filed this application on 04.12.2020 after one month of passing of order by the Hon'ble NCLAT on 02.11.2020.
The Corporate Insolvency Resolution Process (CIRP) has already been set in motion. During the course of hearing the Learned Counsel for the Applicant argued that the matter should be disposed of after giving an adequate opportunity. We are not in dispute with this proposition of law but the law also says that one should be aware of its responsibilities and must take necessary precaution so that such situation does not arise. Even assuming for a moment that notice of hearing was served on the Applicant, however, no useful purpose would be serve and it will prolonged the litigation, if such Ex-parte order is set aside as there is no case of the Applicant on merits - We are constraint to said this kind of frvioulous litigation as resulted into situation where the main object of the Insolvency & Bankruptcy Code, 2016 being timely disposal of matters preferably under the statutory timelines prescribed under the 'Code' is not achieved.
The Applicant has failed to make out any case for setting aside the order of Corporate Insolvency Resolution Process (CIRP) - Application dismissed.
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2021 (2) TMI 882
Withdrawal from CIRP on the ground that the Applicant is in the process of re-structuring the debt of the Corporate Debtor - Seeking indulgence and challenging the action of IRP, of not filing the application of withdrawal of CIRP of the Corporate Debtor - section 60(5) and section 12A of Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The Bench observed that the Interim Resolution Professional has acted fair and has taken actions as per requirements of the Code judiciously. It is a settled law by the Hon'ble Supreme Court through various judicial pronouncements that Corporate Insolvency Resolution Proceedings (CIRP) are proceedings in rem. On the issue as to which event is crucial for withdrawal of CIRP, as per the law laid down by Hon'ble K.C. Sanjeev v. Easwara Pillai Kesavan Nair [2020 (8) TMI 542 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], the relevant date for considering withdrawal of CIRP is the date of application and nothing else.
As a matter of fact, in this case no application for withdrawal of CIRP has ever been filed by the Interim Resolution Professional before the Adjudicating Authority, rather this IA has been filed by the assignee of financial creditor. As is evident from the records, since CoC has already been constituted in this case, any application for withdrawal of CIRP has to comply with regulation 30A (1) (b) of CIRP regulations read with Section 12 A of IBC-2016.
Application dismissed.
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2021 (2) TMI 881
Violation of principles of natural justice - instead of submitting the data called for by the Resolution Professional, the Applicant filed this Application making various allegations against the Resolution Professional in particular and the CIRP in general - whether the claim put forward by the applicant before the R.P can be entertained by the R.P in view of the facts and reasons stated in the application and the counter filed by the Respondent? - HELD THAT:- On verification of records, it is seen that the applicant claimed that his salary was raised from ₹ 1,05,000/- per month to ₹ 12,05,000/- per month with effect from 01st April, 2016. However, from the records produced by the applicant, it is not clear as to revision of salary and that the ledger do not say that how much amount every month credited to his salary account being the salary for every month. In order to consider and settle the claim of the applicant, the Resolution Professional on 02.11.2020 sent a letter to the applicant - Since the Resolution Professional (R.P) had already received Resolution Plan from the prospective Resolution Applicant and the same is under consideration of the Committee of Creditors; the applicant is directed to submit all the documents requested for by the Resolution Professional through his letter dated 02.11.2020, without fail, in any case within two weeks from today. If the applicant produces the documents sought for by the R.P within two weeks, the R.P is directed to explore all possibilities to settle the claim of the applicant and give a reply to the applicant before finalisation of the Resolution Plan.
Application disposed off.
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2021 (2) TMI 879
CIRP - Relating parties - right of representation, participation and voting at the meetings of the Committee of Creditors of the Corporate Debtor - whether the “related party” status of the Respondent No.2 has to be seen on the commencement date of insolvency process or from the date of initiating CIRP? - Sec.5(24) and 5(24A) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is also pertinent to consider that as per Section 5 (12) the CIRP commencement date is to be taken from the date of admission of the application. It is true that Respondent No.2 had resigned from the position as a Director of the Corporate Debtor on 15.11.2019, that is after initiation of an application for CIRP. However, at that moment it cannot be said that the application will be admitted or rejected. So, this argument regarding eligibility as on the CIRP commencement cannot hold water. In this case, the Respondent No. 2 is participating in the CoC as a Financial Creditor with 45.60 voting percent along with his family members after resigning from the Directorship of the Corporate Debtor. The Respondent No. 2 herein is a Financial Creditor who is exercising its rights after stepping into the shoes of the creditors. Hence, saying that a creditor cannot be included in CoC, merely because the creditor was a related party of the Corporate Debtor before the commencement of CIRP, would be impractical and will prejudice the rights of the Financial Creditor.
The matrix to decide whether the Respondent No. 2 is a related party of the Corporate Debtor or not is that what is the position or status of Respondent No.2 as on the date when it stepped into the shoes of the creditor or when he was made a part of CoC. As on the date of it becoming a part of the CoC, Respondent No. 2 was purely a Financial Creditor of the Corporate Debtor and hence, it cannot be said that because he was a related party of the Corporate Debtor prior to becoming a CoC member, Respondent No.2 is still a related party and cannot be a part of CoC. Since the Respondent No. 2 is a Financial Creditor of the Corporate Debtor and Respondent Nos.3 to 5 are his wife and Children, there is no illegality in constitution of CoC with Respondent Nos. 2 to 5. Hence Respondent Nos.3 to 5 will not come under the purview “related party”.
Application dismissed.
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2021 (2) TMI 878
Liquidation Order - section 33 (2) of the Insolvency and Bankruptcy Code, 2016 - Prescribed period for filing application - Appointment of Liquidator - Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016)
Prescribed period for filing application - HELD THAT:- In the present case, the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted on 22-1-2020 and the present application is filed by the Resolution Professional on 19-8-2020. The period of 180 days were completing on 19-7-2020 but as per Notification No. IBBI/2020-21/GN/REG059 dated 20-4-2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after excluding the lockdown period, the present application is filed within the prescribed period.
Appointment of Liquidator - HELD THAT:- Section 34 (1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent act as the Liquidator for the purpose of liquidation - The Law Researcher of this Tribunal has checked the credentials of proposed Liquidator and nothing adverse has been found on record. Therefore, Mr. Amarnath is appointed as the Liquidator.
Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - HELD THAT:- The COC has not made compliance of Regulation 39B of the CIRP Regulations, 2016 regarding meeting of liquidation costs. The Liquidator is, therefore, directed to take necessary action under Regulation 2A of the CIRP (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs.
Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - HELD THAT:- The COC has not made any recommendation regarding sale of the corporate debtor as a going concern. Therefore, the Liquidator is directed to refer to Regulation 32A of the CIRP (Liquidation Process) Regulation, 2016 and take necessary action.
Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT:- In the 4th meeting of COC, it has been resolved that liquidation fee will be paid to the Liquidator as ₹ 3,00,000/- on lump sum basis for six months.
In view of the satisfaction of the conditions provided under section 33(2) of the Code, the corporate debtor Karan Processors Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code - That as per section 33(5) of the Code and subject to section 52 of the Code, no suit or other legal proceedings shall be instituted against the corporate debtor.
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2021 (2) TMI 876
Seeking permission to contest the case before the Adjudicating authority, since, earlier, the appeal was dismissed as withdrawn - grievance of the Applicant/Appellant is that the Applicant/Appellant had approached the Adjudicating Authority in a bona-fide manner as an 'Operational Creditor' and in the absence of liberty, by Tribunal, the Applicant/Appellant will be barred by limitation to approach the Hon'ble Adjudication Authority under section 7 of the I&B Code, which in turn will cause grave prejudice to it - HELD THAT:- This Tribunal, after going through the withdrawal order dated 18-2-2020 passed in the instant Appeal is of the considered view that Applicant/Appellant was permitted to withdraw the present Company Appeal (AT) (Insolvency) No. 746 of 2019 and the same was dismissed as 'withdrawn' but without costs.
This Tribunal makes it abundantly clear that it is open to the respective parties to raise all factual and legal pleas before the 'Competent Authority'/'Adjudicating Authority' when the necessary 'Application seeking appropriate relief is filed by the concerned party and further that said 'Authority' shall determine the said 'Application' on merits, of course, after providing due opportunities to the contesting parties to air their the views, by adhering to the 'Principles of Natural Justice' - Application disposed off.
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2021 (2) TMI 875
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - existence of is debt and dispute or not - HELD THAT:- On a careful perusal of the documents it is noticed that there were two work orders given to the Operational Creditor by the Corporate Debtor as sub-contract, i.e. HVAC works was given by way of Work Order MMC/COGS/378 dated 17.10.2018 for a total consideration of ₹ 7,62,71,187 and electrification work for the same project was also given to the Operational Creditor by way of Work Order MMC/CO/GS/379 dated 26.10.2018 for a total consideration of ₹ 5,53,50,852. It appears from the record that the time period for completion for work was for a period of 11 months i.e. from 01.01.2019 to 30.11.2019. The Corporate Debtor also admit that the work order was provided to the Operational Creditor - It is reiterated that testing. commissioning. providing guarantee/warranty cards arise only at the final stage when handing over is done. The reliance on clause 46 of the work order is also blatantly Wrong as same comes into effect only at the final stage of testing, commissioning and handing over. It in denied that the Operational Creditor did not supply materials of the approved make and that defective materials were supplied. It is nothing more than an unsubstantiated contention taken after receiving the entire amount from the principal contractor.”
In respect of the definition of “dispute”, the law is now very much settled by several courts, most importantly the decision of the Hon’ble Supreme Court in Mobilox (supra) in which it is clearly observed that the Adjudicating Authority is to examine at the stage of admission whether there is a plausible contention which requires further investigation and on assertion of fact a dispute is supported by evidence. The expression used in Section 8(2) of the Insolvency & Bankruptcy Code “existence of a dispute, if any” is very significant, because the Legislature is deemed not to waste its words or to say anything in vain, hence every word is significant - A view has also been expressed that the definition of ‘dispute’ as per Section 5 of Insolvency & Bankruptcy Code is illustrative and not exhaustive. It is held that a ‘dispute’ must not be spurious, hypothetical or illusory, quoted verbatim “So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application”. This Tribunal is also expected to see whether there is a plausible contention of dispute and not a feeble argument. Therefore, all that this Tribunal is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence.
Finally, a conclusion is hereby drawn that this is not a case where the impugned Debt and the alleged default was free from existence of plausible dispute or merely a feeble argument; but duly supported by corroborative evidences. Therefore, it cannot be proceeded under the Insolvency Code so as to commence CIRP by declaring the Debtor insolvent or bankrupt. It is worth to put on record that the scope and jurisdiction of this Tribunal is limited and also confined to the provisions of Insolvency Code while dealing with application filed under Section 9. Therefore, the impugned debt in question does not fall within those ambits. However, the claim under any other law, if permissible, can be pursued by the applicant as prescribed under that law. Any observation, legal or factual, shall not prejudice the rights of the applicant, if to be exercised under any other law.
Application dismissed.
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2021 (2) TMI 873
Professional Misconduct - Validity of accepting the assignment as the Liquidator in the Corporate Insolvency Resolution Process (CIRP) of M/s The Jeypore Sugar Company Limited (CD) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) from his IPA - Regulation 7A of IP regulations - HELD THAT:- It is clear from the said Regulation that one of the essential condition for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake any assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019 - The bye-laws of Indian Institute of Insolvency Professionals of ICAI defines in para 4(1)(aa) the expression "authorisation for assignment" as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made by the IPs to the IPA under para 12A of said bye-laws. An IP who is more than seventy years of age is ineligible to make an application for AFA under para 12A (2)(e) of the said bye-laws.
In the present matter it is observed that, Mr. Sivakumar was appointed as Liquidator of the CD vide order of the AA dated 29th May, 2020. The date of Public Announcement of the Liquidation is 29th May, 2020. The notification published on 23rd July, 2019, inter alia, amended the IP Regulations and holding of AFA has been made one of the essentials for conducting various processes under the Code, to be effective from 1st January, 2020. Thus, adequate time was given to the Insolvency Professionals to obtain AFA. The DC notes that Mr. Sivakumar did not hold valid AFA even after more than four months from the date of enforcement of the provisions. The submission of Mr. Sivakumar that liquidation of the CD is not a new assignment is not tenable as the order for liquidation is separately passed under section 33 of the Code and liquidator is appointed subject to his consent as per section 34 of the Code. The CIRP and Liquidation process are entirely separate and require separate consent from the Insolvency Professionals - The DC finds that an order has been passed against Mr. Sivakumar on 1st December, 2020 by the Disciplinary Committee of IPA for accepting assignment as Liquidator after 31st December, 2019 without holding a valid AFA in the CIRP of the CD and it has been decided that Mr. Sivakumar is guilty of Professional Misconduct and a penalty of ₹ 10,000/- has been imposed.
In view of the fact that the Disciplinary Committee of the Indian Institute of Insolvency Professional of ICAI has already passed order in this matter, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction - SCN disposed off.
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2021 (2) TMI 872
Professional misconduct - Validity of accepting the assignment as the Interim Resolution Professional (IRP) in the Corporate Insolvency Resolution Process (CIRP) of MLP Developers & Promoters Private Limited after 31st December 2019 without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA - Regulation 7A of IP regulations - HELD THAT:- It is clear from Regulation 7A that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye-laws of Indian Institute of Insolvency Professionals of ICAI defines in para 4(1)(aa) the expression "authorisation for assignment" means an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws. An application for grant of AFA can be made to the IPA under para 12A of said bye-laws.
The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP/Liquidator during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP Regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with mala fide or with negligence - In the present matter it is observed that, Mr. Sawhney had provided his consent to accept the assignment in Form-2 on 5-4-2019 prior to the amendment made to IP regulation for acceptance of assignment in matter CIRP of MLP Developers & Promoters Private Limited before 31-12-2020. However, it is observed that the date of commencement of the CIRP is 27-1-2020.
In view of the fact that the Indian Institute of Insolvency Professionals of ICAI has already taken disciplinary action against Mr. Sawhney, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction against Mr. Romesh Chander Sawhney - SCN disposed off.
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2021 (2) TMI 871
Professional misconduct - Validity of the assignment as the Liquidator in Liquidation process of M/s. Bansal Refineries (P.) Ltd. (CD) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) from his IPA - Regulation 7A of IP regulations - HELD THAT:- It is clear from the said Regulation that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye laws of ICSI Institute of Insolvency Professionals defines in para 4(1)(aa) the expression "Authorisation for Assignment" as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made to the IPA under para 12A of said Bye laws.
The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with malafide or with negligence - In the present matter, the CoC took a decision to liquidate the CD on 19th December, 2019 and thereafter, Mr. Sircar filed his written consent to act as Liquidator on 2nd January, 2020. The application for liquidation was considered by the AA and order for liquidation was passed on 17th January, 2020. The consent to act as a Liquidator has been given by Mr. Sircar on 2nd January, 2020 which is after 31st December, 2019. The DC notes that Mr. Sircar did not hold a valid AFA either on the date of consent to act as liquidator i.e. 2nd January, 2020 or on the date of passing of liquidation order i.e. 17th January, 2020. This is in violation of the provisions of regulation 7A of the IP Regulations.
In view of the fact that ICSI Institute of Insolvency Professionals has already taken disciplinary action against the IP, Mr. Pinaki Sircar for accepting assignment as Liquidator after 31st December, 2019 without holding a valid AFA in the matter of M/s. Bansal Refineries (P.) Ltd., the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction against Mr. Pinaki Sircar.
SCN disposed off.
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2021 (2) TMI 840
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is clearly established that the default in payment of the Operational debt has occurred by the corporate debtor. Though the corporate debtor has raised dispute with regards the payments of invoices on grounds of substandard quality of goods but has not placed on record any document which proves the pre-existing dispute between the parties. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. This leaves no doubt that the default has occurred for the payment of the operational debt to the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute as laid down in Mobilox Innovative Private Limited vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT].
The present application is complete and the Applicant has established its claim which is payable and due by the corporate debtor - Application admitted - moratorium declared.
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2021 (2) TMI 839
Recalling of approved Resolution Plan - Whether a Resolution Plan approved by the Adjudicating Authority can be recalled and an order of Liquidation be passed? - HELD THAT:- In the matter “Committee of Creditors of Educomp Solutions Ltd. vs. Ebix Singapore Pte. Ltd. & Anr.” [2020 (8) TMI 338 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], it was held that this Tribunal cannot exercise its powers under Section 60(5) of I&B Code and recall its own orders, as there is a provision of Appeal in such matters.
The plea raised by the applicant in IA/IBC/16/KOB/2021 to get back the EMD amount of ₹ 25,00,000/- also cannot be entertained at this stage because after approval of the Resolution Plan by this Tribunal, a Resolution Applicant cannot come forward and state that due to their ignorance about the provisions regarding ‘Asset Reconstruction Companies’ they are withdrawing the Resolution Plan, as the Resolution Applicant should have examined all the provisions/ rules before submitting a Resolution Plan and depositing the E.M.D. As per Regulation 36B (4A) of IBBI (Insolvency Resolution Process for Corporate persons) Regulations, 2016, the Request For Resolution Plans (RFRP) shall require the Resolution Applicant (if the resolution plan is approved under Sub-Section (4) of Section 30), to provide a performance security within the time specified therein and such performance security shall stand forfeited if the Resolution Applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule.
Thus, it is clear that when a Resolution Plan is admitted, in case the party withdraws its Resolution Plan by not remitting the requisite amount, surely the EMD amount paid will be forfeited as per the aforesaid provisions in the IBBI Regulations. Hence, this Tribunal cannot direct the Resolution Professional to refund the EMD of the Resolution Applicant - Since the Resolution Applicant has withdrawn the Resolution Plan for the reasons stated in their request for withdrawal of Resolution Plan and that the EMD amount is still available with the Resolution Professional, it is a matter for the parties to approach the appropriate forum seeking directions as per the IBBI Regulations.
This Tribunal cannot either order liquidation or to direct the refund of the EMD, as this Tribunal has become functus officio after approval of a Resolution Plan with the consent of both the parties - Application dismissed.
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2021 (2) TMI 832
Seeking extension of CIRP period by 90 days more beyond 180 days after excluding the lockdown period - Section 12 read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Hon'ble National Company Law Appellate Tribunal in Suo Moto-Company Appeal [2020 (6) TMI 495 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for 'Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where 'Corporate Insolvency Resolution Process' has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal.
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 held that 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 and the said regulation reads as 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 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, instant application is allowed and the period of CIRP extended by 90 days more, beyond 180 days after excluding the period from 25.03.2020 to 31.07.2020 - application allowed.
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2021 (2) TMI 824
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - whether there is any ‘Existence of a Dispute’, and whether the Appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence and whether the Dispute is ‘Pre-Existing’?
HELD THAT:- It is clear that the existence of ‘Dispute’ must be ‘pre-existing’ i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the ‘operational debt’ is exceeding rupees one lakh and the Application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of any existence of a ‘Dispute’ between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid ‘operational debt’, the Application under Section 9 cannot be rejected and is required to be admitted.
This Tribunal without going into the merits of the ‘Dispute’ holds that the documentary evidence furnished with the Application read with the email communication shows that the debt is ‘due and payable’ and has not been paid and there is no plausible contention which requires further investigation and that the ‘Dispute’ raised is only a patently feeble argument unsupported by evidence. Hence, this Tribunal is of the considered view that the ratio of the Hon’ble Supreme Court in M/s. Mobilox Innovations Pvt. Ltd., [2017 (9) TMI 1270 - SUPREME COURT] squarely applies to the facts of this case as the Hon’ble Apex Court has laid down that the ‘Dispute’, if any, should be ‘Pre-Existing’ and also that it cannot be a feeble argument. Merely contending that accounts were not reconciled for almost a year in our considered opinion, can be construed as a ‘feeble and spurious argument’.
A perusal of the contents of the reply to the Demand Notice, this Tribunal is unable to find any ‘Dispute’. It is seen from the record that at the earliest point of time, the Corporate Debtor did not raise any dispute that existed between the parties. For all the reasons assigned in this instant Appeal, we do not find any illegality or infirmity in the Order passed by the Learned Adjudicating Authority warranting our interference - Appeal dismissed.
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2021 (2) TMI 823
Initiation of CIRP - consent decree / Decree Holder - whether decree comes under the definition of Corporate Debt or not - Corporate Debtor failed to make repayment of its dues - existence of debt or not - Operational Creditor - capacity as a ‘person’ who is a proprietor of a firm is an ‘Individual’ - HELD THAT:- In the instant case, the Appellant/Petitioner has come out with a plea that the Respondent/Corporate Debtor had admitted to pay a sum of ₹ 7,50,000/- towards the Principal sum in respect of goods received by the Respondent/Corporate Debtor, as per ‘Settlement Agreement’ dated 16.8.2018 etc. Furthermore, ₹ 1,35,000/- towards ‘Penalty’ of ₹ 5,000/- per instalment per month as per ‘Undertaking’ given by the Respondent/Corporate Debtor and the same was recorded by the Learned Additional District Judge, Saket Court, New Delhi in Civil Suit No.6912 of 2016 in the case of Ashok Agarwal v. Amitex Polymers Pvt.Ltd.(Respondent/Corporrate Debtor) and Another. Therefore the total dues claimed by the Appellant/Operational Creditor as per ‘Consent Decree’ passed by the Competent Court of law is ₹ 8,85,000/- as seen from Part IV of Application wherein the “Particulars of Operational Debt’ were mentioned - Even a ‘person’ who is a proprietor of a firm is an ‘Individual’ as per Section 3(23) inclusive definition of The Insolvency and Bankruptcy Code 2016, in the considered opinion of this Court. As such, the Appellant is not incompetent in his ‘Individual’ capacity as proprietor of M/s Shree Marketing, New Delhi.
The Principal Bench had come out with a plea that the Respondent/Corporate Debtor owes a sum of ₹ 8,85,000/- and for which a demand notice dated 11.3.2019 was issued to the Respondent/Corporate Debtor for which no reply was issued by the Respondent/Corporate Debtor to the Appellant/Operational Creditor and this Tribunal taking note of the prime fact that the Appellant/Operational Creditor is a ‘Decree Holder’ as per the ‘Consent Decree’ passed on 25.10.2018 in Civil Suit No.6912 of 2016 by the Learned Additional District Judge, Saket Court, New Delhi, this Court comes to an irresistible and inescapable conclusion that a ‘Decree Holder’ is no way excluded from the purview of the ambit of the term ‘Operational Creditor’ as per Section 5(20) of The Insolvency and Bankruptcy Code 2016 and the contra view taken by the ‘Adjudicating Authority’ in the impugned order is clearly held by this Tribunal as an unsustainable one in the eye of Law - In the present case, the Appellant/Operational Creditor supplied the goods based on invoices beginning from 19.2.2011 to 26.3.2011 amounting in all to a sum of ₹ 7,28,072/- and in due discharge of legal liability/lawful debt towards payment of dues/Invoices by the Respondent/Corporate Debtor had paid a sum of ₹ 1,10,221/- as mentioned by the Appellant/Operational Creditor in the Application in Part IV under caption of ‘Particulars of Operational Debt’.
The other aspect of the matter to be significantly pointed out is that the Respondent/Corporate Debtor through its purchase orders had offered to make payment to the Appellant/Corporate Debtor within a period of 45- 60 days and in fact the payment was agreed to be made within 30 days from the date of Invoice. As a matter of fact, the Respondent/Corporate Debtor had not made any payment in respect of the due amount even after the ‘Consent Decree’ passed by the Competent Court of law.
Section 3(10) of The Insolvency and Bankruptcy Code 2016 defines ‘Creditor’ and even in the said definition a ‘Decree Holder’ cannot be excluded to file an Application under the Code. Going by the definition 3(10) of ‘Creditor’, it includes ‘Financial Creditor’, ‘Operational Creditor’.
The impugned order passed by the National Company Law Tribunal, New Delhi Bench is set aside by this Tribunal for the reasons assigned in the instant Appeal - Appeal allowed.
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2021 (2) TMI 788
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Business Transfer Agreement entered into between the parties - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Under the provisions of this Agreement, it was the obligation of the Respondent to make payment of all liabilities towards the retiral benefits of the employees and the Respondent has failed to perform this liability. Therefore, the Petitioner was compelled to discharge its liability on behalf of the Respondent and therefore, payment was made by the Petitioner to these parties on behalf of the Respondent. After making these payments, the Petitioner demanded these amounts from the Respondent and the Respondent even failed to make payment of these amounts. Also, when demanded by the petitioner, the Respondent has admitted its liability and still failed to make any payment to the Petitioner. Therefore, it is crystal clear that there is debt and default on the part of the Respondent.
‘Operational Creditor’ or not - HELD THAT:- In this matter, the claims pertain to supply of goods and services by third parties and also pertains to the employees’ dues. Therefore, the same fall within the meaning of the term “Operational Debt” as defined under the Code. As per the terms of the Business Transfer Agreement, the Respondent was legally under a duty to pay various employees and suppliers of goods and services of which the payment was made by the Petitioner. Therefore, the debt is now transferred and is due and payable to the Petitioner by the Respondent - there remains no doubt that the debt is due and payable and also that the same is admitted by the Respondent itself. It is only now that the Respondent has come with certain defenses and an attempt to show that there is a dispute between the parties. It is observed that this is attempt is nothing but an afterthought and thus, we find no merit in the case of the Respondent. For these reasons, it is a case fit case for admission.
Also, the documents submitted by the Petitioner are enough to establish the debt upon the Respondent and hence the defenses made by it cannot be relied. Also, they defaulted in repaying the debt which they themselves have admitted. Also, the amount of debt is much above the minimum required amount of ₹ 1,00,000/-. The debt is also within limitation. The Petitioner has also filed the consent of the proposed Interim Resolution Professional by way of Form-2. Hence, the petition is complete in all respects and fulfills the requisite conditions for admission of a petition under Section 9.
Application admitted - moratorium declared.
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2021 (2) TMI 787
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Whether the amount claimed by the applicant falls under the definition of Financial Debt or not? - HELD THAT:- The Petitioner has failed to produce on record any document to show that the amount which is actually given to the Corporate Debtor for interest i.e. loan disbursed against the time value of money.
From the careful perusal of the definition of Financial Debt, makes it clear that a debt will not become financial debt if it was not advanced for time value money. The letter dated 03.04.2016 at annexure ‘D’ and the various balance sheets relied upon by the Petitioner makes it abundantly clear that there is no interest payable on the loan advanced by the Petitioner. Apart from the above, no time is fixed for repayment in the absence of which it cannot be said that the loan was lent for time value money. Thus, there should be no hesitation in holding that the above amount claimed in the above Petition does not fall under the definition of financial debt and the above Company Petition is liable to be dismissed.
Petition dismissed.
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2021 (2) TMI 785
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - existence of debt and dispute or not - HELD THAT:- Ample opportunity was given to the Corporate Debtor to file its reply. Not only the Corporate Debtor failed to file a reply but also failed to make representation before this Bench. Therefore, the Corporate Debtor was set ex-parte vide an order of this Bench dated 05.12.2019. Later the constitution of the Bench was changed and the Corporate Debtor again was given an opportunity to be present before this Bench and make representation if any on their behalf and the corporate debtor did not chose to appear. Heard the counsel appearing for the Financial Creditor and perused the documents submitted by him. The counsel for the Financial Creditor successfully demonstrated and proved the existence of debt and default. Financial Creditor also mentioned the name Mr. Mukesh Kumar Gupta as IRP and enclosed the consent letter given by the proposed IRP in Form-2. The debt is within limitation. Thus, the Company Petition satisfies all the requirements for admission. Since the Corporate Debtor remained ex-parte even without filing any reply, the claim of the applicant remained unchallenged.
The initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against Shakti Motors Automobiles Private Limited. - petition allowed.
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2021 (2) TMI 775
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has produced all invoices, delivery challans under the case were sold and supplied to the Corporate Debtor. He has also produced a copy of demand notice under Section 8 of the LB. Code and postal tracking record shows that the notice was delivered to the Corporate Debtor - The Operational Creditor also produced on record the affidavit of compliance of provision under Section 9(3)(b) and 9(3)(c) of the LB. Code.
The application is defect free. In spite of notice, no one appeared on behalf of the Corporate Debtor. The notice was also published in local newspapers. The Corporate Debtor did not give any response. From the evidence, it is clear that the amount of debt ₹ 25,25,672/- is due and payable to the Operational Creditor - Application deserves to be admitted.
Application admitted - moratorium declared.
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2021 (2) TMI 724
Recovery of disputed outstanding amount - default period is varying from over 200 days to approximately 500 days - allegation is of manipulation of accounts department - HELD THAT:- Keeping in mind the provisions of law laid down in the Code and the Hon’ble Apex Court Judgment which has made the provisions of applicability of the Code amply clear as far as initiation of proceedings by Operational Creditor against the Corporate Debtor is concerned, we are very much clear that the following facts are proved beyond doubt which has been complied with in accordance with the Hon’ble Apex Court Judgments and provisions of the Code. The debt became “due” from July 2018, the question is whether it became “payable” by the Corporate Debtor under the law, the answer is in “negative” because there were quality & other issues raised by the Corporate Debtor. The Operational Creditor has issued a Demand Notice dated 18.11.2019 received on 06.12.2019 by the Corporate Debtor and within the stipulated period, the Corporate Debtor vide its letter dated 09.12.2019 has replied and proved beyond doubt that there is an existence of dispute particular the cracks in the projects sites, reduced quality of goods supplied, short supply of concrete multiple snags in windows and doors etc & also raising issue to initiate arbitration proceedings for excess sum of over ₹ 9.51 Crore paid to the Appellant etc. This meets the criteria of genuine dispute raised within stipulated period. Accordingly, under Section 9(5)(ii)(d) Application needs to be rejected. The provision of the Code cannot be invoked for recovery of outstanding amount as well as it cannot be misused to drop the curtain on a healthy organization. The Objective of the Code is to consolidate and amend the laws relating to reorganization and Insolvency Resolution of Corporate Persons. Using the platform of the Code, threatening the vendor to release even disputed amount is not fair and equitable.
There are no merit in the appeal and the Adjudicating Authority has rightly rejected the Application under Section 9 of the Code. The Appeal deserves to be dismissed and hence dismissed.
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