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Insolvency and Bankruptcy - Case Laws
Showing 1 to 20 of 177 Records
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2021 (5) TMI 1058 - SC ORDER
Approval of Resolution Plan - sub-section(1) of Section 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The resolution plan was approved by the Committee of Creditors in their commercial wisdom. The resolution plan has been approved by the NCLT in terms of the above directions (save and except for a minor aspect pertaining to the security expenses of West Bengal Industrial Development Corporation, on which there is no cavil or contest on either side). No substantial question of law has been raised by the appellant.
The appeal is accordingly dismissed.
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2021 (5) TMI 1048 - DELHI HIGH COURT
CIRP proceedings - Petitioner is a Doctor by profession and was a Director in the Company - Counsel for the Petitioner submits that independent of the NCLT proceedings, the petitioner is offering the hospital facility to Respondent No.1 and is ready and willing to deposit Rs.15 Lakhs as an initial contribution as also Rs.4 Lakhs p.m. for running the hospital.
HELD THAT:- we hereby direct Respondent No.1 to take a decision with respect to the aforesaid offer of the Petitioner, subject to the undertaking given by him with regard to the contribution of funds and the control over the running of the hospital and also looking to the reply affidavit of Respondent No. 3 file in this petition.
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2021 (5) TMI 1047 - NATIONAL COMPANY LAW TRIBUNAL PRINCIPAL BENCH, NEW DELHI
Maintainability of petition - initiation of CIRP - Corporate Debtor defaulted in repaying the Arbitral Award and due license fee - Financial Creditors - existence of debt and dispute or not - HELD THAT:- In the present case, the Applicant has submitted that the award was passed on 10.07.2019 and the same becoming enforceable on expiry of a period of 90 days thereafter and since the Corporate Debtor has failed to make the payment in terms of award, has committed default in terms of Section 7 of Insolvency and Bankruptcy Code, 2016. Further, it must be noted that the arbitral award was passed on the basis of rental agreement dated 17.08.2005 and subsequently on 03.07.2006 in pursuance of which a Plot No. B-481 situated at Industrial Area, Bhiwadi, Rajasthan admeasuring 8444 sq. mts consisting of building and vacant land was given to Corporate Debtor for its business purpose. The basic nature of transaction is not covered under financial debt. Rental lease agreement can be operational debt but not financial debt. In any case, the transactions which transpired between the parties does not partake the character of a ‘Financial debt’ and as such the Applicant does not qualify to be a Financial Creditor in relation to the Corporate Debtor.
The instant Application is liable to be dismissed and accordingly stands Dismissed.
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2021 (5) TMI 1045 - NATIONAL COMPANY LAW TRIBUNAL BENGALURU
Approval of Resolution Plan - HELD THAT:- In view of these multiple IAs emanating from the RP's actions while conducting the CIRP, seeking inclusion of their claims or consideration of their Resolution Plan by the CoC, and thus seeking to reject the Resolution Plan submitted in IA 161 of 2020, we have prima facie reason to believe that the process followed by the RP during the CIRP neither takes into account the interest of all the creditors / stake holders, nor seeks to maximise value of the assets of the CD by considering all possible Resolutions Plans, even though these are the twin objects of the CIRP - the manner in which the CIRP has been conducted is not satisfying.
Whether under the facts and circumstances of the case, the liability of the Corporate Debtor to the Applicant State Govt. would amount to a Financial Debt? - HELD THAT:- The Respondent's argument that no actual money was disbursed for the time value of money and that there was no financial debt has to be rejected and the said transaction has to be considered as 'Financial Debt' under Section 5(8) of the Code.
When the audited books of accounts of the Corporate Debtor were available for the concerned years and reflected the financial debt under consideration, and in view of the clear provisions of the Code and the Regulations, the RP was duty bound to determine the financial position of the CD, verify the credits in the name of the Creditor from the books of accounts and put up the same before the CoC, with the complete factual and legal position, rather than reject it behind its back.
Whether the financial creditor is eligible to have its claim considered, if not presented or submitted within the period stipulated under Regulation 12(2) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016? - HELD THAT:- In accordance with the provisions of section 60(5)(c) of I&B code read with Rule 11 of NCLT Rules 2016 this Adjudicating Authority passes the following orders and directs the Resolution Professional as under:
(1) IA 85 of 2021 C.P. (IB) No. 51/BB/2018 is disposed of with the directions that the claim filed by the Applicant, the State of Karnataka, Department of Industries & Commerce as a Financial Creditor, in Form C, shall be put up by the RP to the CoC for its consideration/acceptance, in the light of our findings and decision in the foregoing paragraphs. Reconstitution of the CoC will also be considered by the RP.
(2) IA227 of 2020 C.P. (IB) No. 51/BB/2018 is disposed of with the directions that the Resolution Plan submitted by Swamitva Landmark, Shankeshwar Landmarks LLP and Shankeshwar Landmarks, shall be placed before the CoC along with the Resolution Plan filed by METL and submitted for our approval in IA 161, for the CoC's evaluation and approval, strictly keeping in mind the objects of the Code, and superior commercial viability. The Resolution Plan approved out of the two by the CoC shall be submitted to us for our consideration and approval.
(3) IA 248 r/w IA 225 C.P. (IB) No. 51/BB/2018 is disposed as infructuous as IA 225 has already been disposed of. However, the issues raised by the erstwhile Promoters shall be kept in view by the RP so as to attain the objects of the Code.
(4) IA 134 of 2020 is disposed with directions to the Commercial Taxes Dept. to place before the RP only ascertained, crystallised demand that may have arisen from a regular assessment for the period under consideration. The RP shall place the same before the CoC/reconstituted CoC, for its consideration.
(5) IA 161 of 2020 is deemed to be disposed of and restored to the RP, for being re-considered by the CoC along with the Resolution Plan submitted by Swamitva Landmark, Shankeshwar Landmarks LLP and Shankeshwar Landmarks.
(6) The directions at sl. nos. 1), 2) and 4) shall be carried out within a period of 12 weeks from the receipt/uploading of this order. This period is considered appropriate considering the present Covid 19 pandemic situation and the ensuing lockdown in several states. The RP is granted liberty to bring an Application before this Adjudicating Authority for any further exclusion of time, if the same is for exceptional and justifiable reasons, and in the interest of completing the process and achieving the objects of the Code.
Application disposed off.
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2021 (5) TMI 1040 - NATIONAL COMPANY LAW TRIBUNAL KOLKATA
Direction to disburse payment of dues of workers and employees of the Company working at the Dharwad Plant of the company in Karnataka in a regular and timely manner - restraint on respondent/Liquidator by an order of injunction from taking any coercive steps for closing the operations of the company's plant at Dharwad, Karnataka - restraint on respondent/Liquidator by an order of injunction from terminating, or taking any decision to terminate, the agreement between the company and Jeju Metals Private Limited - appointment of competent and independent agency to investigate the manner in which the respondent/Liquidator has been conducting his affairs as such Liquidator.
HELD THAT:- A contractual agreement between two corporate entities such as the Corporate Debtor and JMPL cannot be considered to be skewed in favour of any one party. It has necessarily to be treated as a contract between equals, and therefore, unless the contrary is proved, entered into without any undue influence, coercion, fraud or any other such element which would have vitiated the agreement. The parties to the contract, in such circumstances, should normally be held to their bargain - If JMPL thought that the termination of the contract was wrong, it has all the resources and the legal framework to challenge the same. The fact remains that this has not been done so far. An inference should, therefore, be drawn that JMPL was not aggrieved in any manner by the termination of the contract.
Direction sought upon the liquidator to pay the dues of the workers and employees working at the Dharwad plant of the Company in a regular and timely manner - HELD THAT:- The liquidator has taken the decision to terminate the contract on 15.07.2020 from a commercial perspective, where the payments for April 2020 came to be paid in tranches till July 2020. The liquidator was not sure whether the payments for May, June and July 2020 would at all come, and therefore came to the conclusion to terminate the contract so that he could explore other options - it is a matter of conjecture whether JMPL would have come as the knight in shining armour to save the workers. Considering that no payments have come forth from JMPL after the termination of the contract, we are not too sure that this could have happened.
Direction to restrain the liquidator from taking any coercive decision for closing down the operations of the Company's Dharwad plant - HELD THAT:- The prayer cannot be granted. It is for the Liquidator to take a call on whether to close down the operations of the Dharwad plant of the Company, as indeed for other units of the Corporate Debtor. In the order dated 11.01.2018, this Adjudicating Authority had specifically ordered the liquidator to try and dispose of the corporate debtor as a going concern within a maximum period of three months. For various reasons, this has not been possible for the liquidator.
Appointment of competent and independent agency to investigate the manner in which the liquidator has been conducting his affairs as such liquidator, was not seriously argued by the learned counsel for the applicants - HELD THAT:- In the absence of any allegation of fraud or bias in the decisions of the liquidator, we cannot order a roving inquiry just on the basis of perceived loss of employment of the workers on account of a business decision taken by the liquidator to terminate the arrangement with JMPL. To hold otherwise will set a wrong precedent, and insolvency professionals shall not be able to take independent decisions, leading to a failure of the system. Such an approach should, therefore, be shunned. Actions taken in good faith by a public servant always enjoy protection under the law, and the IBC is no different, providing for the same under section 233 of the Code.
Application dismissed.
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2021 (5) TMI 1027 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI
Seeking withdrawal of application which was filed for initiation of CIRP against Corporate Debtor - Section 12A of the Insolvency and Bankruptcy Code 2016 read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- List the matter on 17th May 2021 for hearing. During this period, no COC meeting would be held by the IRP.All the parties are requested to file a short synopsis on or before 16th May 2021. Mr. Dutta is also at liberty to file a short synopsis on behalf of allottees.
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2021 (5) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Maintainability of appeal - material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period - Section 61(3)(ii) of IBC - HELD THAT:- Learned Counsel for the Appellants has failed to point out that there is any material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period. The Promoters are failed to comply their one-time settlement proposal till 31st December, 2019.
Appeal dismissed.
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2021 (5) TMI 1015 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Seeking withdrawal of the Corporate Insolvency Resolution Process - section 12A of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- I&B Code and CIRP Regulations provide for various activities to be completed in a time bound manner and model time lines is provided as stated above inspite of the same, the CoC had time and again directed the RP to postpone the issue of EOI and FORM G, other activities of CIRP as stated earlier. By exercising their Commercial Wisdom, they cannot be permitted to not comply with the Provisions of the I&B Code as well as Regulations framed thereunder. Neither RP, CoC has filed any IA for seeking permission of this AA in this regard thereby CoC in this case has taken Law in to its hands and not complied with applicable provisions of I&B Code and CIRP Regulations.
Further after receipt of NCLT approval for the present withdrawal application, within 60 days they would receive their outstanding amount, constituting Monitoring Committee etc is not in line the I&B Code and CIRP Regulations further there is no backup plan is provided in case of failure to meet the shortfall within the time line agreed by the parties etc, and the settlement proposal contains lot of uncertainty, future events therefore the AA is of the confirmed view that the present application filed under Section 12 A of I&B Code read with Regulation 30 A of IBBI (CIRP) Regulations, 2016 deserves no favourable consideration therefore this application is dismissed.
Application dismissed.
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2021 (5) TMI 1012 - NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD
Liquidation of Corporate Debtor - Section 33 of the IB Code - HELD THAT:- No one appeared on behalf of the Suspended management even after issuance of notice. The Suspended Management is also found absent in the said meeting held on 08.03.2021.
In view of the above situation, it is also pertinent to mention herein that recently the Hon'ble Supreme Court of India in its judgement passed in Civil Appeal No. 8766-67 of 2019 Committee of Creditors of Essar Steel India Limited through Authorised Signatory Vs. Satish Kumar Gupta & Ors. [2019 (11) TMI 731 - SUPREME COURT] has held that the commercial wisdom has been exercised by the CoC after taking into count all the factors leading to maximisation of asset value of the Corporate Debtor, but the ultimate discretion of what to pay and how to pay each class or sub-class of creditors lies with the CoC.
The Corporate Debtor is allowed to be liquidated - application allowed.
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2021 (5) TMI 1010 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - main defence of Corporate Debtor is that the Petition is barred by limitation as date of guarantee invocation was 08.12.2014 and the period of limitation expired on 08.12.2017 - extension of limitation period or not - Section 18 of Limitation Act - HELD THAT:- The Corporate Debtor has executed corporate guarantee dated 14.01.2014, 25.02.2010, 26.06.2009 wherein the Corporate debtor have agreed to undertake to pay on demand an amount of ₹ 56.70 Crores in case the borrower commits default under the facility agreement. The Principal borrower failed to repay the said amount as on 01.06.2019 amounting to ₹ 60,39,87,991.41/-. Hence, the Petitioner Company had invoked and had issued recall notice to the Principal borrower on November 14, 2014 and also invoke the proceedings under SARFAESI and invoke the guarantees on December 08, 2014 - Essentially all the financial debt u/s. 7 of IBC is complied with further, the claim of the financial creditor is recognised under the guarantee deed and therefore amounts to a debt and there has been default of non-payment of dues by the Principal borrower and thus the Petitioner has rightly invoked the guarantee deed.
In J.C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. & Anr. [2008 (1) TMI 963 - SUPREME COURT] wherein the Hon‘ble Supreme Court held that Section 18 of Limitation Act, 1963 deals with acknowledgment of writing. Sub-section 1 provides that where before the expiration of period for a suit for application in respect of any rights, an acknowledgment of liability in respect of such right has been made in writing signed by party against whom that it is claimed, a fresh period of limitation shall be computed from the time when acknowledgment was so signed. The explanation to this section was to provide that an acknowledgment may be insufficient though it omits to specify the exact nature of right or averse that the time for payment has not yet come, or is accompanied by refusal to pay or is coupled with claim to set off, or is addressed to a person other than a person entitled to a right.
It is a well settled law that a writing of acknowledgment of liability must involve an admission/ conscious affirmation and intention of the Corporate Debtor vide letter dated 27.09.2017 at para 2 had mentioned that the principal borrower Great Indian Nautanki Company Private Limited had failed to pay its dues to IDBI as a result of which IDBI has invoked the above-mentioned guarantee and called upon Wizcraft International Entertainment Private Limited to pay IDBI dues of ₹ 49.39 crores - the Corporate Debtor has sought time which amounts to admission and acknowledgment of liability and also recorded the default of non-payment of money by the Principal Borrower, thus the letter dated 27.09.2017 amounts of acknowledgment of liability in writing and period of limitation is extended from 27.09.2017 to 26.09.2020 under Article 137 of Limitation Act.
The judgment in Jignesh shah vs. Union of India [2019 (9) TMI 1121 - SUPREME COURT] correctly hold that the suit for recovery based upon cause of action it is within limitation cannot be in any manner in fact separate an independent remedy of winding up proceedings. In law, when time begins to run, it can only be extended in the manner provided the limitation act. For eg. An acknowledgment of liability u/s. 18 of Limitation Act, 1963 would extend limitation period but a suit for recovery which is independent proceedings distinct from the remedy of windings up, in no manner, in fact the limitation within which winding up proceedings is to be filed, by somehow keeping the debt alive for the purpose of winding up - the Hon‘ble Supreme Court has held that limitation can only be extended in the manner provided u/s. 18 of Limitation Act, 1963.
This Bench is of the considered opinion that the letter of the Corporate Debtor dated 27.09.2017 has amounts to acknowledgment of liability and thus extends the limitation periods u/s. 18 of Limitation Act, 1963 and thus all the ingredients of Section 7 of IBC are satisfied and the liability of Corporate Debtor being a Corporate Guarantor is established in view of the admission of liability by the Corporate Debtor vide its Letter 27.09.2017 and the Petition is within 3 years is filed and hence the Petition is admitted - moratorium declared.
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2021 (5) TMI 948 - NATIONAL COMPANY LAW TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Liquidation of Corporate Debtor - section 33(1)(a) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- No resolution plan has been called during the 180 days and extension for the for time limit of this CIRP as per section 12(2) was put before CoC for voting in the last CoC meeting. The voting as received on 12.03.2020, 66% positive vote has not been received from CoC members as mandate for it. Hence, applicant filed this application for initiation of liquidation order u/s. 33 of IBC, 2016 read with regulation 3 of the IBBI (Liquidation Process) Regulations, 2016.
This is a fit case for liquidation - Liquidation order granted - application allowed.
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2021 (5) TMI 947 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Moratorium - relevance of section 14 of the Code - Whether appointment of the Corporate Debtor as the developer of the property could be terminated during the pendency of the CIRP? - HELD THAT:- A plain reading of the salutary provision of Section 14, would indicate that on the Insolvency Commencement Date (ICD/08.05.2019), the institution of the suits or continuation of pending suits or proceedings against the Corporate Debtor before any authority or any court of law shall be prohibited.
In this case there is no dispute that the property in respect of which the development agreement was executed is not an asset of the Corporate Debtor. The Corporate Debtor only was permitted to develop it in terms of the development agreement. The fact that the Corporate Debtor was the developer in respect of the property and had undertaken certain constructions thereon in pursuance to the development agreement. This would unequivocally indicate that the property was under its occupation as on the ICD. For the purpose of this case, it would thus be sufficient to hold that on the date of Insolvency Commencement, the property was occupied by the Corporate Debtor and the Corporate Debtor was in possession thereof.
The Hon'ble Supreme Court in RAJENDRA K. BHUTTA VERSUS MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ANOTHER [2020 (3) TMI 34 - SUPREME COURT] have in clear terms delineated the extent of this Code and limits of the other Authorities in dealing with a Corporate Debtor under CIRP. The termination of the Corporate Debtor as the developer would essentially result in the property being taken out of its possession. Both of which are prohibited under Section 14(1) of the Code. Therefore, the order dated 17.07.2019 being violative of the mandatory provision cannot be held to be valid and operative in law.
The issues are answered in the negative - application allowed.
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2021 (5) TMI 946 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Directions to Respondent No. 3 to place the settlement proposals of this Applicant before Respondent No. 2 through Respondent No. 1 - section 60(5), 227 and 239(2) of the Insolvency and Bankruptcy code, 2016 - HELD THAT:- From a bare perusal of Section 12A and Regulation 30A of the CIRP Regulations, it is amply clear that for any withdrawal of an admitted application it is the Original Applicant, that must present such withdrawal application for approval of the CoC.
Once the CoC (Respondent No. 2) has approved the Resolution Plan, the Administrator of the DHFL, has to obtain no-objection from RBI in accordance with Rule 5(d) of the FSP Insolvency Rules. Apart from the same, neither the Code nor the FSP Insolvency Rules, casts any other obligation on RBI vis-à-vis the CIRP process, which is left to be run by the resolution professional along with the CoC as per its commercial wisdom. The RBI cannot intervene in the CIRP process, and the reliefs as sought for by the Applicant qua RBI seeks RBI to intervene in the CIRP process, which is completely contrary and inconsistent with the spirit of the Code and will have the effect of derailing the CIR Process. Without prejudice to the aforesaid, it is pertinent to mention herein that the Applicant is the ex-promoter of DHFL against whom various proceedings, civil and/or criminal, have been filed, alleging cheating, fraud, siphoning of funds and such other serious offences. The Applicant is presently in judicial custody and most regulatory agencies like CBI, EOW, ED etc. are at present investigating against the Applicant.
It is beyond any cavil that RBI has been unnecessarily impleaded as a party Respondent in the present Application and been dragged in such litigation. RBI cannot and ought not to intervene in the CIR Process and direct the Administrator to conduct himself in a manner which is contrary to the Code. Further, considering that the CIRP is at a very advanced stage, passing any ad-interim reliefs as sought for by the Applicant will completely derail the process and force DHFL into liquidation, which will be completely against the spirit of the Code. This being so, it is necessary in the interest of justice, equity and good conscience that the Application as against RBI be dismissed in limine and costs be imposed upon the Applicant for filing such frivolous and vexatious application against the RBI.
Hon'ble Supreme Court in its decision in the matter of Swiss Ribbon Vs. Union of India [2019 (1) TMI 1508 - SUPREME COURT], has pleased to held that Corporate Debtor may come for settlement in post admission stage before the constitution of CoC and the Adjudicating Authority may exercise its power conferred to the NCLT under rule 11 of the NCLT Rules. After constitution of the CoC an application can be entertained under the procedure of section 12A of the IB Code. Hence the present application appears to be a pre-stage process of an application under section 12A. That can be considered by this AA, if it is filed by the main petitioner in the IB Petition (RBI/Administrator) with having requisite majority of more than 90% voting of the Members of the CoC. Hence there can be no prejudice to either parties if CoC gives due consideration as per norms and in its commercial wisdom to examine feasibility of such proposal of settlement for Approx. ₹ 91,000/- Crores (Rupees Ninety-one Thousand Crores) and above. The CoC may take appropriate decision by taking in to consideration the paramount interest of the Creditors, Fixed Depositors, and Stakeholders of the Corporate Debtor involved in the present matter.
CoC ought to have considered such settlement proposal of the applicant as per norms and its commercial wisdom which we did not to have been followed by the CoC in the present matter. From the Submissions of the respondents, they treat this Settlement Proposal as a resolution plan but factually that is not case as discussed - We are conscious about our jurisdiction that this Adjudicating Authority cannot substitute its view of over the Commercial Wisdom that may be exercised by the CoC in respect of the present Applicant, however there appears to be some procedural irregularity by not considering a settlement proposal which is around 150% higher value of the Resolution Plan approved. Hence it needs due consideration and cannot be kept aside nor contention of the applicant in the present IA can be brush aside that an Ex-promoter cannot move a proposal of settlement.
This Adjudicating Authority hereby directs the Administrator to place the 2nd Settlement Proposal of the applicant Mr. Kapil Wadhawan before COC for its consideration, decision, voting and inform the outcome of the same within 10 days from today and list the matter on 31.5.2021 - Petition disposed off.
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2021 (5) TMI 944 - NATIONAL COMPANY LAW TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
CIRP proceedings - illegal transfer of IPR and business by the corporate debtor - Failure on the part of Promoter-Director Jasjit Singh Sawhney to provide information to the RP for discharging his functions during the CIRP - avoidance of preferential transactions, undervalued transactions and fraudulent and wrongful trading and diversion of the business of the Corporate Debtor.
Non-co-operation of promoter-director and his men - HELD THAT:- Initially, the Resolution Professional/the applicant sent emails dated 14.03.2019, 18.03.2019 to its promoter director (Rl-Sahweny) seeking information of the corporate debtor, to which Mr. Sawhney on 19.03.2019 replied seeking time to provide information, subsequent to it, one of the employees of the Corporate Debtor namely Mr. Sumit Gupta sent an email on 31.03.2019 along with some information. As that information was not sufficient to discharge CIRP functions, this Applicant had mailed on 02.04.2019, 15.04.2019, 16.04.2019, 23.04.2019 and 07.05.2019 requesting Mr. Sawhney and Mr. Sumit Gupta to provide information, but whereas Mr. Sumit Gupta wrote back on 13.05.2019 seeking time to provide pending documents as Mr. Sawhney was not feeling well. In this application, R1 has filed reply for the first time disclosing that the shares of Pipetel Communications Private Limited (Pipetel) and Net4 Network Services Limited (Net4 Network) held by the CD were transferred to Trak Online Net India Private Limited (Trak Online), the business of the CD was transferred to Net4 Network through Master Reseller Agreement (MSA) and Trade Marks of the CD were assigned to the promoter director Mr. Sawhney - This Bench also directed Mr. Sawhney to provide information on passing various orders 03.07.2019, 22.07.2019, 02.09.2019, 27.10.2019 and 20.12.2019, but till date no progress, except providing piece meal information, which is not enough to figure out the transactions of the Corporate Debtor.
Avoidance of preferential transactions, undervalued transactions and fraudulent and wrongful trading and diversion of the business of the Corporate Debtor - HELD THAT:- It is evident that the directors fraudulently transferred the shareholding of the Corporate Debtor in their subsidiary companies to Trak Online to take out the holding of the corporate debtor over Net4 Network so that the corporate debtor will not have any right over the business of the corporate debtor subsequently transferred to Net4 Network, that the Corporate Debtor entered into undervalued and fraudulent transactions such as execution of Assignment Agreement of trade marks in favor of its director (R1) and execution of Master Reseller Agreement in favor of Net4 Network (R2) for keeping the assets of the Corporate Debtor beyond the reach of the Creditors so as to defraud the Creditors - the declaration of assignment of trademarks in the name of R1 is declared null and void and execution of Master Reseller Agreement in favor of Net4 Network is invalid, and direct R1 to restore the trade name "Net4" to the Corporate Debtor and R2 to restore the business of the corporate debtor it has taken through Master Reseller agreement from the Corporate Debtor with immediate effect. Likewise, we hereby declare the Share Transfer Agreements reflecting transfer of Pipetel shares held by CD to Trak Online and transfer of Net4 Network shares to Trak Online as null and void.
For the transactions mentioned being declared as null and void, u/s. 66 & 67 of the Code, whatever business so far Net4 Network held from the date of alleged transfer of business shall be inspected by an auditor appointed by this Bench on the suggestion made by the RP within 15 days thereof, and the auditor shall determine the opportunity loss to the CD within 30 days from the date of his appointment. Upon approval of the said report by this Authority, the promoter director Mr. Jasjith Singh Sawhney (R1) shall pay back the loss estimated by the auditor to the CD because R1 is the person caused all these fraudulent transactions happened. R1 shall produce all relevant records within seven days from the date of receipt of request from the auditor to be appointed by this Bench.
Application disposed off.
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2021 (5) TMI 943 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI BENCH
Rejection of claim filed by the Applicant (FC and OC) before the Respondent in respect of operational debt due and payable by the Corporate Debtor, by RP - rejection on the ground that the amount claimed is disputed and is pending adjudication before Arbitral Tribunal & District Court - HELD THAT:- The admission of CIRP of the Corporate Debtor was passed on 09.08.2019. The IRP was confirmed as RP by the CoC as it first meeting on 09.09.2019. The IRP issued public announcement in Form "A" to receive claim from creditors of Corporate Debtor. The last date filing of the claim as per the public announcement was 07.11.2019, whereas the applicant lodged its claim on 12.11.2019 - In the instant case the arbitration proceedings were initiated by the Corporate Debtor and a counter claim was filed by the Applicant herein and the same was pending adjudication before the Arbitral Tribunal. The said claim was filed on 12.11.2019 and whereas the last date of submission of claim was 07.11.2019, this Bench condones the delay of four days of filing the claim before the IRP.
The Applicant who has filed a counter claim before the Arbitral Tribunal is said to have a claim and is contingent upon adjudication by the Arbitral Tribunal and hence, such a claim is necessarily to be declared as contingent claim by the Resolution Professional in the information memorandum - Application allowed in part.
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2021 (5) TMI 942 - NATIONAL COMPANY LAW TRIBUNAL , CHENNAI BENCH
Seeking extension of time period of the CIRP of the Corporate Debtor by a period of 90 days effective 30.03.2020 - sections 12 and 60 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per the facts of the present case, there is no resolution for Liquidation of the Corporate Debtor. As per section 33(1) of the IBC, 2016 which contemplates that if the maximum period permitted for completion of the CIRP has expired then this Tribunal has to order for the liquidation of the Corporate Debtor. Since this Tribunal has not granted the extension of the CIRP beyond the stipulated period of 180 days, as per operation of Section 33(1) of the IBC, 2016, the Corporate Debtor should be ordered for liquidation. Section 33(1) of the IBC, 2016.
The Resolution Professional expressed his willingness to continue as the liquidator and also a perusal of the same discloses the fact that the Resolution Professional is willing to act as the Liquidator of the Corporate Debtor, if appointed by this Tribunal.
The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended upto date enjoined upon him - Application disposed off.
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2021 (5) TMI 939 - NATIONAL COMPANY LAW TRIBUNAL , HYDERABAD BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt or dispute or not - HELD THAT:- It is found that due to defaults committed by the respondent/CD, the account of the CD was classified as NPA on 27.12.2018. Subsequently, the FC has issued Demand Notice dated 08.01.2019 (page 73) under section 13(2) of SARFAESI Act demanding total outstanding dues. Unable to get response from the CD, the FC has taken symbolic possession of properties on 07.06.2019 and 20.06.2019.
Both the parties have preferred proceedings before different forums. The respondent/had preferred a writ petition before the Hon'ble High Court of Telangana - the Adjudicating Authority admits this Petition under Section 7 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code - Petition allowed.
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2021 (5) TMI 921 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking direction against the Appellant Banks and Financial Institutions to reimburse all the amounts appropriated by them after the Insolvency Commencement Date - Seeking to resume the working capital limits as available to the ‘Corporate Debtor’ as on the Insolvency Commencement Date.
HELD THAT:- As per Section 17(1)(d) of the I&B Code, the Financial Institutions maintaining the accounts of the ‘Corporate Debtor’ have to act on the instructions of the Interim Resolution Professional in relation to such accounts and furnish all information relating to the ‘Corporate Debtor’. This Tribunal in a catena of Judgements has held that Banks cannot debit any amounts from the account of the ‘Corporate Debtor Company’ after the Order of moratorium, as it amounts to recovery of amount - the Banks cannot freeze accounts nor can they prohibit the ‘Corporate Debtor’ from withdrawing the amount as available on the date of moratorium for its day-to-day functioning. Section 14 of the I&B Code overwrites any other provision contrary to the same and any amount due prior to the date of CIRP cannot be appropriated during the moratorium period. It is seen from the record that payments due under the LCs have been made out of the funds of the ‘Corporate Debtor’ as is established from the reduction of liabilities under non-fund based facilities.
Adjusting of the ‘Claims’ by the Appellant Banks during the CIRP out of the funds of the ‘Corporate Debtor’ results in unjust enrichment of the Banks and further, crediting amounts towards non-fund and fund based accounts during the moratorium period is against the provisions of Section 14 of the Code.
The non-Applicants are directed to release the title deeds for effective implementation of the terms of the ‘Resolution Plan’ as provided for under Section 31 of the Code - application allowed.
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2021 (5) TMI 912 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Recovery of electricity charges during CIRP - Whether the Appellant was entitled to recover electricity charges being incurred by the Corporate Debtor on month to month basis after the CIRP was initiated against the Corporate Debtor? - HELD THAT:- Regulation 32 makes the distinction clear. If the electricity consumption was for manufacturing and output of the Biscuits which is the normal operation of the Corporate Debtor, in that case dues arising from such supply of electricity during moratorium would have to be paid during moratorium - In present matter the consumption is stated to have been for running of office and security of Corporate Debtor. In that case, the same will be part of the CIRP Costs which can be recovered when the Resolution Plan is approved or would form part of Section 53 if the Liquidation has been initiated.
The electricity charges during CIRP would form part of CIRP Costs - Appeal disposed off.
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2021 (5) TMI 900 - NATIONAL COMPANY LAW TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking possession of an asset of the corporate debtor held by India Infoline Finance Ltd. through SARFAESI proceedings - HELD THAT:- The Applicant has filed the financial contract disclosing that the Suspended Director Mr. Vinay Jain executing a loan agreement in favour of the Applicant herein, the Applicant disbursing the loan amount to the ESCROW Account, thereafter appropriating the said amount towards the earlier loan accounts which became irregular and also documents reflecting sale of the property mortgaged by Best View Properties Limited. Moreover, the Suspended Directors of the Corporate Debtor have not denied anywhere about taking amounts through three loan accounts prior to availing this loan by the Suspended Director of the Corporate Debtor and depositing this loan amount of ₹ 85 Crore in the ESCROW Account, thereafter adjusting the same against the previous three loan accounts. All these transactions having remained apparent on record, we wonder how this RP has ignored all this material establishing financial contract, disbursal of the amount, thereafter signing memo of deposit of title deeds for creation of equitable mortgage.
With regard to obligation of guarantee, there is a separate guarantee deed the corporate debtor taking obligation upon itself to pay the loan amount of ₹ 85 Crores along with the interest in the event Vinay Jain defaulted in repaying the loan amount. In addition to it, the corporate debtor has also given its property as security by deposit of title deeds. These are two separate agreements binding the corporate debtor. To proceed against the corporate debtor to place claim upon it as financial debt, IIFL need not rely upon the mortgage charge because section 5 (8)(i) of the Code says that when any guarantee is given over the money borrowed by the borrower with a promise that he would repay the money borrowed along with interest, such obligation of guarantee will fall within the ambit of the clause (i) of section 5 (8) of the Code. For the present claim will fit into clause (i) of definition of financial debt, to admit the claim, the RP need not look into as to whether any charge created and whether such charge has been properly recorded. Of course, all documentary proof is evident on record to prove that money is availed, security is given towards the consideration received.
Application disposed off.
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