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Insolvency and Bankruptcy - Case Laws
Showing 61 to 80 of 120 Records
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2021 (7) TMI 715
Operational Creditor or Financial Creditor - Seeking to declare applicant/GNIDA as Operational Creditor in the 6th CoC - seeking for issue of necessary directions for upholding and continuing the already declared position/status of the applicant/GNIDA as 'Financial Creditor' as per the earlier decision taken in the 4th meeting of CoC on 21.10.2019 - HELD THAT:- Similar issue decided in the case of VMS EQUIPMENT PVT. LTD. VERSUS PRIMOSE INFRATECH PVT. LTD. [2020 (10) TMI 385 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH] where the applicant had challenged the decision taken by the CoC in its 6th meeting dated 17.12.2019, by which the applicant i.e. Greater Noida Authority was declared as an Operational Creditor instead of Financial Creditor - this Adjudicating Authority, after considering the submissions of the applicant as well as RP and the decisions referred by the parties, passed a detailed order and confirmed the decision of the RP, to treat the applicant as an Operational Creditor instead of Financial Creditor.
Since the similar issue raised earlier by the applicant has already been decided by this Bench, hence, the present application is not maintainable - application dismissed.
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2021 (7) TMI 714
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - issuance of demand notice in Form 3 annexed with invoices - query raised from the Operational Creditor as to how the Demand Notice based on invoices issued in Form 3 is in compliance of Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- Subject of the Form 3 is Demand Notice/invoice, which requires the Operational Creditor to give comprehensive details of the operational debt in columns from 1 to 7 like Total amount of debt, Date of Default, Calculation of reaching the amount of Default, Particulars of Security held, Record with Information Utility etc. However, in contrast, the Form 4 provides an escape route to the Operational Creditor from disclosing these important facts - Hence, one finds that no prejudice can ever be caused to any of the parties if the Demand Notice based on Invoices is sent in Form 3.
The facts of the Neeraj Jain [2020 (3) TMI 99 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] decided by Hon'ble NCLAT were different from the facts of the present case inasmuch as no invoice was ever sent by the Operational Creditor in that case, whereas the Operational Creditor in the present case has annexed the invoices with its demand notice sent in Form 3. Hence, the conclusion made in the aforesaid Judgment is binding on this Adjudicating Authority only in a situation where invoice is not only generated but is also a relevant document to prove the existence of default but the same is not annexed with the Demand Notice sent in Form 3 or Form 4.
In a situation where an Operational Debt arises out of the provision of goods and services and pursuant to that Invoices are raised, there is no illegality in choosing the Form 3 as provided in Rule 5(1)(a) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for sending the Demand Notice provided that the Unpaid Invoices forming part of the transaction are annexed therewith - issuance of Demand Notice in Form 3 annexed with invoices by the Operational Creditor in the present case would be in order in terms of the Rules.
List this matter for hearing on 12.07.2021 on the point of delivery of Demand Notice to the Corporate Debtor, pecuniary jurisdiction, limitation etc.
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2021 (7) TMI 680
Condonation of delay of 241 days in filing the Company Petition - applicability of Section 5 of the Limitation Act, 1963 where there are cases of filing Company Petition beyond the limitation period - case of Appellant is that the Adjudicating Authority in the impugned Order had failed to appreciate that in as much as Section 238 A of the Insolvency and Bankruptcy Code, 2016 provides that the Limitation Act, 1963 shall apply as far as may be to the proceedings under the Code before the Adjudicating Authority or the Appellate Tribunal - HELD THAT:- It is to be pointed out that Section 433 of the Companies Act and Section 238 of the I&B Code apply to the Provisions of the Limitation Act, as far as may be. As such, the Limitation period mentioned in the Code will not apply notwithstanding anything to the contrary mentioned in the Limitation Act - Indeed, the Limitation Act, 1963 is applicable to all applications filed under Section 7 and 9 of the I & B Code from the inception of the Code. Therefore, Article 137 of the Limitation Act, 1963 gets attracted.
It is significantly pointed out that the condonation of delay cannot be claimed as a matter of right. Of course, the condonation of delay is a matter of discretion of the Court/Tribunal. It cannot be forgotten that limitation is a prescription of repose and unless the statute allows the Court, an element of discretion, by way of an application for condonation of delay, the Court/Tribunal has no power to find out a method in granting relief to a person who may appear to have suffered. When there is want of due care and attention or want of due diligence, the Tribunal may decline to entertain an application, as there is no sufficient cause for the delay.
Notwithstanding the fact that the Limitation Act, 1963 is applicable to the Applications projected under Section 7 and 9 of the Code from the I & B Code and hence, the ingredients of Article 137 of the Limitation Act, gets attracted. As such, the Right to sue accrues when a Default occurs and if the Default had occurred beyond three years, the Limitation period for filing of an application under Sections 7 and 9 starts sticking from the date of Default committed by the Corporate Debtor.
Section 5 of the Limitation Act, 1963 may be pressed into service to condone the delay in filing necessary interlocutory application, in the considered opinion of this Tribunal. However, it is for the Applicant/Appellant to explain the delay that has occasioned to the subjective satisfaction of the Tribunal - In the instant case, this Tribunal is not subjectively satisfied as to the occurrence of the long and inordinate delay of 241 days and therefore, this Tribunal is not inclined to extend its ‘helping hand of judicial arm of generosity’, based on the facts and circumstances of the case which float on the surface.
The Appeal is devoid of merits - Appeal dismissed.
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2021 (7) TMI 672
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of privity of contract between the Operational Creditor and the Corporate Debtor or not - original work order was issued by Gammon India Limited but the actual work was done by the Operational Creditor in respect of project site of Gammon Infrastructure Projects Limited - some of the bills were also paid by the Gammon Infrastructure Projects Limited - existence of debt and dispute or not - reply to demand notice not sent - HELD THAT:- It is very clear from the said work order that the work order has been issued and duly signed by the Gammon India Limited. The Operational Creditor also annexed copy of the order dated 22.03.2017 passed by this Tribunal in Company Scheme Petition No. 125/2017 jointly filed by Gammon India Limited and Gammon Engineers and Contractors Private Limited (Corporate Debtor) whereunder the scheme of transfer of Gammon India Limited as transferor company with Gammon Engineers and Contractors Private Limited as the transferee company was approved by this Tribunal under which all the assets and liabilities of the transferor company were taken over by the transferee company i.e. Corporate Debtor. Therefore, it is very clear from the above two documents that the Corporate Debtor being the transferee of Gammon India Limited cannot deny the unpaid bills of the Operational Creditor.
Mere forwarding of the bills submitted by the Operational Creditor to Gammon Infrastructure Projects Limited by the Corporate Debtor does not absolve the Corporate Debtor from its liability. There was no dispute with regard to the debt and default in this case. The respondent has not sent any reply to the demand notice issued by the petitioner.
This tribunal is of the considered opinion that the above company petition is liable to be admitted - Petition admitted - moratorium declared.
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2021 (7) TMI 668
Maintainability of application - initiation of CIRP - Corporate Debtor failed to pay the defaulted payment of installment - account declared as Non-Performing Asset - the Respondent Bank has mentioned the date of default as 07.06.2016, whereas, under Section 7 an Application was filed by Respondent Bank on 06.06.2019 - time limitation - HELD THAT:- An application under Section 7 of the IBC was filed by Respondent No. 1/ Financial Creditor, namely, the Bank of India on 04.06.2019. Further, from the perusal of the application Part-4 Volume-I of the Appeal Paper Book marked at Page-38 the date of default is mentioned as 07.06.2016 - The Appellant in the Reply Affidavit filed before the Adjudicating Authority Para 4 at Page- 65 of the Appeal Paper Book, Volume- I has already stated that 07.06.2016 is the date when the account of the Appellant was declared NPA. And in Para-9 of the Reply Affidavit marked at Page- 67 of the Appeal Paper Book, they have admitted that the installment of month of January, 2019 remain unpaid so the default date started on 30.01.2016.
There is a clear acknowledgment on behalf of two Directors one who have died subsequently.
There is no illegality in the Impugned Judgement passed by the Adjudicating Authority and Impugned Judgement is hereby affirmed - there is no merit in this Appeal - Appeal dismissed.
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2021 (7) TMI 663
Seeking withdrawal of admitted application - Pre-constitution stage of CoC - submission of the Learned Counsel is that the ‘Operational Creditor’ has wrongly proceeded against the ‘Corporate Debtor’ instead of the sister concern and that the sister concern has already paid all the amounts claimed by the ‘Operational Creditor’ - HELD THAT:- Section 12-A read together with amended Regulation 30-A effective from 25.07.2019 provides that stage of pre-Constitution of CoC which is now covered in Regulation 30-A(1)(a). It is evident that Section 12-A deals with the situation of Withdrawal of Application admitted under Sections 7, 9 or 10, on an Application made by the Applicant with the approval of 90% voting share of the Committee of Creditors, in such manner as may be specified’, meaning thereby that Section 12-A refers to a situation Post Constitution of CoC, whereas Regulation 30-A(1)(a) deals with procedure to be followed Pre- Constitution of CoC. It is stated by the Learned Sr. Counsel that the language of the Section, whereunder IBBI has been empowered to frame Regulations is clear that the said Regulation should be consistent with the I&B Code.
Rule 11 of NCLAT Rules, 2016 provides that ‘Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal.’ - in the present case, there is no force in the contention of the proposed Intervenor Applicants that the Application for Withdrawal, filed, prior to Constitution of CoC ought to be mandatorily dealt with the provisions under the Regulation 30-A(1)(a).
It is not the case of the Intervenors that Demand Notice under Section 8 is pending. It is only their case that money is due. Before Constitution of Committee of Creditors mere filing of a ‘Claim’ does not constitute default per se. It is only on the basis of the ‘Claims’ that the CoC is constituted. In a catena of Judgements the Hon’ble Supreme Court has reiterated that the prime objective of the Court is not recovery, but revival - in the interest of Justice, the inherent powers under Rule 11 can be exercised by both NCLT and NCLAT which may allow or disallow the Application of Withdrawal keeping in view the interest of the concerned parties and the facts of each case.
Application allowed.
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2021 (7) TMI 618
Seeking approval of sale of Corporate Debtor as a going concern - section 60(5) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- There are no disputes regarding the basic facts of the case such as Advertisement for sale of Intangible Assets viz. Credentials, Arbitration Receivables, Work-in-Progress (Contracts) of the Company under Liquidation as well as the Special Terms & Conditions stated in the Tender Documents and the process of e-auction conducted by the Liquidator in which the Impleading Respondents were declared as Successful Auction Purchasers.
This Adjudicating Authority while dismissing the prayer of the Successful Bidder regarding adjustment of all the amounts received from the arbitration receivables, work-in-progress from the date of declaration of Respondents as Successful Bidder till date towards the balance bid consideration payable by the respondents, gave a specific direction to the Liquidator to provide Audited Financial Statements of the Company upto 30.09.2020 and also to provide copies of Agreements relating to ongoing projects and details of receivables until 30.09.2020 to the Respondents.
It appears that the Successful Bidder, who is the Impleading Respondent herein has already paid 25% of the total bid value of ₹ 12.43 crores but has not made further payments to the Liquidator so as to complete the sale - both sides directed to take necessary steps for completion of the sale in terms of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the terms of sale as advertised by the Liquidator in respect of the intangible assets of the company under liquidation.
Application disposed off.
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2021 (7) TMI 613
Seeking to declare communication as null and void - seeking to direct the Resolution Professional to reject the claim submitted by the 1st Respondent - seeking declare the 1st Respondent's claim as erroneous - seeking reconstitution of CoC - HELD THAT:- There is no dispute between the parties that the terms of the Exit Agreement could not be fulfilled and the Claimant/1st Respondent continued to remain invested. In para 9.60 of the Award, it is also discussed that the Respondent/Corporate Debtor had committed a breach of the terms of the Exit Agreement which constituted an event of default under the SSA in and by which the Claimant is entitled to require the promoter to pay to the Claimant the Total Investment with an IRR of 30%. In pursuance of the same the Claimant/1st Respondent issued a notice on 02.02.2016 - In para 9.63 of the Award, it has been stated that in view of the notice dated 02.02.2016 issued by the Claimant/1st Respondent, the 1st Respondent is entitled to a sum of ₹ 143,40,00,000/-.
The crux and gravamen of the contention being raised by the Applicant in the present Application is that as per the Award the 1st Respondent is entitled only to the Remainder Amount in terms of para 9.66. However, a perusal of the operative portion of the Award posits the fact that the 1st Respondent is entitled to a sum of ₹ 155,32,56,626/- and that the manner in which the said amount is required to be paid as set out in para 9.64.
It is to be noted that the claim of the 1st Respondent is not in any manner linked with the Remainder Amount. The concept of the Remainder Amount in the SSA only sets out the details of the amount, how the payments are required to be made to the 1st Respondent when the project is being developed and it does not in any manner change the position, either in fact or in law that as per the said Award the Corporate Debtor is bound and liable to repay the amount which is due to the 1st Respondent - from a conjoint reading of the award and the definition of the term 'claim', and viewed from the said perspective, the contention of the Learned Counsel for the Applicant the extent payable by the Corporate Debtor could be paid only from the Remainder Amount as per the Award, would render the entire Award otiose and thereby it would amount to material change in the Award dated 31.01.2018.
The contention of the Learned Counsel for the Applicant that as on date the Remainder Amount is NIL would be of no relevance since it does not dilute the claim of the Applicant in any manner - Application dismissed.
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2021 (7) TMI 593
Maintainability of writ petition - petitions are filed on the premise that the appeals and stay petitions are not being taken up by the NCLAT - effective alternative remedy of appeal under Section 61 of I&B Code - HELD THAT:- As observed by the Apex Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] the IBC, 2016 is a Single Unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner. The code provides a three-tier mechanism namely, (i) the NCLT, which is the adjudicating authority (ii) the NCLAT, which is the appellate authority (iii) the Supreme Court, which is the final authority, for dealing with all issues that may arise in relation to the re-organisation and insolvency resolution of corporate persons. An order passed by the NCLT is appealable to the NCLAT under Section 61 of the Code and the orders of the NCLAT are amenable to the appellate jurisdiction of the Supreme Court under Section 62.
One of the issues that arose for consideration before the Division Bench in SULOCHANA GUPTA VERSUS RBG ENTERPRISES (P.) LTD. [2021 (1) TMI 240 - KERALA HIGH COURT], was the maintainability of the writ petition under Article 226 against an order of the NCLT. The Division Bench, after elaborate survey of precedents, answered the issue by holding that the writ petition to be not maintainable.
In view of the exposition of the Honourable Supreme Court regarding the objective of the Code and the authoritative pronouncement of the Division Bench, the writ petitions are dismissed.
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2021 (7) TMI 581
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - Exercise of jurisdiction by Adjudicating Authority while examining the nature of transaction - collusive application or not.
Whether the Adjudicating Authority has exceeded in its jurisdiction while examining the nature of transaction in question? - HELD THAT:- The IBC recognizes that for the success of Insolvency regime the real nature of transaction has to be unearthed in order to prevent any person from taking undue benefit of its provisions to the detriment of the rights of legitimate creditors. It means, while admitting the Application under Section 7 of the IBC, it is the duty of the Adjudicating Authority to investigate the real nature of the transaction in order to prevent any person from taking undue benefit of its provisions to the detriment of the rights of legitimate creditors.
The Adjudicating Authority is obliged to investigate the nature of the transaction and should be very cautious in admitting the Application in order to prevent taking undue benefit of provisions of IBC to detriment of the rights of legitimate creditors as well as to protect the Corporate Debtor from being dragged into CIRP with malafide - the argument of Ld. Counsel for the Appellant that Ld. Adjudicating Authority when entered into investigating the nature of the transaction then exceeded in its jurisdiction under Section 7 (5) of the IBC, is not convincing.
Whether the transaction in question is Financial Debt? - HELD THAT:- As per the definition given in Section 5(8) of IBC, 'financial debt' means a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The essential requirement is of disbursement and consideration for time value of money - The Financial Creditor is not doing financial business but manufacture of rice. On the other hand, the Corporate Debtor Company incorporated on 11.09.2018 having authorized and paid share capital of 7crores 30 lacs, as per the MCA data filed by the Financial Creditor showed that the Bank of Baroda has sanctioned cash credit limit to the tune of ₹ 24 crores in the year October, 2018. According to the Financial Creditor, they have granted a loan of ₹ 10 lacs on 20.04.2019 - it is not convincing that the Corporate Debtor Company having paid up share capital of 7 crores 30 lacs and cash credit limit to the tune of ₹ 24 Crores has to take a loan for ₹ 10 lacs from the Financial Creditor and that the Corporate Debtor is not able to make repayment of ₹ 10 lacs and has no objection if the Application under Section 7 is allowed and the CIRP initiated against the Corporate Debtor Company - the transaction in question is not a financial debt within the meaning of Section 5 (8) of the IBC.
Whether a default has occurred? - HELD THAT:- In support of date of default, the Financial Creditor has not filed any document. Therefore, it is not clear that how the financial creditor has arrived at date of default is 21.04.2019 (i.e., just next day of disbursement of loan) or 30.09.2019. It is not the case of the Financial Creditor that they have served demand notice on the Corporate Debtor and the Corporate Debtor has failed to make the payment or the loan was given for a specific period - the Financial Creditor has failed to satisfy that the transaction in question is a Financial Debt and a default has occurred.
Whether the application in question is collusive? - HELD THAT:- Nobody will believe that the Corporate Debtor Company having paid up capital of ₹ 7 Crores 30 lacs and Bank of Baroda has sanctioned cash credit limit for the amount of ₹ 24 Crores, is not able to make a payment of ₹ 10 lacs and they have no objection, if the CIRP is initiated against the Company. In this case when the Corporate Debtor has admitted the default in repayment then they should have make the prayer that they are ready to settle the matter with Financial Creditor instead of submitting that they have no objection in admitting the application. In the circumstances, Ld. Adjudicating Authority held that it is a case of collusive Application - Financial Creditor has filed MCA Data of the Corporate Debtor Company, which shown an open charge in favour of Bank of Baroda, such loan was sanctioned on 12.10.2018 and on 02.08.2019 bank declared the account of Corporate Debtor as NPA. Thereafter, the bank has initiated recovery proceedings against the Corporate Debtor under the provisions of Section 13 (4) SARFAESI Act.
Ld. Adjudicating Authority has given a finding that the Corporate Debtor trying to seek benefits of moratorium under Section 14 of the IBC and other advantages in accordance with other provisions of the IBC and thereby rejected the Application filed under Section 7 of the IBC - the Ld. Adjudicating Authority, is agreed upon, as there is inevitable conclusion that the Financial Creditor colluded with the Corporate Debtor and filed the Application with other than the Resolution or for ulterior motive to prevent the Bank of Baroda to recover the debt from the Corporate Debtor.
There is no merits in this Appeal - Appeal dismissed.
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2021 (7) TMI 580
Maintainability of application - CIRP is initiated - amount claimed to be in default were deposits made by flat owners with the Developer - while CIRP was pending, the Respondent No. 1 filed proceedings under Section 7 of IBC for the amounts deposited in terms of the agreement to sell, with the Developer - HELD THAT:- It is clear that the Sale Agreement executed between the Developer – ‘M/s Avaani Projects and Infrastructure Ltd.’ and the main land owner ‘M/s Electrical Manufacturing Company Ltd.’ and the Corporate Debtor as Maintenance Company were to render common service and upkeep till the Association/Society of the flat owners was formed. The Corporate Debtor was to look after the maintenance till three years of the Deed of Conveyance by the respective purchasers with the Developer and Maintenance Company or so soon after completion of construction of Phase II of Avani Oxford whichever was later. The Appeal has also put on record that Avani Oxford Project received Completion Certification on 21st March, 2016.
The application under Section 7 of IBC (Page 39 of the Appeal) is dated 21st November, 2019. Record shows that the Financial Creditors also moved the National Consumer Disputes Redressal Commission in July, 2016 in which orders were passed and even written submissions were filed by the Developer and that the Financial Creditors were pursuing their remedies. The Balance Sheets of the Corporate Debtor have also been filed - The Respondent No. 1 Company of Flat Purchasers has been trying to get back the money deposited by Flat Buyers themselves. They have also pursued rights in Consumer Forum - there is no substance in the claim made by the Appellant that the debt is time barred.
Admittedly, the amounts were collected by the Developer and kept with its subsidiary, the Corporate Debtor, for the purpose of maintenance till the Association/ Society or Holding Organization (i.e. Respondent No. 1) gets established to hand over the amounts to the body of the flat owners. Section 5(8)(f) Explanation makes it clear that any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing.
The claim made by Respondent No. 1 is accepted that it is the ‘Financial Debt’. There is Financial Debt due and in default of amount more than threshold stated in Section 4 of IBC. There is any error in the impugned order vide which the CIRP was initiated.
Appeal dismissed.
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2021 (7) TMI 567
Seeking Liquidation of Corporate Debtor - also seeking appointment of liquidator - Section 33 and 34 of the Insolvency & Bankruptcy Code - HELD THAT:- Upon going through the contents of the present Liquidation application and the provisions contained in the Code this Adjudicating Authority is of the view that as Sec. 33(1) of IBC, 2016 contemplates that this Tribunal can pass an order of liquidation of the corporate debtor, if the maximum period permitted for the completion of the CIRP is over and in the present matter more than 1000 days has passes since initiation of CIKP and as by operation of Sec. 33(1) IBC, the corporate debtor is necessarily required to be ordered for the liquidation under Sec. 33(1)(b) of the IBC, 2016 - even COC in its 18th meeting held on 04.01.2020 has with 95.29% majority has passed the resolution to liquidate the Corporate Debtor as no resolution plan was received for revival of the company and even the latest valuation of the assets have not attracted any resolution plan and further the commercial wisdom of the COC cannot be challenged which has approved the resolution for liquidation of the company.
This Adjudicating Authority hereby directs that the Corporate Debtor i.e. Shree Bhawani Paper Mills Ltd. shall go into Liquidation and the moratorium declared for the Corporate Debtor under Liquidation shall cease to have effect from pronouncement of this Order - Resolution Professional Ms. Anju Agarwal is appointed to act as liquidator - application allowed.
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2021 (7) TMI 564
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational debt or not - payment of Minimum Guaranteed Royalties to the Operational Creditor - use of Trademark - licensed product - existence of debt and dispute or not - HELD THAT:- As per the judgment VIKAS SALES CORPORATION AND ANOTHER VERSUS COMMISSIONER OF COMMERCIAL TAXES AND ANOTHER (AND OTHER APPEALS AND WRIT PETITIONS) [1996 (5) TMI 363 - SUPREME COURT] it is held that incorporeal rights like trademarks, copyrights, patents and rights in personam capable of transfer or transmission are included in the ambit of "goods" - Further having considered the facts and circumstances and the material available on record the Adjudicating Authority is of the view that for a claim to fall within the definition of 'operational debt', the operational creditor must establish that it has a "right to payment" "in respect of the provision of "goods or services" and also that Corporate Debtor has committed a "default" towards its "liability or obligation in respect of such outstanding claim".
In the present case, the MGR was a fixed payment due and payable by the Corporate Debtor to the Operational Creditor under the Agreement and the non-payment by the Corporate Debtor, for using the "Trademark" which is the Licensed "Product" of the Operational Creditor, amounted to an "operational debt" under the IBC. It has been observed that time and again the Corporate Debtor has admitted its liability be it by way of making a part payment (first and second quarter payment) or by submitting before the Adjudicating Authority that "admittedly the claim of the Applicant arises out of failure to pay the Minimum Guaranteed Royalties and were not paid on the condition that the Operational Creditor under the obligation to promote the brand for the Corporate Debtor" therefore, it is a clear admission of default and this Adjudicating Authority does not have to indulge in the details or the terms of the Agreement.
The Corporate Debtor did not raise any dispute in terms of Section 8(2)(a) read with Section 5(6) of the IBC, either with regard to the (a) existence of the amount of debt, (b) the quality of goods or service, or (c) the breach of a representation or warranty, either directly or indirectly. Therefore, the defense of pre-existence of dispute can be categorized as a moonshine dispute.
The Application is admitted and the commencement of the CIRP is ordered - Moratorium declared.
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2021 (7) TMI 563
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- The date of default is 29.12.2015 which is the date of the last invoice issued which was unpaid, and the present application is filed on 24.09.2018. Hence the application is not time barred and filed within the period of limitation - the registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.
Existence of dispute before the receipt of demand notice or invoice - HELD THAT:- On appraisal of the arguments advanced by the Ld. Counsels, it emerges that there were disputes existing prior to the issuance of the Demand Notice - in the e-mail dated 07.08.2014, 27.03.2015, 01.02.2016, 25.03.2016 and 08.04.2016 stating the deficiency in the goods (PP sacks) supplied and that the foreign customer had rejected the entire shipment of raw material supplied by the Operational Creditor, causing a loss of USD 60030 to the Corporate Debtor establishes that the Operational Creditor was aware of the dispute prior to issuance of Demand Notice dated 01.11.2017. A pre-existing dispute does not entitle the Operational Creditor to seek Insolvency Resolution of the Corporate Debtor.
This Bench is of the view that the prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable - Application disposed off.
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2021 (7) TMI 560
Seeking Liquidation of Corporate Debtor - seeking appointment of liquidator - Section 33 and 34 of the Insolvency & Bankruptcy Code - HELD THAT:- It is pertinent to refer Section 33(1)(a) of the IBC, which mandates that "where the Adjudicating Authority before the expiry of maximum period permitted for completion of the corporate insolvency resolution process under Section 12 or the fast track corporate insolvency resolution process under Section 56, as the case may be, does not receive a resolution plan under sub-section (6) of Section 30, it shall pass an order requiring the Corporate Debtor to be liquidated in the manner as laid down in the manner."
The Tribunal observes that upon failure of the resolution process and no approved resolution plan and further on completion of statutory CIRP process, there is no alternative left but to order in conformity with the decision of the CoC liquidation has to follow under Section 33 of the Code. Adherence of the statutory requirement has to be done as the language of the Code is clear that the adjudicating authority must give effect to it whatever may be consequences - even CoC in its 8th meeting on 04.11.2020 has with 100 % majority has passed the resolution to liquidate the Corporate Debtor as no resolution plan was received for revival of the company and further RP has complied with the provisions laid down under Insolvency and Bankruptcy Code.
Thus, by exercising the power under Section 33(1), this Adjudicating Authority hereby directs that the Corporate Debtor i.e. V.A.M. Resorts and Hotels Pvt. Ltd. shall go into Liquidation and the moratorium declared for the Corporate Debtor under Liquidation shall cease to have effect from pronouncement of this Order - the Resolution Professional Mr. Ashish Singh is appointed to act as liquidator.
Application allowed.
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2021 (7) TMI 559
Allegation of Wilful and deliberate violation of Resolution Plan by the successful Resolution Applicant(Rl) - Seeking encashment of Performance Guarantee - backing out after submission of Resolution Plan - criminal punishment u/s. 74(3) of I&B Code - application seeking award of criminal punishment be filed by the erstwhile RP before this Adjudicating Authority.
Can the RA be accused of backing out after submission of Resolution Plan, so as to warrant criminal punishment u/s. 74(3) of the Code? - HELD THAT:- In the scheme of the IBC, if a successful RA either refuses or evades the implementation of the approved Resolution Plan, it may tantamount to an offence under Section 74(3) of the Code - The rationale behind criminal punishment for breach or violation of a resolution plan is for maintaining the sanctity of the CIRP process and for deterring pseudo-bidders from delaying or sabotaging the insolvency resolution process - The RA had taken out a sum of over ₹ 40cr from their account for making DD/Bankers Cheque of equal amount for making down payment as per the Resolution Plan way back on 02.02.2021 itself, which has been allowed to be revalidated on 07.05.2021 by this Bench. The RA's conduct, thus appears bona fide and they cannot be held liable for breach of the Resolution Plan so as to warrant punishment u/s. 74(3) of the Code - question framed above in the negative.
Can an application seeking award of criminal punishment u/s. 74(3) of the Code be filed by the erstwhile RP before this Adjudicating Authority? - HELD THAT:- The IBC being a complete Code in itself has also incorporated a specific section for trial of offences under the Code by a Special Court - A reference to the provisions of section 236 makes it abundantly clear (I) that all offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 and (II) that a complaint in this behalf can only be made either by the Board or the Central Government or any person authorised by the Central Government.
The applicant in the instant application on the one hand has failed in due discharge of his duties as an erstwhile RP and a Member of the MC, by absenting himself from the meeting of the MC on 29.01.2021 and on the other, he also failed in maintaining due diligence while filing the instant application before us without referring to the provisions of S. 236 of the Code according to which neither he could make a complaint seeking criminal punishment against the RA u/s. 74(3) read with Section. 236(2) of the Code without being authorised by the Central Government nor any offences under the Code could be tried by this Adjudicating Authority in view of provisions of Section 236(1) of the Code - the second question framed also answered in negative.
Application not maintainable and is dismissed.
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2021 (7) TMI 557
Seeking intervention in support of application filed by Ex Resolution Professional under section 66 read with section 43 of IBC, 2016 - seeking to allow the applicants access to all the reports, findings and other documents - HELD THAT:- The judgment of the Hon'ble High Court of Delhi in M/S. VENUS RECRUITERS PRIVATE LIMITED VERSUS UNION OF INDIA AND ORS. [2020 (11) TMI 850 - DELHI HIGH COURT], wherein the Hon'ble High Court decided the question of whether an application filed under Section 43 of the Code, for avoidance of preferential transactions, can be adjudicated upon by the National Company Law Tribunal (NCLT), after the approval of a resolution plan and conclusion of CIRP.
It is clearly evident from the aforesaid judgment that once the Resolution plan of a Resolution Applicant is approved it cannot file an avoidance application under section 43 of IBC, 2016. It is pertinent to mention that the case in hand where the applicant No. 1 is the successful resolution applicant seeking to intervene in the Avoidance application filed by the erstwhile Resolution professional prior to the approval of resolution plan is not maintainable and no direction prayed in the present application can be granted to the applicants.
Application dismissed.
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2021 (7) TMI 556
Secured Financial Creditor or not - seeking to put Resolution Plan again in terms of the change in status of the Applicant as a Secured Financial Creditor - HELD THAT:- Considering the fact that the loan was disbursed to the corporate debtor by the applicant but the said is not supported with any documentary evidence to show the creation of security interest as mentioned in IBBI (Liquidation Process) Regulations, 2016. Hence, the arguments that the present applicant needs to be classified as secured creditor cannot be accepted - The RP has rightly considered the absence of any proof of security document and then declared the applicant as unsecured financial creditor, at par with financial creditors in class of creditors being home buyers.
In absence of any registration of charge in the ROC record of the corporate debtor, the present applicant needs to be recognized as unsecured financial creditor. Moreover, the resolution plan is approved by CoC and the resolution applicant cannot be put to hardship of facing new claim/new category of a claim.
The present application fails and is rejected.
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2021 (7) TMI 552
Maintainability of application - issue connected with CIRP relating to continuance of the affair of the Corporate Debtor - Seeking directions for issuance of a No Objection Certificate (NOC) in favour of Applicant No. 1 for the purpose of creating temporary security of 20% of the value of project land in favour of Ghaziabad Development Authority (GDA) in terms of Clause 4.7 of Pradhan Mantri Awas Yojana (PMAY) policy - seeking to release surplus value of security those were created by the applicant in favour of the DHFL so that the applicant can raise further loans from other Banks/Financial Institutions for construction in the project land - seeking waiver as well as reduction of rate of interest.
Maintainability of application - issue connected with CIRP relating to continuance of the affair of the Corporate Debtor - HELD THAT:- By reading the provisions of Section 60(5) and 231 of IBC it is opined that this Adjudicating Authority possess with necessary jurisdiction under the above sections and in the light of Hon'ble Supreme Court decision in the matter of Gujrat Urja Vikas Nigam case [2017 (10) TMI 1533 - SUPREME COURT] to deal with the issue intrinsically connected with CIRP and which relates to continuance of the affair of the Corporate Debtor as going concern - the present application is maintainable before this Adjudicating Authority.
Merits of the case - HELD THAT:- It is now a well settled legal position, under the IBC that the business of a Corporate Debtor undergoing CIRP must be ensured to run smoothly and as good as a going concern. The initiation of CIRP does not prevent/or prohibit the business activity of the Corporate Debtor but it is the duty of the Administrator and of the CoC to ensure that the Corporate Debtor should run all its business activities as a going concern. That apart as per settled Constitutional Law of the Land and declared by the Hon'ble Supreme Court that even in Administrative /Executive nature of proceedings it is incumbent upon the Government bodies/organization which are treated as instrumentality of state (Article 13 of the Constitution of India) to follow and adopt reasonable, just and fair procedure for making administrative decision and to maintain the transparency in their findings.
As per record it is evident and may be seen that the GDA issued demand letter dated 01.10.2019, inter alia, for creation of ad hoc security and have also been apprised that GDA has issued notices dated 16.12.2020 calling upon the applicants to accomplish the mandatory requirements including creation of ad hoc security, in default of which the project shall stand disapproved. The representations made by the applicants span over a period of 16 months and even today they are facing hard ship - any further delay would irretrievably prejudice the project which is time bound in nature and under the supervision of the State Government and Central Government.
Application disposed off by declaring that the applicants are entitled to create ad hoc security in favour of GDA in terms of Clause 4.7 of PMAY and they are eligible to raise additional loans from other banks and financial institutions by creating additional securities on the project land - the Administrator is directed to consider the grant of NOC in consultation with the CoC by retaining adequate and sufficient security as per their norms and to release encumbrances on security in surplus found against the outstanding amount of loan disbursed by the DHFL to the applicants and to grant the same by four weeks from the date of receipt of the copy of this order.
Application is partly allowed and stands disposed off.
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2021 (7) TMI 512
Seeking to constitute the Committee of Creditors in accordance with Section 21 of IBC - It is claimed by the Appellant that BPPL has furnished a collateral security to Respondent No. 2 STCI Finance Limited - STCI Finance Ltd. is financial creditor as defined in Section 5(7) and Section 5(8) of the IBC or not - HELD THAT:- The liability arising out of guarantee for any of the items referred in sub-clause (a) to (h) is Financial Debt. The requirement for a debt to be a financial debt and such a creditor to be a financial creditor has been explained very succinctly by Hon’ble Apex Court in ANUJ JAIN VERSUS AXIS BANK LTD. [2020 (2) TMI 1259 - SUPREME COURT] where it was held that the root requirement for a creditor to become financial creditor for the purpose of Part II of the Code, there must be a financial debt which is owed to that person. He may be the principal creditor to whom the financial debt is owed or he may be an assignee in terms of extended meaning of this definition but, and nevertheless, the requirement of existence of a debt being owed is not forsaken.
In order to differentiate between the nature and purpose of “mortgage‟ and “guarantee‟ with respect to a loan, the Hon’ble Apex Court proceeds to clarify in Anuj Jain by holding that a mortgagee as a creditor shall be a “secured creditor‟ but not a “financial creditor‟ - The Appellant‟s reliance on Anuj Jain in support of his claim is, therefore, found to be out-of-context from the facts of the instant case.
We may look at the ASCOT REALTY PRIVATE LIMITED VERSUS AJAY KUMAR AGARWAL, ORIENTAL BANK OF COMMERCE -SUBSTITUTED BY PUNJAB NATIONAL BANK, INDIA BULLS HOUSING RESPONDENT FINANCE LIMITED, FULLERTON INDIA CREDIT COMPANY LIMITED, SWARNA TECHNOLOGY PRIVATE LIMITED, ESKAY ENCLAVE PRIVATE LIMITED, YUTHIKA TRADING COMPANY PRIVATE LIMITED, PANDEY CHEMICAL PRIVATE LIMITED, ACTUAL DRESSES, GM DRESSES, KRYSTAL DRESSES, QUEEN DRESSES, RDH TECHNOLOGIES PRIVATE LIMITED [2020 (10) TMI 962 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI] where it was held that The matter cannot, of course, be settled merely by treating the ipsissima verba of Wiles, J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished Judge.
Looking to the detailed exposition of Anuj Jain and Ascot Realty in the aforementioned paragraphs and the facts of the present case, we are of very clear and unambiguous view that on the basis of Corporate Guarantee given by BPPL for the loan provided by STCI Finance Ltd. (Respondent No. 2) to BIL; STCI Finance Ltd. is a financial creditor in the Corporate Insolvency Resolution Process of the Corporate Debtor BPPL - there are no error in the Impugned Order.
Appeal dismissed.
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