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Insolvency and Bankruptcy - Case Laws
Showing 121 to 133 of 133 Records
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2021 (9) TMI 173
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 present claim of ₹ 22,14,86,000/- of the Applicant has arose out of the two High Seas Sales Agreement, the dispute relating to which was referred by the Applicant to the Sole Arbitrator.
Admittedly, the Corporate Debtor has raised dispute over the claim of the applicant within 10 days, as prescribed under Section 8 of the Code, vide its reply to the Demand Notice dated 28.01.2021. The Corporate Debtor in reply to the demand notice, has referred to the Arbitration Proceedings and claimed pre-existing dispute - further the applicant itself had initiated the Arbitration Proceeding to resolve the dispute relating to its claim, which resulted in dismissal of the claim being pre-mature.
The documents on record sufficiently indicate that there has been a pre-existing dispute between the parties prior to issuance of demand notice. Hence, there being a pre-existing dispute and a situation in which the Applicant/Operational Creditor itself has referred the dispute to the Arbitration proceeding, which resulted in dismissal of the claim of the Applicant being pre-mature, the operational Creditor has failed to prove that its operational debt is undisputed. In terms of Section 9(5)(ii)(d) of the IBC, the moment it is established that there is a pre-existing dispute, the Corporate Debtor gets out of the clutches of the I & B Code.
Petition dismissed.
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2021 (9) TMI 144
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute between the parties prior to filing of the Application - HELD THAT:- From the perusal of the Legal Notice dated 26.10.2019 issued by the Respondent, it is clear that the Respondent had raised a dispute with regard to the payments made to the Appellant. Further, the Appellant also replied to the Legal Notice issued by the Respondent on 15.11.2019 denying the contents as made in the Legal Notice. The events are prior to issuance of ‘Demand Notice’ dated 26.11.2019. Therefore, this Tribunal is of the Prima facie view that there exists dispute prior to issuance of Demand Notice. Therefore, having arrived at a finding that there exists ‘prior dispute’ between the Appellant and the Respondent, this ‘Tribunal’ is not traversing into the merits of the case and as such, there is no illegality in the ‘Impugned Order’ passed by the Adjudicating Authority dated 04.03.2021.
Appeal dismissed.
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2021 (9) TMI 143
Jurisdiction - power of Adjudicating Authority to review its own Order - case of appellant is that Adjudicating Authority has traversed beyond its powers and jurisdiction by reviewing its own Order - HELD THAT:- The Ld. Adjudicating Authority was of the view that as per Section 3(23) of the IBC 2016 only a person as defined therein can approach the NCLT and an opportunity was given to the Sole Proprietor as a Petitioner/Applicant as the case may be to approach the Adjudicating Authority. The Adjudicating Authority also directed the Applicant therein to amend the cause title to cure the defect. Further, the Ld. Adjudicating Authority granted ten days’ time for compliance of the Order dated 25.02.2020 in view of the Pandemic due to Covid- 19.
From the perusal of the Application it is seen that the Proprietorship name i.e., M/s. M2N Interiors is represented by its Sole Proprietor Mr. M. Murali as depicted in cause title, therefore, taking into consideration that the Proprietorship Firm represented by its Sole Proprietor by reflecting the name of sole proprietor itself would show that the Application is being represented by the Proprietorship Firm as well as the Proprietor, duly represented by its Sole Proprietor Mr. M. Murali. In this regard, as decided by this Tribunal Section 2 of I & B Code 2016 applies to Partnership Firms and Proprietorship Firms. As per Sub Clause (f) of Section 2, the person defines in Sub Section 23 of Section 3 includes a Partnership Firm.
This Tribunal is of the view that the Application filed by the Respondent i.e., M/s. M2N Interiors, a Proprietorship Firm is maintainable - appeal dismissed.
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2021 (9) TMI 117
Direction to register a criminal complaint against the Respondent - offences committed under sections 191, 192, 193, 199, 200, 209 and 120-B of the Indian Penal Code - HELD THAT:- The Registry of this Tribunal has posted this Application for maintainability. From the relief portion as extracted supra, it is seen that the Applicant/RP has moved the present Application seeking to direct the Registrar of this Tribunal to register a criminal complaint against the Respondent for offences committed under sections 191, 192, 193, 199, 200, 209 and 120-B of the Indian Penal Code and also to hold a preliminary enquiry in relation to the same. It is seen that the present Application is filed under Section 70 and 72 of IBC, 2016 which falls under Chapter VII of IBC, 2016 which is termed as "Offences and Penalties".
A perusal of Section 236(1) of IBC, 2016 states that the offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. Further, section 236(2) states that the complainant in all such cases shall be the Insolvency and Bankruptcy Board of India (IBBI). Thus, in so far as Applications in relation to Chapter VII is concerned only the Special Court is having jurisdiction to try and hear the said Applications - the present Application filed by the Applicant is not maintainable - Application dismissed.
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2021 (9) TMI 115
Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Despite all possible steps as required under the Code taken during the CIRP, the CoC did not receive any viable resolution plan/proposal for revival of the Company. The CoC in its wisdom has resolved with 91.04% voting share in favour of the liquidation of the Corporate Debtor as a going concern. The Applicant RP has given his consent to act as Liquidator. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, it has no option than to pass an order for liquidation of the Company in the manner laid down in Chapter III of the Code.
The Corporate Debtor is ordered to be liquidated - application allowed.
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2021 (9) TMI 90
Recovery of dues from PSU - Seeking directions for payment of the dues of the company which was deposited as security deposit, along with interest - Writ Court is being used as a forum for recovering dues which, according to the Petitioner, are admitted - seeking an extraordinary remedy of recovery against the Union of India on the ground that HPCL is a PSU - HELD THAT:- Admittedly, the claims of the Petitioner have already been filed before the Liquidator. In so far as the security deposit is concerned, the question as to whether the said amount would have to be treated as one which is held in trust by the company is a question which would be considered by the liquidator. If the Petitioner-company is, in any manner, aggrieved by the opinion of the liquidator, it is free to challenge the same before the appropriate forum i.e., the NCLT and avail of its remedies in accordance with law.
The question as to whether a PSU ought to be revived or not is a question of policy. In the opinion of this Court, just because there are dues which are liable to be paid by the PSU it cannot be said that each and every PSU which is fully controlled by the Government would have to be revived or that the Government ought to pay the dues of the PSU. The PSU would have its own independent existence. In a writ petition which is seeking recovery of amounts, the Court cannot direct the Union of India to revive the Company. The scope of this writ petition is limited. If the Petitioner wishes to raise this as a legal issue, it may avail of its remedies in accordance with law.
Since the liquidation process is underway and some assets of the Petitioner-company are stated to have been advertised for sale, upon any amount being recovered from the sale of the assets, the Petitioner-company is free to approach the liquidator for taking a view in respect of the amounts due, including the Security deposit, in accordance with the provisions of the IBC - Petition disposed off.
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2021 (9) TMI 89
Constitutional validity of some of the provisions of the Insolvency and Bankruptcy Code, 2016 - Government companies to be equated with State or not - Applicability of provisions of the Insolvency Code as not applicable for Government Companies - HELD THAT:- Not only was there a challenge to the constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996 but a challenge was also there to various provisions of the Insolvency Code. Therefore, the contention of the learned senior counsel for the petitioners that the matter relating to the Insolvency Code was not before the Court, is not correct.
The petitioners then argued that Government Bodies other than Government Companies are exempted from the Insolvency Code as they are statutory authorities of the Government Department and, therefore, they cannot be taken before the adjudicating body under the Insolvency Code. On the other hand, the petitioners, who also owes large amount of dues to its Operational Creditors can be taken to the adjudicating authority under the Insolvency Code. Therefore, apart from a challenge to Section 87 of the Arbitration and Conciliation Act, 1996, there was also constitutional challenge to the Insolvency Code.
It is not an arm of the State. It is usually performing a commercial or/and business functions. A Government Company cannot be equated with a State authority, like National Highway Authority of India (NHAI), which is performing statutory functions or like other Departments, like Postal, Telegraph or the Railways or Public Works Department. This distinction has been clearly made by the Hon’ble Apex Court in the case of Hindustan Construction Company Limited, [2019 (12) TMI 5 - SUPREME COURT] which is binding upon this Court.
Petition dismissed.
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2021 (9) TMI 87
NCLAT proceedings - Requirements from the parties before the NCLAT to file brief written submissions and copies of the judgments - jurisdiction of the NCLAT to issue such direction - primordial ground raised by the Appellant is that there is no Rule or procedure which permits the NCLAT to direct filing of written submissions / judgments and exchanging copies thereof, between the parties - HELD THAT:- Appellant may be right in his submission that there is no written procedure which provides for filing of written submissions or exchanging copies thereof between the parties, but that, in our view, cannot lead to a conclusion that the impugned orders of the NCLAT are illegal. As rightly held by the learned Single Judge, Courts or Tribunals usually direct filing of the brief written submissions in order to facilitate the adjudication and crystallize the issues involved in the matter before them. The questions of law and facts are placed before the Courts in a concise manner, which certainly streamline the course of proceedings, and exchanging the copies of the written submissions enables each side to meet the case of the other side more effectively at the time of final hearing.
Direction to exchange the written submissions between the parties - HELD THAT:- It is a matter of practice in all Courts and Tribunals as also a facet of principles of natural justice that when any party to a lis files any pleading/affidavit/document before a Court or a Tribunal, a copy is required to be given to the other side, as no document etc. can be relied upon by the Court without giving an opportunity to the other side to effectively deal with the said document - In the present case, Appellant has filed his written submissions before the NCLAT on 02.11.2020. Therefore, even assuming that there was no categorical direction by the NCLAT to supply a copy to the Respondent, it was incumbent upon the Appellant to share a copy with the Respondent, to enable the Respondent to defend its case and rebut the issues highlighted by the Appellant in the written submissions. It would be a travesty of justice if the NCLAT takes into account the written submissions of one party without a copy having been shared / exchanged with the other party.
There are no merits in the appeal - appeal dismissed.
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2021 (9) TMI 67
Exclusion of 317 days from the date the CoC in their commercial wisdom has decided to liquidate the Corporate Debtor u/s 33 of the Code as well as on account of lockdown due to COVID-19 pandemic - HELD THAT:- This is a case where no publication of Form G was made and the extended period of CIRP period has expired on 18/03/2021. Therefore, there is no alternative but to order the liquidation of the Corporate Debtor.
The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with subsection (1) thereof - Application allowed.
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2021 (9) TMI 60
Seeking appointment of Resolution Professional and calling report under Section 99 of the IBC - HELD THAT:- The Parliamentary intent was to treat personal guarantors differently from other categories of individuals. The intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee - The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity.
What appears is that action against Personal Guarantor can be maintained during pendency of CIRP of Corporate Debtor or even later.
The scheme which appears to be provided by the legislature appears to be that when application under Section 95 is "filed" by the Creditor/s by themselves or through Resolution Professional as per the prescribed format, the interim-moratorium kicks in when the application is filed - we are not accepting the fear expressed by the Appellant that how could the Resolution Professional appointed by the Creditor itself if appointed by the Adjudicating Authority deal with the application filed by himself for the Creditor and give Report. What the Resolution Professional under Section 99 would be doing was requiring the Debtor to furnish proof of repayment as per Section 99(2) and after doing the necessary spade work Resolution Professional has to recommend acceptance or rejection of the application with reasons. The decision making whether to admit or reject the application would be only by the Adjudicating Authority.
The observations have been made by the Adjudicating Authority that the Corporate Guarantor (should have been only 'Guarantor') has not filed any submission and on date of hearing there was no representation. It appears that the Adjudicating Authority was of the view that service of 'Form C on 29th August, 2020 and 'Amended Form C' on 28th January, 2021 was the notice. Having gone through the Form and Rules and Regulations, we do not find that anywhere it is provided that when the Form is submitted it would also contain notice of date as to when the matter is coming up before the Adjudicating Authority. In the absence of any such requirement, we find that there has to be limited notice for presence conveying the "filing" of application and commencing of Interim Moratorium under Section 96 from date of filing (to be mentioned).
The appointment of Mr. Ram Ratan Kanoongo as Resolution Professional is not disturbed. It is stated that he has already given report - Appeal allowed in part.
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2021 (9) TMI 33
Alienation of accruals from the account of the Corporate Debtor upon imposition of moratorium after the initiation of the Corporate Insolvency Resolution Process - power of COC to take a decision regarding payments to a particular financial creditor during the CIRP - adjustment of amounts belonging to Corporate Debtor towards the claim of any particular financial creditor during the moratorium period - moratorium imposed u/s 14 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Section 14 of the IBC, particularly sub-section (b) of section 14(1) prohibits “transferring, encumbering, alienating or disposing of by the Corporate Debtor, any of its assets or any legal right or beneficial interest therein”. It is quite clear about how accruals to the corporate debtor are to be treated during the currency of CIRP. This provision prohibits the corporate debtor, and the resolution professional who is managing the affairs of the corporate debtor during CIRP, from transferring any of the corporate debtor’s assets to creditors. The amounts received by the corporate debtor during the currency of the CIRP are assets of the corporate debtor whose transfer to chosen creditor in priority without the process of Resolution Plan would be prohibited.
Such a condition as was prescribed in the first COC meeting regarding apportioning of the accruals in the separate bank account of corporate debtor to the Bank of India would not be legal and against the provision in sub-section 3 of section 14, which allows only such transactions which may be notified by the central government, in consultation with any financial regulator, to be exempted from the rigour of moratorium. The accruals in the separate bank account in the Bank of India during the CIRP are not notified by the Central Government and hence they are the assets of the corporate debtor.
In the present case, the Resolution Plan, which was approved by the Adjudicating Authority, included Bank of India’s share as ₹ 9 crores only as full and final settlement with no conditions attached. Therefore ,the condition stipulated by the COC in its first meeting regarding the receipts by the corporate debtor during the CIRP period and apportioning of 25% of the accruals due to the operations of corporate debtor are not part of the final resolution plan and this has no legs to stand on vis a vis’ the approved resolution plan and the share of Bank of India contained therein.
It is considered necessary that the erstwhile Resolution Professional be made responsible for proper monitoring of the implementation of the successful resolution plan to ensure its complete and proper implementation and to ensure that issues such as the one raised in this appeal do not cause unnecessary delays and obstructions in the implementation of the resolution plan - the amounts received towards interim finance during pendency of CIRP for which account was opened in the branch of Respondent No.4- Bank have to be held as amounts received by the Corporate Debtor during CIRP and are to be utilised as per the provisions of IBC, Rules and Regulations and the Resolution Professional is responsible for due utilisation of the same, strictly as per the provisions of IBC, Rules and Regulations and the Resolution Plan which was approved by the Adjudicating Authority.
Appeal allowed.
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2021 (9) TMI 30
Preferential transaction or not - sale agreement for transferring the land belonging to the Corporate Debtor to the Appellant towards partial settlement of the debt owed to the Appellant - Section 43 of the IBC 2016 - HELD THAT:- If the Adjudicating Authority is of the opinion that the said transaction is preferential in nature and is within the period of one year preceding the Insolvency commencement date, the said transaction can be declared as void and reverse the effect of such transaction in accordance with Section 45 sub-section (1) of the I & B Code and in accordance with the Chapter III of the I & B Code, 2016.
In the present case, from the documents it is crystal clear that the Appellant is not a related party and the transaction is preceding one year from the date of admission of the application by the Adjudicating Authority on 04.02.2019. The sale agreement dated 22.06.2018 and the Application was admitted on 04.02.2019, is well within one year preceding the admission of Application - Further, the Resolution Professional need to see whether the property belongs to the Corporate Debtor or not? In the present case, admittedly the property belongs to the Corporate Debtor as evident from the sale agreement and there is no dispute with regard to the same.
The vital point is whether the transaction is ‘preferential one’ and whether the said transaction is beneficial to such creditor (Appellant herein) by discriminating the distribution of assets as per Section 53 of the I & B Code in case of liquidation. The Ld. Adjudicating Authority at Para 23 drawn a table where the claims have been lodged and the waterfall mechanism need to be adopted in the case of liquidation. From the perusal of the table, the Operational Creditor stands at Serial No.7 under the waterfall mechanism. In the case of liquidation, the criteria as enumerated under Section 53 need to be followed. If the said principle is followed, the Appellant stands at Serial No.7. Certainly, it amounts to preferential treatment over other Creditors and the distribution of liquidation assets namely (a) Insolvency Resolution Process Costs, Liquidation Costs and the debts which shall rank equally between and among the following namely viz. workmen’s dues, debts owed to secured creditors, wages to employees, debts to unsecured creditors, dues to the Central Government, State Governments etc.
This Tribunal is of the view that the said transaction is a preferential transaction and not in the ordinary course of business - the said transaction entered between the Appellant and the Corporate Debtor by way of sale agreement dated 26.06.2018 certainly prejudice the interest of other Creditors who have precedence in relation to the claim being settled ahead of the Appellant or even in relation to other ‘Operational Creditors’ who are similarly placed like the ‘Appellant’.
Appeal dismissed.
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2021 (9) TMI 8
Seeking to grant an extension of 120 days to the Applicant for balance payment - seeking to direct the Resolution Professional (RP) to complete all formalities including but not limited to opening of Bank Account, transfer of shareholding and directorship and hand over the management of the Corporate Debtor to the Resolution Applicant - HELD THAT:- The Resolution Applicant is seeking for extension of 120 days for making balance payment of ₹ 12.78 Crores as per the approved Resolution Plan from the Adjudicating Authority. Further, the matter has been negotiated by both the parties and approval has already been granted by the CoC i.e., sole financial creditor, and the successful Resolution Applicant agreed to pay ₹ 15,00,000/- extra over and above to the agreed amount. In view of the same, an extension of 03 months of time is granted for making the balance payment.
Petition disposed of by granting 03 (Three) months of time for making the balance payment.
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