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Insolvency and Bankruptcy - Case Laws
Showing 121 to 140 of 160 Records
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2022 (6) TMI 285 - SC ORDER
Appeal before NCLAT - applicability of time limitation - Section 61(2) of the IBC - Non-consideration of claim regarding the provident fund dues - HELD THAT:- The limitation prescribed by Section 61 of the IBC fell for consideration of this Court in KALPRAJ DHARAMSHI & ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. & ANR. [2021 (3) TMI 496 - SUPREME COURT]. In the said judgment, it was categorically held by this Court that an appeal against the order of NCLT shall be preferred within a period of 30 days from the date on which the order was passed by the NCLT. The Appellate Tribunal has the power to extend the period of limitation by another 15 days.
The Appellate Tribunal committed an error in issuing notice in an appeal that was filed by Respondent No.1 with delay of 388 days - Appeal allowed.
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2022 (6) TMI 284 - RAJASTHAN HIGH COURT
CIRP - Claim of successful resolution applicant over pre-deposit made the corporate debtor for filing of an appeal under VAT Act - right of state to recover the outstanding tax liability - recovery of claims or claim any debts owed to them by the corporate debtor accruing prior to transfer date and “that consequences shall follow” - Section 83 of the RVAT Act, 2003 - HELD THAT:- As the original assessee, i.e. M/s. Binani Cement Ltd., was compelled to file the appeals with pre-deposits of a percentage of the tax liability by way of mandatory statutory obligation as per the assessment orders issued by the Commercial Taxes Department, the consequential relief pursuant to extinguishment of the demands under the assessment order would definitely require a direction for refund of the amount to the successful Resolution Applicant, i.e. the petitioner herein, who took over the assets and liabilities of the sick unit according to the Resolution Plan approved by the NCLAT.
In the case of State of Gujarat Vs. Essar Steel Ltd. [2016 (5) TMI 221 - GUJARAT HIGH COURT], Hon’ble Gujarat High Court directed refund of predeposit on acceptance of the appeals and decided the issue in favour of the assessee. In the present case, though the appeals have not been accepted, but an analogous situation has been created with acceptance of the Resolution Plan and extinguishment of all debts/liabilities of the sick unit towards the statutory creditor, i.e. the State Government/Commercial Taxes Department.
The consolidated impugned order dated 28.12.2020 passed by the Rajasthan Tax Board, Ajmer in the appeals filed by the petitioner is set aside to the extent the applications filed by the petitioner for refund of pre-deposit amounts with interest were rejected. The amounts deposited by M/s. Binani Cement Ltd. as mandatory statutory obligation while filing the appeals before the Tax Board shall be reimbursed to the petitioner within a period of three months from today with interest at the rate applicable by law.
These Revisions/ Sales Tax References deserve to be and are hereby allowed - the demands raised by the Commercial Taxes Department against the Corporate Debtor M/s. Binani Cement Limited except to the extent admitted by NCLAT are declared to be infructuous/ are quashed/struck down - the amounts deposited by the Corporate Debtor under protest and by way of pre-deposit as mandatory statutory obligation while filing the appeals, shall be refunded to the petitioner M/s. UltraTech Nathdwara Cement Limited being the Successful Resolution Applicant with applicable interest as per law within a period of 60 days.
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2022 (6) TMI 283 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
CIRP - Rejection of impleadment - allottees of “Amadeus” a real estate project being developed by the Corporate Debtor - Whether the application for impleadment filed by the Appellants before the Adjudicating Authority seeking impleadment in I.A. Nos 2275 of 2021 and 2286 of 2021 deserve rejection on the ground that Authorised Representative of Homebuyers who are creditors in class is not representing the creditors in a class before the Adjudicating Authority? - Whether the Appellants have no right to participate in adjudication of the claim of the Financial Creditors whose claim has been rejected by the IRP? - Whether the Adjudicating Authority committed error in rejecting impleadment application filed by the Appellants?
HELD THAT:- The statutory scheme as is reflected from Section 21(6-A) and Section 25-A of the Code indicates that the Authorised Representative is chosen to represent the creditor in a class in the CoC. The Authorised Representative needs to attend the meeting of the CoC and vote on behalf of the Financial Creditor to the extent of voting share of the Financial Creditor. The Adjudicating Authority in its order has referred to Regulation 16A Sub-regulation (5) of the CIRP Regulations, 2016. Regulation 16A deals with the Authorised Representative. Regulation 16A provides for procedure of choosing an Authorised Representative of creditors of the respective class - The mere fact that the Authorised Representative of a creditor in a class have no role in receipt and verification of the claim of the creditors, it cannot be held to mean that creditors in a class have no right with regard to receipt and verification of their claim. The clarification as contained in Regulation 16A(5) has been read by the Adjudicating Authority to an extent which it never meant. The conclusion recorded by the Adjudicating Authority in paragraph 23 on the basis of erroneous interpretation of Regulation 16A(5) resulted in a wrong conclusion that the creditors in a class have no role in receipt or verification of claims of creditors.
Right of impleadment of Appellants in Applications filed by Respondent No. 2 and 3 challenging the rejection of their claim as Financial Creditors - HELD THAT:- The Appellants are also Financial Creditors in a class and they represent majority of the Homebuyers in class, as has been pleaded by the Appellants. The Financial Creditors in a class, who at present consist of 99.85% of CoC, have every right to be heard in the Applications filed by Respondent No. 2 and 3 whose claim has been partly and fully rejected, respectively by the IRP - It cannot be said that since the Authorised Representative has not came up before the Adjudicating Authority for filing the impleadment application, the Appellants who themselves are Homebuyers have no right to participate in the adjudication initiated by filing applications by Respondent No. 2 and 3.
The Hon’ble Supreme Court held that Phoenix Arc Pvt. Ltd. [2021 (2) TMI 91 - SUPREME COURT] and Yes Bank [2019 (1) TMI 1800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] being Financial Creditors they were legitimately within the right to seek direction for exclusion of AAA Landmark Pvt. Ltd. and Spade Financial Services Pvt. Ltd. from the CoC.
The Adjudicating Authority committed error in rejecting impleadment application filed by the Appellants to implead them as party respondent - Appeal allowed.
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2022 (6) TMI 282 - NATIONAL COMPANY LAW TRIBUNAL , CHANDIGARH BENCH
Right to present application for Approval of Resolution Plan - barred under Section 29A(f) of IBC or not - rejection of Resolution Plan in view of the disqualification provided under Section 29-A (f) of the Insolvency and Bankruptcy Code, 2016 - seeking direction to Resolution Professional to place the present Applicant’s Resolution Plan for consideration before the Committee of Creditors - locus standi to file the application challenging the eligibility of successful resolution applicant.
Whether the Unsuccessful Resolution Applicant is having any locus standi to file the application challenging the eligibility of successful resolution applicant for presenting and approval of the resolution plan? - HELD THAT:- It cannot be said that the applicant has no locus standi to challenge the eligibility of the Successful Resolution Applicant for submitting the resolution plan, much less can it be said to be an abuse of the process of law with some vested interest.
Whether successful resolution applicant, namely, M/s Aggarsain Spinners Limited, is eligible under Section 29A(f) of the Code as per IA No.348/2021? - HELD THAT:- Proviso (1) to Section 30(4) requires that committee of creditors shall not approve a resolution plan where the Resolution Applicant is ineligible under Section 29A of the Code. Before submitting a plan before the committee of creditors, it is also incumbent upon the Resolution Plan to verify whether the Resolution Applicant is eligible under Section 29A of the Code - suffice for this ‘Tribunal’ to pertinently point out that an ex-facie opinion is to be offered to the ‘committee of creditors’ by the ‘Resolution Professional’ that the law was violated. It is also the duty of the ‘Resolution Professional’ to determine as to whether the eligibility criteria of the Resolution Applicant prescribed in Section 29-A of the Code are satisfied. The Resolution Professional has to consider the objections brought to his notice prior to the submission of the Resolution Plan to the ‘Committee of Creditors’. As per Section 30(2) of the Code, the Resolution Professional has to examine each resolution plan received by him to confirm that the resolution plan provides for payment of Insolvency Resolution Process Costs, Payment of Debts of the Operational Creditors, management of the affairs of corporate debtor, the fulfilment and supervision of resolution plan, other requirement as may be specified by the Board and that it does not violate any of the provisions of the law for the time being in force 0 A bare perusal of Section 29A(f) reveals that Resolution Applicant shall not be eligible to submit a resolution plan if it is prohibited by SEBI from trading in securities or accessing the securities markets.
Whether an express order of prohibition is required to be passed by SEBI directly or otherwise? - HELD THAT:- When SEBI having no restrictions in delegation of its power and functions under Section 11(1) of the SEBI Act, then certainly there was no need to pass any independent order directly by SEBI debarring the resolution applicant from accessing the securities market. More so Section 29A(f) of the Code does not provide for an order to be passed by SEBI prohibiting the resolution applicant from trading in securities or accessing the securities market. Admittedly, no such order was passed by SEBI expressly and it was also not required to be passed directly by SEBI when it has got ample open-ended powers to delegate its regulatory function to any other authority including BSE.
Whether the information received from SEBI by a third party under the RTI Act, 2006, filed in IA No.155/2022 is having some bearing upon the eligibility part of the successful resolution applicant? - HELD THAT:- While taking into consideration the point of eligibility of Resolution Applicant at the time of submitting the resolution plan, it is evident that no such order was every passed by SEBI at any point of time on the basis of such circulars. The said order could have been passed under the quasi-judicial powers of the SEBI, but so far as regulatory functions of SEBI is concerned, the said power stands delegated to BSE as so clarified by SEBI in its reply to the application under the RTI Act that SEBI by circular dated 01.08.2017, inter alia, states that the concerned stock exchange and depositories shall coordinate with each other and ensure compliance with the circular requirement. Therefore, it can be said that under the quasi-judicial function of SEBI, no such order was passed but under the regulatory functions, this power was delegated to the stock exchange to pass the appropriate order debarring the defaulter/non-compliant of the said circular issued by SEBI.
Whether the Resolution Professional has discharged his duty diligently about verifying the eligibility of resolution applicant before submission of resolution plan to committee of creditors for discussion and approval? - HELD THAT:- There is no averment and evidence placed on record on behalf of the Resolution Professional that before submitting the resolution plan to committee of creditors for approval, he had verified the antecedents of the resolution applicant from the websites of SEBI and BSE. If SBI has accessed this information from the BSE website, then certainly Resolution Professional could have also done so, if acted diligently. In these circumstances, it can be safely concluded that Resolution Professional has failed to discharge its duties diligently about verifying the eligibility of Resolution Applicant.
Whether the matter be referred back to the committee of creditors for determining the question of eligibility or this Bench may decide the eligibility of the Resolution Applicant and reject the resolution plan submitted by the Resolution Applicant being ineligible under Section 29A(f) of the Code? - HELD THAT:- From the careful perusal of the finding of the Hon’ble NCLAT, this Bench is competent to decide issue of ineligibility of Resolution Applicant at the time of submitting the Resolution Plan under Section 29A(f) of the Code as it has not been decided by the Committee of Creditors when the Resolution Plan was put before it by the Resolution Professional for approval.
The Resolution Applicant is declared ineligible under Section 29A(f) of the Code at the time of submission of the resolution plan and resolution plan submitted by Resolution Applicant stands rejected - the matter is referred back to the Committee of Creditors, which is ordered to be reinstated and revived to make another attempt for consideration of other resolution plans in accordance with law - application allowed.
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2022 (6) TMI 212 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Validity of directions issued by the NCLT after permitting the withdrawal of application - Direction to deposit the unpaid TDS amount, deducted from the employees, within the period of 15 days - HELD THAT:- The steps are being taken by the Income Tax Department for recovery of TDS amount. Present is a case where deposit of TDS amount deducted from the salary of the employees was not deposited by the Corporate Debtor inspite of specific clause entered into the Joint Settlement Agreement that the amount shall be deposited by the Appellant on or before 20.07.2021. The submission of the Counsel for the Appellant is that when Application under Section 9 was to be withdrawn by virtue of payment of all dues to employees under the Settlement Agreement, there was no occasion or jurisdiction of the Adjudicating Authority to issue direction to deposit TDS amount. While permitting withdrawal of Section 9 Application, the Adjudicating Authority could have passed an order taking into consideration the Settlement entered between the parties. Hence, direction to Appellant to deposit the deducted amount of TDS cannot be faulted.
Company Appeals are disposed of upholding the direction of the Adjudicating Authority to the Appellant to deposit the TDS amount. We, however, set aside the period of 15 days as allowed by the Adjudicating Authority to the Appellant to deposit and we observe that the deposit shall be made by the Appellant during the period as provided by the Income Tax Authorities.
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2022 (6) TMI 211 - NATIONAL COMPANY LAW TRIBUNAL , AMARAVATI BENCH
Maintainability of application - initiation of CIRP - Personal Guarantor of the Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - service of demand notice - opportunity to seek replacement of Resolution Professional, was provided or not - violation of principles of natural justice - HELD THAT:- It is evident from a reading of the Section along with the Rule, that what the Creditor has to serve is the copy of the application "made under sub-section (1)" to the Debtor. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form -C and the Creditor will serve forthwith "a copy of the application" to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been "submitted" - The procedure thus prescribed will give the Personal Guarantor, notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide a copy of the application "made under sub-section (1)", to the Debtor. Thus, serving advance copy is not contemplated.
The arguments that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for.
Any amount of audience is provided to the debtor before the Resolution Professional submits a report. Section 99 (2) of IBC gives an opportunity to the debtor to prove repayment of debt claimed as unpaid by the creditor. Section 99 (4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report. Hence there are no violation of principles of natural justice by not giving an opportunity to the Debtor for making his submissions before the appointment of IRP.
This Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016, since the application is found to be complete - Application admitted - moratorium declared.
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2022 (6) TMI 210 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - privity of contract - forum shopping - HELD THAT:- Undisputedly, the contract was given by NBCC to M/s. ERA Infra Engineering Limited and there was no agreement executed between the Applicant and the Respondent herein. No such agreement has been placed on record, whereby ERA Infra Engineering Limited might have been authorised to engage the sub-contractor and for that purpose the Respondent can be held liable and vice-versa.
From the record, it is not proved on the record that there was any privity of contract between the applicant and the Respondent herein except to the extent that one letter, which has been written by the Respondent to the M/s. ERA Infra Engineering Limited, that too was only with request to 'due payment' if any of M/s. ERA Infra Engineering Limited. Further, on 08.05.2018 M/s. ERA Infra Engineering Limited had undergone CIR proceedings therefore, any amount lying even if any with the Respondent qua the contract with M/s. ERA Infra Engineering Limited that cannot be made payable to the Applicant herein due to 'Moratorium'.
Apart that, there is a serious dispute qua the amount also, as the balance sheets of M/s. ERA Infra Engineering Limited is showing a sum of Rs. 51,79,028 due, whereas the Applicant has been claiming a sum of Rs. 7,10,07,021/-. Moreover, the Applicant has already availed the remedy before the Hon'ble High Court, Delhi by virtue of filing a writ petition 12427/2021, which was filed on 28.10.2021 against the respondent, whereas the demand notice was issued on 26.11.2021. The applicant also filed claim before Ld. R.P. of M/s. ERA Infra Engineering Limited, which was also rejected. Therefore, even otherwise, there is a preexisting dispute - Apart that the applicant is indulged in forum shopping.
This Tribunal is also affirm view that there is a serious dispute about the 'due payment', which cannot be decided in a summary manner and requires a detailed enquiry - Application rejected.
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2022 (6) TMI 209 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Approval of Resolution Plan - Seeking reconsideration of resolution plan submitted by the resolution applicant within the parameters of the provisions of the Code as required under regulation 39(3) of the CIRP Regulations, 2016 - alternatively seeking to place a revised resolution plan in consultation with the Committee of Creditors for the resolution of the Corporate Debtor - HELD THAT:- In the present case it is undisputed fact the Resolution Plans submitted by both the PRAs have been rejected by CoC. It is well settled that evaluation and acceptance of a resolution plan is exclusive domain of CoC who is expected to apply best of its commercial wisdom and arrive at appropriate decision.
Further, RP is agreed upon that unsuccessful Resolution Applicant does not have any vested right for consideration or approval of its resolution plan. Accordingly, having regard to the judgment of Hon'ble Apex Court in Arcelormittal India Private Limited v. Satish Kumar Gupta & Ors. [2018 (10) TMI 312 - SUPREME COURT] and submissions made by RP, there are no merits in contentions of the Applicant in present.
Application dismissed.
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2022 (6) TMI 208 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of present application - Setting aside and recall of order dated 23.11.2020 and 01.12.2020 u/r 49 r/w rule 11 of NCLT rules, 2016 - HELD THAT:- It is pertinent to discuss that Rule 49(2) of NCLT Rules, 2016 only provides that this Tribunal may set aside the order of ex-parte passed against the respondent, however, neither Rule 49(2) nor any other rule of NCLT Rules, 2016 provides that this Tribunal is empowered to recall its final order and review the same.
The relief sought by the applicant is not only with respect to set aside of ex-parte order dated 23.11.2020 but also recall of order dated 01.12.2020, which this Tribunal is not empowered to do. Hence, this Tribunal is inclined to dismiss the present application in view of the above facts and circumstances.
Application dismissed.
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2022 (6) TMI 173 - SUPREME COURT
Jurisdiction - approval of resolution plan - Power of NCLT / NCLAT over commercial wisdom of the Committee of Creditors (CoC) - seeking withdrawal of the application filed under Section 7 of the IBC in view of the Settlement Plan submitted by the appellant - whether the adjudicating authority (NCLT) or the appellate authority (NCLAT) can sit in an appeal over the commercial wisdom of the Committee of Creditors (CoC) or not? - HELD THAT:- Section 12A of the IBC was brought in the statute book on the basis of the said Committee’s Report. It could be noticed that though by the Amendment Act No. 26 of 2018, the voting share of 75% of CoC for approval of the Resolution Plan was brought down to 66%, Section 12A of the IBC which was brought in the statute book by the same amendment, requires the voting share of 90% of CoC for approval of withdrawal of CIRP. It could thus clearly be seen that a more stringent provision has been made insofar as withdrawal of CIRP is concerned.
Where an application for withdrawal under Section 12A of the IBC is made after the constitution of the Committee, the same has to be made through the interim resolution professional or the resolution professional, as the case may be. The application has to be made in FormFA. It further provides that when an application is made after the issue of invitation for expression of interest under Regulation 36A, the applicant is required to state the reasons justifying withdrawal of the same. The RP is required to place such an application for consideration before the Committee. Only after such an application is approved by the Committee with 90% voting share, the RP shall submit the same along with the approval of the Committee to the adjudicating authority. It could thus be seen that a detailed procedure is prescribed under Regulation 30A of the 2016 Regulations as well.
This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. It has been held that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts - the provisions under Section 12A of the IBC have been made more stringent as compared to Section 30(4) of the IBC. Whereas under Section 30(4) of the IBC, the voting share of CoC for approving the Resolution Plan is 66%, the requirement under Section 12A of the IBC for withdrawal of CIRP is 90%.
It is thus clear that the decision of the CoC was taken after the members of the CoC, had due deliberation to consider the pros and cons of the Settlement Plan and took a decision exercising their commercial wisdom. Neither the learned NCLT nor the learned NCLAT were justified in not giving due weightage to the commercial wisdom of CoC.
Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 172 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Liquidation of corporate debtor - disposal of asseets - Withdrawal of Scheme of arrangement under Section 230 of the Companies Act, 2013 - HELD THAT:- When no Scheme could be submitted or approved under Section 230, there was no option left to the Adjudicating Authority except to direct the Liquidator to proceed further in the liquidation process. The Appellate Authority while considering the Appeal filed against the order of the Liquidation has clearly stated that the Appellate Authority is not inclined to interfere with the impugned order.
The mere fact that the Appellants in this Appeal claims that they are interested to offer a higher amount to one which the Corporate Debtor has been auctioned cannot be a ground to entertain this Appeal or interfere with the impugned order. Everyone including the Appellants had ample opportunity before the Adjudicating Authority when proceedings were on to submit appropriate Scheme Under Section 230. A Scheme under Section 230 was submitted by ‘Mahalaxmi Continental Limited’ an Operational Creditor which was a consortium of Operational Creditors including some of the Appellants also. The Scheme was subsequently withdrew by the Applicant. It is amply clear that there is no Scheme under Section 230 which may obviate proceeding in the liquidation.
No grounds have been made out to interfere with the impugned orders - Appeal dismissed.
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2022 (6) TMI 170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Initiation of CIRP - Period of limitation -acknowledgement of debts in the Balance Sheet - Corporate Debtor failed to make repayment of its dues - Non-Performing Asset - existence of debt and dispute or not - Whether Limitation under Section 7 Application is triggered from 15/06/2013 the date of ‘default’ or from 31/03/2014 on which date the Bank has classified the Account of the ‘Corporate Debtor’ as ‘NPA’? - HELD THAT:- In view of this letter, signed and stamped by the ‘Corporate Debtor’, the specific ‘Date’ on which the account was declared as NPA for the purpose of Limitation pales into insignificance. What is pertinent herein is that the Appellant has acknowledged that there is a loan of Rs. 1665.00 Lakhs/- which was taken under various heads that there is an amount which is ‘due and payable’ as on 31/03/2014 meaning thereby that there is a ‘Debt’ as defined under Section 3(11) of the Code and a ‘default’ as defined under Section 3(12) of the Code - the letter signed and stamped by the ‘Corporate Debtor’ acknowledged, the debt as on 30/03/2014, construes clear ‘acknowledgment of debt’ as stipulated under Section 18 of the Limitation Act, 1963, thereby granting a fresh period of Limitation for another three years from 30/03/2014, which is nine months from the admitted ‘date of default’.
Whether an OTS proposal given ‘without Prejudice’ construes ‘Acknowledgement’ as stipulated under Section 18 of the Limitation Act, 1963? - HELD THAT:- It remains trite that the question of Limitation is essentially a mixed question of fact and law and in this case a strong foundation has been laid in Part V of the Application. It is noteworthy to state that ‘a document constituting an acknowledgment has to be construed in the context in which it is given. At this juncture, we find it relevant to quote, ITC LIMITED VERSUS BLUE COAST HOTELS LTD. & ORS. [2018 (3) TMI 932 - SUPREME COURT], in which the Hon’ble Supreme Court dealing with whether Section 3(A) of Section 13 of SARGAESI, was mandatory or directory, took note of the ‘Notices’ issued by the ‘Financial Creditor’ and the different proposals made by the Debtor including a ‘Letter of Undertaking’ saying that they were given ‘without Prejudice’.
The admission of the ‘debt’ ‘due and payable’ is further explicit in the letters dated 20.04.2015 which is reproduced in the aforenoted para 4 wherein the Corporate Debtor has admitted the debt, and has also undertaken to pay the amount and requested the Financial Creditor to ‘verify the amount so that it could be immediately paid’. It is significant to mention that in this letter dated 20.04.2015 the phrase ‘without prejudice’ is omitted - the default amount has already been acknowledged on 31/03/2014, on 20/04/2015 and on 10/08/2016 in confirmation with Section 18 of the Limitation Act, 1963.
Whether the Adjudicating Authority was justified in admitting the Section 7 Application holding that the Application was not ‘barred by Limitation’? - HELD THAT:- Section 134 of the Companies Act, 2013 requires that every Balance Sheet shall be signed by not less than two directors of the Company. The Balance Sheet for the Financial Year 2016-2017 evidences acknowledgement of the loan/borrowings and is duly signed on 04.09.2017 by the Chartered Accountant and by both the directors, one of whom is the Appellant himself - In the instant case, the Balance Sheet for the Financial Year 2016-17 and the appended notes to the Financial Statements clearly specify the ‘debt’ owed to the ‘Financial Creditor’. The material on record does not define any ‘caveats’ forming part of the Financial Statements to prove otherwise.
This Tribunal is of the considered view that the acknowledgement in Balance Sheet for FY 2016-17, relied upon by the Financial Creditor, is unequivocal and crystallizes the issue of ‘acknowledgement of debt’ as defined under Section 18 of the Limitation Act, 1963 - this Tribunal is of the earnest view that the Application filed under Section 7 of the Code is well within the period of Limitation.
As regarding the contention of the Learned Counsel for the Appellant that the ‘Corporate Debtor’ had initiated Proceedings under Section 14 of the SARFAESI Act, 2002 and has recovered some amounts and taken physical possession of some of the assets and therefore the ‘Financial Creditor’ is precluded from initiating CIRP under IBC, 2016, is without merit, especially keeping in view Section 238 of the Code which overrides other laws. The material on record also shows that the Bank has specifically pleaded that the Application moved under Section 14 of the SARFAESI Act, 2002 on 04/02/2017, was dismissed by the ADM on 03/10/2017 and that the assets were never sold and no money was realized against the same. The documentary evidence on record shows that a Writ Petition was also preferred before the Hon’ble Bombay High Court and the Bank was given the liberty to file a fresh Application under Section 14 of the SARFAESI Act, 2002.
Appeal dismissed.
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2022 (6) TMI 169 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Pecuniary Jurisdiction/monetary limit involved - HELD THAT:- The last invoice was raised on 28.05.2017, whereas the present application is filed on 01.01.2020, therefore, it is well within the limitation period and since the application was filed prior to the issuance of the notification dated 24.03.2020, by which the minimum threshold has been increased from Rs. 1 lakh to Rs. 1 crore, therefore, the present application is also within the pecuniary jurisdiction of this Bench.
The amount of default is also not denied by the Respondent either by filling the reply to the demand notice or even by filling the written synopsis. It is further observed that there is no pre-existing dispute and the application is complete. The Applicant has not proposed the name of IRP. The application fulfills the requirement of Section 9(5)(i) of the IBC 2016.
Petition admitted - moratorium declared.
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2022 (6) TMI 168 - NATIONAL COMPANY LAW TRIBUNAL , JAIPUR BENCH
Maintainability of application - initiation of CIRP - Personal Guarantors to Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Application has been filed in respect of debts which are not excluded debts as enumerated under Section 79(15)(e) of the Code. It is noted that no application under Chapter III of Part III of the Code has been admitted before this Adjudicating Authority in respect of the Applicant/Debtor during twelve months preceding the date of submission of the instant Application. The Applicant has filed an affidavit stating that she is not barred in terms of Section 94(4) of the Code. The Application under consideration is in a Form-A format and accompanied with the required fees as prescribed and contains the required details. Thus, prima facie the requirements of Section 94 of the Code are fulfilled.
As stipulated under Section 96(1) of the Code interim moratorium commences from the date of filing of the Application under Section 94 or 95. Accordingly, in the instant matter interim moratorium commences from 04.01.2022 i.e., from the date of filing of the instant Application, concerning all the debts, and interim moratorium shall cease to have effect from the date of admission of the Application - As per Rule 6(2) of the Rules, the Guarantor has served a copy of this application to every financial creditor and the corporate debtor for whom the guarantor is a personal guarantor. It is seen that the Guarantor has annexed proof of service to the creditors and Corporate Debtor in form of postal slips. In this respect, the Applicant had been directed to file an affidavit of service to the creditors and Corporate Debtor along with a tracking report, the same has been filed vide Diary No. 225/2022 dated 27.01.2022.
Application admitted - moratorium declared.
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2022 (6) TMI 167 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold amount to maintain application - HELD THAT:- It transpires from the records that although the Demand Notice was issued in 2019, the Operational Creditor has filed the present application in the year 2021 after a lapse of nearly two years. Further, the Operational Creditor has claimed the default on part of the Corporate Debtor for the amount of Rs. 26,20,992/- which is inclusive of interest @18% per annum calculated from 11.07.2018 till 11.01.2021. However the, said amount is below the pecuniary limit fixed by the Central Government vide notification dated 24.03.2020.
The present application is filed on 14.02.2021 and the amount claimed in default is less than Rs. 1 Crore. Therefore, in the light of the notification dated 24.03.2020, the present application does not fulfill the minimum threshold limit to trigger the Corporate Insolvency Resolution Process.
The instant Application filed by the Applicant under Section 9 of IBC, 2016 is not maintainable - Application dismissed.
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2022 (6) TMI 166 - NATIONAL COMPANY LAW TRIBUNAL , CHANDIGARH BENCH
Seeking direction to claim of the applicant submitted on 26.04.2019 as a financial debt owed by the corporate debtor to Vardhman Industries - whether the claims of the applicant have been properly verified before the rejection of the same by the Resolution Professional? - HELD THAT:- From the correspondence between the parties, it is clear that no serious effort was made by the Resolution Professional to classify the debts into financial and operational debts of the applicant. There is no denying the fact that the Resolution Professional needs documents and supporting evidence to decide on the nature of a claim for the purpose of admission of the same. The documents brought on record have not shown any kind of non-compliance by the applicant to any query raised by the Resolution Professional in this regard.
The very fact that prior to the CIRP both the applicant and the respondent were under the same management would have ensured a better appreciation of the facts presented by the applicant relating to its claim. In the course of the present proceedings, the Resolution Professional could not justify the rejection of the detailed claim made by the applicant and also his inability to classify the same into operational and financial debts. The Resolution Professionals' statements that after receiving details of the claim he could not change his earlier decision to reject the same on the ground that he was advised not to review his original rejection is against the tenets of equity. To sum up, this rejection of the claim of the applicant could not be justified by the Resolution Professional during the present proceedings.
This Bench is of the view that the Resolution Professional has failed in his duty to analyze the evidence placed before him regarding the nature of transactions of the applicant reflected in the books of the corporate debtor and present the complete facts regarding the admissibility of the claims made by the applicant before the CoC. The Resolution Professional in the present case was duty-bound to verify these transactions and put the same before the CoC with the complete factual and legal position rather than reject it summarily - this Bench directs the Resolution Professional to reconsider the claims made by the applicant with reference to the evidence already before him.
Release of salary - HELD THAT:- It is noted that there are claims and counter-claims regarding the genuineness of the documents submitted before this Bench especially those relating to the terms and duration of employment and resignation of the applicants. In this context, it is made clear that this Bench does not provide the forum for deciding on the genuineness of the documents placed in the course of the proceedings.
The Resolution Professional is directed to reconsider the claims made by the applicants regarding the payments of their salary, gratuity, and other perks strictly as per the terms and conditions laid down at the time of their employment and put up his findings before the CoC. This Bench, however, cannot decide on the claims and counter-claims made regarding the genuineness of the documents relied upon during the present proceedings and the parties may take up these issues before the Competent Judicial Authorities, if they decide to do so.
Seeking direction to the Respondent- Resolution Professional to not interfere in the usage Vodafone-Idea Mobile Numbers belonging to the applicant - HELD THAT:- The Resolution Professional is directed not to interfere in the usage of the above mobile numbers and allow the applicant to continue the usage of the SIM cards mentioned in his prayer in his private capacity - Application allowed.
Direction to direct Resolution Professional to pay the outstanding amount - HELD THAT:- A perusal of the facts of the present application indicates that there is a continuing dispute regarding a few transactions of supply of cotton yarn made by the applicant to the corporate debtor after the initiation of the CIRP. It is also observed that most payments regarding yarn supplies made by the applicant have been made except in the cases of the disputed transactions of supply of yarn. The reasons for the non-payment by the corporate debtor is attributed to the low quality of yarn supplied by the Applicant. The parties have made claims and counterclaims on the quality issue.
This Bench is of the view that the prayers made by the applicant cannot be acceded to - Application dismissed.
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2022 (6) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Refusal to entertain the belated claims of Homebuyers as Financial Creditors of the Corporate Debtor - rejection of claim having been filed after delay of eight months from the cut-off date - whether after approval of the Resolution Plan on 20.07.2021 by CoC, the claim of the Appellant(s) stood extinguished? - Resolution Professional is required to include details of Homebuyers as reflected in the records of the Corporate Debtor in the Information Memorandum, even though they have not filed their claim before the Resolution Professional within time? - dealing with Resolution Plan regarding Homebuyers, whose names and claims are reflected in the record of the Corporate Debtor, although they have not filed any claim.
Whether the Adjudicating Authority has rightly rejected the IAs filed by the Appellant(s) seeking direction to include their claims, which was belatedly filed? - HELD THAT:- There is no dispute between the parties that the claim by the Appellant(s) were filed beyond the timeline prescribed in Form-A. Form-A required that the claims to be filed by 11.11.2020, whereas the claims were filed by the Appellant(s) on 14.07.2021, 23.07.2021 and in 09.11.2021.
The List of Creditors was already published by Resolution Professional, which did not include the name of the Appellant(s). The Resolution Plan as submitted by Resolution Applicant was based on List of Creditors as published by Resolution Professional. It is true that Homebuyers whose number runs in several hundred in real estate project belong to different class of Financial Creditors. All Homebuyers who have booked a flat may not normally be residing in the area where Corporate Debtor has its corporate office and registered office - The Homebuyers are a class belonging to middle class of society and majority of whom, who book flat has taken loan from Banks and other financial institutions and they are saddled with liability to pay their loan from their hard-earned income they make payment to the Corporate Debtor in hope of getting a possession of the flat for their residence. Non-submission of claim within the time prescribed is a common feature in almost all project of real estate. But as law exists today, they cannot be included in the List of Creditors and that too after approval of Plan by CoC. There are no ground to interfere with order of the Adjudicating Authority rejecting their Application for admission of their claim.
Whether after approval of the Resolution Plan on 20.07.2021 by CoC, the claim of the Appellant(s) stood extinguished? - HELD THAT:- The Hon’ble Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT] while dealing with the similar question, concluded in paragraph 102.1 and held that once Resolution Plan is approved by the Adjudicating Authority, the claims as provided in the Resolution Plan shall stand frozen and all such claims, which are not part of Resolution Plan shall stand extinguished - It is thus clear that extinguishment of claim of the Appellant(s) shall happen only after approval of the Plan by the Adjudicating Authority. The argument of the Respondents that since CoC has approved the Resolution Plan, the claim of the Appellant(s) have been extinguished, cannot be accepted as there is no extinguishment of claim of the Appellant(s) on approval of Plan by the CoC.
Whether the Resolution Professional was obliged to include the details of Homebuyers as reflected in the records of the Corporate Debtor in the Information Memorandum, even though they have not filed their claim before the Resolution Professional within time? - Whether Resolution Applicant ought to have also dealt with Resolution Plan regarding Homebuyers, whose names and claims are reflected in the record of the Corporate Debtor, although they have not filed any claim? - HELD THAT:- Looking to the procedure as is prevalent regarding filing of the claim by Financial Creditors, large number of Homebuyers are unable to file their claim within the time due to various genuine reasons related to such Homebuyers. Homebuyers make payment to the Corporate Debtor, receive allotment letter from the Corporate Debtor and also enter into Builder Buyers Agreement. All the documents pertaining to Homebuyers are on the record of the Corporate Debtor and Interim Resolution Professional/ Resolution Professional does take charge also of all the records of the Corporate Debtor. Even though, Interim Resolution Professional/Resolution Professional are not obliged to include the name of such Homebuyers, who have not filed the claim within the time in their List of Creditors, but there is no reason for not collating the claims of such Homebuyers whose claims are reflected from the records of the Corporate Debtor, including their payments and allotment.
When the allotment letters have been issued to the Homebuyers, payments have been received, there are Homebuyers and there is obligation on the part of real estate Company to provide possession of the houses along with other attached liabilities. The liability towards those Homebuyers, who have not filed their claim exists and required to be included in the Information Memorandum. Further, under Regulation 36, sub-regulation 2(l), there is column for other information, which the Resolution Professional deems relevant to the Committee - The purpose of CIRP of Corporate Debtor is to find out all liabilities of the Corporate Debtor and take steps towards resolution. Unless all liabilities of the Corporate Debtor are not known or included in the Information Memorandum, the occasion to complete the CIRP shall not arise.
In the present case there is no denial that details of the Appellant(s) and other Homebuyers, who could not file their claims has not been reflected in the Information Memorandum. There being no detail of claims of the Appellant(s), the Resolution Applicant could not have been taken any consideration of the claim of the Appellant(s), hence, Resolution Plan as submitted by Resolution Applicant cannot be faulted - the ends of justice would be met, if direction is issued to Resolution Professional to submit the details of Homebuyers, whose details are reflected in the records of the Corporate Debtor including their claims, to the Resolution Applicant, on the basis of which Resolution Applicant shall prepare an addendum to the Resolution Plan, which may be placed before the CoC for consideration.
Appeal disposed off.
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2022 (6) TMI 107 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Auction - extension of 30 days time for filing auction bid - non-speaking order - HELD THAT:- On examination of the email of the Appellant there is no difficulty to infer that the Appellant was not at all interested to participate but his sole object was to delay the bid. Even though as per auction notice which was held on the date fixed i.e. 20.04.2021 total 16 bidders participated but much belatedly the Appellant started raising dispute and finally he filed IA Petition before the Adjudicating Authority assailing the bid. Of course, the order of the Adjudicating Authority is not elaborate but on perusal of the same it is reflected that despite indulgence given by the Adjudicating Authority for depositing the amount as stated by the Appellant, he never comply with the same and one way or the other he was trying to delay the proceeding and as such the learned Adjudicating Authority was left with no option but to reject the same - The sanction letter which was annexed with the additional affidavit of the Appellant filed before the Adjudicating Authority makes it clear that the Appellant’s application for capital bridge funding was of Rs.300 lakhs whereas sanction of funding was shown as Rs.700 lakhs. Such stand taken by the appellant itself creates serious doubts on the conduct of the appellant.
The appellant has initiated the present proceeding only and only with a view to defeat the auction sale - Appeal dismissed.
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2022 (6) TMI 106 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Initiation of CIRP - existence of debt and dispute or not - Payment withheld by the respondent corporate debtor on the ground of alert circular issued by the GST department - It is submitted that, they are still willing to pay the amount once they provide the bank guarantee for the GST amount involved - NCLT rejected the application - HELD THAT:- It is not in dispute that the Appellant is a ‘Trader’ and whenever he used to get any order from any source, he used to put corresponding order on the supplier/manufacturer of that particular goods and used to directly ask them to make direct supply to the concerned source/CD - the Respondent has raised the dispute on the issue of the Input Tax Credit in the reply to the demand notice itself. Although they have not replied within 10 days which is directory in nature but has replied in a very short period (Demand notice is dated 01st July, 2019. Reply received from CD by Appellant on 22nd July, 2019). Hence, it meets the criteria of Section 9 of the Code for raising the dispute. As in the circumstances stated, this is not a moonshine defence.
The IBC is a summary proceeding. The role of the Code is limited to Insolvency Resolution to Corporate Persons in a time bound manner & in case of initiation of CIRP by Operational Creditor, the Operational debt must be undisputed. As far as the GST dispute is concerned, he is free to approach Appropriate Forum under Chapter – V of the Sale of Goods Act, 1930 for redressal of its grievance - I&B Code clearly provides for the requirements of following three criteria’s before admission of a petition under Section 9 of the Code for initiation of CIRP by Operational Creditor (i) the ‘Debt’ must be due and payable in law (ii)there must be occurrence of default & (iii) the ‘Debt’ must be undisputed.
It is very much clear that the amount is outstanding. But the amount is not due and payable in the law as is very much evident from the facts that one of the supplier of the Appellant has on the basis of intelligence input and investigation conducted by ‘anti invasion’ branch of the Commissionerate of GST has revealed that the concerned supplier has taken registration under GST Regime is nonexistent and fictious, resulting into perceived loss of more than two times of the outstanding amount loss to the CD without any mistake on the part of the CD - it can be concluded that it is not meeting the criteria of either debt is due and payable in law or the Debt must be undisputed which are the pre-requisite for the admission of case under Section 9 of the Code. The Appellant is not even meeting the criteria ‘as enunciated in Section 9(5)(d) as no notice of dispute has been received by the Operational Creditor. The Operational Creditor has raised the issue with a dispute that the Appellant is not providing bank guarantee. The Appellant /OC has factually failed to communicate that there is no existence of dispute.
The Hon’ble Supreme Court in TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED VERSUS EQUIPMENT CONDUCTORS AND CABLES LIMITED [2018 (10) TMI 1337 - SUPREME COURT] has already held that IBC is not intended to be a substitute to a recovery forum and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The Code cannot be used whenever there is existence of real dispute and also whenever the intention is to use the Code as a means for chasing of payment or building pressure for releasing the payments.
Appeal dismissed.
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2022 (6) TMI 105 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues/defaulting settlement deed - Operational Creditors - existence of debt and dispute or not - HELD THAT:- On behalf of the Applicant herein the settlement deed dated 20.04.2022 has been placed on record, wherein it is clearly mentioned that an amount of Rs. 5,25,00,000/- to be paid by the Corporate Debtor to the Applicant and out of the settled amount of Rs. 2,01,92,143/- shall be payable against the principal and Rs. 3,23,07,857/- shall be payable towards interest to the Operational Creditor. Further it is agreed that post-dated cheques 069333 to 069345 (Total 13) of different amounts shall be given by the Respondent/Corporate Debtor to the Operational Creditor towards the above-said amount. In the said settlement, it is also mentioned that the payment shall be either made through cheques or RTGS.
A copy of demand draft dated 10.05.2020 of an amount of Rs. 45 lacs has also been placed on record, existing in the name of Shobha Cards Private Limited, which further indicates that the respondent has intent to pay the amount as per settlement deed. Thus, the Operational Creditor merely wants to recover that amount and not having a fair intent to trigger CIR proceedings. Had, it would have been there, the Operational Creditor might have not withdrawn the earlier petition. NCLT cannot be permitted to move at the whims and wishes of unscrupulous persons, as the main intent of the legislation was to keep the Corporate Debtor as going concern. The parties, who are coming forward to file the petition under Section 7 or 9 of the code with malicious intent to initiate CIR proceedings are to be curbed at the very outset. NCLT cannot allowed to become "Recovery Tools" for such like litigants.
This Tribunal is of affirm view that the no cause of action has arisen to initiate CIR proceedings and the present applicant has also not come with clean hands to trigger the same - application not maintainable and is dismissed.
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