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Insolvency and Bankruptcy - Case Laws
Showing 21 to 40 of 178 Records
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2022 (9) TMI 1297
Condonation of delay of 45 days in filing appeal - Appellant failed to apply for certified copy within 30 days period - it is alleged that the Appeal is barred by time as filed beyond extended time of limitation prescribed under Section 61(2) of the Code - Section 12(2) of Limitation Act, 1963 - HELD THAT:- In the facts of the present case, when order was passed on 06.05.2022, the period of 30 days expired on 06.06.2022. 15 days period upto which delay is condonable under Section 61(2) also expired upto 20.06.2022. The appeal by the Appellant having been filed on 06.07.2022 is clearly beyond the 45 days - In the present case, certified copy is claimed to be applied by the Appellant on 15.06.2022 i.e. after expiry of limitation. Thus, the present appeal has been filed beyond 45 days from date of the order dated 06.05.2022 and delay of more than 15 days beyond the period of 30 days cannot be condoned by this Tribunal in exercise of its jurisdiction under Section 61(2) of the I&B Code.
There are no good ground to allow section 5 application filed by the Appellant. Delay condonation application is dismissed.
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2022 (9) TMI 1296
Revival of Insolvency Application - whether Application filed by the Appellant under Section 9 was entertainable by the Adjudicating Authority? - time limitation - HELD THAT:- There is no enabling provision in the Code to revive the Application, Learned Counsel for the Appellant has relied on a Judgment of “Shree Bhadra Parks and Resorts Ltd.” [2021 (4) TMI 402 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI]. This Tribunal had held that the Adjudicating Authority has jurisdiction under Rule 11 of NCLT, Rules to revive the Application. In the above case, the Adjudicating Authority had passed an Order dated 28th January, 2021 restoring the Company Petition.
Initiation of proceeding under Section 9 by filing an Application to the Adjudicating Authority has to be made by Operational Creditor which must comply with requirement of Section 4. Part-II of the Code which deals with Insolvency Resolution and Liquidation for Corporate Persons applies only when minimum amount of default is Rs. 1 Crore (w.e.f. 24th March, 2020). Thus initiation of an Application under Section 9 has to conform to the requirement under Section 4. Section 4, as it is in operation with effect from 24th March, 2020, is not a mere procedural provision but provides a substantive condition to be fulfilled by an Applicant to initiate CIRP.
The period of default after 25.03.2020 as provided in Section 10-A was entirely for different purpose. The purpose was to protect the corporate debtor from insolvency initiation for default committed on or after 25.03.2020 when whole country was suffering from Covid-19 and all corporate debtors were unable to function effectively, hence default in the said period legislatively was treated to be not giving rise to initiate insolvency. The threshold in Section 4 is entirely different from the protection given under Section 10 A hence Section 10-A has no relevance with regard to interpreting requirement of Section 4.
Application filed by the Appellant under Section 9 on 08.09.2021 for an amount of Rs. 46,64,249/- was not entertainable due to not fulfilling the threshold of Rs. 1 Crore as statutorily required under Section 4 of the Code with effect from 24.03.2020 - there is no merit in the Appeal, the Appeal is dismissed.
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2022 (9) TMI 1295
Handing over possession of an asset of immovable property belonging to the Corporate Debtor to IRP - HELD THAT:- The Agreement to Sell, which is relied by the Appellant dated 30.12.2019 contemplated sale of the immovable property of the Corporate Debtor for a consideration of Rs.1.70 crores. In the Agreement, the Appellant claimed to have paid Rs.30 lakhs. There is no proof by the Appellant for making payment of balance amount of Rs.1.40 crores. The Leave and License Agreement, which is relied by the Appellant dated 30.12.2019 is an unregistered document, where the Corporate Debtor claims to have granted the permission to the Licensee to occupy the property together with building till the time Licensor and Licensee execute the Sale Deed - The Leave and Licensee Agreement is thus admittedly without any consideration.
The present is a case where ownership of the asset is not denied even by the Appellant. The submission, which has now been pressed by the learned Counsel for the Appellant is that Adjudicating Authority has no jurisdiction to entertain the Application - The Leave and License Agreement under which the Appellant is occupying the assets could not have been cancelled by the Adjudicating Authority, nor the Leave and License could be disregarded by the Adjudicating Authority by directing the Resolution Professional to take possession of the assets.
Whether the Appellant has any right to resist for taking possession of the assets by the IRP? - HELD THAT:- The Leave and License Agreement was executed without any consideration. Clause 2 of the Leave and License Agreement clearly contemplated that Licensor shall not charge any License Fee from the Licensee, for grant of Leave and License of the said premises. Section 25 of the Contract Act, 1872 provides that Agreement without consideration are void, unless it is in writing and registered - The present is a case where Leave and License Agreement was executed without any consideration and the document, which has been relied by the Appellant is an unregistered document. Thus, it is not saved by exception as carved out in Section 25, sub-section (1). The document is a void document, which shall not give any right to the Appellant to resist taking up the possession by the RP of the assets belonging to the Corporate Debtor.
The Adjudicating Authority has not committed any error in directing the Appellant to handover the possession of the assets belonging to the Corporate Debtor - Appeal dismissed.
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2022 (9) TMI 1294
Seeking direction to the present Appellants to jointly and severally pay the Corporate Debtor the principal amount outstanding alongwith interest as claimed by the Resolution Professional - Sections 60(5) and 25 of the IBC - whether an amount of Rs. 50 lakh is outstanding for recovery from Appellant No. 1 Company and payable to the Corporate Debtor? - lifting of corporate veil - time limitation - HELD THAT:- After proper examination of records and financial statements of the Corporate Debtor and after due diligence, the RP has concluded from the ledger account of Appellant No. 1 company as maintained in the books of account of the Corporate Debtor as placed as at page 178 of the Appeal Paper Book (APB) that an amount of Rs. 50 lakhs was outstanding and due for payment. Following this discovery, we find that the RP/Respondent methodically took up the matter, as obligated under the IBC, by sending emails/letters at regular intervals to the Appellant No. 1 company including the statutory auditor as well as to Appellants No. 2 to 4 being Directors of Appellant No. 1 company to make good the outstanding amount along with interest @18% per annum.
There are no reasons to disagree with the findings of the RP/Respondent that the contents of the SPA do not indicate any role of the Corporate Debtor in the entire transaction - in the absence of any established link of the Corporate Debtor with this share related transaction between Appellant No. 1 and the SRS Ltd., the Adjudicating Authority has concurred in the findings of the RP/Respondent that the amount of Rs. 50 lakh remains outstanding and recoverable from the Appellant No. 1 Company and other Appellants jointly and severally.
Whether the recoverable amount of Rs. 50 lakhs is barred by limitation? - HELD THAT:- The claim that the share purchase transaction between the Appellant No. 1 company and SRS Limited amounted to recovery of the said sum lacks credence in the absence of any documentary substantiation. It is also an uncontested fact that there is no loan agreement between the Appellant No. 1 and the Corporate Debtor in this regard. Furthermore, nothing has been placed on record to indicate that this amount had to be repaid back within any specific time-line. In other words, the said sum was payable on demand anytime. Given the above, we hold that the applicability of limitation period in the present case does not stand to reason. Once the Corporate Debtor has come under CIRP, the logical corollary is that all actionable claims of the Corporate Debtor must be brought back into the corpus kitty of the Corporate Debtor - the RP/Respondent has rightly issued the demand notice on 29.04.2019 and 09.05.2019 to the Appellant No. 1 company as the said amount is due and payable from it.
Whether Appellant No. 1 company is alone liable for the recovery of the outstanding advance or the recovery can be jointly and severally sought against Appellant No.2, 3 and 4? - HELD THAT:- The Adjudicating Authority while disregarding the separate legal entity of the Appellant No. 1 company has also not recorded the reasons for holding the individual members jointly and severally liable for the obligations of the corporate entity. The Adjudicating Authority is no doubt entitled to lift the veil of the corporate entity but in doing so must delineate the reasons for piercing the corporate veil and show as to how and to what extent the individual members are liable. This not having been done by the Adjudicating Authority, we are of the considered opinion that the outstanding amount alongwith interest is recoverable from Appellant No. 1 company and not jointly and severally at this stage.
The Adjudicating Authority has not committed any error in holding that an outstanding principal amount of Rs. 50 lakhs along with 18% interest is due and recoverable by the Resolution Professional and to that extent affirm the impugned order - this amount alongwith interest is recoverable only from Appellant No. 1 company and therefore set aside that part of the impugned order which held that this amount is jointly and severally recoverable from Appellants no. 1 to 3 - Appeal allowed in part.
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2022 (9) TMI 1291
Seeking dissolution of the Corporate Debtor - Section 54(1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- The ultimate objective of the Code is either to resolve by way of a Resolution Plan or to liquidate the Corporate Debtor, as expeditiously as possible. The facts and circumstances of present case justifies that no purpose would be served to keep the Corporate Debtor under CIRP and/ or under Liquidation Proceedings. The Adjudicating Authority is vested with inherent powers under Rule 11 of NCLT Rules, 2016 conferred under the Act, to pass appropriate order(s) in the interests of speedy justice.
No useful purpose would be served by placing the Corporate Debtor under the Liquidation Process which will increase the cost without any fruitful result. The State Bank of India, the sole CoC member has already proceeded against the Corporate Debtor by approaching DRT and by taking possession. The Liquidation Process under the provisions of the Code can be considered to have been carried forward and thus it would be just and proper for the Adjudicating Authority to dissolve the Company, as proposed by the Resolution Professional, moreover when the sole CoC member in its commercial wisdom has passed a resolution seeking dissolution of the Corporate Debtor.
This is a fit case for dissolving the Corporate Debtor without undergoing the liquidation process - Corporate Debtor, M/s. Nassco Trading India Private Limited is ordered to be dissolved with immediate effect - application allowed.
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2022 (9) TMI 1290
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- On perusal of records, it can be seen that while an amount of ₹2,00,00,000/- was disbursed by the Financial Creditor to the Corporate Debtor on 07.02.2014, there are no documents to prove whether the said amount was disbursed as a loan or ICD to the Corporate Debtor. However, in para 3(v) of the reply affidavit, the Corporate Debtor has admitted to the taking of the loan by the erstwhile director, albeit without the knowledge of the current directors cum promoters - The same has also been admitted by the Corporate Debtor in para 9 and 14 of its supplementary affidavit.. Further, repayments have been made by the Corporate Debtor to the bank account of the Financial Creditor. As such, it can be concluded that a financial debt does exist in favour of the Financial Creditor from the Corporate Debtor.
Time Limitation - HELD THAT:- The disputed payments were made in 15.10.2016, 23.02.2017 and 27.02.2017. According to section 19 of the Limitation Act, 1963, when payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period of limitation, by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made. Therefore, taking into account the said dates, the petition is well within the period of limitation.
This adjudicating Authority is satisfied that there exists a financial debt, due from the Corporate Debtor to the Financial Creditor and the Corporate Debtor has defaulted in the repayment of the same. Further, the petition is complete in all respects - Application admitted - moratorium declared.
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2022 (9) TMI 1289
Misconduct in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - mistreatment of the Homebuyers as a class of creditors - 368 Homebuyers (applicants) purchased properties from the Corporate Debtor against the Resolution Plan of the Corporate Debtor - whether liquidation value is required to be provided to every individual Home buyer under Section 30(2)(b)(ii) in the capacity of a dissenting Financial Creditor? - HELD THAT:- Individual Homebuyers may have divergent views but ultimately, they vote as a class and individuals therein cannot claim to be ‘dissenting financial creditors’ if they vote against the Resolution Plan - since Individual Homebuyers cannot be called as dissenting Financial Creditors, the question of providing separate liquidation values to each Homebuyer under Section 30 of the Code does not arise.
Whether the e-voting conducted by the RP for approval of the Resolution Plan was carried out following due procedure? - HELD THAT:- In case the Homebuyers are not satisfied with the conduct of the AR, they have the option of replacing him. Since no such steps were taken in the present case, the AR proceeded to vote in favour of the Plan according to the majority votes of the Homebuyers and since he did not change his vote after receiving the communication regarding extension of the voting lines, it is deemed that the AR voted according to the instructions he received from the Homebuyers he represents - this is a belated stage for the Homebuyers to raise allegations against the AR especially after the CoC has voted in favour of the Resolution Plan with an overwhelming majority of 96.14% voting share. Moreover, the AR has already voted in favour of the Plan and a change in this decision would not influence the results in a substantial manner given that the Homebuyers hold 7.45% voting share in the CoC.
Environment Clearances - HELD THAT:- It is noted that the Applicants’ apprehensions related to extension of the EC are legitimate and the EC is a mandatory compliance for the revival of the Corporate Debtor. The RP is cognizant of this fact and has taken several steps to procure the EC as expeditiously as possible. He has approached relevant authorities such as the State Environment Impact Assessment Authority (SEIAA), State Level Expert Appraisal Committee (SEAC), Principal Secretary of the Environment Department (Government of Maharashtra) and has also filed appropriate applications before authorities such as the National Green Tribunal. It is evident from these steps that the RP comprehends the importance of the EC and the gravity of the consequences of its non-procurement. These applications are pending adjudication before the respective authorities and it is clear that the RP has not acted adversely to the interests of the members of the CoC including the Homebuyers.
There ate no merit in the present Application - application dismissed.
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2022 (9) TMI 1288
Initiation of Voluntary Liquidation proceedings under IBC - section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On examining the submission made by the counsel appearing for the petitioner and the documents annexed to the petition it appears that the affairs of the company have been completely wound up, and its assets have been completely liquidated.
The submissions made by the Liquidator the Company deserves to be dissolved - Petition allowed.
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2022 (9) TMI 1221
Seeking directions for review of the observations & conclusions as contained in the Judgement and Order [2022 (3) TMI 998 - TRIPURA HIGH COURT]- whether Review Petitioner was not a party to the original PIL proceedings? - HELD THAT:- The Case at hand is an example of the interplay between the explanation to Section 18 and other provisions of the Code on the peculiar facts of the case, in our considered view, the NCLT correctly found that the decreed property was an asset of the Review Petitioner held in trust by the corporate debtor. In fact, it was even being maintained by the Review Petitioner in terms of orders of the Bombay High Court. The said property was merely in possession of the Provisional Liquidator of SRUIL, held in constructive trust for the Review Petitioner.
The NCLT has recorded in its order dated 08.10.2021 that the IRP does not have any funds to run the CIRP. This is also borne out by the orders passed by the Bombay High Court, that acknowledge that neither the Provisional Liquidator, nor the IRP was in a position to maintain the property and carry out repairs on the fallen boundary wall due to lack of funds. Further, the IRP has categorically averred before the NCLT, that the creditors of SRUIL had refused to infuse any funds to carry out the CIRP. In this context, the Rs.75,30,00,000/- that is to be received by SRUIL in terms of the orders passed by the Bombay High Court and upheld by the Hon’ble Supreme Court, are crucial to ensure that the CIRP of the corporate debtor in the present matter happens in a meaningful manner. Further, once we have observed that the property itself is not an asset of SRUIL, maximisation of assets of the corporate debtor can be achieved, only by the IRP moving to secure the Rs. 75,30,00,000/-, which surely is a receivable of SRUIL.
Looking into the facts pertaining to the case of the Review Petitioner, the Impugned Order did not appreciate the need to balance the considerations of Section 18 of the Code viz-a-viz the moratorium under Section 14 of the Code. The Impugned Order is therefore modified to the extent that it shall not effect the rights of the Review Petitioner to the subject property that has been upheld upto the Supreme Court and also stands crystallised by various orders passed by the Hon’ble Bombay High Court which are still in operation. As held by the NCLT, the conveyance however, shall be subject to the payment of the balance consideration by the Review Petitioner.
The Review Petition is allowed.
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2022 (9) TMI 1220
Acceptance of claim of the Resolution Professional for payment of fee - Section 61 of Insolvency and Bankruptcy Code, 2016 - main contention of the Respondents before the Adjudicating Authority was that he was having only 25.54% of voting right being creditor and cannot be compelled to pay half of the share of remuneration and expenses and that he is not liable to pay the legal expenses which was not approved by the CoC and agreed to pay the fee payable to Resolution Professional and other expenses approved by CoC.
HELD THAT:- A conjoint reading of Regulation 25A, 26 and 27 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Regulation 31 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the expenses incurred under the different heads covered by Regulation 31 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall be paid by the creditors - In the instant case, the cost incurred by erstwhile RP and remuneration payable to him was approved by CoC in the CoC meetings, the total amount payable is Rs. 16,09,402/-, thus, the legal heirs of deceased RP are entitled to claim the remuneration payable to erstwhile RP and cost incurred by him, approved in CoC meetings.
One of the major contentions of the Appellant herein is that the Appellant is having only 25.54% voting share and liable to pay its share of costs. As per provisions of the Act, the Respondent before the Adjudicating Authority Appellant herein, the creditors have to bear the cost of resolution process and remuneration payable to the Resolution Professional in proportionate to voting share, but the Adjudicating Authority directed the creditors to pay 50% of the cost payable to erstwhile RP. Therefore, the direction to the extent of payment of remuneration equally by the creditors is contrary to the provisions of ‘IBC’ and relevant Regulations.
The direction to pay equally with other creditor is erroneous, since, the Respondent before the Adjudicating Authority is having 25.54% voting share and therefore liable to pay the expenses in proportionate to the voting share of Appellant herein and before the Adjudicating Authority. Accordingly, the order of the Adjudicating Authority is modified to this extent - the Appeal is allowed in part modifying the order directing the Appellant to pay remuneration and cost of resolution process approved in CoC meeting i.e. Rs. 16,09,407/- proportionate to its voting share.
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2022 (9) TMI 1219
Seeking admission of the claim - whether from the internal correspondence it can be concluded that loan disbursed to the Corporate Debtor by the Appellant stood discharged? - HELD THAT:- The internal correspondence between the Corporate Debtor and the RDPL who’s Promoters are same, does not lend support to their case that the loan payable by Corporate Debtor to the Appellant against disbursal of Rs.32.50 Crore stood discharged. The Adjudicating Authority, thus, erroneously relied on the said correspondence which is wholly irrelevant for proving any discharge of the loan amount.
There are no material to indicate that the loan which was disbursed by the DHFL to the Corporate Debtor was discharged at any point of time. The Adjudicating Authority committed error in refusing to admit the claim of the Appellant. Resolution Professional also did not correctly and properly look into the materials placed before it by the Appellant as well as the Ex-Director of the Corporate Debtor and erred in not verifying the claim of the Appellant.
The order passed by the Adjudicating Authority is unsustainable and deserved to be set aside - appeal allowed - decided in favor of appellant.
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2022 (9) TMI 1217
Approval of Resolution Plan - section 31 of IBC - HELD THAT:- Reliance placed in the BANK OF MAHARASHTRA AND ORS. VERSUS VIDEOCON INDUSTRIES LTD. AND ORS. [2021 (7) TMI 1292 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI], wherein the Hon’ble NCLAT had observed that Statutory compliances does not fall under the commercial wisdom of the CoC. Hence, the statutory compliances as mandated by proviso to Section 31(4), have to be ensured before the Resolution Plan is approved by CoC.
In the present case, it is clear that before approval of the Resolution Plan, all the compliances have to be met by the Resolution Applicants. At this stage the Resolution Plans are under consideration of the Committee of Creditors and no decision has been arrived at with respect to the approval of the Resolution Plans submitted by the Respondent Nos. 3, 4 and 5 respectively.
It is found that the Applicant is not affected merely by the submission of the Resolution Plans by the Respondent Nos. 3, 4 and 5 respectively.
Petition dismissed - List the main Company Petition on 31.10.2022.
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2022 (9) TMI 1166
Seeking contribution to the Corporate Debtor, under Section 66 (2) of IBC, 2016 - fraudulent and knocked off Receivables - Preferential Transactions - fraudulent motive/dishonest intention - diversion of Receivables of the Corporate Debtor - HELD THAT:- It is not in dispute that the Corporate Debtor Insolvency Resolution Process (CIRP) had attained finality and that the Resolution Plan became Functus Officio and he cannot file / pursue any Petition/ Application on behalf of the Company - The ingredients of Section 23 of the Insolvency & Bankruptcy Code, 2016 pertains to the Role of the Resolution Professional to conduct Corporate Insolvency Resolution Process (CIRP) in managing the affairs of the Corporate Debtor during the Resolution Process Period and not at a later point of time.
This Tribunal, significantly, points out that, whenever Fraud on a Creditor is perpetrated in the course of carrying on Business, it does not necessarily follow that the Business is being carried on with an Intent to Defraud the Creditor - One cannot remain oblivious of the candid fact that, if the Directors of a Company had acted on a bonafide belief that the Company would recover from its Financial Problems / Difficulties, then, they will not be held liable for the act / offence of Fraudulent Trading.
The aspect of Fraudulent Trading requires a very High Degree of proof, which is attached to the Fraudulent Intent. To put it emphatically, a more compelling Material / Evidence is required to satisfy the conscience of this Tribunal, on a preponderance of probability. Apart from that, an isolated/ solo fraud case, against the person, then, action in tort can be resorted to, as opined by this Tribunal. No wonder, a Creditor, who was defrauded, will have recourse to an alternative remedy, under Civil Law.
In the instant Case on hand, the Appellant / Applicant before the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai) had filed application under Section 66 (1) of the Insolvency and Bankruptcy Code, 2016. In this connection, this ‘Tribunal’ significantly points out that in respect of an Application (Filed under Section 66 of the Insolvency and Bankruptcy Code, 2016) Fraudulent Trading / Wrongful Trading, by the Applicant/ Resolution Professional is concerned, Tangible Materials / Relevant Facts are to be pleaded in an Unambiguous and Unequivocal Terms, by supplying the necessary details / facts as the case may be.
The averments projected by the Appellant / Applicant in application do not come within the Four Parameters, of the ingredients of Section 66 of the Insolvency and Bankruptcy Code, 2016). Viewed in that perspective, the Impugned Order dated 01.07.2022 in application passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench – II) in dismissing the Application, without Costs, is free from any Legal error. Consequently, the Appeal fails.
Application dismissed.
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2022 (9) TMI 1165
Initiation of CIRP - NCLT admitted the application - Corporate Debtor failed to make repayment of its dues - Financial Creditors - debt declared as Non-Performing assets - applicability of time limitation - Notice under SARFAESI Act also issued - whether debt was acknowledged by the Corporate Debtor or there was offer of OTS? - HELD THAT:- There is no dispute that the account of corporate debtor was declared NPA on 30.09.2013 . It is also not in dispute that balance sheet for the year 2014-15, 2015-16 showing acknowledgement was brought to the notice of the Adjudicating Authority. It is also not in dispute that on 16.4.2014 the corporate debtor had submitted balance cum security letter acknowledging the debt. The said balance sheet of 2014-2015 and 2015-16 were uploaded by the corporate debtor on the portal of MCA website. Thereafter on 23.02.2017 the corporate debtor vide its letter dated 23.02.2017 submitted proposal for settlement of dues.
There is no reason to accept the plea of Learned Counsel for the appellant that the initiation of CIRP was barred by limitation. The question regarding acknowledgement has already been set at rest by three Judges Bench of Hon’ble Supreme Court in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL & ANR. [2021 (4) TMI 753 - SUPREME COURT]. Whatever points have been raised by the learned counsel for the appellant in the present case, is squarely covered by the Hon’ble Supreme Court in Bishal Jaiswal case. As per judgement of the Hon’ble Supreme Court in a proceeding under the IBC, provisions of Limitation Act is applicable though Section 238A was inserted in the IBC w.e.f. 6.6.2018. It has been clarified by the Hon’ble Supreme Court that it was clarificatory in nature and it was having retrospective effect.
The application under Section 7 of the Code was filed by the Financial Creditor within the period of limitation. The appellant has never raised any dispute on the question of debt i.e. recoverable amount nor a dispute has been raised regarding endorsement in the balance sheet or offer of OTS. In such view of the matter there is no reason to interfere with the impugned order - Appeal dismissed.
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2022 (9) TMI 1164
Seeking inclusion of applicant bank into the CoC - Financial Creditor has been declared a related party to the Corporate Debtor (Corporate applicant) and has been ousted from the CoC - HELD THAT:- The relationship of the Financial creditor (herein ) and the corporate debtor is that the Kanodia foundation controls 31% of voting rights or a general control over the corporate debtor and by virtue of the fact that the HVM is owned to the extent of 99.9% by KF, it also controls crosses the bar of holding more than the 20% voting rights stipulated in Section 5(24)(j). Thus KF-HVM- SUASTH are related parties.
What has already been said regarding 5(24) (i) and is appropriately depicted in the organogram to conclude that the stipulations are evidently matching the current configuration of the parties/entities. Thus, in terms of the stipulations of the code, HVM is a body corporate of a holding company (KF) to which the corporate debtor is a subsidiary (to the extent of ~ 31%) applicable and, therefore, there is no infirmity or contradiction in the letters of the RP given at page 57 of the application - Examining the status of the parties on the last postulate of Section 5(24)(h), it would be naïve to think that a director or a manager of the Suasth Healthcare would not be accustomed to act on the advice, directions or instructions of Kanodia Foundation, which would be synonymous with HVM being a 99.9% ownership of KF. Thus even on this count also the present case crosses the bar of 5(24)(h).
There are no hesitation in holding that HVM is a related party of the Corporate Debtor i.e. Suasth Healthcare Foundation and that the RP has not erred in holding the same - application dismissed.
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2022 (9) TMI 1163
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - primary defence raised by the Corporate Debtor is that the Corporate Debtor made payments to the Operational Creditor for the months of January 2018, February 2018 and March 2018 (until 21st March) and further paid other dues - HELD THAT:- On a plain reading of the Non-Disclosure Agreement, it is clear that the Corporate Debtor had agreed to make two payments as mentioned in Clause 2 (e) and Clause (i). There is nothing to suggest any connection of 2 (e) with Clause (i). Whereas it is construed that clause 2 (i) is in reference to clause 1 (a) and thus the same has been discharged with. Hence, the payment made for the months of February and March, 2018 cannot be construed to be in discharge of the liabilities rising out of Clause 2 (e). Thus, the Corporate Debtor has failed to comply with the terms of Clause 2 (e) of the Agreement and has committed default.
The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor.
Petition admitted - moratorium declared.
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2022 (9) TMI 1162
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existenc eof debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 30.07.2019 was properly served? - HELD THAT:- The petitioner has placed a copy of the registered postal receipts and copy of demand notice which was delivered to the corporate debtor.Therefore, demand notice was duly served.
Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of the corporate debtor despite repeated service and has been set ex parte vide order dated 13.12.2021. Moreover, the petitioner has appended compliance affidavit u/s 9(3)(b) stating that there is no reply given by the corporate debtor relating to a dispute of the unpaid operational debt. Even corporate debtor have received the notices but have not replied to the same (attached as Annexure-F of the main petition). It is stated that there is no pre-existing dispute between the parties.
Whether this application is filed within limitation? - HELD THAT:- This application was filed on 24.09.2019 vide Diary No.5078. Whereas the date of default is 14.04.2018, therefore, this Adjudicating Authority finds that this application has been filed within limitation.
In the present petition, all the requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted.
Petition admitted - moratorium declared.
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2022 (9) TMI 1161
Pre-Packaged Insolvency Resolution Process - new procedure for resolving cases of Micro, Small and Medium Enterprises (MSME) under IBC - Section 54C of IBC (Pre-Packaged) - what is the role of the Adjudicating Authority when there is a Section 7 IBC petition filed and pending long before the present PPIRP application is filed? - HELD THAT:- This Adjudicating Authority is a creature of the statute and has to work within the framework of the IBC. It is seen from the objects and reasons of the amendment to the IBC which came into effect on 04.04.2021, the Parliament in its wisdom after having enacted the IBC Code, 2016 thought it fit to have an alternative mechanism by bringing in the concept of pre-package by way of an Amendment on 04.04.2021. On a reading of the objects and reasons, one factor is clearly discernible that the Government wanted a hybrid method of Insolvency Resolution Process which includes creditors in control (Section 7, 9 or 10) as well as debtors in control (PPIRP). The Government opted for the hybrid method by bringing this Ordinance.
How the hybrid method should work? - HELD THAT:- While bringing the amendment into force the Parliament in its wisdom perceived a situation where the Adjudicating Authority will be faced with the dilemma as to how the matter should be resolved if there are applications are filed or pending under IBC & Chapter IIIA as the case may be. It is a situation of FC in control versus the CD in control - In order to ensure that the Adjudicating Authority does not face a logjam and to resolve the overlap, Section 11A was brought into force laying down the parameters as to how the Adjudicating Authority will deal with the cases of this nature.
The pre-package application under Chapter III-A which has been filed on 12.07.2022, cannot take precedence over the Section 7 of IBC application which was filed on 21.10.2020, and remained pending though heard and reserved and re-heard on a number of occasions. The Section 7 IBC application filed and pending in the case will have to be given precedence over the pre-package application - Merely because there was a delay in the admission of CIRP proceedings in the Section 7 IBC application, this Tribunal finds no justification to allow the pre-package to take precedence. We are bound by the mandate of Section 11A(4). Further our view is fortified by reading the paragraph 3.16 (c) of Insolvency Law Committee Report which is already extracted earlier. It clarifies the object and intent behind Section 11A(4).
The object of Section 11A is to guide the Adjudicating Authority to deal with applications of IBC-vs. Pre pack based on relevant dates as between them (Section 11A(1) (2) & (3) and to ensure that there is no clash between the applications filed prior to the Amendment dated 04.04.2021 and application filed after coming into force of the Amendment dated 04.04.2021 Various scenarios have been identified under Section 11A and the guiding principle has been given to the Adjudicating Authority. The guiding principle enjoined in Section 11A (1), (2), (3) & (4) is binding on this Adjudicating Authority. Therefore, there cannot be any deviation, however, much the real estate allottees' plead that it will be in their best interest.
The PPIRP i.e. (IBPP)-02(PB)/2022 cannot be entertained in view of the pending Section 7 IBC petitions C.P. No. (IB)-1081(PB)/2020 & C.P. No. (IB)-1775(PB)/2018. Since the CD has already given the consent for admission of CIRP in the earlier proceedings as recorded and that, the debt and default is already admitted and recorded by this Tribunal in the earlier order dated 07.06.2021 recorded in para 10 above, which has not been modified or altered. The CD has also admitted debt and default as it is a pre condition for Chapter III-A petition. Therefore, there is no further enquiry needed on debt and default. The CD having conceded to debt and default both in terms of operational creditor earlier and real estate allottee presently, no further enquiry on debt and default is required.
Petition dismissed.
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2022 (9) TMI 1129
Invocation and encashment of Performance Bank Guarantee(s) (PBG) granted by the Appellant - surety in a contract of guarantee to a ‘Corporate Debtor’ - Scope of section 14 of IBC - whether fraud or irretrievable injustice has been done? - HELD THAT:- Section 14(3)(b) states that a surety in a contract of guarantee to a ‘Corporate Debtor’ is not covered under Section 14 - Section 3(31) Describe Security Interest and states that Security Interest shall not include a Performance Bank Guarantees.
A Performance Bank Guarantee does not enjoy the benefits of a moratorium under Section 14 of the Code. It is pertinent to mention that the CIRP commenced on 07.11.2019 and notices for invocation were sent prior to the commencement on 18.10.2019. The actual disbursement took place pursuant to the Order of the Hon’ble High Court of Telangana.
Having regard to the fact that the Bank Guarantees stood invoked vide letter dated 18.10.2019 by the ‘Corporate Debtor’ on the ground that the Appellant has failed to perform its obligations in terms of the Agreements, read with Clause 2 of the Bank Guarantees and also keeping in view that there are no material on record with respect to any fraud, we do not find any illegality or infirmity in the Order of the Impugned Order. The question of fraud has been dealt with by the City Civil Court, which held that there was ‘no element of fraud’ involved.
It is the case of the Resolution Professional that the amount of Rs.2,50,16,972/- be released and permitted to be utilised against the overall outstanding amount of Rs.13,06,30,410/- to ensure that the plant of the ‘Corporate Debtor’ is kept running as a ‘Going Concern’ - the amount may be utilised for the functioning of the ‘Corporate Debtor’ as a Going Concern.
Appeal dismissed.
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2022 (9) TMI 1128
Validity of Resolution Plan - only 2% of their ‘Claims’ has been admitted, while the workman and other statutory dues have been paid 100% - HELD THAT:- Section 24(3)(c) specifies that ‘Operational Creditors’ or their representatives if the amount of their aggregate dues is not less than 10% of the dues are to be given Notice of each CoC Meeting, Section 24(4) of the Code specifies that the representative of the ‘Operational Creditors’, may attend the Meeting of CoC but shall not have any right to vote in these Meetings - it cannot be stated that there was any ‘prejudice’ caused to the Appellants herein in terms of Section 24(3) not having been complied with. Also, there is no documentary evidence on record to establish that a name of a representative of the ‘Operational Creditors’ was indeed given to the RP and the RP had chosen to ignore the same, as it is the specific case of the RP that no such information was ever tendered to him.
There is no material irregularity warranting any interference as it is compliant with Section 30(2) of the Code.
Having regard to the fact that the Resolution Plan was approved on 17.01.2021 by the CoC and subsequently by the Adjudicating Authority on 08.04.2021 and more than a year has lapsed, and also keeping in view that the ‘Operational Creditors’ do not have any Voting Right in the CoC and that the Commercial Wisdom of the CoC is non-justiciable and when there is no material irregularity on the face of the record, there are no illegality or infirmity in the Order of the Adjudicating Authority.
Appeal dismissed.
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