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Insolvency and Bankruptcy - Case Laws
Showing 41 to 60 of 178 Records
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2022 (9) TMI 1127 - NATIONAL COMPANY LAW TRIBUNAL , KOLKATA 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 - Time limitation - HELD THAT:- It can be seen that the purported acknowledgment dated 09.03.2015 of the Corporate Debtor in a letter from the Operational Creditor addressed to the Corporate Debtor wherein, the Corporate Debtor has acknowledged the receipt of the said letter, and not the contents of the same. The stamp of the Corporate Debtor mentions “Contents not verified”. As such, the same cannot be considered as acknowledgement of debt under section 18 of the Limitation Act, 1963.
However, even if the purported acknowledgment dated 09.03.2015 were to be considered, the resultant limitation period would still come to an end on 09.03.2018. Even if, under section 14 of the Limitation Act, 1963, the period of pendency of the winding up petition No. 161 of 2016 (from February 2016 to 29.03.2016) is excluded, the limitation period will still only extend till may 2018 - The limitation period in the instant case would resume from 29.03.2016 and would have been extinguished by May 2018. The proceedings under section 9 of the Code, however, were filed on 31.12.2019. The instant petition, therefore is barred by limitation.
This Adjudicating authority is satisfied that the instant petition is both incomplete and barred by limitation and therefore is liable to be dismissed.
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2022 (9) TMI 1126 - NATIONAL COMPANY LAW TRIBUNAL , MUMBAI 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 - reply to the main Company Petition not given, despite giving opportunities to file reply in the matter - time limitation - HELD THAT:- The Last date of invoice is 23.12.2019 and the date of filing is 06.04.2021 and it is well within the Limitation. This Bench has jurisdiction to deal with this Company Petition.
The Petition 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 of one lakh rupees stipulated under section 4(1) of the IBC, as per the date of filing of this petition. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority hereby admits this Petition and orders initiation of CIRP against the Corporate Debtor.
Petition admitted - moratorium declared.
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2022 (9) TMI 1125 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - authorisation of signatory of the petition - date of default mentioned in the petition - HELD THAT:- As per clause 4(c) of the loan agreement dated 06.05.2018, the loan amount is disbursed against the interest calculated @ 3% per month. Further clause 3 of loan agreement dated 06.05.2018 and the certified copy of board resolution dated 14.05.2018 of the corporate debtor authorizing to avail the loan facility from the applicant clearly states that the amount disbursed shall be utilized in the Krbing work, PQC and DLC work, stone pitching, Toe Wall, Darfin chute work at KME Expressway project that has been awarded by Pan India Infra projects Private Limited.
It is clear that when a default takes place, and debt becomes due and is not paid, the Insolvency Resolution Process shall begin against the corporate debtor - the present application is complete in all respect. The applicant financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor.
In terms of Section 7 (5) (a) of the Code, the instant petition stands admitted - Petition admitted - moratorium declared.
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2022 (9) TMI 1071 - ORISSA HIGH COURT
Seeking release of seized vehicle alongwith goods - seizure for non-payment of the tax and penalty irrespective of the vehicles under the Orissa Motor Vehicles Taxation Act - opportunity to rebut the factual aspect that the Petitioner had not raised any claim when the Interim Resolution Professional made an advertisement to raise such claims, were not provided - violation of principles of natural justice - HELD THAT:- Admittedly the Petitioner has not amended the prayer in the writ petitions nor incorporated the facts by way of an amendment. But by fling an additional affidavit, drawing the notice of the Court to the subsequent development in the NCLT i.e. the finalization of the Resolution Plan approved by the NCLT, he has sought for the relief.
Since the Petitioner has not incorporated the aforesaid plea in the writ petitions nor he has amended the prayer, allowing such prayer of the Petitioner would amount to take the Opposite Party by surprise that too without giving any opportunity to rebut such factual aspect that the Petitioner had not raised any claim when the Interim Resolution Professional made an advertisement to raise such claims under Section 15 of the Insolvency and Bankruptcy Code, 2016. The same would amount to violation of the principle of natural justice.
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2022 (9) TMI 1070 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Constitution of Stakeholders Consultation Committee (‘SCC’) - Nominations of members - entity hostile to the interest of the Corporate Debtor - Regulation 31A(3) of the Liquidation Regulations - HELD THAT:- It is the case of the Respondent that the SCC has to be constituted based on the list of Stakeholders which in turn is prepared on the basis of the claims received and accepted by the Stakeholders. The list of Stakeholders present in the case does not contain the name of the Appellant and therefore the Liquidator has erred in adding the Appellant as a representative of the Shareholder.
A perusal of the material on record shows that as none of the Shareholders have filed their claims before the Liquidator, in terms of Regulation 20 of the Liquidation Regulations, their names do not appear in the list of Stakeholders prepared in terms of Regulation 31 of the Liquidation Regulations. The Liquidator constituted SCC in terms of the Regulation 31A based on the Shareholding pattern of the ‘Corporate Debtor’ as per the available records. As provided for under Regulation 31A(3) of the Liquidation Regulations, the Liquidator, to facilitate the class of Shareholders to nominate the representatives sent emails to all the five Shareholders on 06.02.2021. Admittedly, the first Respondent has been nominated as a representative by three of the five Shareholders, including himself having a combined shareholding of 24.99%. The other two Shareholders having 75.01% combined shareholding have not nominated the Appellant as their nominated representative and in fact did not nominate anyone. Therefore, the Liquidator rejected the nomination of the first Respondent on the ground that the nomination was not made unanimously by all the Shareholders.
The Adjudicating Authority has rightly held that the nomination of the first Respondent as the representative of the Shareholders cannot be rejected by the Liquidator simply on the ground that the said nomination was not made unanimously by all the Shareholders and has further held that as the first Respondent was nominated by or i.e., the 3 out of 5 Shareholders, the question of applicability of the provisions under Regulation 31A(4) does not arise.
This Appeal fails and is accordingly dismissed.
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2022 (9) TMI 1069 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking direction to Resolution Professional to restore the claim of the applicant as it was lodged in accordance with the arbitration award - seeking to direct the RP to provide details, documents and information sought by the applicant in stipulated time period - HELD THAT:- The Respondent admitted the claim based on calculation of the Appellant wherein the Appellant itself has given treatment to the security deposit by deducting it from the outstanding amount, the interest rate as per the arbitration award dated 04.04.2016 was @ 18% which is also not disputed by the Appellant and further treatment also has been given to the information provided by the RBI on 19.12.2019 with respect to the interest on the security deposit, which again has been admitted by the Appellant before the RBI. The Resolution Professional has therefore not adjudicated but only has collated the information provided by the Appellant, Corporate Debtor and the RBI. Hence, we are of the view that there is no merit in the Appeal, the instant Appeal deserves to be dismissed.
The Adjudicating Authority has considered the submissions made by the Appellant and have held that the Hon’ble Supreme Court in the case of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] relied by the Resolution Professional, wherein it is observed that it is the responsibility of the Resolution Professional to collect, collate and finally admit claims of all creditors, the role of the Resolution Professional is not adjudicatory but administrative.
Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Ahmedabad Court 2), forthwith.
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2022 (9) TMI 1068 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH
Seeking release of Corporate Debtor from the rigor of Corporate Insolvency Resolution Process - non-payment of installment and interest the loan accounts, categorized as NPA - Section 13(2) of the SARFAESI Act, 2002 - HELD THAT:- The amount reflected in the Balance Sheet as on 31.03.2018 at page no. 357 of the ‘Affidavit in Reply’ reflects Principal amount of Rs. 30,11,22,262/- and interest outstanding Rs. 388,47,984/- the details of security are also reflected therein. In Note-VII interest accrued and due on borrowings of these non- convertible debentures is reflected in other current liabilities at Rs. 50,57,75,337/-. All these reflects that there is a large amount due as far as the job of reconciliation is concerned the code goes by the filing of claim and its scrutiny in accordance with the Code and related Regulation to be verified in primarily by the Interim Resolution Professional/Resolution Professional followed by the scrutiny and approval by Committee of Creditors and its acceptance by the Adjudicating Authority.
There is no iota of doubt that the debentures being a long term borrowing a debt under Section 5 (8) - it is very much clear that the debt is due and payable in law and the amount is exceeding the basic threshold of the Code and hence, we are in agreement with the order of Adjudicating Authority and accordingly, the order of Adjudicating Authority is upheld.
The Appeal is accordingly dismissed.
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2022 (9) TMI 1067 - NATIONAL COMPANY LAW TRIBUNAL , CHANDIGARH 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 - Time Limitation - service of demand notice - whether the demand notice in Form 3 dated 21.01.2020 was properly served? - HELD THAT:- The demand notice was served to the respondent/corporate debtor and in response to the same only, the respondent/corporate debtor vide its e-mail dated 26.01.2020 requested the petitioner for granting some more time to clear the outstanding amount.
Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit under Section 9(3)(b) of the Code, wherein it has been deposed that the no notice was given by the corporate debtor relating to a dispute of the unpaid operational debt. Thus, it can be inferred that there is no pre-existing dispute between the parties.
Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the application was filed vide Diary No.01243 on 30.12.2020 (refiled on 12.01.2021), whereas the date of default is 31.07.2020, therefore, this Adjudicating Authority finds that this application has been filed within limitation.
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 for initiation of the CIRP in the case of the corporate debtor, Govind Electrica Private Limited is admitted - moratorium declared.
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2022 (9) TMI 1066 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI BENCH
Consideration and acceptance of claim filed by the Respondent as a Financial Creditor in Form-C to the Committee of Creditors (CoC) - consideration of reconstitution of the CoC - HELD THAT:- The Respondent did not file the claim before the RP during CIRP period therefore, there was no question of considering the same by the CoC at such a belated stage - 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], the Hon’ble Supreme Court held that the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt is owed in respect of payment of dues arising under any law for the time being enforce, such as authorities to whom statutory dues are owed, including tax authorities.
However, in the present case, an application for approval of plan was pending before the Adjudicating Authority and the Adjudicating Authority vide the impugned order disposed of the said I.A. and against the same an appeal is also pending before this Tribunal, in which the matter was heard and Reserved for Orders - this Tribunal finds that the Claim of the Respondent is belated and cannot be considered and the finding of the Adjudicating Authority in directing the Appellant / RP to place the Claim of the Respondent in Form-C before CoC per se illegal and unsustainable. Accordingly, the point is answered against the Respondent.
Whether the Resolution Professional has power to admit the Claims suo-motu? - HELD THAT:- The I & B Code, 2016, prescribes the duties to be performed by the Interim Resolution Professional and Resolution Professional as per Section 18 and Section 25 of the Code. The IBBI CIRP Regulations prescribed the procedure to be adopted followed. As per Chapter IV Regulation 7 the claims by Operational Creditor to be submitted with proof to the IRP in Form-B and as per Regulation 8 of the Regulations the Financial Creditors shall submit the Claims to the IRP in Form-C. After receipt of claims, the IRP shall verify the Claims in accordance with Regulation 13 and the IRP maintained list of creditors containing Names of Creditors along with the amount claimed by them, the amount of their Claims admitted and the Security Interest, if any, in respect of such claims. There is no such provision that the IRP shall admit the Claim without filing a Claim either in Form-B or in Form-C.
Therefore, this Tribunal, is of the view that the IRP suo-motu cannot admit the Claims without their being a Claim by the Claimants viz. Operational Creditors, Financial Creditors and the Claims by other Creditors. Every Claim shall be submitted by the ‘Claimant’ with proof. Accordingly, the issue is answered.
This Tribunal comes to a resultant conclusion that the Order passed by the Adjudicating Authority is per se illegal and unjustifiable - Appeal allowed.
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2022 (9) TMI 1065 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Liquidation of Corporate Debtor - Section 33(2) read with section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The present application is filed under section 33(2) of the Insolvency and Bankruptcy Code. The CoC has expressed its opinion in the 2nd CoC meeting held on 04.06.2022 that there is no scope of revival or selling the company as going concern and that the Corporate Debtor may be liquidated. Therefore, this Tribunal sees no merit in interfering with the commercial wisdom of the CoC.
The application is allowed by ordering liquidation of the corporate debtor, namely M/s. VRJ Traders Private Limited with directions imposed.
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2022 (9) TMI 1064 - 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 - HELD THAT:- In view of the facts and circumstances of the case and in the interest of justice, it is deemed appropriate to provide one last and final opportunity to the Applicant/Corporate Debtor to file the reply within 10 days from today - However, the aforesaid permission is subject to cost of Rs. 25,000/- to be deposited by the applicant herein in the Prime Minister's Relief Fund within 3 days. It is made clear that if cost is not deposited, the reply shall not be taken on record.
Application disposed off.
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2022 (9) TMI 1012 - SUPREME COURT
Initiation of CIRP against two corporate debtors - Joint Liability - co-borrower/guarantor under the Loan-cum-Pledge Agreement - existence of two borrowers or two corporate bodies - scope of Financial Debt - existence of debt and dispute or not - HELD THAT:- It is not in dispute that the Financial Creditor disbursed loan to the tune of Rs.6,00,00,000/- to Premier pursuant to the Loan-cum-Pledge Agreements, executed both by Premier and by Doshi Holdings. Doshi Holdings has been referred to in the agreement as borrower and pledgor. Prima facie, it appears that Doshi Holdings was a party to the Loan-cum-Pledge Agreement in its dual capacity of borrower and pledgor of shares. The Appellate Authority has arrived at the factual finding that Doshi Holdings is also a borrower under the Loan-cum-Pledge Agreement. The factual finding of the Appellate Authority which was the final fact finding authority ought not to be interfered in this appeal.
The finding of the Appellate Authority that Doshi Holdings is a borrower, is based on its interpretation of the Loan-cum-Pledge Agreements and supporting documents. The interpretation given by the Appellate Authority is definitely a possible interpretation. The interpretation is a plausible interpretation which cannot be interfered with in an appeal under Section 62 of the IBC.
If there are two borrowers or if two corporate bodies fall within the ambit of corporate debtors, there is no reason why proceedings under Section 7 of the IBC cannot be initiated against both the Corporate Debtors. Needless to mention, the same amount cannot be realised from both the Corporate Debtors. If the dues are realised in part from one Corporate Debtor, the balance may be realised from the other Corporate Debtor being the co-borrower. However, once the claim of the Financial Creditor is discharged, there can be no question of recovery of the claim twice over.
Appeal dismissed.
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2022 (9) TMI 1011 - SUPREME COURT
Seeking withdrawal of application admitted u/s 7 of IBC - Seeking restraint on IRP from constituting a Committee of Creditors (CoC) till the next date of hearing - Section 12A of the IBC read with Rule 11 of the National Company Law Tribunal Rules, 2016 (NCLT Rules) - HELD THAT:- Section 12A of the IBC clearly permits withdrawal of an application under Section 7 of the IBC that has been admitted on an application made by the applicant. The question of approval of the Committee of Creditors by the requisite percentage of votes, can only arise after the Committee of Creditors is constituted. Before the Committee of Creditors is constituted, there is no bar to withdrawal by the applicant of an application admitted under Section 7 of the IBC.
The object of the IBC is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance of interests of all stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India and matters connected therewith or thereto - A reading of the statement of objects and reasons with the statutory Rule 11 of the NCLT Rules enables the NCLT to pass orders for the ends of justice including order permitting an applicant for CIRP to withdraw its application and to enable a corporate body to carry on business with ease, free of any impediment.
Considering the number of people dependant on the Corporate Debtor for their survival and livelihood, there is no reason why the applicant for the CIRP, should not be allowed to withdraw its application once its disputes have been settled - the settlement cannot be stifled before the constitution of the Committee of Creditors in anticipation of claims against the Corporate Debtor from third persons. The withdrawal of an application for CIRP by the applicant would not prevent any other financial creditor from taking recourse to a proceeding under IBC. The urgency to abide by the timelines for completion of the resolution process is not a reason to stifle the settlement.
The application for settlement under Section 12A of the IBC is pending before the Adjudicating Authority (NCLT). The NCLAT has stayed the constitution of the Committee of Creditors. The order impugned is only an interim order which does not call for interference. In an appeal under Section 62 of the IBC, there is no question of law which requires determination by this Court - appeal dismissed.
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2022 (9) TMI 1010 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of Insolvency Petition against the Guarantor - novation in a contract of Guarantee - novation made without any reference to the Guarantor Company - discharge’ of the Guarantor or not - whether the Appellant/Guarantor is liable to pay the amount when the Guarantee was initially invoked on 03.03.2015? - whether the Learned Adjudicating Authority was justified in admitting the Section 7 Application? - time limitation.
HELD THAT:- The OTS has been signed by the Appellant, Clause 3 of the Deed of Guarantee, and also Clauses 5, 9 & 10 of the Deed of Guarantee, having invoked the Guarantee on 03.03.2015, the question of invoking the Guarantee again, as per law, does not arise.
Addressing the question of Limitation, reliance placed on the Judgement of the Hon’ble Supreme Court in Dena Bank (now Bank of Baroda) Vs. C. Shivkumar Reddy & Anr., [2021 (8) TMI 315 - SUPREME COURT], in which the Hon’ble Supreme Court has clearly laid down that on issuance of a Recovery Certificate, fresh cause of action would arise to initiate proceedings under Section 7 of the Code. Further Clauses 9 & 10 of the Deed of Guarantee specify that the Guarantee is a continuing one.
It a fit case to consider the Recovery Certificate which has been issued by the Hon’ble DRT, Mumbai on 25.04.2016 and the second OTS dated 12.03.2018 and the part payment which has been made on 28.03.2018 read together with the warrant of attachment dated 20.06.2019 and the date of filing of the Petition dated 17.03.2022 we observe that the Section 7 Petition is not barred by Limitation.
The OTS is not a novation of the original debt but is only to be construed as Terms of Settlement offered and agreed upon by the Borrower to discharge its liability. The Guarantor is a direct beneficiary of the OTS. Having signed and accepted OTS proposal, the Appellant cannot now turn around and take a stand that the liability is not co-extensive or that the Guarantee was invoked only in 2013. This argument is not tenable as it is held that (a) it is a continuing Guarantee and (b) that it is not required for a continuing Guarantee to be invoked twice in these facts of the matter when the liability is co-extensive.
Appeal dismissed.
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2022 (9) TMI 1009 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Maintainability of application - Resolution plan approved - Fraudulent Trading / Wrongful Trading - Section 66 of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- It must be borne in mind that CIRP in the instant case had attained finality and that the Resolution Professional became functus officio and he cannot file / prefer / pursue any Application on behalf of the Company. It is only be to the new Management of the Corporate Debtor, which is responsible to file such an Application - It cannot be brushed aside that Section 23 of the Insolvency & Bankruptcy Code, 2016 clearly envisages the Role of a Resolution Professional in managing the affairs of the Corporate Debtor, during the Resolution Process and not, thereafter.
It is an established fact that the Interim Resolution Professionals / Resolution Professionals are required to play their part, as per the ingredients of the Insolvency & Bankruptcy Code, 2016. They are to provide for a ‘mechanism’ in aid to benefit of the Corporate Debtor not only during the interregnum period of Insolvency but also till the Resolution Process is completed - Suffice it for this Tribunal to make a pertinent mention that the Role of a Resolution Professional, much less of the Erstwhile Resolution Professional is that he cannot proceed any further, after the Resolution Pla is approved by the Adjudicating Authority.
This Tribunal comes to an inevitable, inescapable, and irresistible conclusion that the view arrived at by the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai) in dismissing the application on the basis of the Appellant / Applicant lacking locus standi to prefer the said Interlocutory Application, does not suffer from material irregularity or patent illegality in the eye of Law.
Application dismissed.
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2022 (9) TMI 1008 - NATIONAL COMPANY LAW TRIBUNAL , KOLKATA BENCH
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Pre-existing dispute or not - jural relationship between the parties - HELD THAT:- The Hon’ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] has observed that all that the Adjudicating Authority has to see at ‘the stage of Admission’ is whether there is a plausible contention which requires further investigation and that the ‘Dispute’ is not a patently feeble legal argument or an assertion of fact or a moonshine defence unsupported by tangible materials/evidence.
Since, the pre-existing dispute has been established, other issue is not touched upon.
Petition dismissed.
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2022 (9) TMI 1007 - NATIONAL COMPANY LAW TRIBUNAL , NEW DELHI BENCH
Maintainability of application - Suspension of initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Section 10A of IBC - HELD THAT:- Going into the legislative intent and the proviso to Section 10A of the code, which stipulates that "no application shall ever be filed" for the initiation of the CIRP "for the said default occurring during the said period, we are of the considered view that the expression "shall ever be filed" is a clear indicator that the intent of the legislature is to bar the institution of any application for the commencement of the CIRP in respect of a default which has occurred on or after 25 March 2020 for a period of six months, extendable up to one year as notified.
On a perusal of the provision of section 10A of the Code, it is apparent that the provision bars the filing of an application in a situation, where the default has occurred during the period from 25.03.2020 to 24.03.2021 - There is no dispute that even a notice for curing the said default and to submit fresh security was also given, but the same was also not complied with or cured on behalf of the respondent. Therefore, there was specific default on the part of the respondent for not providing the security against the loan facility availed. The said default cure notice was given on 20.10.2020, but the said impairment of security was not cured in due time. Thereafter, the recall notice dated 15.12.2020 was issued, calling upon the corporate debtor to repay the loan amount within 7 days of receipt of this notice. Thus, the default on the part of corporate debtor was not only committed on 20.10.2020, but also subsequently, after 7 days of the receipt of the loan recall notice dated 15.12.2020.
On a conjoint reading and meticulous perusal of the clause 12.1 (Events of Default) and clause 12.2 (consequences of event of default) of loan agreement dated March 31, 2020, Cure Notice dated October 20, 2020, Loan Recall Notice dated December 15, 2020, Cheques Dishonored Communication from the bank and the Notice dated 08.04.2021 issued to the corporate debtor, the impairment of security comes within the preview of 'Event of Default', which was not cured by the corporate debtor even after the issuance of the cure notice dated 20.10.2020 by the applicant to either perfect the security or provide an alternative security, consequent to which a loan recall notice dated 15.12.2020 was issued by the applicant calling upon the corporate debtor to repay the entire loan amount due as on 12.2.2020 amounting Rs. 224,63,86,228/-.
Since, the instant petition is not maintainable in view of the provision of Section 10A of the Code, 2016, this Adjudicating Authority is not willing to go into the merits of the present case - Petition dismissed.
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2022 (9) TMI 954 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - appeal dismissed on the ground that it is below the threshold limit of Rupees One Crore - HELD THAT:- A default by the Corporate Debtor entitled a financial creditor and operational creditor to initiate Corporate Insolvency Resolution Process. The default is thus condition precedent for initiating CIRP. The minimum amount of default as has been prescribed under Section 4 of the Code has a purpose and object. The object is that unless there is a minimum amount of default, no person should be permitted to initiate CIRP. When the amount of default was amended from Rupees One Lakh to Rupees One Crore, the object was that no application for initiation of CIRP be filed unless the threshold is fulfilled - The initiation date is thus the date on which financial creditor, corporate applicant or operational creditor makes an application to the Adjudicating Authority. Part II of the Code is applicable only when minimum amount of default of Rupees One Crore is fulfilled after 24.03.2020. Thus, right to initiate the CIRP after 24.03.2020 is only on the condition that minimum default is of Rupees One Crore. There is no right to initiate CIRP after 24.03.2020 when minimum default is not Rupees One Crore.
Section 10A was inserted in the Code to give protection to the Corporate Debtor from initiation of CIRP process with regard to default committed by the Corporate Debtor after 25.03.2020. The object and purpose of insertion of Section 10A was clearly to save the Corporate Debtor on account of ill-consequences which ensued after spread of COVID-19. 25.03.2020 is the date when lockdown was imposed in the entire country - Section 10A was inserted to give protection to the Corporate Debtor to save from initiation of any CIRP against them since the default committed by the Corporate Debtor was mostly due to ill-consequences of COVID-19. The explanation clearly indicates that the provisions of this section shall not apply to any default committed under the sections 7, 9 or 10 after 25th March, 2020. The idea was to give protection to the Corporate Debtor from default which was committed from 25.03.2020 for period of one year thereafter. It was unable to see how explanation to Section 10A comes to any aid in Appellant’s case. Section 10A was introduced for entirely different object and purpose and could not be read to give any support to the submissions which have been made by the Appellant in the present case.
When Section 4 is applied to initiation of CIRP process, threshold should not be looked into when a right to sue accrues rather threshold be looked into on the date of initiation. Default by Corporate Debtor is a condition precedent which gives right to the Operational Creditor to file application under Section 9 but for initiating CIRP process threshold, as prescribed under Section 4, is to be fulfilled by the Operational Creditor on the date of initiation of CIRP process.
Thus, no error has been committed by the Adjudicating Authority in rejecting Section 9 application filed by the Appellant on 18.01.2021 which did not fulfil the threshold of Rupees One Crore - there are no merits in the appeal - appeal dismissed.
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2022 (9) TMI 953 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - whether payment to the Operational Creditor/Respondent No. 1 as per work order is triggered in the present case giving rise to an operational debt? - existence of debt and default or not - whether the said operational debt exceeds an amount of Rs. 1 lakh and is an undisputed debt? - HELD THAT:- While Corporate Debtor/Appellant has claimed to have paid Rs. 92,62,856/- (Rupees ninety two lakhs sixty two thousand eight hundred fifty six only), the Respondent No. 1 has claimed to have received only Rs. 83,93,717/- (Rupees eighty three lakhs ninety three thousand seven hundred seventeen only). It is pertinent to note that the Corporate Debtor/Appellant has admittedly held back an amount of Rs. 23,72,215/- (Rupees twenty three lakhs seventy two thousand two hundred fifteen only) on the ground that 15% payment was to be released after installation and 5% amount as defect liability to be released after 6 months - Respondent No.1 was entitled to receive 62% payment from out of the retained amount, on pro-rata basis for the completed installations. If that be the case, then payment to the tune of Rs 14.70 lakhs had become due and payable as per payment terms and for which invoices had also been raised. The contention of the Appellant that payment was to be made only after full installation was completed in the respective towers and not on flat-wise completion cannot be acceded to for the following reasons. Firstly, it fails to explain why composite payment was not insisted upon tower-wise for the 80% amount for material delivery and RA bills were accepted. Secondly, from a plain reading of the payment terms, we do not find any embargo having been placed on the Operational creditor from claiming flat-wise payments as long as the installation was complete.
Merely placing of conditions prior to release of payment, does not alter the colour and character of the operational debt and does not detract from its having become due and payable.
Whether there is existence of dispute between the parties? - HELD THAT:- There is nothing on record to suggest that the Corporate Debtor/Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice. There is nothing credible to substantiate the pre-existence of dispute.
The Corporate Debtor/Appellant has defaulted in the payment of operational debt, of an amount exceeding Rs 1 lakh, which amount had clearly become due and payable, and further in the absence of any pre-existing dispute, there are no error has been committed by the Adjudicating Authority in admitting the application under Section 9 of IBC and initiating CIRP - Appeal dismissed.
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2022 (9) TMI 952 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Liquidation of Corporate Debtor - Section 33 of IBC - financial creditor of Guarantor company - Circular Loan transactions or not - applicability of section 7 of IBC - insufficient stamping of letter of guarantee - HELD THAT:- Charge Certificate dated 09.03.2018 issued by Registrar of Companies, Mumbai has been brought on record, which certifies creation of Charge dated 29.12.2017 between G.C. Property Private Limited (First Party) and IL&FS Financial Services Limited (Second Party). Charge having been registered by the Corporate Debtor himself, the Corporate Debtor cannot escape from its liability for payment of loan as per its own act of creating mortgage by deposit of Title Deed and registration of Charge. It is further relevant to notice that in the Offer Letter dated 27.12.2017, as extracted above in ‘Security Package’, where Primary Security was Flat No.6 and it was noticed in the Offer Letter itself that the valuation of Flat is Rs.300 million, i.e., equivalent to the Financial Facility, which was to be extended to the Principal Borrower - the Corporate Debtor cannot escape from its liability from repayment of the loan sanctioned to the Principal Borrower on the ground that Letter of Guarantee was insufficiently stamped.
Whether IL&FS can be treated as ‘Financial Creditor’ of the Guarantor Company or not - HELD THAT:- The submission raised by learned Counsel for the Appellant has to be rejected in view of the law laid down by the Hon’ble Supreme Court in Laxmi Pat Surana vs. Union Bank of India and Another [2021 (3) TMI 1179 - SUPREME COURT]. The Hon’ble Supreme Court has laid down in the above case where an Application was filed under Section 7 by Financial Creditor against a Corporate Person who had offered guarantee to the two loans of Principal Borrower - It was held in the case that we find no substance in the argument advanced before us that since the loan was offered to a proprietary firm (not a corporate person), action under Section 7 IBC cannot be initiated against the corporate person even though it had offered guarantee in respect of that transaction. Whereas, upon default committed by the principal borrower, the liability of the company (corporate person), being the guarantor, instantly triggers the right of the financial creditor to proceed against the corporate person (being a corporate debtor). Hence, the first question stands answered against the appellant.
Transactions which was entered with the Borrower and IL&FS was Circular Loan Transactions or not - HELD THAT:- The Corporate Debtor cannot be heard in contending that it has no liability of repayment for the financial facility, which was extended by the IL&FS to the Principal Borrower. The mere fact that Principal Borrower has further granted loan to M/s Vadraj Cement Ltd. out of the money received from loan sanctioned by IL&FS, cannot be a ground to come to the conclusion that Corporate Debtor has no liability towards payment of loan and no debt is due on Corporate Debtor. We thus do not find any substance in this submission.
Section 7 Application has malafidely initiated for purpose other than resolution of the Corporate Debtor or not - HELD THAT:- The Corporate Debtor gave security to secure the loan of Rs.30 crores granted by IL&FS to Principal Borrower. Primary security as noted above was residential Flat of the Corporate Debtor and the same was mortgaged by depositing the Title Deed of Flat No.6 on 29.12.2017, with regard to which Charge was also registered. We do not find any malafide in initiation of Section 7 proceedings by the Financial Creditor. There is no denial to default committed in repayment of the loan. When default was committed in the repayment of the loan and debt became due on both Principal Borrower and Corporate Debtor, no error can be said to be committed by the Financial Creditor in filing Application under Section 7 against the Corporate Debtor.
Liquidation order - HELD THAT:- Section 33, sub-section (2) clearly empowers the CoC to take the decision to liquidate the Corporate Debtor, any time after its constitution under sub-section (1) of Section 21 and before the confirmation of the resolution plan.
In the facts of the present case, no infirmity is found in the Resolution passed by the CoC for liquidating the Corporate Debtor. The Adjudicating Authority after perusing the material on record and after perusing the 3rd CoC Meeting has allowed the Application filed by the Resolution Professional under Section 33. No infirmity is found in the order of the Adjudicating Authority directing for liquidation of the Corporate Debtor.
There is no merit in any of the Appeals, both the Appeals are dismissed.
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