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Insolvency and Bankruptcy - Case Laws
Showing 61 to 80 of 178 Records
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2022 (9) TMI 951
Consideration of Resolution plan - Validity of order of NCLT excluding and extending CIRP period - whether the resolution plan submitted for approval of the Adjudicating Authority under Section 31 of I&B Code, 2016 is binding on the CoC and Successful Resolution Applicant? - HELD THAT:- It is a settled position of the law that once the CoC has approved a resolution plan which has been submitted for approval under Section 31 of the Code, whether the same is binding on the CoC. It is unequivocal that Section 31 of the Code deal with approval of resolution plan and if the Adjudicating Authority is satisfied that the resolution plan as approved by the Committee of Creditors under sub-section (4) of Section 30 meets the requirement as referred to in sub-section (30), it shall by order approve the resolution plan which shall be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government any State Government or any Local Authority etc.
In the present case, the Adjudicating Authority vide impugned order directed the 1st Respondent to place the resolution plan before the CoC for its consideration by excluding and extending the CIRP period, when an application is pending for approval of resolution plan, which is completely illegal and against the law laid down by the Hon’ble Supreme Court in Ebix Singapore [2021 (9) TMI 672 - SUPREME COURT] - This Tribunal in the facts of the present case, is of the opinion that there are no reasons for extending and excluding the CIRP period by the Adjudicating Authority. It is not the case that no PRAs received in the CIRP process and to afford an opportunity to call for PRAs with an aim to avoid liquidation of the Corporate Debtor. In the present case, the plan is pending for approval before the same Adjudicating Authority and the Adjudicating Authority for reasons best known to it allowed the application filed by the Respondents No. 5 to 7 is arbitrary and against all canons of law.
Whether the Adjudicating Authority can overlook the decision of CoC which was taken in their commercial wisdom? - HELD THAT:- The commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated process within the time lines prescribed by the I&B Code - reliance can be placed in the case of Hon’ble Supreme Court in K. Shashidhar Vs. Indian Overseas Bank & Ors. [2019 (2) TMI 1043 - SUPREME COURT].
The Adjudicating Authority is not authorised to pass any orders which would circumvent and attempt to frustrate the resolution plan pending before it for consideration under Section 31 of the Code. The bitter truth remains that the Respondents No. 5 to 7 are completely standing outside of the CIRP and once evinced their EoI and backed out from participating in resolution process and now after completion of the CIR period their application cannot be considered.
The reason given by the Adjudicating Authority that the 1st Respondent has not provided the documents to the Respondents No. 5 to 7 is concerned from the records, it is seen that the audited balance sheet up to a period of financial year 2014-15 was available from the data room which was accessible by all the PRAs including the Respondents No. 5 to 7. Further the financial statements for years 2015-16, 2016-17 and 2017-18 were also made available in the data room - This Tribunal does not go into the oblique motive of these Respondents in submitting the resolution plan belatedly.
This Tribunal is of the view that the resolution plan submitted by the Respondents No. 5 to 7 on 27.05.2020 after expiry of CIRP period is illegal and this Tribunal upholds the decision taken by the 1st Respondent in rejecting the plan of the Respondents No. 5 to 7 vide its communication dated 18.06.2020 is legal and valid - Impugned order is unsustainable and the same is set aside.
Appeal allowed.
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2022 (9) TMI 950
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:- There is no reason to deny the Petition under section 7 filed by the Financial Creditor to initiate the CIRP against the Corporate Debtor as the Corporate Debtor himself has admitted its liability.
On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, it is the fit case for initiation of CIRP against the corporate debtor. Hence, the Application filed by the Financial Creditor is liable to be admitted.
The application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established.
Application admitted - moratorium declared.
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2022 (9) TMI 949
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT:- A perusal of Part IV of the Form V, reveals that the Operational Creditor has submitted that the Corporate Debtor has made payments for invoices ranging from 05.01.2018 till 03.04.2019. However, the amount claimed by the Operational Creditor is for 11 invoices ranging from 27.02.2018 to 23.04.2018. Further, the date of default mentioned by the Operational Creditor on page 9 of the petition is 05.03.2018 which is for default relating to an invoice dated 26.02.2019 i.e. a future date. Further, the said invoice dated 26.02.2019 has not been put on record. Therefore, the instant petition is an incomplete one.
Also, keeping in mind that the date of default is 05.03.2018, a perusal of Annexure E of the Reply Affidavit shows that various payments have been made by the Corporate Debtor to the Operational Creditor on 27.03.2018, 06.04.2018, 07.04.2018, 20.04.2018 and so on. As such, the date being 05.03.2018 cannot be considered as date of default and therefore the instant petition is defective in nature.
Service of demand notice by email - HELD THAT:- This Adjudicating Authority is satisfied that since the mentioned email id is registered with the ROC as the email-id of the company, the service of the demand notice to the said email id is valid. As such, the demand notice was successfully delivered to the Corporate Debtor and no reply was given by it.
Pre-existing dispute or not - HELD THAT:- The fact that no reply to the demand notice was issued by the Corporate Debtor, would not prevent the Corporate Debtor from bringing on record facts to establish pre-existing disputes relating to the instant petition - it can be seen that the dispute relating to the weight of the reels supplied was first raised by the Corporate Debtor vide letter dated 01.10.2018 i.e. much prior to the issuance of the demand letter by the Operational Creditor on 02.09.2019. the said dispute has also been acknowledged by the Operational Creditor vide email dated 01.10.2018.
Without going into the merits of the said disputes, this adjudicating authority is satisfied that there are pre-existing disputes in the instant petition.
The pre-existing disputes in the instant case are not mere feeble arguments, instead they are backed by evidence. As such, in presence of pre-existing disputes, the instant petition is not maintainable - this Adjudicating Authority is satisfied that the instant petition is liable to be rejected - Petition dismissed.
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2022 (9) TMI 948
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor failed to adhere to the terms and conditions of the said restructured cum sanctioned letter and defaulted in payment of the outstanding dues to the Financial Creditor. Thereafter, the Financial Creditor on 07 May, 2018 sent a notice under section 13 (2) of the SARFAESI Act, 2002. As per the records the account of the Corporate Debtor was declared as NPA as on 28 February, 2018.
Upon perusal of the Pending restructural proposal – vis-a-vis OTS of the loan in the name of the Corporate Debtor is adequate enough to attract section 18 of the Limitation Act, 1882, which envisages that the acknowledgment of debt within the period of limitation would give rise to a fresh period of limitation.
The present petition made by the Financial Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time - Petition admitted - moratorium declared.
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2022 (9) TMI 947
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 03.02.2020 was properly served? - HELD THAT:- The demand notice was received as per tracking report mentioned at Page No. 51 of the main petition and through e-mail on 24.02.2020 (Annexure A-6). In view of the same, it is held that the demand notice has been duly served. However, reply was received to the demand notice sent through e-mail, whereby the corporate debtor admits the liability by stating, to close the project as it is where basis and to excuse from the payments as they do not have sufficient funds.
Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is deposed by petitioner that the operational creditor affirms that the corporate debtor has not given any notice raising dispute relating to the unpaid amount of operational debt as claimed in the application. The same has been inferred from the affidavit in terms of Section 9(3)(b) of I&B Code, 2016. The affidavit is attached with the main petition from page 59 to 61. It implies that there is no pre-existing dispute in relation to the debt claimed as per Part IV of Form 5. Moreover, the corporate debtor in its reply stated that the amount claimed is not denied and the respondent is not in a position to repay the debt in question. Therefore it is evident from above that the present petition is of admitted liability.
Whether this application is filed within limitation? - HELD THAT:- A demand notice issued dated 03.02.2020 in Form 3 attached as Annexure A-5 was duly served on the corporate debtor through speed post delivered on 29.02.2020. It is to be noted that the period of limitation would begin from the date of default i.e. 13.09.2019. This application was filed on 13.03.2020 and refiled on 02.11.2020 vide Diary No. 2002. Therefore, this Adjudicating Authority finds that this application is filed within limitation.
It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that from the above mentioned facts that the liability of the corporate debtor is undisputed as it is stated by respondent/corporate debtor in its reply that due to adverse financial conditions. Thus, the respondent-corporate debtor has admitted its liability. Accordingly, the petitioner proved the debt and the default.
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 914
Rejection of claim of the appellant by the liquidator - delay of submission of claim during the Liquidation process - HELD THAT:- Present is a case where after initiation of CIRP, the IRP himself has written a letter to the Appellant on 10.08.2017 asking the Appellant to make payment of dues to the Corporate Debtor in the Escrow Account of the Corporate Debtor, which letter was replied by the Appellant on 06.09.2017. The Appellant has clearly informed the IRP that Appellant is claiming a sum of Rs.12,20,72,608 from the Corporate Debtor.
It is noted by Adjudicating Authority in its impugned order that there was no response by the IRP to the letter dated 06.09.2017, thus, the claim of the Appellant was communicated to the IRP. The Appellant’s case is that they were not aware of the liquidation process and the publication made by the Liquidator. They could not file the claim within the period prescribed by the Liquidator vide publication dated 23.01.2020 and on 15.06.2021, the Liquidator sought balance confirmation from the Appellant, when they came to know about the liquidation proceedings.
The present is a case where the Appellant has informed about its claim to the IRP as early as on 06.09.2017 and the Liquidator himself sent letter dated 15.06.2021 asking the Appellant to make payment to the Corporate Debtor. The claim of the Appellant was forwarded to the Liquidator vide letter dated 21.07.2021 and 02.08.2021. Thereafter, the Liquidator wrote to the Appellant proposing settlement of old outstanding amount. The claim, thus, raised by the Appellant was under active consideration of the Liquidator and the view subsequently taken by the Liquidator on 07.01.2022 that claim was not filed within the time period is unsustainable.
In the present case Adjudicating Authority committed error in simply rejecting/ dismissing the Appeal of the Appellant without taking into consideration the detailed correspondence, which were exchanged between IRP/Liquidator and the Appellant. Furthermore, no process regarding auction of the assets of the Corporate Debtor has yet been initiated. Hence, in the facts of the present case and to meet the ends of justice, the Liquidator is directed to consider the claim of the Appellant herein - Appeal allowed.
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2022 (9) TMI 913
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - Financial Debt or not - amount was transferred to the personal account of the intermediary as well as the personal account of the directors but failed to establish that the amount was given to the corporate debtor - restraint from selling or alienating any third party rights on the assets till the disposal of the Appeal - Section 5(8) (a) to (i) of the IBC - HELD THAT:- Limited protection till the next date of hearing, be granted to the Appellant in the interest of justice. Hence, status quo is directed to be maintained on the subject property in the instant matter till the next date of hearing.
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2022 (9) TMI 912
Seeking consideration of belated resolution plan submitted by the Respondents No.6 to 8 - Section 31 of the I&B Code, 2016 - HELD THAT:- The Appellant rightly invoked the jurisdiction of the Adjudicating Authority seeking approval of Resolution Plan of the 5th Respondent which was approved by the CoC on 11.02.2020. The CoC in their commercial wisdom and by exercising the powers under sub-section (4) of Section 30 of the I&B Code approved the Resolution Plan with 100% voting share, though as per the provision 66% of the voting share of the CoC, meets the requirement for approval of Resolution Plan. After approval of the Resolution Plan by the CoC, the Resolution Professional shall submit the resolution plan to the Adjudicating Authority for its approval under sub-section (6) of Section 30 of the Code.
The power vested in the Adjudicating Authority, that it shall approve the Resolution Plan if it is satisfied that the plan has been approved by the CoC and meets the requirements or reject the Resolution Plan under sub-section (2) of Section 31 of the Code. Other than this the Adjudicating Authority simply cannot dispose of the application without considering the same on merits. The Adjudicating Authority miserably failed in exercising the powers vested in it and passed a cryptic and unreasonable order, this Tribunal is of the view that the said order is illegal and without application of mind.
This Tribunal does not find any justification in passing the above impugned order when an application is pending for considering before the same Adjudicating Authority for approval of resolution plan. When an application is filed before the Adjudicating Authority seeking approval of Resolution Plan, meaning thereby the resolution process with respect to Corporate Debtor is in advance stage by overcoming the engrossing process as enshrined under the I&B Code from the date of initiation of CIRP against the Corporate Debtor till the approval of Resolution Plan - It is apt to note that the once Resolution Plan is approved by the CoC with requisite voting share i.e. 66%, in the present case, the CoC voted with 100% voting share in approving the Resolution Plan and the same is binding and irrevocable as between the CoC and the Successful Resolution Applicant.
This Tribunal unequivocally comes to a resultant conclusion that the impugned order passed is per se illegal, without application of mind, the same is set aside - Appeal allowed.
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2022 (9) TMI 911
CIRP proceedings - Financial Creditors - Corporate Debtor submitted that Corporate Debtor is now ready to deposit the entire amount within 45 days - HELD THAT:- In the present case, Section 7 Application was filed claiming an amount of Rs. 15,79,41,658/-. On the earlier date, when the Company Petition was taken i.e. on 06th July, 2022, Corporate Debtor came with an offer of Rs. 12.75 Crores to be paid within 45 days on which, Court directed the Financial Creditor to obtain instructions. Amount of Rs. 12.75 Crores which was offered on 06th July, 2022 by the Corporate Debtor was not the entire amount claimed by the Financial Creditor in the Application. But on the next date i.e. 11th July, 2022, when the case was taken, Learned Counsel for the Corporate Debtor submitted that Corporate Debtor is now ready to deposit the entire amount within 45 days.
Submission of the Appellant is that since the Appellant expressed its unwillingness to settle the matter, the course adopted by the Adjudicating Authority is impermissible. The present is a case where the Adjudicating Authority has not directed the Financial Creditor to enter into settlement with the Corporate Debtor, the Adjudicating Authority has only recorded the statements of the Corporate Debtor that they are ready to deposit the entire defaulted amount within 45 days and has permitted the Corporate Debtor to deposit the amount within 45 days. The Adjudicating Authority by the same order has also granted liberty to the Financial Creditor to revive the Company Petition if the amount is not paid within 45 days.
In the facts of the present case, the Adjudicating Authority has only given an opportunity to the Corporate Debtor to deposit the entire defaulted amount for which Section 7 Application was filed, within 45 days with liberty reserve to the Financial Creditor to revive the Section 7 Application in event the amount is not deposited - in consequence of the Order of the Adjudicating Authority, the Corporate Debtor deposits the entire defaulted amount whether still the Adjudicating Authority was required to necessarily admit the Section 7 Application.
Appeal dismissed.
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2022 (9) TMI 910
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Person - existence of debt and dispute or not - HELD THAT:- As the Corporate Debtor is not carrying any business and has huge losses also, therefore, the Adjudicating Authority has rightly passed the impugned order in admitting the Application filed by Bihar State Construction Corporation Limited- the Corporate Person under Section 10 of the IBC.
Also keeping in view of the facts that the seventh meeting held on 30.10.2021, the CoC rejected to reissue Form G again as no EOI had been received till date, the Corporate Debtor is not carrying any business and huge losses also. Hence, CoC decided to liquidate the Corporate Debtor. In the same meeting, the resolution for filing of liquidation application and confirming the Resolution Professional as Liquidator was approved by the CoC with 100% voting and as such the liquidation application was filed before the Adjudicating Authority on 01.11.2021.
Appeal dismissed.
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2022 (9) TMI 909
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - initiation of proceedings under Sections 13 and 14 of the SARFAESI Act under which possession of property was handed over - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Appellant in application has given the details of events from 19.06.2015 to March, 2020 and has given details of the Deed of Mortgage entered by Corporate Debtor to secure the loan granted to the sister concern. Details of SARFAESI proceedings initiated against borrower as well as complaint filed under Maharashtra RERA Act was referred to. Details of the order passed by MRERA dated 04.05.2018 and other details were given. The application filed by the Appellant was an application under Section 60(5) of the Code r/w Rule 11 of NCLT Rules, 2016 and under Section 65 of the Code seeking appropriate directions.
The Appellant/ Applicant has come up in the application as an assignee of the Financial Creditor to whom the subject property is mortgaged and possession has already been taken under Section 13(4) of SARFAESI Act much before the filing of Section 7 application. Application also notice in detail the proceedings initiated against the Corporate Debtor prior to the application under Section 7 and allegations have been made in the application that the application has been filed fraudulently and maliciously to save the Corporate Debtor. Allegations made in the application are the allegations which are made in reference to Section 65 of the Code.
The application by the Appellant was competent application filed under Section 60(5) of the Code r/w Rule 11 of NCLT Rules, 2016 and under Section 65 of the Code and the Adjudicating Authority was obliged to look into the allegations to find out if there is any ground to grant any of the prayers made in the application. The finding of the Adjudicating Authority that the Appellant has no locus cannot be sustained. When the Appellant claims to be the Financial Creditor who is assignee of the Financial Creditor and the application records sequence of events and various proceedings prior to the application under Section 7, the allegations ought to have been looked into and could not have been brushed aside by observing that the applicant has no locus.
Appeal allowed.
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2022 (9) TMI 908
CIRP - admission of belated claim - financial debt - NCLT allowed the claim and issued direction that the claim filed by the Respondent/State of Karnataka in Form-C, shall be put up by the RP to the CoC for its consideration - mandatory requirement of filing a claim - whether the Appellant has made out any case warranting interference by this Tribunal in the order passed by the Adjudicating Authority? - HELD THAT:- Admittedly, the Corporate Debtor availed a special scheme / incentive from the 1st Respondent and there is no actual disbursement of money. The said fact was not denied by the 1st Respondent herein. The loan was interest free and towards unpaid Value Added Tax for a period of 10 years which is a benefit issued by the Respondent as a promotion policy of the State Government - it is seen that there is no actual disbursement of money that has made to the Corporate Debtor. Further, there is no enhancement of money after a particular time period. It is pertinent to note that the policy / scheme was to enhance / boost industrial production by providing some monitory incentive/concession and not to earn interest and the interest payment in case of default in repayment is purely in the nature of a penalty. It is reiterated that there is no actual disbursement of money. While so, the contention of the Appellant that since there is no interest factor as per the definition of the financial debt, the claim of the 1st Respondent cannot be considered as financial debt.
It is apt to note that one of the most crucial principle is time is essence in any resolution process within which the process has to be completed in a time bound manner as contemplated under the Code - this Tribunal find that the claim of the 1st Respondent herein is belated and cannot be considered and the finding of the Adjudicating Authority in directing the RP to place the claim in Form-C before CoC per se illegal and unsustainable accordingly, the point is answered against the 1st Respondent.
Whether the RP has power to admit the claims suo-motu? - HELD THAT:- The code prescribes the duties to be performed by the Interim Resolution Professional and the Resolution Professional, as per Section 18 and Section 25 of the I & B Code, 2016. The IBBI (Insolvency Resolution Process for Corporate persons) Regulations 2016, prescribes the procedure to be adopted/followed. As per Chapter IV Regulation 7 of the Regulations, the ‘Claims’ by the Operational Creditor to be submitted with proof to the Interim Resolution Professional in Form-B and as per Regulation 8 of the Regulations, the Financial Creditors shall submit the Claims to the Interim Resolution Professional in Form-C - There is no such provision that the Interim Resolution Professional, shall admit the Claim without filing a Claim Form either in Form-B or in Form-C. Therefore, this Tribunal, is of the considered view, that the Interim Resolution Professional, suo-motu cannot admit the Claims without their being a Claim by the Claimants viz. Operational Creditors, Financial Creditors and Claims by other Creditors. Every Claim shall be submitted by the Claimant with proof.
This Tribunal comes to a resultant conclusion that the order passed by the Adjudicating Authority is per se, an illegal and an unjusticiable - Appeal allowed.
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2022 (9) TMI 907
CIRP - power to entertain new Resolution Plan after approval of another resolution plan by the CoC - whether the Respondents after expressing their inability to submit the Resolution Plan vide their e-mail dated 06.11.2019 can again submit the Resolution Plan after lapse of more than 5 months and that to after approval of the Resolution Plan by the CoC in accordance with law? - HELD THAT:- From the provisions of law and the Regulation the procedure for submission of resolution plan and the powers of the Committee of Creditors in approving the resolution plan by a vote of not less than 66% of voting share of the Financial Creditors after considering its feasibility and viability may approve the plan. Once the plan is approved by the Committee of Creditors, the Adjudicating Authority empowered to approve the plan under Section 31 which was approved by the Committee of Creditors and meets the requirements as referred to in sub-section (2) of Section 30. Further, the procedure encapsulated under the regulations and as per Regulation 39(1-B) the Committee shall not consider any resolution plan received after the time as specified by the Committee under Regulation 36B. In view of the reasons every Resolution Applicant shall comply with the procedure as prescribed under the law and regulations. The due procedure and the scrutiny are a continuous process and cannot be considered as a simple contractual negotiation between two parties.
In the instant case, the Respondents have failed to submit the Resolution Plan within the time therefore there is no immunity to the respondents to file beyond the time prescribed. The RP rightly rejected the request of the Respondents - the Respondents failed to establish that the RP violated the CIRP process. It is only the case of the Respondents such averments allegations have been made and the Adjudicating Authority without going into the reality simply ratified the submissions of the Respondents, which this Tribunal highly deprecate the said stand.
It is not in dispute that the CIRP period has been expired prior to submission of plan by the Respondents and the Respondents have not evinced any interest in submitting of resolution plan, after they backed out from the submission of plans vide letter dated 06.11.2019. It is not in dispute that the Respondents backed out and submitted its plan beyond the ‘CIRP’ period by levelling baseless allegations against the RP to pressurise the RP to place its plan before the ‘CoC’. Such conduct of the Respondents is unwarranted.
The Adjudicating Authority vide its impugned order had directed the CoC to consider the 2nd settlement offer of the 1st Respondent therein, when the resolution plan after approval from CoC was pending adjudication under Section 31 before the Adjudicating Authority.
The Appellant has made out a prima-facie case to be interfered with the Order, passed by the Adjudicating Authority, whereby the Adjudicating Authority exceeded its jurisdiction in directing the Resolution Professional to place the Resolution Plan of the Respondents before the CoC is amounts to interference with the Commercial Wisdom exercised by the CoC in its Commercial Decision, more particularly, in the absence of any material irregularity and violation of any law for the time being inforce - this Tribunal comes to a resultant conclusion that the impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) is illegal, exceeded its jurisdiction and hence, the same is set aside.
Appeal allowed.
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2022 (9) TMI 906
Financial Creditors or not - Appellants are ‘allottee’ within the meaning of the Real Estate (Regulation and Development) Act, 2016 or not - admission of claim of the landowners as Financial Creditors, by Resolution Professional - allotment of flats and commercial shops consequent to the Development Agreement - Financial Debt or not - HELD THAT:- The present is a case where on the land which was offered by the landowners including the Appellants the development was proposed to be undertaken by the Corporate Debtor. A Development Agreement was entered between the parties where area sharing was in the ratio of 45:55 percent. The Landowners has also received a refundable security deposit of Rs.1.75 Crores from the Corporate Debtor. Learned counsel for the Appellants has much emphasized on the fact that as per the Development Agreement 117 flats and 20 commercial shops have been allotted to the landowners and they are allottee within the meaning of RERA Act, 2016.
From provision of Section 5(8)(f) Explanation (i) and (ii), it is clear that pre-condition for a debt being a Financial Debt is disbursement against the time value of money and when any amount is raised from an allotment under real estate such transaction is also covered under Section 5(8)(f). The pre-condition for application of Explanation (i) of Section 5(8)(f) is raising of an amount from allottee. The present is not a case where an amount has been raised from the Appellants – the Landowners - On looking into the real nature of the transaction entered between the Corporate Debtor and the Appellants – Landowners, the landowners were entitled to share the constructed area in the ratio of 45:55 and allotment of flats and commercial units in lieu of their entitlement under the Development Agreement does not make the transaction of allotment a Financial Debt within the meaning of Section 5(8)(f).
There are no error in the decision of the Adjudicating Authority holding the Appellants-Landowners as not Financial Creditors - appeal dismissed.
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2022 (9) TMI 905
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - existence of debt and dispute or not - HELD THAT:- In the present case, the occurrence of default is evidenced by the copy of Certificates of all financial creditors issued by the corporate debtor (Annexure B), establishing the relationship between the parties and date of redemption as promised by the Corporate Debtor.
Whether the present application has been filed within limitation? - HELD THAT:- It can be seen from the records that corporate debtor had to pay back the invested amount to Mr. Dhan Kunwar Verma on 05.11.2019. Further, details with respect to other Financial Creditors about the allotment, amount paid and date of default is mentioned at pages 37-50 of the petition. True Copy of the Certificates of all financial creditors has been attached at Annexure B, whereas the present petition has been filed vide Diary No. 0902109003652021 dated 18.06.2021. Therefore, the present petition is filed within limitation.
Whether the present petition 'by investors who are the creditors of same class is maintainable? - HELD THAT:- In the present case, more than 132 creditors of same class who have approached this Authority for the redressal of their grievances. In view of The Insolvency and Bankruptcy Code (Amendment) Act, 2020 dated 16.08.2019 by which 1st Proviso to Sec. 7(1) was added which was upheld by judgment of the Hon'ble Supreme Court of India in MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER [2021 (1) TMI 802 - SUPREME COURT], the petitioners being more than one hundred of such creditors in the same class are eligible to file the present petition under Section 7 of the IBC, 2016. Moreover, no such objection on the maintainability of the petition has been raised by respondent as it proceeded against ex-parte. Thus, the application filed in the prescribed Form No. 1 is found to be complete.
The present petition being complete and having established the default in payment of the Financial Debt and default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Petition admitted - moratorium declared.
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2022 (9) TMI 861
Initiation of CIRP - Period of limitation - condonation of the delay in filing an application or appeal - NCLT dismissed the application - NCLAT allowed the application - HELD THAT:- The condition precedent for condonation of the delay in filing an application or appeal, is the existence of sufficient cause. Whether the explanation furnished for the delay would constitute “sufficient cause” or not would be dependent upon facts of each case. There cannot be any straitjacket formula for accepting or rejecting the explanation furnished by the Appellant/applicant for the delay in taking steps.
When an appeal is filed against an order rejecting an application on the ground of limitation, the onus is on the Appellant to make out sufficient cause for the delay in filing the application. The date of enforcement of the IBC and/or the date on which an application could have first been filed under the IBC are not relevant in computation of limitation. It would be absurd to hold that the CIRP could be initiated by filing an application under Section 7 or Section 9 of the IBC, within three years from the date on which an application under those provisions of the IBC could have first been made before the NCLT even though the right to sue may have accrued decades ago - the pendency of the proceedings in a parallel forum, invoked by the Respondent, is not sufficient cause for the delay in filing an application under Section 9 of the IBC. By the time the application was filed, the claim had become barred by limitation.
It is now well settled that the provisions of the Limitation Act are applicable to proceedings under the IBC as far as may be - Similarly, under Section 18 of the Limitation Act, an acknowledgment of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing of a fresh period of limitation, from the date on which the acknowledgment is signed. However, the acknowledgment must be made before the period of limitation expires.
A claim may not be barred by limitation. It is the remedy for realisation of the claim, which gets barred by limitation. The impugned order of the NCLAT is unsustainable in law - appeal allowed.
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2022 (9) TMI 860
Maintainability of suit - related parties of the Corporate Debtor or not - commercial arrangements between Spade i.e. the plaintiff herein, AAA and the Corporate Debtor i.e. the defendant No. 1 - financial debt or not - HELD THAT:- The present suit for recovery cannot continue against the defendants.
Defendant No. 1 is the Corporate Debtor as referred to by Hon'ble Supreme Court in its judgment dated 01.02.2021 Civil Appeal Nos. 2842/2020 and 3063/2020 [2021 (2) TMI 91 - SUPREME COURT], defendant No. 2 herein is the erstwhile Director of defendant No. 1 - Once Hon'ble Supreme Court having categorically held that commercial arrangements between the plaintiff and the defendant No. 1 were collusive in nature and that they would not constitute a ‘financial debt’, there is no question of any suit being maintainable against either the defendant No.1 or defendant No.2, who is the erstwhile director of defendant No. 1. Similarly, as far as defendant No. 3 is concerned, defendant No. 3 is the auction purchaser of the defendant No. 1 company, carried out by YES Bank under the SARFAESI Act. It is seen that the proceedings before Hon'ble Supreme Court emanated from the applications filed on behalf of YES Bank before the NCLT. Thus, all the issues pertaining to defendant No. 3 have also been considered by Hon'ble Supreme Court.
It has been informed by learned counsel appearing for the Resolution Professional that the moratorium in terms of Section 14 of the IBC still continues to operate against the defendant No. 1 company. Thus, there is clear bar to continuation of the present suit in terms of the provisions of the IBC.
In view of the categorical findings by Hon'ble Supreme Court and also in view of provisions of IBC, it is held that the present suit cannot continue - application dismissed.
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2022 (9) TMI 859
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 is not in dispute that a Legal Notice dated 13.11.2015 was issued and a Demand Notice under Section 8 of the Code was issued on 04.04.2018 and subsequently the Section 9 Application was filed on 26.11.2018. Even if we do not take into consideration the disputed Debit Note dated 28.05.2015, the fact still remains that the last payment was made on 16.03.2015 whereas, the Demand Notice was sent on 04.04.2018. Having regard to the fact that the Legal Notice and the Demand Notice are within three years of the last payment made i.e., 16.03.2015, the Application is well within the limitation period. However, perusal of the material on record read together with the grounds of Appeal and the Rejoinder Affidavit, it is crystal clear that there is an admitted dispute between the parties.
The Appellant themselves are admitting the existence of a dispute which is neither spurious or mere bluster. Further there is a Civil Suit O.S. NO. 271/2015 filed before the Additional District Judge, Kakenada for the amount claimed to be in default and is pending adjudication.
This Appeal was filed with a delay of 392 days which was condoned - it is not a fit case to remand the matter to the Adjudicating Authority having regard to the fact that the Impugned Order is dated 15.10.2019 and almost three years has lapsed and additionally the Appellant themselves have admitted to the existence of a dispute.
Appeal disposed off.
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2022 (9) TMI 858
Approval of the Resolution Plan - Acceptability of claim of debts which remain unverified during CIRP - Section 31 of I&B Code - HELD THAT:- In the instant case, the information sought for by the RP vide email dated 16.04.2019 was provided by the Appellants vide email dated 12.07.2019, after a clear gap of three months. There are no substantial reasons given for this delay of three months specially keeping in view that IBC mandates a time bound process. It is also not in dispute that the Appellant represented the Ex-Directors of the ‘Corporate Debtor’ in their personal capacity and therefore the Resolution Professional sought for information from the Appellant herein to ascertain the liability of the ‘Corporate Debtor’ against the claims preferred by the Appellant. Admittedly, the Resolution Plan of the ‘Corporate Debtor’ was passed by a majority of 87.57% Voting by the CoC Members way back on 17.10.2019 and this Application was preferred by the Appellants in September, 2019, which was listed on 22.10.2019 and disposed of vide Order dated 17.03.2021.
In the absence of any cogent reasons for having delayed supplying the information to the RP who had sought for clarification on 16.04.2019, but the Appellant had admittedly provided the information only on 12.07.2019 after 90 days after the receipt of the email.
This Tribunal is of the earnest view that the Successful Resolution Applicant cannot be asked to face with undecided claims after the Resolution Plan submitted by him has been accepted by the Committee of Creditors as this would amount to lot of uncertainty - Appeal dismissed.
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2022 (9) TMI 857
Seeking respective attachment/lien/prohibition order over the Bank account of the Corporate Debtor maintained with Axis Bank, Rajam Branch - seeking to allow the Applicant to take control of the bank account - seeking to direct both the Respondents to remove their attachment/lien/prohibition order on the account of the CD - seeking to refrain from doing so during continuance of the Corporate Insolvency Resolution Process (CIRP) of the CD - HELD THAT:- As regards the PF of the employees also, the Counsel for the Applicant submits that during the pendency of this Application they have submitted their claim and it is totally admitted. The Counsel for the Respondent No. 2 however submits that the employees have to be given preference in respect of the distribution of the assets of the CD. Section 53 (1)(b)(i) of IBC, 2016.
In view of the IBC carving out a preference for the employees dues and the Government dues and in view of the fact that the claims of GST and EPFO were totally admitted, the prohibitory orders dated 19.02.2020 and 07.03.2022 issued by the respective departments to the Axis Bank are liable to be set-aside.
Appeal allowed.
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