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Insolvency and Bankruptcy - Case Laws
Showing 81 to 100 of 178 Records
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2022 (9) TMI 805
Auction of the barge which was hypothecated with the bank - initiation of proceedings under SARFAESI Act - HELD THAT:- The Adjudicating Authority committed error in rejecting the application only on the ground that appellant has no locus.
The order impugned is set aside and the application filed by the appellant is revived before the Adjudicating Authority which may be considered and decided in accordance with law - Appeal allowed.
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2022 (9) TMI 804
Validity of Auction held by the Liquidator, without proper Notice to Shareholders/Stakeholders of the Company - Sale was valid, when Payment from Auction Purchaser is not received within 90 days or not - grant of extension - act of Auctioneer to Sell the Property at Revised and Reduced upset price can be treated as valid or not - selling the entire Assets of the company when Sale of a part of the Assets of the Company would have been sufficient to discharge the liability of the company or not - conduct of Auction Proceedings without forming the Committee of Stakeholders, as envisaged under the I & B Code, 2016 - review its own order by Adjudicating Authority.
Whether the Auction held by the liquidator, without proper Notice to the Shareholders/Stakeholders of the Company is valid in accordance with the IBBI Rules and Regulations, 2016? - HELD THAT:- The auction held without notice shall be invalid, as the language of the abovementioned Regulation seems to be a clear direction and mandatory - it is noted that the IBBI (Liquidation Process) Regulations, 2016 (Liquidation Regulations) as it stood before the amendment dated 25th July 2019, provided that the Liquidator shall Liquidate the Corporate Debtor (CD) within a period of two years from the Liquidation Commencement Date (LCD). Keeping in mind the principle of time value as enshrined in the BLRC report, the said time limit was reduced to one year vide amendment dated 25.07.2019.
This Tribunal find that the required Notice was issued correctly by the Liquidator in accordance with the Rules, as provided in I & B Code, 2016, and there was no infringement of rights of the Appellant. There are no error in the impugned order on this issue.
Whether sale was valid when payment from the Auction Purchaser is not received within 90 days? - Can any extension be granted for the same? - HELD THAT:- The extension was granted due to the Covid-19 lockdown. The order passed by the Adjudicating Authority stands valid on the grounds that almost all functioning were restricted during Covid-19 outbreak, vide Order dated 05.05.2020 - Moreover, the property was said to be in subsistence of attachment of Income Tax Department, and due to the same, the Registrar was not registering the property in the name of the Successful Bidder and subsequently the Adjudicating Authority directed the Income Tax Department to issue a NOC, and then the property was registered successfully in name of Successful Bidder - There are no error on the part of the liquidator. The ‘Adjudicating Authority’ correctly gave the impugned order on this issue.
Whether the act of Auctioneer to Sale the property at revised and reduced Upset Price can be treated as valid? - HELD THAT:- Time value in any commercial transaction is of paramount importance. It is the onerous responsibility of the Liquidator to ensure maximum realisation of the property and therefore, it is expected that he shall take decisions in the sale of the property to Auction, based on the Commercial Wisdom as being done in case of Corporate Insolvency Resolution Process by the Committee of Creditor. In catena of Judgment of the Hon’ble Supreme Court of India, it has been clearly held that the Adjudicating Authority or the Appellate Authority, need not to dwell upon the Commercial Wisdom of the Committee of Creditors. Although, there is no scope for the Liquidator to be treated at par with the Committee of Creditors, however we need to recognise the Commercial Wisdom of the Liquidator in conduct of an Auction to realise Maximum Value - the act of Liquidator stands to be valid as the process was conducted in accordance with the IBBI Rules and Regulations, especially as per Rule 4A and 4B, the Liquidator has power to reduce the Reserve Price by 25% for subsequent action. There is no error in the impugned order w.r.t. this aspect.
Whether the Liquidator was justified in selling the entire assets of the company when sale of a part of the Assets of the company would have been sufficient to discharge the liability of the company? - HELD THAT:- The liability was not even the 1/10th and could have been satisfied with only selling some particular part of the property and there was no need to sell the whole property.
Whether the Liquidator was justified in conducting the Auction Proceedings without forming the Committee of Stakeholders, as envisaged under the I & B Code, 2016? - HELD THAT:- Retrospective effect is restricted and prohibited in Law, and are not enforceable in the rule of Law. This Tribunal, therefore do not find any error in the Impugned Order, on this ground.
Whether the Adjudicating Authority can review its own order? - HELD THAT:- The Applicant filed an Appeal to NCLT to review and revise their order regarding commencement of Liquidation Proceeding, here arises the principle of Res judicata the principle that a cause of action may not be pursued further once it has been judged on the merits. Finality is the term which refers to when a court renders a final judgment on the merits - the Adjudicating Authority was right in taking a decision that it has no power to Review/Recall its own order.
This Tribunal, is of the considered opinion that no ground is made out for any interference by this Tribunal - Appeal dismissed.
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2022 (9) TMI 803
Seeking replacement of IRP appointing another professional as the RP - Section 22 of the IBC - HELD THAT:- It is seen from the material on record that the CoC in its second meeting held on 15.07.2022 decided to replace IRP. In fact, there is no much difference in between provisions of Section 22 of IBC and Section 27 of IBC except that the Section 22 of IBC to be invoked for replacement of IRP to the RP and Section 27 of IBC to be invoked in case of replacement of RP during the CIRP of Corporate Debtor. However, both the provisions mandates that the CoC to pass such resolution by not less than 66% of votes. The Adjudicating Authority, in general to accept such recommendation and forward the same to IBBI for confirmation. In short the CoC has power to replace IRP by invoking Section 22 of IBC. In this case, it is not done in the first CoC meeting but it has been in 2nd CoC meeting. The resolution to replace IRP passed by 92.76% votes. Appointment of Mr. Ashish Chhawchharia is objected on the ground that he is not independent qua Corporate Debtor.
There is no law imposing such restrictions on appointment of the RP. In the case which is relied on by the learned counsel for the Suspended Management, the facts were quite different. CIRP in that case was almost at concluding stage. The RP in that case had worked a lot and this Adjudicating Authority found that RP sought to be replaced by the CoC was without disclosing any reasons. In this case, the CIRP of the Corporate Debtor is just commenced.
The objection raised by the Suspended Management of the Corporate Debtor are not sustainable. The Suspended Management appears to raise objection only to protract the CIRP of the Corporate Debtor.
Appeal allowed.
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2022 (9) TMI 802
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:- On perusal of the pleadings, it is found that the operational creditor filed the present application on the basis of demand notice dated 06.06.2019, which was duly served on and replied by the Corporate Debtor on 22.06.2019 and therefore, this contention raised above has no basis. It is an admitted fact that the applicant in the present petition has supplied the goods; therefore, the applicant falls within the definition of the Operational Creditor. The debt and default are also not denied by the Corporate Debtor.
The only issue left before this Adjudicating Authority is whether there was any 'pre-existing dispute' raised by the corporate debtor before issuance of section 8 notice by the Operational Creditor - In the present matter demand notice u/s. 8 of IBC, 2016 was sent on 06.06.2019 by the operational creditor and same was replied by the corporate debtor on 21.06.2019, wherein, the corporate debtor has raised objection with respect to deficiency in services, misrepresentation of facts and losses suffered by corporate debtor and also raised the objection with respect to format of demand notice u/s. 8 of IBC, 2016. In order to establish that there is pre-existing dispute pending, the corporate debtor relied on the emails dated 20.03.2017, 23.03.2017, 28.03.2017, 03.04.2017, 28.08.2017, 10.09.2017, 25.10.2017, 01.11.2017, 04.11.2017, 05.12.2017, 12.12.2017, 13.08.2018. It is pertinent to discuss herein, that the corporate debtor has made payments of an amount of Rs. 3,98,958/- on 08.02.2018, Rs. 22,36,225/- on 15.02.2018 and Rs. 10,00,000/- on 12.06.2018 i.e., even after raising dispute through emails as evident from ledger account annexed as Annexure A-2 - there is no preexisting dispute pending on the date when the operational creditor sent the demand notice u/s. 8 of IBC, 2016 and therefore the judgment of Hon'ble Supreme Court relied upon by the Corporate Debtor is not applicable in the present matter. Therefore, this Adjudicating Authority is inclined to initiate the CIR Proceeding of the Corporate Debtor.
Application admitted - moratorium declared.
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2022 (9) TMI 752
Distribution of proceeds of Resolution Plan - Appellant-dissenting Financial Creditor is entitled to claim distribution of proceeds of the plan as per value of the security interest of the Appellant or as per the debt of the Appellant (voting share) or not - whether distribution as approved by the CoC to the Appellant as per voting share of the Appellant contravenes the Section 30(2)(b) as contended by Learned Counsel for the Appellant? - HELD THAT:- The financial creditors who do not vote in favour of the resolution plan shall receive an amount that is not less than the liquidation value of their debt. The above statement of objects and reasons also makes it clear that the entitlement of dissenting financial creditor is to receive liquidation value of their debt and not the distribution as per their security value as is sought to be contended by the Learned Counsel for the Appellant. The statement of objects and reasons by which amendments in Section 30(2)(b) has been made, makes it clear that entitlement of dissenting financial creditor is the liquidation value of their debt which also clearly negate the submissions raised by the Learned Counsel for the Appellant.
The conclusion of the committee is that the priority under Section 53(1)(b)(ii) shall be only to the extent of security interest of the secured creditor. The secured creditor cannot claim priority under Section 53(1)(b)(ii) of the whole debt where only part of the debt is secured, the above report of the Committee in no manner helps the appellant to support the submission.
The decision of the Committee of Creditors and the Adjudicating Authority deciding to distribute the proceeds of the plan value as per voting share of the secured creditor in no manner contravenes the provisions of Section 30(2)(b) of the Code - appeal dismissed.
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2022 (9) TMI 751
Seeking reversal of transactions of appropriation of the margin money against the Letters of Credit (LC) - seeking to credit the same amount of the margin money into the Current Account of the Corporate Debtor - breach of the Moratorium imposed under Section 14 of the Insolvency and Bankruptcy Code, 2016.
Whether margin money deposited by way of an FDR against a Letter of Credit (LC) is an asset of the Corporate Debtor? - Whether margin money construes, a Security as provided for under the Code? - Whether this margin money can be appropriated by the Appellant Bank during the period of Moratorium on the ground that it does not form a part of the asset of the Corporate Debtor.
HELD THAT:- Admittedly, the amount of margin money is not debited to make any recovery or adjustment towards the dues of the Bank, but the payment is made to the supplier of the material to keep the Company as a going concern. It is also seen that the payment under the LC along with the margin money cannot be said to be an appropriation of the Corporate Debtor’s funds towards the dues of the issuing Bank. A perusal of the Clause 8 of Form-C as provided for under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulations, 2016, the Claim submitted by the Banks specifically provides for the list of securities and it is pertinent to mention that there is no mention of ‘margin money’ in this list of securities - In the instant case, the FDRs cannot be said to be a property of the Corporate Debtor as the date of default is much prior to the date when the Moratorium was invoked. A perusal of the material on record also shows that the entries which have been justified against the LCs and the payment loans are not shown as assets of the Corporate Debtor in its Balance Sheet and Moratorium can be applicable under Section 14 of the IBC only to the assets of the Corporate Debtor.
Margin money is construed as substratum of a Trust created to pay to the beneficiary to whom Bank Guarantee is given. Once any asset goes into trust by documentation for the benefit of beneficiary, the original owner will not have any right over the said asset unless it is free from the Trust. As it is observed that margin money has the character of Trust for the benefit of the beneficiary, it cannot be said to be an asset of the Corporate Debtor. These FDRs cannot be realized by the Corporate Debtor as and when it desires. The margin money is deposited in the FDRs which the Corporate Debtor becomes entitled to only when the Margin Money is free from the obligations of the terms of the LC.
This Tribunal is of the view that in terms of its functions, a Performance Guarantee is similar to that of an LC. Further, having observed so, the contention of the Respondents that the Banks have erroneously invoked the LCs and liquidated the margin money during the period of Moratorium, cannot be sustained - the material on record does not establish that any Security Interest was created by the Corporate Debtor with margin money. The provision of Section 14(3)(b) specifically excludes the Application of Section 14 to a ‘surety’ in a contract of Guarantee to a Corporate Debtor. This Tribunal is of the earnest view that LC is basically akin to a contract of Guarantee, as it a contingent liability of the Corporate Debtor which gets crystallized on the happening of a future event.
The margin money can in no manner be said to be a Security Interest as defined under Section 3(31) of the IBC. Section 14(1)(c) prohibits any action to foreclose, recover or ensure any Security Interest created by the Corporate Debtor in respect of its property - a conjoint reading of Section 3(31) and Section 14 of the Code makes it abundantly clear that margin money is not included as a Security and is not an asset of the ‘Corporate Debtor.
Appeal allowed.
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2022 (9) TMI 750
CIRP - Financial Creditor - Assignment of debt - Requirement of registration of assignment deed - requirement of proper stamping of the assignment deed - Appellant is related party to the Corporate Debtor or not - HELD THAT:- It is relevant to notice the transactions entered between the Reliance Infrastructure Ltd. and the Corporate Debtor according to which the Inter-Corporate Deposit of Rs.2500 Crores was given to the Corporate Debtor by Reliance Infrastructure Ltd. The Hypothecation Deed dated 07.03.2018 was executed between the Corporate Debtor and the Reliance Infrastructure Ltd. Borrower has availed from the Lender various financial assistance with regard to Master Restructuring Agreement which was entered earlier. At request of the Borrower, the Lender has agreed to give financial assistance in the form of Inter-Corporate Deposits of an aggregate amount not exceeding Rs.2500 Crores.
The assignment of debt was alongwith the relevant rights and liabilities of the Assignor with the consent of the Confirming Party (Corporate Debtor). The Assignment Deed which contains all rights and liabilities indicates that the assignment was not of only actionable claim.
Whether Registration of Assignment Deed was necessary? - HELD THAT:- The assignment by the Assignor to the Appellant was alongwith relevant rights and liabilities. We have noticed above that for securing the repayment of Inter-Corporate Deposit, Corporate Debtor and Reliance Infrastructure Ltd. entered into Hypothecation Deed as well as an Indenture of Mortgage dated 11.07.2018. The assignment in favour of the Appellant by the Assignor of entire debt was with relevant rights and liabilities of the Assignor, which has now been assigned to the Appellant - the Adjudicating Authority did not commit any error by coming to the conclusion that the Assignment Deed dated 01.03.2019 required registration.
Whether Assignment Deed was insufficiently stamped? - HELD THAT:- Reliance Infrastructure Ltd. had given Inter-Corporate Deposit for which Deed of Hypothecation and Indenture of Mortgage was entered on 07.03.2018. Application under Section 7 by the IDBI Bank against the Corporate Debtor was filed in September, 2018 and after filing of the application within six months Assignment Deed dated 01.03.2019 was executed by the Assignor in favour of the Assignee. The purpose and object was obvious that Reliance Infrastructure Ltd. being related party could not have participated in the CoC of the Corporate Debtor, hence, Assignee has been brought into for the sole purpose of participating in the CoC which Assignee as per the case of the Appellant is not a related party. Further, the debt of Rs.2538 Crore has been assigned for amount of Rs.114.93 Crores speaks for itself. Further, the Reliance Infrastructure Ltd. had Hypothecation Deed and Mortgage. The time and manner in which assignment has been made clearly indicate that Assignment is not bonafide and was made only to put the Appellant in the CoC with ulterior motive to watch the interest of the related party.
There are no infirmity in the opinion of the Adjudicating Authority where it has held that the Assignment Deed dated 01.03.2019 was not in good faith and rather shows that the arrangement was made with a view to get backdoor entry into the COC through the Applicant assignee to have a control over the process of the CIRP as the Reliance Infrastructure Ltd. being the related party to the Corporate Debtor could not be the member of the CoC. The Adjudicating Authority further held that an act of this kind done with malafide intention cannot give an equivalent right with that of the unrelated financial creditors.
There are no error in the order of the Adjudicating Authority rejecting the application of the Appellant as a Financial Creditor. The submission of learned counsel for the Appellant that even if it may not participate in the CoC, claim of the Appellant should be admitted as Financial Creditor, also could not be accepted - appeal dismissed.
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2022 (9) TMI 748
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 19.02.2022 was properly served? - HELD THAT:- The demand notice dated 19.02.2022 was sent through courier on the registered office of the respondent/corporate debtor and the same was delivered on 21.02.2022. Demand notice was also sent through e-mail on 07.03.2022 at the registered e-mail address of the corporate debtor as available on the master data of the MCA.
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 it has not received any reply to the demand notice dated 19.02.2022 and that no notice has been given by the corporate debtor relating to a dispute of the unpaid operational debt and 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.00757 dated 22.04.2022 (refiled on 20.05.2022), whereas the date of default is 17.12.2019, therefore, this Adjudicating Authority finds that this application has been filed within limitation.
There is a total unpaid operational debt (in default) of ₹1,35,15,157/-. As noted above, the operational creditor has provided the details of the debt due and has also annexed with the petition copy of ledger account statement, and invoices. Accordingly, the petitioner/operational creditor has established the debt and the default, which is more than Rupees one lakh i.e. the threshold limit - 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, Sarv Awas Housing Bhiwadi Private Limited is admitted.
Petition admitted - moratorium declared.
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2022 (9) TMI 747
Seeking liquidation of the Corporate Debtor - Section 33 of IBC - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the Resolution Professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six percent of voting share to liquidate the corporate debtor.
The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code - Application allowed.
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2022 (9) TMI 746
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:- Upon perusal of the records, specifically the letter dated 29th September 2019 and its reply dated 2nd August 2019, it is clear that there were preexisting disputes in the instant matter. Further, annexure R-3 to the reply affidavit, being the master data of the Proxichem LLP i.e the company which manufactures ‘Miteshot’ reveals that the representatives of the Operational Creditor, being Mr. Kailash Dhaundival and Mr. Ishan Dhaundival are the directors of Proxichem LLP. Even though the letter containing such disputes was issued after the demand for the debt was made by the Operational Creditor vide email dated 3rd July 2019, it appears that the Corporate Debtor’s contentions regarding the relation between the Operational Creditor and Proxichem LLP is not baseless and need to be looked into further. However, the same can only be adjudicated in an evidentiary proceeding and not by a summary proceeding under the Code.
The pre-existing disputes in the instant case are not mere feeble arguments and need to be adjudicated upon by a court of competent jurisdiction. 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.
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2022 (9) TMI 687
Maintainability of application - appellant contends that the observation recorded in the order that Appellant has withdrawn earlier application under Section 76 is incorrect - HELD THAT:- There is no dispute that matter has been heard thrice by the Adjudicating Authority but Section 9 Application could not be decided. Learned counsel for the Appellant submits that after order was passed on 03.06.2022, the Operational Creditor was directed to file affidavit which has already been filed. Learned counsel for the Appellant submits that it is only thereafter concealment has come which impelled the Corporate Debtor to file applications.
It is true that the application under Section 76 was not listed and was laying in defect, as has been submitted by learned counsel for the Appellant, however, the order record the statement of counsel for the Corporate Debtor that they shall withdraw the application. The Adjudicating Authority has heard the parties and has to decide finally. The power of the Adjudicating Authority to take proceeding for prosecution are ample and at any stage the Adjudicating Authority can direct for the prosecution of either of the parties.
Filing of applications on 30.08.2022 under Section 76 of I&B Code and Section 340 of CRPC were only for the purpose of delaying the proceedings as has been observed by the Adjudicating Authority - the Adjudicating Authority who is at the helm of the affairs and made observations after consideration and conducting the proceeding, due weightage has be given to such observation. When the Adjudicating Authority has observed that the application has been filed for delaying the proceedings, there are no reason to take a different view.
Appeal dismissed.
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2022 (9) TMI 686
Validity of ad-interim stay granted to the process of fresh e-auction - e-auction of immovable property - HELD THAT:- No relaxation in respect of time-line would be provided to the successful bidder in the second round of e-auction. Since this order had achieved finality as it had not been appealed against or modified, Pavan Enterprises could not have been given extension of time-line to what was provided in the e-auction document. Moreover, Pavan Enterprises who was the successful bidder in the second e-auction, had committed itself to making full payment by 21.4.2021 and therefore to engage in litigation through IA no. 868/2022 and IA no. 485.2021 was highly improper on the part of Respondent, and obtaining the order of ad-interim stay dated 28.2.2022 when it was precluded from doing so was clearly abuse of the judicial process - the Respondent experienced difficulty in depositing the balance of sale consideration after the first round of e-auction and could not deposit the requisite amount after committing itself to doing so.
In view of the order dated 16.3.2021 passed by the Adjudicating Authority which had achieved finality and also the Terms and Conditions of the second round of e-auction process, it is opined that the Respondent caused a serious obstruction in the sale of ‘the property’ by preferring an application to obtain stay order to the third round of e-auction through order dated 28.2.2022 which was granted - In view of the facts of the case and the conduct of the Respondent in obstructing the process of liquidation, particularly the e–auction of ‘the property’ despite it being fully aware of the order dated 16.3.2021 in IA No.468 of 2021, it is opined that the Respondent has clearly abused the process of law to gain undue advantage and thereby caused a delay in the culmination of the liquidation process.
In view of the situation and the conduct of the Respondent as discussed in detail above, we are of the view that a fine of Rs. One Lakh should be imposed on the Respondent for abusing the process of law thereby causing delay in the liquidation process, and seeking to subvert the basic objective of IBC. This fine shall be deposited in Prime Minister’s Relief Fund within 30 days of this order - appeal disposed off.
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2022 (9) TMI 685
Maintainability of application - Initiation of CIRP u/s 9 of IBC - default of instalment of Settlement Agreement - Operational debt or not - HELD THAT:- The Adjudicating Authority has considered the Settlement Agreement and rightly come to the conclusion that default of instalment of Settlement Agreement does not come within the definition of ‘operational debt’ as it does not fall within the definition of additional debt as per Section 5(21) of the IBC and further prayer made by the Corporate Debtor that the matter be referred to the Arbitration under Section 8 of the Arbitration and Conciliation Act, the Adjudicating Authority has also rightly held that the role of National Company Law Tribunal is very limited while exercising its power under Section 7, 9 and 10 of the IBC, 2016, it is beyond the scope of Section 9 of the IBC.
The Adjudicating Authority has taken note of the submissions of Corporate Debtor that the Commercial Civil Suit No. 2/2020 is pending for consideration before the Court of competent jurisdiction and rightly rejected the claim of the Appellant.
The impugned order passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench Court-V) is hereby affirmed. The Appeal is hereby dismissed.
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2022 (9) TMI 684
Resolution Professional seeking payment of his fees - whether the Appellant Bank, which is the sole ‘Financial Creditor’ of the reconstituted CoC be made liable to pay the fees of the CIRP Cost and RP, which the earlier CoC had ratified? - HELD THAT:- The ‘Operational Creditor’ who had initiated the CIRP was initially the sole CoC Member which had ratified the fees and expenses at Rs.1 Lakh per month. The total liability to be paid by the ‘Operational Creditor’ towards CIRP Cost was Rs.2,07,000/- till 12.10.2019. Subsequently, the Appellant Bank filed its claim and the CoC was reconstituted and the Bank became the sole CoC Member. It is not in dispute that the Appellant participated in all the CoC Meetings and even passed a Resolution seeking Liquidation of the ‘Corporate Debtor’ in the fourth CoC Meeting dated 10.02.2020. It is also not disputed that the fees and the cost incurred, claimed by the RP is only till the date, the Resolution for the Liquidation was passed.
The proviso in this Regulation clearly stipulates that if any decision is taken by the committee, prior to the reconstitution, which in this case is the ratification of the fees and the expenses, its validity will not be affected. Admittedly the CIRP Costs were approved by the COC prior to the inclusion of the Appellant Bank and hence as per the proviso to Regulation 12(3) of CIRP Regulations, 2016, it is the liability of the Appellant Bank to pay the expenses. The quantum of costs and fees was ratified by the earlier CoC and the Appellant has not objected to any such issues having participated in the Meetings and specifically being the sole CoC. The Adjudicating Authority has only very fairly bifurcated the expenses to be paid by the ‘Operational Creditor’ and Rs.10,20,858/- to be paid by the Appellant Bank for the subsequent period till the Liquidation Resolution was passed.
There are no substantial reasons to interfere with the well-considered Order of the Adjudicating Authority - appeal dismissed.
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2022 (9) TMI 683
Resolution Professional (RP) seeking a direction to Bank of India/the Appellant herein to release an amount of Rs.100Lakhs/- held in the ‘no lien account’ - seeking release for the purpose of CIRP of the Corporate Debtor Company/M/s. Actif Corporation Limited. - whether the amount of Rs. 1 Crore lying in the ‘no lien account’ belongs to the Appellant Bank? - HELD THAT:- It is relevant to note that this amount was admittedly paid by the ‘Corporate Debtor’ pursuant to an OTS Proposal on 15.07.2017 to show its bona fide. It is not in dispute that the OTS, as proposed, did not materialise and the amount of Rs.1 Crore was parked in the ‘no lien account’ maintained with the Bank. CIRP was initiated on 26.11.2019. Despite repeated requests of the RP, the Appellant Bank did not release the said amount.
The said amount was to be adjusted/utilised upon approval of the Resolution Plan and was not to be adjusted towards ‘Interest’ or ‘Principal’ till then. Prior to the commencement of CIRP, this amount was not adjusted by the Bank towards the loan account of Bank as the OTS Proposal had failed. Once the CIRP was initiated, keeping in view that the OTS had failed, the amount lying in the ‘no lien account’ belongs to the ‘Corporate Debtor’ and under Section 18(f) of the Insolvency and Bankruptcy Code, 2016, the IRP/RP is obligated to take control and custody of all the assets and properties of the ‘Corporate Debtor’. Further, the Bank could not have appropriated this money once the period of Moratorium has commenced on 26.11.2019.
The contention of the Learned Counsel for the Appellant Bank that the Bankers lien over the money held in a customer’s account is a Statutory Right, is unable, keeping in view the facts of the attendant case and also that CIRP had commenced on 26.11.2019, and having regard to the fact that the amount was deposited with a specific understanding that the amount shall not be used by the Bank until approval of OTS. Admittedly, the said amount was paid at the behest of the ‘Corporate Debtor’ by a third party and it was lying with the Bank for more than five years.
There is no illegality or infirmity in the Order of the Adjudicating Authority - Appeal dismissed.
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2022 (9) TMI 682
Seeking Voluntary Liquidation of Corporate Debtor - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A bare perusal of the material available on record shows that the Board of Directors of the Company has taken a conscious decision for closing down the company. Thus, the Board of Directors of the company have unanimously proposed to liquidate the company by invoking the provisions of voluntary liquidation under Section 59 of the Code.
It has been mentioned in the petition that the liquidator has satisfied the claims received, therefore, no prejudice and loss will be caused to anyone, if the company is dissolved. In support of the same, the company has duly passed the requisite Special Resolution in its Extra Ordinary General Meeting on 27.07.2018 by confirming the decision of its Board of Directors and proposing for its Voluntary Liquidation - From the perusal of the record of the case, it is seen that the Liquidator, after his appointment has duly performed his duties and completed necessary formalities to complete the liquidation process of the applicant company, which has been averred in the present petition and, thus, the liquidator has prayed for an order from this Tribunal to dissolve the applicant company.
Since there is no objection received from any angle opposing the proposed voluntary liquidation/dissolution of the company either from the side of the shareholders or from creditors, nor any adverse comment have been received from the public at large against such liquidation/dissolution, despite there being a public announcement by the liquidator and also updation of the same in the website of the Insolvency and Bankruptcy Board of India (IBBI) - Apart, as per record of the present case, it is seen that the company is not found involved in such kind of business activities, which are detrimental to the interest of the public at large. Further, it is not the case that the proposed liquidation may adversely affect its shareholders/members or is contrary to the provisions of law.
The present application deserves to be allowed for the proposed Liquidation/Dissolution of the Corporate Person - Application allowed.
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2022 (9) TMI 681
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:- The Hon’ble Supreme Court in Mobilox [2017 (9) TMI 1270 - SUPREME COURT] has also 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.
The defence is not spurious or plainly frivolous or vexatious. The dispute very much existed between the parties way before the demand notice was sent by the Operational Creditor i.e., 13 July, 2019. Hence, the Petition is dismissed.
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2022 (9) TMI 680
Approval of resolution plan - whether Mr. Nimit Sangani, the Resolution Applicant can get benefit of Section 240A of IBC? - HELD THAT:- It is not in dispute that the Corporate Debtor is MSME. It is also not in dispute that Mr. Nimit Sangani, one of the Promoters of the Corporate Debtor has submitted the resolution plan in his individual capacity.
In view of the statement of law as made by Hon'ble NCLAT, it is held that Mr. Nimit Sangani, one of the Promoters of the Corporate Debtor is not ineligible to submit the resolution plan though he is a related party of the Corporate Debtor in view of the Section 240A of the IBC because he is paying debt of all the stakeholders in equitable manner.
The term of the plan is in between 180 days to 720 days. In view of material on record, it is held that the resolution plan as submitted for our approval complies the provisions of Section 30(2),Section 31 and Regulation 30 of IBBI (CIRP of Corporate Person) Regulations 2016.
This Resolution Plan is approved - application allowed.
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2022 (9) TMI 638
Seeking clarification of the order to the effect that this Court never prohibited Respondent No.1-bank from initiating or maintaining proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) against the Appellant-Zee - HELD THAT:- This Court is of the view that the clarification application as to whether the order dated 03rd December, 2021 intended to restrain Respondent No.1-bank from exercising its rights under IBC is not in the nature of a review. In fact, the present application has been filed in accordance with liberty granted to the parties to approach the Court if the need arises. Consequently, the preliminary objection raised by the Appellate-Zee is untenable in law.
This Court is of the view that every individual has a right to file any legal proceeding till specifically prohibited by law or by a stay/injunction order granted by a competent Court.
In the present case, the Appellant-Zee is seeking to restrain the respondent No.1-bank from initiating IBC proceeding on the strength of the order dated 03rd December, 2021 passed by the learned predecessor Division Bench. However, the order dated 03rd December, 2021 modified the earlier restraint order dated 25th February, 2021 and permitted the Respondent No.1-bank to file recovery proceeding - assuming that IBC proceeding initiated by Respondent No.1bank is not a recovery proceeding, one will have to examine if IBC proceeding initiated by Respondent No.1-bank is violative of order dated 25th February, 2021.
It is settled law that IBC proceeding is neither coercive nor adversarial to the interest of corporate debtor and guarantor.
Further, it is a settled proposition of law that no interim injunction can be granted where permanent injunction cannot be granted. Accordingly, this Court is of the prima facie opinion that the learned Single Judge rightly held that if the interim injunction was to be granted it would debilitate the Respondent No.1bank’s ability to take recourse to remedies which are available to it in law.
Thus, it is clarified that this Court never prohibited Respondent No.1-bank from initiating or maintaining proceedings under the IBC against the Appellant-Zee. Accordingly, there is no disobedience or violation of this Court’s orders dated 25th February, 2021 and 3rd December, 2021 and the contempt petition is without any merit - petition dismissed.
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2022 (9) TMI 637
Maintainability of present suit - liquidator is appointed and liquidation proceedings commenced - whether upon commencement of liquidation proceedings against the defendant no.1 company under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and Liquidator being appointed, the present suit can proceed or not? - HELD THAT:- From the language of Section 33(5) of the IBC, it is clear that the bar/moratorium is only in respect of fresh suits or legal proceedings. Unlike the moratorium under Section 14 of the IBC, where it is clearly noted that the moratorium is in respect of institution of suits or continuation of pending suits or proceedings against corporate debtor, the words “continuation of pending suits or proceedings” are conspicuously absent in Section 33(5) of the IBC - under Section 446 of the Companies Act, 1956, once the Official Liquidator was appointed as the provisional liquidator, neither a fresh suit nor a pending suit could be proceeded against the company except with the leave of the Company Court/Tribunal. Similar position has been maintained under the Section 279 of the Companies Act, 2013. However, the word ‘pending’ is missing in Section 33(5) of the IBC.
A reading of Section 63 of the IBC would reveal that the bar on the Civil Court is only to ‘entertain any suit or proceeding in respect of any matter on which NCLT has the jurisdiction under this Code’. This would not apply to suits, which were already pending before the commencement of liquidation proceedings. Section 231 of the IBC, inter alia states that no injunction shall be granted by a Court in respect of action taken in pursuance to any order passed by the Adjudicating Authority. The intent is clear that the bar is only in respect of civil suits filed after an order has been passed by the Adjudicating Authority. In my view, the aforesaid bar under Sections 63 and 231 of the IBC would only be in respect of fresh suits. Sections 63 and 231 of the IBC cannot be read in manner so as to defeat the provisions of Section 33(5) of the IBC. If Sections 63 and 231 of the IBC are interpreted in the manner canvased by the counsel for the Liquidator, the provision of Section 33(5) of the IBC would be rendered otiose and the moratorium under Section 33(5) of the IBC, which was to apply only in respect of fresh suits would also apply to pending suits. This cannot be the intention of the legislature.
The bar under Sections 33(5), 63 and 231 of the IBC will not apply to the present suit and therefore, the proceedings in the present suit shall continue - the bar/moratorium under Sections 33(5), 63 and 231 of the IBC would not apply to the present suit, the aforesaid claim of the plaintiff can only be adjudicated in the present proceedings. The plaintiff cannot pursue two separate remedies in respect of the same claim. Therefore, the Liquidator is directed not to adjudicate the claim filed on behalf of the plaintiff before the Liquidator.
List the suit along with pending applications before the Roster Bench on 19th September, 2022.
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