|
Advanced Search Options
Insolvency and Bankruptcy - Case Laws
Showing 21 to 40 of 78 Records
-
2023 (3) TMI 1175 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH
Effect of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - should be limited to the same project i.e Winter Hills only or not - seeking appropriate direction to the Ld. IRP/ Respondent to effect the moratorium limited to the real estate project Winter Hills only and not to enlarge the effect of the moratorium against the other assets of the Corporate Debtor or against the entire company of the Corporate Debtor - as per applicant role of IRP/ Respondent should be confined only with respect to project Winter Hills-77 instead of whole company of the Corporate Debtor.
HELD THAT:- The intent of Section 7 of the I & Code, 2016 is pretty clear and the role of Adjudicating Authority has been clearly defined to examine the existence of debt and subsequent default on payment on due date by the Corporate Debtor and also meeting the threshold criteria. Admittedly, in the present case no error was found in the order of the Appellate Tribunal contained in order dated 04.02.2020, thereby there was no case of the Appellant therein to set aside the order dated 20.08.2019 - This Appellate Tribunal, taking the support of the ratio as laid down by the Hon’ble Supreme Court of India 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], regarding economic experimentation, took on challenge for finding new dynamic solution and laid down for the first time the concept of ‘Reverse CIRP’ along with other aspect related to the case in Para Nos. 13, 15, 20, 21, 25, 26, 29, 30 & 31 of (04.02.2020) as discussed in preceding paragraphs.
Similarly, Section 14 of the I & B Code, 2016, is explicit and without any ambiguity which prescribes that once CIRP has been admitted, the entire Corporate Debtor is placed under management of the IRP who shall conduct day to day affairs of the Corporate Debtor and moratorium automatically find its place. The balance has been placed on the rights and obligations of various stakeholder during this calm period as per Section 14 of the I & B Code, 2016 and this has been primarily done to protect the assets of the Corporate Debtor so that by suitable Resolution Plan of Resolution Applicant the Corporate Debtor can be continued on going concern basis and not push the Corporate Debtor towards Insolvency/ Liquidation.
The intent of order of this Appellate Tribunal dated 04.02.2020, therefore, seems to restrict the scope of the Reverse CIRP to only project Winter Hills-77, whose two allottees, namely, Rachna Singh and Ajay Singh, filed an application asking for the CIRP of the Corporate Debtor and who not only got the possession of their flats but also received sale deeds and were able to get these registered in their favour. Thus, technically the grievances of the Original Applicants/ Movers of Section 7 application have been satisfied.
This Appellate Tribunal consciously notes that Section 14 of the I & B Code, 2016 recognise moratorium of the Corporate Debtor implying that under such moratorium all assets and liabilities are covered by provision of moratorium and protected from any detrimental action against the Corporate Debtor by way of any fresh/continuation of any suit or litigation etc., to protect the Corporate Debtor’ in the difficult times and give temporary respite to overcome difficulties and revive itself by other means including by the ‘Successful Resolution Plan’ of third party - It is pertinent to note that the concept of Reverse CIRP was also allowed to the specific project and without touching or commenting on other projects and assets of the ‘Corporate Debtor’ and without any specific direction/observation regarding continuation of moratorium on other projects for the Corporate Debtor.
Thus, it becomes evident that the order is confined to only Winter Hills-77 and not to other projects of the Corporate Debtor and consequently and logically the moratorium in the present case can deemed to have been confined to only project Winter Hills-77 and not to other projects of Corporate Debtor. This clarification is being given looking to peculiar and extraordinary circumstance of the case and detailed rational along with elaborate directions contained in its order dated 04.02.2020. This Appellate Tribunal also takes into account an important fact that in its earlier order dated 04.02.2020, for the first time, the concept of Reverse CIRP was introduced and as such this is evolving process needing such clarification.
This Appellate Tribunal will like to amplify that above clarification is on specific request of the Appellant in present appeal and cannot be treated as general guidance or interpretation regarding moratorium on the Corporate Debtor - moratorium on Corporate Debtor as a whole is a normal, basic and fundamental law as laid down in Section 14 of the I & B Code, 2016 and need to be read accordingly.
Application disposed off.
-
2023 (3) TMI 1077 - CALCUTTA HIGH COURT
Review of Order - Upon filing of section 95 application, interim moratorium under section 96 of the IBC commenced and all legal action and proceeding against the judgment debtor no.2 are deemed to be stayed - HELD THAT:- The scope of review under order XLVII rule 1 read with section 114 of the Code of Civil Procedure is applicable where mistake or error is apparent on the face of the record and it is not synonymous with re-hearing of the matter, for detecting any error in earlier decision and to correct the same. Error which is not self evident and has to be detected by a process of reason, can hardly be said to be an error apparent of the face of the record, justifying court to exercise his power of review under order XLVII rule 1 CPC. It is also settled position of law that in case of review, it must be remembered that it can be used for limited purpose and it’s not an appeal in disguise. There is a clear distinction between erroneous decision and error apparent on the face of the record.
When the court has specifically directed the judgment debtor no. 2 to file affidavit of asset, long back on 2nd April 2019 and also by subsequent order and when judgment debtor in spite of appearance did not bother to comply the same on the plea that such affidavit is not required to be filed in the present context, there are no mistake or error which is apparent on the face of the record. Even when impugned order was passed, opportunity was given to judgment debtor to file affidavit of asset within four weeks and in case filing the same opportunity was given to them for mentioning to discharge the warrant of arrest. Till date, judgment debtor has not complied the same and as such there is no mistake or error apparent on the face of the record and as such the prayer for review is not sustainable.
Application dismissed.
-
2023 (3) TMI 1076 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Winding up of company - Section 241 and 242 of the Companies Act, 2013 - HELD THAT:- Reliance has been placed by Ld. Counsel for the Respondent No. 2 in the case of MSDC RADHARAMANAN VERSUS M. SD CHANDRASEKARA RAJA [008 (3) TMI 471 - SUPREME COURT], wherein the Hon’ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company. The ratio laid down in the aforesaid case is applicable in the facts of the instant case.
The Consent Terms entered between the parties in the past, pursuant thereto, the Original Petition was disposed off, thereafter, violation of Consent Terms, applications were filed before the NCLT, therefore, the NCLT appointed Observer cum Facilitator to settle the disputes, to revive the company etc. however, the parties could not arrive at any amicable settlement despite several opportunities given by the NCLT - the order passed by the NCLT is correct in nature to meet ends of Justice and in the interest of the Company, winding up order was passed.
Keeping in view of the aforenoted background, there are no merit in the instant appeal. The impugned order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) is hereby affirmed.
Appeal dismissed.
-
2023 (3) TMI 1075 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of discernible pre-existing dispute surrounding the debt claimed to be due and payable by the Operational Creditor or not - HELD THAT:- The Corporate Debtor in its reply dated 08.08.2020 to the Section 8 demand notice had disputed both the quantum of operational debt and also deficiencies in respect of discharge of contractual obligations by the Operational Creditor.
There are no material to have been placed on record by the Operational Creditor wherein the Corporate Debtor can be said to have unambiguously admitted the operational debt claimed by the Appellant - the Adjudicating Authority has rightly observed in the impugned order that the Corporate Debtor had raised an issue with regard to the existence of amount claimed by the Operational Creditor and asked for reconciliation of accounts.
Deficiencies in respect of discharge of contractual obligations by the Operational Creditor as raised by the Corporate Debtor - whether there was a plausible dispute supported by the materials raised by the Corporate Debtor in Reply to Demand Notice? - HELD THAT:- On looking into the contents of allegations made in the Reply to the Demand Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor’s amount due.
The issue of deficiency in terms of defects and delays in respect of supplies received from the Operational Creditor was raised by the Corporate Debtor prior to issue of demand notice of 29.07.2020 as borne out from a series of emails placed at pages 432-437 of APB. Concisely put, the email dated 10.10.2017 from the Corporate Debtor raises issues about repair/replacement of supplies made; email dated 18.10.2017 relates to complaint about oil drums having been sent without sealing; email dated 18.05.2018 is about non-supply of oil; email dated 29.11.2018 is about oil drums sent without sealing; email dated 23.02.2019 is about repair of leaking power transformers; email dated 15.10.2019 and 26.11.2019 are about repair of power transformers. These emails which are on record clearly substantiate that the Operational Creditor was put to notice regarding non-supply of goods, delay in supplies, supply of defective goods which are clear signs of pre-existing disputes.
The Adjudicating Authority having noted that the arbitration proceedings were kick-started by the Corporate Debtor starting September 2020, also observed that these arbitration proceedings were clearly initiated after the issuance of the demand notice in July 2020. Hence, it has been rightly held by the Adjudicating Authority that the invocation of the arbitration proceedings being subsequent to the issue of the demand notice cannot be treated as a pre-existing dispute.
There exists a pre-existing dispute with respect to the existence of amount due and payable and quality of goods and services supplied by the Operational Creditor to the Corporate Debtor. Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. The ratio of judgment by the Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT] is indeed squarely applicable in the present case and has been correctly applied by the Adjudicating Authority.
The Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute. There is no merit in the Appeal - Appeal dismissed.
-
2023 (3) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Initiation of CIRP - Financial Creditors or not - unsecured loan - Financial Debt within the meaning of Section 5(8) of IBC or not - time value of money is an essential ingredient in classification of Financial Debt - HELD THAT:- The findings given by the Adjudicating Authority are agreed upon, that the Appellant has not produced any agreement between the Appellant and the Respondent that any interest would be payable by the Respondent/Corporate Debtor against the alleged loan. Further, the Adjudicating Authority rightly come to the conclusion that in order to qualify the debt to be a ‘financial debt’, it is necessary that the amount advanced to the Corporate Debtor is against the time value of money, which is totally absent in the present matter. Further, it was held that since the Appellant is not a financial creditor as the Appellant has not disbursed money against the consideration for the time value. Accordingly, the claim of the Appellant is not a ‘financial debt’ within the meaning of Section 5(8) of the IBC.
There are no merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority - appeal dismissed.
-
2023 (3) TMI 954 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Liquidation of Corporate Debtor - non-execution of decrees - Section 33 of I&B Code - HELD THAT:- Admittedly, the Appellant is an Association ventilating its grievance against appointment of the Respondent as Liquidator. The fact remains that the RP has not challenged the appointment of this Respondent as Liquidator and this Tribunal does not find any allegations against this Respondent. No one aggrieved against the appointment of this Respondent as Liquidator except the Appellant and no genuine cause or reason shown neither any illegality or irrational has been pointed out by the Appellant except mere appointment as Liquidator by the Adjudicating Authority. Moreover, the Appellant failed to explain that the Adjudicating Authority lacks jurisdiction in appointing the Respondent as Liquidator. Furthermore, the CoC it its 4th meeting held on 07.08.2018 passed a Resolution and decided to appoint the Respondent as Liquidator. It is to be presumed that the CoC in its commercial wisdom has taken a decision and reposed its confidence in the Respondent to act as Liquidator.
Further, this Tribunal in SANDEEP KUMAR GUPTA VERSUS STEWARTS AND LLOYDS OF INDIA LTD. AND ANR. [2018 (4) TMI 276 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, KOLKATA] held that the observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the ‘Resolution Professional’, we hold that the Adjudicating Authority was well within its jurisdiction to engage another person as ‘Resolution Professional’ or ‘Liquidator’.
Without going into the other aspects of the case this Tribunal is of the view that the order under challenge was passed by the Adjudicating Authority on 01.09.2020 and till passing of this order, if the period is taken into consideration from the date on which the impugned order was passed i.e. 01.09.2020, much time has passed i.e. more than 2½ years and it would be a futile exercise if the order is interfered with, keeping in view of the time bound proceedings of the IBC.
This Tribunal comes to a resultant conclusion that the Appellant has not made out a prima-facie case to be interfered with the order passed by the Adjudicating Authority - appeal dismissed.
-
2023 (3) TMI 897 - SUPREME COURT
Modification/alternation of the approved Resolution Plan by the CoC - Resolution Plan was approved with majority of 81.39% voting rights of CoC which is in compliance of Section 30(2) and 30(4) of the IBC - ownership of the Corporate Debtor declared over the trademark after the approval of the Resolution Plan by the CoC - is this action of modification of Resolution Plan is permissible or not?
HELD THAT:- It may be relevant to note that the Resolution Plan and particularly Clause 11.12 which has been referred, it is confined to the perpetual exclusive right to use the brands i.e. “Deccan Chronicle” and “Andhra Bhoomi”, etc. by the Corporate Debtor without any financial implications for the purpose of running its business and it was approved by the adjudicating authority under its order dated 3rd June, 2019, but since it was made subject to the result of pending I.A. No.155 of 2018, the adjudicating authority had approved so far as the exclusive rights of the Corporate Debtor to use trademarks namely “Deccan Chronicle” and “Andhra Bhoomi” under its order dated 14th August, 2019, but at the same time, a further declaration was made in para 38 holding that trademarks “Deccan Chronicle” and “Andhra Bhoomi” belong to the Corporate Debtor, which indeed does not reconcile with the Resolution Plan approved by the CoC and later by the adjudicating authority under its order dated 3rd June, 2019.
The NCLAT, after taking into consideration the material available on record and Clause 11.12 of the Resolution Plan, in para 16 of the order of the adjudicating authority (NCLT) returned a finding that the ownership of the Corporate Debtor declared over the trademark after the approval of the Resolution Plan by the CoC, would amount to modification/alteration of the approved Resolution Plan by CoC which is impermissible in law and is not in terms of Section 60(5) of IBC.
It clearly indicates that what was approved by the CoC with 81.39% of its voting is to the effect that the Corporate Debtor has a perpetual exclusive right to use the brands, namely, “Deccan Chronicle” and “Andhra Bhoomi” and it nowhere indicates regarding the right of ownership over the trademarks/brands, “Deccan Chronicle” and “Andhra Bhoomi” of the Corporate Debtor. But the adjudicating authority while adjudicating application I.A. No.155 of 2018, apart from upholding the exclusive right to use the trademarks, “Deccan Chronicle” and “Andhra Bhoomi”, made a further declaration that trademarks belong to Corporate Debtor/DCHL under its order dated 14th August, 2019, which, was a modification/alteration in the approved Resolution Plan which indisputably is impermissible in law.
In terms of the approved Resolution Plan, it was the perpetual exclusive right to use the brands, namely, “Deccan Chronicle” and “Andhra Bhoomi”, by the Corporate Debtor which were available to SRA i.e. the appellant herein and once it has been approved by the adjudicating authority, certainly the right to exclusive use of the trademarks belonging to the Corporate Debtor, on being approved by the adjudicating authority, is always available to the SRA i.e. the appellant, but not the ownership rights of the trademarks of the Corporate Debtor.
Appeal dismissed.
-
2023 (3) TMI 896 - CALCUTTA HIGH COURT
Seeking refund the sum received from the writ petitioner as transfer fee - impugned order has reached to the conclusion that the transfer fee was exempted under the resolution plan sanctioned by the National Company Law Tribunal and has found that the demand of the respondent No. 1 for transfer fee was unsustainable - HELD THAT:- In terms of the resolution plan, the company and resolution applicant were exempted for payment of transfer charges.
Hon’ble Supreme Court in the matter of 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] has held that on approval of the plan, it becomes binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The legislative intent behind this is to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. In that judgment, it has also been held that 2019 Amendment in the Code was declaratory and clarificatory in nature and it has retrospective result.
The writ petitioner is entitled to interest on the amount deposited in pursuance to the unsustainable demand letter dated 24.06.2019. Hence, considering the prevailing rate of interest, application is disposed off holding that writ petitioner is entitled to interest at the rate of 8% on the amount deposited towards the transfer charges in pursuance to the impugned demand letter from the date of deposit till the date of refund.
Application dismissed.
-
2023 (3) TMI 895 - NATIONAL COMPANY LAW TRIBUNAL , CHENNAI BENCH
Seeking early dissolution of the Corporate Debtor - CD cannot be continued as going concern as it was not functional at the time of initiation of the CIRP process - no cooperation from the Directors of the Corporate Debtor since the books of accounts not furnished to the IRP - no cooperation from the Committee of Creditors who are not attending the CoC Meetings and not ready to contribute the cost of CIRP - no liquid assets with the Corporate Debtor to cover the cost of the CIRP and liquidation process.
HELD THAT:- As the CIRP period is already over and no resolution plan is pending or approved for our consideration and as the maximum period prescribed under Section 12 of the Code is already over taking resort to Section 33(1)(a), it is necessary to order for liquidation of the Corporate Debtor.
Application allowed.
-
2023 (3) TMI 837 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of disputes between the parties prior to the issuance of the Demand Notice - HELD THAT:- It is observed that the emails dated 07.08.2014, 27.03.2015, 01.02.2016, 25.03.2016 and 08.04.2016 sent by the Respondent to the Appellant shows that there was pre-existence dispute between the parties before issuance of Demand Notice which is not permissible in IBC to initiate the Corporate Insolvency Resolution Process. Therefore, the reasons assigned by the Adjudicating Authority in the impugned order is fully agreed upon.
Keeping in view of the facts, there are no merit found in the Appeal to interfere with the order impugned passed by the Adjudicating Authority. The impugned order passed by the Adjudicating Authority (National Company Law Tribunal, Court No. IV, New Delhi) is hereby affirmed.
Appeal dismissed.
-
2023 (3) TMI 836 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI BENCH
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors (Homebuyers) - minimum threshold as required under Section 7 of the I & B, Code, 2016 (regarding minimum number of allottees), met or not - Respondents stated that total 39 Financial Creditors file the original application filed under Section 7 of the I & B Code, 2016 who were allotted 20 Real Estate Units of a Phase II having 170 units and therefore met the threshold limits.
Whether, the Application under Section 7 of the I & B Code, 2016 was complete and without defects and the same was considered accordingly, by the Adjudicating Authority? - HELD THAT:- From the reading of the ingredients of Section 7 of the Code, it is obvious that, if an Application, filed under Section 7 of the I & B Code, 2016, is found to be incomplete, then the Adjudicating Authority, in compliance of proviso to Section 7 of the I & B Code, 2016 is required to issue Notice, and provide an opportunity to rectify the Defects, within seven days, failing which, the Petition, can be rejected. An incomplete or improper authorisation, may vitiates, the entire proceedings, rendering Legal Action, Devoid of Authority. It is therefore, felt that the rectification of defects, if any, is of utmost importance and cannot be ignored.
This Tribunal, aptly points out the decision of the Hon’ble Supreme Court of India in M/S. SURENDRA TRADING COMPANY VERSUS M/S. JUGGILAL KAMLAPAT JUTE MILLS COMPANY LIMITED AND OTHERS [2017 (9) TMI 1566 - SUPREME COURT], wherein it is observed and held that the time provided for rectifying the Defective Application, under Section 9 (5) of the I & B Code 2016, is directory in nature, and in the given circumstances, the Adjudicating Authority (Tribunal), can provide more than 7 days’ time, to rectify the defect.
The requirement of Section 7 of the Code, is that the Application, should be complete in all respects and in case of defects, the Adjudicating Authority (Tribunal), should provide an opportunity, to the Applicant, for rectifying these defects, before Accepting/ Rejecting of the Application - The Finding in the impugned order, is cryptic, bereft of any qualitative or quantitative discussions, smacks of any reasoned speaking order, is therefore, clearly Unsustainable. Even, the Respondents herein, have not brought out any details, to allay the doubts raised, by the Appellant herein, either in the Appeal or in the Reply/ Rejoinder in the Original Petition, before the Adjudicating Authority.
This Tribunal, relevantly points out that it is not expressing its opinion on the merits or demerits of the case, and hence, remits back the case to the Adjudicating Authority (Tribunal), with directions to look into all factual and legal aspects and decide the Petition Denovo, on merits, by providing, adequate opportunity of Hearing, to the respective Parties, and also, by adhering to the Principles of Natural Justice.
Appeal disposed off.
-
2023 (3) TMI 805 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Seeking leave for filing an appeal - locus standi - concept of Sufficient Cause, is alien to the maintaining of an Appeal, under Section 61 (1) of the I & B Code, 2016 or not - the plea of the Petitioner / Appellant is that, there is no need to prove any Sufficient Cause, to prefer an Appeal - Validity of Process of Sale and Realisation - Sale of the Corporate Debtor, as a Going Concern, by means of a Private Sale.
HELD THAT:- In the instant case, consequent to the Order dated 19.01.2023, passed by the Adjudicating Authority, the Sale as a Going Concern for the Corporate Debtor, was allowed by the Adjudicating Authority, a Sale Agreement, was executed by the 2nd Respondent with the Corporate Debtor and the 2nd Respondent, took over the Whole Management and the Sale Proceeds, were distributed to the Stakeholders, as per Section 53 of the I & B Code, 2016.
In the light of foregoings and this Tribunal, bearing in mind a prime fact that the Petitioner / Appellant, is not a Stakeholder in the Liquidation Process, and in any event, has no vested interest, in the Corporate Debtor, comes to a resultant conclusion that the appeal, filed by the Petitioner / Appellant, is an Otiose one, and the same is filed, only to disrupt, the Liquidation Process of the Corporate Debtor, because of the fact that the entire Sale Proceeds, were distributed to the Stakeholders, as per ‘Section 53 of the I & B Code, 2016. Looking at from any angle, the Leave, prayed for by the Petitioner / Appellant, to file the instant Comp. App, is not assented to, by this Tribunal, cementing upon the facts and circumstances of the instant case.
Appeal dismissed.
-
2023 (3) TMI 804 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Sale of the Corporate Debtor, as a Going Concern, by means of a Private Sale - Seeking to consider the Proposal of the Petitioner / Appellant, for Swiss Challenge Method - wanton omission, breach and collusion, in between the Parties, in Compliance of the Order - it is the stand of the Petitioner / Appellant that the Offer of the Petitioner / Appellant, is more than the value offered by the 2nd Respondent, before the 1st Respondent, and that the Appellant’s Proposal dated 08.11.2021, to purchase the Corporate Debtor / Company, as a Going Concern, is much beneficial to the Stakeholders Committee and Economy, at large.
HELD THAT:- It must be borne in mind that the Proposals of one M/s. Galaxy Freight Systems and the Proposal of the 2nd Respondent / G C Logistics India Private Ltd., was placed before the Stakeholders Consultation Committee, and MA No.122 of 2021, was filed by the 1st Respondent / Liquidator, for a Swiss Challenge Auction, to be held, which was allowed, by the Adjudicating Authority, through its Order, passed on 11.03.2022.
In the Swiss Challenge Auction, which took place on 06.04.2022, in which, the 2nd Respondent, was named as a Successful Bidder, and it satisfied the payment of Rs.44,64,00,000/-. Further, the purchase of the Corporate Debtor, as a Going Concern, by the 2nd Respondent, was allowed, by the Adjudicating Authority, through its Order, passed in IA(IBC)/1018/CHE/2022 in main CP/759/IB/CB/2018.
In so far as the present case is concerned, it is brought to the fore that the New Management of the Corporate Debtor, had issued two communications dated 02.02.2023, whereby and whereunder, the 2nd Respondent had announced a Welcome Bonus, to all the employees of the Corporate Debtor. Also that, the Sale Proceeds, received in Full, from the 2nd Respondent, was distributed to the Stakeholders, as per the ingredients of Section 53 of the Code - Not resting with the above, this Tribunal, keeping in mind of a primordial fact that the Petitioner / Appellant, is not a Stakeholder, in the Liquidation Process of the Corporate Debtor, and in any event, has no substantial interest in the Corporate Debtor, comes to a cocksure conclusion that the Petitioner / Appellant, has no vested interest in the Corporate Debtor, and in view of the fact that the entire Management, was handed over to the 2nd Respondent and the entire Sale Proceeds, were distributed to the Stakeholders, the Leave sought for by the Petitioner / Appellant, to prefer the instant Comp. App (AT) (CH) (INS.) No. 33 of 2023, before this Tribunal, is not acceded to.
Appeal dismissed.
-
2023 (3) TMI 803 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Condonation of 55 days delay in filing the Appeal - delay due to health problems - HELD THAT:- The power to condone delay vested in this Tribunal under Section 61 (2) proviso is only 15 days. The judgment of this Tribunal in Chennai Bench in M. K. Resely & Ors. vs. Union Bank of India & Ors [2022 (11) TMI 1155 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] which has been relied by the Appellant in support of his submission is needed consideration. In the said case, this Tribunal relying on Section 14 of the Limitation Act has granted exclusion of the period from 25.01.2022 to 22.06.2022, during which period the Appellant of that case had indulged in bonafide litigious activity in preferring the Writ Petition No. 2832/2022 and Writ Appeal No. 537 of 2022 before the High Court of Kerala.
The grounds as given in the application does not give any satisfactory cause for condonation of delay, which is beyond 15 days. The judgment of Chennai Bench of this Tribunal relied by the Appellant in M. K. Resely & Ors. vs. Union Bank of India & Ors. has no application in the facts of the present case.
This application which prays of condonation of delay of 55 days cannot be accepted - COD application dismissed.
Present is not a case where the Appellant is claiming any benefit of Section 14 of the Limitation Act. Appellant in the application has taken the ground that he received the impugned order dated 07.09.2022 on 24.11.2022 and the same was prepared by the registry on 16.11.2022 and due to health problems of the Appellant, the appellant could not provide the required documents and annexures.
-
2023 (3) TMI 748 - DELHI HIGH COURT
Disciplinary Action against the Resolution Professional (RP) - Incorporation of partnership firm by the name ‘IBBI Insolvency Practitioners LLP’ - issuance of SCN on the ground that the RP had used the name ‘IBBI’ in the firm’s name - violation of Section 208 of the IBC read with Regulation 7(2)(a) and 7(2)(b) of the 2016 Regulations - HELD THAT:- This Court is of the opinion that the RP could not have used the name IBBI for his own private entity which would amount to misleading the trade and industry, as also the stakeholders who are involved in resolution and insolvency processes. The Disciplinary Committee’s view does not deserve to be interfered with. The order has also already been given effect to by the MCA and the RP’s suspension period of three months as directed by the impugned order has already come to an end.
The writ petition is dismissed.
-
2023 (3) TMI 747 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of Resolution Plan - illegal constitution of the CoC by including ‘related parties’ - Appellant HIL has thus claimed that the Impugned Order was passed by the Adjudicating Authority without considering the information regarding the presence of related parties in the CoC and fraudulent initiation of CIRP placed by HIL on record, whereas the order approving the resolution plan should have been passed with complete satisfaction of the Adjudicating Authority as required under section 31, read with section 30(2) of the IBC.
Was the financial loan claimed in default of payment in the application under section 7 of IBC filed by the financial creditor Nandakini Contractors Pvt. Ltd., a loan that could qualify as ‘financial debt’ under IBC and appropriate for initiation of CIRP against the corporate debtor? - Was the admission of section 7 application and consequent initiation of CIRP against the corporate debtor in accordance with the legal requirements and provisions of the IBC? - HELD THAT:- While the financial creditor Nandakini has claimed a financial debt, evidently there is no document included in the Form 1 application in proof of any loan agreement and/or disbursement of the said loan. A purported proof of the disbursement of the said loan has been filed by the corporate debtor in the form of its balance sheet, but notably there is no balance sheet or ledger account of the financial creditor for the same financial year showing such a loan. We further find that no document or record regarding entries in the banker books in accordance with the Bankers Book Evidence Act, 1891, which are required to be furnished by the financial creditor along with Form 1 application under section 7 was filed by the Nandakini - The financial creditor did not either submit any document or record regarding the financial loan and/or its disbursement, but only relied on letters ostensibly sent by the financial creditor demanding repayment of the alleged loan and two letters dated 9.2.2019 and 22.2.2019 which was found convincing and worthy of satisfaction by the Adjudicating Authority.
The letter dated 22.2.2019 has been considered as admission of loan and default of repayment by the Adjudicating Authority. In the absence of any document evidencing the loan agreement placed on record by the financial creditor, the only indirect proof of purported loan is contained in the letters dated 15.4.2018 and 9.2.2019 sent by the financial creditor to the corporate debtor, wherein no specific amount of dues either in principal or interest payable to the financial creditor is mentioned - the admission order under section 7 of IBC passed by the Adjudicating Authority stands on shaky foundation.
The section 7 application was submitted by Nandakini Contractors fraudulently in collusion with the corporate debtor to seek an admission order for CIRP of the corporate debtor, and such an admission order was given by the Adjudicating Authority without proper and adequate scrutiny of the contents of the section 7 application and without examination of material therein.
Was the constitution of CoC with the inclusion of a number of financial creditors vitiated as they were ‘related parties’ closely connected with the CD, and were the approvals and resolutions passed in the meetings of CoC vitiated and bad in law? - HELD THAT:- An important issue that has been raised by the Appellants is about piercing the corporate veil to be able to understand the actions and role of various companies that have shown stake in the CIRP - as corporate debtor, applicant – financial creditor, members of CoC and the successful resolution applicant. Their connections with each other and consequently their role in filing of the section 7 application and in the CIRP would then become apparent - Section 2(27) of The Companies Act, 2013 states that control “shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner”.
The inter-connections between the corporate debtor, financial creditor Nandakini, members of the CoC and the holding companies of the Successful Resolution Applicant through common directors sitting on the board of more than one company, different levels of shareholdings and common registered addresses and working-email IDs thus adds strength to the argument that they belong to the same group of companies working towards common objective insofar as the CIRP in the instant case goes - looking at the events in this case from the lens of the nature, involvement and conduct of the companies, we find the inference inescapable that these companies were acting ‘in concert’ and being guided and led by a ‘controlling mind as part of a fraudulent project to defraud the creditors of the corporate debtor by misusing the instrumentality of the IBC, completely against its objectives and spirit and such actions, which are infringing the provisions of the IBC cannot be condoned or overlooked.
The constitution of CoC with related parties of the corporate debtor participating in the CoC as a majority, is also vitiated. Consequently, we find force in the submission of the Appellants HIL and HIW Workers Union that the corporate debtor is influencing decisions in the CoC and through members of the CoC, who have shareholding and through the CoC. The decisions, therefore, that are taken in the CoC meetings are coloured and are infringement of second proviso of section 21(2).
Was the Successful Resolution Applicant Regus Impex Private Limited disqualified to submit a resolution plan for the corporate debtor? - HELD THAT:- The Constitution of the Committee of Creditors violates the proviso to Section 21(2) of the I & B Code 2016 read with 12(3) of CIRP Regulations. Therefore, the Constitution of the creditors' committee is a nullity in the eye of law that vitiates the entire CIRP. Liquidation is like a death knell for the corporate entity/corporate person. Liquidation based on the resolution of the CoC, which consists of related party Financial Creditors having 77.20% vote share, is a matter of grave concern - It is also pertinent to mention that when the Constitution of the Committee of Creditors itself is found to be tainted, then the decisions of that COC cannot be validated on any pretext even it is about exercise of commercial wisdom.
In the present case, as the initiation of CIRP itself has been found to be tainted and faulty, and in addition, the subsequently constituted CoC is also found to include parties that are connected with each other and acting in concert with the corporate debtor and other parties, we are of the opinion that the interest of justice would be served if the admission order under section 7 passed by the Adjudicating Authority is quashed. We, therefore, set aside the said admission order which would lead to all the other actions including CIRP as non est and null and void - Thus, beginning with the initiation of CIRP to the constitution of CoC, its various decisions and resolutions and the denial of opportunities to the workers to submit their claims (although such a request was not made explicitly and also there was a delay when the HIW Workers’ Union contacted the RP for copies of Section 7 application and pleadings therein), we are of the view that all these proceedings are fraudulent and also reek of malice and are, therefore found to be bad in law.
Appeal disposed off.
-
2023 (3) TMI 699 - SUPREME COURT
Eviction order - tri-partite agreement - right or interest that the Corporate Debtor has over the property in question, for the purpose of deciding the inclusion of the same in the Information Memorandum prepared by the Resolution Professional under Regulation 36 of the Regulations - Seeking direction to Energy Properties & Others (including Victory) not to obstruct the sole and exclusive possession of the property - issuance of direction to the local district administration to give proper assistance to the Resolution Professional in taking possession of the property so as to discharge his duties under the Code.
What is the nature of the right or interest that the Corporate Debtor has over the property in question, for the purpose of deciding the inclusion of the same in the Information Memorandum prepared by the Resolution Professional under Regulation 36 of the Regulations? - HELD THAT:- A bundle of rights and interests were created in favour of the Corporate Debtor, over the immovable property in question. The creation of these bundle of rights and interests was actually for a valid consideration. But for the payment of such consideration, Energy Properties would not even have become the owner of the property in dispute. Therefore, the development rights created in favour of the Corporate Debtor constitute “property” within the meaning of the expression under Section 3(27) of IBC. At the cost of repetition, it must be recapitulated that the definition of the expression “property” under Section 3(27) includes “every description of interest, including present or future or vested or contingent interest arising out of or incidental to property”. Since the expression “asset” in common parlance denotes “property of any kind”, the bundle of rights that the Corporate Debtor has over the property in question would constitute “asset” within the meaning of Section 18(f) and Section 25(2)(a) of IBC.
In Sushil Kumar Agarwal [2018 (10) TMI 1822 - SUPREME COURT], this Court brought out the distinction between different types of Development Agreements, with particular reference to Section 14(3)(c) of the Specific Relief Act, 1963. After summarizing the different types of Development Agreements, this Court held that An essential incident of ownership of land is the right to exploit the development potential to construct and to deal with the constructed area. In some situations, under a development agreement, an owner may part with such rights to a developer. This in essence is a parting of some of the incidents of ownership of the immovable property.
Therefore, it is not very difficult to conclude, that a bundle of rights and interests were created in favour of the Corporate Debtor, by a series of documents such as (i) the MoU dated 24.01.2008; (ii) the shareholders agreement dated 24.01.2008; (iii) the flow of the consideration from the Corporate Debtor to the UCO Bank and to Energy Properties; (iv) the Development Agreement dated 16.06.2008; (v) the Memorandum Recording Possession dated 02.03.2010 executed by the original shareholders of Energy Properties; (vi) the Memorandum Recording Possession dated 24.06.2010 executed by Energy Properties in favour of the Corporate Debtor; and (vii) the Leave and License Agreement primarily executed by the Corporate Debtor in favour of Victory, which was merely confirmed by Energy Properties as a confirming party. Some of these bundle of rights and interests, partake the character and shade of ownership rights. Therefore, these rights and interests in the immovable property are definitely liable to be included by the Resolution Professional in the Information Memorandum and the Resolution Professional is duty bound under Section 25(2)(a) to take custody and control of the same.
Whether NCLT and NCLAT have exercised a jurisdiction not vested in them in law by seeking to recover/protect the possession of the Corporate Debtor? - HELD THAT:- As a matter of fact, the only decision of this Court which may probably come close to the facts of the present case, is the one in RAJENDRA K. BHUTTA VERSUS MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ANOTHER [2020 (3) TMI 34 - SUPREME COURT]. In the said case, there was a tripartite joint development agreement entered into between (i) a Society representing a large number of persons occupying 672 tenements in the property; (ii) Maharashtra Housing and Area Development Authority (MHADA), which was the owner of the land; and (iii) the corporate debtor. After initiation of CIRP against the corporate debtor, MHADA issued a notice for the termination of the joint development agreement. NCLAT refused to treat the property as the asset of the corporate debtor. But this Court reversed the said decision, by holding that Section 14(1)(d) stood attracted in the facts and circumstances of the said case and that even a reference to Sections 18 and 25 may not be necessary. Though the said case arose out of a fact situation where the termination of the joint development agreement was hit by Section 14, the said decision clinches the issue on what constitute a property and the distinction between occupation and possession of a property.
The fact that there were security guards posted in the property is borne out by records. This is why NCLT as well as NCLAT have done a delicate act of balancing, by protecting the interests of Victory to the extent of the land permitted to be occupied. In fact, Victory does not even have the status of a lessee, but is only a licensee. A license does not create any interest in the immovable property - NCLT as well as NCLAT were right in holding that the possession of the Corporate Debtor, of the property needs to be protected. This is why a direction under Regulation 30 had been issued to the local district administration.
The impugned orders do not call for any interference. Hence, the appeals are dismissed.
-
2023 (3) TMI 698 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
E-auction - submission which has much pressed by learned counsel for the Appellant is that the Appellant has made a higher offer of more than 10% from the offer of Respondent No.2 which was sufficient ground to accept the offer of the Appellant, maximisation of the value of the Corporate Debtor being the main objective of the I&B Code.
HELD THAT:- There can be no dispute that maximisation of the value of the Corporate Debtor is one of the objectives of the I&B Code. However, the said objective has to be achieved within timelines. There has been already five failed e-auctions and the Respondent No.2 was an entity who had been interested in the Corporate Debtor from very beginning by submitting Resolution Plan. Respondent No.2 was objecting to the liquidation and even filed an appeal in this Tribunal, where this Tribunal observed that Liquidator should explore the possibility for a scheme for compromise and arrangement. The Respondent No.2 has also filed a scheme for compromise which came to be considered by the Stakeholder Consultation Committee, which was not approved having received only 64% voting share. The Stakeholder Consultation Committee have thus well aware of the plan and scheme submitted by Respondent No.2 and Stakeholders has given their express approval to the proposal of Respondent No.2. The acceptance of proposal of Respondent No.2, which was more than the last Reserve Price of the failed auction, after due deliberation was accepted by the Stakeholders.
The Respondent No.2 was not a stranger to the above process and he has already filed Resolution Plan and a scheme which was not earlier approved. Financial Creditors were aware of the credentials of the Respondent No.2 and must have interacted with the Respondent No.2 even earlier - there are no error in exercise of jurisdiction by the Adjudicating Authority in approving the proposal of Respondent No.2 and judgment of this Tribunal in Rimjhim Ispat Ltd. was on its own facts.
There are no illegality in the order of the Adjudicating Authority which may warrant interference in the impugned order in exercise of our appellate jurisdiction - appeal dismissed.
-
2023 (3) TMI 697 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
E-auction - seeking direction to declare the applicant as successful bidder and cancel the bid of Appellant which was accepted by the Liquidator - It is submitted that since the Respondent No.1 has given the equal bid of Rs.38,40,00,000/- within two minutes of the bid submitted by the Appellant, by virtue of the E-auction Process Information Document, the Respondent No.1 was to be declared as Successful Bidder and the Liquidator committed error in declaring the Appellant as Successful Bidder.
HELD THAT:- The document clearly indicate that if bid under option 1 and 2 are equal, then bidder under option 1 as going concern shall be declared as successful bidder. The system of bidding and various entries shows that bid of Appellant and Respondent No.1 were of equal amount, whereas the system of bidding as was applied by the bidding forum rejected the bid of Respondent No.1, which was required to be analysed by the Liquidator. It is on the record that the last bid given by the Appellant was of Rs.38,40,00,000/- and since there is no incremental increase by Respondent No.1, its bid of same amount was rejected by the system. The requirement in the Process Document that if the both the bids in option 1 and 2 are equal, bidder under option 1 for sale as going concern shall be successful bidder, there was no measure to apply said provision in the system. System proceeded on its own basis as per terms and conditions.
There is no dispute that one of the participant i.e. Respondent No.1 has submitted bids under option 1 i.e. sale of Corporate Debtor as going concern and bid by the Appellant was under option 2 and preference to bid under option 1 has to be given since sale of Corporate Debtor as going concern is audible objection in an insolvency proceeding for revival of the Corporate Debtor. The bidding was closed after receiving aforesaid bid and it was duty of the Liquidator to apply the relevant conditions to find out who should be declared as the successful bidder. The Liquidator instead of looking into the relevant conditions, acted mechanically and followed the auction platform in declaring the Appellant as the highest bidder.
The Liquidator is the best person, in facts of the present case, to appreciate the requirements and interpretation of the Information Document and E-auction Document issued by him. In the present case, the Liquidator has not given effect to the requirement in the Information Document that in event bid under option 1 and 2 are equal, the bidder under option 1 shall be declared as successful bidder.
The liquidation process has to be conducted as per the Liquidation Regulation and as per the Process Document issued by the Liquidator. When the process was completed, highest bidder was to be chosen as per the terms and conditions. Present is not a case where this Tribunal should allow the bidding process to again commence. The question before the Adjudicating Authority was as to whether in the facts and circumstances of the present case, on an application, Respondent No.1 was required to be declared as successful bidder, which decision has been taken by the Adjudicating Authority after considering the relevant Process Document. This Tribunal in the case of Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL & ORS. AND SERVALAKSHMI PAPER LTD. & ORS [2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that it is clear that during the liquidation process, steps required to be taken for its revival and continuance of the Corporate Debtor by protecting the Corporate Debtor from its management and from a death by liquidation.
The Adjudicating Authority has also permitted to refund the amount of deposited by the Appellant with the accrued interest as accrued - no grounds have been made to interfere with the impugned order.
Appeal dismissed.
-
2023 (3) TMI 651 - DELHI HIGH COURT
CIRP - Seeking Formulation and implementation of a scheme that conclusively addresses the grievances of other home buyers who may not have the capacity to approach courts/forums to seek redressal against builders - Seeking issuance of directions to the Central Government to draft and implement a comprehensive scheme to address the grievances of home buyers availing home loans - grant of full tax benefit from the date of payment of- first instalment of EMI to the Bank to all those home buyers who have taken home loan from the banks but possession of their dream home is delayed due to the fault of the builder.
HELD THAT:- In SMALL SCALE INDUSTRIAL MANUFACTURES ASSOCIATION VERSUS UNION OF INDIA (UOI) AND ORS. [2021 (3) TMI 1214 - SUPREME COURT], the Apex Court while placing reference to the observation made in PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VERSUS RESERVE BANK OF INDIA [1992 (1) TMI 337 - SUPREME COURT], proceeded to hold that the courts ought not to supplant themselves for government expert authorities fully competent in the domain of economic and fiscal policy, which in this instance is the RBI.
In INTERNET AND MOBILE ASSOCIATION OF INDIA VERSUS RESERVE BANK OF INDIA [2020 (3) TMI 364 - SUPREME COURT], the Apex Court held that directions issued by the RBI are supplemental to the statutory force of the RBI Act, 1934.
Statutory directives issued by RBI are done in exercise of powers under Sections 21 and 35A of the Banking Regulation Act, 1949. The master circulars in the counter affidavit sets out extensive detailed norms for lending activities which would include housing loans, for banks to follow and implement. What emerges thus on a reading of the foregoing is that the RBI being a regulatory body is equipped with requisite expertise to advise on and to formulate economic policies, that have a binding effect on the banking system which is backed by statutory force - it is well settled law that while considering matters pertaining to economic policy, courts ought to yield to the wisdom of policy makers who are fully equipped to decide on matters of policy in their domain, and therefore to refrain from exercising powers of judicial review. A perusal of the same shows that a well structured regimen has been created by the RBI which includes guidelines to the various banks on the issue of advancing loans to home buyers. A perusal of the said Master Circular shows that RBI has given advice to various banks as to which all projects should loans be advanced and the precautions which the banks have to take while extending loans. The Master Circular also advices that the quantum of loans which are to be granted by the banks for housing finance and also to maintain loan to value ratio in case of individual housing loans.
When the projects proponent defaults in completing a project, it is always open for the banks to approach the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 for getting a Insolvency and Resolution Professional appointed and to take measures to ensure that project is revived and the project is completed because the banks are also anxious to recover their money - Other than the remedies in Insolvency and Bankruptcy Code, 2016, it is always open for the home buyers to approach the Real Estate Regulatory Authority (RERA) to ensure that the project is completed.
There is a proper regimen available to redress the grievances of a home buyer and also in view of the Master Circular issued by the Reserve Bank of India, no further Orders and directions are required to be passed in the instant petition.
The petition is dismissed.
|
