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Insolvency and Bankruptcy - Case Laws
Showing 61 to 78 of 78 Records
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2023 (3) TMI 176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Competency of appeal - Appellant – Vistra ITCL (India) Ltd. has appropriate authority to pursue the present Appeal - after completion of Challenge Mechanism on 21.12.2022, the Committee of Creditors was obliged to put the draft plans submitted by the Resolution Applicants on 22.12.2022 to vote without it having any other option, or not - value maximization was achieved and Committee of Creditors was prohibited to take any further steps towards value maximization or not.
Whether the Appellant – Vistra ITCL (India) Ltd. has no appropriate authority to pursue the present Appeal and the Appeal is not competent at its instance? - HELD THAT:- When Board of Directors of the Appellant has authorised filing of the appeal by authorized person, we fail to see how the appeal filed by Vistra ITCL (India) Ltd. is incompetent. The submission of learned counsel for Respondent No.1 that Bondholders has not authorized filing of the Appeal does not commend us. The Board of Directors is fully competent to take all steps on behalf of Vistra ITCL (India) Ltd. including initiation of legal proceedings. When the Board has authorised filing of the appeal through authorised representative, the submission cannot be accepted that Appellant is not authorised by the shareholders. Interests of the shareholders are looked by the Board of Directors of the Vistra and Board having been authorized, the preliminary objection raised by Respondent No.1 cannot be accepted. The Appeal by financial creditor who is member of the Coc and as per learned senior counsel for the Appellant, holds 90% vote share in the CoC, there is sufficient locus with the Appellant to challenge the impugned order dated 02.02.2023. Appellant being Financial Creditor in the CoC which is admitted fact, there is no lack of jurisdiction in the Appellant to file this appeal.
Whether Regulation 39(1A) contains an implied prohibition on the jurisdiction of the CoC to enter into any further negotiations with Resolution Applicant or to further ask a Resolution Applicant to increase its Resolution Plan value? - HELD THAT:- Regulation 39(1A) was inserted empowering Resolution Professional to allow modification of the Resolution Plan, but not more than once or use a Challenge Mechanism to enable Resolution Applicants to improve their Plans. The Regulation 39(1A) cannot be read containing any fetter on the right of the CoC to take further action as per RFRP after receipt of the Resolution Plan consequent to Challenge Mechanism - there is no consideration of the relevant Clauses of RFRP and without adverting to relevant Clauses of RFRP, the Adjudicating Authority opined that the same run foul to Regulation 39(1A). The Adjudicating Authority further fell into error in coming to a conclusion that there is no power with the CoC to enter into negotiations with the Resolution Applicant, after the Challenge Mechanism and the exercise of the commercial wisdom is circumscribed by the framework for value maximization provided under the Code read with the Regulations.
Whether the Regulation 39(1A) has taken place of the negotiation process and it forecloses any negotiation by CoC with Resolution Applicant? - HELD THAT:- The consideration by the CoC comes after the Plan is examined by Resolution Professional and presented before the CoC and thereafter, the deliberation by CoC begins in the presence of Resolution Applicants. The process of negotiations, thus, can commence only after Plan comes for consideration, when the Resolution Applicants are also present. The modification of Plan not more than once and improvement of Plan under Regulation 39(1A) completes before deliberation on the Plan. Thus, it can neither foreclose, nor prohibit negotiations. The Clauses in RFRP as noticed above reserve right to the CoC to negotiate and interact with one or all Resolution Applicants, which obviously is subsequent act, after Plan is received under Regulation 39(1A). Hence, Regulation 39(1A) cannot prohibit any negotiation or any further steps of the CoC. The view of the Adjudicating Authority that “no negotiation or value maximizatioin exercise can be individually undertaken by the CoC dehors the mandate of Regulation 39(1A)” is contrary to the Scheme delineated by the Code and CIRP Regulations. The very concept of negotiation envisages dialogue between two parties.
The Adjudicating Authority has again concluded that no negotiation or value maximization exercise can be individually undertaken by the CoC in view of the provisions of Regulation 39(1A) - It is opined that Adjudicating Authority committed error in allowing IA No.1/MB/C-I/2023 and IA No.99/MB/C-1/2023. 60.
Thus, even after completion of Challenge Mechanism under Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP - appeal allowed.
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2023 (3) TMI 175 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Rejection of claims by Resolution Professional - privity of contract between the Appellant and the Corporate Debtor or not - business loan for expansion of their business - Financial Debt or not - HELD THAT:- It is seen from the record that the erstwhile Promoter has brought in funds in his personal capacity which were permitted as Director loans and the same was already informed to the Appellant that they were treated accordingly in the Books of Accounts of the Corporate Debtor. There is no rebuttal by the Appellant to the submissions made by the Respondent that loans from Directors are allowed as per the provisions of the Companies Act, 1956 & 2013, subject to certain conditions and that in the instant case, the amount that was brought in by the Promoter into the Corporate Debtor, was deemed as Directors loans and treated accordingly in the Books of Accounts.
From the Resolutions relied upon by the Counsel for the Appellant, it is clear that Dr. AM Arun in his capacity as Managing Director was authorized to sign the documents and to conclude the money in his personal name and deposit the same into Company’s Account and the Board approved that the repayment is to be made by Company only. There are no substantial reasons given as to why the amounts, if meant for the purpose of rendering the operations of the Company, and the Company has a distinct Bank Account, the amount was disbursed to the Personal Account of the Managing Director. The Adjudicating Authority has given a finding that there was no copy of any Notice convening the Board Meeting or the relevant extract of the attendance of the other Directors on the Board, having been produced before the Adjudicating Authority.
The documents relied upon by the Appellant with respect to the Promissory Note, the Confirmation Letter dated 31.03.2019, the Statement of the Account (Annexure-5) do not establish that the amounts were lent directly to the Corporate Debtor, though the amounts have been linked to the Promoter of the Corporate Debtor, in his personal capacity, the same cannot be treated as Financial Debt, as defined under Section 5(8) of the Code, specifically in the absence of any documents, supporting the transactions, namely, the Bank Accounts of the Corporate Debtor to substantiate that the amounts were directly lent by the Appellant into the coffers of the Corporate Debtor meant for the business purposes of the Corporate Debtor - merely because the Promoter had acknowledged the debt does not tantamount to the same being classified as a Financial Debt under the IBC, specially, in the absence of Loan Agreements, terms of repayment, payment of interest, tenure of loan, etc., more so keeping in view the Independent Auditor’s Report for three consecutive Financial Years.
This Tribunal does not find any illegality or infirmity in the well-reasoned Order of the Adjudicating Authority, National Company Law Tribunal, Division Bench – I, Chennai) in observing that the Applicant/Appellant herein is to seek his/its remedy against the said Promoter and not against the Corporate Debtor - Appeal dismissed.
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2023 (3) TMI 174 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
CIRP - Ex-Parte Order - appeal barred by time limitation or not - NCLT admitted the application - Pre-Existing Dispute or not - HELD THAT:- It is seen from the record that though the Impugned Order of Admission is passed on 21.03.2022, the Operation of the Order was stayed vide Order dated 25.03.2022 till 05.05.2022, that is the date on which the Order in I.A.33/2022 was passed. It is apparent from the record that the Appellant has diligently pursued their remedy of seeking recall of the Ex-Parte Order, passed against the Corporate Debtor, and therefore the period spent before the Adjudicating Authority, pending adjudication, would not be included in computing the Limitation. This Tribunal is of the considered view that when the Operation of the Impugned Order dated 21.03.2022 was suspended till 05.05.2022, no Appeal could have been preferred by the Appellant herein, pending the adjudication before the Adjudicating Authority. The Appellant had challenged both Orders dated 21.03.2022 and 05.05.2022 by filing both these Appeals before this Tribunal on 09.05.2022 which is well within the period of Limitation and thereforethe Company Appeal (AT) (CH) (Ins.) No.158/2022 is not barred by Limitation.
This Tribunal is conscious of the fact that any Admission under Section 9 of the Code, it is also mandated that the existence of a Pre-Existing Dispute is to be ascertained by the Adjudicating Authority.
Keeping in view the peculiar facts of the attendant case that the Corporate Debtor had replied on 06.01.2022 to the Section 8 Demand Notice dated 21.12.2021, highlighting the Pre-Existing Dispute; the Section 9 Application was filed on 07.01.2022 and the copy of the Reply Notice was delivered to the first Respondent on 08.01.2022; that the matter was listed before the Adjudicating Authority on 10.02.2022 and on 17.03.2022, but the Respondent had failed to place this Reply before the Adjudicating Authority either on 10.02.2022 or on 17.03.2022; this Tribunal is of the earnest view that in the interest of justice, an opportunity be given to the Appellant herein to be heard on merits.
This Tribunal finds it a fit case to remand to the Adjudicating Authority to decide the matter on merits, specifically keeping in view that in paras 13 & 20 of the Impugned Order, the Adjudicating Authority has observed that even if the Reply Notice dated 06.01.2022, was placed on record, the same conclusion, as was drawn in respect of the Reply Notice dated 04.10.2021, could have been drawn in respect of the said Notice, since, no document in support of the proof of the contention of the said Notice dated 06.01.2022 also came forth.
Having regard to the fact that the Adjudicating Authority has touched upon the merits of the case by adverting to the submissions made in the Reply Notice, this Tribunal, is of the earnest view that an opportunity be given to the Appellants to raise all contentions and put forth the communication between the parties and argue their case on merits.
The Impugned Orders are set aside and the Adjudicating Authority (Tribunal), shall hear both parties on merits and decide the matter afresh, uninfluenced by any of the observations made by this Tribunal in this Order - Appeal allowed.
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2023 (3) TMI 164 - NATIONAL COMPANY LAW TRIBUNAL: NEW DELHI PRINCIPAL BENCH
Unable to give a date or proof, on which the reply was filed to the section 7 petition - HELD THAT:- It is found from the DMS that it is still continues under scrutiny and the respondent has not chosen to rectify the defects so as to bring it on record. This shows the callous attitude on the part of the CD, as he in not defending the case hence we have no other option except to close the right of filing reply.
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2023 (3) TMI 135 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Condonation of 493 days delay in filing the appeal - period of moratorium during which the Appellant was under moratorium has to be excluded giving the benefit of under Section 60(6) of the Insolvency and Bankruptcy Code, 2016 or not - HELD THAT:- The case before the Hon’ble Supreme Court in NEW DELHI MUNICIPAL COUNCIL VERSUS MINOSHA INDIA LIMITED [2022 (5) TMI 1123 - SUPREME COURT] was a case where a benefit of Section 60(6) was extended to the Corporate Debtor and the Resolution Applicant in respect to the proceedings under the Arbitration and Conciliation Act, 1996. The case before the Hon’ble Supreme Court was not a case for limitation for filing an appeal under Section 61 of the Code and the Court was concerned with the benefit of Section 60(6) of the Code in proceedings under 1996 Act - The Supreme Court held that Section 60(6) of the IBC does contemplate exclusion of the entire period during which the moratorium was in force in respect of corporate debtor in regard to a proceeding as contemplated therein at the hands of the corporate debtor.
The present appeal is filed under section 61(1) of the Code with delay of 493 days. Our jurisdiction to condone the delay under Section 61(2) of the Code proviso is only 15 days.
The delay of 493 days in filing the appeal cannot be condoned - Application for condonation of delay is dismissed.
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2023 (3) TMI 74 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI BENCH
Fraudulent transactions (entries of Rs. 21.37 crores shown in the Audited Financial Statement for the year 2018) - distribution under Section 53 of the Insolvency and Bankruptcy Code, 2016 (liability to pay to liquidator) - HELD THAT:- Section 66 of the I & B Code, 2016, gives powers to the Adjudicating Authority to pass suitable orders, if it is found that any person has carried on the business of the Corporate Debtor with an intention to defraud its Creditors or other stakeholders. Section 66 also give powers to the Adjudicating Authority to give directions for making contribution to the assets of the Corporate Debtor. This also includes Directors of the Corporate Debtor, and their personal liability towards contribution, provided such Directors did not exercise due diligence or failed to take reasonable steps to minimize potential losses to the creditors when there was no possibility of avoiding the commencement of Corporate Insolvency Resolution Process. However, a director can be deemed to have exercised due diligence, if such diligence was exercised as expected reasonably of a director carrying out a business in ordinary course of business.
Thus, for establishing the fraudulent purpose, it must be shown that the Ex-Directors of the Corporate Debtor knew that the Company was insolvent but continued to run business with dishonest intentions. On a broader sense, concealment of true financial position of the Corporate Debtor can also be covered under such provisions.
This Appellate Tribunal after going through the averments of both the parties and the record made available, comes to the conclusion that onus was on the Appellants and difficult to accept that details of large number of 4,000 customers were not available. Similarly, it also not convincing that no payment has been received from any of such customers. On face of it, the finding of the Adjudicating Authority seems to be correct and no error is found in the impugned order on this account.
This Appellate Tribunal, is of the considered opinion that the Appellants, have not turned out to be clean in their explanations and submissions, and therefore cannot avoid their responsibilities towards non-available / non-verifiable Assets of Rs. 21.37 crores, as shown in the Balance Sheet for the Financial Year 2018. These Assets, have proved to be Fictitious / Fraudulent, in nature and seems to have been created in the Books of Accounts, with an intent to Defraud the Creditors - Appeal dismissed.
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2023 (3) TMI 73 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Quantum of fees and other expenses payable to the Resolution Professional and in the course of determination of fees/expenses - conduct of the Resolution Professional in respect of insolvency proceedings of M/s Kushal International Limited which had entered into liquidation.
Whether in light of the facts of the present case the Adjudicating Authority had erred in disallowing the fees/expenses claimed by the Appellant and in refixing the same and whether the negative remarks made on the conduct of the Appellant stands to reason?
HELD THAT:- On the activities undertaken post passing of the liquidation order, we notice that the Adjudicating Authority has returned the findings that no progress report was filed by the Resolution Professional on the efforts made by him during the period when the liquidator remained to be appointed. While this is factually correct, it also cannot be discounted that he had undertaken several steps including appointment of security guards to protect the assets of the Corporate Debtor, prevented the suspended management from causing harm to the property of the Corporate Debtor by way of unauthorized leased deeds, undertook several visits to the factory site, made several appearances for hearings before the Adjudicating Authority etc. This finding of the Adjudicating Authority has also been challenged on the ground that in the absence of his regular appointment as liquidator, the liquidation process could not have moved forward and therefore there was no question of submitting progress report.
The Adjudicating Authority in the impugned order has narrated the chronology of hearings and stated that though the matter was heard 22 times, in none of the hearings the expeditious appointment of liquidator without delay was emphasized. In fact there were numerous adjournments either on request of the parties or on grounds of settlement being under consideration between parties. The delays were compounded by the lockdown imposed on account of Covid pandemic during the intervening period - for the sluggishness in the appointment of the liquidator, it is not the Resolution Professional alone who can be held solely responsible but the responsibility equally devolves on the CoC and as much on the Adjudicating Authority which took an inordinately long time in making the appointment.
The fees/expenses claimed by the Resolution Professional for the period following the passing of the liquidation order is exorbitant and not commensurate with the work performed by him as is clearly borne out from material on record.
The directions of the Adjudicating Authority as contained in the impugned order are concurred with respect to the determination of the fees of the Resolution Professional; expenses incurred by him on site visits; fees of the legal advisor and salary of the security guards and direct that the same shall be paid by the CoC within ten days from the date of uploading of this order. Further all the adverse observations made on the conduct of Resolution Professional in the impugned order is expunged - appeal disposed off.
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2023 (3) TMI 72 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Violation of principles of natural justice - Impleading Financial Creditors as necessary party - Resolution plan already approved - whether for obtaining the approval of the Adjudicating Authority for sale of asset as per the Revised Resolution Framework, whether the Appellant ought to have been impleaded as necessary party to the application? - HELD THAT:- The Appellant being member of the Creditors Committee and having participated in the meeting held on 17.02.2021, it cannot be said that in passing resolution for approving the highest bid any principles of natural justice have been violated. The Appellant is a dissenting Financial Creditor who has only 1.89% vote share. When resolution is passed by the Creditors Committee and approval is sought from the Adjudicating Authority, as per the Revised Resolution Framework approved by this Tribunal on 12.03.2020, it is not necessary that all dissenting Financial Creditors should be impleaded to the application - Present is not a case where it can be said that any principles of natural justice have been violated since the Appellant has raised its objection in the meeting of the Creditors Committee and also voted against the resolution. The filing of the application for approval before the Adjudicating Authority was as per the steps provided in the Revised Resolution Framework - the order of the Adjudicating Authority dated 23.09.2022 cannot be set aside on the ground of violation of any principles of natural justice.
The stay of an order means that the order which has been stayed would not be operative from the date of the passing of the stay order but it does not mean that the said order has been wiped out from existence.
The distribution of the consideration received by the applicant (IL&FS) from the transaction which have been proposed or withdrawal of any other amounts from the designated bank account shall be subject to further orders of the Adjudicating Authority. In event, order is passed by Hon’ble Supreme Court in the pending Appeal, the same is also to be given effect in the proceedings before the Adjudicating Authority - Appeal dismissed.
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2023 (3) TMI 71 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admitted application - existence of any stay order or not - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Non-performing Assets (NPA) - time limitation - order for liquidation of corporate Debtor - HELD THAT:- The NPA of the corporate debtor loan account was declared on 6.8.2012. Thereafter, while it is noted that the corporate debtor filed a civil suit before the Hon’ble High Court of Calcutta that suit is yet to be decided and therefore in the present, no illegality attaches to the declaration of NPA, as the stay order granted by Hon’ble High Court of Calcutta vide order dated 15.10.2020 [[2021 (3) TMI 126 - CALCUTTA HIGH COURT]] was vacated by the Hon’ble Supreme Court by its judgment in SLP Civil No. 1168/2021 [[2021 (4) TMI 753 - SUPREME COURT]].
Thus, it is clear that there is no stay order operative on the order of NCLT dated 19.8.2019, whereby the application under section 7 was admitted.
The State Bank of India declared the loan account of the corporate debtor as NPA on 6.8.2012 and quite clearly the declaration of NPA has not been declared as illegal or incorrect. Therefore, the limitation for section 7 application starts from 6.8.2012. As per Article 137 of the Limitation Act, 1963 the period of limitation prescribed for an application under section 7 of IBC is three years. Therefore, the limitation of section 7 application would be valid upto 5.8.2015. Before the expiry of the limitation period, the balance sheet for FY 2014-15 filed by the corporate debtor (attached at pp.86-100 of the appeal paperbook Vol.I) mentions the amount of long-term borrowings as Rs.33,49,92,064/- and the balance sheet very clearly mentions in Textual Information 23 “that the company has defaulted in repayment of dues to the Bank - It is noted that while this limitation period was running, another acknowledgment was made by corporate debtor in its balance sheet for the FY 2015-16, wherein again the long-term borrowings for the year ended 31.3.2016 has been shown as Rs.33,49,92,064/-. Further, since no caveat by way of any textual information is shown by the corporate debtor in its appeal with the balance-sheet (attached at pp.101-114 of the appeal paperbook, vol.II) , the limitation would again get extended from the last date of the balance sheet i.e. 31.3.2016 for another three years, which would make it upto 31.3.2019.
It is observed from the section 9 application that it was filed on 8.8.2018, which is within the limitation period, which extends upto 31.3.2019. It is clear that the application under section 7 is within the prescribed limitation period - The loan account of corporate debtor declared by State Bank of India as NPA on 6.8.2012 the date of default and the balance-sheets for the financial years 2014-15 and 2015-16 provide an unequivocal and clear extension of limitation of the debt by virtue of section 18 of the Limitation Act, 1963. Such a limitation is validly extended through acknowledgment of liability of the said debt upto 31.3.2019 and the section 7 application, which was filed on 8.8.2018, is clearly within limitation.
The admission order passed by the Adjudicating Authority admitting the section 7 application is correct - the Impugned Order-I does not need to be interfered with. Further, in view the fact that the Impugned Order-I has been held to be correct, the order of liquidation i.e. Impugned order-II also is held to be correct and therefore, there are no reason to interfere with it.
Appeal dismissed.
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2023 (3) TMI 70 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
CIRP - Approval of the Resolution Plan - whether the Appellant/Operational Creditor can be allowed to pursue the Arbitration Proceedings in the light of the ratio laid down by the Hon’ble Apex Court in FOURTH DIMENSION SOLUTIONS LTD. VERSUS RICOH INDIA LTD. & ORS. [2022 (1) TMI 1352 - SUPREME COURT]? - Contingent Liability
HELD THAT:- any ‘Claims’ which are not part of the Resolution Plan shall stand extinguished and no person would be entitled to continue any Proceedings in respect of a ‘Claim’, which is not part of Resolution Plan.
The Hon’ble Apex Court had disposed of the Appeal with a liberty to the parties to pursue all contentions available to them in the Proceedings at the relevant period of time.
Contingent Liability - HELD THAT:- The ratio of this Judgement is applicable to the facts of this case, keeping in view that the CIRP Proceedings were invoked under Section 10 of the Code, that the name of the Appellant was mentioned in the list of Operational Creditors, that the RP had posted on the website that the Claims of the Operational Creditors are under verification, and that admittedly Pre-Arbitration Proceedings were pending prior to the invocation of the Section 10 Proceedings, and there was no Contingent Liability or any other provision made in the Resolution Plan, subject of course, to the result of the Arbitration Proceedings.
There is no illegality in the Order of the Approval of the Resolution Plan by the Adjudicating Authority and there are no reason to set aside the Resolution Plan per se except for observing that the RP ought not to have made a ‘Contingent Provision’ with respect to the Appellant herein having regard to the specific facts of this case, which would be subject to the result of the Arbitration Proceedings.
Having observed so, liberty is being given to the Appellant herein to pursue all contentions available to them in the pending Arbitration Proceedings and the same be decided in the said proceedings on its own merits in accordance with law.
Appeal disposed off.
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2023 (3) TMI 24 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Liability of the guarantor / surety upon approval of the Resolution Plan - liability limited to the extent of the balance recoverable / remaining amount of default, or not - HELD THAT:- The liability of the Guarantor, if any, is limited to the balance amount remaining post approval of Resolution Plan, which is neither disclosed nor determined by Respondent No. 1. in the event the Principal Borrower enters CIRP and a Resolution Plan has been approved in its favour, the claim of the creditors against the Guarantee is strictly limited to the balance outstanding, that too in terms of the Guarantee Deed executed between parties.
The standard of examination of default, as adopted by the Adjudicating Authority, is erroneous and reflects non-application of mind. The impugned order has been passed in gross violation of the principles of natural justice as the impugned order has been passed by the Adjudicating Authority without providing an opportunity of hearing to the Corporate Debtor. As evident from the Order dated 03.08.2021, the hearing in the matter was interrupted due to a technical glitch. However, the Adjudicating Authority has proceeded to reserve its judgment on the said date.
There are no merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority - appeal dismissed.
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2023 (3) TMI 22 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI BENCH
CIRP admitted - locus of shareholder of the Corporate Debtor in Section 7 application filed by the Financial Creditor - Fraudulent and malicious initiation of proceedings under Section 7 of the I & B Code, 2016 - Both the Appellants and the Respondents have alleged that they have become Shareholder / Financial Creditors respectively for a paltry sum of few crores and trying to grab the Corporate Debtor whose investment in form of shares in other companies have been valued more than Rs. 1000 crores - both the Appellants and the Respondents have alleged each other that they are acting on behalf of the Ex-Promoter Mr. Vijay Mallya is group companies and trying to take over the company at the behest of Ex-Promoter.
Whether the Respondent No. 2 (Corporate Debtor) is a Non- Banking Financial Company (NBFC) having assets of more than Rs. 500 crores and therefore exempted from the Corporate Insolvency Resolution Process ordered by the Adjudicating Authority? - Appellants are related parties of the suspended management as claimed by the Respondents or not - Respondents are related parties of the suspended management of the Corporate Debtor or not.
Whether the Adjudicating Authority committed an error in admitting the CIRP of the Corporate Debtor - Whether, the shareholder of the Corporate Debtor has any locus in Section 7 application filed by the Financial Creditor? - HELD THAT:- In the present case, undisputedly, the 1st Respondent became Financial Creditor since the assignment was created with all requisite formalities and the Corporate Debtor has not denied the financial transaction. In such case, the Adjudicating Authority is supposed to admit Section 7 Application - It is the case of Appellant that Section 7 Application was filed by the Financial Creditor in collusion with the Corporate Debtor.
After reading Section 61(1) of the I & B Code, 2016, it becomes clear that any person aggrieved by the order of the Adjudicating Authority may prefer an appeal to National Company Law Appellate Tribunal.
It infers that the Appellants even as shareholders cannot be aggrieved merely by the admission of the Corporate Debtor into Corporate Insolvency Resolution Process. Such objection may render the object of I & B Code, 2016 illusory since any shareholder of any Corporate Debtor against which Insolvency proceedings have been initiated can then seek to maintain a derivative action and sabotage a valid Corporate Insolvency Resolution Process initiated by the Adjudicating Authority - prima-facie there is no specific law which allows any shareholder of the Corporate Debtor to challenge the admission of Corporate Insolvency Resolution Process of the Corporate Debtor, once the debt due and default is established by the Adjudicating Authority, in an application made by the Financial Creditor filed under Section 7 of the I & B Code, 2016 before the Adjudicating Authority.
Having considered all the averments made by the Appellants as well as the Respondents, including various Written Submissions made available to this Appellate Tribunal and after careful consideration of various judicial pronouncements of the Hon’ble Supreme Court of India as well as this Appellate Tribunal, comes to concrete conclusion without any hesitation that in the present Appeals, the Appellants do not have any Locus, and therefore the present Appeals, are not maintainable. This Appellate Tribunal, therefore, does not find any Error / Legal Infirmity, in the impugned order, on this issue.
Appeal dismissed.
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2023 (3) TMI 21 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking direction to refer the matter to conciliation - Petition admitted u/s 7 of IBC - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - HELD THAT:- The reasons assigned by the Adjudicating Authority is fully agreed upon, whereby objection raised by the Respondent (before the Tribunal) / Appellant so far authorized representative of the Financial Creditor is concerned, the Adjudicating Authority rightly found that on 18.10.2019 a board resolution was passed by Invesco Trustee Pvt. Ltd., whereby, Ms. Nupur Tainwala, Assistant Vice President-Legal of Invesco Asset Management (India) Pvt. Ltd. is authorised to file any case/suit etc. before any court of law, tribunal, quasi-judicial process etc. which contained the detail power/authorization provided to Ms. Nupur Tainwala by one Ms. Deepti Dave being authorized signatory of Invesco Trustee Pvt. Ltd.
There are no merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority - impugned order affirmed - appeal dismissed.
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2023 (3) TMI 20 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Rejection of application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 - rejection primarily on the ground of not meeting the required minimum number of allottees as per amendment in Section 7 of the IBC - rejection also on the ground of contractual dispute - HELD THAT:- On going through the investment agreement, there is no difficulty in coming to the conclusion that appellants had invested money for a specified period and that too for some period they received interest as admitted by the Respondent/Corporate Debtor in para 4(j) of it affidavit in reply. The investment agreement was unambiguous for 24 months and in lieu charge was created to the plots. In such situation there was no reason for the adjudicating authority to treat the appellants as allottees.
The Adjudicating Authority has further misunderstood the observation of the Hon’ble Supreme Court in Manish Kumar case [[2021 (1) TMI 802 - SUPREME COURT]]. It is evident that the fact remains that after the amendment in section 7 was introduced appeal was filed before the Supreme Court and Hon’ble Supreme Court by its order dated 13.01.2020 while issuing notice directed to maintain status quo with respect to pending applications. Though the Hon’ble Supreme Court finally upheld the amendment, the Hon’ble Supreme Court further extended time to cure the defects within two months from the date of order of Hon’ble Supreme Court.
On examination of the aforesaid direction of the Hon’ble Supreme Court it is clear that the impugned order of the Adjudicating Authority fortfeits the right of the appellant to cure the defect in compliance with the order of Hon’ble Supreme Court. It is not in dispute that before amendment under Section 7 was brought by the Govt of India, the application under section 7 filed by the appellant was pending and during pendency of the said application the amendment travelled upto the Hon’ble Supreme Court. Initially Hon’ble Supreme Court directed to maintain status quo and finally on 19.01.2021 while upholding the amendment provided two months time from the date of the order of Hon’ble Supreme Court for curing the defect. However, the Adjudicating Authority before expiry of two months has passed the impugned order on 23.02.2021. Accordingly there is no reason to allow the impugned order to continue.
Contractual dispute - HELD THAT:- In view of specific averment made in the Investment Agreement and non-raising of dispute by the Corporate Debtor on debt, there was no reason to record that there was contractual dispute - on this issue also the finding of the Adjudicating Authority is erroneous.
The impugned order is hereby set aside and the matter is remitted back to the Adjudicating Authority to hear the parties afresh and pass appropriate order in accordance with law particularly considering the time extended by the Hon’ble Supreme Court in Manish Kumar case and unequivocal Investment Agreement entered in between appellants and the Corporate Debtor - Appeal allowed.
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2023 (3) TMI 19 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking direction to Respondent to provide copy of the Resolution Plan submitted before the Tribunal for approval to enable the Appellant to make submission/objection - HELD THAT:- The judgment of this Tribunal in Jet Airways [2022 (2) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] which has been relied by the Appellant was a case where Resolution Plan was approved by the Adjudicating Authority and Appeal was filed challenging and an I.A. No. 1700 of 2021 was filed seeing direction to provide copy of the Resolution Plan, where this Tribunal has directed that part of the Resolution Plan which deals with the claim of workmen and employees shall be provided to the Appellant by Successful Resolution Applicant.
The Appellants are entitled for inspection of the records of the Adjudicating Authority as per the NCLT Rules, 2016 - there are no reason to interfere with the order impugned - appeal disposed off.
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2023 (3) TMI 18 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Approval of the Resolution Plan - whether ‘PF’, ‘Gratuity’ and ‘Workmen/Employees dues’ have to be paid in full. - Section 30(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Limited enquiry which can be made by the Adjudicating Authority/this Tribunal while examining the ‘Plan’ is to see whether the Plan complies with requirements as provided for in Section 30(2) of the Code. The minimum that is required to be paid to Operational Creditors under a Resolution Plan said to be under Section 30(2)(b) of the Code as being the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under Section 53.
Hon’ble Apex Court in Ebix Singapore Private Limited Vs. Committee of Creditors of Educomp Solutions Ltd. [2021 (9) TMI 672 - SUPREME COURT] has held that the Resolution Applicant has no jurisdiction to withdraw from the Resolution Plan or modify the Plan. The Adjudicating Authority has ample jurisdiction only to interfere with the Resolution Plan in the event that the Plan violates, or does not adhere to any of the provisions of Section 30(2) of the Code. It is categorically mentioned by the Resolution Professional that the Secured Financial Creditors and workmen were treated equally under the Plan with the allocation of 35.13 % of the admitted claim amounts and therefore the claims of workmen were fully considered.
Having regard to the ratio of the Judgement in Jet Aircraft Maintenance Engineers Welfare Association [2022 (11) TMI 332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] of this Tribunal, upheld by the Hon’ble Apex Court, this Tribunal is of the earnest view that PF and Gratuity is to be paid in full as per the provisions of EPF and NP Act, 1952 and payment of Gratuity Act, 1972. Since admittedly the amounts paid are only 35.13% having treated them as Secured Creditors, it is opined that indeed there was a violation of the provisions of Section 30(2) of the Code, with respect to the payment of PF and Gratuity only.
Undervaluation - scope and performance of SRA in taking over the unit are sans evidence - HELD THAT:- This Tribunal, does not find any other material irregularity, in the Approval of the Resolution Plan.
Appeal allowed in part.
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2023 (3) TMI 3 - SUPREME COURT
Approval of Resolution plan - non-payment of the full amount of Provident Fund Dues - violation of provision of Section 30(2)(e) - Time limitation - HELD THAT:- There are no error in the order of the National Company Law Appellate Tribunal, Principal Bench, New Delhi in ASSAM TEA EMPLOYEES PROVIDENT FUND ORGANIZATION VERSUS MR. MADHUR AGARWAL, HAIL TEA LIMITED [2022 (11) TMI 403 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] where it was held that provident fund dues are not the assets of the Corporate Debtor and they have to be paid in full. Hence, the Appellant was clearly entitled for payment of full provident fund dues i.e. an amount of Rs. 2,10,13,798/-.
Appeal dismissed.
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2023 (3) TMI 1 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Maintainability of appeal - HELD THAT:- Intervenor submits that he does not want to press the said I.A. The I.A. No. 3670 of 2019 is dismissed.
Hearing stands concluded.
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