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IBC - Case Laws
Showing 141 to 160 of 779 Records
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2023 (10) TMI 1121
CIRP - Distribution methodology as per categorisation of financial creditors based on the security structure - distribution of the amount of Rs. 351 Crores which has been deposited by the SRA - HELD THAT:- It is true that there was discussion regarding CoC expenses which was to reimburse from the amount as part of the upfront payment to the Financial Creditors but for the voting only two resolutions were put as noted above. The Resolution which received 74.41% vote and was approved was “Resolve that Resolution Plan shall be approved along with the distribution methodology which shall be as per categorisation of Financial Creditors based on the security structure and as discussed in 24th CoC Meeting”. The two discussion methodology was up for consideration that is one based on the share of voting of each financial creditor and other based on security structure of the Financial Creditor.
Even on accepting the argument saying that distribution methodology which was circulated by Process Advisor to all Members of CoC which was also discussed in the meeting it having not specifically approved in the minutes resolution can be read only to mean that distribution methodology based on security structure have been approved - it is clear that CoC expenses which is figured at 4.01 Crores was to be repaid by the members of the CoC which has contributed the COC expenses along with resolution proceeds which clearly indicates that said amount has to be deducted from Rs. 351 Crores Upfront amount.
The payment towards fee of Process Advisor to the CoC was to be contributed by the CoC which required to be reimbursed from the proceeds of the Resolution. The Respondents’ claim deduction of Rs. 4.01 Crores which is under heading COC Expense and Future Litigation Fund which is at page 18 of the Reply of Respondent No. 2 and 3, as held above COC expenses could have been very well deducted from the upfront payment but there is no requirement of deduction of future litigation fund. No Litigation Fund was required to be created nor for that said period any amount need to be deducted from the upfront payment - out of amount of Rs. 4.01 Crores only that much amount need to be deducted, which is COC expenses i.e. which is required to be reimbursed to the CoC as per their contribution.
The Adjudicating Authority ought not to have directed the Monitoring Agency to determine and appropriate the amount. The Adjudicating Authority itself could have considered the issue since there was divergent statement raised before the Adjudicating Authority which is reflected from the pleadings in the Application which was filed by the Respondent No. 1 i.e. I.A. No. 724/KB/2022 and detailed reply filed by the Appellant. The issue as to what is the correct amount to which the Appellant is entitled under the Resolution Plan was very much disputed and raised before the Adjudicating Authority and the Adjudicating Authority ought to have proceeded to determine and ought to have directed for issuance of NDC only after direction for payment of the Resolution Plan.
The Respondents are directed to make the payment of principal balance amount of Rs. 248,02,09,427/- along with accrued interest of Rs. 14,94,28,383/- (upto 10th July, 2024) along with further interest payable upto date of payment within one week from this order which amount shall be transferred in the account, details of which has already been communicated by the Appellant to the ex-RP - Out of Rs. 4.01 Crores which has been deducted towards COC expenses and Future Litigation Fund, only COC Expenses are required to be deducted and any amount towards Future Litigation Fund need not be deducted from the upfront payment. The Ex-RP shall recalculate the amount towards COC Expenses which need only to be deducted from the upfront payment and any amount kept under Future Litigation Fund need to be distributed to the Financial Creditors as per their Security Interest, which amount need to be paid to the Appellant as per its share of security interest and shall be paid by the Resolution Applicant - the Appellant shall issue a No Dues Certificate and execute the assignment agreement in terms of approved resolution plan and hand over title deeds of the corporate debtor within two weeks from the date of the receipt of the payment.
Appeal disposed off.
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2023 (10) TMI 1120
Rejection of application seeking a direction to the Resolution Professional to convene a meeting of the CoC to comply with the provision of Regulation 39(3)(b) of the CIRP - HELD THAT:- The time for filing the Affidavit already extended by order dated 18.09.2023. Now the CoC having approved the Resolution Plan with voting share of 99.84%, Resolution Professional seeks liberty to file an application before the Adjudicating Authority for approval of the Resolution Plan - Considering the facts of the present case, the highest Resolution Plan having now received the majority of votes, the Resolution Professional may file an application before the Adjudicating Authority for approval of the plan which may be done within three weeks from today.
Nothing survives to be decided in this Appeal - Appeal disposed off.
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2023 (10) TMI 1119
Violation of principles of natural justice - impugned order passed without perusing the law of the land (the Code) and also ignoring the precedent cases - Levy of penalty u/s 70 of IBC - HELD THAT:- It is concluded that clearly the Adjudicating Authority erred in passing the Impugned Order overlooking the law of the land (the Code) and also ignoring the precedent cases settled by this Appellate Tribunal.
The impugned order cannot be sustained - matter remanded back to the National Company Law Tribunal, New Delhi Bench, Court - III to have a fresh look of the case and decide in accordance with the law and pass suitable order.
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2023 (10) TMI 1096
Existence of vested right to file a Resolution Plan pursuant to the process in published Form – G - approval of Resolution Plan - HELD THAT:- The Appellant does not have any vested right in submitting the Resolution Plan in the absence of filing one Plan pursuant to Form – G, and taking the right steps at the appropriate time, specifically keeping in view that the Appellant had attended the 5th CoC Meeting when the entire contours of the Resolution Plan was discussed.
Reliance on the Judgment of the Hon’ble Apex Court in the matter of MAHARASHTRA SEAMLESS LIMITED VERSUS PADMANABHAN VENKATESH & OTHERS [2020 (1) TMI 903 - SUPREME COURT] in which the Hon’ble Apex Court has held Certain allegations were made by the MSL over failure on the part of the Resolution Professional in taking possession of the assets of the corporate debtor and subsequently in their failure in handing over the same to MSL. These issues are factual.
The ratio of the aforenoted Judgment directly contradicts the contention of the Appellant that the bid value has to match the liquidation value. It is significant to mention that the Resolution Plan has already been implemented and we do not wish to set the clock back.
This Tribunal is of the considered view that there is no illegality in the Order of the ‘Adjudicating Authority’ dismissing the Intervention Application - Appeal dismissed.
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2023 (10) TMI 1095
Seeking condonation of delay of 3 days in preferring the Appeal - Condonation sought on the ground that the Impugned Order was passed on 11/04/2023 and the Applicant had tried to apply for the Order copy on the very same date, but was informed by the Registry that the same could be applied after the Order was uploaded - HELD THAT:- From the Report sent by Deputy Registrar of NCLT, it is clear that the Order was uploaded on 19/04/2023 and that the Appellant had applied for the Certified Copy only on 04/05/2023, which was issued to the Counsel Mr. P. Gowthaman on the very same day. Therefore, even if we take into consideration, 45 days from the date of 19/04/2023, the time lapses on 02/06/2023 and this Appeal has been preferred on 06/06/2023, and is clearly barred by limitation.
Further the Hon’ble Supreme Court in the matter of ‘National Spot Exchange Limited Vs. Anil Kohli, Resolution Professional for Dunar Foods Limited’ [2021 (9) TMI 1156 - SUPREME COURT] held that as per the proviso to Section 61(2) of the Code, the Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing the appeal, but such period shall not exceed 15 days. Therefore, the Appellate Tribunal has no jurisdiction at all to condone the delay exceeding 15 days from the period of 30 days, as contemplated under Section 61(2) of the IB Code.
This Appeal is barred by limitation and is dismissed.
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2023 (10) TMI 1001
Challenge to resolution plan as approved by the CoC - Reduction of the claim of the home buyers / creditors - to be ranked at the top in terms of the waterfall mechanism or not - HELD THAT:- In the present facts of the case, it is found that the Appellants were given a chance to raise their objections before the RP as well as the Authorized Representative of the Home Buyers. The RP did not falter in accepting their claims in spite of expressing some reservations initially. The RP had also facilitated the Appellants in routing their objections to the Authorized Representative and the latter had provided them the window of opportunity of taking up their issues with the resolution applicants.
The RP and the Authorized Representative did not fail in the discharge of their responsibilities and no cause of action survives on this count.
Once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law the same cannot be a subject matter of judicial review and modification - the plea raised by the Appellants that the Adjudicating Authority had committed an error in rejecting their IA without having considered the main petition seeking approval of the resolution plan, is not impressing.
Merely because there is a reduction in the claim of any creditor does not make the resolution plan fall foul of law. We quite agree with the Adjudicating Authority that “resolution plan providing a lesser amount than admitted does not make it illegal”. Any clause in the resolution plan which requires creditors to take a hair-cut cannot be construed as being violative of Section 30(2)(e) of the IBC.
There is nothing to show that there has been transgression of the bounds of rules and regulations which have caused any serious miscarriage of justice to the Appellants - the Adjudicating Authority did not commit any error in dismissing Application.
There are no good grounds to entertain this appeal. Appeal is dismissed.
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2023 (10) TMI 1000
Initiation of CIRP - Rejection of Section 7 application - status of the decree-holder - Real Estate Allottee or not - NCLT held that, being a single allotment, does not meet the threshold requirement as per second proviso to Section 7(1) of the I&B Code - HELD THAT:- Respondent has relied on judgment of Hon’ble Supreme Court in VISHAL CHELANI & ORS. VERSUS DEBASHIS NANDA [2023 (10) TMI 949 - SUPREME COURT] where in it has been held that to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable.
In view of the law laid down by the Hon’ble Supreme Court, it is now well settled that the status of the party i.e. allottee does not change and therefore the Adjudicating Authority has rightly concluded that threshold being not met one allottee cannot trigger the insolvency.
The rejection of Section 7 application cannot be faulted - there are no merit in the appeal - appeal dismissed.
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2023 (10) TMI 949
CIRP - Home Buyers - Contention that, Resolution Professional (RP) treated them differently from other home buyers allottees - Financial Creditors or not - scope of Financial Debt - HELD THAT:- With the introduction of the explanation home buyers and allottees of real estate projects were included in the class of “financial creditors” - because financial debt is owed to them. On a plain reading of Section 5 (8)(f) no distinction is per se made out between different classes of financial creditors for the purposes of drawing a resolution plan. Consequently, the reasoning of the Mumbai Bench of NCLT “Mr. Natwar Agrawal(HUF)” is correct in the opinion of this Court.
The Resolution Professional’s view appears to be that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA – no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable.
As held in MR. NATWAR AGRAWAL (HUF) VERSUS MS. SSAKASH DEVELOPERS & BUILDERS PVT. LTD. [2023 (8) TMI 1362 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI] by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party, in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions.
The appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority.
Appeal allowed.
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2023 (10) TMI 895
Initiation of CIRP u/s 7 - NCLT / NCLAT admitted the application - time limitation - A request for one time settlement (OTC) was made - The NCLT treated this letter to be an acknowledgement of debt - composite claims of the banks - NPA - long history of litigation before DRT - non-revival of right to sue - HELD THAT:- This Court has construed the purpose of the said provision to include bringing an action under the IBC on the strength of Section 19(22) and (22A) of the 1993 Act. In the said provision, however, so far as bringing a winding-up action is concerned, the right of a recovery certificate-holder as a deemed-decree holder has been confined to companies registered under the Companies Act, 2013 and certain other entities with which we are not concerned here. But in relation to initiating proceeding under the IBC or making a claim under the said Code, the restriction does not remain confined to the Companies Act, 2013. The corporate debtor in this proceeding was incorporated under the Companies Act, 1956.
In the case of Kotak Mahindra [2022 (8) TMI 329 - SUPREME COURT], credit facilities were extended to the borrower entities in the years 199394. It is obvious that the three corporate entities involved in that case were incorporated under the Companies Act that prevailed prior to coming into operation of 2013 Act. The position of law to guide the subject proceeding should be the same. In the event a financial creditor wants to pursue a recovery certificate as a deemed decree, he would get twelve years’ time.
The argument of the appellant about maintainability of the application out of which this appeal arises on the ground of the application being barred under limitation, is not satisfying. The application with respect to the two recovery certificates issued in the year 2017 is maintainable. In the event the Appellate Tribunal is of opinion that the CIRP could not lie so far as the recovery certificate of 2015 is concerned, as the decree would be still alive, the claim based on the said recovery certificate could be segregated from the composite claim and the Committee of Creditors shall, in that event, treat the sum reflected in the said recovery certificate as part of the claims made in pursuance of the public announcement. This direction issued in exercise of our jurisdiction under Article 142 of the Constitution of India.
Appeal dismissed.
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2023 (10) TMI 894
Jurisdiction to extend the limitation for completion of the Corporate Insolvency Resolution Process (CIRP) beyond the statutory period as prescribed under Section 12 of IBC of 2016.
HELD THAT:- Hon’ble the Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] while striking down the word “mandatorily”, was of the view that if the CIRP is on the verge of being settled, then in such exceptional cases, the time for completion of the process may be extended even beyond the period of 330 days as stipulated in second proviso to Section 12(3) of IBC of 2016. Thus, any proposal for extension of CIRP beyond 330 days should clearly reflect that the extension was being granted on account of the fact that the CIRP was nearing completion and grant of one further extension would result to a positive outcome so that the Corporate Debtor could be put back on its feet.
However, bare perusal of the order dated 25.08.2022, passed by the NCLT, Guwahati Bench makes it clear that there is no such indication in the order that the extension was being granted for the reason that the resolution plans submitted on record, were likely to revive and bring the Corporate Debtor back on its feet.
Rather a perusal of the order would indicate that the same has been rendered in gross ignorance to the mandate of first proviso to Section 12(3) of the IBC of 2016.
Appeal dismissed.
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2023 (10) TMI 893
Maintainability of section 7 application - Initiation of CIRP - time barred debt or not - Amended Application filed beyond the statutory period of 3 years.
The clear cut stand of the Appellant, is that, the Adjudicating Authority / Tribunal, had failed to appreciate that there was no authorisation to and in favour of Mr. J. Vijay Kumar, Asst. General Manager, who had signed the amended Petition, indeed, the requirement of specific authorisation, is mandatory, to prefer an Application, under Section 7 of the I & B Code, 2016.
HELD THAT:- An Application, under Section 7 of the Code, is not to be turned down, by an ‘Adjudicating Authority’ / ‘Tribunal’, just on ‘technical grounds’. The reason for inability of a ‘Corporate Debtor’, to pay its ‘Debt’, is not to be looked into, by an ‘Adjudicating Authority’ / ‘Tribunal’, while dealing with an ‘Application’ (Filed by a ‘Financial Creditor’, under Section 7 of the I & B Code, 2016). To put it differently, the ‘situation / circumstances’, under which, a ‘Corporate Debtor’, could not ‘repay’, the ‘Financial Debt’, need not be taken as a ‘Defence’, in a proceeding, under the ‘Code’ - The ‘Adjudicating Authority’ / ‘Tribunal’, need not wait for the determination, to be made by the ‘Debt Recovery Tribunal’. Although, ‘Debt’, is ‘Disputed’, if the ‘Amount’, is more than ‘Rs.1 Lakh’ (‘Rs.1 Crore’, after ‘amendment’, to the ‘Code’), the ‘Application’, under ‘Section 7’, is ‘maintainable in Law’.
It cannot be gainsaid that if a ‘Debtor’, ‘acknowledge’, receiving the ‘Payment’, but, chose to amuse itself, by ‘denying’ the ‘liability’, the ‘document’, would still be ‘one’, that would keep the claim ‘alive’, within the ‘ambit’ of ‘Section 18 of the Limitation Act, 1963’. Also that, if the ‘Sum’, borrowed by the Respondent, is shown in the ‘Balance Sheet’, it may amount to an ‘acknowledgement’, and the ‘Creditor’, might have a ‘fresh Period of Limitation’, on the date on which, an ‘acknowledgement’, was made.
As a matter of fact, the ‘Balance Sheets’ of the ‘Corporate Debtor’, dated 16.08.2014, 27.08.2015 and 27.08.2016, the 1st Respondent / Bank, unerringly points out the ‘admission’ of ‘acknowledgment of liability’, and therefore, it is established on the part of the 1st Respondent / Bank that its ‘Claim’, made in ‘Section 7 Application’, in CP (IB) No. 645 / 7 / HDB / 2018, dated 06.09.2018, but filed on 12.09.2018 (before the ‘Adjudicating Authority’ / ‘Tribunal’), is ‘not a Time Barred’ one - In the instant case on hand, this ‘Tribunal’, points out on 31.08.2018, going by the ‘Application’ (Filed by the 1st Respondent / Financial Creditor / Bank / Petitioner, under Section 7 of the Code, vide CP (IB) No. 645 / 7 / HDB / 2018), the ‘Sum’ claimed to be in ‘Default’, was Rs.327,03,72,501.81/- (vide Page 76 of the Appellant’s Appeal Paper Book, Vol-I, Form-I, Part IV - ‘Particulars of Debt’, at Page 79), from the ‘Corporate Debtor’ / ‘Vibha Agro Tech Limited’. According to the 1st Respondent / Bank, the ‘Outstanding Sum’, claimed before the ‘Interim Resolution Professional’, is Rs.1,061.15 Crores.
One cannot remain in oblivion of a vital fact that to commence a ‘Corporate Insolvency Resolution Process’ proceedings, by the ‘Financial Creditor’, against the ‘Corporate Debtor’ (under Section 7 of the I & B Code, 2016), the twin requirements, (a) Debt and (b) Default, are to be proved and once they are established, then, the ‘Application’, which is complete in all respects, is to be ‘admitted’, by the ‘Adjudicating Authority’ / ‘Tribunal’.
In the present case on hand, the 1st Respondent / Bank, had claimed a Sum of Rs.327,03,72,501.81/- as ‘Debt’, ‘due and payable’, by the ‘Corporate Debtor’, as on 31.08.2018 (vide in its Application in CP (IB) No. 645 / 7 / HDB /2018, before the ‘Adjudicating Authority’ / ‘Tribunal’), this ‘Tribunal’, keeping in mind of the ‘primordial fact(s)’ the ‘Corporate Debtor’, had tacitly ‘Acknowledged’, its ‘Debt’ / ‘Liability’, in its ‘Balance Sheets’, for the Year ending 2013-14 dated 16.08.2014, for the Year ending 2014-15 dated 27.08.2015 and for the Year ending 2015-16 dated 27.08.2016, the same being ‘not Barred by Time’, taking note of the entire conspectus of the facts and circumstances of the present case, in an encircling manner, and exercising its subjective discretion, comes to a resultant conclusion that the aspect of ‘Debt and Default’, committed by the ‘Corporate Debtor’, have been duly proved by the ‘1st Respondent / Bank’.
The impugned order passed by the ‘Adjudicating Authority’ (‘National Company Law Tribunal’, Bench – I, Hyderabad) in ‘admitting’ the ‘Section 7 Application’ (Filed by the 1st Respondent / Bank / Financial Creditor / Petitioner), is free from any ‘Legal Infirmities’. Accordingly, the instant ‘Appeal’ fails.
Appeal dismissed.
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2023 (10) TMI 892
Correctness of approved Resolution Plan - only 16% of the Dues of the Contractors / Operational Creditors has been allowed in the said Resolution Plan - violation of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal while dealing with the batch of Appeals filed by the Employees of the Corporate Debtor Company in MRS. C.G. VIJYALAKSHMI VERSUS SHRI KUMAR RAJAN, RESOLUTION PROFESSIONAL, HINDUSTAN NEWSPRINT LIMITED, (CORPORATE DEBTOR) , COMMITTEE OF CREDITORS OF THE CORPORATE DEBTOR THROUGH RBL BANK LTD., RESOLUTION APPLICANT [2023 (3) TMI 18 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI], challenging the very same Resolution Plan and the Order of the Adjudicating Authority, dated 29.01.2021, has allowed the Appeals in Part - it is specifically observed that this Tribunal, did not find any material irregularity in the Approval of the Resolution Plan, except for directing the Successful Resolution Applicant to make payment of the unpaid Provident Fund and Gratuity Fund and pending dues to the Employees, till the date of Corporate Insolvency Resolution Process, after deducting the amounts already paid.
Regarding the rest of the allegations raised by the Appellants, this `Tribunal’, did not find any evidence to support their contentions.
As the Resolution Plan has already been implemented way back in the year 2021, specifically keeping in view that this Tribunal has confirmed the Approval of the Resolution Plan by the Adjudicating Authority, except for payment of unpaid Provident Fund and Gratuity Fund, this Tribunal does not find any merit in these Appeals.
Appeal dismissed.
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2023 (10) TMI 751
Admission of section 7 application - seeking grant of interim relief for commencement of the project - It was contended that with the introduction of Strategic Partner, Corporate Debtor shall complete the project under the supervision of the IRP in a time bound manner which shall be beneficial to the homebuyers/allottees and to the creditor without having to undergo any haircut.
HELD THAT:- From the sequence of the events and submissions made by Learned Counsel for the parties, it is clear that the project of the Appellant which is ‘Belvedere’, Sector-79, Noida having an area of 30,000 Sq. Mtr. is a project which can be very well revived under the supervision of the IRP with the assistance and co-operation of the promoters and the strategic finance provider. ‘EKA Life’ a strategic project partner has offered to provide finance even before filing of this Appeal and the ground taken in the Appeal is that ‘EKA Life’ the strategic project partner is ready to provide interim finance of Rs.75 Crores which shall sufficient to carry out the completion of the project which will be beneficial to both homebuyers as well as the Financial Creditor.
Having passed a detailed order on 25.07.2023 for carrying out the construction in the project as per directions contained therein, there are no reason to modify the said direction and now permit any other interim finance provider who has now come up offering to provide interim finance to the project.
The cost of interim finance as offered by ‘EKA Life’ is now equal to the one offered by ‘Zenious Global Media Pvt. Ltd.’ - it is satisfying that there are no grounds made out to issue any modification of our order dated 25.07.2023 and we are of the view that the construction of the project need to be proceeded further as per the direction on 25.07.2023.
After commencement of the construction in the project, receivables in the project have to be deposited in the RERA designated account i.e. 70% and 30%. Although in the Master Agreement, as noted above, certain clauses have been indicated with regard to payment of dues of ‘Aditya Birla Finance Limited’, the promoters, IRP and interim finance provider in consultation with the ‘Aditya Birla Finance Limited’ need to submit a fresh proposal as to how and in what manner the dues of ‘Aditya Birla Finance Limited’ shall be cleared out of the project.
Thus, the commencement of the project is needed to serve the interest of homebuyers as well as creditors - List the Appeal on 04.12.2023.
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2023 (10) TMI 750
Approval of Resolution Plan - no proposal of distribution mechanism for consideration of the CoC - delegation of task of proposing the manner of distribution of funds to the CoC - whether the Adjudicating Authority was justified in approving a Resolution Plan where the manner of distribution was proposed, and decided by the CoC?
HELD THAT:- It is not in dispute that the Resolution Plan of Vedanta was approved by the CoC by a majority of 94.96 % - The Hon’ble Supreme Court in a catena of Judgments has held that the ‘Adjudicating Authority’ and the ‘Appellate Tribunal’ cannot enter into the merits of a ‘Business Decision’ of the requisite majority of the CoC, unless it is violative of the provisions of Section 30 (2) of the Code. An approved Resolution Plan cannot be subject to judicial review in terms of carrying out a quantitative analysis qua each Stakeholder. The Hon’ble Supreme Court has observed so in ‘India Resurgence ARC private Limited Vs. Amit Metaliks Limited’ [2021 (6) TMI 684 - SUPREME COURT], that the commercial wisdom of CoC and the scope of judicial review remains limited within the four corners of Section 30 (2) of the Code for the ‘Adjudicating Authority’ and Section 30 (2) read with Section 61 (3) for the Appellate Authority.
Whether the CoC is empowered to decide the distribution methodology? - HELD THAT:- The Hon’ble Supreme Court in the matter of Amit Metaliks has held that ‘thus, what amount is to be paid to different classes or subclasses of creditors in accordance with provisions of the Code and the related Regulations, is essentially the commercial wisdom of the Committee of Creditors; and a dissenting secured creditor like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest’.
Though the IBC does not have a specific Provision that uses the term ‘Business Decision’ of the CoC, the Code contains several provisions that detail the powers and functions of the CoC, which encompass various decision-making responsibilities relating to the Insolvency Resolution Process, which definitely includes distribution methodology of the Resolution Plan - This Tribunal is of the earnest view that the Appellant having taken part in these Meetings and not having raised any substantial objections at that point of time, is estopped from questioning the commercial wisdom of the CoC in proposing, considering and approving the distribution methodology of the Resolution Plan.
Keeping in view the catena of Judgments of the Hon’ble Apex Court regarding the commercial wisdom of the CoC in approving the Plan and the limited jurisdiction therein, this Tribunal is of the considered view that ‘the CoC in its commercial wisdom can propose, consider and decide on the distribution mechanism under the Resolution Plan’, as long as it is within the domain of Section 30(2) of the Code.
Appeal dismissed.
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2023 (10) TMI 749
Invocation of Bank Guarantee allowing the Application of the Resolution Professional - Performance Bank Guarantee or not - exclusion as per provision of Section 3 sub-Section (31) of the IBC, 2016 - applicability of Moratorium under Section 14 of IBC for encashment of the bank guarantee - HELD THAT:- From the perusal of the Agreement and the Bank Guarantee it is apparent that the Bank Guarantee was given by the Bank to secure the interest of the Appellant, as per Clause 6 of the Agreement, the raw material assistance under the Agreement was to be granted by the Appellant to the Corporate Debtor subject to furnishing of surety in the form of Bank Guarantee executed by a nationalised/approved Bank to the satisfaction of the Appellant. It further prescribes that the Appellant shall be entitled to invoke and encash the said Bank Guarantee on the terms and conditions as stipulated in the said Bank Guarantee.
From the perusal of the Bank Guarantee bond dated 30.05.2012, this Tribunal finds that the Bank had undertaken to pay the amounts due and payable under the said Guarantee without any demur, merely on a demand from the Appellant and the Bank had undertaken to pay the Appellant any amount so demanded notwithstanding any dispute raised by the Corporate Debtor and that the Bank’s liability under the said Bank Guarantee is absolute and unequivocal - it is apparent that the Bank had absolute, unequivocal and irrevocable liability to pay to the Appellant the amount guaranteed to the Appellant on demand without any demur and irrespective of any objection or dispute or any legal proceeding initiated by the Corporate Debtor.
The Moratorium was envisaged to ensure that the Corporate Debtor’s Assets are not liquidated or reduced till the CIRP is completed. The idea behind Moratorium was that no additional stress is brought on the business which is being rescued. In the instant case, the Appellant has raised the demand on the Bank for payment which was guaranteed by the Bank much prior to the initiation of the CIRP. No recovery is being made from the Corporate Debtor and therefore there is no threat immediately to the Assets of the Corporate Debtor.
The Bank Guarantee is a contract of Guarantee provided/furnished by the Bank, the surety, to perform the promise, or discharge the liability, of the third person, being the Corporate Debtor herein, in case of his default. From the plain reading of Section 14(3)(b) of the IBC, 2016, along with Section 126 of the Indian Contract Act, 1872, it is apparent that the Bank Guarantee given by the Respondent No. 2 to the Appellant is covered by the exclusion given in Section 14(3)(b) and that provisions of Section 14(1) shall not apply to the instant case.
The Appellant had also brought to the attention of this Tribunal to the Judgement of this Tribunal in IDBI Bank Ltd. Vs. Indian Oil Corporation Ltd. [2023 (1) TMI 548 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], wherein it was held that an irrevocable and unconditional Bank Guarantee can be invoked even during Moratorium period in view of the amended provisions under Section 14(3)(b) of the IBC, 2016 - In the instant case also the Bank Guarantee is an irrevocable and unconditional one, and the said Judgement squarely applies to the facts of this case on all fours.
Thus, as per the facts of this case, the Bank Guarantee, provided by the Respondent No. 2/Bank is held to be covered by the exception provided in provisions of Section 14(3)(b) of IBC, 2016, and the Moratorium prescribed under Section 14(1) of IBC, 2016, shall not apply to its Encashment.
Appeal allowed.
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2023 (10) TMI 682
Interim relief not granted - HELD THAT:- The appeal has been heard and orders were reserved by the NCLAT on 21 September 2023. However, while reserving orders, the NCLAT has directed the parties “to maintain status quo as was available prior to EOGM dated 03.05.2019” till the judgement is delivered. No reasons have been indicated by the NCLAT even prima facie for issuing the interim order, particularly in the context of the fact that there was no interim relief operating since the dismissal of the application for interim relief on 31 December 2019. It is admitted that no relief was obtained by the first respondent in the proceedings before the Bombay High Court, as well.
The interim direction is vacated - The Annual General Meeting (AGM) of the company, Finolex Cables Limited is to take place on 29 September 2023. Any action which is taken on proposed resolution No 4 pertaining to the appointment of the Executive Chairperson shall be subject to the outcome of the appeal which is pending before the NCLAT.
The impugned order is set aside - Appeal allowed.
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2023 (10) TMI 665
Maintenance of status quo - HELD THAT:- Considering the submission advanced by learned senior counsel for the appellant that e-voting for AGM is scheduled to commence from 26th September, 2023 wherein authorized representative of Orbit Electricals Pvt Ltd/Respondent No.1 may participate as well as the fact that decision taken in the EOGM of Orbit Electricals Pvt Ltd held on 3rd May, 2019 is subject matter of the present appeal, it is proposed to direct the parties to maintain Status Quo as was available prior to EOGM dated 03.05.2019 till the judgement is delivered by this Tribunal.
Normally after admission of appeal and at the time of hearing such order is not required to be passed but for the ends of justice once we are reserving judgement and delivery of judgement may take some reasonable time, we feel it is necessary to pass the aforesaid interim order while reserving the judgement. Judgement is reserved.
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2023 (10) TMI 645
Successful Resolution applicant - Restoration of electricity connection - pre-CIRP dues - refusal on the ground of electricity dues - Maintainability of application under Section 60(5) of the IBC - HELD THAT:- What has been laid down by the Hon’ble Supreme Court in Gujarat Urja Vikas Nigam Limited [2021 (3) TMI 340 - SUPREME COURT] is that the NCLT has jurisdiction to adjudicate dispute which arise solely from or which relate to the insolvency of the Corporate Debtor. Looking into Section 60(5), the provision clearly provides that NCLT shall have jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor or corporate person or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor.
The law is settled that an application can be entertained only when it raises a question which arises or relates to the insolvency of the Corporate Debtor. Judgment of the Hon’ble Supreme Court in Embassy Property Developments Pvt. Ltd. [2019 (12) TMI 188 - SUPREME COURT] has also been relied upon by the Counsel for the Respondent. Embassy’s case was a case where Adjudicating Authority has issued a direction to the Government of Karnataka to execute a supplemental lease deed for extension of mining lease which was held beyond the jurisdiction of the Adjudicating Authority - The judgment of the Embassy was a case where the Adjudicating Authority has issued direction pertaining to exclusion of supplementary lease which was in the jurisdiction of the Government under the MMDR Act, 1957. It was held that directions issued by the NCLT were beyond the jurisdiction vested in the NCLT.
The Respondent cannot insist that unless the arrears of the electricity dues which dues were payable by the Corporate Debtor prior to disconnection are paid by the Appellant only then communication can be issued.
The application is fully maintainable under Section 60(5) of IBC - Application allowed.
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2023 (10) TMI 606
Validity of order of NCALT - Clear directions issued by the Apex court was not considered - Restoration of the status quo ante at a stage when the arguments were concluded and the matter was reserved for judgment - HELD THAT:- The Court has been apprised of the fact that the Bench of the NCLAT consisting of Mr Rakesh Kumar and Dr Alok Srivastava proceeded to deliver the order. If what is stated is correct, this will clearly constitute the defiance of the order of this Court by the NCLAT.
It is directed that an enquiry shall be conducted on the above allegations by the Chairperson of the NCLAT. A report shall be submitted before this Court by 5 pm on 16 October 2023 after specifically verifying the facts from the Judges who constituted the Bench of the NCLAT.
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2023 (10) TMI 605
Admissibility of application under Section 9 of the IBC - initiation of CIRP - Corporate Debtor denied the demand raised by the Operational Creditor in the reply to the Section 8 demand notice - debt barred by limitation - HELD THAT:- The wordings of the email do not show that the Corporate Debtor had denied or disputed the existence of outstanding debt qua the Operational Creditor. All that can be inferred from a plain reading of this letter is that they were in the process of reconciliation of accounts on completion of which they were to determine the payment plan. By no stretch of extrapolation can it be concluded that any dispute qua the debt was raised in the said email or the payment was denied by the Corporate Debtor therein.
Even after the Corporate Debtor mentioned about reconciliation of accounts in their email, the Operational Creditor again sent an email on 19.05.2018 seeking a confirmation reply from the Corporate Debtor with regard to the outstanding balance payable to them towards services rendered - The email was again followed up a day later on 20.06.2018 by the Operational Creditor seeking release of outstanding payment and the schedule of payment as is placed at page 114 of APB. This shows that the Operational Creditor had been consistently pressing for release of their outstanding amount while there is nothing on record to show that the Corporate Debtor objected to the claims raised by the Operational Creditor or disputed the issue of outstanding payment raised by the Operational Creditor.
There are no material having been placed on record to show that the Corporate Debtor had claimed an amount of Rs.7,71,434/- as receivable from the Operational Creditor prior to the issue of demand notice.
The existence of debt, due and payable, has not been controverted by the Corporate Debtor in the emails exchanged by them with the Operational Creditor.
The Adjudicating Authority in the present case has duly considered the reply and submissions made by the Corporate Debtor and correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute which can thwart the admission of Section 9 application against the Corporate Debtor - the Adjudicating Authority has rightly admitted the application of the Operational Creditor filed under Section 9 of IBC.
The impugned order does not warrant any interference - Appeal dismissed.
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