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IBC - Case Laws
Showing 161 to 180 of 779 Records
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2023 (10) TMI 604
Rejection of section 9 application - initiation of CIRP - existence of genuine pre-existing dispute surrounding the debt claimed by the Operational Creditor to be due and payable to them by the Corporate Debtor or not - HELD THAT:- The existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 30.07.2018 and notice of dispute raised by the Corporate Debtor on 09.08.2018. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC.
It is a well settled proposition that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application.
The Adjudicating Authority has taken note of the correspondences exchanged between the two parties prior to the Section 8 demand notice to determine the issue of pre-existing dispute. Two of such communications dated 29.04.2018 and 30.04.2018 sent by the Corporate Debtor to the Operational Creditor have been reproduced at para 18 of the impugned order. From the email of 29.04.2018, it is clear that the Corporate Debtor gave opportunities to the Operational Creditor to sit across the table to sort out their problems amicably - A holistic analysis of the emails leads us to the inescapable conclusion that genuine pre-existing disputes were there and the Adjudicating Authority therefore committed no error in drawing similar conclusion of pre-existing disputes.
It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. The Adjudicating Authority has therefore correctly noted that the conditions laid down in section 9 having not been fulfilled, the application deserved to be rejected.
There are no reasons to disagree with the findings of the Adjudicating Authority - the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant - appeal dismissed.
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2023 (10) TMI 603
Contempt petition - decision in personam - admission of application and initiation of CIRP - case of the Petitioner is that the Respondent No. 1 (RP) has violated the order by appointing a project monitoring consultancy during the subsistence of the order i.e. in the month of June, 2020.
HELD THAT:- It is well settled that the contempt is a serious matter because it causes both physical and fiscal punishment specially when the contempt has been alleged against a professional (RP). The Petitioner has to make out a full proof case about the wilful violation of the order passed by the Tribunal for the purpose of seeking attention to issue an order of contempt and punish accordingly.
In the present case, the petition has been filed after the expiry of limitation of one year as the order was passed on 24.01.2020 and the petition has been filed on 12.08.2023 and is clearly barred by limitation because the Petitioner was very well aware of the appointment of the PMC which was duly ratified in the second meeting of CoC held on 21.08.2020 and the Petitioner attended 3rd and 4th CoC meeting held on 10.09.2020 and 16.09.2020 subsequently.
The case of the Petitioner is that he came to know about the appointment of the PMC somewhere in April, 2023 when the alleged promoters/directors of the PMC challenged the FIR registered against them before the Patna High Court and were not successful cannot be believed.
Locus Standi - HELD THAT:- The decision in the case of Girish Mittal [2019 (4) TMI 1630 - SUPREME COURT] is also of no help because in that case it was an order passed in rem which could have affected a person in the street, therefore, the contempt was filed because of the direction issued by the Hon’ble Supreme Court were not followed but here is the case in which the direction issued was between the parties, therefore, it was a decision in personam.
There is no contempt made out in this case because the order which was passed on 24.01.2020 was only to the extent that the CoC shall not be constituted if it is not yet constituted and the RP has to ensure that the company remains a going concern which is also the spirit of Section 20(1) of the Code and further the RP was directed to take assistance of the suspended board of director which is again the spirit of Section 19 of the Code.
Petition dismissed.
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2023 (10) TMI 537
Extinguishment of claims - approval of the Resolution Plan results in an extinguishment of all claims that the Petitioner could enforce against Arcelor Mittal or not - arbitration of disputes which are sought to be referred for the consideration of an AT. - “eye of the needle” test.
HELD THAT:- The legislative intent and command of Sections 30 and 31 of the IBC is an issue which is no longer res integra - In Ghanashyam Mishra [2021 (4) TMI 613 - SUPREME COURT] as well as the host of judgments rendered in that context and which were duly noticed by the Supreme Court in that decision, the underlying theme has been the recognition of the right of the successful Resolution Applicant to take over the corporate debtor on a “clean” or “fresh” slate. Those decisions lay primordial importance of the successful Resolution Applicant being enabled to take over the corporate debtor without being burdened by any uncertainties or a specter of irresolution. The approval of the Resolution Plan is statutorily recognised as conferring a closure upon all claims that persons or entities may have had against the corporate debtor. The claims or liabilities which could have been enforced against the corporate debtor are duly considered in the course of the CIRP with the Adjudicating Authority undertaking a detailed exercise with respect to identification of the various creditors of the corporate debtor, including the classes thereof, the scrutiny of claims received and the ultimate apportionment of the amounts deposited by the successful Resolution Applicant amongst the creditors inter se.
However, once the aforesaid process has been completed and the Resolution Plan comes to be approved, no fresh claims can be laid or enforced against the successful Resolution Applicant. The successful Resolution Applicant is only bound to meet the claims as may have been accepted and ultimately form part of the approved Resolution Plan. This issue assumes seminal importance since the successful Resolution Applicant cannot be left open to defend or oppose claims which are either not factored in the Resolution Plan nor can it be left to fend off actions that may be brought with respect to alleged or asserted dues of the corporate debtor which were not admitted.
The Court is of the considered opinion that approval of the Resolution Plan in terms given clearly amounts to the extinguishment of all debts that were owed by the corporate debtor except to the extent as was admitted in the Resolution Plan. The IBC and the resolution process does not contemplate matters being left inchoate. In fact, and to the contrary it exhorts one to accept the seal of finality and quietitude which stands attached to the approval of a Resolution Plan.
While the Court is conscious of the Section 11 power contemplating a prima facie view being formed and a first review alone being undertaken, the decisions handed down on the scope of that jurisdiction also bids High Courts to ensure that dead disputes are not revived and parties forced to undertake arbitration. Thus, where issues which are canvassed on a Section 11 petition are found to be contested or even arguable, the High Court would desist from delving into the merits of the rival claims.
Once it is accepted that the approval of the Resolution Plan results in the extinguishment of all claims that the petitioner may have had, the dispute which is now sought to be canvassed cannot be permitted to be urged again before the AT. That would clearly amount to rewriting upon the clean slate based upon which the respondent took over the corporate debtor. A reference of the disputes as sought by the petitioner would clearly amount to a reopening of the Resolution Plan and which is clearly impermissible - Empowering the AT to adjudicate or rule upon these disputes would also be contrary to the principles which were enunciated by the Supreme Court in Ghanashyam Mishra.
The Court thus comes to conclude that on due application of the “eye of the needle” test, it is manifest that the disputes which are spoken of in the Section 11 petition are non-arbitrable and thus no reference to the AT is warranted - petition dismissed.
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2023 (10) TMI 536
Condonation of Delay - period of limitation is to be computed from the date of knowledge of the order or otherwise - sufficient cause for delay present or not.
Whether limitation for filing an Appeal under Section 61 of the IBC shall commence from the date of the order or from the date when contents of the order are known to the aggrieved party i.e. the date when copy of the order is received by an aggrieved party? - HELD THAT:- In the present case, orders passed by the Adjudicating Authority were pronounced in the open Court in the presence of the Counsel for the Appellant. In any view of the matter, they cannot contend that they do not have even constructive knowledge of the order on the said date. Knowledge of the order has to be actual or constructive knowledge and when the orders are pronounced, it can very well be said that the constructive knowledge has to be imputed to the contents of the order to an aggrieved party.
In the present case, when orders were pronounced by the Adjudicating Authority, they cannot be allowed to contend that they are not aware of the order of the Adjudicating Authority. Further, Section 12 of the Limitation Act provides for exclusion of the time taken in obtaining certified copy of an order. After an order is pronounced which pronouncement is well known to the Appellant in the present case, it was open for them to apply for the certified copy of order, even if they are not aware of the contents of the order as per their submissions on that date - Law, thus, clearly provides opportunity to any aggrieved party to obtain certified copy of the order and file an appeal after exclusion of the period obtaining in certified copy of the order. Legislative scheme takes care of all situations where order was pronounced by a Court, it is expected for the parties to diligently apply for certified copy of the order in event there may be any chance to file an appeal.
The limitation for filing an Appeal under Section 61 shall commence from the date when the order is pronounced and not from the date when aggrieved party or Appellant claims to have knowledge of the contents of the order.
Whether in the Delay Condonation Application being IA No.3694 of 2023 sufficient grounds have been made out to condone the delay in filing the Appeal? - HELD THAT:- It is undisputed that the order was pronounced on 08.05.2023. The order clearly notices the presence of the Counsel who appeared on the date physically/ video conferencing. It is not denied by the Appellant that the order was pronounced on 08.05.2023. The submission of the Appellant that he came to know about the contents of the order only when order was received by an e-mail dated 02.06.2023 - The Appeal having been filed on 04.07.2023 i.e. after 15 days from expiry of limitation, there is a delay of 27 days in filing the Appeal.
The jurisdiction to condone the delay is limited to only 15 days under Section 61(2), the Delay Condonation Application cannot be allowed - no sufficient ground has been made out in I.A. No.3694 of 2023 to condone the delay in filing the Appeal being Company Appeal (AT) (Insolvency) No. 1071 of 2023.
Whether in Delay Condonation Application being IA No.1956 of 2023 sufficient grounds have been made out to condone the delay in filing the Appeal? - HELD THAT:- The order was pronounced by the Adjudicating Authority on 12.01.2023. Counsel for the Successful Resolution Applicant i.e. Appellant was present when the order was pronounced - Appellant’s case is that he has applied for certified copy on 06.02.2023 and he has received free of cost copy on 08.02.2023. Even if exclusion of the aforesaid period is given, it shall be only 3 days against the order dated 12.01.2023. Appeal has been filed on 11.03.2023 even after giving exclusion of 3 days, period of 45 days shall come to an end by 02.03.2023, hence, the appeal has been filed with a delay of more than 15 days after expiry of limitation. Jurisdiction to condone the delay is limited to 15 days, the delay in filing the appeal cannot be condoned.
There are no sufficient grounds made out in I.A. No.1956 of 2023 to condone the delay in filing the Appeal being Company Appeal (AT) (Insolvency) No.588 of 2023 - both the Delay Condonation Applications dismissed.
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2023 (10) TMI 535
Approval of Resolution Plan - validity of assessment order - Claim of workmen dues in full - section 7A and 7Q of Employees Provident Fund Miscellaneous Provisions Act, 1952 as well as section 14B - exercise of jurisdiction under 1952 Act - HELD THAT:- The submission of Respondent No. 2 with regard to damages as imposed on the Corporate Debtor needs consideration. From the claim forms which was submitted by the Appellant on 18.10.2019 annexed as Annexure C to the Appeal indicates that one of the assessment pertaining under Section 14B for amount of Rs. 68,54,869 was imposed by Order dated 14.10.2019 which is clear from Form-F which was submitted by the Appellant itself. The Copy of Order dated 14.10.2019 by which amount of Rs. 68,54,869/- has been imposed is clearly after initiation of CIRP against the Corporate Debtor vide Order dated 30.09.2019 - it is not necessary in this proceeding to issue any direction for payment of the damages as imposed by the Order dated 18.10.2019 which was subsequent to CIRP imposition of moratorium. No direction need to be issued for payment of damages under Section 14B of Rs. 68,54,869/-.
Another part of damages amounting to Rs. 31,16,446 which was imposed by order dated 25th July, 2017 - waive of damages under Section 14B of the Act - HELD THAT:- When Insolvency Resolution Process has been initiated against a Corporate Debtor and Resolution plan has been approved under IBC, power of Central Board to reduce or waive the damages can be exercised with regard to the damages imposed under Section 14B. Paragraph 32 of the 1952 Scheme as extracted above also contemplate recommendation by Board for Industrial and Financial Reconstruction, 1985 Act being not in force and substituted by Insolvency Regime there can be now no recommendation for waiver of the damages under Section 14B of Board for Industrial and Financial Reconstruction. The power of recommendation as contemplated in paragraph 32B scheme can very well be exercised by the NCLT.
Another part of the admitted claim i.e. claim for Rs. 1,32,44,314 along with Form F - HELD THAT:- In the amount which is claimed by the Appellant towards 7A and 7Q, the amount which has already been paid to the workmen need to be deducted. Resolution Professional needs to compute the amount paid to the workmen under Resolution Plan towards PF dues. Resolution Professional being ex- Resolution Professional i.e. Respondent No. 1 we direct the Respondent No. 1 to compute the amount of PF dues paid to the workmen under Resolution Plan and thereafter arrive at the amount which is required to be paid to the Appellant as against the admitted claim towards Section 7A and 7Q.
Let the aforesaid exercise be completed by the Respondent No. 1 within two months from today and communicate the amount payable to Appellant under 7A and 7Q. The amount to be determined for payment to Appellant has to be the amount after deducting from total claim of Rs. 1,32,44,314 by deducting the amount paid towards PF to the workmen and amount already paid to the Appellant under Resolution Plan.
The Order passed by the Adjudicating Authority approving the Resolution Plan is upheld subject to following;
(a) SRA shall make the payment of dues of Appellant under Section 7A and 7Q on the basis of computation communicated by the Respondent No. 1 after deducting the amount paid to the workmen under Resolution Plan towards PF and the amount paid to the Appellant under Resolution Plan. SRA shall make the said payment within 30 days from computation as communicated by Respondent No. 1.
(b) No direction is issued to the SRA to make payment of amount of damages under Section 14B for amount of Rs. 68,54,869/- which was imposed by Order dated 14.10.2019 after enforcement of the moratorium.
(c) With regard to amount of Rs. 31,16,446/- under Section 14B we permit the SRA to make an application to Central Board for waiver of 100 per cent damages along with copy of this order within 30 days from today.
Appeal disposed off.
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2023 (10) TMI 534
Validity of permission granted by the NCLT to Respondent / Petitioner/Operational Creditor to file the necessary amended copy, with the Registry, of this Tribunal - Permission granted even after inordinate delay of 2 and 1/2 years- HELD THAT:- It must be borne in mind that ‘Amendments’ are allowed in ‘pleadings’ to avoid, uncalled for ‘multiplying of litigations’.
All amendment, ought to be allowed, if the twin conditions are satisfied (i) of not working injustice to other side; (ii) of being necessary, for the purpose of determining the real questions in controversy between the parties - There is no rule limiting ‘amendment’ to ‘accidental’ errors. An ‘amendment’, which is necessary for the just decision of a case can be allowed. Also that, an ‘amendment’, in ‘general’, is not to be refused, in a mechanical and casual manner. In fact, the ‘pleadings’ can be amended, to substantiate, to elucidate and expand the ‘pre-existing facts’, ‘already existing’.
Where an amendment, does not constitute and addition of a new case, but amounts to no more than adding to the facts already on record, the ‘amendment’, would be allowed, even after the statutory, period of limitation - An ‘amendment’, which is necessary for the just decision of a case, can be allowed.
In the present case, even though, the Appellant / Respondent, had ‘come out with the plea’ that the amendment in pleadings was sought for by the Respondent / Petitioner in application with the inordinate delay of 2½ years, keeping in mind, of a prime fact, that the ‘Amendment’, ‘in pleadings’ is in ‘imperative one’, for a proper, effective and efficacious adjudication of the controversies, involved in the main application on the file of the Adjudicating Authority / Tribunal - this Tribunal, comes to a consequent conclusion, that application is a ‘Bonafide’ one and to ‘minimise litigation’ between the parties and also that ‘No Party’, should suffer on account of ‘technicalities’ of Law.
Appeal dismissed.
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2023 (10) TMI 450
Condonation of Delay in filing Appeal - Certified Copy was prepared on 27.04.2023 and was delivered on 03.05.2023 - present Appeal was e-filed on 10.05.2023.
HELD THAT:- Sub- Rule (2) of Rule 22 of the National Company Law Appellate Tribunal Rules, 2016, regarding presentation of Appeal provides that every Appeal shall be accompanied by a Certified Copy of the Impugned Order. NCLAT Rules framed under Section 469 of the Companies Act, 2013 also bind the litigants under the IBC. The litigant’s efforts to apply for a Certified Copy before filing Appeal cannot be faulted.
It is clear from the provision of Section 12(2) that the period taken in obtaining the copy of the Order appealed against is to be excluded in calculating the limitation period in filing for any legal proceedings.
Excluding the period spent in obtaining Certified Copy of the Impugned Order, the present Appeal has been filed within the period of 30 days. Considering the provisions of Section 12(2) of the Limitation Act, 1963, the delay in filing of the company appeal condoned, by allowing benefit of exclusion of period spent in obtaining paid Certified Copy of the Order from AA (National Company Law Tribunal, New Delhi).
Aplication allowed.
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2023 (10) TMI 356
Jurisdiction of Adjudicating Authority to pass an order in regard to payment of pre-CIRP dues during the CIRP - HELD THAT:- Though the issue raised by the Appellant may be attractive but in the present case, no such issue survives after the order dated 15.05.2023 is passed, therefore, the same is dismissed.
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2023 (10) TMI 293
Liquidation proceedings - waterfall mechanism - rejection of claim of appellant - appellant is Financial Creditor or not - claim reflected in the Balance Sheet.
It is submitted that even though the claim of the Appellant was rejected in the liquidation proceeding but since it was reflected in the balance sheet, Appellant is a Financial Creditor.
HELD THAT:- The claims of all creditors are to be considered in the liquidation proceedings and examined by the Liquidator and in event of any dispute, matter is required to be adjudicated by the Adjudicating Authority. There is no dispute to the fact that the claim was filed by the Appellant as Financial Creditor which stood rejected by the Liquidator as well as the Adjudicating Authority. The rejection of the claim of the Appellant clearly lead to the conclusion that the claim cannot be accepted in the liquidation proceedings nor Appellant is entitled for any claim in the water fall mechanism.
Present is a case where a scheme was submitted in the liquidation proceeding in which scheme also the payment to the Appellant has been shown as a ‘nil’ and the scheme was approved by SIDBI who according to the Liquidator was a 100% Financial Creditor. When the Appellant’s claim was rejected, he cannot claim that he is a Financial Creditor whose consent was required for approval of the scheme - It is after the reflection in the balance sheet that in the liquidation proceeding, the claim was filed by the Appellant and adjudicated rejecting the claim of the Appellant. The proceeding which undertook in the liquidation proceedings cannot be ignored nor can be washed out only on the ground that in the balance sheet of the Corporate Debtor the name of the Appellant was reflected. Proceeding in the adjudication which culminated in the rejection of the claim has to be given effect to in the liquidation proceeding.
The scheme was also a part of the liquidation proceeding, hence no error has been committed by the Adjudicating Authority rejecting the application of the Appellant - Appeal dismissed.
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2023 (10) TMI 239
Correctness of admitting section 7 application - allegation is that Section 7 application has been filed with the help of fabricated and manufactured documents as well as by suppression of material facts - HELD THAT:- It is trite law that under the IBC once a debt becomes due or payable, in law and in fact, and there is incidence of non-payment of the said debt in full or part thereof, CIRP may be triggered by the Financial Creditor as long as the amount in default is above the threshold limit. It is also well accepted that debt means the liability in respect of a claim and claim means a right to payment even if it is disputed.
When financial debt is undisputedly established and default in payment is also crystal clear, it is opined that the Adjudicating Authority did not commit any error in admitting the Section 7 application.
There are substance in the contention of Respondent No.1 that the IA was not only heard by the Adjudicating Authority but was heard before pronouncing the order in the main company petition. It is also borne out from the orders that both parties were present and had placed their respective contentions / arguments before the Adjudicating Authority in the matter of the IA.
It is an undisputed fact that there was disbursal of funds by the Financial Creditor to the Corporate Debtor. Receipt of this amount by the Corporate Debtor has not been controverted by the Appellant. Neither has any claim been made that this entire sum was repaid by the Corporate Debtor. That being the case there arises no doubt in our mind that there was a debt on the part of the Corporate Debtor qua the Financial Creditor which remained unpaid. There is no infirmity in the findings of the Adjudicating Authority that the Financial Creditor having successfully proved the financial debt and default on the part of the Corporate Debtor, Section 7 application has been admitted.
There are no error in the order impugned passed by the Adjudicating Authority admitting the Section 7 application - there is no merit in the Appeal - appeal dismissed.
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2023 (10) TMI 238
Challenge to CIRP process after resolution plan was approved - seeking clarification from the Resolution professional as to whether the shareholding of Shubhkamana Buildtech Private Limited in two companies namely Rudra Buildwell Projects Private Limited and JSS Buildcon Private Limited has been taken into consideration while assessing the assets and liabilities of the Corporate Debtor? - HELD THAT:- The Information Memorandum must have been prepared in the CIRP and Form G was issued for Resolution Plan including details of the assets - It is opined that at this stage no relief can be granted on the prayer as made in the application.
Appellant has prayed for providing a copy of the Resolution plan approved by the Adjudicating Authority - HELD THAT:- Suffice it to say that the Appellant was not part of the CIRP process. He himself submitted that in 2014 he resigned as Director. In so far as his submission that he is shareholder of the Corporate Debtor, Resolution Plan having been approved what are the rights of different stakeholders is subject matter of the plan.
In the case of ASSOCIATION OF AGGRIEVED WORKMEN OF JET AIRWAYS (INDIA) LIMITED VERSUS JET AIRWAYS (INDIA) LTD., COMMITTEE OF CREDITORS LED BY STATE BANK OF INDIA, SHRI ASHISH CHHAWCHHARIA, THE CONSORTIUM OF MR. MURARI LAL JALAN & MR. FLORIAN FRITSCH [2022 (2) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], this Tribunal in held that after approval of the plan they were entitled to access the Resolution Plan and Resolution Professional was directed to provide relevant portion of the Resolution Plan which was relevant for the workmen. The said judgment cannot come to the aid of the Appellant in the present case who was not stakeholder in the CIRP process.
The entire CIRP process being over where Resolution Plan has been approved in 2022, at this stage, any direction on the prayers made by the Appellant in the application are uncalled for and unnecessary - the Adjudicating Authority did not commit any error in rejecting the application filed by the Appellant - there is no merit in the Appeal - appeal dismissed.
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2023 (10) TMI 237
Maintainability of application - initiation of CIRP - pre-existing dispute or not - whether the Corporate Debtor created a moonshine defence on frivolous grounds or there were genuine pre-existing disputes which escaped the attention of the Adjudicating Authority while passing the impugned order? - HELD THAT:- From the material facts available on record and in particular the email dated 15.06.2018, cognizance taken that it has been categorically admitted by the Corporate Debtor that this cyclical business arrangement was not supported by any written document. It is also noticed that the first reference to a cyclical business arrangement was admittedly made by the Corporate Debtor in their email sent to the Operational Creditor on 15.06.2018. It is also an undisputed fact that the contents of this email of 15.06.2018 was specifically denied by the Operational Creditor on 21.06.2018 and 09.07.2018. Both the above emails bear ample testimony to the fact that the Operational Creditor had denied any cyclical business arrangement having been agreed between them at any stage.
The present facts on record clearly show that the Operational Creditor supplied and delivered raw material to the Corporate Debtor and raised corresponding invoices. No dispute has been raised by the Corporate Debtor with respect to quantity and quality of goods received by them. Corporate Debtor admittedly had made several part-payments against invoices from 01.03.2017 till 28.02.2018 - The Corporate Debtor has failed to produce any proof to show that it had made full and final payments to the Operational Creditor.
The existence of debt due and payable by the Corporate Debtor has also not been controverted by the Corporate Debtor. No material has been placed on record by the Corporate Debtor to show that they had categorically rejected the outstanding dues claimed by the Operational Creditor prior to issue of demand notice. From a plain reading of the emails of the Corporate Debtor at pages 147-152 of AA, there arises no doubt in our minds that the Corporate Debtor had acknowledged that there was debt due and payable to the Operational Creditors - While admitting that the civil suit was filed subsequent to the issue of notice under Section 8 of IBC, it has been contended that there is no need in every case for a civil suit or an arbitration to be pending before Section 8 notice and that a dispute as understood by the IBC is not limited to a pending suit or an arbitration but includes a real dispute as to payment between the parties.
The Adjudicating Authority in the present case has carefully considered the reply and submissions made by the Corporate Debtor and has correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute - there are no convincing reasons to be persuaded that there was any genuine pre-existing dispute.
The Adjudicating Authority did not commit any mistake in admitting the Section 9 application of the Operational Creditor - impugned order does not warrant any interference - Appeal dismissed.
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2023 (10) TMI 236
Approval of Resolution Plan - Dues of Income Tax liability - Appellant challenged the order contends that the Resolution Applicant has wrongly stated that the Income Tax Department did not file any claim pertaining to operational debt - HELD THAT:- The question of approval of Resolution Plan was remitted to the Adjudicating Authority for fresh consideration. The Adjudicating Authority while hearing the parties afresh on the Resolution Plan permitted Income Tax Department and other Objectors to raise their objections and has considered the said objections. The Hon’ble Supreme Court specifically in the Jaypee Kensington judgment [2021 (3) TMI 1143 - SUPREME COURT] has not dealt with the claim of the Income Tax Department nor observed that claim of the Income Tax Department stands extinguished.
There is one more reason to reject the submission of learned counsel for Respondent No.1 that claim of the Income Tax Department stands extinguished by judgment of Jaypee Kensington. In the impugned order, Para 131 onwards, the Adjudicating Authority has dealt with reliefs and concessions under heading ‘X. Reliefs and Concessions’. Para 132 expressly dealt with obligation of the Corporate Debtor vis-à-vis Income Tax Department. The Adjudicating Authority held that the Adjudicating Authority is not inclined to grant such a blanket relief - It is made clear that reliefs from Income Tax liabilities have not been granted as prayed by the Successful Resolution Applicant. The claim which was submitted in the proceeding and the Successful Resolution Applicant has very well dealt with claim submitted by the Income Tax Department of Rs.3334.29 Crores. Even if the claim for the AY 2012-13 of Income Tax Department cannot be said to be extinguished, Appellant being an Operational Creditor, the liquidation value of the Income Tax Department is NIL. The payment of Rs.10 Lakhs cannot be said to be violative of provisions of Section 30(2)(e).
Now coming to the question of relief which can be claimed by the Appellant in the present Appeal. Suffice it to say that Appellants claim for the AY 2012-13 cannot be said to be non-existent, as is the stand taken by the IRP. However, after admitting the aforesaid claim for the AY 2012-13 for total amount of Rs.1157.07 Crores, as claimed by the Appellant, Income Tax Department who has filed claim as Operational Creditor was entitle for amount not less than the amount to be paid in the event of liquidation as per Section 53.
At the instance of the Appellant – Income Tax Department, impugned order passed by the Adjudicating Authority need no interference - Appeal disposed off.
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2023 (10) TMI 235
Rejection of Resolution Plan - validity of the plan - resolution plan already approved by 100% majority of CoC and also approved by Adjudicating Authority - it is the contention of CRP that the RP treated them unfairly and unjustly by not entertaining their resolution plan.
HELD THAT:- Even after the Adjudicating Authority had allowed consideration of their plan by the RP, the RP had managed to persuade the CoC to not consider the resolution plan on its own merits by raising hyper-technical objections. Thus, the RP failed to discharge the duties as mandated by law to ensure the revival of the corporate debtor by not adopting a fair and transparent process. Furthermore, CRP has alleged that the RP had endorsed the resolution plan of Vama though it was not meeting the requirements under applicable law.
From the facts of the case there are no doubt in mind that the CRP did not submit their EOI on time either in the first or second round of Form G. However as and when it was received the RP had apprised the CoC. Besides being non-serious and casual about complying with timelines stipulated in the IBC, even while submitting their EoI they had failed to adhere to mandatory requirements of RFRP. Even the EMD payment was made belatedly and that too for Rs. 2.25 crore as against requirement of Rs 2.5 crore. The CoC deliberated upon the matter and ultimately passed the resolution not to consider the non-compliant plan of CRP in the interests of the corporate debtor and this was communicated to CRP. There are no lapse or irregularity on the part of the RP or the CoC in not entertaining the belated and defective plan of CRP.
The CoC has meticulously evaluated the matrix in approving the plan of Vama and the sole member of CoC having 100% voting share has already approved the plan in their commercial wisdom as contemplated under the law. That being the case, the Adjudicating Authority cannot substitute its views with the commercial wisdom of the CoC nor deal with the merits of Resolution Plan unless it is found it to be contrary to the express provisions of law and against the public interest. There is neither any material regularity nor contravention of any provisions of law by the CoC and the plan has been rightly approved by the Adjudicating Authority.
The IBC provides for an initiation of timely resolution of the corporate debtor and in the instant case the resolution plan having already been approved by the CoC and the Adjudicating Authority and implemented by the SRA, it cannot now be open to interference on an appeal preferred by an unsuccessful resolution applicant. It is equally significant to note that following the rejection of the plan of CRP by the CoC, CRP accepted the EMD refund and did not approach the Adjudicating Authority objecting to the resolution plan. It is, therefore, clear that CRP did not challenge the resolution plan before the Adjudicating Authority at the right point of time and raking up the matter belatedly - no case has made by CRP to establish any procedural or material irregularity committed by the RP/CoC in rejecting their EoI and that the challenges raised by the CRP clearly fall within the domain of commercial wisdom of the CoC which is non-justiceable. Nor has CRP been able to establish any contravention of law by the Adjudicating Authority in approving the resolution plan of Vama.
Tenability of the contentions raised by UTGST and AC-CGST that rejection of their claims by the RP and CoC was not in consonance with the requirements of law - HELD THAT:- There has been no dereliction of duty on the part of the RP in rejecting the belated claims of UTGST and AC-CGST - there are no error or irregularity on the part of RP to have rejected the belated claims of UTGST and AC-CGST. Furthermore, the Adjudicating Authority in the first impugned order has taken note that the resolution plan submitted by the SRA – Vama has taken into account the interest of government authorities and provided for appropriate treatment of admitted government dues. The Resolution Plan submitted by the Vama has dealt with the claims of Operational Creditors to the extent of Rs. 10 lakhs besides earmarking an additional sum of Rs. 25 lakhs for all the Government Department claims and undertaken to pay all the PF dues at actuals based on the outcome of an ongoing legal case at Delhi High Court with respect thereto. Thus, the approval of resolution plan of SRA-Vama by Adjudicating Authority, which was approved by the CoC with 100% vote share, does not suffer from any material or procedural infirmities.
There are no illegality in either the first or second impugned order of the Adjudicating Authority which may warrant any interference in the exercise of appellate jurisdiction - there are no merit in any appeal - appeal dismissed.
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2023 (10) TMI 234
Reduction of claim filed by appellant before the Adjudicating Authority by Resolution Professional (RP) - it is also claimed that when list of creditors were published in the same list the RP transferred the claim from the category of admitted claim to the claim under review - HELD THAT:- Since learned Adjudicating Authority in its impugned order has noticed that MOUs which were the basis for claim appears as forged documents, there is no reason to place reliance on such MOUs. Moreover, on record there is nothing to show as to whether for rendering services of liaisoning any agreement was entered in between the appellant or CD. It is unbelievable that the appellant is claiming for more than Rs.4 crores as rendering services of liaisoning to the CD still on record there is no chit of paper as to on what terms and conditions the appellant was rendering liaison services to the CD or its unit. Moreover, once the Adjudicating Authority has noticed that MOUs which were brought on record before the NCLT by the appellant were forged one, in that event the whole claim of the appellant was required to be rejected and has rightly been rejected.
Considering the order impugned passed by the learned Adjudicating Authority wherein the MOUs placed on record by the appellant before the Adjudicating Authority were treated as if they were forged one, in normal course it was required on the part of the Adjudicating Authority to direct for conducting enquiry/investigation while exercising powers under Section 340 of CrPC - It is opined that if any party brings on record any forged documents for getting unlawful benefit on the judicial side it would be necessary for the concerned Court to exercise its jurisdiction for examining the entire issue by entrusting same to investigating agency. In any event such act of either party may not get any lenient approach by the concerned Court.
While approving the impugned order passed by the learned Adjudicating Authority,it is deemed appropriate to remit back the matter to the Adjudicating Authority with request to exercise its jurisdiction under Section 340 of Cr PC in respect of alleged MOUs, regarding which observation has been given by the Adjudicating Authority as if those documents appeared to be fraudulent one.
Appeal dismissed.
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2023 (10) TMI 176
Application for recalling an order passed by five-member bench of NCLAT in UNION BANK OF INDIA (ERSTWHILE CORPORATION BANK) VERSUS DINKAR T. VENKATASUBRAMANIAN & ORS. [2023 (7) TMI 308 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] where the matter was referred to Larger Bench - HELD THAT:- Since the Financial Creditors of M/s Amtek Auto Limited were not a party before this Tribunal when it was considering CA(AT)(Insolvency) No. 729 of 2020 which was disposed off in UNION BANK OF INDIA (ERSTWHILE CORPORATION BANK) VERSUS MR DINKAR T. VENKATASUBRAMANIAN, DVI PE (MAURITIUS) LTD, DECCAN VALUE INVESTORS LP [2022 (1) TMI 1382 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI, by which the Resolution Professional was directed not to deduct the amount of Rs. 34 crores, it was necessary that the Financial Creditors of M/s Amtek Auto Limited (who comprised the CoC) should have been heard before making an order, which was a variance with the commercial decision of the CoC. In doing so, this Tribunal did not follow the dictum that ‘no one shall be Condemned unheard’.
The judgment of three-member bench of this Tribunal in [2022 (1) TMI 1382 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] is hereby recalled - application disposed off.
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2023 (10) TMI 119
Seeking reopening of Accounts with the Order of the Tribunal, was kept pending - erroneous admission of Section 7 application only based on the Financial Statements of the Years 2012-2016, which the Appellant was challenging as ‘fraudulent’ - HELD THAT:- It is the main case of the Respondents that an amount of Rs. 4 Crores was lent to the Corporate Debtor Company based on a Resolution passed by the Board of Directors on 07/11/2011. Curiously, this document was neither filed before the RoC nor was it a part of the Section 7 Application filed earlier or even part of the present Application, but was only filed along with the ‘Rejoinder’.
It is clear that there was an interim direction given by the three Member Bench of the Principal Bench, NCLAT dated 17/11/2020 that any action taken during the CIRP would be subject to the outcome of this Appeal. This Order was not challenged and the interim direction stands as of today.
Having regard to the chequered history of the case, the Investigative Auditors Report which is dated 01/08/2018 and immediately a week thereafter the second Section 7 Application was filed before the ‘Adjudicating Authority’ and C.A. 162/130/HDB/2019 seeking reopening of the Books of Accounts under Section 130 of the Companies Act, 2013 was filed by the Appellant on 26/11/2018 and the Order of the ‘Admission’ under Section 7 of the Code was passed on 13/02/2020, which Impugned Order does not refer to adjudication of C.A. 162/130/HDB/2019, this Tribunal is of the considered view that the issues raised by the Appellant regarding ‘transactions’ and ‘entries in the Financial Books’ require Consideration. This Tribunal is of the considered view that the ‘Adjudicating Authority’ ought to have adjudicated C.A. 162/130/HDB/2019 which was kept pending from 26/11/2018 to 13/02/2020 before deciding the Section 7 Petition.
The Impugned Order of the Adjudicating Authority is set aside and the matter is remanded to the ‘Adjudicating Authority’ to decide application and then adjudicate the Section 7 Application, in accordance with Law - Appeal allowed.
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2023 (10) TMI 72
CIRP - Status of the entity (Corporate debtor) as MSME or not - certificate being procured after the process started - NCLAT held the status of entity as MSME - Contempt proceedings against the Resolution professional for not folloiwng the decision of NCLAT - HELD THAT:- Reliance placed in the case of SARAVANA GLOBAL HOLDINGS LTD. AND ANR. VERSUS BAFNA PHARMACEUTICALS LTD. AND ORS. [2019 (9) TMI 841 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that Admittedly, the ‘Corporate Debtor’ is a ‘MSME’ and the promoters are not ineligible in terms of Section 29A of the ‘I&B Code’. Therefore, it is not necessary for the ‘Committee of Creditors’ to find out whether the ‘Resolution Applicant’ is ineligible in terms of Section 29A or not.
In the impugned judgment, it can hardly be disputed that there is no discussion on the special circumstances other than the reference to judgment in Bafna’s case. The impugned judgment is predicated on a broad reasoning as if ipso facto there is no need to call other proposals if it is an MSME. In view of the larger context it would have, we clearly observe and hold that this is not the correct position of law - This is more so as in the factual scenario of Bafna’s case, the observations were made in the context of (a) before the constitution of CoCs or (b) in terms of Section 12A of the Code on the basis of an offer given by the promoter in such a case.
The appellant cannot be faulted for calling for other proposals in which the proposal given by respondent No.1 was also to be examined, put them to voting before the CoCs and declare the results - impugned order set aside - appeal allowed.
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2023 (10) TMI 71
Related party or not - allowed to take place on the Committee of Creditors or not - Section 5(24) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There can be no cavil to the proposition that so far as the appellant before us is concerned, on account of both the aspects urged by learned senior counsel for the appellant, the appellant cannot be treated as a related party and thus, would find a place on the Committee of Creditors.
Having opined so, insofar as the other aspects are concerned, which have not been dealt with by the NCLAT, it would not be appropriate for this Court to venture into that area and other aspects, considering the nature of appeal before this Court as the NCLAT must bestow consideration on those aspects first before this Court is called upon to take a view in the matter, especially keeping in mind the limited jurisdiction of this Court vis-a-vis Section 62 of the Code limiting the appeal to a “question of law”.
The impugned order set aside - matter remitted back to the NCLAT for its adjudication on the various other aspects which the appellant seeks - appeal allowed by way of remand.
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2023 (10) TMI 70
Scope of N/N. S.O 1683(E) issued by the Ministry of Corporate Affairs, Government of India dated 24.05.2017 - jurisdiction provided to the tribunal by the notification to decide the issues raised - HELD THAT:- It is observed that the order in the case of M/S SPARTEK CERAMICS INDIA LTD. VERSUS UNION OF INDIA & ORS. [2018 (10) TMI 1660 - SUPREME COURT] does not leave the party without remedy and, if aggrieved, a writ petition can be filed.
Appeal dismissed.
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