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IBC - Case Laws
Showing 201 to 220 of 779 Records
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2023 (9) TMI 1291
Initiation of CIRP - NCLT rejected the application u/s 7 - Corporate Debtor admitted default in payment of debt - existence of dispute about debt or liability or not - HELD THAT:- There is no dispute regarding disbursal of Rs.3.20Crs. from the account of the Financial Creditor to the account of the Corporate Debtor. There is also no dispute that Application under Section 7 of IBC, 2016 was filed within limitation. The AA has erred in relying on the Joint Venture Agreement dated 04.03.2017, which was terminated by consent by both the parties on 29.04.2017 also noting therein that with this termination of MoU, none of the parties are bound by the terms and conditions of the MoU dated 04.03.2017. Even if it is assumed that payments have come under the Joint Venture, the subsequent two Agreements dated 29.04.2017 clearly establish that Joint Venture MoU was terminated, and fresh MoU for unsecured loan was executed and that it was mutually agreed by Corporate Debtor and Financial Creditor that they will not be bound by the Joint Venture MoU. The amounts paid by the Financial Creditor to the Corporate Debtor took the character of loan from Financial Creditor to Corporate Debtor.
The Corporate Debtor had accepted before the AA that it is not in a position to repay `debt’ because of financial distress. The AA ought to have admitted the Application of the Appellant under Section 7 of the IBC, 2016 as there is no dispute about the `debt’ or liability of the Corporate Debtor and the Corporate Debtor has admitted that it is defaulting in repayment of `debt’ due to its financial condition.
Matter remanded back to the AA for consideration of the Application of Financial Creditor under Section 7 of the IBC, 2016 - appeal allowed.
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2023 (9) TMI 1290
Legality of forfeiture of EMD deposited by the Respondent - failure to pay the balance 75% of sale consideration till 15.08.2020 which was the date stipulated for full payment in the EOI.
Whether the parties are bound by the terms and conditions fixed by the Appellant in the EOI dated 08.07.2020 or the Appellant was required to follow the terms and conditions of Clause 12 of Schedule 1 of the Regulations which was amended on 25.07.2019?
HELD THAT:- The very fact that the circular dated 26.08.2019 has already been withdrawn and that the amendment dated 25.07.2019 was in vogue as on 08.07.2020, it was incumbent upon the Appellant to have followed the provisions of Regulation 33 much less Schedule 1 (Clause 12) of the Regulations which has not been followed and the terms and conditions have been provided by the Appellant on its own in the EOI overlooking the terms and conditions as envisage in Schedule 1.
The action of the Appellant is totally unsustainable, therefore, there are no error in the order under challenge in which all the factors of this case have been thoroughly appreciated.
In the end, Counsel for the Appellant requested that the component of interest which has ordered to be paid with EMD which has been forfeited would cause extra burden on the Appellant but at the same time, it is also submitted that the amount of EMD is lying deposited in Bank on which the interest is accruing. In such circumstances, there are no merit in this argument as well.
There are no merit in the appeal and the same is hereby dismissed.
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2023 (9) TMI 1289
CIRP - Maintainability of application u/s 7 r.w.s. 10A - default in repayment of term loan - applicability of time limitation - date of default - it is claimed that original Loan Agreement,has not to be looked into for default and default which is the basis of Section 7 Application is the default under OTR Agreement, which default took place on 31.03.2022 - HELD THAT:- Section 7 Application, thus, has been filed on the basis of default committed by the Corporate Debtor on 31.03.2022 as per OTR Agreement. Section 7 Application is thus based on event of default as per Clause 8.1 of the OTR Agreement and date of default has been clearly mentioned as 31.03.2022 under the OTR Agreement. It is also to be noted that date of NPA has been mentioned as 29.12.2020 as per Clause 48 of the Circular of the RBI dated 06.08.2020.
Section 10A makes it clear that no Application shall ever be filed for initiation of Corporate Insolvency Resolution Process (“CIRP”) if the default occurred during the Section 10A period. What is prohibited was initiation of proceeding under Section 7, 9 and 10 for any default committed by the Corporate Debtor pre 10A period. When we look into Section 7 Application filed by the Corporate Debtor, the Application is not filed on a default under 10A period, rather it was filed on event of default, which has occurred under the One Time Restructuring Agreement dated 21.05.2021, which default occurred on 31.03.2022, when the Corporate Debtor failed to pay interest installments as well as principal installments, which were due by that time.
In the present case, there was default committed before implementation of the Plan, as NPA was declared on 29.12.2020. Hence, in the present case, asset classification of the borrower has to be treated to be downgraded with effect from 29.12.2020. Clause 48, is thus only to be read with regard to downgrading to NPA for the relevant date and this Clause 48 is not relevant to find out event of default, which occurred under the One Time Restructuring Agreement and which is foundation of Section 7 Application.
The event of default under the One Time Restructuring Agreement, which contained in Clause 8.1 as extracted above and by virtue of Claude 8.2, which contains heading “Consequences in event of default”, the lenders in its own discretion can exercise or pursue any other legal remedy or right provided in any other applicable law. Thus, when event of default under the One Time Restructuring Agreement happens, the said event of default shall form foundation of any legal action - by the One Time Restructuring Agreement an amount of Rs.51.71 Crores was granted as Fresh Funded Interest of the Term Loan, which was disbursed to the Corporate Debtor and default with regard to the said amount can be committed only when there is a default in repayment of FITL disbursement.
The learned Senior Counsel for the Appellant has relied on the judgment of the Hon’ble Supreme Court in Rakesh Kymal vs. Siemens Games Renewable Power Pvt. Ltd [2021 (2) TMI 394 - SUPREME COURT] , in which case the Hon’ble Apex Court had occasion to consider Section 10A - In the above case an Application under Section 9 was filed on 11.05.2020 whereas an Ordinance No.09/2020 was Promulgated by the President of India from 05.06.2020, by which Section 10A was inserted in the Code. It was contended that the Application was filed prior to Ordinance when Section 10A was brought into force, which argument was rejected. The ratio of the judgment is well settled that with regard to a default committed under Section 10A, no Application can ever be filed for the said default. Thus, what is prohibited is initiation of proceedings for any default committed during 10A period.
In the present case, Application under Section 7 was not filed for default committed during 10A period, rather the Application was specifically filed for default committed under the OTR Agreement, which is committed on 31.03.2022, which was much subsequent to 10A period. The mentioning of date 29.12.2020 as NPA in Section 7 Application was on account of Clause 48 of the RBI Circular dated 06.08.2020, which downgraded the Corporate Debtor in event of any default committed under One Time Restructuring Agreement. By mentioning NAP date, i.e., 29.12.12020, which was in obedience of the Clause 48, no benefit can be made by the Appellant by contending that Application was filed for default during the 10A period.
The Application under Section 7 of the Code filed by the Central Bank of India was not for any default committed during 10A period, rather the Application was filed for default committed on 31.03.2022 under the One Time Restructuring Agreement dated 21.05.2021 and the event of default under One Time Restructuring Agreement happened only on 31.03.2022, giving right to the Financial Creditor to take recourse of Section 7 Application, which was rightly done in the facts of the present case - no error has been committed by the Adjudicating Authority, admitting Section 7 Application.
Appeal dismissed.
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2023 (9) TMI 1261
Condonation of delay in filing the claim - Refusal to admit the claim - HELD THAT:- It is significant to mention that subsequent to the last date of receipt of Claim i.e. 22.10.2020, the Appellant had filed an Appeal on 10.11.2020, without choosing to prefer any Claim, within the stipulated period.
Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 clearly stipulates that the Claim has to be submitted on or before the last date mentioned in the Public Announcement.
In the instant case, it is an admitted fact that the Claim was submitted with an inordinate delay of 390 days. The contention of the Learned Counsel for the Appellant that this inordinate delay of 390 days is on account of pursuing the Appeal, challenging the Exparte Liquidation Order, is untenable on the ground that the last date for receipt of Claim was 22.10.2020, the Appeal challenging the Liquidation Order, was on 10.11.2020 and moreover, challenging the Liquidation Order by way of an Appeal, specifically in the absence of any `Stay Order’, does not prevent, viewed from any angle, the Appellant in preferring a Claim, within the stipulated period of time.
The Liquidator had intimated to the Appellant herein, the reason for having rejected the Claim as the last date for Submission of Claim, was 22.10.2020 and 14 months had elapsed, since the Liquidation Order, was passed. Being the Managing Director of the Corporate Debtor Company, the Appellant cannot plead ignorance of the Proceedings and this Tribunal is of the earnest view that preferring an Appeal and challenging the Liquidation Order, cannot be a substantial ground, for not having preferred the Claim on time.
This Tribunal, is of the considered view that IBC is a time bound process and the Liquidator cannot accept a belated Claim, which would go against with the provisions of the IBC, 2016 as well as the scope and objective of the `Code’. It is also seen from the record that the Appellant had made every effort to derail the process and this Tribunal, does not find any substantial grounds to interfere with the well-reasoned order of the Adjudicating Authority.
Appeal dismissed.
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2023 (9) TMI 1260
Admissibility of application u/s 9 of IBC - operational debt qua the Corporate Debtor is due and payable or not - pre-existing dispute between the parties or not - HELD THAT:- This examination would be in consonance with the test which has been laid down by the Hon’ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] where it was held that Admittedly, the matter has never been resolved. Also, the respondent itself has not commenced any legal proceedings after the e-mail dated 30th January, 2015 except for the present insolvency application, which was filed almost 2 years after the said e-mail. All these circumstances go to show that it is right to have the matter tried out in the present case before the axe falls.
The Adjudicating Authority has failed to take cognizance of the fact that there clearly existed dispute between the two parties anterior to the date of demand notice in respect of the terms and conditions of their business transactions as also on the liability to discharge the obligations to pay. Moreover, keeping in mind that IBC bestows only summary jurisdiction upon the Adjudicating Authority and this Tribunal, once plausibility of a pre-existing dispute is shown, it is not required of them to make further detailed investigation. What has to be looked into is whether the defence raises a dispute which needs further adjudication by a competent court. It is well settled that in a Section 9 proceeding, the Adjudicating Authority is not to enter into final adjudication with regard to existence of dispute between the parties regarding the operational debt. There was no reason for the Adjudicating Authority in the present case to go under the skin of dispute to unravel who is the principal debtor.
There are force in the contention of the Appellant that since they had never accepted any liability to make payments to the Operational Creditor and that given the fact that there was pre-existing dispute surrounding the oral agreement of 08.05.2019 and modified arrangement on 05.09.2019, the Section 9 application ought not to have been admitted by the Adjudicating Authority in terms of the judgment of the Hon’ble Supreme Court in Mobilox.
The Adjudicating Authority committed serious error in admitting Section 9 application in the facts of the present case. The Impugned Order dated 12.05.2022 initiating CIRP of the Corporate Debtor and all other orders pursuant to Impugned Order are therefore set aside. The Corporate Debtor is released from the rigours of CIRP and is allowed to function independently through its board of directors with immediate effect - Appeal allowed.
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2023 (9) TMI 1259
Admissibility of Section 7 application - Application is within the period of Limitation or not - extension of OTS proposals - acknowledgement of Debt as defined under Section 18 of the Limitation Act, 1961 - HELD THAT:- Section 22 (1) SICA makes it clear that there is a bar for realisation of a right referred to in this Section against the Corporate Debtor when once an enquiry under Section 16 SICA is pending against it or any scheme referred to under Section 17 thereof, is being considered or an Appeal under Section 25 is pending, an exception being with the consent of the Board or that of the Appellate authority.
The Hon’ble Apex Court in the matter of Sabarmathi Gas Limited Vs. Shah Alloys Ltd. reported in [2023 (1) TMI 195 - SUPREME COURT] referred to a three judge Bench Judgment in the matter of KSL & INDUSTRIES LTD. VERSUS ARIHANT THREADS LTD. [2014 (12) TMI 1023 - SUPREME COURT] in which the issue whether a Recovery Application under the RDDB Act, 1963 would lie or be proceeded with against a sick company in view of the bar contained in Section 22 (1) of SICA, was addressed to.
The facts are distinguishable as in Invent Assets [2021 (11) TMI 731 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI], there was no acknowledgment of liability under Section 18 of the Limitation Act, 1963 and further the dismissal of the BIFR reference was also dated beyond 3 years from the date of default. The other Judgments relied upon by the Appellant in support of his case that this period spent before the BIFR / AIFR cannot be excluded in the facts of the attendant case, cannot be accepted for the reason that the ratio in Sabarmathi Gas Limited Vs. Shah Alloys Ltd. under the IBC Code, 2016 is squarely applicable to the case on hand.
OTS proposals being conditional cannot be taken into consideration? - extension of period of limitation as they were given beyond three years from the date of default - HELD THAT:- The question of applicability of Section 8 of the Limitation Act, 1963 under IBC, 2016 is to be examined on the touch stone of the ratio laid down by the Hon’ble Apex Court in the matter of DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. [2021 (8) TMI 315 - SUPREME COURT] wherein it was held that issuance of a Recovery Certificate in favour of a Financial Creditor would rise to a fresh cause of action to initiate proceedings under Section 7 of the Code.
Whether subsequent to the issuance of the Debt Recovery Certificate on 19/11/2009, there was any acknowledgement which falls within the scope and ambit of Section 18 of the Limitation Act, 1961, by the Corporate Debtor within 3 years of 19/11/2009? - HELD THAT:- It is seen from the record that several letters of OTS Proposals even prior to 19/11/2009, were exchanged between the Corporate Debtor Company and the Financial Creditor on 04/11/2008, 22/11/2008, 17/12/2008, 25/12/2008, 26/12/2008 and 27/12/2008 - From the letter, it is clear that there is a clear acknowledgement of the Debt together with the terms of payment. Even on 16/02/2010 an amount of Rs. 37,50,000/- was remitted to the bank in pursuance of the OTS settlement proposal.
Only those OTS letters are being reproduced here where there is a ‘promise’ to pay and there is also a reference to a part payment made. The next letter dated 15/11/2012 refers in paragraph 2, the earlier OTS letters dated 27/06/2007, 31/08/2007, 02/01/2008 and 19/03/2008, thereby establishing that even prior to the issuance of Debt Recovery Certificate there were several attempts made to discharge the loan, thereby acknowledging the Debt - The letter dated 27/10/2017 addressed by the Corporate Debtor shows the part payments of Rs. 20 lakhs made vide cheque dated 30/10/2017 and the said letter refers to OTS proposals and approvals from 21/09/2012 onwards. A letter dated 17/02/2018 (PG. 473) evidences the continued discussions with the bank and acknowledgment of payment to be made vis a vis the OTS proposals.
The entire correspondence and the OTS proposals between the parties from 2008 to 2022, i.e. even after the filing of the Section 7 Application, the contention of the Appellant that there was no ‘acknowledgement of debt’ within 3 years of the date of the Debt Recovery Certificate pales into insignificance. The period from 21/04/2013 to 02/07/2017 is also covered in this correspondence.
Whether the Appellant / Party-in-Person that a ‘conditional promise to pay’ and ‘part payments made’ do not fall within the ambit of definition of acknowledgement of Debt as defined under Section 18 of the Limitation Act, 1961? - HELD THAT:- In the instant case, there is a continuous ‘promise to pay’ in the OTS proposals made by the Corporate Debtor Company and this communication clearly evidences a jural relationship between the Corporate Debtor and the Financial Creditor - This Tribunal is of the considered and earnest view that an OTS proposal with a promise to pay and part payments being made thereafter, positively construes an ‘acknowledgment of Debt’ as defined under Section 18 of the Limitation Act, 1963.
The admitted OTS Proposals between the Corporate Debtor Company and the Financial Creditor substantiate that a ‘reasonable inference’ can be made regarding the subsisting liability.
Appeal dismissed.
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2023 (9) TMI 1071
Recovery of Electricity dues - waterfall mechanism - successful resolution applicant is asked to pay the arrears payable by the corporate debtor for the grant of an electricity connection in her/his name - HELD THAT:- The observations from Embassy Property Developments Private Limited [2019 (12) TMI 188 - SUPREME COURT] would confer jurisdiction on the tribunal constituted under the Code insofar as the appellant – Tata Power Western Odisha Distribution Limited is insisting on payment of the dues of the corporate debtor for restoration/grant of the electricity connection. The dues of the corporate debtor have to be paid in the manner prescribed in the resolution plan, as approved by the adjudicating authority. The resolution plan is approved when it is in accord with the provision of the Code. Thus, the issue of corporate debtor’s dues falls within the fold of the phrase ‘arising out of or in relation to insolvency resolution’ under section 60(5)(c) of the Code.
There are no good ground and reason to interfere with the impugned judgment(s)/order(s) - the present appeals are dismissed.
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2023 (9) TMI 1026
CIRP - Preferential Transaction - transactions infringing section 43 of the IBC - HELD THAT:- A plain reading of sub-section (2) of section 43 makes it clear that if the transfer of a property or an interest of the corporate debtor is made for the benefit of a creditor or a surety or a guarantor, such transaction would be ‘preferential transaction’, if it puts such creditor or surety or guarantor in a beneficial position and if such transactions are made within the ‘relevant period’ - the transactions which are the subject of the Impugned Order were made during the period 18.11.2019 to 30.9.2021. Out of these, the transactions made between 22.6.2021 to 30.9.2021 which total Rs. 7,81,352 were all made within a period of two years immediately preceding the insolvency commencement date which is 6.10.2021. Therefore, and quite clearly, all these transactions are within the ‘relevant period’.
In the background of the report of ‘Forensic Audit’ of the ‘Corporate Debtor’, it is quite clear that the said transactions amounting to Rs.7,81,352 are ‘preferential transactions’, as defined under section 43 of the IBC - the Impugned Order does not suffer from any infirmity - there are no reason to interfere with the said order - appeal dismissed.
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2023 (9) TMI 1013
Maintainability of application u/s 7 of IBC - default prior to the Section 10 A period - Application barred by Section 10A or not - It was held by NCLAT that no error has been committed by the Adjudicating Authority in admitting Section 7 Application - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment and hence, the appeal is dismissed.
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2023 (9) TMI 965
Maintainability of application u/s 7 of IBC - application made on the basis of an Assignment Deed - not legally enforceable document being and unregistered agreement - privity of contract between the Corporate Debtor and Respondent No.1 - making malafide attempt to file duplicate claims - non-service of notice of the company petition on the Corporate Debtor - existence of debt and dispute - HELD THAT:- At this stage, no contentions have been raised by either party regarding debt and default committed thereto. On perusing the impugned order, it is found that the Adjudicating Authority has recorded that there exists financial debt and default and admitted Section 7 application. Debt and default on the part of the Corporate Debtor not having been contested, there are no error on the part of the Adjudicating Authority in admitting the Section 7 application.
Non-service of notice of the company petition on the Corporate Debtor - HELD THAT:- The Adjudicating Authority had taken cognizance of the Affidavit of Service which had been filed by the Respondent No.1. From the totality of above cited circumstances, we have sufficient reason to believe that notice was properly served upon the Corporate Debtor at their valid email address on three separate occasions and an affidavit of service to this effect was also filed as placed on record at pages 25-29 of Reply Affidavit. However, after service of notice, if the Corporate Debtor did not appear before the Adjudicating Authority, the Respondent No.1 cannot be held responsible for not having sent proper notice - the Appellant cannot rightfully claim that they were deprived of reasonable opportunity of hearing due to non-service of notice. While it is axiomatic that principles of natural justice are not an empty formality, it cannot be unmindful of the fact that this cannot be resorted to by a litigant to cover up their own shortcoming and derail the judicial process.
The SBI vide the Assignment Agreement had assigned and transferred all its rights in the credit facilities extended to the principal borrower along with all underlying security interests to Respondent No.1. Hence, the Respondent No.1 having clearly stepped into the shoes of SBI and on having acquired the assets under the Assignment Agreement in the capacity of an Asset Reconstruction Company in the manner and procedure laid down by the SARFAESI Act, it had become the deemed lender and therefore entitled to exercise its right to initiate proceedings under Section 7 of IBC.
The issue of debt and default on the part of the Corporate Debtor is not in contention and no submissions have been made in this regard by the Appellant. In result, there are no error in the impugned order admitting the Section 7 application - appeal dismissed.
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2023 (9) TMI 964
Proxy of Corporate Debtor - two separate entities - whether any admission or communication sent by SNG Developers Ltd. can be considered as being sent by Corporate Debtor SNG Techno Build Pvt. Ltd.? - time limitation - HELD THAT:- It is amply clear from the various communications and e-mails between the contractors/sub-contractors with the group companies of SNG Group that the use of the e-mail address or Letter head of SNG Developers Ltd was being used in loose sense and it would not be proper to draw any inference from such e-mails that SNG Developers Ltd did not possess any authority to communicate on behalf of the Corporate Debtor SNG Techno Build Pvt. Ltd. It is also significant that in every such e-mail or Minutes of Meeting the work of SNG Plaza has been clearly mentioned, and significantly, in the e-mail dated 11.09.2015 which calls upon Luxmi Electricals to submit the final bill of the work, the work relates to the Work Order No. SNG/GM(C)/Plaza/WO/11/460 dated 25.07.2011, which is the Work Order given by the Corporate Debtor SNG Techno Build Pvt. Ltd. to the Luxmi Electricals. Further, the invoices in relation to the R.A. Bills all relate to the same Work Order and the name of the site is clearly mentioned as “Electrical Works at SNG Plaza at Gr. Noida” - the Work Order dated 25.07.2011 is the genesis of the RA bills and the related operational debt.
Time Limitation - HELD THAT:- It is clear that the dues payable between 01.10.2012 and 31.03.2015, remain at Rs. 8,54,593/- as no payments were made during this period. Thus, the operational debt gets limitation of three years from 1.10.2012, i.e., upto 30.09.2015. Within this period there is admission in Balance Sheet for the year ending 31.3.2016 wherein the due operational debt upto 31.3.2015 is included as Rs. 8,54,593/- - the work seemed to have been abandoned or stopped and upon a request by the Corporate Debtor vide e-mail dated 11.09.2015, the final bill was sought from the Operational Creditor. After the e-mail dated 11.09.2015, the final bill was submitted by the Operational Creditor on 24.03.2018. This final bill was granted approval by the Corporate Debtor vide e-mail dated 09.04.2018 (at Pg. 213 of the Appeal Paper Book) which is again admission of the operational debt by the Corporate Debtor. None of these facts have been controverted by the Corporate Debtor.
The limitation of operational debt due was upto 23.3.2021 (i.e. 3 years from the issue of Final Bill on 24.3.18). The Section 9 Application was filed within three years of the extended limitation of 23.3.2021. In such a situation, it is clear that the Section 9 Application was filed within limitation.
The Impugned Order does not suffer from any error - Appeal dismissed.
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2023 (9) TMI 960
Maintainability of application u/s 7 of IBC - default prior to the Section 10 A period - Application barred by Section 10A or not - HELD THAT:- The Adjudicating Authority has noticed and returned a finding that the default recorded in the NESL is 31.01.2020. The default on 31.01.2020 is obviously prior to the Section 10 A period. When default has been committed by the Corporate Debtor prior to Section 10A period, any default committed during the Section 10A period can not be held to bar the application which is filed on the basis of default prior to Section 10A and subsequent to Section 10A period.
The Application which has been filed under Section 7 gives the detail for Part-IV of the Application which part of the appeal itself indicate the date of default as 31.01.2020. In appeal book, the date of default due date has been mentioned as 31st March, 2019 for the financial year 2018-19. Reading of the Application indicates that default was committed by the Corporate Debtor prior to Section 10A period.
Thus, no error has been committed by the Adjudicating Authority in admitting Section 7 Application. There is no merit in the Appeal, the Appeal is dismissed.
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2023 (9) TMI 874
Application filed u/s 7 of IBC dismissed - dismissal on the ground of time limitation - whether limitation for filing Section 7 Application had already come to an end when Section 7 Application was filed by the Appellant on 01.10.2021? - HELD THAT:- The law is well settled that for finding out acknowledgement within the meaning of Section 18 of the Limitation Act, balance sheets can be looked into. Hon’ble Supreme Court in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL & ANR. [2021 (4) TMI 753 - SUPREME COURT] has examined the question in reference to Section 18 of the Limitation Act and held that it depends on the facts of each case as to whether an entry made in a balance sheet made in accordance with law, qua any particular creditor is unequivocal or has been entered into with caveats.
Whether the “notes to the account” or the “Director’s Report/Statement” as relied by Learned Counsel for the Respondent are sufficient to hold that there is no acknowledgement in the balance sheet of the debt? - HELD THAT:- The acknowledgement of debt in the balance sheets from 1998-99 is continuous. Notes to the account and the Director’s Report/Statement at best can be treated to be account of litigation emanating from such date - it is noticed that in the notes to the account and the Director’s Statement/Report, it has been categorically mentioned that Company failed to repay the loan. In the Financial Year 2020-21, there is reiteration of credit facility availed by the Company from the IDBI - When the Company Petition was dismissed with the observation as observed, there is a failure to see that how the Respondent can contend that claim of the Appellant is limited to only Rs. 250 Lakhs.
After perusing the relevant balance sheets and director’s report, it is satisfied that balance sheets contain an acknowledgement of debt and the mere fact that details of litigation emanating from the loan and subsequent events are mentioned in the notes to the account and the director’s report does not denude the value of the balance sheets for purposes of Section 18 of the Limitation Act.
Reference made to Judgment of this Tribunal in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS UNIWORTH TEXTILES LIMITED [2023 (7) TMI 484 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] where this Tribunal had occasion to consider the balance sheets for purposes of finding out acknowledgement under Section 18 of the Limitation Act. This Tribunal also looked into the Director’s Report - This Tribunal ultimately accepted the acknowledgment in the balance sheets to extend the benefit of Section 18 of the Limitation Act and allowed the Appeal and set aside the order of the Adjudicating Authority dismissing Section 7 Application.
The Adjudicating Authority committed error in rejecting Section 7 Application filed by the Appellant as barred by time. The Application filed by the Appellant was not barred by time there being continuous acknowledgment in their respective balance sheets of the Corporate Debtor which acknowledgment was within the meaning of Section 18 of the Limitation Act extending the period of limitation by fresh period of limitation by each acknowledgment - Appeal allowed.
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2023 (9) TMI 873
Dismissal of Section 9 Petition on the ground that the ‘Settlement Agreement’ was anti-dated, unstamped and unregistered - Operational creditors - correctness of Petition filed in respect of claims arising under the Settlement Agreement - HELD THAT:- The very document which the ‘Appellant’ is relying upon establishes that the initial amount of Rs.50 lakhs was to be paid prior to 31.03.2018, and that the balance amount of Rs.4 Crores was to be paid in tranches, whereas it is not in dispute that the agreement is dated 01.11.2018 which is subsequent to the amount of Rs.50 lakhs, and to be paid on or before 31.03.2018. Therefore, this document substantiate that the ‘Settlement Agreement’ is anti-dated, apart from being unstamped and unregistered.
The amount in Part IV of Form-5 mentioned as ‘Default’ is Rs.8,46,32,553/- as on 31.01.2021 whereas the amount in the ‘Settlement Agreement’ appears to have been reduced to around Rs.4 Crores. Admittedly, criminal cases were filed against the Corporate Debtor prior to the issuance of Section 8 Demand Notice’ under Section 138 read with Section 141 of Negotiable Instruments Act, 1881.
The Petition filed in respect of claims arising under the aforementioned Settlement Agreement [even if disputed herein] does not come within the definition of ‘Operational Debt’]. Time and again, the Hon’ble Apex Court in a catena of Judgments held that the IBC is not a ‘recovery mechanism’. Even if the Settlement Agreement is taken into consideration, this ‘Tribunal’ is of the earnest view that the claims arising under the ‘MOU’ lost the character of ‘Operational Debt’ and became a debt simpliciter. In respect of’ in the definition of Operational Debt cannot be interpreted widely so as to include any agreement between the parties which does not specifically pertain to the supply of goods or services.
Keeping in view, the spirit of the Code, this ‘Tribunal’ is of the considered view that at best, the claims are contractual claims for which appropriate Civil Proceedings may lie.
Appeal dismissed.
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2023 (9) TMI 821
Admission of application u/s 7 of the IBC after condoning the delay - time limitation - whether Respondent No.2 (SBI) would be entitled to the benefit of Section 18 of the Limitation Act and whether Section 5 of the Limitation Act thereof would also be applicable? - HELD THAT:- Section 3(1) of the Limitation Act creates bar for the institution of any suit, appeal, or application made after the prescribed period of limitation to be dismissed, even though limitation has not been set up as a defence - Section 5 of the Limitation Act provides for an extension for the prescribed period in certain cases where sufficient cause for not preferring the appeal or where the application could not be made within the prescribed time.
Coming to the benefit available under Section 18 of the Limitation Act, the following sequence of events and the law thereon would be relevant. The State Bank of India declared the Corporate Debtor as an NPA on 28.06.2013. Therefore, the limitation period would be three years from the last date of the financial year previous to the declaration of NPA, which would be 31.03.2013, and would run up to 31.03.2016. If there were no further intervening circumstances or developments relating to acknowledgment, the contention raised by the appellant that the petition under Section 7 of IBC having been filed much beyond 31.03.2016, in 2020 to be specific on 22.01.2020, the petition would be clearly barred by limitation.
Whether the debt acknowledged in the balance sheet of the financial year would end on 31st March, 2015 and whether the three OTS proposals would give a fresh life of limitation of three years from each of the respective dates? - HELD THAT:- The documents relating to acknowledgement claiming benefit of Section 18 were introduced at appellate stage, and such documents being balance sheets and settlement offers. It was held that the same could be accepted even at the appellate stage and a settlement offer akin to an OTS proposal would be an acknowledgment of debt for the purpose of Section 18 of Limitation Act. The only caveat was that such acknowledgments should be before the expiry of limitation prescribed under law - A balance sheet acknowledging debt is also a document relevant for calculating the limitation. This has already been held in case of Asset reconstruction Company India Ltd. [2021 (4) TMI 753 - SUPREME COURT].
Another argument raised by the counsel for the appellant was with respect to the genuineness of the OTS proposals giving several reasons to discard the same. All the said reasons will be tested in the proceedings before the Adjudicating Authority as and when raised by the Corporate Debtor or any other party having locus to raise such plea. Presently in this appeal the said issue cannot be taken up for two reasons: firstly, the Adjudicating Authority as well as NCLAT have accepted the explanation of Respondent No.2 for the delay caused in filing the Section 7 IBC petition to be satisfactory and have condoned the same. Secondly, in view of the first and second OTS proposals by the Corporate Debtor being not questioned by the suspended Directors, there is no reason to disbelieve or to cast any doubt on the said documents at the instance of the appellant.
There are no merit in the appeal. The same is accordingly dismissed.
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2023 (9) TMI 820
Approval of Resolution Plan - Plan approved by CoC with 98% vote share - seeking reconsideration of the plan - HELD THAT:- The approval of the CCI, which is provided for a combination and the time prescribed under the Competition Act is 210 days. It is also noticed that CIRP Regulations also provide a timeline. Section 12 of the Code, contemplate completion of CIRP within 180 days, subject to further extension. Section 12, further provides that CIRP shall be completed within a period of 330 days from the insolvency commencement date. It is noticed that timeline prescribed under Regulation 40A for submission of Resolution Plan to CoC take additional 30 days and 135 days are provided for submission of Resolution Plan. Till the submission of Plan and by 165 days, the Plan is required to be considered by the CoC. The question of obtaining approval from the CCI only arises when Resolution Plan submitted contains a combination and require approval from the CCI. After submission of Plan, the Resolution Applicant applies for approval of combination from the CCI. It is not in his hand that as to when CCI will grant the approval. The CCI has to act as per statutory provisions of the Competition Act and it has been given 210 days to take a decision - It cannot be held that since provision is there, approval by CCI has to be obtained prior to approval of Plan by the Adjudicating Authority - it is noticed that the judgments of this Tribunal where it has been laid down that approval by CCI, prior to approval by the CoC is ‘directory’ because there is no consequences provided for non-compliance of Section 31(4) proviso.
In the present case, RFRP provided that CCI’s approval has to be obtained prior to approval of Plan by the CoC, which RFRP was in accordance with Section 31(4). Although, the RP subsequently clarified that approval can be obtained even after the approval by the CoC, which was in accordance with the prevalent legal position as settled by this Tribunal in Arcelor Mittal and other cases - Section 31, sub-section (4) proviso has to be read to mean that though the approval by the CCI is ‘mandatory’, the approval by the CCI prior to approval of CoC is ‘directory’ - there are no error in the order of the Adjudicating Authority dated 28.04.2023 rejecting the I.A. No.1497/KB/2022 filed by the Independent Sugar Corporation Ltd.
There are no ground to interfere with the impugned order - appeal dismissed.
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2023 (9) TMI 819
Who is entitled to get the income tax refund after de-merger - Jurisdiction to direct the IT Department and RBL Bank Ltd. - It is submitted that, income tax refund which had been wrongly credited by the IT Department to CLCI-Respondent No.4 - rightful claimant of the tax refund - HELD THAT:- The issues concerning payment of interest on tax refund and extension of time to pay tax are matters which intrinsically relate to conduct of assessment proceedings. Such an exercise squarely falls within the competent jurisdiction of the income tax assessing authority and cannot be arrogated by the Adjudicating Authority - there are no error on the part of the Adjudicating Authority in refusing to look into the prayers on jurisdictional grounds.
Rightful claimant of the tax refund - HELD THAT:- The Adjudicating Authority has only spelt the need on its part to exercise abundant care and caution so as not to interpret the core assessment provisions of the Income Tax Act - the modicum of restraint exercised by the Adjudicating Authority in not getting into computational aspects of income tax assessment or applying the assessment related provisions of the Income Tax Act is appreciated and instead confining itself to the facts and circumstances on record to arrive at a conclusion as whether the Appellant or the Corporate Debtor was the rightful recipient of the tax refund. Hence, the contention of the Appellant that the Adjudicating Authority had raised the issue of lack of jurisdiction is devoid of merit and misconceived and therefore not acceptable.
CLCI had addressed a series of communications to the IT Dept through their authorized representative on 09.07.2019, 06.08.2019, 16.09.2019, 13.11.2019, 19.11.2019, 21.11.2019 wherein the Department was requested to give effect to the order of ITAT and issue income tax refund to them. These letters barring that of 09.07.2019 categorically state that the refund amount payable to CLCS belongs to CLCI. It is also noteworthy that in these communications sent by CLCI to the IT Dept, it was explained at length that CLCS was de-merged and all the assets and liabilities of CLCS as on the date of de-merger had been transferred to Apro - it is not wrong on the part of the Adjudicating Authority to have come to the conclusion that CLCS and CLCI collectively wanted the refund to go to CLCI-Corporate Debtor.
It was vehemently contended by the RP-Respondent No. 4 that only after CLCI went into CIRP and the CLCS came to realize that the refund money cannot therefore be utilized by the ex-management of the Corporate Debtor to their benefit that they wrote to the IT Dept for the first time on 22.02.2020 for crediting the refund to CLCS and not to the Corporate Debtor. There is force in this contention since the material available on record also substantiates that only after the CLCI-Corporate Debtor was admitted into CIRP on 03.01.2020, that CLCS started addressing communications to the IT Dept to issue refund to CLCS. Even the tax consultant had initially informed the RP that refund was due only to the CLCI but on 03.04.2020, the tax consultant changed its stand and informed the RP that the refund was due to CLCS - both the Appellant as well as the tax consultant have taken a somersault post CIRP of the Corporate debtor in claiming the tax refund for the Appellant without stating any credible grounds for the change in their stance.
The Adjudicating Authority did not commit any error in dismissing the application - there are no reason to interfere with the impugned order - appeal dismissed.
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2023 (9) TMI 726
Acceptance of claim - whether claim can be accepted without getting it condoned by the Adjudicating Authority/Tribunal, as mandated under Regulation 12 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Debtor) Regulations, 2016 - HELD THAT:- In the instant case on hand, the Corporate Debtor had already settled the dues of two Operational Creditors (i) SS Metal & Amsa Agencies and Services to their satisfaction and made a ‘draft’ already in favour of M/s. Mayura’s Industrial Services.
In the judgement dated 03.06.2022 of the Hon’ble Supreme Court in Vallal RCK V M/s. Siva Industries and Holdings [2022 (6) TMI 173 - SUPREME COURT], the Hon’ble Supreme Court has observed that ‘Tribunals’ should not interfere with the Commercial wisdom of the Committee of Creditors, agreeing to the settlement Plan submitted by the Corporate Debtor, once it got the approval of ‘Committee of Creditors’, with more than 90% voting in its favour.
This Tribunal bearing in mind of a primordial fact that the Operational Creditor had admitted that entire sum of Rs. 1,86,389/- was received by the Petitioner and added further the averments made in the Petition by the ‘Resolution Professional’ as withdrawal was approved by the CoC meeting that took place on 06.06.2022 (third meeting), the IA 676(CHE)/2022 filed by the Resolution Professional in the main IBA/374/2020 on the file of the Adjudicating Authority/NCLT, Division Bench II, (filed under section 12A of the Code) was rightly allowed by the Adjudicating Authority/NCLT, Division Bench II, Chennai.
Appeal dismissed.
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2023 (9) TMI 664
Recovery of arrears of electricity dues - waterfall mechanism - insistence on on payment of arrears, for grant of an electricity connection can be done or not - overriding effect of IBC - Section 53 of the Code - HELD THAT:- The electricity connection, applied for or revival sought by the successful resolution applicant is not an asset or property.
The observations from Embassy Property Developments Private Limited [2019 (12) TMI 188 - SUPREME COURT] would confer jurisdiction on the tribunal constituted under the Code insofar as the appellant – Southern Power Distribution Company of Andhra Pradesh Limited is insisting on payment of the dues of the corporate debtor for restoration/grant of the electricity connection. The dues of the corporate debtor have to be paid in the manner prescribed in the resolution plan, as approved by the adjudicating authority. The resolution plan is approved when it is in accord with the provision of the Code. Thus, the issue of corporate debtor dues falls within the fold of the phrase ‘arising out of or in relation to insolvency resolution’ under section 60(5)(c) of the Code.
There are no good ground and reason to interfere with the impugned judgment(s)/order(s) and hence, the present appeals are dismissed.
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2023 (9) TMI 663
Prayer for direction to the Resolution Professional for considering and settling the claim of the Appellant workers - Approved Resolution plan - HELD THAT:- It is the responsibility of the Claimant to bring all relevant record to substantiate the claim. The Resolution Professional having admitted the claim of Rs.96 lakhs and odd on the basis of balance sheet of the Corporate Debtor, no error can be said to have been committed by the Resolution Professional for accepting the claim of Rs. 96 lakhs and odd. The Adjudicating Authority also held that there are no documents filed to support the claim of the workmen.
Approved Resolution plan - HELD THAT:- The entire claim which was admitted of the workmen has been proposed to be paid i.e. Rs.96,83,497/- - there are no ground to interfere with the order of the Adjudicating Authority approving the Resolution Plan.
Appeal dismissed.
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