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IBC - Case Laws
Showing 341 to 360 of 779 Records
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2023 (7) TMI 1364
Seeking condonation of delay of 12 days in filing of this Appeal - sufficient reasons for delay or not - Applicant/Appellant has submitted that the Appellant was not a party to the Interlocutory Application and was not having any knowledge about the Order - HELD THAT:- Section 61(1) provides that any person who is aggrieved against the Order of the Adjudicating Authority can prefer an Appeal before the Appellate Authority - Section 61(2) lays down the period within which the Appeal under Section 61(1) is to be filed. The said period has been fixed as 30 days. However, Section 61(2) proviso further provides for extension of time beyond the period of 30 days upto 15 days but not beyond that. In case the Applicant, filing the Appeal, alongwith Application of Condonation of Delay, is able to satisfy the Appellate Authority that there exists a sufficient cause for not filing the Appeal within the prescribed time then it can be entertained.
It is pertinent to mention that the Hon'ble Supreme Court in the case of National Spot Exchange Limited Vs. Mr. Anil Kohli, Resolution Professional for Dunar Foods Limited [2021 (9) TMI 1156 - SUPREME COURT], dealing with this aspect of the matter that as to whether the Appellate Authority has the jurisdiction to condone the delay beyond the period of 15 days provided in the proviso to Section 61(2) of the Code held that there was a delay of 44 days in preferring the appeal which was beyond the period of 15 days which maximum could have been condoned and in view of specific statutory provision contained in Section 61(2) of the IB Code, it cannot be said that the NCLAT has committed any error in dismissing the appeal on the ground of limitation by observing that it has no jurisdiction and/or power to condone the delay exceeding 15 days.
No explanation has been given anywhere in the Application for not filing the Appeal within the time prescribed under the Statute. It is rather the case of the Appellant that the Appeal has been filed only 3 days before the expiry of the extended period of 15 days without giving any further explanation about the laxity on the part of the Appellant in not filing the Appeal - It is pertinent to mention that the Legislator has consciously provided a period of 30 days for the purpose of filing an Appeal and has provided only 15 days window to the Appellate Authority to entertain an Appeal by condoning the delay beyond the period of 30 days if it is satisfied about the existence of a sufficient cause assigned by the Appellant for not approaching the Appellate Authority within the time prescribed.
In the case of National Spot Exchange Limited, the Hon'ble Supreme Court has categorically held that the Appellate Authority does not have the jurisdiction to extend even a day beyond the extended period of 15 days. In such circumstances, the Appellant should have been vigilant enough to have filed its Appeal firstly within a period of 30 days which has been given to it by the Statute and if it could not have filed the Appeal within that period, then there should have been some justifiable reason much less sufficient cause for the purposes of satisfying the Appellate Authority for not filing the Appeal in time. The sufficient cause is just conspicuous by its absence in the Application in question and also during the course of hearing in the arguments of the Counsel for the Appellant.
The Appellant has been pursuing this Litigation very casually and has failed to make out a case for the purpose of condonation of delay - the Application is thus found to be devoid of any merits and the same is hereby dismissed.
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2023 (7) TMI 1363
Maintainability of application filed u/s 9 of the IBC, 2016 - Condonation of delay in filing appeal - sufficient cause for delay or not - HELD THAT:- Any person, who is aggrieved by an order of the Adjudicating Authority, has a right to appeal but for that purpose a period of 30 days has been prescribed. In case, the Appellant fails to file the appeal within the period of 30 days due to some reasons which is justifiable or constitute a sufficient cause, the appeal still can be filed within a period of 15 days but it cannot be extended any further beyond the period of 15 days in view of the Judgment of the Hon'ble Supreme Court in the case of National Spot Exchange Limited [2021 (9) TMI 1156 - SUPREME COURT].
The Appellant has given a lame excuse for not filing the appeal in time (30 days) on the ground that the person who had to file the appeal is 74 years of age but it is nowhere mentioned in the application much less the affidavit attached that he was infirm and incapable of engaging the counsel for the purpose of filing the appeal. It appears that there has been a totally causal approach of the Appellant in coming to this Court in appeal beyond the period of 30 days and without any sufficient cause.
There is hardly any merit in this application which requires consideration and interference, consequently, the application is found devoid of any merit and the same is hereby dismissed.
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2023 (7) TMI 1349
Imposition of moratorium - Existence of two Orders on record of allowing two separate Resolution Plans - HELD THAT:- Let Notice be issued to the Respondents. At this stage, Sh. VVN Raju accepts Notice on behalf of the Respondent No. 2 (Corporate Debtor). Sh. HS Hredai accepts Notice on behalf of Respondent No. 3 - Let Notice be also issued to Respondent No. 4, the Erstwhile Committee of Creditors. Necessary requisites etc., and the process fee shall also be filed for the date already fixed. Counsel for Respondent No. 4 be also served through email which shall be provided by Counsel for the RP to the Registry by Monday i.e., 17.07.2023.
List this matter on 31st July, 2023 and this matter should be shown in the list of Hearing After Notice.
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2023 (7) TMI 1338
Violation of principles of natural justice - Adjudicating Authority has not gone into all the aspect of the matter - maintainability of application - HELD THAT:- Since the findings recorded by the Adjudicating Authority are not satisfying, as it has not gone into all the aspect of the matter much less the auditor report produced by the Appellant in its right perspective, it is opined that these matters deserve to be reheard by the Adjudicating Authority and to record specific findings on specific issues having been raised by the Appellant and defended by the Respondent.
The matters are remanded back to the Tribunal to decide it again after taking into consideration each and every prayer made by the Appellant in these applications.
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2023 (7) TMI 1320
Avoidance of preferential transactions - Right of claim over the amount available - conclusion of corporate insolvency resolution process - RP can continue to act beyond the approval of the Resolution Plan or not - HELD THAT:- Issue notice returnable in four weeks.
Dasti service, in addition, is permitted.
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2023 (7) TMI 1243
Violation of principles of natural justice - evidence produced by the Corporate Debtor showing that claims by Operational Creditor were bogus on the basis of 12 fake invoices, were not considered suitably by the Adjudicating Authority - existence of operational debt over Rs. 1 Crore existed between the Corporate Debtor and the Respondent No. 1 or not - HELD THAT:- It is noted from the averments that there has been no pre-existing dispute between the parties and the Corporate Debtor did not raise any dispute before the demand notice was issued. Even during pleading before this Appellate Tribunal, no pre-existing dispute on any ground has been brought out by the Corporate Debtor.
It is the case of the Corporate Debtor that 12 invoices which have been claimed by the Respondent No. 1 are not genuine and have been fabricated by the Respondent No. 1 to get more money out of the Corporate Debtor. From this, only point emerges is regarding existence of 12 invoices and not regarding any other point including supply or quality of the material/ pre-existing disputes.
The Corporate Debtor has also taken the plea that the Respondent No. 1 has not furnished documents to prove his claims like weight scale receipt of Dharamkata. On this account the Respondent No. 1 has submitted that he was never required to submit the Dharamkata receipt as it was choice on part of the Corporate Debtor as buyer of the goods to get the products weighted at its end, if so required, and to communicate discrepancy, if any, the Respondent No. 1. The Respondent No. 1 further clarified that even for the invoices admitted by the Corporate Debtor, no Dharamkata receipts have been produced, by the Corporate Debtor as such the plea of the Corporate Debtor about non-submission of documents is prima-facie not convincing.
The Corporate Debtor has admitted that there was no formal written contract agreement for supply of material by the Respondent No. 1 and similarly no formal purchase order was issued by him. The Corporate Debtor also admitted that on the representative of the Corporate Debtor used to ask the Respondent No. 1 to supply goods on oral instructions and subsequently payment would be claimed by the Respondent No. 1 based on invoices issued by him to the Corporate Debtor. Hence, there cannot be any dispute regarding payment being made on the basis of invoices issued by the supplier of the material, here in case, by the Respondent No. 1 - On consideration of various invoices which have been relied upon by the Respondent No. 1 had been attached with the application filed before the Adjudicating Authority under Section 7 of the Code. On this account, it may also be pertinent to note that these invoices have stated to been reported in the GST returns and necessary ITC have also been claimed. It is the case of the Corporate Debtor that CGST Department had enquired into alleged fake purchases by the Corporate Debtor based on the alleged fake documents/ invoices issued by alleged non-existent Respondent No. 1.
The Corporate Debtor has admitted that he was undergoing financial stress and there have been delays in making payments as well as in default at relevant period. In fact, the Corporate Debtor indeed tried to settle the matter by making payments as already discussed earlier, however, the Corporate Debtor failed to settle the matter - there are not in position to accept the plea of the Corporate Debtor regarding alleged fraudulent invoices claimed by the Respondent No. 1 or over payment made by the Corporate Debtor to the Respondent No. 1.
There are no error in the challenged Impugned Order - The Appeal being devoid of any merit(s) is dismissed.
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2023 (7) TMI 1242
Maintainability of application u/s 7 of IBC - initiation of CIRP - legitimate loan transactions between the Appellant and the Corporate Debtor or not - disbursement to the Corporate Debtor against the consideration for the time value of money or not - HELD THAT:- It is pertinent to note that Section 7(1) clearly spells out that a Section 7 application can only be initiated only by a Financial Creditor either by itself or jointly. A perusal of the definition of expression ‘Financial Creditor’ would show that it refers to a person to whom a financial debt is owed and includes even a person to whom such debt has been legally assigned or transferred to. The trigger for initiation of the corporate insolvency resolution process by such a Financial Creditor under Section 7 of IBC is the occurrence of a default by the Corporate Debtor above a prescribed threshold limit. Default in the IBC framework means the incidence of non-payment of debt in whole or in part when the debt has become due and payable, in law and in fact. Debt means a liability or obligation in respect of a claim which is due from any person and claim means a right to payment even if it is disputed.
From a bare reading of Section 7 of IBC, it is amply clear that insolvency process under IBC can be triggered only by a Financial Creditor either singularly or jointly. The primary and fundamental basis for a creditor to be treated as a financial creditor for the purpose of Section 7 in Part II of the IBC requires that a financial debt is owed to that person in terms of Section 5(7) of IBC. Such a financial debt could cover any of the transactions outlined in Section 5(8) (a) to (i) of the IBC. That being so, the basic requirement of existence of financial debt being owed by the Corporate Debtor to the Financial Creditor has to be first satisfied and cannot be overlooked.
Whether the Appellant had made any disbursement to the Corporate Debtor against the consideration for the time value of money? - HELD THAT:- In the present facts of the case, it is an undisputed fact that the Corporate Debtor has neither admitted to owing a financial debt to the Appellant nor has the Appellant been able to successfully substantiate that he directly disbursed any sum of money against the consideration for time value of money to the Corporate Debtor - the Appellant has clearly failed to adduce evidence to prove the existence of financial debt qua the Corporate Debtor. In the absence of financial debt qua the Corporate Debtor, the Appellant cannot be said to be a financial creditor under Section 5(7) of IBC.
There are no hesitation in holding that the Appellant does not meet the specific and distinct connotations required to be treated as a Financial Creditor qua the Corporate Debtor. Since the Appellant is not a Financial Creditor of the Corporate Debtor and the transactions in question are not in the nature of financial debt owed by the Corporate Debtor, there is no error in the judgment of the Adjudicating Authority that no case has been made out against the Corporate Debtor for initiation of CIRP.
Thus, it is a settled proposition of law that a company is a legal personality entirely distinct from its directors. Once a company is incorporated, it becomes an ‘artificial person’ and must be treated separately from its members. In the present factual matrix, the Respondent No.1-THPL is a ‘corporate person’ in terms of Section 3(7) of IBC and therefore enjoys a legal entity separate from that of BKT and NT. From the juristic point of view, therefore, the rights, duties and liabilities of THPL are distinctive from those enjoyed, exercised or discharged by directors in their personal capacity. It is abundantly clear that the Appellant has not entered into any direct transactions with the Corporate Debtor at any stage - Given the fact that the Appellant has failed to establish that he had given any loan to the Corporate Debtor directly, it does not stand to reason for him to press for piercing the corporate veil to alleviate the burdens of his financial misadventure - the findings of the Adjudicating Authority are satisfying that the Section 7 application filed by the Appellant before it was not liable to be admitted.
The Adjudicating Authority did not commit any error in rejecting the Section 7 application filed by the Appellant. The impugned order does not warrant any interference - Appeal dismissed.
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2023 (7) TMI 1186
Maintainability of application for CIRP under IBC - pre-existing dispute - HELD THAT:- It is in this backdrop that the proceedings under the Insolvency and Bankruptcy Code 2016 for initiating the Corporate Insolvency Process have not been entertained. There is no error in the concurrent findings of fact.
Appeal dismissed.
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2023 (7) TMI 1185
Filing of petition with leave to appeal - parties in the proceedings or not - mis-disclosure of facts for seeking condonation of delay - HELD THAT:- It is not required to interfere with the oblique endeavour of the petitioner through the present proceeding as it is their say that their own appeal is pending before the NCLAT.
It will be for the NCLAT to take a call on its own merit in the appeal filed by the petitioner and respondent No.1 - M/s Indiabulls Housing Finance Ltd. would have equally all defences available including the plea of limitation. SLP is accordingly dismissed.
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2023 (7) TMI 1184
Condonation of delay in filing appeal - sufficient reason for delay present or not - ex-parte order - Principles of natural justice - HELD THAT:- Section 61(1) provides a statutory right to any person who is aggrieved by an order of the Adjudicating Authority to prefer an appeal to the appellate authority. Section 61(2) prescribes a period of 30 days within which the appeal under Section 61(1) is to be filed before the Appellate Authority, however, Section 61(2) proviso further provides for a period of 15 days for the purpose of extension of time in case the Applicant is able to satisfy the Appellate Authority that there was a sufficient cause for not approaching the Appellate Authority in time with the appeal but in no case the period of 15 days can further be extended.
Whether there is a sufficient cause assigned by the Appellant for the purpose of condoning the delay? - HELD THAT:- Although the limitation to challenge the impugned order started w.e.f. 03.03.2022 but even if it is presumed that the Appellant was pursuing its other remedy to challenge the order of exparte itself and had remained unsuccessful till the Hon’ble Supreme Court when its Civil Appeal was also dismissed on 06.04.2023 and the period of limitation is to be counted from 06.04.2023, the period of 30 days for the purpose of filing of this appeal had expired on 06.05.2023. If 15 days more are added which are prescribed under Section 61(2) proviso then the period of 45 days would have expired on 21.05.2023 whereas the present appeal has been filed on 22.05.2023, even after the expiry of period of 15 days as well which cannot be condoned in any manner.
Looking from any another angle, even if it is taken then that the appeal has been filed on 15th day of the extended period of 15 days even then there is no sufficient cause assigned by the Appellant as to why it had taken exactly 45 days in filing the appeal against the order dated 03.03.2022. The reasons are conspicuous by its absence especially when the Appellant is a Bank who had huge machinery at its disposal for the purpose of preparing the appeal and filing the same within the statutory period of 30 days.
There are no reason to interfere in this application because of the absence of sufficient cause for condonation of delay to the satisfaction - application dismissed.
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2023 (7) TMI 1183
Condonation of delay in filing appeal - if the Appellant got the information on 26.03.2023 then she had the opportunity to file the appeal within the statutory period of 30 days up to 26.04.2023 but no appeal was filed nor even certified copy was applied? - HELD THAT:- Be that as it may, the Appellant then took further period of 15 days i.e. the appeal has been filed on the last day of the extended period of 15 days without giving any cogent reason for not preferring the appeal within the statutory period or even before that. The only reason given is that after she came to know the impugned order dated 22.03.2023 on 26.03.2023, she collected relevant documents and filed the appeal. The reason assigned in this application is not at all sufficient for the purpose of condonation of delay and it appears to us that the Appellant is not taking the period, within which the appeal is to be filed, seriously rather it appears that there is a perception that the condonation of delay is a matter of right.
There is hardly any ground mentioned by the Appellant in the application and argued during the course of hearing for the purpose of causing the delay in filing of the appeal which may be a sufficient cause, therefore, there is no merit in the present application and hence, the same is hereby dismissed.
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2023 (7) TMI 1127
Misconduct by Resolution Professional - Liquidator is not able to furnish the details called by the NCLT - Resolution Professional not allowed to manage the affairs of the company due to non cooperation and interruption by the erstwhile Manager - HELD THAT:- This communication goes to show that the petitioner herein has already approached the CBI with the complaint followed by the representation that was forwarded to CVC Union Bank and CVC Union Bank after recording the matter that it has already been seized of by the NCLT and Resolution Professional been appointed, warned to approach the appropriate authority. As this Court has already pointed out as one round of complaint had been initiated against the Resolution Professional came to an end by an order passed by IBBI on 29.10.2021 followed by the order in the review application dated 21.11.2021. Now certain new facts from the communication of the Liquidator has come to light and in the normal course, query raised by the Liquidator could have been explained by the Resolution Professional, but he had failed to do so for more than a year.
The query raised by the Liquidator regarding non reconciliation of account and stocks, bank cash balance to the tune of 840 Crores need to be proved and explained and therefore, the CBI is directed to conduct preliminary enquiry on the complaint dated 13.08.2021 and the representation been given by the petitioner on 19.01.2021. If need the communication of the Liquidator dated 01.03.2022 shall also be taken for consideration for taking preliminary enquiry and if any cognizable offence is made out, then the CBI can register the complaint and proceed in accordance with law in the course of conducting preliminary enquiry. If the investigating officer need any access to any account in the premises of SLO Industries, party concern shall provide it without any demur or protest.
Petition disposed off.
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2023 (7) TMI 1027
Prayer for interim temporary injunction - Lease agreement - Corporate Debtor disturbing peaceful possession of the appellant in respect of subject land, or not - Lease agreements only notarised not registered.
In sum and substance it has been argued that once the appellant had entered into lease rent agreement with Corporate Debtor/landlord and agreed to pay monthly rental as Rs.55000/- the appellant continued as tenant of the Corporate Debtor and such tenancy was not required to be interfered with by the Adjudicating Authority.
HELD THAT:- Considering the fact that in another appeal which was filed by the Appellant i.e. Company Appeal (AT)(Ins) No.861/2022 which is already taken note of two rent agreements dated 27.07.2014 and 26.07.2019 which we have considered prima facie as fraudulent documents and noticing the same, it is directed for enquiry by the Delhi Police Commissioner which judgement has been delivered only today i.e. 24th July, 2023, there is no need to go further in detail and this appeal in terms of judgement passed in Company Appeal (AT)(Ins) No.839/2022 and 861/2022 stands dismissed.
In this appeal also the appellant has placed on record two lease rent agreements vide Annexure A-2 and A-3 - Let a copy of this order be also communicated to the Delhi Police Commissioner for its needful with a direction to the learned Registrar of this Tribunal to render full assistance and providing necessary documents as and when approached by the Delhi Police doing enquiry or investigation.
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2023 (7) TMI 1026
Initiation of CIRP - Recovery of Interest - invoice not signed by the Appellant - unilateral document or not - interest claimed by the Respondent on the basis of the invoices in which it is mentioned that if the amount is not paid within the due date then 21% interest shall be charged - HELD THAT:- The impugned order is patently illegal and deserves to be set aside.
The question which has been raised by the Appellant, is hereby answered in favour of the Appellant in view of the decision taken by this Court in case of S.S. POLYMERS VERSUS KANODIA TECHNOPLAST LIMITED [2019 (11) TMI 1428 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], as well as the decision of the ‘Hon’ble Karnataka High Court’ in the case of JYOTI LTD. VERSUS BOVING FOURESS LTD. [2000 (12) TMI 817 - HIGH COURT OF KARNATAKA], where it was held that The application was pursued for realisation of the interest amount, which, according to us is against the principle of the I&B Code, as it should be treated to be an application pursued by the Applicant with malicious intent (to realise only Interest) for any purpose other than for the Resolution of Insolvency, or Liquidation of the ‘Corporate Debtor’ and which is barred in view of Section 65 of the I&B Code.
Before parting, it is constrained to observe that the Adjudicating Authority has erred in not looking into the facts that the principal amount has entirely been paid and the issue was only regarding to interest for which the application under Section 9 of the Code was not maintainable as the spirit of the legislation of the Code is for ‘resolution of debt’ and not for ‘recovery’.
The impugned order set aside - appeal allowed.
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2023 (7) TMI 962
Seeking issuance of writ of prohibition, preventing the respondent from approaching the concerned NCLT under the provisions of the IBC - Seeking quashing of demand notice, invoking the personal guarantees of the petitioner for the purported total outstanding debt.
HELD THAT:- A writ of prohibition can be issued, when a petitioner has made out a case for want of jurisdiction. However, in cases where jurisdictional challenges can be agitated before an alternate forum, circumspection must be observed before a writ of prohibition can be granted.
Indeed, the authorities do not treat the existence of an alternate remedy as a bar to grant the writ of prohibition. In the landmark case of WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI & ORS. [1998 (10) TMI 510 - SUPREME COURT] as well, the Hon’ble Supreme Court declared that in cases where proceedings are wholly without jurisdiction, an alternate remedy does not bar relief.
Despite the existence of an alternate remedy not being a bar to grant the writ of prohibition, it is a valid consideration that needs to be given its due weightage while entertaining a petition praying for a writ of prohibition.
Undeniably, the principle of Nooh [1957 (9) TMI 42 - SUPREME COURT], has application in the instant case, not merely because the petitioner prays for the impugned demand notice to be quashed, but also because the writs of certiorari and prohibition are complementary in nature, having a common ground of ‘lack of jurisdiction’.
Thus, the existence of an alternate remedy does not act as a bar to entertain a petition praying for a writ of prohibition. In cases where an alternate remedy is available to the petitioner, there is a higher threshold that needs to be met, it being of a total and absolute lack of jurisdiction, in order for a writ court to grant relief. The existence of a statutorily prescribed alternate remedy, where a specialized forum is competent to decide upon its own jurisdiction, the burden upon a petitioner is further compounded. In such a scenario, the petitioner needs to convince the court, not merely that the proceedings or actions being taken are wholly without jurisdiction but also why the alternate forum must be deprived of an opportunity to decide upon its own jurisdiction.
The petitioner contends that the respondent must be prevented from approaching the concerned NCLT under Section 95 of the IBC, and the impugned demand notice must be quashed as there is no ‘debt’ the petitioner owes to the respondent.
Firstly, that the assignment, by splitting the debt, adversely affects the rights of the surety. An assignment of this kind, when analysed through this lens, may possibly undermine a variety of different benefits that a surety is entitled to under the Indian Contract Act, 1872 (ICA). For instance, in the present case, the right of subrogation, may be seen to have become illusory. If at all in the present case, the assignor is allowed to enforce the guarantee, and the guarantor subsequently pays the entire debt, the guarantor could not, then, meaningfully make a claim for subrogation, as the principal debtor still owes the debt to the assignee - Importantly, however, it may be seen that a guarantor may waive these beneficial rights that he is so entitled to under the ICA. The general principle of the law allowing beneficial provisions to be waived off by the consent of the beneficiary is equally applicable in the context of the surety’s rights under the ICA. The surety may waive his rights either through express and specific terms in the contract of guarantee itself, or through a subsequent agreement between the guarantor and the creditor to that effect - thus, the concerned NCLT must carefully scrutinize the deed of guarantee, if at all required.
There are broadly three submissions of the respondent that are relevant to the issue, firstly, while relying upon the decision of Lalit Kumar Jain [2021 (5) TMI 743 - SUPREME COURT], that the discharge or release of the principal debtor does not absolve the surety/guarantor of his liability; secondly, that the respondent is only seeking to recover the part of the debt that was left unrecovered after the CIRP of FACOR was concluded; and thirdly, that since the personal guarantees were specifically excluded from the Resolution Plan and the said Assignment Agreement, the terms of the Resolution Plan cannot be altered.
It is clear that the specific issue considered by the Hon’ble Supreme Court in the case of Lalit Kumar Jain was— whether the approval of a resolution, which leads to a discharge or release of a corporate debtor can, in and itself, lead to a discharge of the personal guarantor - In the instant case, the petitioner’s claim is not based on the mere passing of the Resolution Plan of FACOR, but rather is concerned with the effect that the terms of the Resolution Plan have in law. It is their case, that the Resolution Plan is valid in law, its terms need to be adhered to, however, the effect of the terms of the Resolution Plan is that the respondent cannot enforce the guarantee given to it by the petitioner - This court is, therefore, of the opinion that the pronouncement of Lalit Kumar Jain shall have no application in the facts of the present case.
The second submission of the respondent—that the respondent is only seeking to recover the part of the debt that was left unrecovered after the CIRP of FACOR was concluded—now deserves attention - Indeed, it is the case that the respondent intends to recover what was left unrecovered after the CIRP of FACOR concluded, however, after the underlying debt was assigned. The assignee is entitled to recover the unrecovered amount as well.
The third argument, and the most vehemently argued submission of the respondent must now be considered by this court. It is their contention that since the personal guarantees were specifically excluded from the Resolution Plan and the said Assignment Agreement, the respondent can proceed to enforce the guarantee given by the petitioner to the creditor. The terms of the Resolution Plan cannot be altered after they have attained finality.
This court is of the opinion, that in the present case, no right of the petitioner under Article 14 of the Constitution of India has been violated. It is, therefore not warranted to delve into, what the true import of specific clauses of contracts is - it can be concluded that a reservation of rights clause is incompatible with an absolute release of a principal debtor.
Whether the petitioner has established that the impugned demand notice was wholly without jurisdiction and the respondent must therefore be prevented from approaching the concerned NCLT under the provisions of the IBC? - HELD THAT:- In a petition praying for a writ of prohibition, where a petitioner is to demonstrate the absence of jurisdiction, this court does not consider it fit, to develop, if at all this is a case for that to take place, an area of private contractual law, and then to use that development in order to establish a want of jurisdiction on the part of the respondent - It is not the case that the reliefs prayed for cannot be granted by the concerned NCLT. The petitioner’s claim of the guarantor getting a right to be heard at a belated stage, is not sufficient to entertain the present petition. The legislature, in its wisdom, thought it fit to give the right of hearing at belated stage. Indeed, if in the present case the petition is entertained, it would subvert the procedure laid down under the IBC. The respondent in turn would be denied the opportunity to present their case before the concerned NCLT.
This court is, therefore, of the opinion that the present writ petition deserves to be dismissed - Petition dismissed.
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2023 (7) TMI 961
CIRP - Recovery of dues from the Guarantor, while moratorium was decelerated against the corporate debtor - Legal Steps taken by the Respondent Bank under the provision of the SARFAESI Act - Plaintiff is an MSME within the meaning of the MSMED Act of 2006 or not - applicability of notification S.O. 1432(E) dated 29.5.2015 - no opportunity of restructuring of the Principal Borrower Company and to its directors/ guarantors, provided by the Respondent No. 1 Bank.
Petitioner submitted that the Borrower being an MSME should be taken care of by the Government and Special Mention Accounts and rectification, restructuring and if both the options do not work, then recovery option as last option should be used.
HELD THAT:- Supreme Court in the matter of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [2018 (2) TMI 25 - SUPREME COURT] held that if statutory remedies under the DRT Act and the SARFAESI Act is available, High Court should not exercise its jurisdiction under Article 226 for passing orders.
In the case of PHOENIX ARC PRIVATE LIMITED VERSUS VISHWA BHARATI VIDYA MANDIR & ORS. [2022 (1) TMI 503 - SUPREME COURT] it was held that High Court should not entertain Petition when a remedy under SARFAESI Act is available.
Petitioner has already availed the benefits of Section 17, by preferring an exhaustive application by way of Securitisation Application No. 92 of 2022 before the D.R.T. On 8 May 2023, liberty was granted to the parties to file Written submissions, and matter was closed for orders.
By Order dated 11.09.2019, the NCLT has declared a moratorium against the action being taken against the Borrower, including the SARFAESI proceedings. However, the Secured Asset is owned by the Petitioner/Guarantor. Therefore, as such, the Respondent No. 3 /Bank can proceed against the Mortgaged Property of Personal Guarantor as per S. 13(11) of the SARFAESI - The issue is already covered by the judgment of the Supreme Court in STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [2018 (8) TMI 837 - SUPREME COURT] which holds that S. 14 and S.31 of the IBC does not bar initiation and continuation of the SARFAESI proceedings against the Guarantor. As such, the bank has not violated the moratorium as ordered by the NCLT, in initiating SARFAESI Proceedings against Petitioner / Guarantor.
The present proceedings cannot be entertained - This, more particularly, for the reason that the adjudication on such prayer and that too at the behest of the petitioner, is wholly academic - Petition dismissed.
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2023 (7) TMI 960
Seeking Condonation of Delay of 13 days in filing the present Appeal - Sufficient reasons for delay present or not - time limitation for the purpose of filing an appeal - HELD THAT:- In the present case, the Impugned Order was passed on 12.05.2023. The period of 30 days had expired on 11.06.2023 whereas the Appeal alongwith the Application for Condonation of Delay was filed on 26.06.2023. The reason given by the Appellant is that the Appellant was Ex- Parte before the Learned Tribunal in IA/846(CHE)/2020 in which the Impugned Order has been passed about which it came to know only on 27.05.2023. But no evidence is brought on record even prima facie to prove that the Appellant acquired the knowledge only on 27.05.2023.
It is to be borne in mind that the legislature has provided only a period of 30 days for the purpose of filing of an Appeal in order to ensure expeditious disposal of the Litigation arising out of the Code and has further provided a window of only 15 days to the Appellate Tribunal to consider an Application for Condonation of Delay that too on being satisfied that there was a sufficient cause with the Appellant/Applicant for not approaching the Court by way of an Appeal in time (within the period of 30 days as prescribed).
There are no substance in the present Application as it does not inspire confidence for the purpose of constituting a sufficient cause to satisfaction. Hence, the Application is hereby dismissed.
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2023 (7) TMI 959
Rejection of Section 7 Application - rejection on the ground that ledger and the bank statement do not tally - discrepancies between the Bank Statement and the Ledger Account, exists or not - existence of debt and default or not - HELD THAT:- Section 7 Application was filed by the Financial Creditor with the case that loan was given to the Corporate Debtor for an amount of Rs. 9.41 crores out of which Rs. 5.12 Crores was paid in the year 2013-14 and the amount of Rs. 4.29 was pending. In the Part-IV of the Section 7 Application, the said amount was claimed on the basis of which the CIRP was sought to be initiated.
The observation of the Adjudicating Authority that amount of Rs. 4.10 lac was received from Harvansh and not from the Corporate Debtor is not a correct observation. The Bank Statement has been placed on record by the Corporate Debtor which indicate that on 24th August, 2015 by transfer Rs. 4.10 Lac was received by the Financial Creditor and on the same day the said amount of Rs. 4.10 Lac was transferred to one Mr. Harvansh. The two entries are separate entries in the Bank Statement and tallies with the Ledger Account which indicate that Rs. 4.10 Lac was credited in the Account of the Financial Creditor. Thus the basis of the order of the Adjudicating Authority rejecting Section 7 Application is unfounded.
Debt and Default being admitted, the Adjudicating Authority ought to have admitted Section 7 Application in view of the law laid down in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT].
The order passed by the Adjudicating Authority is not sustainable in law and is hereby set aside - appeal allowed.
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2023 (7) TMI 958
CIRP - Fraudulent Transactions or transaction in the normal course of business with the Corporate Debtor - appellant submits that they have availed financial assistance to overcome their financial distress and therefore transactions should have been treated as normal commercial transaction - existence of malafide intention or wilful misconduct or not - Section 66 of the I & B Code, 2016 - HELD THAT:- As per Section 66, the ‘Adjudicating Authority’ can pass suitable orders, if it is found that any person has carried on the business of the ‘Corporate Debtor’ with intent to defraud its creditors and such persons can be directed to make contributions to the assets of the ‘Corporate Debtor’. It can also be inferred that the ‘fraud’ can, interalia, consist of such debts which debtor has no intention of paying or does not expect to be able to pay or such fraud may also happen by way of false representation and without intention to pay back. The expression any person includes a knowing party to the carrying out fraudulent transactions.
Section 66 of the I & B Code, 2016, therefore, clearly provides that if it is found that any business of the ‘Corporate Debtor’ has been carried on with an intent to defraud the creditors of the ‘Corporate Debtor’ or for any fraudulent purpose, the ‘Adjudicating Authority’ may on the application of the Resolution Professional pass an order to make liable to such contribution to the assets of the ‘Corporate Debtor’ as may deemed fit.
This ‘Appellate Tribunal’ notes that the business of the ‘Corporate Debtor’ was related to trading in Bullion i.e. import/ export/ dealing in local markets by way of sale/purchase of gold and the ‘Corporate Debtor’ was not at all connected with business of financial services or lending money - this ‘Appellate Tribunal’ finds it quite unusual on the part of the ‘Corporate Debtor’ to lend such huge amount of Rs. 41.03 crores and similarly unusual on point of the ‘Appellant’ to have benefitted of this largesse without any explainable rhyme or reason.
From the averments made during the hearing as well as records available, it transpires that the ‘Appellant’ made two different and contradictory submissions regarding nature of its relationship with the ‘Corporate Debtor’ and nature of the transaction based on which the ‘Appellant’ received such huge amount of Rs. 41.03. crores from the ‘Corporate Debtor’. It is noted that initially the ‘Appellant’ explained this transaction as ‘Long Term Borrowing (Loan)’ and ‘not credit from trading activities’ before the ‘Adjudicating Authority’ in Para 6(b) of the ‘Reply’ filed by the ‘Appellant’. The ‘Appellant’ has now taken the stand in rejoinder before this ‘Appellate Tribunal’ that money pertains to ‘regular business transactions’ which is evident from Para 5 of the ‘Rejoinder’ - Such contradictory statements also do not auger well and raises doubts in the mind of the ‘Appellate Tribunal’ regarding the real nature of the transaction along with true relationship between the ‘Appellant’ and the ‘Corporate Debtor’.
It cannot be the case of the Appellant’s that the ‘Appellant’ is not a party to the subject fraudulent and wrongful trading, despite being the sole beneficiary of the same and beyond any acceptable logical conclusion.
It is seen that the intent to defraud the creditors”, under Section 66(1) of the I & B Code, 2016 is further established by the fact that the ‘Respondent Nos. 2 & 3’ had provided different books of accounts in different proceedings before the ‘Adjudicating Authority’ with a clear intent to fraudulently deprive the creditors of the ‘Corporate Debtor’ from the admitted amounts - This ‘Appellate Tribunal’ observed that the ‘Appellant’ is a principal beneficiary of fraudulent and wrongful trading and therefore the ‘Adjudicating Authority’ has rightly held this transaction as fraudulent under Section 66 of the I & B Code, 2016.
Thus, this ‘Appellate Tribunal’ comes to definitive conclusion that there is no error in the ‘impugned order’ dated 29.01.2021 - appeal dismissed.
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2023 (7) TMI 922
Initiation of CIRP - appellant ready and willing to pay the debt - Operational Creditors - HELD THAT:- It is pointed out that the flat buyers have filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, which proceedings are pending before the National Company Law Tribunal (NCLT), Chandigarh Bench, Chandigarh.
Appeal dismissed - it is left open to the appellant – Tejinder Pal Setia to move an appropriate application before the NCLT, expressing his desire to liquidate and pay off the debt due to operational creditor/respondent no. 1 - M/s. Kone Elevator India Pvt. Ltd., which stands assigned to the respondent no. 3 - Sanjeev Chadha.
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