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IBC - Case Laws
Showing 421 to 440 of 779 Records
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2023 (6) TMI 374
Exclusion of claim of the fourth Respondent IARC from the list of the Financial Creditors of the Corporate Debtor and consequentially directing her to declare the fresh list of the Financial Creditor with their revised percent of voting rights in the CoC - Non-speaking order - violation of principles of natural justice - HELD THAT:- This Tribunal is of the considered view that in the interest of Justice, an opportunity may be accorded to the Appellant, herein to be heard on merits, before the Adjudicating Authority and therefore, it is a fit case to remand the matter to the Adjudicating Authority and the Adjudicating Authority shall decide the Application within a period of four weeks from the date of this Order. It is made clear that this Tribunal has not commented on the merits of the matter and the Adjudicating Authority shall proceed in accordance with Law, uninfluenced by any observations in this Order.
The matter is remanded back to the Adjudicating Authority for fresh adjudication on merits - Appeal allowed.
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2023 (6) TMI 330
Seeking appointment of an Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - respondent has approached the NCLT under the provisions of the IB Code - time limitation - whether the provisions of the IB Code interdict the appointment of an arbitrator by invoking Section 11(6) of the A & C Act? - HELD THAT:- At the outset, it is necessary to note that there is no provision in the A & C Act, giving the provisions of the Act an overriding effect as is contemplated by Section 238 of the I B Code. However, it is equally trite that the A & C Act, is a special Statute, governing the field of Arbitration, and all other Statutes governing the filed earlier thereto, stood repealed in view of Section 85 of the A & C Act.
Whether there is anything inconsistent in the A & C Act, to what has been provided for in Section 7 to 9 of the IB Code, so that it can be said that Section 7 to 9 of the I B Code would prevail? - HELD THAT:- The admission of an application after recording its satisfaction as contemplated by Section 7(5) of the IB Code would be the starting point where the bar under Section 238 of the IB Code can be said to be capable of being invoked and the mere filing of an application under Section 7(1) of the IB Code cannot be said to be enough to invoke the bar - What is also material to note is that Section 7(5)(b) of the IB Code permits the Adjudicating Authority to reject the application where it is of the opinion that default has not occurred, thereby indicating that the mere filing of an application under Section 7(1) of the I B Code, would not act as a bar to any proceedings under other statutes, until and unless the satisfaction as contemplated by Section 7(4) r/w Section 7(5)(a) of the IB Code is recorded by the Adjudicating Authority and the application is admitted.
It would also be material to note that there does not appear to be anything inconsistent between the provisions of the A & C Act and the IB Code, inasmuch as the provisions of Section 238 of the IB Code would come into play only upon an order having been passed by the Adjudicating Authority under Section 7(5) of the IB Code and therefore an application under Section 11(6) of the A & C Act, till such time cannot be said to be not maintainable - In case the Adjudicating Authority comes to a conclusion that there was a default then the position would squarely be governed by Section 238 of the IB Code, however, till such time it is so done, the entertaining of an application under Section 11 (6) of the A & C Act, would not stand prevented.
Time Limitation - HELD THAT:- The arbitration clause was invoked only in the reply dated 15/09/2020 by the applicant, in pursuance to which, the present application has been filed on 23/10/2020, considering which, it cannot be said that the application is beyond time. A plea that the dispute/claim itself would be beyond time, is one which will have to be considered by the Arbitrator.
In view of what has been held in Indus Biotech (supra) that, the triggering of a petition under Section 7 of the IB Code to consider the same as a proceeding in rem, it is necessary that the Adjudicating Authority ought to have applied its mind, recorded a finding of default and admitted the petition, GUJARAT URJA VIKAS NIGAM LIMITED VERSUS MR. AMIT GUPTA AND ORS. [2021 (3) TMI 340 - SUPREME COURT] are of no assistance, for a contrary argument, to be acceptable.
The application is, therefore, allowed and Mr. Justice Z. A. Haq, Former Judge of this Court, is hereby appointed as an Arbitrator, to adjudicate the disputes between the parties hereto. The parties shall appear before him on 12/06/2023 at 11:00 a.m. The processing charges shall be paid as a condition precedent.
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2023 (6) TMI 329
Initiation of CIRP - Proof of debts - raising an Invoice, is a precondition, in all cases, for admission of a Section 9 Petition under the I & B Code, 2016 or not - strict proof of debt and default present or not - According to the Appellant / Petitioner / Operational Creditor, the Respondent / Corporate Debtor, is required to pay an advance Sum of Rs,2,28,62,374.63, but the Respondent / Corporate Debtor, is denying / disputing its Liability, to pay an Advance Sum.
HELD THAT:- The Proceedings under the I & B Code, 2016, are summary in character and a trial is not conducted, like that of Civil matter, before the Competent Civil Court.
It cannot be forgotten that an Application under Section 9 of the Code, requires a strict proof of Debt and Default. An existence of a Pre-existing Dispute, is a bar to the initiation of the Corporate Insolvency Resolution Process, at the instance of an Operational Creditor. If there is a Pre-existing Dispute, between the Parties, the main CP (IB) No.49 / BB /2021, under Section 9 of the Code, against the Respondent / Corporate Debtor (filed by the Appellant / Petitioner / Operational Creditor), per se is not maintainable.
On a careful consideration of the contentions advanced on either side and when the Appellant / Petitioner / Operational Creditor, in the instant case, has not proved, to the satisfaction of this Tribunal, as to the Aspect of Debt and Default, committed by the Respondent / Corporate Debtor (ofcourse, based on the facts and circumstances of the instant case, which float on the surface), the conclusion, arrived at by the Adjudicating Authority (NCLT, Bengaluru Bench), in dismissing CP (IB) No. 49 / BB / 2021 (preferred by the Appellant / Petitioner / Operational Creditor), is free from any legal infirmities. Consequently, the instant Appeal fails.
Appeal dismissed.
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2023 (6) TMI 315
Seeking Liquidation of the Corporate Debtor Company - HELD THAT:- M/s. Cantors Fitzgerald is ready and willing to fund any settlement even during the Liquidation Process. In the event, any such settlement is able to be executed, with funds infused, keeping in view the spirit and intent of the Code, the Adjudicating Authority shall proceed in accordance with law giving 14 days time peremptorily, of course from the date of this Order failing which, this Tribunal does not find any tangible ground(s) to interfere with the Order of Liquidation as more than sufficient time was granted by the Adjudicating Authority/Tribunal to the Appellant herein to settle the matter.
Appeal disposed off.
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2023 (6) TMI 252
Insufficient stamped agreement - reference of matter to arbitration - non-joinder of the Special Purpose Vehicle (SPV), namely Orissa Steel Expressway Private Limited, which a party to the Option Agreement containing the arbitration clause - Corporate Insolvency Resolution Process (CIRP) commenced on March 30, 2017, that is, after the Option Right accrued in favour of the petitioner on January 13, 2017 - exercise of option - HELD THAT:- From the definitions as provided in the Option Agreement itself, there cannot be any doubt that the agreement, under Clause 10(a), was to be effective from the date of execution and was to remain in full force and effect until the earlier of three contingencies. It is undisputed that out of the three contingencies, the first, being expiration of the Option Period, was the earliest, since there was no settlement date or mutual termination - the Option Period, as per Clause 1.1.26, means the period starting from the Option Start Date and ending immediately after the completion of the Concession Period.
The notice dated July 29, 2011, on which the petitioner seeks to rely, was long before the Option Period. As such, the same cannot count, by any stretch imagination, as the exercise of Option under the Option Agreement.
In the present case, the petitioner having admittedly not done so, the question of applicability of Clause 10(b) does not arise at all. Hence, the argument of the petitioner, that upon service of the notice on July 29, 2011 the obligations under the Agreement crystallised and were to continue in force until fulfilment even though such obligations may fall beyond the Option Period, falls flat. In the absence of any notice being served within the time as contemplated in the agreement, there did not arise any question at any point of time for the obligations under the agreement to continue. Hence, the petitioner’s argument of its rights having crystallised with the notice dated July 29, 2011 is not tenable in the eye of law and in the context of the agreement. Such unilateral notice of the petitioner did not even constitute any agreement between the parties to give rise to obligations on the part of the respondent.
Following the principles in Vidya Drolia [2020 (12) TMI 1227 - SUPREME COURT], the dispute sought to be raised by the petitioner is not maintainable and, hence, non-arbitrable. Even by limiting the interference of Court under Section 11 to a prima facie review of the dispute, the dispute sought to be referred is patently ‘deadwood’ and non-arbitrable. Thus, a reference to arbitration of such a dispute, which is ex facie not maintainable, would merely be a futile exercise.
Insofar as the non-impleadment of the SPV, Orissa Steel Expressway Private Limited is concerned, the same could be termed as a curable defect. Although the SPV was a signatory to the Option Agreement and a proper party to the present application, the question of curing such defect became infructuous ab initio in view of the application under Section 11 not being maintainable.
The present application under Section 11 of the Arbitration and Conciliation Act, 1996 is not maintainable in law and in terms of the Option Agreement itself, as amended - Application dismissed.
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2023 (6) TMI 251
Initiation of CIRP - Period of limitation - Operational Creditors - date of default in payment of the dues for supply of Isobutanol by the operational creditor to the corporate debtor - period specified under section 10-A of the IBC or not - pre-existing dispute regarding the poor quality of the material supplied to the corporate debtor - dishonouring of the LC discounting by the South Indian Bank - negligence of the corporate debtor.
Whether the date of default in payment of the dues for supply of Isobutanol by the operational creditor to the corporate debtor is in the period specified under section 10-A of the IBC? - HELD THAT:- The HSS Agreement, which was signed on 15.1.2020 after the creation of LC on 13.1.2020, says that the date of payment would be as given in the invoice. Further, the invoice (attached at pg. 102 of appeal paperbook, Vol.I) clearly states that the credit days are ‘060-LC collectable in 60 days’. It is thus clear that the HSS Agreement, which is the last final contract signed between the parties, clearly specifies that the payment against invoice is to be made by ‘LC which is collectable within 60 days’.
Hon’ble Supreme Court in the matter of M/S BAWA PAULINS PVT. LTD. VERSUS UPS FREIGHT SERVICES (INDIA) PVT. LTD. AND ANOTHER [2022 (11) TMI 1361 - SUPREME COURT], which is cited in support by the Learned Senior counsel for Appellant, held that a letter of credit is independent of and unqualified by the contract of sale or underlying transactions. The autonomy of an irrevocable LOC is entitled to protection and as a rule, courts refrain from interfering with that autonomy. If courts interfere in such transactions, it would be prone to misuse by the applicant party to gain undue advantage leaving the issuing bank at peril in the international financial market.”
The above judgment places autonomy on an irrevocable LC which is held to be entitled to protection. In the present case, we note that after the opening of LC, a HSS Agreement was entered into between the two parties, which when seen in conjunction with the sales invoice, notes that the payment is to be made through a LC within 60 days from the date of issue of invoice, which is 6.1.2020. This judgment therefore, is distinguishable on the facts of the present case, wherein an explicit HSS Agreement has been signed between the parties since the sale of Isobutanol was on high seas.
It is thus clear that the date of default is 60 days from 6.1.2020, which is the date of invoice. Counting 60 days from 6.1.2020, we find that the payment was due to be made by 5.3.2020. Thus, it is clear that the date of default is not covered in the period as stipulated in section 10-A of the IBC, and therefore, section 9 application does not suffer from bar as specified in section 10-A regarding its admission and initiation of CIRP.
Whether there was a ‘pre-existing dispute’ regarding the poor quality of the material supplied to the corporate debtor as defined in law? - HELD THAT:- While it is claimed by the Appellant that section 21 notice under the Arbitration and Conciliation Act, 1996 for invoking the arbitration clause under the HSS Agreement was sent through Blue Dart courier, the contents letter dated 10.6.2021 as mentioned above, very clearly show that such a document did not travel in the Blue Dart Express Ltd. network and therefore, no such notice was ever served on the operational creditor.
The law propounded by the Hon’ble Supreme Court in the matter of Mobilox Innovations Private Ltd. vs. Kirusa Software Private Ltd. [2017 (9) TMI 1270 - SUPREME COURT], that the pre-existing dispute has to be ‘real’ and ‘genuine’ one, and not an ‘illusory’ or ‘hypothetical’ dispute, is followed - In the present case, the dispute was neither raised before the issue of section 8 demand notice and also the notice under section 21 of the Arbitration and Conciliation Act, 1996 was not proven to be served on the operational creditor. In such a situation, the corporate debtor cannot claim ‘pre-existence of dispute’ in the adjudication of the section 9 application.
Whether the dishonouring of the LC discounting by the South Indian Bank was on account of negligence of the corporate debtor? - HELD THAT:- The operational debt should have been paid through LC facility within 60 days from 15.1.2020, and since it could not done due to discrepancies in submission of documents to the South Indian Bank, it was the responsibility of the corporate debtor to make the payments, more so when it was being repeatedly asked to do so by the operational creditor - HSS Agreement was executed on 15.1.2020 and under the General Conditions of Sale included in the HSS Agreement, the payment was to be made with 60 days from the date of bill of lading, which would be ‘date of default’ and which would not be covered in the period stipulated in Section 10-A of the IBC.
The Impugned Order does not suffer from any infirmity and it does not require any interference - Appeal dismissed.
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2023 (6) TMI 194
Fraudulent/wrongful trading - related party transaction of not - Lands sold at a Higher Amount than at which, the same was purchased - intent of defrauding its Creditors - HELD THAT:- The expression Party to the carrying on business, indicates taking positive steps, in carrying on company’s business, in a fraudulent manner. The intent to defraud, is to be judged, by its effect on a Person, who is the object of conduct, in question - A preponderance of probability suffices, but the degree of probability must be such that the Tribunal, is satisfied and further that under Section 66 of the I & B Code, 2016, it is not essential to attract that there ought to be a Debtor and a Creditor relationship.
It must be borne in mind that for proving a Fraudulent Trading needs meeting the High Standard of Proof, which is attached to a Fraudulent Intent. A Director, of a Company, may be proceeded against for a Wrongful Trading, because of the reason of Negligent Failure of Management. Besides this, a person, knowingly a Party to a Fraudulent Trading, by the Company concerned, may be subject to the proceedings - The Appellant has a duty, to establish to the satisfaction of this Tribunal, that a person, is knowingly carrying on the business with the Corporate Debtor, with an dishonest intention, to defraud, the Creditors. For a Fraudulent Trading / Wrongful Trading, necessary materials are to be pleaded by a Litigant / Stakeholder, by furnishing Requisite Facts, so as to come within the purview of the ingredients of Section 66 of the I & B Code, 2016. Suffice it, for this Tribunal, to pertinently point out that the ingredients of Section 66 (1) and 66 (2) of the I & B Code, 2016, operate in a different arena.
It is crystalline clear that the transaction of Transfer of Assets, among / within the Group Companies, ex-facie, will not come within the umbrage of the Fraudulent Trading, as per Section 66 (1) of the Code, as opined by this Tribunal. Furthermore, in the instant case, the Appellant / Applicant, has made an fervent endeavour, to converse the transactions, allegedly made by the Respondents, as per Section 66 of the Code.
On a careful consideration of the contentions, advanced on behalf of the Appellant, and keeping in mind of the facts and circumstances of the case, in an integral manner, and also on going through the impugned order of dismissal, passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai), comes to a conclusion that the Appellant / Applicant, had not established the Aspect of Fraud or Dishonest Intent, on the Respondents’ side, to the subjective satisfaction of this Tribunal. As such, the view taken by the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai), preferred by the Appellant / Applicant, in dismissing the application is free from any legal errors. Consequently, the Appeal, fails.
Appeal dismissed.
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2023 (6) TMI 153
Initiation of CIRP - Quantum of Debt - Period of Limitation - NCLT admitted the application - Directors of the Financial Creditors who submitted the application and Corporte directors are same - Interest on debt - jurisdiction to determine the amount in Default - HELD THAT:- It is not in dispute that the 1st Respondent’s Society was formed by the same set of Directors, who are in control of the Corporate Debtor. It is seen from the ‘Investigation Report’ that the Society was used as a channel to pool in funds from large number of small investors to fund the financial requirement of the Corporate Debtor. The Corporate Debtor is in the business of Real Estate and Construction and has secured the funds from the general Public through the 1st Respondent / Financial Creditor. The Balance Sheet on 31/03/2011 of the Corporate Debtor Company shows that a major chunk of the deposited amount of the 1st Respondent has been taken by the Corporate Debtor by way of Cash Credit Facility. As per the Books of Account, the loan received by the Corporate Debtor at that point of time was Rs.11,03,82,823/-. The limit of Cash Credit Facility was decided as Rs. 14 Crores without following the regulations. The Investigation Report establishes that the disposing of the said loan itself is a violation of ‘Karnataka Souharda Sahakari Act, 1997’ and the byelaws of the 1st Respondent’s Society.
The Special Officer had categorically stated that the reversal of interest waiver, which the Appellant is relying upon to establish their case that the ‘Quantum of Debt’ is incorrect, is practically inaccurate. Moreover, once the ‘threshold on debt’ is crossed, the Adjudicating Authority has to admit or reject the Application based on the Provisions of the Code.
Time Limitation - HELD THAT:- It was decided that once the ‘threshold’ is crossed, it is not for the Adjudicating Authority to decide the exact ‘Quantum of Debt’, but what has to be examined is whether there is a ‘Debt’ and ‘Default’. The grounds raised by the Company Secretary appearing on behalf of the Appellant that the Company was ‘not in Default’, is not supported by any documentary evidence. The Balance Sheet for the year ending 31/03/2018 clearly includes the amount due and payable. The total Debt as on 31/03/2020 stood at Rs. 12,09,45,192/- which includes the rebate amount drawn by the Corporate Debtor and the Corporate Debtor was not in any position to pay. The Liquidator had since proceeded with the filing of the Application under Section 7 of the Code. The Argument of the Appellant that the Application is barred by Limitation, is unsustainable, keeping in view that the material on record, evidences the amount payable by the Corporate Debtor and it is also recorded in the Balance Sheet. The loan demand was made on 04/12/2017 and the ‘Notice’ was served on 01/03/2018 and the Section 7 Application was filed on 16/06/2020. Therefore, viewed from any angle, the Application cannot be said to be barred by Limitation.
In the instant case, the record establishes that there is a ‘debt’ and a ‘default’ and the Application is complete and the Adjudicating Authority has rightly admitted the Application under Section 7 of the Code.
The argument of the Appellant that the Adjudicating Authority has no jurisdiction to determine the amount in ‘Default’ unless the dispute is decided by the Court of Deputy Registrar of Co-operative Society, cannot be sustained as the RP was in receipt of the Order dated 11/10/2021 whereby the Deputy Registrar of Co-operative Societies, Bangalore had allowed the JRD/KSCFL/4638/2018-19 and had held that the Corporate Debtor is liable to pay a sum of Rs. 5,13,71,863/- towards principal and Rs. 1,67,86,388 towards interest. Therefore, the case of the Appellant that the Corporate Debtor was ‘not in default’, the ‘debt amount was not crystallized’, and that the Deputy Registrar of Co-operative Societies should first decide the disputed amount, fails.
It is pertinent to mention that the Adjudicating Authority has rejected the Resolution plan, though approved by the CoC, on the ground that it does not satisfy the provisions of Section 29A(G) read with Section 240 A of the Code - Appeal dismissed.
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2023 (6) TMI 152
Seeking Condonation of Delay of 49 days in filing of the Claim under Form – C - Sufficient cause for delay - whether the Adjudicating Authority was justified in rejecting the Condonation of Delay of 49 days in filing the Claim together with the delay in filing the Application before the Adjudicating Authority? - HELD THAT:- A brief perusal of the material on record shows that the CIRP commenced on 21.03.2022, a public announcement was made on 25.03.2022, the last date for filing of the Claims was 04.04.2022, the expiry of 90 days is 19.06.2022, whereas the Appellant had filed the Claim before the RP on 07.08.2022, which is indeed the 139th day of the commencement of the CIRP. The ground taken by the Counsel for the Appellant that it was initially filed under Form – B as an Operational Creditor which was rejected vide email communication dated 03.08.2022, and thereafter the Appellant had resubmitted her Claim under Form – C on 07.08.2022, does not strengthen or substantiate her case as the timelines given under IBC are to be strictly adhered to and any latches on behalf of the Appellant in filing, the Claim under a wrong category cannot be a substantial ground for condoning the delay.
It is clear that the actual time period of delay in submitting the Claim Form is 125 days. It is also significant to mention that the Appellant approached the Adjudicating Authority, vide I.A.1522/22 with a further delay of 100 days, and the only reason that was given is that they were seeking legal advise, which the Adjudicating Authority has rightly held is only a bald explanation and does not construe a sufficient cause for the delay.
Had there been a substantial ground, the case of N BALAKRISHNAN VERSUS M. KRISHNAMURTHY [1998 (9) TMI 602 - SUPREME COURT], could have been applied to the matter on hand. But the fact of the matter is that the Appellant has given no substantial grounds to condone the delay. IBC is a time bound process, which has been repeatedly held by the Hon’ble Supreme Court in a catena of Judgements and at the cost of repetition, the explanation given by the Appellant herein is neither substantial nor can be construed as a sufficient cause.
This Appeal fails and is dismissed accordingly.
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2023 (6) TMI 151
Seeking approval of the Resolution Plan - validity of MSME status provided to the Corporate Debtor - HELD THAT:- In the instant case, the Resolution Applicant registered as an MSME only after the initiation of CIRP. This Tribunal in the case of Digamber Anand Rao Pingle Vs. Shrikant Madanlal Zawar & Ors. [2021 (7) TMI 456 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], wherein the Promoter of the Corporate Debtor had filed an Appeal against the Liquidation Order passed by the Adjudicating Authority claiming that the Corporate Debtor was an MSME and that he could file a Resolution Plan, but this Tribunal observed that as the Application for MSME certificate was made after the commencement of CIRP, such unauthorized Application cannot be considered and cannot tide over ineligibility under Section 29-A. The ratio of this matter is squarely applicable to the facts of this case and the matters of eligibility under Section 29-A as observed by the Hon’ble Supreme Court in a catena of Judgements, cannot be undermined.
There are no grounds to interfere with the well-reasoned Order of the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench) - appeal dismissed.
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2023 (6) TMI 102
Dissolution of Corporate Debtor - contention of the Appellant is that, when he was taking necessary all possible endeavours to revive the business of the Company, the 1st Respondent had filed an Application for early Dissolution of the Corporate Debtor, in terms of Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, at the Corporate Insolvency and Resolution Process itself.
HELD THAT:- Section 54 of the I & B Code, 2016, provides that once the affairs of the Corporate Debtor, have been wound up, its Assets, completely liquidated, the Liquidator, has to prefer an Application, before the Adjudicating Authority (National Company Law Tribunal) for the Dissolution of the Corporate Debtor.
It is to be noted that the Account of the Corporate Debtor, was classified as Non Performing Asset, by the 2nd Respondent / Bank, on 18.09.2016. There is no two opinion of the primordial fact that in the absence of any Resolution Plan(s) or Saleable Assets of the Company, the 1st Respondent / Resolution Professional, had no option, but to seek a Relief, for the Dissolution of the Corporate Debtor, and the fact of the matter is that the same was approved, by the Committee of Creditors - It is to be remembered that the Appellant was issued with a No Objection Certificate, dated 27.09.2018, and it has No Nexus with the present Controversy / Dispute, that the said No Objection Certificate, was no way concerned with the Corporate Debtor, because of the simple fact that it was issued to the Appellant, in his personal capacity as Corporate Debtor.
One cannot remain oblivious of the candid fact that the I & B Code, 2016, does not envisage that the Adjudicating Authority / Tribunal, ought to provide a Hearing to the Promoter / Corporate Debtor of the Company, at the time of passing of an Order for Liquidation.
The Insolvency Resolution Process under the I & B Code, 2016, is a Time Bound Process, and the Appellant / Promoter, having failed to project the Resolution Plan, within the specified time limit and later, the 1st Respondent / Resolution Professional, is not to accept any Plan - Suffice it for this Tribunal, to make a pertinent mention that in the absence of any Asset(s) / the Resolution Plan(s), the Resolution Professional, had no other go, but to pray for an Order of Dissolution, to be passed by the Adjudicating Authority. After all, the end of Liquidation, requires complete Dissolution of an Entity.
This Tribunal, taking note of the facts and circumstances of the instant case, in a conspectus fashion, comes to a consequent conclusion that the impugned order, dated 24.06.2020 in IA No. 198 of 2020 in CP (IB) No. 180 / BB / 2018, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench), in passing an Order of Dissolution of the Corporate Debtor / Company (M/s. Air Pegasus Private Limited), with immediate effect, is free from any Legal Infirmities - Appeal dismissed.
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2023 (6) TMI 101
CIRP - Objection to the Resolution Plan approved by the Committee of Creditor - rigged parameters used to fraudulently declare H2 bidder as H1 bidder - Appellant submitted that the CoC approved Swiss Challenge Method to get the best value out of the Resolution Plan and finally the proposal of M/s Serveall Land Developers Pvt. Ltd. (alleged second highest bidder) was approved - whether the approval of Resolution Plan and distribution of funds amongst the Creditors was legal and correct in accordance with law or otherwise? - HELD THAT:- The Appellant has taken shelter of the judgment of MK Rajagopalan [2023 (5) TMI 344 - SUPREME COURT], where it has been held that the irregularity of not placing of the Revised Plan before the CoC and directing placing before the Adjudicating Authority cannot be ignored as mere technicalities and every aspect relating to the Resolution Plan particularly its financial layout, has to be considered by the CoC before could be considered by the Adjudicating Authority.
This Appellate Tribunal notes that the total amount as provided by M/s Serveall Land Developers Pvt. Ltd. (SRA) was Rs. 50.40 Crores in his original Resolution Plan dated 22.08.2022 and after the Swiss Challenge Method dated 09.09.2022, the Resolution Plan amount was substantially enhanced to Rs. 61.70 Crores (approx.) which was recommended by the CoC and finally approved by the Adjudicating Authority vide impugned order dated 09.03.2023 - after Swiss Challenge Method, it was proposed to distribute Rs. 61,21,03,175/- to Sole Secured Financial Creditor and Rs. 48,96,826/- to two Unsecured Financial Creditors. Initially, there were two Unsecured Financial Creditors, namely, Damont Developers Pvt. Ltd. whose claim of Rs. 9,25,00,000/- was admitted and it was proposed to distribute Rs. 34,15,316/- to him and the other Unsecured Financial Creditors, namely, M/s Sikka Hotels & Resorts Pvt. Ltd., whose claim of Rs. 4,01,25,000/- was admitted and Rs. 14,81,509/- was proposed to be distributed to him. The distribution between the Secured Financial Creditors and Unsecured Financial Creditors is in the same ratio as provided in the original Plan dated 22.08.2022 to Secured Financial Creditor (Bank of Baroda) and to Unsecured Financial Creditors.
It is only due to judicial orders of the Adjudicating Authority which resulted into exclusion of M/s Damont Developers Pvt. Ltd. and inclusion of the Appellant in the list of Unsecured Financial Creditors and this obviously required some arithmetical changes in distribution between these two Unsecured Financial Creditors keeping the overall kitty as available to Unsecured Financial Creditors intact.
Regulation 12(3) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 prescribes that decisions taken by the CoC are not invalidated by a subsequent change in the composition of the COC. Therefore, even though the Appellant was not in the COC when the Final Plan was approved, the approval of the Final Plan by the COC is not vitiated by the subsequent inclusion of the Appellant - the ‘Resolution Plan’ is already under implementation and the hotels of the Corporate Debtor have already been handed over to the SRA and SRA has already paid Rs. 17,25,00,000/- to various Creditors, along with payment of the CIRP expenses of Rs. 4,68,00,000/-.
There are no error in both the challenged impugned orders - appeal dismissed.
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2023 (6) TMI 70
Initiation of CIRP - NCLT admitted the application - pre-existence of dispute - non-compliance with GST Rules - operational debt in default - It is submitted that whether the GST rules were complied or not by the Operational Creditor, did not vitiate the fact that there was an operational debt in default without there any pre-existing dispute raised in respect of that debt.
HELD THAT:- Appellant did not file any Written Submissions in fact the order was passed on 04.05.2023 by this Appellate Tribunal that the Parties have to file their Written Submissions within two weeks. Counsel for the Appellant did not file any submissions, till date.
The Learned Adjudicating Authority had admitted Section 9 Petition filed on behalf of the Respondent – Operational Creditor and initiated CIRP proceedings.
There are no irregularities and therefore accordingly there are no merits in this Appeal - appeal dismissed.
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2023 (6) TMI 69
Resolution Plan implemented - liability for power connection on account of which, the Resolution Applicant was made to pay an additional amount of Rs.40,43,001/- to KSEB for the bills raised for the month of October 2018 - It was submitted by the RP before the Adjudicating Authority that the Resolution Plan does not include this amount of Rs.40 Lakhs but was paid by the Resolution Applicant to keep the Company as a going concern.
HELD THAT:- The RP has categorically admitted that this amount which was paid towards the electricity bill was not a part of the Resolution Plan and that the Resolution Applicant had paid this amount of Rs.40 Lakhs for the month of October 2018, only to avoid disconnection of the Power Supply. It is an admitted fact that this electricity bill is for the period when the power was not consumed by the Resolution Applicant. It is also not in dispute that the Appellant/Sole Financial Creditor had received the entire balance payment without any objection.
The Resolution Plan has been implemented. The Adjudicating Authority has categorically recorded in the Impugned Order that the Appellant herein had undertaken to return the original Title Deeds after receipt of the balance amount, but have not done so. It is also a matter of the record that the SRA has paid the balance amount of Rs.19,24,678/-. The electricity bills clearly reflect that the arrears as on 30.09.2018, is for the period which was prior to the Resolution Applicant having taken over the Company and, therefore, we do not see any substantial grounds in interfering with the directions given by the Adjudicating Authority that the amount paid by the Resolution Applicant towards the electricity bills, though not a part of the Resolution Plan, be set off from the interest portion of the Sole Financial Creditor.
The electricity dues upto the transfer date are the liability of the Appellant and there are no substantial grounds to interfere with the well-reasoned Order of the Adjudicating Authority. This Tribunal is of the earnest view that the subject Title Deeds are to be handed over to the SRA within a week from the date of this Order.
Appeal dismissed.
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2023 (6) TMI 68
Initiation of CIRP for the resolution of an unresolved financial debt - NCLT Admitted to the application - time limitation - it is alleged that though the Financial Creditor had mentioned that the default occurred on 31.03.2014 but the date of default mentioned in part IV of the application filed under Section 7 of the Code is 01.06.2015.
HELD THAT:- In the present case, the claim w.e.f. 01.06.2015 till 01.06.2018 was live because the Financial Creditor could have filed a petition under Section 7 of the Code during this period and the occurrence of one time settlement/compromise, initiated at the instance of the Corporate Debtor during this period vide its letter dated 31.01.2018 had revived the period of limitation from 31.01.2018 to 31.01.2021 in terms of Section 18 of the Limitation Act and the application under Section 7 of the Code having been filed on 15.01.2021 is thus within the period of limitation.
In the given facts and circumstances of the case Vidarbha Industries Power Limited [2022 (7) TMI 581 - SUPREME COURT], relied upon by the Appellant, is not applicable because there is a clear admission on the part of the Corporate Debtor of the amount of debt due in view of the letter dated 31.01.2018.
The Hon’ble Supreme Court in the case of M. SURESH KUMAR REDDY VERSUS CANARA BANK & ORS. [2023 (5) TMI 570 - SUPREME COURT] has held that it was clarified by the order in review that the decision in the case of Vidarbha Industries was in the setting of facts of the case before this court. Hence, the decision in the case of Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in the cases of Innovative Industries and E.S. Krishnamurthy [2021 (12) TMI 683 - SUPREME COURT]. The view taken in the case of Innovative Industries still holds good.
There is hardly any merit in these two appeals which do not require any interference and therefore, the present appeals are hereby dismissed.
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2023 (6) TMI 14
Maintainability of application - permission sought to intervene in Section 7 application against Ascot Projects - Adjudicating Authority merely on the ground that a “third person” is not a necessary party in Section 7 proceedings, rejected the application - HELD THAT:- It is noted that the CIRP of Intellicity Business Park as corporate debtor was initiated on 27.05.2019 after admission of a section 7 application of the IBC. It is also noted that the proposed resolution plan in respect of Intellicity Business Park has been filed by Respondent No.4 - M/s SSR Townships Private Limited, which is pending approval of the Adjudicating Authority after being approved by the CoC. It is also noted that the land obtained on lease by M/s Ascot Projects Pvt. Ltd. from GNIDA is the land on which the project Intellicity Business Park is being developed and which is included in the proposed resolution plan filed by Respondent No.4 for insolvency resolution of M/s Intellicity Business Park Ltd. It is also noted that the proposed resolution plan of Intellicity Business Park includes merger of Ascot Projects Pvt. Ltd. with its holding company Intellicity Business Park.
It stands to reason that admission of Section 7 application against M/s Ascot Projects Pvt. Ltd. and initiation of a separate CIRP would create hurdle in the full and proper implementation of the proposed resolution plan of Intellicity Business Park filed by the Respondent No.4 once it is approved by the Adjudicating Authority. It also cannot be denied that the interest of the unit buyers and creditors of Intellicity Business Park is intricately and closely linked with the land which is held in lease by company M/s Ascot Projects Pvt. Ltd. Therefore the continuation of Ascot Projects Pvt. Ltd. as a financially healthy and viable company is a necessity for successful insolvency resolution of Intellicity Business Park.
It is noted that issue of alleged fraud in the filing of Section 7 application against Ascot Projects was brought to the notice of the Adjudicating Authority, which was filed under Sections 60(5) and 65 of the IBC. A perusal of the application makes it clear that the Appellant Airwil Intellicity Social Welfare Society had pleaded the matter relating to alleged fraud being played by Airwil Infra Ltd. on the unit holders and creditors of M/s Intellicity Business Park Ltd. and also the collusion of its ex-directors Mr. Sanjay Kumar, Mr. Manoj Kumar Chaudhary and Mr. Kamal Aggarwal (who are the current directors of M/s Airwil Infra Ltd.) in this regard.
When an allegation of fraud being played on the financial creditors and unit buyers of Intellicity Business Park was brought to the notice of the Adjudicating Authority when it was considering section 7 application CP (IB) No. 2356(ND)/2019 with regard to corporate debtor Ascot Projects it ought to have been taken note of by the Adjudicating Authority and the Appellant should have been provided an opportunity to present its case in the Section 7 proceedings of M/s Ascot Projects Pvt. Ltd. in view of the requirement of natural justice and to avoid miscarriage of justice to the Appellant who could have been adversely affected by the admission of section 7 application.
The Adjudicating Authority should have allowed application and permitted the Appellant to intervene and participate in the Section 7 proceedings with relation to the corporate debtor M/s Ascot Projects Pvt. Ltd. This was necessary to avoid miscarriage of justice and would have allowed the Appellant to substantiate its allegation.
The impugned order is set aside permitting the Appellant to intervene and participate in the proceedings under consideration of the Adjudicating Authority - appeal allowed.
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2023 (5) TMI 1439
Maintainability of application filed by the Appellant - notice prescribed u/s 8 of the Code was served on 21.03.2017 and the application was filed on 28.03.2017 - date of delivery is to be presumed from 17.03.2017 when the first attempt was made to deliver the notice but it could not delivered because the premises was locked - it was held by the high Court that 'the presumption of delivery of notice cannot be drawn in the present case w.e.f. 17.03.2017 when it was first offered for delivery but could not be delivered because the premises was found locked as the notice was ultimately delivered on 21.03.2017. Therefore, the date of delivery has to be taken as 21.03.2017 when it was actually delivered and not the date when it was firstly offered to be delivered on 17.03.2017'.
HELD THAT:- It is not convinced that there is not any error in the impugned order passed by the NCLAT. The appeal will stand dismissed.
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2023 (5) TMI 1423
Sanction of scheme of Composite Scheme of Amalgamation - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme annexed as Exhibit “A-1” to the Company Scheme Petition appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy.
Since all the requisite statutory compliances have been fulfilled, the said Company Scheme Petition is made absolute in terms of the prayer - the scheme is sanctioned - petition allowed.
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2023 (5) TMI 1350
Dismissal of application filed under Section 7 of IBC by the Financial Creditor - barred by Section 10A or not - determination of date of deault - HELD THAT:- The Hon’ble Supreme Court in Ramesh Kymal versus Siemens Games Renewable Power Private Ltd. [2021 (2) TMI 394 - SUPREME COURT] had noticed the objects and purpose of enactment of Section 10A. In the case before the Hon’ble Supreme Court in Ramesh Kymal versus Siemens Games Renewable Power Private Ltd., the application under Section 9 was filed by the Operational Creditor on 11.05.2020. An ordinance was passed on 05.06.2020 by which Section 10A was inserted in the I&B Code. The Corporate Debtor sought dismissal of Section 9 application by filing an application which was allowed by the Adjudicating Authority which order was also affirmed in appeal. Appellant’s case in appeal before the Hon’ble Supreme Court was that since the application was filed on 11.05.2020 i.e. before insertion of Section 10A on 05.06.2020, the application is not hit by Section 10A, although the default was dated 30.04.2020.
Present is a case where date of default is claimed as 31.03.2021 in Part IV of the application and the application is filed including the default amount as per the Debenture Trust Deed, Schedule V, the default from 31.03.2021 onwards - What is prohibited by Section 10A is that no application shall ever be filed for the default which occurred during the period of Section 10A i.e. from 25th March, 2020 to 25th March, 2021. Section 10A has no application when an action is initiated for default which occurred subsequent to 10A period. Section 7 application as well as Reply filed to I.A. No. 34/2022 clearly indicate that Section 7 application which was filed by the Financial Creditor wad confined to the default committed by the Appellant on 31.03.2021 and thereafter.
The judgment of this Tribunal in M/s Next Education India Pvt. Ltd. vs. M/s K12 Techno Services Pvt. Ltd. [2021 (3) TMI 767 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], was a case where Section 9 application was rejected on the ground of pre-existing dispute and being time barred - In the above case, the question which was up for consideration was question of limitation as to regarding payments within three years from the date when the right to apply accrues. In the present case, there is no issue pertaining to limitation in Section 7 application raised, hence, judgment of this Tribunal in M/s Next Education India Pvt. Ltd. vs. M/s K12 Techno Services Pvt. Ltd. has no relevance while considering the claim of the Appellant on the basis of Section 10A.
The Adjudicating Authority did not commit any error in rejecting the application - the application under Section 7 filed by the Financial Creditor was not hit by Section 10A - appeal dismissed.
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2023 (5) TMI 1320
Rejection of application seeking Condonation of Delay of 49 days in filing of the Claim under Form - C together with the delay in filing the Application before the Adjudicating Authority - sufficient cause for delay or not - HELD THAT:- The actual time period of delay in submitting the 'Claim Form' is 125 days. It is also significant to mention that the 'Appellant' approached the 'Adjudicating Authority', vide I.A.1589/22 with a further delay of 100 days, and the only reason that was given is that they were seeking 'legal advise', which the 'Adjudicating Authority' has rightly held is only a bald explanation and does not construe a 'sufficient cause for the delay'.
The Appellant placed reliance on PUNEET KAUR VERSUS KV DEVELOPERS PRIVATE LIMITED, MR. PANKAJ NARANG, COMMITTEE OF CREDITORS, CONSORTIUM OF SUMIT KUMAR KHANNA AND M/S. BRIJ KISHORE TRADING PVT. LTD. [2022 (6) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], in support of his case that the NCLAT Principal Bench condoned the delay of the Homebuyers in filing their Claims. The facts in that matter are distinguishable as the case relates to Homebuyers where there were Builder Buyer Agreements ('BBA') and it was held that rightfully some provisions in the Plan/submission of Claims are to be made for the genuine Homebuyers.
The fact of the matter is that the Appellant has given no substantial grounds to condone the delay. IBC is a time bound process, which has been repeatedly held by the Hon'ble Supreme Court in a catena of Judgements and at the cost of repetition, the explanation given by the Appellant herein is neither substantial nor can be construed as a sufficient cause.
Appeal dismissed.
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