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IBC - Case Laws
Showing 441 to 460 of 779 Records
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2023 (5) TMI 1291
Approval of the Conditional Resolution Plan - HELD THAT:- The condition which are contained to the effect that Resolution Applicant can seek suitable modification or withdraw plan are conditions which are unenforceable on account of law declared by the Hon’ble Supreme Court in “Ebix Singapore” (Supra). The facts of the present case as detailed in the Reply filed by Respondent No.3 as well as Resolution Professional indicate that plan has been implemented and all necessary approvals including the approval by NHAI has been received for carrying out the plan. After implementation of the plan, we are of the view that the submissions of learned counsel for the Appellant that Resolution Plan was conditional plan and could not have been approved, does not furnish any ground to interfere with the impugned order, at this stage. NHAI approval was set out as a condition precedent to takeover the Corporate Debtor since it was provided in Clause 5.3.1 of the Concession Agreement.
The law declared by the Hon’ble Supreme Court in Ebix Singapore [2021 (9) TMI 672 - SUPREME COURT] made categorical that no Resolution Applicant can be allowed to withdraw their plan and in facts of the present case, Resolution Applicant has never come up with any case, application or request to withdraw from the Resolution Plan.
Present is a case where Form G was issued and time to submit the plan was extended time to time. There were two Resolution Plans which were duly considered by the Committee of Creditors. The submission of the Appellant that mandatory requirements as prescribed under Regulation 38(3) of the Regulations, 2016 has not been satisfied since there are no reasons given regarding cause of default - submission of learned counsel for the Appellant that mandatory requirement under Regulation 38 is not fulfilled, is not correct and the plan gives causes of default, hence, the above mandatory requirement under the plan is fulfilled.
There are no substance in any of the submission of learned counsel for the Appellant to interfere with the impugned order - there is no merit in the Appeal - appeal dismissed.
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2023 (5) TMI 1245
Maintainability of application - barred in terms of Section 10(A) of the Insolvency and Bankruptcy Code, 2016 - date of default - HELD THAT:- Prima facie there is a merit in the argument of the Counsel for Appellant and therefore we issue a formal Notice to the Respondents for 27th June, 2023. The Appellants shall deposit the requisite process fee etc. for effecting service upon the Respondents.
In the meantime, operation of the Impugned Order shall remain stayed.
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2023 (5) TMI 1200
Section 7 application admitted - the Adjudicating Authority passed an order on 06.01.2023 closing the right of the Appellant to file reply and the orders were reserved - Respondent submits that the order of the High Court was not even before the Adjudicating Authority when order was passed on 28.02.2023, therefore, there is no error in the order admitting application under Section 7 - HELD THAT:- From the sequence of events which has been brought on the record it does appear that reply was filed by the Corporate Debtor on 29.11.2022 which continued to be under scrutiny as per DMS, as noted in order dated 06.01.2023. Learned counsel for the Appellant submits that there are certain minor defects in the reply which Appellant was always ready to rectify. It is submitted that the High Court has passed the order on 22.02.2023 when the Appellant directly approached the High Court in a Writ Petition. Their being statutory need, the Appellant should have filed appeal, if any, against the order dated 06.01.2223 of the Adjudicating Authority, before this Tribunal.
The ends of justice be served in directing the Adjudicating Authority to consider the reply which was filed by the Appellant on 29.11.2022, especially when the Financial Creditor has already filed it rejoinder. The Adjudicating Authority passed the impugned order without taking into consideration the reply which has already filed on 29.11.2022 but laying in defect.
Let the Section 7 application be listed before the Adjudicating Authority on 03.07.2023, on which date the Adjudicating Authority may consider the application as well as reply and rejoinder and take decision in accordance with law, as early as possible.
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2023 (5) TMI 1199
Maintainability of Section 9 application - it is argued that entire Operational Debt having been paid by the Corporate Debtor, there is no useful purpose in continuing the Section 9 proceeding any further - impleadment of Respondent as Corporate Debtor - Appellant submits that the Section 9 application was filed for Safeguard Duty reserving right to claim future interest or penalties or delay charges - HELD THAT:- Admittedly, the levy by the Custom Department is by Assessment Order dated 04.10.2022 by which finalization of duty on the bill of entry was made. In the Safeguard Duty, on the date when application was filed, interest could not have included as the amount of interest has been crystalized only subsequently when provisional assessment has been finalized by letter dated 04.10.2022 - The claim of interest levied by order dated 04.10.2022 cannot be said to be included in the debt as claimed by the Applicant under Section 9.
The impugned order records that Appellant has deposited on 14.11.2022, entire claim amount of Rs.16,41,96,213.38/- Principal amount and applicable GST making a total amount of Rs.18.68,55.290.82/-. On deposit of the aforesaid amount, thus, the debt as was claimed in the application stood paid. The order further notice that submission was made on behalf of the learned senior counsel for the Appellant that in view of the aforesaid deposit, the application should be rejected, which was opposed by learned counsel for the Respondent stating that interest is also to be paid by the Corporate Debtor - Operational Debt as was claimed in the application under Section 9 which is apparent from Part IV of the Application which clearly states that the Operational Debt was only Rs.17,24,06,024/- and Applicant has reserved its right to claim further interest, penalties or delayed charges, etc. - On payment of entire Operational Debt as was claimed in the application, there was no occasion to continue the Section 9 application any further.
It is open for the Appellant to challenge the levy of interest, if they are so aggrieved to liability of interest which ultimately will come on them as per the supply agreement. Appellant cannot get away from liability of interest by saying that it has requested the Operational Creditor to challenge the levy of interest since if the liability of the interest is of the Appellant as per the Supply Agreement, it was open for the Appellant to take such recourse in accordance with law challenging the levy of interest.
Section 9 application which was filed by the Operational Creditor, the entire Operational Debt having been paid by the Corporate Debtor, there is no useful purpose in continuing the Section 9 proceeding any further. The Adjudicating Authority ought to have closed the matter and the observation that the parties are permitted to settle the matter amicably within one week, was uncalled for.
Appeal deserves to be allowed closing the application under Section 9 filed by the Operational Creditor - Appeal allowed.
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2023 (5) TMI 1161
Grant of anticipatory bail - recovery under Section 66 of IBC against the persons who, prima facie, appear to be primarily responsible for the fraudulent affairs of the corporate debtors - HELD THAT:- In the name of seeking a clarification, the endeavor of the applicant herein is to indirectly get over with the judgment and order dated 18.01.2023 in WP(C) (PIL) 04 of 2023 passed by Tripura High Court in [2023 (1) TMI 921 - TRIPURA HIGH COURT]. Such an endeavor, in the guise of a clarification, cannot be permitted.
The Tripura High Court has rightly relied upon the observations made by this Court in a binding precedent, in Usha Ananthasubramanian Vs. Union of India [2020 (2) TMI 1081 - SUPREME COURT], which pertains to a matter under Section 339(1) of the Companies Act, 2013 which is pari materia with Section 66 of IBC. The High Court in the case of Sudipa Nath [2023 (1) TMI 921 - TRIPURA HIGH COURT] has rightly observed that an application under Section 66(1) by the resolution professional would not bar any civil action in accordance with law, either at the instance of resolution professional or liquidator or by the corporate debtor in its new avatar on a successful CIRP for recovery of any dues payable to the corporate debtor by such organization / legal entities. Such legal action is independent of Section 66(1).
It is for the Resolution Professional or the successful resolution applicant, as the case may be, to take such civil remedies against third party, for recovery of dues payable to corporate debtor, which may be available in law. The remedy against third party, however, is not available under Section 66 of IBC, and the civil remedies which may be available in law, are independent of the said Section.
The application for clarification is wholly misconceived and, accordingly, stands dismissed.
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2023 (5) TMI 1160
Operational Debt or not - advance payment paid by the Operational Creditor and not refunded by the Corporate Debtor - falls within the scope of Operational Creditor or not - NCLT held that the alleged debt is not an Operational Debt as defined u/s 5(21) of IBC, 2016 - HELD THAT:- The National Company Law Appellate Tribunal [NCLAT] has reversed the above decision while relying upon the decision of this Court in Consolidated Construction Consortium Limited vs Hitro Energy Solutions Private Limited [2022 (2) TMI 254 - SUPREME COURT], where it has been held that Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the Corporate Debtor which ultimately leads to an operational debt.
The NCLT in its original order had not considered the other defences that were raised by the applicant to the application under Section 9 of the IBC. Hence, on remand, all the rights and contentions of the parties on the merits of the case are kept open to be urged before and decided by the NCLT.
Application disposed off.
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2023 (5) TMI 1159
Disqualification of resolution applicant - wilful defaulter of bank - Rejection of Resolution Plan submitted by the Applicant - Appellant submits that on the day when Resolution Plan submitted by the Appellant came for consideration before the CoC, there was no declaration by Union Bank of India as willful defaulter - disqualification under Section 29A of I&B Code - whether the Appellant was disqualified at the time when the Resolution Plan submitted by the Appellant came for consideration? - HELD THAT:- Appellant was not willful defaulter at the time he submitted the Resolution Plan and at the time his plan came for consideration, we cannot lose sight of the fact that by another order dated 20th January, 2022 in IN THE MATTER OF FANENDRA H. MUNOT LTD., WOOD PRESERVERS PRIVATE LIMITED VERSUS LB INDUSTRIES PRIVATE LIMITED [2022 (1) TMI 1370 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI] filed by the RP seeking liquidation, Adjudicating Authority has passed an order on 20th January, 2022 which has been brought on record at page 393 of the Appeal paper Book by the Appellant himself. The order dated 20.01.2022 having not been challenged has attained finality. The Corporate Debtor is in the Liquidation and Liquidation Process has commenced subsequent to the Order dated 20th January, 2022. Liquidation Process having commenced there is no occasion for issuing any direction for consideration of the Resolution Plan of the Appellant.
It is also relevant to notice that according to the Regulation 2B, compromise or arrangement proposed under Section 230 has to be completed within 90 days of order of liquidation. But we having by this order held that order of identification committee declaring the promoters/directors as willful defaulter is not in operation which we have found by order of the date, ends of justice will be served if 90 days period is allowed to the Appellant to submit a compromise or arrangement to the Liquidator.
The order of the Adjudicating Authority dated 20th January, 2022 upholding the decision of CoC declaring the Appellant as ineligible to submit a Resolution Plan under Section 29A is set aside. It is held that Appellant was eligible to submit a plan on the date of its submission as well as on the date it came up for consideration - Appeal disposed off.
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2023 (5) TMI 1132
Initiation of CIRP - Existence of dispute - NCLT dismissed the application - Operational Creditors - whether in the facts of the present case, a genuine and real pre-existing dispute can be said to be in existence between the two parties? - HELD THAT:- There are no material on record by way of reply to the Corporate Debtor by the Operational Creditor which substantiates their having controverted the email dated 15.10.2014. The Adjudicating Authority, has, therefore not committed any mistake in holding that the said email clearly reflected that there was a specific dispute about the poor quality of goods supplied by the Operational Creditor. It is also noticed that the quality test analysis report of Coal dated 29.09.2014 was conducted by the testing agency on the instructions of the Operational Creditor as placed at Annexure-H in the reply affidavit. This lends credulity to the contention of the Learned Counsel for the Respondent that when the test was conducted by an agency on behalf of the Appellant themselves and refund was also allowed, the poor quality of coal stood admitted by the Appellant.
There was sufficient foundation of genuine disputes between the two parties and the same is amply supported by material on the record. It is not the remit of IBC to investigate all related contractual disputes and look into their merits as long as it suffices that a plausible defence has been raised as has been done in the present case. In the present factual matrix, the defence raised by the Corporate Debtor cannot be held to be moonshine, spurious, hypothetical or illusory - the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute.
There is no merit in the Appeal - Appeal is dismissed.
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2023 (5) TMI 1084
Seeking permission for appointment of Board of Directors of the Corporate Debtor - HELD THAT:- The Application is not opposed by the SRA and it is stated that the appointment of Board of Directors to the Corporate Debtor is the step, which is essential for taking various regulatory actions as part of general corporate compliances under law - the prayer is allowed.
Seeking for exclusion of time prayed for in the Application from 16.11.2022 till the Company Appeal (AT) (Insolvency) Nos. 129 & 130 of 2023 is decided - HELD THAT:- SRA is entitled for exclusion of period from 16.11.2022 till 03.03.2023, when this Tribunal in the present Appeal passed an order declining the interim relief as prayed by the MC Lenders. IA Nos.2028-2029 is thus allowed, excluding the period from 16.11.2022 till 03.03.2023. As undertaken by the SRA, the IA No.1863 of 2023 pending before the Adjudicating Authority shall be withdrawn - Application allowed.
Invocation of performance Bank Guarantee - Seeking restraint/ injunction on the Respondents from encashing or appropriating the Performance Bank Guarantee and Ernest Money deposited by the Applicant/ SRA - HELD THAT:- When the Resolution Plan of the Corporate Debtor has received approval up to Hon’ble Supreme Court and the Monitoring Committee is constituted under the Plan to oversee implementation, the Monitoring Committee has to act as a facilitator for implementation of the Resolution Plan instead of finding fault and taking steps, which does not facilitate the implementation, rather delay the implementation. There is no doubt that Performance Bank Guarantee can be invoked by the MC Lenders, but the said invocation can only take place when SRA has failed to implement the Plan. Present is a case where directions have been issued to both MC Lenders and SRA to implement the Plan and the event of failure of the Plan has not yet arrived. When the Adjudicating Authority has directed on 13.01.2023 to take steps towards the implementation of the Plan and which order was not been stayed by this Tribunal on 03.03.2023, the steps ought to have been taken by the MC Lenders in furtherance of the implementation - The Resolution Plan has been approved with the intent and purpose to revive the Corporate Debtor, which revival is in accordance with objective and purpose of the IBC - MC Lenders shall not invoke the Performance Bank Guarantee in the facts of the present case as on date, and for invocation, if any, MC Lenders may take leave of the Adjudicating Authority.
Application disposed off.
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2023 (5) TMI 1083
Territorial Jurisdiction for consideration of section 7 application - territorial jurisdiction of the NCLT, Mumbai to consider the application - can lender can take proceedings relating to a dispute in any other courts, apart from courts in England, with jurisdiction to the extent allowed by law and the lender bank is also allowed to take concurrent proceedings in any number of jurisdictions? - HELD THAT:- A plain reading of the provision relating to jurisdiction makes it abundantly clear that clause 35.1 in the Loan Facility Agreement dated 17.11.2011 is for the benefit of the lender Punjab National Bank (International) Limited, and wherein clause 35.1(c) stipulates that the lender shall not be prevented from taking proceedings relating to a dispute in any other Courts than the courts of England and also that the lender is empowered to taking concurrent proceedings in any number of jurisdictions. Further, by clause 35.2, the borrower-corporate debtor has irrevocably and generally consented in respect of any proceeding anywhere and has also waived immunity on grounds of sovereignty or otherwise - on the issue of jurisdiction it is unambiguously clear that Punjab National Bank (International) Limited as financial creditor is fully entitled and authorised to take action in respect of section 7 application against the corporate debtor under the IBC before the NCLT, Mumbai which shall be the Adjudicating Authority to adjudicate the section 7 application.
The corporate debtor has not denied the issue or receipt of demand notice but has only claimed that it was unable to due repayment amount because of the severe financial and commercial stress experienced by the corporate debtor as a result of the Covid-19 pandemic - It is thus clear that the repayment of instalments of loan amounts due and payable to the corporate debtor on account of the two loan facility agreements are financial debts which are in default of repayment and the dates of the recall notice and filing of section 7 application make it clear that the application was filed within limitation.
The Adjudicating Authority has not committed any error in the Impugned Order, and hence it does not require any interference - Appeal dismissed.
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2023 (5) TMI 1082
Implementation of the approved Resolution Plan - exclusion of three years and nine months (after resolution plan approved) - no interim order passed by the Hon’ble Supreme Court staying the implementation of the Plan - HELD THAT:- Even before approval of the Resolution Plan by the CoC, the issue of ineligibility of Resolution Applicant was raised and against the order of the Adjudicating Authority, declaring the Resolution Applicant eligible, Appeals were filed by Punjab National Bank and RBL Bank, which Appeals were withdrawn on 23.03.2018 by an order of the Appellate Tribunal. Thereafter, Plan was approved on 18.04.2018. After approval of the Plan by the Adjudicating Authority, again a set of litigation was initiated by the Lenders, including the SBI. Four Appeals were filed challenging the Plan approval order. In the Appeal, which was filed by the Lenders against the Plan approval order, there was order passed by this Appellate Tribunal that decision regarding approval or rejection of the Plan, shall not be taken without leave of the Appellate Tribunal. Ultimately, the Appeals were dismissed by the Appellate Tribunal on 16.08.2019.
The fact that the Financial Creditors right from the very beginning, even before approval of the Resolution Plan have been raising ineligibility issue in respect of the Resolution Applicant and after approval of the Plan several Appeals were been filed by the Lenders themselves, challenging the approval order contending that Resolution Applicant is ineligible. When Lenders themselves were challenging the approval of the Plan, it is reasonable to comprehend that Lenders were not keen to implement the Plan. The Resolution Applicant has initiated contempt proceedings in which also subsequently the Adjudicating Authority while disposing of the contempt application directed the SBI to implement the Resolution Plan.
The Hon’ble Supreme Court in its order dated 18.01.2022 [2022 (1) TMI 811 - SUPREME COURT] made it clear that Resolution Plan has to be implemented as the Corporate Debtor being a on-going concern and Promoters have infused over Rs.63 crores. The Hon’ble Supreme Court also noticed that interest of over 23,000 shareholders and thousands of employees have to be taken care of. The observations made by the Hon’ble Supreme Court is clear and categorical that Plan is required to be implemented.
Present is not a case where Resolution Plan has been modified by the Adjudicating Authority. The Adjudicating Authority vide order dated 11.03.2022 has already granted extension by the impugned order for the period from 18.04.2018 to 18.01.2022, which period was taken in the litigation initiated by the Lenders themselves. It is also relevant to notice that while approving the Resolution Plan on 18.04.2018, the Adjudicating Authority has granted exclusion of 106 days. The Hon’ble Supreme Court in its judgment has approved the exclusion on account of litigation and proceedings.
In the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, under Regulation 39, sub-regulation (9), a creditor is allowed to apply to Adjudicating Authority for direction in case there is any non-implementation of the Resolution Plan. At no point of time, the Appellant made an application praying for any direction to the Resolution Applicant towards implementation of the Plan alleging any non-implementation - The Lenders and Banks are obliged to discharge their obligations as per the Resolution Plan. The fact that directions have been issued to the Appellant, cannot mean that Resolution Applicant is not to perform its obligation as per the Resolution Plan.
The learned Counsel for the Resolution Applicant has undertaken to perform all its obligations under the Plan as and when it arises according to the Resolution Plan. Recording the aforesaid statement of the Resolution Applicant, there is no ground to interfere with the impugned order passed by the Adjudicating Authority, which order is clearly in aid of implementation of the Resolution Plan. The implementation of the Resolution Plan being obligation and duty of all stake holders as per the scheme of the IBC, as observed above, the Resolution Applicant shall also carry out its obligation under Resolution Plan promptly, while the Lenders will discharge their obligations in the Plan and as per directions issued in the impugned order by the Adjudicating Authority.
Appeal dismissed.
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2023 (5) TMI 984
Condonation of delay of 21 days in filing appeal - time limitation - initiation of CIRP - HELD THAT:- There is a delay of 21 days in filing the appeal under Section 62 of the Insolvency and Bankruptcy Code 2016. The delay is beyond the maximum period which is condonable in terms of the statute.
The civil appeal is dismissed on the ground of limitation.
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2023 (5) TMI 983
Initiation of CIRP - time limitation - date of default - whether the original application filed by the Appellant under Section 7 of the Code before the Adjudicating Authority was within limitation time frame in accordance with the Limitation Act, 1963 or it was time barred as observed by the Adjudicating Authority based on which the Application was dismissed?
HELD THAT:- The debt is defined under Section 3(11) of the Code and ‘default’ has been defined under Section 3(12) of the Code, debt has been defined as a liability or obligation in respect of a claim which is due and default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor/ Corporate Debtor. It is observed from Section 7(1) of the Code that the Financial Creditor may file an application for initiating CIRP when the default has occurred. It is not necessary for the Appellant to file an application under Section 7 of the Code, on the happening of first default of amount due and it is discretion of the Financial Creditor to decide filing an Application under Section 7 as per the facts and his legal rights - the Financial Creditor do not initiate on many occasions the proceeding for CIRP against the Corporate Debtor on the first date of default itself although it is his legal right as provided in the Code and the law.
From Schedule II of the Loan Account, it is seen that there has been moratorium on payment of principal amount and only on 19.09.2017 the principal amount became due and payable - the Appellant could have taken legal recourse under the Code either on 19.08.2018 or on subsequent defaults or when entire loan became due, payable and defaulted i.e. on 28.03.2022. It is noted that in the present case, the Appellant has chosen 28.03.2022 as date of default in the application filed under Section 7 of the Code before the Adjudicating Authority.
The Corporate Debtor defaulted the payment of the instalment for the month of July 2018 which was due and payable on 19.08.2018 which could be treated as an event of default in terms of Clause 12.1.1 of the Loan Agreement i.e., non-payment according to which, if the borrower (‘Corporate Debtor’) does not pay by the due date(s) the borrower’s dues or part thereof and/ or any amount payable pursuant to loan document, the same will be treated as event of non- payment. Similarly, Clause 12.2 of the Loan Agreement describes consequence of an event of default. It is therefore, clear the date of default could have been taken as 19.08.2018 in terms of various clauses of Loan Agreement - The Financial Creditor gets rights for filing an Application under Section 7 of the Code when the right to apply against default accrues and for every default there is a fresh period of limitation. It seems that the Adjudicating Authority has taken the date of 09.05.2016 as the date of default presuming that the first instalment was due, payable and not paid and therefore date of default became 09.05.2016.
Either of the date i.e. 19.08.2018 i.e., the date on which the instalment was due, resulting into default payable and not paid or the date of 28.03.2022 when the entire loan account stood defaulted in terms of Loan Recall Notice dated 25.03.2022, would have been and is covered within the limitation period as discussed in the preceding paragraphs. The Adjudicating Authority clearly erred in taking the date of default as 09.05.2016 for computing the limitation for filing the Section 7 Application - this Appellate Tribunal has no hesitation in holding that the impugned order was incorrect and is set aside.
Appeal allowed.
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2023 (5) TMI 982
Initiation of CIRP - NCLT dismissed the application on the ground of period of limitation - relevant date - date of acknowledgement of debt by email - Operational Creditors - Corporate Debtor did not issue any notice of dispute - HELD THAT:- The Corporate Debtor in their reply dated 09.03.2020 to the Section 9 application filed by the Appellant had raised several objections, inter-alia, non-maintainability arising out of the bar created by the Indian Partnership Act, 1932; invalidity of demand notice being in Form III and for not containing date of default; non-receipt of demand notice and non-service with the Information Utility; defective issue of demand notice; etc. - on the issue of limitation, it held that the Section 9 application has not been filed within three years from date of default and in the absence of sufficient material on record to establish extension of limitation period, Section 9 application was dismissed.
A plain reading of the provision of Section 4 of IT Act, makes it clear that the intent of Section 4 of the IT Act is to allow any information which can be transmitted on paper by physical mode to also be henceforth transmitted in electronic form too. In other words, this section recognizes that a document sent and received electronically shall be deemed to have complied with the requirement of sending information in writing - the Adjudicating Authority is agreed upon that merely because a document is sent via electronic mode instead of physical mode, the legal and mandatory requirements of authentication of documents will not change and cannot be dispensed away.
Section 18 of the Limitation Act also specifies that the acknowledgment should be in writing and signed by the party against whom such right is claimed though of course the word ‘sign’ or ‘signed’ has not been defined in the said section. This requirement is required to be met irrespective of whether it is in electronic or in physical form. Merely because a document is sent via e-mail, the mandatory requirements of Section 18 cannot be exempted - the Adjudicating Authority only exercises summary jurisdiction in admitting or rejecting the Application under Section 9 of the Code. In view of their limited jurisdiction, disputes of authenticity of the statement of accounts annexed to an email, cannot be adjudicated by the Adjudicating Authority. Hence, the Adjudicating Authority cannot be found to have committed any error in not entering into the issue of authenticity of the statement of accounts.
Given the fact that the debt has not been acknowledged; that a dispute has also been raised on the quality of goods supplied in the Section 9 application and that the veracity of statement of accounts contained in the form of external attachment to the main body of the email has been questioned, we are persuaded to believe that the email of 05.05.2017 cannot be viewed as an acknowledgment of liability on the part of the Corporate Debtor and hence cannot help in extending the period of limitation.
There are no merit in the submissions raised by the Learned Counsel for the Appellant to warrant any interference in the impugned order. The Adjudicating Authority did not commit any error in rejecting the Section 9 application filed by the Appellant on grounds of having been barred by limitation. There is no merit in the appeal - Appeal dismissed.
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2023 (5) TMI 981
Liquidation of Corporate Debtor - Vacation of premises - direction to Respondent to co-operate with the Liquidator to show the said premise to the prospective investors - HELD THAT:- Reliance placed on judgment passed by three Members Bench of this Tribunal in the case of M/S. JHANVI RAJPAL AUTOMOTIVE PVT. LTD. VERSUS VERSUS R.P. OF RAJPAL ABHIKARAN PVT. LTD., AGARWAL REAL CITY PVT. LTD. [2023 (1) TMI 301 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. In the above case, lease Agreement was not renewed and also no dispute that assets in question is owned by the Corporate Debtor and this Appellate Tribunal laid down that Adjudicating Authority has rightly allowed the Application filed by the RP directing the Appellant to vacate from the premises so that Resolution Plan which has been approved can be implemented. We thus do not find any merit in the Appeal, the Appeal is dismissed.
The aforesaid case was challenged before the Hon’ble Supreme Court in M/S. JHANVI RAJPAL AUTOMOTIVE PVT. LTD. VERSUS R.P. OF RAJPAL ABHIKARAN PVT. LTD. & ANR. [2023 (2) TMI 1133 - SC ORDER] and the Hon’ble Supreme Court upheld the order passed by three Members Bench of this Tribunal.
In the present case also, Agreement was expired and further, Respondent is paying rent for the Tenanted Premises as per mutual understanding between the parties. The said internal communication email dated 31.07.2019 (at page 106 of the Appeal) of Corporate Debtor clearly stated that New Agreement will not be renewed and Corporate Debtor will raise invoice with 5% increase in monthly rent. Contrary to the above, the Tribunal noted the fact in the impugned order is of the dispute relating to title of the Corporate Debtor. Therefore, the Tribunal permitted the liquidator to file eviction suit in the proper Court.
The Adjudicating Authority has failed to notice the above judgment passed by three Member Bench of NCLAT which was upheld by Hon’ble Supreme Court. The three Member Bench of NCLAT judgment is binding. In view of the fact, the impugned order dated 10.02.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Court 1) is hereby set aside and the matter is remanded back to the Adjudicating Authority with a request to pass afresh order in accordance with law at an early date.
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2023 (5) TMI 980
Initiation of CIRP - NCLT admitted the application filed u/s 7 - status / locus of Debenture Trustee - Corporate Debtor failed to make repayment of its dues - assignment of debt to assignment holder - admission of debt and default - HELD THAT:- The present is a case where in the reply filed before the Adjudicating Authority, the Corporate Debtor did not dispute the debt and default. In the reply filed by the Corporate Debtor, it was mentioned that due to COVID-19 there was standstill in the business activities of the Corporate Debtor. The debt and default was an admitted position in the reply filed by the Corporate Debtor. The submission which is much pressed by learned counsel for the Appellant is that the Respondent No.1 had no locus to issue Acceleration Notice dated 26.07.2022. It is submitted that it was only Debenture Trustee who could have taken action in event of default, as per the Debenture Trustee Document. In the facts of the present case, there is no dispute that event of default took place.
After looking into the different clauses of the Debenture Trust Document and Inter-Creditor Agreement, it is clear that the Financial Creditor was fully entitled to issue Acceleration Notice issued on 26.07.2022. The Debenture Trustee having already issued Notice of Demand on 13.07.2022, the argument of the Appellant that action has to be taken by Debenture Trustee loses its significance - there are substance in submission of learned counsel for the Appellant that the Financial Creditor was not entitled to issue Acceleration Notice dated 26.07.2022. We do not find any infirmity in the initiating proceeding against the Corporate Debtor under Section 7, there being debt and default undisputed and clearly proved by the fact as noted above. The Financial Creditor stepped in the shoes of the Debenture Holder on the basis of Assignment Deed dated 04.03.2021.
There are no substance in grounds raised by the Appellant to interfere with the impugned order - appeal dismissed.
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2023 (5) TMI 979
Initiation of CIRP - NCLT rejected the application - Scope of the agreement between parties for use of office space - Unilateral Termination of agreement before the specified date - Corporate Debtor failed to make repayment of its dues - Operational Creditors - non-registered, non-stamped document - existence of debt and dispute or not - HELD THAT:- Clause 1.4 of agreement deals with cancellation and clause provides that client that is the Corporate Debtor can terminate agreement with 30 days notice after the lock in period whereas there are restriction on the services provided in the agreement. The present is a case where in pursuance of the agreement, Corporate Debtor took the possession of the premises. When we look into the agreement, there is a number of services, site plan containing the various facilities which has to be provided by the service provider to the corporate debtor like meeting room, writing wall, work stations, etc. - The Operational Creditor thereafter issued notices to the Corporate Debtor demanding payment in respect of unpaid operational debt and ultimately a Demand Notice under Section 8 was issued on 18th August, 2020.
Whether the debt claimed by the Appellant was an Operational Debt? - HELD THAT:- The Adjudicating Authority committed error in holding that the debt claimed by the Operational Creditor was not Operational Debt. The debt claimed by the Appellant is clearly a claim within the meaning of IBC and on default being committed by the Corporate Debtor the debt became due and Appellant was fully entitled to initiate proceedings under Section 9 of the Code.
Compulsorily registrable agreement - HELD THAT:- The nature of Agreement is where no interest, title or right on property immovable or movable or any other form of right to assert any claim save and except availing services being run by the Appellant. There being no right, title or interest in the agreement created in favour of the Corporate Debtor, the Agreement was not compulsorily registrable under Section 17(b) of the Registration Act - it is clear that agreement does not purport or operate to create, declare, assign, limit or extinguish any right, title or interest in immovable or movable property. The Agreement was clearly not required to be compulsorily registered under Section 17(b). The above determination by the Adjudicating Authority was also fallacious.
Agreement was originally engrossed on an unstamped paper or not - HELD THAT:- On looking into the Reply, stand taken by the Corporate Debtor is clear that Corporate Debtor clearly admits that in the Agreement in the stamp paper there are no signatures of both the parties whereas in the entire reply the Corporate Debtor does not deny execution of the agreement between the parties. The Agreement was termed by the Corporate Debtor as a lease agreement.
The Reply of the Corporate Debtor and the fact that Corporate Debtor in pursuance of the Agreement took the possession of the premises, also paid monthly office fee upto July 2019 clearly indicate that agreement dated 17th August, 2018 was given effect to. When the Corporate Debtor has accepted the agreement and acted upon by using the premises and have utilized services in the office space provided by the Appellant, even accepting the argument of Learned Counsel for the Respondent that it was not duly stamped, do not negate and do not oblige the Adjudicating Authority to ignore the agreement for finding out as to whether the claim made by the Appellant was an Operational Debt - In the present case, when Agreement was admittedly executed between the parties, signed by both the parties and acted upon, mere fact that it not being engrossed on stamped papers shall have no adverse consequence on the claim of the Operational Creditor. The Adjudicating Authority erred in determining the 3rd point against the operational creditor.
The Appellant has proved that debt claimed by the Appellant in Section 9 Application was operational debt. Further the agreement dated 17th August, 2018 was not compulsorily registrable and agreement having not been executed on Rs. 100 Stamp Paper was inconsequential, the agreement having been acted upon and the Corporate Debtor having entered into possession of the premises in pursuance of the Agreement.
Appeal allowed.
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2023 (5) TMI 978
CIRP - Application filed for intervention of home buyers dismissed - dismissal on the ground that Appellant had no locus to maintain the said application at this stage when the proceedings are pending and no order of admission has been passed - CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors.
Whether an application like the one in hand could have been maintained at the instance of the Appellant before the admission of the application under Section 7 of the Code? - HELD THAT:- There is no dispute that the Applicants/Appellants are the homebuyers who have booked their units in the said project being developed by the Corporate Debtor. However, as submitted by counsel for Respondent, the units which has been booked by the Appellants are in the Tower “Joy and Spark” which is far beyond completion. It is further the case of the Respondent that there are large number of homebuyers and if all of them keep on filing the application before the order of admission then the timeline which is provided for the purpose of pursuing the application filed under Section 7 of the Code shall be adversely affected as also the interest of the Financial Creditor who has initiated the proceedings.
The order passed in the case of SURINDER PAL SINGH & ORS. VERSUS SPAZE TOWERS PVT. LTD. [2023 (5) TMI 928 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI], this court was dealing with an application which was filed by homebuyer as an Intervener in the proceedings under Section 7 of the Code and held that the Application under Section 7 is not maintainable till the application under Section 7 is admitted. However, a window was kept open for the Applicant by observing thus “it shall be open to the Appellant to file appropriate fresh application in the event application is admitted under Section 7 IBC.”
In the case of PRAYAG POLYTECH PVT. LTD. VERSUS HIND TRADEX LTD. [2019 (8) TMI 1867 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] it was held that “In that view of the matter, there is no requirement for intervention of any Directors or shareholders of the ‘Financial Creditor’ or any other party before admission of Application under Section 7 of IBC. If the application is admitted, it would be open to any aggrieved party to move before this Appellate Tribunal.” - In the case of Shrem Residency Pvt. Ltd. [2023 (1) TMI 551 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] this court has held that the only thing which is to be taken into consideration at the time of admission of section 7 of the Code that there is a debt and default.
There are no merit in the present appeal and the same is hereby dismissed.
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2023 (5) TMI 934
Initiation of CIRP - Application u/s 7 dismissed by the NCLT - Financial Debt or not - existence of debt due and payable or not - loan was lent for time value of money or not (existence of interest component on loan or not - existence of tripartite agreement between the Appellant, Corporate Debtor and SBI - time limitation.
Whether the payment of Rs.10.46 crore by the Appellant to the SBI on behalf of the Corporate Debtor during 2014-2016 in terms of the two MoUs and OTS qualifies to be a ‘financial debt’ within the meaning and scope of Section 5(8) of the IBC? - HELD THAT:- In Pioneer Urban [2019 (8) TMI 532 - SUPREME COURT] it has been held that any debt to be treated as financial debt, there must happen disbursal of money and the disbursal must be against consideration for time value of money. The concept of time value of money has been further explained to also include a transaction which does not necessarily culminate into money being returned to the lender or interest being paid in respect of money that has been borrowed. Holding Section 5(8) as a residuary provision which has a catch-all nature, it held that it can include anything which is equivalent to the money that has been loaned as long as commercial effect of borrowing or profit as the aim is discernible - In the matter of Anuj Jain [2020 (2) TMI 1259 - SUPREME COURT], the Hon’ble Supreme Court articulated that the essential condition of financial debt is disbursement against the consideration for time value of money - Further in the most recent judgment of Hon’ble Supreme Court in Orator [2021 (8) TMI 314 - SUPREME COURT], it has been clearly held that financial debt does not expressly exclude an interest free loan. It has also emphasized that financial debt includes any amount raised under any other transaction having the commercial effect of borrowing.
The impugned order has observed that the disbursal made by the Appellant is not in the nature of financial debt on the grounds that there is no interest payable on the loan advanced by the Appellant and that there is no time value of money since there is no time fixed for repayment of the loan.
In the present facts of the case, that money had been disbursed by the Appellant on behalf of Corporate Debtor to SBI towards loan repayment is undisputed. It is also an admitted fact that no interest was either claimed by the Appellant nor paid by the Corporate Debtor. That the component of interest is not a sine qua non for bringing a debt within the fold of financial debt has been clearly held by the Hon’ble Supreme Court in Orator - The misconceived finding of the Adjudicating Authority cannot be accepted that simply because the instant transaction was bereft of loan component and no time was fixed for repayment, it did not qualify to be a financial debt.
Whether in the present case, disbursement of money has taken place against the consideration for time value of money and whether commercial effect of borrowing is found to underpin the transaction? - HELD THAT:- The concept of time value of money has not been expressly defined in the IBC. Undoubtedly, the most typical illustration of time value is in the form of interest on the principal amount that has been borrowed. However, it is now a well settled proposition of law that interest on loan is not the only binding criterion for determining time value of money. The Insolvency Law Report, 2018 has also held time value of money to mean compensation or the price paid for the length of time for which money has been disbursed. Thus, time value of money is not only a regular or timely return received for the duration for which the amount is disbursed as an amount in addition to the principal, but also covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration.
The Adjudicating Authority in the impugned order has held that in the absence of time fixed for repayment, it cannot be said that the loan was advanced for time value of money. Even if the loan extended was not interest-bearing and no time was fixed for repayment, it would be both skewed and misconstrued to hold that the loan was disbursed without time value of money. The Appellant had advanced the payment with an intent to gain from the land, plant and machinery and factory building changing hands from the Corporate Debtor to the Appellant as borne out from Clause 4.1.2 of MoU-2 - The expectation to benefit from acquiring the entire right, title and interest over the subject property at a lesser rate compared to the market value has to be factorized as time value of money. As long as the lender visualizes an element of profit and enhancement of economic prospect in return for the money advanced for certain time period, the loan in question entails time value of money and acquires the colour of commercial borrowing which is clearly borne out from the facts of the present case. It has all the trappings of a financial debt and squarely falls within the purview of Section 5(8) of IBC.
Thus, the disbursal made by the Appellant in the present case is in the nature of a financial debt and to that extent disagree with the Adjudicating Authority.
Whether there was debt, if any, which had become due and payable on the part of the Corporate Debtor and default thereof qua the Appellant? - HELD THAT:- It is trite law that under the IBC once a debt which becomes due or payable, in law and in fact, and there is incidence of non-payment of the said debt in full or even part thereof, CIRP may be triggered by the financial creditor as long as the amount in default is above the threshold limit. It is also well accepted that debt means a liability in respect of a claim and claim means a right to payment even if it is disputed. Viewed against this broad backdrop of the IBC framework, we now dwell upon the facts of the present case to find out whether in this case debt was due and payable.
The modality of payment by the Appellant by way of direct deposit to the Corporate Debtor’s account with SBI was clearly laid down in Clause 5.7 of the MoU-2. There is also no dispute that Appellant had complied to these modalities and routed the disbursal by depositing the same in the Corporate Debtor’s account in the SBI. Receipt of this amount has not been controverted by the Corporate Debtor thereafter. Neither has any claim been made that any part of this sum was repaid by the Corporate Debtor. That being the case there arises no doubt that there was a debt on the part of the Corporate Debtor qua the Appellant for an amount of Rs.10.46 crore.
The Appellant having already paid Rs.10.46 crore was still required to pay the balance consideration of Rs.16.70 crore by or before 31.03.2016. Further, it is significant to note that Clause 5.1 of the “Completion Arrangements” in MoU-2 expressly provided that only after final payment is made by the Appellant to the Corporate Debtor’s account in SBI that Corporate Debtor was to take further steps for execution of lease deed in respect of land and registration of factory building in favour of the Appellant. The recitals of the MoU make it amply clear that the Appellant was required to remit the full payment of Rs.27.16 crore and until then he was not entitled to acquire rights and title over the subject property. In other words, the debt qua the Corporate Debtor would have become payable only on the full amount having been remitted to the Corporate Debtor’s account and this stage was yet to be reached.
The MoUs and A2S had been frustrated due to non-payment by the Appellant of the agreed consideration amount contained therein and for this breach the Corporate Debtor cannot be held responsible as that would tantamount to allowing the Appellant to take advantage of his own wrong. The full payment had clearly not been made by the Appellant having admittedly paid only Rs.10.46 crore, we agree with the finding of the Adjudicating Authority that unless the entire payment was made, no right would accrue to the Appellant to enter into the shoes of SBI and have right to title and possession of the subject property - under the given facts and circumstances, the debt had not become due and therefore was not payable. The Corporate Debtor is entitled to point out that a default has not occurred in the sense that the debt is not due. In the present facts, the debt had not become due in the sense that it was payable only after receipt of full agreed amount of Rs.27.16 crore and which not having occurred, there was no event of default and that being so the debt had not become payable and hence Section 7 of the IBC does not get attracted.
The impugned order is upheld - appeal dismissed.
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2023 (5) TMI 928
Maintainability of intervention application - It is submitted that the Application is still pending for consideration and has not yet been admitted - rejection of impugned Application on the ground that at the pre-admission stage there is no occasion to permit the Applicant to intervene in the matter - HELD THAT:- In the present case the Application under Section 7 has not yet been admitted. Adjudicating Authority did not commit any error in rejecting the Intervention Application at pre-admission stage, filed by the Appellant - there are no error in the Impugned Order rejecting the application for intervention. However, it shall be open to the Appellant to file appropriate fresh application in the event application is admitted under Section 7 IBC.
Appeal dismissed.
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