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IBC - Case Laws
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2023 (5) TMI 901
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - delay of 5 days in filing the appeal - appellant submitted that the inadvertent delay of 5 days in filing the appeal had been caused due to the additional time needed to obtain legal advice, collate documents and connect with counsel during the festive season.
Whether the appeal was instituted within limitation?
HELD THAT:- In its impugned order, NCLAT observed that the appeal was lodged through the e-portal on 10 October 2022, which was the 46th day after the order of the NCLT. It observed that while Section 61(2) of the IBC prescribes a 30-day deadline for preferring an appeal against an order of the adjudicating authority, the appellate tribunal can condone a delay of upto 15 days, if sufficient cause is shown. Furthermore, it held that the ingredients of Section 61 of the IBC do not visualize that an aggrieved person has to wait till he is in receipt of a certified copy of the impugned order before preferring an appeal.
The NCLAT held that even according to the version of the appellants, the period of 30 days would end on 4 October 2022 while the appeal was filed on 10 October 2022. It noted that 10 days (from 26 August 2022 to 4 September 2022) were spent prior to the application for a certified copy and between 15 September 2022 and 4 October 2022 another period of 20 days elapsed - the NCLAT concluded that the appeal was barred by limitation on the ground that it was instituted on the 46th day following the order of the NCLT, exceeding the outer limit of 45 days that was permissible under Section 61 of the IBC.
The dispute in the appeal arises over the period of limitation applicable for filing an appeal against an order of the NCLT under the IBC. The IBC is a complete code. Section 238 of the IBC provides that the Code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Relevant provisions of the IBC, Limitation Act 1963, NCLAT Rules 2016 and administrative orders are extracted below and are referred to, in turn.
It is evident that on the one hand, Rule 22 of the NCLAT Rules 2016 requires the presentation of an appeal at the filing counter in the prescribed mode, but on the other, NCLAT also envisages e-filing of appeals. This is made evident in the SOP dated 3 January 2021 which mandates the filing of a physical copy of an appeal as per the procedure prescribed in the NCLAT Rules 2016, while referring to the procedure for the hearing of cases through the virtual mode, using the e-filing portal. The subsequent order dated 21 October 2022 acknowledges that there was an absence of clarity in regard to the period with reference to which limitation would commence - The power of condoning a delay of up to 15 days beyond the original period of 30 days lies within the discretionary power of the NCLAT. The appeal was instituted within the outer limit of 45 days.
In the present case, the application for a certified copy was sent from Delhi to Chennai on 2 September 2022, which was received on 5 September 2022, within the period of limitation of 30 days specified in Section 61(2) - In the present case, the appellant exercised due diligence and applied for a certified copy upon pronouncement of the order in terms of Rule 22(2) of the NCLT Rules 2016. The certified copy was provided to the appellant on 15 September 2022. Hence, the period of 10 days between 5 September 2022 and 15 September 2022 taken by the court to provide a certified copy of the order ought to be excluded when determining the period of limitation under Section 61(2) of the IBC.
Thus, the NCLAT was in error in dismissing the appeal on the ground of limitation. The explanation which was advanced by the appellant for condoning the period of 5 days (beyond the period of 30 days stipulated for the filing of an appeal) was sufficient and the delay should have been condoned within the four corners of the statute.
Appeal allowed.
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2023 (5) TMI 900
Initiation of CIRP - Admission of application u/s 10 - issuance of notice to the creditors to give a hearing or opportunity of hearing to the creditors before admission of Section 10 Application - opportunity to the creditor to file Section 65 Application (if section 10 application filed with fraudulent intent) - termination of Lease Agreement in favour of the Corporate Applicant prior to admission of Section 10 Application - effect of moratorium to assets, which were earlier leased by the Lessor to the Corporate Applicant - entitlement to claim possession of the aircrafts and export the aircrafts as per the Lease Agreement on termination of lease agreement.
Whether in a Section 10 Application filed by a Corporate Applicant, it is necessary to issue notice to the creditors to give a hearing or opportunity of hearing to the creditors before admission of Section 10 Application? - HELD THAT:- The present is a case where Application under Section 10 was filed on 02.05.2022 and on 04.05.2022 it came for hearing. The learned Counsel for the Appellant had appeared and was head by the Adjudicating Authority. The Adjudicating Authority however took a view that it was open for the objector to file an Application under Section 65 even after admission of Section 10 Application.
Since the statutory Scheme does not contain any obligation of issuing notice to the creditors by the Corporate Applicant, any objector appearing at the time of hearing has to be heard and the objection may be noted by the Adjudicating Authority and thereafter the appropriate decision can be taken - the mere fact that no notice was issued to the creditors or any opportunity was given to the objectors before proceeding to hear, the Corporate Applicant, cannot be held to vitiate any procedure or violating the principles of natural justice, more so when objectors were heard by the Adjudicating Authority.
Whether at the time of hearing of Section 10 Application, if some of the creditors appear and object admission of Section 10 Application alleging that Application has been filed fraudulently with malicious intent, Adjudicating Authority is required to first give opportunity to the creditor to file Section 65 Application and decide the said Application before proceeding to admit Section 10 Application? - HELD THAT:- here was sufficient material before the Adjudicating Authority to come to the conclusion that Application under Section 10 filed by the Corporate Applicant was fraudulent and with malicious intent. The Adjudicating Authority in its impugned order has captured the particulars of financial debt and operational debt - It is not the case of the Appellant that Corporate Applicant has not defaulted any payment of lease rentals to the Appellant(s). Non-payment of lease rentals is admitted fact and has been made basis of cancellation of Lease Agreement by the Lessors, which took place immediately after presentation of the Application under Section 10 on 02.05.2023.
On the strength of the oral objections which were raised before the Adjudicating Authority on behalf of the Appellant as well as other, which has also been raised in this Appeal, no conclusion can be derived at this stage that Application filed by the Corporate Applicant was fraudulent with malicious intent - Adjudicating Authority has given liberty to the Appellant to file an application under Section 65. It is open for the Appellant to file Section 65 Application with appropriate pleadings and materials and in the event of such Application has been filed, the Adjudicating Authority shall consider the Application in accordance with law without being influenced by any observations made in this order.
Whether Lessors having terminated Lease Agreement in favour of the Corporate Applicant prior to admission of Section 10 Application, the moratorium as directed by order dated 10 May, 2023 cannot be said to be applicable to the assets, which were earlier leased by the Lessor to the Corporate Applicant? - Whether the Appellant having terminated the Lease Agreement in favour of the Corporate Applicant prior to admission, is entitled to claim possession of the aircrafts and export the aircrafts as per the Lease Agreement? - HELD THAT:- These Appeal(s) have been filed against the order admitting Application under Section 10 and the issues which are sought to be raised in this Appeal have not yet been considered by the Adjudicating Authority. When the Adjudicating Authority has not adverted to the aforesaid issues, where the CIRP is pending, the ends of justice will be served by granting liberty to the Appellant(s) or to the IRP to make appropriate Application before the Adjudicating Authority under Section 60, sub-section (5) of the Code. In event any such Application is filed under Section 60, sub-section (5), the Adjudicating Authority shall take appropriate decision in accordance with law - the issues, which have been raised and noted in this paragraph need no consideration at this stage.
The order dated 10.05.2023 admitting Section 10 Application is upheld - appeal disposed off.
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2023 (5) TMI 897
Condonation of delay in filing appeal - sufficient reasons for delay provided or not - Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues (or not) - Operational Creditors - application filed u/s 9 of IBC dismissed on the ground that the Corporate Debtor has already paid the Principal Amount and the Petition under Section 9 is not maintainable in respect of interest.
Whether there is a sufficient cause assigned by the Applicant/Appellant for the purpose of Condonation of Delay or not? - HELD THAT:- Admittedly, the Impugned Order was received by the Appellant within two/three days of its passing. The Appellant was having about 25 days if not more for the purpose of engaging the Counsel and filing of Appeal but he has made a lame excuse that he belongs to Orrisa and the Counsel was to be engaged at Chennai, therefore, the prescribed period of 30 days had expired and even the Appeal has been filed on the last day of 15th day, therefore, the Appellant is asking for Condonation of 15 days which is the extended period provided in Section 61(2) proviso.
The cause shown by the Applicant/Appellant is not satisfying, as it does not fall within the ambit of sufficient cause, therefore, there are no merit in this Application and the same is hereby dismissed.
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2023 (5) TMI 817
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Guarantor - assignment of debt to an Asset Reconstruction Company - CIRP against the Principal Borrower, already commenced - initiation of two applications under Section 7 for same set of claim amount and default simultaneously - Validity of unregistered Assignment Agreement.
Whether the Assignment Agreement being unregistered document could not have been relied by the Adjudicating Authority for admitting Section 7 application? - HELD THAT:- The Assignment Agreement dated 18.01.2021 was relied by the Financial Creditor and has been referred to by the Adjudicating Authority in Para 5 of the order. The Order dated 11.05.2022 initiating Section 7 application has not been reversed or modified and still in force. Secondly, the Assignment Agreement dated 18.01.2021 being in accordance with Section 5 of the SARFAESI Act, 2002, the Respondent No.1 has to be deemed to be lender and is thus entitle to exercise all rights which were vested in the lender.
Section 5 is an enabling provision to empower the Asset Reconstruction Company to acquire financial assets in the manner provided in Sub-section (1). The Assignment Agreement dated 18.01.2021 was in accordance with Section 5(1)(b) i.e. by entering agreement with State Bank of India. Sub-section (2) of Section 5 contains a deeming clause. Sub-section (2) provides that Asset Reconstruction Company on such acquisition be deemed to be the lender and all the rights of such bank or financial institution shall vest in such company. When the legislature uses the deeming fiction it is always for purpose and object.
Hon’ble Supreme Court had occasion to consider provision of Section 43 of the Indian Contract Act, 1872 which contains the deeming provision and on fulfilling the ingredients as provided in the statute, legal fiction will come into play, irrespective whether the transaction was in fact intended or even anticipated to be so - Hon’ble Supreme Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited vs. Axis Bank Ltd. & Ors. [2020 (2) TMI 1259 - SUPREME COURT] held that Applying the principles to the provision at hand i.e., Section 43 of the Code, it could reasonably be concluded that any transaction that answers to the descriptions contained in sub-sections (4) and (2) is presumed to be a preferential transaction at a relevant time, even though it may not be so in reality. In other words, since sub-sections (4) and (2) are deeming provisions, upon existence of the ingredients stated therein, the legal fiction would come into play; and such transaction entered into by a corporate debtor would be regarded as preferential transaction with the attendant consequences as per Section 44 of the Code, irrespective whether the transaction was in fact intended or even anticipated to be so.
Following the law laid down by the Hon’ble Supreme Court, when acquisition of assets by Asset Reconstruction Company is made as per Section 5(1), deeming provision contained in Sub-section (2) of Section 5 shall come into play and the Asset Reconstruction Company shall be deemed to be Lender for all purposes. As a Lender, the Respondent No.1 was fully entitled to exercise its right to initiate proceeding under Section 7.
Assignment of financial debt has to be by registered document, or not - HELD THAT:- Reliance placed on judgment of this Tribunal in Palm Products Pvt. Ltd. vs. T.V.L. Narsimha Rao and Anr., [2021 (3) TMI 304 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI]. In the above case, a Non-Banking Financial Company (NBFC) after being held to be related party under Section 29A was kept out of the CoC which action was challenged before this Tribunal. When the NBFC made an application before the Resolution Professional on the basis of Assignment Deed, the said deed was unregistered and that is the reason given by the Resolution Professional for not accepting the claim. The Adjudicating Authority has observed in the order that applicant was non-financial institution, which findings were challenged before this Tribunal. This Tribunal held that there being NBFC certificate, the applicant was NBFC and the said observation have to be ignored.
A perusal of the above observation indicate that although the application was held to be NBFC, however, there was no case that applicant was Asset Reconstruction Company. Assignment in the above case was not in favour of any Asset Reconstruction Company. Hence, the observation made in the judgment upholding the view of the Adjudicating Authority that document was unregistered hence the Resolution Professional rightly ignored the claim, does not lend any support to the case of the Appellant in the present case - The present is a case of an Asset Reconstruction Company where for acquisition of asset by an Asset Reconstruction Company an particular manner and procedure is prescribed and when asset is acquired as per provisions of Section 5 of SARFAESI Act, deeming section will come into play.
Application under Section 7 having admitted against the Principal Borrower, it was not open for the Respondent No.1 to file application against the Corporate Guarantor since two simultaneous proceedings under Section 7 cannot be proceeded with - HELD THAT:- In the case of Dr. Vishnu Kumar Agarwal vs. Piramal Enterprises Ltd. [2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] it was held that though there is a provision to file joint application under Section 7 by the 'Financial Creditors', no application can be filed by the 'Financial Creditor' against two or more 'Corporate Debtors' on the ground of joint liability ('Principal Borrower' and one 'Corporate Guarantor', or 'Principal Borrower' or two 'Corporate Guarantors' or one 'Corporate Guarantor' and other 'Corporate Guarantor'), till it is shown that the 'Corporate Debtors' combinedly are joint venture company.
The Hon’ble Supreme Court in Laxmi Pat Surana vs. Union of India & Anr. [2021 (3) TMI 1179 - SUPREME COURT] had occasion to consider the right to proceed against Guarantor in aforesaid case. Hon’ble Supreme Court has held in the above judgment that Section 7 is an enabling provision which permits the Financial Creditor to initiate CIRP against a Corporate Debtor. The Corporate Debtor can be the Principal Borrower as well as the Corporate Guarantor. The Hon’ble Supreme Court held that right or cause of action would enure to the lender to proceed against the Principal Borrower, as well as the guarantor in equal measure.
The scheme of I&B Code, in view of law laid down by the Hon’ble Supreme Court in Laxmi Pat Surana vs. Union of India & Anr., the judgment of this Tribunal in Dr. Vishnu Kumar Agarwal is not followed.
It is further relevant to notice that no submission have been advanced regarding debt or default. Debt and default by the Corporate Debtor is an admitted fact which has not been questioned or contested. The Adjudicating Authority having returned the finding that there exist financial debt and default, no error has been committed by the Adjudicating Authority in admitting Section 7 application.
There are no error in the impugned order admitting Section 7 application. There is no merit in the Appeal. Appeal is dismissed.
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2023 (5) TMI 770
CIRP - Seeking revival of company - withdrawal of Company Petition under Section 12-A of the Code - default in making payment of any of the tranches of Financial Creditors - settlement of dispute between the parties - HELD THAT:- In the present case, consent terms were brought on record since they were part of the Application under Section 12A of the Code which was noticed in the Order of the Adjudicating Authority itself. When consent term itself contains clause for revival, non-giving liberty specifically for revival by the Adjudicating Authority is inconsequential.
The Adjudicating Authority has also referred to the Judgment of this Tribunal in Himadri Foods Ltd. v. Credit Suisse Funds AG, [2021 (1) TMI 1303 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], which was distinguished by the Adjudicating Authority. The Adjudicating Authority held that the liberty was granted by the Adjudicating Authority hence the case is distinguishable - It was found that there are no distinguishing feature of the Judgment in Himadri Foods Ltd. In the said case also, consent terms contemplated event of default and gave liberty to report the matter. In the present case also, Company Petition was disposed of taking settlement on record and when Clause 10 of the Settlement specifically contains an undertaking by the Corporate Debtor for revival, corporate debtor can not be allowed to go back from its commitment as was made in the settlement.
Another judgment which has been relied on by Learned Counsel for the Respondent is C.A. (AT) Ins. No. 294 of 2021-SRLK Enterprises LLP v. JALAN Transolutions (India) Ltd. [2021 (4) TMI 1358 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] - the adjudicating Authority while rejecting the revival application observed that the settlement was arrived in between the parties outside the Tribunal. In the present case, the Settlement was arrived and submitted before the Adjudicating Authority which was noticed in the Order dated 09.02.2022 hence the Judgement of SRLK Enterprises LLP is clearly distinguishable from the facts of the present case.
Thus in the facts of the present case, the Adjudicating Authority committed error in rejecting the revival application 3196 of 2022 when the consent term itself contemplates a clause for revival in event of default and default having been committed by the Corporate Debtor, rejection of revival is to deny the Financial Creditor rightful remedy. Non-mention of specific liberty in the Order is inconsequential in view of the clear terms in the settlement which was the basis of withdrawal of Company Petition.
Application allowed.
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2023 (5) TMI 724
Rejection of claim by Resolution Professional - Petitioners sought return of stock of their owned rice from the Corporate Debtor - whether the rice belonging to the Appellants, could be made part of liquidation estate of the Corporate Debtor? - HELD THAT:- This Appellate Tribunal observe that the claims of the Appellants need to be crystal clear and cannot be on the basis of assumptions and presumptions like Oral Agreements without any specific details, more so when the Corporate Debtor and the Suspended Director/ Corporate Debtor were allegedly involved in fraud with Bank for over Rs. 1700 crores and who were investigated by the CBI and case seems to be still on.
This Appellate Tribunal note that the Respondents made averments during hearing that the one single visit was made by the rice expert on 09.10.2020 to the premises of the Corporate Debtor and reported with partially identification of the rice belonging to the Appellant involving huge quantity of stock at the factory premises of the Corporate Debtor including 291.33 MT of Gurudeo Exports Corporation Pvt. Ltd, 493.42 MT of Shree Kalka Global, 84.00 MT of Neon International Traders and 58.94 MT TLS Mercantile P. Ltd. and total rice claimed to have been identified by the rice expert was 927.69 MT of four ‘Appellants’ altogether in one single visit by rice expert.
The Resolution Professional/Liquidator is agreed upon, that the report of the rice expert perhaps has been prepared in hurry and can not be treated as conclusive and authentic and therefore cannot be fully relied upon in order to accept the claims of the Appellants - the Appellants have not disputed that the Corporate Debtor never issued any invoice of job work to the Appellants and the Appellants also admitted that they have not recorded the payment of job work consideration in their own Audited Books of Accounts.
The Liquidator brought out the fact the CBI is already investigating the case against the Corporate Debtor involving Rs. 1,700 crores of the claims of the several banks and the stock claimed by the Appellants have not been proven belonging to them.
There are no concrete evidence or documentary proof are available to substantiate the claims of the Appellants. It may be the case that earlier the Appellants and the Corporate Debtor were involved in such types of trade practices, even may be on the basis of oral agreements and sometimes in violation of relevant laws like Companies Act, 2013, GST or TDS under Income Tax Act, etc. but to accept the claims of the Appellants at the stage of Resolution and now Liquidation proceedings, the claims have to be real, based on solid documentary evidence and in accordance with law. These cannot be allowed on the basis of indirect or circumstantial or secondary evidence/ documents.
There are no error in the impugned order - appeal dismissed.
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2023 (5) TMI 664
Seeking Liquidation of Corporate Debtor - no resolution plan received till date (by RP) - HELD THAT:- The Committee of Creditors in its meeting held on 10.03.2020 took a decision with 100% vote to liquidate the Corporate Debtor. In the CoC meeting it was noted that last date for submitting the resolution plan was 26.02.2022, which date was extended till 09.03.2022, however, the Resolution Professional did not receive any plan till the time of the meeting - The Committee of Creditors noted that the Corporate Debtor is not a going concern and no plan having been received resolution was passed to liquidate. The Adjudicating Authority has allowed the application filed by the Resolution Professional for accepting the liquidation resolution - no error can be said to have been committed by the Committee of Creditors in taking decision of liquidation when no resolution plan was received by the Resolution Professional inspite of extending the date.
Valuation of the Corporate Debtor - HELD THAT:- The present is a case where the valuation has been conducted under the CIRP Regulation, 2016. Liquidator is obliged to consider the average of the value arrived as per Regulation 35 of the CIRP Regulation, 2016. Present is not a case where Liquidator has directed fresh valuation under Regulation 35 Sub-regulation (2) - Furthermore, in the present case, two valuation reports are already on the record, as brought on the record by the Appellant, as noted above. When the case is covered by Regulation 35(1), the Liquidator has to take the average of the estimate of the value arrived by the two Valuers.
The Liquidator while proceeding to sell the assets in accordance with Liquidation Process Regulation, 2016 has to take the reserve value as per Schedule-I of the Liquidation Regulation. The reserve price has to be value of assets arrived at as per Regulation 35 (1).
Liquidation order upheld - appeal disposed off.
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2023 (5) TMI 663
Appointment of Administrator of DHFL to perform all functions of the Resolution Professional (RP) under the Code and to conduct the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor – Dewan Housing Finance Corporation Limited - Supersession of Board of Directors of Dewan Housing Finance Corporation Limited (DHFL) - avoidance of different transactions undertaken by the Corporate Debtor in the CIRP of the Corporate Debtor - section 25(2)(j), 43, 44 and 66 of IBC.
The first submission raised by the learned Counsel for the Appellant is that after completion of the CIRP, avoidance applications, which are not decided by that time, becomes infructuous and cannot be proceeded any further - HELD THAT:- The above submission of the learned Counsel for the Appellant is not acceptable on account of the statutory scheme delineated by the Code and the Regulations. Section 26 itself gives clear legislative intent that avoidance applications are different stream than the stream of insolvency resolution process - Admittedly, the liquidation process begins when no Resolution Plan is approved in CIRP. Continuance of the avoidance application is implicit by provision of Section 36, sub-section (3), sub-clause (f). What is contemplated in Section 36(3)(f) is also clear from CIRP process, which is reflected by Regulation 38(2)(d) of CIRP Regulations. Regulation 38 provides for Mandatory contents of the resolution plan.
Regulation 38(2)(d) has been inserted by Notification dated 14.06.2022. The insertion of Regulation 38(2)(d) by the above amendment clearly makes the legislative intent clear that Resolution Plan shall provide manner in which proceedings in respect of avoidance transactions will be pursued after approval of Resolution Plan - The Division Bench in Venus Recruiter Pvt. Ltd. vs. Union of India [2020 (11) TMI 850 - DELHI HIGH COURT] has clearly held that avoidance application is independent of the resolution of the Corporate Debtor and can survive the CIRP. We, thus, are of the view that argument of the Appellant that after conclusion of the CIRP by approval of the Resolution Plan, avoidance application becomes infructuous, cannot be accepted.
Another submission which has been pressed by the learned Counsel for the Appellant is that Successful Resolution Applicant cannot pursue the avoidance applications and if at all, the avoidance applications can be pursued, it could have been only by the RP and that in the present case the Administrator - HELD THAT:- The present is not a case where Successful Resolution Applicant is exercising any delegated powers of RP/ Administrator. In the present case, Resolution Plan envisages and specifically provides for pursuing of the applications by the Successful Resolution Applicant. The Successful Resolution Applicant is not exercising any delegated powers of RP, hence, the argument that RP being persona designate, has no relevance in the present case - Although, the proviso to Regulation 38(2)(d) provides that this clause shall not be applicable to Resolution Plan, which was submitted before the commencement of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022, that is prior to 14.06.2022, however, in the present case, the Resolution Plan, which was submitted prior to the date, contained specific provision for continuance of avoidance applications by Successful Resolution Applicant, which provision in the Resolution Plan cannot be said to be contrary to any provisions of the Code or the Regulations.
When Resolution Plan specifically empowers the Successful Resolution Applicant to pursue the avoidance applications, the said provisions of the Plan shall bind everyone including the erstwhile Administrator. The submission of the learned Counsel for the Appellant cannot be accepted that it is the erstwhile Administrator/ RP, who could alone, if at all, pursue the avoidance application. This argument has to be rejected in view of the specific clause, permitting the Successful Resolution Applicant to pursue the application.
Another argument advanced by the learned Counsel for the Appellant is that two applications filed by the Administrator were after Resolution Plan was voted on 15.01.2021 - submission of the Appellant is that any avoidance application, which has been filed subsequent to approval of the Plan cannot be pursued and the order of the Adjudicating Authority substituting the Piramal in those application deserves to be set aside - HELD THAT:- The timeline for filing avoidance application under Regulation 35A have been held to be not mandatory, however, the applications have to be filed in a reasonable time and any avoidance application, which is filed with inordinate delay can be refused to be entertained by the Adjudicating Authority. The submission which has been pressed by the learned Counsel for the Appellant is that avoidance applications, which were filed after approval of the Resolution Plan by the CoC, could not have been entertained. In the Code and the Regulations, there are no such provisions, which indicate that avoidance application filed after approval of the Plan by the CoC is to be rejected or not. It depends on the facts of each case and circumstances as to whether any application filed after approval of the Resolution Plan by the CoC can be considered or not. In the present case, the Resolution Plan has noted the pending avoidance applications.
The present Appeals have been filed by the Ex-Promoter of the Dewan Housing Finance Corporation Finance Limited and allegation regarding fraudulent transactions were against the Ex-Promoters including the Appellant. The object of continuing the avoidance applications, even after the CIRP is the discovery of dubious transactions and permitting such preferential undervalued and fraudulent transactions to continue, will be depriving the benefit of such transactions to the creditors, which is not the intent of the statutory scheme.
The impugned order has rightly permitted the Piramal – Successful Resolution Applicant to pursue the avoidance applications, which were filed by the erstwhile Administrator and were pending before the Adjudicating Authority - there are no error in the impugned orders passed by the Adjudicating Authority permitting the Piramal to pursue the applications and rejecting the applications filed by the Appellant and other Applicants to reject such applications - appeal dismissed.
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2023 (5) TMI 662
Seeking closure (withdrawal) of CIRP proceedings - Section 7 Application admitted - Financial Creditor has already settled the dispute with the Appellant and ‘Terms and Conditions’ of the Settlement have been brought on record vide Settlement Letter dated 08th May, 2023 - It is submitted that claim of the intervener having been already filed, CIRP process against the Corporate Debtor be allowed to continue rejecting prayer of the Appellant to close the CIRP.
HELD THAT:- From the facts of the present case, it is clear that CIRP was initiated against the Corporate Debtor vide Order dated 23rd December, 2022 admitting Section 7 Application filed by the IDFC First Bank Limited Respondent No. 1 herein. On 04th January, 2023, Interim Order was passed in this Appeal directing that Committee of Creditors (CoC in short) may not be constituted. Interim Order passed in this Appeal still continues as on date. In the I&B Code as enacted in 2016, there was no statutory provision permitting withdrawal of an Application under Section 7 and 9 of the Code.
Hon’ble Supreme Court Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors. [2019 (1) TMI 1508 - SUPREME COURT] held that before a Committee of Creditors is constituted, a party can approach the NCLT directly under inherent powers of Rule 11 for withdrawal of Section 7 or 9 Application.
The present is a case where Committee of Creditors has not yet been constituted and the Appellant after filing settlement agreement by the Financial Creditor dated 08th May, 2023, prays for withdrawal of the CIRP in exercise of inherent power of this Tribunal under Rule 11 of NCLAT Rules, 2016.
A categorical observation made by the Hon’ble Supreme Court in Ashok G. Rajani v. Beacon Trusteeship Ltd. & Ors. [2022 (9) TMI 1011 - SUPREME COURT] is that Settlement cannot be stifled before the Constitution of Creditors in anticipation of the claims against the Corporate Debtor from 3rd Persons.
In another recent Judgment of the Hon’ble Supreme Court Abhishek Singh v. Huhtamaki PPL Ltd. & Anr. [2023 (3) TMI 1285 - SUPREME COURT], Hon’ble Supreme Court again referring to the Judgment of Ashok G. Rajani again reiterated the same preposition. In the above case, Appeal was filed against the Order of NCLT by which an Application under Section 12A filed for withdrawal of the CIRP was rejected by the NCLT. The Application filed under Section 12A was opposed by intervener who claimed to have raised their claim before the IRP.
The above judgement of the Hon’ble Supreme Court in Ashok G Rajani and Abhishek Singh where the cases were Application for withdrawal was filed before the Committee of Creditors was constituted - Present is also a case where Settlement has been entered between the parties and prayer is being made to withdraw the CIRP in exercise of jurisdiction under Rule 11 of NCLAT Rule, 2016. The Financial Creditor having settled the matter with the Corporate Debtor and Settlement letter dated 08th May, 2023 having been brought on record, it is deemed to be a fit case to exercise jurisdiction under Rule 11 of NCLAT Rules, 2016 to close the CIRP.
On account of objection raised by the intervener of his filing claim before the IRP, the CIRP can not be allowed to proceed since the debt for which CIRP has been initiated, has been settled with the Financial Creditor. The Intervener is free to take such legal proceedings as may be advised to protect his interest.
Taking the settlement letter dated 08th May, 2023 on record, the CIRP against the Corporate Debtor is closed, setting aside the Order dated 23.12.2022 - appeal disposed off.
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2023 (5) TMI 661
Maintainability of application filed u/s 9 of IBC - NCLT admitted the application - Non service of demand notice - it is alleged that before filing the Section 9 Application Section 8 notice was not issued - HELD THAT:- The letter dated 07.08.2013 clearly contains acknowledgement of the debt by the Corporate Debtor. The submission which has been pressed by the Appellant is that the payment was to be made when the work starts. The said statement at best stated the time from when payment shall start, which was accepted by the Operational Creditor. The fact that payment was to take place from the date work start does not in any manner absolve the liability of the Appellant since acknowledgment was very much there. From the order of the Adjudicating Authority, it is clear that the debt was never disputed.
Insofar as the question of Section 8 notice not being issued, on basis of which Appellant contends that there was no default, sufficient to notice that notice was issued to the Corporate Debtor in the winding up petition, subsequently which was transferred. The submission of learned counsel for the Appellant that no default was committed cannot be accepted.
Thus, present is a case where debt was proved and default was committed by the Appellant - there are no error in the order the Adjudicating Authority admitting Section 9 application - There is no merit in the Appeal, Appeal is dismissed.
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2023 (5) TMI 612
Initiation of CIRP - Period of limitation - NCLT rejected the application - Corporate Guarantor who had guaranteed the obligation of the Borrower - The Adjudicating Authority observed that on the one hand the facility agent and the trustee participated in the proceedings before BIFR and at the same time they were pursuing the foreign suit - seeking exclusion of period during the pendency of the reference till 01.12.2016 when the SICA was repealed - HELD THAT:- There is no dispute raised regarding the liability of the Corporate Debtor towards the Financial Creditors and the guarantee by the Respondent. The account of the Borrower was declared as NPA in 2011 but the proceedings were initiated by the Financial Creditors against the Guarantor after issuance of loan acceleration notice dated 03.02.2012 issue to Borrower recalling the entire outstanding loan amount with interest and by invocation of the corporate guarantee given by the Respondent, vide invocation notice dated 21.02.2012, calling upon the Respondent to pay the entire outstanding amount due. However, no payment was made by the Respondent and hence the date of default cannot be taken to be a date of NPA of the Borrower but the date of default has to be taken when the guarantee invocation notice dated 21.02.2012 was given.
While the foreign suit was pending the Respondent filed a reference with the BIFR on 06.11.2012 which was registered on 07.12.2012 and the Respondent was restrained from disposing of or alienating in any manner any fixed assets without the consent of the BIFR. Neither the foreign suit was contested by the Respondent mentioning the pendency of the reference nor mentioned about the foreign suit in the reference. The foreign suit was decreed on 08.04.2014. The Facility Agent also filed an application for intervention before the BIFR for their impleadment but the said application was not decided.
It has also been held in the case of Hyderabad Abrasives & Minerals [2002 (12) TMI 497 - HIGH COURT OF ANDHRA PRADESH] that the benefit of exclusion of period for computing the limitation period, spent while the Company was before BIFR shall be applicable even to those creditors who did not approach BIFR.
However, in the present case, the Appellant made an effort to become a party by filing a Miscellaneous Application before the BIFR but the said application was not decided though the Respondent filed the reply also to the said application - In the present case, on referring to the dates then date of invocation of guarantee is 21.02.2012. Form A Case No. 74 of 2012 (reference) is 06.11.2012, the reference was registered on 07.12.2012 and the SICA was repealed w.e.f. 01.12.2016 vide notification dated 25.11.2016, therefore, the limitation would start running from 01.12.2016 and shall go up to 01.12.2019. The application under Section 7 has admittedly been filed on 30.08.2019 which is prior to the expiry of period of limitation.
It has been held in the case of Gouri Prasad Goenka Vs. Punjab National Bank [2020 (5) TMI 65 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] and a Judgment of Delhi of Delhi High Court rendered in the case of IFCI FACTORS LIMITED VERSUS RAMSARUP INDUSTRIES LIMITED & ORS. [2019 (8) TMI 1866 - DELHI HIGH COURT] that the period shall start running from the date of repeal of SICA.
The order under challenge is patently illegal - Appeal allowed.
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2023 (5) TMI 611
Revival of dismissed application - Seeking direction to revoke decision of approving the resolution plan submitted by Respondent No. 6 - to accept the resolution plan submitted by the Appellant - HELD THAT:- The Judgment relied upon by the Appellant in the case of M/S. VEDANTA LIMITED VERSUS CA VIKASH GAUTAMCHAND JAIN & ANR [2022 (8) TMI 1375 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] is not applicable because the facts of the said case are altogether different from the facts of the present case as in the case of M/s Vedanta Limited an appeal was filed by the Unsuccessful Resolution Applicant who had filed an application to set aside the communication issued by the RP rejecting his prayer to allow it to submit a revised resolution plan and since the Appellant in the said case could not appear, therefore, order was passed rejecting the application. However, subsequently, the Appellant in the said application filed another application for revival of the application I.A No. 406 of 2022 but the said application was also dismissed - In this background, order was passed by this Tribunal that since the application for approval of the resolution plan is under consideration before the Adjudicating Authority, therefore, the appeal filed by the Appellant in the said case was not required to be entertained and the end of justice be served giving liberty to the Appellant to raise his objections regarding the approval of the resolution plan which may be heard by the Adjudicating Authority while considering the application for approval of the resolution plan.
However, in the present case, the Appellant has raised all the issues available to it for the purpose of revoking the decision of the CoC to approve the resolution plan submitted by the Respondent No. 6 and has also made a prayer that resolution plan submitted by the Appellant be accepted. The said application has been thoroughly discussed both on the issue of facts and law and ultimately the same has been dismissed by a detailed order.
There are no merit in the present appeal - appeal dismissed.
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2023 (5) TMI 570
Initiation of CIRP - NCLT admitted the application - Power of NCLT to refuse the application - Refusal of banks to extend the Bank Guarantees of the Corporate debtor - HELD THAT:- Once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section 7.
Even the non-payment of a part of debt when it becomes due and payable will amount to default on the part of a Corporate Debtoṛ. In such a case, an order of admission under Section 7 of the IB Code must follow. If the NCLT finds that there is a debt, but it has not become due and payable, the application under Section 7 can be rejected. Otherwise, there is no ground available to reject the application.
A Review Petition was filed by the Axis Bank Limited seeking a review of the decision of Vidarbha Industries [2022 (7) TMI 581 - SUPREME COURT] on the ground that the attention of the Court was not invited to the case of E.S. Krishnamurthy [2021 (12) TMI 683 - SUPREME COURT] - it was clarified by the order in review that the decision in the case of Vidarbha Industries1 was in the setting of facts of the case before this Court. Hence, the decision in the case of Vidarbha Industries1 cannot be read and understood as taking a view which is contrary to the view taken in the cases of Innoventive Industries3 and E.S. Krishnamurthy2. The view taken in the case of Innoventive Industries3 still holds good.
A demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 dated 29th August 2018 was issued by the first respondent. As the Corporate Debtor did not honour the said notice, the original application for recovery has been filed by the first respondent before the Debt Recovery Tribunal at Hyderabad. Moreover, the Corporate Debtor acknowledged the debt on 5th May 2019 to the extent of Rs. 63,36,61,897.26. Moreover, the Balance Sheet as of 31.03.2019 of the Corporate Debtor reflects the said liability of the Corporate Debtor.
It is true that as far as Bank Guarantees are concerned, the Executive Engineer of the Government of Telangana addressed letters to the Bank requesting the Bank to revalidate the Bank Guarantees. On 8th January 2020, the Government addressed a letter to Syndicate Bank to extend the seven Bank Guarantees mentioned therein. The letter mentions that if the action of revalidation or extension of the Bank Guarantees is not taken, the Bank Guarantees be realized and the amount be paid by Demand Drafts to the State Government. Thus, Bank Guarantees were invoked by the State Government - the first respondent called upon the Corporate Debtor to clear the outstanding immediately. Thus, there is no doubt that the Corporate Debtor committed a default within the meaning of Section 3(12) of the IB Code due to non-payment of the amounts due to the Bank.
There are a large number of Guarantees issued by the Bank. The interim order of the Telangana High Court does not relate to all Bank Guarantees. Moreover, there is no finding recorded in the interim order that the Corporate Debtor is not liable to pay the dues. The interim order only prevents coercive action against the Corporate Debtor - Even assuming that NCLT has the power to reject the application under Section 7 if there were good reasons to do so, in the facts of the case, the conduct of the appellant is such that no such good reason existed on the basis of which NCLT could have denied admission of the application under Section 7.
There is no merit in the appeal, and the same is, accordingly, dismissed.
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2023 (5) TMI 532
Adoption of reverse CIRP by the Appellate Tribunal - limiting the CIRP and constitution of CoC to only one project of corporate debtor, i.e., Eco Village-II - It has been contended on behalf of the appellants that the Appellate Tribunal does not have power under IBC to allow project-wise CIRP and does not have power to accept a resolution plan presented by the promoter without giving opportunity to the CoC to study the commercial viability of the plan - HELD THAT:- The element of balance of convenience shall have its own significance. On one hand is the position that the Appellate Tribunal has adopted a particular course (which it had adopted in another matter too) while observing that the project-wise resolution may be started as a test to find out the success of such resolution. The result of the directions of the impugned order dated 10.06.2022 is that except Eco Village-II project, all other projects of the corporate debtor are to be kept as ongoing projects and the construction of all other projects is to be continued under the supervision of the IRP with the ex-management, its employees and workmen. Infusion of funds by the promoter in different projects is to be treated as interim finance, regarding which total account is to be maintained by IRP. If at the present stage, on the submissions of the appellants, CoC is ordered to be constituted for the corporate debtor as a whole in displacement of the directions of the Appellate Tribunal, it is likely to affect those ongoing projects and thereby cause immense hardship to the home buyers while throwing every project into a state of uncertainty.
The other projects are being continued by the IRP and efforts are being made for infusion of funds with the active assistance of the ex-management but without creating any additional right in the ex-management. In our view, greater inconvenience is likely to be caused by passing any interim order of constitution of CoC in relation to the corporate debtor as a whole; and may cause irreparable injury to the home buyers. In this view of the matter, we are not inclined to alter the directions in the order impugned as regards the projects other than Eco Village-II.
In relation to Eco Village-II project, since CoC was ordered to be constituted by the Appellate Tribunal in the impugned order dated 10.06.2022, we are not interfering with those directions too but, in our view, any process beyond voting on the resolution plan should not be undertaken without specific orders of this Court - these appeals may be listed for final hearing at the admission stage in the second week of July, 2023.
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2023 (5) TMI 531
Condonation of delay - time limit for filing appeal - Cloud9 Apartment Owner Association challenged the admission of application for Initiation of CIRP - HELD THAT:- The remedy of appeal is a creation of statute. Section 61 of the Code deals with the appeal and the Appellate Authority - It is provided in Section 61(1) of the Code that if any person is aggrieved by the order of the Adjudicating Authority, he may prefer an appeal to this Tribunal. Section 61(2) of the Code provides that every such appeal provided under Section 61(1) shall be filed within thirty days before this Tribunal and proviso to Section 61(2) says that the period of 30 days allowed to file the appeal can further be extended to 15 days and not thereafter. Meaning thereby, the limitation to file an appeal before this Tribunal is only upto 45 days out of which the period of fifteen days can be used by the Appellant for the purpose of extension of period of limitation on assigning sufficient cause to the satisfaction of the Appellate Authority for condonation of delay.
In the present case, admittedly within the period of 30 days and even the extended period of 15 days i.e. 45 days no appeal was filed rather the Writ Petition was filed before the Hon’ble High Court in which the aforesaid order has been passed.
Application dismissed.
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2023 (5) TMI 530
Initiation of CIRP - Operational Creditors - existence of debt and dispute or not - proof of service of Section 8 Notice - burden of proof lies on the Operational Creditor proving delivery of goods or not - whether the Petition has been duly signed and verified by the competent person? - HELD THAT:- The said issue was analyzed and finding was returned by the Adjudicating Authority that petition which was filed by Mr. Debabrata Basu on behalf of the Operational Creditor who was territory sales manager, East Zone was fully competent.
The submission which has been pressed by the Learned Counsel for the Appellant is that the Operational Creditor did not file any proof of delivery of goods along with Section 9 Application where it was onus on the Operational Creditor to bring on record the proof of delivery of goods. Learned Counsel for the Appellant however does not raise any argument regarding non-service of Section 8 Notice, looking to the fact that although Operational Creditor did not file any proof of service of Section 8 notice along with Section 9 Application but supplementary affidavit was filed before the Adjudicating Authority bringing on record the proof of service of Section 8 Notice.
It is very relevant to notice that at no point of time prior to filing reply to Section 9 Application, corporate debtor issued any such letter or complaint informing the Operational Creditor about non-delivery of goods. The tax invoice which was noticed above clearly contains the details of vehicles with their numbers by which goods were delivered. The fact is that at no point of time, the Corporate Debtor even raised a little finger about non-delivery of goods.
In Demand Notice as well as Section 9 Application, there was categorical pleadings of the Operational Creditor that there is no dispute or demur with regard to goods supplied. The statement was made due to attending facts and circumstances when after supply of goods no issue regarding supply or delivery was raised - Present is a case where Demand Notice was not even replied by the Corporate Debtor and the plea raised in the Reply by the Corporate Debtor regarding non-supply of goods has been held to be dishonest plea and moonshine plea hence the judgement of this Tribunal in above case does not come to any help to the Appellant.
The Adjudicating Authority did not commit any error in admitting Section 9 Application. Debt and Default being fully proved and all defences raised by the Corporate Debtor were groundless, no error has been committed by the Adjudicating Authority admitting Section 9 Application - there are no merit in the appeal.
Appeal dismissed.
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2023 (5) TMI 529
Rejection of application for withdrawal of application (for closing the CIRP under 12A of IBC) - HELD THAT:- Present is the case where CoC has already been constituted and the Resolution Plan were under consideration by the CoC. The application filed by the Appellant cannot be treated to be an application for settlement u/s 12A - Any proposal for re-structuring cannot be treated to be the proposal u/s 12A, hence, we do not find any error in rejecting the application filed by the Appellant. Moreover, there is no consent by 90% of CoC in favour of 12A proposal of the Appellant.
There are no error in the order of the Adjudicating Authority, the appeal is dismissed.
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2023 (5) TMI 528
Initiation of CIRP - existence of debt and dispute or not - acknowledgement of debts - amount due to the Operational Creditor has been shown as ‘Trade Payable’ in the balance sheet - Complaint raised by the appellant for fraud and cheating against the respondents / creditors - NCLT admitted the application - HELD THAT:- The Settlement Agreement is signed by the Appellant which is a fact not denied. The settlement agreement contains an acknowledgement of liability by the Appellant towards the Operational Creditor for which adjustment of liability of Rs. 40 Lakhs have been mentioned in the agreement. The Adjudicating Authority has rightly relied on Settlement Agreement to come to the conclusion that debt of operational creditor has been acknowledged by the Appellant, Director of the Corporate Debtor.
Appellant cannot take any benefit of Criminal Proceedings initiated by the Appellant by filing an Application under Section 156 of the Cr. PC which proceedings were initiated subsequent to receipt of Demand Notice. Application under Section 9 was to be considered and decided on the basis of material which was brought by the Operational Creditor with regard to its debt and default and the Adjudicating Authority being satisfied that there is debt which remained unpaid, no error has been committed by the Adjudicating Authority in admitting Section 9 Application.
There are no error in the order of the Adjudicating Authority admitting Section 9 Application. There is no merit in the Appeal, the Appeal is dismissed.
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2023 (5) TMI 446
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The NCLAT having referred to the nature of the claim made has taken note that the amount as claimed by the appellant herein was to the extent of Rs.1,81,45,943/-. The appellant herein however contended that the claim as made is not sustainable but according to the statement of accounts maintained by the appellant herein only a sum of Rs.22,56,833/- was due to be paid. In that context, the NCLAT having taken note that in any event since the appellant herein had stated that they are due in a sum of Rs. 22,56,833/- which amounts to admission and such amount in any event being more than Rs. 1,00,000/- had pressed into service the decision of this Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] and in that context was of the opinion that the application filed before the NCLT under Section 9 of IBC was sustainable and has accordingly remanded the matter.
Be that as it may, in the present circumstance when the claim as put forth by the respondent is to the tune of Rs.1,81,45,943/- after referring to the earlier deductions and the appellant herein is presently contending that only a sum of Rs.22,56,833/- was due and was offered to be paid but declined to be received by the respondent, the said amount itself was made the basis by the NCLAT to arrive at its conclusion that in any event, the due admitted is more than Rs. 1,00,000/- - in the present circumstance it is opined that the impugned order is liable to be set aside and the matter is to be remitted to the NCLAT to undertake the said exercise to find out as to whether any amount more than Rs.22,56,833/- is due as claimed by the respondent herein and thereafter arrive at its conclusion in accordance with law.
Appeal disposed off.
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2023 (5) TMI 445
Preferential Transaction or Fraudulent Transaction - charge on the property of the corporate debtor with respect to the two Agreements in form of Bajaj Finance Ltd. - defrauding the creditors of the corporate debtor or not - ultimate beneficiaries of the two loans are related parties of the corporate debtor or not.
Whether the creation of the security interest by way of mortgage of the “Mortgaged Property” located at Noida is a preferential transaction under section 43 or a transaction intended to defraud the creditors of the corporate debtor which is covered under section 66 of the IBC? - HELD THAT:- Section 43 of the IBC stipulates that if there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for on an account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor, such a transaction would be considered a preferential transaction. Moreover, if the transaction is with a ‘related party’ then the lookback period will be two years and if it is a party other than a ‘related party’ the lookback period would be one year preceding the insolvency commencement date as per sub-section 4 of section 43.
The Hon’ble Supreme Court has held in the matter of Anuj Jain, PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [2020 (2) TMI 1259 - SUPREME COURT] that mortgage deeds entered by the corporate debtor JIL should be considered alongwith the fact as to who are the real beneficiaries of the transaction - The Hon’ble Supreme Court has thus held that if there is a transfer of property or interest thereof of the corporate debtor for the ‘benefit of related parties’ and not necessarily be the corporate debtor, then the look back period would be two years and such a transaction will be considered as a transaction which infringes sub-section (2) of section 43.
The Adjudicating Authority erred in holding that the security interest created in the “Mortgaged Property” was correct and we accordingly set aside this part of the Impugned Order and hold that the mortgage created on the “Mortgaged Property” and which is registered by Form CHG-1 shall be cancelled and the said property shall become a part of the assets of the corporate debtor in an unencumbered form, available in the liquidation estate of the corporate debtor for the benefit of its creditors.
Ultimate beneficiaries of the two loans are related parties of the corporate debtor or not - Transfer of Rs.1,02,09,360/- by the corporate debtor in favour of SAKS Developers LLP - HELD THAT:- An MoU was signed between the corporate debtor and SAKS Developers on 30.08.2018. Notably, Mr. Ramesh Kumar Suneja as director of the corporate debtor and Mr. Pankul Suneja as managing partner/partner of SAKS Developers signed this MoU who are father and son respectively. Moreover, this MoU was executed on a non-judicial stamp paper purchased in Uttar Pradesh (where stamp papers in hard copy as against e-stamp paper could be purchased) even though the corporate debtor and SAKS Developers have their registered offices in New Delhi. It is also noted that in New Delhi only e-stamp papers can be purchased. Moreover the MOU is neither notarized or registered. Therefore the veracity about the signing of the MoU on the date claimed cannot be firmly established.
A close perusal of the recital and profits sharing clauses of the MoU reproduced above shows that while on one hand the Developer had ostensibly shared with the Collaborator the relevant details of project including architectural plans, estimated cost of land and constructions etc. and after due consideration the Collaborator had agreed to invest in the proposed project, the clauses in the “Profit Sharing” section as extracted above show that the plans and final project cost etc. are not yet clear and therefore the actual profit sharing ratio and the total cost of the proposed project are not indicated in the MoU. The absence of these details in the MoU shows that the MOU was perhaps executed in a hurry. The intention of the Developer and Collaborator for development of the proposed project also then appears either half-baked or suspicious - Thus, it is clear that when the corporate debtor was experiencing insolvency, it still chose to transfer an amount of Rs.1,02,09,360/- to a related party SAKS Developers LLP and which is also a family concern of Mr. Ramesh Kumar Suneja to siphon off the said amount from the corporate debtor to SAKS Developer LLP even though it could have used the said amount to pay off its debtors and resolve its insolvency.
The amount of Rs.1,02,09,360/- which was transferred by the corporate debtor to the related party SAKS Developers LLP during the lookback period of two years was in clear violation of section 43 of the IBC. Therefore, the order made by the Adjudicating Authority directing SAKS Developers LLP to repay/refund the amount of Rs.1,02,09,360/- to the corporate debtor is correct and does not require any interference.
Appeal allowed.
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