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IBC - Case Laws
Showing 501 to 520 of 779 Records
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2023 (4) TMI 1351
The High Court of Gujarat stayed the order passed by the respondent Board on 23.3.2023 due to it being signed by only one member, contrary to Section 220(1) of the Insolvency and Bankruptcy Code, 2016. The matter is returnable on 15.6.2023.
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2023 (4) TMI 1313
Seeking recall of order - power of recall - application filed by the RBI was barred by Section 10A of IBC or not - HELD THAT:- The power of recall can be exercised if there is any procedural error committed by the Court or order was obtained by playing fraud on the Court. The present is not a case where any procedural error has been committed by the Adjudicating Authority by passing the order dated 08.10.2021. Counsel for the Appellant has advanced submission that order dated 08.10.2021 is in violation of principle of natural justice which submission is wholly unfounded.
Bar of Section 10A - submission is that there is apparent error on the record since default noticed in the order was during 10A period but the Adjudicating Authority ignoring the bar of Section 10A has admitted 10A application - HELD THAT:- The present is a case where Appellant exercised its right of appeal and failed. Appellant who have challenged the order on merits in which he has been unsuccessful, cannot be allowed to file an application to recall the order on the same ground on which the appeal was filed by the Appellant. It is true that the Appeals filed by the Appellant were dismissed due to rejection of the application praying for condonation of 321 days’ delay in refiling the appeal but in the recall application, the ground to challenge the order on which appeal was founded are now being agitated in the Appeal - The IBC is a statute which prescribes timelines for completion of the proceedings. The recall applications have been filed after 17 months of admission of application under Section 227 filed by the RBI that too after unsuccessful challenge by the Appellant to the order dated 08.10.2021 before this Tribunal as well as before the Hon’ble Supreme Court. The Adjudicating Authority has correctly observed in the impugned order that there were no grounds made out in the applications filed by the Appellant for recall of the judgment dated 08.10.2021.
Thus, no error was committed by the Adjudicating Authority in rejecting recall applications - there is no merit in the Appeals - appeal dismissed.
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2023 (4) TMI 1312
Seeking for an order for liquidation of the Corporate Debtor (CD) - Section 33(1) read with section 34(1) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The fact remains that there is no resolution plan pending before the CoC and in the 18th CoC meeting, the RP explained to the CoC that in the event, the NCLT, Hyderabad does not accede to the request of granting further extension of 60 days, the liquidation process u/s 33(1) of Code shall commence in line with the order dated 31/12/2020. The ld. Counsel for the petitioner relies on this part of the Minutes of the 18th CoC meeting to contend that resolution of the CoC has to be deemed as being made, since CoC also noted the explanation given by the RP with regard to the liquidation. However, the Hyderabad Bench of NCLT, in the similar circumstances, has ordered for liquidation without the resolution of the CoC for liquidation. The adjudicating authority considered that no resolution plan was pending before CoC and that the adjudicating authority did not receive any resolution plan under sub-section (6) of Section 30 of the I&B Code, 2016.
When under section 33(1)(a), the Adjudicating Authority has power to order for liquidation when no resolution plan is submitted to it, it implies that the Adjudicating Authority has to only see whether any resolution plan has come up before it for approval prior to the order for liquidation under section 33(1)(a). As no resolution plan is received by the Adjudicating Authority, the questions whether CoC has resolved for liquidation or whether there is no coordination between RP and CoC, are immaterial for the Adjudicating Authority to order for liquidation u/s 33(1)(a).
There are no reason to reject the request made by the RP to order for liquidation of the Corporate Debtor - application allowed.
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2023 (4) TMI 1304
Direction to transfer Igatpuri Unit to the nominee of the Resolution Applicant M/s Kitply Industries Ltd within 45 (forty five) days - It is specific case of the appellant that the respondent failed to honour agreement and as such number of communications were made to the respondent/corporate debtor either to make payment or the appellant will take back possession of the property in question.
HELD THAT:- Admittedly the property of Igatpuri Unit is in relation to agreement to sale which was entered in between the appellant and Corporate Debtor long back in the year 1998. In terms of the agreement after payment of certain amount within a specified time, possession of land property of Igatpuri Unit was to be handed over to the Corporate Debtor i.e. Kitply Inds Ltd. It was clarified in the agreement as to how rest of amount was to be paid; in which manner and within what time.
It is specific case of the appellant that the respondent failed to honour agreement and as such number of communications were made to the respondent/corporate debtor either to make payment or the appellant will take back possession of the property in question. The record reflects that several opportunities were given for payment of the consideration amount failing which the appellant had communicated that it will terminate the agreement and take back possession of the property in question. However, it continued for several years. Even OTS was also offered. The appellant claims that as per OTS the entire consideration amount was not paid whereas the respondent has taken a plea that though there were two OTS i.e. dated 19.02.2008 and 20.02.2008, the respondent settled the dispute by making payment of Rs. 2 crore and by issuance of NCD of Rs.31 lakhs.
Once it is noticed that title holder of the property in dispute is the appellant, in such situation even after initiation of CIRP neither IRP or RP was competent to control the said property in view of rider as incorporated in Section 18(f) Explanation (a).
Admittedly till date the CD is not title holder of the property in question and dispute comes around the execution of the sale deed. It is admitted that dispute regarding either payment of remaining consideration amount as per sale agreement or non-execution of sale deed arose much before initiation of CIRP in the present proceeding and as such neither RP nor NCLT was having any jurisdiction to deal with such property - If there was still dispute in between parties it was not permissible for the NCLT to direct the appellant for transferring the property of Igatpuri in favour of CD or its nominee. Though it is not necessary to reiterate but it is established that unless in terms of agreement to sale, sale deed is finally executed after accepting full consideration amount, title always lies with the vendor.
The dispute whether agreement to sale which was entered in between the parties in the year 1998 was breached by the appellant or the respondent breached the agreement, may not be examined in a proceeding under the IBC. Such disputes are required to be examined by the court of competent jurisdiction. In view of admitted position that title of the property in respect of Igatpuri Unit still lies with the appellant, the Learned NCLT has committed error in allowing the application filed on behalf of the Respondent in directing for transferring the land in question and as such there is no option but to set aside the impugned order.
Impugned order set aside - appeal allowed.
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2023 (4) TMI 1280
Admission of claim after Resolution Plan approved - HELD THAT:- From the facts which has been brought on record it does appear that there was inordinate delay in filing the claim by the Appellant. The Application which was filed by the Appellant came to be rejected by the Adjudicating Authority observing that Resolution Plan having been approved, no claim can survive.
Learned Counsel for the Appellant has relied on Judgement of Hon’ble Supreme Court in STATE TAX OFFICER (1) VERSUS RAINBOW PAPERS LIMITED [2022 (9) TMI 317 - SUPREME COURT] - there is no necessity to consider the judgement since the claim of the Appellant was not admitted by the RP or by the Adjudicating Authority.
There are no error in the order, the Appeal is dismissed.
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2023 (4) TMI 1273
Seeking refund to the Corporate Debtor’s Account in the Corporate Insolvency Resolution Process - existence of sufficient cause and non-appearance of the parties or not - it was held by NCLAT that Although the Plea of Covid-19 Pandemic, appears to be a persuasive one, at the first blush, on acceptable one, on going through the spirit and tenor of the Counter filed by the Respondent, this Tribunal without any haziness, comes to an inevitable and inescapable conclusion that there is no Sufficient Cause / Good Cause for Allowing the application.
HELD THAT:- There are no reason to interfere with the impugned order dated 25 January 2023 passed by the National Company Law Appellate Tribunal at Chennai - appeal dismissed.
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2023 (4) TMI 1256
Maintainability of CIRP application - one time settlement - time limitation - petition has been filed beyond the period of three years from the date of default - date of default can be changed by the Bank or not - Payment of Rs. 2.75 Lakh on 29.03.2017 by the Appellant in their account.
Time limitation - petition has been filed beyond the period of three years from the date of default - HELD THAT:- There is no dispute that the Bank did not mention the date of default in Part IV of Form 1 i.e. the application filed under Section 7 of the Code and disclosed the date of default only in its supplementary affidavit which was filed pursuant to the order passed by the Adjudicating Authority. The Bank has mentioned the date of default as 31.08.2013 in the affidavit. It has also mentioned the date of NPA as 31.03.2014. The Bank has tried to change the date of default as 31.03.2014 which in fact has been mentioned as the date of NPA. The period of limitation, counted from 31.08.2013 i.e. date of default would continue till 31.08.2016 and shall expire w.e.f. 01.09.2016. The Bank failed to produce any evidence of acknowledgement of debt on the part of the Appellant during the period from 31.08.2013 to 31.08.2016.
Whether the date of default can be changed by the Bank? - HELD THAT:- It has been held by the Hon’ble Supreme Court in the case of RAMESH KYMAL VERSUS M/S SIEMENS GAMESA RENEWABLE POWER PVT LTD. [2021 (2) TMI 394 - SUPREME COURT] that the date of default cannot be changed. It has also been held in the case of LAXMI PAT SURANA VERSUS UNION BANK OF INDIA & ANR. [2021 (3) TMI 1179 - SUPREME COURT], BABULAL VARDHARJI GURJAR VERSUS VEER GURJAR ALUMINIUM INDUSTRIES PVT. LTD. & ANR. [2020 (8) TMI 345 - SUPREME COURT], B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [2018 (10) TMI 777 - SUPREME COURT] and B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [2018 (10) TMI 777 - SUPREME COURT] that the period of limitation would be attracted from the date when the default occurs and not from the date of declaration of NPA. Therefore, the date of NPA cannot be taken to be the date of default for the purpose of limitation.
Payment of Rs. 2.75 Lakh on 29.03.2017 by the Appellant in their account - HELD THAT:- It has now been well settled by three judge bench of the Hon’ble Supreme Court, in the case of SHANTI CONDUCTORS (P) LTD. AND ORS. VERSUS ASSAM STATE ELECTRICITY BOARD AND ORS. [2019 (12) TMI 1513 - SUPREME COURT], that Section 19 would come into play if the payment is acknowledged in the handwriting of, or in a writing signed by the person making the payment - thus, no advantage can be given to the Bank of the entry dated 29.03.2017.
One time settlement - HELD THAT:- It has come on record that the OTS has occurred much after the expiry of period of limitation, therefore, it cannot be taken into consideration for the purpose of Section 18 to extend the period of limitation.
The impugned order is patently illegal and the appeal is thus hereby allowed and the impugned order is set aside.
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2023 (4) TMI 1238
Continuation of proceedings u/s 138 of the NI Act, once moratorium declared - thrust of the arguments of the learned counsel rest on the contention that the scope of the protection accorded to individuals/firms under Section 96 of the IBC (interim moratorium) is wider than that of Section 14 of the IBC.
HELD THAT:- As per the settled law, even in the wake of legal impediment under Section 14 of the IBC, natural persons mentioned in Section 141 of the NI Act, e.g. the petitioners in the instant case, would continue to be statutorily liable under Section 138 of the NI Act.
It is abundantly clear that when the provisions of Section 14 and 96 of the IBC are viewed in context of Corporate Debtors vis-a-vis individuals, as is the case in hand, the scope of Section 14 of the IBC comes across as being much wider than that of Section 96 of the IBC.
Adverting to the submissions made by learned counsel qua the petitioners not being vicariously liable in view of their status being that of ‘suspended Directors’, it would be pertinent to notice that the cheques in question had been issued on 15.09.2019 i.e. prior to the order dated 10.10.2019 passed by the NCLT, Chandigarh Branch, appointing Amit Gupta as IRP. Therefore, there can be no manner of doubt that on the date of issuance of the cheque in question, the petitioners were still in-charge of the management of the affairs of the Corporate Debtor as it was a matter of record that they were its Managing Directors.
This Court does not find any merit in the instant petitions and they stand dismissed.
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2023 (4) TMI 1200
Enforcement of Security Interest for recovery of its Outstanding Dues - Seeking to nullify the Security Interest created to and in favour of the Petitioner/ Appellant and L & T Infra Investment - grievance of the Petitioner/ Appellant, is that the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai), without considering the Concept of Relief Period, mentioned under Section 46 (1) (i) and /or Section 46 (1) (ii) of IBC and without considering the Contentions/ Objections, raised by the Suspended Directors - HELD THAT:- In the instant case, the Petitioner/ Appellant, although, being a Secured Financial Creditor of the Respondent Nos. 1 & 4/ Corporate Debtors, and not arrayed as Party, in the Petition, in IA(IBC)/400(CHE)/2021 and that the Petitioner/ Appellant, has filed the instant Comp. App (AT) (CH) (INS.) No. 325 of 2022, as an Aggrieved Person, yet this Tribunal, is of the earnest opinion that the Resolution Applicant of RPPL, had taken over the Corporate Debtor (ofcourse with a clean slate), after Approval, of its Resolution Plan, by the Adjudicating Authority / Tribunal, and in that perspective, the Petitioner/ Appellant, has No Locus Standi, to challenge the said Plan, or Corporate Insolvency and Resolution Process Proceedings of the Corporate Debtor. As such, the filing of an IA No.696 of 2022 in Comp. App (AT) (CH) (INS.) No. 325 of 2022, seeking Leave, to prefer the instant Appeal, before this Tribunal, cannot be sought for, with an inordinate and inexplicable delay, in the considered opinion of this Tribunal.
It must be borne in mind, that when RISPL, itself, had no Rights, in the Properties, the aspect of any Rights, having been vested on the same, to and in favour of the Petitioner/ Appellant, by the Security, created by RISPL, will not arise. In any event, the Impugned Order, dated 30/05/2022 in IA(IBC)/400(CHE)/2021 in IBA/1099/2019, passed by the Adjudicating Authority / National Company Law Tribunal, Division Bench – II, Chennai, does not take away the Rights of Petitioner/ Appellant, in any manner.
This Tribunal, on a careful consideration of the divergent contentions advanced on either side, all the more, when RISPL, itself , had no rights in the Properties in question, any Rights, having been vested on the same, to and in favour of the Petitioner / Appellant, by Security, created by RISPL, does not arise, bearing in mind, a crystalline fact that the Rights of the Petitioner / Appellant, are not taken away, by means of the Impugned Order, dated 30/05/2022, in IA(IBC)/400(CHE)/2021 in IBA/1099/2019 (on the File of the Adjudicating Authority / National Company Law Tribunal, Division Bench – II, Chennai), comes to a consequent conclusion, that the IA No. 696 of 2022 in Comp. App (AT) (CH) (INS.) No. 325 of 2022, preferred by the Petitioner / Appellant, (seeking Leave to prefer the instant Appeal), is Ex facie, not maintainable, and it fails.
Petition dismissed.
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2023 (4) TMI 1140
Overriding effect of forest law over IBC - Jurisdiction of NCLT over state government - Order passed by the National Company Law Tribunal, Ahmedabad on an application filed under Section 60 of the Insolvency and Bankruptcy Code, 2016 - Tribunal by the impugned order dated 06-07-2022 directs the State Government to permit functioning of the windmill by holding that it was essential to resolve insolvency of the corporate debtor i.e., the Company - Whether the Tribunal has exceeded its jurisdiction by passing the impugned order?
HELD THAT:- The Company could not have knocked at the doors of the Tribunal as it completely falls beyond the purview of the Code, being in the realm of public law, since the State has exercised its jurisdiction in drawing up the proceedings and directing forest clearances to be submitted by the corporate debtor, the petitioner, in exercise of powers conferred under the statute. Therefore, they are in the realm of public law. The Tribunal had no jurisdiction to direct functioning/continuing of the windmill without the forest clearances, merely because the State had granted such permission at an earlier point in time.
The submission of the learned senior counsel for the Company is that if the State had passed an order, then the Tribunal would have no jurisdiction. According to him, the one that is passed is not an order. The said submission is noted only to be rejected, as it is a communication from the hands of the State and it is understood by the Company also to be an order only, as the averments in the application filed before the Tribunal demolishes the contention of the learned senior counsel for the Company.
Therefore, none of the contentions of the learned senior counsel for the Company would merit acceptance. It is open to the Company to produce all the necessary clearances as is sought by the State if the Company wants to continue with the operations. In the event, the Company would furnish its documents for forest clearances, it is open for the State to consider the same and pass appropriate orders in accordance with law.
Impugned order dated 06.07.2022 passed by the National company Law Tribunal, Ahmedabad Division stands quashed - Petition allowed.
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2023 (4) TMI 1139
Action against Resolution Professional - Demand of Bribe for showing leniency in the insolvency resolution process for extending CIRP process from 09 months to 02 years - demand of bribe for obtaining favourable forensic audit/valuation report from his chosen Forensic Auditor/Valuer and for helping in re-possession of plant/company - applicability Section 7 of PC Act to this petitioner (as a ‘Resolution Professional’ is not a public servant within the meaning of Section 2(C) of the Prevention of Corruption Act or under Section 21of the IPC).
Whether ‘Resolution Professional’ as defined under Section 22 of the I&B Code will come within the meaning of ‘Public Servant’ under Section 2 (c) of the PC Act?
HELD THAT:- This court is of the view that resolution professional will come within the meaning of a public servant under Section 2(c) the PC Act for the reason that definition of public servant as given under the PC Act is very wide and expansive. It is not limited to those serving under the Government or its instrumentalities and drawing salary from the public exchequer. Apart from the list of the functionaries given in Section 2 (c), the definition also lays down the functional criteria to include within its fold those discharging public duty or any duty authorized by a court of justice, in connection with administration of justice.
Under Section 16 (1) an interim resolution professional is appointed by the adjudicating authority on the insolvency commencement date. Under section 22 (3)(a), the committee of creditors after taking a decision to continue the interim resolution professional as the resolution professional, is required to communicate its decision to Adjudicating Authority and others - Against this scheme of the I&B Code the plea advanced on behalf of the petitioner that Adjudicating Authority had no role in the appointment of Resolution Professional is not sustainable.
Thus, the appointment of Resolution Professional is made during the resolution process before the Company Law Tribunal with its approval, he will be a public servant under Section 2(c)(v) of the P.C. Act.
Whether the functions of a Resolution Professional partake the character of a ‘public duty’? - HELD THAT:- The appointment of resolution professional is made by the National Company Law Tribunal, which is the Adjudicating Authority for the insolvency resolution process of the companies under the I & B Code, 2016. Resolution Professional has a key role to play in the insolvency resolution process and to protect the assets of the corporate debtors. From his nature of assignment and duty to be performed his office entails performance of functions which are in the nature of public duty and therefore will come within the meaning of public servant both under sections 2 (c) (v) & (viii) of the PC Act - the plea that the Petitioner was not a Public Servant within the meaning of the PC Act is rejected.
Petition dismissed.
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2023 (4) TMI 1138
Initiation of CIRP - date of default - period of limitation - Corporate Debtor contested the application filed under Section 7 of the Code on the ground that it has been filed beyond the period of limitation and is not maintainable - whether the petition filed under Section 7 of the Code is barred by limitation or not? - HELD THAT:- It has now been repeatedly held by the Hon’ble Supreme Court and followed by this Tribunal that Article 137 of the Act would apply for counting the period of limitation in respect of an application filed under Section 7 of the Code. Article 137 of the Act provides three years from the date when the right to apply accrues. Right to apply accrues from the date of default as has been provided in Section 7 of the Code itself.
Admittedly, the Bank did not mention the date of default in Part IV of Form 1 of the application filed under Section 7 of the Code and disclosed the date of default as 30.06.2011 only in the supplementary affidavit. The trigger date is thus 30.06.2011 for the purpose of counting the period of three years which is up to 30.06.2014. Meaning thereby, w.e.f 01.07.2014 the limitation to apply under Section 7 of the Code had expired. However, Section 18 of the Act deals with acknowledgement of the debt for the purpose of extension of limitation but it categorically provides that the acknowledgement has to be made during the period of three years and not beyond that. In the present case, the Bank could not produce any evidence to prove that there has been acknowledgment in writing and signed by the Appellant for the purpose of extension of period of limitation except for the reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002 in which the Appellant did not make any unambiguous and unequivocal acknowledgement which could extend the period of limitation.
The limitation counted from the date of default i.e. 30.06.2011 had expired on 30.06.2014 and there is no acknowledgement of debt during this period in terms of Section 18 of the Act. The Bank did not place on record the balance sheet prior to 2014 and the only balance sheets placed on record are from 31.03.2015 to 31.03.2018 and the OTS also took place on 21st January, 2019 much beyond the period of three years.
There are no substance in the argument of Counsel for Respondent for the purpose of maintaining the impugned order which is patently erroneous and based upon mis-reading of evidence. Hence, the appeal is hereby allowed and the impugned order is set aside.
Appeal allowed.
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2023 (4) TMI 1137
Preferential Transactions - appellant are related party to the Corporate Debtor or not - repayment to related parties and repayment to the non-related parties - HELD THAT:- There is no dispute between the parties that repayment to related parties and repayment to the non-related parties were within the lookout period.
The avoidance transaction in Insolvency Proceedings has been dealt with in the legislative schemes under several enactments relating to subject. We may have a look over the legislative scheme with regard to avoidance transaction prior to enforcement of IBC to appreciate the changes in the legislative scheme which has been brought by the IBC - Anuj Jain [2020 (2) TMI 1259 - SUPREME COURT] was a case where the Hon’ble Supreme Court was considering a case where IRP filed an Application for avoidance of certain transactions as preferential transactions where the Corporate Debtor had created security interest by way of mortgage in favour of lenders of third party that is “JAL” on the unencumbered land of the Corporate Debtor which transaction were sought to be avoided by RP by filing an application. The Adjudicating Authority has declared the said transaction as preferential transaction.
Taking financial assistance from related and non-related parties which transactions are subject of enquiry in the present Appeal can not be held to be ordinary course of business of the Corporate Debtor. The expression “ordinary course of business” or “financial affairs of the Corporate Debtor” has to be read “ejusdem generis”. The expression “financial affairs of the Corporate Debtor” cannot be given an extended meaning as contended by Learned Counsel for the Appellants that all financial transactions done by the Corporate Debtor is covered within expression “financial affairs’ hence the loan taken by the corporate debtor from different related and non-related parties is part of the financial affairs cannot be accepted - Undistinguished common flow of the business of the Corporate Debtor does not contemplate any such or particular situation where the Corporate Debtor’s claim that its financial position became unstable due to market condition and had started arranging money from their relatives and other parties. Money arranged from relative and other parties by the Corporate Debtor thus cannot be held to be part of ordinary course of business or part of financial affairs.
When the law mandates that any transfer made in pursuance of order of Court can not preclude such transfer to be deemed to be giving a preference there is no occasion for not accepting any transaction made in pursuance to a notice or demand issued by the Lender or by threat extended by lender for initiating any legal proceeding as preferential transaction. The legislative scheme which is clarified by the above proviso clearly leads to the conclusion that any transaction under any notice, demand or threat shall not lose its character of preferential transaction merely on the above reason.
The submissions of the Appellant on the ground that the transaction was entered into by the Corporate Debtor due to pressure put on it has no relevance and shall not change the nature of transaction from preferential transaction.
Whether the composite application under Section 43, 44, 45, 46, 66, 67 and 60(5) of the Code could not have been filed by the RP? - HELD THAT:- The ingredients of Section 43, 45 and 66 are different and Resolution Professional is expected to keep such requirement in view while making motion to the Adjudicating Authority - When we look into the Application which has been filed in the present case the Resolution Professional has in the avoidance application in his application has dealt with preferential transaction undertaken by the Corporate Debtor and undervalued transaction undertaken by the Corporate Debtor as well as fraudulent transaction in different heads - thus allegations and averments were separately made and filing of composite application does not lead to any infirmity in the Application. We are not persuaded to accept the submission of the Appellant that since the composite Application was filed it ought to have been rejected.
The Adjudicating Authority has rightly allowed the Application filed by the Resolution Professional and declared the preferential transactions undertaken in favour of the Appellants and directed the Appellants to refund the amount within three months - Appeal dismissed.
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2023 (4) TMI 1081
Admitting Section 7 application - Initiation of CIRP - default in payment of guaranteed amount by the Corporate Debtor - Whether application filed under section 7 by the Bank being barred by time ought not to have been admitted? - time limitation.
Whether default in payment of guaranteed amount by the Corporate Debtor is the same default as is committed by the Principal Borrower and the period of limitation for both the Principal Borrower and the Corporate Guarantor shall be same for the purposes of filing Section 7 application for the Bank? - Whether in the facts of the present case, the application filed by the Bank on 17.03.2020 was barred by limitation against the Corporate Guarantor? - Whether the order of the Adjudicating Authority admitting Section 7 application is unsustainable?
HELD THAT:- The scheme of I&B Code clearly indicate that both the Principal Borrower and the Guarantor become liable to pay the amount when the default is committed. When default is committed by the Principal Borrower the amount becomes due not only against the Principal Borrower but also against the Corporate Guarantor, which is the scheme of the I&B Code. When we read with as is delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the Guarantor, as noted above. The definition of default under Section 3(12) in addition to expression ‘due’ occurring in Section 3(11) uses two additional expressions i.e “payable” and “is not paid by the debtor or corporate debtor” - It is well settled that the loan agreement with the Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the Guarantor are two different transactions and the Guarantor’s liability has to be read from the Deed of Guarantee.
Although the Guarantor immediately become liable on any default committed by the Principal Borrower but for initiating any action against the Guarantor, a demand is to be made. Without there being any demand to the Guarantor, it cannot be accepted that period of limitation against the Guarantor shall commence. In the present case, Section 7 application filed by the Bank has been brought on the record as Annexure A-49. When we look into the Part IV of the application, the date of NPA i.e. 31.03.2017 has been mentioned in Part IV and total amount in default as on 31.12.2019 has been computed. The Application under Section 7 thus proceeds on date of NPA - default on the part of the Guarantor cannot be treated to be on 31.12.2016, when the Principal Borrower committed Default. It is also relevant to notice that the Corporate Debtor did not file any reply in Section 7 application despite giving opportunity by the Adjudicating Authority and right to reply was also forfeited - In the facts of the present case, where the Corporate Debtor did not file any reply and also did not file application for recall of order dated 23.11.2021 forfeiting right to file reply, the Adjudicating Authority did not commit any error in admitting Section 7 application.
The application filed by the Bank on 17.03.2020 was not barred by limitation - The order of the Adjudicating Authority admitting Section 7 application is sustainable.
Appeal dismissed.
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2023 (4) TMI 1080
Maintainability of petition - initiation of CIRP - Default in payment of term loan - Financial Creditors - one time settlement scheme (credit facilities) - stand of the Appellant is that, the Term Loan, is repayable over 90 monthly instalments, beginning from April 2016 and entire Loan, will get Repaid, only in October 2023, hence, on 01.06.2019, the Sum in Default, cannot not be Rs.107.48 Crores, at all - on behalf of 1st Respondent / Bank, it is projected that when there is a clear Admission of Liability, and there was an undertaking, to discharge, the Loan Liability, under One Time Settlement, the Appellant, is not justified, in coming out with vexatious and frivolous issues - existence of debt due and payable or not?
HELD THAT:- The very fact that the Corporate Debtor, had admitted its Liability, cementing on the One Time Settlement dated 18.12.2021, the same unequivocally, points out the factum, of Financial Debt, (as per ingredients of Section 5 (8) of the I & B Code, 2016), which is due and liable to be paid by it, to the 1st Respondent / Bank / Financial Creditor, (as per Section 5 (7) of the Code) - The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of Non Performing Asset, on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the Default, took place before the Covid-19 Pandemic, is turned down, by this Tribunal.
Admittedly, the main CP (IB) / 279 (CHE) / 2021, preferred by the 1st Respondent / Bank / Financial Creditor, under Section 7 of the Code on 27.10.2021, before the Adjudicating Authority / Tribunal. The Corporate Debtor’s Loan Account, was declared as NPA, on 01.06.2019. As such, the main CP (IB) / 279 (CHE) / 2021, was filed well within the Limitation Period, by the 1st Respondent / Bank / Financial Creditor / Petitioner, and the point, is so answered.
In the present case, it cannot be lost sight of that the One Time Settlement, dated 18.12.2021, amounting to Rs.84.81 Crores was rejected, by the 1st Respondent / Bank on 18.12.2021 itself, whereby and whereunder the Corporate Debtor / Company, was requested to raise the OTS Sum, which is a clear cut pointer, about the Existence of Financial Debt and Default - in the instant case, the Corporate Debtor’s Financial Debt, with the 1st Respondent / Bank / Financial Creditor, is established by means of a Default, committed by the Corporate Debtor. The available material records projected on the side of the 1st Respondent / Bank, supports the case of the Bank that the Corporate Debtor, had committed Default, in respect of the Debt, due and payable.
Suffice it, for this Tribunal, to pertinently make a mention that as the Debt, due and payable by the Corporate Debtor, is not interdicted by any Law, and this Tribunal, on being subjectively satisfied as to the Default, committed by the Corporate Debtor, in respect of the Financial Debt, due and payable, then, the view arrived at, by the Adjudicating Authority/Tribunal, in holding that the Financial Debt of the Corporate Debtor, was proved by the 1st Respondent / Bank / Financial Creditor, is free from any Legal Flaws.
Appeal dismissed.
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2023 (4) TMI 1079
Jurisdiction for deciding on the eviction vested with the Small Causes Court or the NCLT where liquidation was underway - Appellant was a ‘tenant’ or a ‘licensee’ or an ‘illegal occupant’ - putting the premises under lock and key of the Liquidator once a status-quo order has been passed by the Small Causes Court, Mumbai - HELD THAT:- Once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC.
In the matter of Embassy Properties Developments [2019 (12) TMI 188 - SUPREME COURT], the Hon’ble Supreme Court has held that “if asset owned by a third party in possession of the Corporate Debtor held under contractual arrangements, is specifically kept out of the definition of the term “assets” Further, in a situation where a contractual arrangement is ongoing, the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). These judgements are distinguished on the basis of the fact that no contractual arrangement existed between the Appellant and the Corporate Debtor after 02.07.2020, when the extended Leaves and Licence Agreement expired and therefore the ratio in these judgements cannot provide support to the case of the Appellant.
The residuary jurisdiction is relevant during the CIRP when the insolvency resolution of the corporate debtor is taking place, whereas in the present case the liquidation of the corporate debtor is being considered and the liquidator has taken recourse to its powers under section 33(5) to get control and custody of the asset of the corporate debtor.
The NCLT order notes the contention of the Liquidator that Respondent No. 1 had obtained status-quo order from the Small Causes Court, Mumbai by suppressing facts and without making the Liquidator as a necessary party. We therefore, are of the opinion that the ‘status- quo’ order was obtained from the Small Causes Court by the Appellant without placing full and complete facts regarding its occupation and possession of the said premises and without impleading the Liquidator as a necessary party - the NCLT possesses the correct jurisdiction in considering an application for vacation of the premises in question and that the NCLT was correct in passing the Impugned Order which would be necessary to put the premises in question with the Liquidator and pending the final disposed of I.A. No. 1635 of 2020 - The Impugned Order does not need any intervention.
The NCLT possesses the correct jurisdiction for considering an application for vacation of the premises in question in the circumstances of the present case, and the NCLT was correct in passing the Impugned Order which would be necessary to place the custody of the premises in question with the Liquidator pending the final disposal of I.A. No. 1635 of 2020 so that the liquidation process is completed timely and in accordance with legal provisions - Appeal dismissed.
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2023 (4) TMI 1028
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - notice under Section 8 of IBC - pre-existing disputes or not - HELD THAT:- The fact which is not disputed that there was a meeting between the parties on 12.11.2019 and the meeting itself indicated that there was some issues to be sorted out and on the same date the Appellant shot the email on 12th November, 2019 sending Section 8 Notice and the Corporate Debtor has also initiated suit by filing the same on 14th November, 2019. The filing of the suit can not be relevant to find out pre-existing dispute because Section 8 Notice was issued on 12th November, 2019 but the attending facts and circumstances including meeting between the parties to settle the issue and the email dated 23.10.2019 sent by the Appellant itself indicate that there was issue regarding the rates and the corporate debtor was complaining about the rates as well as there was pre-existing dispute and the Adjudicating Authority did not commit any error in rejecting the Application.
There is no ground to interfere with the Impugned Order - the Appeal is dismissed.
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2023 (4) TMI 1027
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of default - time limitation to ascertain the existence of default - whether Appellant has made out any cause to grant one more opportunity to file its reply before the Adjudicating Authority? - HELD THAT:- The Corporate Debtor does not deny that it had appeared with his counsel on 02.12.2022 before the Adjudicating Authority and prayed for time for filing reply. Appellant has also stated in Additional Affidavit dated 06.04.2023 filed in this Tribunal that counsel was given instructions to file reply, however, same could not be prepared and filed on 03.01.2023. This Tribunal in Ashok Tiwari’s Case [[2022 (7) TMI 1371 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.]] has laid down that the Adjudicating Authority is fully empowered to proceed and pass appropriate order if it is satisfied that the Corporate Debtor is delaying the proceeding.
The loan was taken by the Corporate Debtor from DHFL against which insolvency resolution process was initiated and under the Resolution Plan the DHFL was taken over by the Piramal Capital & Housing Finance Limited. In CIRP proceedings of DHFL, an I.A. was filed by the Corporate Debtor bringing subsequent facts after disbursement of Rs.10 Crores by DHFL. The Corporate Debtor’s case and grievances regarding non-disbursement of balance amount and its adverse effect on the Corporate Debtor was highlighted in the application filed in the CIRP process of DHFL, which application is also part of the record in the present case. Admittedly, order passed by the Adjudicating Authority is exparte and Appellant could not get an opportunity to place its say and the facts and subsequent event after disbursement of loan of Rs.10 Crores could not be brought before the Adjudicating Authority for consideration.
The ends of justice be served in allowing three days’ time to the Corporate Debtor to file reply before the Adjudicating Authority subject to payment of cost of Rs.1,00,000/- to the Financial Creditor - application disposed off.
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2023 (4) TMI 926
Liquidation proceedings - settlement dues of Corporate Debtor - locus standi - whether the liquidation proceedings should be allowed to proceed or whether an opportunity with a strict time-frame can be given to the Appellant to settle the dues of the Corporate Debtor in the interest of justice, fairness and equity?
HELD THAT:- There is no quarrel over the fact that the Corporate Debtor had taken a loan of Rs.36,59,250/- from ICICI on 30.04.2004 for acquiring the subject property and that the said asset is registered in the name of present Appellant though he was only a co-applicant of the loan. It is also a factual statement that the forensic audit report while estimating the value of subject property at Rs. 4 crore had also observed that the subject property should be transferred to the Corporate Debtor so that Service Tax due could be recovered from sale of the subject property to safeguard the interests of stakeholders particularly the Service Tax Department, Government of India.
All the four creditors of the Corporate Debtor in the present case are statutory creditors being government departments. In respect of two statutory creditors, namely, EPFO and Income Tax Department, the amounts due and payable by the Corporate Debtor have been settled by the Appellant and the payments made. A copy of the settlement dated 21.01.2023 submitted to the EPFO office on 27.09.2023 is at Annexure A-2 in Appeal Paper Book No.275 of 2023. As regards, the third statutory creditor namely ESIC, the settlement proposal was placed before the Hon’ble High Court of Delhi for taking on record. Thus, prima-facie, the claim of three statutory creditors appears to have been settled and therefore can be considered to have been more or less extinguished. The sole surviving statutory creditor is the Department of GST which undisputedly happens to be the creditor with majority share.
Keeping in view that the reserve price for auction of the subject property has been kept at Rs.1.75 crore by the liquidator, while the claim of the GST department is Rs.8.04 crore, prima- facie, it appears that even after liquidation, there is a likely possibility that the dues of this statutory creditor may remain unmet. We are also inclined to accept the contention of the Appellant that there is no material on record to show that visible steps have been taken by the liquidator with the GST department to reduce the interest component on Service Tax/penalty liability of the Corporate Debtor - the Appellant having successfully met the dues of three statutory creditors, there is no reason to deny an opportunity to the Appellant to settle the dues of the fourth statutory creditor. It has also weighed that if the dues of GST Department are also cleared by the Appellant, no useful purpose will be served by pressing ahead with liquidation.
Locus standi - HELD THAT:- It has been the contention of the Respondent that the Appellant lacks the authority to offer settlement proposals to the statutory creditors. In support of their contention, they have relied on a judgment in delivered by this Tribunal. In so far as facts of that case is concerned it related to CIRP proceedings and not to liquidation proceedings and thus clearly distinguishable. Thus the ratio are not of help the Respondent in taking the stand that the Appellant has no role to play in settling the dues of the statutory creditors and in discharging the liabilities of the Corporate Debtor - Furthermore, when the present creditors are Govt. Departments which have well laid down mechanism to recover their dues and for this purpose and they have been following up with the Appellant for clearing of liabilities due from the Corporate Debtor, it does not stand to reason for the liquidator to question the locus of the Appellant. For the same reasons, we hold that the Adjudicating Authority has committed an error in rejecting the request of the Appellant to take on record the settlement proposal with EPFO on grounds of locus standi.
The liquidator should assume a more positive approach in resolving the distressed position of the Corporate Debtor and not shun the bona-fide efforts being made by the Appellant in this direction to clear the debt of the Corporate Debtor - The e-auction notice published by the liquidator in the newspapers and warrant of attachment of subject property is stayed. In the interim, the Appellant is allowed to settle all dues of the statutory creditors by complying with the directions imposed.
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2023 (4) TMI 925
Restoration of appeal - condonation of delay of 194 days in filing application - sufficient reason for delay was given or not - HELD THAT:- Although, it is not necessary that the Applicant should explain every days delay but there is a huge delay of 194 days in filing of the application for condonation of delay for which the reasons, are not sufficient for the purpose of condonation of delay. Therefore, in our considered opinion, the application for condonation of delay i.e IA No. 1215 of 2023 which has though been dismissed because of dismissal of IA No. A41 of 2023 deserves to be dismissed independently.
Be that as it may, even if we consider that the application i.e. IA No. A41 of 2023 is duly constituted even then there has been continues lapse on the part of the Appellant in perusing the applications before the Adjudicating Authority and for that matter there is no error committed by the Adjudicating Authority in passing the impugned order - Insofar as, the decision relied upon, in the case of RAFIQ AND ANOTHER VERSUS MUNSHILAL AND ANOTHER [1981 (4) TMI 255 - SUPREME COURT], is concerned, there is no dispute about it but each case has to be decided on its own facts and the facts of this case are such in which discretion for the purpose of restoration of the application by recalling of the order dated 27.02.2023, cannot be exercised.
Appeal dismissed.
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