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Insolvency and Bankruptcy - Case Laws
Showing 121 to 140 of 8669 Records
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2024 (3) TMI 25
Maintainability of petition - Declaration sought that the petitioners are not liable to pay any transfer fee as demanded in the notices - seeking to issue mandamus upon the respondents and/or its officers and/or its men and/or its agents and/or its servants to cancel, rescind and revoke the notices - prohibition on respondent and/or its officers and/or its men and/or its agents and/or its servants and/or its assignees from giving any effect or further effect - prohibiting the respondents, their men, agents, servants, subordinates and each one of them from in any manner disturbing or interfering with fullest enjoyment of the rights of the sub-lessee under the sublease.
Maintainability of petition - appeal preferred before the learned NCLAT in view of apprehension of a belated and illegal demand for purported transfer fees from the first respondent in respect of the Kharagpur land - HELD THAT:- The appellants have incessantly tried to convince this Court that waiver of transfer fee was approved by the NCLT, NCLAT and the Hon’ble Supreme Court whereas the fact is otherwise. The waiver as recorded in clause 15.15.5 of the Resolution Plan was not approved by any of the forums and it was unanimously held that such waiver was left open for determination of appropriate authorities, if applied for. Therefore it is crystal clear that the petitioners have made an attempt to obtain an order in their favour by misleading the Court and misconstruing the contents of the orders passed by the NCLT, NCLAT and the Hon’ble Supreme Court deliberately.
Challenge to notices issued by the WBIDC on April 26, 2022 and July 6, 2022 - challenge on the ground that demand raised therein is in violation of the orders passed by the NCLT, NCLAT as well as the Hon’ble Supreme Court - HELD THAT:- The authorities relied upon by the petitioners demonstrate that once a Resolution Plan is duly approved by the adjudicating authority under section 31(1), the claims as provided in the Resolution Plan shall stand frozen and will be binding on the corporate debtor and its employees and also, all such claims which are not part of the Resolution Plan shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the Resolution Plan. The Hon’ble Supreme Court as well as this Court has held in various judgments that change in shareholding of a company does not amount to transfer of its lease-hold interest on the plot in question which will call for payment of permission fees. Unless there is express transfer or assignment of a lease in favour of some other party, it cannot be ordinarily said that there is assignment or transfer of the lease merely because there is transfer of shareholding.
It is trite law that no demand which is not part of the approved Resolution Plan can be raised subsequently. Clause 15.15.5 of the Resolution Plan is reproduced herein below for proper appreciation of the matter in issue - In the case in hand, clause 15.15.5 of the Resolution Plan was not approved at all, thereby authorizing the WBIDC to raise the demand impugned. There is nothing on record to suggest that the petitioners approached the respective authorities for exemption of transfer fee prior to issuance of the notice impugned by the authority.
This Court is inclined to hold that the notices impugned issued by the WBIDC are in conformity with the terms of the Resolution Plan and there is no illegality or irregularity in the notices which calls for interference by this Court - Petition dismissed.
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2024 (3) TMI 24
While permitting withdrawal of Section 9 Application, Adjudicating Authority did not grant liberty to the Appellant to reapproach the Adjudicating Authority in the event of breach of Memorandum of Understanding - HELD THAT:- There was no undertaking by the Operational Creditor that Operational Creditor shall not pursue this matter on the basis of settlement reached between the parties. What was undertaken that in view of the settlement between the parties an application shall be filed for withdrawal/ closure of CIRP - very basis of denial to grant further liberty to the Appellant to reapproach the Adjudicating Authority was fallacious, as the MoU only states that in view of the agreement between the parties, both the parties shall file an application for withdrawal of Section 9 Application, for which no exception can be taken and the Adjudicating Authority rightly allowed the application for withdrawal. However, the MoU cannot be read to mean that the Operational Creditor has relinquished its right to make any further application before the Adjudicating Authority in event any default is committed by the Corporate Debtor.
There was no occasion for declining any further liberty to the Operational Creditor to reapproach to the Adjudicating Authority at the stage when Section 9 Application was withdrawn on the basis of Section 12A Application.
In the MoU, between the parties, neither there was any specific prayer made for revival of the CIRP, nor there was any statement that Operational Creditor has relinquished its right to revive the CIRP. The learned Counsel for the Respondent has relied on judgment of this Tribunal in Amrit Kumar Agrawal vs. Tempo Appliances Pvt. Ltd. [2020 (11) TMI 993 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI]. In the said case, Section 7 Application was dismissed on the ground of default in payment of Settlement Agreement holding that the debt does not come under the definition of financial debt. In the above case, MoU was entered on 22.09.2017 between the Appellant and the Principal Borrower, where Respondent stood as Guarantor. Since, cheques issued by Principal Borrower, were dis-honoured on presentation, the Respondent as guarantor came forward to pay the outstanding amount of Rs.86 lakhs with interest and issued two cheques in consideration of such liability.
This Tribunal held that mere obligation to pay does not bring the liability within the ambit of ‘financial debt’. The above case is clearly distinguishable from the facts of the present case. In the present case, MoU was entered between the parties in proceedings under Section 9, with regard to which default was committed by the Corporate Debtor. The said judgment has no application in the present case.
The order of the Adjudicating Authority insofar as it declines liberty to the Applicant to reapproach the Adjudicating Authority is set aside. The Appeal is partly allowed
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2024 (3) TMI 23
CIRP - Jurisdiction of the Adjudicating Authority to direct consideration of a settlement proposal after approval of a Resolution Plan. - Appellant (Successful Resolution Applicant - SRA) submits that after approval of Resolution Plan of the Appellant by the CoC, there was no occasion for directing consideration of fresh settlement proposal submitted by Ex. Directors to be placed before the CoC - HELD THAT:- The Adjudicating Authority, ought to have allowed opportunity to SRA to respond to the Application (IA No.188 of 2024 filed by Respondent Nos.1 and 2), whose Resolution Plan has been approved by the CoC and which is pending consideration before the Adjudicating Authority. Without giving an opportunity to the Appellant, direction to the CoC to consider the Plan, cannot be sustained.
The Application for approval of Resolution Plan being pending consideration, it shall be open for the Adjudicating Authority to consider IA No.188 of 2024 along with its objection.
The impugned order set aside - appeal disposed off.
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2024 (3) TMI 22
Rejection of section 9 application filed by the Appellant - pre-existing dispute - Allegations have been made in the email that excess amount has been paid to the Appellant and email also says that excess amount should be refunded - HELD THAT:- The submissions of the Learned Counsel for the Appellant that work was completed in March, 2021 and email sent was only moonshine defence cannot be accepted. Averments made in the email raises clear dispute which cannot be said to be moonshine. As per the submission of the Appellant that Corporate Debtor has taken input on the tax invoice sent by the Appellant. It is on record that advance payments were made by the Corporate Debtor and issues whether input tax taken is in excess is the issue which could not be gone into in proceeding under Section 9 of the Code.
It is observed that it shall be open for the Appellant to take such remedy as available under the contract if there are any dues.
Appeal dismissed.
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2024 (3) TMI 21
Withdrawal of CIRP - main contention of the appellant is that as per the provisions of Section 12A of IBC, 2016, CIRP can be withdrawn only on the application of the applicant who had filed the application under Section 7, Section 9 or Section 10 of the Code - HELD THAT:- The Adjudicating Authority has over looked and ignored the fact that Form ‘FA’ has not been signed by the applicant of application under Section 9 of IBC, 2016. No finding in this regard has been given in the impugned order.
The submissions of IRP requesting that the case may be remitted back to NCLT, Chennai as the corporate debtor has failed to honour the settlement agreement is considered - It is held that the Form ‘FA’ was not proper, and was not as prescribed under the provisions of Regulation 30A of IBBI (CIRP) Regulations, 2016 and Section 12A of IBC, 2016 and hold that withdrawal of CIRP was not correct as per Law. The impugned order dated 09.11.2022 is set aside.
Appeal allowed.
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2024 (3) TMI 20
Eviction of the Appellant from the property - handing over the possession of the property in question to the RP (now Liquidator) within 15 days from the passing of the order and the Statutory Authorities i.e. Local Police - HELD THAT:- Section 60(5) of the Code provides the power to the Adjudicating Authority which can be invoked to entertain or dispose of any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and also any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Section 238 of the Code creates an overriding effect which provides that the provisions of this 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.
It was held by the Hon’ble Supreme Court in Gujarat Urja [2021 (3) TMI 340 - SUPREME COURT] that the NCLT has the jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the corporate debtor but it has also been held that while doing so, the Tribunal may not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the corporate debtor and nexus with the insolvency of the corporate debtor must exist - The termination is not on a ground independent of the insolvency, therefore, the dispute in that case solely arising out of and relates to the insolvency of the corporate debtor and it was thus held that the RP can approach the NCLT for adjudication of the dispute that were related to the insolvency resolution.
Similarly, in the present case also, the issue is in regard to the title of the property of the Corporate Debtor which is in CIRP and as per Section 60(5)(c) of the Code the question of fact as to whether the asset of the Corporate Debtor is the property of the Appellant on account of the agreement or is the property of the Corporate Debtor in CIRP is a question relating to the insolvency resolution.
It is also pertinent to mention that the argument raised by the Appellant that the Appellant is entitled to double of the earnest money paid towards the part performance, in view of clause 7 of the agreement is concerned, it would not apply to this case because there was no denial on the part of the Corporate Debtor for the execution of the sale deed rather it was agreed by both the parties that the Appellant shall complete his part of the contract by 30.11.2018 which he had failed to perform, therefore, there are no substance in this argument as well.
There is hardly any merit in this appeal which requires interference by this Court - Appeal dismissed.
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2024 (2) TMI 1317
Condonation of delay in filing the Appeal - Appellant submits that since certified copy which was sought has not been given, the Appellant could not file the appeal in time and delay in filing the Appeal need to be condoned - HELD THAT:- Jurisdiction to condone the delay is limited to only 15 days after expiry of the limitation under Section 61(2) proviso. Even from the own case of the Appellant, it is clear that for the first time the certified copy was applied on 23rd November, 2023 physically. The email was sent on 18th November, 2023 prayer of which we have quoted above cannot be treated to be an application for certified copy, according to own case of the Appellant, application for certified copy was made on 23.11.2023 after 30 days of passing of the order dated 19.10.2023 - no benefit under Section 12 of the limitation act can be allowed to the Appellant whereas admittedly according to the Appellant, the certified copy was not given.
The Appeal having been filed on 23rd January, 2024 which is well beyond time and well beyond period of 15 days which is permissible to be condoned under Section 61(2) proviso, the delay cannot be condoned in filing the Appeal - Delay Condonation Application is dismissed.
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2024 (2) TMI 1316
Initiation of CIRP - Personal Guarantors - Maintainability of Applications filed under Section 95 sub-section (1) of IBC - time limitation - It is submitted that Adjudicating Authority cannot be used as a Forum to recover a time barred debt - HELD THAT:- In view of the judgment of the Hon’ble Supreme Court in DILIP B JIWRAJKA VERSUS UNION OF INDIA & ORS. [2024 (1) TMI 33 - SUPREME COURT], it is settled now that question of adjudication of issues between the parties arises only at the stage of Section 100 and the RP has only role of facilitator. The RP has to submit a Report, after examining the Application under Section 95 and after giving opportunity to Personal Guarantor. The role of RP has been elaborately examined by the Hon’ble Supreme Court in the aforesaid case and it is held that RP does not perform any adjudicatory function, nor even can take an administrative decision. The role of RP has been held to be only facilitator. The judgment relied by learned Senior Counsel for the Appellant in SHANKARLAL AGGARWALA VERSUS SHANKARLAL PODDAR [1963 (1) TMI 40 - SUPREME COURT] has no application in the facts of the present case.
Insofar as the submission of the Appellant(s) that Adjudicating Authority failed to take into consideration that authorization was not filed by the RP, it is always open for the Appellant to take such or other pleas as permissible at the time of adjudication of issue, including any defect in the Application under Section 95 and the said question also does not require any consideration at the stage when RP is appointed. Of course, if there is any invalidity or shortcomings while appointing the RP, Section 98 is there for the debtor or creditor, which provides for replacement of the RP.
There is no error in the impugned order passed by the Adjudicating Authority appointing the RP - There is no merit in these Appeal(s) - The Appeal(s) are dismissed.
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2024 (2) TMI 1315
Initiation of CIRP - Admission of main company petition - liability of Guarantor of loan - acknowledgment of debt by the Principal Borrower shall be binding on the Guarantor or not - plea of the Appellant is that the ‘action’ as far as the Corporate Guarantor is concerned, the same is barred by Limitation and that Article 137 of Limitation Act 1963 applies - HELD THAT:- As per the decision of Hon’ble Supreme Court in Laxmi Pat Surana’s case [2021 (3) TMI 1179 - SUPREME COURT], the liability of the Guarantor being co-extensive with the Principal Borrower under Section 128 of the Indian Contract Act, 1872 it triggers the moment the Principal Borrower commits default in paying the acknowledge debt and this being a legal fiction and such a ‘liability of the guarantor will flow from the Guarantee Deed and Memorandum of Mortgage created therein’.
On a careful consideration of respective contentions, this ‘Tribunal’, taking note of the facts and circumstances of the instant case in an encircling manner, and ongoing through the impugned order passed by the Adjudicating Authority/NCLT Kochi Bench, comes to a resultant conclusion that the conclusion arrived at by the Adjudicating Authority/Tribunal in admitting main petition holding that the debt has not been paid by the ‘Corporate Guarantor’ is free from any legal flaws.
Application dismissed.
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2024 (2) TMI 1314
Improper handling of Resolution Plan - Respondent No.1 alleges that the Resolution Professional (RP) violated the process by opening a sealed cover containing the plan without the presence of the Committee of Creditors (CoC) and Principal Resolution Applicants (PRAs). - HELD THAT:- Regulation 39 of the CIRP Regulations, 2016 also requires the Resolution Professional to look into the Resolution Plan submitted by the Applicants and to place the plan before CoC which is in compliance with Section 30(2). The opening of Resolution Plan by Resolution Professional is essential for further process in the CIRP. The Resolution Professional without opening the plan cannot come to any opinion whether the plan is complaint to Section 30(2) or not. There is no regulation or law which provide that the Resolution Professional should open the plan in presence of CoC and PRAs. Learned counsel for the Respondent No.1 has been unable to show any provision of law which require that the Resolution Professional shall open the plan in presence of CoC and PRAs.
The order passed by the Adjudicating Authority is unsustainable - In result, Appeal is allowed.
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2024 (2) TMI 1260
Qualified bidder or not - Application rejected holding that in third round of e-auction conducted by the Respondent property lot-III as is specified in e-auction notice dated 07th July, 2023 also stands sold - grievance of the Appellant is that in the process document, the time for payment was provided for 10 days whereas in the Schedule I, the time for payment is for 90 days.
HELD THAT:- Auction having already held with regard to lot-III, challenge to auction notice cannot be entertained.
In so far as the submission of the Appellant that in the process document only 10 days time is allowed for making payment whereas regulation provides for 90 days, it is well settled that in event of conflict between a clause in the process document and the regulations, it is the regulation which will override. The question of payment arises only when auction is confirmed and when bidder is declared a successful bidder. It is not the case of the Appellant that Appellant has been declared as Successful Bidder and he has been asked to deposit within 10 days, Appellant having not participated in the auction, at his instance the auction notice has not rightly been quashed by the Adjudicating Authority.
There is no merit in the Appeal, the Appeal is dismissed.
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2024 (2) TMI 1259
Initiation of CIRP u/s 9 - time limitation - threshold limit of amount claimed - whether the claims made by operational creditor are time barred? - whether the claims are meeting the threshold limit for them to be eligible for section 9 proceedings? - acknowledgement of debt - HELD THAT:- This Tribunal in S.M. GHOGBHAI VERSUS SCHEDULERS LOGISTICS INDIA PVT. LTD. [2022 (5) TMI 1210 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] had held that proceedings under Section 9 of the IBC 2016 cannot be set to be a suit relating to accounts and as such Article 1 of the Limitation Act is not applicable and the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of the Limitation Act. Accordingly, the time from which period of limitation begins is when the right to apply accrues and right to apply accrues when the invoices were to be paid.
Time barred claims or not - HELD THAT:- The Limitation period begins to run from the time when the right to apply accrues i.e. limitation will be three years from when the right to apply accrues, which is over for 224 out of 234 invoices, as the due dates of these invoices, admittedly are from 2013 to 2014. In the instant case there are six projects, located in different locations, though under the same construction company viz HCCL. Most of the invoices pertain to the period of 2012 to 2014 and default dates varies from the year 2012 to 2014 in majority of the cases. Therefore, the three-year limitation period, even for the last invoice out of the 224 invoices had lapsed in September 2018, while this Company Petition was filed on 25th February, 2021. Therefore, the argument of the petitioner that for Company Appeal the limitation stood extended is not tenable.
The legal tenability of running accounts has already been noted in the instant case for all the invoices together and there cannot be any better justification to settle them project wise as per Article 1 and therefore they also have to be settled as per Article 137 of the Limitation Act. The Operational Creditor has not been able to cross the hurdle of limitation and the threshold of Rupees one crore in a consolidated manner for 234 invoices claimed in his demand notice - with respect to 234 invoices, which are payable within 30 days of the invoices, 224 invoices are ex-facie time barred and the remaining 10 invoices do not meet the threshold of Rs.1,00,00,000/-. Therefore, this line of argument of the operational creditor is also not tenable.
Emails-are they acknowledgement of debt? - whether the emails of 14.07.2017, 07.01.2019 and 26.03.2019, annexed to the petition constitute an acknowledgement of debt or not? - HELD THAT:- The claims either suffer from hurdle of limitation or threshold or most of the time by both. In the present case as the so-called acknowledgement of liability by these emails is not before the expiration of the period of limitation. Taking these projects individually, in the case of Kashang Hydro Electric Project the due date for the last invoices had fallen on 28.06.2014. The claims were rendered time barred on 28.06.2017. And the purported emails sent by the Appellant is dated 10.11.2017, which is much after the period of expiry of limitation. Similarly , the due date for the last invoice for the Uri Project had fallen on 23.01.2014. The claims were rendered time barred on 23.01.2017. Appellant had relied upon email dated 14.07.2017, which is much after the period of expiry of limitation. Same is the case for other projects also. Therefore, section 18 of the Limitation Act doesn’t apply and these emails do not provide any acknowledgement of the debt and doesn’t help the Appellant.
It is well settled that the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of The Limitation Act, 1963. The claim of the Operational Creditor that they were having running account and are covered under Article 1 of the Limitation Act cannot be accepted - In the instant case in most of the claims, as noted by the Adjudicating Authority they are time barred. Specifically, out of 234 invoices 224 are ex-facie time barred and for the remaining 10 invoices the total does not make it more than the threshold of Rupees one crore and therefore the claims of the Operational Creditor cannot be accepted.
Accordingly, the Appeal is dismissed.
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2024 (2) TMI 1258
Prayer for direction for placing the Settlement Proposal submitted by the Appellant before the CoC for consideration - CoC unanimously decided to reject the proposal - HELD THAT:- On looking into the minutes of the CoC, it is clear that the proposal submitted by the Appellant was duly considered and deliberated by the CoC. The reasons have also been noted in the minutes due to which the proposal did not find favour with the CoC. The decision to accept or reject the proposal under Section 12A is essentially a business decision and is in the domain of commercial wisdom of the CoC - the submission of learned counsel for the Appellant that proposal of the Appellant was not adequately considered by the CoC or there is any error in consideration or CoC has arbitrarily acted in rejecting the proposal of the Appellant, is not accepted.
It is well settled that jurisdictional review of the decision of CoC for accepting or rejecting a proposal by the Adjudicating Authority is only on the ground that decision is arbitrary. The minutes of the CoC meeting does indicate that there is application of mind and CoC has rejected the proposal after due consideration and deliberation.
There are no error in the order of the Adjudicating Authority rejecting the application - appeal dismissed.
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2024 (2) TMI 1219
Approval of Resolution Plan - homebuyers are waiting their units to be given possession for the last several years and by appeal filed by promoters/directors, process is being delayed.
First judgment delivered by the Hon’ble Supreme Court in respect to CIRP of the Corporate Debtor is the Judgment of the Hon’ble Supreme Court in Chitra Sharma Vs. Union of India [2018 (8) TMI 661 - SUPREME COURT] - HELD THAT:- In this case, Hon’ble Supreme Court exercised its jurisdiction under Article 142 in reviving the CIRP of the Corporate Debtor.
Judgment of the Hon’ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank [2019 (11) TMI 316 - SUPREME COURT] - HELD THAT:- Hon’ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment - Another direction issued in the above case was that the IRP to complete the CIRP process within 90 days and it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively who were finally bidders and had submitted resolution plan on the earlier occasion.
Judgment of Hon’ble Supreme Court in Jaypee Infratech Limited Vs. Axis Bank Ltd. [2020 (2) TMI 1259 - SUPREME COURT] - HELD THAT:- Hon’ble Supreme Court held that approval of the Resolution Plan is exclusively in the domain of the commercial wisdom of the CoC, the scope of judicial review is circumscribed.
After noticing the Judgments of the Hon’ble Supreme Court which was delivered in the CIRP of the Corporate Debtor and certain background facts, now the question which have been framed are now considered.
Whether Appellants have locus to challenge the order dated 07.03.2023 passed by the Adjudicating Authority approving the Resolution Plan of Suraksha Realty? - HELD THAT:- The main reasons for dismissing the appeal has been contained in paragraph 48. The main reason, where the court has observed that one who does not come to a court with clean hand may not get any relief. It was held that conduct of the Appellant in both the appeals is not transparent. In the present case, there are several other facts which need to be noticed. For example, the Appellants were permitted to file objections before the Adjudicating Authority against the resolution plan and their objections were heard on merits, promoter and director was also impleaded as one of the parties in appeal of NBCC, objections of appellants were also noticed by Hon’ble Supreme Court in earlier round of litigation that is while deciding Jaypee Kensington Case [2021 (3) TMI 1143 - SUPREME COURT] - the appeals of appellant cannot be thrown out on the ground of locus. The limited ground to challenge approval of the resolution plan is that the same is not in conformity with Section 30(2) - the objection of the respondent on the locus is rejected and it is proceeded to examine the submissions raised by the Appellant.
Whether the treatment of Income Tax dues in the Resolution Plan where they have been treated as Operational Creditor and offered only Rs. 10 Lacs violates the provision of sub-section (2) of Section 30? - HELD THAT:- The income tax department has itself filed an appeal being C.A.(AT) Ins. No. 549 of 2023 which has been decided on 26.09.2023 where this Tribunal came to the conclusion that there is no violation of provision of Section 30(2)(b) in so far as treatment of the claim of the income tax department is concerned and the order of the Adjudicating Authority not being interfered with in the Appeal, Appellant is not entitled to raise any further issues regarding the dues of the income tax department which has been concluded in the Appeal filed by the Income Tax Department itself. This Tribunal having held that there is no non-compliance of section 30(2)(b) with regard to treatment of claim of the income tax department who is operational creditor, we cannot accept the submission of the Appellant that there is any violation of section 30(2) of the Code with respect to claim of income tax department - there is no violation of provisions of subsection (2) of Section 30 of the Code with regard to dues of the Income Tax Department.
Whether the treatment of claim of YEIDA towards farmers' compensation and other claims of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? - Whether YEIDA is a Secured Creditor of the Corporate Debtor? - HELD THAT:- The issues pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised - the issues raised by the Appellant need to be examined and considered in the appeal filed by YEIDA and there is no necessity to consider those issues in this appeal which is filed by the Suspended Promoter and Director of the Corporate Debtor. Answer to both the questions is recorded accordingly.
Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further upon discharge of principal debtor to repay the debt the liability of surety also gets extinguished? - HELD THAT:- In the facts of the present case, it is not the case of the Appellant that the Corporate Guarantor and Personal Guarantor have paid the dues of the creditor and thus they are entitled to get in the shoes of the principal creditor. On this single ground claim of Section 140, does not subsist. In the present case, debt of the Principal Borrower is being discharged consequent to the Resolution Plan under the IBC - Clause 34.50 is already noticed which expressly takes away the right of subrogation to the Guarantors. The Hon’ble Supreme Court had occasion to consider the right to Guarantors consequent to approval of Resolution Plan in IBC in Lalit Kumar Jain vs. Union of India, [2021 (5) TMI 743 - SUPREME COURT]. Submission was advanced before the Hon’ble Supreme Court that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities - The Hon’ble Supreme Court noted relevant provisions of the Contract Act including Section 141 of the Contract Act. The Hon’ble Supreme Court laid down that approval of Resolution Plan and finality imparted to it does not per se operate as a discharge of the guarantor’s liability.
The law is thus well settled that after approval of the Resolution Plan, the Personal Guarantors and Corporate Guarantors have no right of subrogation especially when in the facts of the present case under Clause 34.50 of the Resolution Plan, right of subrogation is expressly extinguished. The debt against the Corporate Debtor might have extinguished after approval of the Resolution Plan but said consequence shall not be with regard to the Corporate Guarantors and the Personal Guarantors. The same shall be as per the express provisions of the Resolution Plan - there are no substance in submission of the Appellant that debt is extinguished under Section 135 and they have right of subrogation under Section 140 and to receive provision of securities under Section 141, cannot be accepted.
Whether the Adjudicating Authority having denied several reliefs and concessions which clearly means that those provisions of Resolution Plan have been disapproved, the Adjudicating Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? - Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Authority and by issuing various directions, Adjudicating Authority travelled beyond its jurisdiction and further no direction could have been given to statutory authority as has been directed in the impugned order, which is impermissible? - HELD THAT:- The SRA has prayed for issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan. The above direction is only for the purpose of implementing the Resolution Plan and does not violate any statutory provisions. The use of expression “as applicable under the prevailing laws” clearly indicate that the SRA is not seeking any relief and concession in violation of any applicable law. The objection raised by the Appellant thus has no merit - The above direction is only to relevant RERA Authority to expeditiously make the appropriate changes in its records qua Projects, in accordance with the Resolution Plan. The said action is necessary consequence to the approval of Resolution Plan. The SRA is not asking any direction which is in violation of any applicable law. Thus, there is no error in granting the above relief by the Adjudicating Authority.
The Successful Resolution Applicant has clearly contemplated that the Successful Resolution Applicant will implement the plan whether or not reliefs and concessions are granted - there are no infirmity in the reliefs and concessions granted by the Adjudicating Authority. As noted above, the fact that certain reliefs and concessions have not been granted could have not adverse effect on validity of the Resolution Plan or it can be said that any illegality has been crept in the Resolution Plan on the above ground.
Whether Resolution Plan take into consideration 758 acres of land which became available to the Corporate Debtor consequent to allowing the avoidance application and subsequent to the judgment of the Hon'ble Supreme Court [2020 (2) TMI 1259 - SUPREME COURT] ? - HELD THAT:- The judgment of Hon’ble Supreme Court in Anuj Jain Vs Axis Bank Ltd. [2020 (2) TMI 1700 - SUPREME COURT] was delivered before approval of the Resolution Plan on 03.03.2020. From judgment of Jaypee Kensington of the Hon’ble Supreme Court it is noticeable that even in NBCC’s plan relief was sought with regard to 858 acres of land. Both the Resolution Applicants were thus well aware about order of the Hon’ble Supreme Court dated 26.02.2020 and there was no occasion for not including the said land which was available for the kitty of the Corporate Debtor after release of encumbrances - there are no substance in submission of the Appellant that 758 acres of land has not been included in the plan submitted by Suraksha Realty.
Whether applicants who have been permitted to intervene in the appeal are entitled for any relief? - HELD THAT:- It is well settled that interveners by the I.A. cannot claim any relief for themselves. Interveners are either to support the order which is subject matter of challenge or support the Appellant in their challenge. The Applicants who have filed their claims before the IRP and whose claims are reflected are fully entitled to approach the SRA/Monitoring and Implementation Committee for their entitlement, for which they are entitled as per the Resolution Plan.
There are no ground in these appeals to interfere with the impugned order dated 07.03.2023 passed by the Adjudicating Authority at the instance of the Appellants - appeal dismissed.
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2024 (2) TMI 1215
Maintainability of application filed under Section 95 (1) of the IBC, 2016 - initiation of CIRP against the Respondent/Personal Guarantor - invocation of personal guarantee - issuance of demand notice - HELD THAT:- It is noted under section 128 of Indian Contract Act, 1872 that when a default is committed the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously.
From the report of IRP, it is clear to us that: i. IRP has recommended to accept the application for the reason as stated in the report dated 11.12.2021. ii. The Respondent has admitted to have executed the Guarantee Agreement. iii. The Applicant has demanded the amount outstanding from the Respondent vide Demand Notice dated 22.09.2021. iv. Resolution Professional report states that no evidence was placed before him by the Respondent having paid the amount demanded by the Applicant and as such in overview entire amount demanded is un-serviced as on the date of order. v. The application is not hit by Limitation.
It is directed to initiate Insolvency Resolution Process against the Respondent/Personal Guarantor and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided under Sec 101 of IBC, 2016 - application filed under Section 95 (1) of the IBC, 2016 is admitted and the Insolvency Resolution Process stands initiated against the Respondent/Personal Guarantor.
Application allowed.
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2024 (2) TMI 1187
Liquidation of the Corporate Debtor under Section 33 of the IBC - whether the statutory provisions of IBC provides scope for the CoC to consider approval of liquidation of the Corporate Debtor before inviting resolution plans? - HELD THAT:- The statutory provisions of IBC allow the CoC to consider approval of liquidation of the Corporate Debtor before inviting resolution plans. However, it depends on the facts of each case as to whether the decision to liquidate is in conformity with the provisions of the IBC and to that extent open to judicial review by the Adjudicating Authority and this Appellate Tribunal.
SBI had failed to gain possession of the Assets of the Corporate Debtor inspite of filing SARFAESI proceedings. It was also pointed out that though the IRP had sent several mails to the suspended management to be present and assist in the handover of the assets of the Corporate Debtor no such assistance was given in handing over the assets of the Corporate Debtor. Therefore, the CoC in the exercise of its powers endowed upon it by Section 33(2) of the IBC was entitled to liquidate the Corporate Debtor.
Whether in the present facts of the case there were good reasons for the CoC to initiate liquidation of the Corporate Debtor in the exercise of its commercial wisdom? - whether there existed any cogent ground for the Adjudicating Authority to reject the recommendation made by the CoC to initiate liquidation of the present Corporate Debtor? - HELD THAT:- From the CoC minutes it is also clear that the RP had noticed that Corporate Debtor is not a going concern for 3 years prior to CIRP. This fact has not been contested by the Appellants either. In the present case, when the Corporate Debtor has not been functioning for three years prior to admission into CIRP, the objection raised by the Appellant to the decision of the CoC to liquidate the Corporate Debtor as arbitrary therefore lacks merit. Moreover, the IRP did not have requisite and certain information to draw up proper information memorandum. The CoC had also noted that the IRP had not provided requisite documents like Information Memorandum, Evaluation Matrix, RFRP to the PRAs to facilitate submission of plans. Hence the CoC rightly felt that in the given circumstances it was unlikely that a viable and feasible resolution plan would come around. Continuation of CIRP would only have enhanced the CIRP cost without corresponding advantage.
In the present case, the CoC took a decision for liquidation of the Corporate Debtor after holding 5 meetings. This decision was taken by 100% vote share. Thus, this decision of the CoC conforms to the requirements laid down in terms of Section 33(2) of the IBC - The Adjudicating Authority has therefore not committed any error in approving the recommendation of the CoC to liquidate the Corporate Debtor in such circumstances.
Furthermore, the decision of the CoC to liquidate could not have been interfered with by the Adjudicating Authority because of the limited powers of judicial review. It is a well settled proposition of law that the Adjudicating Authority has been bestowed with limited jurisdiction as specified in the IBC while dealing with matters relating to liquidation of the Corporate Debtor and cannot enter upon adjudicating into the merits of a business decision taken by the CoC with requisite majority in its commercial wisdom to liquidate a corporate debtor. In the present case too, the Adjudicating Authority has abided by the discipline of the statutory provisions of the IBC.
This decision of the CoC to liquidate having been approved by the Adjudicating Authority, the same is not open to judicial review when no grounds have been made out as provided under Section 61(4) of the IBC of material irregularity or fraud committed in relation to such an order. As both these grounds do not arise in the facts in this case, hence the objections of the Appellants to set aside the resolution passed by the CoC to initiate liquidation has no merit. No infirmity is found in the order of the Adjudicating Authority approving the decision of the CoC to liquidate the Corporate Debtor.
There are no good ground to interfere with the impugned order passed by the Adjudicating Authority. There is no merit in both the appeals - appeal dismissed.
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2024 (2) TMI 1094
Corporate insolvency proceedings - infirmity in the scheme - it was held by NCLAT that In absence of any provision to get the Schemes in question executed through any court of Competent jurisdiction, the relevant provision(s) having been repealed, the appellant(s) may raise the question, if the respondent(s) move before any court of Law for implementation of the Schemes - HELD THAT:- It is not required to interfere with the impugned order of the National Company Law Appellate Tribunal, New Delhi - appeal dismissed.
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2024 (2) TMI 1093
CIRP - Validity of extension of 90 days was calculated Retrospectively from 10.05.2023 rendering the very extension practically an infructuous one - It is the stand of the Appellant that the Resolution Professional had no actual or constructive knowledge of the ‘Retrospective Calculation’, on 27.07.2023, until the order was uploaded on 11.08.2023 - HELD THAT:- This Tribunal points out that the Petitioner/Appellant had mentioned that he is approaching the Adjudicating Authority/Tribunal praying for an extension of 90 days to complete the CIRP of the Corporate Debtor.
As per Section 12(3) of the I&B Code, 2016, on receipt of an application u/s 12(2) of the Code, if the Insolvency Resolution Process remained pending on the date of the commencement of the I&B Code(Amendment) Act, 2019, such Resolution Process must be completed within a period of 90 days from the date of commencement.
This Tribunal taking note of the fact that the sole COC Member has passed a Resolution to extend further period of 90 days from the last date of CIRP dated 10.05.2023, in view of the categorical and candid averment that for a ‘better negotiation’, ‘evaluation’ and ‘discussion’ on the Resolution Plan received from the Resolution Applicant and submission of the same to the Adjudicating Authority/Tribunal the Interim Resolution Professional has proposed to extend the CIRP period for a further period of 90 days from the date of approval of the instant IA, and considering the totality of the entire conspectus of the facts and circumstances surrounding the instant case, this Tribunal comes to an ‘inevitable’ and ‘irresistible’ conclusion that the Adjudicating Authority/Tribunal had committed an error in not granting the exclusion for the period from 09.05.2023 to 27.07.2023 viz. the period spent in pursuing the IA (IB)1235/CHE/2023, the exclusion period would have enabled the Petitioner/Appellant to pursue the Expression of Interest received and made efforts to revive the Corporate Debtor through a Resolution Plan and in furtherance of ‘substantial cause of justice’ and to prevent an aberration of justice, the observation made by the Adjudicating Authority/Tribunal in the impugned order dated 27.07.2023 in IA that the ‘CIRP’ is extended for a further period of 90 days with effect from 10.05.2023 is set aside because of the fact that the period of pendency of proceeding before the Adjudicating Authority/Tribunal shall be excluded when calculating the CIRP period. Likewise, the period of pendency of instant Comp App is ordered to be excluded and the extension of CIRP period of 90 days is granted by this Tribunal from the date of the disposal of the instant Appeal, as per Section 12(2) of the I&B Code, 2016.
Consequently, the instant Appeal succeeds.
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2024 (2) TMI 1092
Challenge to direction that entire cost be paid by the Applicant/Appellant - Admission of CIRP set aside - Corporate Debtor was NBFC - HELD THAT:- In a situation where CIRP has been admitted and there is interim order passed by the Appellate Authority to the effect that in the CIRP no final decision shall be taken with regard to resolution plan since the order was challenged on the ground that CIRP cannot proceed against a NBFC, the CoC and the Resolution professional should have been more cautious in proceeding and incurring costs in the CIRP of the Corporate Debtor.
The ends of justice be served in giving liberty to the Resolution Professional to file an application before the Adjudicating Authority to take a decision on payment of balance cost, as to whether entire balance cost is fully payable and as to whether entire cost be borne by the Appellant or shared by all the members of CoC and/or Resolution Professional. Taking into consideration the sequence of events and facts which have taken place in the CIRP proceedings of the Corporate Debtor, the Adjudicating Authority shall pass orders in the application.
Appeal disposed off.
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2024 (2) TMI 1091
Prayer for condonation of delay of 1197 days and admission of the claim - seeking admission of claims of appellant - HELD THAT:- The claims were filed by the Appellant in Form-CA after more than 1 and a half year of the approval of the Resolution Plan by the CoC. Even orders on Application for approval of Resolution Plan was reserved on 22.02.2023 and the claims were filed only on 29.03.2023.
The Adjudicating Authority in the impugned order has referred to the judgment of the Hon’ble Supreme Court in RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr. [2023 (9) TMI 516 - SUPREME COURT]. In Mukul Kumar’s case, the claim was filed with a delay of 287 days, which was based on arbitral award. The Appeal filed by the RP was allowed and it was held that the Adjudicating Authority erred in directing the RP to consider the claim of Respondent, which was filed with a delay of 287 days, where the CoC has already approved the Resolution Plan.
In the present case, the claims were filed by the Appellant on 29.03.2023, when the Resolution Plan was already approved by the CoC on 13.08.2021. The Application for approval of Resolution Plan was also heard and order was reserved on 22.02.2023 as stated by the learned Counsel for the Respondent. In the facts of the present case, no error has been committed by the Adjudicating Authority in rejecting Applications filed by the Appellants. It is also relevant to notice that Adjudicating Authority by order dated 23.06.2023 has already approved the Resolution Plan, which Plan approval order has been challenged by the Appellants by means of Company Appeal, which Appeals are still pending for consideration.
Thus, no error has been committed by the Adjudicating Authority - appeal dismissed.
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