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Insolvency and Bankruptcy - Case Laws
Showing 181 to 200 of 8693 Records
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2024 (2) TMI 568
Direction for termination of CIRP from the stage of Second EOI and replacement of the RP, Sandeep Khaitan and appointment of new RP, Amit Pareek - seeking direction for re-examination and reverification of the claim of the Financial Creditor - terminating the CIRP from Second EOI and replacement of RP - bone of contention between the parties is regarding the quantum of claim submitted by the Financial Creditor and verified and admitted by the RP - HELD THAT:- The present is a case where the Financial Creditor has initiated proceedings against the Corporate Debtor after 18 years of invoking the guarantee. Guarantee was invoked on 03.12.2001 and Section 7 Application was filed on 12.03.2019. It is also relevant to notice that Corporate Debtor was in BIFR and it came out of BIFR only on 30.11.2016 and after 20.10.2017, it started earning profit. The Corporate Debtor was MSME and was running for last 54 years and it collapsed after initiation of CIRP by the Financial Creditor.
The Financial Creditor was proceeding to recover its dues from Principal Borrower and after one time settlement dated 30.04.2005, the Principal Borrower sold its immovable properties to pay its dues under the Negotiated Settlement and it paid Rs.92.24 lakhs. The proceeding under which the Principal Borrower was selling its assets and repaying its dues was got interrupted by the Financial Creditor itself by filing an Application and obtaining an order dated 09.09.2011 from DRT. Further, the Financial Creditor did not prosecute further proceedings, even after restraining the Principal Borrower to sale its assets. Ultimately, DRT has adjourned the proceedings sine-die on 16.11.2018 as noted above. Thus, it was due to its own reasons, the Financial Creditor interdicted the proceedings of sale the immovable assets of the Principal Borrower and stopped the midway, due to which the Principal Borrower could not further sell its immovable properties further and clear the entire debt.
Filing of Section 7 Application by the Financial Creditor against the Corporate Debtor is nothing but steps towards recovery of dues of the Financial Creditor and not for any insolvency resolution of the Corporate Debtor. The Corporate Debtor after coming out from the BIFR has recovered from its insolvency and started earning profit, which has been noticed by Adjudicating Authority in the order dated 08.04.2022 in IA No.43 of 2021.
The facts of the present case and sequence of events clearly indicate that Section 7 Application was nothing but proceedings to recover the dues and was not for any purpose of insolvency resolution of the Corporate Debtor. The present was a fist case where powers under Section 65 of the IBC were to be exercised and proceedings of CIRP required to be closed against the Corporate Debtor. However, in view of the orders passed by this Tribunal, under which the proceedings of CIRP proceeded too far, it is desisted from passing any such order and the CIRP be completed as per the directions issued by the Adjudicating Authority.
There is no merit in Company Appeal which deserves to be dismissed and is hereby dismissed.
Removal of respondent no.2 as the Resolution Professional - order made setting aside all acts of the RP in which the RP had been instrumental, as unfair, biased, motivated and lacking in transparency - removing the respondent no. 3 in the matter - disqualification of respondent no.4 as a Resolution Applicant - HELD THAT:- The Respondent No.5 always appeared for Financial Creditor, which was clearly stated before the Adjudicating Authority. Respondent No.4/ PLBB was fully eligible to submits its Resolution Plan. The mere fact that it was incorporated subsequently, i.e. on 20.07.2020, does not have any effect on its eligibility, since it was mentioned in the Application that Respondent No.4 is in the process of incorporation. The allegation that Respondent No.2 and the CoC rollout second EOI to give backdoor entry to Respondent No.4 is wholly incorrect. The second Form-G was issued since no Resolution Plan was received in pursuance to first EOI. Even the Promoter/ Director did not file any Resolution Plan. The second Form-G was issued to fulfill the object of maximization of value of the Corporate Debtor. It is further incorrect to suggest that the RP and CoC permitted Respondent No.4 to modify the Resolution Plan from time to time. Only change made by Respondent No.4 was to increase the CIRP cost. Side-byside perusal of the Resolution Plan would show that Resolution Plan of Respondent No.4 was better than Plan of Promoter/ Director. More so, it was the commercial wisdom of CoC to approve the Resolution Plan, the Promoter Director cannot seek any direction that CoC should approve the Plan of Promoter/ Director. The approval of Resolution Plan by the CoC cannot be questioned before the Adjudicating Authority, which is a settled law - The allegation made by Promoter/ Director against the RP were all unfounded and complaints were filed before the IBBI, which complaints were closed. The allegation that family of Respondent No.2 is in the business of Plywood is not correct. The father of Respondent No.2 was small retail trader of Plywood. The Adjudicating Authority could not have passed an order removing the RP. The RP can be removed only in accordance with Section 27 of the Code. When the statute provides for a thing to be done in a particular way, it must be done in that manner alone, or not at all. The allegations of collusion against Respondent No.2 are all incorrect.
There can be no doubt to the scheme of the Code for removal of the RP by the CoC which has to pass a Resolution. The Adjudicating Authority, who has appointed the RP cannot be said to lack jurisdiction to take a decision to replace the RP, when the facts and circumstances of a particular case warrants. In the present case, where serious allegations were made against the RP, regarding not conducting the CIRP transparently, the Adjudicating Authority did not lack jurisdiction to pass an order for replacement of the RP.
The observations made against RP be not treated regarding integrity of RP and the observations will be confined and treated as observation for the purpose of case only and the said observations shall not be made basis for initiating any proceedings against RP in any Forum.
The order of Adjudicating Authority to the extent it terminates the CIRP from the stage of Second EOI as well as replacement of the RP is upheld - adverse observations made by the Adjudicating Authority against Respondent No.5 in the impugned order, i.e., Counsel who was appearing for Financial Creditor are deleted - Observations made by the Adjudicating Authority against the RP shall not to be treated as adverse to the integrity of RP and not be made basis for initiating any proceeding or action against the RP in any Forum - The new RP, who has been appointed under the impugned order shall conclude the entire CIRP process within 90 days from today, under the supervision and control of Committee of Creditors.
Preferential, undervalued and fraudulent transactions undertaken by suspended Director of the Corporate Debtor - Section 43, 45, 49, 44, 48 and 66 of the IBC - Contention raised by Suspended Director that transactions referred to in the Application were taken in ordinary course of business or transfer/ sales made for securing new value of the CD, has been accepted. Aggrieved by the said order, RP as well as Financial Creditor has come up in this Appeal - HELD THAT:- It is clear that Adjudicating Authority has only recorded its conclusion, paragraphs-13 and 15 cannot be said to contain any reason, on the basis of which the Application was rejected. The conclusion in an order has to follow the reasons for coming to the conclusion. Both the parties have elaborately made their submissions and referred to the various materials in support of their respective submissions. The Adjudicating Authority ought to have adverted to them and thereafter should have recorded its reasons and conclusion. There are substance in the Appellant’s submission that order of the Adjudicating Authority does not contain any reason for coming to the conclusions.
In the facts of the present case, ends of justice will be served in setting aside the order dated 07.10.2021 and remitting the matter before the Adjudicating Authority for deciding IA No.51 of 2020 afresh. The new RP, who has now been appointed by subsequent order dated 08.04.2022, as noticed above, shall take steps for early disposal of IA No.51 of 2020.
Appeal disposed off.
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2024 (2) TMI 557
Application filed by Resolution Professional (RP) for approval of Resolution Plan - waterfall mechanism - HELD THAT:- From the facts, which have been brought on record, it is clear that in pursuance of Form-G issued on 20.11.2018, no Resolution Plan was received. The 180 days of CIRP period had come to an end. The RP filed an Application before the Adjudicating Authority for exclusion of period. The RP also in the Application stated before the Adjudicating Authority that now the Flat Buyers Association is desirous to complete the project with the help of a developer. The Adjudicating Authority, noticing the fact that Flat Buyers themselves are desirous to complete the project, extended the period of CIRP. In the order dated 03.07.2019, the extension of CIRP was granted by the Adjudicating Authority, taking the note of the fact that now Flat Buyers Association is desirous to complete the unfinished project.
The Appellant dissented with the Resolution Plan. As per Section 30, subsection (2) of the IBC, a dissenting Financial Creditor is entitled for the amount, which shall not be less than the amount, which the dissenting Financial Creditor is entitled in event of liquidation of the Corporate Debtor. The amount is to be distributed in accordance with order of priority provided in sub-section (1) of Section 53.
The Resolution Plan, which has been approved by the CoC with 90.45% vote share and through which Resolution Plan the completion of unfinished project is helping in resolution of the CIRP of the Corporate Debtor and in which 97% vote share are being held by the Flat Buyers themselves, the Resolution Plan cannot be set aside at the instance of Appellant, who is being paid the amount as per Section 30, sub-section (2).
There are no ground to interfere with the impugned order - The Appeal is dismissed.
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2024 (2) TMI 509
Maintainability of section 9 application - initiation of CIRP - It was held by NCLAT that The present was a case filed by the Operational Creditor only for recovery of its contractual dues with regard to default committed as per the case of the Appellant on 30.04.2015 for stage 1 and 23.10.2018 for stage 2. The Adjudicating Authority did not commit any error in rejecting Section 9 application as barred by time - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (2) TMI 508
Liquidation of Corporate Debtor - CoC’s decision to liquidate was tainted with material irregularity and arbitrariness or not - Whether the decision of the Adjudicating Authority is based on incorrect premise that once the CoC had decided with the requisite majority to liquidate the CD, such a decision would not be amenable to judicial scrutiny? - ineligibility under Section 29-A(b) of the IBC - classification of wilful default is dehors the RBI circular.
Whether CoC’s decision to liquidate was tainted with material irregularity and arbitrariness or not? - HELD THAT:- Adjudicating Authority has noted that the CoC had, with 100% voting, recommended that the CD should be liquidated and that there were no reasons on record for the adjudicating authority not to disagree with the recommendations of RP/CoC. Further, as per Section 33(2) of the IBC 2016, where the Adjudicating Authority has been intimated by the Resolution Professional about the decision of the CoC for initiation of liquidation, it has go to along with it. Adjudicating Authority has gone along with the recommendations of the COC and ordered for its liquidation. Therefore, it cannot be faulted for not reviewing the decision of the CoC when no such grounds are available.
The Appellants also brings the issue of the hesitation of the interim resolution professional, which is recorded in the first CoC meeting dated 08.11.2021. In the CIRP proceedings under the IBC, the decision of the CoC is supreme and IRP or RP’s subjective views and feelings cannot dictate the outcome or change the direction of the proceedings. The members of the CoC decided to go for liquidation and IRP has to record like that without inserting his feelings - it cannot be said that there has been material irregularity in the decision of the CoC. The arguments relating to material irregularity cannot be accepted and are therefore rejected.
Whether the decision of the Adjudicating Authority is based on incorrect premise that once the CoC had decided with the requisite majority to liquidate the CD, such a decision would not be amenable to judicial scrutiny? - HELD THAT:- There are no grounds for the judicial scrutiny of the Resolution plan, as envisaged under Section 30(2) or Section 61(3) of the IBC or any other provisions of the IBC. Therefore, no error can be found in the orders of the Adjudicating Authority.
The judgment of NCLAT referred to by the Appellant is with respect to Hero Fincorp Limited Vs. M/s Hema Automotive Private Limited [2023 (1) TMI 305 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] which is distinguishable. As noted in Sreedhar Tripathi [2022 (10) TMI 1143 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] judicial review of the decision of the CoC is not precluded and it depends on the facts of each case - Facts of the case in hand are distinguishable as the CoC in its very first meeting had decided to go for liquidation basis their commercial wisdom and therefore, this judgement is not helpful for the Appellant.
None of the judgements relied upon by the Appellant help them. Therefore, the decision taken by the CoC to liquidate a CD cannot be subjected to judicial review in the facts of this particular case.
Whether the Applicants’ ineligibility under Section 29-A(b) of the IBC does not take effect if the classification of wilful default is dehors the RBI circular? - HELD THAT:- The decision of the Adjudicating Authority and the recommendations of the CoC don’t refer to the ineligibility basis Section 29- A(b) of the IBC. Even then it is noted from the minutes of the first CoC meeting of 8.10.2021, which is post Oral Order dated 18.04.2019 of Hon’ble High Court of Gujarat, the Appellant was present and resolution of the CD was discussed with him and thereafter basis their commercial wisdom, it was decided to go for liquidation of the CD. CoC had given a clear finding that there were no chances of getting an EoI or possibility of revival of the CD basis the facts of the case.
Conclusion:-
The CoC has taken a commercial decision, basis their discussion within the lenders and also with the Appellant and they have come to a conclusion for liquidation of the CD. Commercial wisdom of the CoC has been exercised in a clear and forthright manner. The Adjudicating Authority has also relied upon that. There are no irregularity on the part of CoC or Adjudicating Authority, so these averments of the material irregularity and arbitrariness cannot be sustained.
The liquidation was ordered by the Committee of Creditors with 100% majority vote. This was very clearly and un-ambiguously established in the very first meeting of CoC. The commercial wisdom of the COC has been converted into a decision of liquidation as per Section 33(2) of the IBC, instead of going for calling for resolution claim. When such a decision has been taken and when no grounds have been made out as per Section 61(4) of the IBC and there is no grounds of material irregularity, there are no justification for review of the orders of the Adjudicating Authority, which are based on commercial wisdom of the CoC.
Appeal dismissed.
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2024 (2) TMI 377
Initiation of CIRP u/s 7 of the IBC - financial debt or not - Period of limitation - Advance paid subject to execution of the share purchase agreement - NCLT rejected the application as the appellant does not falling within the category of financial creditor - whether the amount of Rs. 1.25 crores paid by the Appellant to Shri Shabir Nirban, ex-Director of the Respondent Company constitute a financial debt as defined in IBC and whether the section 7 application filed regarding the purported financial debt deserved to be admitted? - HELD THAT:- It is noted from the definition of ‘debt’ and ‘default’ as enumerated in section 3(11) and 3(12) of the IBC that the financial debt had to be in the shape of liability and non-payment of such liability in the given time would cause default. In the present situation again, no date of default is made out and so we it is found that neither the said transaction is in the shape of a financial debt or in commercial effect of borrowing is evidenced and no default is also made out.
As argued by the Learned Counsel for Respondent, and also admitted by the Learned Counsel for Appellant, the said transaction of Rs. 1.25 crores was ostensibly against the purchase of the property situated at Teen Batti, Walkeshwar Road, Mumbai, which was capable of redevelopment under the provision of the Development Control Regulation 33(7) and the value of property in view of this development potential was more than Rs. 15 crores. Therefore, a total consideration as claimed by the Appellant as about Rs.4.5 crores does not appear to constitute a tenable argument as a total amount of Rs. 4.5 crores would not be sufficient consideration for acquisition of the said property - it is considered necessary to go any further into the nature of the contract, whether written or otherwise between the two parties suffice to say that if transaction was made in December, 2014 against the purchase of a specific property, the Appellant should have asserted its right within the stipulated period of three years being the specific purchase of the contract to try to enforce such contract through IBC does not appear to be correct legal course of action.
It is noted that in SANJAY D. KAKADE VERSUS HDFC VENTURES TRUSTEE COMPANY LTD AND ORS [2023 (11) TMI 1219 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI], this Tribunal has considered a written Share Subscription and Shareholders Agreement between the shareholders as proof of financial debt. Quite obviously there is a delay in signing of shareholder subscription agreement, which was in consideration in the said appeal - the ratio laid down in the matter of Sanjay D. Kakade vs. HDFC Ventures Trustee Company Ltd. and Others does not apply in the facts and circumstances of the present case.
The Adjudicating Authority has not committed any error in dismissing the section 7 application - the appeal is devoid of merit and consequently it is dismissed.
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2024 (2) TMI 309
Jurisdiction - power of NCLT to declare the VAT / Tax assessment order as void ab initio under Section 33(5) of IBC - HELD THAT:- From the provisions of Section 14 of the IBC it is evident that Section 14 prescribes a moratorium on the initiation of CIRP proceedings and its effects. The Supreme Court, in its judgment in the case of SUNDARESH BHATT, LIQUIDATOR OF ABG SHIPYARD VERSUS CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [2022 (8) TMI 1161 - SUPREME COURT], after considering the February 2020 Report of the Insolvency Law Committee, held that one of the purposes of the moratorium is to keep the assets of the Corporate Debtor together during the insolvency resolution process and to facilitate orderly completion of the processes envisaged under the Statute. Moratorium under Section 14 is to ensure the curtailing of parallel proceedings and reduce the possibility of conflicting outcomes in the process. Section 14(1)(a), (b) and (c) of the IBC shields and protects against pecuniary attacks against the Corporate Debtor. This is to provide the Corporate Debtor with breathing space to allow it to continue as a going concern and rehabilitate itself.
Under Section 238, the provisions of IBC have an overriding effect on any other law for the time being in force or any instrument having effect by virtue of any law - after declaring the moratorium, there is an embargo on enforcing the demand, but there is no embargo under Section 14, read with Section 33(5) of the IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor.
This Court finds the impugned order passed by the National Company Law Tribunal, Kochi Bench, as preposterous and untenable. The Company Law Tribunal has no power and authority under the IBC to declare an assessment order as void ab initio and non est in law. Such an order only reflects the competence of the persons who are manning such an important Tribunal - The Order shows the lack of basic understanding of the law. Instead of considering the application by the 2nd respondent for permission to file an appeal against the assessment order, the National Company Law Tribunal, Kochi Bench, has assumed the jurisdiction of the Constitutional Court to declare the assessment order as void ab initio.
The matter is remitted back to the National Company Law Tribunal, Kochi Bench, to consider and pass an order on the application of the 2nd respondent - Petition allowed by way of remand.
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2024 (2) TMI 261
Approval of Resolution Plan - Fresh claim based on Foreign Judgement - Allegation that the order is a non-speaking one - Section 44A of Civil Procedure Code, 1908 - It is represented on behalf of the Appellant that the I&B Code, 2016 does not impose ‘any bar’ upon this ‘Tribunal’, to take cognizance of a ‘Foreign Judgement’.
HELD THAT:- In so far as the instant Appeal is concerned, this Tribunal pertinently points out that Section 60(5) of the I&B Code, 2016 concerns with the ‘Applications against a Corporate Debtor’ undergoing ‘CIRP’ or claims against such ‘Corporate Debtor’, undergoing ‘CIRP’. Also that the ‘Adjudicating Authority/Tribunal’ is enjoined with the ‘power to determine any question of ‘Law or Fact’ arising out of in, or in relation to the ‘Insolvency Resolution or Liquidation Proceedings’ of the Corporate Debtor, or Corporate Person under this Code’ - It cannot be disputed that the Company was long out of the Insolvency and CIRP of the Company stood completed upon passing of the Plan Approval Order. Suffice it for this ‘Tribunal’ to point out that the Approved Resolution Plan stood implemented as on date.
This ‘Tribunal’ in a crystalline manner points out that all such ‘claims’ which were not a part of the ‘Resolution Plan’ stood extinguished, on the date of ‘Approval of Resolution Plan’ and further no individual, is permitted to initiate or continue any ‘proceedings’, in regard to a ‘claim’, which was not part of the ‘Resolution Plan’.
Appeal dismissed.
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2024 (2) TMI 203
Seeking refund of money paid in excess inadvertently to the Corporate Debtor - related parties - HELD THAT:- By the Impugned Order applications have not been finally decided and direction has been issued to list it before the Regular Bench. The Appellant who claims not to be promoter/key managerial personnel submits that they are not affected by the earlier directions as referred to in the Impugned Order. The said issue is to be considered by the Adjudicating Authority before passing a final order on the said application.
Thus, no purpose shall be served in keeping these Appeals pending here. Both the appeals are disposed of directing the Adjudicating Authority to dispose of I.A. No. 4951 of 2023 and I.A. No. 3234 of 2023 in accordance with law.
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2024 (2) TMI 202
Admission of application u/s 7 of IBC - Period of limitation - Date of default - Suspension of initiation of corporate insolvency resolution process - barred under Section 10A of IBC - HELD THAT:- There is clear acknowledgement by the Corporate Debtor that Rs.64,04,90,697/- is amount due as on 19.02.2020, i.e., the prior to commencement of 10A period. Section 10A period begun on 25.03.2020 and when default has been committed by the Corporate Debtor prior to 10A period, the submission of the Appellant that Application is barred by 10A period cannot be accepted. There being clear acknowledgement of default of Rs.64,04,90,697/-, which is prior to commencement of 10A period, as accepted in the Agreement dated 26.02.2020, it is not open for the Appellant to contend that default occurred only on 25.08.2020, hence, the Application is barred by Section 10A. It is well settled that when default by Corporate Debtor has occurred prior to 10A period, Application shall not be barred.
The fact that letter dated 13.01.2022 has not been brought on the record in the Appeal by the Corporate Debtor also supports the submission of the Financial Creditor that letter dated 13.01.2022, records the state of affairs as it existed at the relevant time - the Adjudicating Authority did not commit any error in accepting the date of default as 15.12.2021 as pleaded in Section 7 Application.
The Adjudicating Authority has returned a finding that Agreement dated 15.02.2016 was not a joint venture Agreement and further the amount of Rs.34.55 Crores was disbursed. The Corporate Debtor as noted above, on one hand is pleading that Agreement dated 15.02.2016 was entered and on other hand submits that the said Agreement was not to be implemented or acted upon - The endeavour of the Corporate Debtor is to somehow relieve itself from the liabilities, which could not be discharged in pursuance of the Loan Agreement dated 15.02.2016.
The Application filed by the Financial Creditor, cannot be thrown on the ground of Section 10A. The Adjudicating Authority has rightly admitted Section 7 Application. There is no merit in the Appeal - Appeal dismissed.
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2024 (2) TMI 142
Authorization of Applicant/ Liquidator to defend all of any of the suit, prosecution or other legal proceedings, civil or criminal in the nature of and on behalf of the Corporate Debtor initiated both prior and post the commencement of liquidation proceedings of the Corporate Debtor - requisition to the Courts, Tribunals and such government authorities for expeditious disposal of matters pending in the name of and against the Corporate Debtor - blanket/de-facto approval for the institution of the suit or any other legal proceedings by the Liquidator on behalf of the Corporate Debtor in near future so as to ensure appropriate recovery in favour of the Corporate Debtor for its beneficial liquidation - HELD THAT:- There cannot be any exception to requirement of law as contained in Section 33(5) of the Code i.e. legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. When the application was filed by the Liquidator being I.A. No.405 of 2021, this was with intent and purpose to obtain prior approval of the Adjudicating Authority to instituted legal proceeding on behalf of the Corporate Debtor, which application was allowed by the Adjudicating Authority by the order passed on 28.04.2022.
The subsequent application became necessary as the objection was raised to the maintainability of the Writ Petition on the ground that there is no prior approval with regard to filing of the Writ petition. Though it is not disputed that there was no specific approval for filing Writ Petition, however, when the Adjudicating Authority has allowed the Liquidator to prosecute on behalf of the Corporate Debtor, the Adjudicating Authority ought to have issued necessary order as prayed in I.A. No.1081 of 2023 to clarify that the Liquidator was fully entitled to peruse the Writ Petition on behalf of the Corporate Debtor. The impugned order cannot be sustained. Order dated 29.11.2023 is set aside.
Appeal disposed off.
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2024 (2) TMI 94
Rejection of Resolution Plan - Liquidation ordered - Application under Section 66 of IBC - reliability of Forensic Audit Report, an independent expert agency - ineligibility of the Appellants under Section 29 (A) (g) of the Code - It was held by NCLAT that the persons who are not covered under clause 29 A(g), will remain eligible to submit resolution plans under clause (c) of Section 29A, else will become ineligible as in the present Appeal - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal.
The appeals are accordingly dismissed.
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2024 (2) TMI 93
CIRP - Unsuccessful resolution applicant - Locus standi to challenge the plan after its approval - it was held by NCLAT that The Appellant is not a stakeholder within the ambit of Section 31(1) of the Code qua the Corporate Debtor after having been unsuccessful as a resolution applicant and has no locus standi to file the present appeal - HELD THAT:- There are no reason to interfere with the impugned judgement passed by the National Company Law Appellate Tribunal, Chennai Bench.
The Civil Appeal is accordingly dismissed.
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2024 (2) TMI 92
Rejection of the Resolution Plan submitted by Respondent No. 3 - HELD THAT:- The Approval of the Resolution Plan by the CoC is the commercial wisdom of the CoC challenge to which approval can be on limited ground when it is shown that Resolution Plan is not in compliance with Section 30(2) of the Code. No ground has been made out in the Appeal to show that Resolution Plan is in non-compliance of Section 30(2) of the Code.
Further, this Tribunal in AJR INFRA AND TOLLING LTD. (FORMERLY GAMMON INFRASTRUCTURE PROJECTS LTD.) VERSUS SUTANU SINHA; COMMITTEE OF CREDITORS PATNA HIGHWAY PROJECTS LTD. ; SILVER POINT LUXEMBOURG PLATFORM S.A.R.L. [2023 (5) TMI 1291 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] has held that the plan is in compliance of the all mandatory requirements and plan has already been upheld.
Thus, no grounds have been made out to interfere with the Order impugned passed by the Adjudicating Authority - appeal dismissed.
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2024 (2) TMI 91
Approval of Resolution Plan - non-allocation of any marks on equity allotment to the Financial Creditors to the Appellant with regard to which IA No. 413 of 2023 was filed before the Adjudicating Authority - mis-calculation of the NPV of the Respondent No.2 which according to the Appellant is not accordance with the evaluation matrix.
Non-allocation of any marks on equity allotment to the Financial Creditors to the Appellant with regard to which IA No. 413 of 2023 was filed before the Adjudicating Authority - HELD THAT:- As per the Process Document and terms and conditions, Appellant was not entitled to change its financial proposal, hence, Clause 2 as extracted above included in the final Resolution Plan on 18.01.2023 could not help any allocation or marks to the Appellant. Further, in Clause 2 as added on 18.01.2023 provided for option to elect the fresh equity allotment by the CoC. CoC never opted to accept equity allotment as offered by the Appellant. When equity allotment was never accepted there was no question of giving any marks to the Appellant on equity allotment. Thus, allocation of no marks in the equity allotment was as per the Process Document and evaluation matrix and the Adjudicating Authority did not commit any error in rejecting IA No.413 of 2023. Further, value of the equity offered by the Appellant is Rs.200 Crores which does not meet the minimum INR 250 Crores threshold as prescribed in the evaluation matrix - no error was committed in not allocating any marks to the Appellant on equity allotment and the first submission raised by the Appellant has no merit.
Mis-calculation of the NPV of the Respondent No.2 which according to the Appellant is not accordance with the evaluation matrix - HELD THAT:- The determination of NPV of the Respondent No.2 as per final Resolution Plan as done by the Consolidated CoC and its advisors, thus, has to be treated as final and cannot be allowed to be challenged by any other Resolution Applicants. Present is a case where Appellant is challenging the determination of NPV by CoC and its Process Advisors contrary to the aforesaid Clause 2(ii) which is impermissible. The evaluation matrix and Process Document are documents which have been issued by the CoC and the CoC is the best judge to interpret its document and apply it for evaluation of NPV of the Resolution Applicants. The Hon’ble Supreme Court in Silppi Constructions vs. Union of India [2019 (6) TMI 1449 - SUPREME COURT] held that the author of a document is a best judge as to how the document has to be interpreted.
Thus, commercial decision of the CoC while approving the plan to take decision whether to approve the plan of Resolution Applicant has highest NPV or not. The above clause of the Process Document also clearly indicate that the commercial wisdom of the CoC has been given paramount importance and whether the Applicant has highest NPV or not is not a deciding factor.
The law laid down by the Hon’ble Supreme Court is well settled that the business decision of the CoC is not to be interfered with by the Adjudicating Authority or this Tribunal unless it is shown that there is violation of Section 30(2) of the Code. Present is not a case where there is any submission that the Resolution Plan does not comply with Section 30(2). What is challenged by the Appellant is the allocation of marks on the basis of evaluation matrix to the Resolution Applicant - the CoC has considered the Resolution Plan in accordance with the evaluation matrix and there were no error in determination of the NPV of the Respondent No.2. Further, the Appellant was not entitled for any marks on equity allotment to the Financial Creditors which mark was rightly not given to the Appellant in the evaluation matrix.
There are no error in the order of the Adjudicating Authority rejecting IA No.413 of 2023 and IA No.557 of 2023. Approval of the Resolution Plan by the Adjudicating Authority is in commercial wisdom of the CoC. No grounds have been made out to interfere with the order of the Adjudicating Authority approving the Resolution Plan.
Appeal dismissed.
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2024 (2) TMI 23
CIRP - Moratorium against the company has been ordered - Home Buyers sought direction to Developer to complete the project in all respects and handover the possession of the allotted flats/apartments to the members of the Association of the homebuyers within the time specified - submission of appellants is that under the provisions of the IBC, there is no prohibition on proceeding against the directors/officers of the company, which is the subject-matter of moratorium under Section 14 of the IBC - HELD THAT:- The National Commission has not made any adjudication on the question whether the opposite party Nos. 2 to 9(the respondent Nos. 2 to 9) in the execution application were under an obligation to abide by the directions issued against the company. This issue has not been considered at all by the National Commission. There is no finding recorded by the National Commission that in view of any particular provision of the IBC, moratorium will apply to the directors/officers of the company.
Only because there is a moratorium under Section 14 of the IBC against the company, it cannot be said that no proceedings can be initiated against the opposite party Nos. 2 to 9(the respondent Nos. 2 to 9) for execution, provided that they are otherwise liable to abide by and comply with the order, which is passed against the company. The protection of the moratorium will not be available to the directors/officers of the company.
The impugned judgments and orders set aside - the execution application remitted to the National Commission - appeal allowed in part.
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2024 (2) TMI 22
Validity of order of liquidation of the Corporate Debtor based on the unanimous decision of the Committee of Creditors with 100% voting rights - ‘Locus-Standi’ of the appellants - HELD THAT:- It is to be remembered that the ‘Representatives of the Corporate Debtor’ were also present in the 7th CoC meeting and it cannot be brushed aside that the only Asset, which was on ‘Lease’ for a period of 30 years, provided by ‘Bekal Resorts Development Corporation Ltd.’ (BRDCL) was cancelled on 30.03.2022. In fact, the Corporate Debtor’s Representatives, who were present during the meeting had mentioned that they had not assailed the termination of ‘Lease Agreement’ till the start of the CIRP date. Also, that the Resolution Professional was unable to take any action in as much as the Termination of the ‘Lease Agreement’ was more than 10 months before the CIRP and ‘BRDCL’ had informed of not changing its decision through its letter dated 15.03.2023.
Merely because there were ‘No Assets’ and no option for revival of the Corporate Debtor an unanimous 100% decision was taken by the Committee of Creditors in its commercial wisdom to liquidate the Corporate Debtor.
The commercial wisdom of the Committee of Creditors is to be respected subject to the limited judicial review, that was available to the Adjudicating Authority / Tribunal. Also that the commercial wisdom of Committee of Creditors is beyond the ambit of challenge, pertaining to the decision taken for liquidation of the Corporate Debtor being essentially a ‘business decision’ based upon the commercial wisdom and keeping in view the ingredients of Section 33(2) of the I&B Code, 2016 and the explanation thereto.
In law, when the Resolution Plan is in accordance with Section 30 and 31 of the Code, the Resolution Plan was to be approved. Whether the Adjudicating Authority/Appellate Tribunal, it cannot enter into any analysis to judge, as to whether the prescription of the Resolution Plan results in maximization of the value of assets are not as per decision of Hon’ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. [2021 (3) TMI 1143 - SUPREME COURT].
As far as the present case is concerned, commercial decision taken by the Committee of Creditors was in fulfilment of the relevant provisions of the I&B Code, 2016 and Regulations, especially in the teeth of Regulation 40D of the IBBI Corporate Persons Regulations, 2016 - The I&B Code, 2016 does not any way spell out ‘any such opportunity’ being provided to the Appellants (Promoters/Shareholders), at the time of passing of the Liquidation order and they don’t have any semblance of any ‘legal right’ or ‘vested right’ to oppose the ‘Liquidation order’ before the ‘Adjudicating Authority/Tribunal’ in the considered opinion of this Tribunal. Viewed in that perspective the Appellants in the instant Appeal are not to be characterised as ‘Aggrieved Persons’ within the parameters of Section 61 of the I&B Code, 2016.
This Tribunal taking note of the rival contentions advanced on either side is of the earnest opinion that in the present case the only Asset to Corporate Debtor, which was on Lease for 30 years was cancelled on 30.03.2022 there were no Assets and no option for the resurrection /revival of the Corporate Debtor, the 100% unanimous decision taken by the Committee of Creditors, in its commercial wisdom to Liquidate the Corporate Debtor is not to be interfered with by this Tribunal because of the limited power of ‘judicial review’.
Appeal dismissed.
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2024 (1) TMI 1266
Condonation of delay in filing the Appeal - ground taken in the Application for condonation is that the Order passed by the Adjudicating Authority was passed without giving an opportunity to the Appellant - Violation of principles of natural justice.
Whether Appellant is entitled for benefit of Section 14 of the Limitation Act for excluding the period during which the two applications were pending before the Adjudicating Authority?
HELD THAT:- Hon’ble Supreme Court in KALPRAJ DHARAMSHI & ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. & ANR. [2021 (3) TMI 496 - SUPREME COURT] had occasion to consider Section 14 of the Limitation Act in reference to Appeal filed under Section 61 of the Code before the Appellate Tribunal. In the above case, Appeal was filed before the Appellate Tribunal against the Order dated 20th November, 2019 on 18.02.2020 - The Hon’ble Supreme Court considered the submissions, noticed the ambit and scope of the Section 14 of the Limitation Act and after noticing the judgments of the Hon’ble Supreme Court in MP. STEEL CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE [2015 (4) TMI 849 - SUPREME COURT] and CONSOLIDATED ENGG. ENTERPRISES VERSUS PRINCIPAL SECY. IRRIGATION DEPTT. & ORS. [2008 (4) TMI 668 - SUPREME COURT] held that benefit of Section 14 of the Limitation Act can be extended in Appeal filed under Section 61 of the IBC. Ultimately after elaborate discussion and after noticing the facts of the present case, it was held that Appellant was entitled to exclusion of period during which he was bona fide prosecuting before the High Court with due diligence.
The judgment of Hon’ble Supreme Court thus clearly establishes that benefit of Section 14 of the Limitation Act can be extended in Appeal filed under Section 61 of the IBC. Thus the applicability of Section 14 of the Limitation Act with regard to Appeal under Section 61 is no more res integra.
Hon’ble Supreme Court in Kalpraj Dharamshi has also held that even if Section 14 is not strictly applicable, the principles under Section 14 are attracted. Section 14 of the Limitation Act is applicable in IBC proceeding which is now settled by several judgments of the Hon’ble Supreme Court as well as by virtue of Section 238A of the Code which clarifies about the applicability of limitation act.
Thus, even Section 14 is not attracted the benefit of Section 5 of the limitation act can be extended and the cause can be considered for condonation of delay by applying Section 5 but in the IBC there is a cap on the jurisdiction in condoning the delay as per Section 61(2) proviso, jurisdiction to condone the delay is only of 15 days. Period during which application was pending before the Adjudicating Authority is not excluded under Section 14 of the Limitation Act, the delay in filing the Appeal is beyond 15 days which is not within condonable limit. Thus, delay is beyond 15 days and cannot be condoned.
This Appeal has been filed challenging the Order beyond 45 days. The jurisdiction to condone the delay being limited to 15 days and having held that benefit of Section 14 of the Limitation Act cannot be extended to exclude period during which I.A. No. 2337 of 2023 and I.A. No. 3270 of 2023 remained pending before the Adjudicating Authority, the Delay Condonation Applications which prays condonation of 74 days delay deserves to be dismissed.
Application dismissed.
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2024 (1) TMI 1265
Application seeking direction to release payment as an Operational Creditor, for the services rendered during the CIRP period, dismissed - right to appeal in terms of Section 61(3) of the Code - HELD THAT:- The application filed under Section 60(5) was filed by the Appellant on 01.06.2019. At that time the proceedings in regard to approval of the Resolution Plan was not over. The Appellant did not file any application for staying the approval of the Resolution Plan till the disposal of his application. The Resolution Plan was approved on 27.06.2019 itself and the same has ultimately been approved by the Hon'ble Supreme Court on 28.02.2020. It is also a matter of fact that the Plan has also been implemented. In such circumstances, the application filed under Section 60(5) had lost its sheen as a new right of appeal become available to the Appellant to pursue its remedies in terms of Section 61(3)(iii) and (iv) of the Code before the Appellate Authority. The said procedure was not followed by the Appellant and therefore, in our considered opinion, the application filed under Section 60(5) was not maintainable.
In view of the aforesaid discussion and the fact that Resolution plan was approved way back on 28.02.2020 by the Hon’ble Supreme Court and has been implemented, there are no merit found in the present appeal - appeal dismissed.
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2024 (1) TMI 1257
Rejection of Resolution plan - no related party - Non-inclusion of the Appellant in the Committee of Creditors - entitlement to vote in the Committee of Creditors - categorization of the homebuyers in class as ‘Affected’ and ‘Unaffected’ homebuyers - violation of Section 30(2)(e) of IBC - it was held by NCLAT that no error has been committed by the Adjudicating Authority in rejecting the application - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed.
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2024 (1) TMI 1256
Seeking withdrawal of appeal - HELD THAT:- Acceding to his request for withdrawal, the instant Comp. Appeal is `dismissed as withdrawn’.
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