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Insolvency and Bankruptcy - Case Laws
Showing 261 to 280 of 8722 Records
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2024 (1) TMI 186 - SUPREME COURT
Whether the amendments made in the substantive portion of Section 30(2), in terms of Explanation 2 will be applicable when the first appeal was heard by the NCLAT - HELD THAT:- Explanation 2(ii) clearly states that an appeal preferred under Section 61 or 62, when it is not barred by time under any provision of law, shall be heard and decided after considering the amended Section 30(2)(b) under the Amendment Act. In fact, Explanation 2(i) states that the amended clause shall “also” apply to the CIRP of the corporate debtor where a resolution plan has not been approved or rejected by the adjudicating authority. Explanation 2(iii) states that the amended Section 30(2)(b) shall “also” apply where legal proceedings have been initiated in any court against the decision of the adjudicating authority. Clauses (i), (ii) and (iii) of Explanation 2 reflect the wide expanse and width of the legislative intent viz. the application of the Amendment Act, whether proceedings are pending before the adjudicating authority, the appellate authority, or before any court in a proceeding against an order of the adjudicating authority in respect of a resolution plan. Only when the resolution plan, as approved, has attained finality as no proceedings are pending, that the amendments will not apply to re-write the settled matter.
A three Judge Bench of this Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT], has observed that Explanation 2 applies to the substituted Section 30(2)(b) to pending proceedings either at the level of the adjudicating authority, appellate authority or in a writ or civil court. Referring to several decisions, it is observed that no vested right inheres in any resolution applicant who has plans approved under the Code.
Interpretation of Section 30(2)(b)(ii) of the Code - HELD THAT:- As per Section 30(2)(b)(ii), the dissenting financial creditor is entitled to payment, which should not be less than the amount payable under Section 53(1), in the event of the liquidation of the corporate debtor. The provision recognises that all financial creditors need not be similarly situated. Secured financial creditors may have distinct sets of securities - the resolution plan accepted by the requisite creditors/members of the CoC upon voting, is enforceable and binding on all creditors. The CoC can decide the manner of distribution of resolution proceeds amongst creditors and others, but Section 30(2)(b) protects the dissenting financial creditor and operational creditors by ensuring that they are paid a minimum amount that is not lesser than their entitlement upon the liquidation of the corporate debtor.
The provisions of Section 30(2)(b)(ii) by law provides assurance to the dissenting creditors that they will receive as money the amount they would have received in the liquidation proceedings. This rule also applies to the operational creditors. This ensures that dissenting creditors receive the payment of the value of their security interest.
The contention on behalf of the respondent that there is conflict between sub-section (4), as amended in 2019, and the amended clause (b) to sub-section (2) to Section 30 of the Code does not merit a different ratio and conclusion. Section 30(4) states that the CoC may approve the resolution plan by a vote not less than 66% of the voting share of the financial creditor. It states that the CoC shall consider the feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors under sub-section (1) to Section 53, including the priority and value of the security interest of the secured creditors, and other requirements as may be specified by the Board. These are the aspects that the CoC has to consider. It is not necessary for the CoC to provide each assenting party with liquidation value - The conflict with sub-clause (ii) to clause (b) to sub-section (2) to Section 30 does not arise as it relates to the minimum payment which is to be made to an operational creditor or a dissenting financial creditor. A dissenting financial creditor does not vote in favour of the scheme. Operational creditors do not have the right to vote.
It is felt appropriate and proper if the question framed at the beginning of this judgment is referred to a larger Bench. The matter be, accordingly placed before the Hon’ble the Chief Justice for appropriate orders.
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2024 (1) TMI 185 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Dismissal of section 7 application - case of debt and default in the context of IBC which deserved admission of Section 7 application filed by the Appellants or not - HELD THAT:- The Adjudicating Authority has recorded the finding that the Facility Agreement relied upon by the Appellants in support of their debt is un-dated and hence discounted the same to be credible evidence to prove the existence of debt. More importantly, if the email of 07.02.2022 from the Respondent to the Appellants sharing the FFA is perused as has been placed at page 231 of the Appeal Paper Book (APB), it is found that it is only a draft agreement seeking comments/observations of the Appellants. Furthermore, it is noticed that the FFA which has been placed on record at Annex A-5 of the APB does not have the signature of the Respondent but it is the Appellant No. 6 who has signed for the Corporate Debtor as may be seen at page 270 of the APB - there are no mistake on the part of the Adjudicating Authority in not relying on the FFA to prove the existence of debt.
The other ground to prove existence of doubt which has been adverted to by the Appellants is that the financial debt is also disclosed in the provisional balance sheet dated 03.03.2022 as shared by the Respondent themselves vide their email dated 04.03.2022 - The Respondent failed to repay the said credit facilities and hence this is a clear case of debt and default.
The Adjudicating Authority in the impugned order has noticed that the Appellants had sold their shareholding to OMAT by executing the SPA on 03.02.2022 after payment of a lumpsum amount settled between the two parties. The Adjudicating Authority after perusal of the SPA has further noted that Schedule 1A and 1B of the SPA shows that the new management of the Respondent had settled the deal with all the shareholders at a lumpsum amount of Rs.10.62 crore - the Adjudicating Authority has rightly concluded that it was not satisfied with the evidence produced before it by the financial creditor to prove that a debt had crystallized beyond doubt and that a default has occurred.
The Adjudicating Authority has rightly dismissed the Section 7 application filed by the Appellant - the impugned order does not warrant any interference. There is no merit in the Appeal - Appeal dismissed.
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2024 (1) TMI 142 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of the Resolution Plan - power of the Adjudicating Authority to remit the Resolution Plan for consideration before the CoC - HELD THAT:- In EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED & ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED & ORS. [2021 (9) TMI 672 - SUPREME COURT], the Hon’ble Supreme Court has considered a case where Successful Resolution Applicant sought to withdraw the Resolution Plan and third withdrawal application before the Adjudicating Authority for permitting withdrawal of the Resolution Plan was allowed which order was set aside by this Appellate Tribunal against which the Civil Appeal was filed before the Hon’ble Supreme Court.
The law is thus well settled that the Resolution Plan approved by the CoC is binding on the CoC and it cannot have reviewed its own decision or pray for review of its opinion. Adjudicating Authority in the impugned order has taken the view that the Resolution Plan can be sent for re-consideration to the CoC - Present is not a case where CoC is claiming in its application that the Resolution Plan which was approved by the CoC is in violation of any provisions of Section 30(2).
There is a delay in implementation of the Resolution Plan of ‘Allied Strips Limited’ and ‘Tirupati Infraprojects Private Limited’ by the Appellant was very much raised before the CoC and were considered by the CoC before approving the Resolution Plan of the Appellant and the CoC is well aware that there is delay in implementation of the plans of ‘Allied Strips Limited’ and ‘Tirupati Infraprojects Private Limited’ which was noticed in its minutes as has been brought on the record - From the facts of the present case, out of two entities for which allegation was made of non-implementation. Admittedly, for one i.e. ‘Allied Strips Limited’ has been implemented and for other plan has not been implemented but that itself shall not impart any ineligibility.
There were no grounds on which the plan could have been sent back for reconsideration before the CoC. In result, both the Appeals are allowed.
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2024 (1) TMI 93 - MADRAS HIGH COURT
Disciplinary enquiry / proceedings against Resolution Professional (RP) - Automatic suspension of Authorization For Assignment (AFA) of the Resolution Professional - Regulation 23A of the Model Bye-Laws and Governing Board of Insolvency Professional Agencies Regulations, 2016 - liquidator-petitioner shared the details of the valuation report of the assets of the company with all the scheme proponents, as a result of which all of them quoted the same price.
The petitioner does not deny that he shared the valuation report, but defends it on the ground that he was under an order of the NCLT to try for a compromise under Sec.230 of the Companies Act and backs it up with the ratio of the Hon'ble Supreme Court in Vijay Kumar Vs Standard Chartered Bank [2019 (2) TMI 97 - SUPREME COURT] and that of the NCLT in Hemant Shantilal Shah & another Vs Care Office Lt., [2022 (4) TMI 522 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH].
Whether the show cause notice which the IBBI has served on the petitioner is legally sustainable?
Whether this petition is entertainable when only a show cause notice of a statutory body is in challenge?
HELD THAT:- Inasmuch as the petitioner has admitted that he had shared the valuation report of the CD, this Court considers that a prima facie ground is available for the IBBI to issue the show cause notice.
The prima facie view of this Court is that when the petitioner ceases to be a Resolution Professional, and starts wearing the cap of a liquidator, the role of IIIP of ICAI vis-a-vis its member ceases. Hence, this Court considers, that at the best the decision of the IIIP of ICAI can be a piece of evidence in the proposed disciplinary proceedings but may not be adequate to affect the jurisdiction of the IBBI to initiate a disciplinary action against the petitioner.
Turning to suspension of the petitioner is concerned, this is an automatic process on commencement of a disciplinary proceedings under Regulation 23A of the IBBI (Model Bye-laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. This cannot be interfered with since this Court finds that the IBBI has the jurisdiction to initiate a disciplinary proceedings, and in the instant case it is not established to be a malafide exercise of statutory power.
The petitioner will have all the liberty to put forth his entire line of defence disciplinary enquiry, which needless to say includes all that the grounds on the basis of which he has now challenged the show cause notice - Petition dismissed.
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2024 (1) TMI 92 - HIMACHAL PRADESH HIGH COURT
Maintainability of Letters Patent Appeal - CIRP - Seeking RBI to take action against HSBC Bank - Independent right of appellant to approach the court in capacity as a Member of the erstwhile Board of Directors - approval of resolution plan was also granted - HELD THAT:- Once approval of the Resolution Plan was granted by the NCLT on 27.4.2023 and the Resolution Applicants have taken control of the respondent no.4 Company, and the existing equity share capital of the 4th respondent stood written off in view of the Clean Slate Principle envisaged under the IBC, the said order is binding on the appellant as well (see para 40 of the order dt.27.4.2023 of the NCLT) - Consequently, the appellant-writ petitioner ceased to be not only a share holder but also a Member of the Board of Directors of the 4th respondent.
The appellant has no locus either as a Share Holder or as a Director or as a Former Director of the 4th respondent to continue this Letters Patent Appeal, particularly when no leave of the NCLT had been obtained to pursue this Letters patent Appeal by him.
Also, when the Management of the 4th respondent already stood transferred by reason of approval of the Resolution Plan by the NCLT, it’s new Management should pursue the grievance which is now being pursued by the appellant.
There are no merit in the appeal - appeal dismissed.
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2024 (1) TMI 91 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of the resolution plan - whether the amount which has been assessed by the Appellant at a later date i.e. on 10.07.2019 and was not an assessed amount, being part of Form B as on 18.02.2019 has rightly been rejected by the RP and the Adjudicating Authority?
HELD THAT:- In the present case, it is found that CIRP was initiated on 12.06.2018, public announcement was made on 15.06.2018, the time period provided of 90 days expired on 15.09.2018 but still keeping in view the fact that it is a matter qua the amount of EPF, Form B was as on 18.02.2019 was entertained but in so far as the amount of interest and penalty is concerned, there was an inordinate delay as it has been assessed on 10.07.2019.
Before parting with this order, Counsel for the Appellant has drawn our attention to an observation made by the Adjudicating Authority in the first appeal in Para 15 of the impugned order where it has been said that “statutory dues of the CD are also settled at 10% of the admitted claims”. In this regard, it is submitted that in view of the judgment of this Tribunal rendered in the case of JET AIRCRAFT MAINTENANCE ENGINEERS WELFARE ASSOCIATION VERSUS SHRI ASHISH CHHAWCHHARIA RESOLUTION PROFESSIONAL FOR JET AIRWAYS (INDIA) LTD., COMMITTEE OF CREDITORS OF JET AIRWAYS (INDIA) LTD., HDFC BANK, M/S. VRIHIS PROPERTIES PRIVATE LIMITED [2022 (2) TMI 627 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] the admitted claim has to be released. Counsel for the Respondent has submitted that there is no quarrel with the law laid down by this Court in this regard which has further been affirmed by the Hon’ble Supreme Court in appeal.
The first appeal is partly allowed only to the extent that the amount of Rs. 15,62,128/-, being statutory dues of the provident fund shall be paid by the Resolution Applicant. The rest of the contention raised in this appeal are hereby rejected.
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2024 (1) TMI 90 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Refund of home buyers who had obtained a decree from the RERA - to be treated as separate class or not - HELD THAT:- On perusal of the very fact that the Appellants have obtained a decree from UP RERA and the issue decided in the case of Vishal Chelani & Ors. [2023 (10) TMI 949 - SUPREME COURT] was whether they form a separate class has been decided that they are also to be treated as such alongwith other home buyers/financial creditors for the purpose of resolution plan and the argument raised by the Respondent that a provision has already been made in the resolution plan for the purpose of refund in Clause (B3)(c), there are no error in the impugned order and thus the present appeal is hereby dismissed though without any order as to costs.
Appeal dismissed.
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2024 (1) TMI 89 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of application - initiation of CIRP - existence of pre-existing dispute or not - Respondent stated that there were clear pre-existing disputes with the Appellant and he sent e-mail dated 10.05.2021 much prior to demand notice sent by the Appellant under section 8 of the Code.
HELD THAT:- The fact that Air India being one of the largest airlines operating large number of flights on Domestic routes was one of the significant revenue contributor and Air India not allowing players in the airline business using the Amadeus Software under the GDS might have impacted the business of the Respondent. Attention has been drawn by the Respondent that the Appellant never replied to the e-mail of the Respondent dated 10.05.2021 and the Appellant never addressed the issue of termination of its software by Air India and Jet Airways.
The e-mail dated 10.05.2021 sent by the Respondent to the Appellant under title of “Intimation of breach of contract” much prior to issue of demand notice under Section 8 of the Code, is nothing but pre-existing disputes and thus the dispute is squarely covered by the judgement of the Apex Court in Mobilox Innovations [2017 (9) TMI 1270 - SUPREME COURT].
The Adjudicating Authority after considering all documents and facts correctly held that there was a pre-existing dispute and the appeal raises no valid grounds to controvert the said finding - there are no error in the Impugned Order under challenge - appeal dismissed.
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2024 (1) TMI 47 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admission of application u/s 9 of IBC - non-service of notice - Adjudicating Authority did not issue any notice to the Appellant and without issuance of any notice to the Appellant, direction to proceed ex-parte was passed - violation of principles of natural justice - HELD THAT:- Service of notice prior to filing of the Application is requirement of the NCLT Rules and even if the advance notice was served by the Operational Creditor the requirement of rule 37 is not dispensed with unless the party itself appears before the Adjudicating Authority and in event the corporate debtor itself appears there is no requirement of any notice under Rule 37 but when a party does not appear notice has to be issued to show cause and fix the date for appearance in NCLT Form 5.
The present is a case where no notice was issued by the Adjudicating Authority and only on the statement of Learned Counsel for the Operational Creditor that Corporate Debtor has not appeared despite service, the Adjudicating Authority proceeded to direct ex-parte hearing.
When notice required under Section 37 which was not issued and the Adjudicating Authority proceeded against the Corporate Debtor, it is opined that the Order admitting section 9 Application suffers from error and need to be interfered with - the Order impugned is set aside - appeal allowed.
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2024 (1) TMI 46 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
CIRP - Jurisdiction of Adjudicating Authority - imposition of cost / fine and intent of Section 70 of IBC - Allegation that, appellants (suspended director) were not co-operating with the Liquidator - HELD THAT:- There are no hesitation in holding that the word “fine”, used consciously by the Adjudicating Authority in the Impugned Order, is covered in penalty which is required to be dealt under Section 70 and 236 of the Code and which further is not within jurisdiction of the Adjudicating Authority.
It is concluded that clearly the Adjudicating Authority erred in passing the Impugned Order overlooking the law of the land through the Code and also ignoring the precedent cases settled by this Appellate Tribunal earlier.
The Impugned Order is set aside - matter remanded back to the National Company Law Tribunal, New Delhi Bench to have a fresh look and decide in accordance with the law.
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2024 (1) TMI 45 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of Resolution Plan - resolution plan approved by the CoC of the Corporate Debtor with 77.54% - impugned order having been passed by a single member, is contrary to the provision of Section 419(3) of the Companies Act, 2013 or not - non-speaking order - violation of principles of natural justice.
Whether as per Section 419(3) of the Act, the order has to be passed by two members or a single member until and unless there is a notification specifically issued in this regard? - HELD THAT:- It is clear from the bare reading of Section 419(3) of the Act that the powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member but still a single Judicial Member can exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify - In the present case which is pending since 2020, nothing has been brought on record by the Respondents that there has been a notification in this regard much less in terms of first proviso to Section 419 (3) of the Act authorising the solitary judicial member (Acting President at that time) to entertain unnumbered applications filed by RP and Resolution Applicant to decide the same in such a summary manner, therefore, the answer to this question is that until and unless a notification is issued under the first proviso to Section 419(3) of the Code the single judicial member cannot take upon itself the jurisdiction to entertain an application such like the one in hand and decide the same, therefore, the impugned order has been passed by an authority having no jurisdiction.
Administrative order issued on 22.03.2020 by none else than the NCLT - HELD THAT:- This administrative order was issued in the wake of Covid-19. It was specifically mentioned in the said instructions that because the whole country is fighting against Covid-19, therefore, during this period the serious matter like extension of time, approval of resolution plan and liquidation shall not be entertained as urgent matters - It is needless to mention that on the one hand the Adjudicating Authority itself is issuing instructions that the issue regarding the extension of time, approval of the resolution plan and liquidation should not be treated as urgent matter and on the other hand the Acting President heard the unnumbered applications treating them most urgent and then approved the resolution plan only on the basis that the CoC has already approved the same without recording his satisfaction about Section 30(2) of the Code.
The impugned order is patently illegal as it is without any reason which is the heart and soul of a judicial order because the Adjudicating Authority has passed the order though referring to Section 31 of the Code but it has not recorded its satisfaction about the provisions of Section 30(2) of the Code - the impugned order is not only illegal, but also unreasonable and non-speaking.
The matter has to be remanded back to the Adjudicating Authority to decide the issues again after recording its findings in accordance with law - Appeal allowed by way of remand.
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2024 (1) TMI 44 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
CIRP - Interpretation of statute - right of Operational Creditor to seek a copy of the information memorandum - Operational Creditor is merely a participant in the CoC and not a member.
HELD THAT:- The Respondent has admitted that he is only a participant. It is also an admitted fact that there is no definition of member provided in the Code or the Regulations which has been repeatedly used in the Code as well as Regulations. Section 21 deals with the composition of CoC and Section 21(2) provides that member shall be the financial creditors of the Corporate Debtor. Section 25 is in regard to the preparation of information memorandum. Section 29(2) says that the information memorandum has to be provided to the resolution applicant whereas Regulation 36 provides that it has to be given to each of the member of the committee and Regulation 36(4) provides that it shall be given to the resolution applicant.
From the aforesaid two provisions and the fact that the Code and Regulations are totally silent about the supply of the information memorandum to the participant, it has to be inferred that the legislature has made a provision for providing a copy of the information memorandum to the member of the CoC and the Resolution Applicant but not to the participant of the meeting of the CoC such like the present Respondent. Therefore, the finding recorded by the Adjudicating Authority that since there is no prohibition in the Code or the Regulations for providing the information memorandum to the Operational Creditor as a participant is totally erroneous and unsustainable.
In so far as, the decision of the Hon’ble Supreme Court in Vijay Kumar Jain [2019 (2) TMI 97 - SUPREME COURT] is concerned, reference firstly is made to the facts of the said case. In that case, the Appellant was the member of the suspended board of director. He was aggrieved because he was not given the copy of the resolution plan and was denied even participation in the meeting of the CoC. In this background, the Hon’ble Supreme Court has held, in Para 9 of the Judgment, that in view of Section 30(2)(b) of the Code since repayment of debts is an important part, therefore, the resolution plan has to be given to the participant of the CoC - As far as Para 12 of the said judgment is concerned, it talks about the information memorandum which is to be given to the resolution applicant so that he may submit the resolution plan in terms of Section 30 of the Code and the CoC get the information memorandum so that they can assess the financial position of the Corporate Debtor before the meeting. There is no reasonable nexus attached with the supply of information memorandum to the participant such like the Operational Creditor - In such circumstances, the judgment in the case of Vijay Kumar Jain which is on its own facts has wrongly been relied upon by the Adjudicating Authority while passing the impugned order.
The question framed in the beginning is hereby answered to the effect that the Operational Creditor being a participant in the meeting of the CoC has no right to seek a copy of the information memorandum.
There are merit in the appeal, the same is hereby allowed and the impugned order is set aside.
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2024 (1) TMI 43 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
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 - HELD THAT:- It is seen CoC approved the resolution plan and accordingly the application for the liquidation of the Corporate Debtor was withdrawn by the Respondent/Resolution Professional. However, since the CoC at a later stage authorised the Respondent to file the application under section 66 of the Code, therefore the Respondent filed the said application after forming her independent opinion. Therefore, it is incorrect submissions made by Appellant that the Resolution Professional want to send the Corporate Debtor into liquidation.
It is the contention of the Appellants that the Statutory Auditor did not find any fraudulent transactions contrary to the Forensic Audit Report submitted by M/s VMRS & Associates, Chartered Accountants and therefore Forensic Audit Report was not correct. In this regard, it is observed that the role of Forensic Audit becomes relevant only when such situation occurs about alleged preferential, undervalued, fraudulent and extortionate type of transaction takes place and on most occasions the process of Forensic Audit is required to be undertaken after the annual financial statement of the Corporate Debtor are duly compiled and audited - the contention of the Appellant cannot be accepted that in absence of pointing out fraudulent transactions by the Statutory Auditors, the alleged fraudulent transactions should not have been taken into consideration by the Respondent or by the Adjudicating Authority.
There are no error in the Impugned Order dated 12.11.2021 and there are no merit in the Appeal.
Disapproval of Resolution Plan - Liquidation of the Corporate Debtor ordered - ineligible under Section 29 (A) (g) of the Code - HELD THAT:- The Adjudicating Authority has power under Section 33(1) of the Code to reject plan and direct liquidation of Corporate Debtor, if any of the requirement of not fulfilled by Resolution Applicant - In the present case the Appellant/Resolution Applicant was declared ineligible under Section 29A(g) of the Code after determination of fraudulent transactions of Rs. 29,75,73,550/- by him along with related parties/ his family members vide order dated 12.11.2021 in I.A. 102/2021 - It is seen that the Adjudicating Authority has exercised its power in the light of Section 33(1) (a) for Initiation of Liquidation, where the Adjudicating Authority has to consider the maximum period permitted for completion of the CIRP under section 12 i.e., 330 days and in this case, around 1,469 days already been lapsed (25.07.2019 CIRP to 02.08.2023 date of liquidation order).
It is evident that once the Resolution Applicant become ineligible under Section 29 (A) (g) of the Code, the Adjudicating Authority is bound to reject the Resolution Plan and consequently order for Liquidation of the Corporate Debtor - Section 29A(c) of the Code is provision which and has been added with clear intention to ensure that people who were at the helm of the affairs of the Corporate Debtor, do not come back in some other guise to get back the management/ control/ ownership of the Corporate Debtor without clearing its outstanding debts - 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.
There are no error in the Impugned Order - appeal dismissed.
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2024 (1) TMI 42 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Maintainability of application for restoration of the petition before the Adjudicating Authority - failure to cross the threshold limit - appeal dismissed also on the ground of threshold limit and not only on the ground of non-appearance of the appellant.
HELD THAT:- In the ordinary course, had an order been passed by the Adjudicating Authority dismissing the petition filed under Section 9 of the Code only on the ground of non-appearance of the appellant then the application for recalling of the order dated 20.09.2022 could have been maintainable but the facts are otherwise because the order dated 20.09.2022 was passed on merits by the Adjudicating Authority holding that the petition under Section 9 is not maintainable as it has failed to cross the threshold limit as per Notification dated 24.03.2020 issued by the MCA.
This order could have been challenged by way of an appeal by the Appellant before the Appellate Authority but the Appellant did not choose to file the appeal rather filed a frivolous application for restoration of the petition, may be under wrong belief, that the petition has been dismissed for non-appearance of the appellant only - Thus, no error is committed by the Adjudicating Authority in dismissing the application for restoration vide impugned order dated 23.03.2023 because it has been observed that the order dated 20.09.2022 has been passed on merits much less on the ground that the Appellant has failed to cross the threshold limit as provided because the amount which has been sought to be resolved was Rs. 75 Lakh whereas after the amendment the threshold has been increased to Rs. 1 Crore.
There are no merit in this appeal and the same is hereby dismissed.
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2024 (1) TMI 41 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admission of application filed under Section 7 of IBC - proceeding ex-parte ignoring the reply of the Corporate Debtor - HELD THAT:- The reply having been filed which was noticed by this Appellate Tribunal in order dated 27.05.2022, the Adjudicating Authority ought to have looked into the reply and even it was not on the e-portal opportunity ought to have been given to bring it on e-portal or physical copy of the reply ought to have been taken from the Corporate debtor.
The Adjudicating Authority committed error in proceeding ex-parte ignoring the reply and admitting section 7 application. In result, the impugned order set aside, Section 7 application revived again before the Adjudicating Authority.
The Adjudicating Authority shall fix a date after two weeks and after hearing the parties pass afresh order in accordance with law.
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2024 (1) TMI 40 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking direction to the IRP to admit their claim in full - Seeking not to treated as a related party of the Corporate Debtor - assignment of voting rights in respect of Corporate Insolvency Resolution Process - HELD THAT:- The Adjudicating Authority has committed a patent error in holding that a related party has a right to join the meeting of the CoC - Adjudicating Authority has further erred in observing that the Appellant did not refer to a specific sub clause of Section 5(24) of the Code whereas it has in fact referred to Clause 5(24)(m) and also gave the detail of the name of the directors by way of a chart which also forms part of Para 11 of the impugned order but still there has been no finding in this regard.
Further, the Adjudicating Authority has erred in making specific observation that no material has been brought on record except general observations given by the RP on the basis of the order of SAT whereas the Appellant has produced on record a detailed summary which has been prepared on the basis of MCA Data which though has been reproduced in the impugned order from pages 89 to 111 but it has not been referred to in the discussion part where it has been rather held that no material has been produced except for the order of the SAT - The argument raised by the Respondent that every provision of Section 5(24) has its own effect and impact which has to be assessed on the basis of the evidence may be attractive but even that part has not been seen by the Adjudicating Authority while passing the impugned order.
This is a fit case for allowing the appeal for the purpose of its remand to the Adjudicating Authority to decide it afresh after take into consideration the entire evidence brought on record by the Appellant and Respondent and then passing a speaking order - matter is remanded back to the Adjudicating Authority to decide it again by recording specific findings on the basis of material which has been brought on record - appeal allowed by way of remand.
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2024 (1) TMI 33 - SUPREME COURT
Constitutional validity of Sections 95 to 100 of the Insolvency and Bankruptcy Code 2016 - time bound resolution of insolvency - comparison between the stages of Part II and Part III of the IBC - role of the resolution professional in corporate as opposed to individual insolvency - impact of a moratorium under Section 14 of Part II, on one hand, and an interim-moratorium under Section 96 of Chapter III of Part III - role of the adjudicating authority in applications under Part II, on one hand, and Part III, on the other.
HELD THAT:- The conclusion of this judgment is summarised below:
(i) No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC;
(ii) The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application;
(iii) The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining ‘jurisdictional facts’ at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review;
(iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;
(v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional;
(vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;
(vii) The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application;
(viii) The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings; and
(ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution.
Petition dismissed.
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2023 (12) TMI 1309 - SC ORDER
Taking possession of the demise premises in view of Section 14(1)(d) of I&B Code - it was held by NCLAT that 'Since the demised premises ceased to be the property of the Corporate Debtor much prior to the initiation of CIRP, therefore, it cannot be covered under Section 14 much less 14(1)(d) of the Code' - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal since no substantial question of law is involved in the appeal.
Appeal dismissed.
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2023 (12) TMI 1255 - SUPREME COURT
Qualification of Resolution Applicant - Promotor of the company - Application for Resolution Plan dismissed on the ground that the promoters could not have presented the plan - ineligibility to continue as a Resolution Professional - ineligibility to be considered as Board is liquidator of the corporate debtor - whether the appellant had erred in putting up a plan that was not in consonance with law for consideration of the adjudicating authority?
HELD THAT:- As per the factual scenario on record, there is no per say disqualification under Section 29A - it is pointed out that the plea based on Section 240A needs the opinion of this Court as there are a number of such cases arising and the orders earlier passed are being followed.
The common submission thus, is that while interpreting Section 240A, the reason for carving out an exception in micro, small and medium industries is set out on the date of application for making the bid as the crucial date. The submission is that while for some other aspects the initiation of the CIRP proceedings would be the cut off date, the same would not apply in the case of Section 240A, in view of the statement by the Minister themselves while introducing the amendment Bill.
The statement of the Minister is looked into for purposes of a cut off date that “there is no other specific provision providing for cut off date” which submits that it should be the date of application of making a bid. Thus, to opine that it is the initiation of the CIRP proceedings which is the relevant date, cannot be said to reflect the correct legal view and thus, it is constrained to observe that the law laid down in DIGAMBAR ANANDRAO PINGLE VERSUS SHRIKANT MADANLAL ZAWAR, SHRIKANT MADANLAL ZAWAR, VANDANA GARG LIQUIDATOR M/S PINGLE BUILDERS PVT. LTD., STATE BANK OF INDIA, VIJAYA BANK, M/S SOORAJMULL BAIJNATH PVT. LTD. [2021 (7) TMI 456 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] case by the Tribunal is not the correct position in law and the cut off date will be the date of submission of resolution plan - Thus, even on this count, the plan submitted in question will not incur the disqualification.
The petition before the Adjudicating Authority would stand restored to National Company Law Tribunal for reconsideration
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2023 (12) TMI 1249 - SUPREME COURT
Condonation of delay in filing an appeal before NCLAT - whether the appeal was instituted within limitation? - Maintainability of application under Section 7 of the IBC - HELD THAT:- On the facts of the case, the Court noted that the appeal was barred by limitation as the appellant did not even attempt to secure a certified copy and only relied on the date of uploading the order on the website. Significantly, in the case, there was a pronouncement on the date mentioned on the order and the appellant did not dispute his presence before the NCLT when the order was pronounced in open court.
The date on which the limitation begins to run is intrinsically linked to the date of pronouncement. The question that arises in the facts of the present case, therefore, is when is an order deemed to be pronounced. The National Company Law Tribunal Rules, 2016 [NCLT Rules] provide guidance in this regard. Rule 89(1) of the NCLT Rules indicates that when NCLAT registry publishes its cause list, a distinction is drawn between cases listed for pronouncement of orders and other cases.
In the present case, the cause list for 17 May 2023 placed on record by the appellant indicates that the case was listed for admission and not for pronouncement. Further, on a specific query of the Court, it is not in dispute between counsel for the appellant and the respondent, that no substantive order was passed on 17 May 2023 by the NCLT. In these circumstances, limitation would not begin to run on 17 May 2023 which was the date on which hearings concluded. As no order was passed before 30 May 2023, there was no occasion for the appellant to lodge an application for a certified copy on 17 May 2023. Time for filing an appeal would commence only when the order appealed from was uploaded since prior to that date no order was pronounced.
The period of limitation began to run on 30 May 2023. The 30- day limitation period provided in Section 61(2) of the IBC concluded on 29 June 2023. Though the appeal was filed beyond the period of thirty days, it was within the condonable period of fifteen days - the appeal should be restored to the NCLAT for reconsidering whether the appellant has shown sufficient cause for condoning the delay beyond thirty days.
Appeal disposed off.
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