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Insolvency and Bankruptcy - Case Laws
Showing 321 to 340 of 8707 Records
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2023 (12) TMI 313
Seeking that the amount which is still to be refunded to the investors need to be kept separate from the CIRP of the Corporate Debtor - Corporate Debtor is asset management company of the trust i.e. OAF and all inventories and assets of the OAF has been handed over to the Resolution Professional - HELD THAT:- The Resolution Professional has directed for forensic audit which report has also been received and has been relied by the Resolution Professional. It is not shown as per the forensic report that the amount of Rs.30,86,62,832/- belonging to OAF lying with the Corporate Debtor or is reflected in the accounts of the Corporate Debtor, no material has been placed either before the Adjudicating Authority or before this Tribunal by the Appellant to show that the said amount is reflected in the books of the account of the Corporate Debtor which amount is claimed to be belonging to OAF. The Adjudicating Authority has returned the finding that no direct investment/deposit from OAF reflects in the books of the Corporate Debtor. In the appeal also, neither any foundation has been laid nor any material has been produced to indicate that the said finding is incorrect.
Even though the Appellant has not filed its claim, the Resolution Professional has already pleaded that the Resolution Plan notices the amount to be refunded as per the SEBI’s order dated 28.05.2021. The Resolution Plan also contains a clause for discharge of the liability of the SEBI. There shall be no question of extinguishment of the claim of the SEBI pursuant to the order dated 28.05.2021 on completion of the CIRP of the Corporate Debtor. The Resolution Plan envisaged for clearing such liability as per scheme envisaged in the Resolution Plan. Counsel for the Resolution Professional is right in his submission that during currency of moratorium which was imposed by order dated 19.12.2021, no recovery can be affected from the Resolution Professional of the Corporate Debtor as per SEBI’s order dated 28.05.2021.
Thus, no error has been committed by the Adjudicating Authority in rejecting IA No.3787 of 2022 filed by the Appellant - appeal dismissed.
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2023 (12) TMI 312
Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor u/s 7 - Financial debt or not - financial assistance of Rs.25 crore given by the Appellant to the Respondent by way of an ICD for the purpose of buying land for a real estate project which was being jointly developed under a JVA - Financial Creditor - HELD THAT:- A careful perusal of the JVA and the ICD between the two parties show that there are unmistakable signs of reciprocal rights and obligations contained in both the agreements besides evidence of common participation as well as sharing of profits and losses in the real estate projects. This spirit of being collaborators and profit-sharing partners is writ large in both the JVA and the ICD and therefore the Adjudicating Authority has committed no error in holding that the JVA and the ICD are interdependent and inter-related and not independent of each other.
Undisputedly both parties being partners in developing the project together, the purchase and availability of land for the project was an essential ingredient thereof and hence any assistance by the Appellant to the Respondent tantamount to financing the operations of the joint venture. When shared liability for profit is so clearly manifested in the JVA and the ICD and responsibilities well demarcated in the execution of the real estate projects, it cannot be overlooked that both parties are development partners and co-sharers in the real estate projects. The JVA and ICD laid the foundations of a legal and binding relationship with mutual financial obligations towards each other. Given this backdrop, clearly the present transaction is in the nature of investment for profit and not disbursement for time value of money and hence does not fall within the canvas of financial debt as defined under Section 5(8) of the IBC - This Tribunal has also observed time and again that the primary focus of IBC, as a beneficial legislation, is to ensure revival and continuation of the Corporate Debtor and that the provisions of IBC cannot be misused for staging recovery of debt and for treating the Adjudicating Authority as a debt recovery forum.
In so far as the findings of the Adjudicating Authority are concerned that both the parties being joint venture partners, there was no financial debt in terms of Section 5(8) of IBC and hence the application under Section 7 of the IBC could not be entertained, there are no error in the impugned order - the Appellant is not a Financial Creditor in terms of Section 5(7) of IBC and the application under Section 7 at the instance of the Appellant was not maintainable and hence the same has been rightly rejected by the Adjudicating Authority.
Appeal dismissed.
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2023 (12) TMI 259
Maintainability of application u/s 7 of IBC - initiation of CIRP - legitimate loan transactions between the Appellant and the Corporate Debtor or not - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal in GP. CAPT ATUL JAIN (RETD.) VERSUS TRIPATHI HOSPITAL PVT. LTD., DR. BIRENDRA KR. TRIPATHI, DR. MRS. NIDHI TRIPATHI, DR. MRS. MANJU LATA TRIPATHI, MS. SUNAYANA AGARWAL, DR. MANOJ AGARWAL, DR. MAYAK GUPTA, MRS. RAKHI SHUKLA, M/S HERITAGE HOSPITALS LTD. [2023 (7) TMI 1242 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] since no substantial question of law is involved in the appeal.
Appeal dismissed.
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2023 (12) TMI 258
Admissibility of application u/s 9 of IBC - operational debt qua the Corporate Debtor is due and payable or not - HELD THAT:- There are no reason to interfere with the order in RAJU JAGTAP, SUSPENDED DIRECTOR OF INSTEEL ENGINEERS PRIVATE LIMITED VERSUS JAYESH STEEL PVT. LTD., INSTEEL ENGINEERS PRIVATE LIMITED [2023 (9) TMI 1260 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] since no substantial question of law is involved in the appeal.
Appeal dismissed.
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2023 (12) TMI 257
Approval of the Resolution Plan - Appellants’ case is that they are workers engaged by sub-contractor and in the Resolution Plan, the claims submitted on behalf of sub-contracted workers have been accepted only to the extent of 8% whereas workmen of the Corporate Debtor have been proposed payment of 100% of their claim - HELD THAT:- The Hon’ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] held equitable treatment is to be accorded to each creditor depending upon the class to which it belongs: secured or unsecured, financial or operational.
In the present Appeal, the claim which was filed through sub-contractor cannot be treated as workmen of the Corporate Debtor. The Resolution Plan has dealt with claim as admitted by Resolution Professional and reflected in the Information Memorandum. The claim filed by the Operational Creditor in Form B has been dealt with in accordance with the IBC and CIRP Regulation and the claim which was filed by the Operational Creditor cannot be transposed to be claim of workmen for the purpose of this Appeal.
The issue raised by the Counsel for the Appellant that workers employed by sub-contractor are also workers of the Corporate Debtor need no answer in this Appeal since the question is as to treatment of the claim which was submitted in the CIRP of the Corporate Debtor and admitted by the Resolution Professional.
The submission which has been advanced by Counsel for the Appellant that due to the workers of sub-contractor being not aware of the CIRP could not file their claim cannot be considered at the stage when all claims have been collated and admitted and dealt with in the Resolution Plan. Challenge in this Appeal is to the order of the Adjudicating Authority approving the Resolution Plan - there is no infirmity in the Resolution Plan giving different treatment to the workmen dues and those claimed by the Operational Creditor.
Appeal dismissed.
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2023 (12) TMI 256
Recovery of arrears of electricity dues on the premises for providing new electricity connection - Respondent submits that the Successful Auction Purchaser is not liable to pay electricity dues which was payable by the erstwhile Corporate Debtor - HELD THAT:- There is no dispute between the parties regarding facts of the case. Electricity dues amounting to Rs.39,15,625/- was owed by the erstwhile Corporate Debtor – Shashi Oils and Fats Private Limited. E-auction notice was issued by the Liquidator for sale of the assets.
There can be no dispute between the parties that the sale in the liquidation process was on “As Is Where Is, As Is What Is, Whatever There Is and Without Recourse basis”. ‘Due Diligence’ Clause also notes that any outstanding charge was also to be performed in the e-auction process by the prospective bidder. The question that electricity dues of the Corporate Debtor who underwent insolvency resolution process/liquidation process can still be insisted against the Successful Resolution Applicant/ Successful Auction Purchaser is not res integra.
The issue which has arisen in the present case has been recently considered by this Tribunal in Chinar Steel Segments Centre Pvt. Ltd. vs. Samir Kumar Agarwal [2023 (10) TMI 645 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. In the above case, an application filed by the Successful Auction Purchaser seeking direction to Damodar Valley Corporation to energize its electricity connection, was rejected relying on WBERC Regulation. Appeal was filed by the Successful Auction Purchaser which appeal was ultimately allowed by this Tribunal directing that fresh connection be granted without charging any outstanding dues of the Corporate Debtor. It is relevant to notice that the submission which has been advanced by the Appellant that the application filed by the Successful Auction Purchaser was not maintainable was also considered by this Tribunal in the above case and it was held that the application was fully maintainable under Section 60(5). This Tribunal held that application filed by the Successful Auction Purchaser was fully entertainable under Section 60(5) since it arose out of liquidation proceeding of the Corporate Debtor.
The Hon’ble Supreme Court in Tata Power [2023 (9) TMI 1071 - SC ORDER] clearly held that Tata Power cannot insist on payment of arrears for granting electricity connection.
The submission raised by learned counsel for the Appellant that Successful Auction Purchaser was liable to pay the arrears of electricity dues which were dues of the erstwhile Corporate Debtor and without payment of said dues electricity connection cannot be granted are not in accord with the statutory scheme of IBC. The Adjudicating Authority did not commit any error in issuing direction in Para 16 of the impugned order, to energise the electricity connection without insisting on the payment of pre-CIRP dues.
There are no ground to interfere in the impugned order of the Adjudicating Authority - there are no merit in the appeal - appeal dismissed.
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2023 (12) TMI 255
Replacement of IRP - Submission of appellants were not considered - non-speaking order - violation of principles of natural justice - HELD THAT:- From the facts brought on the record, it is clear that the Appellant was appointed as IRP by order of the Adjudicating Authority dated 09.02.2023 which appointment was not even confirmed by the CoC since no resolution could be passed by the CoC confirming the Appellant as Resolution Professional. From the facts it is clear that the first agenda for 1st CoC meeting was issued only on 03.03.2023 which meeting could not be concluded by Appellant till April 2023. CoC was left with no remedy except to file an IA No.1874 of 2023 seeking a direction for convening a meeting with agenda of replacement of the IRP on which order was passed on 12.05.2023 directing the Appellant to hold the meeting within one week from receipt of the order. In spite of the order dated 12.05.2023, no meeting was convened by the Appellant with the agenda of the replacement of the IRP and ultimately the Adjudicating Authority had to pass another order on 27.09.2023 issuing direction to convene the meeting.
From the facts which have been brought on the record, it is clear that the appointment of the Appellant as IRP was never confirmed by the CoC nor any material has been brought on record to indicate that the appointment of IRP was confirmed by the CoC by majority of not less than 66% of the vote. When Appellant’s appointment as IRP has not been confirmed, the Appellant could have been replaced by the CoC under Section 22 - The objection which was raised before the Adjudicating Authority that the State Bank of India has assigned its debt, hence, it has no locus to file the application has been dealt with by the Adjudicating Authority. It has been noticed in paragraph 3 that assignment was made on 12.10.2023 whereas the application IA No.1874 of 2023 was filed in May 2023 and the resolution to replace the IRP was passed on 06.10.2023 i.e. much before the assignment of debt.
There is no error in the order passed by the Adjudicating Authority dated 17.10.2023 - There is no merit in the Appeal - Appeal dismissed.
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2023 (12) TMI 254
Approval of resolution plan - Challenge to Constitution of the Committee of Creditors (CoC) for the purposes of initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - HELD THAT:- The statutory construct of IBC clearly puts the onerous responsibility of pursuing avoidance applications on the RP. In terms of Section 25(2)(j) of the IBC, it is the duty of the RP to file appropriate applications for avoidance of transactions which fall under the ambit of preferential, fraudulent, undervalued or extortionate transactions. When the statutory scheme clearly states that it is the duty of Resolution Professional to determine the nature of such transactions and file an appropriate application before the Adjudicating Authority, neither the Appellants-1 being home buyers themselves nor the GSC as unsuccessful resolution applicant are entitled on their own to file applications seeking avoidance of transactions.
The ratio of the Jayanta case [2022 (2) TMI 305 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] cannot come to the aid of the Appellant-1 since in that case the RP without verifying the claims submitted by the Financial Creditors had allotted voting share. Further, the RP had not prepared the Information Memorandum and the CIRP proceedings were conducted without any valuation of the Corporate Debtor. Neither was there any publication of Form G inviting Expression of Interest. Moreover, in that case the CoC had rushed into liquidation of the Corporate Debtor - It cannot be commended that such unilateral addition of names in the list of suspect home buyers by the Appellants-1.
Simply because the Appellants have raised the issue of avoidance application, it does not stand to reason that the approval of the resolution plan needs to be put on hold or kept in abeyance. We also find that the present resolution plan also provides that recovery under Section 43 , 45 , 50 and 66 of the IBC would be the exclusive rights of the CoC of the Corporate Debtor.
Thus, no cogent grounds have been raised in either of the two appeals which would warrant any interference with the impugned orders passed by the Adjudicating Authority - appeal dismissed.
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2023 (12) TMI 185
Approval of Resolution Plan - failure to submit the Bank Guarantee as per RFRP - whether condition for requiring to submit Rs. 50 Lakhs Bank Guarantee was contrary to Regulation 36B (4) and (4A)? - HELD THAT:- Regulation 36-B (4) only provides for request of resolution plan shall not require any non-refundable deposit. In RFRP there is no such clause which requires that Resolution Applicant has to submit any non-refundable deposit. With regard to Regulation 36B (4A), RFRP itself contains a condition as extracted above. Therefore, the RFRP was fully in compliance with Regulation 36B (4A). Learned Counsel for the Resolution Professional has rightly submitted that requirement of Bank Guarantee was only for the purpose to consider seriousness of the Resolution Applicants who are able to submit the Bank Guarantee of Rs. 50 Lakhs. Appellant has never complied the said and has not challenged the RFRP at any stage, cannot be allowed to contend that the said condition is not correct.
It is further noticed in 09th COC Meeting that Appellant has made a request to CoC to waive the requirement of Bank Guarantee which was not accepted by the CoC and Appellant having not complied with the terms of the RFRP in submitting the plan, there are no illegality in the decision of the CoC in not considering the Resolution Plan of the Appellant.
There are no reason to entertain this Appeal, the Appeal is dismissed.
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2023 (12) TMI 129
CIRP - Equity or financial debt - RP rejected the claim of the appellant - Whether the CCDs along with the other documents can be said to be really a debt and not an equity despite the wording of the CCDs which must be read along with the other documents and communications inter se the parties? - Maintainability of appeal after statutory period of limitation.
HELD THAT:- The definition of debt under Section 3(11) of the Code would be the liability or obligation in respect of a claim which is due from any person. ICTL does not have a liability or obligation qua the appellant because the appellant is actually an equity participant and does not have a debt to be repaid. The success of a commercial venture pays benefit to the equity participants but with income, which would not inhere in case of the the failure of the venture - if it was a simpliciter debenture, it would have fallen under the category of a financial debt along with bonds etc. However, we are not concerned with a debenture per se.
The debenture subscription agreement clearly defines ICTL as the special purpose vehicle while IVRCL is the sponsor company and IFCI is the lender. In terms of Clause 2.4, the rate of interest/coupon rate of 11 per cent per annum, payable quarterly, is applicable till either the buy back of all the CCDs (an option available to the borrowers) or conversion of CCDs into equity. The liability is of the sponsor company for making coupon payments and not of the SPV/ICTL. Further, under Clause 2.8, the buy back is also an arrangement inter se the Sponsor company and IFCI - the appellant was provided security under the Debentures Subscription Agreement but the obligations are of the sponsor company. That being the position, it is difficult to appreciate how the obligation is of the SPV i.e. ICTL. Unless the debt is of the ICTL, the appellant cannot seek a recovery of the amount on the basis of being a creditor of the SPV ICTL.
The effect of the aforesaid is that a contract means as it reads. It is not advisable for a Court to supplement it or add to it. It is an unfortunate scenario where the appellant is being left high and dry as there is nothing which it can recover from the sponsor company, there being no assets and funds.
The investment was clearly in the nature of debentures which were compulsorily convertible into equity and nowhere is it stipulated that these CCDs would partake the character of financial debt on the happening of a particular event. - The appellant has invoked the guarantees and sought remedy against the sponsor company. The fact that it is not serving any fruitful purpose is not something which can weigh with us.
Maintainability of appeal after statutory period of limitation. - The jurisdiction is restricted to a question of law akin to a second appeal. The law does not envisage unlimited tiers of scrutiny and every tier of scrutiny has its own parameters. Thus, the lis inter se the parties has to be analyzed within the four corners of the ambit of the statutory jurisdiction conferred on this Court.
The appeal does not raise any such question of law and that the findings of the Courts below are in accordance with settled principles - Appeal dismissed.
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2023 (12) TMI 128
Service of notice - It is the main case of the Appellant that failure to provide an accurate Notice to the 11th CoC Meeting dated 14/12/2022 and the failure to provide Notice to e-voting of the Resolution Plan is in contravention of Regulations 21, 24 and 26 of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 - HELD THAT:- The Appellant herein cannot be said to be prejudiced or his legal right having been injured on account of the Appellant not attending the 11th CoC Meeting at 3.00 p.m. Be that as it may, there are force in the contention of the Learned Counsels for the Respondents that the change in the timing was also intimated and it was the Appellant who did not choose to join the link. The voting sheet enclosed with the material on record establishes that Regulation 26 of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 was not violated. Section 25 (2) and Regulation 21 have been complied with by the Respondents as the contents of the Notice for the Meeting and presenting all Resolution Plans at the Meetings of the CoC was duly done by the RP. Therefore, there was no violation of any Regulation of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 to warrant interference in the approval of the Resolution Plan.
Applicability of the ratio in the matter of Vijayakumar Jain Vs. Standard Chartered Bank [2019 (2) TMI 97 - SUPREME COURT] is applicable to the facts of this case - HELD THAT:- It is held in Vijaykumar Jain that the Law must ensure that access to this information is made available to all Creditors to the Enterprise, directly or through the RP. In the attendant case, the Appellant was well aware of the Resolution Plan and was part of all the discussions with respect to the evaluation matrix. It is significant to mention that the Appellant had not made any request seeking for the Copy of the Resolution Plan, which is not the case in the facts of the matter of Vijaykumar Jain - the ratio of Vijaykumar Jain cannot be made squarely applicable to the facts of the attendant case on hand.
There is no prejudice or injury to any legal right caused to the Appellant herein and there are no illegality or infirmity in the Common Impugned Order dated 05/07/2023, passed by the Adjudicating Authority and hence, these Appeals fail and are accordingly dismissed.
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2023 (12) TMI 50
Sanction of scheme of compromise of the Corporate Debtor under Section 230 of the Companies Act, 2013 read with Regulation 2B of IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- It is submitted that the proposed scheme of the appellant may be put to the SCC on 01.12.2023 which shall be considered by the SCC on that day and take the decision accordingly. Counsel for the Appellant has not shown any averseness to this proposal made by the Counsel for the Respondent. As a result, thereof, while disposing of this appeal, it is directed as per the agreement between the parties, that the scheme propounded by the appellant, in terms of the Section 230 of the act, shall be presented before the SCC on 01.12.2023. the meeting shall be convened by the liquidator on 01.12.2023 by giving time, date and place to the parties concerned and in that meeting the scheme shall be considered by the SCC a decision shall be taken in accordance with law.
The present appeal is hereby disposed of.
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2023 (11) TMI 1213
Locus Standi of shareholder of the Corporate Debtor to challenge the Resolution Plan - Seeking for forensic audit of the Books of Accounts of the Corporate Debtor, and not to approve the Resolution Plan till the disposal of the Application - CIRP proceedings (proceedings in rem) - it was held by NCLAT that This Tribunal finds no infirmity in the Order of the Learned Adjudicating Authority in the Approval of the Plan or in the rejection of application - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment(s) and hence, the present appeals are dismissed.
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2023 (11) TMI 1172
Maintainability of SLP - Special Leave Petitions/Civil Appeals have been filed prior to the adjudication under Section 100 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- As the petitioners/appellants would be able to pursue all remedies before the Adjudicating Authority at the stage of Section 100, these Special Leave Petitions/Civil Appeals cannot be entertained.
The Special Leave Petitions and Civil Appeals are accordingly dismissed.
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2023 (11) TMI 1134
Contempt petition - CIRP proceedings - Preferential, undervalued, extortionate, fraudulent or wrongful trading - Pre-mature application or not - whether the Business Service Agreement (BSA) is valid and legal for which the Resolution Professional is cognizant and has initiated the Transaction Review Audit of various transaction to ascertain, whether any transaction fall under the ambit of preferential, undervalued, extortionate, fraudulent or wrongful trading under the provision of the Code? - HELD THAT:- Taking into consideration the entire facts and circumstances prevailing at the time when the application was filed and at the time the order was passed that when the application was filed a serious question was raised about the legality and validity of BSA and the Adjudicating Authority was of the view that RP has already initiated transaction review audit of various transactions, therefore, the application was premature at that stage but the apprehension of the applicant therein was found legitimate and necessary directions were given to the RP.
Since, the order dated 31.05.2023 by which the interim protection was granted to KCPL (Appellant) has been upheld by the Hon’ble Supreme Court because the civil appeal filed against the order dated 31.05.2023 has been dismissed, therefore, it is directed that this order of stay dated 31.05.2023 shall continue till the decision of the applications filed under Section 45 and 66 of the Code by the RP. The Adjudicating Authority is further directed to make all efforts to decide as early as possible the applications filed under Section 45 and 66 of the Code by the RP to the earliest but not later than 3 months from the date of passing of this order - appeal disposed off.
Second appeal - this filed by TNSI Retail Pvt. Ltd. on being aggrieved against the observation of the Adjudicating Authority recorded in the impugned order that “the apprehensions of the Applicants are legitimate” - HELD THAT:- There are not much substance in this appeal because after the receipt of transaction review audit, prima facie it is evident that there are issues involved which have been brought to the notice of the Adjudicating Authority by the RP by filing of the applications under Section 45 and 66 of the Code, therefore, this appeal is found to be without merit and the same is hereby dismissed.
Third appeal - HELD THAT:- TNSI is a 100% subsidiary of FRL, therefore, the board can be changed by the RP or he can take it over and follow the direction issued in the impugned order - the contention of the Appellant not agreed with - appeal dismissed.
Contempt petition - HELD THAT:- Since the appeal is being disposed of as the entire matter is again under consideration by the Adjudicating Authority by virtue of applications filed under Section 45 and 66 of the Code by the RP, there are no substance in the present petition as well and the same is hereby dismissed.
It is hereby ordered that the stay regarding the Appellant shall operate in respect of the area in its possession in the aforesaid Mall - Matter disposed off.
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2023 (11) TMI 1034
Approval of Resolution Plan - Plan providing for extinguishment of security interest and the guarantees of the Financial Creditors including dissenting Financial Creditors - payment, proposed to the dissenting Financial Creditors in the Resolution Plan - contrary to the provision of Section 30, sub-section (2) and the CIRP Regulations or not.
Whether Resolution Plan providing for extinguishment of security interest and the guarantees of the Financial Creditors including dissenting Financial Creditors is contrary to the provision of Section 30, sub-section (2) and the CIRP Regulations? - HELD THAT:- The present is a case where CoC deliberated over the issue and on such deliberation and inputs, the Successful Resolution Applicant submitted revised Resolution Plan and the Resolution Plan dealt with security interest and the personal guarantee also - Resolution Plan in question has consciously dealt with securities and personal guarantees given to the Financial Creditors including the dissenting Financial Creditors and the said clauses of the Resolution Plan do not contravene any provisions of Section 30, sub-section (2) as well as CIRP Regulations, 2016. The view of the Adjudicating Authority that Resolution Plan is contrary to provisions of Section 30, sub-section (2) is unsustainable and deserved to be set-aside.
Whether the payment, which have been proposed to the dissenting Financial Creditors in the Resolution Plan, is contrary to the provisions of Section 30, sub-section (2) and CIRP Regulations? - HELD THAT:- According to the scheme of the IBC, the payment to which a Financial Creditor, who does not vote in favour of the Resolution Plan is entitled for payment in accordance with sub-section (1) of Section 53, in the event of liquidation of the Corporate Debtor and further dissenting Financial Creditor has to be paid in priority to the Financial Creditors who vote in favour of such Resolution Plan. The submission advanced on behalf of learned Counsel for Respondent Nos.1 and 2 that dissenting Financial Creditors are entitled to upfront payment is not in line with the statutory scheme as contained in the IBC and the CIRP Regulations. There is no provision which can be pointed out, which requires Successful Resolution Applicant to make upfront payment to the dissenting Financial Creditors - The Successful Resolution Applicant having himself come out to make entire payment to the dissenting Financial Creditor within 90 days, it is opined that there can be no question of any contravention of provisions of IBC as well as CIRP Regulations with regard to payment to dissenting Financial Creditors.
In the present case, it not the case of Respondent Nos.1 and 2 that they are not receiving the payment, which they could have been entitled under Section 53, sub-section (1). What have been contended is that payment to them is not in priority as compared to the payment to assenting Financial Creditors - it is found that payment as provided in Resolution Plan is in accordance with the priority to the dissenting Financial Creditors, hence, there are no substance in the above submission.
The order impugned passed by the Adjudicating Authority is unsustainable and deserves to be set aside and the Application filed by RP deserves to be allowed - Application allowed.
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2023 (11) TMI 968
Seeking a direction under Section 60 (5) of the Code to declare the Appellant as the ‘Financial Creditor’ and include the Appellant’s name in the list of Creditors of the Corporate Debtor.
It is the case of the Respondent / RP of the Corporate Debtor Company that the Appeal is barred by the principle of Res Judicata as initially ARCIL had challenged the Order, on the ground that the Appellant is not a Financial Creditor.
HE;D THAT:- While allowing C.A. (AT) (Ins) 633/2018, this Tribunal noted that there is a dispute as to whether Mahal Hotel Pvt. Ltd. comes within the meaning of ‘Financial Creditor’ or not, and has concluded that ‘further, once a decision was taken by the Committee of Creditors to call for a Meeting for removal of Mr. Koteswara Rao Karuchola as RP, it was improper for him to include Mahal Hotel Pvt. Ltd. as Financial Creditor of the Member of the Committee of Creditors. Further, money laundering case having been initiated against Mahal Hotel Pvt. Ltd., the said Hotel cannot be allowed to be Member of Committee of Creditors’. It was also observed in paras 11 and 12 that the Adjudicating Authority had failed to notice the aforesaid facts and circumstances and without going into the question of delay in inclusion of Mahal Hotel Pvt. Ltd. as Financial Creditor, has decided the Claim and this Tribunal has set aside the Order dated 04/10/2018, whereby the Adjudicating Authority has directed the RP to revise the Claim submitted by Mahal Hotel Pvt. Ltd.. Therefore, it is crystal clear that the Order of this Tribunal dated 18/11/2019 has set aside the finding of the Adjudicating Authority revising the Claim of the Appellant herein without granting any liberty to once again approach the Adjudicating Authority for adjudication of its Claim.
The Hon’ble Apex Court in the matter of 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 the ‘clean slate’ theory is to prevent hydra heads popping up, preventing any past Claims from resurging and thereby leading to any uncertainty regarding the amounts payable by the Resolution Applicant who successfully takes over the business of the Corporate Debtor.
Appeal dismissed.
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2023 (11) TMI 967
Section 9 Application not admitted - pre-existing dispute between the parties - Disputed reply to the notice - HELD THAT:- The Appellant submits that the Reply to the Demand Notice was not correct reply and it was duly explained in the Rejoinder by Corporate Debtor - On looking into the Reply to the Demand Notice, the notice is clearly notice of dispute. When the Corporate Debtor immediately after first design was submitted said that it was not complete and refund of Rs.3 Lakhs was claimed, the dispute was raised immediately after 31.07.2019, which was much prior to the Demand Notice. The averments made in the Reply to Demand Notice clearly indicate that dispute was raised which cannot be a moonshine or not supported by any material.
The Adjudicating Authority did not commit any error in rejecting Section 9 application on the ground of pre-existing dispute - there is no merit in the Appeal - appeal dismissed.
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2023 (11) TMI 910
Approval of Resolution Plan - NCLAT / NCLT kept the application pending - Application seeking approval of a Resolution Plan for ACIL Limited (ACIL or Corporate Debtor) was kept in abeyance while directing the Official Liquidator (OL) to carry out a re-valuation of the assets of the Corporate Debtor and to provide exact figures/value of the assets and exact valuation details - HELD THAT:- In the case at hand, there was no occasion before the Adjudicating Authority- NCLT to be swayed only on the per se ground that the hair-cut would be about 94.25% and that it was not convinced that the fair value of the assets have been projected in proper manner as the bid of the appellant was very close to the fair value of the assets of ACIL. Ordering revaluation of the assets, by the OL, Ministry of Corporate Affairs, Government of India, in-charge of the particular area, cannot be justified.
As explained in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] and SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT], the Code was specifically introduced by Parliament for ensuring quick and time-bound resolution of insolvency of corporate entities in financial trouble, by first attempting to revive the Corporate Debtor, failure whereof would entail liquidation of the Corporate Debtor’s assets, and no unnecessary impediment should be created to delay or derail the CIRP. In the present case, both the NCLT and NCLAT erred to fully recognise that under the Resolution Plan, the Corporate Debtor was set to be revived and not liquidated. Thus, the minimum mandatory component in the Resolution Plan was only a reflection of the actual money, including upfront payment, which would go towards the FC(s). As discussed previously, the final Resolution Plan provided for the monetization proceeds of the land as also the avoidance amounts to go to the FC(s) of the Corporate Debtor.
At this juncture, it also cannot be lost sight of that it is for the FC(s) who constitute the CoC to take a call, one way or the other. Stricto sensu, it is now well-settled that it is well within the CoC’s domain as to how to deal with the entire debt of the Corporate Debtor. In this background, if after repeated negotiations, a Resolution Plan is submitted, as was done by the appellant (Resolution Applicant), including the financial component which includes the actual and minimum upfront payments, and has been approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with - It is worthwhile to note that the Adjudicating Authority has jurisdiction only under Section 31(2) of the Code, which gives power not to approve only when the Resolution Plan does not meet the requirement laid down under Section 31(1) of the Code, for which a reasoned order is required to be passed.
Under the circumstances, while this Court could have adopted the course of remanding the matter back to the NCLT for fresh/de novo consideration, but being conscious of the fact that such course would impede quick resolution as the CIRP is in a stalemate right from 01.09.2021 and after having applied our minds to the factual aspects also, it is not found that remand for consideration afresh, now, would serve the purpose of justice or aid the objects of the Code.
The order dated 01.09.2021 of the NCLT and the Impugned Judgment dated 19.01.2022 of the NCLAT are set aside - appeal allowed.
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2023 (11) TMI 909
Right to get registered as RP - Rejection of application of the Petitioner herein for registration as a Resolution Professional - rejection on the ground that she is not a fit and proper person to be appointed as an Insolvency Professional - HELD THAT:- An Insolvency Professional performs very important functions in the insolvency resolution process of a company. An Insolvency Professional virtually takes over the company during the period it goes through the insolvency resolution process. An Insolvency Professional in fact becomes the heart and brain of the company under the insolvency resolution process and a person having slightest of disqualification cannot be permitted to be appointed as an Insolvency Professional otherwise the entire purpose of the IBC will get vitiated.
Keeping in mind the functions and obligations of an Insolvency Professional, the Board has taken a decision that the Petitioner is not eligible to be registered as an Insolvency Professional because she is not a fit and proper person to be appointed as Insolvency Professional - As rightly contended by the learned Counsel for the Board, an Insolvency Professional is vested with the responsibility of managing the operations of the company undergoing the insolvency resolution process and all the assets of such a company are looked after by the Insolvency Professional.
A reading of the Regulations indicates that the Board can take a decision that a person who has been involved in any kind of financial irregularity cannot be appointed as an Insolvency Professional. The fact that the financial irregularity occurred 11 years ago and that the Petitioner has already paid the penalty for the same. Though the Petitioner might be eligible to be considered to be appointed as an Insolvency Resolution Professional but the decision of the Board not to permit the Petitioner to function as an Insolvency Professional cannot be said to be arbitrary - The question of adjudging as to whether a person is suitable for a particular job or not should be left to the appointing authority and more particularly when the appointing authority consists of experts. It is for the experts to decide as to who is best and most qualified for a particular job. The antecedents of a person is an important criterion to decide as to whether the said person is suitable for the post or not.
Even though the Petitioner can be registered as an Insolvency Resolution Professional but for determining as to whether the Petitioner is fit and proper candidate it is for the Board to take account of any consideration as it deems fit, including but not limited to the criteria of integrity, reputation and character. The Petitioner has been found guilty of fraudulent practices of violating market integrity and the decision of the Respondent Board to refuse the registration of the Petitioner as an Insolvency Professional cannot be said to be so perverse or irrational warranting interference under Article 226 of the Constitution of India.
This Court is of the opinion that the decision taken by the Board does not suffer from any irregularity which requires interference by this Court under Article 226 of the Constitution of India - Petition dismissed.
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