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Insolvency and Bankruptcy - Case Laws
Showing 401 to 420 of 8707 Records
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2023 (10) TMI 893
Maintainability of section 7 application - Initiation of CIRP - time barred debt or not - Amended Application filed beyond the statutory period of 3 years.
The clear cut stand of the Appellant, is that, the Adjudicating Authority / Tribunal, had failed to appreciate that there was no authorisation to and in favour of Mr. J. Vijay Kumar, Asst. General Manager, who had signed the amended Petition, indeed, the requirement of specific authorisation, is mandatory, to prefer an Application, under Section 7 of the I & B Code, 2016.
HELD THAT:- An Application, under Section 7 of the Code, is not to be turned down, by an ‘Adjudicating Authority’ / ‘Tribunal’, just on ‘technical grounds’. The reason for inability of a ‘Corporate Debtor’, to pay its ‘Debt’, is not to be looked into, by an ‘Adjudicating Authority’ / ‘Tribunal’, while dealing with an ‘Application’ (Filed by a ‘Financial Creditor’, under Section 7 of the I & B Code, 2016). To put it differently, the ‘situation / circumstances’, under which, a ‘Corporate Debtor’, could not ‘repay’, the ‘Financial Debt’, need not be taken as a ‘Defence’, in a proceeding, under the ‘Code’ - The ‘Adjudicating Authority’ / ‘Tribunal’, need not wait for the determination, to be made by the ‘Debt Recovery Tribunal’. Although, ‘Debt’, is ‘Disputed’, if the ‘Amount’, is more than ‘Rs.1 Lakh’ (‘Rs.1 Crore’, after ‘amendment’, to the ‘Code’), the ‘Application’, under ‘Section 7’, is ‘maintainable in Law’.
It cannot be gainsaid that if a ‘Debtor’, ‘acknowledge’, receiving the ‘Payment’, but, chose to amuse itself, by ‘denying’ the ‘liability’, the ‘document’, would still be ‘one’, that would keep the claim ‘alive’, within the ‘ambit’ of ‘Section 18 of the Limitation Act, 1963’. Also that, if the ‘Sum’, borrowed by the Respondent, is shown in the ‘Balance Sheet’, it may amount to an ‘acknowledgement’, and the ‘Creditor’, might have a ‘fresh Period of Limitation’, on the date on which, an ‘acknowledgement’, was made.
As a matter of fact, the ‘Balance Sheets’ of the ‘Corporate Debtor’, dated 16.08.2014, 27.08.2015 and 27.08.2016, the 1st Respondent / Bank, unerringly points out the ‘admission’ of ‘acknowledgment of liability’, and therefore, it is established on the part of the 1st Respondent / Bank that its ‘Claim’, made in ‘Section 7 Application’, in CP (IB) No. 645 / 7 / HDB / 2018, dated 06.09.2018, but filed on 12.09.2018 (before the ‘Adjudicating Authority’ / ‘Tribunal’), is ‘not a Time Barred’ one - In the instant case on hand, this ‘Tribunal’, points out on 31.08.2018, going by the ‘Application’ (Filed by the 1st Respondent / Financial Creditor / Bank / Petitioner, under Section 7 of the Code, vide CP (IB) No. 645 / 7 / HDB / 2018), the ‘Sum’ claimed to be in ‘Default’, was Rs.327,03,72,501.81/- (vide Page 76 of the Appellant’s Appeal Paper Book, Vol-I, Form-I, Part IV - ‘Particulars of Debt’, at Page 79), from the ‘Corporate Debtor’ / ‘Vibha Agro Tech Limited’. According to the 1st Respondent / Bank, the ‘Outstanding Sum’, claimed before the ‘Interim Resolution Professional’, is Rs.1,061.15 Crores.
One cannot remain in oblivion of a vital fact that to commence a ‘Corporate Insolvency Resolution Process’ proceedings, by the ‘Financial Creditor’, against the ‘Corporate Debtor’ (under Section 7 of the I & B Code, 2016), the twin requirements, (a) Debt and (b) Default, are to be proved and once they are established, then, the ‘Application’, which is complete in all respects, is to be ‘admitted’, by the ‘Adjudicating Authority’ / ‘Tribunal’.
In the present case on hand, the 1st Respondent / Bank, had claimed a Sum of Rs.327,03,72,501.81/- as ‘Debt’, ‘due and payable’, by the ‘Corporate Debtor’, as on 31.08.2018 (vide in its Application in CP (IB) No. 645 / 7 / HDB /2018, before the ‘Adjudicating Authority’ / ‘Tribunal’), this ‘Tribunal’, keeping in mind of the ‘primordial fact(s)’ the ‘Corporate Debtor’, had tacitly ‘Acknowledged’, its ‘Debt’ / ‘Liability’, in its ‘Balance Sheets’, for the Year ending 2013-14 dated 16.08.2014, for the Year ending 2014-15 dated 27.08.2015 and for the Year ending 2015-16 dated 27.08.2016, the same being ‘not Barred by Time’, taking note of the entire conspectus of the facts and circumstances of the present case, in an encircling manner, and exercising its subjective discretion, comes to a resultant conclusion that the aspect of ‘Debt and Default’, committed by the ‘Corporate Debtor’, have been duly proved by the ‘1st Respondent / Bank’.
The impugned order passed by the ‘Adjudicating Authority’ (‘National Company Law Tribunal’, Bench – I, Hyderabad) in ‘admitting’ the ‘Section 7 Application’ (Filed by the 1st Respondent / Bank / Financial Creditor / Petitioner), is free from any ‘Legal Infirmities’. Accordingly, the instant ‘Appeal’ fails.
Appeal dismissed.
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2023 (10) TMI 892
Correctness of approved Resolution Plan - only 16% of the Dues of the Contractors / Operational Creditors has been allowed in the said Resolution Plan - violation of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal while dealing with the batch of Appeals filed by the Employees of the Corporate Debtor Company in MRS. C.G. VIJYALAKSHMI VERSUS SHRI KUMAR RAJAN, RESOLUTION PROFESSIONAL, HINDUSTAN NEWSPRINT LIMITED, (CORPORATE DEBTOR) , COMMITTEE OF CREDITORS OF THE CORPORATE DEBTOR THROUGH RBL BANK LTD., RESOLUTION APPLICANT [2023 (3) TMI 18 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI], challenging the very same Resolution Plan and the Order of the Adjudicating Authority, dated 29.01.2021, has allowed the Appeals in Part - it is specifically observed that this Tribunal, did not find any material irregularity in the Approval of the Resolution Plan, except for directing the Successful Resolution Applicant to make payment of the unpaid Provident Fund and Gratuity Fund and pending dues to the Employees, till the date of Corporate Insolvency Resolution Process, after deducting the amounts already paid.
Regarding the rest of the allegations raised by the Appellants, this `Tribunal’, did not find any evidence to support their contentions.
As the Resolution Plan has already been implemented way back in the year 2021, specifically keeping in view that this Tribunal has confirmed the Approval of the Resolution Plan by the Adjudicating Authority, except for payment of unpaid Provident Fund and Gratuity Fund, this Tribunal does not find any merit in these Appeals.
Appeal dismissed.
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2023 (10) TMI 751
Admission of section 7 application - seeking grant of interim relief for commencement of the project - It was contended that with the introduction of Strategic Partner, Corporate Debtor shall complete the project under the supervision of the IRP in a time bound manner which shall be beneficial to the homebuyers/allottees and to the creditor without having to undergo any haircut.
HELD THAT:- From the sequence of the events and submissions made by Learned Counsel for the parties, it is clear that the project of the Appellant which is ‘Belvedere’, Sector-79, Noida having an area of 30,000 Sq. Mtr. is a project which can be very well revived under the supervision of the IRP with the assistance and co-operation of the promoters and the strategic finance provider. ‘EKA Life’ a strategic project partner has offered to provide finance even before filing of this Appeal and the ground taken in the Appeal is that ‘EKA Life’ the strategic project partner is ready to provide interim finance of Rs.75 Crores which shall sufficient to carry out the completion of the project which will be beneficial to both homebuyers as well as the Financial Creditor.
Having passed a detailed order on 25.07.2023 for carrying out the construction in the project as per directions contained therein, there are no reason to modify the said direction and now permit any other interim finance provider who has now come up offering to provide interim finance to the project.
The cost of interim finance as offered by ‘EKA Life’ is now equal to the one offered by ‘Zenious Global Media Pvt. Ltd.’ - it is satisfying that there are no grounds made out to issue any modification of our order dated 25.07.2023 and we are of the view that the construction of the project need to be proceeded further as per the direction on 25.07.2023.
After commencement of the construction in the project, receivables in the project have to be deposited in the RERA designated account i.e. 70% and 30%. Although in the Master Agreement, as noted above, certain clauses have been indicated with regard to payment of dues of ‘Aditya Birla Finance Limited’, the promoters, IRP and interim finance provider in consultation with the ‘Aditya Birla Finance Limited’ need to submit a fresh proposal as to how and in what manner the dues of ‘Aditya Birla Finance Limited’ shall be cleared out of the project.
Thus, the commencement of the project is needed to serve the interest of homebuyers as well as creditors - List the Appeal on 04.12.2023.
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2023 (10) TMI 750
Approval of Resolution Plan - no proposal of distribution mechanism for consideration of the CoC - delegation of task of proposing the manner of distribution of funds to the CoC - whether the Adjudicating Authority was justified in approving a Resolution Plan where the manner of distribution was proposed, and decided by the CoC?
HELD THAT:- It is not in dispute that the Resolution Plan of Vedanta was approved by the CoC by a majority of 94.96 % - The Hon’ble Supreme Court in a catena of Judgments has held that the ‘Adjudicating Authority’ and the ‘Appellate Tribunal’ cannot enter into the merits of a ‘Business Decision’ of the requisite majority of the CoC, unless it is violative of the provisions of Section 30 (2) of the Code. An approved Resolution Plan cannot be subject to judicial review in terms of carrying out a quantitative analysis qua each Stakeholder. The Hon’ble Supreme Court has observed so in ‘India Resurgence ARC private Limited Vs. Amit Metaliks Limited’ [2021 (6) TMI 684 - SUPREME COURT], that the commercial wisdom of CoC and the scope of judicial review remains limited within the four corners of Section 30 (2) of the Code for the ‘Adjudicating Authority’ and Section 30 (2) read with Section 61 (3) for the Appellate Authority.
Whether the CoC is empowered to decide the distribution methodology? - HELD THAT:- The Hon’ble Supreme Court in the matter of Amit Metaliks has held that ‘thus, what amount is to be paid to different classes or subclasses of creditors in accordance with provisions of the Code and the related Regulations, is essentially the commercial wisdom of the Committee of Creditors; and a dissenting secured creditor like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest’.
Though the IBC does not have a specific Provision that uses the term ‘Business Decision’ of the CoC, the Code contains several provisions that detail the powers and functions of the CoC, which encompass various decision-making responsibilities relating to the Insolvency Resolution Process, which definitely includes distribution methodology of the Resolution Plan - This Tribunal is of the earnest view that the Appellant having taken part in these Meetings and not having raised any substantial objections at that point of time, is estopped from questioning the commercial wisdom of the CoC in proposing, considering and approving the distribution methodology of the Resolution Plan.
Keeping in view the catena of Judgments of the Hon’ble Apex Court regarding the commercial wisdom of the CoC in approving the Plan and the limited jurisdiction therein, this Tribunal is of the considered view that ‘the CoC in its commercial wisdom can propose, consider and decide on the distribution mechanism under the Resolution Plan’, as long as it is within the domain of Section 30(2) of the Code.
Appeal dismissed.
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2023 (10) TMI 749
Invocation of Bank Guarantee allowing the Application of the Resolution Professional - Performance Bank Guarantee or not - exclusion as per provision of Section 3 sub-Section (31) of the IBC, 2016 - applicability of Moratorium under Section 14 of IBC for encashment of the bank guarantee - HELD THAT:- From the perusal of the Agreement and the Bank Guarantee it is apparent that the Bank Guarantee was given by the Bank to secure the interest of the Appellant, as per Clause 6 of the Agreement, the raw material assistance under the Agreement was to be granted by the Appellant to the Corporate Debtor subject to furnishing of surety in the form of Bank Guarantee executed by a nationalised/approved Bank to the satisfaction of the Appellant. It further prescribes that the Appellant shall be entitled to invoke and encash the said Bank Guarantee on the terms and conditions as stipulated in the said Bank Guarantee.
From the perusal of the Bank Guarantee bond dated 30.05.2012, this Tribunal finds that the Bank had undertaken to pay the amounts due and payable under the said Guarantee without any demur, merely on a demand from the Appellant and the Bank had undertaken to pay the Appellant any amount so demanded notwithstanding any dispute raised by the Corporate Debtor and that the Bank’s liability under the said Bank Guarantee is absolute and unequivocal - it is apparent that the Bank had absolute, unequivocal and irrevocable liability to pay to the Appellant the amount guaranteed to the Appellant on demand without any demur and irrespective of any objection or dispute or any legal proceeding initiated by the Corporate Debtor.
The Moratorium was envisaged to ensure that the Corporate Debtor’s Assets are not liquidated or reduced till the CIRP is completed. The idea behind Moratorium was that no additional stress is brought on the business which is being rescued. In the instant case, the Appellant has raised the demand on the Bank for payment which was guaranteed by the Bank much prior to the initiation of the CIRP. No recovery is being made from the Corporate Debtor and therefore there is no threat immediately to the Assets of the Corporate Debtor.
The Bank Guarantee is a contract of Guarantee provided/furnished by the Bank, the surety, to perform the promise, or discharge the liability, of the third person, being the Corporate Debtor herein, in case of his default. From the plain reading of Section 14(3)(b) of the IBC, 2016, along with Section 126 of the Indian Contract Act, 1872, it is apparent that the Bank Guarantee given by the Respondent No. 2 to the Appellant is covered by the exclusion given in Section 14(3)(b) and that provisions of Section 14(1) shall not apply to the instant case.
The Appellant had also brought to the attention of this Tribunal to the Judgement of this Tribunal in IDBI Bank Ltd. Vs. Indian Oil Corporation Ltd. [2023 (1) TMI 548 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], wherein it was held that an irrevocable and unconditional Bank Guarantee can be invoked even during Moratorium period in view of the amended provisions under Section 14(3)(b) of the IBC, 2016 - In the instant case also the Bank Guarantee is an irrevocable and unconditional one, and the said Judgement squarely applies to the facts of this case on all fours.
Thus, as per the facts of this case, the Bank Guarantee, provided by the Respondent No. 2/Bank is held to be covered by the exception provided in provisions of Section 14(3)(b) of IBC, 2016, and the Moratorium prescribed under Section 14(1) of IBC, 2016, shall not apply to its Encashment.
Appeal allowed.
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2023 (10) TMI 682
Interim relief not granted - HELD THAT:- The appeal has been heard and orders were reserved by the NCLAT on 21 September 2023. However, while reserving orders, the NCLAT has directed the parties “to maintain status quo as was available prior to EOGM dated 03.05.2019” till the judgement is delivered. No reasons have been indicated by the NCLAT even prima facie for issuing the interim order, particularly in the context of the fact that there was no interim relief operating since the dismissal of the application for interim relief on 31 December 2019. It is admitted that no relief was obtained by the first respondent in the proceedings before the Bombay High Court, as well.
The interim direction is vacated - The Annual General Meeting (AGM) of the company, Finolex Cables Limited is to take place on 29 September 2023. Any action which is taken on proposed resolution No 4 pertaining to the appointment of the Executive Chairperson shall be subject to the outcome of the appeal which is pending before the NCLAT.
The impugned order is set aside - Appeal allowed.
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2023 (10) TMI 665
Maintenance of status quo - HELD THAT:- Considering the submission advanced by learned senior counsel for the appellant that e-voting for AGM is scheduled to commence from 26th September, 2023 wherein authorized representative of Orbit Electricals Pvt Ltd/Respondent No.1 may participate as well as the fact that decision taken in the EOGM of Orbit Electricals Pvt Ltd held on 3rd May, 2019 is subject matter of the present appeal, it is proposed to direct the parties to maintain Status Quo as was available prior to EOGM dated 03.05.2019 till the judgement is delivered by this Tribunal.
Normally after admission of appeal and at the time of hearing such order is not required to be passed but for the ends of justice once we are reserving judgement and delivery of judgement may take some reasonable time, we feel it is necessary to pass the aforesaid interim order while reserving the judgement. Judgement is reserved.
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2023 (10) TMI 645
Successful Resolution applicant - Restoration of electricity connection - pre-CIRP dues - refusal on the ground of electricity dues - Maintainability of application under Section 60(5) of the IBC - HELD THAT:- What has been laid down by the Hon’ble Supreme Court in Gujarat Urja Vikas Nigam Limited [2021 (3) TMI 340 - SUPREME COURT] is that the NCLT has jurisdiction to adjudicate dispute which arise solely from or which relate to the insolvency of the Corporate Debtor. Looking into Section 60(5), the provision clearly provides that NCLT shall have jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor or corporate person or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor.
The law is settled that an application can be entertained only when it raises a question which arises or relates to the insolvency of the Corporate Debtor. Judgment of the Hon’ble Supreme Court in Embassy Property Developments Pvt. Ltd. [2019 (12) TMI 188 - SUPREME COURT] has also been relied upon by the Counsel for the Respondent. Embassy’s case was a case where Adjudicating Authority has issued a direction to the Government of Karnataka to execute a supplemental lease deed for extension of mining lease which was held beyond the jurisdiction of the Adjudicating Authority - The judgment of the Embassy was a case where the Adjudicating Authority has issued direction pertaining to exclusion of supplementary lease which was in the jurisdiction of the Government under the MMDR Act, 1957. It was held that directions issued by the NCLT were beyond the jurisdiction vested in the NCLT.
The Respondent cannot insist that unless the arrears of the electricity dues which dues were payable by the Corporate Debtor prior to disconnection are paid by the Appellant only then communication can be issued.
The application is fully maintainable under Section 60(5) of IBC - Application allowed.
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2023 (10) TMI 606
Validity of order of NCALT - Clear directions issued by the Apex court was not considered - Restoration of the status quo ante at a stage when the arguments were concluded and the matter was reserved for judgment - HELD THAT:- The Court has been apprised of the fact that the Bench of the NCLAT consisting of Mr Rakesh Kumar and Dr Alok Srivastava proceeded to deliver the order. If what is stated is correct, this will clearly constitute the defiance of the order of this Court by the NCLAT.
It is directed that an enquiry shall be conducted on the above allegations by the Chairperson of the NCLAT. A report shall be submitted before this Court by 5 pm on 16 October 2023 after specifically verifying the facts from the Judges who constituted the Bench of the NCLAT.
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2023 (10) TMI 605
Admissibility of application under Section 9 of the IBC - initiation of CIRP - Corporate Debtor denied the demand raised by the Operational Creditor in the reply to the Section 8 demand notice - debt barred by limitation - HELD THAT:- The wordings of the email do not show that the Corporate Debtor had denied or disputed the existence of outstanding debt qua the Operational Creditor. All that can be inferred from a plain reading of this letter is that they were in the process of reconciliation of accounts on completion of which they were to determine the payment plan. By no stretch of extrapolation can it be concluded that any dispute qua the debt was raised in the said email or the payment was denied by the Corporate Debtor therein.
Even after the Corporate Debtor mentioned about reconciliation of accounts in their email, the Operational Creditor again sent an email on 19.05.2018 seeking a confirmation reply from the Corporate Debtor with regard to the outstanding balance payable to them towards services rendered - The email was again followed up a day later on 20.06.2018 by the Operational Creditor seeking release of outstanding payment and the schedule of payment as is placed at page 114 of APB. This shows that the Operational Creditor had been consistently pressing for release of their outstanding amount while there is nothing on record to show that the Corporate Debtor objected to the claims raised by the Operational Creditor or disputed the issue of outstanding payment raised by the Operational Creditor.
There are no material having been placed on record to show that the Corporate Debtor had claimed an amount of Rs.7,71,434/- as receivable from the Operational Creditor prior to the issue of demand notice.
The existence of debt, due and payable, has not been controverted by the Corporate Debtor in the emails exchanged by them with the Operational Creditor.
The Adjudicating Authority in the present case has duly considered the reply and submissions made by the Corporate Debtor and correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute which can thwart the admission of Section 9 application against the Corporate Debtor - the Adjudicating Authority has rightly admitted the application of the Operational Creditor filed under Section 9 of IBC.
The impugned order does not warrant any interference - Appeal dismissed.
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2023 (10) TMI 604
Rejection of section 9 application - initiation of CIRP - existence of genuine pre-existing dispute surrounding the debt claimed by the Operational Creditor to be due and payable to them by the Corporate Debtor or not - HELD THAT:- The existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 30.07.2018 and notice of dispute raised by the Corporate Debtor on 09.08.2018. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC.
It is a well settled proposition that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application.
The Adjudicating Authority has taken note of the correspondences exchanged between the two parties prior to the Section 8 demand notice to determine the issue of pre-existing dispute. Two of such communications dated 29.04.2018 and 30.04.2018 sent by the Corporate Debtor to the Operational Creditor have been reproduced at para 18 of the impugned order. From the email of 29.04.2018, it is clear that the Corporate Debtor gave opportunities to the Operational Creditor to sit across the table to sort out their problems amicably - A holistic analysis of the emails leads us to the inescapable conclusion that genuine pre-existing disputes were there and the Adjudicating Authority therefore committed no error in drawing similar conclusion of pre-existing disputes.
It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. The Adjudicating Authority has therefore correctly noted that the conditions laid down in section 9 having not been fulfilled, the application deserved to be rejected.
There are no reasons to disagree with the findings of the Adjudicating Authority - the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant - appeal dismissed.
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2023 (10) TMI 603
Contempt petition - decision in personam - admission of application and initiation of CIRP - case of the Petitioner is that the Respondent No. 1 (RP) has violated the order by appointing a project monitoring consultancy during the subsistence of the order i.e. in the month of June, 2020.
HELD THAT:- It is well settled that the contempt is a serious matter because it causes both physical and fiscal punishment specially when the contempt has been alleged against a professional (RP). The Petitioner has to make out a full proof case about the wilful violation of the order passed by the Tribunal for the purpose of seeking attention to issue an order of contempt and punish accordingly.
In the present case, the petition has been filed after the expiry of limitation of one year as the order was passed on 24.01.2020 and the petition has been filed on 12.08.2023 and is clearly barred by limitation because the Petitioner was very well aware of the appointment of the PMC which was duly ratified in the second meeting of CoC held on 21.08.2020 and the Petitioner attended 3rd and 4th CoC meeting held on 10.09.2020 and 16.09.2020 subsequently.
The case of the Petitioner is that he came to know about the appointment of the PMC somewhere in April, 2023 when the alleged promoters/directors of the PMC challenged the FIR registered against them before the Patna High Court and were not successful cannot be believed.
Locus Standi - HELD THAT:- The decision in the case of Girish Mittal [2019 (4) TMI 1630 - SUPREME COURT] is also of no help because in that case it was an order passed in rem which could have affected a person in the street, therefore, the contempt was filed because of the direction issued by the Hon’ble Supreme Court were not followed but here is the case in which the direction issued was between the parties, therefore, it was a decision in personam.
There is no contempt made out in this case because the order which was passed on 24.01.2020 was only to the extent that the CoC shall not be constituted if it is not yet constituted and the RP has to ensure that the company remains a going concern which is also the spirit of Section 20(1) of the Code and further the RP was directed to take assistance of the suspended board of director which is again the spirit of Section 19 of the Code.
Petition dismissed.
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2023 (10) TMI 537
Extinguishment of claims - approval of the Resolution Plan results in an extinguishment of all claims that the Petitioner could enforce against Arcelor Mittal or not - arbitration of disputes which are sought to be referred for the consideration of an AT. - “eye of the needle” test.
HELD THAT:- The legislative intent and command of Sections 30 and 31 of the IBC is an issue which is no longer res integra - In Ghanashyam Mishra [2021 (4) TMI 613 - SUPREME COURT] as well as the host of judgments rendered in that context and which were duly noticed by the Supreme Court in that decision, the underlying theme has been the recognition of the right of the successful Resolution Applicant to take over the corporate debtor on a “clean” or “fresh” slate. Those decisions lay primordial importance of the successful Resolution Applicant being enabled to take over the corporate debtor without being burdened by any uncertainties or a specter of irresolution. The approval of the Resolution Plan is statutorily recognised as conferring a closure upon all claims that persons or entities may have had against the corporate debtor. The claims or liabilities which could have been enforced against the corporate debtor are duly considered in the course of the CIRP with the Adjudicating Authority undertaking a detailed exercise with respect to identification of the various creditors of the corporate debtor, including the classes thereof, the scrutiny of claims received and the ultimate apportionment of the amounts deposited by the successful Resolution Applicant amongst the creditors inter se.
However, once the aforesaid process has been completed and the Resolution Plan comes to be approved, no fresh claims can be laid or enforced against the successful Resolution Applicant. The successful Resolution Applicant is only bound to meet the claims as may have been accepted and ultimately form part of the approved Resolution Plan. This issue assumes seminal importance since the successful Resolution Applicant cannot be left open to defend or oppose claims which are either not factored in the Resolution Plan nor can it be left to fend off actions that may be brought with respect to alleged or asserted dues of the corporate debtor which were not admitted.
The Court is of the considered opinion that approval of the Resolution Plan in terms given clearly amounts to the extinguishment of all debts that were owed by the corporate debtor except to the extent as was admitted in the Resolution Plan. The IBC and the resolution process does not contemplate matters being left inchoate. In fact, and to the contrary it exhorts one to accept the seal of finality and quietitude which stands attached to the approval of a Resolution Plan.
While the Court is conscious of the Section 11 power contemplating a prima facie view being formed and a first review alone being undertaken, the decisions handed down on the scope of that jurisdiction also bids High Courts to ensure that dead disputes are not revived and parties forced to undertake arbitration. Thus, where issues which are canvassed on a Section 11 petition are found to be contested or even arguable, the High Court would desist from delving into the merits of the rival claims.
Once it is accepted that the approval of the Resolution Plan results in the extinguishment of all claims that the petitioner may have had, the dispute which is now sought to be canvassed cannot be permitted to be urged again before the AT. That would clearly amount to rewriting upon the clean slate based upon which the respondent took over the corporate debtor. A reference of the disputes as sought by the petitioner would clearly amount to a reopening of the Resolution Plan and which is clearly impermissible - Empowering the AT to adjudicate or rule upon these disputes would also be contrary to the principles which were enunciated by the Supreme Court in Ghanashyam Mishra.
The Court thus comes to conclude that on due application of the “eye of the needle” test, it is manifest that the disputes which are spoken of in the Section 11 petition are non-arbitrable and thus no reference to the AT is warranted - petition dismissed.
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2023 (10) TMI 536
Condonation of Delay - period of limitation is to be computed from the date of knowledge of the order or otherwise - sufficient cause for delay present or not.
Whether limitation for filing an Appeal under Section 61 of the IBC shall commence from the date of the order or from the date when contents of the order are known to the aggrieved party i.e. the date when copy of the order is received by an aggrieved party? - HELD THAT:- In the present case, orders passed by the Adjudicating Authority were pronounced in the open Court in the presence of the Counsel for the Appellant. In any view of the matter, they cannot contend that they do not have even constructive knowledge of the order on the said date. Knowledge of the order has to be actual or constructive knowledge and when the orders are pronounced, it can very well be said that the constructive knowledge has to be imputed to the contents of the order to an aggrieved party.
In the present case, when orders were pronounced by the Adjudicating Authority, they cannot be allowed to contend that they are not aware of the order of the Adjudicating Authority. Further, Section 12 of the Limitation Act provides for exclusion of the time taken in obtaining certified copy of an order. After an order is pronounced which pronouncement is well known to the Appellant in the present case, it was open for them to apply for the certified copy of order, even if they are not aware of the contents of the order as per their submissions on that date - Law, thus, clearly provides opportunity to any aggrieved party to obtain certified copy of the order and file an appeal after exclusion of the period obtaining in certified copy of the order. Legislative scheme takes care of all situations where order was pronounced by a Court, it is expected for the parties to diligently apply for certified copy of the order in event there may be any chance to file an appeal.
The limitation for filing an Appeal under Section 61 shall commence from the date when the order is pronounced and not from the date when aggrieved party or Appellant claims to have knowledge of the contents of the order.
Whether in the Delay Condonation Application being IA No.3694 of 2023 sufficient grounds have been made out to condone the delay in filing the Appeal? - HELD THAT:- It is undisputed that the order was pronounced on 08.05.2023. The order clearly notices the presence of the Counsel who appeared on the date physically/ video conferencing. It is not denied by the Appellant that the order was pronounced on 08.05.2023. The submission of the Appellant that he came to know about the contents of the order only when order was received by an e-mail dated 02.06.2023 - The Appeal having been filed on 04.07.2023 i.e. after 15 days from expiry of limitation, there is a delay of 27 days in filing the Appeal.
The jurisdiction to condone the delay is limited to only 15 days under Section 61(2), the Delay Condonation Application cannot be allowed - no sufficient ground has been made out in I.A. No.3694 of 2023 to condone the delay in filing the Appeal being Company Appeal (AT) (Insolvency) No. 1071 of 2023.
Whether in Delay Condonation Application being IA No.1956 of 2023 sufficient grounds have been made out to condone the delay in filing the Appeal? - HELD THAT:- The order was pronounced by the Adjudicating Authority on 12.01.2023. Counsel for the Successful Resolution Applicant i.e. Appellant was present when the order was pronounced - Appellant’s case is that he has applied for certified copy on 06.02.2023 and he has received free of cost copy on 08.02.2023. Even if exclusion of the aforesaid period is given, it shall be only 3 days against the order dated 12.01.2023. Appeal has been filed on 11.03.2023 even after giving exclusion of 3 days, period of 45 days shall come to an end by 02.03.2023, hence, the appeal has been filed with a delay of more than 15 days after expiry of limitation. Jurisdiction to condone the delay is limited to 15 days, the delay in filing the appeal cannot be condoned.
There are no sufficient grounds made out in I.A. No.1956 of 2023 to condone the delay in filing the Appeal being Company Appeal (AT) (Insolvency) No.588 of 2023 - both the Delay Condonation Applications dismissed.
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2023 (10) TMI 535
Approval of Resolution Plan - validity of assessment order - Claim of workmen dues in full - section 7A and 7Q of Employees Provident Fund Miscellaneous Provisions Act, 1952 as well as section 14B - exercise of jurisdiction under 1952 Act - HELD THAT:- The submission of Respondent No. 2 with regard to damages as imposed on the Corporate Debtor needs consideration. From the claim forms which was submitted by the Appellant on 18.10.2019 annexed as Annexure C to the Appeal indicates that one of the assessment pertaining under Section 14B for amount of Rs. 68,54,869 was imposed by Order dated 14.10.2019 which is clear from Form-F which was submitted by the Appellant itself. The Copy of Order dated 14.10.2019 by which amount of Rs. 68,54,869/- has been imposed is clearly after initiation of CIRP against the Corporate Debtor vide Order dated 30.09.2019 - it is not necessary in this proceeding to issue any direction for payment of the damages as imposed by the Order dated 18.10.2019 which was subsequent to CIRP imposition of moratorium. No direction need to be issued for payment of damages under Section 14B of Rs. 68,54,869/-.
Another part of damages amounting to Rs. 31,16,446 which was imposed by order dated 25th July, 2017 - waive of damages under Section 14B of the Act - HELD THAT:- When Insolvency Resolution Process has been initiated against a Corporate Debtor and Resolution plan has been approved under IBC, power of Central Board to reduce or waive the damages can be exercised with regard to the damages imposed under Section 14B. Paragraph 32 of the 1952 Scheme as extracted above also contemplate recommendation by Board for Industrial and Financial Reconstruction, 1985 Act being not in force and substituted by Insolvency Regime there can be now no recommendation for waiver of the damages under Section 14B of Board for Industrial and Financial Reconstruction. The power of recommendation as contemplated in paragraph 32B scheme can very well be exercised by the NCLT.
Another part of the admitted claim i.e. claim for Rs. 1,32,44,314 along with Form F - HELD THAT:- In the amount which is claimed by the Appellant towards 7A and 7Q, the amount which has already been paid to the workmen need to be deducted. Resolution Professional needs to compute the amount paid to the workmen under Resolution Plan towards PF dues. Resolution Professional being ex- Resolution Professional i.e. Respondent No. 1 we direct the Respondent No. 1 to compute the amount of PF dues paid to the workmen under Resolution Plan and thereafter arrive at the amount which is required to be paid to the Appellant as against the admitted claim towards Section 7A and 7Q.
Let the aforesaid exercise be completed by the Respondent No. 1 within two months from today and communicate the amount payable to Appellant under 7A and 7Q. The amount to be determined for payment to Appellant has to be the amount after deducting from total claim of Rs. 1,32,44,314 by deducting the amount paid towards PF to the workmen and amount already paid to the Appellant under Resolution Plan.
The Order passed by the Adjudicating Authority approving the Resolution Plan is upheld subject to following;
(a) SRA shall make the payment of dues of Appellant under Section 7A and 7Q on the basis of computation communicated by the Respondent No. 1 after deducting the amount paid to the workmen under Resolution Plan towards PF and the amount paid to the Appellant under Resolution Plan. SRA shall make the said payment within 30 days from computation as communicated by Respondent No. 1.
(b) No direction is issued to the SRA to make payment of amount of damages under Section 14B for amount of Rs. 68,54,869/- which was imposed by Order dated 14.10.2019 after enforcement of the moratorium.
(c) With regard to amount of Rs. 31,16,446/- under Section 14B we permit the SRA to make an application to Central Board for waiver of 100 per cent damages along with copy of this order within 30 days from today.
Appeal disposed off.
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2023 (10) TMI 534
Validity of permission granted by the NCLT to Respondent / Petitioner/Operational Creditor to file the necessary amended copy, with the Registry, of this Tribunal - Permission granted even after inordinate delay of 2 and 1/2 years- HELD THAT:- It must be borne in mind that ‘Amendments’ are allowed in ‘pleadings’ to avoid, uncalled for ‘multiplying of litigations’.
All amendment, ought to be allowed, if the twin conditions are satisfied (i) of not working injustice to other side; (ii) of being necessary, for the purpose of determining the real questions in controversy between the parties - There is no rule limiting ‘amendment’ to ‘accidental’ errors. An ‘amendment’, which is necessary for the just decision of a case can be allowed. Also that, an ‘amendment’, in ‘general’, is not to be refused, in a mechanical and casual manner. In fact, the ‘pleadings’ can be amended, to substantiate, to elucidate and expand the ‘pre-existing facts’, ‘already existing’.
Where an amendment, does not constitute and addition of a new case, but amounts to no more than adding to the facts already on record, the ‘amendment’, would be allowed, even after the statutory, period of limitation - An ‘amendment’, which is necessary for the just decision of a case, can be allowed.
In the present case, even though, the Appellant / Respondent, had ‘come out with the plea’ that the amendment in pleadings was sought for by the Respondent / Petitioner in application with the inordinate delay of 2½ years, keeping in mind, of a prime fact, that the ‘Amendment’, ‘in pleadings’ is in ‘imperative one’, for a proper, effective and efficacious adjudication of the controversies, involved in the main application on the file of the Adjudicating Authority / Tribunal - this Tribunal, comes to a consequent conclusion, that application is a ‘Bonafide’ one and to ‘minimise litigation’ between the parties and also that ‘No Party’, should suffer on account of ‘technicalities’ of Law.
Appeal dismissed.
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2023 (10) TMI 450
Condonation of Delay in filing Appeal - Certified Copy was prepared on 27.04.2023 and was delivered on 03.05.2023 - present Appeal was e-filed on 10.05.2023.
HELD THAT:- Sub- Rule (2) of Rule 22 of the National Company Law Appellate Tribunal Rules, 2016, regarding presentation of Appeal provides that every Appeal shall be accompanied by a Certified Copy of the Impugned Order. NCLAT Rules framed under Section 469 of the Companies Act, 2013 also bind the litigants under the IBC. The litigant’s efforts to apply for a Certified Copy before filing Appeal cannot be faulted.
It is clear from the provision of Section 12(2) that the period taken in obtaining the copy of the Order appealed against is to be excluded in calculating the limitation period in filing for any legal proceedings.
Excluding the period spent in obtaining Certified Copy of the Impugned Order, the present Appeal has been filed within the period of 30 days. Considering the provisions of Section 12(2) of the Limitation Act, 1963, the delay in filing of the company appeal condoned, by allowing benefit of exclusion of period spent in obtaining paid Certified Copy of the Order from AA (National Company Law Tribunal, New Delhi).
Aplication allowed.
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2023 (10) TMI 356
Jurisdiction of Adjudicating Authority to pass an order in regard to payment of pre-CIRP dues during the CIRP - HELD THAT:- Though the issue raised by the Appellant may be attractive but in the present case, no such issue survives after the order dated 15.05.2023 is passed, therefore, the same is dismissed.
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2023 (10) TMI 293
Liquidation proceedings - waterfall mechanism - rejection of claim of appellant - appellant is Financial Creditor or not - claim reflected in the Balance Sheet.
It is submitted that even though the claim of the Appellant was rejected in the liquidation proceeding but since it was reflected in the balance sheet, Appellant is a Financial Creditor.
HELD THAT:- The claims of all creditors are to be considered in the liquidation proceedings and examined by the Liquidator and in event of any dispute, matter is required to be adjudicated by the Adjudicating Authority. There is no dispute to the fact that the claim was filed by the Appellant as Financial Creditor which stood rejected by the Liquidator as well as the Adjudicating Authority. The rejection of the claim of the Appellant clearly lead to the conclusion that the claim cannot be accepted in the liquidation proceedings nor Appellant is entitled for any claim in the water fall mechanism.
Present is a case where a scheme was submitted in the liquidation proceeding in which scheme also the payment to the Appellant has been shown as a ‘nil’ and the scheme was approved by SIDBI who according to the Liquidator was a 100% Financial Creditor. When the Appellant’s claim was rejected, he cannot claim that he is a Financial Creditor whose consent was required for approval of the scheme - It is after the reflection in the balance sheet that in the liquidation proceeding, the claim was filed by the Appellant and adjudicated rejecting the claim of the Appellant. The proceeding which undertook in the liquidation proceedings cannot be ignored nor can be washed out only on the ground that in the balance sheet of the Corporate Debtor the name of the Appellant was reflected. Proceeding in the adjudication which culminated in the rejection of the claim has to be given effect to in the liquidation proceeding.
The scheme was also a part of the liquidation proceeding, hence no error has been committed by the Adjudicating Authority rejecting the application of the Appellant - Appeal dismissed.
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2023 (10) TMI 239
Correctness of admitting section 7 application - allegation is that Section 7 application has been filed with the help of fabricated and manufactured documents as well as by suppression of material facts - HELD THAT:- It is trite law that under the IBC once a debt becomes due or payable, in law and in fact, and there is incidence of non-payment of the said debt in full or part thereof, CIRP may be triggered by the Financial Creditor as long as the amount in default is above the threshold limit. It is also well accepted that debt means the liability in respect of a claim and claim means a right to payment even if it is disputed.
When financial debt is undisputedly established and default in payment is also crystal clear, it is opined that the Adjudicating Authority did not commit any error in admitting the Section 7 application.
There are substance in the contention of Respondent No.1 that the IA was not only heard by the Adjudicating Authority but was heard before pronouncing the order in the main company petition. It is also borne out from the orders that both parties were present and had placed their respective contentions / arguments before the Adjudicating Authority in the matter of the IA.
It is an undisputed fact that there was disbursal of funds by the Financial Creditor to the Corporate Debtor. Receipt of this amount by the Corporate Debtor has not been controverted by the Appellant. Neither has any claim been made that this entire sum was repaid by the Corporate Debtor. That being the case there arises no doubt in our mind that there was a debt on the part of the Corporate Debtor qua the Financial Creditor which remained unpaid. There is no infirmity in the findings of the Adjudicating Authority that the Financial Creditor having successfully proved the financial debt and default on the part of the Corporate Debtor, Section 7 application has been admitted.
There are no error in the order impugned passed by the Adjudicating Authority admitting the Section 7 application - there is no merit in the Appeal - appeal dismissed.
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