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Insolvency and Bankruptcy - Case Laws
Showing 81 to 100 of 8669 Records
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2024 (3) TMI 987
Approval of Resolution Plan by the Adjudicating Authority - plan was approved by the Committee of Creditors - constitution of CoC. - Group of 77 homebuyers as a class of creditors seeking rejection of plan.
Sustainability of the argument advanced by the Learned Counsel for the Appellant that the constitution of the CoC stood vitiated because of the related party status of the Financial Creditor and Corporate Debtor - HELD THAT:- In view of absence of material placed on record and lack of substantiation of pleadings made by the Appellant of related party status of the Financial Creditor/Respondent No. 2 and the Corporate Debtor, it is not inclined to subscribe to the bogey of related party issue raised by the Appellant. Having failed to adequately demonstrate the related party status of the Financial Creditor/Respondent No. 2, and the Corporate Debtor, there are no irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 as a member thereof.
Financial Creditor/Respondent No. 2 was assigned a higher vote share than its entitlement - HELD THAT:- There was discriminatory treatment of the claims made by the Appellant as against what was offered to the Financial Creditor/Respondent No. 2 is clearly misconceived since the RP was diligently updating the claims and the corresponding vote share of the financial creditors. Not having pointed out any irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 having majority vote share prior to the CoC approving the resolution plan, it cannot be agitated now at this belated stage when the resolution plan stands approved. Thus, to answer the second issue, the CoC is found to have been validly constituted based on the duly verified claims of the financial creditors, to which no objections were raised by the Appellant, there are no cogent reasons to hold the decisions taken by the CoC to be either irregular or invalid.
Whether the RP was actively following up the TMC reservation issue or not? - HELD THAT:- The CoC was periodically kept apprised of the follow up steps taken by the RP in dealing with this issue which included visit to the TMC office and filing of an RTI application to find out the correct status of the reservation. The Resolution Professional had also taken up the matter through the architect to enquire about the reservation status besides seeking legal opinion on the matter and appointing a legal firm to seek appropriate legal remedy. Thus, the Resolution Professional cannot be held responsible for having suppressed any material fact pertaining to the TMC reservation issue from the CoC members including the AR. Keeping in mind the above-cited multifarious efforts made by the RP, the bonafide of the RP in this regard cannot be doubted. Hence, there are no infirmity or error in the findings recorded by the Adjudicating Authority in respect of the conduct of the Resolution Professional.
The RP at all stages had facilitated the Homebuyers in raising their concerns and objections to the resolution plan through the AR and in fact also provided them the window of opportunity of taking up their issues with the SRA. Under such circumstances, but for bald assertions, there is nothing to show that there has been negligence or dereliction of duties and responsibilities cast on the RP which can be said to have caused any serious miscarriage of justice to the Appellant - thus no cause of action survives on this count.
Whether the approval of the resolution plan by the Adjudicating Authority deserves to be set aside or the CoC approved resolution plan be sent back for the SRA/Respondent No. 3 to make necessary changes to the plan in the order to cater to the needs and demands of the Homebuyers as has been urged by the Appellant? - HELD THAT:- It is an undisputed fact that the resolution plan of the SRA has been approved by the CoC with requisite vote share. This resolution plan duly approved by the CoC with 89.05% vote share was placed before the Adjudicating Authority which has already approved the resolution plan. In the instant case, we find that when the resolution plan came up for consideration and approval before the Adjudicating Authority, the SRA improvised and upwardly revised its offer by way of an affidavit agreeing to pay 100% of the principal amount of the Homebuyers as against refund of approximately 40% of the claim amount admitted by the RP which was initially contained in the CoC approved resolution plan. This amount was acceptable to the Homebuyers and has not been objected to by any of the 77 Homebuyers.
Whether in the given circumstances, the Appellant as a disgruntled solitary homebuyer or at best representing 77 Homebuyers can raise objections against the collective business decision taken by the CoC approving the resolution plan of the SRA? - HELD THAT:- In the present matter at hand, neither any contravention of law nor material irregularity has been brought on record. It is settled law that once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law and nothing has come to light to show that the RP had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification. In any case, quite apart from the fact that the resolution plan is already under implementation it has also not been controverted by the Appellant that all the 77 Homebuyers including the Appellant have accepted the offer of 100% of their principal amount from the SRA.
The intent, objective and purpose of IBC being time bound resolution of insolvency of the Corporate Debtor, it clearly does not provide any leeway or scope to dissatisfied individual Homebuyers in a minority like the present Appellant to override the commercial wisdom of the majority in the CoC. There are no merit in the contention of the Appellant to reject the CoC approved resolution plan which has since been approved by the Adjudicating Authority. Any indulgence shown would tantamount to derailing the resolution process and setting the clock back which we cannot countenance.
There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal - Appeal dismissed.
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2024 (3) TMI 931
Validity of declaring of the respondent as a Secured Creditor - retention of shares held as security - primary grievance of the petitioner is that the NCLT ought to have decided the Liquidator’s application under Section 25 of the Insolvency and Bankruptcy Code (IBC), 2016 prior to deciding the application under Regulation 21-A of the IBBI (Liquidation Process) Regulations, 2016 - direction to hand over the share certificates - HELD THAT:- The provisions of Regulation 21-A of the 2016 Regulations are to be examined. Clause (1) of the same provides that a Secured Creditor shall inform the Liquidator of its decision to relinquish its security interest to the liquidation estate or realize its security interest as the case may be. Alliance has filed a Form-D application expressing its interest to realize its security interest. The Liquidator, upon expiry of 30 days from the liquidation commencement, Alliance having not intimated its decision, filed the application under Regulation 21-A for presuming the assets covered under the security interest to be part of the liquidation estate - irrespective of the claim of Alliance to the pledged shares being sub judice in a separate suit, the fact remains that the effect of the order under Regulation 21-A is that the assets covered under the security interest that is the said shares, are presumed to be part of the liquidation estate.
By virtue of the order passed under Regulation 21-A treating the assets covered under the alleged security interest of Alliance (the shares-in-question) to be part of the liquidation estate, the interest of the secured creditors, be it the petitioner or others, cannot be adversely affected in any manner; rather, such order can only enure to the benefit of the secured creditors. The effect of the order is that, despite the claim of security interest of Alliance in the said shares, those are made a part of the liquidation assets, thereby subjecting the sale proceeds obtained after sale of such shares to the rigours of Section 53 of the IBC - Section 53 provides the order of priority for distribution of the proceeds from the sale of the liquidation assets. If the shares are treated to be liquidation assets and are sold as such, the proceeds from the said sale will be a part of the hotchpot of the liquidation assets and will be distributed in terms of Section 53 where the secured creditors will get their dues in accordance with the order of priority stipulated therein. The petitioner claims to be a secured creditor and, hence, could only be benefited, and not suffered, from the order under Regulation 21-A.
There are no irregularity in the order impugned herein. Since the Liquidator’s repeated efforts directing Alliance to hand over its shares failed, Section 25 of the IBC has been rendered academic. Section 25, it is to be noted, does not envisage any adjudication of the rights of a secured creditor to any of the assets. Only if a secured creditor in the liquidation proceedings realizes its security interest in the manner specified in section 52 of the IBC, under sub-section (1)(b) of the said Section, he shall inform the Liquidator of such security interest and identify the assets subject to such security interest to be realized, as per the provisions of sub-section (2) of Section 52 - the scope of an adjudication of the security interest during a liquidation process is provided only in Section 52(3). If Alliance had succeeded in having its way under Section 52(1)(a), it would not be the bounden duty of the Liquidator to adjudicate on the said rights under sub-section (3) of Section 52. However, since such bid of Alliance has failed by way of the impugned order under Regulation 21-A, presuming the shares-in-question to be a part of the liquidation asset and directing sale thereof, there cannot arise any question of such adjudication, since, in any event, the shares become a part of the liquidation estate, sufficiently subserving the interest of all secured creditors, including the petitioner (who claims to be a secured creditor), who would be getting their dues in order of priority under Section 53 of the IBC.
The petitioner cannot claim to have been aggrieved in any manner, as the order passed under Regulation 21-A did not adjudicate on the rights of Alliance in respect of security interest to the disputed shares. Rather, the Liquidator has rightly submitted that the said shares would be shown in the auction sale to be subject to the pending suit.
The argument of the petitioner that the order is devoid of reasons is entirely misplaced. In the absence of any adjudication on the issue of Alliance’s rights to the pledged shares, there arises no question of any reason being provided for such non-existent adjudication - there is no scope of interference in the present writ petition.
Petition dismissed.
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2024 (3) TMI 930
Rejection of transfer application - proceedings were initiated by the Financial Creditor under Section 7 which proceedings were initially admitted and the application to recall the said order was rejected - HELD THAT:- The facts indicate that the order of admission of the CIRP and the order rejecting the application of the Corporate Debtor for recall of the order was set aside by this Tribunal on 26.09.2023 and thereafter Section 7 proceedings revived before the Adjudicating Authority to be proceeded and decided in accordance with law.
There can be no dispute to the preposition of law that mere apprehension of bias is sufficient for transfer of a proceeding. The question is as to whether the facts and sequence of the events in the present case reflect any apprehension of bias. Having adverted to the submission and facts and sequence are fully satisfied that neither there is bias reflected nor any apprehension of bias which can be imputed the Bench hearing the matter. In the impugned order, Hon’ble President has looked into the submission and has rejected the application for transfer in which there are no error.
Appeal dismissed.
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2024 (3) TMI 929
Liability to contribute towards Liquidation Process Costs - scope of Financial Institution - Appellant points out that neither the Appellant nor the Debenture Holders, it acts on behalf of the fall within the definition of Non-banking Institution, under Section 45-I(e) of the RBI Act and hence, not liable to contribute towards Liquidation Costs - HELD THAT:- As a matter of fact, in view of the rejection of the Resolution Plan, by the Members of the Committee of Creditors, and in view of the CIRP Period, expiring on 17.02.2020, the Resolution Professional, preferred an Application, as per Section 33(1) of the Code, seeking Liquidation of the Corporate Debtor. The Adjudicating Authority / Tribunal, by an Order dated 13.03.2020, passed an Order of Liquidation, for the Corporate Debtor. Also that, the Adjudicating Authority, had appointed the 1st Respondent / Liquidator as Liquidator, through an Order dated 13.03.2020.
The 1st Respondent / Petitioner / Liquidator, had informed the 3rd Respondent / Phoenix ARC Private Limited, through letter dated 26.08.2020, their respective Share of Liquidation Costs of Rs.36,74,771/-, (which includes, the approved Liquidation Costs and Liquidator Fee) and requested to remit their respective Share as a whole or at least 30% within 5 days, from the issuance of the Letter. In fact, the 1st Respondent / Petitioner / Liquidator, had provided the Liquidator’s Fee Estimate, as per Letter dated 26.08.2020, as per Regulation 4(2)(b) of the Liquidation Process Regulations, 2016 - It is represented on behalf of the 1st Respondent / Petitioner / Liquidator that any delay, in depositing the Liquidation Costs by the Respondents, is delaying the Liquidation Process and the Liquidator, is unable to perform his duties, as mandated under the I & B Code, 2016.
Petition is filed in a Bona fide manner, and in the interest of Justice, the said Application, may be allowed by issuing necessary directions to the Respondents, to forthwith defray the portion of Liquidation Process costs, as per Regulation 2A of the IBBI (Liquidation Process) Regulations.
The filing of a Certified Copy (Paid Cost Copy), is not an empty ritualistic formality, in the considered opinion of this Tribunal. It cannot be gainsaid that only when the Petitioner / Appellant / Aggrieved Party, applies within the prescribed period of Limitation, as envisaged, under Section 61 (2) of the Code, the time taken to secure the Certified Copy, will be excluded from the Computation of Period of Limitation - In terms of Rule 22(2) of the NCLAT Rules, 2016, a Certified Copy of the Impugned Order, shall accompany every Appeal to be filed, before the Office of the Registry. Only in a Paid Certified Copy, by an Aggrieved Party, the details Viz. when the Application for Certified Copy of the Impugned Order was made by the Applicant, when it was made ready, when it was handed over / taken delivery, etc., will find a place, ofcourse, duly signed by the Deputy / Asst. Registrar of the Adjudicating Authority / Tribunal.
Considering the entire conspectus of the attendant facts and circumstances of the instant case, in an encircling manner, comes to an irresistible conclusion that the Impugned Order, dated 25.05.2023 in IA No. 399 / BB / 2020 in CP (IB) No. 189 / BB / 2018, passed by the Adjudicating Authority / NCLT, Bengaluru Bench, in directing the Appellants, 1st Respondent and two other Respondents, to Defray their portion of Liquidation Process Costs, is free from any legal infirmities.
Appeal dismissed.
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2024 (3) TMI 928
Admission of section 7 application - financial debt owed by the Corporate Debtor or not - default was committed by the Corporate Debtor in not carrying out the construction due to interim order or not.
Whether Grandstar Reality Pvt. Ltd., auction purchaser under SARFAESI Act, 2002, on 17.06.2016/ 19.07.2016 can be held to be Financial Creditor of the Respondent allottees, who were issued allotment letters/ Builder Buyers Agreement by Akme Projects Ltd. (the predecessor of the Corporate Debtor)? - HELD THAT:- The definition of Financial Creditor means that any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. The crucial word in the definition is “any person to whom a financial debt is owed” becomes a Financial Creditor. Further, the expression “includes a person to whom such debt is legally assigned or transferred to” is only incidence of further elaboration of person to whom the financial debt is owed. In the facts of the present case, there can be no denying that financial debt, which was owed by Akme to the allottees is now the debt owed by Grandstar Reality Pvt. Ltd. The Grandstar Reality Pvt. Ltd. is fully covered by the definition of Section 5, sub-section (7), who owed the debt towards the allottees.
The financial debt can be owed in more than one manner. Assignment or transfers are two modes, which has been expressly included in the definition. In cases of amalgamation and demerger under the Companies Act, 2013 of a Corporate Debtor with another entity is obviously considered as Corporate Debtor on account of transfer/ vesting of assets and liabilities to the amalgamated/ transferee Company. Transferee Company cannot be permitted to escape the rigours of the Code by claiming that disbursement was not done to it directly. In the present case, where Grandstar Reality Pvt. Ltd. has taken over the Project under the SARFAESI Act, cannot escape the rigours of the Code and defeat the rights of the homebuyers under the Code - there is a financial debt and the filing of the Application by the allottees under Section 7 cannot be faulted on this ground.
Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon’ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors. [2018 (3) TMI 1964 - SUPREME COURT], M/s Akme Projects Ltd. vs. YES Bank & Anr.Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon’ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors.; in M/S. AKME PROJECTS LTD. VERSUS YES BANK LTD. & ANR. [2016 (10) TMI 1397 - DELHI HIGH COURT]? - HELD THAT:- The learned Counsel for the Respondent is right in her submission that even in additional affidavit filed on 19.01.2024 by the Appellant, no such facts have been stated, which may indicate that Grandstar Reality Pvt. Ltd. has been taking steps for completion of the Project. In the additional affidavit, the Appellant has placed reliance on letter dated 09.05.2023 issued by Tehsildar in terms of the order No.17/LAC dated 12.04.2023 passed by District Revenue Officer cum Land Acquisition Collector Gurugram. On looking into the said letters/ orders, it is clear that said orders were issued on a request made by one Om Prakash Yadav in the Rameshwar’s case. Hence, order of the District Revenue Officer dated 12.04.2023 and letter dated 09.05.2023 by Tehsildar are not relevant for the present case - in the facts of the present case default was clearly proved on the part of the Grandstar Reality Pvt. Ltd. and the findings recorded by the Adjudicating Authority that Section 7 Application is complete and deserved to be admitted, does not warrant any interference.
There are substance in the submission of learned Counsel for the Respondent that since the Project has been taken over by the Grandstar Reality Pvt. Ltd. in 2016 and it is now the obligation of Grandstar Reality Pvt. Ltd. to continue the Project, the filing of the claim by the allottees against the CIRP of Akme Project, cannot preclude the allottees from agitating their claim by filing Application under Section 7 against the Grandstar Reality Pvt. Ltd., who has taken over the Project.
There is no error in the order of the Adjudicating Authority admitting Section 7 Application. The Appeal is dismissed.
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2024 (3) TMI 927
Seeking impleadment of Successful Auction Purchaser/Appellant as one of the Respondents - HELD THAT:- This ‘Tribunal’, makes a pertinent mention that all pleadings exchanged prior to and non-impleadment, to overcome direction issued by the ‘Adjudicating Authority/Tribunal’, in regard to impleadment shall not be anyway to be construed that the concerned party had an effective and adequate opportunity to putforth its views/grievances, in terms of the ‘principles of natural justice’.
This ‘Tribunal’, is of the considered view that even though the ‘Adjudicating Authority/Tribunal’ had observed among other things “Liquidator is permitted to start e-auction process afresh allowing the ‘Applicant/Successful Bidder’ and other persons to participate in the process. It was also submitted that the mistake was bona fide and he is willing to allow the ‘Successful Bidder’, to participate with the amount already ‘furnished/deposited’ and ultimately, proceeded to pass an order, that there will be a ‘fresh auction’ and the ‘Applicant, Successful Bidder’ and other persons would be permitted to participate in the ‘fresh e-auction’ is liable to be set aside, to secure the ‘ends of justice’ because of the latent and patent fact that the ‘Appellant/Proposed Impleading Party, who was directed earlier by the ‘Adjudicating Authority/Tribunal’ through its order dated 30.01.2024 to be impleaded as the ‘Appellant/Successful Bidder’, as one of the ‘Respondents’, was not added as a party as one of the Respondents, this ‘Tribunal’ is of the considered view that the said omission is a vital one and goes to the root of the matter and affects the impugned order on the file of the ‘Adjudicating Authority/National Company Law Tribunal, Division Bench Court-I, Chennai.
Appeal allowed.
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2024 (3) TMI 867
Condonation of delay in filing the Civil Appeals - Section 62 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- There is a delay of 216 days and 141 days respectively in filing the Civil Appeals. The delay is beyond the maximum period which can be condoned under Section 62 of the Insolvency and Bankruptcy Code 2016.
The Civil Appeals are dismissed on the ground of limitation.
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2024 (3) TMI 866
Condonation of delay of 474 days in filing the Civil Appeals - HELD THAT:- Even before the Special Leave Petition was filed, the period of limitation under Section 62 of the IBC had come to an end - There is a delay of 474 days in filing the Civil Appeals, much beyond the period which can be condoned in terms of the provisions of Section 62 of the Insolvency and Bankruptcy Code 2016.
There are no reason to entertain the Civil Appeals since they are barred by limitation - Since the appellants seek to withdraw the appeals, the appeals dismissed as withdrawn.
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2024 (3) TMI 865
Admission of section 9 application - Insurance Company has made payment to the Operational Creditor of its claim - third party liability - Liability of Corporate debtor to discharge its debt - preexisting dispute between the parties - it was held by NCLAT that Section 9 Application is fully maintainable and the fact that Insurance Company has made payment to the Operational Creditor of its claim, cannot be a ground to reject Section 9 Application - HELD THAT:- The order of the National Company Law Appellate Tribunal dated 13 December 2023 does not raise any substantial question of law so as to warrant interference in the appeal under Section 62 of the Insolvency and Bankruptcy Code 2016.
However, the time which was granted by the NCLAT by its order dated 13 December 2023 for deposit shall stand extended, on the request of the counsel for the appellant, until 8 April 2024. In the event of default, the consequences as envisaged in the order of the NCLAT shall follow.
Appeal dismissed.
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2024 (3) TMI 864
Initiation of CIRP - Failure to make deposits the entire OTS amount - section 7 still pending - It is submitted that the Appellant is ready to deposit the entire OTS amount which was earlier arrived along with 12% interest in the Court to show his bonafide - HELD THAT:- Admittedly, Section 7 application is still pending before the Adjudicating Authority. From the facts which have been brought on the record, it is clear that the deposit could not be made by the Appellant as per our order dated 29.02.2024 by 10.03.2024 since letter dated 29.02.2024 could not be responded before the 10.03.2024. Since Section 7 application is pending before the Adjudicating Authority, it is for the Adjudicating Authority to take a call on the submissions and offer made by the Appellant.
The Appellant and the investors as submitted before the Court may deposit the amount of Rs.167 Crores along with 12% interest and Rs.87 Crores plus 12% interest before the NCLT within 10 days as prayed by way of FDR in favour of Registrar, NCLT. If the said deposit is made or not made, the Adjudicating Authority shall take appropriate decision on Section 7 application after hearing both the parties.
There are no reason to keep the Appeals pending - Both the Appeals are disposed of accordingly.
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2024 (3) TMI 863
Approval of Resolution Plan - Consideration of Resolution Plan from Non-Listed Applicants - Authority of CoC to Modify Invitation for Expression of Interest (EOI) - Interpretation of Regulations 39(1)(b) and 36A of the CIRP Regulations, 2016 - HELD THAT:- The Regulation clearly provides that the committee shall not consider a resolution plan received from an application whose name does not appear in the list of PRAs. Admittedly, neither Patanjali nor other two applications have submitted any EOI nor their name was reflected in the List of PRAs - Regulation 36A which provide for Invitation for Expression of Interest also empowers the CoC to modify the invitation for Expression of Interest. It is always open for the CoC to take a decision to not proceed on the Applications, EOI received and take a decision for issuance of fresh Form G and permit other applicants to participate. When no fresh Form G has been issued, it is not open for any new applicant to submit application before the Adjudicating Authority for being permitted to participate in the CIRP and submit Resolution Plan.
In any view of the matter, affidavit has been filed by the CoC where resolution has been brought on record that the CoC has now decided not to consider any additional new entrants and they will confine their consideration to Resolution Applicants whose names were reflected in the final list of Prospective Resolution Applicants dated 07.11.2023.
The Committee of Creditors having taken resolution not to consider any additional new entrants, we are of the view that impugned order dated 12.02.2024 and 21.02.2024 cannot be sustained. Both the Appeals are allowed.
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2024 (3) TMI 806
Approval of Resolution Plan - Dues of Income Tax liability - HELD THAT:- It is not required to issue notice in the present appeal as it is apparent that the corporate debtor did not have money/assets, and the appellant under the waterfall would not have received payment.
The present appeal is dismissed.
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2024 (3) TMI 805
Maintainability of appeal - time limitation - impugned order was passed on 10.06.2022 and the period of 30 days prescribed for filing the appeal had expired on 10.07.2022 and a further period of 15 days had also expired on 25.07.2022 but these appeals have been filed without annexing the certified copy of the impugned order and the certified copies of the impugned order were applied much after the expiry of period of 45 days - HELD THAT:- It has been found from the resume of the facts that four appeals have been filed within a period of 30 days, six appeals have been filed within the extended period of 15 days alongwith the application for condonation of delay which are yet to be decided and all these ten appeals have been filed with applications for seeking exemption from filing certified copy of the impugned order whereas three appeals have been filed without seeking exemption from filing certified copy of the impugned order which can be granted under Rule 14 of the Rules.
In all these appeals, the certified copies have been obtained after the expiry of 30 days/45 days but the fact remains that the application for seeking exemption is yet to be disposed of and this Tribunal has the jurisdiction to grant the exemption for the compliance of the Rules though on a sufficient cause shown in an appropriate application filed by the Appellant. Similarly, six appeals have been filed beyond the period of 30 days but within 45 days and the application for condonation of delay has not yet been decided. Supposing, the application for condonation of delay is allowed then the appeals shall be deemed to have been filed within the period of limitation and if the application is dismissed then the matter would be over. In so far as the remaining three appeals are concerned, these appeals have been filed without any application for seeking exemption from filing certified copy of the impugned order whereas Rule 14 clearly lays down that exemption can be granted if an application is moved in that behalf and by assigning a sufficient cause to render substantial justice.
Appeal disposed off.
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2024 (3) TMI 804
Rejection of Section 7 Application filed by the Appellant - initiation of CIRP for default of payment of the Financial Debt owed to the Appellant - guarantor of the Financial Facilities or not - Approval of Resolution Plan lead to debt extinguishment or not.
Whether the ECL is a ‘guarantor’ to the SREI for the financial facilities availed by ESL from SREI? - HELD THAT:- The submission of the Appellant cannot be accepted that there was clear and categorical admission of Respondent No.1 in the pleadings before Madras High Court and the Hon’ble Supreme Court that Respondent No.1 stood guarantor of the Financial Facilities extended by SREI to ESL - Admittedly, Respondent No.1 mortgaged its immovable property as per the Supplementary Agreement as noted above and pleadings have to be looked into the background that mortgage was made by Respondent No.1 of his immovable property to secure the Facilities.
The issue directly arose in proceeding under Section 7, as to whether Respondent No.1 stood guarantor to SREI in reference to Financial Facilities extended to ESL, which has been answered by the Adjudicating Authority taking into consideration all relevant facts. Neither the issue was decided in proceedings before Madras High Court or by the Hon’ble Supreme Court, nor any such admission can be pressed into service as claimed by the Appellant. The Adjudicating Authority in the impugned order after considering all facts and circumstances of the present case has rightly come to conclusion that Respondent No.1 cannot be held to be guarantor to the Financial Facilities extended by Financial Creditor to the ESL. In paragraph 11 of the judgment of the Adjudicating Authority, detailed consideration and reasons have been given for holding that Respondent No.1 is not guarantor of the Financial Facilities.
Whether approval of ESL’s Resolution Plan by the Adjudicating Authority led to extinguishment of entire debt of ESL and no claim would lie against Respondent as guarantor/ third party surety in respect of the financial facilities availed by the ESL? - HELD THAT:- Law on extinguishment of claim against personal guarantor and third party on approval of Resolution Plan has been settled by Hon’ble Supreme Court in its judgment in LALIT KUMAR JAIN VERSUS UNION OF INDIA AND ORS. [2021 (5) TMI 743 - SUPREME COURT], where the Hon’ble Supreme Court held that approval of resolution plan does not ipso facto discharge a personal guarantor (of a Corporate Debtor) of her or his liabilities under the contract of guarantee.
There cannot be any dispute to the proposition that after the approval of the Resolution Plan, entire debt of the Corporate Debtor against the Financial Creditor stand discharged and after approval of Resolution Plan, Financial Creditor can have no further recourse against the Corporate Debtor. But the question as to whether debt of personal guarantor or third party which arises out of different contract shall also automatically extinguished after the approval of Resolution Plan is a question to be answered in the present case - The Minutes of the CoC throws light on the true interpretation of Clause 3.2 (ix) and cannot be said to be not relevant. When Clause 3.2 (ix) of the Resolution Plan expressly provides that all the debt shall be extinguished against the Company, but it shall not extinguish against personal guarantor and third party, nothing more is required to be looked into. The Respondent cannot be allowed to raise the submission contrary to above Clause of the Resolution Plan, which has received approval.
In view of Clause 3.2 (ix) of the Resolution Plan, when read in the light of the CoC Meeting dated 29.03.2018, which throws considerable light on the meaning and content of Clause 3.2 (ix), the submission of the Respondent cannot be accepted that after approval of Resolution Plan, the entire debt stand extinguished and no recourse can be taken by the Financial Creditor against third party.
Whether the approval of the Resolution Plan has led to extinguishment and effacement of the entire debt of ESL (including the liability owed by the CD)? - HELD THAT:- In view of Clause 3.2 of the Resolution Plan, which clearly contemplated that all rights/ remedies of the creditors shall stand permanently extinguished against the Company, except any rights against any third party (including the Existing Promoter) in relation to any portion of unsustainable debt secured or guaranteed by third parties. The finding of the Adjudicating Authority that approval of Resolution Plan has led to extinguishment and effacement of the entire debt of ESL has to be held to be finding qua the Corporate Debtor only. There is no finding recorded by the Adjudicating Authority in the impugned order that after approval of the Resolution Plan, it would lead to extinguishment and effacement of the entire debt of third party including the Corporate Debtor.
The order of Adjudicating Authority rejecting Section 7 Application filed by the Financial Creditor upheld - appeal disposed off.
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2024 (3) TMI 760
Grant of permission to take on record the rejoinder subject to payment of cost of Rs.10,000/- - appellant contends that the said rejoinder was taken on record after conclusion of the hearing of the Financial Creditor - HELD THAT:- When the Adjudicating Authority found fit to take rejoinder on record subject to payment of cost of Rs.10,000/-, the discretion exercised by the Adjudicating Authority need not be interfered with by this Tribunal in exercise of its appellate jurisdiction. It is true that normally pleading are completed before commencement of hearing but in facts of the present case, the rejoinder affidavit was taken during course of the hearing.
Thus, no rule preclude such a course by the Adjudicating Authority - the appeal need not be entertained - appeal dismissed.
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2024 (3) TMI 696
Seeking condonation delay of 41 days in filing the present appeal - Sufficient reasons for delay or not - Admission of section 9 application - initiation of CIRP - HELD THAT:- Any person aggrieved by any order of the Adjudicating Authority is vested with the statutory right of filing an appeal. However, the statutory right to file the appeal is required to be exercised within a period of 30 days of the impugned order before this Tribunal. If for certain reasons the right to file appeal is not exercised within the prescribed 30 days, the proviso to Section 61 (2) can be invoked which proviso provides that the appeal can still be filed subject to such appeal being filed up to a further period of 15 days only. The statutory construct is absolutely clear and unambiguous that the limitation period provided under Section 61(2) of IBC is 30 days which is extendable by a maximum of 15 days. Thus, no appeal can be filed after the expiry of the extended period of 15 days and that any appeal filed within the extended limitation period can be admitted only after satisfying the Appellate Tribunal that there was sufficient cause justifying the delay of 15 days.
IBC by virtue of being a special statute, this Tribunal is not empowered to condone any delay beyond the statutory prescriptions in IBC containing a provision for limitation. This legal precept has been squarely laid down by the Hon’ble Supreme Court and for this purpose reference made to the judgement of the Hon’ble Supreme Court in Kalpraj Dharamshi vs Kotak Investment Advisors Ltd [2021 (3) TMI 496 - SUPREME COURT] wherein it has been noticed that IBC being a special statute, for purposes of calculating the period of limitation to file an appeal, the governing section shall be Section 61 of the IBC.
Section 61 of the IBC has to be interpreted keeping in mind the overall purpose and object of the IBC which inter-alia includes timely resolution of the CIRP. That being an avowed objective of this legislation and it being settled law that for purposes of calculating the period of limitation to file an appeal in any IBC proceeding, the governing Section shall be Section 61 of the IBC, the submission of the Appellant that the period of limitation shall commence for filing the appeal when the Appellant became aware of the order is untenable.
Undisputedly, the present impugned order was pronounced on 22.11.2023. Thus, limitation for filing the appeal starts from 22.11.2023 and does not depend upon when the Appellant becomes aware of the order. The date on which the order is pronounced is to be excluded from the calculation of limitation in terms of Section 12(1) of the Limitation Act. The 30 days period comes to an end on 22.12.2023 and further period of 15 days comes to an end on 07.01.2024. The Appeal having been filed on 01.02.2024, the appeal has clearly been filed with a delay of more than 15 days from the date of expiry of limitation - the jurisdiction to condone the delay is limited to only 15 days under Section 61(2) of IBC, hence, the delay condonation application cannot be entertained.
The delay condonation application deserves to be dismissed. In result, the delay condonation application is dismissed and the Memo of Appeal is rejected.
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2024 (3) TMI 646
Admission of section 9 application - initiation of CIRP - pre-existing disputes or not - appellant submits that even though no reply of Section 9 application could be filed but reply to demand notice contains specific details by which Corporate Debtor has given notice of dispute - HELD THAT:- The Adjudicating Authority has not noticed the contents in the reply to demand notice given by the Appellant fully and the observation that reply raises issue only two invoices 203 and 205 is incorrect. It is true that the Corporate Debtor could not file reply to Section 9 application although in the appeal, Suspended Director of the Corporate Debtor has sought to given reason as to why it could not appear and file reply, it is not necessary to enter into the said issue. The fact remain that no reply has been filed. The Corporate Debtor, however, has filed certain other correspondences between the parties prior to demand notice to which reply has also been filed by the Operational Creditor. The correspondence which was brought on the record in the appeal prior to demand notice has not been denied.
The demand notice dated 25.08.2021 was sent on the basis of ledger confirmation treating to be principal amount due as Rs.1,79,93,691/-. The demand notice was replied on 20.11.2021 and with regard to faulty cables, the Corporate Debtor has issued a debit note for Rs.67,96,800/- and further stated debit note for amount of Rs.50,00,000/- towards non-supply of G.I. Pipe for Bill number 203. The above reply to demand notice clearly indicate the dispute regarding the claim of the Appellant - there are ample materials on record to indicate that there was pre-existing dispute between the parties and reply dated 20.11.2021 replying the demand notice was not disputed, reply cannot be said to be based on no material or no evidence nor the defence raised by the corporate debtor in the reply to demand notice can be said to moonshine dispute or frivolous dispute as contended by the counsel for the Appellant. Issue of faulty cables between the parties was going on immediately after supply of the goods and joint inspection was also done on 08.12.2019 but there is no redemption was seen when faulty cables was measured. The fact thus, clearly indicate that dispute persisted between the parties and reply to the demand notice was clearly notice of dispute and, therefore, pre-existing dispute between the parties, Section 9 application ought not to have been admitted.
The Hon’ble Supreme Court in M/S S.S. ENGINEERS VERSUS HINDUSTAN PETROLEUM CORPORATION LTD. & ORS. [2022 (9) TMI 377 - SUPREME COURT] clearly held that the operational creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence. However, if the debt is disputed, the application of the operational creditor for initiation of CIRP must be dismissed - Present is a clear case where claim raised by the operational creditor where payment was disputed, notice of dispute was given on 20.11.2021. It is also noticed the correspondences between the parties prior to issuance of demand notice which indicate that the dispute persisted between the parties with regard to default in cable supplied. Thus there is pre-existing dispute between the parties and the Adjudicating Authority committed error in admitting Section 9 application.
The order passed by the Adjudicating Authority set aside - Section 9 application filed by the operational creditor dismissed - appeal allowed.
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2024 (3) TMI 602
Permission to withdraw the present Special Leave Petition - Right to get registered as RP - Rejection of application of the Petitioner herein for registration as a Resolution Professional - It was held by High Court that 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 - HELD THAT:- Permission as sought for is granted.
The Special Leave Petition is dismissed as withdrawn.
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2024 (3) TMI 601
Undervalued/preferential/fraudulent transactions - Failure to adjudicate about the ingredients of Section 43, 45, 49 and 66, specifically - Adjudicating Authority in the impugned order has only noticed the opinion of the Resolution Professional - Need for separate consideration of preferential, undervalued, and fraudulent transactions, each requiring distinct scrutiny and evidence - HELD THAT:- The Adjudicating Authority has recorded only its conclusions and that too without considering the preferential, undervalued and fraudulent, each transaction separately and there is general observation that the transactions are undervalued transactions as well as preferential and fraudulent transactions. The ingredients of preferential, undervalued and fraudulent transaction are entirely different and there has to be application of mind to the ingredients of each transaction to come to conclusion that ingredients are satisfied and the transaction falls in the said category adverting to the given pleadings in the application. The Adjudicating Authority ought to have adverted to the said pleadings and returned the finding regarding the fulfilment of ingredients of each provision. The Adjudicating Authority has only in two paras i.e. 27 and 28 has recorded his conclusion without giving any reason and without adverting to any pleadings or materials on record.
The order passed by the Adjudicating Authority cannot be sustained. Order impugned is set aside - Application revived before the Adjudicating Authority to be heard afresh and decided in accordance with law.
Appeal disposed off.
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2024 (3) TMI 567
Constitutional validity - Disciplinary proceedings against insolvency professional agencies - suspension of authorization for assignment - Seeking review of the common order - Error apparent on the face of record or not - sufficient cause for review or not - Regulation 23 A is liable to be struck down or not - violation of principles of natural justice - Section 204 of IBC is violative of Article 20(2) of the Constitution of India or not - HELD THAT:- The alleged error pointed out is nothing but recording the case of the petitioner that by an order dated 14.01.2020 the application was rejected. Assuming that the petitioner is correct in stating that as per the counter affidavit the same was communicated on 16.07.2020, even then, the same has no bearing whatsoever to the ultimate findings and conclusions arrived at.
Even though the petitioner would term the grounds raised in the review application as ‘error apparent on the face of the record’, it could be seen that all his pleadings and arguments are nothing but pointing out that the conclusions reached by this Court are erroneous. The petitioner is virtually assailing correctness of the findings before the self same Court and pleading for re-consideration of the issue, which is nothing but an appeal in disguise, which cannot be entertained by this Court. No grounds on any materials which were not there for consideration is pleaded. The conclusions are not on the basis of any error apparent on the face of the record. No other sufficient cause which would be within the contours of review as contemplated under Order XXVII Rule 1 of CPC is made out.
There are no merits in the review application - application dismissed.
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