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Showing 421 to 440 of 1740 Records
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2024 (9) TMI 1322
Applicability of "clean slate" principle only to liabilities prior to the insolvency commencement date or will extend to the date of actual sale of the Corporate Debtor as a "going concern" - refusal of Adjudicating Authority to grant necessary reliefs and concessions without even considering them and without assigning any reasons - whether the Appellant was entitled to grant of reliefs and concessions not on the date prior to insolvency commencement date, but ought to have been granted the reliefs and concessions till the date of actual sale of the Corporate Debtor as a ‘going concern’?
HELD THAT:- The reliefs and concessions was granted to the Appellant with regard to declaration that Corporate Debtor shall not be liable on account of any transaction, dealing, or arrangement between it or any other person relating to the period prior to the date of CIRP. We do not find any illegality in the above relief granted to the Appellant prior to the date of CIRP. Insofar as claims of known or unknown, disclosed or undisclosed liabilities, the obligation is up to the cut-off date, i.e. date of commencement of liquidation. The e-auction Notice clearly mention that transactions prior to the cut-off date shall be dealt as per Section 53 of the IBC. Thus, all claims known or unknown on the date of liquidation commencement date has to be dealt as per Section 53.
The prayer of the Appellant in this Appeal is to grant reliefs and concessions for all claims and liabilities up to the date of sale by e-auction i.e. 30.03.2023. When the eauction Notice itself does not contemplate grant of any relief from claims and liabilities up to the date of e-auction sale, the Appellant cannot be granted reliefs and concessions, which is not contemplated by e-auction Notice itself.
Regulations 12 and 16 contemplate filing of a claim as on the liquidation commencement date. There can be no question of extinguishment of claim up to the date of sale of e-auction of the Corporate Debtor as ‘going concern’. When claim itself are as on the liquidation commencement date in the liquidation process, the argument that extinguishment of claims and liabilities should be granted till the date of sale by e-auction is not in accord with the statutory scheme as delineated by IBBI (Liquidation Process) Regulations, 2016 - the prayer of the Appellant that it should have been granted reliefs and concessions up to the date of e-auction sale, cannot be accepted and has rightly not been granted by the Adjudicating Authority.
The relief claimed by the Appellant to grant extinguishment of all claims and liabilities up to the date of e-auction, i.e. 30.03.2023, cannot be accepted and Adjudicating Authority by the impugned order has granted reliefs and concessions to which the Appellant was entitled and the reliefs and concessions not granted were in accordance with law and statutory scheme of the liquidation process - there are no error in the order impugned, warranting interference in this Appeal - appeal dismissed.
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2024 (9) TMI 1321
Lifting of attachment - invocation of provisions of Sub Regulation 8 of Regulation 39 of Regulations of 2016 - HELD THAT:- The instant Appeal would stand disposed off leaving it open for the Appellant to file an appropriate application falling within the domain of Sub Regulation 8 of Regulation 39 of Regulations of 2016 to be read with sub Clause (i) of XV of the Impugned Judgment of 20th March 2024, and if the Appellant does so, the Application thus to be preferred by the Appellant for the purposes of lifting the embargoes for enforcement of the Resolution Plan, by lifting attachment, the same would be adjudicated upon by the Learned Adjudicating Authority, in accordance with law.
Since the Appeal is only the enforcement of the approved resolution plan, which has been sought by the appellant for that, he will have to abide by Sub Regulation 8 of Regulation 39 of Regulations of 2016 and if the appellant does so, it may be proceeded to be decided in accordance with law.
Subject to the above, the Company Appeal stands disposed off.
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2024 (9) TMI 1320
Levy of service tax - Business Auxiliary Services (BAS) - expenses reimbursed to the foreign distributors under reverse charge mechanism - Extended period of limitation - it was held by CESTAT that 'in the instant case, the gross value of taxable service for the purpose of computation of service tax shall be the gross amount paid by the recipient of such service.'
HELD THAT:- No case is made out for grant of stay. However, time of three months granted to the appellant to deposit the demand for the normal period.
The application for stay is disposed of accordingly.
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2024 (9) TMI 1319
Seeking permission of the Court to withdraw the impleadment application - monetary limit involved in the appeal - HELD THAT:- By a Circular dated 6 August 2024 of the Revenue Division, Judicial Cell (Central Board of Indirect Taxes & Customs), Ministry of Finance, the monetary threshold of the tax effect for filing an appeal to the Supreme Court has been increased from Rupees two crores to Rupees five crores. The Additional Solicitor General has confirmed that the tax effect in the present matter is less than Rupees five crores.
The application is permitted to be withdrawn.
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2024 (9) TMI 1318
Denial of CENVAT credit - rent of building taken by the appellant for the purposes of its job workers - taxability of service under renting out immovable property services - HELD THAT:- It is an admitted position that the manufacturer-appellant had shifted his machinery to the rented premises. The raw material was also provided by the appellant. The contract was entered into between the appellant and the job workers to perform the job of manufacturing additionally at the rented premises and handover the final product to the appellant. The premises were thus made available to the job workers for the purpose of performing their work and therefore, the necessary ingredients as required for taxable service would be fulfilled namely that the service has been provided by the job workers in the rented immovable property and secondly the rented immovable property was being utilized for the furtherance of business or commerce by the manufacturer – appellant.
It is found that none of the authorities below examined this aspect while deciding the case and both the appellate authorities proceeded on examining the case in light of the definition of job workers. A perversity has crept in the order as the claim of Cenvat credit is not for the job workers and payment made was for the rent paid for the premises. In the circumstances, it is not found that the orders impugned to be sustainable in the eyes of law and the same are accordingly set aside.
The order dated 28.04.2014, passed by the Customs, Excise and Service Tax Appellate Tribunal is set aside - the appellant entitled for the benefit of Cenvat credit as claimed - appeal allowed.
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2024 (9) TMI 1317
Challenge to recovery notice - recovery of the dues of a Company from its Directors - alternative remedy under Section 287-A of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 - HELD THAT:- On a plain reading of sub-Section (1) of Section 12 of the Act, the liability of the Directors of a private company will arise when a private company is wound up after the commencement of the Act. Therefore, Section 12 (1) will have no application as an order of winding up has not been produced.
Therefore, when there was no provision under the Act under which dues of a limited company could have been recovered from its Directors, the third respondent was not justified in issuing the recovery certificate and demand notice against the appellant. These crucial factors have been ignored by the High Court. It ought to have been noted by the High Court that an attempt to recover tax payable by the Company from the appellant from its inception was illegal and, therefore, the appellant ought not to have been driven to the remedy of preferring an appeal.
The impugned judgments and orders of the learned Single Judge and the Division Bench are set aside. The notice of recovery dated 6th June, 2019 issued by the third respondent is hereby quash and set aside - Appeal allowed.
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2024 (9) TMI 1316
Seeking waiver of tax - non-production of C-Forms - Whether the petitioners can file their documents for obtaining waiver of tax, at a later date? - whether such waiver of tax can be given without any further assessment/re-assessment/appellate order being passed by the concerned taxing authorities?
HELD THAT:- The conditions for grant of waiver are contained in the memo dated 27.09.2016 which has been extracted above. A perusal of the terms and conditions, in this memo, make it clear that the waiver of tax given under the memos, is applicable to those dealers who remit their tax completely as per the provisions of the CST, Act for the period from 01.06.2014 to 31.12.2015 before 30.09.2018; complete their assessment for the period from 01.06.2014 to 31.12.2015 before 30.09.2018; produce documents of movement of goods in the form of lorry receipts/railway receipts and CST waybills; production of proof of exit of the goods from the State Andhra Pradesh by producing proof of exit from the last notified check post in the State or by production of ledger accounts or book entries relating to payment of charges for transporting goods to other States.
A cutoff date is prescribed only in relation to payment of tax under the CST, Act and for completion of the assessment for the period from 01.06.2014 to 31.12.2015. There is no cutoff date prescribed for production of the other documents mentioned above. In the circumstances, the contention of the learned Government Pleader for Commercial Tax, that the documents required for grant of waiver should be produced before the cutoff date cannot be accepted.
As far as the non-production of documents is concerned, the said non-production would be a question of fact, which would have to be gone into by the assessing authorities after considering whether the documents produced by the petitioners meet the terms and conditions set out in the memos.
It would be inequitable, to grant relief to those dealers who approached in the year 2019 while denying such relief to the dealers who approached later. In any event, the applications are only for the purposes of ascertaining the eligibility of the dealers/petitioners for grant of waiver.
The Endorsements issued by the respective tax authorities are set aside - The respective tax authorities, shall consider the applications of the petitioners afresh and grant waiver to those petitioners who are able to comply with the requirements of the documents set out in the memos - Petition disposed of.
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2024 (9) TMI 1315
Requirement to pay the requisite amount towards compensation as determined in the Supplementary Award - Scheme of Arrangement between the Appellant and JAL under Sections 391 to 394 of the Companies Act, 1956 - HELD THAT:- A bare reading of Section 38 of Companies Act, 2013 indicates that the payment of full and final compensation to the land owners is a precursor to taking possession of the land sought to be acquired from such persons. It is clear from the facts that the acquisition proceedings herein failed to confirm to this statutorily mandated sequence of events. It is regrettable that the State of Himachal Pradesh, being a welfare state, did not ensure payment of compensation to the Respondent Nos. 1-6 before taking possession of their land. In fact, the landowners had to approach the High Court to seek directions to the LAC for passing of the supplementary award which was finally passed on 02.05.2022 that is, after a period of almost four years from the date of passing of the Award of 2018.
Section 41 necessitates an agreement between the appropriate government and the company for whose purpose the land is being acquired. One of the purposes of such an agreement is to ensure that payment towards the cost of acquisition is made by the company to the appropriate government and it is only upon such payment that the land is transferred to the company. Thus, it can be said that JAL was mandated to make the requisite payment to the State of Himachal Pradesh prior to the subject land being transferred to it.
Thus, even before the amount of compensation could be determined by way of a supplementary award as stipulated in the Award dated 08.06.2018, the subject land stood transferred to JAL - this is in contravention of Section 38 of the 2013 Act and Section 41 of the 1894 Act respectively.
The impugned order dated 12.07.2022 passed by the High Court is set aside - appeal allowed.
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2024 (9) TMI 1314
Validity of notice u/s 148 issued to a deceased assessee - salary income received by the deceased assessee - Responsibility of employer for TDS payments and affect of tax deduction at source on reassessment - HELD THAT:- While dealing with an identical question, this Court in the case of Savita Kapila [2020 (7) TMI 441 - DELHI HIGH COURT] held that the pre-requisite for issuing a notice in the name of the correct person and not in the name of a dead person is sine qua none for acquiring the jurisdiction and initiating action under Section 148 of the Act.
In the present case, the proceedings were not initiated against the assessee when he was alive and after his death, his legal heirs did not step into the shoes of the deceased assessee. The Gujarat High Court in Chandresh Jayantibhai Patel [2019 (1) TMI 353 - GUJARAT HIGH COURT] took the view that there is no statutory provision which casts a duty upon the legal representatives to intimate the factum of death of an assessee to the Income Tax Department. The Court also took note that there may be cases where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity.
Action under Section 147 of the Act cannot be initiated as the impugned notices were issued in the name of a dead person.
As per Section 204 (i) of the Act, in the case of payments of income chargeable under the head “Salaries”, the employer is the person responsible for making payment of tax and Section 205 of the Act provides that where the tax is deductable at the source, assessee shall not be called upon to pay the tax himself to the extent to which the tax has been deducted from that income.
Since the tax has already been deducted on the salary income, as is evident from Form-16, the reassessment action leading to demand of tax cannot be initiated against the assessee or even his legal representatives. Even on account of non-deposit of TDS by the employer, we had in the case of Shantanu Awasthi [2014 (5) TMI 1237 - DELHI HIGH COURT] while relying upon the Office Memorandum of the Central Board of Direct Taxes concluded that there was no justification for the demand being shown as outstanding against the writ petitioner.
The impugned notice u/s 148-A(b), order u/s 148-A(d) and notice u/s 148, both even dated 21.03.2024 cannot be sustained and are set aside. Assessee appeal allowed.
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2024 (9) TMI 1313
Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - HELD THAT:- As decided in latest case recent decision of this Court in Nainraj Enterprises Pvt. Ltd. [2024 (7) TMI 511 - BOMBAY HIGH COURT] relying on Hexaware Technology Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. Decided in favour of assessee.
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2024 (9) TMI 1312
Addition u/s 68 - bogus share application receipts money in the hands of the assessee - assessment solely on the basis of statements of Accomodation entry proviser/sh. Pravin Kumar Jain (a third party, not related to assessee in any manner) recorded during the course of search conducted at his premises
HELD THAT:- As is evident from the record that case of the assessee was reopened solely based on statement of unrelated party which was also later on retracted. Therefore, as such there is no specific information, which could prove that transactions undertaken by the assessee are of the nature of accommodation entries. It is further submitted that during the course of assessment proceedings as well as appellate proceedings assessee submitted necessary evidence regarding receipts of share application money from the above parties before the AO as well as CIT(A).
The documents so submitted for all these investor companies consists of Copy of Share Application form, Copy of Board Resolution, Copy of investor company’s PAN Card, Copy of Bank statement showing the payment by an account payee cheque, Income Tax return of the investor company for the year under consideration and of the previous year, copy of companies master data dated 31.03.2009 and 31.03.2015 as to show that the company are active and copy of confirmation and affidavit of the director of the investor company at the time of reassessment proceeding so as to confirm the investment made by the investor company. All this evidence so filed before the ld. AO has not been controverted including the affidavit of the director of the investor company. These evidences so filed proves the identity, credit worthiness and genuineness of the transaction.
Here it is worthwhile to note that First Proviso to Section 68 wherein addition on account of Share Application Money / Share Capital can be made, stood inserted to the statue book, by Finance Act 2012, w.e.f. 01.04.2013 and therefore that addition made by ld. AO on account of Share Application Money u/s 68 for the year under consideration is not in accordance with law and it is made without considering the provision of law stood related to the year under consideration.
Thus, for the year under consideration from the perusal of section 68, it is evident that assessing officer can make addition u/s 68 only under two circumstances, i.e.:
(iii) Appellant does not offer any explanation about nature and source of such credit or
(iv) Explanation offered by Appellant is not upto the satisfaction of Ld. AO.
Here in this case as we note that the assessee provided the explanation and when the assessee provides explanation, before rejecting the same ld. AO has to record dissatisfaction as to why the explanation furnished by the assessee is not acceptable.
CIT(A) has merely based on the statement of Shri Praveen Kumar Jain confirmed the addition. Without dealing with the provision of law and evidences provided by the assessee.
Addition made by the ld. AO and sustained by the ld. CIT(A) is without appreciating the provision of law prevailing and the evidence placed on record by the assessee. We get support of our view from the decision of apex court in the case of M/s Lovely Exports Pvt. Ltd. [2008 (1) TMI 575 - SC ORDER]
Assessee has not only given the names and addresses of the shareholders but has also given their PANs. Further assessee to prove genuineness of the transaction also submitted the Share Application form, Board Resolution, ITR’s, Confirmation and Affidavit from investors.
On the above facts, the decision of the Hon’ble Apex Court in the case of CIT V/s. Lovely Exports (P) Ltd. [2008 (1) TMI 575 - SC ORDER] as well as Venkateshwar Ispat (P) Ltd. [2009 (5) TMI 290 - CHHATTISGARH HIGH COURT] are squarely applicable as the assessee has filed the necessary confirmation and other particulars of shareholders and incidentally all the subscribers are Private Limited Companies and the appellant had received the application money through banking channel. Appeal of the assessee is allowed.
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2024 (9) TMI 1311
Revision u/s 263 - as per CIT AO's orders were erroneous and prejudicial to the interests of the revenue due to the alleged failure to properly inquire into the credit entries in the bank accounts - HELD THAT:- As demonstrated in the proceedings, the AO had already addressed these concerns during the reassessment and therefore he had duly considered all the relevant facts such as explanation of credit entries in the bank account, while framing the assessment order. Thus, there is no material evidence or substantial grounds to suggest that the assessment order was either erroneous or prejudicial to the interest of the Revenue.
As a settled law that for an order to be revised u/s 263, it must be demonstrated that the assessment order suffers from a legal infirmity or factual error leading to a loss of revenue. In the present case, the AO has made a detailed inquiry into all the issues as specifically pointed out by PCIT, and the conclusions drawn by the AO are supported by evidence. Therefore, the assessment order cannot be said to be erroneous in so far as it is prejudicial to the interests of the Revenue. Consequently, the revisionary powers u/s 263 are not required to be exercised in the instant case. Appeals filed by assessee are allowed.
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2024 (9) TMI 1310
Exemption u/s 11 - Violation of Section 13(1)(d) regarding excess payment to sister trust - Disallowance of honorarium paid to Ms. Meenakshi Sundaraja - HELD THAT:- As noted that the Trust has been formed on 01.02.1961 which is before the commencement of the Income Tax Act, 1961. As per clause 36 to 41 of the Memorandum of Association of the assessee trust, Ms.Meenakshi Sundararajan is entitled for honorarium in rendering services to the benefits of the assessee society. According to the Ld. AR the payment paid was towards medical expenses of the spouse of the Trustee, who was also employee of the organization until his death.
This issue of payment of honorarium has already been allowed in favour of the assessee in the Tribunal in its decision in [2018 (8) TMI 643 - ITAT CHENNAI], which has not been further challenged by the Revenue. Respectfully following the decision of this tribunal, we do not find any infirmity in the order of the Ld.CIT(A) and hence the ground of the Revenue is dismissed.
Payment of loan to M/s.Ganapathy Educational Trust(GET) - As noted that the recipient Trust is also into charitable and education Trust. According the ld.AR the payment of loan of Rs. 70,25,780/- has not been claimed by the assessee as application of fund of the income of the society. Assessee Trust has paid this loan amount for the purpose of construction of the college building by the sister concern which is also carrying on the similar objects.
As noted that loan amount has been paid by the assessee Trust during the Financial years 2003 – 2005 towards construction of the college building. It is pertinent to note that the sister concern had given loan to the assessee Trust to the tune of Rs. 3.12 crores as on 31/03/2004 and later on the assessee trust repaid the same along with excess amount which has been shown as loan receivable in the audited financials of the Trust. The assessee Trust has furnished all the details invoices, payments particulars for amounts paid to the contractors M/s.L & T, who built the college building of the sister concern M/s.GET, before the AO for verification, in pursuance of the directions of the Honourable High Court of Madras.
Payments made to other charitable trust as loan does not violate the provisions of Section 13(1)(c) - Decided in favour of assessee.
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2024 (9) TMI 1309
Revision u/s 263 - VAT on sale of liquor is levied exclusively on the assessee and provisions under section 40(a)(iib) of the Act is violated - HELD THAT:- The facts and circumstances of the case are similar to AY 2014-15 [2022 (11) TMI 990 - ITAT CHENNAI] and 2015-16 [2024 (1) TMI 1316 - ITAT CHENNAI] in assessee’s own case, wherein, it was held that VAT payment would not attract the provisions of section 40(a)(iib) - Thus, following the same, we hold that the order of the ld. PCIT in setting aside the assessment order u/s 143(3) r.w.s. 143(3A) & 143(3B) is erroneous and prejudicial to the interest of Revenue, is not justified. Therefore, the grounds raised by the assessee in seeking to quash the order passed by the ld. PCIT under section 263 of the Act are allowed. Assessee appeal allowed.
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2024 (9) TMI 1308
Rejection of application for grant of registration u/s 10(23C)(vi) on unaudited accounts - As argued as per the applicable statutes, the audited clause applied on the assessee university only after three years of existence - HELD THAT:- As in the present case as the assessee was unable to furnish necessary information or explanation before the CIT(E). The order of rejection passed by CIT(E), wherein elaborate discussion was made regarding the failure of the assessee in submitting the information and supporting documents towards the response of various queries.
Before us also AR has submitted that the accounts of the assessee university are not required to be audited as per applicable statute, the audit clause applied only after 3 years of existence, however, such contention have not been established with any supporting evidence. Even the audit clause no. 48(1) of the relevant statute does not state that the audit should be done after 3 years of the existence. It is also the contention of the AR that audit for FY 2020-21 was not carried out for the reason that the assessee institution was notified under the audit list on 13.12.2022 by whereas on perusal of records, it is revealed that the books of the assessee for completed FY 2021-22 were got audited on 30.09.2022 i.e., before the date of aforesaid notification dated 13.12.2022, however, the audit of FY 2020-21 was not carried out, therefore, such contention that the audit was not conducted on account of assessee’s non-inclusion in the audit list is found to be untenable and incomprehensible.
Regarding vehicle expenses also no plausible explanation or supporting evidence could be furnished before us, rather the vouchers shown to us which were debited under the said head are found to be irrelevant for which Ld. AR had tried to explain that there was a mistake in booking the said expenses under proper head of account and genuineness of such expenses should not be doubted.
For examination expenses AR contention that these are confidential expenses and relevant information was shown to the ITO-Exemption, Bilaspur at the time of physical verification was found to be bereft of any supporting evidence, thus, the observations of CIT(E), that the assessee failed to provide relevant detailed and explanations on the above-mentioned points could not be reasonably refuted. Further, no corroborative evidence such as any letter / request showing purpose from the donee qua the donation offered by various teachers and professors for the purpose of honouring gold medallist students could be furnished before the Ld. CIT(E) and so before us.
Respectfully following the principle of law laid down in the case of New Noble Education Society [2022 (10) TMI 855 - SUPREME COURT] we do not find any infirmity in the order of Ld. CIT(E), so as to interfere with the same - Decided against assessee.
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2024 (9) TMI 1307
Validity of assessment order passed without issue of notice u/s 143(2) - HELD THAT:- As perused the assessment order and we do not find any mention of the issue of notice u/s 143(2) - It is also proved that if the fact of issue of notice under Section u/s 143(2) is not mentioned in the assessment order it cannot be said that no notices has been issued u/s 143(2) of the Act.
Therefore, as this was also the argument of the learned Departmental Representative, we granted time for 7 day to submit whether any such notice is issued or not. However till to date no such communication is received. Thus, we do not have any option but to hold that notices u/s 143 (2) of the Act is not issued. Still, later on if it is found that such notices were issued in time, necessary application of recall of this order , may be made in time.
Thus, if no notice u/s 143(2) of the Act is issued in reassessment proceedings, the reassessment order cannot be sustained. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1306
The Supreme Court of India, comprising Hon'ble Ms. Justice Bela M. Trivedi and Hon'ble Mr. Justice Satish Chandra Sharma, dismissed the Special Leave Petition filed by the petitioner. The Court refused to interfere with the impugned order passed by the High Court. Consequently, the interim order granting exemption from surrendering was vacated, and the petitioner was directed to surrender before the concerned Court within one week.
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2024 (9) TMI 1305
Maintainability of application u/s 9 of the IBC - initiation of CIRP - pre-existing dispute between the parties - whether there existed a ‘pre-existing dispute’ at the time of filing the Section 9 Application, thereby rendering the dismissal of the Application by the Adjudicating Authority proper and valid? - whether the Appeal is maintainable on any other ground? - HELD THAT:- The Appellant had provided the particulars of operational debt for five invoices only for the year 2019 but while producing records of outstanding it has produced ledgers starting from 2016. The Respondent has contested the Appellant’s Application of the FIFO method for adjusting payments, and there is no evidence to suggest that this method was mutually agreed upon. Moreover, the claim in the Section 9 Application concerns five invoices only and not for past invoices. In fact for establishing the payment made, the Respondent has filed the statement of account from the Federal Bank for each of the five invoices from @329 to @379 in the APB, which clearly establish that payment was made without any doubt. The ledger of Operational Creditor/Tamra Dhatu also is very clear from @382 to @384 and establishes that instead Operational Creditor has to pay Rs 75,627/- to the Corporate Debtor. There is no question of any outstanding to be paid by the Corporate Debtor.
This is a case wherein there is a clear case of pre-existing disputes with respect to the quality of goods which was supplied by the Operational Creditor. Therefore, we cannot find any infirmity in the Order of the Adjudicating Authority.
Under Section 9 (5) (ii) (d) of the IBC, an Application for initiation of CIRP by an Operational Creditor must be rejected if a ‘pre-existing dispute’ is shown to exist prior to the issuance of the demand notice. The Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT] held that the dispute need not be a meritorious one but must be real, substantial, and bona fide, and it must predate the demand notice.
The Adjudicating Authority correctly dismissed the Section 9 Application. The Respondent has demonstrated the existence of a pre-existing dispute, as evidenced by the civil suit filed before the demand notice and the ongoing contentions regarding defective goods.
The impugned order is upheld - appeal dismissed.
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2024 (9) TMI 1304
Rejection of application filed by the Appellant - Appellant who is an Operational Creditor can be given any preference over the debt of the unsecured financial creditor or not - difference between unsecured financial creditor and related party unsecured financial creditor u/s Section 53 of IBC - whether Appellant who is an operational creditor has priority in payment in distribution of the liquidation estate of the corporate debtor over the Respondent No.2 who was financial unsecured creditor?
HED THAT:- Section 53(1) provides that liquidation assets shall be distributed in the order of priority as enumerated therein. In the order of priority, financial debts owed to unsecured creditors are at Clause (d). Clause (f) deals with any remaining debts and dues. The operational debt of the Appellant falls under clause (f). Thus, on plain reading of Section 53(1), it is clear that financial debts owed to unsecured creditors ranked higher than debt of operational creditor. The submission which has been advanced by the Counsel for the Appellant to support the appeal is that the Respondent No.2 being related party, he need not be treated under sub-clause (d) rather he has to fall under sub-clause (h) as equity shareholder. The submission of the Appellant is that admittedly Respondent No.2 was ex-director and being related party of the corporate debtor, he cannot claim any preference over the operational creditor who have given services to the corporate debtor and who are entitled for priority in payment.
The Hon’ble Supreme Court in Swiss Ribbon [2019 (1) TMI 1508 - SUPREME COURT] held that there is intelligible differentia between the financial debts and operational debts. The reason for differentiating between financial debt and operational debt was noticed and differentiation was upheld. The BLRC Report has also been quoted by the Hon’ble Supreme Court in paragraph 118 of the judgment. The BLRC Report also highlighted the importance of financial debt and dues of unsecured financial creditor were kept higher than the remaining debts within which operational debt now formed.
Definition of ‘financial debt’ as contained in Section 5(8) does not indicate any exclusion of financial debt which is reflected by any transaction with the corporate debtor by related party. When a financial debt is extended by related party the consequence for such creditor is captured in Section 21. As per Section 21(2), a financial creditor if it is related party of the corporate debtor shall not have any right of representation, participation or voting in a meeting of the CoC. Further by virtue of Section 29A, related party may incur any of the disqualifications under Section 29A.
The judgment in M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder and Anr [2023 (5) TMI 344 - SUPREME COURT] was rendered in context of Section 21 of the IBC which mandates that the related party of corporate debtor is prohibited to be part of CoC. The Hon’ble Supreme Court further held that so long as the provisions of the Code and the CIRP Regulations are met, any proposition of differential payment to different class of creditors in a resolution plan is, ultimately, subject to the commercial wisdom of CoC and no fault can be attached to the resolution plan merely for not making the provisions for related party. Those observations made by the Hon’ble Supreme Court were in context of approval of the Resolution Plan by the CoC in its commercial wisdom and in the said case also, the Hon’ble Supreme Court has not laid down any ratio with respect to distribution under Section 53 in reference to operational creditor and unsecured financial creditor.
The Adjudicating Authority has not committed any error rejecting the application filed by the Appellant. Appellant cannot claim any priority in distribution of assets of the corporate debtor as compared to unsecured financial creditor - Appeal is dismissed.
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2024 (9) TMI 1303
Seeking grant of Regular bail - Money Laundering - scheduled offence - Long incarceration - completion of 3 years and 6 months i. e. half of the punishment - right to speedy trial under Article 21 of the Constitution - HELD THAT:- It is required to be noted that the Supreme Court in the case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] considered the applicability of Section 436A of the Cr. P. C. which is concerning the maximum punishment for which an under trial prisoner can be detained. It has been held that Section 436A of the Cr. P .C. has come into effect on 23.06.2006 and the said provision is the subsequent law enacted by the Parliament and the same will prevail and will apply in spite of rigors of Section 45 of the PMLA Act.
As per the settled legal position whereas at commencement of proceedings, the courts are expected to appreciate the legislative policy against grant of bail as enacted under Section 45 of the PMLA Act but the rigours of such provisions will melt down where there is no likelihood of trial being completed within a reasonable time and the period of incarceration already undergone has exceeded a substantial part of the prescribed sentence - inspite of restrictive statutory provisions like Section 45 of the PMLA Act, the right of the accused undertrial under Article 21 of the Constitution of India cannot be allowed to be infringed. In such a situation, statutory restrictions will not come in the way of the Court to grant bail to protect the fundamental right of the accused under Article 21 of the Constitution of India.
It is also required to be noted that the Applicant is 72 years old and is suffering from cancer.
The Applicant states that as several witnesses are residing in the same locality as that of the Applicant, the Applicant will therefore not reside within District - Pune and that the Applicant will reside at the residence of Mr. Shivajirao Patil, R/o. ‘Vikram’ Bungalow, Chintamani Nagar, Madhavnagar Road, Sangli – 416 416 and will attend the Sanjay Nagar Police Station, Sangli - The Applicant does not appear to be at risk of flight.
The Applicant can be enlarged on bail subject to fulfilment of conditions imposed - bail application allowed.
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