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Insolvency and Bankruptcy - Case Laws
Showing 1 to 20 of 42 Records
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2018 (3) TMI 1966
Maintainability of application - Initiation of CIRP - petition filed by Corporate Debtor u/s 10 of IBC - financial Creditor - Non-performing asset - existence of debt and dispute - HELD THAT:- As per the ‘Preamble’ a practical motive is intended behind the incorporation of this Code. The I&B Code, 2016 was enacted to consolidate and amend the laws relating to reorganization and Insolvency Resolution of Corporate persons, that too in a time bound manner, for maximization of value of assets of a Corporate Debtor. The purpose of CIRP is to promote entrepreneurship, side by side to balance the interest of all stakeholders. A Petition either filed under section 7, under section 9 or under section 10 is to be Admitted to achieve the said goal also to consider the objectives enshrined in the Preamble and the purpose for which this Code came into operation.
Although on the face of such a Petition it appears strange that why a Corporate Body itself is taking step to be declared Insolvent by moving an Application under section 10; but the answer is obvious that sometimes it becomes impossible to run the business due to pressing demand of recovery by the Creditors. It is to be made clear at this moment itself that Section 10 be not used or considered as a scapegoat for the defaulters, or that an exist route be made possible under the guise of Bankruptcy. The procedure of Section 10 is to be applied to facilitate the restructuring of the Stressed Assets as well as to reorganize the finances of a defaulted Company.
Considering the voluminous evidences annexed along with the Application and in the light of the provisions of Section 10 of the Code, it is held that the conditions as prescribed under section 10 of The Code have duly been fulfilled. Since this is a Petition of “Corporate Debtor”, therefore, the Insolvency Process shall commence as prescribed under Section 10 of IBC 2016.
On one hand the existence of Financial Debt as well as Operational Debt is proved, on the other hand the occurrence of “default” is also established. The Corporate Debtor had failed to pay the amounts due and also failed to adhere to or comply with the other terms of Facility agreements. The Financial Debts have been classified as “Non-Performing Asset” in the books of the Financial Creditor. The Petition under consideration therefore deserves “Admission”.
Petition admitted - Moratorium declared.
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2018 (3) TMI 1951
Seeking permission to withdraw the appeal - HELD THAT:- Without going into the ground shown in their affidavit for withdrawal, the Appellant is allowed to withdraw the Appeal, without any liberty to challenge the same very impugned order.
Application allowed.
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2018 (3) TMI 1949
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- In the facts and circumstances of the case, this Bench is satisfied that the petitioner being a Financial Creditor has a claim against the Corporate Debtor which has remained unpaid. Accordingly, the petition merits consideration and is Admitted.
Application admitted - moratorium declared.
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2018 (3) TMI 1945
Recovery during the moratorium period - debit of any amount from Corporate Debtor account during moratorium period - HELD THAT:- The appellant cannot debit any amount from the ‘Corporate Debtor’s account’ after the order of moratorium, as it may amount to recovery amount in spite of the order of moratorium passed by the Adjudicating Authority in violation of Section 14 of the Insolvency and Bankruptcy Code.
Post the matter for further hearing on 26th March, 2018.
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2018 (3) TMI 1939
Application for condonation of delay in filing application - defective appeal was preferred by the Appellant after delay of more than six months on 22nd September, 2017 without any application for condonation of delay - HELD THAT:- It is found that the Appellant has not explained as to what action the Appellant had taken between 15th March, 2017 and 18th August, 2017 i.e. between the day of judgment and the day the application for certified copy was filed.
As per Section 421 of the Companies Act, 2013, if an appeal is preferred under Section 421 of the Companies Act, 2013, the Appellate Tribunal counts the period of limitation from the date on which a copy of the order is made available by the Tribunal in terms of sub-section (3) of Section 421 of the Companies Act, 2013 - the appeal is required to be filed within thirty-days, means within thirty-days from the date of knowledge of the order against which appeal is preferred.
In the present case, as Appellant had knowledge of the impugned order as on the date of pronouncement of the said order i.e. 15th March, 2017. It is not the case of the Appellant that its Lawyer has not informed Company Appeal (AT) (Insolvency) No. 223 of 2017 of the order passed by the Adjudicating Authority - application for condonation of delay being not satisfactory, it is fit to be rejected.
Appeal dismissed.
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2018 (3) TMI 1930
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Existence of debt and dispute or not - HELD THAT:- The Operational Creditor issued Demand Notice dated 06.10.2017 in form No.3 demanding payment of outstanding amount within 10 days from the date of receipt of notice. However, the Corporate Debtor failed to pay the amount due. Further the Bankers of Operational Creditor viz. M/s Kotak Mahindra Bank & HDFC Bank, New Delhi vide their certificates dated 30.10.2017 and 06.11.2017 respectively have certified that they have not vencived the amount from the Corporate Debtor.
Despite several reminders, when the Corporate Debtor failed to make payments, the Operational Creditor filed this company petition, seeking to initiate CIRP against the Corporate Debtor - The Company petition is filed under Section 9 of IBC.
Petition admitted - moratorium declared.
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2018 (3) TMI 1928
Rejection of expression of interest without assigning any reason - principles of natural justice - HELD THAT:- At the time of hearing it is brought to my notice a letter issued by the State Bank of India stating that no amount is due from the resolution applicant and in the above circumstances the resolution applicant is not at all a defaulter within the meaning of Section 29A of the amended Code.
The resolution applicant is hereby directed to submit all the required documents before the Resolution Professional in order to ascertain whether the resolution applicant comes under the purview of Section 29A and submit all the Resolution Plans as per Section 25(i) of the Insolvency and Bankruptcy Code. 2016 before the Committee of Creditors for its consideration. It is made clear that rejection or approval of a Resolution Plan is the right of the Committee Of Creditors and Resolution Professional cannot reject any Plan without a decision of Committee of Creditors.
For further hearing, if any, list it on 15/03/2018.
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2018 (3) TMI 1913
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial debt - non-performing asset - Corporate Applicant has filed the application - HELD THAT:- The I and B Code, 2016 was enacted to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, that too in a time bound manner, for maximization of value of assets of a corporate debtor. The purpose of CIRP is to promote entrepreneurship, side by side to balance the interest of all stakeholders. A petition either filed under section 7, under section 9 or under section 10 is to be admitted to achieve the said goal also to consider the objectives enshrined in the Preamble and the purpose for which this Code came into operation - The hon'ble court has not directed the respondent restraining to take due recourse provided under any provision of law so that the liability of the petitioner GTL be secured, if possible, along with other stakeholders. Any judicial authority shall encourage such move on the part of the debtor. Filing of the petition under section 10 is a step towards the said direction. As far as the corporate debtor's filing of this petition is concerned, this is not a case that the fact about the order of the hon'ble Delhi Court was concealed.
Considering the voluminous evidences in 8 Volumes annexed along with the application and in the light of the provisions of section 10 of the Code I hereby hold that the conditions as prescribed under section 10 of the Code have duly been fulfilled. Since this is a petition of the "corporate debtor", therefore, the insolvency process shall commence as prescribed under section 10 of the IBC, 2016. On one hand the existence of financial debt as well as operational debt is proved, on the other hand the occurrence of "default" is also established. The corporate debtor had failed to pay the amounts due and also failed to adhere to or comply with the other terms of facility agreements.
The financial debts have been classified as "non-performing asset" in the books of the financial creditor. The petition under consideration therefore deserves "admission".
Petition admitted - moratorium declared.
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2018 (3) TMI 1911
Initiation of liquidation proceedings on property belonging to Smt. Saroj Singhania, which was also ‘mortgaged’ to the Bank under the same Loan Agreement on the basis of which the Financial Debt in question - Insolvency Proceedings commenced against the Corporate Debtor - HELD THAT:- There was no confusion for initiation of Liquidation Proceedings for IRP who is now to be termed as “Liquidator”. However, a question was raised that whether the process of Liquidation can also be initiated against a property belonging to Smt. Saroj Singhania. On enquiry it was affirmed by the RP and the Bank Authorities that the property belonging to Smt. Saroj Singhania was also ‘mortgaged’ to the Bank under the same Loan Agreement on the basis of which the Financial Debt in question was sanctioned. It is, therefore, explained that since the property belonging to Smt. Singhania had already been mortgaged, therefore, to realize the Debt amount the said property is also to be liquidated. One more reason is that the total realizable value is about ₹ 4,68,15,000/- + ₹ 12,90,00,000/- totalling to ₹ 17,58,15,000/- if both the properties are liquidated. Otherwise, the realizable value of the Corporate Debtor is only ₹ 4,68,15,000/- against the Debt of ₹ 41,38,06,010/-. If the amount of ₹ 4,68,15,000/- is to be received then the Banks shall have a very high haircut by sacrificing about 89% of the Debt in question and the recovered amount shall be only 11% of the total Debt. Therefore, to avoid such high percentage of sacrifice, it is necessary to take a decision in favour of the Financial Creditor to initiate Liquidation Proceedings against a Guarantor as well who had mortgaged the property and on that Guarantee the Loan in question was granted. The Debt in question is intricately linked with the property mortgaged hence cannot be segregated in the process of Liquidation proceedings. Therefore, it is hereby authorized that the Liquidator shall take necessary steps to liquidate the asset of Smt. Saroj Singhania, for which a Valuation Report is already on record.
This decision is taken on the basis of one of the Sections as prescribed under the I&B Code i.e. Section 60(2) which prescribes that where a Corporate Insolvency Resolution Process or Liquidation Process of a Corporate Debtor is pending before NLCT, an Application relating to the Insolvency Resolution or Bankruptcy of a “Personal Guarantor” of such “Corporate Debtor” shall be filed before such NCLT. A clarification can also be inserted at this juncture that the Resolution Process is distinct from Liquidation Process.
The Resolution Professional is hereby appointed as a “Liquidator” to proceed with the Liquidation Process - Application disposed off.
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2018 (3) TMI 1909
Permission for withdrawal of petition - Service of Demand notice - demand notice was not sent by the learned counsel with prior authorisation - also original documents have not been properly annexed - HELD THAT:- The petitioner-operational creditor is permitted to withdraw the instant petition with liberty to file fresh petition with better particulars on the same cause of action.
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2018 (3) TMI 1890
Maintainability of appeal - two suits pending is with regard to the money claim - HELD THAT:- We do not accept the submission made on behalf of the appellant as it is clear from the provisions of the law that where a suit or arbitration proceedings is pending between the parties and such matter is brought to the notice of the Adjudicating Authority, the Authority is bound to reject the application.
Appeal dismissed.
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2018 (3) TMI 1889
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - suit between the parties was pending since prior to issuance of demand notice under sub-section (1) of Section 8 of the 'I & B Code' - HELD THAT:- As, admittedly the suit between the parties was pending before the date on which demand notice was issued under sub-section (1) of Section 8 of the 'I & B Code' and was also pending when the application under Section 9 of the 'I & B Code' was admitted, application under section 9 of the 'I & B Code' was not maintainable.
The order dated 30th August, 2017 passed by Adjudicating Authority, Bengaluru Bench is set aside and the appeal is allowed.
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2018 (3) TMI 1854
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of dispute or not - HELD THAT:- It is established that the Corporate Debtor has defaulted in making payment of the outstanding debt. The Financial Creditor has fulfilled all the requirements of law and has also proposed the name of IRP after obtaining the written consent in Form-2. Therefore, is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed.
Application admitted - moratorium declared.
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2018 (3) TMI 1829
CIRP Proceedings - pendency of Winding up proceedings - Appellant submitted that ‘I&B Code’ is a complete Code by itself and Section 238 of the ‘I&B Code’ will override the other provisions, including the winding up proceedings initiated under Section 433 of the Companies Act, 1956 - whether even after initiation of winding up proceedings, it is open to the Adjudicating Authority to restore the Company to its first stage of Resolution Process and on failure to order final stage of liquidation?
HELD THAT:- Similar issue decided in the case of INNOVENTIVE INDUSTRIES LIMITED VERSUS KUMAR MOTORS PRIVATE LIMITED [2018 (2) TMI 1736 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL] where it was held that as admittedly the High Court has already admitted the winding up proceedings and ordered for winding-up of the Respondent-‘Corporate Debtor’, we hold that the question of initiation of ‘Corporate Insolvency Resolution Process’ against same ‘Corporate Debtor’ does not arise.
There are no merit in this appeal - appeal dismissed.
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2018 (3) TMI 1819
Maintainability of petition - initiation of CIRP - Corporate Debtor unable to make repayment - existence of debt and default - HELD THAT:- This Bench is of the view that the corporate debtor has committed default and the petition contains the particulars as required u/S 10 Of the Code.
Having satisfied with the Corporate Debtor could not pay/discharge its debt to the abovesaid Financial Creditors and having satisfied with the proposed IRP is also eligible to act as Interim Resolution Professional in the instant case, accordingly, Adjudicating Authority admits the Application for initiation of CIRP under Section 10 of the Code and also imposes the moratorium - petition admitted - moratorium declared.
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2018 (3) TMI 1812
Maintainability of application - initiation of CIRP - Suspension of trading on the Applicant Exchange’s platform - existence of debt or not - claim related to sister concern - HELD THAT:- It is distinct and noticeable from the pleadings and evidences from both the sides that the claim is not pertaining to the Corporate Debtor but it is related to a sister concern of the Corporate Debtor viz. P.D. Agro Processors Ltd. Though the whole business conducted by the sister concern is in favour of the Corporate Debtor, as contended by the Applicant, there is no authenticating documentary evidence to prove that the Corporate Debtor is legally liable for the payment of outstanding dues arising out of the business transactions made between P.D. Agro and the Applicant herein.
It is necessary for a claimant to place on record that there was existence of debt due to the said Operational Creditor to be claimed against the Corporate Debtor. There should be a direct nexus between Operational Creditor and the Corporate Debtor. It is to be established by the Operational Creditor through records available or other relevant documents such as contract agreement, service agreement with Corporate Debtor or any invoice or any Court of Order or Financial Accounts. Even Form-B prescribe for lodgement of claim requires details of mutual credit or mutual debts or mutual dealings between the Corporate Debtor and the creditor. A third party is not entitled to lodge its claim even indirectly through a sister concern.
Application dismissed.
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2018 (3) TMI 1783
Approval of the scheme of arrangement - HELD THAT:- In the present instance, disputes have arisen between the Petitioner Companies on the one hand and DOT on the other which are pending adjudication before various courts and it is for these courts to give directions, including any interim ordeRs. However the same cannot be a factor to deny the merger of the companies with each other as contemplated under the Scheme of Amalgamation for which sanction is sought for. However, in relation to Spectrum License and the like for which the Licensor is DOT, it is for the Licensing Authority to see whether both the companies abide by the guidelines including the guidelines prescribed for merger of two companies holding licenses granted by DOT and this Tribunal cannot enter into the same it being in exclusive domain Of the Licensing Authority. In case of any denial of merger of the licenses consequent upon the sanction of the Scheme it is for the Petitioner to seek appropriate remedy available to it under law against DOT.
The approval of this Tribunal is conditional upon the requisite sanction and approval in accordance with the prescribed guidelines for transfer/ merger of various categories Of Telecommunication service Licenses/ authorization under Unified License (UL) on compromise/ arrangement and amalgamation of Companies by DOT which goes without saying and both the parties (i.e) the Companies or DOT will not be prevented from exercising their rights under due process of law and remedies as may be available to them in case of any grievance before the appropriate Tribunal or forum meant for the same in relation to the acts of each other.
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2018 (3) TMI 1778
Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - corporate debtor - default in repayment of huge outstanding amount - main contention of the respondent is that the Applicant is guilty of suppression of material facts documents and information and that there is no amount due and payable by responded company to applicant bank because a serious fraud has been committed by the applicant bank - HELD THAT:- Section 7 application filed under the Code is an independent proceeding, which has nothing to do with the pendency of criminal or civil proceedings. Misappropriation of funds by CFO of the respondent company and by employees of bank, if any, has to be dealt with separately. Pendency of investigation and civil suit, in the absence of specific stay order, cannot be construed as a valid defense against triggering of Corporate Insolvency Resolution Process under the provisions of the Code. Insolvency and Bankruptcy Code, 2016 is a special law having an overriding effect on any other law as mandated under Section 238 of the Code. The statutory rights of the applicant bank satisfying the requirements of Section 7 of the Code to trigger Corporate Insolvency Resolution Process cannot be defeated on the ground of pendency of adjudication pertaining to misappropriation of funds.
Once there is a debt and default, the Adjudicating Authority has no option but to admit the application filed under Section 7 of the Code, when it is complete. It is also settled law that facts which are not required to be disclosed as per the prescribed format, cannot be treated as suppression of facts.
Application is admitted - moratorium in terms of Section 14 of the Code declared.
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2018 (3) TMI 1768
Jurisdiction - modification of ‘resolution plan’ once approved by the Committee of Creditors - HELD THAT:- Learned counsel for the appellant submits that the Adjudicating Authority has no jurisdiction to modify the ‘resolution plan’ once approved by the Committee of Creditors. However, if such submission is accepted in that case then only recourse will be available to the Adjudicating Authority is to reject the resolution plan, being not satisfied with the resolution plan.
The appellant submits that the appellant does not want liquidation of the corporate debtor. In this regard, while we are not expressing any opinion, give liberty to the appellant to withdraw the resolution plan, if it is not satisfied with the amendment made therein. In such case the Adjudicating Authority will allow the same and proceed with the liquidation.
The appeal is disposed of with the aforesaid liberty.
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2018 (3) TMI 1697
Extension of period of Corporate Insolvency Resolution Process - Held that:- Vide resolution taken in the COC meeting dated 06/03/2018, COC has taken a unanimous decision for extension of time period of CIRP by 90 days so as to successful completion of CIRP process, Being satisfied that the resolution has been taken unanimously by the COC as per Section 12(2) of the Insolvency and Bankruptcy Code, 2016 and the duration of CIRP beyond 180 days is to be granted - the duration of CIRP extended by 90 days beyond 180 days w.e.f. 18/03/2018 - For further progress report list it on 02/05/2018.
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