Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2021 (12) TMI AT This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2021 (12) TMI 244 - AT - Insolvency and Bankruptcy


Issues Involved:
1. Opportunity to file additional written submissions.
2. Scope of Corporate Insolvency Resolution Process (CIRP) for specific projects.
3. Adjudicating Authority’s permission for amending Section 7 application.
4. Authority and locus standi of applicants to file Section 7 application.
5. Adherence to principles of natural justice.
6. Validity of claims and defaults by the Corporate Debtor.
7. Rights of debenture holders versus debenture trustees in filing CIRP applications.

Issue-wise Detailed Analysis:

1. Opportunity to File Additional Written Submissions:
The Appellant argued that the Adjudicating Authority passed the impugned order dated 12.08.2021 without providing an opportunity to file additional written submissions, countermanding its own order dated 29.07.2021. The Appellant contended that this violated the principles of natural justice. However, the Tribunal noted that the Corporate Debtor had already filed written submissions on 08.12.2020 and that the additional submissions did not contain substantial new grounds.

2. Scope of CIRP for Specific Projects:
The Appellant contended that CIRP should be confined to specific projects funded by the 2nd and 3rd Respondents, namely GVSPL Raksha and GVSPL Green Park, as per the Appellate Tribunal’s order on 04.02.2020 in the Flat Buyers Association Winter Hills-77 Gurgaon case. The Tribunal held that the said order was case-specific and based on a settlement, thus not applicable to the present case. The Tribunal emphasized that CIRP is for the company as a whole, not for individual projects.

3. Adjudicating Authority’s Permission for Amending Section 7 Application:
The Appellant argued that the Adjudicating Authority allowed the amendment of the Section 7 application after 485 days, which was in breach of Section 7 of the I&B Code. The Tribunal noted that the time limit for ascertaining default and rectifying defects is directory, not mandatory, as per the Supreme Court’s decision in Surendra Trading Co V. Juggilal Kamlapat Jute Mills Co Ltd.

4. Authority and Locus Standi of Applicants to File Section 7 Application:
The Appellant contended that only the Debenture Trustee had the authority to file the Section 7 application, not the 2nd and 3rd Respondents. The Tribunal rejected this argument, stating that the Debenture Holders, being financial creditors, have the right to file the application under the I&B Code. The Tribunal emphasized that 100% of the Debenture Holders had filed the application, and their rights were not restricted by the Debenture Trust Deed.

5. Adherence to Principles of Natural Justice:
The Appellant claimed that the principles of natural justice were violated as the Corporate Debtor was not given an opportunity to file additional written submissions. The Tribunal found that the Corporate Debtor had already filed written submissions and that the additional submissions did not introduce any substantial new grounds. Therefore, there was no violation of natural justice.

6. Validity of Claims and Defaults by the Corporate Debtor:
The Tribunal confirmed the existence of financial debt and default by the Corporate Debtor. It noted that the Corporate Debtor had created various securities in favor of the 2nd and 3rd Respondents to secure the repayment of the debt. The Tribunal held that the debt was undisputed and payable both in law and in fact.

7. Rights of Debenture Holders versus Debenture Trustees in Filing CIRP Applications:
The Tribunal held that Debenture Holders have the right to file a CIRP application without the Debenture Trustee. The Debenture Trust Deed did not restrict the rights of the Debenture Holders to act independently. The Tribunal emphasized that the 2nd and 3rd Respondents, being 100% Debenture Holders, had a valid and legal right to file the Section 7 application.

Disposition:
The Tribunal dismissed the Company Appeal (AT)(CH)(Ins) No.217/2021, finding no merit in the Appellant's arguments. The impugned order dated 12.08.2021 by the Adjudicating Authority was upheld as free from legal infirmities. The appeal was dismissed with no costs, and I.A. No. 437 of 2021 was closed.

 

 

 

 

Quick Updates:Latest Updates