9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 1892 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - allegation that Corporate Debtor committed default in payment - existence of default or not - HELD THAT - A perusal of the Petition, filed by the Corporate Debtor, discloses that it is complete in all respects except filing Special Resolution passed by the shareholders of the Corporate Debtor, as required by Sec. l0(3)(c) of the Code, that came into force with effect from 06.06.2018, by virtue of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 - The material on record further discloses the existence of debt and occurrence of default. The Corporate Applicant also proposed the name of the Insolvency Professional to act as IRP and filed his written communication in Form-2. Whether the Special Resolution passed by the shareholders of the Corporate Debtor as required by Sec. 10(3)(c) of the Code, which came into force with effect from 06.06.2018, is applicable to this petition, filed on 09.05.2018, by the Corporate Applicant u/s.10 or not? - HELD THAT - In the instant case, there is no provision in the Code prior to 06.06.2018 that require a special resolution passed by the shareholders of the Corporate Debtor to trigger Corporate Insolvency Resolution Process by a Corporate Applicant u/s.10 of the IB Code. Such a condition precedent is for the first time introduced by way of Ordinance by replacing the earlier Sec. 10(3) and by substituting Sec. l0(3)(a)(b)(c), which came into force with effect from 06.06.2018 - Therefore, it is not a case where an existing right has been taken away. It is a case where a special condition is made applicable for filing of, Applications by the Corporate Applicants u/s.10 of the IB Code. In the case on hand, the petition is filed on 09.05.2018, much prior to coming into force of amended Sec. 10(3)(c), which came into force on 06.06.2018 - Therefore, it is not just and proper to direct the Corporate Applicant to take the approval of the shareholders by applying the amended Section 10(3)(c) of the Code. But, in the instant case, a condition, which is not there prior to the amendment of Sec. l0(3)(c) of the IB Code, has been introduced by the legislature by way of an Ordinance for the first time with effect from 06.06.2018, such burdensome condition, in my view, cannot be given retrospective operation - There is no provision in the Companies Act which says that a Special Resolution is necessary to sue. A resolution passed by the Board of Directors of the Company is sufficient to sue any person or legal entity except for the purpose of filing winding up petition u/s.271 of the Companies Act, 2013 - The requirement of special resolution is introduced in Sec. 10(3)(c) of the IB Code by way of an ordinance for the first time only with a view to avoid mischief played by the persons that are in control and management of the affairs of the Corporate Debtor against the wish of majority shareholders. The amendment is not clarificatory in nature. It may be said that it is procedural in nature, but it takes away the existing right of the Corporate Debtor to file an Application u/s.10 even without the consent of shareholders. Such amended provision cannot be given retrospective effect - The amended Sec. l0(3)(c) if given retrospective effect on the ground that it is procedural one, it gives rise to a new obligation and impose a new duty on the petitioners that already filed petitions u/s.10 of the Code prior to 06.06.2018. Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code (IB Code). 2. Existence of debt and default. 3. Requirement of a special resolution by shareholders under amended Section 10(3)(c) of the IB Code. 4. Allegations of mala fide intention in filing the petition. 5. Applicability of amendments to procedural laws retrospectively. Issue-wise Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the IB Code: The petition was filed by Supraja Textiles Private Limited (Corporate Debtor) under Section 10 of the IB Code to initiate CIRP. The Board of Directors authorized the Managing Director to file the petition. The petition included the necessary documents to prove the existence of default and the amount in default. 2. Existence of Debt and Default: The Corporate Debtor committed a default in payment amounting to ?16,13,67,283/-. The date of default was 28.12.2016. The Corporate Debtor provided various documents, including Form No. 8 and Certificates of Registration of Charge, to substantiate the existence of debt and default. The State Bank of India (SBI), a Financial Creditor, confirmed the default and classified the loan as a Non-Performing Asset (NPA) on 28.12.2015. Despite several notices, the Corporate Debtor failed to make the necessary payments. 3. Requirement of a Special Resolution by Shareholders under Amended Section 10(3)(c) of the IB Code: The primary issue was whether the special resolution requirement, introduced by the amendment to Section 10(3)(c) effective from 06.06.2018, applied retrospectively to this petition filed on 09.05.2018. The tribunal concluded that the amendment is not clarificatory but introduces a new condition. Therefore, it cannot be given retrospective effect. The special resolution requirement was not applicable to petitions filed before the amendment date. 4. Allegations of Mala Fide Intention in Filing the Petition: SBI alleged that the petition was filed with mala fide intentions to stall proceedings under the SARFAESI Act. However, the tribunal noted that pending recovery proceedings do not bar the initiation of CIRP under the IB Code, which has an overriding effect over other acts, including the SARFAESI Act. 5. Applicability of Amendments to Procedural Laws Retrospectively: The tribunal analyzed precedents, including Supreme Court judgments, to determine the retrospective application of procedural amendments. It was concluded that the amendment to Section 10(3)(c) of the IB Code, which introduced a new requirement (special resolution), could not be applied retrospectively as it imposed a new duty on petitions filed before the amendment date. The tribunal differentiated between procedural amendments that affect existing rights and those that introduce new obligations. Conclusion: The tribunal admitted the petition for initiating CIRP against Supraja Textiles Private Limited. The petition was found to be complete in all respects, except for the special resolution requirement, which was deemed inapplicable retrospectively. The tribunal appointed Mr. Manivannan J as the Interim Resolution Professional and declared a moratorium under Section 13(1)(a) of the IB Code, prohibiting certain actions against the Corporate Debtor as laid down in Section 14 of the Code.
|
