2022 (7) TMI 93 - Tri - Insolvency and Bankruptcy

Application seeking exit from an agreement entered into with the Corporate Debtor by the Applicant prior to the initiation of CIRP - HELD THAT - Admittedly, CIRP proceedings were initiated and moratorium was declared against the Corporate Debtor on 19.02.2020. Further, a Resolution Plan has been approved by the CoC and the I.A. filed by the Resolution Professional seeking approval of the said Resolution Plan from this Adjudicating Authority was heard and orders were reserved therein. At this stage, no orders can be passed in the instant Application seeking exit from an agreement entered into with the Corporate Debtor by the Applicant prior to the initiation of CIRP. Moreover, this Adjudicating Authority in its summary adjudication cannot adjudicate the rights and obligations of a Joint Venture Agreement and can give any conclusive finding. Application dismissed.

Summary

Issues:
Application filed under Section 60(5) of the IBC seeking exit from a Joint Venture Agreement with a Corporate Debtor.

Detailed Analysis:

Issue 1: Relief sought by the Applicant
The Applicant sought relief to exit the Joint Venture Company by transferring or purchasing 5,00,000 shares at a nominal value, exercising the Put Option under the JV Agreement. The Applicant invested significantly in the JV Company but faced difficulties due to the Corporate Debtor's failure to operationalize the company.

Issue 2: Background of the JV Agreement
The JV Agreement was entered into on September 1, 2015, with the Corporate Debtor holding 51% and the Applicant holding 49% shareholding in the JV Company. The Applicant invested Rs. 3,20,00,000 in Equity Shares and provided loans to the JV Company, which were not repaid.

Issue 3: Negotiations and CIRP proceedings
Negotiations in 2019 and early 2020 led to an agreement for the Applicant's exit from the JV Company, but CIRP proceedings initiated against the Corporate Debtor in February 2020 hindered the exit process. The Respondent highlighted claims against the Applicant, leading to a dispute regarding the exit from the JV Agreement.

Issue 4: Tribunal's Decision
The Tribunal dismissed the Application as no orders could be passed during the moratorium period under CIRP. The Tribunal clarified that it cannot adjudicate the rights and obligations of a Joint Venture Agreement during summary adjudication. However, the Applicant was not precluded from pursuing its rights against the Corporate Debtor post-moratorium, upon approval of the Resolution Plan.

In conclusion, the Tribunal dismissed the Application seeking exit from the JV Agreement due to the ongoing CIRP proceedings and moratorium. The Applicant was allowed to pursue its rights against the Corporate Debtor post-moratorium and Resolution Plan approval.