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2022 (7) TMI 659 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - the Corporate Debtor had to make payment to the Operational Creditor for supply of the goods subject matter of this case, which was to be made in USD - Operational Creditors - HELD THAT - Since it appears to be beyond the control of the Corporate Debtor to make the payment to the Operational Creditor in US Dollar, in spite of the fact that the Corporate Debtor approached the Hon ble High Court and the Hon ble High Court issued certain directions to the Reserve Bank of India, this appears to be a case which has to be considered by the Reserve Bank of India, following the directions of the Hon ble High Court. It is granted that the amount of interest bearing FDR as proposed by the Corporate Debtor itself through their counsel will be deposited and shall remain deposited in FDR because if and when the Reserve Bank of India grants necessary permission to remit the said foreign currency to the Operational Creditor, the said amount would immediately be utilized for the said purpose because it is an admitted liability which has to be liquidated as soon as the permission of Reserve Bank of India is granted. The Corporate Debtor is directed to make a deposit of the approximate conversion of USD in Indian Rupees and place the same with the Registry of this Court, within 60 days from this order - application disposed off.
Issues Involved:
1. Recall of the order dated 30th August 2021. 2. Jurisdiction and authority of the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. 3. Compliance with Reserve Bank of India (RBI) regulations for foreign remittance. 4. Adherence to the principles of natural justice and statutory provisions. 5. Impact of the RBI's non-approval on the Corporate Debtor's ability to make payments. 6. Legal implications of the settlement agreement and consent terms. 7. Directions from the Hon'ble Calcutta High Court regarding RBI's approval. Issue-Wise Detailed Analysis: 1. Recall of the order dated 30th August 2021: The Corporate Debtor filed an application to recall the order dated 30th August 2021, which directed the Corporate Debtor to deposit the Indian rupee equivalent of USD 621348.05 in a fixed deposit. The Corporate Debtor contended that the order was passed without its consent and exceeded the jurisdiction of the Adjudicating Authority. 2. Jurisdiction and authority of the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016: The Corporate Debtor argued that the Adjudicating Authority, being a creature of statute, derives its powers from the statute and cannot act contrary thereto. The order to deposit money with the Registry was claimed to be beyond the authority vested in the Adjudicating Authority by the 2016 Code. 3. Compliance with Reserve Bank of India (RBI) regulations for foreign remittance: The Corporate Debtor submitted that it was ready and willing to make the payment to the Operational Creditor, subject to clearance from the RBI. The delay in payment was due to the requirement of RBI's approval for foreign remittance against import dues, which had not yet been granted despite multiple representations and a writ petition filed before the Hon'ble Calcutta High Court. 4. Adherence to the principles of natural justice and statutory provisions: The Corporate Debtor contended that the order dated 30th August 2021 did not consider the principles embodied in the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority was urged to correct the self-evident mistake and pass consequential orders to negate its effect. 5. Impact of the RBI's non-approval on the Corporate Debtor's ability to make payments: The Corporate Debtor highlighted that the non-approval from the RBI was beyond its control and not attributable to any fault on its part. The Corporate Debtor had diligently pursued the matter with its banker and the RBI but had not received the necessary approval for the remittance. 6. Legal implications of the settlement agreement and consent terms: The Corporate Debtor acknowledged the receipt of goods and the liability towards the Operational Creditor. However, the breach of the settlement agreement was unintentional and due to the RBI's non-approval. The Corporate Debtor was financially capable of making the payments and had always been ready and willing to perform its obligations under the consent terms. 7. Directions from the Hon'ble Calcutta High Court regarding RBI's approval: The Hon'ble Calcutta High Court directed the RBI to consider the Corporate Debtor's representation for permission for delayed foreign remittance within one month. This direction was to be followed by the RBI, and the Adjudicating Authority took note of this while considering the recall application. Conclusion: The Adjudicating Authority concluded that the order dated 30th August 2021 could not be recalled but could be modified. The Corporate Debtor was directed to deposit the approximate conversion of USD in Indian Rupees with the Registry within 60 days. The unusual situation, where the default was not due to the Corporate Debtor's fault but due to the RBI's non-approval, prevented the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor. The I.A (IBC) No.1056/KB/2021 was disposed of, and certified copies of the order were to be issued to all concerned parties upon compliance with requisite formalities. The order was signed on the 12th day of July, 2022.
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