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IBC - Case Laws
Showing 101 to 120 of 9149 Records
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2024 (10) TMI 827
Violation of principles of natural justice - it is argued that the impugned order is non- speaking and arbitrary as the Appellants have not been given fair opportunity to present their case - maintainability of combined application under Sections 43, 45, 66 of IBC - transaction audit report was not made available to the Appellant - HELD THAT:- It is not in dispute that total claim admitted in the resolution plan was Rs. 2351.97 Lakhs including claim of the financial creditors of Rs. 2277.80 Lakh and claim of the Operational Creditor of Rs.74.17 Lakhs. It is also not in dispute that the CoC in its second meeting held on 14.02.2020 appointed AKG & Associates for carrying out the transaction audit for the period from 01.04.2017 to 04.12.2019 (CIRP Commencement date) and it is not in dispute either that the transaction auditor presented their final report in the 3rd CoC meeting held on 15.05.2020 and report was shared with the present Appellants. There is no objection raised to the final report by the Appellants submitted to the CoC.
The RP then filed the application under Sections 25(2)(j), 43, 45, 66 and 235A of the Code in which the details of the preferential, undervalued and fraudulent transactions were given under separate heads. The application had to be filed because of the aforesaid transactions the total admitted claim of Rs. 2351.97 Lakh of the creditors became unrecoverable. The RP also gave the summary of avoidance transactions in which preferential was of Rs.502.46 Lakh, undervalued was of Rs. 1721.19 Lakh and Fraudulent was of Rs. 2384.32 Lakh.
The present Appellants, who are arrayed as Respondent No.1 and 2 in the application bearing 2445 of 2020, did not choose to appear at the first instance despite service but later on they were allowed to appear by the Court and also allowed to file their reply to the application but they did not choose to file the reply either and as a result thereof, their right to file reply after giving appropriate opportunities was closed and the said order remained unchallenged at the instance of the Respondents (Appellants herein).
In such circumstances at this stage, it does not lie in the mouth of the Appellants to make a complaint that they have not been heard or take the shelter of the principle of natural justice when they themselves are to be blamed for the lapse and negligence on their part in not even filing the reply.
The decision in the case of GVR Consulting Services Pvt. Ltd. [2023 (4) TMI 1137 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] is very much applicable to the present facts and circumstances of the case because the application has been filed giving details under separate heads of the preferential, undervalued and fraudulent transactions determined by the Appellants.
There are no merit in the present appeal and the same is hereby dismissed.
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2024 (10) TMI 826
Dismissal of application filed by the Appellant, under Rule 11 of the NCLT Rules, 2016 for revival of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - seeking revival on the ground that Corporate Debtor has failed to abide by the terms of the settlement - failure of the Interim Resolution Professional (IRP) to disclose claims - HELD THAT:- The admitted facts of this case are that the application under Section 12A was filed by the IRP at the instance of the OC. It is also an admitted fact that the Adjudicating Authority allowed the application bearing 6271 of 2022 after confirming from the IRP that he has not received any claim from any claimant and no claim is outstanding. The IRP has also confirmed that he has not constituted the CoC till date whereas it is also a fact that the last date for the submission of claim was 23.12.2022 and the claim was submitted by the Appellant on 21.12.2022 and the order was passed on 22.12.2022 on the application bearing 6271 of 2022.
There is not even an iota of a doubt that the Adjudicating Authority has been grossly misled by the IRP at the time when the order was passed on 22.12.2022 but instead of rectifying its mistake and or to undo the injustice caused to the Appellant, the Adjudicating Authority has dismissed the application bearing 226 of 2023 holding that it could not find any justifiable reason to allow the prayer made in the application and rather in the entire impugned order expressed its anguish and dissatisfaction about the working of the IRP and repeatedly cautioned him to be careful while exercise of his functions and discharging his duties.
The filing of application under Section 7 by the Appellant is in no way causes any hindrance in maintaining the present application by the Appellant because the said application has been filed in terms of the order passed in the application bearing 6271 of 2022. If the misrepresentation/concealment of any fact by the IRP to the Adjudicating Authority is considered lightly by relegating the Financial Creditor to any other remedy as it happened in the present case, to take his other remedy in accordance with law then it would be giving a premium to the statutory authority for his lapses and unprofessional act and conduct.
Thus, it is a fit case for interference by this Court in this appeal and thus, the appeal is allowed.
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2024 (10) TMI 729
Approval of resolution plan of the Corporate Debtor - resolution plan did not incorporate the claims of the Appellant - whether the Appellant had shown due diligence in submitting their claim before the IRP/RP and, if not, whether sufficient reasons/grounds exist to admit the belated claim at a time when resolution plan has already been approved by the Adjudicating Authority? - HELD THAT:- In the present case, it is noticed that after the Corporate Debtor was admitted into the rigours of CIRP on 28.01.2022, the Interim Resolution Professional made a Public Announcement on 04.02.2022, in compliance with Sections 13 and 15 of the IBC read with Regulation 6 of CIRP Regulations. The Public Announcement had set 16.02.2022 as the deadline for claim submissions. On 10.02.2022, the RP also informed the Appellant of the CIRP initiation against the Corporate Debtor, a fact which has not been controverted by the Appellant - the Appellant cannot deny that he was unaware that the CIRP process had already commenced and that it was incumbent upon the Appellant to make due endeavours on their part to submit their claims. The RP had also not committed any error in making the Public Announcement in the newspapers. Regulation 6 of the CIRP Regulations only mandates pronouncement through newspapers and not through personal service and therefore the RP was not obligated to inform the Appellant through personal service.
The RP in accordance with the CIRP Regulations had regularly uploaded from time to time the list of creditors of the Corporate Debtor both prior to submission of claim by the Appellant and even after the submission of claim. The status of their claims of the creditors was also put up on the websites of Corporate Debtor as well as the Insolvency and Bankruptcy Board of India (IBBI) portal on several occasions. From the material on record, it is clear that the list of creditors was uploaded five times – on 23.02.2022, 14.04.2022, 06.05.2022, 20.06.2022 and 04.08.2022. On 23.02.2022, the first updated list of creditors was published, indicating the status of claims received on the Corporate Debtor's website and the IBBI portal - The Appellant cannot shift the burden of their own negligence of not checking the website to ascertain the status of their claim. Hence there is no force in the contention of Appellant that they became aware that their claim was rejected only when the impugned order was emailed by the RP.
Whether the RP ever agitated the issue of rejection of their claims? - HELD THAT:- It is clear that even until 180 days of CIRP completion, no objections were raised by the Appellant regarding rejection of their claims. The same position continued even when the resolution plan came up for approval before the Adjudicating Authority. When the RP moved IA No. 899 of 2022 before the Adjudicating Authority seeking approval of the resolution plan, the Adjudicating Authority vide order dated 09.11.2022 directed issue of notice upon the Appellant.
Whether sufficient reasons/grounds exist to admit the belated claim at this stage? - whether such undecided claims can be entertained once the resolution plan is approved by the CoC and the Adjudicating Authority? - HELD THAT:- In the instant case, the facts on record do not show that the RP had acted in contravention of the IBC in rejecting or stalling the filing of belated claims or that he did not show due diligence in performing his duty. Hence the objections of the Appellant to the approval of the resolution plan approval merely on the ground that their claims were rejected lacks merit.
It is also found that the Respondents have contended that the Appellant can claim the status of a Secured Creditor only if the relevant statutory provision provides basis for such a claim - the claim of the Appellant of being a secured creditor lacks force.
The Appeal is devoid of merit - The Appeal is dismissed.
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2024 (10) TMI 728
Applicability of interim moratorium under Section 96 of the Insolvency and Bankruptcy Code (IBC) - sale of partnership firm assets - Seeking restraint on the Respondent in the conduct of auction of sale notices dated 15.12.2023 under SARFAESI Act - whether in the backdrop of Section 95 proceedings under IBC having been initiated against the Appellant in his personal capacity as a personal guarantor, can the Respondent be barred from conducting sale of the ‘subject property’, belonging to a partnership firm (under dissolution), in which the Appellant is a partner, on grounds of operation of moratorium under Section 96 of the IBC in respect of personal guarantee of the Appellant?
HELD THAT:- In the present case, admittedly, White Line Enterprises had filed C.P.(IB)No.10/ND/2024 invoking Section 95 of the IBC against RKC for standing as a personal guarantor for repayment of operational debt owed by M/s Sahil Home Loomtex Pvt Ltd. following which resolution process had commenced. Clearly, therefore, it is the personal guarantee of the Appellant against which the Section 95 has been invoked and not against the property of the partnership firm.
The use of the expression “all the debts” and “any debt” are phrases with a very wide amplitude and it clearly covers debts other than the debt basis which moratorium has commenced. Though encompassing in nature, the moratorium relates only to the specific debt and not to the debtor. In addition, we notice the use of the phraseology of “creditors of the debtor” in Section 96(1)(b)(ii) which obviously refers to other creditors of the debtor apart from the creditor on whose application interim moratorium has commenced. Thus, the interim moratorium under Section 96(1)(b)(ii) creates a prohibition on the other creditors of the debtor from initiating any legal action in respect of the debt for which Section 95 has been initiated.
In the present facts of the case, the moratorium imposed under Section 96 of IBC would apply only to the security interest created by the Appellant under the personal guarantee in his capacity as a personal guarantor with respect to default of operational debt qua White Line Enterprises. Merely because the Appellant claims to be an erstwhile partner of partnership firm-Sheetal Exports whose dissolution has been purportedly triggered by the Appellant, the interim moratorium would not cover the subject property against which SARFAESI proceedings have been initiated by the Respondent - It is well settled that Section 238 of IBC bestows on IBC the priority over other laws. Section 238 of IBC provides that the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
In the present case, interim moratorium has come into play only with respect to the personal guarantee of the Appellant as personal guarantor and not of the partnership firm, we find no good grounds for the Adjudicating Authority to have entertained the application of the Appellant to withdraw the notice issued under Rule 8(6) of Security Interest (Enforcement Rules) and restrain the Respondent from taking further action on these notices with respect to subject property having been put to auction.
There are no cogent grounds to interfere with the impugned order - appeal dismissed.
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2024 (10) TMI 727
Assignment of debt - Refusal to acknowledge the assignment of debt from Rolta Private Limited to Peanence Commercial Private Limited - Rolta Private Limited being a related party has not been given a berth in the CoC - HELD THAT:- From the facts as noticed above, it is clear that the entire claim filed by Rolta Private Limited, a related party of the Corporate Debtor, has been admitted in the CIRP. The Rolta Private Limited, however, being a related party has not been given a berth in the CoC. The copy of the Assignment Agreement dated 15.01.2024 has been brought on the record.
Present is a case where in fact no assignment has taken place. What is entered between the parties is agreement for assignment that is contingent on approval by the Resolution Professional that Assignee will be given a seat in the CoC. The Adjudicating Authority has rightly taken the view that the whole exercise is a malafide exercise by Rolta Private Limited whose claim has been admitted and who being related party has not been given berth in the CoC and by means of alleged assignment is trying to bring Peanence Commercial Private Limited into the CoC.
The real intent of the assignment is clear from the email send to the Resolution Professional where the Resolution Professional has been requested to confirm that Assignee would be declared as nonrelated party to the Corporate Debtor, meaning thereafter the Assignee shall get a berth in the CoC.
The Adjudicating Authority has rightly noticed the judgment of the Hon’ble Supreme Court in Phoenix ARC Private Limited vs. Spade Financial Services Limited & Ors. [2021 (2) TMI 91 - SUPREME COURT]. It has also been noticed that the Assignor is a related party of the Corporate Debtor and the Suspended Board of Corporate Debtor. Resolution Plan of the respective Resolution Applicants being placed and discussed, the Suspended Board of the Corporate Debtor is privy to the amounts which has been set aside for payment to Rolta Private Limited in the plan. At this stage, the Assignment Agreement which has been entered by the parties and has been communicated to the Resolution Professional, clearly indicates that Rolta Private Limited is trying to bring its Assignee to create hurdles and delay in the CIRP of the Corporate Debtor.
The Adjudicating Authority has given ample reasons in the impugned order for not allowing the prayers made by the Applicant/ Appellant in the application - Appeal dismissed.
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2024 (10) TMI 726
Admission of Section 7 application - Financial Debt within meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - default with regard to payment of Security Deposit under the terms Development Agreement - estoppel from asserting the claim for refund of Security Deposit without completing the development work under the Development Agreement.
Whether the debt for which the application under Section 7 was filed can be treated to be a Financial Debt? - HELD THAT:- For a transaction to be covered under Section 5(8) first requirement is disbursal against the consideration of the time value of money. Sub section (f) of Clause 8 is a residuary Clause which provides for “any amount raised under any other transaction having the commercial effect of the borrowing”. The Development Agreement is a transaction between the parties and looking to the Clauses of Development Agreement, it is clear that transaction has commercial effect of the borrowings. Payment of 18% interest compoundable and payable quarterly clearly indicate time value of money.
Corporate Debtor has clear understanding that advance made over and above of Security Deposit Rs. 12 Crores carry interest @ 18% interest p.a. compounded and payable quarterly. Letter further said that since even after more than five an half years of signing of Development Agreement, Project has not taken off, hence they are not in a position to make provision for interest for the time being on the additional part of Security Deposit received.
An application was filed before the Adjudicating Authority by first Respondent seeking a direction to IRP to admit the claim as Financial Creditor. Adjudicating Authority held that first Respondent was a Financial Creditor and not an Operational Creditor. Appeal was filed by challenging the order of the Adjudicating Authority. In the above context, Hon’ble Supreme Court has occasion to consider the ingredients of a Financial Debt.
Development Agreement clearly contains the details of transaction entered between the parties which makes it clear that advance of Rs. 3.5 Crores carried interest of 18% which transaction falls within Financial Debt under Section 5(8) - Classification of the same as inventory in the Books of Financial Creditor will not change the nature of transaction and the Financial Creditor has been relying on the acknowledgement of the Corporate Debtor in the Balance Sheet for purposes of limitation under Section 18, which has rightly been noted and accepted by the Adjudicating Authority.
The Adjudicating Authority did not commit any error in considering the relevant issues which arose between the parties and after detailed discussion came to the conclusion that Financial Creditor has been able to prove debt and default. No error has been committed by the Adjudicating Authority in admitting Section 7 application - there are no error in the order of the Adjudicating Authority, warranting our interference in the exercise of the appellate jurisdiction.
There is no merit in the appeal. The appeal is dismissed.
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2024 (10) TMI 725
Admission of Assignment Agreement - appellant contends that the Assignment Agreement dated 29.03.2022 was not duly stamped and a document which was not properly stamped under the Maharashtra Stamp Act, 1958 could not have been admitted - HELD THAT:- There is no dispute between the parties that the Assignment Agreement dated 29.03.2022 is a registered document. Counsel for the Respondent has relied on the provision of SARFAESI Act, 2002 which empowers the assignee to continue prosecute and enforce all applications, appeals and legal proceedings which were pending on the date of assignment. Section 7 application filed by ‘L&T Finance Ltd.’ was pending on the date of assignment. Hence, ‘Phoenix Arc Pvt. Ltd.’ has jurisdiction to prosecute the application.
By virtue of Section 5(2) of the SARFAESI Act, ‘Phoenix Arc Pvt. Ltd.’ is fully entitled to prosecute the application which was filed by ‘L&T Finance Ltd.’. Present is a case where Assignment Agreement is a registered document.
In the facts of the present case where Assignment Agreement is registered and has been filed in the proceedings under Section 7, by virtue of Section 5(2) of the SARFAESI Act, ‘Phoenix Arc Pvt. Ltd.’ is entitled to prosecute and deeming clause as contained in Section 5(2) fully protects and entitled the ‘Phoenix Arc Pvt. Ltd.’ to prosecute Section 7 application. There are no error in the order of the Adjudicating Authority allowing application.
The Adjudicating Authority did not commit any error in rejecting the application of the Corporate Debtor praying for impounding of the document - there are no error in the order passed by the Adjudicating Authority deciding both the applications - appeal dismissed.
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2024 (10) TMI 724
Condonation of delay in filing appeal - Applicability of time limitation for filing appeal - Sufficient cause for delay or not - HELD THAT:- It is clear that 22.11.2023 was date fixed for hearing of the IA No.4434 of 2023 and the arguments were heard on IA No.4434 of 2023. It is not disputed by the Respondent that no order was pronounced on 22.11.2023 by the Court. Judgment of the Hon’ble Supreme Court in Sanjay Pandurang Kalate [2023 (12) TMI 1249 - SUPREME COURT (LB)] supports the submission of the Appellant that when order is not pronounced in the open court, limitation for filing the appeal shall not commence. In Sanjay Pandurang Kalate case, the Hon’ble Supreme Court has granted the benefit to the Appellant and held that limitation is to be counted from the date when order was uploaded on the website.
Although the Appellant’s case is that till 20.02.2024 the order was not uploaded. Appellant has also along with the appeal brought on record the screenshot but in the present case, there is no dispute to the fact that by e- mail dated 25.01.2024, liquidator has informed the Appellant about the order dated 22.11.2023. Thus, the Appellant cannot claim that limitation will not begin at least from 25.01.2024 when the order was communicated by the liquidator to him.
The law indicate that the expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice.
The Hon’ble Supreme Court in Sheo Raj Singh vs. Union of India and Anr. [2023 (11) TMI 814 - SUPREME COURT] has held that condonation of delay being a discretionary power available to courts, exercise of discretion must necessarily depend upon the sufficiency of the cause shown and the degree of acceptability of the explanation, the length of delay being immaterial. In the above case, Single Judge of the High Court has allowed Section 5 application filed by the Union of India and condoned the delay of 479 days. Ultimately, the Hon’ble Supreme Court dismissed the appeal upholding the condonation of delay of 479 days.
In the present case, no date of uploading has been brought on the record, hence, the date for commencement of the limitation cannot be pegged on date of uploading. However, the liquidator having shared the order on 25.01.2024, Appellant had to file the appeal within 45 days. 30 days’ time expired from 24.02.2024 and filing of the appeal on 02.03.2024 is within condonable period and in the facts of the present case, the sufficient cause has been made out to condone the delay.
Delay Condonation Application is allowed.
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2024 (10) TMI 723
Admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - IRP has worked only for 8 days because the constitution of the CoC was stayed by this court on 18.04.2023 which is continuing - non-constitution of the Committee of Creditors (CoC) due to a stay order - HELD THAT:- In view of the settlement arrived at and the money having been paid, duly received by the creditor (Omkara asset Reconstruction Company Pvt. Ltd.), order of admission passed against the CD does not survive and hence CA (AT) (Ins) No. 711 of 2023 is hereby allowed.
CP (IB) No. 439 of 2022 has been disposed of as infructuous because of the admission of CP (IB) No. 1089 of 2022, can be revived for pursuing their remedy against the corporate debtor for the resolution of their claim/debt. In so far as, issue regarding the dues of the IRP are concerned, it can be taken care of by the Adjudicating Authority, if and when the IRP file an application on form FA and put up his claim for the CIRP cost.
The order dated 30.03.2023 is set aside. The FC shall file the form FA along with the bank guarantee to the IRP who shall in turn file the same to the Adjudicating Authority for an order regarding to the withdrawal of the petition.
First appeal is allowed.
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2024 (10) TMI 684
Failure to take into cognizance of the claims filed by it in respect of the outstanding income tax demands raised on the Corporate Debtor while approving the resolution plan - timeliness in the completion of assessment proceedings by the Appellant - admission of belated claim after the approval of the resolution plan.
Whether the claim was filed by the Appellant within time and, if so, how the claim was treated by the RP in the CIRP of the Corporate Debtor Company? - HELD THAT:- No determinative or crystallised amount has been indicated by the Appellant as their claim amount. Mere intimation by the Appellant to the RP of heavy income-tax demand on the Corporate Debtor cannot be construed in any manner to be equated with filing a claim before the RP. Apart from not indicating any firm claim amount, the Appellant has mentioned in Form B the multiple litigations surrounding the said claims. This is indicative of the nebulous and indeterminate claim amount in Form B. The Appellant was required to submit the crystallised claim within the stipulated time frame in terms of CIRP Regulations to the RP for collation and verification of the same for the same to be duly reflected in the IM.
The Appellant in the present facts of the case is trying to make recovery of claims which it is not entitled to recover because of inaction of their part to file their claim on time. On this count, in the absence of the Appellant having filed firm and determinate claims on time, there are no reason to hold the conduct of the RP to be faulty or questionable.
It is pertinent to note that the CoC had already approved the Resolution Plan by then. It is also clear from material available on record that the Appellant had crystallised their tax demands for A.Y. 2013-14 to A.Y. 2019-20 by passing assessment orders dated 29.06.2022 to 01.07.2022. This leaves no doubt in our minds that the demand was raised by the Appellant on the Corporate Debtor Company after the CoC and the Adjudicating Authority had already approved the resolution plan on 20.06.2022.
Whether such belated claim can be admitted after the approval of the resolution plan? - HELD THAT:- The Adjudicating Authority has concluded that once the Resolution Plan was duly approved by the CoC, the claim filed with the RP stands frozen. Since Appellant had failed to file its claim with the RP before the Resolution Plan was approved by the CoC, their claim stands extinguished. The Appellant having failed to file its claim on time before the RP, it cannot be allowed to saddle the SRA with the liability of its claim which was never filed on time.
There is a concomitant need to impart finality to the resolution process by protecting a successful resolution applicant from unnecessary litigation arising out of undecided claims. No proceeding can be initiated or continued in respect of a claim which is not part of the resolution plan or was not preferred at the relevant time. No fresh claims can be lodged or enforced against the SRA after the approval of a resolution plan for when any sudden and fresh claim pops out in respect of the Corporate Debtor, the very calculations on the basis of which the SRA has submitted its plans, would go haywire and the plan would be unworkable.
In the present case there is no dispute with the facts that the claims made by the Appellant in pursuance to the assessment proceedings were finalised after the approval of the resolution plan by the CoC and the Adjudicating Authority. Allowing the claim at this belated stage would unleash the hydra-headed monster of undecided claims on the SRA and would have the effect of setting the clock back causing further delay in the CIRP of the Corporate Debtor.
Thus, no error was committed by the Adjudicating Authority in approving the resolution plan - appeal dismsised.
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2024 (10) TMI 683
Seeking declaration to the effect that claim of the Appellant being in the nature of Stamp Duty and cannot be ignored by the Resolution Professional - applicant authorities have filed their claim at the belated stage - Appellant submitted that without paying the statutory claims, the company does not get a clear and marketable title of the properties in question - HELD THAT:- It is noted from the pleadings of the Appellant that he was informed for the first time by the Respondent on 17.02.2021 whereas which was much delayed after the public announcement on 03.09.2020. One query was raised by this Appellate Tribunal to the Appellant that even for argument’s sake the Appellant came to know only on 17.02.2021 why did the Appellant file the claim only on 23.03.2023 i.e., after more than 2 years and not immediately after 17.02.2021, the Appellant could not response properly on this pointed query. Thus, it is noted that there was no plausible reason for the Appellant to explain his conduct of filing such belated claims after 30 months of the public notice.
It is noted that the Appellant stated that his claims are to be treated at par with land revenue dues and the CIRP proceeding was initiated only in 2018. For this query of this Appellate Tribunal, no specific answer could be furnished by the Appellant to elaborate action taken by the Appellant in realising its dues even prior to initiation of the CIRP. We have already noted in previous paragraphs that even the claims were filed by the Appellant after 30 months of the CIRP.
The issue of the stamp duty was indeed provided in the Resolution Plan in the ambit of the Code and the same was considered by the CoC exercising their commercial wisdom and finally the Resolution Plan was approved by the Adjudicating Authority.
The Resolution Plan was approved by the Adjudicating Authority by vide Impugned order dated 12.10.2023 and it is seen that the total claims which was filed were of Rs. 1695.85 Crores and the claim of Rs. 1672.08 Crores were admitted - Thereafter the Adjudicating Authority approved the Resolution Plan of M/s Steel Strips Wheels Limited who propose to infuse Rs. 138.15 Crores. Obviously, the intended hair cut is being taken by all the Stakeholders including the Secured Financial Creditors, Operational Creditor and the Government dues. Therefore, the Appellant’s challenge on account of non-payment of full dues is not convincing.
It is the fact that the Resolution Plan was approved by the CoC much earlier then the claim submitted by the Appellant. The Resolution Plan is stated to have been implemented by the SRA.
There are no merit in the appeal. The appeal deserved to be dismissed and stand dismissed.
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2024 (10) TMI 682
Termination of lease deed of the subject land by the Noida authority prior to the commencement of the CIRP of the Corporate Debtor - inclusion of subject plot in the resolution plan despite the lease cancellation - wrong and fraudulent action of the suspended management of the Corporate Debtor that the lease over the land was still subsisting - HELD THAT:- The material on record clearly show that the lease of the subject plot was cancelled by Noida authority on 13.08.2015. Nothing has been placed on record to show that the lease deed of the said plot was restored to the Corporate Debtor except that an application had been filed by the suspended management after a gap of 305 days before the Noida authority seeking restoration - In the present case, the Adjudicating Authority has correctly held that since the lease deed had been cancelled much before the commencement of the CIRP, the Corporate Debtor had lost the right to possess the subject plot before the initiation of CIRP. Since the subject plot ceased to be an asset of the Corporate Debtor with effect from 13.08.2015, the provision of moratorium in terms of Section 14 of the IBC will not get attracted in the present case.
There is nothing on record to show that post cancellation of the lease deed, the Noida authority was paid any lease rent or there is any written permission or assent of the Noida authority for restoration or continuation of the said lease. Simply by having filed an application for restoration of the said plot of land, the deemed subsistence or continuation of the lease deed cannot be presumed. The lease having been cancelled on 31.08.2015 for want of deposit of necessary lease rent/charges in terms of the allotment, the lease land could not have been made a part of the resolution plan of the Corporate Debtor - Basis the wrongful obtaining of RERA registration, it cannot be rightfully claimed by the RP that the lease was subsisting or stood revived.
Despite knowing that the lease had been cancelled by the Noida authority, merely on the pretext that the cancellation of the lease was not followed up with other measures by the Noida authority, the RP should not have treated the subject plot to be in the possession of the suspended management. Given this set of facts, RP should have been more circumspect and should not have agreed to make the housing project of suspended management on the subject plot a part of the resolution plan. Instead, the RP continued to take all actions including preparation of the IM projecting the cancelled plot as the asset of the Corporate Debtor and getting approval of the resolution plan from the COC as if the said plot existed with the corporate debtor. Such a resolution plan which is premised on the basis that the land belonged to the Corporate Debtor could not have been considered by the COC - The Adjudicating Authority in its order dated 20.02.2020 had directed the RP to file a complaint with the EOW cell of Delhi police and this again shows that RP had not taken this action on his own volition but was goaded into action by the RP.
There is no quarrel that during the CIRP process, RP is expected to play a pivotal role, so as to effectively assume control of the corporate debtor's management and become responsible for overseeing all aspects of CIRP. RP's underlying mandate is to ensure efficiency, transparency, and accountability within the insolvency resolution process marked by a nuanced equilibrium among creditor rights, stakeholder concerns, and procedural equity. In the present case, the Adjudicating Authority has rightly noted that the role of the RP has leaned towards justifying the wrongful action of the suspended management - there are no error in the findings arrived at by the Adjudicating Authority and affirm the observations made in respect of the unbecoming and unfair conduct of the RP.
There are no reasons to interfere with the impugned order in particular with regard to the observations made on the role of the RP - there are no merit in the appeal - appeal dismissed.
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2024 (10) TMI 632
Approval of the Resolution Plan - Resolution Plan does not provide for payment of Provident Fund and Gratuity - plan not in compliance with Section 30(2) of the I&B Code - whether it is the Successful Resolution Applicant which has to bear the burden of Provident Fund dues and Gratuity Dues or it has to be discharged from the financial outlay in the Resolution Plan? - HELD THAT:- Clause 1 (vii) of the Clarificatory Note clearly contemplate payment of Provident Fund and Gratuity dues which have to be paid as per priority as contemplated in Clause 1 (vii). Thus, the payment of Provident Fund and Gratuity has to be paid as per the Resolution Plan read with Clarificatory Note Clause 1 (vii) and the submission of counsel for the CoC not accepted, that amount of Provident Fund and Gratuity dues has to be borne by the Successful Resolution Applicant independent of Resolution Plan read with Clarificatory Note.
It is noticed the amount of Provident Fund and Gratuity as admitted by the Resolution Professional i.e. Provident Fund dues – Rs.11.49 Crores and Gratuity dues – Rs. 8.84 Crores. The said amount has to be paid as per the Resolution Plan read with the Clarificatory Note.
The entitlement of salary from June to November, 2020 has never been accepted nor the employees actually worked. With regard to salary slips of five employees filed with the appeal, learned counsel for the Resolution Professional submitted that the said salary slips were issued on the request of the employees and is not proof of that they had worked. It is submitted that it is the Resolution Professional who has to take decision regarding allowing employees to work during CIRP period. It submitted by the Resolution Professional that certain employees were called to commence the work but the work did not proceed and in the CIRP cost the Resolution Professional has included the certain part of payment of salary to the workmen and claim of the Appellant for payment of salary from July to November, 2020 cannot be accepted or included in the CIRP cost.
The Resolution Professional is the best judge to compute the CIRP cost and pay wages to the workmen during the CIRP period. Thus, the Resolution Plan having already included payment of salary to some extent in the CIRP cost, we see no reason to issue any direction for payment of salary as claimed by the Appellant from month of July to November, 2020.
The approval of Resolution Plan by order dated 31.03.2023 is upheld subject to declaration that workmen and employees are entitled for payment of full Provident Fund and Gratuity - The Resolution Plan read with Clarificatory Note Clause 1 (vii) contemplate payment of Provident Fund dues and Gratuity dues which was computed by the Resolution Professional as Provident Fund dues of Rs.11.49 Crores + Gratuity dues of Rs.8.84 Crores, totaling to Rs.20.33 Crores (for Shree Gopal Unit), which is to be paid as per the priority mentioned in Clause 1 (vii) of the Clarificatory Note.
Appeal disposed off.
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2024 (10) TMI 631
Admission of application filed by the Operational Creditor u/s 9 of the IBC, 2016 - withdrawal of the petition on the basis of the settlement agreement - existence of debt and default admitted - HELD THAT:- Since, it is a case where the debt and default has been admitted by the CD by entering into a settlement deed, part payment was made but the remaining amount was not paid despite repeated emails, therefore, the Tribunal has rightly admitted the application which is above the threshold provided under Section 4 of the Code and there was no pre-existing dispute. The argument of the Appellant that settlement amount cannot be claimed as an operational debt is totally inconsequential as it has been held by this Court in the case of IDBI Trausteeship Services Limited Vs. Nirmal Lifestyle Limited [2023 (5) TMI 770 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI].
The CD, especially in the cases of Section 9, are adopting this modus operandi by entering into a settlement with the OC in respect of its dues which arises either from the goods supplied or services provided, some payment is made and then there is a breach in the settlement thereafter all sorts of pleas are raised by the CD to deny the right of the OC regarding the resolution of its dues for which the application under Section 9 is filed.
There are no merit in the present appeal for the purpose of interference and the same is hereby dismissed.
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2024 (10) TMI 630
Admission of towards salary and leave encashment with interest - HELD THAT:- The substantial claim of the Appellant has been admitted in the CIRP, hence, there are no reason to interfere in the impugned order, especially when the Resolution Professional in it reply, has declared about the final admission of the claim of the total Rs.50 Lakhs. Recording the said statement of the Resolution Professional of admission of Rs.50 Lakhs of Principal Amount and interest as well as amount towards salary, this appeal is disposed off.
Appeal disposed off.
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2024 (10) TMI 629
Seeking condonation of delay of 10 days in filing the present appeal - calculation of limitation period - HELD THAT:- Admitted facts of this case are that the impugned order was passed on 02.03.2022 and in this regard, the Respondent has appended the cause list of 02.03.2022 as Annexure R3 with the reply in which the present appeal has been shown as ‘for pronouncement of order, Sr. No. P1, CP No. (IB)219/ALD/2018 for order’. It is admitted by the Appellant in the rejoinder that the order was pronounced in their presence. In such circumstances, the decision of the Hon’ble Supreme Court delivered in the case of V. Nagarajan [2021 (10) TMI 941 - SUPREME COURT (LB)] would apply which says that limitation shall start running from the date of order whereas the case set up by the Appellant in the application is that since the impugned order was uploaded by the Tribunal on 14.03.2022, therefore, the limitation shall be counted from the said date and thus there is a delay of 10 days in filing the present appeal.
In order to overcome the difficulties being faced, the Appellant has developed a new story in order to take the advantage of Section 12 of the Limitation Act, 1963 as per which the period spent by the office in preparing the certified copy has to be excluded from the total period of limitation and in this regard, it is alleged that after the order was pronounced on 02.03.2022 the certified copy was applied which was made available on 16.03.2022 but it was mistakenly sent to the previous office address of the counsel at New Delhi and was misplaced.
The Appellant has not applied for the certified copy again for the purpose of placing it on record. The story which has now been propounded and made a part of their rejoinder is totally unbelievable because had it been a situation as suggested, it would have been the first averment in the application itself instead of a plea in the rejoinder.
The story propounded in the rejoinder is a made-up story at the instance of the Appellant which cannot be believed and as it has been held in the case of Lingeswaran Etc. [2022 (2) TMI 1358 - SUPREME COURT] the limitation is to be condoned on a sufficient cause and not on equity, the Appellant cannot take any advantage of alleging that the Court should apply soft hand for the purpose of considering the application for condonation of delay.
There are no merit in the present application, much less sufficient cause, for the purpose of condonation of delay, therefore, the application is found devoid of any merit and the same is hereby dismissed though without any order as to costs.
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2024 (10) TMI 575
Alleged outstanding dues owed by the Petitioner-Company to the Opposite Parties in view of the approval of the Resolution Plan by the National Company Law Tribunal (NCLT) - Validity of demands raised against the Petitioner-Company post-approval of the Resolution Plan - HELD THAT:- In the present case, once the Resolution Plan was approved by the NCLT, which attained finality as per the order of the Hon’ble Supreme Court, it is no more open for the Opposite Parties to again raise the demands for the very period covered by the Resolution Plan, which in other words to say that no claim for the period prior to 22.06.2018, the date of approval of the Resolution Plan by the NCLT, i.e., the Plan Effective Date, could have been raised by the Opposite Parties and such demands to the extent as they cover the period up to 22.06.2018 stand automatically extinguished in terms of the Resolution Plan.
The observations made above in the case of the Appeal filed by the present successful Resolution Applicant in the case of Ghanashyam Mishra & Sons [2021 (4) TMI 613 - SUPREME COURT] provide the answer to the submission of the learned Counsel for the State that the dues arising out of the judgment of the Hon’ble Supreme Court in case of Common Cause were not specifically dealt with in the ARP - the Resolution Applicant should start with fresh slate on the basis of the Resolution Plan approved. In other-words, upon approval of the Resolution Plan, the Company-OMML no more stands as the Corporate-Debtor and it is only under the legal obligation as being in the management of the Company (OMML) strictly in terms of the Resolution Plan.
In terms of section 31 of the I & B Code, the above ARP is binding on all creditors including Central Government and State Government. All those impugned demands raised against the Petitioner-Company pertaining to the period prior to the Plan Effective Date, i.e. 22.06.2018 stand automatically extinguished in terms of Approved Resolution Plan (ARP). In other words, the demands to the extent, which cover the period up to 22.06.2018 are thus unsustainable in law.
Thus, while setting aside the impugned letters under which the demands have been raised against the Petitioner-Company, which are the subject matters of all the three writ petitions, this Court directs the Opposite Parties to revise the demands by limiting it to the period from 22.06.2018 onwards and raise the same afresh as against the Petitioner-Company in accordance with law so as to be satisfactorily discharged.
Petition disposed off.
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2024 (10) TMI 574
Admissibility of Section application - Petition barred by time limitation or not - existence of debt and default corroborated by records or not - Legal Right Under Sanctioned Restructuring - Interpretation of Clause 7.
Date of Default and Limitation Period - HELD THAT:- The period of limitation was extended, pursuant to the restructuring of debt, vide letter dated 27th March, 2021, and further modified vide letter dated 31st March, 2021. By this, the corporate debtor acknowledged its liability as on 31.12.20219, to the extent of Rs. 30,33,02,248.17. Thus, there was due acknowledgment of debt/liability, by the corporate debtor, prior to expiry of limitation period on 29.04.2021, even if the date of default is taken as 30.04.2018. Therefore, we find that the Adjudicating Authority has correctly concluded that the limitation period was extended due to the restructuring of the debt acknowledged on 27.03.2021, thus making the filing of the Petition on 15.12.2022 within the limitation period. The part payments made by the Corporate Debtor post-cancellation of the restructuring plan do not alter this acknowledgment.
The Hon’ble Supreme Court's order in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2022 (1) TMI 385 - SC ORDER], which excluded the period from 15.03.2020 to 28.02.2022 for limitation purposes, further supports the timely filing of the Petition. The Honourable Apex Court had issued direction that period from 15.03.2020 till 28.02.2022, shall stand excluded for the purposes of limitation as may be prescribed under any special or general statute.
Legal Right Under Sanctioned Restructuring - HELD THAT:- Respondent No.1 exercised its legal right under Clause 7 of the Sanctioned Restructuring to revoke the restructuring upon default, reinstating the original liability plus interest. The Corporate Debtor's failure to meet the restructuring terms led to the revocation, and subsequent letters from the Corporate Debtor requesting additional time were not grounds for continuation of the restructuring plan. Compliance with Circular and Other Grounds - Appellant's contention regarding non-compliance with the Master Circular on Asset Reconstruction Companies dated 10.02.2022 is not substantiated with concrete evidence. Furthermore, the arguments about malicious intent and lack of evidence are unsubstantiated, given the documentary evidence presented by Respondent No.1.
Interpretation of Clause 7 - HELD THAT:- Clause 7 of the Sanctioned Restructuring Plan explicitly provides that in the event of default, the Financial Creditor has the legal right to revoke the sanctioned restructuring and restore the original liability as on the cutoff date. The Corporate Debtor's non-compliance with the restructuring terms justified the revocation - Appellant has relied on the judgement of the Hon’ble Apex Court in Vidharbha Industries Power Limited vs Axis Bank Limited [2022 (7) TMI 581 - SUPREME COURT] wherein it was held that discretionary power vests with this Tribunal under Section 7 (5)(a). It was held that while discretion is conferred on the Adjudicating Authority, such discretionary power cannot be exercised arbitrarily or capriciously.
The Hon’ble Supreme Court further held that the decision in the case of Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in the case of Innoventive Industries [2017 (9) TMI 58 - SUPREME COURT] and E.S. Krishnamurthy [2021 (12) TMI 683 - SUPREME COURT]. It finally held that the non-payment of a part of the debt when it becomes due and payable will amount to default on the part of the corporate debtor and an order under Section 7 Insolvency Bankruptcy Code must follow. So both these judgements do not support the case of the Appellant.
In view of the admitted facts, documentary evidence, and the justified findings of the Adjudicating Authority, the Appeal lacks merit. The Impugned Order dated 27.10.2023, admitting Company Petition No. 9 of 2023 and initiating CIRP against Vilson Roofing Product Pvt. Ltd., is upheld.
Appeal dismissed.
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2024 (10) TMI 573
Encashment of PBG during moratorium - Legality of invocation of the Performance Bank Guarantee (PBG) by the Nominated Authority during the moratorium period - HELD THAT:- The judgment of the Hon’ble Supreme Court in Standard Chartered Bank vs. Heavy Engineering Corporation Limited and Anr. [2019 (12) TMI 843 - SUPREME COURT] noticed, where the Hon’ble Supreme Court has laid down that Bank Guarantee is an independent contract between Bank and the beneficiary and the Bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. Few exceptions were also noticed in the judgment, i.e. fraud, irretrievable harm or injustice.
The present is a case where Show Cause notice was issued to the Appellant and after Show Cause notice, decision was taken by Scrutiny Committee, recommending for invocation. The Nominated Authority after considering the recommendation, facts and circumstances, took the decision to invoke the Bank Guarantee as per the terms of the Agreement. Default on the part of the Corporate Debtor was established, hence, present was not a case where Court ought to have exercised its discretion, restraining the Bank from enforcing the Bank Guarantee. The Adjudicating Authority rightly took the decision to not grant the relief as prayed by the Appellant.
There are no error in the order of the Adjudicating Authority, refusing the prayer to set aside the letter sent by Respondent No.1 to the Bank for invocation of Bank Guarantee. It is further to be noticed that letters, which were sent to the Bank were all in consequence to the earlier decision taken on 27.10.2023 by the Nominated Authority to invoke the Bank Guarantee, which was Appropriation Order. Subsequent letters were only follow-up and in consequence to the earlier order and by letter dated 28.03.2024, notice of dispute given by the Corporate Debtor was disposed of, upholding the earlier decision.
There are no ground to interfere with the order of the Adjudicating Authority in this Appeal. There is no merit in the Appeal - Appeal is dismissed.
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2024 (10) TMI 572
Dismissal of Section 7 application - appellant has argued that the Adjudicating Authority has committed an error in dismissing the application because the amount of interest can also be claimed by filing an application under Section 7 of IBC - HELD THAT:- The Appellant did not make any effort to bring to the notice of the Adjudicating Authority in the application filed under Section 9 about the bonafide mistake which has been pleaded in the rejoinder filed in the present appeal in order to avoid the pleadings already set up in the application filed under Section 9 of the Code in which it was averred that the amount in question has been invested which is now sought to be changed as a loan. It is pertinent to mention that Respondent has already paid the principal amount of Rs. 58,30,077/- to the Appellant but the Appellant is pursuing the present appeal for the resolution of the amount of interest, however, in our considered opinion, the petition filed before the Adjudicating Authority under Section 7 is an abuse of process of law because the Appellant cannot change the stand taken in the application filed under Section 9 of the Code by it on its convenience and drag the Respondent before the Adjudicating Authority and this Court in an unnecessary litigation.
The conduct of the Appellant is depreciable and deplorable because this kind of practice is not acceptable before this Court, therefore, this is one such case in which the Appellant deserves to be saddled with costs for initiating a frivolous litigation. Hence, while dismissing the present appeal, a cost of Rs. 1 Lac. imposed upon the Appellant which shall be paid by it to the Respondent by way of a demand draft within a period of 30 days from the date of passing of this order.
Appeal dismissed.
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