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IBC - Case Laws
Showing 161 to 180 of 9417 Records
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2025 (1) TMI 265
Seeking approval of the resolution plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 ('the Code') read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- It is satisfied that all the requirements of Section 30 (2) of the Code are fulfilled and no provision of the law appears to have been contravened.
Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the Code deals with the approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan, as approved by the CoC under section 30(4), meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan, as approved by the CoC, meets the above requirements.
In K Sashidhar v. Indian Overseas Bank & Others [2019 (2) TMI 1043 - SUPREME COURT] the Hon'ble Apex Court held that if the CoC has approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by the CoC, meets the requirements specified in Section 30(2). The Hon'ble Apex Court further observed that the role of the NCLT is 'no more and no less'. The Hon'ble Apex Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements.
The Hon'ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT] held that on the date of the approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the Resolution Plan.
Conclusion - The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A), and 39 (4) of the Regulations. The Resolution Plan is also not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law.
Application allowed.
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2025 (1) TMI 264
Admissibility of application - initiation of the Insolvency Resolution Process (IRP) against the personal guarantor u/s 95 of IBC - HELD THAT:- There is no dispute that the Appellant stood as a guarantor for the loan availed by the CD. A supplementary deed of guarantee was executed on 05.09.2017. There is also no dispute that the CD has already been admitted into CIRP. The Respondent Bank has proceeded in accordance with law by filing the application under Section 95 through the RP appointed by it. The Respondent served a demand notice dated 25.08.2020 on the Appellant about the unpaid debts of the CD in terms of Rule 7(1) of the Rules and evidence has been led that the said notice was duly delivered to the Appellant on 19.09.2020 to which there is no response to deny its liability. The application under Section 95 was filed after the expiry of 14 days after the date of service of demand notice and was duly served upon the Appellant who did not file any response.
The judgment relied upon by the Appellant in the case of Mr. Ravi Ajit Kulkarni [2021 (9) TMI 60 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] may be of some help to the Appellant had the RP not given independent finding in its report dated 23.07.2021 which is already reproduced in the earlier part of this order, for a quick reference, in which it has been categorically said that “in the virtual meeting organized on 19.06.2021, the Appellant acknowledged the existence of debt and stated that he has not made any payment in capacity of guarantor towards the debt due by the CD of the Respondent Bank” Section 99(2) provides that the debtor has to prove repayment of the debt claimed as unpaid by the creditor by furnishing evidence of electronic transfer of the unpaid amount from the bank account of the debtor, evidence of encashment of a cheque issued by the debtor or a signed acknowledgment by the creditor accepting receipt of dues whereas in the present case the Appellant categorically denied to have made payment which was sufficient to hold that there is a default.
Conclusion - The procedural compliance with Section 95 and the independent verification by the RP are critical for admitting insolvency applications against personal guarantors.
Appeal dismissed.
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2025 (1) TMI 229
Rejection of claim filed by the Appellant - whether the RP had committed any irregularity in rejecting the claim of the Appellant for being belated and for being claim of such nature that it required adjudication which was beyond the jurisdiction of the RP? - HELD THAT:- In the present case, it is noticed that after the Corporate Debtor was admitted into the rigours of CIRP on 13.12.2021. The Interim Resolution Professional had undisputedly made a Public Announcement on 17.12.2021 in compliance with Sections 13 and 15 of the IBC read with Regulation 6 of CIRP Regulations. The Public Announcement had set 27.12.2021 as the deadline for claim submissions. The Appellant never filed their claim within the time stipulated by the Public Announcement or within the extended timeline of 90 days as provided by the Regulation 12 of CIRP Regulations. The Appellant had filed their claim on 12.09.2023 which was much beyond the extended period of 90 days. From material on record, it is therefore abundantly clear that a lot of time elapsed since the date of issue of public announcement inviting claim and the actual filing of claim by the Appellant.
Despite having filed their claim belatedly, the Appellant has put the blame on the RP for having dealt with the claims and rejected the same within 3 days - There is no material to either believe that the RP acted in a manner hurriedly pushing the plans for consideration of the CoC or having deliberately orchestrated to stall the claim of the Appellant.
It is a well settled precept that there is a catena of judgements of the Hon’ble Apex Court wherein it has been held that no surprise claims should be flung on the resolution applicant. The logic behind this precept is that all necessary details should find place in the Information Memorandum so that the potential resolution applicants are fully aware of the liabilities that they may have to provide for in their resolution plan towards satisfying whole or part of such liabilities and to also revive the corporate debtor. In the present case too, when the claims have been filed belatedly after 548 days and that too the claims arise from damages and breach of contract which according to the Appellant is admittedly contingent, the RP’s action to reject the claim by way of a reasoned reply to the Appellant cannot be put to fault - there are no justifiable reason to doubt the bonafide of the RP in not admitting the claim of the Appellant. The Adjudicating Authority had not committed any error in the given facts and circumstances in not acceding to the request of the Appellant for admission of their claims.
Conclusion - The RP does not possess adjudicatory powers and must adhere to statutory timelines for claim submission to ensure a timely resolution process.
Appeal dismissed.
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2025 (1) TMI 228
Direction for fresh valuation of intangible assets after the approval of a Resolution Plan - seeking direction to permit the revised Resolution Plan to be reconsidered which has been rightly rejected by the Adjudicating Authority noticing the submissions of the Resolution Professional that it is open for the Appellant to submit Resolution Plan in pursuance of fresh Form G - HELD THAT:- There is no dispute between the parties that initially Resolution Plan filed by the Appellant was approved on 30.12.2019 and Resolution Professional has also filed IA No.102 of 2020 for approval of the Resolution Plan. Unsecured financial creditor filed an IA No.1434 of 2020 seeking direction for valuation of intangible assets of the corporate debtor. It was also prayed that the Resolution Plan be sent back to the CoC for reconsideration. IA No.1434 of 2020 was allowed by the Adjudicating Authority on 04.08.2023 copy of which has been filed as Annexure A-6. Adjudicating Authority issued direction for valuation of intangible assets.
It is relevant to notice that the order dated 11.03.2024 was not challenged by any stakeholders including the Appellant. The order dated 11.03.2024 dismissing IA No.102 of 2020 for approval of the Resolution Plan as infructuous and the Adjudicating Authority having directed for issuance of Form G and the said order having not been challenged, the order dated 11.03.2024 has become final and it is not open for the Appellant to now claim any right on the basis of its earlier Resolution Plan.
The order impugned noticing the statement of Resolution Professional that Appellant can very well participate in the process has rightly observed that the grievance of the Appellant stands addressed and the IA has become meaningless. As noted above, the orders passed by the Adjudicating Authority dated 04.08.2023 directing for revaluation and placing the plan of the Appellant for voting was never challenged. After the order dated 04.08.2023, Appellant has submitted its revised Resolution Plan which was considered and was not approved by the CoC which is clear from 22nd CoC meeting. Direction to issue fresh Form G was in consequence of non-approval of the Resolution Plan of the Appellant - Appellant was free to participate in the fresh process initiated by issuance of Form G on 11.04.2024.
Conclusion - i) The Intangible Assets of the Corporate Debtor shall be valued and categorized separately. ii) The CoC's commercial wisdom in rejecting the revised offer was upheld as a legitimate exercise of its discretion.
Appeal dismissed.
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2025 (1) TMI 227
Invocation of personal guarantee - Section 95 application was filed on behalf of Respondent No.1 Bank by a person having valid authority or not.
Invocation of personal guarantee - HELD THAT:- It is an admitted fact that the Corporate Debtor had not performed its obligation of debt repayment and its account was declared NPA and was later admitted into CIRP. It is a settled position in law that under Section 128 of the Indian Contract Act, 1872 the liability of the surety is coextensive with that of principal debtor unless it is otherwise provided by the contract. The same coextensive liability applies in the case of the personal guarantors. Once the principal borrower fails to discharge the debt, the liability of the personal guarantor gets triggered on the invocation of guarantee.
In the present factual matrix, in terms of the PGA, the Appellant as personal guarantor was mandatorily obliged to honour its guarantee keeping in view that PGA provided for an unconditional, irrevocable and continuing guarantee to the COR Security Trustee/COR Lenders in respect of the COR Secured Obligations and credit facilities secured by the principal borrower - It is clear from the reading of the terms of the PGA at Clause 26 that if the Borrower failed to perform its obligations under the COR Finance Documents, it was incumbent on the Personal Guarantor to forthwith pay on demand to the COR Security Trustee/COR Lenders the whole of such outstanding sum. Hence there is no merit in the plea taken by the Appellant that since no request was made by them as guarantor for release of loan in favour of the borrower, the personal guarantee could not have been invoked.
The invocation of the personal guarantee and signing of the invocation in the capacity of “COR Lenders Agent” by Respondent No. 1 Bank has been questioned by the Appellant. It is dissuaded from agreeing with the Appellant since the Respondent No. 1 Bank had signed the CORLA wherein it had been clearly designated as COR Lenders' Agent. Moreover, though the lenders had appointed SBI Cap as their Security Trustee, in the Security Trustee Agreement dated 21.09.2015, Clause 8.12 stated that any duty or the obligation of the Security Trustee may be performed by the COR Lenders and any such performance shall not be construed as a revocation of the trusts or agency created thereby.
Section 95 of IBC clearly provides that a Section 95 application can be filed by a creditor in his individual capacity or jointly with other creditors or through a RP. It nowhere lays down any prescription that if the credit facility has been extended by more than one financial creditor, the Section 95 application is required to be filed collectively. Hence, there are no irregularity in the invocation of the personal guarantee by the Respondent No. 1 Bank on these counts either.
Section 95 application had been filed without any authority or not - HELD THAT:- The Appellant has claimed that the signing power given to any particular officer is not the decision-making power given to any particular officer of State Bank of India. Decisions have to be taken at the board level for initiating any legal proceedings and only thereafter authority is given to any particular officer to sign pleadings. No such authority had been delegated by the Executive Committee of the Central Board to initiate legal proceedings in the present case thereby rendering the Section 95 application not maintainable. The Respondent No.1 has repelled this argument by placing reliance upon a Gazette notification dated 27.03.1987 issued pursuant to Regulation 76 of the State Bank of India General Regulations, 1955 read with Section 50 of the State Bank of India Act, 1955 to contend that the signatory of the application, Shri Nitin Chauhan was duly authorised to file the Section 95 application - the contention of the Appellant that the Section 95 petition was not signed by a validly authorised person is rejected.
Conclusion - The Respondent No.1 Bank was entitled to invoke the personal guarantee and that the Section 95 application was validly filed by an authorized person.
Appeal dismissed.
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2025 (1) TMI 82
Maintainability of petition - availability of alternative remedy - Money Laundering - territorial jurisdiction of Rajasthan High Court to entertain the writ petition challenging the order of the NCLT, Mumbai - jurisdiction of NCLT, Mumbai to vacate the attachment orders issued by the Enforcement Directorate (ED) under the PMLA, 2002 - vacation of attachment order in exercise of powers under Section 238 of the IB Code read with Rule 11 of the NCLT Rules - petitioner was not made party in the proceedings before the NCLT, Mumbai - violation of principles of natural justice.
Violation of principles of natural justice - HELD THAT:- The order dated 27.09.2023 was passed by the High Court of Bombay after hearing and in presence of the counsel for ED but no such argument, which was raised herein as referred in the stay order dated 06.07.2023 was made by the counsel for ED, rather even after dismissal of the writ petition with aforesaid observations, the order dated 27.09.2023 was not put to challenge by the ED in any manner. It is not worthy that the SLPs preferred against the judgment and order dated 27.09.2023 have also been dismissed by the Hon'ble Supreme Court in NARESH SUNDARLAL JAIN VERSUS UDAIPUR ENTERTAINMENT WORLD PRIVATE LIMITED & ANR. [2023 (10) TMI 1478 - SC ORDER].
Further, a perusal of stay order dated 06.07.2023 also reveals that counsel for petitioner strongly raised another point that the petitioner was not impleaded as party in the CIRP before the NCLT, Mumbai and the order dated 24.02.2022 has been passed by the NCLT, Mumbai behind back of the petitioner, which suffers from blatant violation of the principles of natural justice.
In respect of such plea of petitioner, for violation of principles of natural justice, this Court, having considered the rival contentions of counsel for both sides and gone through the undisputed documents on record, prima facie, finds that the petitioner was well aware about the pending proceedings before the NCLT, Mumbai under the IB Code - It is noteworthy that the ED also replied one letter and e-mail dated 22.06.2021, through its reply letter dated 25.06.2021 to the resolution professional. Thus, such material on record explicitly reflects that the petitioner cannot make out a case to the effect that petitioner was not aware about proceedings pending before the NCLT, Mumbai, at the instance of respondents under the IB Code and further, this factual aspect has also not been disputed by the counsel appearing for and on behalf of petitioner. Thus, prima facie, it appears that the petitioner cannot take resort of the violation of principles of natural justice and cannot plead unawareness to the proceedings before the NCLT, Mumbai and the order dated 24.02.2022 passed therein. Therefore, this Court is prima facie of the opinion that in such view of the undisputed factual matrix, the petitioner cannot be allowed to take a pretext of non-imleading him as party before the NCLT, Mumbai, rather it is a case where petitioner, knowingly and deliberately, himself did not opt to intervene in the matter and CIRP pending before the NCLT, Mumbai.
Maintainability of petition - availability of alternative remedy - HELD THAT:- The petitioner was well aware of the proceedings and the order dated 24.02.2022 passed by the NCLT, Mumbai, yet he did not avail the statutory remedy of filing of appeal against the order dated 24.02.2022 before the NCLAT, Delhi within prescribed period of 45 days (30+15 days), which was available to the petitioner under Section 32 read with Section 61 of the IB Code, 2016. Hence, after losing the available statutory remedy, petitioner has invoked the writ jurisdiction of the High Court by filing the writ petition on 10.03.2023, which has been filed after a delay of about one year from passing of the impugned order dated 24.02.2022 by NCLT. From this angle also, petitioner has no prima facie case to sustain the stay order dated 06.07.2023 and same deserves to be vacated.
Power and jurisdiction of the NCLT, to vacate the attachment orders issued by the ED - HELD THAT:- This Court refraining itself to give any findings on such legal issue, at this stage, which may affect merits of the writ petition. However, such legal issue shall be considered and decided whenever the occasion comes to hear the writ petition on merits. Similar is in respect of all other contentions, made by the respective counsels for parties, which also touch to the maintainability and merits of the writ petition, hence, same shall be considered at the time of final hearing of the writ petition.
Conclusion - i) The petitioner cannot take resort of the violation of principles of natural justice and cannot plead unawareness to the proceedings before the NCLT, Mumbai and the order dated 24.02.2022 passed therein - ii) The stay order was vacated, and the court directed the petitioner to address the jurisdictional issue and consider converting the writ petition under Article 226 of the Constitution.
In the opinion of this Court, stay order dated 06.07.2023 is liable to be vacated and hence, as a final conclusion, the stay order is hereby vacated. The application filed by the respondents under Article 226(3) of the Constitution of India stands allowed and consequentially the stay application of petitioner is hereby dismissed.
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2025 (1) TMI 81
Non-admission of the claim by the Resolution Professional - direction to IRP to get the Resolution Plan modified so as to comply with Regulation 42 and 44 of the Liquidation Process Regulations, 2016 - deduction of amount from the final payment to be made to Applicant as per the scheme of distribution of amount under Resolution Plan - direction to Respondent Resolution Professional to further include amounts towards LC payments and towards Bank Guarantee (BG) payments in the total admitted claim of Applicant - HELD THAT:- The Resolution Plan came to be approved by the CoC with vote share of 70.07%. The appellant has voting share of 6.64% and Appellant voted against the Resolution Plan and thus, was a dissenting financial creditor. The Resolution Plan which is approved in commercial wisdom of the CoC binds all stakeholders including the dissenting financial creditor.
The commercial wisdom of the CoC approving the Resolution Plan is binding on all, which is law laid down by the Hon’ble Supreme Court in K. Sashidhar vs. Indian Overseas Bank & Ors. [2019 (2) TMI 1043 - SUPREME COURT] and the Hon’ble Supreme Court decision in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. [2019 (11) TMI 731 - SUPREME COURT] where it was held that 'The NCLAT judgment which substitutes its wisdom for the commercial wisdom of the Committee of Creditors and which also directs the admission of a number of claims which was done by the resolution applicant, without prejudice to its right to appeal against the aforesaid judgment, must therefore be set aside.'
One of the subject on which CoC is to approve a Resolution Plan is “the manner of distribution proposed”. As noted above, the manner of distribution which was approved by the CoC in 31st CoC meeting contained an approval of deduction of Rs.33.34 Crores from payout of the Appellant. Appellant-Financial Creditor by IA No.222 of 2020 had challenged in effect the decision of the CoC taken in 31st CoC meeting held on 07.02.2020 approving the distribution and opting for second option i.e. deduction of Rs.34 Crores from payout of the Appellant. Appellant- Dissenting Financial Creditor is fully bound by the decision of the CoC and cannot be allowed to challenge the same - It is relevant to notice that by order of the same date 09.07.2020 when IA No.222 of 2020 was decided Resolution Plan was also approved.
Conclusion - No grounds have been made out to interfere with the order passed by the Adjudicating Authority - The CoC's decision to deduct Rs.34 Crores from the Appellant's payout was deemed valid, based on its commercial wisdom and the binding nature of the Resolution Plan. The Appellant, as a dissenting financial creditor, was bound by the CoC's decision, and no grounds were found to interfere with the adjudicating authority's order.
Appeal dismissed.
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2024 (12) TMI 1525
Condonation of delay in filing the appeal under Section 61 of the Insolvency and Bankruptcy Code - Whether under the given factual set of circumstances, the provisions of Section 14 of the Limitation Act, could at all be made applicable to grant the benefit of limitation to the Appellant, during the pendency of the proceedings by way of application? - HELD THAT:- There was a conscious intent that the Ld. Senior Counsel for the Appellant has chosen to address upon Company Appeal (AT) (CH) (Ins) No.192/2022, which is against the Impugned order that was decided on 28.04.2022, which was arising from the interlocutory application proceedings of the same company petition and the principle proceedings of admission into the CIRP, under Section 9, which was made as the subject matter of the Company Appeal (AT) (CH) (Ins) No.193/2022. For the reasons best known, the appeal CA (AT) (CH) (Ins) No.193/2022, was chosen to be addressed upon at a later stage for the reason being that, the consequential effect would be that since the appeal itself was preferred with 45 days of delay, may be that the exclusion which has been sought by the Appellant for a period from 15.03.2022 to 28.04.2022 of 44 days will not be a period, which will be falling within the exemption clause to the proviso, which is strict in its applicability and upon failure to succeed in pressing upon the Condone Delay Application, it would have a direct bearing on the Company Appeal (AT) (CH) (Ins) No.192/2022. Hence, the aspect of exclusion, which has been sought to be argued by the Ld. Counsel for the Applicant, since would be a variable factor in each of the cases depending upon the fact involved therein, cannot be universally made applicable as a concept for the purposes of dealing with an aspect of limitation, when the law itself very strictly creates a restriction on the Appellate Tribunal that while determining the aspect of limitation, it cannot be barge upon, and extend the period beyond which is prescribed under the proviso to Section 61 (2).
The Hon’ble Apex Court in Kalpraj Dharamshi [2021 (3) TMI 496 - SUPREME COURT] has attracted the implications of Section 14 of the Limitation Act because writ remedy was not statutorily contemplated under law. These are not the circumstances which would apply for this instant case, for the purposes of extending the limbs of the interpretation of limitation as prescribed under Section 61 (2), owing to the reason that I & B Code itself has been given an overriding effect to the other law and once it contains a self-contained provision, governing the field of the limitation it has to be determined, on the basis of the strict mandate of the statute provided under Section 61 (2) and at the most it could be extendable upto the upper limit under the proviso to Section 61 (2) of I & B Code. Hence, the Condone Delay Application which has been sought for, is 45 days, which is outside the ambit of the provisions contained under Section 61(2), cannot be allowed.
Application for condonation of delay rejected.
Withdrawal of Corporate Insolvency Resolution Process (CIRP) proceedings under Section 12A of the I & B Code - Whether the Appellant can compel the Respondent to withdraw the Corporate Insolvency Resolution Process (CIRP) proceedings under Section 12A of the I & B Code based on a claimed debt settlement? - HELD THAT:- While exercising powers under Rule 11, the Ld. NCLAT has approved the settlement of a dispute in relation to the dues payable to the Respondent No.03 therein the said case. This would have been a case, had the controversy ended at the stage when there was a Debt Settlement Agreement, the fact of which stands vehemently denied by the Respondent. We feel it apt to observe at this stage itself, that authority of a Hon’ble Apex Court laying down the law and that too which is procedural in nature will always depend upon the facts and circumstances of each and every case and the same cannot be made universally applicable irrespective of considering the facts and circumstances which are involved therein.
The instant appeal would stand answered against the Appellant and we are of the considered view, that a distorted interpretation to the Judgment relied by the Appellant, cannot be given in a manner to mould a Judgment, in a manner as if a right which are given to an Applicant to withdraw an application under Regulation 30A to be read with Section 60 could be chiselled in a manner to impose upon an Applicant by forcing upon him by soliciting a judicial direction to withdraw his own proceedings over which he has a right to pursue and continue in the light of the mandate of Article 14 to be read with Article 21 of the Constitution of India, as there cannot be a deprivation of right to judicial remedies to the citizen of this country of ours, by a judicial adjudication, where a deprivation is being attempted to be forced upon him by calling upon a party by a judicial order for not to pursue a proceeding in which he otherwise intends to continue, being the master of the proceedings drawn by him.
Appeal dismissed.
Conclusion - i) Section 14 of the Limitation Act does not apply to intra-court applications within the same proceeding, as it is intended for proceedings in courts lacking jurisdiction. ii) The decision to withdraw CIRP proceedings under Section 12A lies with the Applicant, and judicial directions cannot compel such withdrawal.
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2024 (12) TMI 1461
Maintainability of petition - applicability of principle of estoppel - Constitutinal validity - Sections 13 of the SARFAESI Act, 19 of the RDB Act, and Sections 7, 9, 10, and 95 of the IBC - jurisdictional bars under Section 34 of the RDB Act, Section 34 of the SARFAESI Act, and Section 63 of the IBC - benefits of Sections 7 and 8 of the MSMED Act of 2006 - HELD THAT:- All the petitions have been filed by the same counsel and, therefore, the petitioners have full knowledge that such repeated petitions have been filed before different High Courts, with identical prayers. It is further found that although in paragraph nos.77 and 78 of the present petition, such facts have been disclosed, still it can be said that the petitioners are trying to somehow get an order in their favour by filing different petitions, with same prayers before the different High Courts.
The present petition is dismissed, with a cost of Rs.1 lac (Rupees One Lac) upon the petitioners, which the petitioners shall deposit with the Registrar General of this Court within a period of one month from today. On deposit of such cost, it shall be transmitted to the account of the High Court Legal Services Committee, Allahabad.
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2024 (12) TMI 1460
Institution of a civil suit claiming a relief by way of a title over the 100 equity shares of the MRF - simultaneous pursuit of a civil suit and a company petition by the Appellant was permissible under the Companies Act, particularly in light of Section 430 of Companies Act or not - HELD THAT:- The dismissal of the Company Petition on 10.08.2022, cannot be legally faulted, because admittedly on that date the Appellant was pursuing two simultaneous remedies, one by way of the Company Petition and the other, by way of a civil suit, which was pending despite of the undertaking given by the Appellant to withdraw the same. Though the withdrawal memo was filed, but no orders were passed till the Company Petition was taken up by the Ld. Tribunal on 10.08.2022 and orders were passed dismissing the company petition, on the ground that civil suit is being simultaneously pursued.
It is a settled preposition of law constitutionally mandated, that a right to judicial remedies is a right which is safeguarded by Article 21 of the Constitution of India, and under this right, nobody could be deprived of availing the judicial remedies before the competent Court of Law for redressal of his grievances, which in the instant case falls to be within an ambit of Section 59 of the Companies Act. But the same was denied by the Ld. Adjudicating Authority on account of the pendency of the civil suit, but we cannot ignore the fact which has been brought on record, that when this company appeal was being considered, it is a fact which is not denied, that on the withdrawal memo was filed in the civil suit except that the Lok Adalat dismissed the suit as withdrawn only on 13.08.2022 after the Company Petition got dismissed.
Owing to the implications of the order passed on 13.08.2022, since in the light of the undertaking given by the Appellant before the Ld. Adjudicating Authority to withdraw the suit, the same has been withdrawn though marginally at a later stage, in that eventuality, minor procedural technicalities should not create any hurdle as such against the Appellant for, depriving him for all times to come, from resorting to his judicial remedies. Therefore, as the suit has been withdrawn on 13.08.2022, the Company Petition No. 106(CHE)/2021, as preferred by the Appellant under Section 59 of the Companies Act, ought to have been considered on its merit.
Conclusion - A right to judicial remedy, is a right envisaged under the Constitution, which cannot be deprived of, merely because of a minor procedural error or procedural technicalities.
Petition allowed.
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2024 (12) TMI 1410
Validity of Look out circular - seeking permission to travel abroad to Dubai and Europe - whether respondent has always cooperated with the investigating authorities in pursuance to the notices/summons received by him? - HELD THAT:- It is undisputed that the investigation in the present case has been pending since 06.06.2022 and with respect to the FIR registered by EOW on 13.04.2021, no Charge Sheet has been filed till date. Further, the petitioner has been involved in the investigation whenever he has been summoned by the Investigating Agencies and has disclosed the required information.
The learned senior counsel on 24.12.2024, on instructions, had undertaken before the learned Single Judge that ‘should the appellant require the respondent’s presence, the respondent will return to the country within five days of receiving such intimation, subject to flight availability’. Moreso, the appellant has further failed to disclose the time frame within which the pending investigations shall be concluded. Needless to say, that in such circumstances, the respondent cannot be deprived of his right to travel abroad.
There are no infirmity in the order passed by the learned Single Judge, which has imposed various conditions upon the respondent while granting him the permission to travel aboard.
LPA dismissed.
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2024 (12) TMI 1316
Challenge Process conducted by the Resolution Professional - Negotiation Process initiated by the CoC/Resolution Professional after the Challenge Process - eligibility to submit a Resolution Plan as per Clause 3 of the Invitation for Expression of interest and the net worth and the turnover of the promoter - material irregularities committed by the Resolution Professional within the meaning of Section 61(3)(ii) of the IBC.
Whether the Challenge Process conducted by the Resolution Professional on 27.10.2023 was not in accordance with the CIRP Regulations, 2016 as well as Process Note dated 12.10.2023? - HELD THAT:- After receipt of the Resolution Plans, the CoC decided to hold a Challenge Process. The Resolution Professional issued a Challenge Process Document on 12.10.2023 containing Rules of the Challenge Process. Resolution Professional also asked by email dated 12.10.2023 to the Resolution Applicants asking them to submit undertaking before commencement of the Challenge Process. As per Annexure 1, the details pertain to financial bid in Challenge Process, base price, increment and other relevant clauses were mentioned. Clause 5(h) provided that value submitted by highest bidder of each round will be disclosed at the end of each round during the meeting to all the participating Resolution Applicants.
There are no error in the Challenge Process insofar as consortium was exited after 2nd round. In the 3rd round, SRA has given a bid of Rs.251 Crores which was with increment of Rs.10 Crores to its earlier bid which was Rs.241 Crores. In the 3rd round, highest bid was Rs.251 Crores and there are no other Resolution Applicants. The Challenge Process was rightly closed - the Challenge Process was conducted by the Resolution Professional in accordance with Process Note. Counsel for the Appellant has also contended that the Challenge Process adopted by the Resolution Professional is in violation of Regulation 39(1A) of the CIRP Regulations - there are no violation of Regulation 39(1A) of the CIRP Regulations in the Challenge Process conducted by the Resolution Professional.
Whether Negotiation Process initiated by the CoC/Resolution Professional after the Challenge Process was in accordance with the CIRP Regulations and RFRP/ Process Note? - HELD THAT:- The Consortium as well as SRA gave their enhanced financial offers by submitting a plan on 04.11.2023. The SRA has given proposal for Rs.261 Crores and Consortium has given proposal for Rs.248 Crores, thus, both the SRA and the Consortium have increased their last financial proposal which was given in the challenge process. Creative also gave proposal of Rs.240 Crores although did not participate in the Challenge Process. In the 12th CoC meeting held on 06.11.2023, the revised proposals received from the Resolution Applicants were opened. One of the CoC members even asked the Consortium if they are satisfied with the Challenge Process and further negotiations by the CoC. In the minutes of 12th CoC meeting, representative of the Consortium stated that they are satisfied with the negotiation process which is recorded in the minutes. Resolution Professional has filed the minutes of 12th CoC meeting.
The Consortium participated in the negotiation process and also gave increased bid. Negotiation process was conducted by the CoC for the value maximisation as is permitted by the RFRP - there are no error in the negotiation process conducted by the Resolution Professional under the decision of the CoC. From the above discussions, it is opined that there is no error in the Challenge Process conducted by the Resolution Professional on 27.10.2023 as well as negotiation process which was undertaken by the CoC after challenge process.
Whether the SRA was ineligible to submit a Resolution Plan as per Clause 3 of the Invitation for Expression of interest and the net worth and the turnover of the promoter Mr. Sahil Mangla could not be included for purpose of net worth of a group it being not a ‘entity’ within the meaning of Clause 3 of Invitation for Expression of Interest? - HELD THAT:- It is true that when no objection was raised to inclusion of Resolution Applicants in the provisional list and the final list, the Resolution Applicants are to be treated eligible to participate in the process and in the process, no objection can be taken regarding eligibility. However, when the Resolution Plan came for approval before the Adjudicating Authority, in a case where it is found that Resolution Applicant is not eligible and does not fulfil any requirement of eligibility, the Adjudicating Authority in no manner is deprived from considering the said question regarding eligibility. The objection regarding eligibility of Resolution Applicant, thus, can very well be considered by the Adjudicating Authority while considering the approval of the Resolution Plan - regarding eligibility of the Resolution Applicant, the same can very well be considered and examined by the Adjudicating Authority when the application to approve the Resolution Plan comes for consideration.
The CoC which consists of financial institutions is well versed with the financials of all Resolution Applicants. The CoC under whose direction the Resolution Professional has issued Invitation for Expression of Interest is well aware of the clauses and eligibility provided. As noted above, the Resolution Plan has placed before the CoC, while computing the net worth and turnover of the SRA, net worth and turnover of the promoter has been included. The definition of ‘entity’ as occurring in Note 5 ‘group’ also includes an individual - the SRA was fully eligible to submit Resolution Plan it having complied with the eligibility as prescribed in Clause 3.
The SRA was eligible to submit a Resolution Plan as per Clause 3 of Invitation for Expression of Interest and the net worth and turnover of the promoter Mr. Sahil Mangla could be included for purposes of net worth of a group it being entity within the meaning of Clause 3 of Invitation for Expression of Interest.
Whether there are any material irregularities committed by the Resolution Professional within the meaning of Section 61(3)(ii) of the IBC so as to interfere with the order of the Adjudicating Authority approving the Resolution Plan dated 06.05.2024? - HELD THAT:- It is already found that the challenge mechanism as well as negotiation conducted by the Resolution Professional is in accordance with the CIRP Regulations and Process Note. In evaluation of eligibility of the SRA also there is no irregularity committed by the Resolution Professional. There are no tenable ground raised within the meaning of Section 61(3)(ii) of the IBC, to interfere with the order approving the Resolution Plan.
Conclusion - The processes and decisions made during the CIRP upheld, emphasizing adherence to regulations and the commercial judgment of the CoC - there are no ground to interfere in the impugned order - appeal dismissed.
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2024 (12) TMI 1315
Admission of Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 - non-fulfillment of the threshold requirement of 100 allottees - Existence of debt and default on the part of the Corporate Debtors in delivering the units within 36 months with grace period of 12 months or not - Existence of privity of contract between the land owning Company and the allottees or not.
Non-fulfillment of the threshold requirement of 100 allottees - HELD THAT:- The effect and consequence of the order, rejecting the Application to initiate criminal proceedings against the Financial Creditors in a class, cannot be bypassed by the Appellant(s) by filing First Information Report or complaints against Financial Creditors. Any Status Report submitted in such criminal proceedings can have no bearing on proceedings, which was taken by Financial Creditors in a class under Section 7. Reliance on Status Report submitted by Appellant(s) in a criminal proceeding can have no bearing while deciding Section 7 Application. The said Status Report is not an evidence on which it can be pronounced that threshold of 100 allottees was not complete in filing of Section 7 Application. Thus, the submission raised by the Appellant(s) that threshold of 100 is not complete has no legs to stand and has to be rejected.
Existence of debt and default on the part of the Corporate Debtors in delivering the units within 36 months with grace period of 12 months or not - HELD THAT:- The unit holders have been waiting for their units for last more than a decade and the amount, was paid in the year 2012 by the allottees, the Appellant cannot be absolved by permitting them to deposit the amount with meagre interest, which was received in the year 2012. The findings recorded by the Adjudicating Authority regarding debt and default and Application filed by the Corporate Debtors itself being IA Nos. 293 and 2497 of 2024 proves beyond doubt that debt and default is admitted on the part of the Corporate Debtor.
Civil Suit has been filed before the District Court Gautam Budh Nagar in the year 2017 and the Writ Petition No.1553/2019 has been filed before the Allahabad high Court in the year 2019. Other Writ Petitions filed by Sammiti were in the year 2019 and 2020. The Project was launched in the year 2012, in which year the amounts were collected from the allottees. Litigation which commenced in the year 2019 and 2020, cannot be a ground to absolve the Corporate Debtor from its responsibility and obligation to complete the Project within the time as contemplated in the Builder Buyers Agreement with the allottees. The fact that litigations are pending with regard to two of the Khasras, which is also included in the Project land, cannot be a ground to absolve the Corporate Debtor from its obligation, nor that can be a reason for not completing the Project - thus, on the ground that litigations filed by the Corporate Debtor for resolution of the issue with respect to title of land are pending, cannot be a ground to reject Section 7 Application, which was filed by the Financial Creditors in a class for initiating CIRP against the Corporate Debtor.
Existence of privity of contract between the land owning Company and the allottees or not - HELD THAT:- All the three Corporate Debtors had joined hands to develop the Project. The Corporate Debtors being closely connected with the construction and implementation of the Project, it is not open for the land owning Company to say that there is no financial debt. There are no substance in submission of the learned Counsel for the Appellant that there being no privity of contract between the land owning Company and the allottees, there is no liability on the land owning Company towards the Project - This Tribunal in Gp. Capt Atul Jain (Retd.) vs. Tripathi Hospital Pvt. Ltd. & Ors. [2023 (7) TMI 1242 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] also came to the conclusion that there was no evidence of any direct transaction to have taken place between the Appellant and the Corporate Debtor and the insolvency resolution can be triggered where there is a financial debt owed to a person. It was held that Appellant was not able to prove that he is a Financial Creditors. This Tribunal affirmed the judgment of the Adjudicating Authority rejecting Section 7 Application. The above judgment does not in any manner help the Appellant in the facts of the present case.
Conclusion - The present is a case of clear default of Appellant in not completing the Project and handing over the units within the time - The challenge in the Appeal is order of the Adjudicating Authority passed in Section 7 Application, which was initiated by allottees of the Corporate Debtors, there are no sufficient ground to interfere with the order passed by Adjudicating Authority under Section 7. It is not for this Tribunal to consider the mode and manner for completion of the Project at this stage. The steps shall be taken by Resolution Professional for completion of the Project in accordance with insolvency resolution process as per the IBC and Regulations.
There are no good ground to interfere with the impugned order - In result, the Appeal is dismissed.
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2024 (12) TMI 1314
Time limitation of Section 95 application filed by the Respondent No. 1 Bank - Section 95 application was filed by a duly authorized person or not.
Whether the Section 95 application filed by the Respondent No. 1 Bank was time-barred? - HELD THAT:- Demand Notice under Rule 7(1) clearly stipulated that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act. The date of default in the Rule 7(1) notice was clearly shown as 04.08.2021 being 60 days from 04.06.2021. The Section 13(2) Notice was also attached with the Rule 7(1) Notice.
Since the guarantee deed specifically mentioned that the guarantee was in the nature of an on-demand guarantee, the default was to arise on the part of the Guarantor only when the Demand Notice was issued as contemplated in the Deed of Guarantee. Thus, the period of limitation of the Personal Guarantor was to commence once the demand was made on the Guarantor by the Respondent No.1 Bank. Hence, the Notice dated 04.06.2021 issued by the Respondent No.1 Bank to the Personal Guarantor has to be treated to be Notice on Demand as contemplated in the Deed of Guarantee. The Rule 7(1) Notice dated 28.06.2021 had therefore rightly recorded that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act and that the date of default occurred on 04.08.2021 on the expiry of 60 days from 04.06.2021.
Section 95 petition which was filed on 18.06.2022 was very much within the limitation period since the Personal Guarantee had been invoked on 04.06.2021 and demand qua the Personal Guarantor arose on the expiry of the period specified in the Demand Notice. When the Respondent No.1 Bank has given time to the Guarantor to make payment by 04.08.2021 in terms of the Notice dated 04.06.2021, there can be no default on the part of the Guarantor on any earlier date.
Whether the Section 95 application was filed by a duly authorized person? - HELD THAT:- It is an admitted fact that the Authority Letter authorising the AGM to file the Section 95 application was signed by the Deputy General Manager. It was clarified by the Ld. Counsel for the Respondent No.1 Bank during the oral submissions that the AGM of the Respondent No1 Bank being SMGS-V was statutorily competent to sign any petition by virtue of The Gazette of India Notification dated 02.05.1987 which notified that in pursuance of Regulations 76(1) of the State Bank of India General Regulations, 1955 framed under Section 50 of the State Bank of India Act, 1955 the Executive Committee of the Central Board of the State Bank of India authorized all Officers in the Grade of SMGS-IV and above to exercise Signing Power in respect of documents connected with the current or authorized business of the Bank. Since the Gazette of India Notification lies in the public domain and is subsisting, the plea raised by the Appellant that the Section 95 application signed by an AGM level Officer of the Respondent No.1 Bank to be unauthorized not impressed - Section 95 application filed by the Respondent No.1 Bank is valid and therefore reject this technical plea raised by the Appellant.
All the three impugned orders therefore do not warrant any interference - The Appeals filed by all the three Appellants are devoid of merit and therefore dismissed.
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2024 (12) TMI 1313
Ownership of property - Validity of the Slump Sale Agreement between the Corporate Debtor and the Appellant - no detail of the loan placed on record - dubious and preferential transaction, carried out to defraud the Creditors - HELD THAT:- Although Appellant has vehemently argued that the amount of Rs. 42.86 Crores was an unsecured loan towards the Corporate Debtor, but there is no documentary evidence that the Corporate Debtor has availed such a huge loan from the Appellant. The Tribunal has also categorically observed that there was no registered Sale/Conveyance Deed, executed between the Parties of the Immovable Property, which as per Section 17 of the Registration Act is a mandatory condition as has been held by the Hon’ble Supreme Court in the matter of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. [2011 (10) TMI 8 - SUPREME COURT], held that an Immovable Property cannot be transferred merely on the Agreement of Sale, rather there has to be registered Sale Deed in that regard.
Also, the Appellant is asked to refer to the Agreement between the Parties on the basis of which the said loan of Rs. 42.86 Crores has been obtained by the Corporate Debtor to which he could only answer that CA Certificate has been attached in this regard which cannot be taken into consideration to hold that the Corporate Debtor has been given such a huge loan by the Appellant and the said advance has been adjusted as a sale consideration on the basis of a mere Agreement to sell and without a Sale Deed.
There are no error in the Impugned Order and thus the present Appeal is hereby dismissed.
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2024 (12) TMI 1248
Exercise of inherent powers of this Court under Section 482 of the CrPC (now Section 528 of the BNSS) - Immunity from prosecution under Section 32A of the Insolvency and Bankruptcy Code (IBC) - Lack of territorial jurisdiction - disclosure of offences in the FIR.
Exercise of inherent powers of this Court under Section 482 of the CrPC (now Section 528 of the BNSS) - HELD THAT:- The Hon’ble Supreme Court, in Neeharika Infrastructure [2021 (4) TMI 1244 - SUPREME COURT], reiterated the principles to be followed while quashing an FIR and held 'When a prayer for quashing the FIR is made by the alleged accused, the Court when it exercises the power under Section 482CrPC, only has to consider whether or not the allegations in the FIR disclose the commission of a cognizable offence and is not required to consider on merits whether the allegations make out a cognizable offence or not and the court has to permit the investigating agency/police to investigate the allegations in the FIR.'
The Hon’ble Supreme Court has time and again reiterated that the power of quashing should be exercised sparingly with circumspection, in the “rarest of rare cases”. Additionally, while examining an FIR/complaint, quashing of which is sought, the Court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint - Thus, ordinarily, the Courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities, however, the inherent power of the Court is to secure the ends of justice or prevent the abuse of the process of law.
As per the law, to invoke its inherent jurisdiction under Section 482 of the CrPC, the High Court has to be fully satisfied that the material produced by the accused is such that would lead to the conclusion that the defence is based on sound, reasonable and indubitable facts, and that the material so produced is such as would clearly defeat or negate the allegations contained in the FIR without conducting trial - Further, as per Rajiv Thapar v. Madan Lal Kapoor [2013 (1) TMI 932 - SUPREME COURT], the material placed on record has to be of such impeccable quality that would persuade a reasonable person to dismiss and condemn the accusations as false. Therefore, in order to meet the ends of justice, the High Court may be persuaded by its judicial conscience to prevent the abuse of the process of law.
Immunity from prosecution under Section 32A of the Insolvency and Bankruptcy Code (IBC) - It is the case of the petitioner that the impugned FIR is liable to be quashed on merits as the same cannot exist qua the petitioner in view of Section 32A of the IBC - HELD THAT:- In Ebix Singapore Pvt. Ltd. [2021 (9) TMI 672 - SUPREME COURT] submitted a resolution plan for Educomp Solutions Ltd., a CD undergoing the CIRP under the IBC. While dealing with various legal issues, the Hon’ble Supreme Court observed that Section 32A of the IBC was introduced to provide immunity to the CD and its assets from liabilities arising out of past offenses once the resolution plan is approved. It was also observed that the said provision ensures the clean slate principle, shielding the CD and its assets from past liabilities once a resolution plan is implemented. It was further clarified that this immunity is crucial for the successful implementation of resolution plans and encourages resolution applicants to participate in the CIRP.
Further, in Ajay Kumar Radheyshyam Goenka [2023 (3) TMI 686 - SUPREME COURT], the Hon’ble Supreme Court while upholding the settled position of law observed that Section 32A of the IBC ensures that the corporate debtor is freed from the past liabilities under the approved resolution plan in the event the new control is with the person/management which is not related to the person/management related to the commission of such offence. However, while stating the effect of Section 32A of the IBC on the directors of the company, it was made clear by the Hon’ble Court that the criminal liability of directors and officers of the concerned corporate debtor is not absolved and the IBC does not shield individuals from personal criminal liabilities under the Negotiable Instruments Act, 1881.
Therefore, it is settled that once a company, against whom an FIR is registered, undergoes CIRP and a resolution plan gets duly approved by the NCLT, whereby, the control of the affairs of the concerned CD is taken over by a new management which is not related to the CD’s erstwhile directors/promoters who are related to the allegations of commission of such offence, the said company’s liability for an offence committed prior to the commencement of CIRP ceases and the concerned CD shall not be prosecuted for such an offence from the date the resolution plan has been approved - In the instant case, it is an admitted position of fact that the impugned FIR pertains to the allegations of commission of fraud and diversion of funds by the petitioner and its erstwhile directors/promoters during the period 2008 to 2017 which is apparent from the bare reading of the complaint and FIR.
Keeping in mind the settled position of law, the admitted position of facts that the offences alleged in the complaint and the FIR pertain to the period 2008-2017, i.e., before the commencement of the CIRP; resolution plan has been approved by the learned NCLT and there has been no objection/appeal against the same; the respondent CBI has not objected or brought on record any contention to submit to the effect that the resolution applicant is related to the persons accused of commission of offences, this Court is of the view that there are cogent grounds to invoke Section 32A of the IBC - It has been ascertained that Section 32A of the IBC protects a CD and leads to extinguishment of any criminal liability of the CD if the control of the said CD goes in the hands of the new management which is different from the original/old management.
This Court also deems it apposite to state that the present petition has been adjudicated only with respect to the contention of immunity from the prosecution of the CD/petitioner under Section 32A of the IBC and has neither dealt with the issues on merits of the allegations levelled in the impugned FIR nor with the issue of territorial jurisdiction.
Conclusion - In view of the undisputed fact that the CIRP in regard to the petitioner company commenced on 10th October, 2019 whereas the FIR was registered on 7th February, 2023 in regard to the alleged offences committed between the year 2008 to 2017, and that the resolution plan of the CD has been approved on 17th February, 2023 by virtue of which a new management has taken over the control of the petitioner/CD; any liability for such offences shall cease against the petitioner/CD and the petitioner cannot be prosecuted for the said offences as the same were committed prior to the approval of the resolution plan. Therefore, the impugned FIR is liable to be quashed qua the petitioner.
Petition allowed.
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2024 (12) TMI 1247
Seeking withdrawal of the Insolvency Petition u/s 12A of the IBC r/w Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - submission pressed by the Appellant is that the Resolution Professional has no jurisdiction to pray for withdrawal of the application.
Whether the Resolution Professional had any jurisdiction or authority to file a purshish for withdrawal of the application? - HELD THAT:- It was the Resolution Professional who has filed the application seeking withdrawal of the CIRP. The Hon’ble Supreme Court had occasion to consider the entire statutory scheme for withdrawal of CIRP in recent judgment of GLAS Trust Company LLC [2024 (10) TMI 1185 - SUPREME COURT (LB)]. The Hon’ble Supreme Court has laid down that after admission of CIRP, the CIRP process becomes in rem proceeding and it is the Resolution Professional who has to thereafter conduct the proceeding and after proceedings having become in rem, they are no longer the preserve of only the applicant creditor and the corporate debtor and even creditors who were not the original applicants, become necessary stakeholders - The Hon’ble Supreme Court after noticing the entire statutory scheme in the IBC for withdrawal of the application held that the application for withdrawal has to be filed through the Resolution Professional.
Thus, it is the IRP/RP who is the person in control of the insolvency proceedings including the proceedings initiated by Resolution Professional for withdrawal under Section 12A - there are no lack of jurisdiction in the Resolution Professional filing purshish for withdrawal of Section 12A application.
In the present case, the MHIL has filed its claim in Form C on 11.06.2024, as submitted by Counsel appearing for MHIL which claim was kept on verification by the Resolution Professional for long period and could be admitted only on 16.09.2024 and prior to that date, MHIL has to file an application seeking intervention as well as seeking a direction to accept the claim of MHIL - The withdrawal of the application under Section 12A is on account of subsequent event which has taken after 16.08.2024 i.e. admission of the claim of MHIL on 16.09.2024 i.e. much before the application filed under Section 12A could be heard or allowed. The Resolution Professional has rightly brought into the notice of the Adjudicating Authority on 17.09.2024 when application came for hearing that claim has been admitted and CoC has to be re- constituted. It is thus satisfied that the Resolution Professional had every jurisdiction to file purshish to withdraw of the application. In the facts of the present case, Adjudicating Authority has permitted withdrawal of Section 12A application in accordance with law by order dated 12.11.2024.
There are no error in the order dated 12.11.2024 passed by the Adjudicating Authority. The Appeal filed against the earlier order dated 15.10.2024 has become infructuous in view of the subsequent order dated 12.11.2024 - appeal dismissed.
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2024 (12) TMI 1246
Determination of the date of default for the purpose of invocation of the proceeding under Section 7 of I & B Code - Appellant had preferred Writ Petition before the High Court of Telangana and the same is still pending consideration - what would be the criteria to determine, as to what would be the date of default has to be, either 01.10.2012 or 03.01.2020, where the OTS/Compromise was in favour of the Financial Creditors was ultimately withdrawn in the meeting of the members of consortium on 04.02.2019?
HELD THAT:- The Ld. Adjudicating Authority while scrutinizing the propriety of the judgment referred to, as rendered in the matters of Bijnor Urban Co-Operative Bank Limited Vs. Meenal Agarwal & Others [2021 (12) TMI 669 - SUPREME COURT], which was relied by the Appellant, has answered the same by observing thereof, that there cannot be any contrary view, with regards to the guidelines issued for the grant of benefit of the OTS scheme, which though cannot be claimed as a matter of right, because it is an arrangement, made under the guidelines issued by the Reserve Bank of India in order to carve out a middle, way for shortening the settlement of the dispute, but it is not as a matter of right. The Ld. Adjudicating Authority has observed that, the aforesaid authority in the matters of Bijnor Urban Co-Operative Bank Limited [2021 (12) TMI 669 - SUPREME COURT], which deals with regards to the modalities to be adopted for sanctioning of the OTS, for settlement of a dispute is not an arrangement, which is available to a dishonest borrower. The defaulter, Corporate Debtor has not remitted the amount.
It was contended that the date of declaration of the account has to be Non-Performing Asset (NPA) on 01.10.2012, would not be the actual date of determination of the limitation, because the same according to the Appellant was to be considered, from the date when the Corporate Debtor has acknowledged the dues - The Ld. Adjudicating Authority, observed that the application under Section 7 of the I & B Code, has been filed on 19.07.2020, and that is being argued to be well within the limitation, determining the same to be with effect from the compromise decree of 03.01.2020. The Ld. Adjudicating Authority considered the aforesaid aspect and ultimately observed, that default in the case of the proceeding has to be reckoned from the date when the financial creditor had actually got the knowledge of the default having been committed, which in the instant case will be falling to be 01.10.2012 when the notices under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was issued.
Commission of a default consciously means, that it is an expression of default when it is realized and accepted by the Financial Creditor and accepted by the Corporate Debtor when the notices under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was issued and accepted by the Corporate Debtor. The aspect of default as defined under Section 13 (2) of the SARFAESI Act was to be reckoned from the date notice is issued. It does not mean a debt when held or any part or instalment of the amount becomes due to be payable, but not paid. It would be actually be the default which has occurred when the notices were issued on 01.10.2012, for drawing the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, reckoning of the period of limitation prescribed under Article 137 the Limitation Act, since has been given a retrospective effect for the purposes of the proceeding under Section 7 or 9 of the I & B Code. The drawing of the proceedings by issuing a notice or demand on 29.08.2018, after the reckoning of the default committed on 01.10.2012, the procedure under Section 7 rendered to be initiated and barred by limitation.
As the entire proceeding under Section 7 of I & B Code, was barred by limitation, the same does not hold merit and would accordingly stand ‘dismissed’.
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2024 (12) TMI 1203
Admission of application u/s 7 of the Insolvency and Bankruptcy Code, 2016 - withdrawal u/s 12A of the IB Code - HELD THAT:- In view of Section 12A of the IB Code, obviously on the basis of the statement of the first respondent, interference cannot be made with the impugned order - the view taken by the NCLAT is agreed upon. There is no error therein.
Accordingly, the appeal is dismissed.
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2024 (12) TMI 1202
Suspension of Petitioner’s registration as an Insolvency Professional for a period of one year by Disciplinary Committee - Petitioner’s engagement of M/s Ibay Capital, a firm owned by his brother, without proper disclosure of appointment to the Committee of Creditors - submission of a valuation report prepared by M/s iVAS Partners, whose appointment and fee had not been approved or ratified by the CoC - purported failure to take timely and appropriate action against Gravity Facility Management Solutions Pvt. Ltd. for non-payment of water charges.
Non-disclosure of Related Party Transaction pertaining to M/s Ibay Capital - Petitioner’s engagement of M/s Ibay Capital, a firm owned by his brother, without proper disclosure of appointment to the Committee of Creditors - HELD THAT:- While Section 28 (1) (f) of the IBC Code, relied upon by the Petitioner, permits the Resolution Professional to undertake Related Party Transaction, the same must be done with the prior approval of the CoC. In the present case, while the CoC approved the appointment of M/s Ibay Capital in its 13th Meeting, the CoC was not made aware of the fact that M/s Ibay Capital was a related party of the Petitioner. Thus, prior approval required under Section 28 (1) (f) of the IBC Code has not been complied with. As regards, compliance with para 3 of the Circular dated 16th January, 2018, the Court has perused the nature of services for which M/s Ibay Capital was hired, as detailed in minutes of the 13th CoC meeting. These services fall within the definition of “professional” rather than mere clerical or logistical support. The Petitioner’s interpretation that no disclosure was necessary is thus off the mark. Thus, in the opinion of the Court, the Petitioner has violated clauses 1,2,5,9,12,13, 14 and 23B of the Code of Conduct, Section 28 (1) (f) of the IBC Code and Circular dated 16th January, 2018. While the Petitioner has relied on the case of Mr. Anil Goel to claim parity it must be noted each case has to be decided on its own merit.
Wile the Court acknowledges that the Impugned order does not indicate any concrete financial irregularity on the Petitioner’s part, it nonetheless remains evident that the Petitioner failed to fully adhere to the requirements of disclosure provided under IBC, 2016 and the regulations framed thereunder. Considering the Petitioner’s role as an Insolvency Professional, entrusted with fiduciary duties and the responsibility to act in the best interests of the stakeholders, strict compliance with these provisions is non-negotiable. Therefore, Petitioner’s oversights in candidly informing the CoC of a related-party engagement justify regulatory intervention.
The valuation report was submitted by M/s iVAS Partners whose appointment or fee was not approved/ ratified by the CoC - HELD THAT:- On perusal of the minutes of 13th CoC meeting, it is clear that CBRE South Asia Pvt. Limited was appointed to determine the cost of completion of the projects. Further, in the minutes of 17th CoC meeting, it was recorded that the cost of completion report and final valuation report of ‘iRing’ commercial complex were submitted by CBRE. However, there is no mention of any discussion with the CoC regarding the engagement of M/s iVAS Partners, nor was any fee related to them approved by the CoC. Even if the valuation of the iRing Complex was delegated to M/s iVAS, by CBRE, the Petitioner has not placed anything on record to show that the fee paid to M/s iVAS was approved by the CoC. Based on the available documents, it can be concluded that neither the appointment of M/s iVAS Partners nor the fees paid to them were approved by the CoC - RP is mandated to take approval of the CoC for the expenditure incurred to run the Corporate Debtor as a going concern. Therefore, the contention of the Petitioner that he, as an RP, is not required to take approval of the CoC for going concern expenses cannot sustain. Hence, the Court finds that the Petitioner violated Regulation 34 of the CIRP Regulations.
The Petitioner failed to take appropriate action against the Gravity Facility Management Solutions Pvt. Ltd for non-payment of water charges - HELD THAT:- The documents placed on record discloses that the Petitioner had infact initiated necessary action against Gravity Facility Management Solutions Pvt. Ltd. A civil suit for recovery of Rs. 64,20,813/- had been intiated by the Petitioner before the Civil Commercial Court, Guatam Budh Nagar, Uttar Pradesh. The Impugned order fails to take note of the same. In light of the aforenoted, it cannot be said that the Petitioner failed to take appropriate action against the Gravity Facility Management Solutions Pvt. Ltd. Accordingly, the contravention, arising from alleged inaction on the part of the Petitioner, is not made out.
Conclusion - The one-year suspension, therefore, stands supported by at least two valid grounds, while the third ground is found lacking. Accordingly, the Petitioner’s plea to set aside the suspension order, in its entirety, cannot be granted - application disposed off.
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