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IBC - Case Laws
Showing 181 to 200 of 9417 Records
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2024 (12) TMI 1201
Condonation of delay of 156 days in re-filing the appeal - sufficient cause for not filing the Appeal presented or not - HELD THAT:- From the series of events as enumerated, it is noted the Appellant has not been vigilant enough in prosecuting the Appeal which was initially e-filed on 01.06.2023 and finally refiled on 22.11.2023 after a huge delay of 156 days. The explanation given by the Appellant is found to be not sufficient to condone the delay.
The Respondent has also relied upon various judgments of Hon’ble Apex Court. The adherence to procedural timelines has been emphasised again and again by Hon’ble Apex Court and also this Appellate Tribunal in various judgments - Reliance placed in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] where it was held that 'on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicating Authority and/or Appellate Tribunal, the delay or a large part thereof being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal itself, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal to extend time beyond 330 days.'
The issue of timelines has been further elaborated by Hon’ble Apex Court in EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED & ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED & ORS. [2021 (9) TMI 672 - SUPREME COURT] where it was held that 'Any judicial creation of a procedural or substantive remedy that is not envisaged by the statute would not only violate the principle of separation of powers, but also run the risk of altering the delicate coordination that is designed by IBC framework and have grave implications on the outcome of the CIRP, the economy of the country and the lives of the workers and other allied parties who are statutorily bound by the impact of a resolution or liquidation of a corporate debtor.'
All above judicial pronouncements don’t support the case of the Appellant. IBC proceedings are time bound. No indulgence can be given for condoning such long delays which do not have sufficient casue. It appears that the Appellants’ attempts are to hinder and restrict the resolution process from attaining finality. Under these circumstances of 156 days of delay in refiling and also supported by judicial precedents and provisions of the Code, re-filing delay cannot be condoned.
Appeal dismissed.
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2024 (12) TMI 1200
Rejection of intervention application filed for the purposes of approval of the Resolution Plan under Section 30 of I & B Code - Applicant/Appellant herein had participated and has been determined as to be an unsuccessful Resolution Applicant - locus standi to become a party to the proceedings - Impleadment of M/s Lulu International Shopping Malls Private Limited.
Rejection of Intervention Application - HELD THAT:- The Applicant himself was admittedly determined as be an unsuccessful Resolution Applicant. The rejection of the of the intervention Application was rightly made because the Appellant was not even required to be heard even at the consideration of approval of the stage when the Resolution Plan is placed before the Ld. Adjudicating Authority for its approval.
Rejection of application filed for the purposes of approval of the Resolution Plan under Section 30 of I & B Code - HELD THAT:- As far as, the aspect pertaining to Section 30 (2) of I & B Code, it would be absolutely falling within the domain of the learned Adjudicating Authority to determine as to whether the approved Resolution Plan by the COC falls to be within the parameters prescribed therein, as that contained in clause A & B of Section 30(2). Ensuring the satisfaction of those conditions is a prerogative of the tribunal and not a right of the Appellant to ensure its compliance, particularly when the plan of the has Appellant already been rejected as their rights are not at all to be affected at the stage when the mechanism prescribed under section 53 of I & B Code, was to be resorted to. Hence the appeal lacks merit and the same would stand dismissed.
Impleadment of M/s Lulu International Shopping Malls Private Limited - HELD THAT:- Having considered the fact that the plan already stands approved and if any orders are likely to be passed in the instant appeal their rights are likely to be affected, the IA No. 1195/2024, would stand allowed, the applicant intervener M/s Lulu International shopping malls Private Limited, is being permitted to intervene in the appeal. The Appellant herein, who is also the appellant of the appeal already decided by the aforesaid part of today's judgment who has put a challenge to the order passed on IA No. 1229/2024, as rendered in CP(IB)No. 296/7/HDB/2022. The factual part as far as the instant appeal is concerned, the same will remain similar up to the stage of filing of the application IA No.1229/2024, preferred by the appellant who has already been dealt with the above, and has been determined as to be an unsuccessful Resolution Applicant and whose Intervention Application has been rejected.
Owing to the fact that the Appellant's Intervention Application has been rejected and its rejection has been affirmed by the Judgment rendered in Company Appeal AT CH (Ins) No. 342/2024 as decided today the limited question which would be required to be venture is as to whether, at all the Company Appeal AT CH (Ins) No. 343/2024, preferred by the Appellant whose intervention has been rejected as against the decision rendered on IA No. 1229/2024, could at all put a challenge to the process of approval of the Resolution Plan, is to the effect that since the appellant has got no locus standi and their Intervention Application has already been rejected.
As such the relief sought for in IA No. 1229/2024, as against the approval of the Resolution Plan, it as stood submitted by the newly impleaded Respondent M/s Lulu International shopping malls Private Limited, the same cannot be questioned by the present appellant hence the appeal at their behest as against the process of the approval of the Resolution Plan would not be tenable the same would too stand dismissed.
The revised plan submitted by the Appellant has been rejected and the rejection of the plan has not been challenged has attained finality, has no locus to agitate a cause by intervention or by challenging approval of Resolution Plan - Since the Resolution Plan of the Appellant has been rejected, he has no locus standi to either intervene or to put a challenge to the process of the approval of the Resolution Plan granted in favour of M/s Lulu International shopping malls Private Limited.
Appeal dismissed.
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2024 (12) TMI 1199
Dismissal of petition for being barred by limitation as having been preferred beyond the prescribed period contemplated under law for initiation of the CIRP proceedings - HELD THAT:- In the instant Appeal, actual balance period of limitation remaining with effect from 01.03.2022 is the period from 01.03.2022 to 06.09.2022, that is, 190 days. Since this is greater than 90 days, the end date of limitation period will continue to be 06.09.2022 and not 22.08.2024 as contended by the Appellant.
The determination of period of limitation as it has been sought to be impressed upon by the Counsel for Appellant, in which he is attempting to compute the end date of the limitation period by adding 905 days from 01.03.2022 on the premises that 905 days is the actual balance period of limitation remaining is absolutely a misconceived notion because the actual balance period of limitation has to be calculated from 01.03.2022 - as the Company Petition was filed only on 17.04.2023, it is clear that it has been filed much beyond 06.09.2022, the end date of limitation period and accordingly, the rejection of the Company Petition on the ground that has been observed by the Learned adjudicating authority does not suffer from any error.
The dismissal of the Company Appeal is also desirable for the reason being that, the proceedings which are held under the I & B Code,2016, are to be strictly construed in a straight jacketed formula, so far it relates to the aspect and computation of limitation, because period of limitation invariably in all the proceedings under the I & B Code, 2016 has an objective to be attained and it cannot be stretched according to the expectation of the appellant to defeat the very objective of the Act, which itself contemplates that, the proceedings of CIRP has had to be concluded in the specified time frame.
Appeal dismissed.
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2024 (12) TMI 1152
Classification of appellant - ‘Financial Creditors’ within the meaning of sub-section (7) of Section 5 of the Insolvency and Bankruptcy Code, 2016 or not - whether the appellants can be classified as ‘Secured Creditors’ and paid commensurate to their security interest? - HELD THAT:- Section 14(1) imposes an embargo or prohibition on certain acts. However, it does extinguish the claim. If the argument that the claims of all the creditors of the Corporate Debtor are extinguished once the moratorium comes into force is accepted, no creditor would be able to file a claim. For example, if money advanced is secured by a promissory note or a negotiable instrument, a suit for recovery based on the said documents will not lie once a moratorium comes into force. But, the liability under the documents will continue to exist. In fact, after moratorium, no creditor can recover any dues from the Corporate Debtor. But still, there is a provision for making a claim. Hence, the argument based on moratorium deserves to be rejected. The DoH will continue to be valid. However, on the basis of the DoH, something which is prohibited by Section 14, cannot be done. Therefore, Section 14 will be of no assistance to the 1st respondent-Doha Bank. 64. When we are on the interpretation of DoH, we must refer to sub-clause (vi) of clause 16 of the DoH, which provides that every provision contained in the deed shall be severable and distinct from every other such provision.
If the right to payment exists or if a breach of contract gives rise to a right to payment, the definition of ‘claim’ is attracted. Even if that right cannot be enforced by reason of the applicability of the moratorium, the claim will still exist. Therefore, whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of ‘claim’.
Much capital was made of the fact that the CoC, including the appellants as well as the third-party lenders, have voted for the Resolution Plan. At this stage, it is noted that the NCLAT has not held against the appellants on the ground that if the case of the appellants is accepted, it will amount to modification of the Resolution Plan - The NCLAT observed that the Resolution Plan was rightly approved, subject to the disposal of the pending application. In fact, in paragraph 7, the NCLAT observed that depending upon the outcome of the applications, if the Resolution Plan requires to be reconsidered, the adjudicating authority will do so after hearing the parties. This order has become final.
The sum and substance of the above discussion is that the impugned judgment and order dated 9th September 2022 passed by the NCLAT cannot be sustained, and the order dated 2nd March 2021 of the NCLT deserves to be upheld. Accordingly, the impugned order of the NCLAT is quashed and set aside, and the order dated 2nd March 2021 passed by the NCLT, Mumbai Bench (adjudicating authority) is restored.
The appeals are, accordingly, allowed.
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2024 (12) TMI 1151
Extinguishment of claim - non-implementation of resolution plan - whether the Adjudicating Authority, on the grounds of non-implementation of the plan, could have revived the gratuity dues claims of the Respondent and given directions to pay gratuity dues to the Respondent without consideration by the CoC? - HELD THAT:- After the Corporate Debtor is admitted into CIRP, RP invites claims and after collating and updating the same in the Information Memorandum thereafter invites potential resolution applicants to submit their respective resolution plans before the CoC. The plans are deliberated and the best plan approved by the CoC in exercise of their commercial wisdom is placed before the Adjudicating Authority which then arrives at a subjective satisfaction that the plan conforms to the requirements as provided under Section 30(2) of IBC and thereafter grants its approval to the Resolution Plan. The Adjudicating Authority while approving the Resolution Plan has to see that the plan does not contravene any requirements set out under Section 30(2) of the IBC and also that the Resolution Plan can be carried out efficiently and satisfactorily as per Section 31(1) of the IBC.
Approval of a resolution plan by the Adjudicating Authority is statutorily recognized as a closure to all claims that creditors or other relevant entities may have against a Corporate Debtor unless it is challenged within the statutorily prescribed time-limit. It is significant to note that once the Adjudicating Authority approves the Resolution Plan, the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan.
Facts on record show that this aspect of the plan was never challenged by the Respondent. Thus, the plan had undisputably attained finality. Further the SRA has already made payments to the stakeholders as per the approved plan. The Appellant have placed reliance on the legal precept laid down by the Hon’ble Supreme Court in Ghanshyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and Ors. [2021 (4) TMI 613 - SUPREME COURT] to contend that belated claims cannot be taken up for inclusion in the Resolution Plan and after placing reliance thereon asserted that the SRA cannot be saddled with the liability of claims which were not part of the plan.
The Hon’ble Supreme Court has time and again held that it an imperative need to impart finality to the resolution process by protecting an SRA from undecided claims.
In the present case, the plan having been approved by the Adjudicating Authority on 16.04.2019, the stage to challenge the plan approval came to an end long time back. Therefore, the Resolution Plan as approved by the Adjudicating Authority has become binding on the Corporate Debtor, creditors, guarantors and other stakeholders involved in the Resolution Plan. Having noticed the contours of IBC and settled jurisprudence, the derivative is crystal clear that no surprise claims should be flung on the SRA in a belated manner.
In the present case, there has been a lapse of more than 5 years since approval of the resolution plan. After the Adjudicating Authority had approved the resolution plan, the same was not challenged and had therefore acquired finality thereby vesting a right in favour of the SRA to acquire the Corporate Debtor in terms of the resolution plan. The same vested right therefore cannot be taken away except in accordance with law. Allowing any interference with the plan at this stage by introducing new claims would prejudice the SRA and put the Corporate Debtor into the throes of grave and unpredictable uncertainty at a time when the resolution plan has been implemented and the CoC not in existence anymore.
Considering the overall architecture of the IBC and the Court evolved jurisprudence, it is clear that the Adjudicating Authority is not empowered to modify the resolution plan approved by the Committee of Creditors. In the eventuality of the Adjudicating Authority finding that the approved resolution plan requires certain modifications, it can only make suggestions regarding the modification of plan to the CoC but cannot unilaterally modify the plan - There is no material on record to demonstrate any such non-compliance or default or failure or breach attributable on the part of the SRA in the plan implementation for the Corporate Debtor to warrant interference by the Adjudicating Authority.
The Adjudicating Authority has clearly exceeded its jurisdiction - Both the impugned orders are set aside. The Appeals are allowed.
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2024 (12) TMI 1150
Rejection of recall of the admission order - withdrawal of CIRP u/s 12A of the Insolvency and Bankruptcy Code (IBC) - exercise of inherent jurisdiction permitting withdrawal of CIRP proceedings against the CD.
Rejection of recall of the admission order - HELD THAT:- The Adjudicating Authority did not commit any error in rejecting the prayer of the Appellant in IA No.2241 of 2024 for recall of the order dated 08.10.2021. The Adjudicating Authority has also in paragraph 26 has noted the order passed by this Appellate Tribunal and has rightly observed that no case has been made out for recall of the admission order dated 08.10.2021. There are no error in the order of the Adjudicating Authority rejecting the prayer of the Appellant to recall order dated 08.10.2021. The order of Adjudicating Authority to that extent is not interfered with.
Withdrawal of CIRP u/s 12A of the Insolvency and Bankruptcy Code (IBC) - exercise of inherent jurisdiction permitting withdrawal of CIRP proceedings against the CD - HELD THAT:- With regard to withdrawal under Section 12A of the IBC, the law has been settled by Hon’ble Supreme Court in Glass Trust Company LLC v. BYJU Raveendran [2024 (10) TMI 1185 - SUPREME COURT (LB)]. The Hon’ble Supreme Court in the said judgment has noticed the procedure for withdrawal of the CIRP as provided in Section 12A and Regulation 30A of the CIRP Regulations - In the present case, Section 7 Application has been filed by Respondent Nos.6 to 9 and unless an Application is filed by the Applicant, who has initiated Section 7 Application, compliance of Section 12A read with Section 30A, cannot be made. The present is not a case where CIRP can be withdrawn under Section 12A read with Regulation 30A.
There can be no quarrel to the proposition that in a case where Adjudicating Authority comes to the conclusion that ingredients of Section 65 are attracted, i.e. Application has been filed with fraudulent or/ with malicious intent for the purpose other than the resolution of the Corporate Debtor, the Adjudicating Authority may impose on such person penalty. In a case where finding is returned within the meaning of Section 65, the Adjudicating Authority can very well exercise its inherent jurisdiction to close such CIRP proceedings.
While considering the exercise of inherent power by the Adjudicating Authority, it is already noticed the judgment of the Hon’ble Supreme Court in SBI vs. Consortium of Murari Lal Jalan & Florian Fritsch [2024 (1) TMI 1021 - SUPREME COURT], wherein the Hon’ble Supreme Court laid down that in an appropriate case, the Adjudicating Authority very well can exercise its inherent power.
The order passed by Adjudicating Authority rejecting the prayer of the Appellant to recall order of admission is upheld - appeal disposed off.
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2024 (12) TMI 1098
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - Whether the relevant column in Section 7 Application having not been amended by Respondent No.1, other materials can be looked into for the purposes of finding an acknowledgement within the meaning of Section 18 of the Limitation Act? - it was held by CESTAT that 'The acknowledgement continues in balance sheets as on 31st March, 2016 and 31st March, 2017. Hence, the Application under Section 7 of the IBC filed in 26th December 2018 is well within limitation and has rightly been admitted by the Adjudicating Authority.'
HELD THAT:- It is not required to interfere with the order passed by the National Company Law Appellate Tribunal - The Civil Appeals are dismissed.
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2024 (12) TMI 1097
Challenge to NCLAT judgment on default by a suspended Director - HELD THAT:- It is clear that, all issues which are required to be adjudicated, including the facts, have to be raised and decided before the adjudicating authority, that is, the National Company Law Tribunal.
Appeal dismissed.
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2024 (12) TMI 1034
Dismissal of Application u/s 7 of IBC - amount advanced by the Appellant qualifies as a financial debt under Section 5(8) of the IBC or not - Appellant’s Petition is barred by limitation or not.
Whether the amount advanced by the Appellant qualifies as a financial debt under Section 5(8) of the IBC with the confirmation of accounts, TDS deduction and other material on record? - Whether the Appellant’s Petition is barred by limitation? - HELD THAT:- The Respondent has claimed that the confirmation of accounts was forged or issued by unauthorised individuals. It is noticed that there are repeated emails issued to the Appellant from the accountant, namely Mr Dilip Mohanty, who is the Chief Accountant of the group company, namely Supreme and Company Private Limited. In fact, he has signed the documents in the confirmation of accounts which is material on record. He has been corresponding with the Appellant on the email address of [email protected]. It is to be noted that Respondent Company is one of the companies of the Group Company of Supreme. Thus, we find that claim of forgery of confirmation of accounts of the Respondent is unsubstantiated and cannot be accepted as an argument of defence.
With respect to the issue of limitation, it is noted that the Respondent has provided an acknowledgement through the confirmation of accounts and tax on interest with deductions as per Form 26AS, the latest of which being in FY 2020-21. This provides an acknowledgement of debt and provides a fresh starting point for the limitation period and extends the limitation. The demand notice was issued on 12.03.2022 and Section 7 Application was filed on 02.12.2022, which is well within three years from the date of last acknowledgment in FY 2020-21. Respondent’s argument that the Petition was barred by limitation is untenable and needs to be rejected.
It is to be noted that the loan is also recorded in the balance sheet of the Appellant even though as “other liabilities” instead of “loan” and this does not negate the existence of a financial debt and therefore the conclusion of the Adjudicating Authority that this is not a financial debt cannot be sustained. Even if this material on record not relied, there is sufficient other material on record to establish debt and default.
Whether the dismissal of the Section 7 Petition by the Adjudicating Authority is sustainable or not? - HELD THAT:- The debt and default is established in the matter. In fact, the Respondent has not even bothered to appear before this Tribunal to defend its case. Under these conditions when the Appellant has been able to establish the debt and default, the finding of the Adjudicating Authority dismissing the Section 7 Petition cannot be sustained. Accordingly, the order of the Adjudicating Authority dated 21.11.2023 is set aside. The Corporate Debtor, namely Brick and Mortar Realty Private Limited, is ordered to be proceeded under Section 7 of the Code.
Appeal allowed.
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2024 (12) TMI 1033
Challenge to order approving the Resolution Plan - Non-admission of the appellant's claim by the Resolution Professional - HELD THAT:- From the facts brought on the record, it is not shown that the Appellant at any point of time raised any grievance regarding non admission of claim nor claimed to have filed any application before the Adjudicating Authority challenging non-admission of the claim. Resolution Professional has published four updated list of creditors, where the claim of Appellant was reflected and in the list, it was stated that the claim was not admitted.
The list of creditors mentioned the claim of the Appellant as not admitted but no steps were taken by the Appellant challenging non-admission of the claim. As noted above, SRA has also prepared the Resolution Plan treating the claim of statutory authorities as ‘nil’. There are no error in the order of the Adjudicating Authority dated 28.11.2019 approving the Resolution Plan. Appellant having not taken any steps for agitating its claim before the Adjudicating Authority at the relevant time, it is not open for the Appellant to raise any grievance for non-allocation of any amount in the Resolution Plan.
The Hon’ble Supreme Court in Kalpraj Dharamshi & Anr. [2021 (3) TMI 496 - SUPREME COURT] has also noticed one fact that the implementation of the Resolution Plan commenced after approval of the plan. Counsel for the Respondent Nos.2 and 3 has submitted that the Resolution Plan approved was fully implemented and information of the implementation of the Resolution Plan has already been sent to all stakeholders in March, 2021.
Thus, no ground has been made out to interfere with the impugned order passed by the Adjudicating Authority approving the Resolution Plan of Respondent Nos.2 and 3. There is no merit in the Appeal - The Appeal is dismissed.
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2024 (12) TMI 1032
Prayer for recall of the order of liquidation - continuation of the auction process by the liquidator.
Whether Adjudicating Authority committed error in rejecting IA (IB) No.93/CB/2024 filed by the Appellant praying for recall of the order dated 13.12.2023? - HELD THAT:- The order dated 13.12.2023 was an order which was passed by the Adjudicating Authority on an application which was filed by the Resolution Professional praying for excluding the CIRP period from 22.03.2023 till the date of filing of the application (30.11.2023). Adjudicating Authority heard the application and by the order dated 13.12.2023 after noticing the relevant facts refused to extend the period. It was noticed by the Adjudicating Authority that already 365 days have expired.
The Appellant contended that in view of the law laid down by the Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory vs. Satish Kumar Gupta & Ors [2019 (11) TMI 731 - SUPREME COURT], period of CIRP could have been extended even beyond 330 days. There can be no dispute to the proposition laid down by the Hon’ble Supreme Court in the above case. However, for extension of period beyond 330 days there has to be valid reason. The present is a case where in CIRP no substantial progress has been made nor completion of Resolution Process was insight. The most important fact to be considered is that the application which was filed by the Appellant was for recall of the order dated 13.12.2023 passed by the Adjudicating Authority refusing exclusion of the period and directing the liquidation of the corporate debtor.
On looking into the grounds which are available for a recall of the judgment and the grounds which were raised by the Appellant, they does not fall within any of the grounds on which recall could have been directed - the Adjudicating Authority did not commit any error in rejecting application filed by the Appellant for recall of the liquidation order.
Whether the continuation of the auction process by the liquidator, as directed by the Adjudicating Authority, was appropriate? - HELD THAT:- There are no error committed by the Adjudicating Authority rejecting IA (IB) No.93/CB/2024 filed by the Appellant, hence, the liquidation order dated 13.12.2023 remains unaffected. We further are of the view that the Appellant is at liberty to file objection to the auction already undertaken by the liquidator before the Adjudicating Authority which may be considered while considering the application for confirmation of the auction. Appellant is free to raise all issues regarding the auction including inappropriate valuation of the assets as is being contended before us in these Appeals. The order dated 21.11.2024 which is challenged in the Company Appeal also does not require any interference since the said application IA ( IB ) No.301 / CB / 2024 filed by the Appellant is still pending and fixed for 19.12.2024.
There are no good ground to interfere with the orders impugned in these Appeals, giving liberty to the Appellant to raise objection with respect to auction already held by the liquidator which are yet to be confirmed by the Adjudicating Authority - appeal disposed off.
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2024 (12) TMI 956
Validity and enforceability of the Resolution Plan approved by the NCLT under the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The order passed by NCLT on 08.04.2021 in I.A.No.981 of 2020, in response to the application filed by the Resolution Professional approving the Resolution Plan by the Committee of Creditor under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 is an appealable order under Section 61 of the Insolvency and Bankruptcy Code, 2016 and ought to have been appealed before the NCLAT. Section 61 of the Insolvency and Bankruptcy Code, 2016 contemplates a limitation of 30 days + 15 days to file such an appeal before the NCLAT. The law on the subject of limitation is clear. The Hon'ble Supreme Court in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and others [2021 (4) TMI 613 - SUPREME COURT] has clearly held in several cases where specific period of limitation is prescribed for condoning the delay. Section 5 of the Limitation Act cannot be invoked to entertain such an application or an appeal.
Therefore, although the respondents may have a case for setting aside the aforesaid order of the NCLT, in absence of a valid challenge to the same in time before NCLAT, the respondents/Commercial Tax Department cannot take a stand contrary to the order passed by the NCLT on 08.04.2021 in I.A.No.981 of 2020.
The Court is of the view this Writ Petition deserves to be allowed. Accordingly, it is allowed.
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2024 (12) TMI 955
Confinement of CIRP to a single project, 'Spaze Arrow' - admission of Section 7 Application filed by Respondents - HELD THAT:- Occupation Certificate is a pre-condition for occupying a premises or building. The facts, which have been brought on record, indicate that in pursuance of CIRP commencement against the CD, the claims have been filed by the allottees of Spaze Arrow and other different Projects. The Respondent has brought on record the list of unsecured Financial Creditors of real-estate allottees as Annexure-B. The Appellant in his rejoinder affidavit has also brought the same list of creditors as on 13.11.2024 as Annexure-30.
From the list of creditors, it is clear that the claims filed by the allottees were to an amount of Rs.1,819,796,643/-. Out of which, the IRP has admitted claim of Rs.727,507,352/- and claims of Rs.868,961,658 is under verification.
The Respondents, who had filed Application under Section 7, relate to Project Spaze Arrow, with regard to which claims have already been filed as noted above. The next Project for which several claims have been filed is the Project ‘Corporate Park’ - the CIRP against the CD commenced on 28.10.2021, i.e., subsequent to Occupancy Certificate or Completion Certificate as was obtained by the CD for Project Corporate Park. Against the order dated 28.10.2021, an Appeal was filed before this Tribunal, in which no interim order was passed. Hence, Civil Appeal No.6798 of 2021 was filed before the Hon’ble Supreme Court, challenging order of this Tribunal, which Appeal was disposed of on account of settlement between the contesting parties.
It is relevant to notice that CIRP against the CD for Project Corporate Park had commenced on 28.10.2021, i.e. date subsequent to CD having obtained Occupancy Certificate and Completion Certificate. The said proceedings were ultimately set-aside on account of settlement before the Hon’ble Supreme Court on 18.11.2021. Large number of Claimants have filed claim arising from the Project Corporate Park.
When the Claimants have filed claims for the Project Corporate Park, which we have noted above and who have pleaded that the Project is not complete despite Occupancy Certificate and Completion Certificate, by confining the CIRP to only one Project – Spaze Arrow, shall tantamount to excluding the claims filed before the RP from different Project. Considering the facts and circumstances, which have been brought on the record by the parties, are of the view that at this stage, it is not persuaded to pass an order, confining the CIRP to only one Project, i.e. Spaze Arrow, as prayed in the Application filed by the Appellant/ Applicant.
Application dismissed.
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2024 (12) TMI 954
Petition filed by the Appellant is barred by limitation or not - Appellant as a decree holder, fall within the definition of a "Financial Creditor" or not.
Whether the Appellant, as a Decree Holder, qualifies as a "Financial Creditor" under the IBC? - HELD THAT:- The Appellant gets support from the judgment of Hon’ble Supreme Court in Laxmi Pat Surana vs Union of India [2021 (3) TMI 1179 - SUPREME COURT] wherein it was held that Section 18 of the Limitation Act gets attracted the moment acknowledgement in writing signed by the parties against whom such right to initiate resolution process under Section 7 of IBC ensures.
Basis the definition of the Creditor as in the Code and also the case laws as cited above, we find that the Appellant’s status as a Decree Holder does not preclude him from being recognised as a Financial Creditor. Also, the Settlement Agreement dated 11.09.2014 clearly recognised the Appellant’s debt arising out of a financial transaction. The Settlement Agreement recorded the Appellant’s financial claim, and the decree passed by the Hon’ble Delhi High Court formalised the Respondent’s obligation to pay this amount. Therefore, the decree does not alter the character of the underlying financial debt.
Whether the Petition filed by the Appellant is barred by limitation? - HELD THAT:- In the facts of the case, it is found that even though the cause of action for the Appellant arose when the cheque issued by the Respondent was dishonoured on 07.04.2016, yet under Section 18 of the Limitation Act, 1963, a fresh period of limitation begins from the date of acknowledgment of the liability.
In the facts of the case the limitations start running from the date when the payments are not being made as per the settlement. The default occurred on 07.04.2016 when the cheque was dishonoured. The Execution Petition was filed by the Appellant on 20.09.2016 and as noted earlier the Respondent had on various hearings before Hon’ble High Court of Delhi, acknowledged the debt as per the settlement. The Respondent on 04.09.2018 and 17.09.2018 had before the Hon’ble High Court of Delhi acknowledged the debt admitted and submissions were made for clearing the same within six months. Therefore, the cause of action effectively starts after six months or Order dated 17.09.2018 i.e. on 16.03.2019. And the Appellant had filed the Section 7 Petition on 11.10.2019 under Section 7 of the IBC. The acknowledgments by the Respondent on 23.08.2018, 04.09.2018, and 17.09.2018, as recorded by the Hon’ble High Court, extended the limitation period under Section 18 of the Limitation Act, 1963 - it can be concluded that the Petition filed on 15.10.2019 was within the limitation period.
The contention of the Respondent that the Petition has been filed with a malicious intent and is covered by International Asset Reconstructions Co. Pvt Ltd [2019 (12) TMI 1583 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] is not borne out by the facts of the case as there are no malicious intent of the Appellant. Therefore, the Adjudicating Authority was incorrect in dismissing the Petition under Section 7 of the IBC on the ground that it is barred by limitation.
Thus, it is evident that the Appellant qualifies as a Financial Creditor, and the Petition under Section 7 of the IBC is within the period of limitation. The NCLT’s Order dated 24.04.2023 is thus erroneous and is liable to be set aside - appeal allowed.
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2024 (12) TMI 953
Admissibility of Section 7 application under the Insolvency and Bankruptcy Code, 2016 - financial debt or operational debt - whether in the given facts and circumstances the financers / alleged financial creditors can maintain the application under Section 7 of the Code or it is a transaction of an operational debt for which an application under Section 9 is maintainable? - HELD THAT:- It would be suffice to note that a similar controversy has been decided by this Court earlier in the case of Minions Ventures Pvt. Ltd. [2023 (3) TMI 1213 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] in which exactly the same issue was raised and this Court categorically held that the case would not be covered by Section 5(8)(e) rather it shall be covered by Section 5(20) and 21(5) of the Code and hence the application filed under Section 7 is not maintainable. However, at the same time, the financers were not left remediless as they are relegated to avail their remedy to file an appropriate application in accordance with law under Section 9 of the Code.
Thus, in view of the law laid down in the case of Minions Ventures Pvt. Ltd., there are merit in the present appeal and hence, the same is hereby allowed and the impugned order is set aside but at the same the Respondents / alleged financers are relegated to their remedy to file an application under Section 9 of the Code, if so adviced, in accordance with law - appeal allowed.
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2024 (12) TMI 952
Rejection of the Appellant's claim by the Resolution Professional (RP) due to delay - Approval of the resolution plan by the Committee of Creditors (CoC) and its implications on pending claims - HELD THAT:- There is no dispute in regard to the fact that public announcement was made on 11.11.2020 and the last date to file the claim was 24.11.2020. There is also no dispute that the application has been filed by the Appellant on account of loss suffered for which the Appellant has already filed a civil suit on 14.10.2019 before the Civil Court, Ahmedabad in which two prayers have been made, namely, for supplying remaining SMP in terms of the purchase order and recovery of a sum of Rs. 6,05,09,000 on account of financial loss. It is not in dispute as well that the application has been filed in respect of the claim of Rs. 6,05,09,000 regarding which civil suit has already pending, however, in any case, the Appellant has admittedly filed the claim in Form B on 19.03.2022 much after 18.10.2021 when the members of all the CoC in its 11th meeting approved the plan submitted by the resolution applicant.
The contention of the Appellant is that the claim was filed on 19.03.2022 during the period when the order passed in suo motu writ petition (c) no. 3 of 2022 by the Hon’ble Supreme Court, therefore, the period was condonable. He has also argued that the claim can be extinguished only after approval of the resolution plan by the Tribunal and has relied upon a decision of this Court in the case of Puneet Kaur [2022 (6) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] but after the decision of the Hon’ble Supreme Court in the case of M/s RPS Infra [2023 (9) TMI 516 - SUPREME COURT] in which the issue was as to whether the appellant’s claim pertaining to an arbitral award, which is in appeal under Section 37 of the said Act, is liable to be included at a belated state i.e. after the resolution plan has been approved by the CoC and the answer to this question was given by the Hon’ble Supreme Court has held that 'The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon.'
The dicta of the Hon’ble Supreme Court in the case of M/s RPS Infra is followed, which is a judgment delivered by the Hon’ble Supreme Court on 11.09.2023 much after the decision in the case of GPR Power [2021 (11) TMI 1045 - SUPREME COURT] decided on 29.11.2021 holding therein that once the CoC has approved the plan then no claim is to be entertained.
There is no error committed by the Tribunal in rejecting the application of the Appellant and rejecting its claim - The appeal is thus found without any merit and the same is hereby dismissed.
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2024 (12) TMI 886
Dismissal of SLP - Legality of the suspension of the petitioner's registration as a Resolution Professional (RP) - contravention of the provisions of Section 30 (2) (b) and (e), 208 (2) (a) and (e) of IBC - It was held by High Court that 'The Disciplinary Committee had failed to indicate the reasons for suspending the petitioner’s registration for a period of one year. The material on the basis of which the Disciplinary Committee proceeded to suspend the petitioner being unquestionable, the period for which such suspension should operate is a matter within the realm of the Disciplinary Committee. The Disciplinary Committee in the light of the jurisdiction conferred upon it by Section 220 of the Code is empowered to take into consideration all relevant aspects including the conduct of RP.'
HELD THAT:- It is not required to interfere with the impugned judgment and, hence, the special leave petition is dismissed.
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2024 (12) TMI 885
Entitlement of Interim Resolution Professional (IRP) to fees - whether he is only entitled to the amount, that was to be paid for the performance of his duties is Rs.4,00,000/- as a whole or Rs.4,00,000/- thereafter too for each subsequent 30 days till the new RP was appointed? - HELD THAT:- By venturing into the observations which has been made by Learned NCLT in IA No.447/2020, wherein it had directed Respondent No.2 to pay a proportional share of Rs.4,00,000/-, the agreed fee which would be payable to the Appellant would be till the new RP has replaced him. Because from records till his date of replacement had worked as IRP, which is fact apparent from records. The fact to be noted is that, the new RP was appointed on 27.11.2020 as per order passed in IA No.562/2019. From the date of expiry of the first slab of 30 days of his appointment as IRP (i.e., on 05.10.2019) till the date of appointment of new RP (i..e, 27.10.2020) wherein it happens to be 53 days, the Appellant is shown to have worked as IRP and would entitled to receive the payment of Rs.4,00,000/- for each 30 days, and for the additional 53 days which amounts to Rs.6,49,290/-.
The actual amount to be received by IRP is at the rate of Rs.4,00,000/- for each 30 days, which would be as determined above that is till 27.10.2020. The amount of Rs.6,49,290/- is directed to be paid to the Appellant within 30 days from the date of this Judgment - Appeal allowed in part.
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2024 (12) TMI 884
Admission of section 7 application - time limitation - Corporate Debtor has able to prove discharge of liability or not - sufficient grounds made out to invoke Section 65 of the IBC for imposing any penalty on the Financial Creditor.
Whether Section 7 Application filed by Respondents No. 1 to 3, the Financial Creditor herein was barred by time? - HELD THAT:- The project having not commenced within seven months from execution of Agreement, the Plan having not been sanctioned within a period of 6 months and grace period of one month from 16.05.2010, the Project never commenced and under Clause 8, the cause of action arose to Financial Creditor to claim refund of the said investment and the said cause of action cannot remain arrested or suspended till the Financial Creditor exercise its option under Clause 6. Limitation for filing the proceeding for claiming refund of investment long expired after three years from 16.12.2010 i.e., in 15.12.2013 itself.
Long silence of the Financial Creditor after 16.12.2010 till filing of Police Complaint by Corporate Debtor itself speaks volumes of the ground realities and State of Affairs between the Parties. We, thus are satisfied that Application filed by the Financial Creditor was hopelessly barred by time and deserves to be rejected. Adjudicating Authority had only adverted to the one part of the submission of the Appellant that on commencement of limitation from 30.07.2019, the Application was barred by time, without adverting to and finding out as to when the cause of action arose for filing the Section 7 Application to the Financial Creditor. As and above the cause of action for filing the Application arose on 16.12.2010 and Section 7 Application which was filed by the Financial Creditor was hopelessly barred by time.
In the present case, the Project did not commence within 6 months and 1 month grace period, which was provided in the MoU when Project did not commence, cause of action arose to the Financial Creditor as per Clause 8 of AoA noted above. Hence the submission of the Respondent that there being continuous obligation, limitation will not commence cannot be accepted.
In view of admission of Financial Creditor, that out of ₹3 Crores paid by the Financial Creditor to the Corporate Debtor, whether Corporate Debtor has able to prove discharge of liability of balance amount of ₹1.7 Crores? - HELD THAT:- The fact that right after execution of the Agreement on 16.05.2010 till sending of the Police Complaint by Corporate Debtor on 04.07.2019, there is not even the letter of demand of any amount from Financial Creditor to the Corporate Debtor towards refund of ₹3 Crores speaks for itself. The letter dated 15.10.2011 was sent by the Financial Creditor, acknowledging the receipt of the payment of ₹1.3 Crores. A Submission was advanced by the Counsel for the Financial Creditor that after receipt of the letter dated 15.10.2011, Corporate Debtor never wrote back to the Financial Creditor that there was other amounts paid by to the Thakkars - The letter dated 15.10.2011 which was sent by the Financial Creditor was only towards acknowledgement of ₹1.3 Crores. When we read the said letter, the said letter does not indicate that Financial Creditor had complaint of non-receipt of any balance amount apart from ₹1.3 Crores. Thus, the said letter 15.10.2011 cannot read to mean that no amount was paid by the Corporate data towards refund of ₹3 Crores received by them.
The Financial Creditor initiated the proceedings by filing Section 7 Application only after Police Complaint was filed by the Corporate Debtor on 04.07.2019, making allegations against Thakkars. Financial Creditor found an opportunity to launch a proceeding after the receipt of the Police Complaint dated 04.07.2019. It is satisfied that Corporate Debtor had refunded the amount of ₹1.7 Crore to Thakkars and their Company, which was meant for refund to the Investors towards their amount of ₹3 Crores - Silence of Financial Creditor for long 8 years of not writing even letter to Corporate Debtor or Vendors/Thakkars clearly indicates that refund of ₹3 Crores was satisfied. Thus, the Developers have refunded the amount of ₹1.7 Crores through Thakkars and its Companies for payment to Investors.
Whether sufficient grounds have been made out to invoke Section 65 of the IBC for imposing any penalty on the Financial Creditor? - HELD THAT:- On looking into the Reply which was filed by the Corporate Debtor to Section 7 Application, although it was pleaded that there is a collusion between Financial Creditor and Thakkars and they have colluded with each other with mala fide intention to cheat the Corporate Debtor, but there are no averment that Section 7 Application has been filed fraudulently or with malicious intent. In the facts of the present case, especially when Corporate Debtor has not pleaded that proceedings have been initiated maliciously with fraudulent intent, the ingredients of Section 65 are not fulfilled, hence Notice under Section 65 is discharged.
The detail facts and opinion given by the IRP were wholly uncalled for IRP who is giving a certificate on 15.07.2022 is not supposed to know the events and facts which transpired between the Parties from 16.05.2010. Learned Counsel for the IRP submits that in view of the `Form–2’ requiring Optional Certificate, the IRP has given the Option Certificate and there was no mala fide intention of the IRP or an intent to help the Financial Creditor. The Optional Certificate was not necessary, and the use of the word “Optional” itself indicates that unless IRP is aware of the facts and events, he is not required to give facts or opinion - Section 7 Application filed by the Financial Creditor was hopelessly barred by time and was nothing but abuse of process of the Court by the Financial Creditor.
Section 7 Application filed by the Financial Creditor dismissed - appeal allowed.
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2024 (12) TMI 847
Entitlement of members to retention allowance - whether the members of the Appellant Association, which is a registered body in the name of M/s. Lanco Infratech Employees Welfare Association, who are 212 in number, are entitled to be paid with the “retention allowance” or not? - HELD THAT:- On analysing the judgment of Sunil Kumar Jain and Others Vs. Sundaresh Bhatt and Others [2022 (4) TMI 888 - SUPREME COURT] from the perspective of Section 53 of the IBC code, it was rendered in those circumstances where, the issue that came up for consideration before the Hon’ble Apex Court, was pertaining to the claim of the workmen employees towards their wages, salary, during CIRP proceedings. It was not a case which was dealing with, any of the aspect of payment of the retention allowance which is a subject altogether, alien to the one which was under consideration in the matter of Sunil Kumar Jain and others (supra). Hence, the observation made in Para 19, where the determination was being made for the entitlement of salary and wages for the workers who worked during the CIRP proceedings, was based upon a case with a marked distinction, than to the one at hand, where the Appellant claims for the retention allowance which is yet to be established as part of wages and salary.
After having scrutinized the Impugned order of, the Ld. Adjudicating Authority, after considering the rival contentions, and particularly the stand taken by the Appellant, based upon the endorsement of 18.05.2017, pertaining to the denial of payment of the retention allowance amounting to Rs. 2,80,36,076/- it is determined to be non-payable as, no service conditions were placed on record, based upon the terms of the appointment, that the retention allowance did ever form as to be part of an emolument, which was ever made payable to the members of the Appellant association, based upon the service contract entered into with them. The payment slip placed on record and the endorsement of the then Managing Director on which the Ld. Counsel for the Appellant has relied heavily, will not establish the case for making the retention allowance as part of salary in itself in the absence of there being any supporting documents, about its legal enforceability. Accordingly, the Appellant and its members would not be entitled for, the payment of the ‘retention allowance’, for the period of claim since not being part of the salary and since not being a fact established by the Appellant before the Ld. NCLT.
The logic which has been assigned by the Ld. NCLT, while rendering the Impugned Order dated 11.03.2024, does not suffer from any apparent error as such, which could call for any interference, in so far as the aspect and entitlement of, the retention allowance is concerned. But having said so, as far as the amount pertaining to the determination of salary for the month of June 2017 is concerned, that will be considered to be paid as per the decision dated 11.03.2024, subject to the condition that it has not already been paid or it is subjected to a challenge before any superior forum.
The Impugned Order dated 11.03.2024, does not suffer from any apparent error as such, which could call for interference in the exercise of our Appellate jurisdiction - The appeal lacks merit and the same is ‘dismissed’.
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