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IBC - Case Laws
Showing 181 to 200 of 9149 Records
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2024 (9) TMI 564
Approval of Resolution Plan - Applicant submits that RP has not issued clarification with regard to certain commercial spaces in the Corporate Debtor’s asset - It is submitted that the Applicant/ Appellant was not informed about the 4th to 9th floor also belong to the Corporate Debtor - HELD THAT:- The entire submission of the learned Counsel for the Applicant advanced, relates to, not divulging about the inclusion of certain floors with commercial spaces in the Corporate Debtor’s assets. It is to be noted that neither in the Appeal, nor in the Application, the Applicant/ Appellant has brought on record the Information Memorandum. The Information Memorandum and virtual room was shared with the Appellant by the RP, he being a Resolution Applicant.
Entire Westin Hotel belong to the Corporate Debtor. With regard to 4th to 9th Floor, it was clearly mentioned in the Information Memorandum that SHPL have assigned it to Savyambhut Marketing Pvt. Ltd. Whatever stated in the Information Memorandum, the conclusion on such assignment was the matter for consideration of the SRA, who had to submit the Resolution Plan. The Resolution Plan for the Corporate Debtor was invited on “as is where is basis” and information was provided to all Resolution Applicants. Learned Counsel for the RP is right in his submission that it was for the Applicant/Appellant to seek any clarification, which it may require regarding the commercial space in the course of its due diligence of the Corporate Debtor. All Resolution Applicants were required to make their own due diligence and submit the Resolution Plan.
The submission, which has been raised by the learned Counsel for the Applicant/Appellant that RP failed to divulge about the inclusion of certain floor with commercial spaces is incorrect on the submissions, which have been advanced by the Appellant itself before this Tribunal.
There is no substance in the submission advanced by the Applicant in the present Application praying for setting aside the order of the Adjudicating Authority and to remand the Plan back to the CoC for fresh consideration. There is no merit in the Application - Application dismissed.
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2024 (9) TMI 563
Rejection of Section 9 Application filed by the Appellant as defective - rejection of application as defective without giving an opportunity of hearing - violation of principles of natural justice - HELD THAT:- The various issues raised by the learned Senior Counsel for the Respondent Shri Amit Sibal need not be gone into at this stage, when the Adjudicating Authority has not adverted to any of the above issues and has rejected the Application as defective. When the Adjudicating Authority has proceeded to dismiss the Application as defective, it was obligatory as per Proviso to Section 9, sub-section (ii) to give a notice to the Applicant to rectify the defect in the Application within seven days from the date of receipt of such notice. The Adjudicating Authority having not issued a notice under Proviso, the order impugned is unsustainable on this ground alone.
The judgment of this Tribunal relied by the learned Counsel for the Appellant in TEK TRAVELS PRIVATE LIMITED VERSUS ALTIUS TRAVELS PRIVATE LIMITED [2021 (4) TMI 813 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI] fully support the submissions of learned Counsel for the Appellant, where this Tribunal has held that before rejection of an Application on the ground of defect, the Adjudicating Authority ought to have provided an opportunity to rectify the defects within seven days.
The order dated 02.01.2024 is set aside - Section 9 Application filed by the Appellant before the Adjudicating Authority is revived - appeal disposed off.
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2024 (9) TMI 510
Suspension of registration of the Petitioner as an Insolvency Professional for a period of two years - Constitution and composition of the Disciplinary Committee - HELD THAT:- The contention of the Petitioner that the Oder of the IBBI suffers from corum non-judice inasmuch as it was only a single member committee which passed the impugned Order, is not tenable in law.
The contention of the learned Counsel for the Petitioner that the IBBI ought to have awaited the proceedings before the Adjudicating Authority instead of rushing with enquiry awarding punishment, cannot be accepted. Both the proceedings are entirely distinct from each other. IBBI has been constituted to oversee the conduct of the IRPs and the Liquidators and to see as to whether the IRPs and Liquidators are acting in compliance with the mandate of the IBC. The IBBI can proceed ahead to investigate into the conduct of the IRPs and the Liquidators even if on getting information that the IRP has committed a misconduct.
Material on record shows that the Petitioner has failed to preserve the assets of the Corporate Debtor. He has not handed over the complete record of the Corporate Debtor to the Liquidator. The Petitioner has allowed suspended ex-Directors to transfer money from the Corporate Debtor's account to his account and has therefore failed to take control and custody of the Corporate Debtor and business records. Material on record discloses that the Petitioner has violated several provisions of the IBC and the Regulations.
In Silppi Constructions Contractors v. Union of India [2019 (6) TMI 1449 - SUPREME COURT], the Hon’ble Supreme Court has followed the aforesaid judgments and reiterated the principle that Courts should exercise a lot of restraint while exercising powers of judicial review in respect of matters pertaining to technical issues as the Courts lack the expertise to adjudicate upon technical issues.
The scope of interference by way of judicial review in commercial matters is extremely limited and can only be justified when a case of arbitrariness, unreasonableness, mala fide, bias, or irrationality is clearly made out. Further, the Courts lack the requisite expertise to adjudicate upon technical issues which are often involved in commercial matters.
The Order of the Disciplinary Committee shows that the reply given by the Petitioner has been considered and all the aspects have been taken care of by the Board and the decision has been taken by the Board after following the due procedure. This Court has gone through the Orders of the Board and the material on record and is of the opinion that the procedure has been followed by the Board before passing the Order suspending the Petitioner herein. The attempt of the Petitioner has been to persuade this Court to substitute its conclusion to the one arrived at by the Board, which is outside the scope of Article 226 of the Constitution of India.
This Court, therefore, does not find any reason to interfere with the Order passed by the Respondents - Petition dismissed.
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2024 (9) TMI 414
Interpretation of statute - Section 220 of IBC - Order passed by the Disciplinary Committee consisting of a whole-time member of the Insolvency and Bankruptcy Board of India - suspension of petitioner’s registration for a period of one year from the date of the order - whether the Disciplinary Committee constituted under Section 220 of the Code can consist of a single whole-time member? - HELD THAT:- What is relevant to note is that though the words in singular would include the plural and vice-a-versa, the same is subject to there being nothing repugnant in the subject or context of the matter. In other words, it is not that in all situations a word in the singular can mean to include the plural and vice-a-versa. The context in which such expression has been used would govern the matter. If the subject or context indicates otherwise, it would not be permissible to interpret a singular word to include the plural and vice-a-versa.
Reference in this regard can be made to the decisions in The Newspapers Ltd. Vs. The State Industrial Tribunal [1957 (3) TMI 55 - SUPREME COURT] and Dhandhania Kedia & Co. Vs. The Commissioner of Income Tax [1958 (10) TMI 11 - SUPREME COURT] wherein it has been held that the principle underlying Section 13 of the Act of 1897 does not have universal application and that the said principle can apply only when no contrary intention is deducible from the scheme or the language used in the statute.
The issue with regard to the requisite number of members of the Disciplinary Committee has to be answered by referring to Clause 2 (1) (c) of the Regulations of the 2017 and not on the basis of the proviso to Section 220 (1) of the Code. There is nothing repugnant either in the subject or context of Chapter VI of the Code or the Regulations of 2017 to construe and restrict the sweep of the expression “members” occurring in the proviso to Section 220 (1) of the Code only to the plural. Rather, the expression “member(s)” in Clause 2 (1) (c) of the Regulations of 2017 is a clear indicator of the intention of the rule-makers that a Disciplinary Committee envisaged under Section 220 (1) of the Code could be either a single member committee or may comprise of members more than one.
In the present case, Clause 2 (1) (c) of the Regulations of 2017 seeks to indicate the manner in which a Disciplinary Committee can be constituted. It could comprise of either a whole-time member or wholetime members. It therefore cannot be said that this clause travels beyond what has been provided by Section 220 (1) since the latter provision merely requires the members of the Disciplinary Committee to be wholetime members of the IBBI. For the very same reason, the ratio of the decision in Bharathidasan University and Anr. [2001 (9) TMI 1126 - SUPREME COURT] cannot be applied to the case in hand. The interim order passed by the Gujarat High Court merely expresses a prima-facie view which cannot be treated as a precedent.
The objection raised by the petitioner to the constitution of the Disciplinary Committee on the ground that it consists only of a single whole-time member of the IBBI cannot be accepted. It would be permissible to constitute a Disciplinary Committee consisting of either a single whole-time member or more than one whole-time member of the IBBI. The challenge as raised therefore fails.
Rule stands discharged with no order as to costs.
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2024 (9) TMI 413
Rejection of Section 9 Application filed by the Appellant/Operational Creditor - reliance on Income Tax Assessment order for rejecting the application - HELD THAT:- The Adjudicating Authority has returned categorical finding that the Income Tax Department has found the invoices bogus, hence, the application was rejected, under Section 9 which was filed by the Appellant. The submission advanced by the Counsel for the Appellant that reliance on Assessment Year 2021-22 could not have been relied is now no more available in view of the relevant assessment orders of the Income Tax Authority passed Company Appeal (AT) (Insolvency) No. 568 of 2024 4 of 4 for the year 2022-23 during which the relevant invoices are covered.
Thus, no grounds have been made out to interfere with order rejecting Section 9 Application. However, rejection of Section 9 Application shall not preclude, the Appellant to take such remedy in law as available.
The imposition of cost deserves to the deleted. The said cost is deleted - appeal dismissed.
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2024 (9) TMI 412
Admitting Section 95 Application challenged by the Personal Guarantor - challenge on the ground that Application filed by Financial Creditor under Section 95 was barred by time - whether Letter dated 12.06.2017 which was written by the Appellant to the Financial Creditor had effect of extending the Limitation for a period of three years from 12.06.2017 or the Letter cannot be treated an acknowledgement within meaning of Section 18 of the Limitation Act?
HELD THAT:- It is well settled that acknowledgement whether by Borrower or by Guarantor has effect of extending the limitation under Section 18 of the Limitation Act. The above proposition was laid down by the Hon’ble Supreme Court in the matter of Laxmi Pat Surana Vs. Union Bank of India & Anr [2021 (3) TMI 1179 - SUPREME COURT]. In Paragraph 48 of the Judgment, Hon’ble Supreme Court held that a fresh period of Limitation be required to be computed from the time when the acknowledgement so signed by the Principal Borrower or the Corporate Guarantor.
The Hon’ble Supreme Court in several cases has laid down that acknowledgement under Section 18 has to be liberally construed and the intention of the Party writing acknowledgement has to be looked into to find out as to whether debt is acknowledged or not.
The Letter contains clear acknowledgment of debt and Adjudicating Authority did not commit an error in giving the benefit of Section 18 of the Limitation Act. When the letter dated 12.06.2017 is treated to be acknowledgement, Limitation of three years will expire on 11.06.2020 and the period from 15.03.2020 to 25.03.2021 directed to be excluded by Hon’ble Supreme Court by its Order passed in Suo Motu Writ Petition No. 03/2020 [2021 (3) TMI 497 - SC ORDER], Application filed on 30.09.2021 was well within time and Adjudicating Authority has rightly overruled the objection of the Appellant that Application is barred by time.
There are no error in the Order of the Adjudicating Authority, holding that Application is well within time - appeal dismissed.
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2024 (9) TMI 411
Challenge to approved Resolution Plan - no consideration with regard to payment to Operational Creditor - Operational Creditor not been proposed any amount in the Resolution Plan - HELD THAT:- Section 30(2)(b) provides that payment of debts of the Operational Creditors shall not be less than the amount to be paid to such Creditor in the event of Liquidation of the Corporate Debtor under Section 53.
Hon’ble Supreme Court in the matter of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT], has categorically laid down that the scope of interference in decision of the CoC regarding the approval of the Resolution Plan. The Hon’ble Supreme Court has laid down that payment to different class of Creditors can be different payment and entitlement of Operational Creditor is not less than payment which becomes due in event the Corporate Debtor is liquidated. It has been held by the Hon’ble Supreme Court that so long as the provisions of the Code and Regulations having met, it is the commercial wisdom of the CoC which is to negotiate and accept the Resolution Plan which may involve differential payment to different classes of Creditors.
The Hon’ble Supreme Court while noticing the jurisdiction of the Adjudicating Authority and Appellate Tribunal has held that provisions investing jurisdiction in NCLT and NCLAT has not made the commercial wisdom exercise by CoC of not approving the Plan rejecting the same justiciable. Hon’ble Supreme Court held that Adjudicating Authority is circumscribed by Section 30(2).
As per the provision of Section 30(2)(b) Operational Creditor has to be paid not less than the amount which would have been payable in event the Corporate Debtor is liquidated under Section 53. On notionally computing the amount which could have been payable to the Operational Creditor in the Liquidation, the amount comes as NIL since sole Financial Creditor itself is not able to receive its full amount. The sole Financial Creditor who is the sole Member of the CoC has approved the Resolution Plan which Plan has proposed payment of total payout to ₹23,12,50,000/- to the Financial Creditor and CIRP Cost ₹30,50,206/–. The payout as proposed in the Resolution Plan cannot be said to be violate in any manner provisions of Section 30(2)(b). It is well settled that Adjudicating Authority can interfere with commercial wisdom of CoC only when Resolution Plan violates any of the provisions of Section 30(2)(b).
It is true that Operational Creditor’s claim was submitted for an amount of ₹1,54,64,926/– but as per the provisions of Section 30(2)(b), it cannot be said that in the facts of the present case there is any non-compliance of Section 30(2)(b) in proposing NIL amount to the Operational Creditor. It is true that non-payment of any payment of Operational Creditor is harsh but the law as stand today is to that effect. It is noticed that this Tribunal in the matter of Damodar Valley Corporation Vs. Dimension Steel and Alloys Pvt. Ltd. & Ors. [2022 (5) TMI 1365 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], has observed that time has come when it should be examined by the Government to find out as to whether there are any grounds for considering change in the Legislative Scheme towards the payment to the Operational Creditor which also consists of the Government dues.
It is true that Operational Creditors as the law stands now are denied any payment when the amount payable to them in the event of Liquidation is NIL, but till the Legislature comes to the aid of the claim of Operational Creditor by amending the Legislative Scheme hands of the Courts are tied to take any other view in the matter.
There are no error in the Order of the Adjudicating Authority, approving the Resolution Plan which was approved by the CoC - there is no merit in the appeal - appeal dismissed.
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2024 (9) TMI 330
Application for amendment of the plaint under order I Rule 10 and order VI Rule 17 of the Code of Civil Procedure, 1908 to implead Ajmera Luxe Realty Pvt. Ltd. (R7) as a party Defendant No. 7 - plaintiff avers that the proposed amendment neither changes the nature of the Suit nor the cause of action is altered - HELD THAT:- The overarching principles, which govern the decision to permit a party to amend the pleadings are that, the proposed amendment is necessary for the determination of the real question in controversy between the parties, and the potentiality of prejudice and injustice which is likely to be caused to the other side in the event the amendment is allowed. All the amendments which are necessary for the determination of real question in controversy between the parties are required to be allowed. Whether the proposed amendment has the propensity to fundamentally change the nature and character of the suit and whether a fresh suit on the amended claim would be barred by limitation or any other statutory provision, are the others considerations which weigh with the Court in considering the prayer for amendment. Ordinarily the amendments at a pre-trial stage, where the interdict contained in the proviso to Order VI Rule 17 of the Code has no application, are liberally allowed.
In the case at hand, the suit is at a pre-trial nay at a nascent stage. The prayer for amendment of the plaint is contested on two counts. One, the bar under section 14 of IBC to the institution and continuation of the suit or proceedings or initiating of an action to enforce the security interest. Two, that the proposed amendment fundamentally changes the nature and character of the suit.
The import of the bar envisaged by clauses (a) and (c) of sub section 14 (1) of IBC deserves to be appreciated. From the text of section 14 (1) (1) (a) it becomes evident that the institution of the suits or continuation of pending suits or proceedings against corporate debtor, is barred once the adjudicating authority orders the moratorium upon admission of insolvency resolution Petition. The bar contained in clause (c) of sub section (1) of section 14 is, however, against the action to foreclose, recover or enforce any security interest created by the corporate debtor.
It is trite law that, at the stage of considering the prayer for amendment in the pleadings, the merits of the case, sought to be incorporated by way of amendment, are not required to be delved into. Yet, by way of abundant caution, it is clarified that this Court may not be construed to have delved into the merits of the claim of the plaintiff that it is entitled to seek a declaration as to the validity of the subsequent development agreement by the Society (D6) in favour of Ajmera Luxe (R7).
The proposed amendment to the extent it partakes the character of enforcement the security interest created by Meeti (D1) in favour of the plaintiff, cannot be allowed - Application allowed in part.
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2024 (9) TMI 329
Approval of Resolution Plan - allegation is that the RP had failed in his duty to examine and scrutinize the resolution plans submitted by the PRAs and fell short of his statutory obligations to ensure that the interests of all stakeholders are protected before placing the same before the CoC for its approval - failure on the part of CoC to apply its commercial wisdom in a proper manner - error on the part of Adjudicating Authority in approving the resolution plan of the SRA or not.
HELD THAT:- The democratic principles of a determinative role of majority opinion in the decision making process of CoC is well established. When the resolution plan has been approved by the CoC with requisite majority and after holding due deliberations, the decision becomes a collective business decision. There are no hesitation in holding that in facts of the present case, when the CoC stood properly constituted and it approved the resolution plan after holding due deliberations and with prescribed requisite majority, there is no foundational basis to agree with the bald assertion made by the Appellant that the principles of corporate democracy has not been upheld.
Regardless of the composition of CoC, the IBC places the CoC in control of the insolvency resolution process. For this purpose it has provided for different threshold levels of voting percentages for CoC to take decisions. As regards approval of resolution plan is concerned, the IBC provides for 66% vote share and once this threshold is met, the decision of the CoC, irrespective of whether it is a single-member or multi-member, the decision of the CoC becomes sacrosanct and binding on all stakeholders. The decision of the CoC on the validity of a resolution plan is essentially a business decision and hence should be left to the CoC so long as it musters more than 66% vote share. There can be no fetters on the commercial wisdom of the CoC.
The Adjudicating Authority has limited jurisdiction in the approval of the resolution plan. It is not for the Adjudicating Authority to evaluate on merits the rationale underlying only commercial decision of the CoC. When the CoC has approved a Resolution Plan by requisite voting share after considering its feasibility and viability, such decision of CoC cannot be interfered in the exercise of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers.
The scope of judicial review being strictly circumscribed within the boundaries of Section 30(2) of the IBC for the Adjudicating Authority and this discipline having been emphasised time and again by the Hon’ble Supreme Court in several judgments, the powers of the Adjudicating Authority dealing with the resolution plan does not extend to examining the correctness or otherwise of the commercial wisdom exercised by the CoC. Merely because there is a reduction in the claim of any creditor does not make the resolution plan fall foul of law. Any clause in the resolution plan which requires creditors to take a hair-cut cannot be construed as being violative of Section 30(2) of the IBC. Under such circumstances there is nothing to show that there has been transgression of the bounds of rules and regulations which have caused any serious miscarriage of justice to the Appellants.
The Adjudicating Authority did not err in approving the resolution plan - the impugned order does not warrant any interference - Appeal dismissed.
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2024 (9) TMI 328
Admission of Section 7 Application filed by the Financial Creditor, Respondent - transaction between the Parties was a financial transaction or not - nature of debt - HELD THAT:- The present is the case where Corporate Debtor has not denied the debt but has categorically denied Letter under which loan is claimed to have been given with 12% interest. It is well settled that there has to be a transaction within a meaning of Section 5(8) of the IBC to treat a debt as a Financial Debt.
The Hon’ble Supreme Court in ANUJ JAIN VERSUS AXIS BANK LIMITED AND ORS. [2020 (2) TMI 1700 - SUPREME COURT], has held that transaction stated in Clauses (a) to (i) of Section 5(8) would be falling within the ambit of Financial Debt only carrying the essential element stated in the principal Clause or at least has the feature which could be traced to such element in the principal Clause.
The element of disbursal for time value of money is one essential condition which need to be proved for proving the debt as a Financial Debt - In the present case, the Financial Creditor came up with the case that Letter dated 20.09.2010 contains terms and conditions of the loan which letter was relied and filed along with Section 7 Application. The letter was impeached by Corporate Debtor before the Adjudicating Authority. Adjudicating Authority has also directed Financial Creditor to bring the proof of service of letter.
The sequence of the event and transaction between the Parties clearly proves that transfer of the amount by Financial Creditor to the Appellant were transferred by one Family Company to another Family Company and was not by way of loan nor any disbursal for any time value of money has been proved from any material on the record. Essential elements i.e., disbursal for time value of money having not been proved, in the facts of the present case, we are satisfied that Adjudicating Authority committed an error in admitting Section 7 Application without adverting to the real nature of transaction between the Parties and without adverting to the Letter dated 20.09.2010 which was the very basis of the case of the Financial Creditor.
There was no disbursal for time value of money and the Corporate Debtor having admitted the amount of ₹1,22,50,000/- as debt, which debt having not been proved to be a Financial Debt, we are satisfied that Adjudicating Authority erred in committing an error in admitting Section 7 Application, however, in the ends of justice, where the amount by Draft has been handed over to the Financial Creditor by the Corporate Debtor the amount is allowed to be retained by Financial Creditor, although Counsel for the Financial Creditor during hearing has expressed his willingness to return the Draft.
Appeal allowed.
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2024 (9) TMI 327
Seeking to initiate Corporate Insolvency Resolution Professional Process - Petitioner is Operational Creditor or not - Existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority is of the considered opinion that there is no reason to deny the petition filed under section 9 of the IBC, 2016 by the Operational Creditor to initiate CIRP against the Corporate Debtor, since the existence of a debt and a default in the payment of debt is clearly established. Therefore, the instant Company Petition bearing CP (IB) No. 149/2023 is admitted against the Corporate Debtor and moratorium is declared in terms of Section 14 of the Code - Petition admitted.
Prayer to Tribunal to pass directions under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the Parties in the present dispute to arbitration - contention of the Applicant is that since the claims of BCCI arise out of a purported Agreement and the said Agreement consists of a valid Arbitration clause under Section 19 of the Agreement the same ought to be referred to Arbitration by this Adjudicating Authority - HELD THAT:- The Adjudicating Authority has to either reject or Admit the Application and cannot postulate a third option. In this matter, the application U/s 9 of the IBC has been admitted by the Order passed today, therefore, the application for referring the matter for Arbitration is not maintainable - application dismissed.
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2024 (9) TMI 326
Seeking an order for initiation of the Insolvency Resolution Process against Personal Guarantor - Whether the present petition for initiation of Insolvency Resolution Process against the Personal Guarantor at the behest of the financial creditor deserves admission or rejection? - HELD THAT:- Admittedly, this Tribunal on 05.01.2022 appointed a Resolution Professional and directed him to file his report in terms of Section 99 of IBC, within 10 days from the date of the said order. Subsequently, the Resolution Professional filed his report, inter-alia, recommending for admission of the Petition. Pursuant thereto this Tribunal ordered the resolution professional to furnish a copy of the said report to the personal guarantor and granted opportunity to the personal guarantor to file his objections if any, to the report. In response, the Personal Guarantor filed his objections contending, inter-alia, that the report as filed by the Resolution Professional does not satisfy the requirements envisaged under Section 99 of IBC, besides that the Resolution Professional failed even to verify whether the financial creditor had filed any document evidencing compliance of sub section 4 (b) of Section 95 IBC.
The Postal Slip issued by the Postal Authorities for the cover purportedly containing the Demand Notice, discloses that the same was tendered at the post office on 18.10.2021 for despatch to the addressee. The Postal Consignment Track Report at page 66 of the Company Petition, discloses that the above postal consignment has been returned to the addressee with an endorsement dated 20.10.2021 "left without instructions" and the returned cover has been delivered to the addressee on 22.10.2021 itself. Thus, the Postal Consignment Track Report clearly falsifies the contention of the Financial Creditor that second Demand Notice dated 16.10.2021 has been served on the Personal Guarantor.
Here it is also pertinent to note that even while it is the case of the Financial Creditor that the property bearing the "address" to which the purported Demand Notice has been sent was taken delivery by the Creditor, through the proceedings initiated under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) much prior to sending the demand notice dated 16.10.2021, strangely, the Financial Creditor chose to send the Demand Notice dated 16.10.2021in the name of the personal guarantor to the very same address, which has been returned with an endorsement that 'no such addressee'. Thus, the creditor herein reduced the compliance of an important statutory requirement in to a mockery.
The present application is thoroughly misconceived, devoid of merit, besides contrary to the provisions of the I&B Code, 2016. Therefore, the same is liable to be rejected - Petition dismissed.
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2024 (9) TMI 325
Seeking extension of period of PPIRP of Kethos Tiles Private Limited for 60 days after the last date of PPIRP i.e., 03.05.5024 - Section 54C of the IBC, 2016 r.w. Rule 4 of Insolvency and Bankruptcy (Pre-Packaged Insolvency Resolution Process) Rules, 2021 - HELD THAT:- A plain reading of Section 54D of Insolvency & Bankruptcy Code, 2016 reveals that a time period of 120 days from the date of commencement of PPIRP is provided in the Act. As per Section 54D(3), if no Resolution Plan is approved by CoC the RP shall file an Application for Termination of PPIRP. Contrary to the Section Resolution Professional in the present matter has filed an Application seeking extension of time.
The present Application is Rejected, PPIRP initiated vide order dated 04.01.2024 is hereby terminated and Corporate Debtor is released from rigor of law.
Petition dismissed.
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2024 (9) TMI 324
Application filed by the Applicant Under Section 60(5) (c) of the Insolvency and Bankruptcy Rules, 2016 read with Rule 11 of NCLT Rules, 2016 - Capital Structure Related/Share Issuance/ ROC - Financial Creditors - Operational Creditors - Legal/ Litigations - Taxation.
Capital Structure Related/Share Issuance/ ROC Related - HELD THAT:- A direction may be issued that on the Transfer Date, the entire existing Equity Shares and Preference Shares issued by the Corporate Debtor (held by the erstwhile Promoters Group as well as Captive Customers) shall stand cancelled without any further act or deed (Capital Reduction) - A direction may be issued that on the Transfer Date, the Corporate Debtor may issue new shares worth INR 10,00,000/- (Indian Rupees Ten Lacs only) (100,000 equity shares @ Rs. 10 each (Rupee Ten each) which will be issued and allotted to Innopark (India) Private Limited and its nominees - Post the infusion of Rs. 10,00,000 (Indian Rupees Ten Lacs only) towards Equity Shares allotment, a direction may be issued that, the Bidder may be permitted to structure the balance amount of INR 1,36,44,000/- (Indian Rupees One Crore Thirty-Six Lacs Forty-Four Thousand only) by way of Optionally Convertible Debentures/Non-Convertibles Debentures/Secured Term Loan or such other instrument as may be decided from time to time, with terms and conditions as mutually agreed between the Bidder and the Corporate Debtor.
Financial Creditors - HELD THAT:- All accrued or unpaid interest, including penal interest, claim, fee, commissions, charges etc. in relation to the financial debt of the Corporate Debtor, arising for any period until the Transfer Date shall stand permanently extinguished and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto - Other than amount received by the Liquidator from the Bidder which is distributable under Section 53 of IBC, all other dues including claims or demands made by or liabilities or obligations owed or payable to (including any demand for any loss or damages, principal, interest, compound interest, penal interest, liquidated damages, notional or crystalized mark to mark losses on derivatives, including claims under existing outstanding Bank Guarantees or Corporate Guarantees (whether claimed or not) or claims under existing outstanding Letter of Credits and other charges already accrued accruing or in connection with any third party claims), any actual or potential financial creditors of the Corporate Debtor or in connection with any debt of the Corporate Debtor (including those arising out of any contractual liability such as corporate guarantee, pledge, shortfall undertaking or similar instruments issued by Corporate Debtor to secure loans taken by its subsidiaries or associate company or any other person, and any transaction in derivatives), whether admitted or not, due or contingent, asserted or un-asserted, crystalized or un-crystalized, known or unknown, disputed or undisputed, present or future, whether or not set out in the audited financial statements, or the list of stakeholders, in relation to any period prior to the Transfer Date, shall, on and from the Transfer Date, stand permanently extinguished by virtue of the order of the Adjudicating Authority and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto.
Operational Creditors - HELD THAT:- The requests regarding settlement of liabilities towards Operational Creditors/Statutory Dues upon distribution of proceeds under Section 53 of the IBC, extinguishment of demands, interest, and penalty charges up to the Transfer Date, and waiver of past, present, or future claims related to operational creditors, intercorporate loans, and non-convertible debentures, granted.
Legal/Litigations - HELD THAT:- The Bidder hereby reiterate that from the Transfer Date, all the liabilities, litigations, proceedings of whatever nature in relation to liabilities or obligations owed or payable to any creditor of the Corporate Debtor, including those relating to direct or indirect taxation, or of any other nature, in respect of the issues, claims, etc., pertaining to the period prior to the Transfer Date shall cease and the Corporate Debtor and Bidder, shall not be prosecuted or liable for any civil or any other consequence including penalty arising from any such offence. Further no action shall be taken against any property of the Corporate Debtor and/or the Bidder in relation to an offence committed prior to the Transfer Date, upon change in control of the Corporate Debtor in favour of the Bidder.
Taxation - HELD THAT:- A direction be issued that the Corporate Debtor and the Bidder shall not be liable for from all Taxes, levies, fees, transfer charges, transfer premiums, surcharges, interests, penal charges and any such other levies, that arise from or relate to the Acquisition, since payment of these amounts may make the Acquisition unviable.
Income tax authorities to allow representation of the case/appeal for the different financial years, without any additional burden on the Corporate Debtor and/or Bidder, for the income tax notices/ demands/ penalties/ assessments/ adjustments of the accumulated losses (including but not limited to additions/ adjustments under Transfer Pricing under the Income Tax Act, 1961) up to the Transfer Date, where the Corporate Debtor failed to represent the case effectively. Such representation/ appeal should not be treated as time barred - On and from the Transfer Date, any debit or credit, being the balancing figure, shall be adjusted by the Corporate Debtor in the capital/other reserve at its sole discretion and the same shall be deemed to be in compliance with the applicable accounting standards without any tax implications on the Corporate Debtor upon such adjustment.
Petition allowed in part.
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2024 (9) TMI 323
Seeking initiation of Corporate Insolvency Resolution Process (CIRP), granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules - Petitioner defaulted in the payment of alleged debt.
Whether the petitioner ceases to be a financial service provider after Cancellation of Registration (COR) by RBI with direction to dispose of the financial assets and bring it below 50% of the total assets within three years from the date of cancellation of COR so that petitioner can come out from the Principal Business Criteria (PBC) stipulated for NBFCs?
HELD THAT:- The applicant was having a valid NBFC license and thus was a financial service provider, on the date of lending by financial creditors as well as on the date of default by the applicant. These two dates are very important as cause of actions for filing this application arose on these two dates i.e creation of debt and in turn default in paying that debt (debt and default). From these facts, a conclusion is drawn that applicant beyond doubt was a financial service provider on the dates when cause of actions arose for filing this application, and therefore is barred for filing section 10 application.
It is found that (1) the Corporate Debtor’s Certificate of Registration had been cancelled in view of its failure to achieve NOF and CRA and not because of change of its activity (2) Reserve Bank of India has categorically clarified that the Company will continue to be governed by the relevant provisions of the Reserve Bank of India Act, 1954 and various directions/ instructions issued by Reserve Bank of India from time to time even after cancellation of Certificate of Registration and (3) RBI had directed the applicant for disposal of financial assets and bring them below 50% within a period of three years from the date of cancellation of COR.
It is found that beyond doubt the petitioner was FSP as on the date of credit facilities sanctioned by the financial creditors and also on the date of default by petitioner and even as on date also its activities continue to be the same and still it is regulated by RBI - there are merit in the submission of SBI that instead of recovering the said debt, the Petitioner has written off its debts only with a sole intention to be outside the purview of Section 277 of the Code.
The respondent is a Financial Service Provider and thus, stands excluded from definition of ‘Corporate Person’ as defined in Section 3(7) of IBC, 2016 and therefore, Chapter II of I&B Code, is not applicable to the present petition for initiation of Corporate Insolvency Resolution Process, consequently, the Petition is not maintainable at the behest of the applicant.
Petition dismissed.
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2024 (9) TMI 322
Seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor - present petition is barred by section 10A of IBC or not - Existence of debt and default or not - HELD THAT:- Upon perusal of records, this Bench is of the considered opinion that there is no dispute regarding the fact that the Corporate Debtor owes debt to the Financial Creditor and has defaulted in the payment of Financial debt of more than Rs. 1 Crore (as per Section 4 of the IBC). Hence, the debt due and default is established. From evidence and material on record, it is also held that the application is filed by properly authorized person. Therefore, this Company Petition is liable to be admitted.
The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor.
Petition admitted - moratorium declared.
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2024 (9) TMI 249
Entitlement to allotted units - claims filed before approval of the plan by the Adjudicating Authority - HELD THAT:- The claims which were filed after the cut-off date (which includes the claims filed by the Appellants) were kept alive for period of six months even after approval of the plan by the Adjudicating Authority and they were to be dealt with by SRA. Admittedly, after the approval of the plan, SRA called for the claims from the Applicants who have again submitted their claims which according to the Appellant has not been verified.
From the order of the Adjudicating Authority, it is clear that the claims were filed by the Appellants after the cut-off date. There are no doubt that SRA has to take care of the claims as per Clause 18.4 (v) of the Resolution Plan and whatever amount is entitled to the Appellant to be paid as per Clause 18.4(v) shall be considered and paid by the SRA because the Resolution Plan binds all concerned including the SRA, Appellants and all stakeholders.
There are no error in the order of the Adjudicating Authority rejecting the application - the Adjudicating Authority itself has observed that the claims have to be dealt with in accordance with Clause 18.4 (v) of the Resolution Plan - appeal disposed off.
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2024 (9) TMI 248
Seeking direction for release of payment of an amount sanctioned as Industrial Promotion Subsidy claim for the mega project of the Corporate Debtor - HELD THAT:- The CIRP against the Corporate Debtor commenced on 12.08.2022 and the letter dated 28.02.2022 which was relied in paragraph 5.2 was written by the erstwhile management. After the CIRP having commenced, all amount which is payable to the Corporate Debtor has to be given in the kitty of the Corporate Debtor and disbursement of the amount has to take place as per the Resolution Plan which has been approved by the CoC as submitted by the Counsel for the Appellant.
The Appeal allowed in part and direction contained in paragraph 5.3 to the Principal Secretary, Directorate of Industries, Government of Maharashtra, to pay the amount of investment subsidy within 30 days in accordance with the disbursal advice to the Government Authorities as mentioned in paragraph 5.2 is set aside. Let the amount which has not yet been paid to the Corporate Debtor be paid to the Corporate Debtor within time as allowed by the Adjudicating Authority.
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2024 (9) TMI 184
Maintainability of petiiton - Resolution Plan stands approved upto the Supreme Court - personal insolvency proceedings have been initiated against the promoters/directors of the CD - COC failed to ensure compliance of Section 29A read with Section 5(24) of the IBC - HELD THAT:- It is significant to note that the “Resolution Applicant” made full and truthful disclosure of its background learned NCLAT at the time of submission of “Resolution Plans” and it was after a detailed analysis that the learned NCLT arrived at the conclusion that the “Resolution Applicant” was not falling foul of the bar of Section 29A of the IBC - the plea that the “Resolution Applicant” was a “related party” has no merits as nothing is brought on the record so as to show its nexus or connection with the activities of the “CD”.
It is well ordained in corporate law that once the CIRP proceedings are initiated and “Resolution Plans” are approved, the adjudication of the claim of the creditors could only be in accordance with the IBC. Needless to state that the COC, once constituted in accordance with the IBC, acts on behalf of all the creditors and the taskof the COC is to attain a balance between the twin goals of the CIRP process viz., maximization of the value of the assets of the CD and also a planned course for revival of the CD. These being the twin objectives, the decisions take by the COC, which have been approved by the NCLT are considered to be commercially viable and cannot be condemned on any counts by the petitioner.
The effect that a “Resolution Plan” once approved would bring is to proceed on a “clean slate” with the successful resolution applicantrather than carrying the cargo of such debts which need to be satisfied to the extent required and then jettisoned, as stated by the Supreme Court in the case of JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. VERSUS NBCC (INDIA) LTD. & ORS. [2021 (3) TMI 1143 - SUPREME COURT].
There is no escape from the conclusion that once the “Resolution Plan” was approved, the assets of the CD in the hand of the “Resolution Applicant” stood shielded from the criminal prosecution and attachment. Section 32A of the IBC is merely clarificatory in nature.
The petitioner has failed to make out a case for issuance of any prerogative writs by this Court. There is nothing as such to find any blemishes or flawed actions or inactions on the part of the respondent No.2 in any manner requiring interference by this Court. Hence, the present writ petition is dismissed with costs.
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2024 (9) TMI 7
Maintainability of the fresh application under Section 94 of the Insolvency and Bankruptcy Code - HELD THAT:- There is no dispute between the parties regarding sequence of the events. The fact that Appellant filed the application under Section 94 in the year 2020 i.e. 24.09.2020 is undisputed. Punjab National Bank has also filed an Affidavit in this Appeal where it has been pleaded that the Appellant has been misusing the Interim Moratorium under Section 96 of the IBC for the last four years due to which Bank was unable to initiate any recovery proceeding under the SARFAESI or RDBFI Act for the recovery of the dues.
The facts clearly indicate that while dismissing the application on 01.02.2024 by the Adjudicating Authority, no liberty was granted to file a fresh petition. While dismissing the application in noncompliance, Adjudicating Authority has not granted any liberty to file any fresh petition for the reasons which have been given. Reliance of the Appellant on the order dated 28.02.2024 claiming that clear liberty was granted to file fresh petition need to be noticed. The liberty to re-file was granted on the request made by the Appellant himself that he wanted to withdraw the petition with liberty to re-file under Section 94 of the Code as per law. The Appellant was permitted to withdraw IA No.519 of 2024 with liberty to re-file under Section 94(1) of the Code. Adjudicating Authority in order dated 28.02.2024 has not expressed any opinion as to whether application which is to be re-filed by the Appellant under Section 94(1) shall be maintainable or not.
The Adjudicating Authority did not commit any error in dwelling on the question as to whether the application which is filed on 29.02.2024 being Company Petition is maintainable or not. As noted above, no liberty to file fresh petition was granted when order was passed on 01.02.2024.
There are no error in the impugned order dated 17.05.2024 passed by the Adjudicating Authority which has been challenged in these two Appeals - both the Appeals are dismissed.
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