|
Advanced Search Options
IBC - Case Laws
Showing 241 to 260 of 9149 Records
-
2024 (8) TMI 212
Admissibility of Section 95 application - it is submitted that earlier the Adjudicating Authority has rejected the application by order dated 01.02.2024 which order was subsequently recalled by order dated 16.02.2024 and thereafter matter was heard again and impugned order was passed - entitlement to challenge the order dated 16.02.2024 in the appeal.
Entitlement to challenge the order dated 16.02.2024 by which earlier order was recalled - HELD THAT:- It was open for the Appellant to challenge the order dated 16.02.2024. The Appellant did not challenge the order of recall and participated in the hearing of the application again, in consequence of which hearing order has been delivered. The provision for filing an appeal against order of Adjudicating Autohrity is provided under Section 61 of the IBC and under Section 61(2) limitation for filing appeal is only 30 days. When appellant has not filed appeal against order dated 16.02.2024, the submission of the Appellant that he can be allowed to challenge order dated 16.02.2024 in the present appeal which is filed against order dated 14.03.2024 cannot be accepted - both the orders are separate orders and both orders need to be challenged separately in the scheme of IBC as provision under Section 61 and the submission which has been made by the Appellant cannot be accepted.
Appellant’s proposal for OTS has not been accepted - HELD THAT:- Admittedly, in the CIRP of the Principal Borrower, the Resolution Plan has been approved, which is pending consideration before the Adjudicating Authority as communicated by letter dated 22.02.2024 - at the time of finalization of Resolution Plan of the Personal Guarantor, the Adjudicating Authority shall consider all aspects of the matter.
There are no error in the order of the Adjudicating Authority admitting Section 95 application warranting any interference in exercise of appellate jurisdiction.
Appeal disposed off.
-
2024 (8) TMI 211
Dismissal of the appeal due to delay of 86 days in re-filing - time limitation - HELD THAT:- The NCLAT Rules 2016 itself contemplates communication of defects and the removal of the defects in the Appeal. Rule 26, sub-rule (4) further empowers the Registrar in appropriate case, to decline to register the Appeal or filing of any documents. Thus, power is vested with the Registrar to decline to register Appeal when defects are not cured. The procedure for clearing the defects, empowers the Registrar to grant further time for clearing the defects, itself contemplate that defective Appeal filed by the Appellant is permitted to be cured and in event the defects are not cured, the Appeal can be refused to be registered. But when defects are cured and the Appeal is registered, the date of refiling of the Appeal after curing the defects, cannot be treated to be the fresh date of filing of the Appeal for computation of limitation.
In the present case, the Appeal having been e-filed on 25.09.2023, i.e. within 30 days from passing of the impugned order dated 28.08.2023, the Appeal cannot be held to be barred by time and the submission advanced by Shri Sanjeev Sen, the Appeal when it was refiled after curing the defects, i.e., 16.01.2024, may be treated as date of filing, cannot be accepted. The date of refiling and date of filing are two different concepts, which are clear from statutory scheme.
Thus, non-compliance of Rule 22, sub-rule (2) has not been provided, nor any consequence has been provided in the Rules in the event Appeal is filed without accompanied by a certified copy of the order. When the power has been given to Court to extend the time or waive compliance of any rule, we have no doubt that the Appeal can be filed without applying a certified copy of the orders, in the facts and situation of a particular case - When an Applicant does not apply for a certified copy of the order within the limitation prescribed, he is not entitled to seek any exclusion under Section 12 of the Limitation Act and it is the Applicant, who has to comply the limitation prescribed for filing an Appeal, but the mere fact that he has not applied for certified copy of the order, cannot be a ground for rejecting the Appeal.
The Appeal e-filed by the Appellant was within the period of limitation and the Appellant has given sufficient cause for condoning the delay of 86 days in refiling of the Appeal - the order dated 25.01.2024 passed by this Tribunal, condoning the delay of 86 days in refiling of the Appeal, does not warrant any interference.
Appeal dismissed.
-
2024 (8) TMI 159
Directions to the defendant to produce on record the Resolution Plan - alleged excess payments made by the defendant to the plaintiff - HELD THAT:- On a query from this Court on whether any such requisition was made by the plaintiff to the defendant or its counsel, the learned counsel for the plaintiff fairly admits that no such requisition was made since last date of hearing.
The documents that are required for a proper adjudication of IA no. 2769/2022, filed by the defendant, are supplied to the plaintiff. In any case, the plaintiff has also not made any effort to obtain a copy of the Resolution Plan from the NCLT - application disposed off.
Dismissal of the instant Suit - Invocation of inherent powers of this Court under Section 151 of the CPC - HELD THAT:- This Court in RAJAN GUPTA VERSUS RAJAN GUPTA [2023 (2) TMI 1323 - DELHI HIGH COURT], while relying on the law laid down in Shipping Corporation (supra), held that though the provisions of Order VII Rule 11 of the CPC may not apply on the facts of the case, however, the Court has ample power under Section 151 of the CPC to dismiss the Suit as having been rendered infructuous due to a subsequent development because of which relief claimed in the Suit cannot be granted. In my opinion, this Suit would be a fit case for the Court to exercise its powers under Section 151 of the CPC to scuttle such a suit as the relief prayed for in the present Suit, due to the subsequent development of the Resolution Plan passed by the learned NCLT, can no longer survive and be granted.
The defendant/applicant succeeds in the application - Application allowed.
-
2024 (8) TMI 158
Seeking an order of this Court at the instance of this RP staying an acquisition process under the Slum Rehabilitation Act, 1995 - Preferential right to self-redevelop - .
Can it ever be suggested that the provisions of the IBC and specifically the pendency of a CIRP meant to protect the assets of a potentially insolvent corporate debtor can ever prevail over the considerations of a welfare statute and the concerns of individual citizens for whom that welfare statute is intended, such as the Slum Act? - HELD THAT:- If not in so many words, then by necessary implication, that until entire gamut of the CIRP process is completed, and whatever be the final outcome, the 4th Respondent’s members must continue to suffer. They will not receive transit rent. They will not see any construction activity on site. The statutory promise of redeveloped premises will be denied to them and this will continue for an indefinite period of time. All this because the corporate debtor’s ‘asset’ must be ‘preserved’. At whose cost, we have to ask? And for what fault of the slum dwellers?
The provisions of the IBC are not meant to defeat slum redevelopment and similar or allied statutes. To hold otherwise would simply be unthinkable. It would mean that a Writ Court would put a premium on corporate wrongdoing and that even a defaulting corporate debtor who had not complied with the terms of a LoI could now use the golden parachute of the IBC to secure through the RP a restraint against the welfare of slum dwellers.
The fact cannot be lost sight that in the RP’s anxiety to “protect the asset of the corporate debtor” not a thing is being said in this Petition about how that asset or its preservation can ever, let alone in the meantime pending a CIRP, be used for the benefit of those persons for whom the Slum Act is intended and for whose benefit essentially Truly Creative obtained an LoI in the first place.
Preferential right to self-redevelop - HELD THAT:- The last argument on behalf of the RP is that it ought to have been given a preferential right to self-redevelop. The argument is so unstatable that we can scarcely credit that it is being made. This is understandable where no LoI is issued at all or has been issued to somebody else to the exclusion of the owner. The argument overlooks that Truly Creative had in fact obtained an LoI. It obtained an LoI while it was an owner of the property - A preferential right to an owner is available only when someone other than the owner is being preferred and the owner has never before been given or availed of a right to develop.
There are no hesitation in rejecting the Petition - petition dismissed.
-
2024 (8) TMI 157
Seeking stay of an award - Seeking an order of restraint restraining the petitioner from interring with its peaceful possession of the schedule property - Termination of lease and possession of the property - Non-payment of rent - Section 34 Arbitration and Conciliation Act, 1996 - HELD THAT:- The dispute having arisen between the two is also not in dispute. The dispute is with regard to non-payment of rent. In terms of the agreement, the matter reaches the table of the Arbitrator in A.C. No. 207 of 2022. Arbitration proceedings go on and the learned Arbitrator by his order dated 09-10-2023 allows the claim of the petitioner/land lord and directs recovery of a sum of qwertyuip 2.60 crores along with the amount of GST, interest and other expenses as detailed in the award.
The claim of the petitioner is that, it has secured keys from the security guards and defence of the respondent is that, there was no such security guard with it. Since the crime had been registered before the jurisdictional police, an application is moved on 17-10-2023. The concerned Court was on vacation and the vacation Court was holding the proceedings. On the same day, the matter is taken up in the afternoon. By then, the petitioner files its objections to I.A. Nos. 1 and 2. The matter is heard at length by the concerned Court and an order is passed on 18-10-2023 after considering the objections so filed.
Therefore, it is not a case where the matter was not heard. Taking of possession by the petitioner in the manner in which it is projected requires further evidence before the concerned Court.
The award of the Arbitrator is stayed subject to the condition that the respondent herein shall furnish security deposit covering 5% of the entire amount of award and temporary injunction restraining the petitioner from disturbing peaceful possession of the respondent. Submissions are made by the petitioner that the concerned Court in a mortal hurry took up the matter and passed the aforesaid order and, therefore, this Court should declare the said order to be inspiring no confidence of this Court - petition dismissed.
-
2024 (8) TMI 102
Direction to respondents to pay compensation of Rupees one crore to the petitioner - seeking removal of the petitioner as Liquidator on account of his incomplete qualifications - petitioner had filed an application for the authorization for assignment and the same was rejected by the Insolvency Bankruptcy Board of India (IBBI) on 14.01.2020, as per Regulation 12 A of the IBBI Regulations - HELD THAT:- The third respondent filed application before the Tribunal seeking removal of the petitioner as Liquidator on account of his incomplete qualifications. On hearing both sides, the petitioner was removed as Liquidator by an order dated 01.07.2022, as per Section 16 of the General Clauses Act, 1897 with aid from Section 276 of the Companies Act, 2013. Aggrieved by the order passed by the Tribunal, the petitioner also filed an appeal before the Appellate Tribunal and the same was also dismissed, thereby confirmed the removal of the petitioner as Liquidator on the ground of not having valid authorization.
Section 199 to 205 of the Insolvency and Bankruptcy Code, 2016 provides for insolvency professional agencies. As per Section 206 of the Insolvency and Bankruptcy Code, a person can render his service as an insolvency professional only after being enrolled as a member of an insolvency professional agencies and registered with the first respondent as an insolvency professional under Section 207 of the Insolvency and Bankruptcy Code subject to other conditions.
This Court finds no infirmity or illegality in the orders passed by the respondents and the prayer sought for in the writ petition is devoid of merit and liable to be dismissed - Petition dismissed.
-
2024 (8) TMI 101
Direction to the Respondents to pay the wages due as per the orders passed by the learned Labour Court - seeking Condonation of Delay of 466 days in filing appeal - reasaonable ground for delay exists or not - Section 42 of the I & B Code, 2016 - HELD THAT:- When the instant Appeal was being argued today, the learned Counsel for the Respondent/Liquidator, had contended that much confidence cannot be reposed to the reason, which has been taken by the Appellant for seeking condonation of delay in an Appellate proceedings under Section 42, for the reason being that for the purposes of gratuity and other past service dues, he has already been awarded an amount, under Section 36(4)(a)(iii) to the tune of Rs.3,23,758/- and paid the same to the Appellant in 2022 itself and that would be sufficient enough for the Appellant to meet out the expenditures of preferring the Appeal, before NCLT, Chennai.
Hence, the financial crunch which is the ground taken in the Condone Delay Application, cannot to be taken as to be a satisfactory ground for overcoming the embargo of limitation of 14 days, as prescribed under Section 42 of the I & B Code, 2016, and for the purposes of seeking condonation of an inordinate delay of 466 days, which is too in-ordinant and unexplained.
On account of the reasons which have been assigned by the learned Adjudicating Authority for not accepting the plea taken by the Appellant and that no reasonable ground has been taken by the Appellant for seeking condonation of delay, the Appeal has been correctly dismissed on the ground of Limitation, which does not call for any interference, by this `Tribunal’, in the exercise of its Appellate Jurisdiction.
Appeal dismissed.
-
2024 (8) TMI 24
Seeking enforcement of an arbitral award - deduction of amount awarded to the respondent against the counter claims - deduction of TDS on the amount payable to the decree holder under the arbitral award.
Deduction of amount ₹ 2,62,93,252/- awarded to the respondent against the counter claims preferred by it before the Arbitral Tribunal from the amount of ₹ 5,51,95,198/- awarded to the petitioner, as the respondent is in liquidation following initiation of proceedings under the IBC 2016 - HELD THAT:- The Arbitral Tribunal has itself, in the impugned award, set off the amount of ₹ 2,62,93,252/- against the amount of ₹ 5,51,95,198/- and has arrived at a difference of ₹ 2,89,01,946/-.
What is sought to contend is essentially that the adjustment of the awarded amount to the respondent against the counter claims preferred by it, from the amount awarded to the petitioner, is impermissible. That, however, would require the petitioner to challenge the award, which has not been done till date - This submission is, therefore, rejected.
Case that the respondent could not have deducted TDS from the amount of ₹ 2,89,01,946/- - HELD THAT:- Plainly read, as the petitioner was working as a contractor for the respondent, and the money payable to the petitioner under the arbitral award were in the petitioner’s capacity as such contractor, the deduction of TDS by the respondent from the petitioner would appear to be in sync with Section 194C (1) of the Income Tax Act, 1961.
The respondent could not have deducted TDS from the amount of ₹ 9,15,93,846/- payable to the petitioner - It is informed that TDS already stands paid by the petitioner to the Income Tax Authorities as well as the Competent Authority under the Building and Other Construction Workers’ Welfare Cess Act, 1996.
Petition disposed off.
-
2024 (8) TMI 23
Attachment of property, pending the liquidation proceedings - seeking interim order permitting the sale to take place as part of the liquidation process, after lifting the attachment order issued by the Enforcement Directorate - HELD THAT:- Reliance is placed on the judgments of the High Court of New Delhi in Rajiv Chakraborty Resolution Professional of EIEL v. Directorate of Enforcement [2022 (11) TMI 600 - DELHI HIGH COURT] and that of the High Court of Gujarat in AM MINING INDIA PRIVATE LIMITED VERSUS UNION OF INDIA [2023 (8) TMI 1489 - GUJARAT HIGH COURT] to submit that the where the insolvency proceedings had been started even before the attachment is ordered by the Enforcement Directorate, the proceedings before the NCLT will have to prevail over the proceedings of the Enforcement Directorate. The Court had interpreted the non obstante clause in the two enactments.
The interest of the parties can be safe guarded pending this litigation by permitting the sale to go on and ensuring that the proceeds of the sale shall be liable for attachment by the Enforcement Directorate. In the above circumstances, there will be an interim direction to lift the attachment effected by the Enforcement Directorate on the properties which are subject matter of the liquidation to facilitate the Liquidator to sell the properties.
-
2024 (8) TMI 22
Seeking for summary judgment against the defendants in terms of the suit prayers - plaintiff contends that the defendants have no real prospect of successfully defending the suit claim - Time limitation - HELD THAT:- The Hon'ble Supreme Court in the case of Life Insurance Corporation vs. Sanjeev Builders Private Limited [2017 (10) TMI 1650 - SUPREME COURT] has also framed general guidelines for Courts while adjudicating amendment applications filed under Order VI Rule 17 of C.P.C. wherein it has been held that if a time barred claim is sought to be introduced, in which case, the fact that the claim would be time barred becomes a relevant factor for consideration.
Though in the instant case, amendment applications have already been allowed permitting the plaintiff to amend the suit claim and the said order also has not been challenged, this Court is of the considered view that just because the amendment applications are allowed, the plea of limitation taken by the defendants cannot be totally ignored and therefore, the limitation issue can be decided only after trial.
The issue of limitation raised by the defendants requires further examination and cannot be decided in this Interlocutory Application as the plea of limitation taken by the defendants cannot be held to be moonshine - the defendants have contended that the plaintiff has flouted the Memorandum of Compromise dated 14.09.2019 by not withdrawing the suit as undertaken by them under the Memorandum of Compromise.
Admittedly, it has been established through the plaintiff's through her documentary evidence that the first defendant defaulted in the payment of Rs.70,00,000/- payable to the plaintiff under the Memorandum of Compromise dated 14.09.2019. The cheque issued by the first defendant to the plaintiff for the said amount has also got returned dishonoured for insufficiency of funds. The plaintiff therefore contends that there is no necessity to withdraw the suit as per the Memorandum of Compromise since under the Memorandum of Compromise, the plaintiff is having the right to restore the suit on account of the breach of the Memorandum of Compromise committed by the first defendant.
The defendants 2 to 4 though being the directors of the first defendant company, in their individual capacity are not parties to any of the contracts entered into with the plaintiff, which includes the construction contract and the Memorandum of Compromise, which are the basis of this summary judgment application. Through this summary judgment application, the defendants 2 to 4 cannot be made liable. Infact this Court, while dismissing the application filed by the defendants 2 and 3 under Order I Rule 10 of C.P.C. to remove from the array of party defendants, has held that only after trial, the liability of the defendants 2 and 3 can be adjudicated upon.
Insofar as the limitation plea is concerned, the first defendant has made out a probable case for defending the suit on the ground that the suit is barred by limitation since the amendment applications seeking amendment of the claim was filed beyond the period of three years from the date of the Memorandum of Compromise.
Without expressing any opinion on the merits of the respective contentions, this application is disposed of as against the first defendant by directing the first defendant to deposit to the credit of the suit a sum of Rs.70,00,000/- within a period of two weeks from the date of receipt of a copy of this order, failing which there shall be a summary judgment for a sum of Rs.70,00,000/- in favour of the plaintiff against the first defendant.
This application filed against the defendants 2 to 4 is dismissed as the suit claim against the defendants 2 to 4 can be adjudicated only after trial - application dismissed.
-
2024 (7) TMI 1558
Challenge to action of assessment - HELD THAT:- Prima facie and bearing in mind the undisputed position that that the Resolution Plan under the Insolvency and Bankruptcy Code, 2016 [IBC] came to be approved on 19 July 2023, the action of assessment cannot be sustained. Matter requires consideration.
Till the next date of listing, the respondents are restrained from taking further steps pursuant to the impugned notice dated 30 March 2024.
-
2024 (7) TMI 1522
Rejection of appeal on grounds of being filed beyond the prescribed time limit - Respondent No. 3 / Liquidator was allowed to include certain lands owned by the Appellants and given on Lease to the Corporate Debtor under Liquidation in the Liquidation Estate - Aggrieved Person under Section 61 of the I & B Code, 2016 - HELD THAT:- The “Aggrieved Person” in the context of the terminology used under Section 61 (1), would be `a person who has not been conscious of an Impugned Order that prejudices his material right and such person could still invoke an Appellate Jurisdiction by seeking the leave of the Court. However, the interpretation of the word `Aggrieved Person’, could not be stretched to an extent, to accommodate a person who was conscious of his rights and has intervened in the proceedings, but whose intervention was ultimately rejected, because, for all practical purposes, such a person cannot be treated as to be a party to the proceedings based on which, he could have preferred an Appeal, Merely based on the fact that he was heard, his Appeal would not be sustainable, as long as he has not been included as a party to the proceedings.
Appellants have not put a challenge to the Orders, passed on the Applications preferred by them to permit them to intervene. However, merely because of the fact that they were heard or they were described as Additional Respondents, before the NCLT, they will not get the status of being a party to the proceedings which will enable them to file an Appeal. Further, they would not be entitled to be treated as to be an “Aggrieved Person”, because, they were conscious of the proceedings, being held, before the NCLT.
Since the Appellants have invoked Appellate Jurisdiction under Section 61 of the I & B Code, 2016, as against the Impugned Order rendered by the NCLT without giving a challenge to the Orders passed on the IAs, rejecting their intervention, the Appeal at their behest would not be maintainable.
The appeal need not be interfered and the same is dismissed.
-
2024 (7) TMI 1462
Clarification of judgment regarding the term "unsecured creditor" in a civil appeal - HELD THAT:- The word "unsecured creditor" referred to in paragraph 20 of the judgment be now read as "secured creditor".
Judgment dated 12.09.2023 is corrected to the above extent only - Miscellaneous application is disposed of accordingly.
-
2024 (7) TMI 1408
Application u/s 7 of IBC is barred by limitation - maintainability of second Application under Section 7 of IBC, against the Corporate Debtor as for the same debt and default - CIRP has already been taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its dues - HELD THAT:- There is no dispute that the 1st respondent financial creditor had granted a loan of Rs.100 crores to the 2nd respondent corporate debtor. The loan was secured by the corporate guarantee furnished by ACIL, which is the holding company of the corporate debtor. There is no dispute that the 2nd respondent-corporate debtor committed a default in payment of the loan amount. Therefore, the guarantee was invoked by the 1st respondent-financial creditor, which led to the filing of an application under Section 7 of the IBC against ACIL. The CIRP of ACIL was completed, and the resolution plan was approved. The claim lodged by the 1st respondent-financial creditor was of Rs.241.27 crores. However, as per the resolution plan, the 1st respondent-financial creditor had to accept a haircut as it was provided therein that the 1st respondent-financial creditor would get only a sum of Rs.38.87 crores from the resolution applicant.
Liability of Guarantor/surety - HELD THAT:- The law is very well settled. The liability of the surety and the principal debtor is co-extensive. The creditor has remedies available to recover the amount payable by the principal borrower by proceeding against both or any of them. The creditor can proceed against the guarantor first without exhausting its remedies against the principal borrower. Chapter VIII of the Contract Act contains provisions regarding indemnity and guarantee.
Section 137 lays down a settled principle that it is not necessary for the creditor to first sue the principal debtor or adopt a remedy against him. If the creditor omits to do that, unless there is a contract to the contrary, it will not amount to discharge of the surety. This means that without proceeding to recover the debt against the principal debtor, the creditor can proceed against the surety unless there is a contract to the contrary. Even if the creditor discharges one surety, it will not amount to the discharge of the other surety. There are two other contingencies provided under Sections 138 and 139 - if there is a compromise or settlement between the creditor and the surety to which the principal borrower is not a consenting party, the liability of the borrower qua the creditor will remain unaffected. The provisions regarding the discharge of the surety discussed above show that involuntary acts of the principal borrower or creditor do not result in the discharge of surety.
In the case of Lalit Kumar Jain [2021 (5) TMI 743 - SUPREME COURT], this Court dealt with the legal effect of approving the resolution plan in CIRP of the corporate debtor on the liability of the surety. This is in the context of Section 135 of the Contract Act, which provides that if the creditor compounds with or gives time or agrees not to sue the principal debtor, it amounts to discharge of the surety.
In such a loan transaction secured by a guarantee, the guarantor has an obligation to repay the loan amount to the creditor, and there is a separate and distinct obligation on the borrower to pay the amount to the creditor. Such a transaction creates a right in favour of the creditor to proceed against the guarantor and borrower for recovery. However, he has the right to recover the amount only to the extent of the loan amount payable by the borrower.
Simultaneous proceedings under the IBC against the Corporate Debtor and Guarantor - HELD THAT:- Sub-section (2) of Section 60 contemplates separate or simultaneous insolvency proceedings against the corporate debtor and guarantor. Therefore, sub-section (3) of Section 60 provides that if CIRP in respect of the corporate guarantor is pending before an adjudicating authority and if the CIRP against the corporate debtor is pending before another adjudicating authority, CIRP proceedings against the corporate guarantor must be transferred to the adjudicating authority before whom CIRP in respect of the corporate debtor is pending. Thus, consistent with the basic principles of the Contract Act that the liability of the principal borrower and surety is co-extensive, the IBC permits separate or simultaneous proceedings to be initiated under Section 7 by a financial creditor against the corporate debtor and the corporate guarantor.
Whether the assets of the Corporate Debtor were part of CIRP in respect of ACIL, Corporate Guarantor - HELD THAT:- There is a mandate of clause (d) of sub-section (4) of Section 36 of the IBC that the assets of an Indian subsidiary of the corporate debtor shall not be included in the liquidation estate assets and shall not be used for the recovery in liquidation. Section 18 entrusts several duties to the IRPs concerning the corporate debtor's assets. Consistent with the provisions of Section 36(4)(d), the explanation (b) to Section 18(1) provides that the term ‘assets’ used in Section 18 shall not include the assets of any Indian subsidiary of the corporate debtor. Perhaps the reason for including these two provisions is that it is well-settled that a shareholder has no interest in the company's assets.
A holding company and its subsidiary are always distinct legal entities. The holding company would own shares of the subsidiary company. That does not make the holding company the owner of the subsidiary's assets - the assets of the subsidiary company of the corporate debtor cannot be part of the resolution plan of the corporate debtor.
By virtue of the CIRP process of ACIL (corporate guarantor), the 2nd respondent-corporate debtor does not get a discharge, and its liability to repay the loan amount to the extent to which it is not recovered from the corporate guarantor is not extinguished.
Subrogation u/s 140 of the Contract Act - HELD THAT:- The words used in Section 140 are “upon payment or performance of all that he is liable for”. When the principal debtor commits a default and when the liability under the deed of guarantee of the surety is not limited to a particular amount, its liability is in respect of the entire amount repayable by the principal debtor to the creditor. The words ‘all that he is liable’ used under Section 140 cannot be ignored. The principal borrower must continuously indemnify the surety. Section 140 of the Contract Act may be founded on the said obligation - the surety gets invested with the rights of the creditor to recover from the principal debtor the amount which was paid as per the guarantee. If the surety pays only a part of the amount payable to the creditor, the equitable right the surety gets under Section 140 will be confined to the debt he cleared.
Only the liability of ACIL under the corporate guarantee to repay the loan to the 1st respondent-financial creditor has been extinguished on the payment of Rs.38.87 crores. By the involuntary act of the creditor of accepting part of the amount from the surety in the discharge of the entire liability of the surety, even if Section 140 is attracted, it will confer on the guarantor or the appellant the right to recover only the amount mentioned above from the corporate debtor. The subrogation will be only to the extent of the amount recovered by the creditor from the surety.
The view taken by NCLAT cannot be faulted. Accordingly, the appeal is hereby dismissed.
-
2024 (7) TMI 1362
Notice issued without commenting on the maintainability of the petition under Article 136 of the Constitution of India - HELD THAT:- The notice is issued without commenting on the question of maintainability of the petition under Article 136 of the Constitution of India, as a legal issue is sought to be raised relying upon the ‘Explanation’ to Section 14 of the Insolvency and Bankruptcy Code, 2016. A copy of the license deed, including the terms and conditions on which it was granted, along with the statement of accounts will be filed by the petitioner, Department of Town and Country Planning, Haryana, in this Court within a period of four weeks from today.
Rejoinder affidavit may be filed within three weeks after service of the reply.
-
2024 (7) TMI 1361
Disqualification from participating in coal mine auctions - debarment is premised on certain outstanding unsettled dues attributable to the Petitioner’s erstwhile management - whether the Petitioner is liable for the alleged dues, thereby ascertaining their eligibility to participate in the coal mine auctions? - HELD THAT:- With the approval of the resolution plan by the NCLT on 20th March, 2023, the claims that were not submitted in the required manner or were rejected by the Resolution Professional, are deemed extinguished. This extinguishment includes all dues, including statutory dues owed to the Central Government that were not incorporated in the resolution plan. The Respondent’s inaction in contesting the categorization of their claims by the Resolution Professional, or challenging the resolution plan signifies their acceptance of the resolution process. Moreover, even if we were to hypothetically consider the financial impact of the PBG claim, had it been recognized as valid operational debt, the actual financial benefit to the Respondent would have been minimal - there exists no legal basis for the Respondent to obstruct the Successful Resolution Applicant’s participation in the auction process.
The finality and decisiveness of an approved resolution plan is recognized under the IBC’s framework. The resolution process, as endorsed by the NCLT, aims to free the corporate debtor from past liabilities and enable a fresh operational start, unhampered by unresolved and extinguished debts - The mandate of Section 31 (1) of the IBC underscores that once a resolution plan is approved by the Adjudicating Authority, it is binding not only on the corporate debtor, but also on all stakeholders, including Central and State Governments, as well as any local authorities to whom debts are due under any current laws. This binding nature extends to all statutory dues owed to these authorities.
In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] the Supreme Court has elaborated on the treatment of claims post-approval of a resolution plan. The Apex Court emphasized that a Resolution Applicant should not be encumbered by sudden and unforeseen claims. Such occurrences would not only disrupt the financial calculations and expectations that underpinned the resolution plan, but also undermine the very purpose of the IBC, which aims to streamline and stabilize the process of corporate revival - the introducing claims that were not part of the list of assessed and finalized claims in CIRP post the approval of resolution plan, contravenes the established legal framework and the Supreme Court’s holding. This ruling importantly guards against the ‘hydra head phenomenon,’ where unexpected financial liabilities emerge post the CIRP, potentially destabilizing the newly revived corporate debtor and deterring future investment and participation in the insolvency resolution processes.
The IBC facilitates economic rehabilitation of the corporate debtor, enabling it to service its debts, thereby enhancing the reliability of the credit market. Importantly, the Code prioritizes the interests of all stakeholders, including the corporate debtor, by shielding it from its past management and potential liquidation threats. This focus on revitalization over mere credit recovery segregates the debtor’s interests from those of its previous promoters or managers, underscoring the IBC’s object as a protective, not adversarial, mechanism in the resolution process. This legislative framework is designed to return the corporate debtor to viability, benefiting the broader economic ecosystem - the Court remains unconvinced with the Respondent’s construal of the observations of the NCLT in deciding concessions to the corporate debtor in respect of their obligations to the Respondent.
The resolution framework intends to balance the interests of all stakeholders, including creditors, by ensuring that they are bound by the finalized resolution plan. As such, the Respondent, who is a creditor within its context, is obligated to adhere to the stipulations of the resolution plan as approved on 20th March, 2023, which mandates an interpretation and application of the IBC as per its intent and statutory mandate. By holding the Petitioner accountable for liabilities that have been legally extinguished, the Respondent has failed to adhere to the statutory mandate of the IBC and the broader objectives of insolvency resolutions. The insistence on clearing past dues contradicts the rehabilitative intent and purpose of the IBC, calls for judicial intervention.
The impugned decision dated 22nd May, 2024, issued by the Respondent, stipulating that the Petitioner remains ineligible to participate in coal mine auctions until outstanding dues to the Petitioner are cleared, cannot sustain - the present writ petition is allowed and the impugned decision dated 22nd May, 2024 is set aside.
-
2024 (7) TMI 1320
Rejection of application u/s 10 of IBC - Seeking to initiate Corporate Insolvency Resolution Proceedings (CIRP) - It is the case of the Appellant that the Section 10 application was complete in all respect and all statutory prescriptions to file Section 10 application had been met - whether the Adjudicating Authority committed any error in rejecting the Section 10 application? - HELD THAT:- It is noticed that much before the Section 10 application was filed by the Appellant, the Respondent Bank had issued notices to the Appellant for personal hearing before declaring the Appellant to be a wilful defaulter. It is also found that the Adjudicating Authority took notice of the fact that the Appellant Company failed to appear before the Respondent Bank in spite of notices having been issued to them twice and gave a slip to the proceedings initiated by the Wilful Defaulter Identification Committee of the Respondent Bank. Even after being declared a defaulter, the Appellant continued not to respond to the notices issued by the Respondent Bank.
The Appellant Company was selectively approaching the Bank requesting for some reprieve but was deliberately avoiding the Bank in the proceedings being conducted for being a wilful defaulter. This glaring duplicity in the conduct of the Appellant as pointed out by the Respondent Bank has also been taken cognisance of by the Adjudicating Authority in concluding that the Appellant has come before it with unclean hands.
It does not escape notice that the Appellant was trying to embroil the Respondent Bank in multiple layers of litigation. It is an undisputed fact that the Appellant had filed securitization application SA-365 of 2019 before the DRT, Lucknow for stay on the auction of its properties by the Respondent Bank. Apart from moving the securitization application before the DRT, the Appellant had also knocked at the doors of the Hon’ble Allahabad High Court by filing a Writ petition - the Appellant made incessant efforts to put a spanner in the recovery proceedings initiated by the Respondent Bank and finally resorted to filing the Section 10 application.
There is no quarrel over the fact that Section 10 vests rights on the Corporate Debtor to resolve their insolvency. However, one cannot lose sight of the fact that this protective umbrella over the assets of the Corporate Debtor is not misused or abused in a manner so as to become a tool for deriving undue advantage at the cost of insolvency resolution which objective unequivocally resonates in the preambular aspirations of the IBC - the Adjudicating Authority rightly deprecated the Appellant Company for having filed the application under Section 10 of IBC after unsuccessfully trying at pre-empting recovery proceedings undertaken by the Respondent Bank.
The Adjudicating Authority agreed upon that the bonafide of the Appellant in filing of the Section 10 application was doubtful and that the filing was done for reasons other than insolvency resolution and therefore deserves to be dismissed.
There are no good reasons which warrants any interference in the impugned order - appeal dismissed.
-
2024 (7) TMI 1261
Impleadment as a party to the proceedings - necessary party to the proceedings or not - whether the Impleadment Application, as it has been preferred by the Respondent No.1 could at all have been allowed without there being a notice issued to him, who was sought to be impleaded in order to enable him to put forth his views on whether at all he happens to be the necessary party to the proceedings or not?
HELD THAT:- As far as the aspect of impleadment is concerned from the perspective of the Appellant, that there was no prior notice given to him, it is an aspect which has already been dealt with, coupled with the fact since the issue of impleadment being exclusive prerogative of the court because it is the court which has to determine the necessity of the party to be introduced in the proceedings as to whether if at all it is the necessary party to decide the case effectively, there are no error in the Impugned Judgment under challenge allowing the Impleadment Application.
The Appeal lacks merits and the same is accordingly dismissed.
-
2024 (7) TMI 1260
Doctrine of necessity - Seeking stay of order directing liquidation of the Corporate Debtor and the appointment of the liquidator, in order to enable the Appellant to deposit the balance amount into the liquidation account of the Corporate Debtor - directing the liquidator to put on hold the liquidation proceedings was rejected - HELD THAT:- Looking at the concept of the ‘doctrine of necessity’, which has to be read in accordance with the provisions contained under section 60(5) of I & B Code, 2016, it provides for meeting out such inevitable circumstances in form of the powers vested with the Tribunals and particularly the NCLT as referred to in sub-section (5) of section 60 of I & B Code, 2016, to pass any appropriate order for fruitfully disposing of any application or proceedings in order to meet the purpose of CIRP, as against the Corporate Debtor. In the instant case owing to the Resolution Plan which was submitted by the Appellant and approved by NCLT, the Corporate Debtor was expected to revive back in and to reach the status of being a going concern.
When the provisions contained under section 60 sub-section (5) of I & B Code, 2016, it starts with a non-obstinate clause, that means it has an overriding effect to any of the provisions to the contrary, of the Code as contained therein and that the exercise of inherent powers have been vested with the Tribunal to carry out the exceptions in order to meet out the objective of the Code in order to avoid liquidation and to enable the Corporate Debtor to transition into position of being a going concern.
In that eventuality, though admittedly the law is not in favour of the Appellant, because he has not put a challenge to the order of appointment of liquidator, but since the liquidator himself supports the contention of the Appellant, the Appellant is granted a last opportunity to deposit the amount, which is to be positively deposited within a period of one month and if the said deposit is not made by the Appellant within the aforesaid time frame, the relaxation which has been granted to the Appellant in the light of the provisions contained under section 60(5) of I & B Code, 2016, will automatically lapse and it will open for the liquidator to seek for an appropriate alternate buyer by resorting to the procedure prescribed under law.
Appeal disposed off.
-
2024 (7) TMI 1214
Refund of the earnest money deposited by the petitioner - It is alleged that the petitioner filed a belated appeal before the National Company Law Appellate Tribunal (NCLAT) which was dismissed on the point of limitation which order remained undisturbed even before the Supreme Court - invocation of writ jurisdiction under 32 of the Constitution of India - HELD THAT:- The prayer for tagging has been opposed and it has been submitted that since the petitioner has already lost up to the Supreme Court in the previous round no such indulgence ought to be granted to her.
Keeping the issue of the maintainability of the writ petition open, this writ petition it is directed to be tagged with Civil Appeal No. 7943 of 2023.
............
|
9911796707
