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IBC - Case Laws
Showing 241 to 260 of 9418 Records
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2024 (11) TMI 1052
Rejection of application filed by the Appellant under Section 10 of the Insolvency and Bankruptcy Code, 2016 - proceedings under Section 13, sub-section (2) of the SARFAESI Act was initiated by the SBI against the Appellant prior to filing of Section 10 Application - main reason for dismissing Section 10 application is that Applicant has filed Section 10 application with malicious and fraudulent intent to delay and halt the recovery proceedings initiated by Respondent Bank - whether filing of an application by the Appellant under Section 10, can be termed as initiation of proceedings with fraudulent and malicious intent? - HELD THAT:- The basis for Section 65 application filed by the SBI is the fact that SBI has initiated proceedings under Section 13, sub-section (2) of the SARFAESI Act vide notice dated 24.02.2023, prior to filing of the application under Section 10 by the Corporate Applicant. Admittedly, Section 10 application was filed by the Appellant, subsequent to initiation of proceedings under Section 13, subsection (2) by the SBI. The pleadings of the of the SBI in proceedings under Section 13, sub-section (2) were that 13(2) proceedings were on the verge of being completed, when Corporate Applicant has filed application under Section 10 with malafide and fraudulent intent. From the pleadings in Section 65 application, we do not find any foundation to come to the conclusion that application under Section 10 was fraudulently initiated.
The learned Counsel for the Appellant has relied on judgment of this Tribunal in Unigreen Global Private Limited vs. Punjab National Bank and Ors. [2018 (1) TMI 505 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], where this Tribunal noticing Section 7 and Section 10 of the IBC held that, two factors are common i.e. the debt is due and there is a default - This Tribunal further held that action under Section 13(4) of SARFAESI Act against Corporate Debtor or proceedings before Debt Recovery Tribunal, if any, are pending, cannot be a ground to rejection application under Section 10, if the application is complete.
The present is a case where Adjudicating Authority has allowed Section 65 application filed by the SBI principally based on the foundation of the SBI that Section 10 application filed at the time when proceedings under Section 13, sub-section (2) were on the verge of completion. Whether Section 10 application deserve to be admitted or not, is a decision, which has to be taken by the Adjudicating Authority on facts of each case.
For allowing Section 65 application, fraudulent and malicious intent of CD has to be proved from some materials on record. Merely because proceeding under Section 13, sub-section (2) and (4) has been initiated by the creditor prior to filing of Section 10 application, cannot be a ground to hold that Section 10 application is filed with malicious and fraudulent intent. For proving fraudulent and malicious intent, something more is required to be pleaded and proved apart from initiation of proceedings under Section 13, sub-section (2) and (4) by the creditor against the Corporate Applicant.
The Adjudicating Authority committed error in allowing Section 65 application filed by the SBI and rejecting Section 10 application. In event a proposition of law is accepted that when a creditor has initiated proceedings under Section 13, sub-section (2) against the CD, he is precluded to file Section 10 application, that proposition will be clearly against the intent and purpose of Section 10 of the IBC - the basis of rejection of Section 10 application is the finding by the Adjudicating Authority that application has been filed with malicious and fraudulent intent to delay and halt the recovery proceedings. There mere fact that application is filed, consequent of which the recovery proceedings may be halted, cannot lead to conclusion that intent and purpose of the application is malicious and fraudulent - Adjudicating Authority committed error in allowing Section 65 application filed by the SBI.
The company petition filed under Section 10 is revived to be considered and decided by the Adjudicating Authority afresh - appeal allowed.
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2024 (11) TMI 1051
Rejection of Section 9 Application filed by the Appellant - pre-existing disputes - dispute existed much before Demand Notice was issued - inflated invoices - HELD THAT:- When the Corporate Debtor is entitled to all rights, interests and has to discharge all liabilities obligations of Transferor under the Principal Agreement, any entitlement or liability of it, which flow from the Master Service Agreement has to be shouldered/claimed by the Corporate Debtor. It cannot be said that inflated invoices which is claimed to have been issued by staff and employees of the Appellant though related to the different Project under the same Master Service Agreement is alien or foreign to claim which has been raised by the Appellant. In the present case, after coming to know about the issue of inflated invoices, Appellant itself has commenced investigation and filed the Police Complaint as well as directed for investigation through Ernst and Young, which is an admitted fact. Appellant in his Appeal has brought on record the Police Complaint which was submitted by Appellant on 24.02.2023.
The correspondence between the Parties which relates to the payments which are subject matter of Demand Notice and Section 9 Application is clear communication by Corporate Debtor that payments have been put on hold indicates that there was dispute raised by Corporate Debtor with regard to entitlement and payment of the invoices which are subject matter of Section 9 Application much before issuance of Demand Notice dated 06.11.2023.
Thus, it is clear that the claim of Appellant for payment of invoices which are subject matter of Section 9 Application was disputed much before Demand Notice was issued - In facts of the present case, Adjudicating Authority has not committed any error in refusing to initiate CIRP, there being Pre-Existing Dispute which is reflected with the correspondence which took place between the Parties much prior to issuance of Demand Notice.
Thus, no error has been committed by the Adjudicating Authority in rejecting Section 9 Application filed by the Appellant.
There is no merit in the Appeal - The Appeal is dismissed.
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2024 (11) TMI 1050
Maintainability of the appeal by a shareholder under Section 61 of the Insolvency and Bankruptcy Code, 2016 - pre- existing dispute between the appellant and Corporate Debtor/Respondent No.1 or not - interpretation of “dispute” under Section 5(6) of the code - HELD THAT:- The disputes related to shareholder oppression or mismanagement under the Companies Act, 2013 are distinct issues governed by separate statutory provisions and fall outside the purview of the Code. As a special statute, the IBC prevails over the Companies Act pursuant to Section 238, which has been affirmed by the Hon’ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank [2017 (9) TMI 58 - SUPREME COURT], which held that the resolution process under the IBC takes precedence over any conflicting laws. Hence, the contention of appellant regarding resolution of Company Petition under Section 241 & 242 of Companies Act, 2013 before the CIRP petition does not hold water.
The NCLT has passed the order after hearing both the parties and it’s an order complying with relevant provisions of the code. The debt and default are on record and there was no pleading of pre-existing dispute in this case.
As owners the equity shareholders are biggest beneficiaries when the company does well. Their capital is multiplied due to increase in share prices and by receipt of dividends. On the other hand, if the company performs badly and goes in liquidation, the equity shareholders loose their entire share capital. The owners of the company have a major role to play in the proper functioning of the company, as equity shareholders are represented through the Board of Directors (BoD) and the BoD holds the management accountable for its proper functioning - As soon as the CIRP petition is admitted and IRP is appointed, the functions of the BoD are taken over by IRP. As a representative of Shareholders erstwhile Directors of CD are allowed to intervene and file appeals under Section 61, but the individual or even majority shareholders are not allowed to pursue derivative action.
The appellant’s argument is that the definition of 'aggrieved person' under Section 61 should include any party whose legal interests are impacted by the outcome of insolvency proceedings, even if not directly named as a party in the original application. The restrictive interpretation conflicts with the broader intent of the IBC to allow for effective appeals by any stakeholder with a demonstrable interest, especially in complex insolvency scenarios where indirect impacts on third-party rights are substantial. Thus, the scope of 'aggrieved person' must not be so narrowly construed as to exclude genuine stakeholders who have a legitimate legal or financial interest in the outcome of the case.
The appellant being a shareholder of the company is not the “aggrieved party” as per the provisions of the Code. The appellant has no locus to file this appeal and the same is not maintainable.
Accordingly, the appeal is dismissed.
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2024 (11) TMI 998
Dismissal of application filed by the appellant under Section 7 of the Code - Respondent miserably failed to meet its obligation - existence of debt and default - judicious application of mind by the Adjudicating Authority - Appellant assailed the conduct of the Respondent for taking several frivolous grounds including that the application of the Appellant under section 7 of the Code has been rejected earlier and by doctrine of res-judicata the same could not have been filed.
Whether there was a debt and default which could trigger Section 7 application filed by the Appellant? - HELD THAT:- There was outstanding debt and there was a clear default on the part of the Respondent in meeting its obligation which entitles the Appellant to take suitable remedy as per the Code and therefore, he correctly filed the Application under Section 7 of the Code - there are no meaningful and detailed discussion on this issue in the Adjudicating Authority decision in the Impugned Order, especially on issue of default which is against the spirit of the Code. In view of these discussions, the debt and default is established in favour of the Appellant.
Whether, ratio of Vidarbha Industries [2022 (7) TMI 581 - SUPREME COURT] was applicable in the present case based on which the Adjudicating Authority rejected the application of the Appellant filed under Section 7 of the Code? - Whether, there was judicious application of mind by the Adjudicating Authority as evident in the Impugned Order while rejecting the application of the Appellant under Section 7 of the Code? - HELD THAT:- In the present case, the total outstanding of all lenders was thousands of crores and debt claims of Appellant was itself Rs. 646.38 Crores, whereas the Respondent is now hopeful of Rs. 1271 Crores to be recovered from other telecom companies based on Arbitration etc., which are at present at different stages of being finalised, thus, perception of the Respondent looks far from finality. It is anybody’s guess as to when this money, if at all, will come to the Respondent’s account after all sort of claims, counter claims and litigations at various legal fora.
The Adjudicating Authority has not even discussed the nature of this repayment of Rs. 16915 Crores i.e., whether it was paid in cash component as per loan agreements or major chunk as deemed payable due to conversion of debt into equity as per CDR/ SDR in terms of RBI Guidelines, which Lenders/ Bank had to follow without any option. We note that both the CDR/SDR failed due to default of the Respondent. This could have been relevant factor to determine viability of the Corporate Debtor in terms of Vidarbha Industries - It would have been desirable for the Adjudicating Authority to go into details as what was the total outstanding claims all the lenders pre CDR/SDR as well as post CDR/SDR and what was the total payment made thereon. This would have given a clear picture in terms of total payment made by the Respondent on account of principals, interest and other ancillary charges like penal interest, if any, happened due to non payment on part of the Respondent to the Lenders. The Adjudicating Authority has not gone into any of these details, as such we are not in position to support the Impugned Order rejecting Section 7 application of the Appellant only on the ground of Vidarbha Industries.
The Adjudicating Authority has not applied the ratio of Vidarbha Industries correctly in the present case while rejecting the application of the Appellant, filed under Section 7 of the Code.
Whether the Adjudicating Authority ignored the acknowledgements of debt and default by the Respondent in its various statements, books of accounts, affidavit in reply and Written Submissions filed before the Adjudicating Authority? - HELD THAT:- There are several acknowledgements of debt and default on the part of the Corporate Debtor - there is a clear debt and default backed several acknowledgements by the Respondent which entitled the Appellant to file application under Section 7 of the Code before the Adjudicating Authority.
Whether the Appellant is permitted to raise any disputed issues of facts before this Appellate Tribunal through Rejoinder dated 11.04.2023 to the Affidavit in Reply and Additional Affidavit in reply and whether it is an impediment in the present appeal? - HELD THAT:- The Appellant pleaded that in the present case, the question as to the applicability of Vidarbha Industries is not a new plea set out by the Appellant. It has its basis in the pleadings of the Respondent as well as the Appellant before the Adjudicating Authority - it is already noted the relevant para of Vidarbha Industries [2022 (7) TMI 581 - SUPREME COURT], Innoventive Industries Ltd. [2017 (9) TMI 58 - SUPREME COURT], Vidarbha Review Order and it is already noted the various financial facts and figures regarding viability of the Corporate Debtor, as such the contentions raised by the Respondent does not hold good.
Even without considering the Rejoinder filed by the Appellant, the ratio and applicably of Vidarbha Industries is in the present appeal is required to be taken into consideration along with various financial facts which are found in the pleadings made as well as written submissions and which are based on the financial statements of the Corporate Debtor which are in public domain.
Whether, the Appellant was duty bound to agree with majority of the lenders to assign its debts to EARC? - HELD THAT:- The Appellant is not duty bound to agree with majority of the lenders to assign its debts to EARC - It is clear that it is the commercial wisdom of the lenders is paramount in deciding to assign its debts or to pursue other remedies including filing under Section 7 of the Code or otherwise and these can’t be any judicial intervention on this aspect by the Adjudicating Authority or this Appellate Tribunal.
The case is remanded back to the Adjudicating Authority to hear the original petition of the Appellant a fresh, taking into consideration all the relevant facts - Appeal allowed by way of remand.
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2024 (11) TMI 930
Rejection of appeal - challenge to acceptance of certain additional documents, together with a rejoinder affidavit filed by the respondent - HELD THAT:- Since the proceedings are pending before the NCLAT, we are not inclined to entertain the appeal, at this stage, particularly in the absence of a substantial question of law.
The appeal is accordingly dismissed.
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2024 (11) TMI 929
Challenge to Impugned Order - directions has been issued to the IBBI to conduct detailed inspection regards the conduct of Liquidator and the records, pertaining to the Corporate Debtor in order to find out the irregularities in the process - cause of action - prior to passing of the order, no opportunity of explaining or defending himself was provided - violation of principles of natural justice - HELD THAT:- The appellate proceedings under Section 61, of I & B Code cannot be resorted to by the Liquidator, for the purposes of the challenging direction issued to the IBBI to enquire into the conduct of the appellant regards his functioning as a liquidator, because that will be absolutely an in-house proceeding of the registering body of the liquidator to justify as to whether at all, the based on the set of allegations, if proved, he is required to continue as a Liquidator or not. In fact, at this stage, there is nothing apparently adverse against the Appellant, which could call for invocation of an Appellate Jurisdiction particularly when it is only an enquiry and upon which the decision on the same is yet to be taken.
As of now there is no specific cause of action for the Appellant, to invoke the Appellate Jurisdiction under Section 61, of I & B Code. The Appeal lacks merit and the same is accordingly dismissed.
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2024 (11) TMI 928
Challenge to order filed by the Resolution Professional (RP) - HELD THAT:- It is clear that Resolution Plan which was submitted by the Appellant was approved on 07.11.2020 by the CoC. It was the Excise & Taxation Officer, Officer-Cum-Assessing Authority filed its Application before the Adjudicating Authority for accepting its claim which was allowed by the Adjudicating Authority. However, the said Orders was reversed by this Appellate Tribunal, against which, Civil Appeal No. 7514– 7515/2022 was filed. The Order of the Hon’ble Supreme Court in [2024 (1) TMI 1382 - SC ORDER] has been brought on record by the Appellant.
It is clear that under the Order passed by the Hon’ble Supreme Court in the Appeal filed by Excise & Taxation Officer, Officer-Cum-Assessing Authority, the process was to be completed within 90 days and for taking steps in pursuance of the Order of the Hon’ble Supreme Court dated 22.01.2024 [2024 (1) TMI 1382 - SC ORDER], I.A. was filed by the RP. Adjudicating Authority by the Impugned Order has allowed the Application in terms of Prayer (c) but has not issued any direction as to what process, RP has to conduct. The expression used is “conduct the ongoing Corporate Insolvency Resolution Process for M/s. Mastana Foods Private Limited”.
The ends of justice be served in disposing the Appeal permitting the RP to place an agenda before the CoC with regard to necessary steps which are required to be taken in the CIRP of the Corporate Debtor in pursuance of the directions of the Hon’ble Supreme Court dated 22.01.2024 in Civil Appeal No. 7514–7515/2022. It is the CoC which is in overall control of the entire CIRP Process to take such steps as required by law.
There are no reason to keep this Appeal pending any further and dispose of the Appeal with liberty to the RP to place appropriate agenda before the CoC, who may take decision and complete the process of CIRP as directed by the Hon’ble Supreme Court.
Appeal disposed off.
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2024 (11) TMI 879
Seeking to withdraw Appeal - seeking permission to withdraw the amount of Rs. 20,00,000/- that had been deposited in this Court pursuant to an interim order, along with accrued earnings thereon - HELD THAT:- The pleadings considered by the Supreme Court in Axis Bank vs. SBS Organics Private Limited and Another [2016 (4) TMI 917 - SUPREME COURT] on the very same question, and the resultant outcome of releasing the ICICI Guarantee, make it clear that security interests over the assets of the corporate debtor in order to secure amounts due from the corporate debtor under a judgement or decree would give way to the provisions of the IBC. The proceedings under the IBC may lead to an approved resolution plan or liquidation of the corporate debtor. Therefore, it is not appropriate to continue to hold the position that the interplay between the rights of a judgement creditor and the implications of insolvency law as existing in 1924 (in terms of Chowthmull) would still apply in 2024, when the IBC governs the field of insolvency and bankruptcy of corporate debtors.
The real import of the ruling by the co-ordinate Division Bench in the NAHAR BUILDERS LTD VERSUS HOUSING DEVELOPMENT AND INFRASTRUCTURE LTD [2020 (1) TMI 1704 - BOMBAY HIGH COURT], which was essentially to make the release of the amount deposited under Section 9 of the Arbitration Act, to the judgement creditor in the arbitration proceedings, subject to the provisions of IBC. Since another co-ordinate bench in Rajendra Bansal [2023 (1) TMI 306 - BOMBAY HIGH COURT] proceeded to release funds deposited by a corporate debtor to the judgement creditor on its reading of CHOWTHMULL MAGANMULL VERSUS THE CALCUTTA WHEAT AND SEEDS ASSOCIATION [1924 (5) TMI 5 - CALCUTTA HIGH COURT] and Nahar Case, it is clarified that the ruling in RAJENDRA PRASAD BANSAL VERSUS RELIANCE COMMUNICATION LIMITED [2023 (1) TMI 306 - BOMBAY HIGH COURT] applies only to the parties in that case, although the statement of law as contained therein, has been overtaken, as explained above. Since the Supreme Court has conclusively released the ICICI Guarantee in this very case, no question of law remains for reference to any larger bench.
Taking into account the decision of the Supreme Court in respect of the ICICI Guarantee, and that too based on similar pleadings made by the parties before the Supreme Court; and also taking into account the provisions of the IBC and its implications for decree holders, the monies deposited in this Court are indeed assets under the ownership of the Applicant-Appellant, with possession being in the hands of the Court. No meaningful purpose would be served in continuing with the deposit, since even if the Appeal were to fail, the Respondent would need to be subjected to the CIRP run by the Committee of Creditors through the Resolution Professional. If the resolution attempts fail, the Respondent’s rights under the Impugned Judgement would be subject to the waterfall mechanism for distribution of liquidation proceedings, stipulated under the IBC.
The monies or any other asset deposited by a corporate debtor in court prior to commencement of CIRP by way of security (to protect against execution of any judgement or decree), would not cease to be the asset of the corporate debtor - the monies deposited by the Applicant-Appellant in this Court constitute assets owned by the Applicant-Appellant although they are not in possession of the Applicant-Appellant - the Applicant-Appellant is permitted to withdraw Appeal No. 597 of 2016, and indeed withdraw the amounts deposited in this Court in these proceedings, along with all earnings thereon. Refund of Court fees shall be processed as per Rules.
Appeal disposed off.
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2024 (11) TMI 842
Maintainability of appeal - Approval of resolution plan - HELD THAT:- The appellants have preferred an appeal before the NCLAT on the ground that they were not aware about the Corporate Insolvency Resolution Process (CIRP). Therefore, the NCLAT is right in not entertaining the appeal.
Appeal dismissed.
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2024 (11) TMI 841
Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - no valid Board resolution in favour of the appellant - existing arbitration clause under the agreement - HELD THAT:- This aspect as to whether there was a bona fide pre-existing dispute or not has to be considered by the Tribunal and Appellate Tribunal which has not been dealt with nor the application under Section 9 of the IBC has been rejected on the above ground.
Both the impugned orders passed by the NCLAT as also by the NCLT are set aside and the application filed under Section 9 of the IBC needs to be considered afresh on its own merits after hearing learned counsel for the parties and the material on record - Appeal allowed.
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2024 (11) TMI 840
Permission to withdraw application filed u/s 9 of the Insolvency and Bankruptcy Code, 2016 - Appellant challenging the order contends that the Adjudicating Authority committed error in not granting liberty to the Appellant to file a fresh Application - it was held by NCLAT that 'no error has been committed by the Adjudicating Authority in permitting withdrawal of the Application, while denying liberty to file fresh Application, once again.'
HELD THAT:- There are no good ground and justification to interfere with the impugned judgment and, hence, the present appeal is dismissed.
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2024 (11) TMI 839
Non-compliance with sub-section 1 of Section 9 of the IB Code - HELD THAT:- Issue notice on the application for stay, returnable on 18th November, 2024.
By order dated 26th November, 2020, a company has been impleaded as Additional Corporate Debtor in the pending application under Section 9 (1) of the Insolvency and Bankruptcy Code, 2016 2016. Prima facie, the order is illegal as compliance with sub-section 1 of Section 9 of the IB Code has not been made.
The order dated 26th November, 2020 passed by the National Company Law Tribunal, Kochi Bench, Kerala is stayed - the main application under Section 9 of the IB Code can always proceed against the original Corporate Debtor.
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2024 (11) TMI 838
Maintainability of Application seeking reference to Arbitration - existence of debt and default or not - commencement of the Arbitration Proceeding by the Financial Creditor - HELD THAT:- In the present case, the Reply to Section 7 was filed in December 2023, whereas Application under Section 8 has been moved on 07.03.2024. There are substance in the submission of the Appellant that right to move Section 8 Application was forfeited since Corporate Debtor did not choose to file the Application.
Application under Section 7 was filed by the Financial Creditor in the Year 2023. The thrust of submission of the Appellant is that Financial Creditor itself has initiated Arbitration Proceeding by unilaterally appointed an Arbitrator on 26.07.2019, hence Section 7 Application ought not to have been proceeded and the Adjudicating Authority ought to have allowed the Application filed by the Corporate Debtor under Section 8 of the Arbitration Act. There is no dispute to the fact that Financial Creditor has unilaterally appointed a sole Arbitrator and sole Arbitrator, however, terminated the Arbitration Proceeding on 26.10.2021 holding that appointment of Arbitrator is contrary to the law laid down by the Hon’ble Supreme Court in `Perkins Eastman Architects DPC & Anr.’ Vs. `HSCC (India) Limited’ [2019 (11) TMI 1154 - SUPREME COURT] reported in Arbitration Application 32/2019.
From the law laid down by the Hon’ble Supreme Court, it is clear that if an Application under Section 8 of the Arbitration and Conciliation Act, 1996, is filed, the Adjudicating Authority is duty bound to proceed first to decide the Application under Section 7 by recording a satisfaction with regard to their being default or not. The fact that whether Arbitration Proceedings are pending on the date when Section 7 Application is filed or it is sought to be initiated subsequent to filing of Section 7 Application is immaterial. The remedy under Section 7 is a special remedy, keeping the object and purpose of the IBC Code. When it is brought in the notice of the Adjudicating Authority that a Corporate Debtor needs a resolution it having committed default in payment of debt, the Court is obliged to consider the Section 7 Application to find out as to whether there is a debt and default.
Allowing the Application under Section 8 filed by the Corporate Debtor amounts to asking the Adjudicating Authority to wait till Arbitration Proceedings are decided which is not in accord with the scheme of the IBC and shall defeat the entire purpose and object of the IBC. Adjudicating Authority in the Impugned Order has rightly rejected Application under Section 8 filed by the Corporate Debtor for referring to the dispute between the parties to the Arbitrator.
The Application under Section 8 was filed much subsequent to the filing of the Reply by the Corporate Debtor.
In the present case, debt and default is admitted by Corporate Debtor in its One Time Settlement offers issued twice in the Year 2019 and 2022 - no error has been committed by the Adjudicating Authority in rejecting the application filed by the Appellant.
There is no merit in the Appeal. The Appeal is dismissed.
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2024 (11) TMI 837
Condonation of delay of 3 days in filing the appeal - Computation of limitation period for filing the appeal - whether the date of limitation is to be counted from the date of e-filing or the date of presentation of appeal? - HELD THAT:- As per the provisions of Section 61 of IBC, any person who is aggrieved against the order passed by the Tribunal has a statutory right to file an appeal before the Appellate Tribunal. Section 61(2) provides statutory period of 30 days for filing such an appeal, however, if the proposed Appellant failed to file the appeal within a period of 30 days for some reason then Section 61(2) proviso gives another period of 15 days to file the appeal provided it satisfy the Appellate Tribunal that there was a sufficient cause for not filing the appeal in time. In no case, the period beyond 15 days can be extended.
Since, the appeal has been filed by the Appellant on 30.05.2022 through e-filing and the hard copy was filed on 20.06.2022 though before coming into force the SOP dated 21.10.2022 which has been made effective from 01.11.2022, the SOP dated 21.10.2022 has been withdrawn by SOP dated 24.12.2022 and it has been ordered that limitation is to be counted from the date of e-filing, therefore, in view of the decision of the Hon’ble Supreme Court in the case of Somdev Kappor [2013 (10) TMI 384 - SUPREME COURT] where it has been held that the rules which are prevalent on the date when the application is considered are to be applied and not the date when the application is made, the application having been filed by the Appellant has to be considered in terms of SOP dated 24.12.2022 which is in operation at the time when the application for condonation of delay is being considered.
The argument raised by Respondent No. 1 not agreed upon, that limitation is to be counted from the date of presentation of appeal at the counter because the issue of computation of limitation was first determined by way of SOP dated 21.10.2022 whereas the appeal was filed much earlier in both ways i.e. e-filing as well as by way of hard copy and the SOP dated 21.10.2022 was superseded/withdrawn by SOP dated 24.12.2022 as per which the limitation is to be counted from the date of e-filing.
The objection raised by the Respondent is hereby overruled and since there is a delay of only three days in filing the appeal which has also been duly explained in detail in the application which is supported by an affidavit and the power to condone the said delay in terms of Section 61(2) proviso is with this Tribunal, therefore, the same is hereby condoned on being satisfied that sufficient reason has been assigned by the Appellant.
The application is thus allowed.
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2024 (11) TMI 836
Service of notice - notice issued under Section 8 of the Code was not in accordance with law - appellant argued that the Tribunal has committed a patent error in dismissing the application on the ground that the notice was not given to the juristic person but has been addressed to the KMP of the CD - HELD THAT:- Undisputedly, the issue of notice under Section 8 that too on a printed proforma (Form 3) is a sine qua non for the purpose of invoking Section 9 of the Code for filing an application under Section 9 of the Code by the OC. In case, the notice is not issued then the cause of action is not complete and application under section 9 cannot be maintained. In the present case, though the notice has been issued on 31.03.2021 and it is also on Form 3 but the same has been addressed to Mr. Sameer Singh, Director, Bibhuti Bhushan Rath, Chief Financial Officer and Mr. S. Subudhi, Manager Commercial of the Corporate Debtor in their capacity of KMP of the CD but no notice has been addressed to the company (CD), namely, Mesco Kalinga Steel Ltd. through its managing director etc., therefore, the said notice cannot be termed to have been delivered to the CD and therefore, the same cannot be taken to be a notice issued under Section 8 of the Code.
In so far as the delivery of notice is concerned, Rule 5 of the Rules prescribes the procedure in which Rule 5(2)(a) provides that notice has to be sent to the Registered office for which various modes have been provided, namely, it can be sent by hand, registered post or speed post with acknowledgement but the notice has to be sent of the CD at its registered office. Rule 5(2)(b) provides for delivery of notice by electronic mail to the KMP of the CD but it does not apply to the present case because no electronic mail has been sent, therefore, it is not required to make any observation in this regard. Form-3 specifically provides for a notice to mention the name of the CD and delivered at the address of the registered office of the corporate debtor.
In so far as the decision in the case of Niraj Kumar [2023 (1) TMI 1147 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] is concerned, that was a case where the dispute was about the nomenclature of the Company because the name of the company was Lex Innova Digital Payments Pvt. Ltd. which was mentioned as LI Digital Payments Pvt. Ltd. and in this regard, the judgement is not on the issue which has been addressed before this Court, therefore, the said judgment is on its own facts and has settled the law which is not applicable to the present case.
There are no error in the impugned order which may require any interference by this Court. Hence, the present appeal fails and the same is dismissed.
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2024 (11) TMI 802
Jurisdiction to enter into issue as to whether the subject land is asset of the corporate debtor - parties were required to be relegated to the Competent Civil Court having jurisdiction or not - proceedings conducted by Sole Arbitrator and the orders passed by the Sole Arbitrator amounts to arbitral award under the Arbitration & Conciliation Act, 1996 determining the rights of both the parties so as to bind the parties in any subsequent proceedings - IRP/ RP could or could have been included the subject land in the Information Memorandum/ CIRP process of the corporate debtor by virtue of Section 18(1)(f) explanation.
Whether the Adjudicating Authority had jurisdiction to enter into issue as to whether the subject land is asset of the corporate debtor or the parties were required to be relegated to the Competent Civil Court having jurisdiction? - HELD THAT:- Whether an asset is required to be reflected in the Information Memorandum or the asset belong to the Corporate Debtor are the question which arise out of or in relation to the insolvency resolution process. The present is a case where the Corporate Debtor has claimed development rights in the land. It is no more res-integra that the development rights are property within the meaning of Section 3(27) of the IBC. We may refer to the judgment of the Hon’ble Supreme Court in “Victory Iron Works Ltd. vs. Jitendra Lohia & Anr. [2023 (3) TMI 699 - SUPREME COURT] where the Hon’ble Supreme Court had held that the development rights created in favour of the corporate debtor constitute “property” within the meaning of Section 3(27) of the IBC.
The question as to whether the assets which are included in the Information Memorandum are the assets of the corporate debtor is foundation of entire CIRP process. When the inclusion of the said asset is questioned before the NCLT by the Appellant, Adjudicating Authority does not lack jurisdiction in entering into question and deciding as to whether assets are part of the CIRP or it should be excluded. We, thus, are of the view that the above question could be determined by the Adjudicating Authority and parties need not have to be relegated to the Civil Court having jurisdiction, the view of the NCLT to the contrary cannot be approved. Judgment of the Hon’ble Supreme Court in Victory Iron [2023 (3) TMI 699 - SUPREME COURT], clearly has held that the NCLT and NCLAT can exercise jurisdiction in the above facts.
Whether proceedings conducted by Sole Arbitrator and the orders passed by the Sole Arbitrator dated 27.05.2014 and 15.07.2015 amounts to arbitral award under the Arbitration & Conciliation Act, 1996 determining the rights of both the parties so as to bind the parties in any subsequent proceedings? - HELD THAT:- In view of the statutory scheme of the Arbitration & Conciliation Act, 1996, and the fact that both City Civil & Session Court Judge as well as High Court of Karnataka having held that the order dated 15.07.2015 passed by the Sole Arbitrator is an order under Section 33(2)(c), the order dated 15.07.2015 cannot be held to be arbitral award within the meaning of Arbitration & Conciliation Act, 1996 so as to make it binding on the parties under Section 35 of the Act. Thus, in view of the fact that the Sole Arbitrator terminated the arbitration proceedings under Section 33(2)(c) by order dated 15.07.2015, the order dated 15.07.2015 cannot be held to be an award within the meaning of Arbitration & Conciliation Act, 1996.
Whether the IRP/ RP could or could not have included the subject land in the Information Memorandum/ CIRP process of the corporate debtor by virtue of Section 18(1)(f) explanation? - Whether Adjudicating Authority erred in not allowing the IA No.4648 of 2020 as prayed by the Appellant? - HELD THAT:- The present is a case where corporate debtor is not claiming any ownership rights over the subject land. Corporate debtor is claiming development rights and the ownership of the Appellants is not even denied by the Resolution Professional. Reply to the IA was filed by the Resolution Professional. In the reply, Resolution Professional has pleaded that the Resolution Professional has rightly included the project in the Information Memorandum as besides receiving the compensation due and payable by the Applicants in terms of clause 6, the Resolution Professional is also required to deal with the claims of Real Estate Allottee pertaining to said project.
IRP/RP has rightly included the subject land in the Information Memorandum/ CIRP and he was not precluded by virtue of Section 18(1)(f) explanation from asserting development rights in the subject land - Adjudicating Authority did not commit any error in not allowing IA No.4648 of 2020 which prayed for exclusion of subject land from the Resolution Plan/CIRP of the corporate debtor.
Whether the Adjudicating Authority committed error in allowing the IA No.58 of 2023 filed by the SRA? - HELD THAT:- The Adjudicating Authority did not commit any error in allowing Intervention Petition filed by Art Construction Pvt. Ltd.
The order dated 30.04.2024 passed in IA No.58 of 2023 upheld - appeal dismissed.
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2024 (11) TMI 801
Admission of Section 7 application filed by the Financial Creditor through Interim Resolution Professional (IRP) - financial debt present in the case or not - Section 10A of the IBC Code - Section 7 application filed by the Financial Creditor dated 20.01.2023 was barred by time, loan having disbursed on 16.12.2016 or not - Section 7 application was barred by Section 10A since as per the letter dated 20.08.2020 issued by the Corporate Debtor and acknowledged by the Financial Creditor the amount was to be paid by the Corporate Debtor by 01.12.2020 and the default if any occurred on 01.12.2020 is hit by Section 10A or not.
Whether Financial Creditor has been able to prove that there was financial debt? - HELD THAT:- It is relevant to notice that in Section 7 application, the financial creditor has filed its ledger with regard to corporate debtor which is part of Section 7 application and as per the ledger as on 31.03.2020 amount outstanding was Rs.4,74,48,109/-. The ledgers indicate that there was entry of payment of interest as on 31.03.2017, 31.03.2018, 31.03.2019 and 31.03.2020. Payment of TDS was also mentioned.
A perusal of the ledger indicate that the closing balance of amount in the ledger of the corporate debtor as on 31.03.2020 towards the financial creditor was Rs.4,78,69,260/-. There were entries regarding ‘interest on loan’ and ‘TDS on interest’ in the ledger of both the corporate debtor and the financial creditor, hence, there is no doubt that the amount is a financial debt. Further in the letter dated 20.08.2020 which has been written by the corporate debtor to the financial creditor, there is a clear admission of loan - Financial Creditor has successfully proved that there is a financial debt.
Whether Section 7 application filed by the Financial Creditor dated 20.01.2023 was barred by time, loan having disbursed on 16.12.2016? - HELD THAT:- In the present case, we have already noted the letter dated 20.08.2020 which was filed by the corporate debtor in the reply to Section 7 application. Reliance has been placed on the said letter by the Appellant also in the present Appeal. The letter dated 20.08.2020 contained a promise to repay the outstanding amount. Even for arguments’ sake, if we accept that three years period as per Article 21 came to end on 15.12.2019, the letter dated 20.08.2020 is clear promise by the corporate debtor to make the payment and as per Section 25 of the Indian Contract Act, 1872, the corporate debtor is bound by the said promise and fresh period of limitation shall commence from 20.08.2020 - Section 25(3) is attracted when a promise is made by letter to make the payment of a time barred debt. In view of Section 25(3), the said promise is enforceable and the promise in writing given by the corporate debtor in letter dated 20.08.2020 will make the said promise enforceable within a period of three years and the application which was filed by the financial creditor dated 20.01.2023 cannot be said to be barred by time. Hence the application under Section 7 cannot be held to be barred by time relying on Article 21 of the Limitation Act.
Whether Section 7 application was barred by Section 10A since as per the letter dated 20.08.2020 issued by the Corporate Debtor and acknowledged by the Financial Creditor the amount was to be paid by the Corporate Debtor by 01.12.2020 and the default if any occurred on 01.12.2020 is hit by Section 10A? - HELD THAT:- It is well settled when default has been committed by the Corporate Debtor prior to commencement of Section 10A period, the application filed under Section 7 cannot be held to be barred by Section 10A. In the present case, as per the case of the Appellant, default took place since the loan was payable within three years from the date of grant of the loan i.e. from 16.12.2016 - Notice issued by the IRP was neither replied nor any amount was paid, hence, the financial creditor treated the date of default as 07.12.2022 i.e. 7 days from the notice - thus, the application filed by the financial creditor was not barred by Section 10A.
One of the submissions also advanced by Counsel for the Appellant is that in the letter dated 20.08.2020 it was provided that in the event, the payment is not made by the corporate debtor prior to 01.12.2020, the financial creditor will be entitled to two residential premises in the project which is currently being developed by the Director of the company. The letter dated 20.08.2020 cannot extinguish the financial debt on a promise to allot two residential premises which is developed not by the corporate debtor but Director of the company. It is not satisfied that the financial debt shall extinguish by the promise made in the letter dated 20.08.2020.
There are no error in the order of the Adjudicating Authority admitting Section 7 application. There is no merit in the Appeal. The Appeal is dismissed.
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2024 (11) TMI 800
Challenge to order directing for reversal of the directions which took place after 22.02.2023 till 01.06.2023 - determination of the Insolvency Commencement Date (ICD) and its implications - Respondents opposing the interim prayer contends that the amount having been appropriated, is clear violation of moratorium which commenced on 22.02.2023 - HELD THAT:- Notices are already issued in the Appeals and a date for hearing is fixed, thus, the ends of justice be served in directing the Axis Bank and other lenders, who are Appellants before us, to keep the amount which is to be reversed under the impugned order in a separate interest bearing account so that in the event amount is finally decided to be reversed the interests of the corporate debtor are protected. Appellant being themselves banks and financial institutions there can be no apprehension that the banks shall not reverse the amount in the account of the corporate debtor in event any final decision is taken in the appeal to that effect. The above interim management shall protect the interest of all the parties.
List these Appeals on 03.12.2024 at 2.00 P.M. for hearing and disposal.
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2024 (11) TMI 737
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 - it was held by High Court that '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.' and the petition was rejected - HELD THAT:- It is not required to entertain the Special Leave Petition under Article 136 of the Constitution of India.
SLP dismissed.
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2024 (11) TMI 736
Preferential and fraudulent transaction - Seeking avoidance of certain preferential and fraudulent transactions carried out by the suspended directors of the Corporate Debtor - Sections 43 and 66 of the IBC - it was held by NCLAT that 'The Adjudicating Authority has erroneously dismissed the application filed by the Resolution Professional under Sections 43 and 66 of the IBC.' - HELD THAT:- After having heard the learned counsel appearing for the appellants, the view taken by the National Company Law Appellate Tribunal concurred upon.
There is no merit in the Civil Appeal and the same is accordingly dismissed.
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