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Insolvency and Bankruptcy - Case Laws
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2024 (4) TMI 828 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Release of assets (machines) seized by the Customs Authorities before initiation of CIRP - violation of principles of natural justice - HELD THAT:- On looking into the order of the Adjudicating Authority, it is clear that the order contains only direction to release the goods to the Customs Department without giving any reason and without even adverting to the facts, which were mentioned by the Applicant himself in the Application. The order of Adjudicating Authority, which does not give any reason for allowing the Application, deserves to be set aside on this ground alone.
The statutory provision of Section 126 is clear and it does not need any interpretative exercise to know the legislative intendment. The option of paying the redemption fine given under the order dated 03.12.2020 has not been availed of, which is an admitted fact. The submission, which has been pressed by the learned Counsel for the Respondent is that since the period of 120 days did not expire and the CIRP commenced, the vesting of goods in Central Government shall not take place. Vesting of goods under Section 126, sub-section (1) is not dependent on exercise of option to pay the redemption fine. The payment of redemption fine and redeeming the goods is a benefit, which is provided by the statute, which option can be availed after the confiscation of the goods - In the present case, it is not the case of RP that any option was exercised for payment of redemption of fine.
In the entire pleading of the Application, there is no claim of exercise of any option. Thus, the argument of Shri Rishav Banerjee that there shall be no vesting till the period for exercising the option comes to an end, has no relevance in the present case. More so, even CIRP commenced against the Corporate Debtor on 30.12.2020, it was always open for the RP, who was entitled to represent the Corporate Debtor to exercise option and redeem the goods by payment of redemption fine. The contention of the Respondent that even though, it has neither exercised the option of payment redemption fine nor redeemed the goods, but sill they continued to be owner of the goods cannot be accepted.
The vesting of goods is on confiscation by the Central Government by provision of Section 126, sub-section (1) and the option to pay redemption fine and redeeming the goods, is only a benefit given to the Corporate Debtor, which however, shall not arrest the vesting of the goods as contemplated by Section 126, sub-section (1) - the submission of learned Counsel for the Respondent is not accepted in the present case that till the option for payment of redemption fine is not exercised within 120 days, the goods continued to vest in the Corporate Debtor.
The order of the Adjudicating Authority impugned in the Appeal is unsustainable and deserve to be set-aside - Appeal allowed.
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2024 (4) TMI 827 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Bench Reconstitution and Order Pronouncement - Whether an order reserved by a bench could be pronounced by a reconstituted bench without considering a subsequent application that called for a re-hearing based on new developments. - Admission of section 7 application - challenge to proceedings in SARFAESI Act initiated by Financial Creditor - HELD THAT:- In exercise of appellate jurisdiction, the Appellate Court can take all decision, which could have been passed by Adjudicating Authority while deciding Section 7 Application. In the present case, sequence of events and facts as noticed above shows that subsequent Application filed in November 2023, i.e., IA No.5177 of 2023, the Applicant prayed for rehearing of the matter on account of subsequent events, that is an order passed by Debt Recovery Tribunal dated 05.10.2023 and on which Application notices were issued by the existing Court-III and orders were reserved. For the purpose of this case, the issue as to whether the plea raised in IA No.5177 of 2023, ought to be allowed or not, need not be perused. But when these facts were brought before the Special Bench on 22.03.2024, on which date the case was listed for pronouncement, the Adjudicating Authority ought to have awaited the orders in IA No.5177 of 2023.
It is well settled that although lis between the parties have to be decided on the date when proceedings were initiated, but subsequent events can very well be taken into consideration by Adjudicating Authority.
There was no fetter on the jurisdiction of the Adjudicating Authority in deferring the pronouncement and awaiting the orders passed in IA No.5177 of 2023. Thus, on this ground alone the order dated 22.03.2024 deserved to be set aside - The Bench, which has delivered the order on 22.03.2024, i.e., Special Bench, which is no more available at Mumbai Bench, ends of justice will be served in directing for hearing of Company Petition afresh before the regular Court-III of the Mumbai Bench.
appeal allowed.
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2024 (4) TMI 826 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Admission of Section 7 Application of the Financial Creditor - commission of default or not - Corporate Debtor / Guarantor failed to fulfil obligations - existence of debt and default or not - HELD THAT:- Admittedly, in the instant case on hand, the Loans, were given by the Financial Creditor / Bank to the Principal Borrower (Coastal Energen Private Limited) and the Corporate Debtor (Fossil Logistics Private Limited), is the Corporate Guarantor, for the Loans, availed by the Coastal Energen Private Limited, as against the Coastal Energen Private Limited / Principal Borrower, an Application for initiating CIRP, was filed by the 1st Respondent / Bank, before the Adjudicating Authority / Tribunal, and an Order of Admission, was passed on 04.02.2022 and later, as against the above Order, the Company Appeal filed by the Shareholder Cum Investor, before this Appellate Tribunal, came to be dismissed.
In the present Appeal on hand, before this Tribunal, although, a plea, is taken by the Appellant, that Corporate Insolvency Resolution Process, cannot be initiated against the Guarantor, if CIRP, against the Principal Borrower, was already initiated by the same Financial Creditor, for the same set of Claim / Default, this Tribunal, unhesitatingly points out that the Liability of the Corporate Debtor / Guarantor, is coextensive and that the Corporate Debtor, having executed a Deed of Guarantee dated 05.07.2016, to and in favour of the 1st Respondent / Bank (Financial Creditor), is bound to act, as per terms and conditions of the Guarantee. In reality, the Corporate Debtor / Guarantor, having not repaid the obligations of the Principal Borrower (M/s. Coastal Energen Private Ltd.) in Law, is deemed to have committed Default.
In the instant Appeal, as per Clause 22 of the Deed of Guarantee, dated 05.07.2016, executed by the Corporate Debtor / Corporate Guarantor (Fossil Logistics Private Ltd.) and the SBICAP Trustee Company Ltd., the Respondent / Corporate Debtor (Corporate Guarantor), in unequivocal terms, had guaranteed to discharge and fulfill the obligations of the Guarantee - it cannot be brushed aside that Clause 3 & 5 of the Deed of Guarantee, dated 05.07.2016, unerringly, mentions that the Guarantor (Corporate Debtor), shall Indemnify, and keep indemnified the Secured Parties Viz. 1st Respondent / Bank, against Losses, Damages, Costs, Claims, and Expenses, whatsoever which the Secured Parties, would suffer.
As on date, there is no embargo, under the I & B Code, 2016, to initiate simultaneous / independent proceedings, under Section 7 of the I & B Code, 2016, by a Financial Creditor, against the Principal Borrower and the Corporate Debtor / Guarantor, in the considered opinion of this Tribunal.
The Impugned Order of the Adjudicating Authority / Tribunal, in admitting the Section 7 Application of the 1st Respondent / Bank, for initiating Corporate Insolvency Resolution Process, against the Corporate Debtor (Guarantor), is perfectly in order - Accordingly, the instant Appeal sans merits and it fails.
Appeal dismissed.
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2024 (4) TMI 825 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Rejection of application by the impugned order - Secured creditors or not - It is submitted that the NOIDA Authority was treated as an Operational Creditor and an amount of Rs.10 Crore was earmarked in the plan - HELD THAT:- NOIDA Authority was the lease holder and the records of lease were already with the Resolution Professional being record of the Corporate Debtor, therefore, the claim has to be reflected by the Resolution Professional in the Information Memorandum.
In view of the judgment of this Tribunal in MR. ANIL MATTA VERSUS GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY AND ATUL MITTAL (RESOLUTION PROFESSIONAL OF ZEAL DEVELOPERS PVT. LTD.) VERSUS NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY [2024 (4) TMI 439 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as well as judgment of Hon’ble Supreme Court in GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS PRABHJIT SINGH SONI & ANR. [2024 (2) TMI 681 - SUPREME COURT], the Appellant is clearly a Secured Operational Creditor - the order of the Adjudicating Authority rejecting the application of NOIDA Authority is unsustainable. The order dated 22.12.2023 is set aside. It is held that the Appellant as Secured Operational Creditor. The Adjudicating Authority may proceed accordingly in accordance with law.
Appeal allowed.
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2024 (4) TMI 727 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of Resolution Plan - whether the Appellant is secured creditor of the Corporate Debtor or not? - whether the decision of the RP declaring the Appellant as unsecured creditor is in accordance with law? - HELD THAT:- It is true that Section 3(31) does not refer to any registration of charge under Section 77. The judgment of the Hon’ble Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Pvt. Ltd. [2023 (7) TMI 831 - SUPREME COURT], which has been relied by learned Counsel for the Appellant, is noticed. The above was a case where a claim was filed under IBC for government dues. The assets of the Corporate Debtor were attached and in the above context issue arose as to whether Electricity Department is ‘secured creditor’ or not and further in the above context Section 77 of the Companies Act was looked into - Hon’ble Supreme Court did not consider it appropriate to rule on the submissions of the Liquidator, vis-à-vis the fact of non-registration of charges under Section 77 of the Companies Act.
On looking into the definition of Section 3(31), it is clear that right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a “transaction which secures payment or performance of any obligation and includes mortgage, charge, hypothecation, assignment and encumbrances or any other agreement or arrangement securing payment or performance of any obligation of any person”, no transaction has been placed on record, under which a security interest is created in favour of the Corporate Debtor with regard to assets of the Corporate Debtor. As noted above, mortgages of immovable property and non-agricultural land were mortgages, which were referred in Sanction Letter, were mortgages by Guarantors and no assets of the Corporate Debtor was mortgaged to the Appellant. The Sanction Letter cannot be said to be a transaction, which secures payment or performance of an obligation.
The Adjudicating Authority, thus, was very well aware that Application has been filed for extension on 11.08.2023 and the Plan was approved on 23.08.2023. The mere fact that no formal orders were passed on that Application are not sufficient to set aside the impugned order on this ground. It is to be noted that 13.08.2023 was a date when 180 days was expiring. Present is not a case that there was any other extension claimed for. The Adjudicating Authority after noticing the aforesaid fact, approved the Resolution Plan, which makes it clear that Adjudicating Authority did not find any infirmity in approval of the Resolution Plan on 23.08.2023. In any view of the matter, exclusion having been prayed for and no order having been passed by the Adjudicating Authority on the said extension, no infirmity can be found on that ground and exclusion as prayed for was fully admissible and is required to be granted.
There are no error in order of the Adjudicating Authority approving the Resolution Plan - appeal dismissed.
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2024 (4) TMI 692 - SC ORDER
Dismissal of application seeking direction to release payment as an Operational Creditor, for the services rendered during the CIRP period - it was held by NCLAT that In view of the aforesaid discussion and the fact that Resolution plan was approved way back on 28.02.2020 by the Hon’ble Supreme Court and has been implemented, we do not find any merit in the present appeal and the same is hereby dismissed.
HELD THAT:- There are no reason to interfere with the impugned order - appeal dismissed.
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2024 (4) TMI 691 - SC ORDER
Prayer for condonation of delay - it was held by NCLAT that Our jurisdiction to condone the delay being limited to 15 days and we having held that benefit of Section 14 of the Limitation Act cannot be extended to exclude period during which I.A. No. 2337 of 2023 and I.A. No. 3270 of 2023 remained pending before the Adjudicating Authority, the Delay Condonation Applications which prays condonation of 74 days delay deserves to be dismissed.
HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal since no substantial question of law is involved in the appeal - appeal dismissed.
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2024 (4) TMI 690 - SC ORDER
CIRP - Preferential Transaction - transactions infringing section 43 of the IBC - it was held by NCLAT that In the background of the report of ‘Forensic Audit’ of the ‘Corporate Debtor’, it is quite clear that the said transactions amounting to Rs.7,81,352 are ‘preferential transactions’, as defined under section 43 of the IBC - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed.
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2024 (4) TMI 634 - BOMBAY HIGH COURT
Maintainability of petition - availability of alternative remedy - discharge of the Advocate appointed by the JCM group and seeking appointment of its own Advocate - representative of Petitioner No. 1-Company - whether Petitioner No. 1 had followed the procedure provided under Rule 120 of the NCLT Rules whilst seeking discharge of the Advocate appointed by the JCM group and seeking appointment of its own Advocate to represent Petitioner No. 1-Company? - Violation of the principles of natural justice.
HELD THAT:- In the present case, there is no doubt that the NCLT had the jurisdiction to pass the said Order dated 22nd March 2024, inter alia, in respect of Interlocutory Application No. 859 of 2024 filed by Petitioner No. 1. The NCLT, in its Order dated 22nd March 2024, has considered Interlocutory Application No. 859 of 2024 filed by Petitioner No. 1 and has recorded reasons as to why the said Interlocutory Application was being dismissed. This clearly shows that there is no violation of the principles of natural justice. The case of the Petitioners is that Petitioner No. 1 had followed the procedure provided under Rule 120 of the NCLT Rules and therefore the NCLT ought to have decided the said Application in its favour. On the other hand, it is the case of Respondent No. 3 that Petitioner No. 1 had not followed the procedure under Rule 120 of the NCLT Rules, and, therefore, the NCLT has correctly rejected Petitioner No. 1’s Application. This is surely an issue which can be raised in Appeal by Petitioner No. 1 and does not warrant interference by this Court in its writ jurisdiction under Article 226 of the Constitution of India.
Moreover, this Court cannot lose sight of the fact that this inter se dispute between two groups for representing the Petitioner No. 1, who is the Corporate Debtor, cannot delay or jeopardize the proceedings filed by Respondent No. 3 as the financial creditor under Section 7 of the IBC. Any interference by the Writ Court would clearly affect the said proceedings as, by the said Order dated 22nd March 2024, the Petition filed by Respondent No. 3, under Section 7 of the IBC, has been admitted against the Corporate Debtor, i.e., Petitioner No. 1.
Petition dismissed.
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2024 (4) TMI 633 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
CIRP - Liquidation of corporate debtor - Refusal to approve the private sale in favour of Eshan Minerals Private Limited - It is submitted that Appellant Eshan Minerals Private Limited has already undertaken to pay all MIDC dues, including transfer charges directly to the MIDC - Appellate being successful bidder and a prospective bidder for the debtor's assets - HELD THAT:- Adjudicating Authority did not commit any error in issuing a direction for issue of a fresh Notice of conducting sale to other interested parties one party had been already expressed interest.
The submission of Sh. Abhijeet Sinha that Sachani Developers who had shown interest and filed an I.A. No.261/2024 subsequently withdrawn his offer by letter dated 26.02.2024 there is no occasion to proceed with the Auction any further. The Auction Notice was already issued on 21.02.2024 and the letter dated 26.02.2024 was issued by Sachani Developers on 26.02.2024 subsequent to e-Auction and in pursuance of Notice for fresh Auction, EMD has already been received at least by one party - fresh Auction need to be conducted by issuance of corrigendum by Liquidator in continuation of the e-Auction Notice by 21.02.2024 by fixing a date within two weeks from today for conduct of the e-Auction. The Liquidator in the corrigendum may also state that the successful bidder has to pay all the dues of MIDC.
The interest of the Appellant Eshan Minerals Private Limited are also protected by the impugned order since the bid given by the Appellant has been treated to be anchor bid. In event no higher bid is received in a Swiss Challenge Method, private sale in favour of the Appellant as per LoI dated 21.11.2023, need to be confirmed without requiring any further approval from the Adjudicating Authority.
The prayer of the Appellant Best One Infraventures Pvt. Ltd., challenging the order of the Adjudicating Authority insofar as it direct for adopting Swiss Challenge Method cannot be accepted. Appellant- Best One Infraventures Pvt. Ltd. in event intend to participate in the Swiss Challenge Method. It is open for Best One Infraventures Pvt. Ltd. to submit an EMD in pursuance of EoI already issued by the Appellant and subject to this liberty to the Appellant- Best One Infraventures Pvt. Ltd., no other relief can be granted.
The order passed by the Adjudicating Authority, challenged in the above Appeals is upheld - Liquidator to issue a corrigendum fixing a date of e-Auction within two weeks from today in continuation of e-Auction Notice dated 21.02.2024 to conduct the e-Auction by Swiss Challenge Method as directed by Adjudicating Authority by order dated 13.02.2024.
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2024 (4) TMI 632 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Rejection of application against admission of CIRP u/s 7 application filed by the Financial Creditor (Respondent herein) - Financial Debt or Equity investment - disbursement by financial creditor to corporate debtor - HELD THAT:- The financial creditor i.e. ‘Surya Testing Services Limited’ was not a party to the said agreement and the said agreement was between three different parties which are neither the financial creditor nor the corporate debtor - Agreement, thus, supersedes any prior oral or written agreements, commitments or understandings with respect to the matter provided therein. With regard to acquisition of ownership of ‘Selma Precision Technologies NC, LLC’, earlier transactions were superseded.
The facts on the record clearly indicate that the financial creditor has neither been given any equity percentage in M/s. Selma Precision Technologies, NC, LLC nor its claim has been admitted in the liquidation of M/s. Selma Precision Technologies, NC, LLC which is going in U.S. Court. Amount of Rs.1.85 Crores was disbursed to the Corporate Debtor which disbursement have clearly been admitted in the balance sheet of the corporate debtor, the said amount has been shown as borrowing from the financial creditor. It is clear that the letter of intent dated 23.12.2017 could not be fructified which was subsequently clearly superseded by 14.02.2018 agreement as noted above. Hence, the amount disbursed by the financial creditor to the corporate debtor has to be treated to be borrowing by corporate debtor which was required to be refunded. As noted above, in the agreement dated 14.07.2018 in which director of the corporate debtor was also party, there was undertaking recorded in paragraph 5 as noted above that Warm Forgings Pvt. Ltd. shall refund amount of Rs.1.85 Crores to the Corporate Debtor.
There is no denial that on 22.05.2018 amount of Rs.25 lacs was returned by the corporate debtor to the financial creditor which is an admitted fact. Had the amount of Rs.1.85 Crores was given by financial creditor only for the purposes of equity in M/s. Selma Precision Technologies, NC, LLC, there was no question of refund of any amount. The refund of Rs.25 lacs clearly proves that amount was borrowed by the corporate debtor as reflected in its balance sheet as noted by the Adjudicating Authority.
Counsel for the Appellant has also referred to the Civil Suit filed by Ajay Kumar Jain in Gurugram Court which suit has been filed by Ajay Kumar Jain against Amit Rajput and others. The injunction has been sought with regard to suit property. Ajay Kumar Jain has claimed that the amount was paid by ‘Surya Testing Services Limited’ to M/s. Warm Forgings Pvt. Ltd. which was payment made by the Appellant. The said pleading by Ajay Kumar Jain in a suit which was filed subsequent to filing of Section 7 application cannot be treated to be pleading on behalf of the financial creditor. The present appeal arises out of the order passed by the Adjudicating Authority rejecting two IAs being IA No.651/JPR/2022 & IA No.652/JPR/2022 by which corporate debtor has prayed for dismissal of Section 7 application. The applications have been rejected by the Adjudicating Authority by the impugned order dated 19.01.2024.
Thus, no ground has been made out to interfere with the impugned order passed by the Adjudicating Authority - The Appeal is dismissed.
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2024 (4) TMI 631 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Acceptance of claim as Financial Creditor - mutually agreed settlement arrived at - whether by virtue of Deed of Security dated 20.03.2020 SPIL was discharged from its obligation of the financing document, Consent Term, and Amendment Agreement and no claim of Financial Debt of the Financial Creditor survived after Deed of Security dated 20.03.2020? - HELD THAT:- The Consent Term between the parties dated 09.09.2019, in para 2(a) clearly contemplated creation for first and exclusive charge by way of registered mortgage in respect of 2,00,000 sq. ft. carpet area in favour of IIFL and IIFL Home Finance Ltd. as additional security in respect of the loan extended by the Financial Creditor. The Deed of Security dated 20.03.2020 is clearly in reference to Consent Term paragraph 2(a) and i.e., a Deed of Additional Security - Clause E of the Deed of Security clearly referred to creation of first ranking mortgage and charge over the property described in Clause 4.1 and Schedule 3. Clause F also referred to same obligation by mortgagor to execute this indenture/deed in favour of the lender on behalf of the obligor/SPIL as security for the payment of the secured obligation payable to the lenders in accordance with the Consent Terms and this Amendment Agreement.
The present is case where from the Mortgaged Properties debt and dues of SPIL has not been discharged and SPIL is claiming discharge only on basis of execution of Security Agreement dated 20.03.2020, which is unacceptable. When all the Clauses E, F, G, I and J are read, it is clear that the Deed of Security was nothing but additional security by creating a mortgage of the assets i.e., 2,00,000 sq. ft. carpet area in the Project - The submission of the Appellant that Deed of Security discharged its obligation under the financial documents cannot be accepted. The deed of security was not an Amendment Agreement to the financial documents, Consent Terms or Amendment Agreement already executed.
There is no applicability of Section 41 in the present case, since the Deed of Security dated 20.03.2020, cannot be read as discharge by the lenders to the obligations of SIPL. SIPL, who continued to be responsible for repayment which were never discharged from its obligation.
The Deed of Security does not novate the terms of the facility document. Facility document were amended by the Amendment Agreement which recorded that terms of the Loan Agreement and Additional Laon Agreement shall be amended only to the extent provided therein. Deed of Security was executed as the additional security document and is not novation of financial documents or Consent Term.
The Judgment of the Hon’ble Supreme Court in VENKATARAMAN KRISHNAMURTHY AND ANOTHER VERSUS LODHA CROWN BUILDMART PVT. LTD. [2024 (2) TMI 1154 - SUPREME COURT] was on its own facts and present is not a case where Adjudicating Authority has created any terms of Agreement for the parties. The Adjudicating Authority has after noticing the relevant Agreement between the parties have only interpreted them in the facts and backgrounds of the case. The Judgment of the Hon’ble Supreme Court in Venkatraman Krsihnamurthy & Anr. thus is clearly distinguishable and has no application in the present case.
The Adjudicating Authority did not commit any error in allowing the application. The Adjudicating Authority has rightly held that the Security Agreement was to provide for Additional Security only - thus, no error has been committed by the Adjudicating Authority, in directing for admission of the claim of the Financial Creditors.
Appeal dismissed.
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2024 (4) TMI 630 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Recall application - power to recall/review - jurisdiction to review a judgment - HELD THAT:- The jurisdiction of this Tribunal to recall an order has already been stated by the 5 Member Bench of this Tribunal in Union Bank of India Vs. Dinkar T. Venkatasubramanian & Ors. [2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] 5 Member Bench has held that the Tribunal has a power to recall however, it has no jurisdiction to review a judgment and the circumstances under which the Court can recall a judgment has also been noted. It was further held that the recall disguised as review cannot be entertained.
By the present application, although its styled as recall but Appellant is virtually asking the Court to review its judgment which was delivered after hearing the Appellant - Present application is misconceived on the ground which are submitted in the application the order cannot be recalled - application for recall is dismissed.
Admission of section 7 application - existence of debt and dispute or not - HELD THAT:- Adjudicating Authority after hearing the parties noted that the only submission expressed by the Respondent is to pay the amount in instalment due to loss in their auto business - The Adjudicating Authority held that the Financial Creditor has proved the `debt’ and `default’. It is well settled that when debt and default has been proved, Adjudicating Authority had to admit Section 7 application more so, looking to the pleadings of the Corporate Debtor before the Adjudicating Authority - thus, no ground has been made out to interfere in the impugned order admitting Section 7 application - appeal dismissed.
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2024 (4) TMI 573 - SC ORDER
Aggrieved person or not - sufficient cause or not - it was held by NCLAT that the Leave prayed for, by the Petitioner / Appellant, to prefer the present Comp. App is not accorded to, by this Tribunal, based on the facts and surrounding circumstances of the case, which float on the surface - HELD THAT:- The appellant – T. Johnson, who was a Director of the company under liquidation had earlier submitted a proposal during the Corporate Insolvency Resolution Process, which upon consideration, was not accepted - at this stage, he should not be allowed and permitted to raise or propose a scheme. Further, the sale, as envisaged and accepted, was after long drawn process, in which opportunity was available to anyone to participate.
Appeal dismissed.
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2024 (4) TMI 572 - SC ORDER
Condonation of delay of 15 days in filing of the appeal - Jurisdiction - power of Tribunal to condone the delay - Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- After having perused the application for condonation of delay and the explanation offered for the delay, it is held that the Tribunal ought to have condoned the delay.
The delay is condoned - impugned order set aside - appeal allowed.
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2024 (4) TMI 571 - SC ORDER
Seeking extension of CIRP beyond the period of 330 days - liquidation of the Corporate Debtor - it was held by NCLAT that the applications filed for extension of time by the RP has rightly been dismissed and the application filed by the RP for an order of liquidation of the Corporate Debtor has rightly been passed which does not require interference by this Tribunal - withdrawal of CIRP application.
HELD THAT:- In view of the subsequent development and as Indian Renewable Energy Development Agency Ltd. and National Asset Reconstruction Company Limited have accepted the proposal, the impugned order as well as the judgment/order dated 27.06.2023 passed by the National Company Law Tribunal is set aside, and the matter remitted to the NCLT, to examine and follow the procedure established by law in terms of Section 12A of the Insolvency and Bankruptcy Code, 2016.
Appeal disposed off.
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2024 (4) TMI 570 - SC ORDER
Maintainability of appeal - Approval of Resolution Plan - case in impugned order is that an order approving the Resolution Plan was passed by a Single Member of the NCLT in violation of the provisions of Section 419 (3) of the Companies Act 2013 - HELD THAT:- Since the impugned order of the NCLAT is by way of an order of remand, the appeal is not entertained at the present stage keeping open all the rights and contentions of the parties to be urged before the NCLT. The parties would be at liberty to approach the NCLT at an early date so that orders can be passed in accordance with the above directions.
Appeal disposed off.
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2024 (4) TMI 569 - SC ORDER
Withdrawal/modification of approved Resolution Plan - Section 31(1) of IBC - HELD THAT:- Resolution plans are not prepared and submitted by lay persons. They are submitted after the financial statements and data are examined by domain and financial experts, who scan, appraise evaluate the material as available for its usefulness, with caution and scepticism. Inadequacies and paltriness of data are accounted and chronicled for valuations and the risk involved. It is rather strange to argue that the superspecialists and financial experts were gullible and misunderstood the details, figures or data. The assumption is that the resolution applicant would submit the revival/resolution plan specifying the monetary amount and other obligations, after in-depth analysis of the fiscal and commercial viability of the corporate debtor - Absence or ambiguity of details and particulars should put the parties to caution, and it is for them to ascertain details, and exercise discretion to submit or not submit resolution plan.
Records of corporate debtor, who are in financial distress, may suffer from data asymmetry, debatable or even wrong data. Thus, the provision for transactional audit etc, but this takes time and is not necessary before information memorandum or virtual data room is set up. Financial experts being aware, do tread with caution. Information memorandum is not to be tested applying “the true picture of risk” obligation, albeit as observed by the NCLAT the resolution professional’s obligation to provide information has to be understood on “best effort” basis.
The impugned order set aside - appeal allowed.
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2024 (4) TMI 568 - SC ORDER
Condonation of delay in filing appeal - Auction of the Corporate Debtor as a going concern - lease deed continues in the name of Corporate Debtor - sale of shares of corporate debtor - it was held by NCLAT that There are no error in the carrying out auction of the corporate debtor as going concern - HELD THAT:- The impugned order of the NCLAT is dated 1 March 2023. The appeal has been filed on 24 May 2023. The delay of 22 days in filing the appeal is beyond the period of fifteen days which can be condoned under Section 62 of the Insolvency and Bankruptcy Code.
The Civil Appeal is dismissed on the ground of delay.
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2024 (4) TMI 567 - SC ORDER
Admissibility of section 9 application - initiation of CIRP against the Corporate Debtor - Respondent No. 1 and the Corporate Debtor both filed civil suit for recovery against each other - after the formation of the NCLT, the matter stood transferred in terms of the Notification dated 07.12.2016 of the Ministry of Corporate Affairs, Government of India - HELD THAT:- The judgment of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT], is considered, which is heavily relied upon by the counsel for the appellant to contend that due to pendency of civil suit application u/s 9 of the IBC cannot be admitted, where it was held that So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application.
After going through the same and considering the findings as recorded by the NCLT and NCLAT, it is concluded that the argument as advanced by the counsel for appellant is of no help to them and the Tribunal has rightly admitted the application filed by the operational creditor for CIRP. Therefore, the order impugned of NCLT and NCLAT need no interference.
Appeal dismissed.
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