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IBC - Case Laws
Showing 441 to 460 of 9149 Records
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2024 (4) TMI 477
Admission of petition under Section 7 of the IBC - initiation of CIRP of Corporate Debtor in its capacity as Corporate Guarantor - Allegations of forged mortgage deeds / contract of guarantee - Whether the instant Section 7 application filed by Shri Rahul Dodeja on behalf of Respondent No.1 suffered from any infirmity as it is the case of the Appellant that this instant petition has been filed by a person on the basis of Power of Attorney without any supporting Board Resolution of the Financial Creditor and hence not maintainable? - Doctrine of indoor management - HELD THAT:- Noticing Rule 4(1), an application against the Corporate Debtor under Section 7 of the IBC requires to be made in Form 1 accompanied with relevant documents and records. In the present case, looking at the Form 1 of Section 7 in Part - I filled in by the Financial Creditor, it has been clearly stated at Sl. No.5 that ‘A copy of the Power of Attorney dated July 8, 2019 authorising Mr. Rahul Dodeja to act on the behalf of the petitioner is annexed herewith and marked as Exhibit 2’ as is placed at page 90 of the Appeal Paper Book (‘APB’ in short). On looking at the Power of Attorney, it is noticed that the same has been issued pursuant to Board Resolution of 12.03.2019 empowering Mr. Rahul Dodeja to file the Section 7 application as is seen at page 103 of the APB.
It is found that Mr. Rahul Dodeja had been provided general authorisation by the Yes Bank by way of Power of Attorney pursuant to a Board Resolution to file necessary applications for commencement of legal proceedings not only against the Borrower but also against their Hypothecators/Mortgagors/Guarantors. Given this position, it is clear that Section 7 application was filed in the present case by a duly authorised person on behalf of the Financial Creditor and thus objection raised by the Appellant in this regard are misconceived and hence not sustainable.
Doctrine of indoor management - Tenability of the Deeds of Guarantee in question in the context of the allegation levelled by the Appellant that they were products of fraud and fabrication - HELD THAT:- This doctrine proceeds on the premise that third parties who enter into a contract with any company is protected against any irregularities in the internal procedure of the company. Persons transacting with companies are entitled to assume that internal company rules have been complied with even if they are not. In other words, the company's indoor affairs are to be treated as the company's outlook - In extending this doctrine to the facts of the present case, it is found that the Adjudicating Authority held that there was clearly no requirement for Yes Bank to look into the company's internal workings. The Yes Bank enjoyed the right to infer that the Board Resolution authorizing the signing of the Deeds of Guarantee was legitimately passed and that the Corporate Debtor was consequently bound by the Deed of Guarantee even if the internal requirements and procedures had not been complied with by the Corporate Debtor.
Thus, in the given circumstances, when there is no cognisance which has been taken by any court of law, civil or criminal, of the Deeds of Guarantee being forged and fabricated, in all fairness, the Respondent No. 1 is fully protected in proceeding on the assumption that the signing and execution of the Guarantee Deeds has taken place in good faith and is therefore a valid and legal document - As regards the alleged handwriting expert’s opinion which has been adverted attention to by the Appellant to establish forgery, the Adjudicating Authority in exercise of summary jurisdiction is not expected to scrutinise such opinions and rely upon the assessment contained therein and more so when the opinion has been disputed as not being an independent third-party opinion. There are no error on the part of the Adjudicating Authority to have desisted from entering into the realm of contractual disputes as it would tantamount to judicial overreach.
Deed of Guarantee was required to be obtained before the disbursement of loan in terms of Section 127 of The Indian Contract Act,1872 or not - HELD THAT:- From a plain reading of the Section 127, the word ‘done’ has a clear and unambiguous meaning denoting an act that has ended. Hence, when the legislature has actually used the word ‘done’, which in its ordinary sense denotes any act that has been completed, it must be assumed that the intention of the legislature is to include ‘anything’ done by the lender for the benefit of the borrower in the past to be valid consideration. Hence, the only plain and natural meaning that could be deciphered would be that any act that has been completed for the benefit of the borrower would constitute consideration. In case of a conflict between the section and its illustration, the latter must give way to the former. It can thus be positively concluded that an act done for the benefit of the principal debtor in the past would constitute a valid consideration for an agreement of guarantee with the surety.
The contention of the Appellant that Section 127 of the Contract Act necessitated the disbursement of loan to precede the Deed of Guarantee also does not hold good in view of a catena of judgements passed by the various Hon’ble High Courts wherein it has been held that the language of Section 127 was clear and unambiguous to also cover past transactions and past promises prior to giving a guarantee or surety - thus, it is not necessary that grant of loan to the principal debtor by the creditor must be necessarily contemporaneous with the execution of Guarantee Deeds and hence the legality and subsistence of the present Deeds of Guarantee cannot be questioned on this ground.
These Mortgage Deeds purportedly created a charge against the property located in Kerala and since an exclusive charge had already been created in respect of the charged property in favour of IFCI Ltd, it could not have been charged to Yes Bank without permission of IFCI. It is also the case of the Appellant that they had disputed and objected to the creation of charge in respect of the mortgage property and had sent an email in this regard to MCA on 21.09.2019. It is therefore the case of the Appellant that reliance by the Adjudicating Authority on the mortgage deeds is erroneous - It is significant to note that these Deeds of Mortgage were executed in furtherance of the Deed of Guarantee. Moreover, the Deeds of Mortgage contained the signature and the common seal of the Appellant besides bearing the stamp of registering authority thereby authenticating its execution. Since, neither the charge nor the modification thereof was disputed by the Appellant either with the MCA or before any appropriate legal forum at an earlier stage and the mortgage deeds were executed in furtherance of the Deed of Guarantee and the notice for invocation of the Corporate Guarantee was issued, there are no reasons to disagree with the findings of the AA that “the liability of Corporate Debtor cannot be done away even if their irregularity in the execution of the mortgage deed or creation of mortgage without NOC from existing mortgagee i.e. IFCI pointed out by the Corporate Debtor is believed ”.
Whether in the facts of the present case, Section 7 petition could have been admitted against the Appellant in their capacity as Corporate Guarantor? - HELD THAT:- It has been contended by the Respondent that there is no bar on the Financial Creditor to proceed against the principal borrowers and the Corporate Guarantor simultaneously. It is their case that the liability of a Corporate Guarantor is coextensive with the principal borrower and therefore the Financial Creditor is at liberty to require the performance by the Guarantor to discharge its liability and obligations - This issue has been squarely covered by the judgement of the Hon’ble Supreme Court in Laxmi Pat Surana vs UOI [2021 (3) TMI 1179 - SUPREME COURT].
In terms of the Laxmi Pat Surana judgment of the Hon’ble Supreme Court, when the Corporate Debtor gives a guarantee in respect of a loan transaction, the right of the Financial Creditor to initiate action against the Corporate Guarantor gets triggered the moment the principal borrower commits a default. In other words, when default is committed by the principal borrower, the amount becomes due against both the principal borrower and the Corporate Guarantor and hence both become liable to pay the amount when the default is committed. Thus, the default by the principal borrower and the guarantor arises on the same date, unless, the terms of contract of guarantee provides that the liability of the guarantor would arise in terms of the Deed of Guarantee.
In the present facts of the case, the Yes Bank had invoked the guarantee vide notice dated 26.08.2019 and 20.11.2019, therefore, the defaults had arisen on the issue of the demand notice as contemplated in the Deeds of Guarantee. The company petition under Section 7 which was filed against the principal borrowers has already been admitted by the Adjudicating Authority and presently undergoing CIRP. In the present case, notice has been duly served upon the Corporate Guarantor demanding payment and there being a clear default on the part of the Corporate Guarantor to clear the outstanding due, the Adjudicating Authority has rightly admitted the Corporate Debtor in its capacity as Corporate Guarantor into CIRP.
The Adjudicating Authority has rightly admitted the Section 7 application for initiation of the CIRP process after coming to the correct conclusion that Respondent No.1 has successfully proved the financial debt and default on part of the Corporate Debtor as Corporate Guarantor. There are no reason to interfere in the impugned order passed by the Adjudicating Authority.
Appeal dismissed.
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2024 (4) TMI 441
Rejection of claim of the Appellant(s) to be declared as Financial Creditors of the Corporate Debtor - it was held by NCLAT that The condition for declaring the Appellant(s) as ‘Financial Creditor’ are not satisfied in the claims submitted by the Appellant(s) and both Resolution Professional and Adjudicating Authority have rightly rejected their claims as ‘Financial Creditor’ for valid reasons - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed.
In the present case, the appellant - Skil Infrastructure Limited is a corporate guarantor as per Section 5(5A) of the Insolvency and Bankruptcy Code, 2016. Its claim against the second/ new promoters/management will not make them a financial creditor against the corporate debtor itself. Section 140 of the Contract Act, 1872 cannot be pressed and is not applicable.
Application disposed off.
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2024 (4) TMI 440
Condonation of delay in filing appeal - Approval of Resolution Plan - it was held by NCLAT that The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b), thus, no ground has been made to interfere with the Impugned Order.
HELD THAT:- The period of delay is 142 days which is in excess of the delay which can be condoned in terms of Section 62 of the Insolvency and Bankruptcy Code 2016.
The Appeal is accordingly dismissed on the ground of limitation.
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2024 (4) TMI 439
GNIDA is Secured Creditor or not - Submissions raised by the Resolution Professional objecting to the claim of the GNIDA as Secured Creditor was noticed and dealt by the Adjudicating Authority in the impugned order - Section 13 and 13-A of UPIAD Act are inconsistent with Section 238 of I&B Code or not - HELD THAT:- CIRP commenced on 30.05.2019, claims were invited, the claim was set up by the Appellant as Financial Creditor, which was rejected and Appellant was treated as Operational Creditor. CoC approved the plan which was presented before the Adjudicating Authority and was approved by the Adjudicating Authority on 04.08.2020. Appellant after coming to know that plan has been approved has filed I.A. No.344 of 2021 questioning the Resolution Plan and decision of the Resolution Professional to treat the Appellant as Operational Creditor.
The submission of the Appellant that Section 13-A was inserted in the Act subsequent to lease having been granted to the Corporate Debtor does not in any manner affect the claim of the Respondent No.1 as Secured Creditor. Section 13-A was inserted by U.P. Act 10 of 2016 in The Uttar Pradesh Industrial Area Development Act, 1976 - Any dues of the Authority is a charge as per Section 13-A over the property. The Corporate Debtor has not paid the dues of Respondent – GNIDA, which has been brought before the Adjudicating Authority by means of an application giving all relevant details. In the present case, the Adjudicating Authority returned finding that Resolution Professional in its affidavit dated 05.05.2023 has admitted that the Corporate Debtor has committed a default in payment of lease rentals prior to the commencement of CIRP.
The submission advanced by the Resolution Professional that charge has not been created under Section 77 of Companies Act has already been dealt and rightly rejected. Present is a case where charge on the assets of the Corporate Debtor was created by virtue of law i.e. Section 13-A and registration of charge under Section 77-78 of Companies Act is inconsequential. We, thus, endorse the above view taken by the Adjudicating Authority that non-registration of charge in favour of Greater Noida Authority was inconsequential. The Adjudicating Authority being aware that lease rentals are due on the Corporate Debtor also directed the parties to file affidavit.
Judgment of Hon’ble Supreme Court in State Tax Officer vs. Rainbow Paper Ltd. [2022 (9) TMI 317 - SUPREME COURT] relying on Section 48 of Gujrat Vat Tax Act held that charge to be statutory, which judgment also fully supports the submission of counsel for the Respondent.
The decision of the Adjudicating Authority declaring the Greater Noida Industrial Development Authority as Secured Operational Creditor does not warrant any interference in this appeal - appeal dismissed.
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2024 (4) TMI 438
CIRP - Admissibility of two additional documents - Section 11 of Arbitration and Conciliation Act - rejection of Application of the Appellant seeking permission to bring additional documents - the arbitration petition and the order were both initiated after the filing of the Section 9 Application - HELD THAT:- Notice under Section 8 was issued by the Operational Creditor on 05.05.2022, which was also replied by the Corporate Debtor. Section 9 Application was filed being CP(IB)No.36/CB/2022 by the Operational Creditor in the year 2022, to which reply was also filed by the Corporate Debtor. Arbitration proceedings before the Hon’ble Calcutta High Court in BALASORE ALLOYS LIMITED VERSUS MSTC LIMITED [2023 (9) TMI 1457 - CALCUTTA HIGH COURT] under Section 11, sub-section (6) of the Arbitration and Conciliation Act, 1996 was initiated on 31.08.2023, on which an order was passed by the Hon’ble Calcutta High Court on 13.09.2023. Both the Arbitration Application and order of the Hon’ble Calcutta High Court, which were sought to be brought on record by the Corporate Debtor, were much subsequent to filing of Section 9 Application.
The observation of the Hon’ble Supreme Court in MSTC LIMITED VERSUS BALASORE ALLOYS LIMITED [2023 (11) TMI 1245 - SC ORDER], clearly indicate that arbitration order passed in the arbitration proceedings shall not affect proceedings in Section 9 Application under the Code, which was filed by the Operational Creditor.
There are no error in order of the Adjudicating Authority rejecting application filed by the Appellant to bring on record two documents - Appeal is dismissed.
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2024 (4) TMI 437
Approval of Resolution Plan - Validity of the order of Adjudicating Authority (NCLT) wherein it held that Rishima cannot be called as a Financial Creditor and Rishima being a Decree Holder of a foreign award can be treated as other creditor. The application of the respondent was partly allowed by the Adjudicating Authority - HELD THAT:- It is clear that in the Resolution Plan which stood approved by the Adjudicating Authority and also upheld by this Tribunal by its order of the date in Company Appeal (AT) (Ins.) No.143 of 2024 [2024 (4) TMI 305 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], the total claim of the Appellant has been admitted as Rs.132,89,75,268/- and has been allocated Rs.1 Lakh. In this appeal it is not necessary for us to enter into the issue whether the Adjudicating Authority’s order dated 30.11.2023 partly allowing the application of Rishima needs to be upheld or not. The order dated 30.11.2023 passed by the Adjudicating Authority has been given effect to as reflected in the Resolution Plan which stands approved on 04.01.2024. There are no reason to enter into various submissions raised by the Appellant questioning order dated 30.11.2023.
In view of approval of Resolution Plan on 04.01.2024, in which Resolution Plan order dated 30.11.2023 passed by the Adjudicating Authority has been given effect to, there is no occasion to consider challenge to the said order in this appeal - Appeal dismissed.
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2024 (4) TMI 436
Prayer for interim distribution of funds lying in the Escrow Account of the Company - date on which Liquidation Value has to be taken for distribution of amount to the creditors - IL&FS had not been servicing the debt since October 2018 - HELD THAT:- The Liquidation Value as on 30.09.2018 is as per order dated 12.03.2020 where this Tribunal has accepted 15.10.2018 as the cut-off, there are no error in fixing the Liquidation Value as on 30.09.2018. Furthermore, the Lenders with the requisite majority has already taken a decision to approve Restructuring Plan, the SBI, who is also one of the Lender, cannot be permitted to wriggle out of the terms of the ITPCL Restructuring Plan and as per decision taken by the majority, prescribed in Clause 10 of the RBI Circular, the Restructuring Plan and the Liquidation Value taken therein is binding on the Applicant.
In the present case, cut-off date has already been laid down by this Tribunal in the order dated 12.03.2020 [2020 (3) TMI 1398 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] and the Liquidation Value as fixed by the Lead Bank cannot be said to be erroneous.
The relevant fact which is brought to the notice here is that the Valuers’ report was received by the Lead Bank and thereafter third Valuer was engaged due to difference in the valuation by the Valuers and all the process was noticed and discussed in the Joint Lenders Meeting. There is no dispute that Liquidation Value as per the Valuers’ Report submitted by Lead bank has been communicated to the Applicant. There are no error in the Master Restructuring Plan having based on Liquidation Value as on 30.09.2018.
Application dismissed.
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2024 (4) TMI 402
Implementation of the Resolution Plan as Approved - Prayer for exclusion of the lease land from the assets of the Corporate Debtor rejected - The respondent alleged that the appellant, as the landowner, obstructed the implementation of the Resolution Plan by preventing access to common facilities and services essential for the functioning of the corporate debtor.
HELD THAT:- Having upheld the Resolution Plan and granted liberty, both the parties are to act in pursuance of the liberty as granted and the order being only an interim direction and the application being still pending, there are no reason to entertain this Appeal.
While disposing of the application, Adjudicating Authority shall take into consideration the judgment of this Tribunal of the date in SHRISTI INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED VERSUS MR. AVISHEK GUPTA, RESOLUTION PROFESSIONAL [SARGA HOTEL PRIVATE LIMITED UNDER CIRP] , JC FLOWERS ASSET RECONSTRUCTION PRIVATE LIMITED, SHRIRAM MULTICOM PRIVATE LIMITED [2024 (4) TMI 321 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as contained in paragraph 13 of the judgment.
Appeal disposed off.
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2024 (4) TMI 376
CIRP - Maintainability of Section 9 Application - rejection on the ground of pre-existing dispute - Appellant relying on the provisions of Section 194 (C) of the Income Tax Act, submits that deduction was made by Corporate Debtor under Section 194(C), after receipt of invoices by the Appellant - HELD THAT:- The above submission of learned Counsel for the Appellant cannot be accepted for two reasons. Firstly, in a reply dated 13.06.2021, the Corporate Debtor has clearly indicated about the deduction under Section 194(C) as well as the credit of GST amount. In the reply it was stated that the Corporate Debtor was to issue debit/ credit note and the Operational Creditor has not settled the accounts for last five years for under-loading and overloading and demurrage charges debited by principal borrower, as Operational Creditor was required to adjust the amount. Thus, deduction under Section 194(C) cannot lead to conclusion that Corporate Debtor acknowledged the liability to pay the entire bills of the Operational Creditor. The dispute was raised by the Corporate Debtor, which is reflected in the letter dated 11.02.2021 referred by Appellant himself in his letter dated 22.04.2021 as well as the reply dated 13.06.2021.
On examining of averments made in the reply dated 13.06.2021, which clearly indicate pre-existing dispute raised by the Corporate Debtor much before the Demand Notice dated 09.08.2021 was issued.
The Adjudicating Authority did not commit any error in rejecting Section 9 Application on the ground of pre-existing dispute. There is no merit in the Appeal - appeal dismissed.
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2024 (4) TMI 336
Violation of principles of natural justice - opportunity of being Heard not provided - Abrogation of valuable right of appellant - Locus of appellant - Applicant is neither a Creditor nor a Shareholder of the First Respondent - It is the stand of the Appellant that the Tribunal, had not taken into consideration of the statutory force, establishing Appellant’s right, under the Copyright Act, 1957 - HELD THAT:- As far as the present case is concerned, the Respondents do not consider the Appellant / IPRS, as its Creditor and have consistently and seriously disputed the Appellant’s Alleged Claims. Indeed, the Appellant, was not recognised as Creditor in the Financial Statements of both the Respondents.
Added further, once a Claim, is Disputed, and the Claimant, is not reflected as a Creditor, in the Audited Financial Statements, such Claimant, is disentitled to Intervene, demand Documents or Object, to a Scheme, and it is outside to the purview of Section 230 – 233 of the Companies Act, 2013, before the Tribunal, to enter into the Merits of the Dispute.
This Tribunal, on a careful consideration of respective contentions, advanced on either side, taking note of the surrounding facts and circumstances of the instant Appeal, especially, in the teeth of the Appellant / Petitioner, not figuring as a Creditor of the Respondents, in terms of its Audited Financial Statement, and the List of its Unsecured Creditors, being duly authenticated, of course, based on verification, by the Statutory Auditor, this Tribunal, comes to a consequent conclusion, that the Impugned Order, dated 09.02.2024, passed by the National Company Law Tribunal, Court No. V, Mumbai Bench, by making an observation that the Appellant, is not a Creditor of the Respondent Nos. 1 & 2, and as such, has no Locus, to object to the process of the Scheme, is free from any legal infirmities.
Appeal dismissed.
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2024 (4) TMI 335
Approval of Resolution Plan - completion of condition precedents provided in Clause 7.6.1 of the Resolution Plan or not - sufficient grounds have been made by the Appellant to set aside the order or not - lapse of Air Operation Certificate granted by DGCA on 20.05.2022 - sufficient grounds have been made out to direct for liquidation of the Corporate Debtor or not - way forward towards implementation of the Resolution Plan.
Whether on 20.05.2022 the Successful Resolution Applicant has completed all the condition precedents provided in Clause 7.6.1 of the Resolution Plan? - Whether condition precedents as under Clause 7.6.1 of the Resolution Plan were not achieved by the Successful Resolution Applicant as contended by the Appellant? - Whether the order dated 13.01.2023 passed by the Adjudicating Authority is unsustainable and sufficient grounds have been made by the Appellant to set aside the order? - Whether due to lapse of Air Operation Certificate granted by DGCA on 20.05.2022, as on date the Successful Resolution Applicant cannot implement the Resolution Plan? - HELD THAT:- The Air Operation Certificate was very well in operation on the date when implementation application was filed by the SRA before the Adjudicating Authority as well as on the date when order was passed by the Adjudicating Authority i.e. 13th January, 2023 hence no infirmity can be found in the findings of the Adjudicating Authority that condition 7.6.1(d) was fulfilled. The Air Operation Certificate was operative and granted till 19th May, 2023 and during this period SRA was not permitted to commence his operations because of challenge by the Appellant to fulfilment of the conditions precedent. The Order dated 13th January, 2023 passed by the Adjudicating Authority upholding the fulfilment of conditions precedent has been challenged by the Appellant in these Appeals and during pendency of these Appeals, MC Lenders did not take any steps nor discharge their part of obligation under the resolution plan hence it cannot be said that it was due to lapse of SRA that Air Operation Certificate could not be operationalised. SRA was always ready to operationalise its air operations but was not permitted by the Appellant.
The submission of the Appellant cannot be accepted that due to lapse of air operation certificate during pendency of these Appeals before this Tribunal, it can be held that conditions precedent as required under 7.6.1.(a) was not fulfilled.
There is no infirmity in the order dated 13th January, 2023 passed by the Adjudicating Authority holding that conditions precedent for commencement of the air operation by the SRA were fulfilled.
Whether direction of the Hon’ble Supreme Court permitting the Successful Resolution Applicant to infuse Rs.150 crore by 31.01.2024 was in reference to the offer made by the Appellant vide Affidavit dated 16.08.2023? - Whether the Successful Resolution Applicant having not been able to infuse Rs. 150 Crores by 31.01.2024 as directed by the Hon’ble Supreme Court vide its judgment dated 18.01.2024, the plan has failed and cannot be implemented by the Successful Resolution Applicant? - Whether sufficient grounds have been made out to direct for liquidation of the Corporate Debtor under Section 33 Sub-clause (3) in these Appeals? - HELD THAT:- The direction to deposit INR 150 crores by 31.01.2024 was only in relation to offer submitted by the Appellant by affidavit dated 16.08.2023. The learned Counsel for the Appellant – Shri N. Venkataraman, ASG as well as Shri Tushar Mehta, SG have contended that SRA having failed to deposit INR 150 crores, there is breach committed by SRA to the Resolution Plan and this Tribunal may pass an order for liquidation of the Corporate Debtor under Section 33, sub-section (3) of the IBC.
The consequence of non-deposit of INR 150 crores by the SRA by 31.01.2024, is that SRA was not entitled to take any benefit of the offer, which was given by the Appellant by affidavit dated 16.08.2023. Hence, the undertaking given by the Appellant to withdraw Company Appeal in STATE BANK OF INDIA & ORS. VERSUS THE CONSORTIUM OF MURARI LAL JALAN AND MR. FLORIAN FRITSCH & ANR. [2023 (5) TMI 1084 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as well as Appeal STATE BANK OF INDIA AND ORS. JC FLOWERS ASSET RECONSTRUCTION PRIVATE LTD. AND PUNJAB NATIONAL BANK VERSUS THE CONSORTIUM OF MR MURARI LAL JALAN AND MR FLORIAN FRITSCH AND ANR [2024 (1) TMI 1021 - SUPREME COURT] was not to happen. On failure to comply with the offer made by Appellant by affidavit dated 16.08.2023, both the Appeals pending in this Tribunal are now to be decided on merits.
The submission of the Appellant that non-deposit of INR 150 crores leads to failure of Resolution Plan, cannot be accepted. The consequence of non-deposit of INR 150 crores is that these Appeals have to be heard on merits and the question, which has arisen in the Appeal has to be decided regarding compliance of conditions precedent by the SRA by 20.05.2022 - Further submission of the Appellant that this Tribunal may exercise jurisdiction under Section 33, sub-section (3) in directing liquidation of the Corporate Debtor due to non-compliance of deposit of INR 150 crores also cannot be accepted. For passing an order under Section 33, sub-section (3), there has to be adjudication that Resolution Plan approved by the Adjudicating Authority has been contravened by the Successful Resolution Applicant.
The direction of Hon’ble Supreme Court permitting the Successful Resolution Applicant to infuse INR 150 crores by 31.01.2024 was in reference to offer made by Appellant in affidavit dated 16.08.2023 - The Successful Resolution Applicant having not been able to infuse funds by 31.01.2024 as directed by Hon’ble Supreme Court vide its judgment dated 18.01.2024, it cannot be held that Resolution Plan has failed and cannot be implemented by the SRA - No grounds have been made out to direct the liquidation of Corporate Debtor under Section 33, sub-section (3) in these Appeals.
What are the way forward towards implementation of the Resolution Plan? - HELD THAT:- The implementation of Plan and revival of the business of the Corporate Debtor does not only generate revenue for making of the payments as contemplated in Resolution Plan, but is important for making payments to workers and employees. The workers and employees are waiting for their payments of provident fund, gratuity and other dues as per the Resolution Plan for last more than three years. Non-implementation of the Plan shall have direct effect on the dues of workers and employees, which need to be avoided.
The implementation of Resolution Plan is a collaborative process, which require positive action from all the parties, including the MC Lenders. The implementation of the Resolution Plan not only revives the Corporate Debtor, but it brings along with revival, new employment, generation of revenues etc. By non-implementation of the Plan, direct sufferers are the workers and employees, who have not received the payments. It is true that Lenders are entitled to take steps for protection of their amount, but that is not the only object of the IBC. The Lenders to protect their own financial interest cannot ignore the primary object of revival of the Corporate Debtor and payments to other stake holders, including workmen and employees, who are entitled for their payments along with Financial Creditors. The Lenders by not taking positive steps for implementation of the Plan have not only adversely affected the interest of the SRA, but have also created circumstances, so that workmen and employees be not paid.
The impugned order passed by Adjudicating Authority is upheld - Monitoring Committee and MC Lenders as well as SRA are directed to take steps for creation of charge over the Dubai Property No.1, Dubai Property No.2 and Dubai Property No.3 within a period of 30 days from today. The SRA to bear all necessary expenses for creation of necessary charge - Performance Bank Guarantee of INR 150 crores, which is lying with the Monitoring Committee/ MC Lenders, shall be adjusted towards the first tranche payment of INR 350 crores as INR 200 crores have already been paid by the SRA. By adjustment of PBG as per the Resolution Plan, the first tranche of payment of INR 350 crores shall be completed - Steps shall be taken for re-constitution of the shares as per the Resolution Plan forthwith. (5) Out of the first tranche payment of INR 350 crores, payments shall be made to the workmen and employees and the creditors as per the Resolution Plan, including the payment of CIRP cost as per the Resolution Plan, which payment shall be completed within 60 days from the date of this judgment - The SRA shall submit an Application for re-issue of Air Operation Certificate which may be obtained within 90 days from the date of this judgment - closing date shall be 90th day from the date of this judgment, on which date, handing over of the Corporate Debtor to the SRA by the Monitoring Committee shall be completed.
Application disposed off.
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2024 (4) TMI 321
Approval of the Resolution Plan - HELD THAT:- The Resolution Plan submitted by Respondent No.3, has been approved by the CoC with 100% vote share.
The Hon’ble Supreme Court in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK & OTHERS [2019 (2) TMI 1043 - SUPREME COURT] and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] has held that the Adjudicating Authority and the Appellate Tribunal are not to sit in appeal over the commercial wisdom of the CoC, which is paramount and non-justiciable and under the scheme of the Code, every dissatisfaction does not partake the character of a legal grievance. It is settled proposition that approval of the Resolution Plan can be interfered with, only when the Resolution Plan violates any of the provisions of Section 30, sub-section (2) of the Code.
It is relevant to notice that at the time when this utilities/ equipment/ installations were made the Corporate Debtor was subsidiary of the Appellant, the holding Company. Shared utilities and equipment installed outside the lease land area were permitted to be utilized and used both by the Corporate Debtor for running the Hotel as well as by the Appellant for the purpose of its residential block and commercial establishment. The Corporate Debtor being no longer subsidiary of the Appellant, which has now been taken over by the SRA, there has to be an arrangement between land owner, i.e., the Appellant and SRA for continuing use and access to the shared utilities and equipment. It is also relevant to notice that the SRA has taken the Hotel of Corporate Debtor as a running concern and for the purposes of running the Hotel, it requires use of shared utilities and services as it was being done prior to initiation of CIRP - there are no error in granting of reliefs and concessions.
The Resolution Plan having been approved by 100% vote share of the CoC and no grounds having been made out to interfere with the approval of the Resolution Plan within the meaning of Section 30, sub-section (2) to establish that Resolution Plan violates any provision of Section 30 subsection (20 of the Code, there are no reason to interfere with the impugned order approving the Resolution Plan - However, approval of Resolution Plan and grant of reliefs and concessions under paragraph-9 (7) as extracted above, does not fetter the right of the parties to enter into an arrangement with regard to shared utilities and equipment, which are located outside the lease hold land of the Corporate Debtor and further, the approval of Resolution Plan and grant of above reliefs and concessions does not fetter the rights of the parties to establish their rights and obligations in a competent Court.
The impugned order dated 04.01.2024 passed by the Adjudicating Authority upheld - appeal disposed off.
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2024 (4) TMI 305
Approval of Resolution Plan - what is the import of order dated 30.11.2023, whether the entire amount of claim of Rs.132,89,52,568/- was to be kept in escrow account or only the amount provided in the plan against the admitted claim has to be kept in the escrow account? - HELD THAT:- On looking into Para 41 and 42 of the order, it is clear that what was intended by the Adjudicating Authority was that value provided against the claim in the plan should be held in escrow account subject to decision in the execution petition. Resolution Plan has provided amount of Rs.1 Lakh against the claim of the Appellant and the Successful Resolution Applicant proposed to pay said amount to the Appellant. The submission of the Appellant that order meant that entire amount of Rs.132 crores be kept in escrow account cannot be accepted. The order dated 30.11.2023 cannot be read to mean that amount of Rs.132,82,52,568/- has to be kept in escrow account.
Hon’ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] has held that allocation of plan value to different category of creditors can be different. It was held that Operational Creditor has to be given priority of payment above all Financial Creditors.
It is also relevant to notice that commercial wisdom of the CoC in approving Resolution Plan has to be given paramount importance and NCLT and this Appellate Tribunal can interfere in the order approving the Resolution Plan only when there is violation of statutory provisions of Section 30(2) of the Code. Present is not a case where violation of any statutory provision under Section 30(2) of the Code has been alleged by the Appellant. Appellant’s claim was accepted as ‘Other Creditor’ and in the allocation of amount of Rs.1 Lakh against the claim of the Appellant it is not shown that there is any violation of any statutory provision.
There are no ground to interfere with the order passed by the Adjudicating Authority approving the Resolution Plan - there are no error in the order impugned - appeal dismissed.
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2024 (4) TMI 304
CIR - Order of Liquidation - The appellant raised concerns about the liquidation process, arguing that prime assets of the corporate debtor were auctioned at a price significantly lower than their fair value - Whether there are any violations in the liquidation process as per Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and consequently whether application filed by the Appellant are maintainable? - HELD THAT:- The Respondent / Liquidator obtained the approval of SCC meeting on 20.10.2022 for conducting E-auction on ‘Slump Sale’ basis wherein certain assets like shares of Barnawa Agro Industries, vehicles, scrap etc. were excluded. The reserved price was fixed as per the valuation reports. It is on record that the Appellant was also present in the 6th SCC meeting as a special invitee. The changes in the prices over different auctions are noted in table in paragraph 28. Appellant has missed out on the provisions that Schedule I of Liquidation Regulations only lays down the manner of sale. If the mechanism of sale as specified in Regulation 32 is changed, the Schedule I will have to be followed afresh after every such change. Nowhere, therefore, it is found that the reductions are violative of the Liquidation Regulations.
In the 10th e-auction dated 10.08.2023, the reserve price was Rs.16.41 crores and the realizable value was 29.41 crores, which was beyond the reserve price. It is also noted that Rs.29.41 crores was realized without the assets such as the shares in subsidiary of Barnawa Agro Industries Ltd., vehicles, scrap etc. which were not part of the sale. It is also noticed that Rs.29.41 crores will not only cover the claim of the Financial Creditors but substantial amounts will also accrue to the shareholders - The argument of the Appellant that presuming that the Respondent had continued with the same mode of sale and reduction of only 10% happened every time, even by that means, by the time of 9th auction the price would have been somewhere around 24 crores. And in the current auction done by the Liquidator realized value at Rs. 29.41 crores, without including some assets, is more than Rs.24 crores. Therefore, there are no merit in the allegations of the Appellant.
There are no violation of the Regulations 32, 32-A, 33, 34 & 36 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
From the facts of the case, it can be noted that the Appellant / Exmanagement were not cooperating the Liquidator and providing full details of the assets of the Corporate Debtor. Liquidator has rightly proceeded ahead and no reasons found to question the liquidation proceedings in this ground - there are no justification in the argument of the Appellant that the Liquidator has not followed the Liquidation Regulations. The non-cooperation of the ex-management is clearly noted by the Adjudicating Authority in its order dated 28.02.2019.
In the facts of the case, it is clearly made out that there appears to be no violation in the liquidation process as provided in various regulations of the Liquidation Process Regulations. In fact, the CIRP process could not proceed because of the non-cooperation of the ex-management. This ultimately led to the liquidation of the Corporate Debtor. Even during liquidation process, there was non-cooperation.
Appeal dismissed.
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2024 (4) TMI 241
Constitutional Validity of Circular issued by issued by the Insolvency and Bankruptcy Board of India (IBBI). - clarification of usage of certain terms contained in Regulation 4(2)(b) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - illegal amendment in the LP Regulations by the circular - computation of the liquidator’s fee before and after the 2019 Amendments.
The challenge is primarily on the ground that in the garb of clarifying certain terms contained in Regulation 4(2)(b), the IBBI has effectively, by a back-door method, amended the LP Regulations by stipulating new substantial requirements, and that too, with retrospective effect.
Whether the Impugned Circular simply clarifies Regulation 4(2)(b), or whether it effects substantive amendments to the term in the garb of clarification?
HELD THAT:- The Impugned Circular positively introduces a new position that an act of court would indeed prejudice the liquidator, unless he gets the court to confirm his fee computation, on a case to case basis. The liquidator may even have to approach different courts since according to Paragraph 2.5, only the forum that stayed a disposal of an asset can confirm if the suspension of the time can be availed of, and that too only for such asset as that court protected from being liquidated. Such a detailed and complicated matrix of regulatory requirements cannot constitute a “guideline” that merely clarifies the existing regulatory framework.
The only way to make regulations towards this end would be to do so under Section 240 and comply with the Law-Making Regulations. That not having been done, Paragraph 2.5 of the Impugned Circular is indeed a substantive amendment masquerading as a clarification. There are no hesitation in striking it down as being ultra vires the LP Regulations and the IBC.
A close review of the material on record also reveals that the IBBI has indeed issued a Discussion Paper on 20th October, 2023 on “Strengthening the Liquidation Process” and has proposed amendments to the LP Regulations in this regard. In the proposed amendment, it appears that the IBBI’s desire is to empower the Stakeholders’ Committee to approve an adjustment to the liquidator’s fees, on account of court-inflicted delays. Even while the standard sought to be introduced in the garb of clarification is different from the standard under active consideration for an amendment to the LP Regulations, what is clear is that Paragraph 2.5 can simply not be upheld as a clarification.
Paragraph 2.1 and Paragraph 2.5 of the Impugned Circular are hereby struck down as being ultra vires the LP Regulations and the IBC. They introduce substantive amendments to statutory legislation even while purporting to be mere clarifications. The changes they seek to bring in are not even covered by the IBC and the LP Regulations. Due process by way of compliance with the statutory requirements of the Law-Making Regulations is missing. Therefore, in the course of conducting the quasi-judicial proceedings, the IBBI is prohibited from placing any reliance on Paragraph 2.1 and Paragraph 2.5 of the Impugned Circular in determining if any fee charged by the Petitioner in the liquidation assignments in question, was in excess of permissible thresholds.
The IBBI must discharge the First Show Cause Notice since it evidently has been subsumed by the Second Show Cause Notice, in substance and content. Multiplicity of proceedings on the same cause of action before the same regulator against the same noticee on the same facts is inappropriate. The IBBI must issue a written communication reconciling the coverage of the two show cause notices and in any case dispose of the proceedings as expeditiously as possible and in accordance with law.
Petition disposed off.
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2024 (4) TMI 240
Condonation of delay in filing an appeal - limitation in preferring an appeal - Rejection of Application of Claim, raised by the Appellant - HELD THAT:- The Learned Counsel for the Appellant in sub para II of Para 3 of the ‘Delay Condonation Application has given unjustifiable reason which were not even prevalent at the time when the period of limitation for preferring an appeal was actually subsisting.
That the counsel for the Appellant has endeavoured to argue certain grounds in support of the delay condonation application which are not even pleaded in the principal delay condonation application and if this be the situation his plea which is not taken and pleaded in defence for seeking condonation of delay cannot be considered by this Tribunal, since being beyond the pleadings.
It would be too hypothetical to accept the arguments extended by the Learned Counsel for the Appellant that he had to seek legal advice and that his placement in Bengaluru had created an embargo in filing an Appeal in time. In fact, due to technological development, these two reasons seems to be without any plausible justification, which could be acceptable by this Tribunal to condone the delay of 28 days which has chanced in filing an appeal, hence as such the period is not extendable under the 2nd proviso of Section 61.
Appeal dismissed.
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2024 (4) TMI 239
Admission of Section 7 application - time limitation - arbitral award dated 04.02.2020 needs to be ignored in proceedings under Section 7 or not, objection of the Corporate Debtor being pending before the Delhi High Court in the proceeding for execution of the arbitral award - existence of debt and default or not.
Whether the application under Section 7 filed by the Appellant on 31.01.2022 was barred by time? - HELD THAT:- Section 3 of the Limitation Act casts an obligation on a Court to consider as to whether application filed is within limitation as prescribed by the Limitation Act, 1963. It is also well settled that even if no defence is raised by the Defendant regarding plea of limitation, the question of limitation has to be looked into and decided by the Court - thus the time being even if 04.02.2020 is not taken as date of default, proceed to examine as to whether application is filed within the limitation. As noted above, the amount was to be paid in 58 instalments. 1st instalment is to be paid in 15.08.2017 and last on 15.05.2022. It is pleaded by the Corporate Debtor itself that it has paid only Rs.40 Lakhs which at best will cover first three instalments. Thus, even if it is taken that the default committed on 15.11.2017, the application filed on 31.01.2022 is well within time - When the entire loan was recalled, the cause of action arose to initiate proceeding and application filed on 31.01.2022 from loan recall notice is also well within time. Thus, from any view of the matter, the application filed by the Financial Creditor on 31.01.2022 was well within time and the Adjudicating Authority did not commit any error in rejecting the submission of the Appellant that the Application is barred by time.
Whether the arbitral award dated 04.02.2020 needs to be ignored in proceedings under Section 7, the objection of the Corporate Debtor being pending before the Delhi High Court in the proceeding for execution of the arbitral award? - HELD THAT:- The challenge to the arbitral award dated is 04.02.2020 pending before the Delhi High Court with regard to which objections have already been filed by the Corporate Debtor - it is not necessary to express any opinion with regard to rival contentions of the parties in relation to award dated 04.02.2020.
Whether debt and default was proved in the proceedings under Section 7? - Whether the Adjudicating Authority committed error in admitting Section 7 application? - HELD THAT:- The debt and default is fully established and even if the arbitral award dated 04.02.2020 is not taken into consideration the debt and default is proved on the part of the Corporate Debtor. We may refer to the judgment of the Hon’ble Supreme Court in M. Suresh Kumar Reddy vs. Canara Bank and Ors. [2023 (5) TMI 570 - SUPREME COURT] where the Hon’ble Supreme Court after noticing the earlier judgments had held that when debt and default is proved, the Adjudicating Authority has to admit the application unless it is incomplete - it is found that there was sufficient materials brought by the financial creditor on the record to prove the debt and default, even if the arbitral award is disregarded.
The Adjudicating Authority did not commit any error in admitting Section 7 application. Debt and default having been proved on the part of the Corporate Debtor, there are no error in the order passed by the Adjudicating Authority admitting Section 7 application.
There is no merit in the appeal - appeal dismissed.
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2024 (4) TMI 238
CIRP - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - Applicability of Threshold - Requirement of joint filing by either 100 allottees or 10% of the total number of allottees of the same real estate project, whichever is less for application u/s 7 - Violation of principles of natural justice - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - appellant submits that the impugned order holding that the Section 7 Petition, filed under I & B Code, 2016, is not maintainable, since the Allottees, belong to different Projects, and the Impugned Order, was passed without, considering the facts, placed on record - wrongful interpretation of explanation (ii) of Section 5 (8) of the I & B Code, 2016.
HELD THAT:- In the instant case, the Appellant / Petitioner, takes a stand that in the Order dated 09.05.2022 of the National Consumer Disputes Redressal Commission (vide Consumer Complaint No. 1951 of 2016), the plea of the Respondent / Corporate Debtor ascribing reasons, in regard to the delay, relating to the time, when the Respondent / Corporate Debtor, accepted the bookings from the Allottees, and regularly raised demands and accepted amounts, from the Allottees, were rejected, a clear adverse circumstance, against the Respondent / Corporate Debtor, all the more, when the outbreak of Pandemic – Covid-19, came after a decade.
The emphatic stand of the Respondent / Corporate Debtor is that Sushant Megapolis Township, comprise of Multiple Commercial Real Estate Projects, all the sub-projects are independent of each other, and were being developed and sold as separate Projects, within the Township. Moreover, they were Registered, under RERA Act, 2016, with different RERA Registration Numbers. As a matter of fact, each Project, is further divided into Multiple phases, with different complete Schedules - Indeed, as per definition Section 5(8)(f) explanation (ii) of the I & B Code, 2016, the expressions 'allottee' and 'real estate project' shall have the meanings respectively assigned to them in clauses (d) and (zn) of Section 2 of the Real Estate (Regulation and Development) Act, 2016, (16 of 2016).
Section 7 of the I & B Code, 2016, provides for an initiation of Corporate Insolvency Resolution Process, by Financial Creditor. The two essential features of an Admission of an Application, under Section 7 of the Code’are (a) Existence of Debt and (b) Default - In fact, an Adjudicating Authority / Tribunal’s jurisdiction is restricted to determine, whether the Application is complete and whether, there is any Debt and Default, as per decision in Dr. H.N. Nagaraj vs. Edelweiss Asset Reconstruction Company Ltd. [2018 (7) TMI 968 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI].
The proceedings, under the I & B Code, 2016, are not a Litigation, to be decided by a Court of Law. It is not the Property, which is at the base of the Code. It is the Liquidity, which is the foundation for triggering the Corporate Insolvency Resolution Process.
In the instant case, the Respondent / Corporate Debtor, had executed, at least Three kinds of Agreements, with the Petitioners (before the Adjudicating Authority / Tribunal) (a) Plot Allottee Agreement (b) Builtup Unit Allottee Agreement and (c) Apartment Allottee Agreement - One cannot ignore an important fact, that the second proviso to Section 7(1) of the I & B Code, 2016, mentions that for ‘financial creditors’, who are ‘allottees’, under a ‘real estate project’, an application, for initiating Corporate Insolvency Resolution Process, against the Corporate Debtor, shall be filed jointly by not less than one hundred of such allottees, under the same real estate project or not less than ten percent of the total number of such allottees under the same real estate project, whichever is less.
In the present case, the Appellant / Petitioner and other Petitioners, who filed CP (IB) No. 596 (PB) / 2021, under Section 7 of the I & B Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, before the Adjudicating Authority / Tribunal, for initiating Corporate Insolvency Resolution Process, against the Respondent / Corporate Debtor, are from different numerous projects, and they have not established their case, as Creditors of a class, concerning any particular project, registered with The Real Estate (Regulation & Development) Act, 2016 (16 of 2016), with a view to fulfil the requirement of ‘10% or 100 Allottees’, as envisaged, as per Section 7 (1) of the I & B Code, 2016.
This Tribunal, on a careful consideration of divergent contentions, advanced on either side, considering the facts and circumstances of the instant case, comes to an irresistible and consequent conclusion that the CP (IB) No. 596 (PB) / 2021, filed by the Appellant / Petitioner and other Petitioners, before the Adjudicating Authority / NCLT, Principal Bench, New Delhi, is prima facie not maintainable in the eye of Law. Further, this Tribunal, on going through the Impugned Order, dated 06.01.2023 in CP (IB) No. 596 (PB) / 2021, passed by the Adjudicating Authority / Tribunal, the views expressed in dismissing the CP (IB) No. 596 (PB) / 2021, is free from any legal flaws.
Appeal dismissed.
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2024 (4) TMI 175
Dismissal of Section 9 application - Appellant and Respondent are having relationship of Corporate Debtor and Operational Creditor or not - pre-existing dispute between the parties which will disallow initiation of CIRP proceedings or not.
Whether in the instant case, the Appellant and Respondent are having any relationship of Corporate Debtor and Operational Creditor? - HELD THAT:- The facts of the case clearly bring out that the Appellant was acting on the referral instructions of the Respondent and was issuing the air tickets on the basis of the credit card the customers details provided by the Respondent. The Respondent had also given the undertaking that if any debit note comes against those tickets, then they will be responsible. The plea of the Respondent that they are not having any debt and the Appellant is not an Operational Creditor as they were not supplying any goods or services to the Respondent is not tenable. It is concluded that there is a relationship of operational creditor and corporate debtor between the Appellant and Respondent.
Whether there is any pre-existing dispute between the parties which will disallow initiation of CIRP proceedings? - HELD THAT:- Respondent was undertaking the responsibility for issuance of the debit notes and when ADMs were issued by the airlines, a debt arises and the unconditional undertakings will act as an acknowledgment of debt towards the Appellant - When the demand notice was issued under Section 8 of the IBC, 2016 on 22.08.2018, it was disputed in its reply by the Respondent vide letter dated 08.09.2018. There are police complaints also on record. It had become a criminal case. Thus it had become a dispute and is not a spurious, hypothetical or illusory dispute.
From the correspondence on record, it can be clearly made out that there is a pre-existing dispute. The Adjudicating Authority has gone into the circumstances of their business dealings and have come to the conclusion that the dispute raised by the respondent is plausible and not a patently feeble legal argument. Thus, when the Appellant received the reply to Section 8 demand notice raising a dispute, the Section 9 petition could not have been proceeded under I&B Code against the respondent.
For CIRP under Section 9 of IBC, 2016 to be initiated, the Appellant is required to prove that the debt is due, it has not been paid and the debt is an undisputed debt. In this particular case, there is no record to suggest that there is any contract entered into between the parties but there is a evidence of pre-existing dispute. The ingredients laid down under Section 9 read with the requirements laid down by the judicial pronouncement are not fulfilled. Therefore, in the present case owing to the pre-existing dispute between the parties, the Adjudicating Authority has rightly rejected the Section 9 Application.
There are no error in the orders of the Adjudicating Authority - appeal dismissed.
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2024 (4) TMI 119
Seeking restoration of petition, which was dismissed for non prosecution - seeking substitution of the Appellant in place of the Bank of Baroda in the main company petition, after dismissal of the main company petition - whether the Appellant had taken appropriate steps to substitute itself in place of the original applicant, Bank of Baroda? - HELD THAT:- It is the case of the Appellant that their counsel was present during the hearing of the main company petition who informed the Adjudicating Authority that pursuant to the assignment agreement they had already filed an I.A. with the NCLT Registry seeking substitution of the Appellant in place of Bank of Baroda in the main company petition but the said IA was yet to be numbered and notified for hearing.
The Appellant was diligent and vigilant in pursuing the main company application and had taken steps to file the substitution application. Want of diligence or wilful inaction is attributable only when something that is required to be done is not done at all or not done in a timely manner - there are no delay or negligence on the part of the Appellant to deprive him of his statutory and legitimate right to prosecute the main company petition.
The Adjudicating Authority in the impugned order, on the one hand, has held that the Appellant had stepped into the shoes of the Bank of Baroda and had the same right against the Corporate Debtor as that of Bank of Baroda including all rights exercisable under the IBC - Appellant cannot be treated as the original applicant of the main company petition and hence the said petition cannot be restored by the Appellant. The Adjudicating Authority further held that in terms of Rule 48 of NCLT rules, 2016, only the original applicant can approach or file an application before the Adjudicating Authority for restoration of the application. The original application has been dismissed on ground of non-appearance of the Bank of Baroda and since in this application, the Appellant was not a party, it could not have filed the restoration application.
Coming to the definition of the word “applicant” in the NCLT Rules, 2016 we find that Rule 2(4) defines “applicant” to mean a petitioner or an appellant or any other person or entity capable of making an application including an interlocutory application or a petition or an appeal under the IBC. Tested against this definition of an “applicant”, let us now see whether the Appellant fits into this definition of an “applicant” - The Adjudicating Authority has also expressly acknowledged this position by stating that following the assignment agreement, the Appellant had stepped into the shoes of the original applicant, Bank of Baroda. The Adjudicating Authority has further opined in the impugned order that the Appellant enjoyed the same right against the Corporate Debtor as that of Bank of Baroda. It also held that the Appellant as an assignee was entitled to all rights exercisable under the IBC. That being the case, the Appellant clearly qualifies to be an “applicant” under the NCLT Rules and therefore enjoys the locus to file the restoration application before the Adjudicating Authority.
When an application which is dismissed for non-appearance of the petitioner can be restored on satisfying the Tribunal that he was prevented by some sufficient cause from appearing before the Tribunal, likewise, in the present facts of the case, opportunity ought not to be denied to the Appellant from seeking restoration of the main company petition which has been dismissed for non-prosecution by the original applicant. It is not in the interest of justice to deny a person the opportunity to file an application for restoration for no ostensible lapses.
The Adjudicating Authority was not correct in dismissing the application for restoration - the impugned order is set aside - Appeal allowed.
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