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IBC - Case Laws
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2024 (3) TMI 1182
Liquidation of the Corporate Debtor - The right of the appellant to propose a revised resolution plan - Chance to revive the corporate debtor, emphasizing the entity's MSME status and its potential for rehabilitation - HELD THAT:- The IBC itself recognises the right of MSME to revive a Corporate Debtor and even if certain ineligibility under Section 29A are not attracted. The object of Corporate Insolvency Resolution Process is always to revive the Corporate Debtor and liquidation being the last resort, which is nothing but a corporate death.
The present is a case where the Appellants – Promoters of the Corporate Debtor have undertaken to liquidate the entire debt of the Financial Creditor, who is the only Financial Creditor consisting of 100% CoC. It is relevant to notice that there are no other creditors of the Corporate Debtor. It is also relevant to notice that Appellant is making efforts from very beginning to revive the Corporate Debtor - When the Appellant is ready to liquidate the entire debt of the Financial Creditor/, there are no reason to deny an opportunity to revive the Corporate Debtor on its feet. There is no doubt that Financial Creditor is entitled to entire debt and it cannot be directed to take any haircut. The present is a case where the Appellant has undertaken to clear the entire claim, which was admitted in the CIRP.
The Adjudicating Authority committed error in not accepting the Bank Draft of Rs.75 lakhs shown to the Court on the date when the matter was heard. The Adjudicating Authority ought to have given an opportunity to deposit the Bank Draft to complete the payment of Rs.1 crore as was directed by the Adjudicating Authority.
The order passed by Adjudicating Authority is set aside - the order dated 07.08.2022 passed in IA 64 of 2023 directing the liquidation is set aside - Appellant is permitted to deposit the entire balance amount of Rs.4,92,81,826/- within 30 days from today by the Bank Draft or RTGS to the Bank. The Appellant shall bear entire CIRP costs.
Appeal disposed off.
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2024 (3) TMI 1142
Condonation of delay in filing appeals - relevant date would be the date of knowledge of order or not - Section 61(2) of IBC - HELD THAT:- In the present case, the Impugned Order dated 24th April, 2023 was pronounced on 24th April, 2023 which is mentioned in the Impugned Order itself when order is pronounced by the Court the pronouncement is for all concerned - having already held that Hon’ble Supreme Court in Safire Technologies Pvt. Ltd. [2022 (6) TMI 285 - SC ORDER] laid down that commencement of the period of limitation for filing an appeal under Section 61 is not date when Appellant came to knowledge of the Order.
The mere fact that Appellants claim that they were not aware of the process of CIRP nor they could file any claim in the CIRP cannot be a ground to permit the condonation of delay which is beyond condonable period. Ignorance of entire CIRP Process cannot be a ground to condone the delay which is beyond condonable period. From the facts brought on record by the parties, it is clear that several Appellants who had filed the Appeals against the Order dated 24th April, 2023 along with delay condonation applications which applications were rejected on the ground that delay was beyond 15 days. The order passed by this Tribunal rejecting similar applications filed by the other Appellants/Applicants cannot be ignored.
There are no grounds made in these applications to condone the inordinate delay of 223/230 days in filing these Appeals - the delay condonation applications are dismissed.
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2024 (3) TMI 1141
Condonation of delay in filing appeal - Appellant submitted that Impugned Order was not available prior to 12.12.2023 and Impugned Order was made available on website of NCLT on 12.12.2023 - HELD THAT:- The Order Impugned Itself indicates that counsel on behalf of the Appellant who is referred as intervening in application was present and order was passed in presence of counsel for the Appellant. The order having pronounced in the presence of the counsel for the Appellant, he cannot be heard in claiming that Appellant was not aware of the order and he came to know only when order was uploaded in website of the NCLT.
Whether the Appellant has filed any application for obtaining certified copy? - HELD THAT:- There is no material on record or affidavit or additional affidavit to indicate that any Application has been filed. Rule 2(14) defines “filed” means filed in the office of the registry of the Tribunal. There is not even pleading that any application was filed for certified copy of the Order.
Whether Appellant was entitled to file an application for obtaining certified copy of the order passed on 10.11.2023? - HELD THAT:- A party means a person who prefers an appeal or application or petition. The present is a case where Section 7 Application was filed by the Appellant- State Bank of India on which CP(IB) No. 3025/2019 was registered. When Appellant is a party to the main company petition, it does not appear to be reason that he cannot make an application for certified copy of the order in I.A. passed in the same company petition which was filed by the Appellant. All I.As filed in the same company petition by different parties are I.As in the Company Petition and when main Company Petition has been filed by the Appellant, it cannot be said that Appellant was not entitled to apply for certified copy of the Order passed in Company Petition or in I.A.s including I.A. No. 127 of 2022.
Hon’ble Supreme Court in V. Nagarajan Vs. SKS Ispat and Power Limited & Ors, [2021 (10) TMI 941 - SUPREME COURT]makes it clear that the limitation commences when order is pronounced and only the time taken by the Court to provide certified copy shall be excluded. The commencement of limitation thus is not suspended till the order is uploaded in the website of the NCLT. Hon’ble Supreme Court in the said Judgment noted the conscious omission “order is made available to the aggrieved party which was occurring in Section 421(3) in Section 61 of IBC”.
The order was pronounced on 10th November, 2023 in the presence of counsel for the Appellant, period for limitation shall commence from the next date i.e. 11.11.2023 and the Appeal having been filed with delay of 18 days on 29th December, 2023 was beyond condonable period. Our jurisdiction to condone the delay is limited to 15 days only hence delay of 18 days cannot be condoned.
Delay Condonation Application is dismissed.
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2024 (3) TMI 1140
Review petition - impugned order passed by this Appellate Tribunal, without hearing him, as an Aggrieved and Necessary Party - Issuance of directions for initiating Perjury Proceedings, against the Respondent Nos. 1 & 2, to protect Authority and Majesty of this Tribunal, and thus restore the Purity of Administration of Justice - Whether the presence of a Particular Party, is necessary in order to enable the Court(s), effectively and completely, to adjudicate upon and settle all the questions, which are involved in the Petition?.
Power to Recall - HELD THAT:- The Power to Recall a Judgment, will not be exercised when the ground for Re-opening the Proceedings or Vacating the Judgment was available to be pleaded in the original action, but was not done or a proper remedy, in some other proceedings, such as, by way of Appeal, was available, but was not availed. Also that, the right to seek Vacation of a Judgment, may be lost by, either Waiver or Estoppel or Acquiescence.
Power of Review - HELD THAT:- The Power of Review is not an Inherent Power, but it is a creation of Statute. A Review of Judgment, cannot be granted in the garb of Clarification, as per decision of Hon’ble Supreme Court, reported in [2004 (5) TMI 606 - SUPREME COURT]. A Review Court, cannot sit in Appeal, over its own Order and rehearing of matter is impermissible in Law - A Debatable and Legal issues are not covered by the expression Sufficient Reason and as such, no Review, would lie. Also that, where, all the Pleas, urged in Review Petition, were reiteration of grounds, urged during the Hearing of Appeals, Review Petitions, were held not maintainable.
Since Power of Review, is a Right, created by a Statute, it cannot be exercised by the Tribunal, in the absence of Statute, providing for it. As a matter of fact, the term Recall, should not be expanded to be read as Synonym for Review.
The present Review Petitioner (Erstwhile Liquidator of M/s. The Jeypore Sugar Company Limited / Corporate Debtor), has no Vested Right, to file the Review Application and further, he cannot pray for Recall of the Impugned Order, passed by this Tribunal.
More importantly, the Review Petitioner (in person), cannot indulge in a Fishing Expedition, in filing the Review Application No. 3 / 2024, without any foundation / justification or any legal basis.
Keeping in mind of the well laid down Proposition of Law that Power of Recall, is not the Power of the Tribunal, to Re-hear the case, to find out any apparent error, in an Order or Judgment, as the case may be, this Tribunal, comes to an irresistible and cocksure conclusion, that the instant Review Application, filed by the Review Petitioner, in his personal capacity is not perse Maintainable, especially, in the teeth of he being neither a Necessary or Proper Party, to the case.
Review application dismissed.
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2024 (3) TMI 1139
Objection to Resolution Plan submitted - categorization of the Appellant as ‘affected’ homebuyer - HELD THAT:- On looking into the Agreement dated 09.08.2018, the Agreement although refers to several earlier events and proceedings prior to 09.08.2018, but it does not refer to Agreement dated 10.07.2015. Agreement dated 09.08.2018 having been executed subsequent to 15.09.2017, on which date the Corporate Debtor obtained loan from LICHFL, which obliged the Corporate Debtor to make an allotment only after the NOC from the LICHFL. The requirement of obtaining NOC was very much there and it is not the case of the Appellant that for allotment dated 09.08.2018, any NOC was obtained from LICHFL by the Appellant. Thus, categorization of the Appellant as ‘affected’ homebuyer cannot be faulted - there is no error committed by the SRA in classifying the Appellant into ‘affected’ homebuyer as his allotment dated 09.08.2018, having been obtained without NOC of LICHFL.
Back door entry in the CIRP - HELD THAT:- EOI was considered by the CoC. The subsequent events as noticed above indicate that IA No.643 of 2021, which was filed for approval of Resolution Plan of Vira Realspace LLP for Phase-1 was decided to be withdrawn by the CoC in its Meeting on 03.08.2021 and it was further resolved by CoC to rescind the previous From-G and issue a fresh advertisement for holistic resolution of the Corporate Debtor. Subsequently, on 08.08.2021 fresh Form-G was published, where, the last date for submitting of EOI was 23.08.2021. Respondent No.5 has submitted EOI on 17.08.2021 and thereafter submitted a Resolution Plan, which was deliberated and approved by the CoC. The submission advanced by the Appellant with regard to EOI submitted against Form-G, which was subsequently rescinded by the CoC is no more relevant - Resolution Plan, which ultimately was approved was in consequent to Form-G published on 08.08.2021 and there is not even any submission that with regard to Form- G dated 08.08.2021, there is any breach of timeline by Respondent No.5.
Next submission of the Appellant is that when Plan with regard to Phase-1 was approved on 01.03.2021 by CoC and IA No.643 of 2021 was filed for approval of such Resolution Plan, the CoC could not have taken any decision to invite fresh Form-G, which makes the entire process of CIRP contrary to the Code and the CIRP Regulations - HELD THAT:- In view of the CoC decision in its 13th Meeting to withdraw the Resolution Plan of Phase 1, the approval of Resolution Plan of Phase-1 was rendered infructuous, which was recorded by the Adjudicating Authority and no one has challenged the said order. It is also relevant to notice that CoC noted the issue as to whether the Resolution Plan of Phase-1 to be withdrawn and the said Agenda was approved by the CoC for withdrawal of Phase-1 Resolution Plan and Appellant also voted in favour of withdrawal of Phase-1, Resolution Plan, which material is on the record. It is difficult to see how the learned Counsel for the Appellant is raising submission that when there was approval of Resolution Plan of Phase-1, the CoC could not have proceeded further to issue fresh Form-G - there are no substance in this submission of learned Counsel for the Appellant.
The next submission of learned Counsel for the Appellant that there was no due diligence with regard to Section 29A while approving the Resolution Plan of SRA - HELD THAT:- From the facts brought on record, it does appear that Appellant is minority homebuyer, who is objecting to the approval of Resolution Plan, where majority homebuyers have voted in favour of the Resolution Plan, which is evident from the 99.96% vote share, the Plan has been approved - In view of the judgment of the Hon’ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association [2021 (3) TMI 1143 - SUPREME COURT] the Appellant has to sail with the decision of the majority of the homebuyers, who have decided to approve the Resolution Plan. Total number of homebuyers are 272, out of which 140 are ‘affected’ home buyers and 132 are ‘unaffected’ homebuyers. Out of 140 ‘affected’ homebuyers, 86 have voted in favour of the Plan and only 26 have voted against the Plan. Thus, majority of homebuyers have voted in favour of the approval of the Resolution Plan. Hence, the Appellant cannot be heard to contend against the majority of homebuyers, who have decided to approve the Resolution Plan.
The submission of the Appellant that RP conducted the CIRP in contravention of the Code and CIRP Regulations also does not find any substance from the materials on record and proceedings undertaken by the RP - there are no material irregularity in conducting the CIRP by the RP, which warrant interference.
There are no ground to interfere with the impugned orders dated 19.07.2023, which are sought to be challenged in these two Appeals - appeal dismissed.
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2024 (3) TMI 1109
CIRP - Seeking a direction to admit the claim of the Appellant as Financial Creditor - HELD THAT:- The Application filed by the Corporate Debtor to stay the proceedings of suit in view of the moratorium imposed with effect from 07.04.2021, was allowed and proceedings in suit was stayed. However, the Appellant’s suit against the Agent, through whom the Units were booked was allowed to proceed. The possession letter dated 24.09.2014, which has been extracted above, clearly indicate that possession letter was accepted by the Appellant, though under protest. The possession of Unit was thus, handed over to the Appellant on 24.09.2014, thus, the RP did not commit any error in not accepting the claim of the Appellant, for the possession of the Units, which have already been handed over - there are no error in the impugned order passed by the Adjudicating Authority in rejecting IA No.1531 of 2023 filed by the Appellant seeking direction to accept the claim. However, as undertaken by the SRA, the Resolution Plan having been approved on 20.11.2023, the SRA now has undertaken to execute of the Conveyance Deed for both the Units.
The order impugned dated 16.06.2023, rejecting IA No.1531 of 2023 is upheld - SRA namely Singla Builders and Promoters Limited shall execute the Conveyance Deed in favour of the Appellant for Units CB-5 and CB-6.
Appeal disposed off.
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2024 (3) TMI 1048
Attachment of current account - seeking recall of the sanctioned resolution plan - Section 31 of the IBC - HELD THAT:- Once the resolution plan has been approved/sanctioned by the NCLT, it is binding on all the stakeholders.
Under Section 32 of the IBC, any appeal from an order approving the resolution plan by the NCLT, can be made in the manner and on the grounds laid down under Section 61 (3) of the IBC and such an appeal can be filed within 30 days before the National Company Law Appellate Tribunal (NCLAT). The NCLAT can allow further extension of time for sufficient cause but not beyond a period of 15 days. As on date and as also recorded by the NCLT order dated 16th January, 2024, no appeal has been filed by the Respondent and the period for filing the same has also long expired.
The Hon’ble Supreme Court in the case of Ghanshyam Mishra and sons private limited through the GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT] has observed that it is trite law that the resolution applicant cannot be fastened with the liabilities in relation to the period upto the date of the resolution plan in case the resolution plan is approved under Section 31 of the IBC.
There is no dispute that the resolution plan approved vide order dated 12th December, 2017 has attained finality and accordingly the claim of the creditors or statutory authorities has to be dealt with in accordance with the approved resolution plan. The principle of clean slate as propounded by the said decision requires that the corporate debtor viz. the Applicant herein cannot be fastened with any liability for a period upto the date of the approval viz. 12th December, 2017, even if such liability crystallizes after this date. That all liabilities payable to any creditor shall stand satisfied and discharged upon approval of the resolution plan, provided those sums are set aside against which all such liabilities are paid.
The warrant of attachment on the said current account be set aside - application disposed off.
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2024 (3) TMI 1047
Non-admission of full claim by RP - Appellant’s case is that although possession were offered, but the Appellant did not take possession since Units were not complete - HELD THAT:- It is relevant to notice that the Resolution Plan of the SRA has already been approved by the Adjudicating Authority vide order dated 20.11.2023 and under the Resolution Plan, the SRA has provided to give 40% of the admitted claim as well as the Units, to which the Appellant is entitled as per the Plan. There is no dispute that Unit Nos. 1GF and 5GF with basement were allotted to the Appellant and the possession was offered on 30.09.2020, which was not taken by the Appellant. Partial Completion Certificate dated 14.10.2016, issued by the competent Authority has already been brought on the record. The Appellant although had not accepted possession on 30.09.2020, but allotment having not been disputed, the Appellant is entitled for the Units as well as the amount as per the Resolution Plan, which has been approved on 20.11.2023.
The Adjudicating Authority has noticed that claim of the Appellant having already been revised, there was no ground made out to interfere with the decision of the RP. The RP has applied his mind and passed a detailed and reasoned email regarding the claim, hence, no interference is called for. The Adjudicating Authority having taken a decision, not to interfere with the admission of the claim of the Appellant, there are no reason to interfere with the impugned order passed by the Adjudicating Authority rejecting the IA Nos.4229 and 4089 of 2023.
The Resolution Plan of the Corporate Debtor has already been approved on 20.11.2023, under which the SRA has undertaken to pay 40% of the amount admitted, i.e., 40% of the assured return - It is noted that although, possession of the Units offered to the Appellant on 30.09.2020, but the same was not taken by the Appellant. The Appellant having not taken possession of the Units and the Units having already been allotted to the Appellant, the Appellant is entitled for the Units.
The SRA is directed to execute the Conveyance Deed for Units 1GF (with basement) and 5GF (with basement) and handover the possession of the Units to the Appellant - appeal disposed off.
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2024 (3) TMI 1046
Dismissal of Section 9 petition - initiation of CIRP - It is contended that the Appellant remained an employee of the Corporate Debtor all through until his resignation and hence the Corporate Debtor was liable to clear the operational dues - HELD THAT:- The Adjudicating Authority in the impugned order after noticing the full and final settlement document has observed that the same was executed between the Appellant and MNT and not between the Appellant and the Corporate Debtor. The Adjudicating Authority has thereafter concluded while passing the impugned order that the settlement agreement clearly shows that the Appellant rendered services to MNT which was a separate company from the Corporate Debtor. The Adjudicating Authority has further gone a step ahead to examine whether in such circumstances the Corporate Debtor can be said to owe any liability to the Appellant in the backdrop of their contention that the Corporate Debtor and the MNT shared the same the management.
The Adjudicating Authority after referring to the decision of the Hon’ble Supreme Court in the matter of VODAFONE INTERNATIONAL HOLDINGS BV. VERSUS UNION OF INDIA & ANR. [2012 (1) TMI 52 - SUPREME COURT] has relied thereon to hold that the holding company and subsidiary company are to be considered as separate legal entities and merely because their management was the same, raising of claims by the Appellant against the Corporate Debtor was not tenable.
The reliance placed upon the Vodafone judgment supra by the Adjudicating Authority in the present facts of the case does not suffer from any infirmity and is very much in order. In this judgement the Hon’ble Supreme Court has carved out the basic legal principle with regard to relationship between subsidiary company and holding company by holding that the legal relationship between a holding company and its subsidiary is that they are two distinct legal persons and the holding company does not own the assets of the subsidiary. The business of a subsidiary cannot therefore ordinarily be treated to be the business of the holding company.
A subsidiary is a separate legal entity for tax and liability purposes. A subsidiary being a distinct legal personality is also allowed to have decentralised management. Mere ownership, parental control, management of a subsidiary by the holding company therefore does not constitute sufficient and adequate ground to justify piercing the status of their relationship as has been urged by the Appellant in the present case. Further, wherever public interest necessitates lifting of the corporate veil in the interests of justice, there always has to be some specific proof and evidence of fraud, wilful breach of trust, or some sham at play leading to avoidance or limiting the liabilities of the subsidiary company - However, to hold the parent company liable, there is need of specific and detailed information, but no such credible information has been provided by the Appellant. In the present case, there are no sustainable grounds placed on record for holding the Corporate Debtor company liable for the acts of its subsidiary and hence we affirm the findings recorded by the Adjudicating Authority in the impugned order.
The present is not a case where there is an undisputed debt for which Corporate Debtor can be brought under the rigors of CIRP. Therefore, in the attendant circumstances, the ratio of the judgement of the Hon’ble Supreme Court in the case of Mobilox [2017 (9) TMI 1270 - SUPREME COURT] squarely applies to the facts of this case. When any Operational Creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two which is not so borne out from the present factual matrix.
The Adjudicating Authority did not commit any error in rejecting the Section 9 application. There are no reasons to disagree with the findings of the Adjudicating Authority - There is no merit in the Appeal - Appeal is dismissed.
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2024 (3) TMI 987
Approval of Resolution Plan by the Adjudicating Authority - plan was approved by the Committee of Creditors - constitution of CoC. - Group of 77 homebuyers as a class of creditors seeking rejection of plan.
Sustainability of the argument advanced by the Learned Counsel for the Appellant that the constitution of the CoC stood vitiated because of the related party status of the Financial Creditor and Corporate Debtor - HELD THAT:- In view of absence of material placed on record and lack of substantiation of pleadings made by the Appellant of related party status of the Financial Creditor/Respondent No. 2 and the Corporate Debtor, it is not inclined to subscribe to the bogey of related party issue raised by the Appellant. Having failed to adequately demonstrate the related party status of the Financial Creditor/Respondent No. 2, and the Corporate Debtor, there are no irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 as a member thereof.
Financial Creditor/Respondent No. 2 was assigned a higher vote share than its entitlement - HELD THAT:- There was discriminatory treatment of the claims made by the Appellant as against what was offered to the Financial Creditor/Respondent No. 2 is clearly misconceived since the RP was diligently updating the claims and the corresponding vote share of the financial creditors. Not having pointed out any irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 having majority vote share prior to the CoC approving the resolution plan, it cannot be agitated now at this belated stage when the resolution plan stands approved. Thus, to answer the second issue, the CoC is found to have been validly constituted based on the duly verified claims of the financial creditors, to which no objections were raised by the Appellant, there are no cogent reasons to hold the decisions taken by the CoC to be either irregular or invalid.
Whether the RP was actively following up the TMC reservation issue or not? - HELD THAT:- The CoC was periodically kept apprised of the follow up steps taken by the RP in dealing with this issue which included visit to the TMC office and filing of an RTI application to find out the correct status of the reservation. The Resolution Professional had also taken up the matter through the architect to enquire about the reservation status besides seeking legal opinion on the matter and appointing a legal firm to seek appropriate legal remedy. Thus, the Resolution Professional cannot be held responsible for having suppressed any material fact pertaining to the TMC reservation issue from the CoC members including the AR. Keeping in mind the above-cited multifarious efforts made by the RP, the bonafide of the RP in this regard cannot be doubted. Hence, there are no infirmity or error in the findings recorded by the Adjudicating Authority in respect of the conduct of the Resolution Professional.
The RP at all stages had facilitated the Homebuyers in raising their concerns and objections to the resolution plan through the AR and in fact also provided them the window of opportunity of taking up their issues with the SRA. Under such circumstances, but for bald assertions, there is nothing to show that there has been negligence or dereliction of duties and responsibilities cast on the RP which can be said to have caused any serious miscarriage of justice to the Appellant - thus no cause of action survives on this count.
Whether the approval of the resolution plan by the Adjudicating Authority deserves to be set aside or the CoC approved resolution plan be sent back for the SRA/Respondent No. 3 to make necessary changes to the plan in the order to cater to the needs and demands of the Homebuyers as has been urged by the Appellant? - HELD THAT:- It is an undisputed fact that the resolution plan of the SRA has been approved by the CoC with requisite vote share. This resolution plan duly approved by the CoC with 89.05% vote share was placed before the Adjudicating Authority which has already approved the resolution plan. In the instant case, we find that when the resolution plan came up for consideration and approval before the Adjudicating Authority, the SRA improvised and upwardly revised its offer by way of an affidavit agreeing to pay 100% of the principal amount of the Homebuyers as against refund of approximately 40% of the claim amount admitted by the RP which was initially contained in the CoC approved resolution plan. This amount was acceptable to the Homebuyers and has not been objected to by any of the 77 Homebuyers.
Whether in the given circumstances, the Appellant as a disgruntled solitary homebuyer or at best representing 77 Homebuyers can raise objections against the collective business decision taken by the CoC approving the resolution plan of the SRA? - HELD THAT:- In the present matter at hand, neither any contravention of law nor material irregularity has been brought on record. It is settled law that once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law and nothing has come to light to show that the RP had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification. In any case, quite apart from the fact that the resolution plan is already under implementation it has also not been controverted by the Appellant that all the 77 Homebuyers including the Appellant have accepted the offer of 100% of their principal amount from the SRA.
The intent, objective and purpose of IBC being time bound resolution of insolvency of the Corporate Debtor, it clearly does not provide any leeway or scope to dissatisfied individual Homebuyers in a minority like the present Appellant to override the commercial wisdom of the majority in the CoC. There are no merit in the contention of the Appellant to reject the CoC approved resolution plan which has since been approved by the Adjudicating Authority. Any indulgence shown would tantamount to derailing the resolution process and setting the clock back which we cannot countenance.
There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal - Appeal dismissed.
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2024 (3) TMI 931
Validity of declaring of the respondent as a Secured Creditor - retention of shares held as security - primary grievance of the petitioner is that the NCLT ought to have decided the Liquidator’s application under Section 25 of the Insolvency and Bankruptcy Code (IBC), 2016 prior to deciding the application under Regulation 21-A of the IBBI (Liquidation Process) Regulations, 2016 - direction to hand over the share certificates - HELD THAT:- The provisions of Regulation 21-A of the 2016 Regulations are to be examined. Clause (1) of the same provides that a Secured Creditor shall inform the Liquidator of its decision to relinquish its security interest to the liquidation estate or realize its security interest as the case may be. Alliance has filed a Form-D application expressing its interest to realize its security interest. The Liquidator, upon expiry of 30 days from the liquidation commencement, Alliance having not intimated its decision, filed the application under Regulation 21-A for presuming the assets covered under the security interest to be part of the liquidation estate - irrespective of the claim of Alliance to the pledged shares being sub judice in a separate suit, the fact remains that the effect of the order under Regulation 21-A is that the assets covered under the security interest that is the said shares, are presumed to be part of the liquidation estate.
By virtue of the order passed under Regulation 21-A treating the assets covered under the alleged security interest of Alliance (the shares-in-question) to be part of the liquidation estate, the interest of the secured creditors, be it the petitioner or others, cannot be adversely affected in any manner; rather, such order can only enure to the benefit of the secured creditors. The effect of the order is that, despite the claim of security interest of Alliance in the said shares, those are made a part of the liquidation assets, thereby subjecting the sale proceeds obtained after sale of such shares to the rigours of Section 53 of the IBC - Section 53 provides the order of priority for distribution of the proceeds from the sale of the liquidation assets. If the shares are treated to be liquidation assets and are sold as such, the proceeds from the said sale will be a part of the hotchpot of the liquidation assets and will be distributed in terms of Section 53 where the secured creditors will get their dues in accordance with the order of priority stipulated therein. The petitioner claims to be a secured creditor and, hence, could only be benefited, and not suffered, from the order under Regulation 21-A.
There are no irregularity in the order impugned herein. Since the Liquidator’s repeated efforts directing Alliance to hand over its shares failed, Section 25 of the IBC has been rendered academic. Section 25, it is to be noted, does not envisage any adjudication of the rights of a secured creditor to any of the assets. Only if a secured creditor in the liquidation proceedings realizes its security interest in the manner specified in section 52 of the IBC, under sub-section (1)(b) of the said Section, he shall inform the Liquidator of such security interest and identify the assets subject to such security interest to be realized, as per the provisions of sub-section (2) of Section 52 - the scope of an adjudication of the security interest during a liquidation process is provided only in Section 52(3). If Alliance had succeeded in having its way under Section 52(1)(a), it would not be the bounden duty of the Liquidator to adjudicate on the said rights under sub-section (3) of Section 52. However, since such bid of Alliance has failed by way of the impugned order under Regulation 21-A, presuming the shares-in-question to be a part of the liquidation asset and directing sale thereof, there cannot arise any question of such adjudication, since, in any event, the shares become a part of the liquidation estate, sufficiently subserving the interest of all secured creditors, including the petitioner (who claims to be a secured creditor), who would be getting their dues in order of priority under Section 53 of the IBC.
The petitioner cannot claim to have been aggrieved in any manner, as the order passed under Regulation 21-A did not adjudicate on the rights of Alliance in respect of security interest to the disputed shares. Rather, the Liquidator has rightly submitted that the said shares would be shown in the auction sale to be subject to the pending suit.
The argument of the petitioner that the order is devoid of reasons is entirely misplaced. In the absence of any adjudication on the issue of Alliance’s rights to the pledged shares, there arises no question of any reason being provided for such non-existent adjudication - there is no scope of interference in the present writ petition.
Petition dismissed.
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2024 (3) TMI 930
Rejection of transfer application - proceedings were initiated by the Financial Creditor under Section 7 which proceedings were initially admitted and the application to recall the said order was rejected - HELD THAT:- The facts indicate that the order of admission of the CIRP and the order rejecting the application of the Corporate Debtor for recall of the order was set aside by this Tribunal on 26.09.2023 and thereafter Section 7 proceedings revived before the Adjudicating Authority to be proceeded and decided in accordance with law.
There can be no dispute to the preposition of law that mere apprehension of bias is sufficient for transfer of a proceeding. The question is as to whether the facts and sequence of the events in the present case reflect any apprehension of bias. Having adverted to the submission and facts and sequence are fully satisfied that neither there is bias reflected nor any apprehension of bias which can be imputed the Bench hearing the matter. In the impugned order, Hon’ble President has looked into the submission and has rejected the application for transfer in which there are no error.
Appeal dismissed.
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2024 (3) TMI 929
Liability to contribute towards Liquidation Process Costs - scope of Financial Institution - Appellant points out that neither the Appellant nor the Debenture Holders, it acts on behalf of the fall within the definition of Non-banking Institution, under Section 45-I(e) of the RBI Act and hence, not liable to contribute towards Liquidation Costs - HELD THAT:- As a matter of fact, in view of the rejection of the Resolution Plan, by the Members of the Committee of Creditors, and in view of the CIRP Period, expiring on 17.02.2020, the Resolution Professional, preferred an Application, as per Section 33(1) of the Code, seeking Liquidation of the Corporate Debtor. The Adjudicating Authority / Tribunal, by an Order dated 13.03.2020, passed an Order of Liquidation, for the Corporate Debtor. Also that, the Adjudicating Authority, had appointed the 1st Respondent / Liquidator as Liquidator, through an Order dated 13.03.2020.
The 1st Respondent / Petitioner / Liquidator, had informed the 3rd Respondent / Phoenix ARC Private Limited, through letter dated 26.08.2020, their respective Share of Liquidation Costs of Rs.36,74,771/-, (which includes, the approved Liquidation Costs and Liquidator Fee) and requested to remit their respective Share as a whole or at least 30% within 5 days, from the issuance of the Letter. In fact, the 1st Respondent / Petitioner / Liquidator, had provided the Liquidator’s Fee Estimate, as per Letter dated 26.08.2020, as per Regulation 4(2)(b) of the Liquidation Process Regulations, 2016 - It is represented on behalf of the 1st Respondent / Petitioner / Liquidator that any delay, in depositing the Liquidation Costs by the Respondents, is delaying the Liquidation Process and the Liquidator, is unable to perform his duties, as mandated under the I & B Code, 2016.
Petition is filed in a Bona fide manner, and in the interest of Justice, the said Application, may be allowed by issuing necessary directions to the Respondents, to forthwith defray the portion of Liquidation Process costs, as per Regulation 2A of the IBBI (Liquidation Process) Regulations.
The filing of a Certified Copy (Paid Cost Copy), is not an empty ritualistic formality, in the considered opinion of this Tribunal. It cannot be gainsaid that only when the Petitioner / Appellant / Aggrieved Party, applies within the prescribed period of Limitation, as envisaged, under Section 61 (2) of the Code, the time taken to secure the Certified Copy, will be excluded from the Computation of Period of Limitation - In terms of Rule 22(2) of the NCLAT Rules, 2016, a Certified Copy of the Impugned Order, shall accompany every Appeal to be filed, before the Office of the Registry. Only in a Paid Certified Copy, by an Aggrieved Party, the details Viz. when the Application for Certified Copy of the Impugned Order was made by the Applicant, when it was made ready, when it was handed over / taken delivery, etc., will find a place, ofcourse, duly signed by the Deputy / Asst. Registrar of the Adjudicating Authority / Tribunal.
Considering the entire conspectus of the attendant facts and circumstances of the instant case, in an encircling manner, comes to an irresistible conclusion that the Impugned Order, dated 25.05.2023 in IA No. 399 / BB / 2020 in CP (IB) No. 189 / BB / 2018, passed by the Adjudicating Authority / NCLT, Bengaluru Bench, in directing the Appellants, 1st Respondent and two other Respondents, to Defray their portion of Liquidation Process Costs, is free from any legal infirmities.
Appeal dismissed.
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2024 (3) TMI 928
Admission of section 7 application - financial debt owed by the Corporate Debtor or not - default was committed by the Corporate Debtor in not carrying out the construction due to interim order or not.
Whether Grandstar Reality Pvt. Ltd., auction purchaser under SARFAESI Act, 2002, on 17.06.2016/ 19.07.2016 can be held to be Financial Creditor of the Respondent allottees, who were issued allotment letters/ Builder Buyers Agreement by Akme Projects Ltd. (the predecessor of the Corporate Debtor)? - HELD THAT:- The definition of Financial Creditor means that any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. The crucial word in the definition is “any person to whom a financial debt is owed” becomes a Financial Creditor. Further, the expression “includes a person to whom such debt is legally assigned or transferred to” is only incidence of further elaboration of person to whom the financial debt is owed. In the facts of the present case, there can be no denying that financial debt, which was owed by Akme to the allottees is now the debt owed by Grandstar Reality Pvt. Ltd. The Grandstar Reality Pvt. Ltd. is fully covered by the definition of Section 5, sub-section (7), who owed the debt towards the allottees.
The financial debt can be owed in more than one manner. Assignment or transfers are two modes, which has been expressly included in the definition. In cases of amalgamation and demerger under the Companies Act, 2013 of a Corporate Debtor with another entity is obviously considered as Corporate Debtor on account of transfer/ vesting of assets and liabilities to the amalgamated/ transferee Company. Transferee Company cannot be permitted to escape the rigours of the Code by claiming that disbursement was not done to it directly. In the present case, where Grandstar Reality Pvt. Ltd. has taken over the Project under the SARFAESI Act, cannot escape the rigours of the Code and defeat the rights of the homebuyers under the Code - there is a financial debt and the filing of the Application by the allottees under Section 7 cannot be faulted on this ground.
Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon’ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors. [2018 (3) TMI 1964 - SUPREME COURT], M/s Akme Projects Ltd. vs. YES Bank & Anr.Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon’ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors.; in M/S. AKME PROJECTS LTD. VERSUS YES BANK LTD. & ANR. [2016 (10) TMI 1397 - DELHI HIGH COURT]? - HELD THAT:- The learned Counsel for the Respondent is right in her submission that even in additional affidavit filed on 19.01.2024 by the Appellant, no such facts have been stated, which may indicate that Grandstar Reality Pvt. Ltd. has been taking steps for completion of the Project. In the additional affidavit, the Appellant has placed reliance on letter dated 09.05.2023 issued by Tehsildar in terms of the order No.17/LAC dated 12.04.2023 passed by District Revenue Officer cum Land Acquisition Collector Gurugram. On looking into the said letters/ orders, it is clear that said orders were issued on a request made by one Om Prakash Yadav in the Rameshwar’s case. Hence, order of the District Revenue Officer dated 12.04.2023 and letter dated 09.05.2023 by Tehsildar are not relevant for the present case - in the facts of the present case default was clearly proved on the part of the Grandstar Reality Pvt. Ltd. and the findings recorded by the Adjudicating Authority that Section 7 Application is complete and deserved to be admitted, does not warrant any interference.
There are substance in the submission of learned Counsel for the Respondent that since the Project has been taken over by the Grandstar Reality Pvt. Ltd. in 2016 and it is now the obligation of Grandstar Reality Pvt. Ltd. to continue the Project, the filing of the claim by the allottees against the CIRP of Akme Project, cannot preclude the allottees from agitating their claim by filing Application under Section 7 against the Grandstar Reality Pvt. Ltd., who has taken over the Project.
There is no error in the order of the Adjudicating Authority admitting Section 7 Application. The Appeal is dismissed.
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2024 (3) TMI 927
Seeking impleadment of Successful Auction Purchaser/Appellant as one of the Respondents - HELD THAT:- This ‘Tribunal’, makes a pertinent mention that all pleadings exchanged prior to and non-impleadment, to overcome direction issued by the ‘Adjudicating Authority/Tribunal’, in regard to impleadment shall not be anyway to be construed that the concerned party had an effective and adequate opportunity to putforth its views/grievances, in terms of the ‘principles of natural justice’.
This ‘Tribunal’, is of the considered view that even though the ‘Adjudicating Authority/Tribunal’ had observed among other things “Liquidator is permitted to start e-auction process afresh allowing the ‘Applicant/Successful Bidder’ and other persons to participate in the process. It was also submitted that the mistake was bona fide and he is willing to allow the ‘Successful Bidder’, to participate with the amount already ‘furnished/deposited’ and ultimately, proceeded to pass an order, that there will be a ‘fresh auction’ and the ‘Applicant, Successful Bidder’ and other persons would be permitted to participate in the ‘fresh e-auction’ is liable to be set aside, to secure the ‘ends of justice’ because of the latent and patent fact that the ‘Appellant/Proposed Impleading Party, who was directed earlier by the ‘Adjudicating Authority/Tribunal’ through its order dated 30.01.2024 to be impleaded as the ‘Appellant/Successful Bidder’, as one of the ‘Respondents’, was not added as a party as one of the Respondents, this ‘Tribunal’ is of the considered view that the said omission is a vital one and goes to the root of the matter and affects the impugned order on the file of the ‘Adjudicating Authority/National Company Law Tribunal, Division Bench Court-I, Chennai.
Appeal allowed.
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2024 (3) TMI 867
Condonation of delay in filing the Civil Appeals - Section 62 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- There is a delay of 216 days and 141 days respectively in filing the Civil Appeals. The delay is beyond the maximum period which can be condoned under Section 62 of the Insolvency and Bankruptcy Code 2016.
The Civil Appeals are dismissed on the ground of limitation.
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2024 (3) TMI 866
Condonation of delay of 474 days in filing the Civil Appeals - HELD THAT:- Even before the Special Leave Petition was filed, the period of limitation under Section 62 of the IBC had come to an end - There is a delay of 474 days in filing the Civil Appeals, much beyond the period which can be condoned in terms of the provisions of Section 62 of the Insolvency and Bankruptcy Code 2016.
There are no reason to entertain the Civil Appeals since they are barred by limitation - Since the appellants seek to withdraw the appeals, the appeals dismissed as withdrawn.
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2024 (3) TMI 865
Admission of section 9 application - Insurance Company has made payment to the Operational Creditor of its claim - third party liability - Liability of Corporate debtor to discharge its debt - preexisting dispute between the parties - it was held by NCLAT that Section 9 Application is fully maintainable and the fact that Insurance Company has made payment to the Operational Creditor of its claim, cannot be a ground to reject Section 9 Application - HELD THAT:- The order of the National Company Law Appellate Tribunal dated 13 December 2023 does not raise any substantial question of law so as to warrant interference in the appeal under Section 62 of the Insolvency and Bankruptcy Code 2016.
However, the time which was granted by the NCLAT by its order dated 13 December 2023 for deposit shall stand extended, on the request of the counsel for the appellant, until 8 April 2024. In the event of default, the consequences as envisaged in the order of the NCLAT shall follow.
Appeal dismissed.
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2024 (3) TMI 864
Initiation of CIRP - Failure to make deposits the entire OTS amount - section 7 still pending - It is submitted that the Appellant is ready to deposit the entire OTS amount which was earlier arrived along with 12% interest in the Court to show his bonafide - HELD THAT:- Admittedly, Section 7 application is still pending before the Adjudicating Authority. From the facts which have been brought on the record, it is clear that the deposit could not be made by the Appellant as per our order dated 29.02.2024 by 10.03.2024 since letter dated 29.02.2024 could not be responded before the 10.03.2024. Since Section 7 application is pending before the Adjudicating Authority, it is for the Adjudicating Authority to take a call on the submissions and offer made by the Appellant.
The Appellant and the investors as submitted before the Court may deposit the amount of Rs.167 Crores along with 12% interest and Rs.87 Crores plus 12% interest before the NCLT within 10 days as prayed by way of FDR in favour of Registrar, NCLT. If the said deposit is made or not made, the Adjudicating Authority shall take appropriate decision on Section 7 application after hearing both the parties.
There are no reason to keep the Appeals pending - Both the Appeals are disposed of accordingly.
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2024 (3) TMI 863
Approval of Resolution Plan - Consideration of Resolution Plan from Non-Listed Applicants - Authority of CoC to Modify Invitation for Expression of Interest (EOI) - Interpretation of Regulations 39(1)(b) and 36A of the CIRP Regulations, 2016 - HELD THAT:- The Regulation clearly provides that the committee shall not consider a resolution plan received from an application whose name does not appear in the list of PRAs. Admittedly, neither Patanjali nor other two applications have submitted any EOI nor their name was reflected in the List of PRAs - Regulation 36A which provide for Invitation for Expression of Interest also empowers the CoC to modify the invitation for Expression of Interest. It is always open for the CoC to take a decision to not proceed on the Applications, EOI received and take a decision for issuance of fresh Form G and permit other applicants to participate. When no fresh Form G has been issued, it is not open for any new applicant to submit application before the Adjudicating Authority for being permitted to participate in the CIRP and submit Resolution Plan.
In any view of the matter, affidavit has been filed by the CoC where resolution has been brought on record that the CoC has now decided not to consider any additional new entrants and they will confine their consideration to Resolution Applicants whose names were reflected in the final list of Prospective Resolution Applicants dated 07.11.2023.
The Committee of Creditors having taken resolution not to consider any additional new entrants, we are of the view that impugned order dated 12.02.2024 and 21.02.2024 cannot be sustained. Both the Appeals are allowed.
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