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IBC - Case Laws
Showing 481 to 500 of 9418 Records
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2024 (7) TMI 1362
Notice issued without commenting on the maintainability of the petition under Article 136 of the Constitution of India - HELD THAT:- The notice is issued without commenting on the question of maintainability of the petition under Article 136 of the Constitution of India, as a legal issue is sought to be raised relying upon the ‘Explanation’ to Section 14 of the Insolvency and Bankruptcy Code, 2016. A copy of the license deed, including the terms and conditions on which it was granted, along with the statement of accounts will be filed by the petitioner, Department of Town and Country Planning, Haryana, in this Court within a period of four weeks from today.
Rejoinder affidavit may be filed within three weeks after service of the reply.
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2024 (7) TMI 1361
Disqualification from participating in coal mine auctions - debarment is premised on certain outstanding unsettled dues attributable to the Petitioner’s erstwhile management - whether the Petitioner is liable for the alleged dues, thereby ascertaining their eligibility to participate in the coal mine auctions? - HELD THAT:- With the approval of the resolution plan by the NCLT on 20th March, 2023, the claims that were not submitted in the required manner or were rejected by the Resolution Professional, are deemed extinguished. This extinguishment includes all dues, including statutory dues owed to the Central Government that were not incorporated in the resolution plan. The Respondent’s inaction in contesting the categorization of their claims by the Resolution Professional, or challenging the resolution plan signifies their acceptance of the resolution process. Moreover, even if we were to hypothetically consider the financial impact of the PBG claim, had it been recognized as valid operational debt, the actual financial benefit to the Respondent would have been minimal - there exists no legal basis for the Respondent to obstruct the Successful Resolution Applicant’s participation in the auction process.
The finality and decisiveness of an approved resolution plan is recognized under the IBC’s framework. The resolution process, as endorsed by the NCLT, aims to free the corporate debtor from past liabilities and enable a fresh operational start, unhampered by unresolved and extinguished debts - The mandate of Section 31 (1) of the IBC underscores that once a resolution plan is approved by the Adjudicating Authority, it is binding not only on the corporate debtor, but also on all stakeholders, including Central and State Governments, as well as any local authorities to whom debts are due under any current laws. This binding nature extends to all statutory dues owed to these authorities.
In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] the Supreme Court has elaborated on the treatment of claims post-approval of a resolution plan. The Apex Court emphasized that a Resolution Applicant should not be encumbered by sudden and unforeseen claims. Such occurrences would not only disrupt the financial calculations and expectations that underpinned the resolution plan, but also undermine the very purpose of the IBC, which aims to streamline and stabilize the process of corporate revival - the introducing claims that were not part of the list of assessed and finalized claims in CIRP post the approval of resolution plan, contravenes the established legal framework and the Supreme Court’s holding. This ruling importantly guards against the ‘hydra head phenomenon,’ where unexpected financial liabilities emerge post the CIRP, potentially destabilizing the newly revived corporate debtor and deterring future investment and participation in the insolvency resolution processes.
The IBC facilitates economic rehabilitation of the corporate debtor, enabling it to service its debts, thereby enhancing the reliability of the credit market. Importantly, the Code prioritizes the interests of all stakeholders, including the corporate debtor, by shielding it from its past management and potential liquidation threats. This focus on revitalization over mere credit recovery segregates the debtor’s interests from those of its previous promoters or managers, underscoring the IBC’s object as a protective, not adversarial, mechanism in the resolution process. This legislative framework is designed to return the corporate debtor to viability, benefiting the broader economic ecosystem - the Court remains unconvinced with the Respondent’s construal of the observations of the NCLT in deciding concessions to the corporate debtor in respect of their obligations to the Respondent.
The resolution framework intends to balance the interests of all stakeholders, including creditors, by ensuring that they are bound by the finalized resolution plan. As such, the Respondent, who is a creditor within its context, is obligated to adhere to the stipulations of the resolution plan as approved on 20th March, 2023, which mandates an interpretation and application of the IBC as per its intent and statutory mandate. By holding the Petitioner accountable for liabilities that have been legally extinguished, the Respondent has failed to adhere to the statutory mandate of the IBC and the broader objectives of insolvency resolutions. The insistence on clearing past dues contradicts the rehabilitative intent and purpose of the IBC, calls for judicial intervention.
The impugned decision dated 22nd May, 2024, issued by the Respondent, stipulating that the Petitioner remains ineligible to participate in coal mine auctions until outstanding dues to the Petitioner are cleared, cannot sustain - the present writ petition is allowed and the impugned decision dated 22nd May, 2024 is set aside.
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2024 (7) TMI 1320
Rejection of application u/s 10 of IBC - Seeking to initiate Corporate Insolvency Resolution Proceedings (CIRP) - It is the case of the Appellant that the Section 10 application was complete in all respect and all statutory prescriptions to file Section 10 application had been met - whether the Adjudicating Authority committed any error in rejecting the Section 10 application? - HELD THAT:- It is noticed that much before the Section 10 application was filed by the Appellant, the Respondent Bank had issued notices to the Appellant for personal hearing before declaring the Appellant to be a wilful defaulter. It is also found that the Adjudicating Authority took notice of the fact that the Appellant Company failed to appear before the Respondent Bank in spite of notices having been issued to them twice and gave a slip to the proceedings initiated by the Wilful Defaulter Identification Committee of the Respondent Bank. Even after being declared a defaulter, the Appellant continued not to respond to the notices issued by the Respondent Bank.
The Appellant Company was selectively approaching the Bank requesting for some reprieve but was deliberately avoiding the Bank in the proceedings being conducted for being a wilful defaulter. This glaring duplicity in the conduct of the Appellant as pointed out by the Respondent Bank has also been taken cognisance of by the Adjudicating Authority in concluding that the Appellant has come before it with unclean hands.
It does not escape notice that the Appellant was trying to embroil the Respondent Bank in multiple layers of litigation. It is an undisputed fact that the Appellant had filed securitization application SA-365 of 2019 before the DRT, Lucknow for stay on the auction of its properties by the Respondent Bank. Apart from moving the securitization application before the DRT, the Appellant had also knocked at the doors of the Hon’ble Allahabad High Court by filing a Writ petition - the Appellant made incessant efforts to put a spanner in the recovery proceedings initiated by the Respondent Bank and finally resorted to filing the Section 10 application.
There is no quarrel over the fact that Section 10 vests rights on the Corporate Debtor to resolve their insolvency. However, one cannot lose sight of the fact that this protective umbrella over the assets of the Corporate Debtor is not misused or abused in a manner so as to become a tool for deriving undue advantage at the cost of insolvency resolution which objective unequivocally resonates in the preambular aspirations of the IBC - the Adjudicating Authority rightly deprecated the Appellant Company for having filed the application under Section 10 of IBC after unsuccessfully trying at pre-empting recovery proceedings undertaken by the Respondent Bank.
The Adjudicating Authority agreed upon that the bonafide of the Appellant in filing of the Section 10 application was doubtful and that the filing was done for reasons other than insolvency resolution and therefore deserves to be dismissed.
There are no good reasons which warrants any interference in the impugned order - appeal dismissed.
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2024 (7) TMI 1261
Impleadment as a party to the proceedings - necessary party to the proceedings or not - whether the Impleadment Application, as it has been preferred by the Respondent No.1 could at all have been allowed without there being a notice issued to him, who was sought to be impleaded in order to enable him to put forth his views on whether at all he happens to be the necessary party to the proceedings or not?
HELD THAT:- As far as the aspect of impleadment is concerned from the perspective of the Appellant, that there was no prior notice given to him, it is an aspect which has already been dealt with, coupled with the fact since the issue of impleadment being exclusive prerogative of the court because it is the court which has to determine the necessity of the party to be introduced in the proceedings as to whether if at all it is the necessary party to decide the case effectively, there are no error in the Impugned Judgment under challenge allowing the Impleadment Application.
The Appeal lacks merits and the same is accordingly dismissed.
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2024 (7) TMI 1260
Doctrine of necessity - Seeking stay of order directing liquidation of the Corporate Debtor and the appointment of the liquidator, in order to enable the Appellant to deposit the balance amount into the liquidation account of the Corporate Debtor - directing the liquidator to put on hold the liquidation proceedings was rejected - HELD THAT:- Looking at the concept of the ‘doctrine of necessity’, which has to be read in accordance with the provisions contained under section 60(5) of I & B Code, 2016, it provides for meeting out such inevitable circumstances in form of the powers vested with the Tribunals and particularly the NCLT as referred to in sub-section (5) of section 60 of I & B Code, 2016, to pass any appropriate order for fruitfully disposing of any application or proceedings in order to meet the purpose of CIRP, as against the Corporate Debtor. In the instant case owing to the Resolution Plan which was submitted by the Appellant and approved by NCLT, the Corporate Debtor was expected to revive back in and to reach the status of being a going concern.
When the provisions contained under section 60 sub-section (5) of I & B Code, 2016, it starts with a non-obstinate clause, that means it has an overriding effect to any of the provisions to the contrary, of the Code as contained therein and that the exercise of inherent powers have been vested with the Tribunal to carry out the exceptions in order to meet out the objective of the Code in order to avoid liquidation and to enable the Corporate Debtor to transition into position of being a going concern.
In that eventuality, though admittedly the law is not in favour of the Appellant, because he has not put a challenge to the order of appointment of liquidator, but since the liquidator himself supports the contention of the Appellant, the Appellant is granted a last opportunity to deposit the amount, which is to be positively deposited within a period of one month and if the said deposit is not made by the Appellant within the aforesaid time frame, the relaxation which has been granted to the Appellant in the light of the provisions contained under section 60(5) of I & B Code, 2016, will automatically lapse and it will open for the liquidator to seek for an appropriate alternate buyer by resorting to the procedure prescribed under law.
Appeal disposed off.
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2024 (7) TMI 1214
Refund of the earnest money deposited by the petitioner - It is alleged that the petitioner filed a belated appeal before the National Company Law Appellate Tribunal (NCLAT) which was dismissed on the point of limitation which order remained undisturbed even before the Supreme Court - invocation of writ jurisdiction under 32 of the Constitution of India - HELD THAT:- The prayer for tagging has been opposed and it has been submitted that since the petitioner has already lost up to the Supreme Court in the previous round no such indulgence ought to be granted to her.
Keeping the issue of the maintainability of the writ petition open, this writ petition it is directed to be tagged with Civil Appeal No. 7943 of 2023.
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2024 (7) TMI 1173
Payment of maintenance charges including electricity charges - payment of dues arising from essential services supply during CIRP period - electricity charges - propriety of the directions issued by the Adjudicating Authority that the RP shall be free to take coercive steps with regard to the non-payment of maintenance charges including the electricity charges of the common area and make the payment to the NPCL - HELD THAT:- It is an undisputed fact that when the RP took over the charge of the Corporate Debtor, there was shortfall in maintenance charges collected from the Home Buyers and an outstanding electricity due payable to NPCL. In the present case since the Corporate Debtor was admitted into CIRP and RP had been appointed, the responsibility to discharge the pending payments of maintenance charges including electricity dues fell on the RP in terms of the statutory construct of IBC. It is also an admitted fact that in terms of Section 11(4)(d) of RERA Act, the Corporate Debtor was obligated to provide essential services including electricity supply till the maintenance of the project was taken over by the association of allottees.
Besides the RP placing the issue of maintenance charges and electricity dues before the CoC for its deliberations and consideration, it is also found that the RP, in all fairness, had from time to time sent communications to the allottees regarding the electricity overdue amount and emphasised the need to clear the outstanding dues of NPCL to avoid disconnection of electricity supply - the communications though not an exhaustive list, clearly depicts that the RP had been making bonafide efforts to apprise the allottees of the need to clear the outstanding electricity dues to stave off the stark possibility of electricity disconnection.
There are no credible ground which has been brought before us by the Appellants to substantiate any impropriety, procedural or otherwise, to have been committed by the RP in placing the correct facts before the allottees and the CoC members regarding the need to enhance the maintenance charges and need to clear the cascading electricity dues to avoid any possible power disconnection by the NPCL. In the given facts of the case, since it was the prime responsibility of the RP to run the Corporate Debtor as a going concern, it was entirely appropriate on the part of the RP to seek the approval of the CoC in the determination of maintenance fees and recovery of electricity dues - After having been present in the CoC meetings and exercised their voting rights on the determination of the maintenance fees and electricity dues, the allottees cannot question the authority of the CoC to have made these business decisions. It goes without saying that the commercial decision of the CoC is paramount and nonjusticiable and every dissatisfaction cannot partake the character of a legal grievance.
Whether payment of electricity charges being an essential service, such amount can be accounted towards CIRP costs and that the Corporate Debtor is not liable to pay the amount till the completion of the period of moratorium? - HELD THAT:- This issue has been squarely covered by the judgement of this Tribunal in Shailesh Verma vs Maharashtra State Electricity Distribution Company [2022 (9) TMI 143 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. This Tribunal by making a contextual and purposive interpretation of statutory provisions of moratorium and its subsequent amendment by Act 1 of 2020 had held that while benefit of essential services should be continued, there should not be any default in the discharge of the dues arising therefrom.
In the present case, the RP has admitted that electricity supply by NPCL, being in the nature of supply of essential goods and services, was necessary to be continued so as to protect and preserve the value of the Corporate Debtor and hence dues arising from electricity supply require to be discharged. This subject matter has been considered and deliberated at length by the CoC from time to time in its various meetings and resolutions passed to collect the outstanding amount from the allottees to square off the dues of NPCL - There is no prohibition or bar imposed by the IBC towards payment of dues arising from essential services supply during CIRP period nor is there any statutory provision which stipulates that the Corporate Debtor is not liable to pay such amounts till completion of the period of moratorium.
There are no infirmity in the impugned order of the Adjudicating Authority holding that the Corporate Debtor through the RP was obligated to make payment of the electricity dues as approved by the CoC and apply coercive measures to collect the same to make payment to the NPCL - appeal dismissed.
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2024 (7) TMI 1077
Dismissal of application - requirement of payment to 103 employees towards arrears of salary - examination of settlement with 103 employees - double paymnet were done to employees or not - HELD THAT:- The prayers made by the Appellant were not liable to be allowed. Whatever prayers have been made has been clearly categorically explained in the reply affidavit of Respondent filed in this Appeal, as well as before the Adjudicating Authority. There is no occasion for holding RP personally liable for any payment made to 103 employees. It is pleaded by the RP that the payments, which have been made, were made with the approval of the CoC. Any payment after CIRP having been made by the RP with the approval of CoC, no personal liability can be fastened on the RP.
The prayers made by the Appellant in the Application, could not have been allowed and in view of the affidavit filed by the RP, the apprehension that Appellants’ 103 employees shall receive double payment has also been clarified and those 103 employees shall not be entitled to be made any payment as per the Resolution Plan towards their unpaid salary. Whereas, 103 employees shall also be entitled for payment of gratuity and provident fund.
There is no ground has been made out to interfere with the order passed by the Adjudicating Authority - appeal dismissed.
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2024 (7) TMI 1005
Validity of SCN - petitioner No. 1 has been addressed as an ‘Ex Independent Director’ - certain acts of financial irregularities have been committed by the petitioner on different dates during the period from November, 2014 to 31st March 2017 - HELD THAT:- The decision in the case of Shantanu Prakash [2024 (5) TMI 1323 - DELHI HIGH COURT], heavily relied upon by the learned counsel for the respondent, was one wherein this Court reiterated the decision in the case of Rajesh Agarwal [2023 (3) TMI 1205 - SUPREME COURT] and the petitioner, who was also an Ex-Director and a guarantor of the company, had availed various credit facilities from consortium of banks, of which the respondent banks were also members and it was found that there was not only a violation of the principles of nature justice inasmuch as relevant documents were not supplied to the petitioner, but also that the petitioner was not given any opportunity before classifying his accounts as ‘fraud’ - this Court passed directions against the respondents to allow the petitioner and/or authorized representative to inspect the records of the company besides the records which are available and in possession of the IRP and once that bridge was passed, the petitioner was called upon to make representation and to be afforded an opportunity of hearing before passing appropriate directions.
It is apparent that despite a clean chit given by the forensic auditor and the fact that the CIRP proceedings had been initiated from 20.04.2018, coupled with the fact that the petitioner No. 1 is described as Ex. Independent Director, a prima-facie ground is made that the impugned SCN is vulnerable in law. Further, the copies of the documents which have been relied upon, have not been supplied. The respondent is also duty bound to supply the report of the forensic audit conducted against it so as to consider what changes in the circumstances, if any, were brought out and in what manner if at all, the report was found to be not correct or unreliable.
This Court finds that this is a fit case for issuance of notice and the same is apparently accepted by learned counsel for the respondent. Let a reply be filed within four weeks from today. Respondent is further directed to place on record the complete report of the forensic audit conducted by Grant Thornton LLP.
Re-notify on 20.08.2024 - the operation of impugned SCN dated 19.06.2024 shall remain in abeyance.
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2024 (7) TMI 1004
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Applicability of Section 10A of the Insolvency and Bankruptcy Code (IBC) - whether any operational debt qua the Corporate Debtor has been proven to have become due and payable and if there has been a default in the payment thereof and whether there is any pre-existing dispute between the parties? - HELD THAT:- The Adjudicating Authority had applied its mind while considering the contention of the Appellant that the Respondent’s claim of payments having been made by them was false. However, this contention of the Appellant was not found sustainable by the Adjudicating Authority and held to be a mere sweeping statement by the Appellant for reasons of being unsubstantiated with supporting documents. It is also notice that the Adjudicating Authority has noticed contradiction in the pleadings made by the Operational Creditor with regard to outstanding payments and the ledger account of the Corporate Debtor maintained by the Operational Creditor in their books of account which reflect that payments have been made by the Corporate Debtor.
In the absence of any credible proof put forth by the Operational Creditor to controvert the contention of the Corporate Debtor that the entire debt has been cleared and that there was no default, we have no reason to disagree with the above findings of the Adjudicating Authority that the allegations of debt and default raised by the Appellant is facile and lacks substance.
The aim and objective of Section 10A was to protect a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing - The Adjudicating Authority has opined that even though the invoice was issued one day prior to the commencement of prohibited period under Section 10A, it cannot escape the clutches of Section 10A since the date of issue of invoice cannot become the date of default since nothing has been placed on record by the Operational Creditor to show that the invoice had been delivered to the Corporate Debtor on the same date.
Mere insertion of any date in the Section 8 demand notice or in the Section 9 application does not make that date of default valid and binding especially when there is no agreement between the two parties as to what shall constitute an event of default. In the absence of any agreement available on record, the alleged date of default cannot be whimsically and arbitrarily decided by the Operational Creditor. The Operational Creditor needs to be put to strict proof to establish the date of default. Neither in their pleadings nor in the course of oral arguments, any evidence has been placed on record by the Appellant to show how the default qua the third invoice did not arise during the Section 10A prohibited period.
The debt and default above the threshold limit has not been established by the Appellant qua the Respondent - the Section 9 application has been filed with malicious intent to settle score between members of the family and not for the resolution of insolvency - the decision of the Adjudicating Authority rejecting the Section 9 application and imposing penalty of Rs. one lakh only upon the Appellant is affirmed - appeal dismissed.
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2024 (7) TMI 934
Issues Involved:
1. Validity of the Impugned Order dated 16.05.2024 suspending the registration of the Petitioner.
2. Composition of the Disciplinary Committee under the Insolvency and Bankruptcy Board of India.
3. Statutory period for completion of proceedings in response to show cause notice.
4. Delay in filing the present petition.
5. Adjudication of legal grounds and reservation of judgment by the Roster Bench.
Analysis:
1. The petitioner sought to quash the Impugned Order suspending their registration as an Insolvency Professional for one year. The petitioner also requested to restrain the Respondent from taking coercive action or to declare the suspension satisfied due to prior suspension. Additionally, the petitioner sought interim reliefs and any other suitable orders. The petitioner's counsel argued irregularities in the Impugned Order, including the composition of the Disciplinary Committee and the statutory period for proceedings.
2. The petitioner contended that the Disciplinary Committee, consisting of a single member, violated Section 220(1) of the Insolvency and Bankruptcy Code. The section mandates that the committee should comprise whole-time members of the Board only. This non-compliance was raised as a ground for challenging the Impugned Order's validity.
3. Another irregularity highlighted was the alleged delay in completing proceedings within the statutory period of 34 days as per Rule 13 of the Insolvency and Bankruptcy Board of India Regulations. The petitioner argued that the delay was not solely due to their conduct, implying shared responsibility for the delay.
4. The Respondent argued that the petition was delayed by four weeks and contested the mandatory nature of the composition rule for the Disciplinary Committee. It was asserted that the delay in the statutory period could not be solely attributed to the Respondent, suggesting the petitioner's conduct contributed to the delay.
5. The Roster Bench reserved judgment on the legal grounds raised in the case. Notice was issued, and the respondents were given time to file a response and a counter affidavit. The case was scheduled for listing before the Roster Bench on a specific date for further proceedings and adjudication of the legal issues raised.
This detailed analysis encapsulates the key arguments, legal provisions, and procedural steps involved in the judgment, providing a comprehensive overview of the case's complexities and implications.
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2024 (7) TMI 933
Challenge to action of the Liquidator forfeiting EMD of Rs.96 Lakhs pursuant to e-auction of the assets of JVL Agro Industries Ltd. - refund of amount along with compensation /damages caused to the applicant due to non-issuance of Sale Certificate - HELD THAT:- On looking into the clauses of the E-auction Process Document, it is clear that there is timeline for payment of balance amount. The Liquidator has communicated 90 days’ timeline for payment of balance amount ending on 05.07.2022. Liquidator after expiry of one month also informed the Appellant from 06.04.2022 that the balance amount has to be paid along with interest.
Admittedly, the Appellant has not made the balance payment. Clause 4.9, as extracted above, clearly contemplate that EMD could be forfeited if the Successful Bidder fails to make the complete payment towards total sale consideration as per the terms of the Letter of Intent issued by the Liquidator within the stipulated time not exceeding 90 days from the date of e-auction. Admittedly, the Appellant has not paid the balance amount within the period of 90 days and Clause 4.9 clearly entitle the Liquidator forfeit the EMD.
On looking into the E-Auction Process Document, there was clear stipulation that entire sale including issue of Sale Certificate is subject to orders and directions passed by NCLT/NCLAT. Clause 5.11 Sub-clause (viii) has already been extracted above which clearly provides that issue of sale certificate in respect of a particular Block of assets shall subject to such orders and directions as maybe passed by the NCLT/NCLAT. Thus, the Process Document already contemplated that issue of Sale Certificate is subject to orders passed by NCLT/NCLAT. Thus, the submission of the Appellant cannot be accepted that Appellant was not aware that the Sale Certificate shall not be issued without leave of the NCLT.
Present is not a case where the Liquidator due to any deficiency on his part could not issue Sale Certificate or hand over the material but on account of order dated 04.04.2022, the Liquidator could not issue Sale Certificate and that was cleared only after passing of order dated 01.06.2023 when IA No.98 of 2022 was rejected. Appellant even before the said date communicated that EMD be refunded and filed IA No.266 of 2022. Appellant has neither deposited the balance amount nor has complied with the terms and conditions of the Process Document.
The Appellant having breached the clauses of the E-auction Process Information Document and having failed to deposit the balance amount within the time allowed, the Liquidator did not commit any error in forfeiting the EMD. Appellant was not entitled for refund of EMD and the application filed by the Appellant has rightly been rejected by the Adjudicating Authority. The claim of compensation made by the Appellant has also been rightly negatevated by the Adjudicating Authority.
The order of the Adjudicating Authority upheld - appeal dismissed.
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2024 (7) TMI 932
Admission of Section 7 application against the corporate debtor (corporate guarantor) - existence of debt and default or not - corporate debtor has only one asset - HELD THAT:- The submission of counsel for the appellant is that the corporate debtor has only one asset which may not be sufficient to clear the debt of financial creditor nor sufficient for the resolution of insolvency does not commend us. Initiation of CIRP process is consequent to debt and default on the part of the corporate debtor who was corporate guarantor. The debt and default by the corporate debtor is writ large on the record. The corporate debtor having unable to pay its debt, insolvency resolution process against such corporate debtor cannot be interdicted on the submission that asset of the corporate debtor is not sufficient to resolve the insolvency of the corporate debtor. These are the issues which have to be addressed in the CIRP of the corporate debtor and cannot be ground to set aside an order of admission under Section 7. It is already noticed that the insolvency process has also commenced against the principal borrower.
There are no ground to interfere with the impugned order of the Adjudicating Authority admitting Section 7 application against the corporate debtor who was a corporate guarantor. There is no merit in the appeal - appeal dismissed.
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2024 (7) TMI 869
Dismissal of an application of recall of an order - manipulation of books of account and siphoning of funds - fabrication of valuation report - it was held by NCLAT that 'The orders dated 11.01.2024 and dt. 22.02.2024 does not warrant any interference by this Tribunal. There is no merit in the appeal' - HELD THAT:- There are no reason to interfere with the impugned order dated 3 May 2023 passed by the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (7) TMI 868
Permission to Financial Creditor to amend the date of default as pleaded in the rejoinder affidavit - date of default - time limitation - HELD THAT:- The date of default is relevant for computing the limitation for filing Application under Section 95 for a Court, before whom any Application is filed, to determine as to whether the Application is filed within the limitation. It is well settled that Financial Creditor is permitted to supplement the Application by filing the additional documents. Present is a case where the issue of invocation of guarantee of Personal Guarantor was specifically raised in the reply of the Personal Guarantor.
The question of date of invocation of personal guarantee of the Personal Guarantor is yet to be decided by the Adjudicating Authority. The Adjudicating Authority has granted time to the Personal Guarantor to file reply to the amended petition and “to oppose the new date of default to be inserted by the Petitioner”. By virtue of the order dated 03.05.2024, the date of new default, which is inserted by the Appellant is 22.12.2021 and when the Demand Notice was sent to the Personal Guarantor by which the guarantee was invoked. The Personal Guarantor has ample opportunity to oppose the date of default and satisfy the Court that it is not the correct date of default and raise all contentions with regard to limitation.
In the facts of the present case, there are no error in the order of the Adjudicating Authority, permitting the Financial Creditor to amend the date of default, specially when the date of default 01.12.2015, which was mentioned in Section 95 Application is date of default of Corporate Guarantor and the Notice dated 19.01.2022, which was relied under Section 13, subsection (2), was the notice to Guarantors and Mortgagers. It is well settled that parties/ Applicants are entitled to bring additional materials on record, which can be accepted by the Adjudicating Authority for adjudication of Application. Materials brought on the record by rejoinder affidavit, refers to Notice dated 22.12.2021, which is being relied by the Applicant as a date on which guarantee of Personal Guarantor was invoked.
The rights of the Personal Guarantor being fully protected by order impugned, there are no ground to entertain this Appeal - appeal dismissed.
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2024 (7) TMI 820
Seeking for substitution of Resolution Applicant with another entity, which has been rejected by the Adjudicating Authority - Asset Reconstruction Companies - Resolution Applicant or not - it was held by NCLAT that 'When plan of the Appellant as Resolution Applicant was approved, the Adjudicating Authority rightly refused to substitute another Resolution Applicant, in which order no infirmity is found.'
HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (7) TMI 819
Admission of Section 95 application for initiation of proceeding against the Personal Guarantor - Jurisdiction of NCLT, New Delhi - time limitation - it was held by NCLAT that 'There are no merit in the submissions raised by learned counsel for the Appellant challenging the order of admission passed by the Adjudicating Authority under Section 100 of the I&B Code' - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (7) TMI 818
Application filed by Resolution Professional (RP) for approval of Resolution Plan - waterfall mechanism - it was held by NCLAT that 'The Resolution Plan, which has been approved by the CoC with 90.45% vote share and through which Resolution Plan the completion of unfinished project is helping in resolution of the CIRP of the Corporate Debtor and in which 97% vote share are being held by the Flat Buyers themselves, the Resolution Plan cannot be set aside at the instance of Appellant, who is being paid the amount as per Section 30, sub-section (2)' - HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (7) TMI 764
Rejection of Section 7 application filed by the Appellant- Financial Creditor - assignment (of debt) agreement or not - intending assignor - corporate debtor continues to be liable for its debt and default or not - HELD THAT:- In the present case, Section 7 application is within the jurisdiction of the Adjudicating Authority which application although initially was withdrawn but having been restored by subsequent order of the Adjudicating Authority has to be continued and interim injunction order dated 29.09.2021 issued by the Commercial Court can have no effect on continuance of proceeding under Section 7.
The view of the Adjudicating Authority that Appellant cannot proceed against Howrah Mills Co. Ltd. anymore is wholly erroneous and not in accordance with law. Appellant was entitled to proceed against the corporate debtor since debt and default continues and debt against the corporate debtor is not wiped off and in any manner or diminished. The interim injunction order dated 29.09.2021 can have no effect on continuous of Section 7 application.
An order of court continues to bind the parties till it is set aside. Till the order of the court subsist, same is liable to be complied with. By proceeding with Section 7 application by the Appellant, no non-compliance of the interim injunction order dated 29.09.2021 can be read. Present is a case where the Appellant is not contending that order dated 29.09.2021 be ignored rather the submission is that the said order has no effect on continuance of Section 7 application which has been revived by the Adjudicating Authority itself to proceed.
The debt and default on the part of the corporate debtor still continues. The intending assignment having never taken place, the debt cannot be held to be assigned to Respondent No.2 so that the Respondent No.2 may step into the shoes of the financial creditor of the corporate debtor. Adjudicating Authority committed error in dismissing Section 7 application filed by the financial creditor. Debt and default having been proved, the Adjudicating Authority ought to have admitted Section 7 application and initiated CIRP against the corporate debtor.
The order dated 25.01.2024 is set aside - The application under Section 7 filed by the appellant deserves to be admitted. Adjudicating Authority may pass an order of admission along with consequential order within 30 days from the date copy of this order is produced before the Adjudicating Authority.
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2024 (7) TMI 763
Seeking return of Income Tax refund amount of two previous assessment years to the liquidation estate of the Corporate Debtor- Sunil Hitech and Engineers Ltd. - Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- While moratorium under Section 14 applies to CIRP, Section 33 applies to moratorium in a liquidation process. A close examination of these two statutory provisions would reveal that both these sections are however entirely distinct in their sweep and application. In terms of the language employed in Sections 14 and 33 of IBC, while Section 14 prohibits both institution and continuation of pending suits or proceedings against the Corporate Debtor, Section 33(5) of IBC is only a bar on the institution of new suits during the liquidation process though the proviso to Section 33(5) further provides that if a fresh suit or legal proceeding is to be instituted, the Liquidator is required to obtain specific permission and prior approval of the Adjudicating Authority - though Section 33 contains provisions similar to Section 14 contemplating stay on suits/proceedings during liquidation, however, the reach and gamut of stay under Section 33 differs from Section 14 in that there is no moratorium on continuation of suits/proceedings already instituted earlier.
The Respondent not having followed the mandatory procedure prescribed by the IBC acted unlawfully in adjusting the ITR amount without having filed any claim before the Liquidator though the Liquidator had published the public announcement inviting claims from the stakeholders of the Corporate Debtor. It is also canvassed that the ITR amount was part of the liquidation estate of the Corporate Debtor and by wrongful adjustment of the ITR against pre-CIRP income tax dues, the rights of other stakeholders of the Corporate Debtor stood violated.
There is no material on record to show that the Adjudicating Authority while passing the impugned order has considered what amount was due to the Respondent in the context of Income Tax pre-CIRP dues for adjustment/set-off of ITR as against what was due to them as their claim under the liquidation proceedings - it is appropriate to remand the matter back to the Adjudicating Authority to examine afresh the quantum of set-off of ITR against pre-CIRP tax dues which has been allowed to the Respondent as against their claim entitlement in the liquidation proceedings.
Appeal disposed off.
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