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IBC - Case Laws
Showing 501 to 520 of 9152 Records
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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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2024 (3) TMI 806
Approval of Resolution Plan - Dues of Income Tax liability - HELD THAT:- It is not required to issue notice in the present appeal as it is apparent that the corporate debtor did not have money/assets, and the appellant under the waterfall would not have received payment.
The present appeal is dismissed.
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2024 (3) TMI 805
Maintainability of appeal - time limitation - impugned order was passed on 10.06.2022 and the period of 30 days prescribed for filing the appeal had expired on 10.07.2022 and a further period of 15 days had also expired on 25.07.2022 but these appeals have been filed without annexing the certified copy of the impugned order and the certified copies of the impugned order were applied much after the expiry of period of 45 days - HELD THAT:- It has been found from the resume of the facts that four appeals have been filed within a period of 30 days, six appeals have been filed within the extended period of 15 days alongwith the application for condonation of delay which are yet to be decided and all these ten appeals have been filed with applications for seeking exemption from filing certified copy of the impugned order whereas three appeals have been filed without seeking exemption from filing certified copy of the impugned order which can be granted under Rule 14 of the Rules.
In all these appeals, the certified copies have been obtained after the expiry of 30 days/45 days but the fact remains that the application for seeking exemption is yet to be disposed of and this Tribunal has the jurisdiction to grant the exemption for the compliance of the Rules though on a sufficient cause shown in an appropriate application filed by the Appellant. Similarly, six appeals have been filed beyond the period of 30 days but within 45 days and the application for condonation of delay has not yet been decided. Supposing, the application for condonation of delay is allowed then the appeals shall be deemed to have been filed within the period of limitation and if the application is dismissed then the matter would be over. In so far as the remaining three appeals are concerned, these appeals have been filed without any application for seeking exemption from filing certified copy of the impugned order whereas Rule 14 clearly lays down that exemption can be granted if an application is moved in that behalf and by assigning a sufficient cause to render substantial justice.
Appeal disposed off.
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2024 (3) TMI 804
Rejection of Section 7 Application filed by the Appellant - initiation of CIRP for default of payment of the Financial Debt owed to the Appellant - guarantor of the Financial Facilities or not - Approval of Resolution Plan lead to debt extinguishment or not.
Whether the ECL is a ‘guarantor’ to the SREI for the financial facilities availed by ESL from SREI? - HELD THAT:- The submission of the Appellant cannot be accepted that there was clear and categorical admission of Respondent No.1 in the pleadings before Madras High Court and the Hon’ble Supreme Court that Respondent No.1 stood guarantor of the Financial Facilities extended by SREI to ESL - Admittedly, Respondent No.1 mortgaged its immovable property as per the Supplementary Agreement as noted above and pleadings have to be looked into the background that mortgage was made by Respondent No.1 of his immovable property to secure the Facilities.
The issue directly arose in proceeding under Section 7, as to whether Respondent No.1 stood guarantor to SREI in reference to Financial Facilities extended to ESL, which has been answered by the Adjudicating Authority taking into consideration all relevant facts. Neither the issue was decided in proceedings before Madras High Court or by the Hon’ble Supreme Court, nor any such admission can be pressed into service as claimed by the Appellant. The Adjudicating Authority in the impugned order after considering all facts and circumstances of the present case has rightly come to conclusion that Respondent No.1 cannot be held to be guarantor to the Financial Facilities extended by Financial Creditor to the ESL. In paragraph 11 of the judgment of the Adjudicating Authority, detailed consideration and reasons have been given for holding that Respondent No.1 is not guarantor of the Financial Facilities.
Whether approval of ESL’s Resolution Plan by the Adjudicating Authority led to extinguishment of entire debt of ESL and no claim would lie against Respondent as guarantor/ third party surety in respect of the financial facilities availed by the ESL? - HELD THAT:- Law on extinguishment of claim against personal guarantor and third party on approval of Resolution Plan has been settled by Hon’ble Supreme Court in its judgment in LALIT KUMAR JAIN VERSUS UNION OF INDIA AND ORS. [2021 (5) TMI 743 - SUPREME COURT], where the Hon’ble Supreme Court held that approval of resolution plan does not ipso facto discharge a personal guarantor (of a Corporate Debtor) of her or his liabilities under the contract of guarantee.
There cannot be any dispute to the proposition that after the approval of the Resolution Plan, entire debt of the Corporate Debtor against the Financial Creditor stand discharged and after approval of Resolution Plan, Financial Creditor can have no further recourse against the Corporate Debtor. But the question as to whether debt of personal guarantor or third party which arises out of different contract shall also automatically extinguished after the approval of Resolution Plan is a question to be answered in the present case - The Minutes of the CoC throws light on the true interpretation of Clause 3.2 (ix) and cannot be said to be not relevant. When Clause 3.2 (ix) of the Resolution Plan expressly provides that all the debt shall be extinguished against the Company, but it shall not extinguish against personal guarantor and third party, nothing more is required to be looked into. The Respondent cannot be allowed to raise the submission contrary to above Clause of the Resolution Plan, which has received approval.
In view of Clause 3.2 (ix) of the Resolution Plan, when read in the light of the CoC Meeting dated 29.03.2018, which throws considerable light on the meaning and content of Clause 3.2 (ix), the submission of the Respondent cannot be accepted that after approval of Resolution Plan, the entire debt stand extinguished and no recourse can be taken by the Financial Creditor against third party.
Whether the approval of the Resolution Plan has led to extinguishment and effacement of the entire debt of ESL (including the liability owed by the CD)? - HELD THAT:- In view of Clause 3.2 of the Resolution Plan, which clearly contemplated that all rights/ remedies of the creditors shall stand permanently extinguished against the Company, except any rights against any third party (including the Existing Promoter) in relation to any portion of unsustainable debt secured or guaranteed by third parties. The finding of the Adjudicating Authority that approval of Resolution Plan has led to extinguishment and effacement of the entire debt of ESL has to be held to be finding qua the Corporate Debtor only. There is no finding recorded by the Adjudicating Authority in the impugned order that after approval of the Resolution Plan, it would lead to extinguishment and effacement of the entire debt of third party including the Corporate Debtor.
The order of Adjudicating Authority rejecting Section 7 Application filed by the Financial Creditor upheld - appeal disposed off.
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2024 (3) TMI 760
Grant of permission to take on record the rejoinder subject to payment of cost of Rs.10,000/- - appellant contends that the said rejoinder was taken on record after conclusion of the hearing of the Financial Creditor - HELD THAT:- When the Adjudicating Authority found fit to take rejoinder on record subject to payment of cost of Rs.10,000/-, the discretion exercised by the Adjudicating Authority need not be interfered with by this Tribunal in exercise of its appellate jurisdiction. It is true that normally pleading are completed before commencement of hearing but in facts of the present case, the rejoinder affidavit was taken during course of the hearing.
Thus, no rule preclude such a course by the Adjudicating Authority - the appeal need not be entertained - appeal dismissed.
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2024 (3) TMI 696
Seeking condonation delay of 41 days in filing the present appeal - Sufficient reasons for delay or not - Admission of section 9 application - initiation of CIRP - HELD THAT:- Any person aggrieved by any order of the Adjudicating Authority is vested with the statutory right of filing an appeal. However, the statutory right to file the appeal is required to be exercised within a period of 30 days of the impugned order before this Tribunal. If for certain reasons the right to file appeal is not exercised within the prescribed 30 days, the proviso to Section 61 (2) can be invoked which proviso provides that the appeal can still be filed subject to such appeal being filed up to a further period of 15 days only. The statutory construct is absolutely clear and unambiguous that the limitation period provided under Section 61(2) of IBC is 30 days which is extendable by a maximum of 15 days. Thus, no appeal can be filed after the expiry of the extended period of 15 days and that any appeal filed within the extended limitation period can be admitted only after satisfying the Appellate Tribunal that there was sufficient cause justifying the delay of 15 days.
IBC by virtue of being a special statute, this Tribunal is not empowered to condone any delay beyond the statutory prescriptions in IBC containing a provision for limitation. This legal precept has been squarely laid down by the Hon’ble Supreme Court and for this purpose reference made to the judgement of the Hon’ble Supreme Court in Kalpraj Dharamshi vs Kotak Investment Advisors Ltd [2021 (3) TMI 496 - SUPREME COURT] wherein it has been noticed that IBC being a special statute, for purposes of calculating the period of limitation to file an appeal, the governing section shall be Section 61 of the IBC.
Section 61 of the IBC has to be interpreted keeping in mind the overall purpose and object of the IBC which inter-alia includes timely resolution of the CIRP. That being an avowed objective of this legislation and it being settled law that for purposes of calculating the period of limitation to file an appeal in any IBC proceeding, the governing Section shall be Section 61 of the IBC, the submission of the Appellant that the period of limitation shall commence for filing the appeal when the Appellant became aware of the order is untenable.
Undisputedly, the present impugned order was pronounced on 22.11.2023. Thus, limitation for filing the appeal starts from 22.11.2023 and does not depend upon when the Appellant becomes aware of the order. The date on which the order is pronounced is to be excluded from the calculation of limitation in terms of Section 12(1) of the Limitation Act. The 30 days period comes to an end on 22.12.2023 and further period of 15 days comes to an end on 07.01.2024. The Appeal having been filed on 01.02.2024, the appeal has clearly been filed with a delay of more than 15 days from the date of expiry of limitation - the jurisdiction to condone the delay is limited to only 15 days under Section 61(2) of IBC, hence, the delay condonation application cannot be entertained.
The delay condonation application deserves to be dismissed. In result, the delay condonation application is dismissed and the Memo of Appeal is rejected.
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2024 (3) TMI 646
Admission of section 9 application - initiation of CIRP - pre-existing disputes or not - appellant submits that even though no reply of Section 9 application could be filed but reply to demand notice contains specific details by which Corporate Debtor has given notice of dispute - HELD THAT:- The Adjudicating Authority has not noticed the contents in the reply to demand notice given by the Appellant fully and the observation that reply raises issue only two invoices 203 and 205 is incorrect. It is true that the Corporate Debtor could not file reply to Section 9 application although in the appeal, Suspended Director of the Corporate Debtor has sought to given reason as to why it could not appear and file reply, it is not necessary to enter into the said issue. The fact remain that no reply has been filed. The Corporate Debtor, however, has filed certain other correspondences between the parties prior to demand notice to which reply has also been filed by the Operational Creditor. The correspondence which was brought on the record in the appeal prior to demand notice has not been denied.
The demand notice dated 25.08.2021 was sent on the basis of ledger confirmation treating to be principal amount due as Rs.1,79,93,691/-. The demand notice was replied on 20.11.2021 and with regard to faulty cables, the Corporate Debtor has issued a debit note for Rs.67,96,800/- and further stated debit note for amount of Rs.50,00,000/- towards non-supply of G.I. Pipe for Bill number 203. The above reply to demand notice clearly indicate the dispute regarding the claim of the Appellant - there are ample materials on record to indicate that there was pre-existing dispute between the parties and reply dated 20.11.2021 replying the demand notice was not disputed, reply cannot be said to be based on no material or no evidence nor the defence raised by the corporate debtor in the reply to demand notice can be said to moonshine dispute or frivolous dispute as contended by the counsel for the Appellant. Issue of faulty cables between the parties was going on immediately after supply of the goods and joint inspection was also done on 08.12.2019 but there is no redemption was seen when faulty cables was measured. The fact thus, clearly indicate that dispute persisted between the parties and reply to the demand notice was clearly notice of dispute and, therefore, pre-existing dispute between the parties, Section 9 application ought not to have been admitted.
The Hon’ble Supreme Court in M/S S.S. ENGINEERS VERSUS HINDUSTAN PETROLEUM CORPORATION LTD. & ORS. [2022 (9) TMI 377 - SUPREME COURT] clearly held that the operational creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence. However, if the debt is disputed, the application of the operational creditor for initiation of CIRP must be dismissed - Present is a clear case where claim raised by the operational creditor where payment was disputed, notice of dispute was given on 20.11.2021. It is also noticed the correspondences between the parties prior to issuance of demand notice which indicate that the dispute persisted between the parties with regard to default in cable supplied. Thus there is pre-existing dispute between the parties and the Adjudicating Authority committed error in admitting Section 9 application.
The order passed by the Adjudicating Authority set aside - Section 9 application filed by the operational creditor dismissed - appeal allowed.
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2024 (3) TMI 602
Permission to withdraw the present Special Leave Petition - Right to get registered as RP - Rejection of application of the Petitioner herein for registration as a Resolution Professional - It was held by High Court that This Court is of the opinion that the decision taken by the Board does not suffer from any irregularity which requires interference by this Court under Article 226 of the Constitution of India - HELD THAT:- Permission as sought for is granted.
The Special Leave Petition is dismissed as withdrawn.
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2024 (3) TMI 601
Undervalued/preferential/fraudulent transactions - Failure to adjudicate about the ingredients of Section 43, 45, 49 and 66, specifically - Adjudicating Authority in the impugned order has only noticed the opinion of the Resolution Professional - Need for separate consideration of preferential, undervalued, and fraudulent transactions, each requiring distinct scrutiny and evidence - HELD THAT:- The Adjudicating Authority has recorded only its conclusions and that too without considering the preferential, undervalued and fraudulent, each transaction separately and there is general observation that the transactions are undervalued transactions as well as preferential and fraudulent transactions. The ingredients of preferential, undervalued and fraudulent transaction are entirely different and there has to be application of mind to the ingredients of each transaction to come to conclusion that ingredients are satisfied and the transaction falls in the said category adverting to the given pleadings in the application. The Adjudicating Authority ought to have adverted to the said pleadings and returned the finding regarding the fulfilment of ingredients of each provision. The Adjudicating Authority has only in two paras i.e. 27 and 28 has recorded his conclusion without giving any reason and without adverting to any pleadings or materials on record.
The order passed by the Adjudicating Authority cannot be sustained. Order impugned is set aside - Application revived before the Adjudicating Authority to be heard afresh and decided in accordance with law.
Appeal disposed off.
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2024 (3) TMI 567
Constitutional validity - Disciplinary proceedings against insolvency professional agencies - suspension of authorization for assignment - Seeking review of the common order - Error apparent on the face of record or not - sufficient cause for review or not - Regulation 23 A is liable to be struck down or not - violation of principles of natural justice - Section 204 of IBC is violative of Article 20(2) of the Constitution of India or not - HELD THAT:- The alleged error pointed out is nothing but recording the case of the petitioner that by an order dated 14.01.2020 the application was rejected. Assuming that the petitioner is correct in stating that as per the counter affidavit the same was communicated on 16.07.2020, even then, the same has no bearing whatsoever to the ultimate findings and conclusions arrived at.
Even though the petitioner would term the grounds raised in the review application as ‘error apparent on the face of the record’, it could be seen that all his pleadings and arguments are nothing but pointing out that the conclusions reached by this Court are erroneous. The petitioner is virtually assailing correctness of the findings before the self same Court and pleading for re-consideration of the issue, which is nothing but an appeal in disguise, which cannot be entertained by this Court. No grounds on any materials which were not there for consideration is pleaded. The conclusions are not on the basis of any error apparent on the face of the record. No other sufficient cause which would be within the contours of review as contemplated under Order XXVII Rule 1 of CPC is made out.
There are no merits in the review application - application dismissed.
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2024 (3) TMI 566
Admission of Section 7 petition - time barred debt or not - appellant were not given adequate opportunity to represent itself in respect of the financial statements which were placed by the CA before the Adjudicating Authority - violation of principles of natural justice (audi alterem partem) - HELD THAT:- There is force in the contention of the Appellant that it was neither aware regarding what was filed before the Adjudicating Authority by the CA nor was provided an opportunity to rebut and/or place reliance on the said balance sheets. The Appellant clearly did not get the chance to explain the notes of the said balance sheets which allegedly expressed caveats regarding the debt.
It is well settled that adherence to principles of natural justice is the essence of fair adjudication and cannot be given a go-by by the Adjudicating Authority or this Tribunal in the discharge of their adjudicatory and appellate responsibilities. Opportunity to hear is a critical limb of this principle of natural justice. The Tribunal must appraise the party of the case he has to meet so as to enable him to make his representation. This opportunity must be real and effective. The right to make representation requires that the person/entity proceeded against must have opportunity to peruse all material relied upon against him - So also in the present matter, to meet the ends of justice, it was the duty of the Adjudicating Authority to have ensured that the balance sheets produced by the CA was shared with the Appellant party since these documents were to constitute the basis on which the impugned order was premised.
Thus, justice should not only be done but should manifestly be seen to be done. In the absence of notice and such reasonable opportunity having been given to the Appellant, the impugned order passed has become vitiated. To meet the ends of justice, the Appellant deserves to be given appropriate and adequate opportunity to represent itself in respect of the financial statements which were placed by the CA before the Adjudicating Authority.
The impugned order is set aside. The orders passed by the Adjudicating Authority initiating CIRP against the Corporate Debtor and appointing Interim Resolution Professional and all other orders pursuant to the impugned order are set aside - appeal allowed.
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2024 (3) TMI 565
Maintainability of Section 9 application - initiation of CIRP - pre-existing dispute - dispute came into the picture before the Demand Notice or not - It was contended that the grounds of pre-existing dispute raised by the Respondent were illusory and created only to wriggle out from clearing the outstanding liability - HELD THAT:- In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 15.12.2017 and notice of dispute was raised by the Corporate Debtor on 26.12.2017. It is also an undisputed fact that in the present matter the Operational Creditor did not receive any further payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC on 20.06.2018.
From a plain reading of the notice of dispute, it is noticed that the Corporate Debtor clearly articulated how the Agency Agreement was breached by the Appellant leading to forfeiture of their payments. It is an undisputed fact that in March 2011, the CBI had arrested some officials of the Appellant for paying illegal gratification. It is therefore the case of the Corporate Debtor that in terms of Clause 7(2) of the Agency Agreement, this constituted a breach of the said Agreement. Hence, they claimed to have terminated the Agency Agreement and consequently payments related to SAD invoices were also withheld by them. The Notice of Dispute thus makes it clear that the Corporate Debtor had not only denied their liability to pay the SAD claims but also laid the edifice of the ongoing disputes between the two parties.
The issue of denial of payment and termination of Agency Agreement by the Corporate Debtor had continued to fester the business relationship of the two parties is reinforced by another communication sent on 12.03.2015 by the Appellant in which they have sought review of the termination of their services by the Corporate Debtor. This letter has been placed on record at pages 140-141 of the APB. The said communication also reads like an admission of aberration committed on their part and failure to meet the exacting standards of compliance expected by the Corporate Debtor leading to the punitive action of termination of services.
It is a well settled proposition that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application - from the material available on record, the dispute over payment of operational debt which has been claimed by the Appellant is writ large and this dispute also clearly precedes the issue of Demand Notice.
The Adjudicating Authority has made no mistake in taking cognizance of the fact that there clearly existed dispute between the two parties anterior to the date of demand notice and that there has been a consistent and clear denial on the part of the Corporate Debtor of their liability to discharge the obligations to pay. In the present factual matrix, there are no material which has been placed on record which substantiates that the defence raised by the Corporate Debtor was moonshine, spurious, hypothetical or illusory. It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. Keeping in view that the present facts of the case indicates that the operational debt is disputed, the Adjudicating Authority has therefore correctly rejected the Section 9 application.
There are no reasons to disagree with the findings of the Adjudicating Authority. Considering the overall facts and circumstance of the present case, and in view of the foregoing discussion, it is clear that the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant.
Appeal dismissed.
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2024 (3) TMI 504
Calculation of the interest - admission of the claim by the Resolution Professional - HELD THAT:- The Adjudicating Authority in the impugned order having noticed certain instances and decided that with regard to claim charging of the interest should be examined and adjudicated, there are no error in the order of the Adjudicating Authority when direction has been passed to examine the interest charge in the claims. Till the issues are finalized, the Adjudicating Authority to balance the interest of the parties has directed that no further steps shall be taken for consideration and approval of the Resolution Plan.
It is further to be noticed that the next date fixed is 12.03.2024 and in the interest of all concerned, Adjudicating Authority may take a decision on the application and thereafter further steps may proceed in accordance with the law.
Appeal disposed off.
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2024 (3) TMI 503
Entitlement for the benefit of Section 14 of the Limitation Act - exclusion of period during pendency of Writ Petition and SLP was pending - Sufficient grounds exists to condone the delay or not - HELD THAT:- The Adjudicating Authority has referred to earlier order dated 11.10.2023 where Adjudicating Authority expressed its prima facie opinion with regard to limitation as well as on the default. When the Adjudicating Authority has granted time to the Respondent to file reply, it is always open for the Corporate Debtor to raise all issues including the issue of limitation and the issue of default - the prima facie view which was expressed by the Adjudicating Authority shall not come in the way of the Adjudicating Authority in deciding the issue after hearing the Corporate Debtor who is permitted to file reply. We see no reason to entertain the appeal filed against the order dated 28.11.2023.
Appeal disposed off.
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2024 (3) TMI 459
CIRP - Unsecured Financial Creditor or not - Non-registration of charge before the Registrar of Companies - the mortgaged property, will form part of the Liquidation Estate or not - mortgage rights over secured assets - failure to fulfil the requirements as per Section 52 of the Code r/w Regulation 21 of the Liquidation Process Regulations - HELD THAT:- This Tribunal keeping in mind of the prime fact that Right to recover the money, lent by enforcing a mortgage is a Right to enforce, an interest in the property and that the claim of the First Charge Holder, shall prevail over the claim of the Second Charge Holder, and the Appellant / Petitioner, can very well enforce the Security Interest, resting on Section 58(f) of the Transfer of Property Act, 1882 and Rule 8 of the Security Interest (Enforcement) Rules, 2002, comes to a resultant conclusion that mortgage, is the result of the Act of Parties, where the Transfer of Ownership Interest, in a particular Immoveable Asset is created, and that the conclusion arrived at by the Adjudicating Authority / Tribunal, in upholding the decision of the Liquidator, in classifying the Appellant / Petitioner / Bank, as an Unsecured Financial Creditor, is an illegal and an invalid one, in the eye of Law and in the Liquidation Proceedings, the Appellant /Bank, is to be treated as Secured Creditor, as held by this Tribunal.
In addition, the non-registration of the Mortgage, as per Section 77 of the Companies Act, 2013, is not a sufficient / enough ground, to come to an opinion, that the Appellant, is not a Secured Creditor. In reality, the rights of a Mortgagee, under the Transfer of Property Act, 1882 and the SARFAESI Act, are not to be diluted, in terms of Regulation 21 of IBBI (Liquidation process) Regulations, 2016.
It cannot be lost sight of the fact that CERSAI Registration, became mandatory, only in February, 2020, much after the Mortgage, was created in the instant case. Further, the fact remains that the Mortgage, was registered in the Office of S.R.O., Thovalai, Kanyakumari District, Tamil Nadu, which is again a Public Office, providing information, on the Mortgages, registered in it. Suffice it for this Tribunal, to unhesitatingly, to hold, that the Appellant’s rights, in holding a Valid Mortgage Right, over the Secured Assets, is to be protected, by any means whatsoever
The impugned order upholding the decision of the Liquidator, in classifying the Appellant/Petitioner, as an Unsecured Financial Creditor, is an invalid and illegal one and the same is set aside, by this Tribunal, to secure the ends of Justice - appeal allowed.
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2024 (3) TMI 410
Prayer for condonation of delay in filing the Appeal - Dismissal of section 9 application - HELD THAT:- The order clearly mentions both the date i.e. date of hearing i.e. 21st September, 2023 and date of pronouncement i.e. 25th September, 2023. Order also indicates that counsel for the operational creditor i.e. Appellant was present and the order was pronounced in the presence of the Learned Counsel for the Appellant.
In view of the law laid down by the Hon’ble Supreme Court in V. Nagarajan [2021 (10) TMI 941 - SUPREME COURT], the period for filing the Appeal shall commence from the date when order is pronounced in presence of Learned Counsel for the Appellant, the submission of the Appellant relying on Judgment of Sanjay Pandurang Kalate [2023 (12) TMI 1249 - SUPREME COURT] in paragraph 20 is to be considered - Paragraph 20 as quoted were in reference of the facts of the case of Sanjay Pandurang Kalate, where although order was pronounced subsequently but earlier date was put in the order. The present is a case where both the date of hearing and date of pronouncement has been clearly mentioned in the order hence the observation of para 20 in Sanjay Pandurang Kalate has no relevance in the presence case.
The Appeal have been filed beyond 15 days after expiry of the limitation, we are unable to condone the delay since our jurisdiction to condone the delay is limited to 15 days only as per Section 61(2) proviso of the Code. Delay Condonation Application is dismissed.
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2024 (3) TMI 291
Rejection of application filed u/s 54C of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 4 of the Insolvency and Bankruptcy (Pre-Packaged Insolvency Resolution Process) Rules, 2021 - rejection of application by entering into base Resolution Plan - HELD THAT:- On looking into sub-section (4) of Section 54C, it provides that Adjudicating Authority shall, within a period of fourteen days of the receipt of the Application, by an order - (a) admit the application, if it is complete; or (b) reject the application, if it is incomplete. Further, the proviso provides that the Adjudicating Authority shall, before rejecting an Application, give notice to the Applicant to rectify the defect in the Application within seven days. The Adjudicating Authority in the impugned order itself has noticed the details of the Application and statutory compliances of the Application.
The provisions of Section 54A and 54C, where under Section 54C, sub-section (4), the Adjudicating Authority is required to admit the Application, if it is complete or reject the Application, if it is incomplete. In paragraphs 10 to 16 of the impugned order, the Adjudicating Authority itself has noticed that all necessary compliances are fulfilled by the Corporate Debtor in filing Application under Section 54C. Thus, when accordingly to the Adjudicating Authority itself, all necessary compliances have been completed by the Corporate Applicant, whether the Adjudicating Authority could have entered into issue of Base Resolution Plan and reject the Application on the ground that Base Resolution Plan is not acceptable is a question to be answered.
In the present case, the Adjudicating Authority has rejected 54C Application after entering into the merits of the Base Resolution Plan, which is not contemplated by statutory Scheme. The order of Adjudicating Authority, thus, rejecting the Application under Section 54C entering into Base Resolution Plan, is thus, contrary to the statutory Scheme of Chapter III-A and on this ground itself the order becomes unsustainable.
Whether M/s WZ Enterprises Pvt. Ltd. could not have submitted the Base Resolution Plan along with the Corporate Applicant? - HELD THAT:- Base Resolution Plan can very well be submitted by a Corporate Applicant individually or jointly with any other person. Thus, there are no illegality in submission of Resolution Plan by Corporate Applicant along with M/s WZ Enterprises Pvt. Ltd. – the Financial Creditor of the corporate applicant.
The Adjudicating Authority committed error in rejecting Application filed under Section 54C and the impugned order is unsustainable - appeal allowed.
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2024 (3) TMI 290
Admission of Section 7 application filed by the Financial Creditor - invocation of guarantee - application filed by the Financial Creditor is barred by Section 10A of IBC or not - first submission is that notice dated 22.02.2020 was not notice for invoking guarantee of the Corporate Guarantor and guarantee of the Corporate Debtor was only invoked by notice dated 12.02.2021 - non-service of notice dated 22.02.2020 - HELD THAT:- The notice clearly indicates that by the notice Borrower and Guarantors were asked to pay the outstanding amount and the notice clearly mention that in event of failure of payment within seven days, the Financial Creditor shall initiate proceedings under SARFAESI Act including proceedings under the I&B Code - the notice dated 22.02.2020 was notice by which guarantee stood invoked and submission of the Appellant that said notice was not notice of invocation of guarantee, cannot be accepted.
In so far as, subsequent notice which was given to the Financial Creditor being notice dated 12.02.2021, it has been submitted by the Financial Creditor that since no payment was made in pursuance of the notice dated 22.02.2020 another letter was issued on 12.02.2021 - Section 7 application filed by the Financial Creditor has been brought on record, which clearly mentioned the notice date as 22.02.2020 which has been referred as Recall Notice issued by the Financial Creditor. When Recall Notice has been issued by the Financial Creditor, the Principal Borrower and Guarantors, liability to pay arises on all and the submission of the Corporate Debtor relying on subsequent notice dated 12.02.2021 cannot affect the right of the Financial Creditor to initiate proceeding on the basis of notice dated 22.02.2020. Even though subsequent notice dated 12.02.2021 was during 10A period but Recall Notice having been issued on 22.02.2020, the Financial Creditor was entitled to initiate Section 7 proceedings against the Principal Borrower as well as the Guarantors.
From the facts brought on the record, it is clear that after April, 2018 no payments have been made either by the Principal Borrower or the Corporate Guarantor towards the loan. Certificate issued by NeSL was also brought on the record in support of Application under Section 7 where default has been proved. It is true that date of default i.e. 15.04.2018 was initially date of default of Principal Borrower but Loan Recall Notice had been issued on 22.02.2020 which was addressed to Principal Borrower as well as all Guarantors including the Corporate Debtor – M/s Earthbuild Greencity Private Limited. The application filed by the Financial Creditor cannot be held to be barred by Section 10A.
There are no grounds have been made out to interfere with the impugned order passed by the Adjudicating Authority admitting Section 7 application - Appeal is dismissed.
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