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IBC - Case Laws
Showing 541 to 560 of 9152 Records
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2024 (2) TMI 1442
Dismissal of application u/s 60(5) of the Insolvency and Bankruptcy Code, 2016 - Corporate Debtor did not adhere to the payment schedule set out in the settlement - nature of the `debt’ of the Operational Creditor has now been changed because of the settlement which is no longer an Operational Debt for filing of application under Section 9 - condition precedent in the settlement - HELD THAT:- In this case, the facts are not much in dispute, because the matter has been settled between the Parties through a written settlement, in which one of the clauses permitted the Appellant to file an application for revival in case of breach on the part of the Corporate Debtor/Respondent. It is otherwise true that the application filed by the Applicant was initially dismissed as withdrawn on account of the settlement between the Parties and no permission was sought at the time for revival of the said application.
However, in the case of IDBI Trusteeship Service Ltd. [2023 (5) TMI 770 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], this Court while distinguishing the order in the case of SRLK Enterprises LLP [2021 (4) TMI 1358 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held 'Adjudicating Authority committed error in rejecting the revival application 3196 of 2022 when the consent term itself contemplates a clause for revival in event of default and default having been committed by the Corporate Debtor, rejection of revival is to deny the Financial Creditor rightful remedy. Non-mention of specific liberty in the Order is inconsequential in view of the clear terms in the settlement which was the basis of withdrawal of Company Petition.'
Moreover, in case of Ahluwalia Contracts (India) Ltd. [2023 (9) TMI 239 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], which was a case under Section 9 itself, the same observations have been made by this Court for the purposes of revival of the application filed under Section 9 on the ground that there was a provision made in the Settlement Agreement that in case of default, the Appellant would be entitled to get the application revived.
Thus, there is an error on the part of Adjudicating Authority in dismissing the application filed by the Appellant. The Appeal thus succeeds and the impugned order is hereby set aside - appeal allowed.
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2024 (2) TMI 1424
Dismissal of petition for non-compliance with the order u/s 94(4) & (5) of IBC - it is pointed out by learned counsel for the Petitioner that he has already filed the affidavit in compliance with the order, but the same was not taken on record because of the non-appearance of the petitioner before the Court - HELD THAT:- It is pointed out by learned counsel for the Respondent-Corporate Bank-IDBI that the mortgaged property of the Petitioner is being put for auction under the provisions of the SARFAESI Act, 2002 but because this interim moratorium has been misused by the petitioner for the last three years and there is no need to adjourn the matter again.
There is no reason to again adjourn the matter for necessary compliance. Thus, the present petition is dismissed for non-compliance.
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2024 (2) TMI 1410
Failure to make claim in time as per Section 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In view of the judgment of this Court in a case of 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], the demand made by the appellants herein would no longer survive for consideration.
Appeal disposed off.
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2024 (2) TMI 1317
Condonation of delay in filing the Appeal - Appellant submits that since certified copy which was sought has not been given, the Appellant could not file the appeal in time and delay in filing the Appeal need to be condoned - HELD THAT:- Jurisdiction to condone the delay is limited to only 15 days after expiry of the limitation under Section 61(2) proviso. Even from the own case of the Appellant, it is clear that for the first time the certified copy was applied on 23rd November, 2023 physically. The email was sent on 18th November, 2023 prayer of which we have quoted above cannot be treated to be an application for certified copy, according to own case of the Appellant, application for certified copy was made on 23.11.2023 after 30 days of passing of the order dated 19.10.2023 - no benefit under Section 12 of the limitation act can be allowed to the Appellant whereas admittedly according to the Appellant, the certified copy was not given.
The Appeal having been filed on 23rd January, 2024 which is well beyond time and well beyond period of 15 days which is permissible to be condoned under Section 61(2) proviso, the delay cannot be condoned in filing the Appeal - Delay Condonation Application is dismissed.
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2024 (2) TMI 1316
Initiation of CIRP - Personal Guarantors - Maintainability of Applications filed under Section 95 sub-section (1) of IBC - time limitation - It is submitted that Adjudicating Authority cannot be used as a Forum to recover a time barred debt - HELD THAT:- In view of the judgment of the Hon’ble Supreme Court in DILIP B JIWRAJKA VERSUS UNION OF INDIA & ORS. [2024 (1) TMI 33 - SUPREME COURT], it is settled now that question of adjudication of issues between the parties arises only at the stage of Section 100 and the RP has only role of facilitator. The RP has to submit a Report, after examining the Application under Section 95 and after giving opportunity to Personal Guarantor. The role of RP has been elaborately examined by the Hon’ble Supreme Court in the aforesaid case and it is held that RP does not perform any adjudicatory function, nor even can take an administrative decision. The role of RP has been held to be only facilitator. The judgment relied by learned Senior Counsel for the Appellant in SHANKARLAL AGGARWALA VERSUS SHANKARLAL PODDAR [1963 (1) TMI 40 - SUPREME COURT] has no application in the facts of the present case.
Insofar as the submission of the Appellant(s) that Adjudicating Authority failed to take into consideration that authorization was not filed by the RP, it is always open for the Appellant to take such or other pleas as permissible at the time of adjudication of issue, including any defect in the Application under Section 95 and the said question also does not require any consideration at the stage when RP is appointed. Of course, if there is any invalidity or shortcomings while appointing the RP, Section 98 is there for the debtor or creditor, which provides for replacement of the RP.
There is no error in the impugned order passed by the Adjudicating Authority appointing the RP - There is no merit in these Appeal(s) - The Appeal(s) are dismissed.
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2024 (2) TMI 1315
Initiation of CIRP - Admission of main company petition - liability of Guarantor of loan - acknowledgment of debt by the Principal Borrower shall be binding on the Guarantor or not - plea of the Appellant is that the ‘action’ as far as the Corporate Guarantor is concerned, the same is barred by Limitation and that Article 137 of Limitation Act 1963 applies - HELD THAT:- As per the decision of Hon’ble Supreme Court in Laxmi Pat Surana’s case [2021 (3) TMI 1179 - SUPREME COURT], the liability of the Guarantor being co-extensive with the Principal Borrower under Section 128 of the Indian Contract Act, 1872 it triggers the moment the Principal Borrower commits default in paying the acknowledge debt and this being a legal fiction and such a ‘liability of the guarantor will flow from the Guarantee Deed and Memorandum of Mortgage created therein’.
On a careful consideration of respective contentions, this ‘Tribunal’, taking note of the facts and circumstances of the instant case in an encircling manner, and ongoing through the impugned order passed by the Adjudicating Authority/NCLT Kochi Bench, comes to a resultant conclusion that the conclusion arrived at by the Adjudicating Authority/Tribunal in admitting main petition holding that the debt has not been paid by the ‘Corporate Guarantor’ is free from any legal flaws.
Application dismissed.
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2024 (2) TMI 1314
Improper handling of Resolution Plan - Respondent No.1 alleges that the Resolution Professional (RP) violated the process by opening a sealed cover containing the plan without the presence of the Committee of Creditors (CoC) and Principal Resolution Applicants (PRAs). - HELD THAT:- Regulation 39 of the CIRP Regulations, 2016 also requires the Resolution Professional to look into the Resolution Plan submitted by the Applicants and to place the plan before CoC which is in compliance with Section 30(2). The opening of Resolution Plan by Resolution Professional is essential for further process in the CIRP. The Resolution Professional without opening the plan cannot come to any opinion whether the plan is complaint to Section 30(2) or not. There is no regulation or law which provide that the Resolution Professional should open the plan in presence of CoC and PRAs. Learned counsel for the Respondent No.1 has been unable to show any provision of law which require that the Resolution Professional shall open the plan in presence of CoC and PRAs.
The order passed by the Adjudicating Authority is unsustainable - In result, Appeal is allowed.
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2024 (2) TMI 1260
Qualified bidder or not - Application rejected holding that in third round of e-auction conducted by the Respondent property lot-III as is specified in e-auction notice dated 07th July, 2023 also stands sold - grievance of the Appellant is that in the process document, the time for payment was provided for 10 days whereas in the Schedule I, the time for payment is for 90 days.
HELD THAT:- Auction having already held with regard to lot-III, challenge to auction notice cannot be entertained.
In so far as the submission of the Appellant that in the process document only 10 days time is allowed for making payment whereas regulation provides for 90 days, it is well settled that in event of conflict between a clause in the process document and the regulations, it is the regulation which will override. The question of payment arises only when auction is confirmed and when bidder is declared a successful bidder. It is not the case of the Appellant that Appellant has been declared as Successful Bidder and he has been asked to deposit within 10 days, Appellant having not participated in the auction, at his instance the auction notice has not rightly been quashed by the Adjudicating Authority.
There is no merit in the Appeal, the Appeal is dismissed.
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2024 (2) TMI 1259
Initiation of CIRP u/s 9 - time limitation - threshold limit of amount claimed - whether the claims made by operational creditor are time barred? - whether the claims are meeting the threshold limit for them to be eligible for section 9 proceedings? - acknowledgement of debt - HELD THAT:- This Tribunal in S.M. GHOGBHAI VERSUS SCHEDULERS LOGISTICS INDIA PVT. LTD. [2022 (5) TMI 1210 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] had held that proceedings under Section 9 of the IBC 2016 cannot be set to be a suit relating to accounts and as such Article 1 of the Limitation Act is not applicable and the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of the Limitation Act. Accordingly, the time from which period of limitation begins is when the right to apply accrues and right to apply accrues when the invoices were to be paid.
Time barred claims or not - HELD THAT:- The Limitation period begins to run from the time when the right to apply accrues i.e. limitation will be three years from when the right to apply accrues, which is over for 224 out of 234 invoices, as the due dates of these invoices, admittedly are from 2013 to 2014. In the instant case there are six projects, located in different locations, though under the same construction company viz HCCL. Most of the invoices pertain to the period of 2012 to 2014 and default dates varies from the year 2012 to 2014 in majority of the cases. Therefore, the three-year limitation period, even for the last invoice out of the 224 invoices had lapsed in September 2018, while this Company Petition was filed on 25th February, 2021. Therefore, the argument of the petitioner that for Company Appeal the limitation stood extended is not tenable.
The legal tenability of running accounts has already been noted in the instant case for all the invoices together and there cannot be any better justification to settle them project wise as per Article 1 and therefore they also have to be settled as per Article 137 of the Limitation Act. The Operational Creditor has not been able to cross the hurdle of limitation and the threshold of Rupees one crore in a consolidated manner for 234 invoices claimed in his demand notice - with respect to 234 invoices, which are payable within 30 days of the invoices, 224 invoices are ex-facie time barred and the remaining 10 invoices do not meet the threshold of Rs.1,00,00,000/-. Therefore, this line of argument of the operational creditor is also not tenable.
Emails-are they acknowledgement of debt? - whether the emails of 14.07.2017, 07.01.2019 and 26.03.2019, annexed to the petition constitute an acknowledgement of debt or not? - HELD THAT:- The claims either suffer from hurdle of limitation or threshold or most of the time by both. In the present case as the so-called acknowledgement of liability by these emails is not before the expiration of the period of limitation. Taking these projects individually, in the case of Kashang Hydro Electric Project the due date for the last invoices had fallen on 28.06.2014. The claims were rendered time barred on 28.06.2017. And the purported emails sent by the Appellant is dated 10.11.2017, which is much after the period of expiry of limitation. Similarly , the due date for the last invoice for the Uri Project had fallen on 23.01.2014. The claims were rendered time barred on 23.01.2017. Appellant had relied upon email dated 14.07.2017, which is much after the period of expiry of limitation. Same is the case for other projects also. Therefore, section 18 of the Limitation Act doesn’t apply and these emails do not provide any acknowledgement of the debt and doesn’t help the Appellant.
It is well settled that the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of The Limitation Act, 1963. The claim of the Operational Creditor that they were having running account and are covered under Article 1 of the Limitation Act cannot be accepted - In the instant case in most of the claims, as noted by the Adjudicating Authority they are time barred. Specifically, out of 234 invoices 224 are ex-facie time barred and for the remaining 10 invoices the total does not make it more than the threshold of Rupees one crore and therefore the claims of the Operational Creditor cannot be accepted.
Accordingly, the Appeal is dismissed.
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2024 (2) TMI 1258
Prayer for direction for placing the Settlement Proposal submitted by the Appellant before the CoC for consideration - CoC unanimously decided to reject the proposal - HELD THAT:- On looking into the minutes of the CoC, it is clear that the proposal submitted by the Appellant was duly considered and deliberated by the CoC. The reasons have also been noted in the minutes due to which the proposal did not find favour with the CoC. The decision to accept or reject the proposal under Section 12A is essentially a business decision and is in the domain of commercial wisdom of the CoC - the submission of learned counsel for the Appellant that proposal of the Appellant was not adequately considered by the CoC or there is any error in consideration or CoC has arbitrarily acted in rejecting the proposal of the Appellant, is not accepted.
It is well settled that jurisdictional review of the decision of CoC for accepting or rejecting a proposal by the Adjudicating Authority is only on the ground that decision is arbitrary. The minutes of the CoC meeting does indicate that there is application of mind and CoC has rejected the proposal after due consideration and deliberation.
There are no error in the order of the Adjudicating Authority rejecting the application - appeal dismissed.
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2024 (2) TMI 1219
Approval of Resolution Plan - homebuyers are waiting their units to be given possession for the last several years and by appeal filed by promoters/directors, process is being delayed.
First judgment delivered by the Hon’ble Supreme Court in respect to CIRP of the Corporate Debtor is the Judgment of the Hon’ble Supreme Court in Chitra Sharma Vs. Union of India [2018 (8) TMI 661 - SUPREME COURT] - HELD THAT:- In this case, Hon’ble Supreme Court exercised its jurisdiction under Article 142 in reviving the CIRP of the Corporate Debtor.
Judgment of the Hon’ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank [2019 (11) TMI 316 - SUPREME COURT] - HELD THAT:- Hon’ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment - Another direction issued in the above case was that the IRP to complete the CIRP process within 90 days and it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively who were finally bidders and had submitted resolution plan on the earlier occasion.
Judgment of Hon’ble Supreme Court in Jaypee Infratech Limited Vs. Axis Bank Ltd. [2020 (2) TMI 1259 - SUPREME COURT] - HELD THAT:- Hon’ble Supreme Court held that approval of the Resolution Plan is exclusively in the domain of the commercial wisdom of the CoC, the scope of judicial review is circumscribed.
After noticing the Judgments of the Hon’ble Supreme Court which was delivered in the CIRP of the Corporate Debtor and certain background facts, now the question which have been framed are now considered.
Whether Appellants have locus to challenge the order dated 07.03.2023 passed by the Adjudicating Authority approving the Resolution Plan of Suraksha Realty? - HELD THAT:- The main reasons for dismissing the appeal has been contained in paragraph 48. The main reason, where the court has observed that one who does not come to a court with clean hand may not get any relief. It was held that conduct of the Appellant in both the appeals is not transparent. In the present case, there are several other facts which need to be noticed. For example, the Appellants were permitted to file objections before the Adjudicating Authority against the resolution plan and their objections were heard on merits, promoter and director was also impleaded as one of the parties in appeal of NBCC, objections of appellants were also noticed by Hon’ble Supreme Court in earlier round of litigation that is while deciding Jaypee Kensington Case [2021 (3) TMI 1143 - SUPREME COURT] - the appeals of appellant cannot be thrown out on the ground of locus. The limited ground to challenge approval of the resolution plan is that the same is not in conformity with Section 30(2) - the objection of the respondent on the locus is rejected and it is proceeded to examine the submissions raised by the Appellant.
Whether the treatment of Income Tax dues in the Resolution Plan where they have been treated as Operational Creditor and offered only Rs. 10 Lacs violates the provision of sub-section (2) of Section 30? - HELD THAT:- The income tax department has itself filed an appeal being C.A.(AT) Ins. No. 549 of 2023 which has been decided on 26.09.2023 where this Tribunal came to the conclusion that there is no violation of provision of Section 30(2)(b) in so far as treatment of the claim of the income tax department is concerned and the order of the Adjudicating Authority not being interfered with in the Appeal, Appellant is not entitled to raise any further issues regarding the dues of the income tax department which has been concluded in the Appeal filed by the Income Tax Department itself. This Tribunal having held that there is no non-compliance of section 30(2)(b) with regard to treatment of claim of the income tax department who is operational creditor, we cannot accept the submission of the Appellant that there is any violation of section 30(2) of the Code with respect to claim of income tax department - there is no violation of provisions of subsection (2) of Section 30 of the Code with regard to dues of the Income Tax Department.
Whether the treatment of claim of YEIDA towards farmers' compensation and other claims of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? - Whether YEIDA is a Secured Creditor of the Corporate Debtor? - HELD THAT:- The issues pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised - the issues raised by the Appellant need to be examined and considered in the appeal filed by YEIDA and there is no necessity to consider those issues in this appeal which is filed by the Suspended Promoter and Director of the Corporate Debtor. Answer to both the questions is recorded accordingly.
Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further upon discharge of principal debtor to repay the debt the liability of surety also gets extinguished? - HELD THAT:- In the facts of the present case, it is not the case of the Appellant that the Corporate Guarantor and Personal Guarantor have paid the dues of the creditor and thus they are entitled to get in the shoes of the principal creditor. On this single ground claim of Section 140, does not subsist. In the present case, debt of the Principal Borrower is being discharged consequent to the Resolution Plan under the IBC - Clause 34.50 is already noticed which expressly takes away the right of subrogation to the Guarantors. The Hon’ble Supreme Court had occasion to consider the right to Guarantors consequent to approval of Resolution Plan in IBC in Lalit Kumar Jain vs. Union of India, [2021 (5) TMI 743 - SUPREME COURT]. Submission was advanced before the Hon’ble Supreme Court that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities - The Hon’ble Supreme Court noted relevant provisions of the Contract Act including Section 141 of the Contract Act. The Hon’ble Supreme Court laid down that approval of Resolution Plan and finality imparted to it does not per se operate as a discharge of the guarantor’s liability.
The law is thus well settled that after approval of the Resolution Plan, the Personal Guarantors and Corporate Guarantors have no right of subrogation especially when in the facts of the present case under Clause 34.50 of the Resolution Plan, right of subrogation is expressly extinguished. The debt against the Corporate Debtor might have extinguished after approval of the Resolution Plan but said consequence shall not be with regard to the Corporate Guarantors and the Personal Guarantors. The same shall be as per the express provisions of the Resolution Plan - there are no substance in submission of the Appellant that debt is extinguished under Section 135 and they have right of subrogation under Section 140 and to receive provision of securities under Section 141, cannot be accepted.
Whether the Adjudicating Authority having denied several reliefs and concessions which clearly means that those provisions of Resolution Plan have been disapproved, the Adjudicating Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? - Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Authority and by issuing various directions, Adjudicating Authority travelled beyond its jurisdiction and further no direction could have been given to statutory authority as has been directed in the impugned order, which is impermissible? - HELD THAT:- The SRA has prayed for issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan. The above direction is only for the purpose of implementing the Resolution Plan and does not violate any statutory provisions. The use of expression “as applicable under the prevailing laws” clearly indicate that the SRA is not seeking any relief and concession in violation of any applicable law. The objection raised by the Appellant thus has no merit - The above direction is only to relevant RERA Authority to expeditiously make the appropriate changes in its records qua Projects, in accordance with the Resolution Plan. The said action is necessary consequence to the approval of Resolution Plan. The SRA is not asking any direction which is in violation of any applicable law. Thus, there is no error in granting the above relief by the Adjudicating Authority.
The Successful Resolution Applicant has clearly contemplated that the Successful Resolution Applicant will implement the plan whether or not reliefs and concessions are granted - there are no infirmity in the reliefs and concessions granted by the Adjudicating Authority. As noted above, the fact that certain reliefs and concessions have not been granted could have not adverse effect on validity of the Resolution Plan or it can be said that any illegality has been crept in the Resolution Plan on the above ground.
Whether Resolution Plan take into consideration 758 acres of land which became available to the Corporate Debtor consequent to allowing the avoidance application and subsequent to the judgment of the Hon'ble Supreme Court [2020 (2) TMI 1259 - SUPREME COURT] ? - HELD THAT:- The judgment of Hon’ble Supreme Court in Anuj Jain Vs Axis Bank Ltd. [2020 (2) TMI 1700 - SUPREME COURT] was delivered before approval of the Resolution Plan on 03.03.2020. From judgment of Jaypee Kensington of the Hon’ble Supreme Court it is noticeable that even in NBCC’s plan relief was sought with regard to 858 acres of land. Both the Resolution Applicants were thus well aware about order of the Hon’ble Supreme Court dated 26.02.2020 and there was no occasion for not including the said land which was available for the kitty of the Corporate Debtor after release of encumbrances - there are no substance in submission of the Appellant that 758 acres of land has not been included in the plan submitted by Suraksha Realty.
Whether applicants who have been permitted to intervene in the appeal are entitled for any relief? - HELD THAT:- It is well settled that interveners by the I.A. cannot claim any relief for themselves. Interveners are either to support the order which is subject matter of challenge or support the Appellant in their challenge. The Applicants who have filed their claims before the IRP and whose claims are reflected are fully entitled to approach the SRA/Monitoring and Implementation Committee for their entitlement, for which they are entitled as per the Resolution Plan.
There are no ground in these appeals to interfere with the impugned order dated 07.03.2023 passed by the Adjudicating Authority at the instance of the Appellants - appeal dismissed.
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2024 (2) TMI 1215
Maintainability of application filed under Section 95 (1) of the IBC, 2016 - initiation of CIRP against the Respondent/Personal Guarantor - invocation of personal guarantee - issuance of demand notice - HELD THAT:- It is noted under section 128 of Indian Contract Act, 1872 that when a default is committed the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously.
From the report of IRP, it is clear to us that: i. IRP has recommended to accept the application for the reason as stated in the report dated 11.12.2021. ii. The Respondent has admitted to have executed the Guarantee Agreement. iii. The Applicant has demanded the amount outstanding from the Respondent vide Demand Notice dated 22.09.2021. iv. Resolution Professional report states that no evidence was placed before him by the Respondent having paid the amount demanded by the Applicant and as such in overview entire amount demanded is un-serviced as on the date of order. v. The application is not hit by Limitation.
It is directed to initiate Insolvency Resolution Process against the Respondent/Personal Guarantor and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided under Sec 101 of IBC, 2016 - application filed under Section 95 (1) of the IBC, 2016 is admitted and the Insolvency Resolution Process stands initiated against the Respondent/Personal Guarantor.
Application allowed.
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2024 (2) TMI 1187
Liquidation of the Corporate Debtor under Section 33 of the IBC - whether the statutory provisions of IBC provides scope for the CoC to consider approval of liquidation of the Corporate Debtor before inviting resolution plans? - HELD THAT:- The statutory provisions of IBC allow the CoC to consider approval of liquidation of the Corporate Debtor before inviting resolution plans. However, it depends on the facts of each case as to whether the decision to liquidate is in conformity with the provisions of the IBC and to that extent open to judicial review by the Adjudicating Authority and this Appellate Tribunal.
SBI had failed to gain possession of the Assets of the Corporate Debtor inspite of filing SARFAESI proceedings. It was also pointed out that though the IRP had sent several mails to the suspended management to be present and assist in the handover of the assets of the Corporate Debtor no such assistance was given in handing over the assets of the Corporate Debtor. Therefore, the CoC in the exercise of its powers endowed upon it by Section 33(2) of the IBC was entitled to liquidate the Corporate Debtor.
Whether in the present facts of the case there were good reasons for the CoC to initiate liquidation of the Corporate Debtor in the exercise of its commercial wisdom? - whether there existed any cogent ground for the Adjudicating Authority to reject the recommendation made by the CoC to initiate liquidation of the present Corporate Debtor? - HELD THAT:- From the CoC minutes it is also clear that the RP had noticed that Corporate Debtor is not a going concern for 3 years prior to CIRP. This fact has not been contested by the Appellants either. In the present case, when the Corporate Debtor has not been functioning for three years prior to admission into CIRP, the objection raised by the Appellant to the decision of the CoC to liquidate the Corporate Debtor as arbitrary therefore lacks merit. Moreover, the IRP did not have requisite and certain information to draw up proper information memorandum. The CoC had also noted that the IRP had not provided requisite documents like Information Memorandum, Evaluation Matrix, RFRP to the PRAs to facilitate submission of plans. Hence the CoC rightly felt that in the given circumstances it was unlikely that a viable and feasible resolution plan would come around. Continuation of CIRP would only have enhanced the CIRP cost without corresponding advantage.
In the present case, the CoC took a decision for liquidation of the Corporate Debtor after holding 5 meetings. This decision was taken by 100% vote share. Thus, this decision of the CoC conforms to the requirements laid down in terms of Section 33(2) of the IBC - The Adjudicating Authority has therefore not committed any error in approving the recommendation of the CoC to liquidate the Corporate Debtor in such circumstances.
Furthermore, the decision of the CoC to liquidate could not have been interfered with by the Adjudicating Authority because of the limited powers of judicial review. It is a well settled proposition of law that the Adjudicating Authority has been bestowed with limited jurisdiction as specified in the IBC while dealing with matters relating to liquidation of the Corporate Debtor and cannot enter upon adjudicating into the merits of a business decision taken by the CoC with requisite majority in its commercial wisdom to liquidate a corporate debtor. In the present case too, the Adjudicating Authority has abided by the discipline of the statutory provisions of the IBC.
This decision of the CoC to liquidate having been approved by the Adjudicating Authority, the same is not open to judicial review when no grounds have been made out as provided under Section 61(4) of the IBC of material irregularity or fraud committed in relation to such an order. As both these grounds do not arise in the facts in this case, hence the objections of the Appellants to set aside the resolution passed by the CoC to initiate liquidation has no merit. No infirmity is found in the order of the Adjudicating Authority approving the decision of the CoC to liquidate the Corporate Debtor.
There are no good ground to interfere with the impugned order passed by the Adjudicating Authority. There is no merit in both the appeals - appeal dismissed.
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2024 (2) TMI 1094
Corporate insolvency proceedings - infirmity in the scheme - it was held by NCLAT that In absence of any provision to get the Schemes in question executed through any court of Competent jurisdiction, the relevant provision(s) having been repealed, the appellant(s) may raise the question, if the respondent(s) move before any court of Law for implementation of the Schemes - HELD THAT:- It is not required to interfere with the impugned order of the National Company Law Appellate Tribunal, New Delhi - appeal dismissed.
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2024 (2) TMI 1093
CIRP - Validity of extension of 90 days was calculated Retrospectively from 10.05.2023 rendering the very extension practically an infructuous one - It is the stand of the Appellant that the Resolution Professional had no actual or constructive knowledge of the ‘Retrospective Calculation’, on 27.07.2023, until the order was uploaded on 11.08.2023 - HELD THAT:- This Tribunal points out that the Petitioner/Appellant had mentioned that he is approaching the Adjudicating Authority/Tribunal praying for an extension of 90 days to complete the CIRP of the Corporate Debtor.
As per Section 12(3) of the I&B Code, 2016, on receipt of an application u/s 12(2) of the Code, if the Insolvency Resolution Process remained pending on the date of the commencement of the I&B Code(Amendment) Act, 2019, such Resolution Process must be completed within a period of 90 days from the date of commencement.
This Tribunal taking note of the fact that the sole COC Member has passed a Resolution to extend further period of 90 days from the last date of CIRP dated 10.05.2023, in view of the categorical and candid averment that for a ‘better negotiation’, ‘evaluation’ and ‘discussion’ on the Resolution Plan received from the Resolution Applicant and submission of the same to the Adjudicating Authority/Tribunal the Interim Resolution Professional has proposed to extend the CIRP period for a further period of 90 days from the date of approval of the instant IA, and considering the totality of the entire conspectus of the facts and circumstances surrounding the instant case, this Tribunal comes to an ‘inevitable’ and ‘irresistible’ conclusion that the Adjudicating Authority/Tribunal had committed an error in not granting the exclusion for the period from 09.05.2023 to 27.07.2023 viz. the period spent in pursuing the IA (IB)1235/CHE/2023, the exclusion period would have enabled the Petitioner/Appellant to pursue the Expression of Interest received and made efforts to revive the Corporate Debtor through a Resolution Plan and in furtherance of ‘substantial cause of justice’ and to prevent an aberration of justice, the observation made by the Adjudicating Authority/Tribunal in the impugned order dated 27.07.2023 in IA that the ‘CIRP’ is extended for a further period of 90 days with effect from 10.05.2023 is set aside because of the fact that the period of pendency of proceeding before the Adjudicating Authority/Tribunal shall be excluded when calculating the CIRP period. Likewise, the period of pendency of instant Comp App is ordered to be excluded and the extension of CIRP period of 90 days is granted by this Tribunal from the date of the disposal of the instant Appeal, as per Section 12(2) of the I&B Code, 2016.
Consequently, the instant Appeal succeeds.
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2024 (2) TMI 1092
Challenge to direction that entire cost be paid by the Applicant/Appellant - Admission of CIRP set aside - Corporate Debtor was NBFC - HELD THAT:- In a situation where CIRP has been admitted and there is interim order passed by the Appellate Authority to the effect that in the CIRP no final decision shall be taken with regard to resolution plan since the order was challenged on the ground that CIRP cannot proceed against a NBFC, the CoC and the Resolution professional should have been more cautious in proceeding and incurring costs in the CIRP of the Corporate Debtor.
The ends of justice be served in giving liberty to the Resolution Professional to file an application before the Adjudicating Authority to take a decision on payment of balance cost, as to whether entire balance cost is fully payable and as to whether entire cost be borne by the Appellant or shared by all the members of CoC and/or Resolution Professional. Taking into consideration the sequence of events and facts which have taken place in the CIRP proceedings of the Corporate Debtor, the Adjudicating Authority shall pass orders in the application.
Appeal disposed off.
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2024 (2) TMI 1091
Prayer for condonation of delay of 1197 days and admission of the claim - seeking admission of claims of appellant - HELD THAT:- The claims were filed by the Appellant in Form-CA after more than 1 and a half year of the approval of the Resolution Plan by the CoC. Even orders on Application for approval of Resolution Plan was reserved on 22.02.2023 and the claims were filed only on 29.03.2023.
The Adjudicating Authority in the impugned order has referred to the judgment of the Hon’ble Supreme Court in RPS Infrastructure Ltd. Vs. Mukul Kumar & Anr. [2023 (9) TMI 516 - SUPREME COURT]. In Mukul Kumar’s case, the claim was filed with a delay of 287 days, which was based on arbitral award. The Appeal filed by the RP was allowed and it was held that the Adjudicating Authority erred in directing the RP to consider the claim of Respondent, which was filed with a delay of 287 days, where the CoC has already approved the Resolution Plan.
In the present case, the claims were filed by the Appellant on 29.03.2023, when the Resolution Plan was already approved by the CoC on 13.08.2021. The Application for approval of Resolution Plan was also heard and order was reserved on 22.02.2023 as stated by the learned Counsel for the Respondent. In the facts of the present case, no error has been committed by the Adjudicating Authority in rejecting Applications filed by the Appellants. It is also relevant to notice that Adjudicating Authority by order dated 23.06.2023 has already approved the Resolution Plan, which Plan approval order has been challenged by the Appellants by means of Company Appeal, which Appeals are still pending for consideration.
Thus, no error has been committed by the Adjudicating Authority - appeal dismissed.
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2024 (2) TMI 1027
Rejection of Resolution Plan by the Committee of Creditors with 95.97% voting against the said Resolution Plan - prime grievance of the Homebuyers who filed the ‘Applications’, was that the ‘interest’ was not adequately protected and ‘Liquidation’ would worsen their position - addition of parties - necessary/proper party as third respondent or not - HELD THAT:- The ‘addition of parties,’ is one of discretion to be exercised by the concerned Tribunal / Court of Law based on the facts and circumstances of the case - The ‘power of the Court’ to ‘add parties’ is succinctly pointed out by the Hon’ble Supreme Court in the decision in ‘Razia Begum v. Anwar Begum’ [1958 (5) TMI 50 - SUPREME COURT] wherein it is observed that the question of addition of parties under Rule 10 of Order 1 of CPC is generally not one of ‘initial jurisdiction’, of the ‘Court’ but of a ‘judicial discretion’, which has to be exercised in view of all facts and circumstances of a particular case; but in some cases it may raise controversies as to the power of the Court in contra distinction to its inherent jurisdiction or in other words of jurisdiction in the limited sense in which it is used in Section 115 of the Civil Procedure Code.
This Tribunal bearing in mind of a crystalline fact that the Petitioner in IA 57/2024 in Comp. App. (AT)(CH)(Ins.) No. 446 of 2023 is a creditor to the Corporate Debtor is not to be impleaded in the instant Appeal as a third Respondent because of the fact that it is neither a necessary party nor a proper party to the instant Appeal’ to be decided by this Tribunal on merits, at the time of ‘Final Hearing’.
In view of well settled principle in law that ‘to add a person as a prospective – proposed Respondent’ is not a substantive right but undoubtedly, it is one of procedure. As such, this Tribunal unhesitatingly holds that a mere ‘interest of a party’ in the ‘Fruits of Litigation cannot be an ‘acid test’ for it being, impleaded as a ‘party’ - Indeed, an ‘Appellant/Plaintiff’ in an ‘Appeal / suit’ proceedings cannot be coerced to join a ‘person’ as ‘party’ against whom, he/it does not desire to contest, unless it is a compulsion of Law, in the considered opinion of this Tribunal.
This Tribunal bearing in mind of the entire facts and circumstances of the instant case, in an ‘encircling manner’, comes to a resultant conclusion that the Petitioner/Appellant is not a necessary / proper party, to be arrayed as third Respondent - Appeal dismissed.
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2024 (2) TMI 1026
Maintainability of section 7 application - Seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - threshold limit involved in in application - exclusion of amount of commission on sale in computation of debt amount.
Principal stand of the Appellant is that though their claim of outstanding dues amounting Rs. 1,11,63,151/- qua the Respondent is duly reflected on the NeSL data, the Adjudicating Authority erroneously held the default amount to be less than the prescribed threshold limit - HELD THAT:- At a time when the principal outstanding amount; the applicable rate of interest and date of default in both the Section 7 applications remained constant and the duration of Agreement was only one year, the interest calculations should have remained confined to one year only. The reason for calculating the interest amount for a different time-period in the present Section 7 application, prima-facie, appears unjustified and irrational - the findings of the Adjudicating Authority that the interest calculation in the present Section 7 application has been unduly inflated and enhanced by the Appellant with the ulterior motive of crossing the threshold limit, agreed upon.
Whether “commission on sale” amount which has been excluded by the Adjudicating Authority should have been included in the computation of debt amount? - HELD THAT:- It is a well settled proposition of law that any debt to be treated as “financial debt”, there must take place disbursal of money and the disbursal must be against consideration for time value of money and also includes anything which is equivalent to the money that has been loaned as long as commercial effect of borrowing or profit is discernible.
There are no good reason to disagree with the findings referred in the impugned order that “commission on sale” amount neither falls in the menu of transactions delineated at sub clauses (a) to (i) of Section 5(8) of the IBC nor does it fall in the category of being a disbursal having time value of money. The “commission on sale” does not carry the implications of commercial effect of borrowing either.
Thus, the Adjudicating Authority did not commit any error in coming to the conclusion that the amount of outstanding financial debt is only Rs. 78,40,000/- and that this amount does not meet the threshold limit of Rs. 1 crore as stipulated under Section 4 of the IBC - the Appellant having failed to meet the threshold limit in the earlier Section 7 application has now tried to overcome this impediment by inflating the claim amount by resorting to a calculation methodology which lacks rational basis. This is a clear case where the Appellant has reagitated the same issue which had been already dismissed by the Adjudicating Authority on an earlier occasion simply to cross the threshold bar. This amounts to misuse of the provisions of IBC to resolve a contractual dispute.
There are no merit in the appeal - appeal dismissed.
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2024 (2) TMI 975
Withdrawal of application which was admitted earlier for CIRP - Manner of computation of voting with regard to application under Section 12A - proposal under Section 12A of the Code permitting withdrawal of the CIRP accepted - voting summary and opinion minuted by the Resolution Professional rejected.
Resolution Professional has challenged the order of the Adjudicating Authority dated 24.05.2023 by which order the Adjudicating Authority has rejected the voting summary and opinion minuted by the Resolution Professional holding that 12A proposal is not approved since it was not approved by 90% votes.
HELD THAT:- The Appellant, Resolution Professional whose summary of voting holding that 12A application was not approved has been set aside by the Adjudicating Authority. The Resolution Professional is duty bound to ensure that the CIRP process is conducted in accordance with provisions of IBC and Regulations. In the facts of the present case where opinion of the Resolution Professional, who was Chairman of the CoC holding that 12A proposal is not approved has been overturned by the Adjudicating Authority, the Resolution Professional is an aggrieved person from the said decision since the decision of the Adjudicating Authority directly overturns the decision of the Resolution Professional.
In so far as judgement of the Hon’ble Supreme Court in “Regen Powertech Private Limited vs. Giriraj Enterprises & Anr. [2023 (9) TMI 1406 - SUPREME COURT]” relied by the Respondent No.4, the judgment of the Hon’ble Supreme Court held that The Resolution Professional should have maintained a neutral stand. It is for the aggrieved parties, including the Committee of Creditors of Regen Powertech Private Limited (RPPL) and Regen Infrastructure and Services Private Limited (RISPL), to take appropriate proceedings or file an appeal before this Court. Recording the aforesaid, the present appeals preferred by the Resolution Professional are dismissed as not entertained. - on looking into the above judgment, it is clear that the said judgment was in the facts and circumstances of that case where the Supreme Court held that the Resolution Professional should have maintained a neutral stand and could not have filed an appeal. The present is a case where the Resolution Professional is required to conduct the proceeding of the CoC according to the IBC and take a decision on the result of voting. There can be no question of Resolution Professional taking, in the present case, any sides.
Computation of votes - HELD THAT:- The Resolution Professional is required to compute the votes as per the statute. Hence, the judgment of the Hon’ble Supreme Court in “Regen Powertech Private Limited vs. Giriraj Enterprises & Anr. [2023 (9) TMI 1406 - SUPREME COURT]” which was in the facts of the said case cannot be said to be applicable in the present set of facts - the appeal could not be held to be not maintainable, at the instance of the Resolution Professional. It is relevant to the notice that the said order has also been challenged by Homebuyer – Mr. Vijay Saini in Company Appeal (AT) (Ins.) No.982 of 2023 with regard to which there is no issue of maintainability.
The proposal under Section 12A having not been approved by 90% vote share of the CoC, the order dated 24.05.2023 has to be set aside reviving the CIRP of the Corporate Debtor.
The order passed by the Adjudicating Authority is set aside - CIRP of the Corporate Debtor- Sidhartha Buildhome Pvt. Ltd. is revived which proceeding shall confine to Project Estella - The Project NCR Green be kept out of the CIRP which henceforth commences. The promoter/director is solely responsible to complete and handover all units of the Project NCR Green to the unit holders and in event there is any failure on the part of the Respondent No.4 to handover the units to all unit holders, it shall be open for the Financial Creditors in class to make an application before the Adjudicating Authority for appropriate relief including relief of revival of CIRP with regard to NCR Green Project also - The Resolution Professional shall issue fresh Form G with regard to Estella Project and complete the CIRP within a period of 90 days from the date of issuance of Form G. Resolution Professional before issuing Form G with regard to Estella Project shall constitute the CoC for the Project Estella and proceed further as per decision of the CoC so constituted.
Appeal filed by Resolution Professional of the Corporate Debtor and Homebuyer allowed.
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