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Insolvency and Bankruptcy - Case Laws
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2024 (4) TMI 566 - SC ORDER
Amendment of section 7 application - time limitation - date of default - HELD THAT:- It is clear from the amendment that the case of the respondent is that though the first default arose on 30 April 2014, the petition under Section 7 is not barred by limitation in view of the subsequent events including the acknowledgements in the balance sheets and the recovery certificate.
The NCLAT while affirming the order of the NCLT allowing the amendment has specifically kept the question of limitation open. In that sense, the plea of the appellant that the petition under Section 7 of the IBC is barred by limitation is not prejudiced - Bearing in mind the above circumstances, it is not necessary for the Court to entertain the appeal.
All aspects on the question of limitation would be decided by the NCLT. This order merely affirms the correctness of the order allowing the amendment without expressing any opinion on the merits of the plea on limitation - Appeal disposed off.
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2024 (4) TMI 565 - KARNATAKA HIGH COURT
CIRP - Partnership Form - Maintainability of petition - Invocation of Section 95 of the Insolvency and Bankruptcy Code - Whether a petition against a partnership firm or its Directors is fileable and maintainable under Section 95 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal? - HELD THAT:- The maintainability of the petition before the Tribunal cuts at the root of the matter, as it relates to jurisdiction, to entertain the petition by the Tribunal. The Code does not permit it. If that be so, even a speck of paper cannot move before a fora that has no jurisdiction. It is un-understandable as to how and why the petitioners have to go before the Tribunal and tell the Tribunal that it has no jurisdiction to entertain the petition. The very acceptance of filing by the Tribunal is contrary to law.
It is declared that the e-filing by the 2nd respondent under Section 95 of the Insolvency and Bankruptcy Code, 2016 as non est and illegal and consequently, the proceedings at whatever stage they are, before the National Company Law Tribunal, stands quashed.
Petition allowed.
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2024 (4) TMI 564 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Interest on deposit - sale consideration amount deposited by the appellant - claim of interest after completion of the sale - rate of interest - HELD THAT:- The sale consideration was deposited by the Appellant, which was lying with the Liquidator and has earned interest. Sale consideration received for the assets of the Corporate Debtor is to be distributed to the stakeholders. The present is a case where assets have been handed over to the Appellant. Present is not a case where due to any reason, the Appellant is entitled for refund of sale consideration. In event the Appellant may be entitled for refund of sale consideration the prayer for refund of the sale consideration along with interest could have been considered. But, here the sale consideration, which was deposited and which has earned interest is in lieu of the assets, which have been ultimately sold to the Appellant and handed over to him.
There is no merit in the submission of the Appellant that Liquidator should be directed to make payment of interest on the sale consideration, which was deposited by the Appellant due to delay in handing over of assets to the Appellant, which assets could not be handed over earlier due to restraint order of the Adjudicating Authority dated 04.04.2022, which could be vacated only on 01.06.2023.
There are no merits in the appeal - appeal dismissed.
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2024 (4) TMI 563 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Liability of Corporate Guarantor - Guarantee has not been invoked by any of the financial creditors nor any claim was filed before the liquidator - existence of debt or not - HELD THAT:- From the facts brought on record, especially by RoC that 23 charges are still showing against the Company and the Company has issued Corporate Guarantee. The submission which has been pressed by the Appellant is that since Corporate Guarantee has not been invoked and no claim has been filed that cannot be relied for rejecting the liquidation application.
The fact that guarantee has not been invoked, does not absolve the Corporate Guarantor from debt. The debt which is Corporate Guarantor, the Company has been given corporate guarantee and undertaken to pay the debt.
The judgment of MUDHIT MADANLAL GUPTA VERSUS SUPREME CONSTRUCTIONS AND DEVELOPERS PVT. LTD. [2023 (7) TMI 1397 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] was a case where this court took a view that default occurred between 10A period and it was held that default on the Guarantor shall be on the date when the Corporate Guarantee has been invoked. The above was a case arising out of Section 7 application which was rejected on the ground of 10A which order was upheld. The above judgment in no manner support the submission of the Appellant.
The liability of Corporate Guarantor is coextensive with the Lenders and the Lenders are at liberty to require the performance by the Guarantor of its obligation. The Adjudicating Authority after noticing the fact which was brought by the RoC as well as Central Bank of India and has rightly taken the view that the present in the not case for liquidating the Company under the process of voluntary liquidation. The submission of the Appellant that since guarantee has not been invoked there is no debt, cannot be accepted. Guarantee continues to bind the Corporate Guarantor to discharge its liability and the fact that as on date, guarantee has not been invoked, cannot be a ground for Appellant to be liquidated under Section 59 of the IBC.
There are no error in the impugned order - appeal dismissed.
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2024 (4) TMI 562 - NATIONAL COMPANY LAW TRIBUNAL HYDERABAD BENCH
Condonation of delay of 34 days in submission of report under Section 112(1) of IBC - rejection of the repayment plan by the creditors - seeking necessary orders to the creditors for payment of Resolution Professional fee and expenses, already approved by the creditors - HELD THAT:- The delay of 34 days i.e. for the period from 24.10.2023 to 27.11.2023 arose in view of the delay in approval of the repayment plan, is condoned.
Approval of the Repayment Plan submitted by the Personal Guarantor - HELD THAT:- The repayment plan placed before the 3rd creditors meeting held on 12.10.2023 was rejected by the Creditors with 88.52% and the remaining 11.48% did not exercise their vote - Considering the report of the Resolution Professional filed u/s. 112 and rejection of the Repayment Plan by the creditors, the creditors shall be entitled to file an application for Bankruptcy under Chapter IV consequent to the rejection of the Repayment Plan. The RP stands discharged. Since the Creditors have approved the payment of Resolution Professional fee and expenses with 64.01% voting share, the Resolution Professional fee and expenses of Rs.6,75,000/- as already approved by the creditors shall be paid.
Application allowed.
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2024 (4) TMI 539 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Initiation of CIRP based on a corporate guarantee provided to a consortium of lenders- Validity of deed of Guarantee - existence of privity of the contract with the Corporate Debtor in relation to the deed of guarantee, or not - authority given by the trusteeship to the Respondents for initiating section 7 application or not - Deed of Guarantee was void under Section 186 of the Companies Act, 2013 or not.
Deed of Guarantee - HELD THAT:- The deed of guarantee dated 10.06.2016 to be treated void in view of Section 186 of the Companies Act, 2013 - it is clearly established that both the principal borrower and the Corporate Debtor are family owned group companies which are owned and controlled by the same set of family member - it will be travesty of justice to even consider the arguments of the Appellant to treat the deed of guarantee as void just in order to avoid the financial obligations towards the consortium of lenders. In any case we also observe that at the best the Corporate Debtor was liable for punishment under Section 186 (13) of the Companies Act, 2013 and the Corporate Debtor is not entitled for any illegal enrichment for its own illegal and malafide acting.
Lack of privity of contract between the Respondent No. 1 and the Corporate Debtor - HELD THAT:- Clause F of the deed of guarantee specifically provides that "the Security Trustee acting for the benefit of the IDBI Consortium has called upon the Guarantor to execute this Guarantee in favour of the Security Trustee in favour of the Banks." This makes it clear that security trustee was to act for the benefit of IDBI Consortium consisting of all four lenders - when the trust is created for the benefit of the beneficiary parties party, such parties are no more strangers to the contract and can step in shoes, to pursue their legal remedies on their own rights - the corporate guarantor is liable to meet its financial obligations.
Initiation of application u/s 7 by guarantor or lender - HELD THAT:- The deed of guarantee and security trust agreement goes hand in hand which primarily provide financial security to the lenders for the credit facilities given to the principal borrower - Thus the lender is entitled to initiate and file application under Section 7 of the Code despite they have been engaged trusteeship.
The allegation of the Appellant regarding want of support of other three bankers to the Respondent No. 1 are also found baseless as the proposed intervenors for three other lenders supported the CIRP proceedings of the Corporate Debtor and confirm the same during hearing before us and the same has been mentioned in their intervention applications filed in the present appeal. Thus, the contention of the Appellant on this ground stand rejected.
Thus, it become clear that the principal borrower and the Corporate Debtor are group companies which are owned and controlled by the same set of close family members and relatives and the corporate guarantee of Rs. 181.29 Cores was duly given by the Corporate Debtor.
Appeal dismissed.
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2024 (4) TMI 538 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI
Fixation of remuneration of liquidator - whether any remuneration is to be paid to the liquidator for the services being rendered by him, when the assets of the corporate debtor are under attachment and cannot be auctioned? - HELD THAT:- From perusal of the regulations as they existed on the date of liquidation order, it appears that the fees of the liquidator was to be either the fees decided by the CoC under Regulation 39D of IBBI (CIRP) Regulations, 2016 or a percentage of fee on the amount that is realised/ distributed during the liquidation process. The Regulations, as it existed at the time on the date of the liquidation order, do not envisage payment of any fees or remuneration to the liquidator on a monthly basis, if such fee is not fixed by the CoC under Regulation 39D of IBBI (CIRP) Regulations, 2016.
Considering the regulations as they existed at the time when liquidation order was issued in this case, and that no fees was fixed by the CoC, it is opined that fees to be paid to the Liquidator in this case shall be as per the percentage prescribed in Regulation 4(2)(b) of IBBI (Liquidation Process) Regulations, 2016 on realization and distribution of proceeds from auction of assets. There are no reason to interfere in the order of the Adjudicating Authority.
Appeal dismissed.
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2024 (4) TMI 537 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH
Maintainability of petition seeking initiation of CIRP against Personal Guarantor/Respondent - invocation of Bank guarantee and time limitation - HELD THAT:- The contentions raised by Personal Guarantor are devoid of merit. There is no bar in IBC (Insolvency & Bankruptcy Code, 2016) to proceed against each separate Personal Guarantor for same debt. Moreover, pendency of CIRP (Corporate Insolvency Resolution Process) against the Principal Borrower does not debar lender from proceeding against Personal Guarantor. Additionally, pendency of Resolution Plan approval also cannot be a ground for dismissal of proceedings against the Personal Guarantor.
The Financial Creditor issued notice on 12.12.2017 under section 13(2) of the SARFAESI Act,2002 invoking the guarantee and calling upon the Guarantor to pay the said amount within 60 days - The Financial Creditor issued another demand notice on 31.10.2020 addressed to the Principal Borrower and Personal Guarantor and is relying on this notice for limitation.
This bench holds that the guarantee was invoked on 12.12.2017 and the limitation began on that day and any subsequent notice of demand cannot be considered for the purpose of limitation. Since the invocation of guarantee was on 12.12.2017 and the present Company Petition was filed on 21.12.2021, it is beyond the limitation period and hence the Company Petition deserves to be rejected.
Petition dismissed.
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2024 (4) TMI 536 - NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD
Scope of the Report of IRP - IRP was appointed on application under Section 94(1) - Proceedings against the Personal Guarantors to Corporate Debtor - Benefit of moratorium as contemplated under Section 96 of the IBC, 2016 - HELD THAT:- It is clearly established that the present application was filed by the debtor herein to thwart the recovery proceedings initiated by the sole Secured Financial Creditor who has obtained physical possession of the secured assets (coowned by the debtor herein) and to frustrate other proceedings under SARFAESI Act, the debtor came running and filed this application.
It appears that the sole intention of the debtor herein is to enjoy the moratorium as contemplated under Section 96 of the IBC, 2016 which commences from the date the application is declared defect-free by the Registry of this Tribunal. The second reason which comes to mind at this stage is the order under Section 94(1) of the IBC, 2016 was issued by this Tribunal on 30.05.2022.
Nearly one and half years have passed in further proceedings in the matter due to the stay by Hon’ble Supreme Court in the matter of DILIP B JIWRAJKA VERSUS UNION OF INDIA & ORS. [2024 (1) TMI 33 - SUPREME COURT] and in case the debtor was inclined towards any settlement of his debt with the Secured Financial Creditor, he had enough time to pay by way of restructuring plans, or otherwise, if any. No document has been placed before us by the debtor herein to show that he has taken any effective steps for settling the dues of the Secured Financial Creditor.
Application allowed.
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2024 (4) TMI 478 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Rejection of Section 7 Application filed by the Appellant (homebuyers) on the ground of non-compliance of Section 7, sub-section (1), 2nd Proviso - decree-holder is class of Financial Creditor or not - HELD THAT:- The judgment of the Hon’ble Supreme Court in Kotak Mahindra Bank [2022 (6) TMI 13 - SUPREME COURT] itself clearly provides that a person, who has a recovery certificate, which is akin to Decree, is entitled to file Section 7 Application as Financial Creditor. Whether the debt is fructified in a Decree or not, if debt is a financial debt it gives right to Financial Creditor to initiate proceedings under Section 7. The judgment of the Hon’ble Supreme Court in Vishal Chelani [2023 (10) TMI 949 - SUPREME COURT] has been relied by the Adjudicating Authority.
It is relevant to notice the facts and ratio of the judgment of Vishal Chelani, which has been relied by the Adjudicating Authority. Vishal Chelani and other were Homebuyers, who had filed their claim on the basis of order passed by UPRERA. They filed claim in Form-CA in the category of Homebuyers. The RP informed the Appellants that they should file their claims in Form-C as a Financial Creditor. The Appellants filed an Application before the Adjudicating Authority, claiming that they should be treated as Homebuyers and they be permitted to file claim in Form-CA, which Application was rejected.
The allottees in Vishal Chelani’s case were Applicants, who had also got order in their favour from RERA, but it was held by the Hon’ble Supreme Court that their status as a ‘Financial Creditor’ does not change and they were entitled to file their claim in Form-CA as a ‘Financial Creditor’. The above judgment of the Hon’ble Supreme Court, which was relied by the Adjudicating Authority, clearly supports the submission of learned Counsel for the Appellant. The Appellant cannot be said to go out of the definition of ‘allottees’ merely because they have an order in their favour by RERA and the Appellants’ submission that they should be treated in a different category, i.e., category of ‘Decree Holder’ and are not required to comply with Section 7, sub-section (1), 2nd Proviso cannot be accepted - Thus, Homebuyers, whether they have an order or Decree from the RERA or who do not have any Decree or order from RERA, belong to same category of allottees and no distinction can be made on the said ground.
The Appellants are ‘allottees’ within the meaning of the Code and as a Financial Creditor, when they have filed the Application under Section 7, they were required to comply with Section 7, sub-section (1), 2nd Proviso and Adjudicating Authority did not commit any error in rejecting their Application due to non-compliance of Section 7, sub-section (1), 2nd Proviso.
There is no merit in the Appeal and the Appeal is dismissed.
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2024 (4) TMI 477 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admission of petition under Section 7 of the IBC - initiation of CIRP of Corporate Debtor in its capacity as Corporate Guarantor - Allegations of forged mortgage deeds / contract of guarantee - Whether the instant Section 7 application filed by Shri Rahul Dodeja on behalf of Respondent No.1 suffered from any infirmity as it is the case of the Appellant that this instant petition has been filed by a person on the basis of Power of Attorney without any supporting Board Resolution of the Financial Creditor and hence not maintainable? - Doctrine of indoor management - HELD THAT:- Noticing Rule 4(1), an application against the Corporate Debtor under Section 7 of the IBC requires to be made in Form 1 accompanied with relevant documents and records. In the present case, looking at the Form 1 of Section 7 in Part - I filled in by the Financial Creditor, it has been clearly stated at Sl. No.5 that ‘A copy of the Power of Attorney dated July 8, 2019 authorising Mr. Rahul Dodeja to act on the behalf of the petitioner is annexed herewith and marked as Exhibit 2’ as is placed at page 90 of the Appeal Paper Book (‘APB’ in short). On looking at the Power of Attorney, it is noticed that the same has been issued pursuant to Board Resolution of 12.03.2019 empowering Mr. Rahul Dodeja to file the Section 7 application as is seen at page 103 of the APB.
It is found that Mr. Rahul Dodeja had been provided general authorisation by the Yes Bank by way of Power of Attorney pursuant to a Board Resolution to file necessary applications for commencement of legal proceedings not only against the Borrower but also against their Hypothecators/Mortgagors/Guarantors. Given this position, it is clear that Section 7 application was filed in the present case by a duly authorised person on behalf of the Financial Creditor and thus objection raised by the Appellant in this regard are misconceived and hence not sustainable.
Doctrine of indoor management - Tenability of the Deeds of Guarantee in question in the context of the allegation levelled by the Appellant that they were products of fraud and fabrication - HELD THAT:- This doctrine proceeds on the premise that third parties who enter into a contract with any company is protected against any irregularities in the internal procedure of the company. Persons transacting with companies are entitled to assume that internal company rules have been complied with even if they are not. In other words, the company's indoor affairs are to be treated as the company's outlook - In extending this doctrine to the facts of the present case, it is found that the Adjudicating Authority held that there was clearly no requirement for Yes Bank to look into the company's internal workings. The Yes Bank enjoyed the right to infer that the Board Resolution authorizing the signing of the Deeds of Guarantee was legitimately passed and that the Corporate Debtor was consequently bound by the Deed of Guarantee even if the internal requirements and procedures had not been complied with by the Corporate Debtor.
Thus, in the given circumstances, when there is no cognisance which has been taken by any court of law, civil or criminal, of the Deeds of Guarantee being forged and fabricated, in all fairness, the Respondent No. 1 is fully protected in proceeding on the assumption that the signing and execution of the Guarantee Deeds has taken place in good faith and is therefore a valid and legal document - As regards the alleged handwriting expert’s opinion which has been adverted attention to by the Appellant to establish forgery, the Adjudicating Authority in exercise of summary jurisdiction is not expected to scrutinise such opinions and rely upon the assessment contained therein and more so when the opinion has been disputed as not being an independent third-party opinion. There are no error on the part of the Adjudicating Authority to have desisted from entering into the realm of contractual disputes as it would tantamount to judicial overreach.
Deed of Guarantee was required to be obtained before the disbursement of loan in terms of Section 127 of The Indian Contract Act,1872 or not - HELD THAT:- From a plain reading of the Section 127, the word ‘done’ has a clear and unambiguous meaning denoting an act that has ended. Hence, when the legislature has actually used the word ‘done’, which in its ordinary sense denotes any act that has been completed, it must be assumed that the intention of the legislature is to include ‘anything’ done by the lender for the benefit of the borrower in the past to be valid consideration. Hence, the only plain and natural meaning that could be deciphered would be that any act that has been completed for the benefit of the borrower would constitute consideration. In case of a conflict between the section and its illustration, the latter must give way to the former. It can thus be positively concluded that an act done for the benefit of the principal debtor in the past would constitute a valid consideration for an agreement of guarantee with the surety.
The contention of the Appellant that Section 127 of the Contract Act necessitated the disbursement of loan to precede the Deed of Guarantee also does not hold good in view of a catena of judgements passed by the various Hon’ble High Courts wherein it has been held that the language of Section 127 was clear and unambiguous to also cover past transactions and past promises prior to giving a guarantee or surety - thus, it is not necessary that grant of loan to the principal debtor by the creditor must be necessarily contemporaneous with the execution of Guarantee Deeds and hence the legality and subsistence of the present Deeds of Guarantee cannot be questioned on this ground.
These Mortgage Deeds purportedly created a charge against the property located in Kerala and since an exclusive charge had already been created in respect of the charged property in favour of IFCI Ltd, it could not have been charged to Yes Bank without permission of IFCI. It is also the case of the Appellant that they had disputed and objected to the creation of charge in respect of the mortgage property and had sent an email in this regard to MCA on 21.09.2019. It is therefore the case of the Appellant that reliance by the Adjudicating Authority on the mortgage deeds is erroneous - It is significant to note that these Deeds of Mortgage were executed in furtherance of the Deed of Guarantee. Moreover, the Deeds of Mortgage contained the signature and the common seal of the Appellant besides bearing the stamp of registering authority thereby authenticating its execution. Since, neither the charge nor the modification thereof was disputed by the Appellant either with the MCA or before any appropriate legal forum at an earlier stage and the mortgage deeds were executed in furtherance of the Deed of Guarantee and the notice for invocation of the Corporate Guarantee was issued, there are no reasons to disagree with the findings of the AA that “the liability of Corporate Debtor cannot be done away even if their irregularity in the execution of the mortgage deed or creation of mortgage without NOC from existing mortgagee i.e. IFCI pointed out by the Corporate Debtor is believed ”.
Whether in the facts of the present case, Section 7 petition could have been admitted against the Appellant in their capacity as Corporate Guarantor? - HELD THAT:- It has been contended by the Respondent that there is no bar on the Financial Creditor to proceed against the principal borrowers and the Corporate Guarantor simultaneously. It is their case that the liability of a Corporate Guarantor is coextensive with the principal borrower and therefore the Financial Creditor is at liberty to require the performance by the Guarantor to discharge its liability and obligations - This issue has been squarely covered by the judgement of the Hon’ble Supreme Court in Laxmi Pat Surana vs UOI [2021 (3) TMI 1179 - SUPREME COURT].
In terms of the Laxmi Pat Surana judgment of the Hon’ble Supreme Court, when the Corporate Debtor gives a guarantee in respect of a loan transaction, the right of the Financial Creditor to initiate action against the Corporate Guarantor gets triggered the moment the principal borrower commits a default. In other words, when default is committed by the principal borrower, the amount becomes due against both the principal borrower and the Corporate Guarantor and hence both become liable to pay the amount when the default is committed. Thus, the default by the principal borrower and the guarantor arises on the same date, unless, the terms of contract of guarantee provides that the liability of the guarantor would arise in terms of the Deed of Guarantee.
In the present facts of the case, the Yes Bank had invoked the guarantee vide notice dated 26.08.2019 and 20.11.2019, therefore, the defaults had arisen on the issue of the demand notice as contemplated in the Deeds of Guarantee. The company petition under Section 7 which was filed against the principal borrowers has already been admitted by the Adjudicating Authority and presently undergoing CIRP. In the present case, notice has been duly served upon the Corporate Guarantor demanding payment and there being a clear default on the part of the Corporate Guarantor to clear the outstanding due, the Adjudicating Authority has rightly admitted the Corporate Debtor in its capacity as Corporate Guarantor into CIRP.
The Adjudicating Authority has rightly admitted the Section 7 application for initiation of the CIRP process after coming to the correct conclusion that Respondent No.1 has successfully proved the financial debt and default on part of the Corporate Debtor as Corporate Guarantor. There are no reason to interfere in the impugned order passed by the Adjudicating Authority.
Appeal dismissed.
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2024 (4) TMI 441 - SC ORDER
Rejection of claim of the Appellant(s) to be declared as Financial Creditors of the Corporate Debtor - it was held by NCLAT that The condition for declaring the Appellant(s) as ‘Financial Creditor’ are not satisfied in the claims submitted by the Appellant(s) and both Resolution Professional and Adjudicating Authority have rightly rejected their claims as ‘Financial Creditor’ for valid reasons - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed.
In the present case, the appellant - Skil Infrastructure Limited is a corporate guarantor as per Section 5(5A) of the Insolvency and Bankruptcy Code, 2016. Its claim against the second/ new promoters/management will not make them a financial creditor against the corporate debtor itself. Section 140 of the Contract Act, 1872 cannot be pressed and is not applicable.
Application disposed off.
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2024 (4) TMI 440 - SC ORDER
Condonation of delay in filing appeal - Approval of Resolution Plan - it was held by NCLAT that The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b), thus, no ground has been made to interfere with the Impugned Order.
HELD THAT:- The period of delay is 142 days which is in excess of the delay which can be condoned in terms of Section 62 of the Insolvency and Bankruptcy Code 2016.
The Appeal is accordingly dismissed on the ground of limitation.
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2024 (4) TMI 439 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
GNIDA is Secured Creditor or not - Submissions raised by the Resolution Professional objecting to the claim of the GNIDA as Secured Creditor was noticed and dealt by the Adjudicating Authority in the impugned order - Section 13 and 13-A of UPIAD Act are inconsistent with Section 238 of I&B Code or not - HELD THAT:- CIRP commenced on 30.05.2019, claims were invited, the claim was set up by the Appellant as Financial Creditor, which was rejected and Appellant was treated as Operational Creditor. CoC approved the plan which was presented before the Adjudicating Authority and was approved by the Adjudicating Authority on 04.08.2020. Appellant after coming to know that plan has been approved has filed I.A. No.344 of 2021 questioning the Resolution Plan and decision of the Resolution Professional to treat the Appellant as Operational Creditor.
The submission of the Appellant that Section 13-A was inserted in the Act subsequent to lease having been granted to the Corporate Debtor does not in any manner affect the claim of the Respondent No.1 as Secured Creditor. Section 13-A was inserted by U.P. Act 10 of 2016 in The Uttar Pradesh Industrial Area Development Act, 1976 - Any dues of the Authority is a charge as per Section 13-A over the property. The Corporate Debtor has not paid the dues of Respondent – GNIDA, which has been brought before the Adjudicating Authority by means of an application giving all relevant details. In the present case, the Adjudicating Authority returned finding that Resolution Professional in its affidavit dated 05.05.2023 has admitted that the Corporate Debtor has committed a default in payment of lease rentals prior to the commencement of CIRP.
The submission advanced by the Resolution Professional that charge has not been created under Section 77 of Companies Act has already been dealt and rightly rejected. Present is a case where charge on the assets of the Corporate Debtor was created by virtue of law i.e. Section 13-A and registration of charge under Section 77-78 of Companies Act is inconsequential. We, thus, endorse the above view taken by the Adjudicating Authority that non-registration of charge in favour of Greater Noida Authority was inconsequential. The Adjudicating Authority being aware that lease rentals are due on the Corporate Debtor also directed the parties to file affidavit.
Judgment of Hon’ble Supreme Court in State Tax Officer vs. Rainbow Paper Ltd. [2022 (9) TMI 317 - SUPREME COURT] relying on Section 48 of Gujrat Vat Tax Act held that charge to be statutory, which judgment also fully supports the submission of counsel for the Respondent.
The decision of the Adjudicating Authority declaring the Greater Noida Industrial Development Authority as Secured Operational Creditor does not warrant any interference in this appeal - appeal dismissed.
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2024 (4) TMI 438 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
CIRP - Admissibility of two additional documents - Section 11 of Arbitration and Conciliation Act - rejection of Application of the Appellant seeking permission to bring additional documents - the arbitration petition and the order were both initiated after the filing of the Section 9 Application - HELD THAT:- Notice under Section 8 was issued by the Operational Creditor on 05.05.2022, which was also replied by the Corporate Debtor. Section 9 Application was filed being CP(IB)No.36/CB/2022 by the Operational Creditor in the year 2022, to which reply was also filed by the Corporate Debtor. Arbitration proceedings before the Hon’ble Calcutta High Court in BALASORE ALLOYS LIMITED VERSUS MSTC LIMITED [2023 (9) TMI 1457 - CALCUTTA HIGH COURT] under Section 11, sub-section (6) of the Arbitration and Conciliation Act, 1996 was initiated on 31.08.2023, on which an order was passed by the Hon’ble Calcutta High Court on 13.09.2023. Both the Arbitration Application and order of the Hon’ble Calcutta High Court, which were sought to be brought on record by the Corporate Debtor, were much subsequent to filing of Section 9 Application.
The observation of the Hon’ble Supreme Court in MSTC LIMITED VERSUS BALASORE ALLOYS LIMITED [2023 (11) TMI 1245 - SC ORDER], clearly indicate that arbitration order passed in the arbitration proceedings shall not affect proceedings in Section 9 Application under the Code, which was filed by the Operational Creditor.
There are no error in order of the Adjudicating Authority rejecting application filed by the Appellant to bring on record two documents - Appeal is dismissed.
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2024 (4) TMI 437 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of Resolution Plan - Validity of the order of Adjudicating Authority (NCLT) wherein it held that Rishima cannot be called as a Financial Creditor and Rishima being a Decree Holder of a foreign award can be treated as other creditor. The application of the respondent was partly allowed by the Adjudicating Authority - HELD THAT:- It is clear that in the Resolution Plan which stood approved by the Adjudicating Authority and also upheld by this Tribunal by its order of the date in Company Appeal (AT) (Ins.) No.143 of 2024 [2024 (4) TMI 305 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], the total claim of the Appellant has been admitted as Rs.132,89,75,268/- and has been allocated Rs.1 Lakh. In this appeal it is not necessary for us to enter into the issue whether the Adjudicating Authority’s order dated 30.11.2023 partly allowing the application of Rishima needs to be upheld or not. The order dated 30.11.2023 passed by the Adjudicating Authority has been given effect to as reflected in the Resolution Plan which stands approved on 04.01.2024. There are no reason to enter into various submissions raised by the Appellant questioning order dated 30.11.2023.
In view of approval of Resolution Plan on 04.01.2024, in which Resolution Plan order dated 30.11.2023 passed by the Adjudicating Authority has been given effect to, there is no occasion to consider challenge to the said order in this appeal - Appeal dismissed.
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2024 (4) TMI 436 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Prayer for interim distribution of funds lying in the Escrow Account of the Company - date on which Liquidation Value has to be taken for distribution of amount to the creditors - IL&FS had not been servicing the debt since October 2018 - HELD THAT:- The Liquidation Value as on 30.09.2018 is as per order dated 12.03.2020 where this Tribunal has accepted 15.10.2018 as the cut-off, there are no error in fixing the Liquidation Value as on 30.09.2018. Furthermore, the Lenders with the requisite majority has already taken a decision to approve Restructuring Plan, the SBI, who is also one of the Lender, cannot be permitted to wriggle out of the terms of the ITPCL Restructuring Plan and as per decision taken by the majority, prescribed in Clause 10 of the RBI Circular, the Restructuring Plan and the Liquidation Value taken therein is binding on the Applicant.
In the present case, cut-off date has already been laid down by this Tribunal in the order dated 12.03.2020 [2020 (3) TMI 1398 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] and the Liquidation Value as fixed by the Lead Bank cannot be said to be erroneous.
The relevant fact which is brought to the notice here is that the Valuers’ report was received by the Lead Bank and thereafter third Valuer was engaged due to difference in the valuation by the Valuers and all the process was noticed and discussed in the Joint Lenders Meeting. There is no dispute that Liquidation Value as per the Valuers’ Report submitted by Lead bank has been communicated to the Applicant. There are no error in the Master Restructuring Plan having based on Liquidation Value as on 30.09.2018.
Application dismissed.
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2024 (4) TMI 402 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Implementation of the Resolution Plan as Approved - Prayer for exclusion of the lease land from the assets of the Corporate Debtor rejected - The respondent alleged that the appellant, as the landowner, obstructed the implementation of the Resolution Plan by preventing access to common facilities and services essential for the functioning of the corporate debtor.
HELD THAT:- Having upheld the Resolution Plan and granted liberty, both the parties are to act in pursuance of the liberty as granted and the order being only an interim direction and the application being still pending, there are no reason to entertain this Appeal.
While disposing of the application, Adjudicating Authority shall take into consideration the judgment of this Tribunal of the date in SHRISTI INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED VERSUS MR. AVISHEK GUPTA, RESOLUTION PROFESSIONAL [SARGA HOTEL PRIVATE LIMITED UNDER CIRP] , JC FLOWERS ASSET RECONSTRUCTION PRIVATE LIMITED, SHRIRAM MULTICOM PRIVATE LIMITED [2024 (4) TMI 321 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as contained in paragraph 13 of the judgment.
Appeal disposed off.
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2024 (4) TMI 376 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
CIRP - Maintainability of Section 9 Application - rejection on the ground of pre-existing dispute - Appellant relying on the provisions of Section 194 (C) of the Income Tax Act, submits that deduction was made by Corporate Debtor under Section 194(C), after receipt of invoices by the Appellant - HELD THAT:- The above submission of learned Counsel for the Appellant cannot be accepted for two reasons. Firstly, in a reply dated 13.06.2021, the Corporate Debtor has clearly indicated about the deduction under Section 194(C) as well as the credit of GST amount. In the reply it was stated that the Corporate Debtor was to issue debit/ credit note and the Operational Creditor has not settled the accounts for last five years for under-loading and overloading and demurrage charges debited by principal borrower, as Operational Creditor was required to adjust the amount. Thus, deduction under Section 194(C) cannot lead to conclusion that Corporate Debtor acknowledged the liability to pay the entire bills of the Operational Creditor. The dispute was raised by the Corporate Debtor, which is reflected in the letter dated 11.02.2021 referred by Appellant himself in his letter dated 22.04.2021 as well as the reply dated 13.06.2021.
On examining of averments made in the reply dated 13.06.2021, which clearly indicate pre-existing dispute raised by the Corporate Debtor much before the Demand Notice dated 09.08.2021 was issued.
The Adjudicating Authority did not commit any error in rejecting Section 9 Application on the ground of pre-existing dispute. There is no merit in the Appeal - appeal dismissed.
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2024 (4) TMI 336 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Violation of principles of natural justice - opportunity of being Heard not provided - Abrogation of valuable right of appellant - Locus of appellant - Applicant is neither a Creditor nor a Shareholder of the First Respondent - It is the stand of the Appellant that the Tribunal, had not taken into consideration of the statutory force, establishing Appellant’s right, under the Copyright Act, 1957 - HELD THAT:- As far as the present case is concerned, the Respondents do not consider the Appellant / IPRS, as its Creditor and have consistently and seriously disputed the Appellant’s Alleged Claims. Indeed, the Appellant, was not recognised as Creditor in the Financial Statements of both the Respondents.
Added further, once a Claim, is Disputed, and the Claimant, is not reflected as a Creditor, in the Audited Financial Statements, such Claimant, is disentitled to Intervene, demand Documents or Object, to a Scheme, and it is outside to the purview of Section 230 – 233 of the Companies Act, 2013, before the Tribunal, to enter into the Merits of the Dispute.
This Tribunal, on a careful consideration of respective contentions, advanced on either side, taking note of the surrounding facts and circumstances of the instant Appeal, especially, in the teeth of the Appellant / Petitioner, not figuring as a Creditor of the Respondents, in terms of its Audited Financial Statement, and the List of its Unsecured Creditors, being duly authenticated, of course, based on verification, by the Statutory Auditor, this Tribunal, comes to a consequent conclusion, that the Impugned Order, dated 09.02.2024, passed by the National Company Law Tribunal, Court No. V, Mumbai Bench, by making an observation that the Appellant, is not a Creditor of the Respondent Nos. 1 & 2, and as such, has no Locus, to object to the process of the Scheme, is free from any legal infirmities.
Appeal dismissed.
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