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IBC - Case Laws
Showing 621 to 640 of 9152 Records
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2024 (1) TMI 895
Doctrine of merger - Seeking recall of order - it is alleged that order dated 31.03.2023 was obtained by the Respondent by citing judgments which were not good law.
It is submitted that two judgments relied in the impugned order dated 31.03.2023 are; judgment of two-member bench judgment in Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr. [2019 (5) TMI 1140 - NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, CHENNAI] and judgment in KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma [2022 (10) TMI 383 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. It is submitted that correctness of the aforesaid two judgments was doubted by three-member bench vide its order dated 09.02.2023 passed in “I.A. No. 3961 of 2022, Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian [2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI].
HELD THAT:- A perusal of the judgment dated 31.03.2023 makes it clear that the two-member bench has heard only on the maintainability issue. In the order dated 31.03.2023, the two-member bench noticed the facts of the case, order passed by this Tribunal dated 04.07.2019. This Tribunal also noticed the grounds claimed by Applicant No.2 to maintain the application (I.A. No.647 of 2023) - The two-member bench after consideration held that it would be difficult to entertain the application particularly on the ground of locus of the Applicant.
The five-member bench of this Tribunal in Budhia Swain & Ors. Vs. Gopinath Deb & Ors. [1999 (5) TMI 596 - SUPREME COURT], thus, categorically held that there is inherent power of recall in the Tribunal and application for recall is maintainable, however, the recall can be granted on sufficient grounds. The grounds for recall has been enumerated in Para 16 of the order, as extracted above. The preposition is well settled that power of recall would be there if an order is obtained by playing fraud on the Court. The two-member bench in its order dated 31.03.2023 while noticing the judgment of Hon’ble Supreme Court in S.P. Chengal Varaya Naidu (Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors., [1993 (10) TMI 315 - SUPREME COURT] also expressed its agreement with the conclusion that fraud vitiates everything.
It is also required to be found out whether there are any grounds to recall order dated 31.03.2023 as has now been laid down by the five-member bench of this Tribunal in Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian [2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as well as judgment of Hon’ble Supreme Court noticed therein. The counsel for the Applicants was fully heard by the two-member bench before passing order dated 31.03.2023. Thus the order was passed after hearing the Applicants fully. The submission which are sought to be advanced by learned counsel for the Applicants is that the two-member bench committed error in holding that the doctrine of merger shall apply and failed to notice the exception to the doctrine of merger as in Para 14(4) of the judgment in Kunhayammed [2000 (7) TMI 67 - SUPREME COURT]. One of the reason for rejecting the application in order dated 31.03.2023 was that relying on the doctrine of merger the order of this Tribunal dated 04.07.2019 came to be merged with the judgment of Hon’ble Supreme Court dated 15.11.2019. The above view taken by the two-member bench in judgment dated 31.03.2023 is sought to be challenged by contending that the precedence of Hon’ble Supreme Court in Kunhayammed has been misinterpreted by the two-member bench and the proposition as laid down by the Hon’ble Supreme Court in Kunhayammed in Para 14(4) was suppressed. The two-member bench having taken the view that doctrine of merger is applicable, we cannot sit over in review of the judgment. The power of review is not conferred to this Tribunal.
There are no jurisdiction to sit in review over the judgment nor we can be persuaded to take a different view which was taken on 31.03.2023. The submission of the Appellant that order dated 31.03.2023 is nullity cannot be accepted.
Application rejected.
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2024 (1) TMI 832
Status of second loan - Security Interest over the Secured Assets - Whether, the 2nd Loan is a Fresh Loan or whether it was given in lieu of the default committed by the Corporate Debtor in servicing the 1st Loan? - Whether it was given for restructuring of the 1st Loan and hence, the Appellant is entitled to retain the Security Interest over the Secured Assets in terms of the Tripartite Agreement entered into on 14.06.2017?
HELD THAT:- It is the main case of the Appellants that the emails dated 08.04.2019, 18.05.2019 and 22.05.2019 were not brought on record and these emails were essential for deciding the subject issue on hand. The Learned Senior Counsel Mr. V. Prakash, appearing for the Applicants / Appellants drew our attention to email dated 22.05.2019 and the Letter dated 08.04.2019, in support of his case that the First Respondent was requested for issue of NOC in favour of the Appellants.
The Learned Senior Counsel Mr. E. Om Prakash appearing for the First Respondent, drew attention to the date and time of retrieval of these emails showing that the emails were printed within a few minutes from the Email ID of the Promoter of the Corporate Debtor Company and that nothing turns on these emails as the fact remains that there is no evidence on record that the 2nd Loan was taken to restructure the 1st Loan. Subsequent to letter dated 08.04.2019, the email dated 20.05.2019, seeking for release of NOC establishes that the restructuring never took place and the NOC was never issued for the 2nd Loan.
It is apposite to reproduce the email dated 31.01.2019, subsequent to the Issuance of the Sanction Letter, which clearly evidences that the Appellants has agreed to Sanction of a New Loan, instead of rescheduling the existing Loan and close the existing Loan. This email clinches the issue that the Sanction of the Loan on 31.01.2019 is indeed a `Fresh Loan’.
Additionally, the subsequent correspondence dated 09.07.2019, requesting to issue NOC further establishes that the NOC was never issued and therefore, the First Respondent continues to have the 1st Charge on the subject Assets.
Appeal dismissed.
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2024 (1) TMI 780
Conflict Between IBC and Companies Act: The contention was whether the IBC 2016 and its regulations should yield to Section 230 of the Companies Act 2013 regarding a scheme for compromise or arrangement. The Appellate Tribunal observed that these laws should be interpreted harmoniously to further the object of the IBC.
Role and Actions of the Liquidator: The liquidator's actions, particularly in the valuation of assets and the handling of the liquidation process, were under scrutiny. The Appellate Tribunal noted allegations of flawed valuation, especially regarding the property in Rayagada, and the failure to include this property in the Asset Memorandum.
Valuation of the Rayagada Property: A significant issue was the zero valuation ascribed to the Rayagada property by the liquidator, which was initially valued at a much higher rate. The Appellate Tribunal highlighted the importance of this property in the liquidation process and the need for its proper valuation.
Section 230 Scheme Proponent Rights: The Appellate Tribunal discussed the rights of a scheme proponent under Section 230 of the Companies Act. It was noted that a bidder in the liquidation process does not have a vested right to have their resolution plan considered or approved.
Stakeholders' Consultation Committee's Role: The role and decisions of the Stakeholders Consultation Committee were also a point of contention. The Appellate Tribunal noted that the approval of the secured creditors and consultation with stakeholders were essential in the process.
Applicability of IBC Regulations: The Appellate Tribunal emphasized the need to follow IBC regulations in the liquidation process, including the proper valuation of assets as per Regulation 35 and the inclusion of disputed assets as per Section 36(3)(e).
Requirement for Fresh Valuation and Inclusion of Rayagada Property: The Appellate Tribunal concluded that a fresh valuation of the assets, including the Rayagada property, was necessary. It was deemed crucial for maximizing the value of the assets and ensuring fairness in the liquidation process.
Maintainability of the Appeal: Finally, The Appellate Tribunal held that the appeal was not maintainable because the appellant, being a bidder, was not a stakeholder in the corporate debtor and thus not an aggrieved party as per the IBC.
On going through the impugned order passed by the Adjudicating Authority/NCLT, Division Bench II, Chennai, in directing a ‘fresh valuation of the assets’ of Corporate Debtor, including the ‘Rayagada Property’, as per Regulation 35(2) of the IBBI (Liquidation Process) Regulations, 2016 and consequently, to update the ‘Asset Memorandum’ and thereafter, to invite the ‘Schemes’, from the ‘Prospective Scheme Proponents’, as per Section 230 of the Companies Act, 2013, are free from any legal flaws.
Appeal dismissed.
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2024 (1) TMI 733
CIRP - Unsuccessful resolution applicant - Locus standi to challenge the plan after its approval - HELD THAT:- There is no doubt that resolution plan submitted by the Appellant was approved in I.A. No. 861 of 2020 on 01.10.2021 but there is no doubt as well that the said plan was ought to have been implemented by the Appellant within 90 days. It is also not in question that on account of its failure to implement the resolution plan, the Appellant filed I.A. No. 77 of 2022 and sought extension of 60 days but the said application was not allowed as it was dismissed on 01.02.2022. The order passed on 01.02.2022 was further challenged by the Appellant in CA (AT) (Ins) No. 86 of 2022 in which the Appellant was granted three months’ time for payment of residual balance amount with interest @ 8%, from the order dated 13.04.2022 till 12.07.2022 but it was still not complied with and this fact has been noticed by the Hon’ble Supreme Court in its order dated 29.08.2022 passed in Civil Appeal No. 3660 of 2022 in which the order dated 13.04.2022 was challenged by one operational creditor, M/s Vishal Nirmiti Pvt. Ltd. In such circumstances, when the Appellant has miserably failed to implement the resolution plan, the RP filed I.A. No. 283 of 2022, praying therein for extension of period of CIRP of 60 days, which was allowed on 05.09.2022.
The Appellant is not a stakeholder within the ambit of Section 31(1) of the Code qua the Corporate Debtor after having been unsuccessful as a resolution applicant and has no locus standi to file the present appeal and in this regard, reliance has been placed upon the judgment rendered by this Tribunal in the case of Ravi Shankar Vedam vs. Tiffins Barytes Asbestos and Paints Limited and Others [2023 (6) TMI 1250 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] where it has been held that the Promoter / Shareholder of the Corporate Debtor Company has no locus to challenge the Plan, after its approval.
There is hardly any merit in the present appeal which calls for interference, therefore, the present appeal is hereby dismissed.
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2024 (1) TMI 587
Maintainability of SLP - applicability of Section 10-A of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Section 10-A of the Insolvency and Bankruptcy Code, 2016 (IBC) was applicable. Hence, no reason for interference is made out in exercise of jurisdiction under Article 136 of the Constitution of India.
The Special Leave Petition is accordingly dismissed.
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2024 (1) TMI 586
Nature of transaction between the parties as is reflected in the Agreement - Refusal of the IRP to admit the claim as Financial Debt - seeking direction to the IRP to claim as Financial Debt - Resolution Professional rejected the claim of the Appellant as Financial Creditor and categorised the claim of the Appellant as Operational Debt - HELD THAT:- It is clear that the opening part of the Agreement clearly stated that “Whereas parties of the first part as well as party of the second part have entered into an agreement (White Sugar Supply Agreement) as per which the party of the second part confirms and agrees to sell and deliver to the party of the first part 5200 M.T's of white crystal sugar S-30 grade packed in P.P. bags of 50 KG's net weight at a fixed price of 3215/- per quintal inclusive of excise duty and cess (i.e. 3020 + 195) by and before 20.11.2016 (hereinafter referred as due date).”. Thus, the transaction between the parties emanates from the White Sugar Supply Agreement.
All the clauses in no manner reflect that transaction between the parties was a financial transaction and the debt due is a financial debt. Adjudicating Authority has rightly come to the conclusion that the claim which was filed by the Appellant was a claim of operational debt and the Resolution Professional has rightly treated the claim as operational debt. It is further to be noticed that the Appellant itself has filed Section 9 Application being CP No.469 of 2020 on 29.01.2020 by which time CIRP was not even commenced against the Corporate Debtor. Learned Counsel for the Appellant submits that there is no estopple against law. The factum of filing Section 9 application by the Appellant itself indicate that the Appellant itself considered it as Operational Creditor since it filed Section 9 application which got dismissed due to initiation of the CIRP against the Corporate Debtor by order dated 23.03.2023. The said conduct of the Appellant fully supports the stand taken by the Resolution Professional that the claim of the Appellant is operational debt.
Thus, no error has been committed by the Adjudicating Authority in rejecting application filed by the Appellant. Appellant’s claim has rightly been held to be operational debt - there are no error in the impugned order.
The Appeal is dismissed.
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2024 (1) TMI 585
Approval of the Resolution Plan - Difference between resolution plan value and liquidation value - locus standi of appellant to challenge the Order of the approval of the Resolution Plan - Appellant is the suspended Director whose locus ends once the affairs of the Corporate Debtor are handed over to the IRP - HELD THAT:- It is seen from the record that Federal Bank had transferred its debt to Edelweiss but did not chose to file any Claim pursuant to the public announcement in Form A in accordance with Regulation 6 of CIRP Regulations, 2016. Having not exercised its right in the form of filing a Claim, the Appellant cannot have any grievance that Edelweiss was not included in the CoC. It is pertinent to mention that the Appellant / Promotor did not raise any objections regarding the constitution of the CoC, having had the Notice and the opportunity to do so as he had the locus to attend the CoC meetings. The only reason given by the Learned Counsel for the Appellant for not raising the objection regarding the constitution of CoC at the appropriate time is that the Appellant was unwell. This cannot be a substantial ground as it is an admitted fact that the Appellant had sufficient opportunities to attend the meetings and raise his grievances.
The Hon’ble Supreme Court in a catena of Judgements, most recent being Kalparaj Dharamshi & Anr. vs. Kotak Investment Advisors Ltd. & Anr [2021 (3) TMI 496 - SUPREME COURT] has observed that the commercial wisdom of CoC must be adhered to unless the Adjudicating Authority is not satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with.
In the instant case, the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the CoC as the Code does not expressly bar that the Resolution Plan value should be over and above the Liquidation value. Hence, there is no material irregularity. As regarding the contention of the Learned Counsel for the Appellant that the Operational Creditor Kerala Ayurvedic Limited was getting an amount lower than the Liquidation value and hence the Plan is discriminatory is untenable, keeping in view that the very same Operational Creditor had voluntarily agreed to accept an amount lower than the Liquidation value.
‘Locus’ of the Appellant challenging the approval of the Resolution Plan - HELD THAT:- It has been held in ‘Ravi Shankar Vedam vs. Tiffins Barytes Asbestos and Paints Limited and Others’ [2023 (6) TMI 1250 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] that the Promoter / Shareholder of the Corporate Debtor Company has no locus to challenge the Plan, after its approval.
There are no considerable grounds to entertain this Appeal and hence, this Appeal is dismissed
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2024 (1) TMI 531
Maintainability of application under Section 7 of IBC - dismissal on the ground that the debt was barred by limitation - HELD THAT:- When the order of the NCLT was questioned in appeal, the NCLAT set aside the order of the NCLT as being “patently illegal”. Once the order of the NCLT was set aside, the order would cease to exist. The observations in regard to whether there was a debt due and payable would also not exist with the setting aside of the order. The order of the NCLAT, properly construed, dealt with the issue as to whether the debt was barred by limitation. A passing reference in the order of the NCLAT to whether the debt was in dispute must be read in the context of the nature of the appeal which arose from an order of the NCLT that the debt was barred by limitation.
Hence, it would be inappropriate to read the order of the NCLAT as concluding the issue in regard to whether the application under Section 7 was or was not liable to be admitted. A stray observation in the order of the NCLAT cannot be regarded as a conclusive determination on merits - it was inappropriate for the NCLAT to direct the NCLT to admit the application under Section 7 straightaway without an evaluation of the rival contentions on merits.
The application under Section 7 has already been restored to the file of the NCLT. The NCLT shall, after hearing the parties, determine as to whether the application under Section 7 is liable to be admitted - Appeal allowed.
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2024 (1) TMI 530
Eligibility to submit Resolution Plan - former promotor/director of the company - whether a mere fact that the person submitting a Resolution Plan has been promoter or director makes ineligible to submit a Resolution Plan? - HELD THAT:- The Hon’ble Supreme Court had occasion to consider Section 29A in reference to promoters of the Corporate Debtor in HARI BABU THOTA VERSUS MR. BISHWAJIT DUBEY, AMICUS CURIAE [2023 (12) TMI 1255 - SUPREME COURT]. In the above case, a plan proposed by the promoter was approved by the Committee of Creditors and the application was filed by the Resolution Professional for approval of the plan which was dismissed on the ground that the promoters could not have presented the plan. The Appeal was filed by the Resolution Professional challenging the order of the Adjudicating Authority. One of the questions which was considered in the case was as to whether Resolution Applicant who was promoter was disqualified under Section 29A. The Hon’ble Supreme Court in the above case has held that there is no per se disqualification under Section 29A. In the above case, MSME certificate was issued after commencement of the CIRP, hence, Section 240A was not relied by the Adjudicating Authority.
The present is not a case where any of the clauses of Section 29A are being pressed for ineligibility of Respondent No.2. Ineligibility is being held only on the ground that Respondent No.2 was promoter of the Corporate Debtor till 2018 when he resigned. The view taken by the Adjudicating Authority is not as per the true and correct interpretation of Section 29A. Section 29A does not make per se promoters and directors ineligible to submit a plan unless they are ineligible under clauses (a) to (g) - Since in the present case, it is not the case that any of the clauses (a) to (g) are attracted on Respondent No.2, the mere fact that Respondent No.2 was promoter and director shall not make him ineligible to submit a Resolution Plan.
The Adjudicating Authority committed error in holding that the Respondent No.2 is ineligible to submit a Resolution Plan. The rejection of IA No.2828 of 2021 is thus, unsustainable - Appeal disposed off.
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2024 (1) TMI 529
Request for closer of CIRP - 88% shareholders ready to provide funds and repay the debts - Rejection of the proposal of the shareholders / corporate debtors - - whether decision of CoC, in which UVARCL has 98.84% voting share, to reject the proposal under Section 12A dated 11.08.2023 as revised on 04.10.2023 is arbitrary and unsustainable? - HELD THAT:- The statutory scheme which has been brought by insertion of Section 12A in the I&B Code by Act 26 of 2018 w.e.f. 06.06.2018. It is to be noted that prior to insertion of Section 12A there was no provision in the Code for withdrawal of CIRP except Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Consequential amendments were also made in Insolvency and Bankruptcy Board of India. (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 by inserting Regulation 30A by notification dated 25.07.2019.
The Hon’ble Supreme Court had occasion to consider Section 12A in Swiss Ribbons Pvt Ltd. & Anr. vs. Union of India, [2019 (1) TMI 1508 - SUPREME COURT] in which various provisions of I&B Code including 12A were under challenge - it was held in the said case that If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code.
Section 12A provides for withdrawal of the application admitted under Section 7 or 9, on an application made by the applicant with the approval of 90% voting share of the Committee of Creditors. Application has to be filed as per procedure provided under Regulation 30A. The objective of Section 12A and Section 29A are totally different. Section 29A is a provision which debars certain categories of applicants from submitting Resolution Plan whereas Section 12A is entirely different provision where CIRP can be withdrawn after admission. The proposal is submitted by Applicant before the CoC and if the proposal is approved by 90% CoC, Regulation 30A provides for procedure for withdrawal. If the CoC approval is granted with 90% vote share, an application has to be filed by the IRP/RP in Form FA. The question of ineligibility of Promoters to submit the proposal does not arise under Section 12A.
The submission of Shri Maninder Singh, Advocate for UV ARCL that by proposal under Section 12A the Appellants are trying to circumvent Section 29A cannot be accepted.
The CoC having decided to refund the EMD of one of the Prospective Resolution Applicant, there cannot be any difficulty in refunding EMD of all of the Prospective Resolution Applicants in event the Proposal under 12A is ultimately found to be acceptable - the CoC cannot be directed to evaluate the Resolution Plan which it has received. The said course cannot be allowed to be directed since the Proposal under 12A has to be finally determined as to whether it deserves to be accepted and the decision of the CoC to refuse to accept Proposal is arbitrary and unsustainable.
The decision of the CoC is arbitrary in not approving 12A Proposal which Proposal offered to pay entire debt of Financial Creditors as well as all other creditors. From the minutes of 14th and 15th CoC, it is clear that CoC has expressed its willingness to accept the proposal if entire amount is deposited, however, opportunity was not granted by the CoC and within three days from 10.10.2023 meeting i.e. on 13.10.2023 they dissented the proposal although they initially granted six weeks’ time to deposit the amount. When in pursuance of order dated 17.10.2023, the entire amount has been deposited, the UVARCL refused to accept the amount which shows its malafide intent. Thus, the facts and circumstances and sequence of events clearly proves that decision of the CoC not accepting the proposal for payment of 100% dues is arbitrary and unsustainable.
Appeal allowed.
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2024 (1) TMI 528
Settlement proposal under Section 12A of IBC - Resolution Plan already approved by the CoC - whether settlement proposal under Section 12A can be given at any stage even after approval of the Resolution Plan? - HELD THAT:- In the case of Shaji Purushothaman Vs. Union Bank of India & Ors. [2019 (9) TMI 1344 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], this Tribunal noted that Resolution Plan was approved but after noticing that it was observed that no direction can be issued but liberty was given to the Appellant to file an application under Section 12A and this Tribunal has observed that if application under Section 12A is filed COC may decide as to whether proposal given by the Appellant is better than the plan.
Coming to the facts of the present case, proposal under Section 12A submitted by the Respondent No.1 was also directed by this Tribunal to be considered along with Resolution Plan as has been noticed above and CoC in its 14th CoC meeting has already considered the Resolution Plan along with settlement proposal submitted by Respondent No. 1. Thus the facts of the present case are entirely different where the Settlement proposal submitted by Respondent No.1 has already been considered by the CoC, the above Judgment does not help the Respondent No.1 in the present case.
The Adjudicating Authority committed error in giving an opportunity to Respondent No. 1 to arrive at acceptable settlement.
The application for approval of the Resolution Plan which has already been filed and pending consideration, the Adjudicating Authority ought to have considered and decided the Application for approval of the plan - The plan having been approved on 08th January, 2023 and application is pending for about last one year before the Adjudicating Authority, the Adjudicating Authority may proceed expeditiously to decide application filed by the Resolution Professional for approval of the plan i.e. I.A. No. 987 of 2023.
Appeal disposed off.
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2024 (1) TMI 460
Wrongful and fraudulent invocation of guarantee by the Concessionaire - Invocation of bank guarantee by Concessionaire after termination of the agreement - HELD THAT:- The Adjudicating Authority have already granted leave to the Liquidator to proceed in arbitration against the Concessionaire where claim on basis of wrongful invocation of guarantee is also included, the Adjudicating Authority did not commit any error in directing deletion of name of Respondent No. 1 in application under Section 66 of the Code.
It is observed that after a decision by the Arbitrator in the arbitration proceeding to be filed by the Liquidator in event facts and findings come in the proceeding which may oblige the Liquidator to file an application under Section 66 against the Concessionaire, the liberty is granted to the Appellant and the deletion of name by the order impugned shall not come into way in filing a fresh application under Section 66 of the Code, if any such circumstance arises.
Appeal dismissed.
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2024 (1) TMI 459
Rejection of application filed - rejection of the claim of the Appellant - assignment of debt - Appellant is stated to have not recovered any amount under the deed of assignment rather it transpired later that the Corporate Debtor had practiced fraud upon the Appellant by making misleading and false representation in the said deed of assignment - no appointment of arbitrator - HELD THAT:- There is no dispute to the fact that the Corporate Debtor had availed the loan from the Appellant. It is also not in dispute that the Corporate Debtor was unable to repay the loan and thus entered into a deed of assignment on 29.03.2017. It is also not in dispute that the Corporate Debtor represented to the Appellant that he had certain receivables which are without any charge or encumbrance which may be received by the Appellant for the purpose of settling the account and also agreed that in case it is found to be otherwise then it would be termed as an event of default and in the event of default the consequence would be the revival of all the financial contracts automatically. There is also no dispute to the fact that the SBI, lead consortium bank, vide letter dated 08.06.2017 informed that the Corporate Debtor had also created a charge/encumbrance on the receivables for the purpose of recovery of their dues. This fact triggered the clause of event of default and as a consequence, the financial contracts were automatically revived.
The Adjudicating Authority rejected the application by its impugned order, inter alia, on the ground that rejection of the assignment agreement vide letter dated 15.06.2019 was not valid. Whereas it is also a fact that there is a categoric provision in the agreement itself that in the event of default, the existing financial agreements and all the obligation of the Corporate Debtor under the existing financial agreements shall automatically revive and become effective and the Appellant shall be entitled to exercise all the rights available to it against the Corporate Debtor under the existing finance agreements. The word ‘automatically’ itself empowers the Appellant to put up the claim, declaring that the assignment agreement has been violated by the Appellant by making a false representation that their receivables were not encumbered or charged. The Corporate Debtor has no doubt made the misrepresentation in the deed of assignment which has become evident from the letter of SBI dated 08.06.2017, therefore, finding recorded by the Adjudicating Authority that the termination of the assignment was not valid is neither here nor there.
Arbitration - HELD THAT:- Admittedly, the arbitrator has not been appointed, no arbitration is pending nor any effort has been made by the Respondent (Corporate Debtor) by filing an appropriate application in terms of the Act of 1996, therefore, the RP has committed an error in relying upon Section 21 of the Act, 1996. It is really heartening to mention that this is the 3rd round of litigation at the instance of the Appellant in which the Appellant is only asking for admission of its claim by the RP which has been rejected on the flimsy grounds.
There is an error in the impugned order in rejecting the application filed by the Appellant, therefore, the appeal is hereby allowed and the impugned order is set aside.
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2024 (1) TMI 458
Maintainability of Section 9 application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute between the parties - Whether any operational debt qua the Corporate Debtor has been proven to have become due and payable and if there has been a default in the payment thereof and whether there is any pre-existing dispute between the parties? - HELD THAT:- The Operational Creditor has admitted that the date of default had initially been inadvertently entered as 27.08.2016 in the Section 8 demand notice.
In view of the last payment having been made on 28.04.2017, the fresh period of limitation would start from that date and the Operational Creditor was entitled for taking benefit of 3 years period of limitation from the date of last payment. Therefore, the Section 9 application was filed well within time. Hence the objection on the ground of limitation raised by the Corporate Debtor basis the date of default mentioned in the demand notice while choosing to ignore the date of default shown in the Section 9 application lacks merit.
Keeping in mind the settled position of law as laid down in the Mobilox judgment [2017 (9) TMI 1270 - SUPREME COURT], it is amply clear that there exists a pre-existing dispute with respect to the computation of claims by the Operational Creditor qua the Corporate Debtor in the backdrop of an arrangement which had come into existence following a meeting held on 28.08.2012. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. Where Operational Creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two which is not so borne out given the facts of the present case.
It is well settled that in Section 9 proceeding, the Adjudicating Authority is not to enter into final adjudication with regard to existence of dispute between the parties regarding the operational debt. What has to be looked into is whether the defence raises a dispute which needs further adjudication by a competent court - On application of the case of Mobilox by the Hon’ble Supreme Court to the facts of the present case, it is clear that defence raised by the Corporate Debtor in their reply to the Section 8 demand notice and detailed reply filed in Section 9 application is not illusory or moonshine and that the nature of dispute raised was such that it required adjudication by competent court.
Thus, the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute.
Appeal dismissed.
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2024 (1) TMI 404
Condonation of delay beyond the maximum period - HELD THAT:- There is a delay beyond the maximum period that can be condoned in terms of the provisions of Section 62 of the Insolvency and Bankruptcy Code 2016 - the appeal not entertained since it is barred by limitation.
Since the Civil Appeal has been dismissed on the ground of limitation, it needs to be only clarified that this will not come in the way of the appellant pursuing its claim in the pending arbitration proceedings - The Civil Appeal is dismissed on the ground of delay.
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2024 (1) TMI 403
Eligibility of appellant to submit a Resolution Plan for the Corporate Debtor - maximisation of the value of the assets of the Corporate Debtor - Regulations 39(1-B) read with 36B(7) of the IBBI (CIRP) Regulations, 2016 - HELD THAT:- The Adjudicating Authority has consistently allowed opportunity to all the resolution applicants as long as they were as per law. In the first case of M/s SEAHAWK, the order clearly states that the CoC is directed to consider the resolution plan, which is submitted by the Applicant as per law in its order in I.A. No. 3593 of 2022 and subsequently when Jindal Power Limited approached the Adjudicating Authority in I.A No. 3223 of 2023, it again acknowledged that an opportunity be given to submit the resolution plan to maximise the value of Corporate Debtor asset. However, this opportunity will be subject to compliance with the provisions contained in Regulation 39(1-B) read with Regulation 36-B(7) IBBI (CIRP) Regulations, 2016. In the first case, even though opportunity was given to M/s SEAHAWK, it is confirmed by the RP that the resolution plan was not submitted. The claim of SRA viz. SEPOL that this resolution plan was rejected by the RP/COC on the same ground that it is not in compliance with the provisions contained in Regulation 39(1-B) read with Regulation 36-B(7) IBBI (CIRP) Regulations, 2016 and now in the case of JPL they have changed their stand and recommending for resolution plan to be considered.
The Regulations do not permit the proposals to be entertained which are not there in the final list of the PRAs and the Adjudicating Authority has acted as per this provisions.
If unsolicited plans are obtained at any stage it will cause unnecessary avoidable delay in the CIRP process. If resolution plans are allowed to be submitted at any stage, it will make the whole CIRP process unending. To curtail the delay in the CIRP process, it is appropriate to restrain the tendency to consider resolution plans after the time as specified by the CoC and from someone not in the final list of PRAs. This has been the spirit and justification of newly inserted provisions in the Regulations in 2021 and which has been eloquently described in the Discussion Paper of the IBBI, before changes were brought in and which have also been referred to by SRA viz. SEAPOL.
RP/CoC should finalize the proposal at hand which is in a sealed cover with them and was improved as per their suggestions and if it is not satisfied, as per the provisions of Regulation 36B(7) of the CIRP Regulations it can reject the resolution plan submitted by M/s SEAPOL and proceed as per the Code and Regulations.
There are no merit in the present Appeal, which if allowed would mean contravention and violation of Regulation 39(1- B) read with Regulation 36-B(7) of IBBI (CIRP) Regulations, 2016 - The Appeal is, therefore, dismissed.
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2024 (1) TMI 402
Approval of Resolution plan - payments to related parties - discrimination in Resolution Plan - HELD THAT:- Related parties cannot claim entitlement of any amount in the plan and cannot claim any discrimination with regard to payments to unrelated unsecured Financial Creditors.
Respondent has rightly placed reliance on the judgment of the Hon’ble Supreme Court in “M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder and Anr.- [2023 (5) TMI 344 - SUPREME COURT] ” where Hon’ble Supreme Court had occasion to consider the provisions of the IBC specially the payments to related parties and discrimination in the Resolution Plan. In relation to related party, it was held by the Hon’ble Supreme Court that there is no provision in the Code which mandates that related party should be paid in parity with unrelated party.
It is also relevant to notice that submission which is advanced by the Appellant is with regard to discrimination in payments to the workers and employees. No workers and employees have any grievance nor any workers and employees is dissatisfied with the payments made under the plan to them nor have they come in Appeal. Plan has been approved with 82.40% vote shares of the CoC - view of the Adjudicating Authority also confirmed that there is no non-compliance of Section 30(2) of the IBC.
Thus, no grounds have been made out to interfere with the impugned order which have been challenged in these Appeals - Both the Appeals are dismissed.
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2024 (1) TMI 344
Validity of assessment orders which is part of the resolution plan sanctioned by NCLT - Recovery of demand - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are accordingly dismissed.
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2024 (1) TMI 343
Time Limitation - Condonation of delay of 20 days in filing and 191 days in re-filing the Special Leave Petitions - HELD THAT:- Since the impugned order of the National Company Law Appellate Tribunal dated 28 September 2022 is amenable to the appellate jurisdiction of this Court under Section 62 of the Insolvency and Bankruptcy Code 2016, we decline to entertain a petition under Article 136 of the Constitution. The bar of limitation cannot be obviated or circumvented by taking recourse of proceedings under Article 136 of the Constitution when a statutory appeal is available.
The Special Leave Petitions declined only on that ground leaving it open to the petitioner to adopt appropriate remedies in accordance with law.
The Special Leave Petitions are, therefore, dismissed on the ground of delay as well as on merits.
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2024 (1) TMI 342
Petition filed by the Appellant challenging the decision of the Resolution Professional rejecting the claim of the Appellant as Financial Creditor, dismissed - HELD THAT:- From the materials brought on the record, it is clearly prove that there is no disbursement by the Appellant to the Corporate Debtor. When there is no disbursement for time value of money essential ingredients to prove a financial debt is missing. As noted, in Form C which was filed by the Appellant, financial debt was claim on the basis of inter corporate loan given from time to time. It is not the case of the Appellant that any inter corporate loan was given to the Corporate Debtor at any point of time. According to the own case of the Appellant what was claimed in Form C was neither proved nor substantiated. In the application which was filed by the Appellant before the Adjudicating Authority there was no mention of any loan at any point of time given to the Corporate Debtor by the Appellant.
Whether there was any financial debt owed to the Appellant by the Corporate Debtor for which the claim was filed? - HELD THAT:- The Balance Sheet even if it is taken on its face value does not in any manner prove that there is any financial debt. The financial debt ought to have reflected under the heading of borrowings and there being no reflection of the claim which is filed in Form C under the heading ‘borrowings’. The Submission of the Appellant that the balance sheet supports the claim of the Appellant cannot be accepted. The balance sheet as on 31.03.2022 does not prove that there was any financial debt owed by the Corporate Debtor to the Appellant.
The Adjudicating Authority in exercise of its jurisdiction under subsection (5) of Section 60 having adjudicated the claim as submitted by the Appellant, the question to be answered in this Appeal is as to whether the order of the Adjudicating Authority adjudicating the claim of the Appellant is sustainable or not. Adjudicating Authority after noticing the judgment of the Hon’ble Supreme Court in PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [2020 (2) TMI 1259 - SUPREME COURT] has held that the applicant has failed to prove the transaction as a deposit of money or a loan from the applicant’s account to the Corporate Debtor’s account.
The Adjudicating Authority did not commit any error in rejecting application filed by the Appellant. There is no merit in the Appeal - appeal dismissed.
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