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IBC - Case Laws
Showing 641 to 660 of 9152 Records
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2024 (1) TMI 341
Maintainability of Section 9 application - pre-existing dispute - Appellant claims that the Adjudicating Authority allowed the CIRP under Section 9 application despite pre-existing dispute with respect to the outstanding amount and quality of work rendered by Operational Creditor - HELD THAT:- The Adjudicating Authority has rightly concluded that there is a debt, which is more than Rs. 1,00,000/- and due and has not been paid and the Appellant had defaulted in making full payments against the services rendered by the Operational Creditor. Therefore, it has rightly proceeded for CIRP proceedings under Section 9 of the Code.
There are no error in the order of the Adjudicating Authority - appeal dismissed.
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2024 (1) TMI 340
Maintainability of section 9 application - time barred claims or not - HELD THAT:- Undeniably the purchase orders have been placed by the Corporate Debtor and the goods have been supplied by the Petitioner. Invoices have been raised by the Petitioner, part payment have also made by the Corporate Debtor and there is also a confirmation of balance in the shape of statement of accounts, which is duly acknowledged and signed by the authorised signatory of the Corporate Debtor. Further, there is evidence to prove the supply of the material to the Corporate Debtor and it has also availed ITC of GST on the goods received by it. Based on these facts, the Adjudicating Authority has come to a conclusion, that all the issues raised by the Corporate Debtor have been duly noted and findings have been returned on all the issues raised in the Corporate Debtor, basis the documentary evidence available with it.
After hearing both the parties the Adjudicating Authority has come to a conclusion that the petition is admissible and accordingly it has passed the Section 9 proceedings for CIRP against the Corporate Debtor namely, M/s Kevin Ventures LLP.
The Adjudicating Authority has on the basis of all the documents come to a conclusion that CIRP proceedings should be initiated against the Corporate Debtor under Section 9 of the Code, and for the above-mentioned reasons, there are no error in the findings.
Appeal dismissed.
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2024 (1) TMI 339
Maintainability of section 7 application - initiation of CIRP - impugned order passed by the Adjudicating Authority without considering the written submissions of the Corporate Debtor thus rendering the impugned order perverse - violation of principles of natural justice - failure to recognize that the Financial Creditor had failed to produce incontrovertible and unimpeachable evidence to prove the debt - OTS offers made on more than one occasion clearly constitute acknowledgment of debt and default or not - time limitation - Bar under Section 10A.
Opportunity of hearing - HELD THAT:- The matter having been heard on 8 occasions and permission having been granted to file written submissions even after the matter was reserved for orders and this opportunity had also been availed by the Corporate Debtor, the contention of having been denied opportunity to be heard before the Adjudicating Authority lacks foundational basis.
Contention that Adjudicating Authority had failed to recognize that the Financial Creditor had failed to produce incontrovertible and unimpeachable evidence to prove the debt - HELD THAT:- It was clearly indicated in the letter that the FDR amount of Rs. 50 lakh was required to be restored. This replenishment was however not done by the Corporate Debtor and therefore there is substance in the contention of the Financial Creditor that EMI appropriation from the FDR cannot be treated as automatic regularization of the loan account and that this was clear evidence of debt and default.
Whether OTS offers made on more than one occasion clearly constitute acknowledgment of debt and default? - HELD THAT:- In the face of multiple communications wherein the Corporate Debtor has admitted debt and default, the Adjudicating Authority did not commit any error in holding that these OTS proposals constitute acknowledgement.
Whether the Section 7 application was filed on time or whether it was barred by limitation? - HELD THAT:- Clearly the OTS proposals, which undisputedly fall within the three- year period from the date of default, clearly provided for a fresh period of limitation of three years - it is found that the Adjudicating Authority did not commit any error in holding that the OTS proposals dated 24.08.2020 and 11.11.2022 constitute acknowledgement under Section 18 of the Limitation Act, 1963 and hence the Section 7 application filed on 24.01.2023 was correctly held to be within the limitation period.
Bar under Section 10A - HELD THAT:- A bare reading of Section 10A shows that what is barred is initiation of CIRP proceedings when the Corporate Debtor commits any default during the Section 10A period. However, if the default is committed prior to the Section 10A period and continues in the Section 10A period, this statutory provision does not put any bar on the initiation of CIRP proceedings. The present is a case where the default has been committed by the Corporate Debtor prior to commencement of Section 10A period. The default having been committed before the bar of Section 10A came into play, the Corporate Debtor was clearly not entitled to claim that the Section 7 application was not maintainable.
Thus, no error has been committed by the Adjudicating Authority in allowing the Section 7 application and admitting the Corporate Debtor into the rigours of CIRP - appeal dismissed.
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2024 (1) TMI 338
Approval of Resolution Plan - whether the Adjudicating Authority went into the details of the deliberations of the 6th CoC meeting to find out whether there was sufficient substance in the plea of the Appellant in IA 2304 of 2022 to seek more time to consider the resolution plan? - HELD THAT:- There was no modification in the resolution plan of DK except on the BSP issue and exclusion of wooden flooring in the Master bedroom and this modification was communicated to all CoC members well before the 6th CoC meeting. In any case, both these modifications, at best, would have had a direct bearing on the interests of the home-buyers and not of the Appellant. Further it is noticed that resolution applicant categorically submitted that their plan is final and members may vote on that plan only. The RP infact allowed more time to the Financial Creditors other than the Home-buyers for voting by keeping it open for them for 72 hours instead of 24 hours. In this backdrop, it is not found that the RP committed any error in concluding that the Appellant had failed to substantiate that there was sufficient ground for claiming additional time to study the modified plan.
Present is not a case where the Appellant has been able to successfully point out any breach of procedure or manifest error in the conduct of the CIRP proceedings which deserve rolling back of the e- voting results.
It needs no emphasis that unwarranted delays in resolution lead to depletion in the value of the assets of the Corporate Debtor. This is neither in the interest of CIRP nor in the interest of the Corporate Debtor. In the present case, extension of CIRP was already granted by the Adjudicating Authority on 24.05.2022 on the expiry of 180 days. The maximization of the value of the Corporate Debtor is admittedly an object of the CIRP and the said maximization has to be achieved within the timeline provided in the scheme. Thus, when a resolution plan is approved by the CoC with more than 66% vote share and submitted before the Adjudicating Authority for approval, it follows therefore that this process cannot be allowed to be frustrated on flimsy grounds. Hence, further delay in CIRP cannot be countenanced. The RP and the CoC cannot be faulted for disallowing further time to the Appellant to study the resolution plan of DK.
The Adjudicating Authority cannot interfere on merits with the commercial decision taken by the CoC unless it is found not to conform to Section 30(2) of the IBC - there are no error in the decision of the Adjudicating Authority to approve the resolution plan.
Appeal dismissed.
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2024 (1) TMI 304
Nature of transactions entered between the parties - Whether any financial debt was owned to the Appellant in the facts of the present case? - - HELD THAT:- In the present case, trade receivables by the Suppliers were discounted by the Financers and liability arose to the Corporate Debtor to pay the Financers as per Agreement and as per transactions carried on M1 Platform - the averments made by the Appellant noticed, which indicates that invoices were raised by the Suppliers at the behest of the Corporate Debtor were discounted by the Financers, hence, the Corporate Debtor was liable to make payment to the Financers along with interest. The transaction was that of discounting of the invoices by the Financers and the Financers have made payment to the Suppliers. The present is not a case that any disbursement is made to the Corporate Debtor by the Financers.
Liability to make payment to Financers arose to the Corporate Debtor as per Master Buyer Agreement 21.12.2018. The Corporate Debtor having failed to honour the commitment, a claim was filed by Assignee of Financer. Nature of transaction between the parties arose out of sale of goods and services - there are no financial transaction between the parties.
In the case of M/S. ORATOR MARKETING PVT. LTD. VERSUS M/S. SAMTEX DESINZ PVT. LTD. [2021 (8) TMI 314 - SUPREME COURT], it was held that Section 5 (8) does not expressly exclude an interest free loan. The above judgment of the Hon’ble Supreme Court was on entirely different facts, where Lender had advanced a loan without any interest - The present is not a case of financing any loan, rather present is a case of transaction of M1 Platform, on which Platform, both Seller, Buyer and Financers are registered and transaction takes place for sale and purchase of goods and discounting of invoices, payments and recoveries of payment by Financers. The transaction emanates from sale and purchase of goods in the present case. No disbursement was made to the Corporate Debtor, hence, the transactions cannot be held to be a financial debt - there are no error in the order of the Adjudicating Authority agreeing with the view of the RP that claim of the Appellant is only an ‘operational debt’.
There are no ground to interfere with the impugned order. There is no merit in the Appeal - appeal dismissed.
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2024 (1) TMI 303
Rejection of claim by Resolution Professional - Resolution Plan was duly approved by the CoC - HELD THAT:- The Resolution Plan of the Corporate Debtor was approved by the CoC on 13.08.2021 and the Applications/ IA Nos.721 and 722 of 2023 were filed by the Appellant(s) in February 2023, i.e., more than one and a half year after approval of the Resolution Plan. The Adjudicating Authority has rightly taken the view that no good reasons have been explained by the Appellant(s) in filing the Application(s) with great delay of more than one and a half year. Resolution Plan having been approved by the CoC on 13.08.2021, the Adjudicating Authority rightly rejected the Application(s).
The mere fact that Application for approval of Resolution Plan is pending for consideration by the Adjudicating Authority does not entitle the Appellant(s) to file an Application for acceptance of their Claim after more than one and a half year of the approval of the Resolution Plan by the CoC.
The Resolution Plan of the Corporate Debtor, which was approved by the CoC on 13.08.2021 has now been approved by the Adjudicating Authority by order dated 23.06.2023, as has been pleaded by the Appellant in his additional affidavit. The Resolution Plan having been approved, the order approving the Resolution Plan dated 23.06.2023 has also been brought on record as Annexure A7 in IA No.5941 of 2023 filed by the Appellant in Company Appeal (AT) (Ins.) No.923 of 2023. The Resolution Plan has already been approved, which order has also not been challenged by the Appellant. In any view of the matter, after considering the facts and the sequence of event in the present Appeal(s), the Adjudicating Authority has rightly rejected IA Nos.721 and 722 of 2023, refusing to accept the prayer of the Appellant(s) to issue a direction to admit their claim.
No grounds have been made out to interfere with the order - Appeal dismissed.
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2024 (1) TMI 253
Recall of an order - seeking removal of the Appellant as RP - Application filed on the ground that RP in spite of request has not convened the meeting, hence he may be removed - HELD THAT:- On looking into Rule 49, sub-rule (2), it is clear that ex-parte order can be recalled on two grounds, firstly, when notice was not served or that the Respondent/ Applicant was prevented by any sufficient cause from appearing when the Application was called for hearing. The Adjudicating Authority in the impugned order, rejected the Recall Application holding that no sufficient case was shown for exercising the power under Rule 49 of the NCLT Rules, 2016.
The Appellant was well aware that case was listed for hearing on 12.05.2023 and he entered appearance through Counsel, who inspite of entering his attendance in chat box, is not shown to be present. The relevant fact to be noticed is that the Appellant was well aware of the date 12.05.2023. On 12.05.2023, according to the Appellant himself, the case could not be taken up due to paucity of time and next date was fixed. The Appellant’s case is that his Counsel wrongly noted the date as 08.06.2023 instead of 07.06.2023, hence, on 07.06.2023, he could not appear and the order was passed ex-parte against him - When a party appears on a date which is fixed before the Court, it is presumed that the party is well aware of the proceedings, which was taken up by the Court on the said date. On 12.05.2023, the next date fixed was 07.06.2023.
In the present case, the Appellant is not denying that he was not served with the copy of the IA No.2121 of 2023, nor he denies the service of copy of Application. The fact remains that he did not file reply within the time allowed and also did not appear on 07.06.2023, when the case was taken up - the Adjudicating Authority did not commit any error in rejecting IA No.3216 of 2023. The Adjudicating Authority being satisfied that no sufficient cause has been shown for nonappearance passed the impugned order dated 12.12.2023.
There are no good ground or reasons to interfere with the impugned order in this Appeal - appeal dismissed.
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2024 (1) TMI 187
CIRP - Right to claim set-off in the Corporate Insolvency Resolution Process, when the Resolution Professional proceeds in terms of clause (a) to sub-section (2) of Section 25 of the Insolvency and Bankruptcy Code, 2016 to take custody and control of all the assets of the corporate debtor - HELD THAT:- The IBC is a complete code relying upon the opening part of the enactment and Sections 238 and 243 takes care and nullifies the argument raised by the appellant Airtel entities that they are entitled to statutory set-off or insolvency set-off, in the Corporate Insolvency Resolution Proceedings under Chapter II Part II of the IBC. Regulation 29 of the Liquidation Regulations does not apply to Part II of the IBC. The legislation or even the legislative intent permits neither statutory set-off, nor insolvency set-off.
Subsection (2)(b)(ii) to Section 30 does not support the contention of the Airtel entities. Sub-section (2) to Section 30 deals with the resolution plan and the quantum of payment required to be made when considering a resolution plan under Chapter II Part II of the IBC. The provision requires that the Resolution Professional shall examine each resolution plan received by him to confirm that each plan provides for payment of debts of the operational creditor in the manner as may be specified by the Board. The Board has not specified the manner in which payment of debts to the operational creditor shall be made. However, the stipulation that the payment of debts to the operational creditor shall not be less than the amount that the operational creditors are entitled to in terms of the order of priority in sub-section (1) to Section 53 of the IBC is mandatory.
The section does not make Chapter III Part II, that is, Section 36(4)(e) or Regulation 29, applicable to the Corporate Insolvency Resolution Process under Chapter II Part II of the IBC. Secondly, clause (ii) to Section 30(2)(b) deals with the amounts to be paid to the creditors and not the amount payable by the creditors to the corporate debtor. Thirdly, clause (ii) to Section 30(2)(b) has appliance when the resolution plan is being considered for approval. Fourthly, and for the reasons elaborated earlier, and in view of the specific legislative mandate as incorporated and reflected in Chapter II Part II of the IBC, it is held that the provisions of the IBC relating to Corporate Insolvency Resolution Process do not recognise the principle of insolvency set-off.
We would reject the argument that insolvency set-off is automatic and self-executing. Self-execution may be acceptable in cases of contractual set-off, as held above.
On the aspect of mutual dealings and also equity, it is to be noted that adjustment of the inter-connect charges are under a separate and distinct agreement. The telephone service providers use each other’s facilities as the caller or the receiver may be using a different service provider. Accordingly, adjustments of set-off are made on the basis of contractual set-off. These are also justified on the ground of equitable set-off. The set-off to this extent has been permitted and allowed by the Resolution Professional. The transaction for purchase of the right to use the spectrum is an entirely different and unconnected transaction - Moratorium under Section 14 is to grant protection and prevent a scramble and dissipation of the assets of the corporate debtor. The contention that the “amount” to be set-off is not part of the corporate debtor’s assets in the present facts is misconceived and must be rejected.
There are no merit in the present appeals and the same are dismissed.
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2024 (1) TMI 186
Whether the amendments made in the substantive portion of Section 30(2), in terms of Explanation 2 will be applicable when the first appeal was heard by the NCLAT - HELD THAT:- Explanation 2(ii) clearly states that an appeal preferred under Section 61 or 62, when it is not barred by time under any provision of law, shall be heard and decided after considering the amended Section 30(2)(b) under the Amendment Act. In fact, Explanation 2(i) states that the amended clause shall “also” apply to the CIRP of the corporate debtor where a resolution plan has not been approved or rejected by the adjudicating authority. Explanation 2(iii) states that the amended Section 30(2)(b) shall “also” apply where legal proceedings have been initiated in any court against the decision of the adjudicating authority. Clauses (i), (ii) and (iii) of Explanation 2 reflect the wide expanse and width of the legislative intent viz. the application of the Amendment Act, whether proceedings are pending before the adjudicating authority, the appellate authority, or before any court in a proceeding against an order of the adjudicating authority in respect of a resolution plan. Only when the resolution plan, as approved, has attained finality as no proceedings are pending, that the amendments will not apply to re-write the settled matter.
A three Judge Bench of this Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT], has observed that Explanation 2 applies to the substituted Section 30(2)(b) to pending proceedings either at the level of the adjudicating authority, appellate authority or in a writ or civil court. Referring to several decisions, it is observed that no vested right inheres in any resolution applicant who has plans approved under the Code.
Interpretation of Section 30(2)(b)(ii) of the Code - HELD THAT:- As per Section 30(2)(b)(ii), the dissenting financial creditor is entitled to payment, which should not be less than the amount payable under Section 53(1), in the event of the liquidation of the corporate debtor. The provision recognises that all financial creditors need not be similarly situated. Secured financial creditors may have distinct sets of securities - the resolution plan accepted by the requisite creditors/members of the CoC upon voting, is enforceable and binding on all creditors. The CoC can decide the manner of distribution of resolution proceeds amongst creditors and others, but Section 30(2)(b) protects the dissenting financial creditor and operational creditors by ensuring that they are paid a minimum amount that is not lesser than their entitlement upon the liquidation of the corporate debtor.
The provisions of Section 30(2)(b)(ii) by law provides assurance to the dissenting creditors that they will receive as money the amount they would have received in the liquidation proceedings. This rule also applies to the operational creditors. This ensures that dissenting creditors receive the payment of the value of their security interest.
The contention on behalf of the respondent that there is conflict between sub-section (4), as amended in 2019, and the amended clause (b) to sub-section (2) to Section 30 of the Code does not merit a different ratio and conclusion. Section 30(4) states that the CoC may approve the resolution plan by a vote not less than 66% of the voting share of the financial creditor. It states that the CoC shall consider the feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors under sub-section (1) to Section 53, including the priority and value of the security interest of the secured creditors, and other requirements as may be specified by the Board. These are the aspects that the CoC has to consider. It is not necessary for the CoC to provide each assenting party with liquidation value - The conflict with sub-clause (ii) to clause (b) to sub-section (2) to Section 30 does not arise as it relates to the minimum payment which is to be made to an operational creditor or a dissenting financial creditor. A dissenting financial creditor does not vote in favour of the scheme. Operational creditors do not have the right to vote.
It is felt appropriate and proper if the question framed at the beginning of this judgment is referred to a larger Bench. The matter be, accordingly placed before the Hon’ble the Chief Justice for appropriate orders.
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2024 (1) TMI 185
Dismissal of section 7 application - case of debt and default in the context of IBC which deserved admission of Section 7 application filed by the Appellants or not - HELD THAT:- The Adjudicating Authority has recorded the finding that the Facility Agreement relied upon by the Appellants in support of their debt is un-dated and hence discounted the same to be credible evidence to prove the existence of debt. More importantly, if the email of 07.02.2022 from the Respondent to the Appellants sharing the FFA is perused as has been placed at page 231 of the Appeal Paper Book (APB), it is found that it is only a draft agreement seeking comments/observations of the Appellants. Furthermore, it is noticed that the FFA which has been placed on record at Annex A-5 of the APB does not have the signature of the Respondent but it is the Appellant No. 6 who has signed for the Corporate Debtor as may be seen at page 270 of the APB - there are no mistake on the part of the Adjudicating Authority in not relying on the FFA to prove the existence of debt.
The other ground to prove existence of doubt which has been adverted to by the Appellants is that the financial debt is also disclosed in the provisional balance sheet dated 03.03.2022 as shared by the Respondent themselves vide their email dated 04.03.2022 - The Respondent failed to repay the said credit facilities and hence this is a clear case of debt and default.
The Adjudicating Authority in the impugned order has noticed that the Appellants had sold their shareholding to OMAT by executing the SPA on 03.02.2022 after payment of a lumpsum amount settled between the two parties. The Adjudicating Authority after perusal of the SPA has further noted that Schedule 1A and 1B of the SPA shows that the new management of the Respondent had settled the deal with all the shareholders at a lumpsum amount of Rs.10.62 crore - the Adjudicating Authority has rightly concluded that it was not satisfied with the evidence produced before it by the financial creditor to prove that a debt had crystallized beyond doubt and that a default has occurred.
The Adjudicating Authority has rightly dismissed the Section 7 application filed by the Appellant - the impugned order does not warrant any interference. There is no merit in the Appeal - Appeal dismissed.
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2024 (1) TMI 142
Approval of the Resolution Plan - power of the Adjudicating Authority to remit the Resolution Plan for consideration before the CoC - HELD THAT:- In EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED & ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED & ORS. [2021 (9) TMI 672 - SUPREME COURT], the Hon’ble Supreme Court has considered a case where Successful Resolution Applicant sought to withdraw the Resolution Plan and third withdrawal application before the Adjudicating Authority for permitting withdrawal of the Resolution Plan was allowed which order was set aside by this Appellate Tribunal against which the Civil Appeal was filed before the Hon’ble Supreme Court.
The law is thus well settled that the Resolution Plan approved by the CoC is binding on the CoC and it cannot have reviewed its own decision or pray for review of its opinion. Adjudicating Authority in the impugned order has taken the view that the Resolution Plan can be sent for re-consideration to the CoC - Present is not a case where CoC is claiming in its application that the Resolution Plan which was approved by the CoC is in violation of any provisions of Section 30(2).
There is a delay in implementation of the Resolution Plan of ‘Allied Strips Limited’ and ‘Tirupati Infraprojects Private Limited’ by the Appellant was very much raised before the CoC and were considered by the CoC before approving the Resolution Plan of the Appellant and the CoC is well aware that there is delay in implementation of the plans of ‘Allied Strips Limited’ and ‘Tirupati Infraprojects Private Limited’ which was noticed in its minutes as has been brought on the record - From the facts of the present case, out of two entities for which allegation was made of non-implementation. Admittedly, for one i.e. ‘Allied Strips Limited’ has been implemented and for other plan has not been implemented but that itself shall not impart any ineligibility.
There were no grounds on which the plan could have been sent back for reconsideration before the CoC. In result, both the Appeals are allowed.
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2024 (1) TMI 93
Disciplinary enquiry / proceedings against Resolution Professional (RP) - Automatic suspension of Authorization For Assignment (AFA) of the Resolution Professional - Regulation 23A of the Model Bye-Laws and Governing Board of Insolvency Professional Agencies Regulations, 2016 - liquidator-petitioner shared the details of the valuation report of the assets of the company with all the scheme proponents, as a result of which all of them quoted the same price.
The petitioner does not deny that he shared the valuation report, but defends it on the ground that he was under an order of the NCLT to try for a compromise under Sec.230 of the Companies Act and backs it up with the ratio of the Hon'ble Supreme Court in Vijay Kumar Vs Standard Chartered Bank [2019 (2) TMI 97 - SUPREME COURT] and that of the NCLT in Hemant Shantilal Shah & another Vs Care Office Lt., [2022 (4) TMI 522 - NATIONAL COMPANY LAW TRIBUNAL , AHMEDABAD BENCH].
Whether the show cause notice which the IBBI has served on the petitioner is legally sustainable?
Whether this petition is entertainable when only a show cause notice of a statutory body is in challenge?
HELD THAT:- Inasmuch as the petitioner has admitted that he had shared the valuation report of the CD, this Court considers that a prima facie ground is available for the IBBI to issue the show cause notice.
The prima facie view of this Court is that when the petitioner ceases to be a Resolution Professional, and starts wearing the cap of a liquidator, the role of IIIP of ICAI vis-a-vis its member ceases. Hence, this Court considers, that at the best the decision of the IIIP of ICAI can be a piece of evidence in the proposed disciplinary proceedings but may not be adequate to affect the jurisdiction of the IBBI to initiate a disciplinary action against the petitioner.
Turning to suspension of the petitioner is concerned, this is an automatic process on commencement of a disciplinary proceedings under Regulation 23A of the IBBI (Model Bye-laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. This cannot be interfered with since this Court finds that the IBBI has the jurisdiction to initiate a disciplinary proceedings, and in the instant case it is not established to be a malafide exercise of statutory power.
The petitioner will have all the liberty to put forth his entire line of defence disciplinary enquiry, which needless to say includes all that the grounds on the basis of which he has now challenged the show cause notice - Petition dismissed.
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2024 (1) TMI 92
Maintainability of Letters Patent Appeal - CIRP - Seeking RBI to take action against HSBC Bank - Independent right of appellant to approach the court in capacity as a Member of the erstwhile Board of Directors - approval of resolution plan was also granted - HELD THAT:- Once approval of the Resolution Plan was granted by the NCLT on 27.4.2023 and the Resolution Applicants have taken control of the respondent no.4 Company, and the existing equity share capital of the 4th respondent stood written off in view of the Clean Slate Principle envisaged under the IBC, the said order is binding on the appellant as well (see para 40 of the order dt.27.4.2023 of the NCLT) - Consequently, the appellant-writ petitioner ceased to be not only a share holder but also a Member of the Board of Directors of the 4th respondent.
The appellant has no locus either as a Share Holder or as a Director or as a Former Director of the 4th respondent to continue this Letters Patent Appeal, particularly when no leave of the NCLT had been obtained to pursue this Letters patent Appeal by him.
Also, when the Management of the 4th respondent already stood transferred by reason of approval of the Resolution Plan by the NCLT, it’s new Management should pursue the grievance which is now being pursued by the appellant.
There are no merit in the appeal - appeal dismissed.
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2024 (1) TMI 91
Approval of the resolution plan - whether the amount which has been assessed by the Appellant at a later date i.e. on 10.07.2019 and was not an assessed amount, being part of Form B as on 18.02.2019 has rightly been rejected by the RP and the Adjudicating Authority?
HELD THAT:- In the present case, it is found that CIRP was initiated on 12.06.2018, public announcement was made on 15.06.2018, the time period provided of 90 days expired on 15.09.2018 but still keeping in view the fact that it is a matter qua the amount of EPF, Form B was as on 18.02.2019 was entertained but in so far as the amount of interest and penalty is concerned, there was an inordinate delay as it has been assessed on 10.07.2019.
Before parting with this order, Counsel for the Appellant has drawn our attention to an observation made by the Adjudicating Authority in the first appeal in Para 15 of the impugned order where it has been said that “statutory dues of the CD are also settled at 10% of the admitted claims”. In this regard, it is submitted that in view of the judgment of this Tribunal rendered in the case of JET AIRCRAFT MAINTENANCE ENGINEERS WELFARE ASSOCIATION VERSUS SHRI ASHISH CHHAWCHHARIA RESOLUTION PROFESSIONAL FOR JET AIRWAYS (INDIA) LTD., COMMITTEE OF CREDITORS OF JET AIRWAYS (INDIA) LTD., HDFC BANK, M/S. VRIHIS PROPERTIES PRIVATE LIMITED [2022 (2) TMI 627 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] the admitted claim has to be released. Counsel for the Respondent has submitted that there is no quarrel with the law laid down by this Court in this regard which has further been affirmed by the Hon’ble Supreme Court in appeal.
The first appeal is partly allowed only to the extent that the amount of Rs. 15,62,128/-, being statutory dues of the provident fund shall be paid by the Resolution Applicant. The rest of the contention raised in this appeal are hereby rejected.
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2024 (1) TMI 90
Refund of home buyers who had obtained a decree from the RERA - to be treated as separate class or not - HELD THAT:- On perusal of the very fact that the Appellants have obtained a decree from UP RERA and the issue decided in the case of Vishal Chelani & Ors. [2023 (10) TMI 949 - SUPREME COURT] was whether they form a separate class has been decided that they are also to be treated as such alongwith other home buyers/financial creditors for the purpose of resolution plan and the argument raised by the Respondent that a provision has already been made in the resolution plan for the purpose of refund in Clause (B3)(c), there are no error in the impugned order and thus the present appeal is hereby dismissed though without any order as to costs.
Appeal dismissed.
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2024 (1) TMI 89
Maintainability of application - initiation of CIRP - existence of pre-existing dispute or not - Respondent stated that there were clear pre-existing disputes with the Appellant and he sent e-mail dated 10.05.2021 much prior to demand notice sent by the Appellant under section 8 of the Code.
HELD THAT:- The fact that Air India being one of the largest airlines operating large number of flights on Domestic routes was one of the significant revenue contributor and Air India not allowing players in the airline business using the Amadeus Software under the GDS might have impacted the business of the Respondent. Attention has been drawn by the Respondent that the Appellant never replied to the e-mail of the Respondent dated 10.05.2021 and the Appellant never addressed the issue of termination of its software by Air India and Jet Airways.
The e-mail dated 10.05.2021 sent by the Respondent to the Appellant under title of “Intimation of breach of contract” much prior to issue of demand notice under Section 8 of the Code, is nothing but pre-existing disputes and thus the dispute is squarely covered by the judgement of the Apex Court in Mobilox Innovations [2017 (9) TMI 1270 - SUPREME COURT].
The Adjudicating Authority after considering all documents and facts correctly held that there was a pre-existing dispute and the appeal raises no valid grounds to controvert the said finding - there are no error in the Impugned Order under challenge - appeal dismissed.
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2024 (1) TMI 47
Admission of application u/s 9 of IBC - non-service of notice - Adjudicating Authority did not issue any notice to the Appellant and without issuance of any notice to the Appellant, direction to proceed ex-parte was passed - violation of principles of natural justice - HELD THAT:- Service of notice prior to filing of the Application is requirement of the NCLT Rules and even if the advance notice was served by the Operational Creditor the requirement of rule 37 is not dispensed with unless the party itself appears before the Adjudicating Authority and in event the corporate debtor itself appears there is no requirement of any notice under Rule 37 but when a party does not appear notice has to be issued to show cause and fix the date for appearance in NCLT Form 5.
The present is a case where no notice was issued by the Adjudicating Authority and only on the statement of Learned Counsel for the Operational Creditor that Corporate Debtor has not appeared despite service, the Adjudicating Authority proceeded to direct ex-parte hearing.
When notice required under Section 37 which was not issued and the Adjudicating Authority proceeded against the Corporate Debtor, it is opined that the Order admitting section 9 Application suffers from error and need to be interfered with - the Order impugned is set aside - appeal allowed.
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2024 (1) TMI 46
CIRP - Jurisdiction of Adjudicating Authority - imposition of cost / fine and intent of Section 70 of IBC - Allegation that, appellants (suspended director) were not co-operating with the Liquidator - HELD THAT:- There are no hesitation in holding that the word “fine”, used consciously by the Adjudicating Authority in the Impugned Order, is covered in penalty which is required to be dealt under Section 70 and 236 of the Code and which further is not within jurisdiction of the Adjudicating Authority.
It is concluded that clearly the Adjudicating Authority erred in passing the Impugned Order overlooking the law of the land through the Code and also ignoring the precedent cases settled by this Appellate Tribunal earlier.
The Impugned Order is set aside - matter remanded back to the National Company Law Tribunal, New Delhi Bench to have a fresh look and decide in accordance with the law.
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2024 (1) TMI 45
Approval of Resolution Plan - resolution plan approved by the CoC of the Corporate Debtor with 77.54% - impugned order having been passed by a single member, is contrary to the provision of Section 419(3) of the Companies Act, 2013 or not - non-speaking order - violation of principles of natural justice.
Whether as per Section 419(3) of the Act, the order has to be passed by two members or a single member until and unless there is a notification specifically issued in this regard? - HELD THAT:- It is clear from the bare reading of Section 419(3) of the Act that the powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member but still a single Judicial Member can exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify - In the present case which is pending since 2020, nothing has been brought on record by the Respondents that there has been a notification in this regard much less in terms of first proviso to Section 419 (3) of the Act authorising the solitary judicial member (Acting President at that time) to entertain unnumbered applications filed by RP and Resolution Applicant to decide the same in such a summary manner, therefore, the answer to this question is that until and unless a notification is issued under the first proviso to Section 419(3) of the Code the single judicial member cannot take upon itself the jurisdiction to entertain an application such like the one in hand and decide the same, therefore, the impugned order has been passed by an authority having no jurisdiction.
Administrative order issued on 22.03.2020 by none else than the NCLT - HELD THAT:- This administrative order was issued in the wake of Covid-19. It was specifically mentioned in the said instructions that because the whole country is fighting against Covid-19, therefore, during this period the serious matter like extension of time, approval of resolution plan and liquidation shall not be entertained as urgent matters - It is needless to mention that on the one hand the Adjudicating Authority itself is issuing instructions that the issue regarding the extension of time, approval of the resolution plan and liquidation should not be treated as urgent matter and on the other hand the Acting President heard the unnumbered applications treating them most urgent and then approved the resolution plan only on the basis that the CoC has already approved the same without recording his satisfaction about Section 30(2) of the Code.
The impugned order is patently illegal as it is without any reason which is the heart and soul of a judicial order because the Adjudicating Authority has passed the order though referring to Section 31 of the Code but it has not recorded its satisfaction about the provisions of Section 30(2) of the Code - the impugned order is not only illegal, but also unreasonable and non-speaking.
The matter has to be remanded back to the Adjudicating Authority to decide the issues again after recording its findings in accordance with law - Appeal allowed by way of remand.
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2024 (1) TMI 44
CIRP - Interpretation of statute - right of Operational Creditor to seek a copy of the information memorandum - Operational Creditor is merely a participant in the CoC and not a member.
HELD THAT:- The Respondent has admitted that he is only a participant. It is also an admitted fact that there is no definition of member provided in the Code or the Regulations which has been repeatedly used in the Code as well as Regulations. Section 21 deals with the composition of CoC and Section 21(2) provides that member shall be the financial creditors of the Corporate Debtor. Section 25 is in regard to the preparation of information memorandum. Section 29(2) says that the information memorandum has to be provided to the resolution applicant whereas Regulation 36 provides that it has to be given to each of the member of the committee and Regulation 36(4) provides that it shall be given to the resolution applicant.
From the aforesaid two provisions and the fact that the Code and Regulations are totally silent about the supply of the information memorandum to the participant, it has to be inferred that the legislature has made a provision for providing a copy of the information memorandum to the member of the CoC and the Resolution Applicant but not to the participant of the meeting of the CoC such like the present Respondent. Therefore, the finding recorded by the Adjudicating Authority that since there is no prohibition in the Code or the Regulations for providing the information memorandum to the Operational Creditor as a participant is totally erroneous and unsustainable.
In so far as, the decision of the Hon’ble Supreme Court in Vijay Kumar Jain [2019 (2) TMI 97 - SUPREME COURT] is concerned, reference firstly is made to the facts of the said case. In that case, the Appellant was the member of the suspended board of director. He was aggrieved because he was not given the copy of the resolution plan and was denied even participation in the meeting of the CoC. In this background, the Hon’ble Supreme Court has held, in Para 9 of the Judgment, that in view of Section 30(2)(b) of the Code since repayment of debts is an important part, therefore, the resolution plan has to be given to the participant of the CoC - As far as Para 12 of the said judgment is concerned, it talks about the information memorandum which is to be given to the resolution applicant so that he may submit the resolution plan in terms of Section 30 of the Code and the CoC get the information memorandum so that they can assess the financial position of the Corporate Debtor before the meeting. There is no reasonable nexus attached with the supply of information memorandum to the participant such like the Operational Creditor - In such circumstances, the judgment in the case of Vijay Kumar Jain which is on its own facts has wrongly been relied upon by the Adjudicating Authority while passing the impugned order.
The question framed in the beginning is hereby answered to the effect that the Operational Creditor being a participant in the meeting of the CoC has no right to seek a copy of the information memorandum.
There are merit in the appeal, the same is hereby allowed and the impugned order is set aside.
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