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IBC - Case Laws
Showing 741 to 760 of 9152 Records
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2023 (11) TMI 967
Section 9 Application not admitted - pre-existing dispute between the parties - Disputed reply to the notice - HELD THAT:- The Appellant submits that the Reply to the Demand Notice was not correct reply and it was duly explained in the Rejoinder by Corporate Debtor - On looking into the Reply to the Demand Notice, the notice is clearly notice of dispute. When the Corporate Debtor immediately after first design was submitted said that it was not complete and refund of Rs.3 Lakhs was claimed, the dispute was raised immediately after 31.07.2019, which was much prior to the Demand Notice. The averments made in the Reply to Demand Notice clearly indicate that dispute was raised which cannot be a moonshine or not supported by any material.
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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2023 (11) TMI 910
Approval of Resolution Plan - NCLAT / NCLT kept the application pending - Application seeking approval of a Resolution Plan for ACIL Limited (ACIL or Corporate Debtor) was kept in abeyance while directing the Official Liquidator (OL) to carry out a re-valuation of the assets of the Corporate Debtor and to provide exact figures/value of the assets and exact valuation details - HELD THAT:- In the case at hand, there was no occasion before the Adjudicating Authority- NCLT to be swayed only on the per se ground that the hair-cut would be about 94.25% and that it was not convinced that the fair value of the assets have been projected in proper manner as the bid of the appellant was very close to the fair value of the assets of ACIL. Ordering revaluation of the assets, by the OL, Ministry of Corporate Affairs, Government of India, in-charge of the particular area, cannot be justified.
As explained in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] and SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT], the Code was specifically introduced by Parliament for ensuring quick and time-bound resolution of insolvency of corporate entities in financial trouble, by first attempting to revive the Corporate Debtor, failure whereof would entail liquidation of the Corporate Debtor’s assets, and no unnecessary impediment should be created to delay or derail the CIRP. In the present case, both the NCLT and NCLAT erred to fully recognise that under the Resolution Plan, the Corporate Debtor was set to be revived and not liquidated. Thus, the minimum mandatory component in the Resolution Plan was only a reflection of the actual money, including upfront payment, which would go towards the FC(s). As discussed previously, the final Resolution Plan provided for the monetization proceeds of the land as also the avoidance amounts to go to the FC(s) of the Corporate Debtor.
At this juncture, it also cannot be lost sight of that it is for the FC(s) who constitute the CoC to take a call, one way or the other. Stricto sensu, it is now well-settled that it is well within the CoC’s domain as to how to deal with the entire debt of the Corporate Debtor. In this background, if after repeated negotiations, a Resolution Plan is submitted, as was done by the appellant (Resolution Applicant), including the financial component which includes the actual and minimum upfront payments, and has been approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with - It is worthwhile to note that the Adjudicating Authority has jurisdiction only under Section 31(2) of the Code, which gives power not to approve only when the Resolution Plan does not meet the requirement laid down under Section 31(1) of the Code, for which a reasoned order is required to be passed.
Under the circumstances, while this Court could have adopted the course of remanding the matter back to the NCLT for fresh/de novo consideration, but being conscious of the fact that such course would impede quick resolution as the CIRP is in a stalemate right from 01.09.2021 and after having applied our minds to the factual aspects also, it is not found that remand for consideration afresh, now, would serve the purpose of justice or aid the objects of the Code.
The order dated 01.09.2021 of the NCLT and the Impugned Judgment dated 19.01.2022 of the NCLAT are set aside - appeal allowed.
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2023 (11) TMI 909
Right to get registered as RP - Rejection of application of the Petitioner herein for registration as a Resolution Professional - rejection on the ground that she is not a fit and proper person to be appointed as an Insolvency Professional - HELD THAT:- An Insolvency Professional performs very important functions in the insolvency resolution process of a company. An Insolvency Professional virtually takes over the company during the period it goes through the insolvency resolution process. An Insolvency Professional in fact becomes the heart and brain of the company under the insolvency resolution process and a person having slightest of disqualification cannot be permitted to be appointed as an Insolvency Professional otherwise the entire purpose of the IBC will get vitiated.
Keeping in mind the functions and obligations of an Insolvency Professional, the Board has taken a decision that the Petitioner is not eligible to be registered as an Insolvency Professional because she is not a fit and proper person to be appointed as Insolvency Professional - As rightly contended by the learned Counsel for the Board, an Insolvency Professional is vested with the responsibility of managing the operations of the company undergoing the insolvency resolution process and all the assets of such a company are looked after by the Insolvency Professional.
A reading of the Regulations indicates that the Board can take a decision that a person who has been involved in any kind of financial irregularity cannot be appointed as an Insolvency Professional. The fact that the financial irregularity occurred 11 years ago and that the Petitioner has already paid the penalty for the same. Though the Petitioner might be eligible to be considered to be appointed as an Insolvency Resolution Professional but the decision of the Board not to permit the Petitioner to function as an Insolvency Professional cannot be said to be arbitrary - The question of adjudging as to whether a person is suitable for a particular job or not should be left to the appointing authority and more particularly when the appointing authority consists of experts. It is for the experts to decide as to who is best and most qualified for a particular job. The antecedents of a person is an important criterion to decide as to whether the said person is suitable for the post or not.
Even though the Petitioner can be registered as an Insolvency Resolution Professional but for determining as to whether the Petitioner is fit and proper candidate it is for the Board to take account of any consideration as it deems fit, including but not limited to the criteria of integrity, reputation and character. The Petitioner has been found guilty of fraudulent practices of violating market integrity and the decision of the Respondent Board to refuse the registration of the Petitioner as an Insolvency Professional cannot be said to be so perverse or irrational warranting interference under Article 226 of the Constitution of India.
This Court is of the opinion that the decision taken by the Board does not suffer from any irregularity which requires interference by this Court under Article 226 of the Constitution of India - Petition dismissed.
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2023 (11) TMI 908
Liquidation of Corporate Debtor - section 33 of IBC - HELD THAT:- It is an admitted fact that there was no Resolution Plan which was approved by the CoC, prior to the expiry of the CIRP Period and therefore, the Adjudicating Authority passed the Liquidation Order as mandated under Section 33 (2) of the Code. Having regard to the fact that the CIRP period of 270 days was over and the CoC had voted in favour of Liquidation of the Corporate Debtor Company with a 100 % majority, there are no substantial reasons in the argument of the Learned Counsel for the Appellant that their Plan ought to have been considered. The material on record establishes that Section 33 (1) (a) (i) and Section 33 (2) of the Code have been satisfied, IBC is a time bound process and the commercial wisdom of the CoC is to be given paramount importance for approval/rejection of a Resolution Plan.
The Hon’ble Supreme Court in a catena of Judgments namely, KALPRAJ DHARAMSHI & ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. & ANR. [2021 (3) TMI 496 - SUPREME COURT], K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK & OTHERS [2019 (2) TMI 1043 - SUPREME COURT] has laid down that the Judicial review of the Tribunals is limited in terms of impeding the commercial wisdom of the CoC except when a Plan is not in adherence to Section 30 (2) of the Code.
In the instant Case, there is no Resolution Plan in the offing, and the CoC has approved the Liquidation with a 100 % Voting as mandated under Section 33 of the Code, and there being no possibility of sale of the Corporate Debtor as ‘a Going Concern’, there are no substantial grounds to interfere with the well-considered Order of the Adjudicating Authority and hence, this Company Appeal is dismissed accordingly.
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2023 (11) TMI 907
Prayer for certain reliefs and concession consequent to going concern sale in the liquidation proceeding of Corporate Debtor - prayer to stay the e- Auction process/ sale process of the Corporate Debtor till fresh bids are invited for re-auction - direction to liquidator for maintenance of status quo - waterfall mechanism - HELD THAT:- Appellant, who was stakeholder of only 0.734% in the total value of stakeholders of the Corporate Debtor, was part of the Committee of Creditors and participated in the liquidation process by filing its claim, which was accepted. The Appellant has been distributed the proceeds of the liquidation as per the entitlement under Section 53 of the IBC. At no point of time, prior to holding of auction, i.e., 04.04.2022, any kind of objection was raised by the Appellant to the reserve price or against valuation obtained in the liquidation process by the Liquidator. It was only after the auction was over and Successful Bidder was declared, for the first-time letter dated 26.05.2022 was written to the Liquidator by the Appellant calling for relevant information.
It is clear that all that Appellant wanted was to stay the process of auction and sale of the Corporate Debtor. Auction having already completed on 04.04.2022, there was no occasion to stay the auction. Further process of Sale was to be undertaken as per the Liquidation Regulations. when the Successful Resolution Applicant has deposited the entire amount, issuance of Sale Certificate was as per the Liquidation Regulations, in which no objection can be raised by the Appellant.
There are no merit in any of the substance raised by learned Counsel for the Appellant in this Appeal to question the impugned order dated 11.11.2022. It is further relevant to notice that order dated 11.11.2022 is an order granting reliefs and concessions to Successful Auction Purchaser, when the sale of the Corporate Debtor is as going concern, the Successful Auction Purchaser is entitled to receive certain reliefs and concessions to run the Corporate Debtor as going concern.
Appeal dismissed.
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2023 (11) TMI 906
Calculation of interest on revocation of settlement - whether the rate of interest applicable for determining the claim of the ARCIL in CIRP proceeding is 22% or the rate of interest has to be 14.85%? - HELD THAT:- The application filed by the ARCIL for amending the rate of interest as 22% from 14.85% was rejected by the DRT which order was also affirmed by the DRAT. Writ Petition was filed by ARCIL against the order passed by the DRAT and DRT rejecting the Amendment Application. In the said Writ Petition, the High Court expressed its opinion that Amendment Application which was filed by the ARCIL for 22% interest was based on the Sanction Letter dated 28.02.2011. The High Court observed that when the Sanction Letter was itself revoked on 17.06.2013, there is no question of enforcement of rate of interest of 22% by carrying out amendment in the Original Application. The said observation made by the High Court fully support the submission raised by counsel for the Appellant - the fact cannot be lost sight that the Hon’ble Supreme Court by order dated 03.01.2019 while dismissing the SLP, clarified that the Tribunal shall, if it considers appropriate having regard to the circumstances of the case, decide on the appropriate rate of interest after hearing both sides. Thus, the determination of rate of interest was left open to the Tribunal after hearing both the sides.
The reason for the Adjudicating Authority for taking the decision for rate of interest as 22% essentially rest on the letter of the Corporate Debtor dated 10.02.2011, Sanction Letter dated 28.02.2011 and Modification Agreement dated 29.09.2011 as well as the Revocation Letter dated 17.06.2013. We now again revert to the aforesaid letters to find out the true import of the decision of the Adjudicating Authority. There is no dispute that the Corporate Debtor himself submitted the letter dated 10.02.2011 offering to pay 22% interest from 01.07.2010 - Settlement Agreement has also noticed due amounts payable to respective lenders as on 30.06.2010. What is the consequence of Revocation Letter dated 17.06.2013 on the rate of interest of 22% is the question which has arisen for consideration.
Emphasis has been laid by learned counsel for the Respondent is that what was revoked by the letter dated 17.06.2013 was only Sanction Letter dated 28.02.2011 and Modification Agreement dated 29.09.2011 was not revoked. When the Sanction Letter dated 28.02.2011 which for the first time provided for rate of interest of 22% p.a. with compounding at monthly rest from 01.07.2010 itself was revoked, it is difficult to see now Modification Agreement dated 29.09.2011 shall be operative. Modification Agreement dated 29.09.2011 is nothing but modification agreement in continuation of the Sanction Letter dated 28.02.2011 and when the original sanction letter itself was revoked, modification of agreement cannot survive.
There is no final determination of the rate of interest and the observations made by the Hon’ble High Court were on the basis of Revocation Letter dated 17.06.2013. The Financial Creditor has sanctioned the settlement of dues on fulfilment of terms as condition precedent as contained in letter dated 28.02.2011 that Rs.10 Crore was to be made upfront payment and rest of the amount was to be paid till 31.09.2011 - Modification Agreement itself has referred to Sanction Letter dated 28.02.2011, where terms and conditions which also have been reiterated in the Modification Agreement were noted.
The Adjudicating Authority has not correctly appreciated the consequence of the Revocation Letter dated 17.06.2013. By Revocation Letter dated 17.06.2013, the Settlement Agreement dated 28.02.2011 which provided for 22% rate of interest from 01.07.2010 came to an end. The Financial Creditor on the one hand revokes the Settlement Agreement and on the other hand wants to enforce 22% rate of interest which was agreed by Sanction Letter dated 28.02.2011 - thus, 22% rate of interest cannot be charged by the Financial Creditor and the determination of rate of interest by the Adjudicating Authority by the impugned order dated 21.07.2023 is erroneous and unsustainable.
In the facts of the present case, the Resolution Professional may re-verify the claim of the ARCIL as per the rate of interest of 14.85% within two weeks and submit it before the CoC as well as to the Successful Resolution Applicant who shall prepare an Addendum to be placed before the CoC within a period of two weeks thereafter. The Resolution Professional should compute the claim of the ARCIL on the basis of rate of interest as indicated above. The Addendum after approval, if any, be placed before the Adjudicating Authority to be considered along with the application for approval of the Resolution Plan - The Resolution Professional as well as CoC to complete the process, within a period of 60 days from today. Extension in CIRP process is granted for further 60 days from today to complete the process.
Appeal allowed.
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2023 (11) TMI 905
Seeking direction for rejection of Resolution Plan - sole financial creditor being related party to the Corporate Debtor - Appellant being under undue and coercive influence of Sunaina Singh which in turn purportedly vitiated the CIRP proceedings - Appellant not challenged the CIRP admission order or the constitution of CoC within 30 days from the date of the passing of the relevant orders by the Adjudicating Authority - challenging the order approving the resolution plan.
With the previous adjudication of IA 344 of 2020; IA 728 of 2020 and in the light of the decision of this Tribunal in CA (AT) (Ins.) 1065 of 2021 dated 14.07.2022 upholding the constitution of CoC and this matter having attained finality, whether the issue of sole financial creditor being related party to the Corporate Debtor can be raised again at this stage? - Whether the benefit of findings of the Hon’ble Delhi High Court in its order dated 29.07.2022 in CS(OS) 589/2021 regarding the Appellant being under undue and coercive influence of Sunaina Singh which in turn purportedly vitiated the CIRP proceedings was not available before the Adjudicating Authority and the Appellate Authority? - HELD THAT:- It is amply clear that this Tribunal on 14.07.2022 came to the categorical conclusion that Sunaina Singh was not a related party having resigned much before the filing of Section 7 application and that her case was not covered by the exception carved out in Phoenix (supra) judgment - it is also noted that this order of 14.07.2022 was not challenged by the Appellant and to that extent has attained finality.
The only issue at hand is the allegation raised by the Appellant that the benefit of findings of the Hon’ble Delhi High Court dated 29.07.2022 was not available to this Tribunal while passing its orders. Be that as it may, this contention lacks substance as we find that the Adjudicating Authority while passing the second impugned order in IA No. 1394/2022 has dwelled at length on the findings of the Hon’ble Delhi High Court dated 29.07.2022 before coming to the conclusion that the financial creditor in the present case is not a related party of the corporate debtor.
Having regard to the material facts on record which shows that Sunaina Singh resigned as Director of the Corporate Debtor on 25.03.2019 while the Section 7 application was filed on 25.09.2019 and CIRP of the Corporate Debtor commenced on 07.02.2020, we are satisfied with the above findings in the second impugned order that Sunaina Singh was not a related party of the Corporate Debtor having resigned much before the filing of section 7 application - the Adjudicating Authority while passing the second impugned order was fully abreast of the findings of the Hon’ble Delhi Court and has recorded detailed findings as to why these findings are distinguishable and inapplicable in determining the issue of Financial Creditor being a related party of the Corporate Debtor.
There is no force in the contention of the Appellant that the findings of the Hon’ble Delhi High Court in the context of related party allegation have been missed out by the Adjudicating Authority. The issue of sole financial creditor not being a related party to the Corporate Debtor has been well settled with due consistency both by the Adjudicating Authority and this Tribunal after noticing the relevant provisions of IBC and Phoenix judgment and cannot be reagitated at this stage now.
Whether the Appellant not having challenged the CIRP admission order or the constitution of CoC within 30 days from the date of the passing of the relevant orders by the Adjudicating Authority is now entitled to raise these issues belatedly at this stage when the resolution plan came up for approval? - Whether cogent grounds have been made out by the Appellant in terms of Section 61(3) of IBC for challenging the order approving the resolution plan and whether the Appellant under the pretext of contesting the approval of the resolution plan has attempted to indirectly challenge the CIRP admission order dated 07.02.2020? - HELD THAT:- It is trite law that under the IBC, once a debt becomes due or payable, in law and in fact, and there is incidence of non-payment of the said debt in full or part thereof, CIRP may be initiated by the Financial Creditor. The Adjudicating Authority only has to determine whether a default has occurred, i.e., whether the debt was due and remained unpaid. Once this is established, the CIRP has to be initiated against the Corporate Debtor. The Adjudicating Authority following this mandate of Section 7(5) of IBC had admitted the section 7 application on 07.02.2020 and initiated the CIRP against the Corporate Debtor. The CIRP admission order could have been challenged and an appeal filed within 30 days from the date of passing of the order. Admittedly, the Appellant never challenged the CIRP order - The statutory scheme of the IBC makes it clear that though the erstwhile Board of Directors are not CoC members, yet they have a right to participate in each and every meeting held by the CoC including right to discuss all the resolution plans presented in such meetings. In the present case too, pursuant to the constitution of CoC, notice of meetings of the CoC were duly sent to the Appellant. Despite service of notices upon the Appellant, it is clear that the Appellant chose neither to attend the meetings of the CoC and participate in the deliberations therein but never raised any objection on the CIRP process in spite of having knowledge of the ongoing CIRP.
The rival submissions made is that the Appellant has attempted to indirectly challenge the CIRP admission order dated 07.02.2020 under the pretext of contesting the approval of the resolution plan - The present prayer of the Appellant to set aside the order approving the resolution plan submitted by the SRA can only be sustained if grounds mentioned under Section 61(3) of the IBC are met.
In the present case, the CoC after considering the viability and feasibility of the resolution plan has approved the same with 100% vote share thereby fairly and squarely meeting the conditionalities laid down in Section 30(4) of the IBC. In the present case, the Resolution Professional after approval of the plan by the CoC filed an application before the Adjudicating Authority seeking approval of the Resolution Plan under Section 31 of the IBC.
The CoC has done due diligence and evaluated the matrix in approving the resolution plan of the SRA and the sole member of CoC having 100% voting share has already approved the plan in their commercial wisdom as contemplated under the law. The Appellant has failed to point out any material irregularity or contravention of any provision of law by the CoC in approving the plan. That being the case, the Adjudicating Authority with the limited powers of judicial review available to it, cannot substitute its views with the commercial wisdom of the CoC in rejecting the resolution plan unless it is found it to be contrary to the express provisions of law or there is sufficient basis which establishes material irregularity.
The scope of interference with an order approving the resolution plan is very limited. The approved resolution plan can only be challenged before the Appellate Authority on limited grounds in terms of Section 61 (3) of the IBC. However, the Appellant has failed to make out a case of applicability of any such limited grounds. The IBC provides for an initiation of timely resolution of the corporate debtor and in the instant case the resolution plan of the SRA having already been approved by the CoC and the Adjudicating Authority, it cannot now be open to interference on the ground that the CoC was not properly constituted. When the Appellant did not challenge the CIRP admission and constitution of CoC at the right point of time, it cannot raise the matter belatedly and make it a ground for rejection of the duly approved resolution plan.
There are no error in the first impugned order dated 12.04.2023 approving the Resolution Plan and in the second impugned order of the same date dismissing IA No. 1394 which sought rejection of the Resolution Plan - appeal dismissed.
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2023 (11) TMI 834
Provision of IBC are overriding the provisions of SARFAESI or not - Recovery from the Personal Guarantor of a corporate debtor - Seeking to declare that the provisions of the Insolvency and Bankruptcy Code, 2016 shall have overriding effect over the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- When an application is filed under Section 94, an interim moratorium shall commence on the date of the application in respect to all the debts and shall cease to have effect on the date of admission of such application.
Once an application for Insolvency Resolution Process is admitted, Section 101 will come into play and a moratorium will commence in relation to all the debts and shall cease to have effect at the end of the period of 180 days beginning with the date of admission of the application or on the date the adjudicating authority passes an order on the repayment plan under Section 114, whichever is earlier. Section 101 provides that during the moratorium period, any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed.
For an interim or final moratorium under Section 96 to come into force, the application filed by the debtor should be complete in all respects and without any procedural defects. In the case of the petitioner herein, the petitioner has only uploaded Ext.P4 application, which by itself cannot be treated as filing of an application as contemplated by Section 96.
Unless there is any repugnancy between the provisions of the IBC 2016 and the provisions of the Act, 2002, there is no question of IBC 2016 overriding the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in totality - the petitioner is not entitled to urge the overriding effect of IBC 2016 based on the facts of the case for yet another reason. As far as the proceedings under the Act, 2002 initiated by the Bank, the petitioner has been proceeded against in his capacity as guarantor to the financial advance by the LLP.
The securitisation proceedings against personal guarantors of corporate debtors can continue under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Therefore, initiation of a Section 94 (IBC 2016) proceedings by a Partner of an LLP in his capacity as a guarantor, cannot be averted to the proceedings initiated by the Bank against the petitioner, but in his capacity as a guarantor, under the Act, 2002.
Petition dismissed.
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2023 (11) TMI 833
CIRP Proceedings - Outstand Tax Dues claimed before the liquidator - Petitioner challenged the Validity of assessment order - Official Liquidator was not heard while finalising the assessment - bar under Section 14 of the IBC - HELD THAT:- From perusal of Section 14 of the IBC and several Judgments of the other High Courts as well as the Supreme Court, it is well settled that Section 14 of the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes. On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings. On perusal of the impugned orders Exhibits P-7 to P- 10, it is evident that the petitioner was issued notice to which reply was filed and after hearing, these orders in Exhibits P-7 to P-10 has been finalised.
There are no substance in the submissions of the Learned Counsel for the petitioner that: since the Official Liquidator was not heard, the order has become bad. It is the petitioner who was issued notice - petition dismissed.
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2023 (11) TMI 832
Prayer for clarification of the judgment dated 11.09.2023 - Rejection of Section 7 application - HELD THAT:- The order dated 11.09.2023 does not preclude the Adjudicating Authority to consider the prayer of the Corporate Debtor if it is ready to pay the entire debt along with the interest to the Operational Creditor. It is open for the Adjudicating Authority to consider any such offer and if the entire debt is liquidated there may not be any necessity to admit Section 7 application.
The Appellant submits that this application for clarification is not maintainable. The application is filed under Rule 11 of the NCLAT Rules, 2016, the application for clarification of the judgment can very well be entertained in exercise of power under Rule 11 and the submission of the Appellant that application is not maintainable cannot be accepted.
Application disposed off.
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2023 (11) TMI 831
Prayer for condonation of 103 days refiling delay - delay on the ground of change of the counsel on record - HELD THAT:- The earlier order dated 22.02.2023 passed in Appeal No.39 of 2021 was for deferring the hearing to 20.03.2023. There was no decision taken by the Adjudicating Authority regarding claim of the Respondent in the said order on merits - It is satisfying that the said order cannot be reason to say that the Adjudicating Authority could not have passed order on 10.05.2023. The order dated 10.05.2023 is not a review or modification of the earlier order as contended by learned counsel for the Appellant. Thus, there is no error in the order dated 10.05.2023 passed by the Adjudicating Authority issuing directions.
Learned counsel for the Respondent submits that the order has not yet been complied by the Liquidator in which the Adjudicating Authority has granted two weeks’ time to the Liquidator to take appropriate steps - the time granted to the Liquidator extended for further period of two weeks from today to comply with the order of the Adjudicating Authority.
Appeal dismissed.
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2023 (11) TMI 830
Initiation of CIRP against the Corporate Debtor - default on the part of the Corporate Debtor or not - no reply to demand notice - existence of pre-existing dispute or not - HELD THAT:- It is clear that the Adjudicating Authority gave all possible opportunities to the Corporate Debtor to present his case but the Corporate Debtor miserably failed to do so. Therefore, the allegations on this account by the Appellant herein are not sustainable - the notice under section 8 (1) of Code was duly served by the Respondent No. 1 upon Corporate Debtor on 23.07.2021 and the Corporate Debtor did not reply to the demand notice.
It is observed that the Operational Creditor raised 44 invoices for the supply of Tire Cord Fabric to the Corporate Debtor, during 2018-2019 arising out of work order dated 06.04.2018, which remained unpaid by the Corporate Debtor - It is noted that through E-mail dated 03.06.2020, the Corporator Debtor admitted the sum of Rs.10.18 Crore due and payable to Respondent No. 1 and also that through an E-mail dated 19.06.2020, the Corporate Debtor gave payment plan to the Respondent No. 1 which also failed.
It is significant to observe that there is no record to show any pre-existing dispute - it is clear that there was established debts and defaults and the Adjudicating Authority passed the Impugned Order after analysing all facts and considering provisions of the Code and therefore we do not find any error in the Impugned Order.
Appeal dismissed.
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2023 (11) TMI 829
Condonation of delay of 15 days in filing of the present appeal - sufficient cause for delay present or not - Section 61(1), (2) and proviso to Section 61(2) of the Code - HELD THAT:- The above provisions have four parts (1) any person aggrieved by the order of the Adjudicating Authority shall have a right of an appeal to the Appellate Tribunal (2) time prescribed for filing such an appeal is 30 days (3) the period of 30 days is further extended to another 15 days but with a rider that the Applicant has to assign a sufficient cause, to the satisfaction of the Appellate Authority, for not filing the appeal within the period of 30 days and (4) the period of 15 days cannot further be extended.
In the case of NATIONAL SPOT EXCHANGE LIMITED VERSUS MR. ANIL KOHLI, RESOLUTION PROFESSIONAL FOR DUNAR FOODS LIMITED [2021 (9) TMI 1156 - SUPREME COURT] the Hon’ble Supreme Court has categorically held that the Appellate Tribunal has no jurisdiction to condone the delay beyond the period of 15 days.
Since, the Code is complete in itself and there are various timelines provided for the completion of CIRP and also Liquidation Process, therefore, the legislature has also prescribed the period of only 30 days in Section 61(2) of the code to file an appeal in terms of Section 61(1). The Legislature did not provide jurisdiction to the Tribunal to extend the period to any extent by condoning the delay of any period in terms of Section 5 of the Act, 1963, in case it is satisfied that there is a sufficient cause with the Appellant for not filing the appeal within the time prescribed rather in proviso to Section 61(2) a period of only 15 days is provided, enabling the Appellant to file the appeal within that period by making out a sufficient cause for not filing the appeal within the prescribed 30 days and sufficient cause has to be to the satisfaction of the Appellate Authority.
It is required to find out whether the reason given by the Appellant for filing the appeal i.e on 45th day, knowing fully well that if the appeal is filed on 46th days then there would be no chance of even getting an order for condonation of delay, has given a reason that the Appeal has been filed belatedly on account of non-availability of the Applicant for the signing purpose as he was stated to be suffering from health-related issues - here the Appellant has been totally casual not only in filing the appeal but also filing the application for condonation of delay, may be because the appeal filed within the period of 15th day is also considered a matter of right.
There are no other alternative but to hold that the reason given in the application for seeking condonation of delay is not a sufficient reason as it was not beyond the control of the Appellant because this Court is not satisfied with it that the signatory authority could not even sign the appeal within the period of 30 days and in the extended period of 15 days as well - the present application is found to be totally bereft of reason and denuded of merit and the same is hereby dismissed.
Application dismissed.
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2023 (11) TMI 828
Condonation of delay in filing appeal - sufficient cause for delay present or not - whether the delay of 46th day can be condoned by the Appellate Tribunal? - HELD THAT:- It is well settled that if the appeal is not filed within the period of limitation prescribed and a delay has occurred a right would vest in the other side and for the purposes of condonation of delay a plausible excuse much less sufficient cause has to be made which may satisfy the conscious of the Appellate Authority. In the present case, however, the appellant has given the reason that the appeal within 30 days (prescribed period) could not be filed and also till the last day of extended period (15th day) could not be filed i.e. after considering the entire period of 45 days, because the appellant was in consultation with its Counsel and internal management with respect to the impugned order and its ramifications. The issue is as to whether both the things that is consultation with the Counsel and internal management was within the control of the appellant or beyond it.
The appellant has made a totally unbelievable and lame excuse for the purposes of seeking condonation of delay which does not inspire confidence at all and shall not fall within the definition of a cause much less sufficient. Thus, looking from any angle, it is not a case in which interference is called for the purposes of condonation of delay and therefore, the application is hereby dismissed though without any order as to costs.
Application dismissed.
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2023 (11) TMI 782
Initiation of CIRP - Maintainability of joint application u/s 7 - separate corporate entities - sharing of Revenue - fulfilment of threshold as prescribed under the IBC or not - existence of financial debt against each applicant or not - time limitation.
Whether the joint application under Section 7 against ‘Anand Infoedge Pvt. Ltd.’, ‘Mist Avenue’ and ‘Mist Direct’ is maintainable? Three Respondents- Appellants herein being separate corporate entities? - HELD THAT:- It is clear that all the three Appellants i.e. Anand Infoedge Pvt. Ltd., Mist Direct Sales Pvt. Ltd. and Mist Avenue Pvt. Ltd. are intrinsically interwoven with the project in question i.e. Festival City in which the Respondents allottees were allotted units. Collaborator No. 1 and 2 are part of project who were entrusted with the development and sale of units. It was collaborator No. 1 who received the payment from the allottees towards allotment of units in favour of the Respondents. All the three Appellants being involved with the one single project in which the allottees have been allotted units, all are necessary ingredients of any resolution which may help the allottees to receive their units, in absence of any of the appellants in Corporate Insolvency Resolution Process, Resolution of project and revival of the Resolution of project is impossible.
Thus, Section 7 Application filed against all the three appellants together is maintainable. The three appellants being part of one Common Real Estate Project and the Applicants of Section 7 Application being part of the said project they had every right to initiate Section 7 Application against all the three appellants together - the decision of the Adjudicating Authority upheld holding that application under Section 7 is maintainable.
Whether Section 7 Application filed by the allottees fulfils the threshold as prescribed under the IBC? - Whether while scrutinizing the claims of each applicants of joint application filed under Section 7, it has to be established that the financial debt exist against each applicant in which default has been committed and the claim of the applicants is not barred by limitation and applicants fulfil all eligibility of valid allottee who is entitled to file Section 7 application? - HELD THAT:- From the ratio of the Judgment of Hon’ble Supreme Court in Manish Kumar [2021 (1) TMI 802 - SUPREME COURT], following conclusions are irresistible (i) In event the default of Rs. 1 Crore is made out against the Corporate Debtor it is not necessary that the default of Rs. 1 Crore should be qua of the applicants individually or separately if default of Rs. 1 Crore is made out qua any of the applicants or any other financial creditor who is not even part of the Application, application under Section 7 is maintainable. (ii) what is required to be proved under Section 7 is that the default of Rs. 1 Crore which is due on the Corporate Debtor is not barred by limitation if default of Rs. 1 Crore due of corporate debtor is within limitation the fact that claim of certain other allottees who were joint in the application is barred by limitation is insignificant.
In Manish Kumar itself it has been answered that requirement of threshold under proviso in Section 7(1) must be fulfilled as on the date of filing of the Application. The fact that eight allottees have settled the matter is thus inconsequential and eight allottees cannot be excluded in the counting of 100 allottees which are required to be fulfilled as threshold. The provision of Section 7(1) Second Proviso inserted by Act No. 1 of 2020 having been explained by the Hon’ble Supreme Court, the law is well settled that all applicants who have joined the Section 7 Application have not fulfilled the threshold individually nor claim of all the applicants individually has to be within time in event there is default of more than Rs. 1 Crore and default of Rs. 1 Crore on basis of which the application is filed is well within time. The mere fact that claim of some other barred by time is insignificant. Application under Section 7 of the Code triggered when default of Rs. 1 Crore qua some of the applicant or some other financial creditors is fulfilled, Insolvency Resolution Process under Section 7 can commence.
The Adjudicating Authority did not commit any error in returning the finding that threshold as required by Section 7(1), second proviso is fulfilled. In the present case, the Application under Section 7 is maintainable and objection that application is not maintainable on the ground that it does not fulfil the threshold as provided under Section 7(1) Second Proviso has righty been rejected.
Thus, no error has been committed by the Adjudicating Authority in holding that application under Section 7 filed by the Respondents allottees is maintainable - there are no grounds raised in these Appeals to interfere with the Impugned Order - appeal dismissed.
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2023 (11) TMI 781
Initiation of CIRP - NCLT admitted the application u/s 7 - period of limitation - case is that Section 7 application which was filed after 18 years in October 2019 was way beyond the prescribed limitation period of 3 years under Section 18 of the Limitation Act, 1963 and thus the petition stood barred by limitation.
HELD THAT:- The law is well settled that for finding out acknowledgement within the meaning of Section 18 of the Limitation Act, balance sheets can be looked into. Hon’ble Supreme Court in Bishal [2021 (4) TMI 753 - SUPREME COURT] has extensively examined the question in reference to Section 18 of the Limitation Act and upheld the consideration of balance sheets as a valid acknowledgment of debts but also observed that it would depend on the facts of each case as to whether an entry made in a balance sheet qua, any particular creditor, is unequivocal or has been entered into with caveats - the status of balance sheets as valid acknowledgment of debts needs to be examined depending upon the facts of each case while considering the mention of such non-acknowledging statements in the annexed notes or the auditor’s report.
The Adjudicating Authority has concluded after scrutinizing the balance sheet and the caveats/notice attached thereto that acknowledgments contained in the balance sheet extends the limitation period and hence the Section 7 application is well within the extended limitation period and thus maintainable.
The balance sheets contain an acknowledgement of debt from SBI, the original lender and assignment of the said debt to KMBL. Merely because the notes to the account and the director’s report narrate the different stages of subsequent litigation with respect to the said unsecured loan, it cannot be said that these notes in any manner diminish the relevance and import of the debt which finds mention in the balance sheets for the purposes of Section 18 of the Limitation Act. Such caveat/information, read together with the balance-sheet do not negate the acknowledgment of that liability - Adjudicating Authority therefore committed no error in holding that the Section 7 application filed by the Respondent No. 1 was not barred by time there being continuous acknowledgment in their respective balance sheets of the Corporate Debtor which acknowledgment was within the meaning of Section 18 of the Limitation Act extending the period of limitation by fresh period of limitation by each acknowledgment.
Section 7 of the IBC allows a financial creditor to initiate an insolvency resolution process against the corporate debtor upon showing a default in debt owed by the corporate debtor. The trigger under Section 7 of IBC is non-payment of dues owed to creditors. In the given facts of the case, where debt and default on the part of the Corporate Debtor qua KMBL stands established, there were no cogent grounds for not admitting the Section 7 petition.
There are no error in the impugned order passed by the Adjudicating Authority admitting the Section 7 application. There is no merit in the Appeal - appeal dismissed.
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2023 (11) TMI 726
Approval of Resolution Plan - waterfall mechanism - HELD THAT:- The claim filed by the Appellant was as Operational Creditor and it is not shown that Operational Creditor was entitled for any more amount as per Section 30(2)(e) under which the Operational Creditor is entitled for the amount equivalent to the amount which could have been paid to the Operational Creditor in event of liquidation as per waterfall mechanism under Section 53.
In judgment of this Tribunal in in Department of State Tax, Through the Dy. Commissioner of State Tax vs. Zicom Saas Pvt. Ltd. & Anr. [2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI]”, the submission on the basis of “Rainbow Paper” was considered and repelled and it was held 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).
There are no grounds have been made to interfere with the order approving the Resolution Plan - appeal dismissed.
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2023 (11) TMI 567
CIRP - Auction of the assets of corporate debtor as per Acquisition Plan - Liquidation - whether the Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan? - Appellant being the suspended Director - HELD THAT:- The Regulation 44A deals with treatment of transaction avoidance which itself contemplates that there can be a position regarding prosecution of avoidance application even after resolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed. Regulation 44A relied on by Learned Counsel for the Appellant does not support his submission that avoidance application cannot be pursued by Successful Auction Purchaser.
In the present case, the only issue concerning as to whether Successful Auction Purchaser can pursue the avoidance application. The question as to whether the Successful Resolution Applicant can be allowed to prosecute the application came for consideration before this Tribunal in Kapil Wadhawan Vs. Piramal Capital & Housing Finance Ltd. & Ors. [2023 (5) TMI 663 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. In the above case also, Successful Resolution Applicant filed an application for substituting its name in place of Administrator/Resolution Professional which was allowed by the Adjudicating Authority. The Suspended Director of the Corporate Debtor had challenged the Order in this Tribunal. This Tribunal after considering the respective submissions, provisions of the Code as well as Regulations and the Judgment of Delhi High Court in TATA Steel BSL Limited Vs. Venus Recruiter Pvt. Ltd. [2023 (1) TMI 644 - DELHI HIGH COURT] held that Any positive monetary recovery received by the Corporate Debtor as a result of orders passed in relation to the Avoidance Transactions hall be distributed, net of costs and expenses (including taxes), to the Financial Creditor pro rata to the extent the Financial Debt for Financial Creditors, provided that, the CoC may in its discretion adopt a different manner of distribution (which may take into account the order of priority amongst Financial Creditors as laid down in Section 53(1) of the Code) and such decision of the CoC shall be accepted by the Successful Resolution Applicant, subject to there being no change in the Total Resolution Amount.
The issue as to whether the Successful Auction Purchaser can prosecute the avoidance application in place of Resolution Professional by substituting its name was not subject matter of the issue in the aforesaid case of 63 Moons Technologies Ltd. [2022 (1) TMI 1287 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH] hence on the ground that civil appeal is pending before the Hon’ble Supreme Court, hearing of the matter need not be deferred.
Thus, no grounds have been made out at the instance of the Appellant to interfere with the order impugned - appeal dismissed.
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2023 (11) TMI 566
Dismissal of Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - committing error in refusing to extend the benefit of Section 14 of the Limitation Act - HELD THAT:- The winding up petition was filed by M/s Oswal Minerals Ltd. in the Bombay High Court. The said proceeding was initiated by third party. The period during which the winding up petition remained pending, cannot come to rescue of the Appellant, nor Section 14, sub-section (2) of the Limitation Act is attracted in the present case. The benefit of Section 14, sub-section (2) of the Limitation Act can be extended when the Applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal and such proceeding is prosecuted in good faith in a court which, form defect of jurisdiction or other cause of a like nature, is unable to entertain it.
A winding up petition was filed and thereafter a civil application. Based on that benefit of Section 14 was sought, which was denied as noted above. Present is a case where winding up petition was filed by the third party - Adjudicating Authority has rightly distinguished the judgement of the Hon’ble Supreme Court and rightly took the view that the Appellant is not entitled to take the benefit of judgment of the Hon’ble Supreme Court in Sesh Nath Singh [2021 (3) TMI 1183 - SUPREME COURT].
In the Application, which was filed under Section 7, the Appellant has not brought on record the OTS offer given by the Corporate Debtor and for the first time in the Appeal, the said document has been brought on record. The Corporate Debtor has no opportunity to file a reply to the OTS offer or to make its submission on the said letter - the ends of justice be served in granting opportunity to the Corporate Debtor to file a reply with regard to OTS offer dated 08.07.2021, which is brought on the record in this Appeal.
Section 7 Application revived before the Adjudicating Authority and direct the Adjudicating Authority to consider afresh the claim of State Bank of India raised in the Appeal on the strength of One Time Settlement offer dated 08.07.2021, which needs to be decided in accordance with law - The Corporate Debtor is allowed one month’s time to file reply, insofar as One Time Settlement offer made by the Appellant is concerned. The Adjudicating Authority may hear the parties and decide Section 7 Application afresh in accordance with law - appeal allowed in part.
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2023 (11) TMI 528
Admission of section 9 application - HELD THAT:- Learned Counsel for the Appellant submits that he has already filed an application bringing on record the proof of the payment to the Operational Creditor. Learned Counsel for the Operational Creditor submits that he has already received the entire payment.
There are no reason in continuing the Corporate Insolvency Resolution Process any further - The Appeal is disposed of, impugned order is set aside and CIRP is closed.
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