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Insolvency and Bankruptcy - Case Laws
Showing 81 to 100 of 8723 Records
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2024 (4) TMI 335 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH , NEW DELHI
Approval of Resolution Plan - completion of condition precedents provided in Clause 7.6.1 of the Resolution Plan or not - sufficient grounds have been made by the Appellant to set aside the order or not - lapse of Air Operation Certificate granted by DGCA on 20.05.2022 - sufficient grounds have been made out to direct for liquidation of the Corporate Debtor or not - way forward towards implementation of the Resolution Plan.
Whether on 20.05.2022 the Successful Resolution Applicant has completed all the condition precedents provided in Clause 7.6.1 of the Resolution Plan? - Whether condition precedents as under Clause 7.6.1 of the Resolution Plan were not achieved by the Successful Resolution Applicant as contended by the Appellant? - Whether the order dated 13.01.2023 passed by the Adjudicating Authority is unsustainable and sufficient grounds have been made by the Appellant to set aside the order? - Whether due to lapse of Air Operation Certificate granted by DGCA on 20.05.2022, as on date the Successful Resolution Applicant cannot implement the Resolution Plan? - HELD THAT:- The Air Operation Certificate was very well in operation on the date when implementation application was filed by the SRA before the Adjudicating Authority as well as on the date when order was passed by the Adjudicating Authority i.e. 13th January, 2023 hence no infirmity can be found in the findings of the Adjudicating Authority that condition 7.6.1(d) was fulfilled. The Air Operation Certificate was operative and granted till 19th May, 2023 and during this period SRA was not permitted to commence his operations because of challenge by the Appellant to fulfilment of the conditions precedent. The Order dated 13th January, 2023 passed by the Adjudicating Authority upholding the fulfilment of conditions precedent has been challenged by the Appellant in these Appeals and during pendency of these Appeals, MC Lenders did not take any steps nor discharge their part of obligation under the resolution plan hence it cannot be said that it was due to lapse of SRA that Air Operation Certificate could not be operationalised. SRA was always ready to operationalise its air operations but was not permitted by the Appellant.
The submission of the Appellant cannot be accepted that due to lapse of air operation certificate during pendency of these Appeals before this Tribunal, it can be held that conditions precedent as required under 7.6.1.(a) was not fulfilled.
There is no infirmity in the order dated 13th January, 2023 passed by the Adjudicating Authority holding that conditions precedent for commencement of the air operation by the SRA were fulfilled.
Whether direction of the Hon’ble Supreme Court permitting the Successful Resolution Applicant to infuse Rs.150 crore by 31.01.2024 was in reference to the offer made by the Appellant vide Affidavit dated 16.08.2023? - Whether the Successful Resolution Applicant having not been able to infuse Rs. 150 Crores by 31.01.2024 as directed by the Hon’ble Supreme Court vide its judgment dated 18.01.2024, the plan has failed and cannot be implemented by the Successful Resolution Applicant? - Whether sufficient grounds have been made out to direct for liquidation of the Corporate Debtor under Section 33 Sub-clause (3) in these Appeals? - HELD THAT:- The direction to deposit INR 150 crores by 31.01.2024 was only in relation to offer submitted by the Appellant by affidavit dated 16.08.2023. The learned Counsel for the Appellant – Shri N. Venkataraman, ASG as well as Shri Tushar Mehta, SG have contended that SRA having failed to deposit INR 150 crores, there is breach committed by SRA to the Resolution Plan and this Tribunal may pass an order for liquidation of the Corporate Debtor under Section 33, sub-section (3) of the IBC.
The consequence of non-deposit of INR 150 crores by the SRA by 31.01.2024, is that SRA was not entitled to take any benefit of the offer, which was given by the Appellant by affidavit dated 16.08.2023. Hence, the undertaking given by the Appellant to withdraw Company Appeal in STATE BANK OF INDIA & ORS. VERSUS THE CONSORTIUM OF MURARI LAL JALAN AND MR. FLORIAN FRITSCH & ANR. [2023 (5) TMI 1084 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as well as Appeal STATE BANK OF INDIA AND ORS. JC FLOWERS ASSET RECONSTRUCTION PRIVATE LTD. AND PUNJAB NATIONAL BANK VERSUS THE CONSORTIUM OF MR MURARI LAL JALAN AND MR FLORIAN FRITSCH AND ANR [2024 (1) TMI 1021 - SUPREME COURT] was not to happen. On failure to comply with the offer made by Appellant by affidavit dated 16.08.2023, both the Appeals pending in this Tribunal are now to be decided on merits.
The submission of the Appellant that non-deposit of INR 150 crores leads to failure of Resolution Plan, cannot be accepted. The consequence of non-deposit of INR 150 crores is that these Appeals have to be heard on merits and the question, which has arisen in the Appeal has to be decided regarding compliance of conditions precedent by the SRA by 20.05.2022 - Further submission of the Appellant that this Tribunal may exercise jurisdiction under Section 33, sub-section (3) in directing liquidation of the Corporate Debtor due to non-compliance of deposit of INR 150 crores also cannot be accepted. For passing an order under Section 33, sub-section (3), there has to be adjudication that Resolution Plan approved by the Adjudicating Authority has been contravened by the Successful Resolution Applicant.
The direction of Hon’ble Supreme Court permitting the Successful Resolution Applicant to infuse INR 150 crores by 31.01.2024 was in reference to offer made by Appellant in affidavit dated 16.08.2023 - The Successful Resolution Applicant having not been able to infuse funds by 31.01.2024 as directed by Hon’ble Supreme Court vide its judgment dated 18.01.2024, it cannot be held that Resolution Plan has failed and cannot be implemented by the SRA - No grounds have been made out to direct the liquidation of Corporate Debtor under Section 33, sub-section (3) in these Appeals.
What are the way forward towards implementation of the Resolution Plan? - HELD THAT:- The implementation of Plan and revival of the business of the Corporate Debtor does not only generate revenue for making of the payments as contemplated in Resolution Plan, but is important for making payments to workers and employees. The workers and employees are waiting for their payments of provident fund, gratuity and other dues as per the Resolution Plan for last more than three years. Non-implementation of the Plan shall have direct effect on the dues of workers and employees, which need to be avoided.
The implementation of Resolution Plan is a collaborative process, which require positive action from all the parties, including the MC Lenders. The implementation of the Resolution Plan not only revives the Corporate Debtor, but it brings along with revival, new employment, generation of revenues etc. By non-implementation of the Plan, direct sufferers are the workers and employees, who have not received the payments. It is true that Lenders are entitled to take steps for protection of their amount, but that is not the only object of the IBC. The Lenders to protect their own financial interest cannot ignore the primary object of revival of the Corporate Debtor and payments to other stake holders, including workmen and employees, who are entitled for their payments along with Financial Creditors. The Lenders by not taking positive steps for implementation of the Plan have not only adversely affected the interest of the SRA, but have also created circumstances, so that workmen and employees be not paid.
The impugned order passed by Adjudicating Authority is upheld - Monitoring Committee and MC Lenders as well as SRA are directed to take steps for creation of charge over the Dubai Property No.1, Dubai Property No.2 and Dubai Property No.3 within a period of 30 days from today. The SRA to bear all necessary expenses for creation of necessary charge - Performance Bank Guarantee of INR 150 crores, which is lying with the Monitoring Committee/ MC Lenders, shall be adjusted towards the first tranche payment of INR 350 crores as INR 200 crores have already been paid by the SRA. By adjustment of PBG as per the Resolution Plan, the first tranche of payment of INR 350 crores shall be completed - Steps shall be taken for re-constitution of the shares as per the Resolution Plan forthwith. (5) Out of the first tranche payment of INR 350 crores, payments shall be made to the workmen and employees and the creditors as per the Resolution Plan, including the payment of CIRP cost as per the Resolution Plan, which payment shall be completed within 60 days from the date of this judgment - The SRA shall submit an Application for re-issue of Air Operation Certificate which may be obtained within 90 days from the date of this judgment - closing date shall be 90th day from the date of this judgment, on which date, handing over of the Corporate Debtor to the SRA by the Monitoring Committee shall be completed.
Application disposed off.
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2024 (4) TMI 321 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of the Resolution Plan - HELD THAT:- The Resolution Plan submitted by Respondent No.3, has been approved by the CoC with 100% vote share.
The Hon’ble Supreme Court in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK & OTHERS [2019 (2) TMI 1043 - SUPREME COURT] and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] has held that the Adjudicating Authority and the Appellate Tribunal are not to sit in appeal over the commercial wisdom of the CoC, which is paramount and non-justiciable and under the scheme of the Code, every dissatisfaction does not partake the character of a legal grievance. It is settled proposition that approval of the Resolution Plan can be interfered with, only when the Resolution Plan violates any of the provisions of Section 30, sub-section (2) of the Code.
It is relevant to notice that at the time when this utilities/ equipment/ installations were made the Corporate Debtor was subsidiary of the Appellant, the holding Company. Shared utilities and equipment installed outside the lease land area were permitted to be utilized and used both by the Corporate Debtor for running the Hotel as well as by the Appellant for the purpose of its residential block and commercial establishment. The Corporate Debtor being no longer subsidiary of the Appellant, which has now been taken over by the SRA, there has to be an arrangement between land owner, i.e., the Appellant and SRA for continuing use and access to the shared utilities and equipment. It is also relevant to notice that the SRA has taken the Hotel of Corporate Debtor as a running concern and for the purposes of running the Hotel, it requires use of shared utilities and services as it was being done prior to initiation of CIRP - there are no error in granting of reliefs and concessions.
The Resolution Plan having been approved by 100% vote share of the CoC and no grounds having been made out to interfere with the approval of the Resolution Plan within the meaning of Section 30, sub-section (2) to establish that Resolution Plan violates any provision of Section 30 subsection (20 of the Code, there are no reason to interfere with the impugned order approving the Resolution Plan - However, approval of Resolution Plan and grant of reliefs and concessions under paragraph-9 (7) as extracted above, does not fetter the right of the parties to enter into an arrangement with regard to shared utilities and equipment, which are located outside the lease hold land of the Corporate Debtor and further, the approval of Resolution Plan and grant of above reliefs and concessions does not fetter the rights of the parties to establish their rights and obligations in a competent Court.
The impugned order dated 04.01.2024 passed by the Adjudicating Authority upheld - appeal disposed off.
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2024 (4) TMI 305 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of Resolution Plan - what is the import of order dated 30.11.2023, whether the entire amount of claim of Rs.132,89,52,568/- was to be kept in escrow account or only the amount provided in the plan against the admitted claim has to be kept in the escrow account? - HELD THAT:- On looking into Para 41 and 42 of the order, it is clear that what was intended by the Adjudicating Authority was that value provided against the claim in the plan should be held in escrow account subject to decision in the execution petition. Resolution Plan has provided amount of Rs.1 Lakh against the claim of the Appellant and the Successful Resolution Applicant proposed to pay said amount to the Appellant. The submission of the Appellant that order meant that entire amount of Rs.132 crores be kept in escrow account cannot be accepted. The order dated 30.11.2023 cannot be read to mean that amount of Rs.132,82,52,568/- has to be kept in escrow account.
Hon’ble Supreme 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 held that allocation of plan value to different category of creditors can be different. It was held that Operational Creditor has to be given priority of payment above all Financial Creditors.
It is also relevant to notice that commercial wisdom of the CoC in approving Resolution Plan has to be given paramount importance and NCLT and this Appellate Tribunal can interfere in the order approving the Resolution Plan only when there is violation of statutory provisions of Section 30(2) of the Code. Present is not a case where violation of any statutory provision under Section 30(2) of the Code has been alleged by the Appellant. Appellant’s claim was accepted as ‘Other Creditor’ and in the allocation of amount of Rs.1 Lakh against the claim of the Appellant it is not shown that there is any violation of any statutory provision.
There are no ground to interfere with the order passed by the Adjudicating Authority approving the Resolution Plan - there are no error in the order impugned - appeal dismissed.
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2024 (4) TMI 304 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
CIR - Order of Liquidation - The appellant raised concerns about the liquidation process, arguing that prime assets of the corporate debtor were auctioned at a price significantly lower than their fair value - Whether there are any violations in the liquidation process as per Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and consequently whether application filed by the Appellant are maintainable? - HELD THAT:- The Respondent / Liquidator obtained the approval of SCC meeting on 20.10.2022 for conducting E-auction on ‘Slump Sale’ basis wherein certain assets like shares of Barnawa Agro Industries, vehicles, scrap etc. were excluded. The reserved price was fixed as per the valuation reports. It is on record that the Appellant was also present in the 6th SCC meeting as a special invitee. The changes in the prices over different auctions are noted in table in paragraph 28. Appellant has missed out on the provisions that Schedule I of Liquidation Regulations only lays down the manner of sale. If the mechanism of sale as specified in Regulation 32 is changed, the Schedule I will have to be followed afresh after every such change. Nowhere, therefore, it is found that the reductions are violative of the Liquidation Regulations.
In the 10th e-auction dated 10.08.2023, the reserve price was Rs.16.41 crores and the realizable value was 29.41 crores, which was beyond the reserve price. It is also noted that Rs.29.41 crores was realized without the assets such as the shares in subsidiary of Barnawa Agro Industries Ltd., vehicles, scrap etc. which were not part of the sale. It is also noticed that Rs.29.41 crores will not only cover the claim of the Financial Creditors but substantial amounts will also accrue to the shareholders - The argument of the Appellant that presuming that the Respondent had continued with the same mode of sale and reduction of only 10% happened every time, even by that means, by the time of 9th auction the price would have been somewhere around 24 crores. And in the current auction done by the Liquidator realized value at Rs. 29.41 crores, without including some assets, is more than Rs.24 crores. Therefore, there are no merit in the allegations of the Appellant.
There are no violation of the Regulations 32, 32-A, 33, 34 & 36 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
From the facts of the case, it can be noted that the Appellant / Exmanagement were not cooperating the Liquidator and providing full details of the assets of the Corporate Debtor. Liquidator has rightly proceeded ahead and no reasons found to question the liquidation proceedings in this ground - there are no justification in the argument of the Appellant that the Liquidator has not followed the Liquidation Regulations. The non-cooperation of the ex-management is clearly noted by the Adjudicating Authority in its order dated 28.02.2019.
In the facts of the case, it is clearly made out that there appears to be no violation in the liquidation process as provided in various regulations of the Liquidation Process Regulations. In fact, the CIRP process could not proceed because of the non-cooperation of the ex-management. This ultimately led to the liquidation of the Corporate Debtor. Even during liquidation process, there was non-cooperation.
Appeal dismissed.
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2024 (4) TMI 241 - BOMBAY HIGH COURT
Constitutional Validity of Circular issued by issued by the Insolvency and Bankruptcy Board of India (IBBI). - clarification of usage of certain terms contained in Regulation 4(2)(b) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - illegal amendment in the LP Regulations by the circular - computation of the liquidator’s fee before and after the 2019 Amendments.
The challenge is primarily on the ground that in the garb of clarifying certain terms contained in Regulation 4(2)(b), the IBBI has effectively, by a back-door method, amended the LP Regulations by stipulating new substantial requirements, and that too, with retrospective effect.
Whether the Impugned Circular simply clarifies Regulation 4(2)(b), or whether it effects substantive amendments to the term in the garb of clarification?
HELD THAT:- The Impugned Circular positively introduces a new position that an act of court would indeed prejudice the liquidator, unless he gets the court to confirm his fee computation, on a case to case basis. The liquidator may even have to approach different courts since according to Paragraph 2.5, only the forum that stayed a disposal of an asset can confirm if the suspension of the time can be availed of, and that too only for such asset as that court protected from being liquidated. Such a detailed and complicated matrix of regulatory requirements cannot constitute a “guideline” that merely clarifies the existing regulatory framework.
The only way to make regulations towards this end would be to do so under Section 240 and comply with the Law-Making Regulations. That not having been done, Paragraph 2.5 of the Impugned Circular is indeed a substantive amendment masquerading as a clarification. There are no hesitation in striking it down as being ultra vires the LP Regulations and the IBC.
A close review of the material on record also reveals that the IBBI has indeed issued a Discussion Paper on 20th October, 2023 on “Strengthening the Liquidation Process” and has proposed amendments to the LP Regulations in this regard. In the proposed amendment, it appears that the IBBI’s desire is to empower the Stakeholders’ Committee to approve an adjustment to the liquidator’s fees, on account of court-inflicted delays. Even while the standard sought to be introduced in the garb of clarification is different from the standard under active consideration for an amendment to the LP Regulations, what is clear is that Paragraph 2.5 can simply not be upheld as a clarification.
Paragraph 2.1 and Paragraph 2.5 of the Impugned Circular are hereby struck down as being ultra vires the LP Regulations and the IBC. They introduce substantive amendments to statutory legislation even while purporting to be mere clarifications. The changes they seek to bring in are not even covered by the IBC and the LP Regulations. Due process by way of compliance with the statutory requirements of the Law-Making Regulations is missing. Therefore, in the course of conducting the quasi-judicial proceedings, the IBBI is prohibited from placing any reliance on Paragraph 2.1 and Paragraph 2.5 of the Impugned Circular in determining if any fee charged by the Petitioner in the liquidation assignments in question, was in excess of permissible thresholds.
The IBBI must discharge the First Show Cause Notice since it evidently has been subsumed by the Second Show Cause Notice, in substance and content. Multiplicity of proceedings on the same cause of action before the same regulator against the same noticee on the same facts is inappropriate. The IBBI must issue a written communication reconciling the coverage of the two show cause notices and in any case dispose of the proceedings as expeditiously as possible and in accordance with law.
Petition disposed off.
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2024 (4) TMI 240 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI - LB
Condonation of delay in filing an appeal - limitation in preferring an appeal - Rejection of Application of Claim, raised by the Appellant - HELD THAT:- The Learned Counsel for the Appellant in sub para II of Para 3 of the ‘Delay Condonation Application has given unjustifiable reason which were not even prevalent at the time when the period of limitation for preferring an appeal was actually subsisting.
That the counsel for the Appellant has endeavoured to argue certain grounds in support of the delay condonation application which are not even pleaded in the principal delay condonation application and if this be the situation his plea which is not taken and pleaded in defence for seeking condonation of delay cannot be considered by this Tribunal, since being beyond the pleadings.
It would be too hypothetical to accept the arguments extended by the Learned Counsel for the Appellant that he had to seek legal advice and that his placement in Bengaluru had created an embargo in filing an Appeal in time. In fact, due to technological development, these two reasons seems to be without any plausible justification, which could be acceptable by this Tribunal to condone the delay of 28 days which has chanced in filing an appeal, hence as such the period is not extendable under the 2nd proviso of Section 61.
Appeal dismissed.
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2024 (4) TMI 239 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admission of Section 7 application - time limitation - arbitral award dated 04.02.2020 needs to be ignored in proceedings under Section 7 or not, objection of the Corporate Debtor being pending before the Delhi High Court in the proceeding for execution of the arbitral award - existence of debt and default or not.
Whether the application under Section 7 filed by the Appellant on 31.01.2022 was barred by time? - HELD THAT:- Section 3 of the Limitation Act casts an obligation on a Court to consider as to whether application filed is within limitation as prescribed by the Limitation Act, 1963. It is also well settled that even if no defence is raised by the Defendant regarding plea of limitation, the question of limitation has to be looked into and decided by the Court - thus the time being even if 04.02.2020 is not taken as date of default, proceed to examine as to whether application is filed within the limitation. As noted above, the amount was to be paid in 58 instalments. 1st instalment is to be paid in 15.08.2017 and last on 15.05.2022. It is pleaded by the Corporate Debtor itself that it has paid only Rs.40 Lakhs which at best will cover first three instalments. Thus, even if it is taken that the default committed on 15.11.2017, the application filed on 31.01.2022 is well within time - When the entire loan was recalled, the cause of action arose to initiate proceeding and application filed on 31.01.2022 from loan recall notice is also well within time. Thus, from any view of the matter, the application filed by the Financial Creditor on 31.01.2022 was well within time and the Adjudicating Authority did not commit any error in rejecting the submission of the Appellant that the Application is barred by time.
Whether the arbitral award dated 04.02.2020 needs to be ignored in proceedings under Section 7, the objection of the Corporate Debtor being pending before the Delhi High Court in the proceeding for execution of the arbitral award? - HELD THAT:- The challenge to the arbitral award dated is 04.02.2020 pending before the Delhi High Court with regard to which objections have already been filed by the Corporate Debtor - it is not necessary to express any opinion with regard to rival contentions of the parties in relation to award dated 04.02.2020.
Whether debt and default was proved in the proceedings under Section 7? - Whether the Adjudicating Authority committed error in admitting Section 7 application? - HELD THAT:- The debt and default is fully established and even if the arbitral award dated 04.02.2020 is not taken into consideration the debt and default is proved on the part of the Corporate Debtor. We may refer to the judgment of the Hon’ble Supreme Court in M. Suresh Kumar Reddy vs. Canara Bank and Ors. [2023 (5) TMI 570 - SUPREME COURT] where the Hon’ble Supreme Court after noticing the earlier judgments had held that when debt and default is proved, the Adjudicating Authority has to admit the application unless it is incomplete - it is found that there was sufficient materials brought by the financial creditor on the record to prove the debt and default, even if the arbitral award is disregarded.
The Adjudicating Authority did not commit any error in admitting Section 7 application. Debt and default having been proved on the part of the Corporate Debtor, there are no error in the order passed by the Adjudicating Authority admitting Section 7 application.
There is no merit in the appeal - appeal dismissed.
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2024 (4) TMI 238 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
CIRP - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - Applicability of Threshold - Requirement of joint filing by either 100 allottees or 10% of the total number of allottees of the same real estate project, whichever is less for application u/s 7 - Violation of principles of natural justice - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - appellant submits that the impugned order holding that the Section 7 Petition, filed under I & B Code, 2016, is not maintainable, since the Allottees, belong to different Projects, and the Impugned Order, was passed without, considering the facts, placed on record - wrongful interpretation of explanation (ii) of Section 5 (8) of the I & B Code, 2016.
HELD THAT:- In the instant case, the Appellant / Petitioner, takes a stand that in the Order dated 09.05.2022 of the National Consumer Disputes Redressal Commission (vide Consumer Complaint No. 1951 of 2016), the plea of the Respondent / Corporate Debtor ascribing reasons, in regard to the delay, relating to the time, when the Respondent / Corporate Debtor, accepted the bookings from the Allottees, and regularly raised demands and accepted amounts, from the Allottees, were rejected, a clear adverse circumstance, against the Respondent / Corporate Debtor, all the more, when the outbreak of Pandemic – Covid-19, came after a decade.
The emphatic stand of the Respondent / Corporate Debtor is that Sushant Megapolis Township, comprise of Multiple Commercial Real Estate Projects, all the sub-projects are independent of each other, and were being developed and sold as separate Projects, within the Township. Moreover, they were Registered, under RERA Act, 2016, with different RERA Registration Numbers. As a matter of fact, each Project, is further divided into Multiple phases, with different complete Schedules - Indeed, as per definition Section 5(8)(f) explanation (ii) of the I & B Code, 2016, the expressions 'allottee' and 'real estate project' shall have the meanings respectively assigned to them in clauses (d) and (zn) of Section 2 of the Real Estate (Regulation and Development) Act, 2016, (16 of 2016).
Section 7 of the I & B Code, 2016, provides for an initiation of Corporate Insolvency Resolution Process, by Financial Creditor. The two essential features of an Admission of an Application, under Section 7 of the Code’are (a) Existence of Debt and (b) Default - In fact, an Adjudicating Authority / Tribunal’s jurisdiction is restricted to determine, whether the Application is complete and whether, there is any Debt and Default, as per decision in Dr. H.N. Nagaraj vs. Edelweiss Asset Reconstruction Company Ltd. [2018 (7) TMI 968 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI].
The proceedings, under the I & B Code, 2016, are not a Litigation, to be decided by a Court of Law. It is not the Property, which is at the base of the Code. It is the Liquidity, which is the foundation for triggering the Corporate Insolvency Resolution Process.
In the instant case, the Respondent / Corporate Debtor, had executed, at least Three kinds of Agreements, with the Petitioners (before the Adjudicating Authority / Tribunal) (a) Plot Allottee Agreement (b) Builtup Unit Allottee Agreement and (c) Apartment Allottee Agreement - One cannot ignore an important fact, that the second proviso to Section 7(1) of the I & B Code, 2016, mentions that for ‘financial creditors’, who are ‘allottees’, under a ‘real estate project’, an application, for initiating Corporate Insolvency Resolution Process, against the Corporate Debtor, shall be filed jointly by not less than one hundred of such allottees, under the same real estate project or not less than ten percent of the total number of such allottees under the same real estate project, whichever is less.
In the present case, the Appellant / Petitioner and other Petitioners, who filed CP (IB) No. 596 (PB) / 2021, under Section 7 of the I & B Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, before the Adjudicating Authority / Tribunal, for initiating Corporate Insolvency Resolution Process, against the Respondent / Corporate Debtor, are from different numerous projects, and they have not established their case, as Creditors of a class, concerning any particular project, registered with The Real Estate (Regulation & Development) Act, 2016 (16 of 2016), with a view to fulfil the requirement of ‘10% or 100 Allottees’, as envisaged, as per Section 7 (1) of the I & B Code, 2016.
This Tribunal, on a careful consideration of divergent contentions, advanced on either side, considering the facts and circumstances of the instant case, comes to an irresistible and consequent conclusion that the CP (IB) No. 596 (PB) / 2021, filed by the Appellant / Petitioner and other Petitioners, before the Adjudicating Authority / NCLT, Principal Bench, New Delhi, is prima facie not maintainable in the eye of Law. Further, this Tribunal, on going through the Impugned Order, dated 06.01.2023 in CP (IB) No. 596 (PB) / 2021, passed by the Adjudicating Authority / Tribunal, the views expressed in dismissing the CP (IB) No. 596 (PB) / 2021, is free from any legal flaws.
Appeal dismissed.
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2024 (4) TMI 175 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Dismissal of Section 9 application - Appellant and Respondent are having relationship of Corporate Debtor and Operational Creditor or not - pre-existing dispute between the parties which will disallow initiation of CIRP proceedings or not.
Whether in the instant case, the Appellant and Respondent are having any relationship of Corporate Debtor and Operational Creditor? - HELD THAT:- The facts of the case clearly bring out that the Appellant was acting on the referral instructions of the Respondent and was issuing the air tickets on the basis of the credit card the customers details provided by the Respondent. The Respondent had also given the undertaking that if any debit note comes against those tickets, then they will be responsible. The plea of the Respondent that they are not having any debt and the Appellant is not an Operational Creditor as they were not supplying any goods or services to the Respondent is not tenable. It is concluded that there is a relationship of operational creditor and corporate debtor between the Appellant and Respondent.
Whether there is any pre-existing dispute between the parties which will disallow initiation of CIRP proceedings? - HELD THAT:- Respondent was undertaking the responsibility for issuance of the debit notes and when ADMs were issued by the airlines, a debt arises and the unconditional undertakings will act as an acknowledgment of debt towards the Appellant - When the demand notice was issued under Section 8 of the IBC, 2016 on 22.08.2018, it was disputed in its reply by the Respondent vide letter dated 08.09.2018. There are police complaints also on record. It had become a criminal case. Thus it had become a dispute and is not a spurious, hypothetical or illusory dispute.
From the correspondence on record, it can be clearly made out that there is a pre-existing dispute. The Adjudicating Authority has gone into the circumstances of their business dealings and have come to the conclusion that the dispute raised by the respondent is plausible and not a patently feeble legal argument. Thus, when the Appellant received the reply to Section 8 demand notice raising a dispute, the Section 9 petition could not have been proceeded under I&B Code against the respondent.
For CIRP under Section 9 of IBC, 2016 to be initiated, the Appellant is required to prove that the debt is due, it has not been paid and the debt is an undisputed debt. In this particular case, there is no record to suggest that there is any contract entered into between the parties but there is a evidence of pre-existing dispute. The ingredients laid down under Section 9 read with the requirements laid down by the judicial pronouncement are not fulfilled. Therefore, in the present case owing to the pre-existing dispute between the parties, the Adjudicating Authority has rightly rejected the Section 9 Application.
There are no error in the orders of the Adjudicating Authority - appeal dismissed.
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2024 (4) TMI 119 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking restoration of petition, which was dismissed for non prosecution - seeking substitution of the Appellant in place of the Bank of Baroda in the main company petition, after dismissal of the main company petition - whether the Appellant had taken appropriate steps to substitute itself in place of the original applicant, Bank of Baroda? - HELD THAT:- It is the case of the Appellant that their counsel was present during the hearing of the main company petition who informed the Adjudicating Authority that pursuant to the assignment agreement they had already filed an I.A. with the NCLT Registry seeking substitution of the Appellant in place of Bank of Baroda in the main company petition but the said IA was yet to be numbered and notified for hearing.
The Appellant was diligent and vigilant in pursuing the main company application and had taken steps to file the substitution application. Want of diligence or wilful inaction is attributable only when something that is required to be done is not done at all or not done in a timely manner - there are no delay or negligence on the part of the Appellant to deprive him of his statutory and legitimate right to prosecute the main company petition.
The Adjudicating Authority in the impugned order, on the one hand, has held that the Appellant had stepped into the shoes of the Bank of Baroda and had the same right against the Corporate Debtor as that of Bank of Baroda including all rights exercisable under the IBC - Appellant cannot be treated as the original applicant of the main company petition and hence the said petition cannot be restored by the Appellant. The Adjudicating Authority further held that in terms of Rule 48 of NCLT rules, 2016, only the original applicant can approach or file an application before the Adjudicating Authority for restoration of the application. The original application has been dismissed on ground of non-appearance of the Bank of Baroda and since in this application, the Appellant was not a party, it could not have filed the restoration application.
Coming to the definition of the word “applicant” in the NCLT Rules, 2016 we find that Rule 2(4) defines “applicant” to mean a petitioner or an appellant or any other person or entity capable of making an application including an interlocutory application or a petition or an appeal under the IBC. Tested against this definition of an “applicant”, let us now see whether the Appellant fits into this definition of an “applicant” - The Adjudicating Authority has also expressly acknowledged this position by stating that following the assignment agreement, the Appellant had stepped into the shoes of the original applicant, Bank of Baroda. The Adjudicating Authority has further opined in the impugned order that the Appellant enjoyed the same right against the Corporate Debtor as that of Bank of Baroda. It also held that the Appellant as an assignee was entitled to all rights exercisable under the IBC. That being the case, the Appellant clearly qualifies to be an “applicant” under the NCLT Rules and therefore enjoys the locus to file the restoration application before the Adjudicating Authority.
When an application which is dismissed for non-appearance of the petitioner can be restored on satisfying the Tribunal that he was prevented by some sufficient cause from appearing before the Tribunal, likewise, in the present facts of the case, opportunity ought not to be denied to the Appellant from seeking restoration of the main company petition which has been dismissed for non-prosecution by the original applicant. It is not in the interest of justice to deny a person the opportunity to file an application for restoration for no ostensible lapses.
The Adjudicating Authority was not correct in dismissing the application for restoration - the impugned order is set aside - Appeal allowed.
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2024 (4) TMI 118 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admission of section 7 application - financial debt or not - financial creditor or not - default or not in the re-payment of the loan by the Corporate Debtor which entitled the Respondent No. 1 to file a Section 7 application in the capacity of a Financial Creditor qua the Corporate Debtor - when a debt is to be treated as a financial debt in the context of IBC? - HELD THAT:- In PIONEER URBAN LAND AND INFRASTRUCTURE LIMITED & ANOTHER VERSUS UNION OF INDIA & OTHERS [2019 (8) TMI 532 - SUPREME COURT], it has been held that any debt to be treated as financial debt, there must happen disbursal of money and the disbursal must be against consideration for time value of money. The concept of time value of money has been further explained to also include a transaction which does not necessarily culminate into money being returned to the lender or interest being paid in respect of money that has been borrowed. Holding Section 5(8) to be a residuary provision which has a catch-all nature, it held that it can include anything which is equivalent to the money that has been loaned as long as commercial effect of borrowing or profit as the aim is discernible.
The Hon’ble Supreme Court while dilating on this subject in the matter of PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [2020 (2) TMI 1259 - SUPREME COURT] propounded that in terms of Section 5(8) of the IBC, the essential condition of financial debt is disbursement against the consideration for time value of money.
Having taken cognizance of the statutory provisions of IBC and the reigning judgements of the Hon’ble Apex Court, it can be safely concluded that it is settled law that for any debt to be treated as financial debt, the pre-requisite is disbursal of money to the borrower for utilization by the borrower and that the disbursal must be against consideration for time value of money even if it is not interest bearing.
When a Financial Creditor who has disbursed money to a Corporate Debtor against consideration for time value of money can trigger the insolvency resolution process against the Corporate Debtor? - HELD THAT:- As per the scheme of IBC, that stage arises when a default takes place, in the sense that a debt which has become due, in fact and in law, but has not been paid. “Default” as defined in Section 3(12) of IBC means non-payment of a debt once it becomes due and payable, and non-payment could be of the whole amount or even part thereof. This has been elaborately discussed by the Hon’ble Supreme Court in the case of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT] holding that What is important is that at this stage, if an application is filed before the adjudicating authority for initiating the corporate insolvency resolution process, the corporate debtor can prove that the debt is disputed. When the debt is so disputed, such application would be rejected.
In the present case, it is an undisputed fact that a sum of Rs. 5 crore was transferred to the account of Corporate Debtor and the disbursal of this amount took place on 01.01.2014. Sufficient material has been placed on record by the Respondent No. 1 to prove that money was actually disbursed to the Corporate Debtor - Neither has any claim been made that any part of this sum was repaid by the Corporate Debtor. Respondent No. 1 has thus produced incontrovertible and unimpeachable evidence to prove the existence of debt liability on the part of the Corporate Debtor.
The IBC does not provide for any prescriptive requirement for the Financial Creditor to place on record formal written agreements/documents between the parties to establish that the disbursal made was in the form of loan with interest. Given this background we therefore find that the Adjudicating Authority committed no error in holding that there was a financial debt owed by the Corporate Debtor to Respondent No. 1.
The essential ingredients of financial debt in the context of IBC consists of disbursal accompanied by consideration for time value of money. We now proceed to examine whether in the present case, disbursement of money took place against the consideration for time value of money and whether commercial effect of borrowing is found to underpin the transaction. The concept of time value of money has nowhere been defined in the IBC. Time value of money is not only a regular or timely return received for the duration for which the amount is disbursed as an amount in addition to the principal, but also covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration - Once the Adjudicating Authority is subjectively satisfied that there is a debt and a default has been committed by the Corporate Debtor and the Section 7 application is complete in all respects, the Adjudicating Authority in the exercise of summary jurisdiction has to admit the Section 7 application - this is a case where all the pre-requisites for filing a Section 7 stood fulfilled and the Adjudicating Authority cannot be held to have committed an error in admitting the Corporate Debtor into CIRP for having defaulted in repaying a financial debt which was above the threshold limit.
The Adjudicating Authority has rightly come to the conclusion that the Respondent No.1 has successfully proved the financial debt and default on part of the Corporate Debtor in admitting the Section 7 application and initiating the CIRP process - there are no reason to interfere in the impugned order passed by the Adjudicating Authority - appeal dismissed.
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2024 (4) TMI 40 - SC ORDER
Modification in the Resolution Plan - HELD THAT:- The National Company Law Appellate Tribunal (NCLAT), has clarified that the clauses in the resolution plan permitting alteration of the layout and building plan including height, location and common area in future are permissive, albeit any change will require approval of the competent authority, that is, Real Estate Regulatory Authority (RERA), Maharashtra. Therefore, the resolution applicant cannot alter the layout and modify the plan on its own without approval.
In view of the aforesaid clarifications given by the resolution applicant – Ashdan Properties Private Limited, by which they are bound, no further order or direction is required to be passed - appeal disposed off.
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2024 (4) TMI 39 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Approval of Resolution Plan - whether the Resolution Plan submitted, which was approved by the Adjudicating Authority, is in compliance of provisions of Section 30, subsection (2) of IBC - HELD THAT:- The extent of judicial review of Resolution Plan approved by the CoC in its commercial wisdom are very limited. The Hon’ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] as well as in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK & OTHERS [2019 (2) TMI 1043 - SUPREME COURT] has laid down that commercial wisdom of the CoC has to be given paramount importance and limited jurisdiction provided to interfere in the approval of the Plan by the Adjudicating Authority or the Appellate Tribunal, i.e., only when the Plan is not in compliance with statutory provisions of Section 30, sub-section (2).
The law is thus well settled that commercial wisdom of the CoC approving the Plan cannot be interfered and it can be interfered only when there is statutory non-compliance, i.e., non-compliance of Section 30, subsection (2). Thus, we need to answer the question as to whether there is statutory non-compliance in the present case - the Hon’ble Supreme Court in JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. VERSUS NBCC (INDIA) LTD. & ORS. [2021 (3) TMI 1143 - SUPREME COURT], held that Operational Creditors are to be paid in priority over the Financial Creditors only by cash and not by issuing of equity.
The distribution of the amount to the Operational Creditor (other than Government Departments) is clearly contrary to provisions of Section 30 (2)(b)(ii). The Adjudicating Authority has failed to advert to Section 30, sub-section (2) (b) (ii) and failed to notice that amount proposed to the Operational Creditor is clearly contrary to Section 30(2)(b)(ii) - order of Adjudicating Authority approving the Resolution Plan cannot be sustained.
The order passed by Adjudicating Authority dated 09.11.2023 requires to be modified. No other part of the Resolution Plan being under challenge, ends of justice will be served in modifying the order of the Adjudicating Authority only with respect to distribution to the Operational Creditor. It was obligatory for the Resolution Plan to comply with the provisions of Section 30(2)(b)(ii) in the facts of the present case. Hence, the order is modified to make it in compliance of the provisions of Section 30, sub-section (2) (b)(ii).
The order of Adjudicating Authority dated 09.11.2023 is modified to the extent of approving the distribution to the Operational Creditors, including the Appellant. Rest of the order is affirmed - appeal disposed off.
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2024 (4) TMI 13 - SC ORDER
Condonation of delay in filing appeal - it was held by NCLAT that 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 - HELD THAT:- Admittedly, the delay in filing the appeal is beyond the maximum period which can be condoned under Section 62 of the Insolvency and Bankruptcy Code 2016.
The appeal is hence dismissed on the ground of limitation.
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2024 (3) TMI 1317 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Doctrine of subrogation - Allowing recourse to the Financial Creditors against the Personal Guarantors of Asian Colour Coated Ispat Limited - Resolution Plan approved - whether the Financial Creditor can proceed against the Personal Guarantors in absence of any debt after extinguishment of such debts upon assignment in terms of the RBI Prudential Framework for Resolution of Stressed Assets dated 07.06.2019 and as stipulated in the approved Resolution Plan? - HELD THAT:- As a general rule, the doctrine of subrogation is an absolute right of the guarantor, however, the issue becomes different, if it falls within the domain of the Code in the context of CIRP proceedings. We note that as per notification dated 15.11.2019, the Personal Guarantors became liable under the Code and therefore, the treatment of Personal Guarantors under the Code are to be treated differently vis-à-vis under the contract of guarantees under the Indian Contract Act, 1872.
The denial of right of subrogation is no more res-judicata and has been decided in catena of the judgments by the Hon’ble Supreme Court of India.
Hon’ble Supreme Court of India in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] noted that the Financial Creditors can pursue their claims against the Personal Guarantors to the Corporate Debtor and right of subrogation gets extinguished, although the apex Court decided not to express conclusive opinion which might have affected them pending litigations on account of invocation of such guarantees.
It is now well settled law, in light of the Essar Case that rights of subrogation that may arise against the Corporate Debtor can be extinguished under the Resolution Plan and therefore the arguments of the Appellant on issue of rights of subrogation’s are not convincing. If the rights of subrogation are allowed to continue against the Corporate Debtor under the management of the new SRA, the same would have the effect of putting the SRA and the Corporate Debtor in the same position as prior to its insolvency resolution. The allegation of the Appellant pertaining to differential treatment due to extinguishing their rights of subrogation under the approved Resolution Plan against the Corporate Debtor is unfounded, which is only to ensure that the SRA takes control of the Corporate Debtor on a clean slate without carrying any previous liability baggage.
The extinguishment of Personal Guarantors right of subrogation is unavoidable and inaccessible fact in insolvency cases and it requires to be respected by all stakeholders and any departure from such principles will have adverse impact on revival of the Corporate Debtors, interest of the Financial Creditors and overall negative impact on the national economy.
The financial creditors have reserved the rights to proceed against the personal guarantors like the Appellant herein in terms of the “Excluded Rights” in approved Resolution Plan. There is no question of transfer of a “mere right to sue” and in such circumstances, we feel that it is a structured financial deal in form of Resolution Plan exercised based on the commercial wisdom, with aim of resolution of a corporate debtor, as well as to ensure that financial creditors are able to recover their outstanding debts as guaranteed by the Personal Guarantors, the Appellants herein.
Alleged non existing of debts in the books of the Financial Creditors and regarding treatment in the books of the financial creditors with respect to such continuing rights of the financial creditors against the personal guarantors of the Corporate Debtor after the approval of the Resolution Plan - HELD THAT:- The treatment in the Books of the Financial Creditors is based on RBI Prudential norms which were issued with several purposes, including and not limited to, discouraging the Financial Creditors to resort to ever greening of loans. We feel that such RBI guidelines do not intent to give undue benefits to the Personal Guarantors of the Corporate Debtors or debar the Financial Creditors in pursuing their legal rights to recover their outstanding debts from the Personal Guarantors to the Corporate Debtor. After all, it cannot be anyone’s case to write off public money by such circuitous route or hypothetical legal assumption.
The Hon'ble Supreme Court, in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT], has categorically recognised the concept of preserving the corporate debtor as a going concern while ensuring maximum recovery for all creditors to be the intent of the Code.
Thus, commercial wisdom of the CoC has been given supremacy and no grounds exist for the Adjudicating Authority or Appellate Tribunal to interfere.
There are no error in the Impugned Order - appeal dismissed.
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2024 (3) TMI 1294 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Admission of section 9 application - Operational Creditors - debt payable or not - prior existence of the dispute between the parties or the pendency of other proceedings filed elsewhere - effect upon the liability of Corporate Debtor in respect of the unpaid operational debt.
Whether based on the documentary evidence which were furnished by the Corporate Debtor whether any debt was payable at all and what is the basis on which it has been claimed to have been paid? - HELD THAT:- A careful scrutiny of the contract agreement dated 03.09.2012 particularly in the context, to its contents provided in clause I.10 and I.40, dealing with the schedule of payment agreed to show that it does not envisage the payment by the Corporate Debtor to the Operational Creditor, would be depending only upon the receipts of amount made from M/s. GVK Coal (M/s. Tokisud Company Pvt. Ltd.). Hence, as far as the purchase order and the contract agreement are concerned, they will have to read only for the contract purposes and not to the liability of payment of the dues to the Operational Creditor. Thus, it could be rightly inferred that prior dues left unpaid by the Corporate Debtor to the Operational Creditor which necessitated invocation of Section 9 of the Insolvency and Bankruptcy Code, 2016, was justified in the eyes of law.
Whether there is a prior existence of the dispute between the parties or the pendency of other proceedings filed elsewhere? - whether such will at all have any effect upon the liability of Corporate Debtor in respect of the unpaid operational debt? - HELD THAT:- The said issue has been dealt with by the Hon’ble Apex Court in matters of Mobilox Innovations Private Ltd. vs Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT], wherein it was ultimately held that the Adjudicating Authority at the stage when it is examining an application under Section 9, will only have confine itself to determine whether there happens to be an operational debt, exceeding amount prescribed under the Code and further the only precaution which is required to be taken is that based on documents on rigour as furnished, the aspects of liability of dues stand established and that if any of the ingredients as aforesaid exists, the application under Section 9 would be sustainable.
As per the records, there is nothing on record to otherwise that the Corporate Debtor had any intention to pay the amount due prior to the date the Demand Notice was issued by the Operational Creditor and that there was existence of any dispute with Operational Creditor by the Corporate Debtor prior to the receipt of demand notice served as a mandatory notice in terms of Section 7 of the Insolvency and Bankruptcy Code, 2016. Hence, since despite the demand notice the amount therein was not paid by the Corporate Debtor in all to the Respondent/Operational Creditor. the existence of amount due to be paid becomes an admitted fact, more so in the light of the aforesaid fact that the Corporate Debtor has not raised any dispute as per terms of the purchase order - the Adjudicating Authority while admitting the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 and dealing with the aspect of moratorium under Section 14 of the Code had not committed any legal error of law and fact in relation to the guidelines for the purpose of arrears or claim raised under Section 9 of the Code.
The act of the Adjudicating Authority in declaring the moratorium for the purpose of Section 14 of the Code, in the light of provisions contained under Section 9 dealing with the aspect of remittance of the dues claimed, does not appear to suffer from any apparent error of law or a fact on record which could call for acceptance of the defence taken by the Corporate Debtor or questioning the existence of the dues to be paid and/or admitting the existence of any prior dispute regarding the amount due remaining unpaid.
The admission of proceedings by the Adjudicating Authority under Section 9 of the Insolvency and Bankruptcy Code do not suffer from any apparent error of fact and law, calling for any interference while exercising Appellate jurisdiction under Section 61 of the Insolvency and Bankruptcy Code, 2016 - Appeal dismissed.
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2024 (3) TMI 1293 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI - LB
Seeking grant of Interim Stay of the Sale Notice - sale of assets of the Corporate Debtor and the property of one Mr. S. Srinivasan (Guarantor) - HELD THAT:- This Tribunal, pertinently points out, that obviously, the Learned Counsel for the Appellant/Petitioner, is not desirous of assailing the subsequent E-auction Notice dated 15.02.2024, (being the later development, after the earlier Auction Notice dated 16.09.2023) and in the absence of any challenge to the subsequent E-auction Notice dated 15.02.2024, then in law, it amounts to waiver, Acquiescence and also Estoppel By Conduct, of the Appellant/Petitioner.
The instant Comp. Appeal filed by the Appellant, is only an exercise in futility/otiose one, in the considered opinion of this Tribunal. As such, this Tribunal is not inclined to entertain the instant Comp. Appeal and Dismisses the same, at the Admission stage, without traversing, or delving deep into the subject matter in issue.
Company appeal dismissed.
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2024 (3) TMI 1292 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI
Ownership of leasehold rights over the subject plot - demand for enhanced land cost was raised much before initiation of CIRP - Applicability of clean slate principle - Seeking quashing of demand notice - direction to to issue ‘No Objection Certificate’ (NOC) for the subject plot - whether in the factual matrix of this case, the successful resolution applicant can be granted ownership of leasehold rights over the subject plot without payment of dues to the respondent?
HELD THAT:- Hon’ble Supreme Court in the MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) VERSUS ABHILASH LAL & ORS. [2019 (11) TMI 844 - SUPREME COURT] has held that the provisions of Section 238 of IBC, 2016 do not override the rights of Municipal Corporation of Greater Mumbai (MCGM) to control and regulate how its properties are to be dealt with. It is public duty of MCGM to control and regulate how its properties are dealt with. The provisions of Section 238 could be of importance when the properties and assets are of debtor and not when a third party like MCGM are involved and therefore in the absence of approval in the terms of Sections 92 and 92-A of the Mumbai Municipal Corporation Act, 1880 (MMC), the Adjudicating Authority under IBC, 2016 cannot create a fresh interest in respect of MCGM’s property and lands.
From the perusal of the aforesaid judgment, it follows that the rights of the Public Sector/ State Land Development Authorities on assets owned by them cannot be overridden by provisions of IBC, 2016 and any transfer to the successful Auction Purchaser or Successful Resolution Applicant has to be in accordance with the terms and conditions of the original allotment or lease deed or policy of the Authority.
The demand for enhanced land cost was raised much before initiation of CIRP and evidently, it was not brought to the notice of the IRP or the CoC. Even the pending litigation before Civil Judge (Senior Division), Ludhiana regarding the subject plot was not brought to the notice of the CoC and the successful Resolution Applicant.
The protective umbrella of IBC, 2016 for CIRP cannot be extended to an extent that public authorities are asked to part with their assets without full payment of their dues or without compliance to terms and conditions of the sale or lease deed or their transfer policy. The ‘clean slate principle’ will not apply to the factual matrix of the present case, where there was prior demand from public sector land authority which was also not disclosed during CIRP to the IRP or the CoC.
The Adjudicating Authority in the impugned order has rightly noted that the payment demanded by the respondent is to clear the defect in the title of the land itself, and is not linked to the CIRP proceedings.
There are no reason to interfere in the order of the Adjudicating Authority - appeal dismissed.
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2024 (3) TMI 1291 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Approval of the Resolution Plan - Requirement of liability of PF and ESI dues to be paid in Full - Claim u/s 7A, 7Q, and 14B of the Employees' Provident Funds & Miscellaneous Provisions Act 1952 - Approval of Resolution Plan in which only amount proposed was amount u/s 7A - HELD THAT:- Similar issue decided in REGIONAL PROVIDENT FUND COMMISSIONER, VATWA, EMPLOYEES PROVIDENT FUND ORGANIZATION VERSUS SHRI MANISH KUMAR BHAGAT, (RESOLUTION PROFESSIONAL OF M/S. PERFECT BORING PVT. LTD.) , M/S. N.A. ROTA MACHINES & MOULDS INDIA [2023 (10) TMI 535 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. One of the claims which was not paid by the Resolution Plan in the said case was also claim under Section 14B of the Employees Provident Fund Miscellaneous Provisions Act, 1952. This Tribunal taking note of the claim under Section 14B took the view that the Central Board is empowered to waive the damages under Section 14B as per the scheme under the 1952 Act. It was observed that Section 14B referred to recommendation by Board under the 1952 Act. The said Act having been repealed and now repealed by the IBC Code, the power of recommendation can be exercised by NCLT.
This Tribunal ultimate directions in paragraph 18(i) (c) permitted the SRA to make an application to Central Board for waiver of 100 per cent damages along with the copy of the order. In the facts of the present case, we are inclined to grant liberty to SRA to make an application to the Central Board for waiver of the amount of damages under Section 14B as provided in Section 14B of the 1952 Act.
Now coming to another part of the claim which was admitted in the CIRP i.e. amount under Section 7Q amounting to Rs.75,62,576/- - the said amount is required to be paid by SRA to the Appellant.
The SRA- Respondent No.3 is directed to make payment of amount of Rs.75,62,576/- within the period of two months from today to the Appellant which was admitted claim under Section 7Q - With regard to amount admitted under Section 14B of Rs.1,05,63,927/-, liberty granted to the SRA to make an application to the Central Board to waive 100% damages levelled under Section 14B.
The impugned order passed by the Adjudicating Authority is affirmed.
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2024 (3) TMI 1290 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI – LB
Rejection of Section 7 application - rejection on the ground that there is non-compliance of order dated 11.08.2022 and 05.12.2022 - direction for publication of notice in two leading newspapers not complied with - issuance of fresh notice to the Respondents and directing the Appellant to serve notice along with copy of petition to the Respondent by all modes and file proof of service.
HELD THAT:- From the order dated 11.08.2022, it is noted that notices were issued and direction was to issue notice by paper publication in two leading newspapers. On 16.09.2022, the Respondent have appeared before the Adjudicating Authority through counsel and time was allowed to them to file vakalatnama and counter affidavit and thereafter again on 05.12.2022 fresh notices were directed to be issued. Affidavit of service was already filed by the Appellant on 08.08.2022, however, thereafter order for publication was issued. The Appearance of counsel on behalf of the Corporate Debtor on 16.09.2022 clearly indicates that the Corporate Debtor was well aware of the proceedings.
In the present appeal, inspite of issuance of notice and publication in newspapers, no one appeared for the Corporate Debtor - the Adjudicating Authority committed error in rejecting the Section 7 application due to non-compliance of order dated 11.08.2022 and 05.12.2022. The Corporate Debtor having appeared before the Adjudicating Authority through counsel who took time for filing vakalatnama and counter affidavit, the Adjudicating Authority ought to have dismissed the application for non-compliance.
The order dated 02.02.2023 set aside - Section 7 application is revived before the Adjudicating Authority to be heard and decided in accordance with law - appeal disposed off.
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