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IBC - Case Laws
Showing 81 to 100 of 9149 Records
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2024 (10) TMI 1551
Handing over of physical possession of the land - Resolution Professional could not place on record the evidence to show that physical possession of the land in question was handed over to him - sufficient materials on record to come to the conclusion that the Resolution Professional/ Corporate Debtor is in possession of area admeasuring 10.81 acres i.e. land in question - possession of subject land in which development rights was claimed by the corporate debtor - adjudication by a Civil Court - exclusion from the CIRP of the Corporate Debtor as prayed by owners - whether the Resolution Professional is in possession or actual possession of the land could have been incidence?
HELD THAT:- The Development Agreement as amended contemplated in the group housing project 50% shares to the owners and 50% shares to the developer. 50% shares which came to the developer share was 10.81 acres on which project Canary Greens was constructed by the corporate debtor which project was taken possession after initiation of the CIRP by the IRP and thereafter by the Resolution Professional. The Sole Arbitrator in its proceedings dated 12.10.2010 has already noted that the possession has been given to the developer of the said land. Corporate Debtor having commenced the project Canary Greens on the subject land, the possession of the corporate debtor of the project could not have been doubted.
The definition under Section 3(27) of the Property is an inclusive definition which obviously includes the Development Rights which was obtained by the Developers from the Owners by Development Agreement dated 03.03.2007 were subsequently assigned to the Corporate Debtor by an Agreement dated 30.07.2010.
The Hon’ble Supreme Court has clearly laid down in the case of Victory Iron Works Ltd. Vs. Jitendra Lohia & Anr. [2023 (3) TMI 699 - SUPREME COURT] that Development Rights are Rights which can be taken control by the RP. Hon’ble Supreme Court in the above case had occasion to consider provisions of Sections 18, 25 & 3(27) of the IBC. Hon’ble Supreme Court has also examined the jurisdiction of NCLT and NCLAT in cases to grant Orders protecting possession of the Corporate Debtor at instance of RP. It was held by the Hon’ble Supreme Court that Development Rights making in favour of the Corporate Debtor constitute Property.
The materials on record fully prove that on the land 10.81 acres, the Project Canary Green was constructed which Project was the Project of the Corporate Debtor. Corporate Debtor having Development Right in subject land RP was entitled to have possession and take possession. Thus, the observations of the Adjudicating Authority that the RP was not in possession of the land in question is erroneous and without considering the relevant materials on the record which fully proves that it was Corporate Debtor who was in possession of the Project land and the Project.
The observation of the Adjudicating Authority in Order dated 05.12.2023 that the RP could not place on record the evidence to show that physical possession of land in question was handed over to him is unsustainable - There are sufficient materials on record to come to conclusion that RP/Corporate Debtor is in possession of area admeasuring 10.81 acres, i.e., land in question - Adjudicating Authority was competent to decide the question of possession of subject land in which Development Rights was claimed by the Corporate Debtor and subject question was not required to be relegated to be adjudicated by the Civil Court - The subject land i.e.,10.81 acres was not required to be excluded from the CIRP of the Corporate Debtor as prayed by the Owners.
Application allowed.
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2024 (10) TMI 1466
Approval of the resolution plan - wrongful allocation of Rs. 79 lakhs as the liquidation value - HELD THAT:- The Hon’ble Supreme Court in M/s Amit Metaliks Limited & Anr. [2021 (6) TMI 684 - SUPREME COURT] while taking into consideration Section 30(4)(2) and Section 53 held that the NCLAT was right in observing that such amendment to sub-section (4) of Section 30 only amplified the considerations for the CoC while exercising its commercial wisdom so as to take an informed decision in regard to the viability and feasibility of resolution plan with fairness of distribution amongst similarly situated creditors and the business decision taken in exercise of the commercial wisdom of CoC does not call for interference unless creditors belonging to a class being similarly situated are denied fair and equitable treatment.
In the case of Paridhi Finvest Pvt. Ltd. [2024 (2) TMI 557 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], the case of the Appellant was that he was not paid the amount as per the liquidation value though the Appellant being a dissenting financial creditor was entitled for payment of amount as per liquidation value. In this case, the Court relied upon the decision in the case of Amit Metaliks and the decision in the case of Paridhi Finvest Pvt. Ltd. was upheld by the Hon’ble Supreme Court and the appeal was dismissed.
Although, the interpretation of Section 30(2)(b)(ii) of the Code is pending by a larger bench but at present the decision of the Hon’ble Supreme Court in the case of Amit Metaliks is subsisting, therefore, relying upon the said decision, we hold that there is no error in the order of the Tribunal which calls for any interference by this Court and hence, the appeal is hereby dismissed.
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2024 (10) TMI 1408
Inclusion of outstanding lease rental and premium due from the date of CIRP commencement that is 26.11.2018 till the approval of the resolution plan i.e. 12.09.2022 in the CIRP costs - CIRP has been triggered and moratorium has been imposed - Section 5(13) of IBC - HELD THAT:- The Appellant has relied upon a decision of this Court in the case of Sunil Kumar Agrawal [2023 (1) TMI 552 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] in which a similar controversy was involved. In the said case, the application was filed under Section 60(5)(c) of the Code by GNIDA for a direction to the resolution professional to make the payment of the amount due and payable towards the outstanding dues which became due during the CIRP. The same was allowed by the Tribunal. It was argued by the Appellant in that case that the Adjudicating Authority has erred in applying explanation of Section 14(1)(d) for allowing the application because the said explanation is not applicable and thus the question was framed by this Court as to whether the explanation under Section 14(1)(d) of the Code for the purpose of directing the Appellant to pay the lease premium amount and the lease rent to the Respondent is applicable?. This court in the decided case has held that explanation is not applicable because the premium amount or lease rent is not part of Section 14(1)(d) which cannot be read as similar grant or right which has to be in respect of the license, permit, registration, quota, concession, clearance etc. but not with premium amount or lease rent.
The order passed in the case of Sunil Kumar Agarwal [2023 (1) TMI 552 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] applies to this case also even though the said decision has been challenged by the Noida by way of Civil Appeal No. 901 of 2023 before the Hon’ble Supreme Court in which notice has been issued but stay has not been granted.
It cannot but have to maintain the same order that has been passed in the case of Sunil Kumar Agrawal till a decision about its correctness is taken by the Hon’ble Supreme Court in Civil Appeal No. 901 of 2023.
The impugned order is set aside - Appeal allowed.
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2024 (10) TMI 1407
Approval of Resolution Plan - Applicability of Section 240A of the IBC to the Corporate Debtor registered as MSME - whether SRA was ineligible as per Section 29A (c) of the IBC, to submit the Resolution Plan in the CIRP of the Corporate Debtor? - HELD THAT:- The Adjudicating Authority has held that Birendra Kumar Pasari, who is Managing Director of the SRA is also the Promoter and in control and management of the CD, hence, he shall be deemed to be in management and control of the SRA. It was also noted and observed that Birendra Kumar Pasari and his family members are also in management and control of the Financial Creditor. After considering the RBI Circular dated 01.07.2015; clarification dated 12.11.2021; provisions of Section 29A and judgment of the Hon’ble Supreme Court in ARCELORMITTAL INDIA PRIVATE LIMITED VERSUS SATISH KUMAR GUPTA & ORS. [2018 (10) TMI 312 - SUPREME COURT], the Adjudicating Authority has come to the conclusion in paragraph 48 that account of CD having become Non-Performing asset on 14.06.2020, whose debt could not have been paid for a period of at least one year before commencement of CIRP, by virtue of Section 29A, the SRA becomes ineligible to submit the Resolution Plan.
The facts of the present case, clearly indicate that the Corporate Debtor was registered as MSME much prior to the submission of the Resolution Plan by Bishwanath Traders & Investment Ltd. Thus, the eligibility of SRA has to be seen on the date of submission of Resolution Plan. A perusal of the judgment of the Adjudicating Authority indicate that Adjudicating Authority has not adverted to Section 240A of the IBC and declared the SRA ineligible on the strength of Section 29A(c).
On looking into the scheme of Section 29A(c), which is relied by the Suspended Director, the scheme itself contemplate ineligibility on the ground that Resolution Applicant is a person under whose management or control the Corporate Debtor’s account has become non-performing. Thus, when Section 240A is applied, ineligibility in the Resolution Applicant, under whose management and control, the account of the CD was declared non-performing, cannot be reckoned. No other ineligibility of the SRA has been pointed out or pressed, SRA Bishwanath Traders & Investment Ltd. did not suffer from any ineligibility from submitting the Resolution Plan on 11.07.2022, on which date Plan was submitted. The Adjudicating Authority committed error in allowing IA No.4173 of 2023 filed by the Suspended Director and rejecting IA No.5458 of 2022 filed by the RP for approval of the Resolution Plan.
The order dated 24.01.2024 impugned in these Appeal(s) are set aside. IA No.4173 of 2023 is dismissed and IA No.5458 of 2022 is allowed, approving the Resolution Plan - appeal allowed.
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2024 (10) TMI 1353
Maintainability of section 7 application - initiation of CIRP - existence of ‘debt’ and ‘default’ on the part of the Corporate Debtor - HELD THAT:- There is a disbursement against the consideration for time value of money and there is a clause for payment of interest. Further, the documents furnished show that it is receivables discounting with recourse basis. Thus, receivables sold under recourse basis will constitute a financial debt as per Section 5 (8)(e) of IBC Act.
It has been held by the Hon’ble Supreme Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT] as well as in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] after going through the Scheme of IBC, 2016 in depth in relation to an Application under Section 7 filed by a Financial Creditor as compared to the one filed under Section 9 by an Operational Creditor, that in relation to a Section 7 Application where there is an existence of a ‘financial debt’ and the default in excess of Rs. 1,00,00,000/-, this Tribunal is bound to admit the Application and as a consequence trigger the Corporate Insolvency Resolution Process (CIRP) and in relation to a Section 7 Application defence of set off or counter claim put forth by the Corporate Debtor cannot be considered as a dispute in relation to the Financial debt and default in relation to it. In the present case, it is clear that there is a default on the part of the Corporate Debtor for a sum exceeding Rs. 1 Crore.
The Applicant / Financial Creditor has proved that there is a ‘debt’ and ‘default’ on the part of the Corporate Debtor and hence in term of Section 7(5) of IBC, 2016, the present application is required to be admitted and Corporate Insolvency Resolution Process as against the Corporate Debtor is required to be initiated.
Application admitted - moratorium declared.
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2024 (10) TMI 1185
Locus of the appellant before the Court - inherent powers under Rule 11 of the NCLAT Rules 2016 - adequate addressing of objections raised by the appellant or not - discretionary power under Rule 11 of the NCLAT Rules 2016.
Whether the appellant, who is not a party to the settlement between the second respondent and the Corporate Debtor, has locus in the proceedings before this Court? - HELD THAT:- Section 62 of the IBC stipulates that “any person” who is aggrieved by the order of the NCLAT may file an appeal before the Supreme Court within the prescribed limitation period. Similar language is used in Section 61 of the IBC, which provides for appeals to NCLAT from orders of the NCLT.50 The use of the phrase “any person aggrieved” indicates that there is no rigid locus requirement to institute an appeal challenging an order of the NCLT, before the NCLAT or an order of the NCLAT, before this Court. Any person who is aggrieved by the order may institute an appeal, and nothing in the provision restricts the phrase to only the applicant creditor and the corporate debtor - The appellant who claims to be a Financial Creditor, has expressed reasonable apprehensions about the prejudice it would face if there were roundtripping of the funds, and the prioritization of the debts of the second respondent, an operational creditor.
The appellant had moved an application before the NCLAT seeking impleadment as a respondent and the objections of the appellant were specifically recorded and addressed in the Impugned Judgement. Therefore, there is no doubt that the appellant falls within the ambit of the phrase “any person aggrieved” and has the locus standi to institute the present Civil Appeal before this Court.
Whether the NCLAT erred in invoking its inherent powers under Rule 11 of the NCLAT Rules 2016 in the presence of a prescribed procedure for withdrawal of CIRP and settlement of claims between parties? - HELD THAT:- The ‘inherent powers’ cannot be used to subvert legal provisions, which exhaustively provide for a procedure. To permit the NCLAT to circumvent this detailed procedure by invoking its inherent powers under Rule 11 would run contrary to the carefully crafted procedure for withdrawal. In the Impugned Judgement, the NCLAT does not provide any reasons for deviating from this procedure or the urgency to approve the settlement without following the procedure. The correct course of action by the NCLAT would have been to stay the constitution of the CoC and direct the parties to follow the course of action in Section 12A read with Regulation 30A of the CIRP Regulations 2016. This legal framework for such withdrawal was formulated after giving due consideration to the appropriate procedure for withdrawal and balancing it with the objectives of the IBC.
Even if the procedural infirmity is kept aside, once the CIRP was admitted, the proceedings became collective, and all creditors of the Corporate Debtor became stakeholders.
Without prejudice to the above, whether the NCLAT adequately addressed the objections raised by the appellant, while exercising its discretionary power under Rule 11 of the NCLAT Rules 2016? - HELD THAT:- The ongoing investigation by the Enforcement Directorate against the first respondent and the Corporate Debtor; and other attempts by the Corporate Debtor to dissipate assets, were not adequately addressed by the NCLAT.
The impugned judgment of the NCLAT dated 2 August 2024 is set aside - appeal allowed.
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2024 (10) TMI 1184
Initiation of CIRP proceedings - existence of debt - main objection to the initiation of CIRP proceedings on the ground of limitation was rejected by the Adjudicating Authority on the ground that there is an acknowledgement of debt in the financial statements as well as auditor’s report of the Corporate Debtor for the year ending on 31.03.2017 - HELD THAT:- The Adjudicating Authority as well as the NCLAT have concurrently held that the entries in the balance sheets amount to clear acknowledgment of debt. The findings are agreed upon. Further, Note 3.4 appended to said balance sheet entry dated 31.03.2017 mentions that “company has made certain defaults in the repayment of term loans and interest.” It further mentions of a continuing default. The entry also mentions long-term borrowings. The conclusions of NCLT and NCLAT that there is acknowledgment of debt are unimpeachable.
Adjudicating Authority and NCLAT have also considered the Corporate Debtor’s proposal of One Time Settlement (OTS) to UCO Bank. The proposal made by letter dated 07.06.2016 acknowledges that there were prior debts owed to UCO Bank. To substantiate the argument that such OTS constituted acknowledgment of debt since it relates to present and subsisting liability and indicates existence of a jural relationship between the parties, UCO Bank relied on judgment of this Court in Lakshmirattan Cotton Mills Co. Ltd. and Messrs Behari Lal Ram Charan v. Aluminium Corporation of India Limited [1970 (10) TMI 81 - SUPREME COURT].
The findings arrived at by the Adjudicating Authority and NCLAT are correct in law and fact - there are no merit in the appeal - appeal dismissed.
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2024 (10) TMI 1183
Extinguishment of claims upon approval of the Resolution Plan - amount arising out of termination of the Agreement due to non-renewal of the PBG - 'clean state' principles - whether the respondent was liable for the alleged dues, thereby ascertaining its eligibility to participate in the coal mine auctions? - HELD THAT:- Once the claim was returned to the appellant to be re-filed, it did not take any action in pursuance thereto. Thus, there did not exist any claim to be processed by the Resolution Professional to be placed before the Committee of Creditors and thereafter, before the NCLT for approval of the Resolution Plan. Notwithstanding that, undeniably, the Resolution Plan was approved by the NCLT on 20th March, 2023 and the second claim of the appellant in respect of Rs. 9.21 crores was calculated and disbursed to it by the successful Resolution Applicant. Despite having notice of all the above events and facts, the appellant neither objected nor challenged the Resolution Plan at any time till date.
Besides, it is trite that once the Resolution Plan is formally approved by the NCLT, any other remaining claims etc. would be deemed to have extinguished. This has been succinctly but authoritatively laid down by the Supreme Court in Ghanashyam Mishra [2021 (4) TMI 613 - SUPREME COURT].
The appellant appears to have let the claim get extinguished without a protest or demur. Merely because the waiver was not allowed by the NCLT while approving the Resolution Plan would not, ipso facto, resurrect the right of claim. In the opinion of this Court, the right of the appellant to the claim is clearly extinguished post approval of Resolution Plan. To that extent, the reliance on Greater Noida Industrial Development Authority [2024 (2) TMI 681 - SUPREME COURT (LB)] would not enure to the benefit of the appellant. In that case, the aggrieved person had infact challenged the Resolution Plan itself whereas, in the present case, the appellant let the claim get extinguished by its own apathy.
In the case of Greater Noida Industrial Development Authority, the Supreme Court was considering a dispute similar to the one in the present case, except, in that case, the aggrieved person therein challenged the Resolution Plan itself and the Supreme Court held that the form in which the claim was submitted with the Resolution Professional is inconsequential so long as a proper claim is laid. It further held that what needed to be considered respecting such claim is, whether it deserved to form part of the Resolution Plan. In the present case, though the appellant did submit the claim at hand, yet did not re-submit the same after it was returned.
There are no reason, much less any cogent reason to interfere with the impugned order passed by the learned Single Judge.
Resultantly, the present appeal is dismissed without any order as to costs.
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2024 (10) TMI 1182
Direction to withdraw the withdrawal letter of mine opening permission - direction to Appellant to keep aside the Annual Mine Closure Cost besides directing the Appellant personally liable for disposal of the mined coal in accordance with the terms of the Mine Agreement - HELD THAT:- On looking at the terms of the Escrow Agreement, it is clear that Clause 3 provides that the AMCC was to be placed in the Escrow Account to perform the mine closure obligations. Undisputedly, the same clause also provides that CCO is to be the exclusive beneficiary and that AMCC is to be verified by the CCO. It is equally significant to note that in the very succeeding clause i.e. Clause 4, the Escrow Agreement clearly provides that 80% of the amount deposited by the Corporate Debtor as AMCC would be returned to the Corporate Debtor every 5 years and the balance would be returned after completion of the final mine closure. Thus, when the Escrow Agreement itself provides that the entire amount is to be returned to the Corporate Debtor after completing mine closure activities, it cannot be persuaded by the argument canvassed by the Respondent No. 1 & 2 that AMCC was money held in trust and are more inclined to agree with the Appellant that this sum clearly belonged to the Corporate Debtor for discharge of mine closure obligations.
The Corporate Debtor stood admitted into the rigours of CIRP on 12.08.2022 under the provisions of the IBC. Pursuant to the admission of the Corporate Debtor into CIRP, moratorium in terms of Section 14 of the IBC stood imposed against the Corporate Debtor. IBC places moratorium on all past dues of the Corporate Debtor. Once moratorium is declared in respect of any company, the institution of suits or continuation of pending suits or proceedings against such company including execution of any judgement, decree or any other order in any court of law, tribunal, arbitration panel or other authority is statutorily barred. Under the scheme of the IBC, each creditor is required to file its claim with the interim resolution professional/resolution professional as on the insolvency commencement date. So, for all pre-CIRP claims, there is a provision contemplated under IBC to file claims. These claims are then to be dealt in the resolution plan or during liquidation as the case may be.
The recovery of unpaid AMCC as pre-CIRP dues independently of the other stakeholders of the Corporate Debtor is a step in direct contravention of the IBC as it is barred under Section 14 and therefore deserves to be set aside. In terms of the provisions of IBC as contained in Section5(13) of IBC it would therefore also be accurate and appropriate to categorise AMCC as CIRP cost in running the Corporate Debtor as a going concern.
The Adjudicating Authority grossly erred in holding that the AMCC is not part of the estate of the Corporate Debtor and that the same needs to be kept aside - the reasoning offered by Adjudicating Authority to allow AMCC to be kept out of the CIRP process to enable its recovery dehors the scheme of IBC, cannot be agreed upon. If the AMCC is allowed to be kept outside the CIRP of the Corporate Debtor, it would tantamount to giving the Respondents a special status that is not recognised by law. Respondents cannot be paid in preference to other creditors as that would defeat the purpose of CIRP and would prejudice other secured financial creditors who are members of the CoC.
The impugned order is modified by setting aside the directions of the Adjudicating Authority to consider the Annual Mine Closure Costs as money not belonging to the Corporate Debtor and to keep the same aside - appeal allowed.
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2024 (10) TMI 1181
Rejection of application for time extension to implement resolution plan - Appellant is ready to deposit the balance amount of the Resolution Plan - HELD THAT:- The entire amount has been deposited in the account of the Corporate Debtor, Liquidator shall distribute the amount to the Creditors as per the Resolution Plan. Appellant shall make payment of Rs.10.5 Lakhs to the Liquidator towards the liquidation cost within two weeks from today by a Bank Draft or by RTGS.
Liberty granted to the Liquidator to file an Application before the Adjudicating Authority with regard to entitlement of fee, if any, which may be decided in accordance with law.
In view of the fact that Financial Creditors have expressed their willingness to accept the amount of the Resolution Plan, the time as prayed was required to be extended by the Adjudicating Authority - the Order of the Adjudicating Authority set aside - appeal allowed.
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2024 (10) TMI 984
Recovery of Tax - Applicability of Section 31 of the IBC - Seeking a declaration that the demand notice and the communication issued to it by Gram Panchayat, Gowari, through its Secretary, Tahsil Rajura, District Chandrapur, be quashed and set aside - demand pertain to the dues for the period prior to 2019 i.e. the period prior to the petitioner's acquisition of the assets of the corporate debtor under the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The liquidation process moved ahead and the petitioner acquired the assets, in due process and now the respondent want to stake its claim for recovery of the amount of tax outstanding and payable to it by the corporate debtor but once the petitioner has acquired the assets of the corporate debtor, the claims, if any, which were not raised, stand extinguished and the respondent cannot now seek to recover those claims from the petitioner, who acquired the assets of the corporate debtor through auction process under the IBC.
Perusal of the scheme under the IBC and in particular Section 31, clearly prescribe that the resolution plan shall be binding on the Central Government, State Government or any local authority to whom a debt in respect of payment of dues arise under any law for the time being in force and the retrospective applicability of 2019 amendment to Section 31 is upheld by the Apex Court in the case of Ghanshyam Mishra & Sons Pvt Ltd vs. Edelweiss Asset Reconstruction Company Ltd [2021 (4) TMI 613 - SUPREME COURT]. The Apex Court has categorically held that the amendment is clarificatory and declaratory in nature and it would apply retrospectively even in relation to pending proceedings and to the dues owed prior to the amendment.
One of the dominant object of the IBC is to see to it that an attempt is made to revive the corporate debtor and make it a running concern and since it contemplate that the resolution applicant has to prepare a resolution plan on the basis of the information, memorandum and which is expected to provide for the payment of insolvency resolution process costs, implementation and supervision resolution plan, once such a plan is approved, it shall bind to one and all.
The demand notice dated 31.12.2023 (Annexure-M) and communication dated 12.01.2024 (Annexure-N) issued by respondent to the petitioner is bad in law, arbitrary and violative of Article 14 of the Constitution of India in so far as demand for dues pertaining to the period prior to 2019 i.e. period prior to the petitioner’s acquisition of the assets of corporate debtor under the Insolvency and Bankruptcy Code, 2016 - the petitioner is not liable to pay any outstanding tax dues to the respondent pertaining to the period prior to the petitioner’s acquisition of the assets of corporate debtor under the Insolvency and Bankruptcy Code, 2016.
Petition disposed off.
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2024 (10) TMI 983
Condonation of 18 days’ delay in filing the appeal - Appellant submits that the delay is not 18 days since he is entitled for the benefit of the time when he received the free of cost copy from the NCLT - HELD THAT:- Present is the case where it is not the case of the appellant that he even applied for certified copy of the order. He is relying only on the free of cost copy of the order which stated to be received on 23.07.2024.
The Judgment of Hon’ble Supreme Court which has relied by appellant itself indicate that the litigant who does not apply for the certified copy cannot then fall back and claim that he was awaiting the grant of the free copy to obviate the bar of limitation - Judgment of the Hon’ble Supreme Court in V Nagarajan vs. SKS Ispat and Power Ltd. & Ors.[2021 (10) TMI 941 - SUPREME COURT (LB)] has laid down that limitation for filing the appeal commences from the date of order is pronounced and litigant has to be vigilant in applying the certified copy of the order.
The mere fact that the appellant received free of cost copy on 23.07.2024 cannot arrest the running of the limitation which began on the date when the Judgment was pronounced. The judgment which has been relied by the appellant in STATE BANK OF INDIA VERSUS INDIA POWER CORPORATION LIMITED [2024 (10) TMI 883 - SUPREME COURT] where the delay was within the condonable period. In the present case the delay being of 18 days is beyond our jurisdiction as per Section 61(2) proviso.
The delay condonation petition is dismissed.
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2024 (10) TMI 905
Determination of the period of limitation for filing an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 - scope of Aggrieved Person - Principle of Estoppel by Conduct - HELD THAT:- Admittedly, because the Appellant has not disputed the fact of email communications being made to him or generated from his email address during the course of the proceedings of CIRP, there will be a deeming presumption of knowledge and if the fact of knowledge is not denied by the Appellant by a specific pleading to that effect, in that eventuality he cannot be deriving the benefit of extension of limitation as a consequence of the Covid-19 situation, which according to the Judgment of the Hon’ble Apex Court commenced from 15.03.2020, and the ratio of the said Judgment cannot be extended to be made applicable in the instant Appeal to the Appellant, because the mandatory period of 30 days for applying for the Certified Copy of the Impugned Order of 31.01.2020 expired much before the short date of the extended period of limitation laid down by the Judgment of the Hon’ble Apex Court in the Suo Motu proceedings [2022 (1) TMI 385 - SC ORDER], due to Covid-19 situation, which was made effective with effect from 15.03.2020.
When the Appellant himself has failed to comply with the first part of the intention of legislature of procuring the Certified Copy of the Judgment in order to enable him to file an Appeal as an “Aggrieved Person” in the light of the provisions contained under Rule 22 and if the cut off period of procuring of the Certified Copy, which was a condition precedent, has expired much prior to the benefit of limitation extended by the Hon’ble Apex Court, the Appellant cannot contend that, he would be entitled for the benefit of limitation for the purposes of condonation of delay of about 451 days and that too, when according to his own records, the Appellant has for the first time applied for the Certified Copy of the Judgment only on 30.04.2021, though, he had knowledge of the proceedings, which is a fact already been established, by documents on record.
The Appellant’s inaction to apply for the Certified Copy despite of having the knowledge of proceedings, would create a legal bar against him in the light of the provisions contained under Section 114 of the Evidence Act, because, the presumption which has been given therein will run against the Appellant and the knowledge would be deemed to be attributed to him, prior to the expiry of the period of limitation which is mandatory for the purposes of applying for the Certified Copy and thus, the entire action of the Appellant would be barred by an `Estoppel by Conduct’.
The Application for condonation of delay, lacks merit and the same is accordingly dismissed.
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2024 (10) TMI 834
Legality of the suspension of the petitioner's registration as a Resolution Professional (RP) - contravention of the provisions of Section 30 (2) (b) and (e), 208 (2) (a) and (e) of IBC - lack of due diligence by the petitioner in verifying the Resolution Plan - non-intimation of the claim of KCIL by failing to reply to the specific queries made by it to the RP - HELD THAT:- There was sufficient basis for the IBBI to issue the show cause notice to the petitioner. Its adjudication thereafter by the Disciplinary Committee is principally based on the findings recorded by NCLAT. While adjudicating the show cause notice, the Disciplinary Committee found that there were various lapses on the part of the petitioner as RP by failing to object to the proposal submitted by the SRA on the ground that it included comments as well as legal analysis of the arbitration process wherein an award was passed in favour of KCIL. It found that it was not open for the SRA to term the award as void ab initio or unlawful. In spite of receiving the legal opinion dated 13th July 2020 wherein it was stated that such comments by the SRA ought not to have been made, the petitioner as RP failed to take cognizance of the same. This conduct of the RP has thus been found to be in contravention of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.
As regards inaction on the part of the petitioner as RP to indicate the precise amount of claim admitted by him, the observations of the NCLAT in paragraph 20 form the basis for holding that the petitioner failed to act in accordance with Regulation 13 (2) (a) and (d) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - the Disciplinary Committee has proceeded to take necessary action based on the observations of the NCLAT, which the petitioner did not challenge. The finding recorded by the NCLAT was that the petitioner had failed in his duty as RP and hence there was substantial material to proceed against the petitioner.
The Disciplinary Committee had failed to indicate the reasons for suspending the petitioner’s registration for a period of one year. The material on the basis of which the Disciplinary Committee proceeded to suspend the petitioner being unquestionable, the period for which such suspension should operate is a matter within the realm of the Disciplinary Committee. The Disciplinary Committee in the light of the jurisdiction conferred upon it by Section 220 of the Code is empowered to take into consideration all relevant aspects including the conduct of RP. The petitioner’s suspension for a period of one year cannot be said to be highly disproportionate that would shock the conscience of the Court for it to interfere in exercise of writ jurisdiction.
No case made out to interfere in exercise of writ jurisdiction. The Writ Petition stands dismissed.
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2024 (10) TMI 833
Maintainability of Section 7 application - non-payment of debt - debt due and payable - whether in the given facts of the case the application under Section 7 of IBC filed by the Appellant was maintainable against the Corporate Debtor? - HELD THAT:- This issue of financial contract being a sine qua non for establishing a financial debt has been well settled in a judgement of this Tribunal in Agarwal Polysacks Ltd. vs K. K. Agro Foods & Storage [2023 (11) TMI 832 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] wherein after going into Regulation 8(2) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Rule 3(1)(d) and Rule 4(1) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which regulates filing of application by the Financial Creditors, it has been held that written financial contract is not a pre-condition or an exclusive requirement for proving existence of debt. It has been further amplified therein that the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and CIRP Regulations makes it clear that financial debt can be proven from other relevant documents and it is not mandatory that written financial contract can be the only basis for proving the financial debt.
Though the name of the Respondent No. 1 is not specifically mentioned as a creditor, there is sufficient material on record to prove that there was disbursal of funds by Respondent No.1 to the Corporate Debtor in their account. The transaction details as culled out from the Ledger Account of the Corporate Debtor, which are quite clearly multiple in nature, are a part of record as placed on affidavit by the Respondent No.1 as may be seen at pages 172-174 of Appeal Paper Book (APB). That this monies were received by the Corporate Debtor has also not been denied by the Corporate Debtor - That the Corporate Debtor repaid certain amount of the outstanding debt between September 2016 till May 2019 also evidences acknowledgement of debt. Since no claim been made that entire sum was repaid by the Corporate Debtor, it can safely be inferred that the debt remained unpaid.
No reasons to disagree with the findings of the Adjudicating Authority that it has concluded the existence of debt on the basis of documents/records like the balance confirmation statement in the balance sheet of the Corporate Debtor to establish existence of debt - It is not for the Adjudicating Authority to decide on the quantum of debt but the only requirement for admission of Section 7 petition is to see that the minimum outstanding amount should be more than the threshold amount under the IBC which clearly stands fulfilled in this case.
There is nothing to evidence that the same was signed, executed or acted upon by Respondent No.1. When there is nothing to show that the Respondent No. 1 was a party or signatory to the said MoU and also keeping in mind that the Respondent No. 1 and Centrio are clearly separate legal entities, the terms of such MoU purportedly signed between Centrio and Corporate Debtor cannot be held to be binding in any manner on Respondent No. 1. Hence, to answer the third question raised by the Appellant, the submission advanced of adjustment of loan by virtue of the terms contained in the MoU and consequential non-requirement for the Corporate Debtor to repay the Respondent No.1 does not inspire our confidence.
It is trite law that under the IBC once a debt which becomes due or payable, in law and in fact, and if there is incidence of non-payment of the said debt in full or even part thereof, CIRP may be triggered by the financial creditor as long as the amount in default is above the threshold limit. It is also well accepted that debt means a liability in respect of a claim and claim means a right to payment even if it is disputed - as long as the financial debt is more than the threshold limit, quantum of debt cannot be used as a ground of defence to assail the admission of Section 7 application.
On the question as to whether debt and default was adequately demonstrated before the Adjudicating Authority, basis the records made available before it, the Adjudicating Authority has rightly concluded that it was satisfied with the evidence and material produced before it by the Respondent No.1 to prove that a debt had arisen; that a default has occurred and the default is above the prescribed threshold. This is a case where all the pre-requisites for filing a Section 7 stands 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 decision of the Adjudicating Authority admitting the Section 7 application is affirmed - appeal dismissed.
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2024 (10) TMI 832
Commencement of look back period beyond two years u/s 43 of IBC - related party transaction - HELD THAT:- In Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd Vs Axis Bank Ltd and Others, [2020 (2) TMI 1259 - SUPREME COURT], the Hon’ble Supreme Court held 'The extent of ‘relevant time’ is different with reference to the relationship of the beneficiary with the corporate debtor inasmuch as, for the persons falling within the expression ‘related party’ within the meaning of Section 5 (24) of the Code, such period is of two years before the insolvency commencement date whereas it is one year in relation to the person other than a related party. The conceptions of, and rationale behind, such provisions could be noticed in the excerpts from the interim report of Law Reforms Committee, as referred on behalf of the appellants.'
The outstanding being of more than 2 years prior to CIRP commencement date, the relief under Section 43 of the Code would not be available. The respondent, however, shall be at liberty to take alternative action(s) as may be allowed under the Law (inclusive of Section 66 of the Code).
The impugned order passed by Ld. NCLT is set aside - appeal disposed off.
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2024 (10) TMI 831
Rejection of liquidation application filed by the Resolution Professional for liquidation of the Corporate Debtor as recommended by the Committee of Creditors - wrong action of the Appellant in advising wrong insurance policy which was for a completed project against the policy required by the Corporate Debtor for a project which was under implementation.
Whether the Adjudicating Authority can discard the recommendation of the CoC and rather give its own directives overriding the commercial wisdom of the CoC?
HELD THAT:- The Adjudicating Authority was lured by the fact that the Resolution Plan submitted by the Respondents was more than 20 times of the liquidation value of the unit and also that amount of EMD was more than the liquidation value. The Impugned Order relied on the doctrine of prudence to justify that resolution of the Corporate debtor is preferred option over the liquidation of the Corporate Debtor.
It is worth noting that according to the Adjudicating Authority the other issues like pending writ before the Hon’ble High Courts suits file by the Corporate Debtor, FIR filed by the investigation agencies (perhaps referred to CBI) report submitted to RBI for declaring the Corporate Debtor and the promoter directors as wilful defaulter are not related to the matter and cannot be grounds or factors relevant to decide about rejection of the Resolution Plan - From reasoning recorded by the Adjudicating Authority, it is seen the Adjudicating Authority was not impressed by the commercial wisdom of the CoC and sought it fit to start fresh process for the resolution of the Corporate Debtor.
In catena of judgements by the Hon’ble Supreme Court of India including K. Sashidhar [2019 (2) TMI 1043 - SUPREME COURT] and Kalpraj Dharamshi [2021 (3) TMI 496 - SUPREME COURT] , it has been stipulated that there is hardly any scope for judicial interference on the part of the Adjudicating Authority or the Appellate Tribunal except ensuring that the Resolution Plan meets the requirements of the Code and the related regulations. There are no violation in the present case and therefore there were no occasion for judicial interference by the Adjudicating Authority. Thus, the Impugned Order is not in consonance of law or in spirit of the Hon’ble Supreme Court of India judgements.
It is beyond doubt that the commercial wisdom of the CoC is required to be honoured in letter and spirit. There is no role for Adjudicating Authority to interfere on such unfounded reasoning as recorded in the Impugned Order. The Impugned Order is found to be perverse and illegal.
The Impugned Order deserves to be set aside - Appeal allowed.
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2024 (10) TMI 830
Rejection of claim of the Appellant to be treated on par with other Financial Creditors and to make the Appellant eligible for distribution of claims as per Resolution Plan - requirement to treat the appellant as equity shareholder by the Adjudicating Authority while approving the resolution plan - discrimination of appellant vis-à-vis other Financial Creditors.
Whether the appellant has been treated as an equity shareholder by the Adjudicating Authority while approving the resolution plan? - HELD THAT:- Both the CoC and Adjudicating Authority has treated the appellant as unsecured Financial Creditor. There are two entries in the category of unsecured financial creditors, in the resolution plan, one being West Coast Papers and second one is Gloster cables Ltd. In both these cases full amount of claim filed by them has been admitted by the RP. They were admitted as part of CoC. Later on, after their being identified as related parties, the RP informed the concerned parties that they could not attend the CoC meetings henceforth. The SRA has proposed NIL amount to the claimants under this head on account of them being related parties. Appellant in its submission has also accepted that he is a related party unsecured creditor. The resolution plan reflecting the status of Appellant as related party unsecured financial creditor has been approved by the CoC and Adjudicating Authority - the appellant has not been treated as equivalent to equity shareholder and such contention of Appellant is devoid of any merit.
Whether the appellant has been discriminated against vis-`a-vis other Financial Creditors? - HELD THAT:- It is seen from the records that the Appellant was aware of the fact, that it was being treated as a related party and was accordingly removed from the Committee of Creditors. The same is evident from emails dated 25.01.2019 and 16.02.2019 sent by the RP to the appellant. However, the Appellant never challenged its treatment as a related party at any stage of the insolvency resolution proceedings, despite have complete knowledge of its status as that of a related party. In this case, the Appellant was held to be a related party of the Corporate Debtor. This has been admitted by the Appellant in his submission also.
In the instant case, among the financial creditors, only secured financial creditors (not related to Corporate Debtor) are being paid Rs. 64.20 crores against their admitted claims of Rs. 619.24 crores. The appellant who is an unsecured financial creditor and related party to Corporate Debtor does not fall in that category as per IBC.
The Court observed in Para 203 of the Judgment of M.K. Rajagopalan [2023 (5) TMI 344 - SUPREME COURT] that in the case under reference, promoter and erstwhile director who was also a contesting respondent in the matter, was also holding the post of Chairman of the said related party. It held that the Appellate Tribunal has erred in applying the principles on non-discrimination between related and non-related parties and held back the resolution plan - the Judgment of M.K. Rajagopalan squarely applies to the facts of the present case. The CoC and Adjudicating Authority were well within their rights not to treat a related party unsecured creditor on par with secured financial creditors - there are no infirmity in the order of Adjudicating Authority in this regard.
There are no merit in the present appeal and the same is hereby dismissed.
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2024 (10) TMI 829
Admission of section 7 application - Appellant has submitted that the Adjudicating Authority has still not dealt with the objections/contentions raised by it before it on the issue that there is no default on the part of the Appellant for which the application under Section 7 could have been admitted - HELD THAT:- Once the Adjudicating Authority has taken into consideration the pleadings and evidence and the contentions raised by both the parties recording the finding only that it has looked into the documents, therefore, it has come to the conclusion that the default has been committed is not sufficient.
This case requires a relook by the Adjudicating Authority on the evidence which has been brought on record to judge about two basic issues i.e. debt and default having been committed by the Appellant for the purpose of attracting Section 7 of the Code.
The matter is remanded back to the Adjudicating Authority to redecide the issue after taking into consideration the contentions of both the parties by recording categoric finding on the issue which has been raised so that it may facilitate a judicial review by the Appellate Tribunal if any - Appeal allowed by way of remand.
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2024 (10) TMI 828
Rejection of Resolution Plan acceptance by Adjudicating Authority - Appellant submits that there was no time prescribed for submission and Resolution Professional could have submitted before 12:00 PM - HELD THAT:- There are no substance in his submission as time mentioned for submission of plan in RFRP was 17:00 Hrs. When the time was extended from 27.05.2023 to 03.06.2023, the time for submission of plan shall remain the same. Admittedly, the Appellant attempted to submit the plan after 17:00 Hrs. 03.06.2023. When the time was extended, the Appellant took risk in submitting the plan at last hours that too after 17:00 Hrs.
There are no reason for consideration of Resolution Plan at this stage. Resolution Plan having not been submitted by the Appellant within time prescribed and the CoC having considered the Resolution Plan which was received in time and has decided to reject the plan and given approval for liquidation. No relief can be granted to the Appellant as prayed in the appeal.
There are no merit in the appeal - Appeal is dismissed.
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