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2021 (5) TMI 550 - AT - IBCMaintainability of application - initiation of CIRP - Approval of resolution plan - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - maintainability of second application against the Corporate Debtor as for the same debt and default, CIRP has already been taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its dues. Time Limitation - HELD THAT - In the present case, admittedly the date of default is 15.04.2012. Within three years, i.e on 24.03.2015, the Debt Repayment and Settlement Agreement was entered into by the parties (Diary no. 24049, Page 214-245, Appeal Paper Book). The Corporate Debtor failed to repay the debt as per Debt Repayment and Settlement Agreement. Therefore, Financial Creditor cancelled the said agreement (Diary no. 24049, Page 246-256, Appeal Paper Book) on 29.05.2017. In this agreement, the Corporate Debtor has specifically acknowledged the debt - Thereafter, within three years i.e on 10.02.2020, the Financial Creditor filed the Application under Section 7 of the IBC. It is apparent that the Application is filed within extended period and the Application is within limitation. There are no force in the arguments advanced by the Ld. Counsel for the appellant - the finding of Ld. Adjudicating Authority that the Application is within limitation is affirmed. Whether the second Application under Section 7 of IBC is not maintainable against the Corporate Debtor as for the same debt and default, CIRP has already been taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its dues? - HELD THAT - Application under Section 7 of the IBC against the Corporate Debtor for the same debt and default is maintainable in the light of judgment of Athena Energy Ventures 2020 (11) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI . The argument made by the Ld. Counsel of the appellant that CIRP has already taken place against the Corporate Guarantor therefore, the second application against the Corporate Debtor is not maintainable, is not convincing. It cannot be held that the Financial Creditor accepted the amount in full and final settlement of all its dues. We are therefore of the considered view that the Application under Section 7 of the IBC is maintainable against the Corporate Debtor for the same debt and default and the Financial Creditor can recover the remaining dues from the Corporate Debtor. Whether the Resolution Applicant is entitled to exercise its right over the subsidiaries company of ACIL (Corporate Guarantor)? - HELD THAT - No forensic audit report place on record to prove that the ACIL fraudulently made investments in its subsidiaries i.e. Corporate Debtor. Therefore, the assets of the subsidiaries cannot be included in the resolution plan in relation to ACIL submitted by Resolution Applicant (Appellant). Whether the approved resolution plan has included the SEZ business of the Corporate Debtor? - HELD THAT - In the case of Facor Alloys Ltd. 2020 (11) TMI 848 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI the shares of Facor Power Ltd. i.e. 86% shares were held by the Corporate Debtor. The RP in accordance with regulation 27 of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations 2016 appointed two registered valuers to determine the fair value and liquidation value of the assets of the Corporate Debtor (Including the shares held by the Corporate Debtor in FPL). However, in the present case, during the CIRP of ACIL, no valuer was appointed to determine the fair value of the shares held by the the Corporate Debtor. Therefore, the assets of the Corporate Debtor (Respondent) cannot be included in the resolution plan - Thus, the facts of the case of Facor Alloys Ltd. are quite different from those of the present case. Thus, this citation is not helpful to the Appellant. Thus, the SEZ Business of the Corporate Debtor is not included in the resolution plan submitted by the Appellant. Appeal disposed off.
Issues Involved:
1. Whether the Application under Section 7 of IBC is barred by limitation? 2. Whether the second Application under Section 7 of IBC is not maintainable against the Corporate Debtor as for the same debt and default, CIRP has already taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its dues? 3. Whether the Resolution Applicant is entitled to exercise its right over the subsidiaries company of ACIL (Corporate Guarantor)? 4. Whether the approved resolution plan has included the SEZ business of the Corporate Debtor? Issue-wise Detailed Analysis: Issue No. (i): Whether the Application under Section 7 of IBC is barred by limitation? The appellant argued that Section 18 of the Limitation Act, 1963 is not applicable to IBC proceedings, citing several judgments. However, the Supreme Court in its judgment dated 15.04.2021 in the case of Bishal Jaiswal confirmed that Section 18 of the Limitation Act is applicable to IBC proceedings. The Financial Creditor's application under Section 7 of the IBC was filed within the extended period of limitation, making it timely. The acknowledgment of debt in the Debt Repayment and Settlement Agreement dated 24.03.2015 and its subsequent cancellation on 29.05.2017 extended the limitation period. Thus, the application was within the limitation period. Issue No. (ii): Whether the second Application under Section 7 of IBC is not maintainable against the Corporate Debtor as for the same debt and default, CIRP has already taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its dues? The appellant contended that since CIRP had already been initiated against the Corporate Guarantor, a second application for the same debt and default against the Corporate Debtor is not maintainable. However, the Tribunal referred to the judgment in Athena Energy Ventures Pvt. Ltd., which held that CIRP can be initiated against both the Corporate Debtor and the Corporate Guarantor. The Financial Creditor's acceptance of the amount in the resolution plan does not constitute a full and final settlement of all its dues. The liability of the Corporate Debtor is co-extensive with that of the Corporate Guarantor, and the Financial Creditor can recover the remaining dues from the Corporate Debtor. Issue No. (iii): Whether the Resolution Applicant is entitled to exercise its right over the subsidiaries company of ACIL (Corporate Guarantor)? The Tribunal examined the minutes of the CoC meetings and the legal opinion sought from M/S Khaitan & Co. It was concluded that the RP can only take care of investments in subsidiaries and not the assets of the subsidiaries. No forensic audit report was presented to prove fraudulent transactions by ACIL in its investments in subsidiaries. Therefore, the Resolution Applicant is not entitled to exercise its right over the assets of the subsidiaries. Issue No. (iv): Whether the approved resolution plan has included the SEZ business of the Corporate Debtor? The Tribunal scrutinized the resolution plan and found no mention of the SEZ business of the Corporate Debtor being included. The plan only stated that the financial obligations of the SEZ unit are on ACIL. The facts of the case differ from those in Facor Alloys Ltd., where the shares held by the Corporate Debtor in its subsidiaries were valued separately. Hence, the SEZ business of the Corporate Debtor is not included in the resolution plan. Conclusion: The Appeals were dismissed, affirming that the application under Section 7 of IBC was within the limitation period, the second application against the Corporate Debtor is maintainable, the Resolution Applicant cannot exercise rights over the subsidiaries, and the SEZ business of the Corporate Debtor was not included in the resolution plan.
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