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Suryakant Kukreja and Ors. Vs. The State of Maharashtra and Ors. – Supreme Court Read Post »
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Shri Sushil Kumar Chadha Vs. Canara Bank and Ors. – Delhi High Court Read Post »
Hon’ble NCLT Chennai Bench holds that:
(i) It is noted that the Applicant had filed its claim before the IRP during the CIRP of the Corporate Debtor. So it cannot feign ignorance for not filing the claim before the Liquidator. However, for the reasons best known to them, the Applicant did not file the claim before the Liquidator within the stipulated time period.
(ii) As per the waterfall mechanism stipulated under Section 53 of IBC, 2016, the Liquidator has distributed the amount to the stakeholders and has also filed an Application seeking dissolution of the Corporate Debtor.
(iii) Regulation 44(2) stipulates that, after the expiry of one year, the liquidator shall file an application to the Authority to continue the liquidation period along with a report and explain why the liquidation has not been completed.
(iv) There is no equity about limitation, unable to entertain this Appeal.
In this important judgment, a division Bench of the Hon’ble Supreme Court held that:
(i) A judicial decision of a superior court, which is binding on an inferior court, has to be accepted with grace by the inferior court notwithstanding that the decision of the superior court may not be palatable to the inferior court.
(ii) This principle, ex proprio vigore, would be applicable to an arbitrator and a multi-member arbitral tribunal as well, particularly when it is faced with a judicial decision (either under section 34 or section 37 of the Act) ordering a limited remand. In the wake of authority of judicial determination made by the Courts of law, any award of an arbitrator or a tribunal that seeks to overreach a binding judicial decision, in our opinion, does conflict with the fundamental public policy and cannot, therefore, sustain.
(iii) In adjudging a claim towards loss of profits, the court may not make a guess in the dark; the credibility of the evidence, therefore, is the evidence of the credibility of such claim.
(iv) The law is that for claims related to loss of profit, profitability or opportunities to succeed, one would be required to establish the following conditions, First, there was a delay in the completion of the contract; Second, such delay is not attributable to the Claimant; Third, the Claimant’s status as an established contractor, handling substantial projects; and Fourth, credible evidence to substantiate the claim of loss of profitability.
(v) A claim for damages, whether general or special, cannot as a matter of course result in an award without proof of the Claimant having suffered injury.
(vi) Hudson’s formula, while attained acceptability and is well understood in trade, does not, however, apply in a vacuum.
The contention of the applicant that the present application is within limitation on account of part payment of Rs.20,00,000/- through RTGS on 16.08.2021 from the Corporate Debtor towards the first installment of the Settlement Agreement dated 13.08.2021 cannot be accepted as the same was made much after the expiry of original period of three years of limitation falling on 29.10.2017 ( i.e., three years from the date of last invoice). From the records, it is evident that last invoice was raised on 29.10.2014 and therefore, the original limitation expired on 29.10.2017. It is seen from record that part payments were made between 30.01.2013 to 29.03.2014 by virtue of which the limitation could not have extended beyond the original date of limitation being 29.10.2017. The next payment was made on 14.02.2018 i.e., after the expiry of original limitation of three years, which in the instant case ended on 29.10.2017. During the period from 30.03.2014 to 13.02.2018 neither any part payment was made by the Corporate Debtor nor any document evidencing the acknowledgement of debt by Corporate Debtor is placed on record. Further, there is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise to pay a time barred debt. Undoubtedly, the above referred settlement agreement dated 13.08.2021 as relied upon by the Applicant is a valid contract wherein the Corporate Debtor had in writing promised to pay the debt which is time barred. However, such a promise as recorded in settlement agreement dated 13.08.2021 may constitute novation and can form the basis of a suit independent of the original operational debt but the remedy under Section 9 of the Code, 2016 is barred by law of limitation.
In this case, questions of law before the Hon’ble High Court are (i) Whether the signatory of the cheque, authorized by the Company, is the “drawer” and whether such signatory could be directed to pay interim compensation in terms of section 143A of the Negotiable Instruments Act, 1881 (NI Act) living aside the company.
(ii) Whether a deposit of a minimum sum of 20% of the fine or compensation is necessary under Section 148 of NI Act in an appeal filed by persons other than “drawer” against the conviction and sentence under section 138 of the NI Act.
Hon’ble High Court held that:
(i) The signatory of the cheque, authorized by the “Company”, is not the drawer in terms of section 143A of the NI Act and cannot be directed to pay interim compensation under section 143A. (ii) In an appeal under section 148 of NI Act filed by persons other than “drawer” against the conviction under section 138 of the NI Act, a deposit of a minimum sum of 20% of the fine or compensation is not necessary. (iii) However, in an appeal filed by persons other than “drawer” against the conviction under section 138 of the NI Act such power to direct deposit of compensation is available with the Appellate Court while suspending sentence under section 389 of code of criminal procedure.
In the present case we are considering the case where Section 7 Application was filed by the Yes Bank where hearing took place before the Adjudicating Authority, the fact of assignment was brought under notice and prayer was made to dismiss Section 7 Application. Application was entertained by the Adjudicating Authority and notices were issued on 19.01.2023 fixing 21.12.2022 as the next date.
NCLAT held that the Application could have been continued and would not have been prejudicially affected by reason of acquisition of the financial asset. Hon’ble Supreme Court in Sharadamma Vs. Mohammed Pyrejan (Dead) on considering the aforesaid Rules had held that on account of failure of assignee to file application to continue the proceeding, the application could not have been dismissed, the original Applicant could have continued the proceeding for the benefit of assignee.
Following common questions of law arise for consideration:
(i) Whether the provisions of Chapter-V of the MSMED Act, 2006 would have an effect overriding the provisions of the Arbitration Act, 1996?
(ii) Whether any party to a dispute with regard to any amount due under Section 17 of the MSMED Act, 2006 would be precluded from making a reference to the Micro and Small Enterprises Facilitation Council under sub-section (1) of Section 18 of the said Act, if an independent arbitration agreement existed between the parties as contemplated in Section 7 of the Arbitration Act, 1996?
(iii) Whether the Micro and Small Enterprises Facilitation Council, itself could take up the dispute for arbitration and act as an arbitrator, when the council itself had conducted the conciliation proceedings under sub-section (2) of the Section 18 of the MSMED Act, 2006 in view of the bar contained in Section 80 of the Arbitration Act,1996?
Hon’ble High Court of Allahabad held that (i) Merely because the petitioner is a bonafide auction purchaser who had purchased assets Corporate Debtor through auction/bidding so conducted by orders of NCLT, will not absolve it from paying arrears of lease rental and interest thereon. (ii) The Insolvency Bankruptcy Code, 2016 grants limited protection to the petitioner (auction purchaser) while allowing it to step into the shoes of the Corporate Debtor but in order to the lessee of the principle lessor (GNIDA) the petitioner has to honor the commitments and discharge its contractual obligation as embodied in the lease deeds, Transfer Memorandum and Sale Certificate. (iii) The words so employed in the Certificate of Sale Deed being “AS IS WHERE IS”, ”AS IS WHAT IS”, “WHATEVER THERE IS” AND “NO RECOURSE” itself creates contractual obligation upon the petitioner to honor the commitments and to discharge the obligations so embodied in the lease and the subsequent lease deeds for the payment of past lease rentals and interest thereon. (iv) The principal lessor has paramount interest over the demised land put to auction and it has legal as well as contractual right to raise demand of out standing arrears of lease rentals and interest thereon. (v) High Court under Article 226 of the Constitution of India cannot by a judicial fiat creates a podium to facilitate avoidance of agreements while wriggling out from contractual obligations so embodied therein. A writ petition containing solitary relief of refund of the amount deposited for fulfilling contractual obligation, is not maintainable.
