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Fund raised by issuing Subsidiary’s Compulsorily Convertible Preference Shares indemnified by Corporate Debtor to construct flats over land owned by Corporate Debtor under the Construction Contract entered into between Subsidiary Company and Corporate Debtor is Financial Debt under IBC – IIRF India Realty XII Ltd. and Anr. Vs. Srigopal Choudhary, RP of Shree Ram Urban Infrastructure Ltd. and Ors. – NCLT Mumbai Bench

In this case, Applicants invested in the shares of Subsidiary based on assurances provided by the Corporate Debtor as well as Subsidiary and these funds were ultimately used for the benefit of the Corporate Debtor.

Hon’ble NCLT Mumbai Bench held that:

(i) Adjudicating Authority has no hesitation to say that the amount paid under the transaction of subscription to CCPS had the commercial effect of borrowing.
(ii) Contravention, if any taken place, or bar under FEMA cannot be a ground to characterize a transaction to hold it not be in nature of a debt, if it otherwise qualifies to be so under the definition(s) of Financial Debt contained in the Code.
(iii) The duty to verify claim in terms of CIRP Regulation 13 requires the IRP/RP to verify each claim received form the proof of claim in order to ascertain the claim amount and the class under which such claim is admissible because if the verification does not encompass the determination of class of a creditor, this will disable the IRP/RP to decide the class of claimant which may render the exercise of verification of claim futile.

Fund raised by issuing Subsidiary’s Compulsorily Convertible Preference Shares indemnified by Corporate Debtor to construct flats over land owned by Corporate Debtor under the Construction Contract entered into between Subsidiary Company and Corporate Debtor is Financial Debt under IBC – IIRF India Realty XII Ltd. and Anr. Vs. Srigopal Choudhary, RP of Shree Ram Urban Infrastructure Ltd. and Ors. – NCLT Mumbai Bench Read Post »

Role of NFRA vs. ICAI | Role of Statutory Auditors of a Company V/s Statutory Auditors of Branches of the company | Standards of Auditing (SA) mandatory or Advisory | Key aspects of the Standard on Auditing (SAs) | What is professional misconduct for member of ICAI – Mr. Harish Kumar T.K v. National Financial Reporting Authority (NFRA) – NCLAT New Delhi

This judgment covers:
A. Role of NFRA vs. ICAI on disciplinary matters of Chartered Accountant
B. Retrospective or prospective applicability of provisions as contained in Section 132 of Companies Act, 2013 as well as NFRA Rules, 2018
C. Violation of Principle of natural justice V/s separate division of NFRA
D. Role of Statutory Auditors of the Company V/s Statutory Auditors of the Branches of the company
E. Are Standards of Auditing (SA) mandatory or Advisory or to be treated as guidance notes to Auditors
F. What is professional misconduct for member of ICAI and legal provisions
G. True intent of Standard of Audits and other related standards relevant for audit and issue regarding alleged violation by the Appellants herein
G.1 Legal status and details of Standards of Auditing and other related Standards in India
G.2 Key aspects of the Standard on Auditing

Role of NFRA vs. ICAI | Role of Statutory Auditors of a Company V/s Statutory Auditors of Branches of the company | Standards of Auditing (SA) mandatory or Advisory | Key aspects of the Standard on Auditing (SAs) | What is professional misconduct for member of ICAI – Mr. Harish Kumar T.K v. National Financial Reporting Authority (NFRA) – NCLAT New Delhi Read Post »

High Court directs RP of Go Air to provide access of records and documents to Lessors and permits Lessors to contract a 24 hour security service for all the Aircrafts at their own expense – ACG Aircraft Leasing Ireland Ltd. Vs. Union of India & Ors. – Delhi High Court

Hon’ble High Court observed that in any event, it has now been more than five months, since the Aircraft were grounded by the Respondent/RP of GoAir. A review of the documents and photographs filed by the Petitioners/Lessors show the evident cannibalization of the Aircraft. The Petitioners/Lessors have made out a prima facie case and it has become necessary for this Court to pass additional directions to protect these highly valuable equipment during the pendency of the present case. It is also deemed necessary that the Petitioners/Lessors be permitted to contract a 24 hour security services for all the Aircraft, to be provided at the expense of the Petitioners/Lessors.

High Court directs RP of Go Air to provide access of records and documents to Lessors and permits Lessors to contract a 24 hour security service for all the Aircrafts at their own expense – ACG Aircraft Leasing Ireland Ltd. Vs. Union of India & Ors. – Delhi High Court Read Post »

Advance Deposit towards license fee for providing and management services comes under the definition of operational debt and the issuance of the legal notice under Negotiable Instrument Act, 1881 cannot be treated as dispute under IBC – Ashimara Housing Pvt. Ltd. Vs. Vibrus Homes Pvt. Ltd. – NCLT New Delhi Bench Court-V

The Adjudicating Authority holds that in the light of the decision referred to Supra, when we consider the submissions of the Corporate Debtor then we are of the considered view that the decision upon which the Corporate Debtor has placed reliance are not applicable in the case in hand, rather the decision upon which the applicant has placed reliance referred to Supra are applicable in the case in hand and in the basis of that we hold that the amount of Rs. 32,43,000/- deposited by the Petitioner towards the advance license fee for providing and management services comes under the definition of operational debt and the applicant is Operational Creditor. Now coming to the merit of the application as we observe that it is admitted by the respondent that the said amount has been received by the respondent and it has not been paid as yet. The contention of the Respondent is that there is pre-existing dispute which the has raised by issuance Of the legal notice under Section 138 N.I. Act. In our considered view, the issuance of the N.I. legal notice under N.I. Act, cannot be treated as dispute. Therefore, we find, no force in the contention raised on behalf of the that there is a pre- existing dispute. We further notice that the application filed by the applicant under Section 9 is complete, demand notice was duly delivered and the amount claimed in Part-IV has not been paid as yet.

Advance Deposit towards license fee for providing and management services comes under the definition of operational debt and the issuance of the legal notice under Negotiable Instrument Act, 1881 cannot be treated as dispute under IBC – Ashimara Housing Pvt. Ltd. Vs. Vibrus Homes Pvt. Ltd. – NCLT New Delhi Bench Court-V Read Post »

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