BKM Industries Ltd.

CIRP commenced before expiry of 120 days as provided in Customs Act, 1962 for exercising of option to pay the redemption fine does not impact on confiscation of the goods by Custom Authorities and vesting right of Central Government under Section 126 of the Custom Act – Principal Commissioner of Customs and Ors. Vs. Pratim Bayal RP for B.K.M. Industries Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) The submission, which has been pressed by the Counsel for the Respondent is that since the period of 120 days did not expire and the CIRP commenced, the vesting of goods in Central Government shall not take place. Vesting of goods under Section 126(1) is not dependent on exercise of option to pay the redemption fine. The payment of redemption fine and redeeming the goods is a benefit, which is provided by the statute, which option can be availed after the confiscation of the goods.
(ii) The judgment of the Hon’ble Supreme Court in Sundaresh Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes & Customs (2022) ibclaw.in 103 SC was on entirely different footingThe clear provision of Section 126(1) and the scheme of Section 125, which is for different purpose and object. Accordingly to our considered opinion vesting of goods is on confiscation by the Central Government by provision of Section 126(1) and the option to pay redemption fine and redeeming the goods, is only a benefit given to the Corporate Debtor, which however, shall not arrest the vesting of the goods as contemplated by Section 126(1). We, thus, do not accept the submission of learned Counsel for the Respondent in the present case that till the option for payment of redemption fine is not exercised within 120 days, the goods continued to vest in the Corporate Debtor.

CIRP commenced before expiry of 120 days as provided in Customs Act, 1962 for exercising of option to pay the redemption fine does not impact on confiscation of the goods by Custom Authorities and vesting right of Central Government under Section 126 of the Custom Act – Principal Commissioner of Customs and Ors. Vs. Pratim Bayal RP for B.K.M. Industries Ltd. – NCLAT New Delhi Read Post »

Whether distribution to Secured Creditor has to be made as per the admitted claim/debt or on the basis of security interest over assets of the Corporate Debtor – ICICI Bank Limited Vs. BKM Industries Ltd. – NCLAT New Delhi

In this case, Resolution Applicant had proposed that amount for payment towards secured creditors shall be distributed amongst them based on proportion of their admitted claim. The Appellant raised objection and claimed distribution as per security interest.

In this important decision, Hon’ble NCLAT held that:

(i) As per Section 53(1)(b), debt owed to a secured creditor has to be distributed equally between and amongst workmen’s dues and debts owed to a secured creditors. The debt owed to the secured creditor is a debt as admitted in the CIRP.
(ii) The distribution of the debt has to be as per the debt of the Financial Creditors.
(iii) The scheme of Section 53(1), clearly indicates distribution as per the debt and in the legislative scheme there is no scope of distribution of assets among the Financial Creditors as per security interest.
(iv) Vistra ITCL (India) (2023) ibclaw.in 62 SC judgment on Article 142 of the Constitution, which jurisdiction was exercised and ultimately the Hon’ble Supreme Court has held Vistra to be a secured creditor.
(v) Upheld the decision of the NCLT Kolkata Bench.

Whether distribution to Secured Creditor has to be made as per the admitted claim/debt or on the basis of security interest over assets of the Corporate Debtor – ICICI Bank Limited Vs. BKM Industries Ltd. – NCLAT New Delhi Read Post »

NCLT dismisses an IA filed by RP on SAP accounting software discontinued during moratorium – Pritam Bayal, RP of BKM Industries Ltd. Vs. NIT Global Data Centers & Cloud Infrastructure India Pvt. Ltd. – NCLT Kolkata Bench

NCLT Kolkata Bench held that:
(i) In view of section 14(2A) of the Code, the Respondent has rightfully terminated the services after non-payment of dues for the services rendered during the CIRP period. Ample warning had been given before the Respondent discontinued the services and deleted the data.
(ii) From the reading of section 19(2) of the Code, it is observed that the Resolution Professional can file an application to the Adjudicating Authority if any personnel of the Corporate Debtor or promoter or person related to the management of the Corporate Debtor or any other person does not cooperate with the Resolution Professional. The Respondent herein is a service provider and fall outside the ambit of a promoter or a personnel of the Corporate Debtor or a person in management of the Corporate Debtor but the Applicant does fall under the purview of “other person”, hence the I.A. is maintainable.

NCLT dismisses an IA filed by RP on SAP accounting software discontinued during moratorium – Pritam Bayal, RP of BKM Industries Ltd. Vs. NIT Global Data Centers & Cloud Infrastructure India Pvt. Ltd. – NCLT Kolkata Bench Read Post »

A creditor enjoys the protection of a security interest he cannot be treated any higher than the other creditors – ICICI Bank Ltd. Vs. Mr. PratimBayal, The RP (for BKM Industries Ltd.) – NCLT Kolkata Bench

The Adjudicating Authority held that just because of the fact that a creditor enjoys the protection of a security interest he cannot be treated any higher than the other creditors, who may have financed the Corporate Debtor while not enjoying any kind of protection in the shape of a security interest and thus such creditors have consistently run the risk of not getting paid their dues in the shape of realisation from the security interest or otherwise for a considerably longer period while the secured creditor was very happilystaying put with the protection of a security interest for if it so happens, then all the secured creditors would like to give dissenting view in the CoC, which will not lead to the maximization of the value of the Corporate Debtor and thus defeating the very purpose of resolution envisaged in the Code.

A creditor enjoys the protection of a security interest he cannot be treated any higher than the other creditors – ICICI Bank Ltd. Vs. Mr. PratimBayal, The RP (for BKM Industries Ltd.) – NCLT Kolkata Bench Read Post »

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