06/10/2023

The issue of fixing of EMD and its reasonableness in EOI is a matter which comes within the scope of Commercial Wisdom of the CoC and Adjudicating Authority has no jurisdiction to sit in appeal – Atharv Intertrade Pvt. Ltd. Vs. Mr. Shivadutt Bannanje, RP for Dnyanyogi Shri Shivakumar Swamji Sugars Ltd. – NCLT Bengaluru Bench

This Application has been filed challenging the requirement of Rs.15 crore as EMD to be submitted along with EOI. The Applicant stated that as against the net worth criterion of Rs. 25 crore, the EMD of Rs.15 crore was exorbitant.

NCLT Bengaluru Bench referred the decision of Hon’ble NCLAT in Kanan Tiruvengadam v. M.K. Shah Exports Ltd. and Ors. (2018) ibclaw.in 147 NCLAT and held that this issue of fixing of refundable EMD and its reasonableness is a matter which comes within the scope of ‘Commercial Wisdom’ of the CoC.

The issue of fixing of EMD and its reasonableness in EOI is a matter which comes within the scope of Commercial Wisdom of the CoC and Adjudicating Authority has no jurisdiction to sit in appeal – Atharv Intertrade Pvt. Ltd. Vs. Mr. Shivadutt Bannanje, RP for Dnyanyogi Shri Shivakumar Swamji Sugars Ltd. – NCLT Bengaluru Bench Read Post »

In Resolution Plan of Real Estate Company, No distinction can be made between Home Buyers who had approached RERA and obtained decree for refund and Other Homebuyers, both are remained the same as Homebuyers within a class – Vishal Chelani & Ors. Vs. Debashis Nanda – Supreme Court

In this case, some home buyers sought decree from UPRERA. In the Resolution Plan, a distinction was made between home buyers, who had opted or elected for other remedies such as i.e. applying before the RERA and having secured orders in their favor, and those who did not do so.

Hon’ble Supreme Court held that:
(i) On a plain reading of Section 5(8)(f) no distinction is per se made out between different classes of financial creditors for the purposes of drawing a resolution plan.
(ii) The reasoning of the Mumbai Bench of NCLT “Mr. Natwar Agrawal (HUF) Vs. Ms. Ssakash Developers & Builders Pvt. Ltd (2023) ibclaw.in 425 NCLT” is correct in the opinion of this Court.
(iii) It is only home buyers that can approach and seek remedies under RERA – no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable.
(iv) Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. Consequently its provisions acquire primacy, and cannot be read as subordinate to the RERA Act.
(v) Set aside the NCLAT’s Order.

In Resolution Plan of Real Estate Company, No distinction can be made between Home Buyers who had approached RERA and obtained decree for refund and Other Homebuyers, both are remained the same as Homebuyers within a class – Vishal Chelani & Ors. Vs. Debashis Nanda – Supreme Court Read Post »

Resolution Professional is well within its powers to issue lay-off notices to workers/employees of the Corporate Debtor during CIRP, Section 238 of Insolvency and Bankruptcy Code overrides the provisions of the Industrial Dispute Act, 1947 – Unitech Machines Karmchari Sang Vs. Mr. Vivek Raheja RP of Unitech Machines Ltd. – NCLT New Delhi Bench Court-VI

In this case, the Employee Union of the Corporate Debtor file application seeking to declare the layoff notice dated 01.02.2020 passed by the Resolution Professional as illegal and arbitrary.

NCLT New Delhi Bench Court-VI held that:
(i) The Resolution Professional is well within its powers to take appropriate steps to preserve and protect the assets of the Corporate Debtor including the continued business operations of the Corporate Debtor.
(ii) Section 238 of the IB Code, 2016 states that the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
(iii) Therefore, there appears to be no illegality in discontinuing the services of the workmen and the layoff notice dated 01.02.2020 to that effect.

Resolution Professional is well within its powers to issue lay-off notices to workers/employees of the Corporate Debtor during CIRP, Section 238 of Insolvency and Bankruptcy Code overrides the provisions of the Industrial Dispute Act, 1947 – Unitech Machines Karmchari Sang Vs. Mr. Vivek Raheja RP of Unitech Machines Ltd. – NCLT New Delhi Bench Court-VI Read Post »

Workmen/Employees/Operational Creditors may file an application u/s 9 of IBC to initiate CIRP in an individual capacity or as a joint capacity by the authorized person, however, for a valid application u/s 9 of the Code, threshold limit for each individual is required to be one crore – Mr. Atanu Kumar Chatterjee Vs. Rolta Defence Technology Systems Pvt. Ltd. – NCLT Mumbai Bench

In this case, the application u/s 9 of IBC has been filed by 29 Operational Creditors who are the former employees of the Corporate debtor.

NCLT Mumbai Bench held that:
(i) It is a settled law that workmen/employees (Operational Creditors) may file an application to initiate CIRP in an individual capacity or as a joint capacity by the authorized person. Therefore, the application to initiate CIRP under Section 9 of the Code can be initiated by the Operational Creditors individually or jointly.
(ii) There is no ambiguity about application u/s 7 of IBC being filed individually or jointly with other Financial Creditors and threshold limit would apply accordingly. However, the provision of Section 9 is differently worded.
(iii) Phrase in Section 7 is “itself or jointly”, whereas the word jointly or any synonym of it is not finding place in Section 9 of the Code.
(iv) For a valid Petitioner u/s 9 of the Code, threshold limit for each individual is required to be one crore.
(v) The current Company Petition is not maintainable as the claim of each Operational Creditor is below the threshold limit of One Crore.

Workmen/Employees/Operational Creditors may file an application u/s 9 of IBC to initiate CIRP in an individual capacity or as a joint capacity by the authorized person, however, for a valid application u/s 9 of the Code, threshold limit for each individual is required to be one crore – Mr. Atanu Kumar Chatterjee Vs. Rolta Defence Technology Systems Pvt. Ltd. – NCLT Mumbai Bench Read Post »

NCLT allows liquidation application filed u/s 33(3) of IBC since Successful Resolution Applicant (SRA) is not even in a position to submit proposal/schedule of payment in terms of approved Resolution Plan, leave aside making any actual payment in accordance with the Resolution Plan – Harshad Deshpande, Supervisor of Monitoring committee and Former RP of Trimurti Corns Agro Foods Pvt. Ltd. – NCLT Mumbai Bench

In this case, an application u/s 33(3) of IBC filed by RP on seeking liquidation order based on the inability of the Resolution Applicant to make payments and adhere with the terms of the Resolution Plan which was duly approved by this Authority.
NCLT Mumbai Bench observed that SRA is not even in a position to submit proposal/schedule of payment in terms of approved Resolution Plan, leave aside making any actual payment in accordance with the Resolution Plan. Accordingly, The SRA has contravened the Resolution Plan approved by this Tribunal by which the interest of the creditors is prejudicially affected. Further, the SRA has not taken any step even to seek further time for making payment. Therefore, this is a fit case for liquidation.

NCLT allows liquidation application filed u/s 33(3) of IBC since Successful Resolution Applicant (SRA) is not even in a position to submit proposal/schedule of payment in terms of approved Resolution Plan, leave aside making any actual payment in accordance with the Resolution Plan – Harshad Deshpande, Supervisor of Monitoring committee and Former RP of Trimurti Corns Agro Foods Pvt. Ltd. – NCLT Mumbai Bench Read Post »

An agreement to resell products on e-commerce platform/Amazon where Applicant paid some amount with some assured profit margins would not confer the status of a Financial Debt – Rajesh Alfred Vs. Ketsaal Retails LLP – NCLT Allahabad Bench

In this case, the parties entered in Reseller Agreement wherein, applicant invested amount with assured return/profit margin of 7% per month on the invested amount. The products of the Corporate Debtor were being provided to the Applicant and the same was being sold by it on Amazon Site.

NCLT Allahabad Bench held that:
(i) As per the Reseller Agreement, the amount invested by the applicant is a consideration which shall be received in advance by Corporate Debtor from time to time for the supply of goods within the periods of 15 days from the date of receipt of advance. This does not come within the meaning of debt as defined Sec. 5(8). Even the return on the amount paid by the applicant is in form of the profit margin and not for paying any interest on the amount deposited.
(ii) For earning of such profit margin, no time value of money on the amount paid is provided, rather profit margin would be determined and shared on the sale price of the product as against the purchase price.
(iii) The nature of transactions of the present case do not come within the meaning of Financial Creditor, as in the case in hand “Assured Returns” is associated with the profit margin amount and this has nothing to do with the requirement of Section 5(8), the time value of money therefore, is grossly missing in the transaction in hand.
(iv) The agreement to resell the products on the e-commerce platform with some assured profit margins as promised in the Agreement would not confer the status of a ‘financial debt’ to the amount due to the Applicant as the transaction does not have a consideration for the time value of money, which is a substantive ingredient to be satisfied for fulfilling requirements of the expression ‘Financial Debt’.

An agreement to resell products on e-commerce platform/Amazon where Applicant paid some amount with some assured profit margins would not confer the status of a Financial Debt – Rajesh Alfred Vs. Ketsaal Retails LLP – NCLT Allahabad Bench Read Post »

NCLT directs Resolution Professional to consider Government dues if appearing in the books of account of the Corporate Debtor, here the list of cases relied by AA to decide whether a claim can be accepted after approval of Resolution Plan by CoC and pending before NCLT for approval – Department of State Tax Vs. RP of Calchem Industries (India) Ltd. – NCLT Mumbai Bench

NCLT Mumbai Bench held that:

(i) Any interruption in the CIRP at this belated stage by allowing the application might open the floodgate for the similar claims, causing unnecessary delays in the CIRP.
(ii) The Code has also altered the order of priority of payment of Government dues when compared to the earlier Companies Act. The emphasis under the Code is for time bound process rather than payment of belated Government dues.
(iii) For all these reasons we do not find any merit in the present applications, except to the extent that if VAT/CST liability was reflected in the books of Corporate Debtor on the date of preparation of Memorandum Information, then the RP should have considered the same in the Information Memorandum and RP is directed to consider such Government dues if appearing in the books of account of the Corporate Debtor.

NCLT directs Resolution Professional to consider Government dues if appearing in the books of account of the Corporate Debtor, here the list of cases relied by AA to decide whether a claim can be accepted after approval of Resolution Plan by CoC and pending before NCLT for approval – Department of State Tax Vs. RP of Calchem Industries (India) Ltd. – NCLT Mumbai Bench Read Post »

When Resolution Plan of a Resolution Applicant has not been approved and there is no other Resolution Plan in the CIRP, no infirmity can be found in the order of the Adjudicating Authority directing for liquidation – Kamlesh Mehta Vs. Mirage Ceramics Pvt. Ltd. & Ors. – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) When order dated 15.06.2023 was not available on the said date and the order was uploaded on 31.07.2023, hence, appeal filed on 24.08.2023 cannot be said to be barred by time.
(ii) Appellant has submitted a Resolution Plan which plan was not approved by the CoC by requisite majority since other member of the CoC opposed the Resolution Plan.
(iii) When the Resolution Plan of the Appellant has not been approved and there is no other Resolution Plan in the CIRP, we are of the view that no infirmity can be found in the order of the Adjudicating Authority directing for liquidation.
(iv) The Appellant who was eligible to submit plan is also eligible to submit its Expression of Interest in the Liquidation Proceeding when notice is issued for selling the Corporate Debtor as a going concern.

When Resolution Plan of a Resolution Applicant has not been approved and there is no other Resolution Plan in the CIRP, no infirmity can be found in the order of the Adjudicating Authority directing for liquidation – Kamlesh Mehta Vs. Mirage Ceramics Pvt. Ltd. & Ors. – NCLAT New Delhi Read Post »

Tribunal is a judicial authority, and has the power to refer the matter to Arbitration if it finds that the dispute is arbitral and falls within the scope of Arbitration Agreement – Nityanand Sharma – NCLT Mumbai Bench

NCLT Mumbai Bench held that:

(i) It is not in dispute that this Tribunal is a judicial authority, and has the power to refer the matter to Arbitration if it finds that the dispute is arbitral and falls within the scope of Arbitration Agreement
(ii) The issues of taxation in the hands of each subscriber is a personal matter, and can not be said to be an act of Oppression qua other members, as other members will also have similar taxation issues
(iii) An Arbitrator can not direct Respondent No. 4 and its shareholders, other than signatories to SHA, who are not party to it, to have shares allotted to the Petitioners in terms of SHA. Further, this Tribunal can also not direct Respondent No. 4 and its shareholders, who are not party to SHA, even if comes to the conclusion that the present petition is not a dressed up petition and has to be dealt with in accordance with Section 241-242 of the Companies Act, 2013.
(iv) This Bench feels that this is an issue arising purely from the SHA, and between two parties i.e. Petitioner and Applicant, which can be referred to the Arbitrator by either of parties, not by this Tribunal, to decide (a) whether the Petitioner’s claim for equitable treatment, in the fact and circumstances of the case, is tenable; and (b) whether the Petitioner’s claim for allotment of shares, against delayed remittance, at initial offered price is also tenable in terms of SHA, if yes, whether Applicant may be made liable to compensate to the Petitioner for the monetary loss resulting from the approach of the Applicant.

Tribunal is a judicial authority, and has the power to refer the matter to Arbitration if it finds that the dispute is arbitral and falls within the scope of Arbitration Agreement – Nityanand Sharma – NCLT Mumbai Bench Read Post »

The Union of India shall ensure that on or before 15.11.2023, all tribunals are provided with requisite infrastructure for hybrid hearings – Sarvesh Mathur Vs. The Registrar General High Court of Punjab and Haryana – Supreme Court

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The Union of India shall ensure that on or before 15.11.2023, all tribunals are provided with requisite infrastructure for hybrid hearings – Sarvesh Mathur Vs. The Registrar General High Court of Punjab and Haryana – Supreme Court Read Post »

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