20/04/2023

Section 11A(4) of IBC is clear and unambiguous and makes it clear that rule of precedence as provided in sub-section (1) to (3) does not apply to application(s) filed prior introduction of PIRP regime in the Code – Sudal Industries Ltd. – NCLT Mumbai Bench

The Adjudicating Authority held that section 11A (4) is clear and unambiguous and makes it clear that rule of precedence as provided in sub-section (1) to (3) does not apply to application(s) filed prior introduction of PIRP regime in the code. Further, this Bench finds the intent of legislature to allow the management of MSMEs to restore its control as contemplated under section 240A of the Code providing waiver of clause (c) to (h) of section 29A in case of MSMEs where the promoters are otherwise qualified u/s remaining clauses of section 29A of the Code. On the harmonious construction of provisions of section 240A and 54C, this Bench finds that while section 240A of the Code allows restoration of control back to the Promoters of MSME in resolution in precedence of other prospective resolution applicants, section 54C allows the promoters to keep it with them till the resolution plan proposed by MSME is not found acceptable by the financial creditors. Accordingly, this Bench feels it would in order to adjudicate application filed u/s 54C of the Code prior to adjudication of application filed u/s 7 of the Code, where such section 7 application filed prior to introduction of PIRP regime remain pending with the Adjudicating Authority.

Section 11A(4) of IBC is clear and unambiguous and makes it clear that rule of precedence as provided in sub-section (1) to (3) does not apply to application(s) filed prior introduction of PIRP regime in the Code – Sudal Industries Ltd. – NCLT Mumbai Bench Read Post »

The liability of the Corporate Guarantor is terminus with the Principal Borrower, all acknowledgement made by the Principal Borrower are also binding upon the Corporate Guarantor – Anchor Leasing Pvt. Ltd. Vs. Sejal Realty and Infrastructure Ltd. – NCLT Mumbai Bench

The Adjudicating Authority held that so far as the point raised with regard to limitation is concerned, it is worth noting that the principle borrower has been acknowledging the outstanding amounts right from 1 April 2012 to March 2019. Considering the fact that the liability of the corporate debtor/corporate guarantor was terminus with that of the principal borrower, all acknowledgement made by the principal borrower are also binding upon the corporate guarantor. Therefore, it cannot be successfully argued on behalf of the corporate debtor that the claim raised in the petition is hit by the law of limitation or the petition is barred by time.
In this regard it is further worth mentioning that during the CIRP against the Principal Borrower, the corporate guarantor voluntarily agreed to forego his right of subrogation against the successful resolution applicant which clearly means that the liability of the corporate guarantor did not come to an end with the approval of the resolution plan in the proceedings under section 7 against the principal borrower. Apart from this, in the resolution plan there is no specific mention of the fact that the liability of the guarantors of the principal borrower will come to an end with the approval of the said plan. Therefore, it cannot be successfully argued on behalf of the corporate debtor that its liability as guarantor came to an end with the approval of the resolution plan against the principal Borrowers.

The liability of the Corporate Guarantor is terminus with the Principal Borrower, all acknowledgement made by the Principal Borrower are also binding upon the Corporate Guarantor – Anchor Leasing Pvt. Ltd. Vs. Sejal Realty and Infrastructure Ltd. – NCLT Mumbai Bench Read Post »

NCLT terminates CIRP of Rajasthan Land Holdings Ltd.(going on from 4 years) on the ground that the funds were always available with the Corporate Debtor to satisfy its claim but still continue the CIRP with malicious motive and also limits the fee of Resolution Professional – IL&FS Transportation Networks Ltd. Vs. Anuradha Gupta, RP of Rajasthan Land Holdings Ltd. – NCLT Jaipur Bench

The CIRP of the Corporate Debtor was admitted on 24.09.2019(approx. 4 years). The Adjudicating Authority observed that we cannot fathom any reason why the RP has gone forward with the CIRP of the Corporate Debtor when the Company had cash of Rs. 3.68 crores on the CIRP admission date and is able to settle the Operational Debt raised by the Operational Creditors which is amounting to a total of Rs. 25 Lakhs approx. The RP has mentioned the CIRP cost of Rs. 73.31 lakhs out of which the RP fees is Rs 41.13 lakhs and the Legal fees is Rs. 16.71 Lacs, when the claim of the OCs was only Rs. 26.76 lakhs. There appears no reasonable explanation with respect to the conduct of the RP of conducting a CIRP which costed three times the debt which is due by the Corporate Debtor. The RP is an officer of the court and ought to have informed this Adjudicating Authority that there is no need for conducting the CIRP of the Corporate Debtor as the Corporate Debtor has availability of funds to settle its dues against the Operational Creditors. It is a clear case of some hidden motives and misuse of IBC and apparently gives rise to the suspicion of understanding among certain parties to continue the CIRP for some oblique purpose and till the amount lying in the account of the CD is exhausted as the CoC is not bearing the CIRP expenses. In view of the termination of the CIRP of the Corporate Debtor.

NCLT terminates CIRP of Rajasthan Land Holdings Ltd.(going on from 4 years) on the ground that the funds were always available with the Corporate Debtor to satisfy its claim but still continue the CIRP with malicious motive and also limits the fee of Resolution Professional – IL&FS Transportation Networks Ltd. Vs. Anuradha Gupta, RP of Rajasthan Land Holdings Ltd. – NCLT Jaipur Bench Read Post »

Whether is it mandatory on the part of Resolution Professional to issue Notice of CoC Meeting to all Operational Creditors in terms of Section 24(3)(c) of the IBC? – Bhushan Shringarpure Vs. Mr. B.K. Mishra RP of Lakeland Chemicals (India) Ltd. – NCLAT New Delhi

In this case, the RP did not issue notice to the Operational Creditors in terms of Section 24(3)(c) of the Code. Even if notice had been given to the Operational Creditors even then they had no right to vote in the meeting of the CoC in view of Section 24(4) of the Code but the question herein arises is as to whether is it not mandatory on the part of the RP to issue notice to all the Operational Creditors in terms of Section 24(3)(c) of the Code if it is found by him that their admitted claim is more than 10%?
NCLAT held that a bare reading of the Section 24(3)(c) shows that it is mandatory in nature and it is incumbent upon the RP to serve notice to all the Operational Creditors of each meeting of the CoC or if they elect their authorised representatives after notice is received by them, then the notice of meeting to the authorised representatives. It is held that it is incumbent upon the RP to serve notice of each meeting of the CoC to the Operational Creditors or their representatives if the amount of the aggregated due is not less than 10% of the debt.

Whether is it mandatory on the part of Resolution Professional to issue Notice of CoC Meeting to all Operational Creditors in terms of Section 24(3)(c) of the IBC? – Bhushan Shringarpure Vs. Mr. B.K. Mishra RP of Lakeland Chemicals (India) Ltd. – NCLAT New Delhi Read Post »

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