21/03/2023

Parties under an agreement cannot confer jurisdiction on any Court or Tribunal which has no inherent jurisdiction to try any particular case – Jagson Colorchem Ltd. Vs. Jayapushpam Investments and Trading Pvt. Ltd. – NCLT Mumbai Bench

Whether the parties under an agreement confer jurisdiction on any Court or Tribunal which has no inherent jurisdiction? The Adjudicating Authority held that in this context it is appropriate to mention here that it is a well settled principle of law that the parties under an agreement confer jurisdiction on any one of the Courts and Tribunals when two or more Courts or Tribunals have jurisdiction. However, parties under an agreement cannot confer jurisdiction on any Court or Tribunal which has no inherent jurisdiction to try any particular case. As discussed above the NCLT has no jurisdiction to adjudicate the lis between the parties under the above Agreement to Sale because of its peculiar nature of transaction and therefore the parties by an agreement cannot confer jurisdiction on NCLT simply because it can be used as weapon against their opponent to recover the dues or it is convenient to them.

Parties under an agreement cannot confer jurisdiction on any Court or Tribunal which has no inherent jurisdiction to try any particular case – Jagson Colorchem Ltd. Vs. Jayapushpam Investments and Trading Pvt. Ltd. – NCLT Mumbai Bench Read Post »

By way of book entry, setting of one receivable from the related party with the liability of another related party results into transfer of property in form of its Debtors is in nature of preferential transaction u/s 43 of IBC – Chetan T. Shah Vs. Mr. Jayesh Vinod Valia (Ex-MD & Promoter of the CD) – NCLT Mumbai Bench

The Adjudicating Authority held that in view thereof, we agree with the contention of Applicant that the sum of Rs. 1,15,17,707/- is preferential transaction u/s 43 of the Code and the Respondents are liable to refund this money to the Corporate Debtor u/s 44(1) of the Code. As regards amount realized from sales of assets, it is held similarly as the Applicant has identified this transaction with the repayment made to the related party. At last, the book entry has effect of setting of one receivable from the related party with the liability of another related party results into transfer of property in form of its Debtors and its makes the other party (debtor) of the Corporate Debtor as creditor of such related party (creditor) and the same is also in nature of preferential transaction, even though the same is represented by the book entry.

By way of book entry, setting of one receivable from the related party with the liability of another related party results into transfer of property in form of its Debtors is in nature of preferential transaction u/s 43 of IBC – Chetan T. Shah Vs. Mr. Jayesh Vinod Valia (Ex-MD & Promoter of the CD) – NCLT Mumbai Bench Read Post »

Whether the value of Preference Shares can be included while computing “net worth” under the Companies Act, 2013? – Teq Green Power XIII Pvt. Ltd. Vs. REMC Ltd. – Delhi High Court

Hon’ble High Court held that (i) A perusal of Section 55 provides that preference shares cannot be redeemed within the share capital of the company. It means that other than two sources i.e., out of profits and out of proceeds of fresh issue of shares, no other source can be used for redemption of preference shares.
(ii) Calculation of net worth and drawing up of a balance sheet are therefore separate concepts. It is well settled that if the preference shares are not redeemed, the holder of the preference shares does not assume the status of a creditor.
(iii) Balance sheet is not an indicator of the true net worth of a company. Balance sheet reflects the share capital of a company and its treatment as an asset or liability to the company on the date of preparation of the balance sheet.
(iv) Only when the preference shares are redeemable at the instance of the shareholders then only the preference shares can be called as a liability and not in all cases. Preference shares are redeemed out of profits or out of a fresh issue meant for the purpose and not from the existing share capital.
(v) The preference shares in question are preference shares redeemable at the instance of the issuer without any fixed term or tenure attached to these shares. Such shares would form part of paid-up share capital which in turn is a component of net worth. We are therefore of the opinion that the shares in question can form a part of the net worth within the scheme and mandate of the Companies Act.

Whether the value of Preference Shares can be included while computing “net worth” under the Companies Act, 2013? – Teq Green Power XIII Pvt. Ltd. Vs. REMC Ltd. – Delhi High Court Read Post »

Financial Creditor who does not attend the proceeding, cannot be heard in saying that CIRP has wrongly been conducted – Consolidated Finvest & Holdings Ltd. Vs. Subhash Kumar Kundra, RP – CLC Industries Ltd. & Ors. – NCLAT New Delhi

In this case, the Appellant was challenging the entire process which was not legally done hence prayer was madeto issue fresh EoI and Appellant does not want liquidation of the Corporate Debtor but was interested in resolution of the Corporate Debtor. Out of sixteen CoC meeting, only in one CoC meeting, the Appellant attended and neither he voted in any agenda nor raised any objection regarding the process. NCLAT held that Financial Creditor of the Corporate Debtor have been given rights as per IBC to take steps for resolution of the Corporate Debtor and financial creditor who does not attend the proceeding, can not be heard in saying that process has wrongly been conducted.

Financial Creditor who does not attend the proceeding, cannot be heard in saying that CIRP has wrongly been conducted – Consolidated Finvest & Holdings Ltd. Vs. Subhash Kumar Kundra, RP – CLC Industries Ltd. & Ors. – NCLAT New Delhi Read Post »

IBC Section 9 proceedings are not the proceedings where the dispute raised by the parties arising out of contract between the parties can be gone into and adjudicated – Jain Irrigation Systems Ltd. Vs. Pragyawan Technologies Pvt. Ltd. – NCLAT New Delhi

NCLAT held that Section 9 Proceedings are not the proceedings where the dispute raised by the parties arising out of contract between the parties can be gone into and adjudicated. The scheme of Insolvency Proceedings contemplate that the proceeding shall go on only when there is an admitted debt and default, forum is not for deciding and adjudicating the contractual dispute between the parties.

IBC Section 9 proceedings are not the proceedings where the dispute raised by the parties arising out of contract between the parties can be gone into and adjudicated – Jain Irrigation Systems Ltd. Vs. Pragyawan Technologies Pvt. Ltd. – NCLAT New Delhi Read Post »

The negligence on the part of Corporate Debtor not to have executed lease deed cannot be allowed to become a ruse for fraudulent transaction u/s 43, 49 and 66 of IBC – Jagdish Kumar Parulkar, Liquidator for Kapil Steels Ltd. Vs. M/s Indore Steel & Alloys Pvt. Ltd. – NCLAT New Delhi

The contention of the Liquidator that the ex-management by not getting the name changed in the lease deed in favour of the Corporate Debtor in 2010 used this fact as a loophole to transfer the leasehold rights in favour of Respondent No.1 and that this amounts to conducting fraudulent transaction.
NCLAT held that the negligence on the part of the Corporate Debtor not to have executed the lease deed cannot be overlooked and cannot be allowed to become a ruse for fraudulent transaction. Mere possibility of a potential collusion without material on record is not sufficient to persuade this Bench to record any finding on preferential or fraudulent transaction. Liquidators under the IBC are assigned by the Court and are undisputedly vested with sufficient authority to take into custody or control all assets, property, effects and actionable claims of the Corporate Debtor and also collect outstanding receivables including paying off bills and outstanding debts. This includes the authority to commence investigations into the Corporate Debtor’s financial affairs for determination of preferential and undervalued transaction as envisaged under Section 35(1)(ℓ) of IBC. The Liquidator has therefore a fiduciary and legal responsibility to the Corporate Debtor, the creditors and the Court.

The negligence on the part of Corporate Debtor not to have executed lease deed cannot be allowed to become a ruse for fraudulent transaction u/s 43, 49 and 66 of IBC – Jagdish Kumar Parulkar, Liquidator for Kapil Steels Ltd. Vs. M/s Indore Steel & Alloys Pvt. Ltd. – NCLAT New Delhi Read Post »

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