18 (g)

NCLT directs to conduct valuation of shares held by a wholly owned foreign subsidiary company of Corporate Debtor, which were sold by SBI Singapore – Mr. Shantanu Prakash Vs. Mr. Mahendar Singh Khandelwal, RP, Educomp Solutions Ltd. – NCLT New Delhi Bench Court-II

In this case, Ex-Director of Educomp Solutions Limited, Corporate Debtor raised the issue that shares of The Learning Internet Inc. (TLI) held by Educomp Asia Pacific Pte Limited (a wholly owned subsidiary of Corporate Debtor and also gone into Liquidation as per order passed by High Court of Singapore) has been sold by SBI, Singapore at lower value.
NCLT New Delhi Bench Court-II held that:
(i) The RP shall approach IBBI for the appointment of Registered Valuers to do the valuation of shares of The Learning Internet Inc. owned by the Educomp Asia Pacific Pte Limited and pledged with State Bank of India, Singapore.
(ii) If the valuation done by the two valuators or third valuator so appointed, as the case may be is found more than the value of USD 7.1 million for which the shares were sold on 03.09.2021, the claim of SBI Singapore against the Corporate Debtor would stand reduced to the equal or that extent.
(iii) The CIRP qua the Educomp Solution Limited (CD) would continue unhindered and uninfluenced by the aforementioned direction (a & b) The secured financial claim of the State Bank of India (Singapore) qua the CD would be subject to the outcome of the valuation result/report.

NCLT directs to conduct valuation of shares held by a wholly owned foreign subsidiary company of Corporate Debtor, which were sold by SBI Singapore – Mr. Shantanu Prakash Vs. Mr. Mahendar Singh Khandelwal, RP, Educomp Solutions Ltd. – NCLT New Delhi Bench Court-II Read Post »

Whether assets of the subsidiary companies can be dealt with in Corporate Insolvency Resolution Process of holding Company? – Greater Noida Industrial Development Authority (GNIDA) Vs. Roma Unicon Designex Consortium – NCLAT New Delhi

The Scheme of the Code has referred the assets of the subsidiary, assets of any Indian or foreign subsidiary of the Corporate Debtor. Thus, assets of the Corporate Debtor and assets of subsidiary of the Corporate Debtor have been separately recognised and dealt with. Section 18, sub-section (1), Explanation further clarifies the law when it says that assets shall include the assets, meaning thereby assets of the Corporate Debtor, shall not include assets of any Indian subsidiary. In the CIRP of Corporate Debtor, thus, assets of subsidiary Company, i.e., Earth Towne were not to be taken into consideration or treated as the assets of the Corporate Debtor. As regards, the law relating to resolution process of a corporate person is concerned, the law is concerned with assets of the Corporate Debtor and its liabilities, so as to focus the resolution on the assets of the Corporate Debtor. The natural corollary to the above provision is that the assets of the subsidiary Company cannot be dealt with, in CIRP of a holding Company. Holding Company and subsidiary Company have separate legal status and the assets of subsidiary Company cannot be taken into consideration.

Whether assets of the subsidiary companies can be dealt with in Corporate Insolvency Resolution Process of holding Company? – Greater Noida Industrial Development Authority (GNIDA) Vs. Roma Unicon Designex Consortium – NCLAT New Delhi Read Post »

Once the Moratorium has been declared Custom Authority cannot sale the imported goods of Corporate Debtor in terms of Section 48 of the Customs Act, 1962 – Commissioner of Customs, (Preventive) West Bengal Vs. Ram Swarup Industries Ltd. & Ors. – NCLAT

In the present case, the goods are in the custody of the Custom Authority, but the ownership remains with the Corporate Debtor, no step having taken for sale of goods in terms of Section 48 of the Customs Act, 1962. As we have seen that the ownership rights of the machineries, in question, is of the ‘Corporate Debtor’ and not of a third party, explanation below Section 18(1)(f) & (g) of the Code is not applicable. Therefore, the Resolution Professional has right to take control and custody of any asset, though the Customs Authority is in possession of the same for the present.

From the Section 14 of Code, it is clear that during the period of Moratorium, the assets of the Corporate Debtor cannot be alienated, transferred or sold to a third party.

Section 48 of the Customs Act, 1962 relates to sale of goods in the custody of the Customs (machinery in question), in the manner as prescribed therein. The order of Moratorium having passed by the Adjudicating Authority on 8th January, 2018, immediately thereafter it was not open to the Appellant, Commissioner of Customs or its authorities to issue an e-auction notice on 15th January, 2018, fixing date of auction of the goods on 19th January, 2018. Officers of the Customs show that after their knowledge of the order of Moratorium they intended to sell the machinery, in question, though it was lying with the Customs Authority since 13th April, 2009 / 27th April, 2009.

In view of the aforesaid findings, no interference is called for against the impugned order dated 3rd July, 2018 passed by the Adjudicating Authority prohibiting the Customs Authority from selling the assets of the Corporate Debtor.

Once the Moratorium has been declared Custom Authority cannot sale the imported goods of Corporate Debtor in terms of Section 48 of the Customs Act, 1962 – Commissioner of Customs, (Preventive) West Bengal Vs. Ram Swarup Industries Ltd. & Ors. – NCLAT Read Post »

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