Indiabulls Asset Reconstruction Company Ltd. Vs. Ram Kishore Arora and Ors. – Supreme Court
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In the present case, the rates have been increased by the original supplier of electricity, i.e., PSPCL and all that the Resolution Professional has done is to pass this increased electricity tariff to the applicant. The Adjudicating Authority found merit in the argument of the Resolution Professional that otherwise respondent-corporate debtor would have incurred huge financial losses thereby affecting its financial viability, had the RP not passed on to the applicant, the differentiated amount of tariffs fixed by PSPCL. In view of the afore-mentioned discussions, we are of the considered view that the upward modification of the tariff made by the RP to secure the financial health of the corporate debtor is justified and is as per the provisions of the IBC 2016.
Summary of judgment of NCLT (total 365 pages judgment) in approval of Resolution Plan of Consortium of M/s. Suraksha Realty Limited and M/s. Lakshdeep Investments and Finance Private Limited for Jaypee Infratech Limited (JIL) (Corporate Debtor) is now available in IBC Laws database.
Following are silent points of the summary:
• (1) Whether a Secured Creditor is entitled to choose the security interest of its own choice for enforcing?
• (2) Whether dissenting secured creditors have right to recover cost of enforcing security interest in case of enforced security interest?
• (3) Whether a Secured Creditor can be treated as an Unsecured Creditor and will be entitled to both the benefits under Section 53(1)(b)(ii) and Section 53(1)(d) both simultaneously??
• (4) Whether YEIDA is Secured Creditors as per Rainbow Decision?
• (5) Whether a Resolution Plan would have given immunity to the personal guarantors from that debt?
• (6) Whether Personal Guarantor has right to subrogation?
• (7) Other such as termination of the maintenance agreement etc.
Further, the Successful Resolution Applicant (SRA)/Suraksha has sought for 38 “Reliefs and Concessions”, some are: (i) Legal proceedings relating to Income Tax, (ii) Waived all the procedural requirements in terms of Section 66, Section 42, Section 62, Section 71 of the CA, 2013 in relation to reduction of share capital of the Corporate Debtor, (iii) Waiver from payment of stamp duty (iv) Non-compliances of the Corporate Debtor or further claims of the Governmental Authorities, (iv) Regularization all the loan accounts of the Corporate Debtor (v) Withdraw all legal proceedings, (vi) Initiation of any investigations, actions or proceedings against the Corporate Debtor, (vi) Resolution Applicants reserve their right to institute any investigation pertaining to any transaction(s) carried out by the ex-management of the Corporate Debtor, (vii) Necessary permissions or approvals under the Banking Regulation Act 1949, (vii) claim set-off of the entire Minimum Alternate Tax (MAT) credit as available to the Corporate Debtor, against the normal income-tax (viii) Losses already lapsed/not lapsed as on the Approval Date should be allowed to be carried forward, (ix) Capital gains/business income to the Corporate Debtor, (x) past litigations pending (xi) Waived of penalty (xii) Removal of the existing auditors of the Corporate Debtor etc.
The Adjudicating Authority held that whereas, Section 18 of the Code envisages the Duties of the Interim Resolution Professional and Regulation 34A of the Insolvency Resolution Process for the Corporate Person says that the interim resolution professional or the resolution professional, as the case may be, shall disclose item wise insolvency resolution process costs in such manner as may be required by the Board. The Board herein refers to the Insolvency and Bankruptcy Board of India. Hence, we do not find that this instant Application has any right or locus under section Section 18 of the Code read with Regulation 34A of the Insolvency Resolution Process for the Corporate Person or any other provisions under the Code. The Application is hereby rejected.
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NCLAT held that it is apparent that without approval of the CoC the Appellant has taken decision to go with United India Insurance Company and renewed the insurance by paying higher insurance premium. The Appellant submitted that he has statutory authority under Section 20(2)(b) of the IBC to take such decision. Section 20 (2)(b) of the IBC authorizes the IRP to enter into such contracts which were entered into before the commencement of CIRP. In this case there was a new contract of insurance after the commencement of CIRP. The Appellant was aware with this situation that he cannot take such decision, therefore, he has circulated the quotations amongst the Members of CoC alongwith comparison of their premium amount. Thus, we are of the view that the aforesaid provision does not authorize the IRP to renew the insurance policy without approval of CoC at higher premium rate.
Section 25(2)(c) deals with ‘Duties of Resolution Professional’ with respect to raising Interim Finance subject to the approval of Committee of Creditors under Section 28. Section 28 refers to whether the approval of Committee of Creditors is required for raising ‘Interim Finance’. It is reiterated by the Resolution Professional that the Corporate Debtor is not a going concern. The Application MA 4002/2019 in CP (IB) No. 2849/MB/2018 was preferred by the employees seeking direction to also pay the salaries for the period prior to the commencement of CIRP cost. It is a well settled proposition of law that for the cost incurred prior to the CIRP process, in case any Resolution Plan is approved, the ‘Resolution Applicant’ shall bear the expenses. In the instant case, it is not in dispute that the Resolution Plan has not been approved and the CoC has recommended for liquidation.
A perusal of Section 20 of IBC makes it clear that after the CIRP is initiated, the IRP/RP is required to manage the Corporate Debtor’s operations as a going concern. Section 20(2) (e) gives power to the IRP (Subsequently RP) to take all actions as are necessary to keep the Corporate Debtor as a going concern. In such a process of managing the business operations of the Corporate Debtor, if advance payments for supply of goods is received, it cannot be treated as raising an interim finance. It is an advance for payment of goods which the Corporate Debtor as a going concern may be manufacturing. The goods are either to be supplied, or the amount should be returned. If the goods are not supplied, the purchaser cannot be made to run for his money. If this approach as in the present matter is not changed, it will become difficult to keep the Corporate Debtors as a going concern. Such amount received as an advance payment for the supply of goods during the CIRP would have to be treated as CIRP costs.
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