PUFE- Time limit for filing application

The timeline specified under CIRP Regulation 35A is directive, not mandatory – Ritesh R. Mahajan Vs. Mr. Shivkumar Malaghan and Ors. – NCLT Bengaluru Bench

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The primary objection of the Respondent is that the RP has not filed this application u/s 66 of the Code within a period of 135 days as prescribed under Regulation 35-A of the IBBI (CIRP) Regulations, 2016. In this connection, reliance is placed on the Judgments of the Hon’ble NCLAT in the case of Aditya Kumar Tibrewal RP v. Om Prakash Pandey reported at (2022) ibclaw.in 278 NCLAT in Order dated 06.04.2022, according to which the Regulation 35-A is not mandatory and is only directory in nature.

The timeline specified under CIRP Regulation 35A is directive, not mandatory – Ritesh R. Mahajan Vs. Mr. Shivkumar Malaghan and Ors. – NCLT Bengaluru Bench Read Post »

Timeline specified in CIPR Regulation 35A, for making an application under Sections 43, 45, 50 or 66, does not apply in Liquidation Process – Vineet K. Chaudhary Liquidator Vs. JSC-OGCC Jazstroy Service – NCLT Mumbai Bench

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This judgment covers:

A. Time limit prescribed in CIRP Regulations 35A (3) for making an application under Sections 43, 45, 50 or 66 to the Adjudicating Authority, does not apply in Liquidation Process
B. Is the provision of the Limitation Act apply to the application for PUEF if not CIRP Regulations 35A(3)?
C. Issue of Section 43 of the IBC

Timeline specified in CIPR Regulation 35A, for making an application under Sections 43, 45, 50 or 66, does not apply in Liquidation Process – Vineet K. Chaudhary Liquidator Vs. JSC-OGCC Jazstroy Service – NCLT Mumbai Bench Read Post »

Time period under Regulation 35A of CIRP Regulations, 2016 is not mandatory but only directory in character – Mr. Tenny Jose Vs. Mr. Prathap Pillai RP of M/s. Tenny Jose Ltd. – NCLAT Chennai

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NCLAT held that:
(i) A pre-ponderance of probability will suffice in respect of an offence of fraudulent trading under Section 66 of the Code is sufficient but the probability must be such that it must satisfy the subjective conscience of the Adjudicating Authority.
(ii) In law, a Company or other entity which is involved in or assist and benefits from the offending business or benefits from business in an offending manner, does so knowingly and dishonestly can be held liable for a fraudulent trading.
(iii) Time period, as CIRP Regulation 35A, Resolution Professional is to form an opinion within 75 days of the CIRP and made determination within 115 days and is to file an application within 135 days from the date of commencement of CIRP is not a mandatory one but only directory in character.
(iv) In law a fraudulent intent is to be proved after a careful examination of all materials / evidence, as the case may be. If a fraudulent intent or fraudulent purpose is made out the liability must follow. An action can also lie, when there is a fraudulent purpose upon the customers of the Company. The Burden of Proof is the same as in a civil case where serious allegations of misconduct such as fraud are in issue. In an isolated fraud case, an Individual Tort Action(Civil Wrong) will lie.

Time period under Regulation 35A of CIRP Regulations, 2016 is not mandatory but only directory in character – Mr. Tenny Jose Vs. Mr. Prathap Pillai RP of M/s. Tenny Jose Ltd. – NCLAT Chennai Read Post »

Whether there is any scope for Resolution Professional to take any action for fraudulent transaction covered under Section 43, 45, 50 and 66 of the IBC beyond the time-line stipulated under CIRP Regulation 35A – Prasant Chandra Rath (Suspended Director of Corporate Debtor) Vs. Surya Kanta Satapathy (RP) – NCLAT New Delhi

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The main points which need to be addressed for determination are:-

(i) Whether the application filed by the Resolution Professional under Section 66 of the IBC before the Adjudicating Authority was barred by limitation; and

(ii) Whether the Appellants had indulged in fraudulent trade transactions and certain avoidance transactions and in the light of the findings thereon whether the Adjudicating Authority had committed any error while passing the impugned order dated 26.04.2022.

NCLAT held that the delay has therefore been condoned by the Adjudicating Authority on the ground that the delay is properly and satisfactorily explained by the Resolution Professional even though there is no formal application for delay condonation. Regulation 35-A is directory and in the present case the application filed by the Resolution Professional cannot be rejected only on the ground of delay in filing beyond 135 days of ICD in view of explanation offered before the Adjudicating Authority justifying the delay. It concluded that CIRP Regulations 35-A is not mandatory and the requirement for approaching the Adjudicating Authority for appropriate relief on or before 135th day of the ICD is only directory.

Whether there is any scope for Resolution Professional to take any action for fraudulent transaction covered under Section 43, 45, 50 and 66 of the IBC beyond the time-line stipulated under CIRP Regulation 35A – Prasant Chandra Rath (Suspended Director of Corporate Debtor) Vs. Surya Kanta Satapathy (RP) – NCLAT New Delhi Read Post »

RP is duty-bound to comply not only with the timelines under CIRP Regulation 35A but also that the opinion and determination required to be made in terms of sub-regulations (1) and (2) in respect of avoidance transactions – Nitesh Kumar More, RP of SPS Steels Ltd. Vs. SPS Steels Ltd. – NCLT Kolkata Bench

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The Adjudicating Authority held that we have taken a consistent stand that the RP is duty-bound to comply not only with the timelines under regulation 35A but also that the opinion and determination required to be made in terms of sub-regulations (1) and (2) therefore are important constituents before filing the applications in respect of avoidance transactions. As Adjudicating Authority, we are required to go by the RP’s determination and not on the views of the transaction auditor appointed by the RP.
The Adjudicating Authority also removed the Corporate Debtor from the array of Respondents holding that once a Resolution Professional is appointed for the Corporate Debtor, the Corporate Debtor is to be represented by the Resolution Professional or Liquidator as and when necessary.

RP is duty-bound to comply not only with the timelines under CIRP Regulation 35A but also that the opinion and determination required to be made in terms of sub-regulations (1) and (2) in respect of avoidance transactions – Nitesh Kumar More, RP of SPS Steels Ltd. Vs. SPS Steels Ltd. – NCLT Kolkata Bench Read Post »

Timeline prescribed in CIRP Regulation 35A is only directory and the timeline prescribed for transactions under Section 46 does not cover the transactions covered by Section 49 and 66 of the Code – Aditya Kumar Tibrewal RP Vs. Om Prakash Pandey, Suspended Director – NCLAT New Delhi

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Following are the questions which are arising for consideration in this Appeal:

i. Whether an Application by the Resolution Professional relating to a Transaction covered under Section 43, 45, 49 and 66 is mandatory to be filed within the period of 135th Day of the Insolvency Commencement Date and in event the Application is filed beyond such period, the same is liable to be rejected due to non-compliance of Regulation 35A of CIRP Regulations, 2016?

ii. Whether time period prescribed under Regulation 35A of the CIRP Regulations, 2016 is mandatory or directory?

iii. Whether Transaction claimed to be defrauding the Creditor under section 49 and fraudulent trading or wrongful trading within meaning of Section 66 can be questioned only within time period as prescribed under Section 46 i.e. one year or 2 years respectively and Application alleging defrauding the Creditors and transaction to be fraudulent trading or wrongful trading is liable to be rejected if it is filed beyond the period prescribed under Section 46 of the Code?

iv. Whether in the Application filed by the Appellant being I.A. No. 742 of 2020 there were any pleadings of fraud as contemplated by Section 49 and 66 of the Code?

v. Whether the Adjudicating Authority committed error in rejecting the Application being I.A. No. 742 of 2020?

Timeline prescribed in CIRP Regulation 35A is only directory and the timeline prescribed for transactions under Section 46 does not cover the transactions covered by Section 49 and 66 of the Code – Aditya Kumar Tibrewal RP Vs. Om Prakash Pandey, Suspended Director – NCLAT New Delhi Read Post »

Without following the timeline prescribed in CIRP Regulation 35A, the former Resolution Professional cannot seek any relief in respect of preferential transaction that too without providing any documents with reference to Preferential Transactions – The South Indian Bank Limited Vs. M/s Churakulam Tea Estate Pvt. Ltd. – NCLT Kochi Bench

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Without following the timeline prescribed in CIRP Regulation 35A, the former Resolution Professional cannot seek any relief in respect of preferential transaction that too without providing any documents with reference to Preferential Transactions – The South Indian Bank Limited Vs. M/s Churakulam Tea Estate Pvt. Ltd. – NCLT Kochi Bench Read Post »

The RP was duty bound to file the application for preferential transaction within time and also seek for urgent hearing of the application before the plan is approved – Santosh Choraria, RP of Suraj Fabrics Industries Limited Vs. Bipin Kumar Vohra – NCLT Kolkata Bench

/ 11 minutes of reading

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The RP was duty bound to file the application for preferential transaction within time and also seek for urgent hearing of the application before the plan is approved – Santosh Choraria, RP of Suraj Fabrics Industries Limited Vs. Bipin Kumar Vohra – NCLT Kolkata Bench Read Post »

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