Landmark Judgments by the Hon’ble NCLAT – 15th to 30th April, 2022
- Pramod Kumar Mittal Vs. UCO Bank (DOJ: 18.04.2022)
The Appellant in this case is a Personal Guarantor of the Corporate Debtor who filed an Appeal against the Order passed by the Hon’ble NCLT in an Application under Section 95(1) of the Code. The Appellant had not filed any reply in the matter before the Hon’ble NCLT and preferred to file the Appeal stating that the Impugned Order records ‘finding of default’. The Hon’ble NCLAT observed that the RP under Section 99 of the Code needs to file a report first on the bases of which the Section 95(1) Application may be admitted under Section 100. The Hon’ble Appellate Tribunal further stated that the ‘finding of default’ must not be treated as acknowledgement of default but acknowledgement of submissions by the Applicant, and that the Hon’ble NCLT must independently consider the question of default while passing the Order under Section 100 of the Code.
- Steel Strips Wheels Ltd Vs. Shri Avil Menezes, RP of AMW Autocomponent Ltd. & Ors. (DOJ: 18.04.2022)
In facts of case, the Resolution Plan of the Appellant was approved by the CoC with 98.55% and application for approval of the Plan was pending adjudication before the Hon’ble NCLT. However, in meantime the Hon’ble NCLT passed an order for consideration of the Resolution Plan submitted by another Resolution Applicant as well, who submitted it plan after the period for submitting EOI and the name of said RA was not included in the final prospective list of the RAs. Being aggrieved, the Successful Resolution Applicant preferred the instant appeal.
The Hon’ble NCLAT relying on the judgment of Hon’ble Supreme Court in the matter of Ebix Singapore Pvt. Ltd. Vs. CoC of Educomp Solutions Ltd. & Anr. held that late and unsolicited bids by RAs after the original bidder becomes public upon passage of the deadline for submission of the plan is a reason for deviation of the original objective and timeline. Further in absence of any valid reason given by the Hon’ble NCLT permitting the consideration of plan of another RA shall be breaching both timeline as well as the finality of the Resolution Plan of the Appellant which was approved by the CoC. Hence, after approval of the Resolution Plan by the CoC by requisite vote and after expiry of CIRP, it is not open for the CoC to contend that it is ready to consider the plan of another RA which according to it may be better plan.
- Gaurav Dilipraj Panwar Vs. M/s. Raksha Bullion (DOJ: 20.04.2022)
The Appeal was filed against the Section 9 Application admitted by the Hon’ble NCLT. The parties in this matter dealt in buying and selling of gold bars against which certain outstanding amount was due and unpaid by the Corporate Debtor. The Appellant contended that the amount reflected in the balance sheet, against which amount the default was caused, reflected ‘as an advance’ and did not amount to Operational Debt. The Hon’ble NCLAT observed that the payments between the parties were not made invoice wise and the invoices that were raised reflected outstanding amount against services of Operational Creditor which amount to Operational Debt under Section 5(21) of the Code.
- Pramod Sharma Vs. Karanaya Heart Care Pvt. Ltd. (DOJ: 21.04.2022)
In present case the Appellant had paid an amount of Rs. 1 Cr. as Share Application Money, though in leu of same no shares were allotted to him. The amount was later returned to the Appellant without interest, against which the Appellant filed a Section 7 Application before the Hon’ble NCLT. NCLT rejected the said application, subsequent to which the Appeal was filed. The Hon’ble NCLAT upheld the decision of the Hon’ble NCLT stating that the principal amount so paid by the Appellant was returned and the share application money does not fall under any Clauses of Section 5(8) of the Code. The reason being no debt was disbursed and no time value of money had been attached by the Appellant in the transaction. Therefore, the claim of the Appellant is not a financial debt and no Section 7 Application could be triggered in this regard.
- Ramesh Chander Agarwala Vs. State Bank of India & Anr. (DOJ: 22.04.2022)
The Hon’ble NCLAT heard two Appeals filed by two personal guarantors of the Corporate Debtor in the present matter against a Section 95 Application. The Appellants were provided a copy of the Application but were not given the limited notice. Subsequently the Resolution Professional was appointed to submit a report. The Hon’ble NCLAT held that personal guarantors should also be given a limited notice to file their Objections.
- Sri Bijay Kumar Agarwal Vs. State Bank of India (DOJ: 27.04.2022)
In present case the Hon’ble NCLAT held that in case if any request is made by a Borrower for one-time settlement, it shall tantamount to acknowledgement under Section 18 of the Limitation Act. Further, it concluded that upon an acknowledgement made by the Principal Borrower within three years period from the date of account being declared NPA, there shall be fresh period of limitation available to the Financial Creditor. Thus, an Application under Section 7 of Code, filed within three years from the date of acknowledgement cannot be held to be barred by time. Moreover, the limitation for proceedings under Section 7 are independent and separate from proceedings under the Recovery of Debts Due to Bank and Financial Institutions Act, 1993. Hence, Section 7 Application is to be filed within a period of limitation as prescribed under Article 137 of the Limitation Act.