Kushal Ltd. Vs. Kartik Baldwa (DOJ 21.07.2022)
In the instant case the Resolution Plan of the Appellants was duly approved by the Hon’ble NCLT vide order dated 27.02.2019. However, after approval of the same, the Appellant filed an Application before the Ld. Adjudicating Authority (AA) to recall its order dated 27.02.2019 stating that the RP in its Information Memorandum had misrepresented the production capacity of the CD. That on account of misrepresentation the appellants are under no obligation to comply with the resolution plan. However, the AA held that the RP did not make any misrepresentation. Further, the AA concluded that it has no power to recall its own orders and none of the rules and regulations under IBC or Rules of NCLT, 2016 permit to exercise such power. Aggrieved by the aforesaid order, an appeal was preferred before the Hon’ble NCLAT. One of the questions that arose consideration before the Hon’ble NCLAT was whether the order passed by the Adjudicating Authority refusing to recall the order passed in I.A. No. 224 of 2018 dated 27.02.2019 be sustained?
The Hon’ble NCLAT held that the Tribunal is competent to recall its own orders & relied on the judgment of the Hon’ble Supreme Court in United India Insurance Co. Ltd. vs. Rajendra Singh wherein it was held that “No court or tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim”.
Rajiv Shrivastava Vs. Manish Kumar Gupta, RP, Three C Projects Pvt. Ltd. & Anr. (D.O.J 21.07.2022)
In the present case the Resolution Professional (RP) had resigned but with a condition that he shall continue as ad-hoc Resolution Professional till new arrangement is made. The issue that arose consideration before the Hon’ble NCLAT was whether the Resolution Professional who has submitted resignation is entitled to carry on any further proceedings or not and whether he can hold or convene any meeting?
The Hon’ble NCLAT held that the Resolution Professional who has submitted resignation is not entitled to carry on any further proceeding nor he can hold or convene any meeting. Since the RP has resigned and a new RP is to be chosen by the Committee of Creditors (CoC) there cannot be any convening of meetings by earlier RP. However, since the ongoing CIRP cannot be delayed due to the said reason, the Appellate Tribunal appointed an officer to conduct a meeting of the COC within a period of one month for the purpose appointment of a new Resolution Professional.
Chandriah Vs. Sunil Kumar Agarwal, RP of Digjam Ltd. (DOJ 22.07.2022)
In the present case the Appellant proposed to purchase surplus land available at the Mills premises of the Corporate Debtor at Jamnagar (Gujarat) and subsequently deposited an earnest money of 7 Crores. In the meantime, CIRP was initiated against the Corporate Debtor. Subsequently, the Appellant filed its claim under Form- C as Financial Creditor. However, the RP rejected the same stating that the Appellant had remitted funds to the CD as interest free advance that was to be adjusted against sale consideration for proposed sale of land which shall not fall under “Financial Debt”. Aggrieved by the same, an Application was filed before the Hon’ble NCLT, and the same was dismissed. Thereafter, the RP filed an Application for approval of Resolution Plan and vide order dated 27.05.2022, the same was approved. Hence, this Appeals.
One of the questions that arose consideration before the Hon’ble Appellate Tribunal was whether the EMD deposit by the Appellate is a financial debt as per Section 5(8) of the Code. The Hon’ble refereed to the definition of financial debt under Section 5(8) of the Code and the Judgments of the Hon’ble Supreme Court in “Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited Vs. Axis Bank Limited and Ors” (2020 8 SCC 401) & “Pioneer Urban Land and Infrastructure Ltd. Vs. Union of India” (2019) 8 SCC 416 & observed that for a debt to be financial debt, essential condition to be proved is that the debt is disbursed against the consideration for the time value of money. Further relying on “Sach Marketing Pvt. Ltd. Vs. Resolution Professional of Mount Shivalik Industries Ltd” the Appellate Tribunal observed that the in instant case the amount disbursed by the Appellant was only a payment of Earnest Money which was to adjusted in the sale of the land. That the disbursement of amount was not in consideration for the time value of money and therefore not a financial debt. Accordingly the appeal was dismissed.
Jitendra Kumar Singh Vs. M/s Vishakarma Tool Works (D.O.J 25.07.2022)
In the instant case, the Hon’ble NCLT, New Delhi admitted the Company Petition field against Mor Mukat Marketing Pvt. Ltd. (Corporate Debtor) and thereby initiated CIRP. The Appellant, one of the suspended Directors being aggrieved by the order of admission filed an appeal before the Hon’ble NCLAT. One of the issues that arose consideration before the Hon’ble NCLAT was whether the proceedings initiated under Section 9 are per se illegal because mandatory notice, provided under Section 8 of the Code was not served upon the corporate debtor at its registered office address.
The Hon’ble NCLAT held that serving a notice against outstanding amounts is an essential ingredient as per Section 8 & 9 of the Code. That the demand notice has to be delivered to the corporate debtor at the registered office by hand, registered post or speed post with acknowledgement due “or” by electronic email service to the Whole Time Director or designated partner or key managerial personnel, if any, of the corporate debtor. That service upon one of the entities is sufficient for compliance of Section 8(2) of the Code. That in the instant case the notice was served upon the Appellant who is the Director of the Company. Accordingly, the order of the Hon’ble NCLT was upheld.
Sumat Kumar Gupta, RP, M/s Vallabh Textiles Company Ltd. Vs. M/s Vardhman Industries Ltd. (D.O.J. 27.07.2022)
In the instant case, one of the Financial Creditors (FC) of the Corporate Debtor (CD) filed its claim before the RP on the last date of submission of claims as per the public announcement. Thereafter, the RP requested for additional documents to be submitted. Since the FC failed to submit the additional documents, the RP rejected the claims of the FC. Thereafter, the FC yet again field its claims before the RP and the same was again rejected stating that since the earlier claim submitted earlier within the period prescribed by the public announcement had already been rejected, no belated claim can be filed. Aggrieved by the same, the FC filed an Application before Hon’ble Adjudicating Authority (AA). The AA based on the facts and documents presented, vide its order directed RP to reconsider and evaluate the claim of the FC. That while passing the aforesaid order, the AA also mentioned the lack of professionalism on part of the Appellant/Resolution Professional in analyzing the admissibility of claims before him.
Aggrieved by the remarks of the Hon’ble AA, the RP/ Appellant field an appeal before the Hon’ble NCLAT. The Hon’ble NCLAT while upholding the order of the AA stating that there has been lack of professionalism and failure in discharge of duties on the part of RP in analyzing the admissibility observed that Regulation 12 of CIRP does not lay down any specific embargo on a creditor who on having failed to satisfy the RP with respect to the claims submitted by him under Regulation 12(1) from refiling his claim under Regulation 12(2) as long as it is done on or before the 90th day of the insolvency commencement date.