Landmark Judgments by the Hon’ble NCLAT from 1st to 15th December, 2022.
- BANKEY BIHARI INFRAHOMES PVT. LTD. VS. MR. ALOK KUMAR KUCHCHAL, LIQUIDATOR, RATANDEEP INFRASTRUCTURE PVT. LTD. (NCLAT – DELHI) [DOJ: 06.12.2022]
In the present case the Appellant was allowed to propose a scheme of compromise and arrangement u/s 230 of the Companies Act, 2013 by the AA, after an unsuccessful CIRP. However, the Appellant failed to submit the requisite proposal within the prescribed period of time pursuant to which, the Respondent (Liquidator) proceeded with the sale of the assets of CD via auctions. In the meanwhile, the appellant submitted their proposal and approached the AA seeking a stay on the auction notice which was rejected.
The issue before the NCLAT was whether the AA was right in rejecting to stay the auction notice and refusing to direct the Respondents to consider Appellant’s proposal.The Appellant contended that the delay in submission was due to incomplete information supplied by the Respondent and the amount offered by Appellants was higher than offered by the highest bidder. The Respondents had alleged that the Appellant was colluding with the ex-management of the CD and creditors of the CD whose claims were rejected during CIRP and the acceptance of their proposal would constitute backdoor entry of ineligible parities which has been prohibited by the Apex Court in “Arun Kumar Jagatramka vs. Jindal Steel and Power Limited”.
NCLAT upheld the decision of the AA observing that the Appellant was provided reasonable opportunity to submit a credible scheme and had failed to do so. The Hon’ble Tribunal further opined that the proposed scheme attempted to inflate the pay outs to related parties.
- MR. AROON KUMAR AGGARWAL V M/S ABC CONSULTANTS PVT. LTD. (NCLAT- DELHI) [D.O.J. – 01.12.2022]
In the present case, the Appellant is an ex-employee of the Respondent/Corporate Debtor and has filed an Application under Section 9 of the Code, 2016 as an Operational Creditor after sending a demand notice under Section 8 of the Code, 2016 to not even avail a response from the Respondents. The Respondents in the present instance stated the existence of a dispute under section 8(2). The operational debt claimed by the appellant relates to the appellant’s salary, flexible pay basket, gratuity and bonuses. The Respondents contended that the Appellant is being terminated in accordance with the employment agreement which stipulates that in case of termination of employment due to fraud or breach of trust no severance is due to the employee. The AA accepted the Respondent’s plea regarding the existence of a dispute in terms of the Operational Debt thus dismissing the Petition.
The Hon’ble NCLAT noted that the amount claimed by the appellant is not severance pay but is the salary and other perks (like gratuity and bonus) which became due and payable at the moment of termination of the employment and dispute pertaining to the same exists, the appellant has not claimed to be owed the severance pay by the respondent. The Hon’ble NCLAT held that for a debtor to take the plea of pre-existing dispute u/s 8(2) the dispute must relate to the claim made by the operational creditor, mere existence of a dispute is not blanket protection under section 8(2)(a) of the I&B Code. The appeal was allowed holding the impugned order to be contrary to law.
- SHAILAJA VAIBHAV PATIL VS. CMA HARSHAD S. DESHPANDE. [NCLAT – NEW DELHI] (DOJ- 05.12.22)
In the facts of the instant case, the Resolution Plan was submitted by the Respondent 5 & 6 (Resolution Applicants), which was rejected by the CoC. Consequently, the AA directed the initiation of liquidation proceedings under section 33 of the IBC, 2016. During the pendency of liquidation application, the Applicants via the assignment deed had acquired 100% voting share in the CoC. An Appeal was made in the Tribunal to set aside the order initiating Liquidation and send the case back to CoC so that they can review the prior Resolution Plan.
Issue for consideration was whether the NCLAT can still turn the clock back, even after the members of CoC passed a resolution to liquidate the Corporate Debtor and allowed the Application under Section 33 of the IBC. Further the Appellant also mentioned that since there is no express provision in Code to set aside the Liquidation Order Rule 11 of NCLT Rules, 2016 may be invoked.
The NCLAT relying upon “Mr. Sharad Sangi Vs. Vandana Garg & Ors., CA (AT) (Ins.) No. 461 of 2018” and “St. Maharashtra Vs. Videocon Industries Ltd.& Ors”, held that the ratio of precedents mentioned is not applicable since there is a change in the voting share. Further the NCLAT dismissed the contention to rely on Rule 11 of the NCLT Rules, since the Hon’ble Apex Court has repeatedly held on several cases that the IBC,2016 is comprehensive on its own and if there is no provision to address the particular circumstance at hand, the Tribunal does not believe it is appropriate to apply Rule 11 of the NCLAT Rules 2016.
- AGARWAL COAL CORPORATION PVT. LTD. V. NILKANTH CONCAST PVT. LTD. (NCLAT-NEW DELHI) [D.O.J.- 5.12.2022]
The appellant had offered respondent supply of Indonesian coal for consideration and certain terms and conditions. The quality of the coal was categorically agreed between the parties. After supplying a big quantity of coal on different occasion, the respondent raised an issue about the quality of coal and insisted on further testing. The respondent, after multiple reminders stopped making the outstanding payments to the appellant. Thereafter, appellant filed an application u/s 9 of the code before Adjudicating Authority. The court rejected the application. Thereafter, an appeal was filled.
The appellant submits that the objection raised on quality of coal was only because it was inspected at appellant’s port and not at discharge port. He contended that demand notice under Section 8 was issued by a person who was not authorized by the Board. Further, the dispute was insignificant to be treated pre-existing dispute. The NCLT held the Appellant was not in a position to satisfy the Adjudicating Authority on the validity of the demand notice as absence of proper authorization for issuance of demand notice under Section 8 of the code. Further it was also held that there were pre-existing disputes between the parties. Therefore the appeal was dismissed.