It was held that mere mistake in the demand notice under section 8 of the Code would not render such notice defective, and if the Corporate Debtor were to question the validity of the demand, the burden would lie on the Corporate Debtor to show that it was adversely affected by the mistake. It was further held that the mere fact of quantum of debt being mis-stated would not ipso facto render that decision defective, as long as the minimum satisfactory figure is owed, since it is not the burden of the Adjudicating Authority to determine the quantum of debt. NCLAT clarified that, in such scenarios the Court would only invalidate the notice if injustice is caused to the debtor, if the failure to interfere would cause injustice to the debtor. The Appeal filed by the Appellant (Ex-Director & Shareholder of Corporate Debtor), against NCLT Ahmedabad Bench order dated 03.06.2020 admitting the application under section 9, was dismissed.
It is clear that IBC provides stringent action under section 65 against the person who initiates proceeding under the Code fraudulently or with mala fide intention, for the purpose other than the resolution of Insolvency or Liquidation under the Code. In order to levy a penalty under section 65 of the Code, a prima facie opinion is required to be arrived at- that a person has filed the petition for initiation of proceedings fraudulently or with malicious intent. Therefore, the NCLAT held that no penalty can be saddled either under section 65(1) or (2) of the Code without recording an opinion that a prima facie case is established to suggest that a person fraudulently and with dishonest intention filed the application for purpose other than the insolvency resolution or liquidation or with intent to defraud any person. NCLAT held that the Order dated 20th November 2019 passed by the Adjudicating Authority/NCLT Delhi Bench, admitting the petition filed U/S 7 of the Code needs no interference and the Appeal fails.
In M/s Shruti Impex v. M/s N.R Commercials Pvt. Ltd,
The NCLAT held that, where any person claiming to be an Operational Creditor is unable to adduce proof in the form of tax invoice, tax remittances, transportation documents, waybill and so on, to establish that the goods were, in fact supplied to the Corporate Debtor, in such a scenario, the person cannot claim relief under section 9 of IBC because of the failure to establish the relationship between Operational Creditor and Corporate Debtor as is required under the law. In the instant case, there are no signatures or identification of the person receiving the supplies, nor was there any evidence of transportation of the said supplies. The appellant failed to establish a buyer-seller relationship between her and the respondent and therefore, no relationship between the operation creditor and corporate debtor could be established. The Appeal filed by the Appellant (Operational Debtor) against order dated 18th February 2020 passed by the Adjudicating Authority dismissing the Application filed by M/s. Shruti Impex on the ground that a dispute existed between the Operational Creditor and Corporate Debtor, was dismissed.
In Hemant Sharma Resolution Professional of Global Softech Ltd,
NCLAT heard both the parties and said that the ground projected for exclusion of the lockdown restriction period from 25th March, 2020 till 15th September, 2020 has substance and the same deserves to be allowed in order to make the resolution process meaningful and result oriented. To remove any ambiguity, it is clarified that the extended period of 90 days beyond 180 days shall commence only after the prescribed period of 180 days is over. The NCLAT held that the period commencing from 25.03.2020 till 15.09.2020 shall be excluded while computing the period of 180 days for the purpose of bringing the CIRP. Also, the extended period of 90 days beyond 180 days shall commence only after the prescribed period of 180 days comes to an end. The order dated 15th October 2020 by the Adjudicating Authority (NCLT, Ahmedabad Bench) allowing exclusion of only 68 days w.e.f. 23rd March 2020 to 31st May 2020) was set aside.
In UCO Bank v. Mr. G. Ramachandran RP of M/s. Sai Regency Power Corporation Pvt. Ltd,
The Respondents found out that the Appellant Bank had adjusted certain amounts which ideally it should not, when section 14 of IBC becomes applicable and CIRP is initiated. As a result, the Respondent decided to write a letter to the Bank acknowledging this irregularity. An impugned order passed by the Adjudicating Authority in view of the same under section 14 of the Code was adhered to. NCLAT held that, once CIRP was initiated and section 14 of IBC applied, Fixed Deposit Adjustment with demand loans by banks cannot be maintained. Lack of knowledge of initiation of CIRP shall not be relevant in such case. The order dated 29th May 2020 passed by the Adjudicating Authority for refund of Rs.2,27,94,706/- adjusted during CIRP by the Appellant Bank from Fixed Deposits of the Corporate Debtor, is required to be maintained. The Appeal was dismissed.
In Panna Pragati Infrastructure Pvt. Ltd. & Anr v. Amit Pareek and Ors
NCLAT held that in exceptional circumstances, the timeline prescribed under section 12 of IBC can be relaxed to allow a Prospective Resolution Applicant to submit a second/revised Resolution Plan. It further held that in the instant case, Appellant submitted the Resolution Plan only two days after the revised plan and well within the 180 days or ordinary timeline of CIRP under IBC. There was no justification for its rejection by the Resolution Professional who was duty bound to place the same before the CoCs especially when the ordinary CIRP period of 180 days was still subsisting. Therefore, the ground urged by Respondents that the time could not be extended by this Appellate Tribunal in appropriate cases is not in tune with the law interpreted by the Hon’ble Apex Court more so as the same was well within the ordinary timelines and subsequently the Resolution Professional himself had sought extension of 90 days from the Adjudication Authority for placing the Resolution Plan approved by Committee of Creditors before it for approval. The impugned orders were set aside and the appeals were allowed. The CIRP is directed to resume from the stage of consideration of the Resolution Plans. The period of judicial intervention shall stand excluded while computing the extended timelines of 270 days.
In Ramesh Kymal v. Siemens Gamesa Renewable Power Pvt. Ltd.
NCLAT discussed the issue of whether an application for initiation of CIRP of a Corporate Debtor in respect of default committed before 25.03.2020 but filed before 05.06.2020 would be maintainable in view of the express bar created by the section 10A or not. It held that in the present case the Appellant- Operational Creditor has specified 30th April, 2020 as the date of default which clearly goes beyond the cut-off date. Therefore, the Adjudicating Authority was perfectly justified in rejecting the application under section 9 of the IBC at the instance of Appellant – Operational Creditor as the default has occurred after the cut-off date and the bar imposed under the amended section 10A was clearly attracted. The appeal was dismissed.
In Volkswagen Finance Pvt. Ltd v. Shree Balaji Printopack Pvt Ltd,
The NCLAT held that the mere fact that a charge was registered through a hypothecation registration with the Regional Transport Office in accordance with section 51of the Motor Vehicles Act, 1988 would not accord the creditor, the status of secured creditor with respect to liquidation proceedings under the Code, unless such charge has been registered under section 77 of the Companies Act, 2013. The order dated 08.11.2019 passed by the Adjudicating Authority (NCLT, New Delhi Bench-III) dismissing the application filed by the Appellant against Liquidator rejecting the claim as secured financial creditor was upheld and the Appeal was dismissed.
