TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal upholds Adjudicating Authority's orders on company petitions, moratoriums, and IRPs.</h1> <h3>M/s. Lepakshi Knowledge Hub Pvt. Ltd. (Shareholder of M/s. Lepakshi Heritage Wellness Village Private Limited) Versus Global Emerging Markets India Ltd., M/s. Lepakshi Heritage Wellness Village Private Limited, Mr. Hemendra Paliwal And M/s. Lepakshi Knowledge Hub Pvt. Ltd. (Shareholder of M/s. Lepakshi Science and Technology Park Private Limited) Versus Global Emerging Markets India Ltd., M/s. Lepakshi Science and Technology Park Private Limited, Mr. Hemendra Paliwal</h3> M/s. Lepakshi Knowledge Hub Pvt. Ltd. (Shareholder of M/s. Lepakshi Heritage Wellness Village Private Limited) Versus Global Emerging Markets India Ltd., ... Issues Involved:1. Jurisdiction of the Adjudicating Authority under Section 7 of the IBC, 2016.2. The nature of the Inter-Corporate Deposit (ICD) as a financial debt.3. Limitation period for filing the application under Section 7 of the IBC, 2016.4. The relevance of arbitration proceedings in the context of the IBC application.5. The impact of the Memorandum of Understanding (MoU) and other related agreements on the ICD.6. The validity of the recall notice issued by the Financial Creditor.7. The acknowledgment of debt in the balance sheets.8. The applicability of penalties under Sections 65 and 75 of the IBC, 2016.Detailed Analysis:1. Jurisdiction of the Adjudicating Authority under Section 7 of the IBC, 2016:The Appellant argued that the Adjudicating Authority failed to appreciate its jurisdiction under Section 7 of the IBC, 2016, and disregarded the arbitration proceedings. The Tribunal clarified that the Adjudicating Authority is only required to ascertain the existence of a financial debt and default. It cited the Supreme Court's decision in M/s. Innoventive Industries Ltd. vs. ICICI Bank & Anr., emphasizing that the insolvency resolution process begins upon default, irrespective of ongoing arbitration.2. The nature of the Inter-Corporate Deposit (ICD) as a financial debt:The Appellant contended that the ICD was part of an investment scheme and not a financial debt. The Tribunal upheld the Adjudicating Authority's finding that the ICD was an independent transaction and constituted a financial debt under Section 5(8) of the IBC, 2016. The Tribunal found force in the Financial Creditor's submission that the ICD was for meeting certain expenses and not for purchasing shares.3. Limitation period for filing the application under Section 7 of the IBC, 2016:The Appellant argued that the application was barred by limitation. The Tribunal noted that the ICD was dated 19.03.2012, and the recall notice was issued on 19.09.2020. The application was filed on 13.10.2021. The Tribunal held that the acknowledgment of the debt in the balance sheets from 2011-2012 to 2018-2019 extended the limitation period, making the application timely.4. The relevance of arbitration proceedings in the context of the IBC application:The Appellant claimed that the Adjudicating Authority ignored the arbitration proceedings. The Tribunal reiterated that the existence of arbitration proceedings does not bar the initiation of insolvency proceedings under the IBC, 2016. It emphasized that the IBC has an overriding effect as per Section 238.5. The impact of the Memorandum of Understanding (MoU) and other related agreements on the ICD:The Appellant argued that the ICD was part of a composite transaction under the MoU. The Tribunal found that the MoU was between the Financial Creditor and a separate legal entity, and the ICD was an independent transaction. It rejected the contention that the ICD was part of the investment scheme.6. The validity of the recall notice issued by the Financial Creditor:The Tribunal upheld the validity of the recall notice dated 19.09.2020, issued by the Financial Creditor. It noted that the Corporate Debtor had acknowledged the debt in its balance sheets and failed to repay the amount within the specified period.7. The acknowledgment of debt in the balance sheets:The Appellant contended that the debt was shown as 'other investments' and not as an ICD in the balance sheets. The Tribunal held that the acknowledgment of the debt in the balance sheets from 2011-2012 to 2018-2019 was sufficient to constitute an acknowledgment under Section 18 of the Limitation Act, 1963, extending the limitation period.8. The applicability of penalties under Sections 65 and 75 of the IBC, 2016:The Appellant argued for the imposition of penalties under Sections 65 and 75 for the Financial Creditor's malafide conduct. The Tribunal found no merit in this contention, as the Financial Creditor had established the existence of debt and default.Conclusion:The Tribunal dismissed both appeals, upholding the Adjudicating Authority's orders admitting the company petitions, declaring moratoriums, and appointing Interim Resolution Professionals. The Tribunal found no legal flaws in the Adjudicating Authority's decisions and held that the Financial Creditor had successfully established the existence of debt and default. The appeals were dismissed with no costs, and the connected interim applications were closed.
TaxTMI 
TaxTMI 
