2023 (3) TMI 896 - HC - Insolvency and Bankruptcy

Court Orders Refund of Transfer Fee, Grants Interest on Deposited Amount

The Court found the demand of transfer fee unsustainable under the resolution plan, directing the respondent to refund the amount. The challenge to the ... Seeking refund the sum received from the writ petitioner as transfer fee - impugned order has reached to the conclusion that the transfer fee was exempted under the resolution plan sanctioned by the National Company Law Tribunal and has found that the demand of the respondent No. 1 for transfer fee was unsustainable - HELD THAT:- In terms of the resolution plan, the company and resolution applicant were exempted for payment of transfer charges. Hon’ble Supreme Court in the matter of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT] has held that on approval of the plan, it becomes binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The legislative intent behind this is to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. In that judgment, it has also been held that 2019 Amendment in the Code was declaratory and clarificatory in nature and it has retrospective result. The writ petitioner is entitled to interest on the amount deposited in pursuance to the unsustainable demand letter dated 24.06.2019. Hence, considering the prevailing rate of interest, application is disposed off holding that writ petitioner is entitled to interest at the rate of 8% on the amount deposited towards the transfer charges in pursuance to the impugned demand letter from the date of deposit till the date of refund. Application dismissed. Issues Involved:The judgment involves issues related to the demand of transfer fee, exemption under a resolution plan, entitlement to recover transfer fee, interest on refunded amount, and applicability of legal principles regarding refund and interest.Summary:Issue 1: Demand of Transfer FeeThe appellants challenged the demand of transfer fee by the respondent, claiming it was exempted under the resolution plan sanctioned by the National Company Law Tribunal. The learned Single Judge found the demand unsustainable and directed the respondent to refund the amount received as transfer fee.Issue 2: Challenge to Refund DirectionThe respondent challenged the direction to refund the transfer fee, arguing for entitlement to recover it. However, the Court dismissed the challenge based on the clause in the resolution plan exempting the company and resolution applicant from transfer charges.Issue 3: Interest on Refunded AmountThe writ petitioner sought interest on the amount deposited towards transfer fee under protest. The Court found that the respondent was not entitled to recover transfer charges, leading the writ petitioner to deposit the amount under protest. Citing legal precedents, the Court held that the writ petitioner was entitled to interest at the rate of 8% on the deposited amount from the date of deposit till the date of refund.Conclusion:The judgment clarified the exemption of transfer charges under the resolution plan and upheld the direction to refund the transfer fee. It also recognized the writ petitioner's entitlement to interest on the refunded amount, emphasizing the obligation to reimburse lawful monies with accrued interest. The Court modified the original order to include the payment of interest and directed the refund of the amount along with the interest within six weeks.