TaxTMI Updates e-Newsletter
Jun 08,2021

Scope of supply - actionable claim - value of supply in betting, gambling and horse racing - nexus between taxable event and measure of tax - consideration as measure of tax - totalisator service and commission as consideration - ultra vires subordinate legislation for exceeding enabling Act

Scope of supply - actionable claim - value of supply in betting, gambling and horse racing - ultra vires subordinate legislation for exceeding enabling Act - nexus between taxable event and measure of tax - Rule 31A(3) of the Central Goods and Services Tax Rules is ultra vires the Central Goods and Services Tax Act insofar as it makes the petitioners liable to pay GST on the total amount paid into the totalisator. - HELD THAT: - Rule 31A(3) declares the value of supply of an actionable claim in the form of chance to win in betting, gambling or horse racing to be 100% of the face value of the bet or amount paid into the totalisator. The CGST Act demands that a tax have a taxable event (supply), a taxable person, rate and measure with a nexus between the taxable event and the measure. The Rule, by directing tax on the entire amount paid into the totalisator, severs that nexus because the totalisator merely holds punters' money in a fiduciary capacity and the race club's supply is the totalisator service for which it receives commission. Treating the full bet amount as the value of supply converts monies held in trust into consideration for supply without any statutory basis in the charging provisions of the Act. Under the principles of judicial review of subordinate legislation, a rule which does not conform to the object and scheme of the enabling Act or which exceeds delegated power is liable to be struck down. Applying these principles, Rule 31A(3) travels beyond the statute by imposing tax on an amount that is not consideration flowing to the supplier and hence is ultra vires the Act insofar as it concerns the petitioners. [Paras 25, 26, 34, 35, 36]

Rule 31A(3) is struck down as ultra vires the CGST Act in its application to the petitioners.

Totalisator service and commission as consideration - consideration as measure of tax - nexus between taxable event and measure of tax - The petitioners are liable to pay GST only on the commission they receive for providing the totalisator service and not on the total amount collected in the totalisator. - HELD THAT: - The factual and legal analysis establishes that the totalisator pools bets, retains a fixed administration charge (commission) and redistributes the balance to winners; the race club does not win or lose from the pool. Under the Act, 'consideration' for a supply is the payment made in respect of that supply; the petitioners' consideration for supplying the totalisator service is the commission retained. The amounts transferred through the totalisator are held briefly in a fiduciary capacity and are not consideration for any supply by the petitioners. Analogous service providers (e.g., brokers, agents) are taxable on their commission/income and not on monies passing through them. Consequently, GST under the Act, properly construed, applies to the commission earned by the petitioners and not to the entire bet amount placed into the totalisator. [Paras 25, 26, 28, 34, 36]

GST liability of the petitioners is restricted to the commission earned for the totalisator service, and not on the total receipts collected in the totalisator.

Final Conclusion: Writ petitions allowed; Rule 31A(3) of the CGST Rules (and corresponding KSGST provision and related circular, insofar as they apply to the petitioners) quashed as ultra vires; petitioners liable to GST only on the commission they receive for operating the totalisator and are entitled to consequential relief.

IGST refund - cess refund - interim relief under Section 151 of the Code of Civil Procedure, 1908

IGST refund - cess refund - interim relief under Section 151 of the Code of Civil Procedure, 1908 - Interim application for release of IGST refund and cess allowed subject to curing of procedural deficiencies - HELD THAT: - The Court entertained the petition seeking interim relief for release of amounts claimed as IGST refund and cess. By order dated the hearing convened via video-conferencing, the Court allowed CM No.17606/2021 on the condition that the petitioner shall cure the deficiencies referred to in the captioned application within three days of the resumption of the normal and usual work pattern of the Court. The Court issued notice in the writ petition and directed service to be accepted by counsel appearing for the respondents. The respondents were directed to file counter-affidavit(s) within five weeks and the petitioner may file rejoinder(s) before the next date of hearing. The matter was listed for further hearing on the specified date.

Interim relief application allowed on condition of curing stated deficiencies; notice issued; counter-affidavits and rejoinders to be filed within prescribed time; matter listed for further hearing.

Final Conclusion: Interim application for release of claimed IGST refund and cess was permitted on a conditional basis (curing of deficiencies); procedural directions issued for filing of pleadings and the matter listed for further hearing.

Anticipatory bail under Section 438 Cr.P.C. - interim bail - conditions of bail - cooperation with investigation - economic offence - liberty to move cancellation of bail

Anticipatory bail under Section 438 Cr.P.C. - interim bail - conditions of bail - cooperation with investigation - liberty to move cancellation of bail - Interim anticipatory bail granted to the petitioner subject to conditions - HELD THAT: - The petition for anticipatory bail in respect of offences registered under the Central Goods & Service Tax Act, 2017 was considered on the basis of submissions that the petitioner is a 53 year old housewife with no criminal antecedents, that her son had been arrested and his statement implicated him as managing the affairs of certain firms in which the petitioner was a partner or proprietor. In view of these facts and the petitioner's undertaking to cooperate, the Court directed that in the event of arrest the petitioner be released on interim bail upon furnishing personal bonds and surety to the satisfaction of the Arresting/Investigating Officer. The petitioner is required to join the investigation whenever called and to abide by the conditions provided under Section 438(2) Cr.P.C. The respondent complainant was permitted liberty to apply for cancellation of the interim bail if the petitioner fails to cooperate with the investigation.

Pending further hearing, interim anticipatory bail granted on furnishing bonds and surety, subject to joining investigation and complying with Section 438(2) Cr.P.C.; respondent granted liberty to move for cancellation for non cooperation.

Final Conclusion: Interim anticipatory bail granted to the petitioner on conditions of bond/surety and cooperation with investigation; liberty given to the respondent to move for cancellation of bail if the petitioner does not cooperate.

Procedure for refund claim and issuance of deficiency memo - acknowledgment in FORM GST RFD-02 - deficiency communication in FORM GST RFD-03 - refund from electronic cash ledger - non-compliance with statutory time limit for acknowledgment - remand for fresh consideration due to procedural default - principles of natural justice

Procedure for refund claim and issuance of deficiency memo - acknowledgment in FORM GST RFD-02 - deficiency communication in FORM GST RFD-03 - non-compliance with statutory time limit for acknowledgment - refund from electronic cash ledger - remand for fresh consideration due to procedural default - Validity of the respondent's order rejecting the petitioner's claim for refund from the electronic cash ledger in the absence of compliance with the statutory acknowledgment and deficiency-procedure. - HELD THAT: - The court examined the statutory scheme under Rule 90(1) read with para 2(d) of Circular No.79 which contemplates issuance of an acknowledgment in FORM GST RFD-02 within 15 days for refund claims relating to the electronic cash ledger, and, if deficiencies exist, communication of such deficiencies in FORM GST RFD-03 requiring rectification and a fresh application. The writ petition challenged the respondent's order rejecting the refund without following that procedure and without issuing the requisite acknowledgment within the prescribed period. The court found a default in compliance with the procedure (failure to issue FORM GST RFD-02 within 15 days) and noted that the statutory scheme prescribes rectification by way of a deficiency communication rather than immediate rejection. In consequence of this procedural default, the court set aside the impugned order and remanded the matter to the respondent to deal with the petitioner's refund request afresh and in accordance with law.

Impugned order set aside; matter remanded to the 1st respondent to decide the refund claim in accordance with law within two to three weeks from 25.11.2020.

Final Conclusion: Writ petition allowed; the order rejecting the refund claim is set aside for failure to follow the statutory acknowledgment and deficiency procedure, and the matter is remitted to the authority for fresh disposal in accordance with law within the time directed; no order as to costs.

Seizure and release of title deeds under search powers - Transmission of appraisal report to Assessing Officer to expedite assessment proceedings - Valuation to determine provisional attachment/security in tax searches - Provisional attachment of immovable property as security pending assessment

Transmission of appraisal report to Assessing Officer to expedite assessment proceedings - Seizure and release of title deeds under search powers - Direction to submit the appraisal report of the search to the petitioners' Assessing Officer within a specified time to facilitate completion of assessment proceedings. - HELD THAT: - The Court directed that the immediate procedural step required to expedite concluding the assessment is transmission of the appraisal report prepared in consequence of the search. The officer in charge of the search was ordered to submit the appraisal report to the petitioners' Assessing Officer within ten days so that the AO can proceed with the assessment and afford the petitioners an opportunity to respond to any proposed additions. This direction follows from the Court's view that appraisal-report transmission is necessary for timely completion of assessment proceedings and for the AO to examine any alleged undisclosed cash component in the ordinary assessment process rather than by indefinitely retaining title deeds. [Paras 3]

Appraisal report to be submitted to the petitioners' Assessing Officer within ten days; notice issued and matter listed for further hearing.

Valuation to determine provisional attachment/security in tax searches - Provisional attachment of immovable property as security pending assessment - Direction to have the remaining properties valued so as to ascertain the extent of security available to the revenue by way of provisional attachment/seizure. - HELD THAT: - The Court directed that the respondents cause valuation of the seven properties referred to in the proceedings (distinct from the ten properties mentioned in the title-deed issue) so that the quantum of security available to the revenue by way of provisional attachment or seizure can be ascertained. The direction is procedural: a valuation will inform parties and the Court about the extent to which the revenue is secured, and assist in the management of provisional measures pending completion of assessment. This is an administrative direction to be carried out by the revenue in aid of adjudication and enforcement. [Paras 3]

The respondents to get the seven properties valued to ascertain the security available; compliance directed.

Final Conclusion: The Court issued directions for prompt procedural steps: the appraisal report of the search is to be transmitted to the petitioners' Assessing Officer within ten days, the specified properties are to be valued to determine security available to the revenue, notice was issued and the matter listed for further hearing; timelines for filing of pleadings were fixed.

Release of seized documents - prerequisite representation to authority - maintainability of writ petition - misnomer of public authority - direction to respondent contingent on prior application

Prerequisite representation to authority - maintainability of writ petition - direction to respondent contingent on prior application - Petition seeking return of documents seized in search is not maintainable when no prior representation or application for release was made to the appropriate income-tax authority. - HELD THAT: - The Court recorded the respondent's plea in the counter-affidavit that the petitioner had not made any representation to the appropriate officer for release of the seized documents. The Court held that it is mandatory for a petitioner to approach the respondent with an appropriate application before seeking a writ directing release of seized material. In the absence of any such representation, the Court declined to entertain the writ petition and refrained from issuing the relief sought. [Paras 2, 3]

Writ petition is not maintainable for want of prior representation to the appropriate authority and is therefore dismissed.

Misnomer of public authority - maintainability of writ petition - Incorrect designation or naming of the respondent authority in the petition (misnomer) was noted and relied upon as a factor in declining relief. - HELD THAT: - The respondent raised a preliminary objection that there is no designation called 'Commissioner of Income Tax-I (Admin.)' as described by the petitioner and pointed out that no representation was made to the appropriate officer, namely the Commissioner of Income Tax, Central Circle-I, Chennai. The Court observed that where the petitioner has failed to make an application to the proper authority and has misdescribed the respondent, the writ cannot be entertained. [Paras 2, 3]

Petition cannot proceed when the respondent is misdescribed and no application was made to the appropriate officer.

Final Conclusion: The writ petition for return of seized original documents was dismissed as not entertainable because the petitioner had not made the requisite representation to the appropriate income-tax authority and had misdescribed the respondent; no costs.

Quashing of auction sale notice - Infructuous writ petition - Disposal as infructuous - Secondary charge - Followance of earlier coordinate bench order

Quashing of auction sale notice - Infructuous writ petition - Secondary charge - Writ petition seeking quashing of the Auction Sale Notice dated 29.0.2012 was disposed of as infructuous following an earlier Division Bench order in WP No.8339 of 2014 where, on similar facts, the petition was dismissed as infructuous because no auction had been conducted. - HELD THAT: - The petitioner sought quashing of an Auction Sale Notice. The Court considered the earlier Division Bench order dated 08.01.2019 in WP No.8339 of 2014, in which the same petitioner had challenged a sale notice and the petition was dismissed as infructuous after it was submitted that no auction had taken place pursuant to the notice. Given the similarity of facts between the present petition and the earlier matter, the Court applied the same reasoning and followed the Division Bench's decision. As a result, the present writ petition was held to be infructuous and disposed of on that basis. [Paras 4, 5]

The writ petition is dismissed as infructuous and disposed of; no costs; connected miscellaneous petition closed.

Final Conclusion: The petition challenging the Auction Sale Notice is dismissed as infructuous by following the earlier Division Bench order; no costs and connected miscellaneous petition closed.

Deduction under section 10B - Deduction under section 10A - Approval under Explanation 2(iv) to section 10B - Alternative claim consideration - Tribunal's power to admit additional grounds and remand - Exercise of revisional power under section 263

Tribunal's power to admit additional grounds and remand - Alternative claim consideration - Admission of additional grounds seeking alternative relief under section 10A was permitted and the additional grounds were admitted. - HELD THAT: - The Tribunal held that the additional grounds raising an alternative claim under section 10A did not require fresh evidence and could be adjudicated on the record. Relying on the principle that the Tribunal's powers under the statute are wide enough to permit consideration of grounds arising while the appeal is pending, the Tribunal applied the reasoning in NTPC Ltd and the clarificatory direction in the revised order of the High Court in Regency Creations (as explained in Fast Booking) to permit admission of the amended grounds and entertain the alternative plea without remittal for new material. [Paras 11]

Additional grounds for alternative claim under section 10A admitted.

Deduction under section 10A - Exercise of revisional power under section 263 - The impugned order was set aside and the matter was remanded to the Assessing Officer to examine the assessee's claim for exemption under section 10A. - HELD THAT: - The Tribunal found it just and proper, in view of similar decisions of the High Court and coordinate benches and the absence of need for fresh material, to remit the matter for fresh consideration of entitlement under section 10A. The Tribunal set aside the order confirmed under section 263 and directed the Assessing Officer to consider the alternative claim under section 10A and to take a fresh view on related contentions; in consequence the Tribunal did not adjudicate the merits of the section 10B contention or the invocation of section 10B(7) read with section 80IA, leaving those issues open for the Assessing Officer's fresh decision. [Paras 14]

Impugned order set aside and issue remanded to the Assessing Officer to examine claim under section 10A; other contentions left open for fresh consideration.

Final Conclusion: Appeal allowed for statistical purposes: additional grounds to claim relief under section 10A admitted and the matter remanded to the Assessing Officer for fresh consideration of the section 10A claim; merits of the section 10B and related contentions left open.

Arm's Length Price - Specified Domestic Transaction - Transfer pricing provisions prevail over general deductibility provisions - Deductibility under section 37(1) of the Act - Commensurate benefit test for intra-group services

Arm's Length Price - Specified Domestic Transaction - Commensurate benefit test for intra-group services - Deductibility under section 37(1) of the Act - Whether the Commissioner (Appeals) was justified in deleting the transfer-pricing adjustment made by the AO/TPO to disallow management fees paid to an associated enterprise for assessment year 2015-16 by treating the ALP as nil. - HELD THAT: - The Tribunal considered the single substantial question of the ALP of management fees paid to Asia Investment Pvt. Ltd. The AO/TPO treated the payments as shareholder services and, finding no invoices or specific evidence of services, determined the ALP as nil. The CIT(A) deleted the adjustment by placing reliance on this Tribunal's earlier decisions in the assessee's own cases for preceding assessment years (notably A.Y. 2013-14 and A.Y. 2014-15), which had examined similar evidence including invoices, training materials, communications and facility details. The Revenue contended that transfer-pricing standards (which test commensurability of price with services received) differ from the ordinary deductibility test under section 37(1) and that the CIT(A) should have independently adjudicated ALP rather than rely on earlier orders. The Tribunal noted that it had already considered the issue in the assessee's earlier years and, applying those findings to the facts before it, held the CIT(A)'s reliance on the earlier Tribunal's orders justified. In view of the prior adjudication in the assessee's favour on substantially similar facts and materials, the Tribunal dismissed the Revenue's grounds and declined to restore the TPO's adjustment. [Paras 4, 5, 12, 13, 14]

The CIT(A)'s deletion of the ALP adjustment in respect of the management fees for A.Y. 2015-16 is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the deletion of the transfer-pricing adjustment to the management fees for A.Y. 2015-16, applying its earlier findings in the assessee's favour for preceding assessment years.

Diversion of income - overriding title of the Government - taxability of interest on unutilised grants - treatment of unutilised revenue grants as liability (matching principle) - principle of consistency in assessment treatment

Diversion of income - overriding title of the Government - taxability of interest on unutilised grants - Interest earned on fixed deposits created from unutilised government grants in A.Y. 2007-08 is not taxable in the hands of the assessee. - HELD THAT: - The Tribunal upheld the learned CIT(A)'s conclusion that governmental Office Memoranda made clear that interest earned on fixed deposits created out of unutilised grants must be treated as part of the grant and is subject to the same restrictive use or return to the State. Applying the test in Sitaldas Tirathdas, the Tribunal accepted that the interest stood diverted at source by virtue of the Government's overriding title and therefore never became the assessee's income. In these changed factual and policy circumstances (the government directions effective for the year), earlier appellate decisions on classification between business income and other sources did not apply. The Tribunal thus concluded that taxing the interest would amount to taxing funds earmarked for future designated expenditure and therefore deleted the addition.

Addition of interest deleted; interest on FDs made from unutilised grants not taxable in assessee's hands for A.Y. 2007-08.

Treatment of unutilised revenue grants as liability (matching principle) - principle of consistency in assessment treatment - Unutilised portion of a revenue grant held as current liability and not taxable in the year of receipt for A.Y. 2007-08. - HELD THAT: - The Tribunal endorsed the CIT(A)'s finding that the appellant consistently accounted for revenue grants on a matching basis-crediting receipts to current liability and recognizing income to the extent of corresponding expenditure. The grant was revenue in nature and earmarked for specific publicity expenditure; the unspent balance remained liable to be applied for that purpose. Absent any material change in facts justifying a departure, the Assessing Officer could not adopt a contrary stance; accordingly, the addition of the unutilised revenue grant was deleted.

Addition of unutilised revenue grant deleted; unspent grant treated as current liability and not assessable as income for A.Y. 2007-08.

Penalty for concealment under section 271(1)(c) - penalty consequential on deletions - Penalty under section 271(1)(c) for A.Y. 2010-11 was not sustainable once the underlying additions were deleted. - HELD THAT: - The Tribunal held that because the substantive additions (on which the penalty was premised) were deleted by the CIT(A) and that deletion was upheld, the consequential penalty could not survive. No separate justification for the penalty independent of the additions was sustained.

Penalty under section 271(1)(c) upheld as deleted; appeal dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletions: interest on fixed deposits from unutilised government grants and the unutilised revenue grant are not assessable as the assessee's income for A.Y. 2007-08, and the penalty for A.Y. 2010-11, being consequential on deleted additions, does not survive; Revenue's appeals dismissed.

Unexplained cash credit - onus of proving identity, genuineness and creditworthiness of lenders - addition under section 68 - notice under section 133(6) - disallowance of interest as not for business purpose - repayment and deduction of tax at source as evidentiary value

Unexplained cash credit - onus of proving identity, genuineness and creditworthiness of lenders - addition under section 68 - notice under section 133(6) - repayment and deduction of tax at source as evidentiary value - Deletion of addition of Rs. 13,10,50,000 made as unexplained cash credit in the hands of the assessee. - HELD THAT: - The assessee furnished confirmations, bank statements of lenders showing account payee cheques, audited financial statements, income tax return acknowledgements and MCA company status, and the AO issued notices under section 133(6) to the lenders who complied. The Assessing Officer's adverse conclusion on creditworthiness was a surmise based on returned income and alleged high security premium without any further cogent enquiry or material brought on record. Once the assessee discharged the primary onus by producing documentary evidence and the lenders responded to AO's notices, the onus shifted to the AO to make further enquiries and produce contrary material; the AO failed to do so. The Tribunal found the documents and evidentiary indicators (including repayment and TDS) sufficient to establish identity, genuineness and capacity to lend, distinguished the authorities relied on by Revenue as factually different, and held that additions based on suspicion and presumption cannot be sustained. [Paras 17, 18, 19]

The addition under section 68 is deleted and the CIT(A)'s order deleting the addition is upheld.

Disallowance of interest as not for business purpose - repayment and deduction of tax at source as evidentiary value - onus of proving identity, genuineness and creditworthiness of lenders - Deletion of disallowance of interest of Rs. 69,10,197 claimed on unsecured loans. - HELD THAT: - The Assessing Officer disallowed interest only because he had treated the underlying loans as unexplained credits. Having held that the loans were duly proved and the AO had not produced cogent material to the contrary, the Tribunal accepted that interest payments were genuine business expenditures: interest was paid with TDS, shown as income by lenders and loans were repaid. For the same reasons that negated the addition under section 68, the disallowance of interest was unsustainable. [Paras 9, 20]

The disallowance of interest is deleted and the CIT(A)'s order deleting the disallowance is upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions of the addition under section 68 and the disallowance of interest for Assessment Year 2013-14.

Disallowance of business expenditure - Section 297 Companies Act - prior approval for related party transactions - post facto approval - voidable contract - Explanation to Section 37(1) - expenditures prohibited by law - Section 40A(2)(b) - payments to interested parties - procedural notice under Section 251(1)(a) - remand for fresh adjudication

Section 297 Companies Act - prior approval for related party transactions - post facto approval - Explanation to Section 37(1) - expenditures prohibited by law - Validity of deletion of disallowance of selling, marketing and distribution expenses where payments to a sister concern were made without prior Central Government approval and a later approval dated 04.01.2012 was produced - HELD THAT: - The Tribunal found that the CIT(A)'s deletion of the disallowance was not sustainable because the approval dated 04.01.2012 relates to the period 7.7.2010 to 31.3.2014 whereas the accounting period under consideration ended 31.3.2010. There was no material on record whether the assessee had applied for the necessary approval for transactions in the relevant year. The Tribunal therefore accepted the Revenue's contention in principle that the CIT(A)'s reasoning was flawed on these facts. The issue touching the effect of non compliance with Section 297 and whether the expenditure is rendered non deductible under the Explanation to Section 37(1) was not finally adjudicated on merits by the Tribunal; accordingly the matter was restored for fresh consideration. [Paras 3, 4]

Revenue's appeal is accepted for statistical purposes and the question concerning the interplay of Section 297 (and related provisions) with tax deductibility is remanded to the CIT(A) for fresh adjudication within three effective opportunities of hearing.

Procedural notice under Section 251(1)(a) - disallowance of business expenditure - Whether the CIT(A) could enhance the Assessing Officer's disallowance without issuing the notice required under Section 251(1)(a), and the quantum of disallowance to be sustained in ITA 632/Hyd/17 - HELD THAT: - The Tribunal observed that the CIT(A) enhanced the disallowance beyond the Assessing Officer's figure without issuance of the statutory notice under Section 251(1)(a). In those circumstances the Tribunal held that the enhancement could not be sustained and restricted the disallowance to the extent originally disallowed by the Assessing Officer. [Paras 5]

Assessee's cross appeal is partly allowed by restricting the disallowance to the amount originally disallowed by the Assessing Officer.

Disallowance of business expenditure - Extent of disallowance in the assessee's appeal ITA 633/Hyd/17 where the CIT(A) had increased the disallowance - HELD THAT: - The Tribunal found that the CIT(A)'s verification exercise had resulted in enhancement of the disallowance. Exercising its appellate power the Tribunal directed that the Assessing Officer should restrict the impugned disallowance to the reduced amount specified by the Tribunal, thereby reversing the higher figure upheld by the CIT(A). [Paras 6]

Assessee's appeal ITA 633/Hyd/17 is partly allowed by directing the Assessing Officer to restrict the disallowance to the amount specified by the Tribunal.

Final Conclusion: The Revenue appeal in ITA 589/Hyd/2017 is accepted for statistical purposes and the question concerning deduction of payments to the sister concern (in light of Section 297 and related provisions) is remitted to the CIT(A) for fresh adjudication; the assessee's cross appeal ITA 632/Hyd/17 is partly allowed by restricting the disallowance to the AO's figure; and the assessee's appeal ITA 633/Hyd/17 is partly allowed by directing the Assessing Officer to restrict the disallowance to the reduced amount ordered by the Tribunal.

Addition of unexplained investment - admission of new evidence under Rule 46A - burden of proof on assessee to establish source of payment - assessment based on agreement between co vendees

Addition of unexplained investment - burden of proof on assessee to establish source of payment - assessment based on agreement between co vendees - Addition of Rs. 1,25,00,000/- in the hands of the assessee was justified and liable to be sustained. - HELD THAT: - The Tribunal accepted the factual finding that the assessee and another person entered into the agreement for purchase of immovable property and that the total advance formed part of the assessment. No agreement specifying vendee wise liability or an evidentiary clause allocating payments between the co vendees was on record. In absence of any contemporaneous evidence showing that the entire payment was made by the co vendee, the only permissible inference was that both co vendees incurred equal expenditure, giving rise to an addition of Rs. 1,25,00,000/- in the assessee's hands. The assessee's subsequent averments and documents did not displace this inference. Applying the burden of proof principle, the assessee failed to establish that he did not make the payment; accordingly the addition was sustained. [Paras 6, 7]

Addition of Rs. 1,25,00,000/- confirmed and appeal dismissed.

Admission of new evidence under Rule 46A - burden of proof on assessee to establish reasonable cause for non production - Affidavit and confirmation letters produced after the assessment were not admissible as new evidence and rightly rejected by the authorities. - HELD THAT: - The documents relied upon by the assessee (confirmation dated 6.12.2018 and affidavit dated 7.12.2018) were not placed before the Assessing Officer prior to completion of assessment. The Assessing Officer's order was passed on 6.12.2018 and the courier receipts established that the papers were dispatched thereafter. The appellant did not establish any reasonable cause preventing filing of the material during assessment proceedings. As the papers constituted new evidence, and no justification was shown for non production before the AO, the authorities were correct in refusing to admit them under the applicable rule governing new evidence. [Paras 3, 6]

Post assessment confirmation and affidavit treated as new evidence and rightly not admitted; reliance on them rejected.

Final Conclusion: The Tribunal upheld the Assessing Officer and CIT(A) findings: the addition of Rs. 1,25,00,000/- in the assessee's hands is confirmed, the later filed confirmation and affidavit were not admitted as new evidence for want of reasonable cause, and the appeal is dismissed.

Provision for leave encashment not falling under Section 43B(f) - Taxation of inter-company grants where utilisation is claimed as deduction - Tax treatment of capital grant versus revenue receipt - Mark-to-market loss on foreign-currency forward contracts as allowable business deduction

Provision for leave encashment not falling under Section 43B(f) - Deletion of disallowance of provision for leave salary under Section 43B(f) in assessment. - HELD THAT: - The Tribunal upheld the CIT(A)'s reliance on earlier ITAT decisions holding that leave encashment/provision is a contractual liability and not a statutory liability falling within Section 43B(f). The Explanation to Section 43B, as interpreted, is applicable to clause (a) and not to clause (f), and leave encashment is payable only on specific contingencies (resignation/retirement) and therefore does not attract the disallowance. No contrary binding decision was placed before the Tribunal, and the Assessing Officer's view that the provision was contingent was rejected. [Paras 6]

Disallowance of leave salary provision of Rs. 30,02,616/- deleted and the CIT(A) order upheld.

Taxation of inter-company grants where utilisation is claimed as deduction - Tax treatment of capital grant versus revenue receipt - Whether the grant of Rs. 2,27,74,314/- received from the holding company is a non-taxable capital receipt while the assessee claims deduction for the utilisation of that grant as director's remuneration. - HELD THAT: - The Tribunal found the assessee's treatment-treating the receipt as an exempt capital grant while deducting the utilisation of the same from taxable income-unsustainable. Although a grant may in some circumstances be capital in nature (for example, to recoup losses or safeguard the holding company's interest), the decisive factor here was the assessee's simultaneous claim of deduction for payments made out of that grant in the computation of income without offering the grant to tax. The Tribunal held that the grant cannot be treated as non-taxable if its utilisation has been claimed as a deduction; such inconsistent treatment warranted taxing the sum. The CIT(A)'s reliance on precedents distinguishing capital grants in loss-recouper scenarios was rejected as distinguishable on facts, and the Tribunal set aside the CIT(A) order allowing the treatment claimed by the assessee. [Paras 20]

CIT(A)'s deletion is set aside; the sum of Rs. 2,27,74,314/- is to be brought to tax since its utilisation was claimed as a deduction.

Mark-to-market loss on foreign-currency forward contracts as allowable business deduction - Allowability of mark-to-market loss of Rs. 74,306/- on forward foreign-exchange contracts as a business deduction. - HELD THAT: - The Tribunal agreed with the CIT(A) and relevant authorities that where forward contracts in foreign exchange are entered into in the course of normal business activities (in this case, to hedge export receipts), mark-to-market losses are revenue in nature and deductible. The forward contracts were incidental to the export business and undertaken to hedge exchange-rate fluctuations; the line of authorities cited establishes that such hedging losses are business losses and not speculative or disallowable notional losses. The Assessing Officer's reliance on decisions disallowing notional foreign-exchange losses on different facts was distinguished. [Paras 27]

Disallowance of the mark-to-market loss deleted and the CIT(A) order upheld.

Final Conclusion: The appeal is partly allowed: the Tribunal upheld deletion of the leave-salary disallowance and upheld allowance of the forward-contract mark-to-market loss, but set aside the CIT(A)'s finding on the inter-company grant and directed that the grant (utilised and claimed as deduction) be brought to tax for A.Y. 2013-14.

Recall of Tribunal order under section 254(2) of the Income-tax Act - Monetary threshold for filing Revenue appeal and exceptions under CBDT Circular No.3/2018 (para 10) - Exception (d) relating to undisclosed foreign bank account - Attribution of interest income from a jointly held account opened by employer - Maintainability of miscellaneous application to recall on low tax-effect grounds

Recall of Tribunal order under section 254(2) of the Income-tax Act - Exception (d) relating to undisclosed foreign bank account - Attribution of interest income from a jointly held account opened by employer - Monetary threshold for filing Revenue appeal and exceptions under CBDT Circular No.3/2018 (para 10) - Whether the Tribunal should recall its order dismissing the Revenue's appeal for low tax effect because the case falls within exception (d) to the CBDT Circular and thus is maintainable despite tax effect being below the monetary limit - HELD THAT: - The Revenue sought recall of the ITAT order dated 23.08.2019 dismissing its appeal for low tax effect on the ground that the case falls within exception (d) in paragraph 10 of the CBDT Circular No.3/2018, which relates to undisclosed foreign bank accounts and thereby permits filing of appeal notwithstanding the monetary threshold. The material on record shows the addition under challenge was estimated interest income from an HSBC account held jointly by the assessee and her husband, which account was opened by the husband's employer for salary credit. The Tribunal accepted the assessee's contention, supported by the husband's assessment having been accepted after verification, that the account was not an undisclosed foreign account of the assessee but a joint account connected to the husband's salary. Because the account was not an undisclosed foreign bank account of the assessee, the specific exception (d) to the CBDT Circular did not apply. Consequently, the low tax-effect bar was not displaced and the miscellaneous application for recall was not maintainable on the basis invoked by the Revenue. The Tribunal therefore dismissed the M.A. [Paras 4]

M.A. dismissed as exception (d) to the Circular is not attracted since the HSBC account was a joint account opened by the husband's employer and not an undisclosed foreign account of the assessee

Final Conclusion: The Revenue's miscellaneous application under section 254(2) to recall the ITAT order is dismissed; the case does not fall within exception (d) of the CBDT Circular and the low tax-effect bar remains operative.

Identity, creditworthiness and genuineness under Section 68 - unexplained cash credits - initial burden on assessee and subsequent onus on assessing officer - reliance on confirmations, bank transactions and assessment orders of investors - addition cannot rest on conjecture and surmise

Identity, creditworthiness and genuineness under Section 68 - initial burden on assessee and subsequent onus on assessing officer - reliance on confirmations, bank transactions and assessment orders of investors - addition cannot rest on conjecture and surmise - Whether the assessee discharged the onus under Section 68 so as to negate the addition treating share capital and share premium as unexplained cash credits - HELD THAT: - The Tribunal examined the materials placed on record by the assessee - share application forms, board resolutions, return of allotment, members register, share certificates, PAN details, bank statements showing banked receipts, audited financial statements and assessment orders of the share applicant companies - and found that these documents prima facie established the identity of the subscribers, that payments were routed through banking channels, and that the subscribers had adequate net worth and taxable income to justify the investments. The AO had not recorded any specific adverse findings controverting these documents, nor had he set out the results of any meaningful investigation despite issuing notices under section 133(6); isolated or self serving observations in the assessment order (such as unserved notices or alleged bogus addresses) were inconsistent with other portions of his order and were not supported by cogent evidentiary findings. Applying settled principles, once the assessee discharged the initial burden by producing confirmations and documentary evidence, the onus shifted to the AO to disprove the veracity of those materials. In absence of affirmative disproof and where the AO proceeded on inference and surmise, the addition under Section 68 could not be sustained. The Tribunal relied on relevant High Court and Tribunal precedents that an assessee proving identity, genuineness and source by such documentary proof satisfies the initial burden and the department must make further inquiry if it disputes the genuineness. [Paras 7, 11, 12, 13, 16]

Assessee discharged the onus under Section 68; addition of Rs.4,50,00,000 as unexplained cash credits deleted and the CIT(A)'s order confirmed.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the deletion of the addition under Section 68 for AY 2012-13, holding that the assessee had established identity, genuineness and creditworthiness of the share subscriptions and that the AO failed to disprove the documents, rendering the addition unsustainable.

Evidentiary value of loose papers and seized diary entries - burden of proof on revenue to corroborate seized material - estimation by extrapolation of periodic receipts - addition based on presumptions and assumptions

Evidentiary value of loose papers and seized diary entries - burden of proof on revenue to corroborate seized material - estimation by extrapolation of periodic receipts - addition based on presumptions and assumptions - Sustainability of addition framed for A.Y.2015-16 on the basis of notings in a seized scribbling pad extrapolated to a year and enhanced to include agents' commission. - HELD THAT: - The Tribunal held that the scribbling pad seized from the residence of a director, without corroborative evidence, has no intrinsic evidentiary value to support additions. The assessee consistently explained that the notings represented net receipts after deduction of agents' designing charges (approximately 33%-37%) and that the gross turnover declared in books exceeded the amounts in the pad. The AO extrapolated five months' notings to twelve months and enhanced the noted amounts by reversing the alleged commission, but did not invoke any specific provisions (such as sections dealing with unexplained cash or investments) nor matched the pad entries with books of account. In the absence of corroboration and having accepted the assessee's explanation, the onus shifted to the revenue to disprove the explanation; the AO failed to discharge that burden. Reliance on precedents established that loose papers/diaries seized during search cannot, without independent corroboration, form the sole basis for additions, and that additions made on surmise or guesswork are unsustainable. [Paras 6, 7]

Addition of Rs. 2,08,80,000/- for A.Y.2015-16 based on the scribbling pad is unsustainable and the CIT(A)'s deletion is upheld.

Evidentiary value of loose papers and seized diary entries - burden of proof on revenue to corroborate seized material - estimation by extrapolation of periodic receipts - addition based on presumptions and assumptions - Sustainability of addition framed for A.Y.2016-17 on the basis of notings in the seized scribbling pad extrapolated to a year and treated as undisclosed income. - HELD THAT: - The Tribunal found that for A.Y.2016-17 the AO treated the amounts in the diary as unaccounted profits and extrapolated eleven months' entries to twelve months, disallowing any expenditure and treating payments noted as unrelated to the company's business. However, the AO accepted in his order that certain notings did not pertain to the assessee company, and the directors (notably Shri B.V. Demullu) had explained the entries as cash receipts and business-related payments that were accounted for. No corroborative evidence of undisclosed receipts, unaccounted assets, or matching defects in books was produced by the revenue. Given these facts and applicable precedents, the Tribunal concluded that additions based on uncorroborated loose papers and on presumptions are not maintainable. [Paras 6, 7]

Addition of Rs. 2,06,50,076/- for A.Y.2016-17 based on the scribbling pad is unsustainable and the CIT(A)'s deletion is upheld.

Final Conclusion: The Tribunal dismissed the revenue's appeals and upheld the CIT(A)'s deletion of additions for A.Y.2015-16 and A.Y.2016-17, holding that additions based solely on uncorroborated notings in a seized scribbling pad, extrapolated and enhanced by the AO without corroborative evidence or proper matching with books of account, are unsustainable; the assessee's explanations having gone unrebutted, the onus on the revenue remained unfulfilled.

Capitalization of interest - nexus between expenditure and income - revenue deduction of interest expense - treatment of funds applied to acquire income generating assets - taxability of rental income

Capitalization of interest - nexus between expenditure and income - revenue deduction of interest expense - Whether interest paid on amounts received against Compulsorily Convertible Debentures, which were utilized to acquire assets that generate rental income, was required to be capitalized or could be allowed as revenue deduction against the rental income offered to tax. - HELD THAT: - The Tribunal accepted the factual finding that the amounts received on issue of CCDs were utilized to purchase business assets (land, building, plant and equipment, furniture and fixtures) which were leased out and yielded rental and maintenance income credited to the profit and loss account and offered to tax. Given that the borrowed funds were applied to acquire assets from which taxable rental income arose and was recognised in the P&L, there exists a direct nexus between the interest expense claimed and the income offered. The AO's view that capitalisation of the subscription amount necessarily required capitalization of the interest was rejected in light of the assessee's accounting and taxable recognition of rental income. Applying the principle that interest is deductible as revenue expenditure where it is incurred in relation to income which is brought to tax, the Tribunal found the CIT(A) rightly directed deletion of the disallowance and there was no reason to interfere with that conclusion.

The disallowance of interest was deleted; the interest expense was allowable against the rental income and need not be capitalized.

Final Conclusion: The revenue's appeal is dismissed and the order of the CIT(A) deleting the addition of interest paid is upheld.

Rectification of register of members - maintainability under Section 59(4) of the Companies Act, 2013 - aggrieved person under Section 59(1) of the Companies Act, 2013 - persons eligible to seek rectification (depository, company, depository participant, holder of securities, Securities and Exchange Board) - disciplinary order by Securities and Exchange Board of India and available appellate remedy - failure to exercise due diligence by Registrar and Transfer Agent

Maintainability under Section 59(4) of the Companies Act, 2013 - aggrieved person under Section 59(1) of the Companies Act, 2013 - persons eligible to seek rectification (depository, company, depository participant, holder of securities, Securities and Exchange Board) - disciplinary order by Securities and Exchange Board of India and available appellate remedy - Whether the petition filed by the Registrar and Transfer Agent is maintainable under Section 59 of the Companies Act, 2013. - HELD THAT: - The Tribunal considered the limited question of maintainability without going into merits. Section 59(4) permits the Tribunal to direct rectification of registers where the application is made by specified categories (a depository, company, depository participant, the holder of the securities or the Securities and Exchange Board). The petitioner, a Registrars and Transfer Agent, did not produce any material to establish that it falls within those categories (notably as a depository participant) and therefore is not within the class authorised by Section 59(4) to seek rectification. The Tribunal further observed that the petitioner sought to rely on being an "aggrieved person" under Section 59(1) by reason of directions issued by SEBI; however SEBI's order is disciplinary in nature and the proper remedy against such an order lies before the appellate authorities constituted under the Act under which SEBI acted. The Tribunal noted SEBI's own statement that it cannot adjudicate private title disputes and that its findings of failure to exercise due diligence do not ipso facto entitle a party to seek rectification of share registers in this Tribunal. Consequently, the Registry was correct in treating the petition as not maintainable and not numbering it for adjudication on merits. [Paras 19, 20, 21, 22, 23]

The petition is not maintainable under Section 59(1) or Section 59(4) of the Companies Act, 2013 and is to be returned to the petitioner by the Registry as not maintainable.

Final Conclusion: The Tribunal, on a limited enquiry confined to maintainability, held that the petitioner (an RTA) is neither within the categories authorised by Section 59(4) nor entitled to invoke Section 59(1) as an "aggrieved person" from SEBI's disciplinary order; the petition is therefore returned as not maintainable and the Tribunal declines to decide the merits.

Winding up under Section 271(c) of the Companies Act, 2013 - fraudulent incorporation and conduct of company affairs - sanction by Central Government to institute winding up proceedings - tribunal's exclusive jurisdiction to wind up company despite parallel criminal or arbitration proceedings - discretion as to publication/advertisement under the Companies (Winding Up) Rules, 2020 - continuous cause of action and limitation in fraud matters

Sanction by Central Government to institute winding up proceedings - The Central Government's sanction to Antrix to file the winding up petition was valid and the petition was maintainable. - HELD THAT: - The Tribunal held that the sanction granted to the Petitioner to file the Company Petition under the notified provision was an exercise of statutory power and correctly made. The Tribunal noted that the challenge to the sanction had been considered and rejected by the High Court of Karnataka (W.P. No. 6191 of 2021) and observed that the proviso to Section 272(3) relied upon by the Respondent was confined to the Registrar; there is no statutory requirement of pre-filing hearing where sanction is granted under the relevant sub clause authorising a person other than the Registrar. The Tribunal recorded that Antrix had already been afforded opportunity in the interim proceedings and that principles of natural justice had been complied with in the course of the admission and interim orders. The Tribunal therefore concluded that the petition was not vitiated for want of sanction. [Paras 11, 22]

Sanction by the Central Government to the Petitioner was valid and the petition was maintainable.

Fraudulent incorporation and conduct of company affairs - winding up under Section 271(c) of the Companies Act, 2013 - Devas was incorporated and its affairs were conducted in a fraudulent manner such that winding up under Section 271(c) was proper. - HELD THAT: - After reviewing the material, including the chronology of incorporation and the contract dated 28.01.2005, investigative developments, reports of the provisional liquidator, and relevant documentary evidence, the Tribunal found that Devas was incorporated shortly before the contract and that the contract was obtained and acted upon in circumstances demonstrating collusion, concealment and misuse of public resources. The Tribunal accepted the petitioner's submissions that (i) Devas lacked commercial antecedents and requisite technical/financial capacity at inception; (ii) funds were brought into India and largely diverted; (iii) procedural norms and policy requirements governing allocation of S Band capacity were bypassed; and (iv) subsequent investigations (CBI/ED) and the Provisional Liquidator's reports corroborated indicia of fraudulent conduct and non existent commercial operations. Applying Section 271(c), the Tribunal concluded that the statutory conditions for winding up on grounds of fraud/misconduct were satisfied and that it would be proper to wind up the company. The Tribunal further directed appointment of the Official Liquidator as Liquidator and gave ancillary directions for liquidation. [Paras 14, 21, 32, 36]

Devas is to be wound up under Section 271(c); the Official Liquidator is appointed as Liquidator and directed to proceed with liquidation.

Continuous cause of action and limitation in fraud matters - Limitation did not bar the petition; the Tribunal treated the cause of action as continuous and held the petition within time on the facts. - HELD THAT: - Respondent argued laches and limitation, asserting discovery of fraud in 2016. The Tribunal examined the nature of the alleged wrongdoing and found the fraud to be of long standing and continuing character starting from incorporation and persisting thereafter. It observed that investigative developments (including supplementary charge sheets and reports) continued to unfold over time and that material relevant to the fraud came to light progressively. On that basis the Tribunal treated the cause of action as continuous and rejected the contention that the petition was time barred; it also noted that the petitioner filed the petition after material pointing to the fraud had crystallised and in the context of ongoing investigations and supplementary disclosures. [Paras 27, 32]

Limitation objection rejected; petition not barred on limitation grounds in the facts of this case.

Discretion as to publication/advertisement under the Companies (Winding Up) Rules, 2020 - Publication/advertisement prior to final order is not an absolute mandatory precondition in every case; the Tribunal exercised its discretion and directed publication after passing the winding up order. - HELD THAT: - The Respondent contended that mandatory advertisement prior to a final winding up order had not been issued, invoking the Companies (Winding Up) Rules. The Tribunal reviewed the changed wording in the 2020 Rules and concluded that the requirement to advertise is subject to the Tribunal's discretion in appropriate cases. In the present case the Tribunal observed that the Respondent had notice of the proceedings, interim orders had been passed and the Provisional Liquidator and stakeholders were already engaged; accordingly the Tribunal exercised its discretion to proceed and, as a matter of direction, ordered the Petitioner to publish the winding up order within 14 days to give wider notice. [Paras 2, 37, 38]

Tribunal may dispense with prior advertisement in appropriate cases; the Petitioner was directed to advertise the winding up order within 14 days.

Tribunal's exclusive jurisdiction to wind up company despite parallel criminal or arbitration proceedings - The Tribunal has jurisdiction to decide the winding up petition notwithstanding parallel criminal investigations and arbitration enforcement actions; winding up will operate subject to High Court/Supreme Court supervision as provided in the Act. - HELD THAT: - Respondent argued that pending criminal proceedings, regulatory investigations and the challenge to the ICC award barred the Tribunal from exercising its jurisdiction. The Tribunal examined statutory provisions, including Section 430 and Section 279, and held that the Tribunal has exclusive jurisdiction to entertain winding up petitions under the Companies Act. The Tribunal emphasised that parallel remedies under other statutes may proceed but that winding up is a statutory remedy for protection of public interest and stakeholders; further, any orders made by the Tribunal would be subject to supervisory jurisdiction of High Courts and the Supreme Court. The Tribunal therefore proceeded to adjudicate the petition on merits notwithstanding other proceedings. [Paras 23, 33]

Tribunal competent to decide winding up petition despite concurrent criminal/arbitral proceedings; its orders remain subject to constitutional courts' supervisory jurisdiction.

Final Conclusion: Company Petition C.P. No. 06/BB/2021 is allowed. Devas Multimedia Pvt. Ltd. is ordered to be wound up under Section 271(c) of the Companies Act, 2013; the Official Liquidator (appointed earlier as Provisional Liquidator) is directed to act as Liquidator and proceed with liquidation in accordance with law, with the petitioner to publish the winding up order within 14 days and the Liquidator to take expeditious steps and communicate the order to relevant authorities and courts; ancillary applications dismissed as infructuous.

Failure to file annual return - filing of annual return under section 92(4) - penalty for failure to file annual return under section 92(5) - compounding under section 441 - remittance of compounding fee and penalty - withdrawal of prosecution on compounding

Failure to file annual return - filing of annual return under section 92(4) - compounding under section 441 - Whether the compounding application should be allowed where the company belatedly filed annual returns for the financial years in question and has otherwise made the default good. - HELD THAT: - The Tribunal examined the materials and submissions and noted that the company had filed the Annual Returns for the Financial Years 2003-2004 to 2006-2007 with the Registrar and thereby made good the default. The contraventions under the provision requiring filing of annual returns within sixty days of the annual general meeting were found to be bona fide and inadvertent, attributed in part to lack of professional guidance and transition to the MCA-21 system. In view of compliance by belated filing and the absence of mala fide intent, the Bench held that the compounding application deserved to be allowed, subject to fulfilment of conditions relating to payment of compounding fee and penalty prescribed for failure to file annual returns. [Paras 9, 10, 11]

Compounding application allowed subject to payment of compounding fee and penalty as prescribed, since the default was belatedly rectified and was bona fide.

Penalty for failure to file annual return under section 92(5) - remittance of compounding fee and penalty - withdrawal of prosecution on compounding - What conditions should be imposed for compounding, and the consequential procedural steps following payment. - HELD THAT: - The Tribunal directed that the offence would be compounded upon proof of payment of the compounding fee and penalty under the penal regime applicable to failure to file annual returns, and recorded that the Registrar of Companies would upon receipt of such proof compound the offence. The RoC was permitted to move the Court of the Additional Chief Metropolitan Magistrate for withdrawal of the prosecution pending against the company. The Bench further specified payment directions to effect the compounding and required a compliance report to be placed on record so that the Registrar could take consequential action. [Paras 11, 12, 14]

Compounding to be completed on furnishing proof of payment of compounding fee and penalty; RoC may apply for withdrawal of prosecution and must place a compliance report on record.

Penalty for failure to file annual return under section 92(5) - Whether the monetary remittance directed by the Tribunal is adequate as a deterrent and what specific remittance is to be made by the company and its directors. - HELD THAT: - Considering the facts, the Tribunal assessed the need for deterrence and directed specific remittances to be paid to compound the offence. The Bench recorded that payment by the company and its officers would be sufficient to deter recurrence and prescribed the mode and timeline for payment and for communication of the order to the RoC for necessary follow up. The directions are procedural and conditional to compounding. [Paras 13]

The Tribunal fixed the remittance amounts by way of fine and directed payment within the stipulated timeframe and by the modes indicated, as a condition for compounding.

Final Conclusion: The compounding application is allowed: the company's belated filing cured the default and compounding is ordered subject to payment of the prescribed compounding fee and penalty, compliance reporting, and consequent action by the Registrar including seeking withdrawal of prosecution.

Withdrawal of application under section 12A of the Insolvency and Bankruptcy Code, 2016 - approval of Committee of Creditors by 90% voting share - payment of settlement amount and payment of CIRP costs - settlement between Committee of Creditors and members of suspended board leading to withdrawal - maximisation of value for stakeholders

Withdrawal of application under section 12A of the Insolvency and Bankruptcy Code, 2016 - approval of Committee of Creditors by 90% voting share - payment of settlement amount and payment of CIRP costs - Application for withdrawal of the admitted Company Petition under section 12A of the Code was allowed. - HELD THAT: - The Adjudicating Authority considered the statutory test under section 12A of the Code which permits withdrawal of an application admitted under section 7, 9 or 10 on an application made by the applicant with the approval of ninety per cent voting share of the Committee of Creditors. The record showed that the Committee of Creditors approved the withdrawal with 100% votes in favour in its tenth and eleventh meetings. The Applicant and the Corporate Debtor had arrived at a full settlement with the members of the suspended board of directors and the settlement amount has been paid. It was further shown that the CIRP expenses have been paid. The CoC also recorded that unsecured financial creditors would realize maximum value upon withdrawal. In view of the requisite CoC approval and payment of the settlement and CIRP costs, the Adjudicating Authority found no impediment to permitting withdrawal and disposed of the underlying Company Petition accordingly. [Paras 8, 9, 10, 11, 12]

IA No. 446/KB/2021 allowed; Company Petition CP No. 432/KB/2019 disposed of and all pending applications stood disposed of.

Final Conclusion: The application for withdrawal under section 12A was allowed on the basis of unanimous CoC approval and payment of the settlement amount and CIRP costs; the Company Petition was disposed of and connected applications were closed.

Stay of implementation of circular resolution - compliance with articles and secretarial standards in passing circular resolutions - primafacie injunction / interim relief - oppression under section 241 of the Companies Act, 2013 - mediation under section 442 of the Companies Act, 2013 - statutory provisions overriding articles

Stay of implementation of circular resolution - primafacie injunction / interim relief - Implementation of the circular resolution dated November 3, 2020 in respect of the first respondent/company. - HELD THAT: - The Tribunal, without finally adjudicating the rival contentions on whether the circular resolution complied with the articles or secretarial standards, took a prima facie view that substantial cause of justice warranted interim protection. On that limited prima facie consideration and without delving into the merits, the implementation of the circular resolution dated November 3, 2020 was stayed in respect of the first respondent/company until the next date of hearing (June 11, 2021). The order is interlocutory and directed at preserving the subject matter pending fuller adjudication rather than resolving the underlying disputes on compliance with articles or allegations of oppression. [Paras 10]

Stay granted on implementation of the circular resolution dated November 3, 2020 until June 11, 2021.

Compliance with articles and secretarial standards in passing circular resolutions - oppression under section 241 of the Companies Act, 2013 - mediation under section 442 of the Companies Act, 2013 - statutory provisions overriding articles - Procedural directions for further contest and service of process in the appeal. - HELD THAT: - The Tribunal directed respondents to file detailed replies/answers (by both e-filing and hard copy) and permitted appellants to file rejoinder after service. Notice was directed to be issued to specified respondents through speed post and email, with appellants to furnish requisite details and process fee. These directions are procedural steps to facilitate fuller hearing of the substantive disputes (including contentions about compliance with articles, alleged oppression, and whether mediation under section 442 is appropriate) and do not constitute any adjudication on those substantive legal questions. [Paras 11, 12]

Respondents to file detailed replies; appellants may file rejoinder; notice to specified respondents issued and matter listed on June 11, 2021.

Final Conclusion: On a prima facie consideration and without deciding the substantive contentions, the Tribunal stayed implementation of the circular resolution dated November 3, 2020 in respect of the first respondent/company until June 11, 2021, and directed procedural steps for service and filing of pleadings to enable fuller adjudication on the merits.

Restoration of company struck off - exercise of power under Section 252 of the Companies Act, 2013 - direction to Registrar of Companies to restore status and take consequential actions - conditional restoration subject to compliance with statutory filings and fees - reactivation of Director Identification Numbers where applicable

Restoration of company struck off - exercise of power under Section 252 of the Companies Act, 2013 - Restoration of the name of the Company in the Register of Companies - HELD THAT: - The Tribunal, after considering the applicant's submissions and the Registrar's report, accepted the applicant's explanation that non-filing of statutory returns was inadvertent and that the requisite documents were ready for filing. Relying on the powers conferred by Section 252 of the Companies Act, 2013 and the relevant rules, the Tribunal held that restoration was appropriate in the interests of the company, its shareholders and creditors. The Tribunal was satisfied with the applicant's assurance to make good all pending statutory compliances upon restoration and found no reason to refuse relief on the facts presented. [Paras 9, 11]

Application allowed and the Registrar of Companies directed to restore the company's name and status as if it had not been struck off.

Direction to Registrar of Companies to restore status and take consequential actions - reactivation of Director Identification Numbers where applicable - Extent of consequential actions to be taken by the Registrar upon restoration - HELD THAT: - The Tribunal ordered the Registrar to treat the company as active for e filing, to take consequential steps necessary to restore the company to the register, to restore and activate DINs if applicable, and to inform bankers so as to defreeze accounts. These directions were framed to give effect to restoration so that the company may resume compliance and operations, subject to the conditions imposed by the Tribunal. [Paras 11]

Registrar directed to restore company status, activate DINs if applicable, and take consequential administrative actions.

Conditional restoration subject to compliance with statutory filings and fees - Conditions and timelines imposed on the company for restoration - HELD THAT: - The Tribunal conditioned restoration on the company filing all pending statutory documents, filing INC-28, and paying prescribed fees/additional fee/fine as decided by the Registrar within thirty days of restoration; the company was also directed to comply with observations/clarifications of the Registrar and to deliver a certified copy of the order so that the Registrar may publish the order in the official Gazette. The Tribunal further directed payment of costs for revival as part of the restoration process and clarified that the order is confined to violations that led to striking off and does not preclude the Registrar from taking action for any other violations. [Paras 11]

Restoration granted subject to specified filings, fees, compliance with ROC observations, delivery of certified copy for Gazette publication, and payment of costs as directed.

Final Conclusion: The Tribunal allowed the company application under Section 252, directing the Registrar to restore the company to the register and take consequential steps (including reactivation of DINs if applicable), while imposing conditions requiring prompt filing of pending statutory documents, payment of prescribed fees and costs, compliance with ROC observations, and publication of the order in the Gazette.

Interim relief - freezing of bank accounts - lien on bank account - hardship as ground for interim relief - investigation of FIR - indemnity bond/undertaking to refund

Interim relief - freezing of bank accounts - lien on bank account - hardship as ground for interim relief - investigation of FIR - indemnity bond/undertaking to refund - Whether the petitioner was entitled to interim relief to lift the lien and unfreeze its bank account and the bank accounts of its creditors which had been frozen pursuant to instructions in connection with a criminal FIR. - HELD THAT: - The Court observed that the petitioner had a commercial relationship with NPIL and had received a payment of Rs. 32.50 lakhs through regular banking channels, while a dispute remained as to whether that amount was transferred without authority by the suspended CMD of NPIL - a matter which was disputed and required police investigation. The gravamen of the FIR implicated the suspended CMD and the question of the petitioner's status as an associate was a disputed fact for investigation. The Court found that freezing all the petitioner's and its creditors' bank accounts would cause unnecessary hardship to the petitioner and its employees and that such comprehensive freezing was not necessary for the investigation in view of the nature of the accusation and the petitioner's offer to furnish a bond. Balancing these factors, the Court concluded that interim relief was justified and ordered the lien on the specified bank account to be lifted and the affected accounts to be allowed to operate, subject to conditions imposed to protect the investigation and any eventual claim. [Paras 8, 9]

Lien on bank account No. 149905001306 and the frozen accounts of the petitioner and its creditors shall be lifted and allowed to be operated until further order, subject to withdrawal of W.P.(C) No.118/2020 and furnishing an indemnity bond undertaking to refund the amount of Rs. 32.50 lakhs if required.

Final Conclusion: Interim relief granted: the lien and freezes on the petitioner's and its creditors' bank accounts are lifted and the accounts permitted to be operated until further order, conditional upon withdrawal of the parallel writ petition and execution of an indemnity bond to refund the specified amount if required.

Financial creditor - default - admission of application under Section 7 of the Insolvency and Bankruptcy Code - maintainability of Section 7 by a decree holder - corporate insolvency resolution process - moratorium under Section 14 of the Insolvency and Bankruptcy Code - appointment of Interim Resolution Professional - jurisdiction of the Adjudicating Authority

Jurisdiction of the Adjudicating Authority - Tribunal's jurisdiction to entertain the Section 7 application - HELD THAT: - The registered office of the corporate debtor is situated at Delhi and the Tribunal accordingly is satisfied that it has jurisdiction to entertain and try the application. The Tribunal records jurisdictional competence as a preliminary matter and proceeds to examine the merits of the Section 7 application. [Paras 15]

The Tribunal has jurisdiction to hear the Section 7 application.

Default - financial creditor - maintainability of Section 7 by a decree holder - Whether a default has occurred and whether the applicant, though a decree holder, qualifies as a financial creditor for the purposes of Section 7 - HELD THAT: - The Tribunal found on the material on record that the debt crystallised by virtue of UP-RERA's order directing refund and the subsequent recovery certificate, and that the corporate debtor failed to pay the principal amount as directed. The applicant is a decree holder who pursued execution before UP-RERA and obtained a recovery certificate; the corporate debtor's challenge to the execution is pending only on quantum of interest while the principal was directed to be paid by the Allahabad High Court. On these facts the Tribunal concluded that the amount payable falls within the category of financial debt and that the applicant, though a decree holder, comes within the umbrella of a financial creditor for the purpose of initiating insolvency proceedings under Section 7. The Tribunal also noted that the present application is not merely an attempt to execute a decree but seeks resolution for the corporate debtor's inability to pay the confirmed financial debt. [Paras 17]

Default is established and the applicant, though a decree holder, qualifies as a financial creditor for the purposes of admitting the Section 7 application.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code - corporate insolvency resolution process - Admissibility and prima facie sufficiency of the Section 7 application - HELD THAT: - The Tribunal examined the Form I filing and accompanying documents and was satisfied that the application under Section 7 is complete and that a default has occurred. Considering the documentary record and submissions, the Tribunal found prima facie that the debt as confirmed by UP-RERA and the Allahabad High Court remained unpaid, thereby warranting initiation of CIRP. The Tribunal distinguished earlier authorities relied upon by the corporate debtor as not being directly applicable to the specific facts, and observed that no stay preventing the applicant's claim reached finality before it. [Paras 16, 17]

The Section 7 application is admitted and CIRP is initiated against the corporate debtor.

Appointment of Interim Resolution Professional - Appointment of Interim Resolution Professional (IRP) - HELD THAT: - The applicant nominated Mr. Amarpal as IRP. The IRP filed the requisite consent and disclosures in Form 2 and under applicable IBBI regulations. Having accepted the nomination and the consent, the Tribunal appointed the nominated individual as the Interim Resolution Professional and recorded his registration details as provided. [Paras 18]

Mr. Amarpal is appointed as the Interim Resolution Professional for the corporate debtor.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Operation of the moratorium consequent to admission under Section 7 - HELD THAT: - Pursuant to admission of the Section 7 application, the Tribunal directed that the moratorium under Section 14(1) shall follow, invoking the statutory prohibitions and subjecting the corporate debtor to the limitations specified in the provisos and related sub-sections. The Tribunal further directed that the provisions of Sections 14(2) and 14(3) shall apply during the moratorium period. [Paras 19]

Statutory moratorium under Section 14 is declared upon admission of the CIRP.

Appointment of Interim Resolution Professional - Interim directions as to operational expenses and deposit by applicant - HELD THAT: - The Tribunal directed the applicant to deposit a sum to meet IRP's expenses in accordance with the IBBI regulations, to be adjusted by the Committee of Creditors and refundable subject to proper accounting. The Tribunal specified a timeline for the deposit and recorded that such amount would be subject to adjustment by the Committee of Creditors. [Paras 20]

Applicant directed to deposit the specified amount with the IRP to meet IRP expenses, subject to adjustment by the Committee of Creditors.

Final Conclusion: The Section 7 application is admitted: the Tribunal, having satisfied itself as to jurisdiction, existence of default and the applicant's status as a financial creditor (albeit a decree holder), ordered initiation of the corporate insolvency resolution process, appointed the nominated Interim Resolution Professional, declared the statutory moratorium, and directed the applicant to deposit funds for IRP expenses.

Limitation and suspension under SICA - acknowledgement extending limitation under Section 18 of the Limitation Act, 1963 - existence of financial debt and default for admission under Section 7 of the IBC, 2016 - no authority to compel a financial creditor to accept an OTS or to appropriate funds in its discretion - appointment of Interim Resolution Professional and imposition of moratorium under Section 14 of the IBC, 2016

Limitation and suspension under SICA - Effect of pendency before BIFR and repeal of SICA on computation of limitation for recovery of debt. - HELD THAT: - The Tribunal held that the remedy for enforcement of a creditor's right remained suspended during the pendency of proceedings under SICA and that the period from 09.05.2001 (commencement of BIFR proceedings) to 01.12.2016 (coming into force of IBC, 2016) is to be excluded when computing limitation in terms of Section 22(5) of SICA. Reliance was placed on prior authority recognizing exclusion of time spent before BIFR. Consequently, the statutory bar created by SICA operated to suspend the limitation period for the relevant span and that excluded period must be disregarded for limitation reckoning. [Paras 13, 14, 15, 16]

Period from 09.05.2001 to 01.12.2016 is excluded for computation of limitation; the application is not barred by limitation on this ground.

Acknowledgement extending limitation under Section 18 of the Limitation Act, 1963 - Effect of the Corporate Debtor's letter dated 14.03.2017 on limitation. - HELD THAT: - The Tribunal found that the Corporate Debtor's letter of 14.03.2017 acknowledged the overdue term loan and sought revival of the previously sanctioned OTS. That communication constituted an acknowledgment within the meaning of Section 18 of the Limitation Act, 1963, thereby extending the period of limitation. The Tribunal further noted that, irrespective of any alleged entries in the balance sheet, the acknowledgment itself brought the claim within limitation. [Paras 16, 17]

The 14.03.2017 letter operates as an acknowledgment extending limitation; the Section 7 application is not time-barred.

Existence of financial debt and default for admission under Section 7 of the IBC, 2016 - Whether a 'financial debt' and default exist such that the Section 7 application must be admitted. - HELD THAT: - Applying the principles in Innoventive Industries, the Tribunal observed that where a financial creditor demonstrates existence of a financial debt and default (exceeding the statutory threshold), the adjudicating authority is obliged to admit the Section 7 application. The sequence of OTS proposals by the Corporate Debtor, their acknowledgments and the rejection of revised OTS offers by the Financial Creditor were held to evidence a debt and default. The Tribunal also rejected reliance on Covid-related relief, as defaults predated the pandemic. [Paras 18, 19, 20]

Existence of financial debt and default established; Section 7 application is to be admitted.

No authority to compel a financial creditor to accept an OTS or to appropriate funds in its discretion - Whether the Tribunal can direct appropriation of amounts in No-Lien Accounts in favour of the Corporate Debtor's OTS and compel the Financial Creditor to accept OTS. - HELD THAT: - The Tribunal considered IA/963/IB/2020 seeking directions for appropriation from No-Lien Accounts towards an OTS. It recorded that the Financial Creditor declined to appropriate or accept the OTS and held that the Tribunal cannot direct a financial creditor to accept an OTS or order appropriation of funds which are within the creditor's discretion. The Tribunal confined its role to determining existence of debt and default under Section 7 and dismissed the IA accordingly. [Paras 21, 22]

IA/963/IB/2020 seeking appropriation and compulsion to accept OTS is dismissed; Tribunal will not direct creditor to accept OTS or appropriate funds.

Appointment of Interim Resolution Professional and imposition of moratorium under Section 14 of the IBC, 2016 - Appointment of IRP and the operation and scope of moratorium consequent to admission under Section 7. - HELD THAT: - Upon admitting the Section 7 petition, the Tribunal appointed the proposed IRP who filed consent in Form 2 and directed him to perform duties under the Code, including filing reports. The Tribunal declared the moratorium operative from the date of the order and reproduced the statutory scope and exceptions under Section 14, including suspension of suits, prohibitions on transfer or enforcement of security and continuance provisions regarding essential supplies and specified exceptions. The powers of the board of directors were directed to be superseded in accordance with the Code. [Paras 24, 25, 26, 27, 28]

IRP appointed; CIRP initiated and moratorium imposed with directions to communicate the order to parties and IBBI.

Final Conclusion: The Tribunal held that the Section 7 application by the Financial Creditor is maintainable and not barred by limitation (time before BIFR excluded and 14.03.2017 letter acknowledged debt), found existence of financial debt and default, admitted the petition, dismissed the Corporate Debtor's IA seeking appropriation/compulsion of OTS, appointed the Interim Resolution Professional and directed the imposition of moratorium in terms of the IBC, 2016.

Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Existence of operational debt and default - Negotiation and adjudication of disputes vis-a -vis Section 9(5) (dispute defence under IBC) - Effect of MSME Facilitation Council order on existence of dispute - Limitation and pecuniary jurisdiction for Section 9 petitions - Appointment of Interim Resolution Professional and consequences of moratorium under Section 14

Existence of operational debt and default - Demand notice compliance under Section 8 and affidavit under Section 9(3)(b) - Operational Creditor proved the existence of an operational debt and that the Corporate Debtor committed default, justifying admission of the Section 9 petition. - HELD THAT: - The Tribunal found that the Operational Creditor produced work orders, completion certificate, invoices and communications evidencing supply and installation and the due date for payment. The Operational Creditor served the statutory demand notice in Form 3 and filed the affidavit as required under Section 9(3)(b), and there is record of two cheques issued by the Corporate Debtor which were returned dishonoured. The MSME Facilitation Council passed an order in favour of the Operational Creditor and the Corporate Debtor did not dispute the amount payable before that forum. On the material before the Tribunal, including the communications and the MSME order, the claim was held to be established and the Corporate Debtor was found to have defaulted in payment of the operational debt. [Paras 8, 9, 15, 16, 19]

Debt and default established; Section 9 petition merits admission.

Dispute defence under Section 9 (existence of a genuine dispute) - Reliance on third party technical report - MSME order negating existence of dispute - The Corporate Debtor's contention of a pre-existing dispute regarding quality/defect was rejected and held not to be a bar to admission. - HELD THAT: - The Corporate Debtor pointed to glass breakages and alleged defects, referencing correspondence demanding rectification and deductions. The Operational Creditor produced the glass manufacturer's report which attributed breakage to an inherent risk of tempered glass rather than a manufacturing defect and showed steps taken to investigate. The Tribunal also noted the MSME Facilitation Council's order recording no dispute as to the amount payable. The defence was described as feeble and, in the circumstances, did not qualify as a pre existing dispute sufficient to defeat the Section 9 application. [Paras 13, 14, 16, 17, 19]

Alleged dispute on quality was held not to be a genuine dispute; it did not preclude admission under Section 9.

Limitation and pecuniary jurisdiction for Section 9 petitions - The petition was within the period of limitation and the Tribunal had pecuniary jurisdiction to entertain it. - HELD THAT: - The Tribunal observed that the last invoice date fell within the relevant limitation period and that the Section 9 application was filed on 24.06.2019. The enhancement of pecuniary jurisdiction effective from 24.03.2020 was noted as inapplicable to defeat the Tribunal's competence, as the petition had been filed earlier; accordingly the Tribunal held it had jurisdiction to entertain the petition. [Paras 20]

Application held to be within limitation and within the Tribunal's pecuniary jurisdiction.

Appointment of Interim Resolution Professional - Operation and scope of moratorium under Section 14 - On admission under Section 9(5), an Interim Resolution Professional was appointed and the moratorium under Section 14 was declared; the Operational Creditor was directed to deposit funds for the IRP's expenses. - HELD THAT: - Since the petition was admitted under Section 9(5), the Tribunal appointed an Interim Resolution Professional from the IBBI list subject to required disclosures and absence of disciplinary proceedings. The Tribunal recorded the statutory moratorium and reproduced its scope under Section 14(1)-(4), and directed payment to the IRP to meet initial expenses in accordance with the Code and regulations. The Registry was directed to communicate the order to the parties, IBBI and the Registrar of Companies as mandated. [Paras 21, 22, 23, 24, 25]

IRP appointed; moratorium imposed; Operational Creditor to pay amount to IRP for expenses and Registry to communicate orders.

Final Conclusion: The Tribunal admitted the Section 9 application: the Operational Creditor established debt and default, the alleged dispute was rejected as not genuine, the petition was within limitation and within the Tribunal's pecuniary jurisdiction, an Interim Resolution Professional was appointed and the moratorium under Section 14 was imposed; the Operational Creditor was directed to pay specified initial funds to the IRP and the registry was directed to communicate the order to relevant authorities.

Exclusion of lockdown period from computation of liquidation timelines - Extension of liquidation timeline - Regulation 47A of the IBBI (Liquidation Process) Regulations, 2016 - Obligation to complete liquidation within one year under Regulation 44(2) - Adherence to model timelines prescribed by IBBI

Exclusion of lockdown period from computation of liquidation timelines - Regulation 47A of the IBBI (Liquidation Process) Regulations, 2016 - Period of lockdown is excluded from computation of the liquidation timeline for tasks that could not be completed due to such lockdown. - HELD THAT: - The Tribunal observed that Regulation 47A, inserted in the IBBI (Liquidation Process) Regulations, 2016, provides that the period of lockdown imposed by the Central Government in the wake of COVID-19 shall not be counted for computation of any timeline for tasks that could not be completed due to such lockdown. Having regard to the notifications of the Ministry of Home Affairs and the State Government extending restrictions, and the Liquidator's uncontested explanation that certain tasks (notably registration of sale) could not be completed due to the pandemic and associated lockdowns, the Tribunal held that the period from 24.03.2020 to 14.03.2021 falls within the scope of Regulation 47A and must be excluded from the liquidation time-line computation. [Paras 10, 11]

The period from 24.03.2020 to 14.03.2021 is excluded from the liquidation period computation under Regulation 47A.

Extension of liquidation timeline - Obligation to complete liquidation within one year under Regulation 44(2) - Adherence to model timelines prescribed by IBBI - Liquidation period of the corporate debtor is extended by six months from 04.09.2020, resulting in a revised completion date of 24.02.2022, and the Liquidator is directed to comply with IBBI model timelines. - HELD THAT: - Regulation 44(2) mandates completion of liquidation within one year; the Tribunal noted that, absent exclusion, the liquidation should have been completed by 04.09.2020. After excluding the lockdown period under Regulation 47A, and having regard to the delay in completing registration and pending interlocutory applications before the Tribunal, the authority considered it just and proper to extend the liquidation timeline. The extension granted is for six months from 04.09.2020, so that, after exclusion of 24.03.2020 to 14.03.2021, the liquidation process must be completed on or before 24.02.2022. The Liquidator was further directed to endeavour to complete the process within the extended period and to follow the model timelines prescribed by the IBBI, including timely filing of reports with the Tribunal. [Paras 8, 11, 12]

IA/356/CHE/2021 is allowed; liquidation period extended for six months from 04.09.2020 and to be completed on or before 24.02.2022, with directions to the Liquidator to follow IBBI model timelines.

Final Conclusion: The Tribunal allowed the Liquidator's application: the lockdown period from 24.03.2020 to 14.03.2021 is excluded from computation of the liquidation timeline under Regulation 47A, and the liquidation period is extended by six months from 04.09.2020, directing completion on or before 24.02.2022 and adherence to IBBI model timelines.

Operational debt and default - dispute raised prior to receipt of demand notice - Section 8(2)(a) of IBC, 2016 - admission under Section 9(5) of IBC, 2016 - pecuniary jurisdiction and threshold - appointment of Interim Resolution Professional - moratorium under Section 14 of IBC, 2016

Dispute raised prior to receipt of demand notice - Section 8(2)(a) of IBC, 2016 - Whether the Corporate Debtor had raised a dispute prior to receipt of the Demand Notice so as to preclude initiation of CIRP. - HELD THAT: - The Tribunal examined the reply to the Demand Notice and the materials relied upon by the Corporate Debtor and found that the alleged disputes and contentions were raised only after receipt of the Demand Notice dated 24.10.2019 (received on 26.10.2019). Section 8(2)(a) requires the corporate debtor to bring to the operational creditor's notice existence of any dispute or record of pending proceedings prior to receipt of the demand notice. Since the Corporate Debtor did not communicate any pre-existing dispute in its reply within the statutory context and its objections relate to matters arising after issuance of the Demand Notice, those contentions cannot be treated as a valid pre-existing dispute under Section 8(2)(a). [Paras 11, 12, 13]

The Corporate Debtor failed to establish a pre-existing dispute under Section 8(2)(a), and the post-demand contentions do not defeat the operational creditor's claim.

Operational debt and default - admission under Section 9(5) of IBC, 2016 - Whether the Operational Creditor has proved existence of operational debt and default and whether the petition is fit for admission under Section 9(5). - HELD THAT: - The Tribunal considered the Memorandum of Understanding dated 22.08.2019 which crystallised the parties' dues and noted that the Corporate Debtor had made part payment in accordance with that instrument. On the documents placed in Part IV and the MoU, the Tribunal concluded that the balance sum remained due and payable and the Corporate Debtor had committed default. The Tribunal further observed that the demand proceedings and the affidavit under Section 9(3)(b) established non-payment and absence of a valid pre-existing dispute, permitting admission under Section 9(5). [Paras 14, 16]

The Operational Creditor proved existence of an operational debt and default; the petition is admitted under Section 9(5).

Limitation - Whether the petition is within the limitation period. - HELD THAT: - The Tribunal noted that the debt fell due on the last date of invoice, 05.11.2019, and the petition was filed on 10.01.2020. On that basis the Tribunal held the application to be within the prescribed period for initiation of proceedings. [Paras 15]

The application is within limitation and not time-barred.

Pecuniary jurisdiction and threshold - Whether the Tribunal had pecuniary jurisdiction to entertain the petition given subsequent increase in the minimum threshold. - HELD THAT: - The Tribunal observed that the statutory increase in the minimum monetary threshold to commence CIRP took effect from 24.03.2020. As the present application was filed on 10.01.2020, prior to that notification, the Tribunal retained pecuniary jurisdiction to entertain the petition notwithstanding the later amendment. [Paras 17]

The Tribunal had pecuniary jurisdiction to hear the petition as it was filed before the threshold was raised.

Appointment of Interim Resolution Professional - moratorium under Section 14 of IBC, 2016 - Appointment of Interim Resolution Professional and imposition of moratorium consequent to admission. - HELD THAT: - Because the Operational Creditor had not nominated an IRP, the Tribunal appointed an Interim Resolution Professional from the IBBI list subject to required disclosures and absence of pending disciplinary proceedings. Upon admission under Section 9(5), the statutory moratorium in Section 14(1) was declared to follow, and the Tribunal explained the scope, exceptions and duration of the moratorium as provided in the Code and attendant regulations. The Operational Creditor was directed to deposit an initial amount to meet IRP expenses as required by regulation. [Paras 18, 19, 20, 21, 22]

An Interim Resolution Professional was appointed and the moratorium under Section 14 was imposed; directions were given for communication of the order and for payment to the IRP.

Final Conclusion: The Tribunal admitted the Section 9 petition, holding that the Operational Creditor established an operational debt and default, the Corporate Debtor's objections did not amount to a pre-existing dispute under Section 8(2)(a), the petition was within limitation and within the Tribunal's pecuniary jurisdiction as filed before the threshold change; an Interim Resolution Professional was appointed and the moratorium under Section 14 was declared.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Resolution Professional as Liquidator under Section 34(1) - Committee of Creditors' resolution by requisite voting share - Requirement of written consent and Authorisation for Assignment for Liquidator - Effect of liquidation on powers of board, restraint on suits and employees' discharge - Obligation to publish public notice and file liquidation order with Registrar of Companies

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' resolution by requisite voting share - The Corporate Debtor is to be ordered into liquidation pursuant to the CoC resolution recorded during CIRP. - HELD THAT: - The CoC resolved by 96.70% voting share to liquidate the Corporate Debtor. Section 33(2) requires the Adjudicating Authority to pass an order for liquidation where the RP, before confirmation of any resolution plan, intimates a CoC decision to liquidate approved by not less than sixty-six percent of voting share. Here, two resolution plans were considered but neither obtained the requisite approval and the CIRP period expired, leaving liquidation as the statutory consequence. The Tribunal therefore allowed the application for liquidation under Section 33(2). [Paras 15, 18, 19]

Application for liquidation allowed and Corporate Debtor ordered to be liquidated.

Appointment of Resolution Professional as Liquidator under Section 34(1) - Requirement of written consent and Authorisation for Assignment for Liquidator - The RP, having submitted written consent, is appointed as Liquidator subject to possession of a valid Authorisation for Assignment (AFA). - HELD THAT: - Section 34(1) provides that, subject to written consent by the RP, the Adjudicating Authority shall appoint the RP as Liquidator; the Code contemplates replacement only under the specified proviso. The RP in this matter furnished his written consent. The Tribunal appointed the RP as the Liquidator but conditioned the appointment on his possession of a valid AFA issued by the IPA in terms of the applicable regulations, thereby giving effect to the statutory and regulatory prerequisites for appointment. [Paras 16, 17, 19]

Mr. Anil Anchalia is appointed as Liquidator subject to his written consent and possession of a valid AFA.

Transfer of records to Liquidator - Commencement of liquidation process under Chapter III - The RP is directed to hand over all documents to the appointed Liquidator and the Liquidator shall initiate the liquidation process under the Code and applicable regulations. - HELD THAT: - Upon appointment of the Liquidator, continuity of process requires transfer of corporate records and documents held by the RP. The Tribunal directed the RP to hand over all documents within a stipulated period and directed the Liquidator to proceed with the liquidation process as envisaged under Chapter III of the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016, ensuring statutory compliance in carrying out liquidation functions. [Paras 19]

RP to hand over documents to Liquidator within 15 days; Liquidator to commence statutory liquidation process.

Effect of liquidation on powers of board, restraint on suits and employees' discharge - Section 33(5) proviso regarding institution of suits - On initiation of liquidation, powers of directors and key managerial personnel cease; suits by or against the Corporate Debtor are barred except as permitted, and the liquidation order constitutes notice of discharge to employees subject to statutory exceptions. - HELD THAT: - The Tribunal applied the Code's provisions to prescribe the consequences of liquidation: the powers of the board and key managerial persons cease and vest in the Liquidator; no suit or legal proceeding shall be instituted by or against the Corporate Debtor save as permitted under Section 33(5) and its proviso, which allows the Liquidator to institute proceedings with prior approval of the Adjudicating Authority; and, in accordance with Section 33(7), the liquidation order serves as notice of discharge to officers, employees and workmen except where business continues during liquidation. [Paras 19]

Directives issued that board powers cease, suits are restrained except as allowed, and employees are deemed discharged subject to statutory exceptions.

Obligation to publish public notice and file liquidation order with Registrar of Companies - The Liquidator must cause public notice of liquidation and file a copy of the liquidation order with the Registrar of Companies. - HELD THAT: - To give statutory and public effect to the liquidation, the Tribunal ordered publication of a public notice in specified newspapers and required the Liquidator to file a copy of the liquidation order with the Registrar of Companies within whose jurisdiction the Corporate Debtor is registered; the Registry was also directed to forward a copy to the ROC, ensuring compliance with the Code's procedural obligations on public notice and statutory filing. [Paras 19]

Public notice to be issued and Liquidator to file the order with the Registrar of Companies as directed.

Final Conclusion: The Tribunal allowed the RP's application and ordered liquidation of Crystal Cable Industries Limited under Section 33(2) of the Code; the RP, having consented, was appointed as Liquidator subject to possession of a valid AFA, directed to receive corporate records and to initiate the statutory liquidation process, with consequential directions regarding cessation of board powers, restriction on suits, employees' discharge, public notice and filing with the Registrar of Companies.

Reduction of share capital - Selective reduction - Confirmation under section 66 Companies Act, 2013 - Notice and publication requirements under reduction procedure - Auditor's certificate under section 66 - Company resolution and members' approval

Reduction of share capital - Confirmation under section 66 Companies Act, 2013 - Notice and publication requirements under reduction procedure - Company resolution and members' approval - Auditor's certificate under section 66 - Application under section 66 for confirmation of selective reduction of issued, subscribed and paid up share capital and directions for compliance with procedural requirements - HELD THAT: - The Tribunal considered the petition for confirmation of reduction of the company's issued, subscribed and paid up share capital as a selective reduction. The Board resolution dated 29.06.2020 and the special resolution passed at the extraordinary general meeting on 30.06.2020 authorise the proposed reduction; all five members holding the entire issued equity capital voted in favour. The statutory auditor furnished a certificate under section 66 and the accounting treatment was certified to be in accordance with the applicable Accounting Standards. The company produced a director's and auditor's declaration that there are no deposits and a certificate that there are no secured or unsecured creditors as on 05.03.2020. In view of the absence of creditors but having regard to the procedural safeguards prescribed under section 66 and the NCLT (Procedure for Reduction of Share Capital of Company) Rules, 2016, the Tribunal directed publication of the proposed reduction in one English and one vernacular newspaper and uploading of the notice on the company's website, required filing of proof of publication by affidavit, and directed the Registry to issue statutory notices to the Regional Director, MCA and the Registrar of Companies, Chennai. The Tribunal afforded an opportunity for objections within three months from receipt of the notices and directed that the matter be placed before the Bench within 15 days after expiry of the 90-day notice period. These directions implement the statutory notice and verification safeguards prior to final confirmation. [Paras 8, 9, 10]

Application proceeded and directions issued for statutory publication, website notice, filing proof, issuance of notices to authorities and opportunity for objections; matter to be placed before the Bench after the 90-day period.

Final Conclusion: The Tribunal, on being satisfied with the board and members' approvals, auditor's certificate and absence of creditors, did not finally confirm the reduction but granted the petitioner's request to proceed subject to statutory publication and notice requirements, filing proof of publication, issuance of statutory notices to the Regional Director and Registrar of Companies, an objection period of three months, and posting the matter before the Bench after expiry of the 90-day period.

Exclusion of time period from liquidation period - application under section 60(5) of the IBC, 2016 - Regulation 47AA of the IBBI (Liquidation Process) Regulations, 2016 - Regulation 47A of the IBBI (Liquidation Process) Regulations, 2016 - effect of COVID-19 on liquidation timelines

Exclusion of time period from liquidation period - Regulation 47AA of the IBBI (Liquidation Process) Regulations, 2016 - effect of COVID-19 on liquidation timelines - Application to exclude the period 24.03.2020 to 31.10.2020 from computation of the one-year liquidation period was allowed. - HELD THAT: - The applicant sought exclusion of 221 days (24.03.2020 to 31.10.2020) in computing the liquidation period, relying on the provisions introduced by the IBBI regulations in the context of the COVID-19 pandemic. The Adjudicating Authority, after perusing the records, applied Regulation 47AA of the IBBI (Liquidation Process) Regulations, 2016 and held that the specified period is excluded from the time frame for completion of the liquidation process. The application was therefore allowed on that basis. The applicant had also referred to Regulation 47A as having come into effect on 17.04.2020, and the Tribunal treated the claim for exclusion under the applicable IBBI regulation as tenable in the circumstances arising from the pandemic.

IA/50(CHE/2021) allowed and the period 24.03.2020 to 31.10.2020 excluded from computation of the liquidation period under Regulation 47AA.

Final Conclusion: The Tribunal allowed the liquidator's application and excluded the period 24.03.2020 to 31.10.2020 from the liquidation timeline under the applicable IBBI regulation, permitting extension of time for completion of the liquidation process.

Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - Management of affairs vested in the interim resolution professional under section 17 of the IBC, 2016 - Duties of the interim resolution professional under section 18 of the IBC, 2016 - Fraudulent trading / wrongful trading and liability to contribute to corporate assets under section 66(1) of the IBC, 2016 - Bank liability for permitting account operations despite moratorium

Fraudulent trading / wrongful trading and liability to contribute to corporate assets under section 66(1) of the IBC, 2016 - Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - Transfers made by the promoters/directors after commencement of CIRP amounted to fraudulent trading under section 66(1) and they are liable to contribute to the assets of the corporate debtor. - HELD THAT: - The Tribunal found that the CIRP was admitted on June 14, 2017 and the moratorium under section 14 came into effect from that date. Despite knowing the moratorium and that their powers stood suspended, the first and second respondents caused distribution of the income-tax refund received after the commencement date by multiple withdrawals and transfers. Chapter III avoidance provisions apply to pre-commencement transactions, but section 66(1) extends to fraudulent or wrongful trading during CIRP and liquidation. Applying the Supreme Court's authority that fraudulent trading during insolvency can be inquired into under section 66, the Tribunal concluded that the transfers were deliberate acts to defraud creditors and amounted to fraudulent trading, attracting liability to make contribution to the corporate estate. [Paras 11, 14]

The first and second respondents are liable for fraudulent trading and directed to contribute the amount diverted to the liquidation estate with interest.

Bank liability for permitting account operations despite moratorium - Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - The bank which permitted operations on the corporate debtor's account after commencement of CIRP without acting on instructions of the IRP is culpable and liable to account to the liquidation estate. - HELD THAT: - The Tribunal observed that the commencement date is fixed upon admission and financial institutions maintaining accounts are obliged to act on the instructions of the IRP. The Bank of India accepted and permitted debits from the corporate debtor's account after the moratorium date, and could not rely on ignorance of the CIRP. Having allowed the withdrawals and transfers that depleted the refund, the bank was held equally culpable for enabling the breach of moratorium and was directed to make contribution to the liquidation estate. [Paras 11, 14]

The third respondent (bank) is held liable to account for the sums withdrawn and ordered to contribute the diverted amount to the liquidation estate with interest.

Management of affairs vested in the interim resolution professional under section 17 of the IBC, 2016 - Duties of the interim resolution professional under section 18 of the IBC, 2016 - The conduct of the interim resolution professional in failing to intimate banks and take steps to protect corporate assets involved omission, but action against the IRP is to be taken by the IBBI. - HELD THAT: - The Tribunal noted that the IRP's duties include obtaining information about accounts and informing financial institutions, and that the IRP ought to have intimated banks after appointment. While the Tribunal found omissions in the IRP's performance that could have prevented the impugned transfers, it declined to adjudicate disciplinary action against the IRP and directed the Insolvency and Bankruptcy Board of India to take appropriate action under its regulatory remit. [Paras 11, 14]

The matter of the fourth respondent's (IRP's) conduct is referred to the IBBI for suitable action; the Tribunal refrained from imposing further sanctions itself.

Final Conclusion: Application allowed. First to third respondents directed to pay to the liquidation estate the amount diverted (as determined by the Tribunal) together with interest at bank rates from the respective dates of withdrawal within sixty days; the conduct of the fourth respondent (IRP) is referred to the IBBI for appropriate action.

Financial debt and default - admission under section 7 of the Insolvency and Bankruptcy Code, 2016 - accrual of cause of action on classification as NPA - limitation for filing under the IBC - appointment of interim resolution professional and initiation of CIRP - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - information utility authentication

Financial debt and default - admission under section 7 of the Insolvency and Bankruptcy Code, 2016 - information utility authentication - The financial creditor has established existence of financial debt and default and the Section 7 petition is maintainable. - HELD THAT: - The Tribunal found from the loan documentation, sanction letters, restructuring agreements, records of default filed with the information utility (showing status as "deemed to be authenticated"), classification of the account as NPA and other records that the corporate debtor was indebted to the financial creditor and had defaulted in repayment. Reliance was placed on settled principles that where a financial debt and default are shown in a Section 7 application the Adjudicating Authority is obliged to admit the petition; counter claims or set offs by the corporate debtor do not constitute a dispute for the purpose of defeating admission under Section 7. The Tribunal also noted that no counter was filed by the corporate debtor and that the default exceeded the statutory threshold, thereby satisfying the requirements for admission under Section 7(5). [Paras 16, 17, 19]

Section 7 petition admitted on the ground of established financial debt and default; CIRP to be initiated.

Accrual of cause of action on classification as NPA - limitation for filing under the IBC - The cause of action for the financial creditor accrued on the date the account was classified as NPA (March 31, 2018) and the Section 7 petition filed on July 24, 2020 is within the three year limitation period. - HELD THAT: - The Tribunal held that the right to sue accrued on the date the account was declared a non performing asset, as recorded in the loan account classification. Applying that accrual date, the application filed by the financial creditor fell within the three year limitation period. The Tribunal expressly relied on the reasoning in earlier decisions cited in the judgment [Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd. ] and [B. K. Educational Services P. Ltd. v. Parag Gupta and Associates ] as articulated in the order to support the conclusion on accrual and limitation. [Paras 16]

Cause of action accrued on March 31, 2018; the petition filed July 24, 2020 is within limitation and hence maintainable.

Appointment of interim resolution professional and initiation of CIRP - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - On admission, an interim resolution professional is appointed and moratorium under Section 14 of the Code follows; powers of the board stand superseded and the IRP shall perform statutory duties. - HELD THAT: - The Tribunal accepted the financial creditor's proposed nominee as interim resolution professional following receipt of his written consent in the prescribed form. Upon admission under Section 7, the Tribunal directed initiation of the corporate insolvency resolution process and declared the moratorium as set out under Section 14(1)-(4) of the Code. The order records that the IRP shall exercise the statutory functions and take steps required by the Code, file reports as mandated, and that the powers of the board of directors are superseded for the duration of the CIRP. The order also directed communication of the initiation to the Registrar of Companies and to the IBBI. [Paras 20, 21, 23, 24]

Mr. Krishnasamy Vasudevan is appointed as IRP; moratorium declared and CIRP initiated with board powers superseded.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the financial creditor, held that financial debt and default were established and the petition was within limitation, appointed the nominated interim resolution professional, and declared the moratorium under the Code with directions to the IRP and registry to effect statutory communications.

Approval of resolution plan under Section 31 - scrutiny limited to requirements of Section 30(2) - committee of creditors approval threshold under Section 30(4) - compliance with CIRP Regulations including Regulation 38 and Regulation 39(4) and Form H - ineligibility under Section 29A - resolution plan binding on the corporate debtor and stakeholders - moratorium ceases on approval of resolution plan - statutory dues and any waiver subject to concerned authorities

Scrutiny limited to requirements of Section 30(2) - approval of resolution plan under Section 31 - committee of creditors approval threshold under Section 30(4) - The adjudicating authority's power to approve the resolution plan is confined to satisfying itself that the plan, as approved by the CoC, meets the requirements of Section 30(2); having so satisfied, the plan may be approved under Section 31. - HELD THAT: - The Tribunal applied the statutory scheme whereby the RP must submit to the Adjudicating Authority a plan approved by the Committee of Creditors (Section 30(6)). The Adjudicating Authority's role is a limited scrutiny under Section 31 to ensure the plan complies with the requirements enumerated in Section 30(2). The Tribunal referred to the threshold of CoC approval under Section 30(4) and the Supreme Court's exposition in K. Sashidhar that the adjudicating authority's discretion is circumscribed and confined to the matters specified in Section 30(2). Upon examination of the plan and accompanying records, the Tribunal found that the plan provides for insolvency resolution process costs, operational creditor payments, post-approval management and supervision, does not contravene law and conforms to other Board requirements; accordingly it satisfied the conditions of Section 30(2) and approved the plan under Section 31. [Paras 7, 8, 17, 18, 19]

The Resolution Plan meets the requirements of Section 30(2) and is approved under Section 31.

Compliance with CIRP Regulations including Regulation 38 and Regulation 39(4) and Form H - Whether the resolution plan and accompanying compliance certificate conform to the CIRP Regulations and related procedural requirements. - HELD THAT: - The Tribunal examined the plan against the CIRP Regulations, noting that liquidation value was ascertained by two registered valuers and that the plan offered more than the average liquidation value. The RP had filed Form H (Compliance Certificate) and certified compliance with the Code and Regulations, electronic voting procedure, and that the plan had been approved by the requisite CoC voting share. The Tribunal found that the RP had complied with the relevant regulations (including Regulation 38 and Regulation 39(4)) and that the plan contained the statement required by Regulation 38(3A) concerning stakeholders' interests. [Paras 11, 14, 15, 16, 19]

The Resolution Plan and the compliance certificate conform to the CIRP Regulations and procedural requirements.

Ineligibility under Section 29A - resolution plan binding on the corporate debtor and stakeholders - statutory dues and any waiver subject to concerned authorities - Whether the Resolution Applicant is ineligible under Section 29A and whether the approved plan is binding on stakeholders while not effecting any waiver of statutory liabilities without appropriate authority. - HELD THAT: - The Tribunal noted that the RP had verified the identity of the Resolution Applicants and obtained affidavits under Section 30(1) affirming non-ineligibility under Section 29A. On review, the Tribunal found no contravention of Section 29A. The Tribunal further held that the approved plan shall be binding on the corporate debtor, its employees, members, creditors (including Central/State Government and local authorities), guarantors and other stakeholders. However, the Tribunal expressly clarified that approval of the plan does not amount to a waiver of statutory obligations; any waiver sought must be approved by the concerned statutory authorities and will be dealt with in accordance with law. [Paras 12, 19, 20]

The Resolution Applicant is not ineligible under Section 29A; the approved plan is binding on stakeholders, but no statutory dues are waived by the approval and any waiver requires approval of the appropriate authorities.

Approval of resolution plan under Section 31 - moratorium ceases on approval of resolution plan - The consequences of approval: the effective date of the plan, cessation of moratorium, and directions concerning implementation and records. - HELD THAT: - The Tribunal directed that the approved plan shall become effective from the date of the order. It directed the Resolution Professional to supervise implementation of the plan and to file status reports periodically. The moratorium previously in force under Section 14 ceases to have effect from the date of passing of the Order. The RP was also directed to forward CIRP records and the approved plan to the IBBI and to send a copy of the order to participants and the Resolution Applicant. [Paras 22, 23, 24, 25, 26]

The approved Resolution Plan is effective from the date of the order; the moratorium ceases from the date of the order; the RP is directed to supervise implementation, file status reports, forward records to IBBI and communicate the order to concerned parties.

Final Conclusion: The Tribunal approved the Resolution Plan after limited statutory scrutiny under Section 31, finding compliance with Section 30(2) and relevant CIRP Regulations, held the Resolution Applicant not ineligible under Section 29A, declared the plan binding on stakeholders while reserving statutory waivers to appropriate authorities, made the plan effective from the date of the order, directed cessation of moratorium and issued implementation and record-forwarding directions.

Admission under Section 7 of the Insolvency and Bankruptcy Code - Default on financial debt - Existence and enforceability of Business Loan Agreement and guarantee deeds - Rejection of plea that advance was an investment adjustable against future equity - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - Permissibility of simultaneous proceedings against principal borrower and guarantor

Existence and enforceability of Business Loan Agreement and guarantee deeds - Rejection of plea that advance was an investment adjustable against future equity - Whether a Business Loan Agreement dated 28.09.2018 was executed and is enforceable and whether the advance constituted a loan recoverable under the BLA rather than an investment to be adjusted against future equity. - HELD THAT: - The Tribunal found that a Business Loan Agreement was entered into between the parties on 28.09.2018 and that the Financial Creditor advanced the principal sum in terms of that BLA. The BLA was amended on multiple occasions by written amendment, extending the repayment date ultimately to 30.09.2019. The contention of the Corporate Debtor that the advance was part of an investment understanding to be adjusted against future equity and therefore not a plain loan was held to be untenable in the light of the written BLA and its amendments. The Tribunal also rejected the plea regarding insufficiency of stamp duty as not displacing the admitted BLA and the terms under which the loan was given. [Paras 5, 6, 22, 23]

The BLA and guarantee deeds are recognised as valid and enforceable and the advance is held to be a loan recoverable under the terms of the BLA.

Default on financial debt - Admission under Section 7 of the Insolvency and Bankruptcy Code - Whether the Corporate Debtor committed default and whether the petition under Section 7 is maintainable and should be admitted. - HELD THAT: - The Tribunal observed that the final repayment date under the amended BLA was 30.09.2019 and that the Corporate Debtor failed to repay the loan on that date. The Corporate Debtor's subsequent admissions in correspondence seeking accommodation for repayment were noted, and it was found that no repayment had been made up to the date of filing. On this factual foundation the Tribunal concluded that there was a financial debt and a default in repayment. Objections raised by the Corporate Debtor regarding locus, service formalities, alleged mismatches of corporate identity, and invocation of restrictions under the Ordinance/Section 10A were considered and rejected to the extent they did not vitiate the admitted fact of debt and default. Consequently, the Tribunal exercised its power under Section 7 to admit the petition. [Paras 8, 9, 22, 24, 25]

Default having been established, the petition under Section 7 is admitted.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - What consequential directions should follow admission, including moratorium and appointment of an Interim Resolution Professional. - HELD THAT: - Upon admission under Section 7, the Tribunal declared the moratorium contemplated by Section 14, prohibiting institution or continuation of suits or enforcement actions, and directed public announcement of the CIRP. The Financial Creditor's proposed IRP could not be appointed due to the proposed professional's limited registration validity; the Tribunal therefore appointed an alternative Interim Resolution Professional from the IBBI-recommended panel whose registration and AFA validity were verified. The petitioner was directed to make an initial payment to the IRP to meet out expenses, subject to adjustment by the Committee of Creditors. Registry was directed to notify the Registrar of Companies to update the corporate status on MCA-21. [Paras 26]

Moratorium ordered and an Interim Resolution Professional appointed with directions for public announcement, initial funding and statutory notifications.

Permissibility of simultaneous proceedings against principal borrower and guarantor - Whether parallel insolvency proceedings against the corporate debtor and the corporate guarantor preclude admission of the present petition. - HELD THAT: - The Tribunal noted the existence of a separate proceeding against the corporate guarantor but accepted the legal position that proceedings against the principal borrower and the guarantor can proceed simultaneously; this did not bar admission of the petition against the Corporate Debtor. The Tribunal relied on the principle that claims against principal and surety are distinct and admissible in parallel fora where appropriate. [Paras 13, 23]

Parallel proceedings against the guarantor do not operate as a bar to admission of the petition against the corporate debtor.

Final Conclusion: The Tribunal admitted the Section 7 petition, holding that a valid Business Loan Agreement existed, the Corporate Debtor defaulted on repayment (final due date 30.09.2019), and the Financial Creditor is entitled to recovery of the claimed debt; moratorium was declared and an Interim Resolution Professional appointed with ancillary directions.

Grant of bail under Section 439 CrPC - Prevention of Money Laundering Act offences as serious economic offences - Requirement of change in circumstances for reconsideration of bail - Burden under Section 24 of the PMLA shifting on the accused - Medical condition/COVID-19 risk as ground for bail

Grant of bail under Section 439 CrPC - Requirement of change in circumstances for reconsideration of bail - Prevention of Money Laundering Act offences as serious economic offences - Burden under Section 24 of the PMLA shifting on the accused - Second bail application filed under Section 439 CrPC was to be considered in light of the gravity of PMLA offences and whether any change in circumstances warranted grant of bail. - HELD THAT: - The court noted that the offences under the PMLA involve alleged deep rooted conspiracies and substantial public loss and therefore must be viewed as grave economic offences, following the principle that once such allegations are made the evidential burden shifts on the accused under Section 24 of the PMLA. The applicant's first bail petition had been dismissed on merits by this Court on 03.01.2020, and the present petition required a demonstrable change in circumstances to justify reconsideration. No material change in circumstances was shown after the earlier dismissal. The Court also observed that delay in trial, standing alone, did not suffice to displace the seriousness of the allegations where the nature of offence and shifted burden are relevant to the bail exercise. Applying these considerations, the Court concluded that the balance did not favour release on bail. [Paras 7, 8, 9]

Second bail application rejected for lack of any change in circumstances and having regard to the gravity of the PMLA allegations.

Medical condition/COVID-19 risk as ground for bail - Grant of bail under Section 439 CrPC - Whether the applicant's medical condition and susceptibility to COVID-19 warranted grant of bail. - HELD THAT: - The applicant relied on medical reports and increased disability to contend that his life was at risk and adequate treatment was not available in custody; reliance was also placed on pandemic related directions for temporary release. The respondent countered that record did not establish any life threatening disease necessitating release. The Court examined the submissions and material on record and found that the medical condition and pandemic circumstances did not constitute such a change in circumstances as would outweigh the seriousness of the offences and the shifted burden under the PMLA. Consequently, the medical ground did not justify bail in the present case. [Paras 4, 5, 8, 9]

Medical condition and COVID 19 risk held insufficient to grant bail; medical ground not accepted as a change warranting release.

Final Conclusion: The second bail application under Section 439 CrPC is dismissed: no change in circumstances since the earlier dismissal and the gravity of the PMLA allegations, with the shifted burden on the accused, weigh against grant of bail; the medical/COVID 19 grounds were not found sufficient to justify release.

Taxability of restaurant services - Service tax on take-away/parcel food - Distinction between sale and service - Declared services under Section 66E(1)(i) - Scope of abatement and bifurcation methodology - Clarifications in Circulars DOF 334/3/2011 and 173/8/2013

Service tax on take-away/parcel food - Distinction between sale and service - Declared services under Section 66E(1)(i) - Clarifications in Circulars DOF 334/3/2011 and 173/8/2013 - Liability to service tax on food supplied as take-away/parcel under the Finance Act, 1994 - HELD THAT: - The Court examined the statutory scheme and administrative clarifications and held that not all restaurant-related transactions attract service tax. The levy under the Act is confined to the service component as declared in Section 66E(1)(i) and, by administrative clarification, to services provided in specified (air conditioned) restaurants and to the service activities commencing from the point food is collected for service at the table until the raising of the bill. The sale of food and drink simpliciter, and the mere provision of food for pick up or home delivery (take away/parcel), lack the attributes (seating, ambience, table service and other hospitality services) which constitute the taxable restaurant service. Circular DOF 334/3/2011 and Circular 173/8/2013 confirm that mere sale/pick up and goods sold at MRP are excluded from the service portion and that the levy targets the service element in specified circumstances. Applying these principles to the facts, the Court found that take away/parcel transactions amount to sale of goods and therefore do not attract service tax under the Act. [Paras 26, 27, 28, 29]

Provision of food and drink as take away/parcel by the petitioners is the sale of goods and does not attract service tax under the Finance Act, 1994; the impugned orders taxing such receipts are quashed.

Maintainability of writ where pure question of law exists - Whether the writ petitions are maintainable notwithstanding availability of statutory appeal - HELD THAT: - The Court noted that the controversy presented a pure question of law (taxability of take away/parcel transactions) and did not involve disputed factual issues. In that circumstance, the existence of statutory appellate remedy did not preclude the exercise of writ jurisdiction. Accordingly, the plea of non maintainability on account of an efficacious alternative remedy was rejected. [Paras 19]

Writ petitions are maintainable and the objection based on availability of statutory appeal is rejected.

Final Conclusion: Writ petitions allowed; orders demanding service tax on take away/parcel sales quashed as such transactions constitute sale of goods and do not attract service tax under the Finance Act, 1994 for the periods up to June, 2017; no costs.

Concessional rate of tax on inter-state purchases - use of 'C' Forms for inter-state purchases - inclusion of commodities in registration certificate - precedential effect of High Court and Supreme Court rulings - invidious classification under Article 14

Inclusion of commodities in registration certificate - concessional rate of tax on inter-state purchases - invidious classification under Article 14 - The petitioner is entitled to have 'High Speed Diesel Oil' included as a commodity in its registration certificate and to claim concessional inter-state purchase benefits accordingly. - HELD THAT: - The Court held that reliance on the impugned departmental circular is misplaced in light of subsequent judicial pronouncements. The Division Bench decision in 2020 (reported as 2020 (3) TMI 450) construed that a dealer's right to purchase specified goods at concessional inter-state rates cannot be taken away merely because the dealer is not selling those goods, and that denying such rights would lead to an invidious classification contrary to Article 14. The Supreme Court declined interference by dismissing Special Leave Petitions challenging that view, treating the High Court exposition as a possible view to be followed. Applying those precedents, the High Court allowed the writ petition and directed inclusion of 'High Speed Diesel Oil' in the petitioner's registration certificate so as to enable purchase at concessional rate. [Paras 3, 4, 5]

Inclusion of 'High Speed Diesel Oil' in the registration certificate is directed and the petitioner is entitled to claim concessional inter-state purchase benefits.

Use of 'C' Forms for inter-state purchases - precedential effect of High Court and Supreme Court rulings - The petitioner is entitled to obtain 'C' Forms for inter-state purchases as a consequence of the inclusion of the commodity in the registration certificate, and the departmental circular restricting such use cannot be relied upon. - HELD THAT: - The Court noted the Division Bench's direction that State and Revenue Authorities should not restrict the use of 'C' Forms for inter-state purchases of the six specified commodities and should permit online downloading of such declarations. The Supreme Court's refusal to reopen the matter by dismissing the Special Leave Petitions reinforced that consistent High Court views must be followed. In view of these authoritative precedents, the departmental circular relied upon by the State could not sustain the restriction; accordingly the petitioner's request for issuance of 'C' Forms was allowed and the authorities were directed to give effect to the registration inclusion within four weeks. [Paras 3, 4, 5]

The petitioner is entitled to issuance of 'C' Forms and the departmental restriction is set aside; the authorities are directed to effect necessary steps (including online facilitation) within four weeks.

Final Conclusion: Writ petition allowed; registration certificate to be amended to include 'High Speed Diesel Oil' and consequential entitlement to 'C' Forms granted; authorities directed to implement the order within four weeks; no costs.

Penalty under section 18(1)(c) of the Wealth Tax Act - concealment of wealth - furnishing inaccurate particulars of wealth - requirement of a positive and specific finding before imposing penalty - parity between section 271(1)(c) of the Income Tax Act and section 18(1)(c) of the Wealth Tax Act

Penalty under section 18(1)(c) of the Wealth Tax Act - concealment of wealth - furnishing inaccurate particulars of wealth - requirement of a positive and specific finding before imposing penalty - Whether imposition of penalty is vitiated where the show-cause notice and the penalty order employ different or inconsistent formulations as to whether the charge is concealment or furnishing inaccurate particulars of wealth. - HELD THAT: - The Tribunal found that the Assessing Officer used distinct and inconsistent expressions in the penalty notice and in the penalty order-one formulation in the notice and another in the order-without recording a clear positive finding as to which specific default (concealment of wealth or furnishing inaccurate particulars) was the basis for levy of penalty. Reliance was placed on the jurisprudence of the jurisdictional High Court and on the reasoning in earlier decisions such as Snita Transport P. Ltd. and ITAT precedents which require the authority, when initiating penalty proceedings on an "and/or" basis, to arrive at and record a clear, specific finding in the penalty order as to which limb is being invoked. The Tribunal accepted that section 18(1)(c) of the Wealth Tax Act is pari materia with section 271(1)(c) of the Income Tax Act; hence the same legal principle applies. A mere clerical or technical inconsistency between the notice and the order that leaves the charge ambiguous undermines the validity of the penalty proceedings. Applying this principle to the facts, the Tribunal observed that neither the AO nor the Commissioner (Appeals) supplied the requisite specific finding distinguishing concealment from furnishing inaccurate particulars, and the resulting ambiguity vitiated the penalty order. [Paras 5, 6]

The penalty order was quashed because the absence of a clear specific finding (whether for concealment or for furnishing inaccurate particulars) rendered the penalty imposition unsustainable.

Final Conclusion: Appeal allowed; the penalty imposed under section 18(1)(c) of the Wealth Tax Act for Assessment Year 2011-12 is quashed on the ground of ambiguity arising from inconsistent charges in the notice and the penalty order.

Section 138 of the Negotiable Instruments Act - quasi criminal proceedings - compounding of offences under Section 147 - compensation in lieu of sentence - presumption under Sections 118 and 139 - summary trial

Section 138 of the Negotiable Instruments Act - compensation in lieu of sentence - summary trial - Whether the conviction and sentence under Section 138 could be set aside and the proceedings closed on payment of compensation equal to twice the cheque amount and costs. - HELD THAT: - The High Court, after reviewing the scheme and authorities on Chapter XVII of the Negotiable Instruments Act and recognising its primarily compensatory object and summary mode of trial, accepted the accused's offer to pay twice the cheque amount as compensation and costs in lieu of the one year sentence. The Court relied on the line of decisions holding Section 138 proceedings to be quasi criminal with compounding permitted under Section 147 and observed that where the complainant is duly compensated the court may, in its discretion, close the proceedings and discharge the accused. Applying that principle to the facts - the accused tendered demand drafts totalling an amount covering twice the cheque value and costs, and the complainant agreed to receive them - the Court was satisfied that the complainant had been duly compensated and that the punitive element could be foregone in favour of the compensatory object of the statute. [Paras 14, 16, 17]

Conviction and sentence set aside and proceedings closed in lieu of payment of twice the cheque amount as compensation and costs.

Quasi criminal proceedings - compounding of offences under Section 147 - Whether Section 138 proceedings are of a quasi criminal nature and amenable to compounding/modification by the court on satisfaction of compensation. - HELD THAT: - The Court restated and applied established precedents that proceedings under Chapter XVII are quasi criminal-primarily compensatory in object-and that Section 147 makes offences under the Act compoundable. The judgment summarises authority holding that the court can, even at later stages, permit compounding or close proceedings when the complainant is compensated, and that the compensatory purpose may justify modification of sentence in appropriate cases. On that legal basis the Court exercised its discretion to accept compensation and close the criminal proceedings. [Paras 13, 14]

Court recognised the quasi criminal character of Section 138 proceedings and the applicability of compounding/compensatory remedies, and applied those principles to permit closing the proceedings upon compensation.

Compensation in lieu of sentence - Whether payment of compensation would remove resultant stigma or disqualification from the accused's employment. - HELD THAT: - Having accepted the compensation and closed the proceedings, the Court expressly directed that the accused shall not suffer any stigma of disqualification in his service by reason of the payment of compensation and the setting aside of conviction and sentence. The Court ordered cancellation of any bail bonds and transmission of records to the trial/appellate courts as consequential steps. [Paras 17]

Payment accepted in lieu of sentence and the accused relieved of stigma/disqualification arising from the conviction.

Final Conclusion: Criminal revision partly allowed: on payment of twice the cheque amount as compensation and costs (tendered and accepted by the complainant), the conviction and sentence under Section 138 were set aside, the proceedings closed, bail bonds (if any) cancelled, and the accused was directed not to suffer any stigma or service disqualification as a consequence.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable reverse onus in cheque dishonour cases - legally enforceable debt/liability evidenced by promissory note and cheque - requirement of statutory notice and non-response - scope of revisional jurisdiction - not to act as second appellate court - confirmation of conviction under Section 138 of the Negotiable Instruments Act - modification of sentence and confirmation of compensation

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable reverse onus in cheque dishonour cases - Presumption of existence of legally enforceable debt arising from admitted promissory note and cheque and burden on accused to rebut that presumption. - HELD THAT: - The Court applied the statutory presumption under Section 139 (read with Section 118) of the Negotiable Instruments Act: once issuance of the cheque and the signature thereon are admitted, a presumption arises in favour of the complainant as to the existence of a legally enforceable debt or liability. That presumption is rebuttable, and the accused bears the onus of adducing evidence to displace it. In the present case the accused admitted signatures on Ex.P1 and Ex.P2 but did not lead any evidence in rebuttal nor take effective steps (such as stop payment instructions) when the cheque was dishonoured. Having perused Ex.P1 to Ex.P8, the Court found no suspicious features and held that the accused failed to rebut the presumption, justifying conviction under Section 138 of the NI Act. [Paras 11, 12, 13, 14]

The presumption under Section 139 stood unrebutted and supported conviction under Section 138.

Legally enforceable debt/liability evidenced by promissory note and cheque - requirement of statutory notice and non-response - Whether discrepancy between amounts in the promissory note and the cheque or non-examination of the pronote attester vitiated the complainant's case. - HELD THAT: - The accused contended that the cheque (Ex.P2) for a higher amount and non-examination of the pronote attester undermined the claim and that no consideration was proved. The Court observed that the complainant had produced Ex.P1 (pronote), Ex.P2 (cheque) and proof of presentation and return (Ex.P3-Ex.P4), and had issued the statutory demand notice (Ex.P5-Ex.P8) which the accused received but did not answer. The Court held that mere discrepancy in amounts and absence of attester's testimony did not, in the circumstances, rebut the statutory presumption; the accused's pleaded defence was not supported by evidence and thus did not vitiate the complainant's case. [Paras 8, 11, 12, 14]

Discrepancy and non-examination of attester did not defeat the prosecution; the complainant's evidence was sufficient.

Scope of revisional jurisdiction - not to act as second appellate court - Whether the High Court should interfere with concurrent findings of fact recorded by the trial and appellate Courts in revisional proceedings. - HELD THAT: - Relying on established precedent, the Court reiterated that in exercise of revisional jurisdiction it will not act as a second appellate forum and will not ordinarily upset concurrent findings of fact unless there is jurisdictional error. The High Court found no jurisdictional infirmity or perversity in the findings of the trial and appellate Courts on the question of guilt; hence interference was inappropriate. [Paras 10, 14]

Revision dismissed; concurrent factual findings by the Courts below left undisturbed.

Confirmation of conviction under Section 138 of the Negotiable Instruments Act - modification of sentence and confirmation of compensation - Whether the conviction, the modified sentence imposed by the Appellate Court, and the compensation awarded should be interfered with. - HELD THAT: - The appellate Court had confirmed conviction under Section 138, reduced the prison term from one year to six months and upheld the compensation awarded by the trial Court. Having found that the complainant had proved the offence and the accused failed to rebut statutory presumptions, and having found no infirmity in the reasoning of the Courts below, the High Court refused to alter the conviction or the appellate modification of sentence and confirmed the compensation order. Directions were given for commitment to prison and payment of compensation as ordered by the Appellate Court. [Paras 6, 14, 15]

Conviction upheld, appellate modification of sentence and compensation confirmed; execution ordered.

Final Conclusion: Criminal Revision dismissed; conviction under Section 138 NI Act upheld, sentence as modified by the Appellate Court and the award of compensation confirmed; bail bonds cancelled and directions issued for commitment and transmission of records.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttable presumption and standard to rebut (preponderance of probabilities) - Burden shifting to the complainant upon rebuttal - Proof of financial capacity to lend as material to cheque dishonour prosecutions - Application of Sections 118(a) and 139 of the Negotiable Instruments Act - Revisional jurisdiction under Sections 397 and 401(1) Cr.P.C. to correct perverse findings

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttable presumption and standard to rebut (preponderance of probabilities) - Burden shifting to the complainant upon rebuttal - Proof of financial capacity to lend as material to cheque dishonour prosecutions - Application of Sections 118(a) and 139 of the Negotiable Instruments Act - Whether the accused successfully rebutted the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act and thereby defeated conviction under Section 138 N.I. Act. - HELD THAT: - The Court examined the materials adduced by the defence - the accused's evidence including trip sheets (Exs.D1, D2) to show absence from town on the alleged date, the bank-manager's evidence and the complainant's bank statement (Ex.D7) showing very low balances, and the complainant's own admissions that some amounts were arranged through friends and that transactions were by bank transfers. Relying on settled law that the presumption under Section 139 is rebuttable on the preponderance of probabilities, the Court found that the accused had brought forward probable and admissible evidence sufficient to displace the initial presumption that the cheque was issued for discharge of a debt. Once the accused probabilised his defence, the evidential burden shifted to the complainant to prove that consideration had in fact been advanced and that he had the financial capacity to lend the stated amount. The complainant failed to lead direct evidence of having advanced the sum (no friends who allegedly advanced funds were examined) and did not satisfactorily explain the discrepancies in his account of dates and sources of funds. On re-appraisal under the revisional jurisdiction where lower courts' findings were found to be perverse in light of defence evidence, the Court concluded that the presumption under Sections 118(a) and 139 could not be allowed to operate in favour of the complainant. [Paras 17, 18]

The accused successfully rebutted the statutory presumptions; the evidential burden shifted to the complainant who failed to discharge it, warranting setting aside the conviction under Section 138 N.I. Act and acquittal of the accused.

Final Conclusion: Criminal Revision allowed; judgments of conviction confirmed by the trial and appellate courts set aside; the petitioner/accused acquitted of the offence under Section 138 N.I. Act; bail bond cancelled and any fine paid to be refunded.

Demand, acceptance and recovery as essential ingredients of offence under Section 7 - presumption under Section 20 of the Prevention of Corruption Act - approver evidence and requirement of independent corroboration - admissibility and corroborative value of tape-recorded conversation

Demand, acceptance and recovery as essential ingredients of offence under Section 7 - Whether the prosecution proved demand, acceptance and recovery necessary to convict under Section 7 read with Section 13(1)(d) and 13(2) of the PC Act. - HELD THAT: - The Court found that the complainant (PW 5) turned hostile and denied that the appellant demanded money; several independent witnesses contradicted the approver's account of presence and interaction. There was no recovery from the appellant and the trial court did not invoke the statutory presumption under Section 20. On the evidence, the essential foundational facts of demand and acceptance were not established beyond reasonable doubt. Applying settled principles that suspicion cannot substitute proof and that benefit of doubt must be given where two views are possible, the Court concluded that ingredients of offence under Section 7 and the consequential charge under Section 13(1)(d) were not proved. [Paras 45, 48, 62, 68, 69]

Prosecution failed to prove demand, acceptance and recovery; conviction under Section 7 and Section 13(1)(d) cannot be sustained.

Approver evidence and requirement of independent corroboration - Reliability and evidentiary value of the approver's (PW 9) testimony and whether it was corroborated by independent evidence. - HELD THAT: - The Court examined the approver's statements and contemporaneous testimony of independent witnesses (including PW 5, PW 8, PW 10 and PW 15) and found material contradictions and evidence that PW 9 was not present in the appellant's room when the complainant was. The approver's account was neither corroborated in material particulars nor supported by independent witnesses; the trial court wrongly relied on approver evidence without requisite corroboration. The Court observed that approver testimony standing uncorroborated and contradicted by independent evidence could not sustain conviction. [Paras 44, 49, 51, 55, 56]

Approver's testimony was unreliable and uncorroborated; it could not form a basis for conviction.

Admissibility and corroborative value of tape-recorded conversation - Whether the tape-recorded conversation and its transcription were admissible and capable of corroborating demand/acceptance. - HELD THAT: - The Court noted defects in handling and production of the recorded tapes: no transcription/production at initial hearing, alleged mishandling and unexplained preparation of copies outside official custody, non-examination of certain custodial/technical witnesses, and inconsistency in who made copies. Citing the established conditions for admissibility (identification of voice, proof of accuracy, and safeguarding against tampering), the Court found the tapes lacked necessary safeguards and could only be corroborative if supported by other credible evidence of the conversation. Given absence of such reliable corroboration, the tape evidence could not cure the failure to prove demand and acceptance. [Paras 16, 17, 18, 28, 32]

Recorded tapes/transcripts were not shown to be sufficiently reliable or properly produced to corroborate the prosecution case.

Presumption under Section 20 of the Prevention of Corruption Act - Whether the presumption under Section 20 could be invoked against the appellant in absence of recovery from him. - HELD THAT: - The Court observed that Section 20 presumption may operate only after foundational facts (demand and acceptance) are established and/or recovery is linked to the accused. In the present case there was no recovery from the appellant and foundational facts were not proved; moreover the trial court did not invoke Section 20. Consequently, no statutory presumption could be raised against the appellant to fill gaps in the prosecution case. [Paras 11, 62, 68]

Section 20 presumption could not be applied; its non-invocation and lack of recovery precluded reliance on the presumption to sustain conviction.

Final Conclusion: The High Court allowed the appeal, set aside the trial court's conviction and sentence, and acquitted the appellant on the charges under Section 7 and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988, holding that prosecution failed to prove demand, acceptance and recovery, that approver and tape evidence were unreliable or uncorroborated, and that Section 20 presumption could not be invoked.