TaxTMI 
TaxTMI 
2026 (7) TMI 250
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.... and Mr. Harsh Gurbani, Advocates for RP. Mr. Vaibhav Gaggar, Sr. Advocate with Mr. Vishesh Kalra, Ms. Smriti Churiwal, Mr. Vikram Wadhera, Ms. Sonia Sharma, Ms. Aasia Hasan, Mr. Ramayani, Mr. Jaiveer, Ms. Neha, Ms. Simran Shadija and Ms. Vidisha Jain, Advocates for Pegasus. Mr. Abhishek Anand, Mr. Karan Kohli and Ms. Palak Kalra, Advocates for SRA. Mr. Abhijeet Sinha and Mr. Dhruv Malik, Sr. Advocates with Mr. Saikat Sarkar, Mr. Prantik Garaj and Ms. Malarika C., Advocates. JUDGMENT Ashok Bhushan, J. These three Appeal(s) arise from same Corporate Insolvency Resolution Process ("CIRP") of Corporate Debtor ("CD") Incab Industries Ltd. being CP (IB) No. 1684/KB/2018. Company Appeal (AT) (Ins.) No. 662 of 2025 has been filed by Tropical Ventures Company Ltd. (hereinafter referred to as "Tropical") challenging the order dated 08.01.2025 passed by National Company Law Tribunal ("NCLT"), Division Bench, Court No. II, Kolkata in I.A.(IB) No. 84/KB/2022. By order dated 08.01.2025 I.A.(IB) No. 84/KB/2022 filed by the Tropical has been dismissed. Company Appeal (AT) (Ins.) No. 16 of 2026 has been filed by Pegasus Assets Reconstruction Pvt. Ltd. (hereinafter referred to as ....
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....asis. On 06.08.2007, Leader Berhad intimated the CD about the assignment of loan to Tropical. (viii) On 01.12.2016, the Sick Industrial Companies (Special Provisions) Act, 1985 was repealed. (ix) On an application filed by an Operational Creditor, Jayanta Baneerjee, the CD was admitted into CIRP on 07.08.2019. The Adjudicating Authority directed for liquidation of the CD on 07.02.2020. An Appeal was filed by the Operational Creditor challenging the order dated 07.08.2019. The Appellate Tribunal vide its order dated 04.06.2021 set aside the order of liquidation and reinstated the CIRP of the CD. Pankaj Kumar Tibrewal was appointed as Interim Resolution Professional of the CD. (x) Tropical filed a claim for a sum of Rs. 21,52,84,33,946.87 in Form-C as Financial Creditor. On 17.11.2021, the RP admitted the claim of Tropical as 'related party' of the CD. The Tropical filed an IA (IB) No. 84 of 2022 challenging the decision of the RP declaring the Appellant as 'related party' and treatment of the part of the claim of Tropical as unsecured. The RP vide email dated 10.12.2021 admitted the claim of Tropical for a sum of Rs. 19,90,63,12,342/- only. (xi) P....
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....solution Plan by the CoC. 3. We have heard Shri Abhijeet Sinha, learned Senior Counsel appearing for Tropical in Company Appeal (AT) (Ins.) Nos. 662 of 2025 and 192 of 2026; Shri S. Niranjan Reddy, learned Senior Counsel appearing for Pegasus in Company Appeal (AT) (Ins.) No. 16 of 2026; Shri Krishnendu Datta, learned Senior Counsel appearing for the RP; Shri Abhishek Anand, learned Counsel appearing for SRA; Shri Vaibhav Gaggar, learned Senior Counsel appearing for Pegasus in Company Appeal (AT) (Ins.) Nos. 662 of 2025 and 192 of 2026. On 15.05.2026, hearing was completed and judgment was reserved. In these Appeal(s), learned Counsel for the parties have made submissions in support of their respective cases. We proceed to notice the submissions of the parties in each Appeal separately. Company Appeal (AT) (Ins.) No. 662 of 2025 4. This Appeal has been filed by Tropical challenging the order dated 08.01.2025 rejecting I.A.(IB) No. 84/KB/2022 filed by the Tropical challenging the decision of the RP declaring the Tropical as 'related party' and rejecting the claim in respect of HSBC Bank. Shri Abhijeet Sinha, learned Senior Counsel appearing for the Tropical submits that the....
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....t Tropical is neither Holding Company or Subsidiary Company is not even challenged by the Respondents. With respect to claim of the Appellant for US$ 3.75 millions against Hold Cover to HSBC, it is submitted that RP committed error in rejecting the said claim. The Hold Cover is essentially a Counter Guarantee on behalf of Leader Universal Holdings Berhad to enable their Guarantee to HSBC. The Hold Cover was issued using the existing Guarantee-line of Leader Cable Industry Berhad, a subsidiary of Leader Berhad. Leader Cable Industry Berhad made necessary payment of US$ 3.75 millions. The RP committed error in rejecting the said claim of US$ 3.75 millions on behalf of the Leader Berhad and on assignment of the debt in favour of the Tropical, the Appellant was subrogated and entitled for acceptance of the claim relating to payment to HSBC. 5. Shri Krishnendu Datta, learned Senior Counsel appearing for the RP refuting the submissions of the Appellant submits that RP had rightly declared the Tropical as 'related party' to the CD. Under the admitted ownership structure, Naresh Asrani is ultimate beneficial owner. The Appellant itself has produced and confirmed the correctness of share....
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.... 63% of Leader Berhad and Leader Berhad in turn holds 52.1% in the CD directly and 10% indirectly through Satyam Incab (Holdings) Ltd., which gives the Appellant effective influence of over 60% voting power in the CD. The Appellant qualifies as a 'related party' under Section 5(24)(i) (associate company and step-down subsidiary company test) and also under Section 5(24)(l) (control over board composition). Lifting of corporate veil rightly applied to determine control. There was no valid basis for admission of claim arising from HSBC facility. Subsequent changes in the CoC cannot affect decisions already taken. The Plan of the SRA has already been approved by the CoC as well as by the Adjudicating Authority. Company Appeal (AT) (Ins.) No. 16 of 2026 8. Learned Senior Counsel appearing for the Pegasus in support of the Appeal submits that RP committed error in admitting exorbitant claim of Tropical of Rs. 1731 crores, which contains principal amount of Rs. 85 crores. + interest of Rs. 1646 crores. The Adjudicating Authority committed error in rejecting IA filed by the Pegasus being IA No. 1511/KB/2025, which contained detailed pleadings and the grounds by questioning the decis....
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....ubmissions of Pegasus submits that assignment in favour of the Tropical by Leader Berhad was assignment with subrogation. The Appellant by virtue of Sections 140 & 141 of the Indian Contract Act, 1872 have all rights of the creditors against the CD and the claim, which was filed by Tropical was in accordance with the Assignment Deed dated 08.03.2007. Assignor has issued a general announcement. The Assignor intimated the CD regarding assignment of debt in favour of the Tropical on 06.08.2007. The CD was declared a SICA Company and was with the BIFR till 01.12.2016. The claim was filed by the Tropical before the RP, which after due verification was accepted by the RP. Pegasus (who is part of the CoC) post claim, which has already been admitted, has no right to question the admission of the claim of the Tropical. The transaction, which took place between the Lenders and the Leader Berhad were much before the Notification dated 26.09.2000 issued by the RBI. The entire transaction having taken place prior to Notification dated 26.09.2000, the Notification has no applicability and the Adjudicating Authority has rightly taken the view that Notification dated 26.09.2000 has no applicabilit....
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....alised authorities such as the RBI or the Enforcement Directorate. The RP is not the forum for adjudication of foreign exchange disputes. The claim is not barred by time. Company Appeal (AT) (Ins.) No. 192 of 2026 11. Learned Senior Counsel appearing for the Appellant - Tropical in support of the Appeal submits that the resolution in 22^nd CoC Meeting was never informed to the Tropical. The SRA noted that the claim of the Tropical has been accepted and Tropical has already been allocated Rs. 294 crores in the Resolution Plan. In the Resolution Plan no additional or subsequent changes has been done by the Adjudicating Authority while approving the Plan. The Appellant - Tropical has only prayed for partially set aside the order approving the Plan. The payment schedule under the Resolution Plan cannot be altered. The Appellant has been allocated the amount, even though it has been treated as 'related party'. 12. Learned Senior Counsel appearing for the RP opposing the submissions of the Appellant submits that the SRA has already deposited the amount of Rs. 585 crores and has taken possession and the control of the CD. The Adjudicating Authority by the impugned order dated 03.....
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.... (II) Whether the decision of the RP rejecting the claim of the Tropical with respect to HSBC was sustainable? (III) Whether in the facts of the case and the sequence of events, the Tropical is 'Secured Creditor' of the CD? (IV) Whether the Peagasus in its is I.A.(IB) No. 1511/KB/2025 has made out sufficient ground to interfere with the order of RP verifying the claim of Tropical to the sum of Rs. 19,90,63,12,342/-? (V) Whether the Notification dated 26.09.2000 was applicable in respect to the claim submitted by the Tropical and the Adjudicating Authority has rightly held the Notification not applicable with respect to verification of the claim of the Tropical? (VI) Whether the Tropical is entitled to obtain any post-facto approval of RBI with respect to amount of claim admitted in the CIRP and the amount allocated in the Resolution Plan to the Tropical? (VII) Whether Tropical has made out a case for partially setting aside the order dated 03.12.2025 in I.A. No. 646 of 2022 insofar as directions, which have been issued by the Adjudicating Authority in the impugned order in Paragraph 49 of the impugned order making the Resolution Plan ....
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.... the Adjudicating Authority has held that the Appellant exercises control over the CD and has more than 20% voting power directly. In Paragraph-44 of the impugned order, following has been held: "44. Therefore, we are of the view that the corporate debtor will have to be treated as "related party" as it is an "associate company" in terms of Section 5(24)(i) as Applicant is in a position to de facto control the corporate debtor, indirectly and also covered by Section 5(24)(1) of the Code as the Applicant is in a position to control the company's board thru its direct shareholding of 63% shareholding in Leader Universal which in turn owns 52% shareholding in corporate debtor. In any event all the Companies are owned or controlled by single person Mr. Naresh Lakshmi Chand Asrani who can decide on the board of any company, mentioned in the chart above and thus Tropical's board, the LUH's board and ultimately the board of the corporate debtor." 19. For considering the issue as to whether the Appellant is 'related party' of the CD, we need to notice relevant provisions of the IBC and the provisions of the Companies Act, 2013. Section 5(24) defines 'related party'.....
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....r the purposes of this clause,- (a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company; (b) the composition of a company's Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors; (c) the expression "company" includes any body corporate; (d) "layer" in relation to a holding company means its subsidiary or subsidiaries;" 23. Learned Counsel for the Appellant has contended that the Tropical does not have any shareholding in CD, hence, the CD cannot be said to be subsidiary of the Appellant. When we look into the chart as quoted in Paragraph-16 of the judgment of the Adjudicating Authority, the Appellant has 63% shareholding in Leader Universal (Mauritius). Paragraph 16 of the impugned order (in Company Appeal (AT) (Ins.) No. 662 of 2025) including the chart therein is as follows: "16. Ld. Counsel relied on a chart which explains the hol....
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.... Thus, no error can be found in the order of the Adjudicating Authority holding the Appellant as 'related party' to the CD. Furthermore, from the chart as quoted in Paragraph-16 of the impugned order, it is clear that Naresh Asrani, who is beneficial owner, has control over all the companies. 28. Learned Counsel for the Appellant contended that the CD was in the BIFR from 04.04.2000 till 01.12.2016, hence, it cannot be said that CD was under the control of Naresh Asrani. The CIRP in the present case had commenced on 07.08.2019. For the purpose of deciding the 'related party', the control on the CD before the commencement of the CIRP is relevant and the fact that the CD was in BIFR till 01.12.2016, has no relevance in finding out the 'related party' status on commencement of the CIRP. Shareholding of the Appellant, CD, Leader Berhad and other companies is reflected in chart as noted in Paragraph-16, is an admitted position, which is prior to initiation of CIRP. Hence, the said shareholding and control is relevant to determine and the submission of the Appellant that CD was in BIFR till 01.12.2016 has no relevance. 29. We also do not find any error in the order of the Adjudicat....
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....ed 03.03.1997 and in favour of ICICI Bank on 26.02.1999. There was a Hold Cover Guarantee also in favour of HSBC which we have already dealt in proceedings paragraph of this judgment. The Lenders have invoked the guarantee in pursuance of which invocation Leader Berhad made the payments to the Lenders in the year 2000-2001 as noted above. The Corporate Debtor had registered charge in favour of Lenders with the Registrar of Companies in the year 1998-1999. Thus, security interest was created over the assets worth charge assets in favour of Lenders. Leader Berhad the Assignor had executed an assignment deed dated 08.03.2007 in favour of Tropical for a consideration of USD 1 on as is where is basis. On the strength of an assignment, Tropical has filed claim before the IRP. RP had admitted the claim as secured creditor. Acceptance of claim of Tropical by RP was challenged by Pegasus Asset Reconstruction Ltd. by filing I.A No. 1511 of 2025. In I.A No. 1511 of 2025, Pegasus who is a secured creditor of the Corporate Debtor had questioned the admission of claim of Tropical. In the application, Pegasus has also pleaded that Tropical is not a secured creditor of the Corporate Debtor, no sec....
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....FEMA) replaced FERA. It came into force on 1st June 2000. ii. The Resolution Professional ought to have appreciated that as stated above, Leader Berhad would have had to obtain prior permission from the Reserve Bank of India if it were to acquire the immovable property of the Corporate Debtor via mortgage under FERA. No such approval has been furnished. On the contrary, in the expert opinion furnished by the Respondent No. 2 to substantiate its claim, the expert has merely contended that upon payment of monies to the lenders, "Leader Berhad, the alleged Assignor stepped into the shoes of the creditors". iii. In so far as payments made by the alleged Assignor to the lenders of the Corporate Debtor post 1st June 2000 (i.e. when FEMA came into force), the following provisions ought to have been considered by the Respondent No. 1, which he has failed to do so:- (a) Notification No. FEMA 29/RB-2000 dated 26.09.2000 ("FEMA 29 RB"), expressly stipulates that "(2A) a person resident in India being the principal debtor, to make payment to a person resident outside India being a guarantor, such payment being by way of reimbursement of the payment made to the reside....
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....reciated that creation of a security in favour of a foreign company, under the construct of the FERA and FEMA provisions require prior approval of the RBI. In this regard, one may refer to the provisions concerning creation of security interests in the case of an External Commercial Borrowing (ECB), wherein the provisions expressly state that approval of the Reserve Bank in mandatory for creating a security interest. The Applicant craves leave to refer to any rely upon the ECB related provisions for reference, when produced. It is submitted that having regard to the foregoing, the Respondent No. 1 erred in accepting the submission of Respondent No. 2 that it should be treated as a secured creditor. It is submitted that no security could have been created in favour of Respondent No. 2 or its predecessor, the alleged Assignor, without the prior permission of the Reserve Bank of India. As stated hereinabove, the Respondent No. 1 has, without application of mind, accepted the submission of Respondent No. 2 that upon discharge of liability by the alleged Assignor, it had stepped into the shoes of the original secured lenders. (b) The Respondent No. 1 ought to have appreciated t....
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....fore the expiry of a period of ninety days from the date on which the application was received by the Reserve Bank, the Reserve Bank does not communicate to the applicant that the permission applied for has been refused, it shall be presumed that the Reserve Bank has granted such permission. Explanation .-In computing the period of ninety days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the applicant for making a representation under the first proviso shall be excluded. (4) Every person and company referred to in sub-section (1) holding at the commencement of this Act any immovable property situate in India shall, before the expiry of a period of ninety days from such commencement or such further period as the Reserve Bank may allow in this behalf, make a declaration in such form as may be specified by the Reserve Bank regarding the immovable property or properties held by such person or company." 34. When we look into Section 31(1) it prohibits a non-citizen of India or a company which is not incorporated under any law in force in India to acquire or hold or transfer or dispose of by sale, ....
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....nd by virtue of provisions of Foreign Exchange Regulation Act, 1973 and no interest in any immovable property could be acquired without permission of RBI. Ld. Counsel for Pegasus has also relied on the judgment of this Tribunal in K.V Jayaprakash Vs. State Bank of India & Anr., CA (AT) (Ins) No. 362 of 2022 decided on 30.09.2022 while considering security interest this Tribunal has held that secured creditor is one in whose favour security interest is created. In the above case, no security interest was created by the CD in favour of Appellant of that case, hence, it was held that the Appellant could not be treated as secured creditor. From paras 67 to 70 following was laid down:- "67. Section 140 of the Indian Contract Act deals with rights of surety on payment or performance. Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. 68. A guarantor will get invested with all the rights which the creditor had only "upon payment or performance of all....
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....pecified modes, thereby he cannot claim to be a secured creditor to include him as secured creditor in the creditors list to pay his share of amount." 36. Learned. Counsel for Pegasus has also relied on judgment of Hon'ble Supreme Court in Amrit Lal Goverdhan Lalan Vs. State Bank of Travancore & Ors., 1968 SCC OnLine SC 246 where the Hon'ble Supreme Court has occasion to deal with Section 140 and 141 of the Indian Contract Act, 1872. Following was laid down in the above judgment:- "In this connection it is necessary to consider the provisions of s. 140 of the Indian Contract Act, 1872 which states "Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for is invested with all the rights which the creditor had against the principal debtor(s)." This section embodies the general rule of equity expounded by Sir Samuel Romilly as counsel and accepted by the Court of Chancery in Craythorne v. Swinburne, namely : "The surety will be entitled to every remedy which the creditor has against the principal debtor; to enforce ....
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....nd substantial security in the event of his being called on to fulfil his duty as a surety, and to pay the debt for which he had so become surety. He will, however, be discharged from his liability as surety if the creditors have put it out of their power to hand over to the surety the means of recouping, himself by the security given by the principal. That doctrine is very clearly expressed in the notes in Rees v. Barrington-2 White & Tudor's L.C., 4th Edn. at pg. 1002- As a surety, on payment of the debt, is entitled to all the securities of the creditor, whether he is aware of their existence or not, even though they were given after the contract of suretyship, if the creditor who has had, or ought to have had, them in his full possession or power, loses them or permits them to get into the possession of the debtor, or does not make them effectual by giving proper notice, the surety to the extent of such security will be discharged. A surety, moreover, will be released if the creditor, by reason of what he has done, cannot, on payment by the surety, give him the securities in exactly the same condition as they formerly stood in his hands.' " It is true that S. 1....
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....xtent of immovable property cannot be sustained. We thus hold that Tropical cannot be held to be a secured creditor with respect to immovable properties of the CD and the decision of the RP to that extent is unsustainable. We answer Question No. (III) in following manner: Tropical cannot be held to be a secured creditor of the Corporate Debtor with respect to immovable properties of the Corporate Debtor in the facts and circumstances of the present case. Question Nos. (IV), (V) and (VI) 39. Prior to filing of IA 1511/KB/2025, the Appellant - Pegasus has filed IA 140/2022 challenging the decision of the RP, admitting the claim of Tropical. Following prayers were made by the Pegasus in IA 140/2022: "a) Pass an Order quashing and setting aside the decision of the Respondent No. 1 whereby he has incorrectly admitted the claim of the Respondent No. 2; (b) Pass an Order rejecting the claim of the Respondent No. 2 against the Corporate Debtor; (c) Pass such further and other Orders and directions as the nature and circumstances of the case may require and as this Hon'ble Tribunal may deem fit and proper.'' 40. The Adjudicating Autho....
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....2000 4. Citibank Guarantee (paid by Leader Berhad) INR 43,53,00,000/- 20th April 2000 5. Citibank Guarantee (paid by Leader Berhad) INR 33,96,26,944.80 12th May 2000" 42. As noted above, the claim pertaining to HSBC was not admitted and the total payments made by Leader Berhad to Citibank and ICICI Bank, which comes to Rs. 85,79,26,944/- were admitted as secured debt, which was the total amount paid by the Leader Berhad to the Lenders of the CD, after invocation of the guarantees. The Citibank and ICIC Bank had also confirmed receipt of the aforesaid amount, to which there is no dispute. Leader Berhad had executed a Deed of Assignment in favour of the Tropical on 08.03.2007. The Assignment was made by the Leader Berhad in favour of Tropical, which is a 'related party' to the CD, which assignment was for consideration of US$ 1. The Assignment Deed mentions about the payments made by Assignor to the Lenders of the CD. It is useful to notice Paragraphs 4, 5, and 6 of the Assignment Deed, which are as follows: "4. The Creditors had provided banking and credit facilities to Incab. The Assignor and its subsidiaries had in turn guaranteed Incab's re....
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....007 is simple assignment of debt, which was discharged by Leader Berhad and by the said Assignment Deed, no subrogation of rights of Lenders were made in favour of Tropical. 46. Learned Counsel for the parties have referred to and relied on judgment of the Hon'ble Supreme Court in Economic Transport Organization, Delhi vs. Charan Spinning Mills Pvt. Ltd. & Anr. - (2010) 4 SCC 114. The Hon'ble Supreme Court in the above case was considering the concept of subrogation in reference to insurer, when it discharges the claim of insurer. In Paragraph-28, three kinds of subrogations have been classified. Paragraphs 28.1, 28.2 and 28.3, which defines three broad categories of subrogations are as follows: "28.1. In the first category, the subrogation is not evidenced by any document, but is based on the insurance policy and the receipt issued by the assured acknowledging the full settlement of the claim relating to the loss. Where the insurer has reimbursed the entire loss incurred by the assured, it can sue in the name of the assured for the amount paid by it to the assured. But where the insurer has reimbursed only a part of the loss, in settling the insurance claim, the insure....
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....s an end to the right of the assured to sue the wrongdoer and recover the damages for the loss. Subrogation only entitles the insurer to receive back the amount paid to the assured, in terms of the principles of subrogation. (iii) Where the assured executes a letter of subrogation, reducing the terms of subrogation, the rights of the insurer vis-à-vis the assured will be governed by the terms of the letter of subrogation. (iv) A subrogation enables the insurer to exercise the rights of the assured against third parties in the name of the assured. Consequently, any plaint, complaint or petition for recovery of compensation can be filed in the name of the assured, or by the assured represented by the insurer as subrogee-cum-attorney, or by the assured and the insurer as co-plaintiffs or co-complainants. (v) Where the assured executed a subrogation-cum-assignment in favour of the insurer (as contrasted from a subrogation), the assured is left with no right or interest. Consequently, the assured will no longer be entitled to sue the wrongdoer on its own account and for its own benefit. But as the instrument is a subrogation-cum-assignment, and not a me....
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....avour of the Respondent No. 2 under the extant laws, and (iii) Whether the Respondent No. 2 is entitled to receive any amount beyond the actual amount purportedly paid under the guarantees, in light of the restrictions under the extant laws. (iv) Effect of Foreign Exchange Management Act, 1999 which came into force with effect from 1.6.2000 i.e. before the alleged assignment." 51. Specific pleadings have been made on the basis of provisions of FEMA 1999 and the Notification dated 26.09.2000 issued by the RBI. In Paragraphs 21 and 22 of the application, detailed pleadings have been made by the Pegasus. It was specifically pleaded that interest component of Rs. 1531 crores in the claim of Tropical, directly violates the proviso to Para 2A of FEMA 29/2000 dated 26.09.2000. It is useful to notice pleadings in Paragraph 22 (A) and (B), which are as follows: "22. A. The entire claim of Respondent No. 2 of secured status is predicated on the Assignment Deed dated 08.03.2007 executed between the alleged Assignor, being Leader Universal Berhad and the Respondent No. 2. However, the said deed merely transfers the "right, title, and interest in the debt" and is c....
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....ng RBI strictions under Notification No. FEMA 29/RB-2000 dated 26.09.2000, which explicitly limits recovery to "reimbursement of actual amounts paid under guarantee." The proviso unequivocally states: "amount payable shall not exceed rupee equivalent paid by non-resident guarantor." TVCL's claim for Rs.1,531 Crores in interest violates this cap." 52. The copy of the Notification dated 26.09.2000 has been extracted by the Adjudicating Authority in Paragraph-62 of the impugned order dated 03.12.2025. It is useful to notice Paragraph-62 of the impugned order, which is as follows: "62. RBI Notification No. FEMA.29/RB-200 dated September 26, 2000 provides that In pursuance of the provisions of Section 3 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in partial modification of its Notification No. FEMA/16/RB-2000 dated 03rd May 2000, (hereinafter referred to as 'the said Notification'), the Reserve Bank hereby directs that the said Notification shall with immediate effect be amended as under, namely after paragraph (2) of the said Notification, the following paragraph shall be added, namely "(2A) a person resident in India being the princi....
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....ribed reimbursement by the resident principal debtor only to rupee equivalent of the amount paid by the non-resident guarantor under the guarantee. 55. The Foreign Exchange Management Act, 1999 was enacted to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. One of the objectives of the enactment is to facilitate external trade and payments and FEMA Notification dated 26.09.2000 was issued with respect to payments. Clause 2A, which was inserted by Notification dated 26.09.2000 and vide the above clause the principal debtor, who is a resident in India has been permitted to make payment to a person resident outside India being a guarantor, which payment was by way of reimbursement of the payment paid to the resident debtor by non-resident guarantor. In the present case, resident guarantors are ICICI, Citibank and HSBC and the payments made by the Leader Berhard, a non-resident guarantor was to resident guarantors. The provision further provided that amount payable by the resident principal debtor shall not exceed to ....
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....editors, namely ICICI Bank and Citi Bank by making direct payments to them under the terms of the invoked guarantees." 58. The above interpretation put by the Adjudicating Authority to the expression 'reimbursement' as occurring in Notification dated 26.09.2000, is incorrect. As noted above, the FEMA Act, 1999 has regulated the payments and by Notification dated 26.09.2000 terms of payment to non-resident guarantors by a resident principal debtor are made, but the payment has been capped as rupee equivalent to the amount paid by non-resident guarantor to the principal resident debtor. All conditions as referred to in the Notification dated 26.09.2000 are fully present in the present case. When there is prohibition on payment by resident principal debtor to non-resident guarantor, no amount can be admitted beyond the aforesaid amount paid by a non-resident guarantor and admission of the claim by RP and the approval of the said claim by the Adjudicating Authority by the impugned order dated 03.12.2005 is clearly contrary to the said Notification. 59. We may also notice one more submission advanced by learned Counsel for the Tropical that guarantee which was given by the Leader ....
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....ppeal. Learned Counsel for the Tropical has submitted that it was held by the Hon'ble Supreme Court in the above case that RBI's approval can also be obtained post facto. Reliance has been made on Paragraph-18 of the judgment, which is as follows: "18. The third partial final award then declared as follows: "1. The respondents are the defaulting party under Clause 23.7 of the JVA; 2. All rights of whatsoever nature conferred on the respondents and specifically Mr Karia under the JVA have ceased to be effective; 3. Any reference in the JVA to any rights of the respondents and specifically Mr Karia including the requirement of consent or approval of respondents and specifically Mr Karia stand omitted; 4. The respondents are prohibited from exercising or attempting to exercise any rights under the JVA including in particular any representation on the Board of the Company; 5. The date for the assessment of the discounted price be 30-9-2014 and that this date be substituted for the finding in para 335(4) of the second partial final award, which date and finding the parties agreed would be remitted back to the Tribunal for further con....
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....r under FERA. In Paragraph 28, IInd question noted for consideration is as follows: "II. Whether the judgment is rendered unenforceable in view of the conditions imposed by RBI in exercise of the statutory power under FERA." 63. The Hon'ble Supreme Court has occasion to consider sub-section (3) of Section 47 of FERA Act, 1973, in which reference in Paragraphs 72 and 73, following was observed: "72. Sub-section (3) of Section 47 clarified that neither the provisions of FERA nor contractual stipulations requiring prior permission of the Central Government or the Reserve Bank shall prevent legal proceedings from being instituted in India to recover sums otherwise due. However, the latter part of the provision engrafts an express limitation in mandatory terms, stipulating that "no steps shall be taken for the purpose of enforcing any judgment or order... except... as the Reserve Bank... may permit." 73. The statutory distinction between the institution of proceedings and the enforcement of a judgment assumes considerable significance. While the legislation expressly permitted adjudicatory proceedings to determine liability, it has simultaneously restricted....
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....ion Nos. (VII) and (VIII) 66. Company Appeal (AT) (Ins.) No. 192 of 2026 has been filed by the Tropical challenging the order of Adjudicating Authority dated 03.12.2025 passed in IA (IB) No. 646/KB/2022. By the impugned order the Adjudicating Authority has approved the Resolution Plan submitted by Vedanta (SRA). In the Plan, amount has also been allocated to the Tropical as secured creditor, although it was held to be 'related party'. Learned Counsel for the Appellant submits that the Resolution Applicant in the Resolution Plan has proposed payment to Tropical and the Tropical was entitled to receive the payment as per Resolution Plan approved by the Adjudicating Authority. It is submitted that the Appellant has no grievance against the Resolution Plan and its implementation, except the distribution mechanism as record by the CoC in its 22^nd Meeting. Learned Counsel for the Appellant has raised objection to the part of the Minutes of the 22^nd CoC held on 23.06.202. In the 22^nd CoC Meeting held, a resolution was placed before the CoC for Members voting, which is as follows: "The following agenda was recommended before the members of COC through E-voting for their appr....
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....any other Appellate forum. Learned Counsel for the Appellant has referred to Paragraph-49 of the order of the Adjudicating Authority, which is as follows: "49. Out of the appeals pending before the Hon'ble NCLAT, Company Appeal (AT) (Insolvency) No. 542 of 2025 with I.A. Nos. 4053 and 4037 of 2025 has attained finality by order dated 09.09.2025, whereby no relief was granted; the remaining appeals, being Company Appeal (AT) (Insolvency) Nos. 561-564 of 2025 and Company Appeal (AT) (Insolvency) No. 662 of 2025, are still pending adjudication. Accordingly, the present resolution plan shall remain subject to the outcome of the aforesaid appeals pending before the Hon'ble NCLAT and successful resolution applicant is bound by its affidavit dated 01/09/2025 (para 11 and 12) plan being unconditional." 68. The Appellant in his Appeal only prayed for partially setting aside the order. The following prayers are made by the Appellant in the Appeal: "a) Allow the Present Appeal; b) Partially set aside the Impugned order dated 3rd December 2025 passed by the Hon'ble NCLT, Kolkata in IA No. 646/KB/2022 in CP (IB) No. 1684 of 2018 w.r.t to the affirmation....
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....ction 31 limited to scrutiny of the resolution plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indi....
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.... 72. We answer Question Nos.(VII) and (VIII) in following manner: Answer to Question No. (VII) : Tropical has not made out any case to partially set aside the order dated 03.12.2025 in IA No. 646/KB/2022. The directions issued by Adjudicating Authority in Paragraph-49 need no interference. Answer to Question No. (VIII) : The decision taken by the CoC in its 22^nd Meeting regarding disbursement of the amount under the Resolution Plan as submitted by SRA, is in accordance with law. 73. We have noticed above the resolution of the CoC approving the Resolution Plan subject to adjudication of pending claims. The Adjudicating Authority while approving the Resolution Plan vide order dated 03.12.2025 has made the approval of the Resolution Plan subject to outcome of the Appeal(s) pending before NCLAT [these Appeal(s)]. We have recorded our discussions and conclusions as above holding that the admission of claim of Tropical has to confine to Rs. 85,79,26,944/-, which was the principal amount paid by Guarantor to the Indian Lenders. We have also held that no security interest was created in favour of Guarantor or the Tropical, the assignee, with respect to immovable asset....