WHAT WE DO
Our Services Include :
We represent clients before
National company Law Tribunal,
Income Tax Appellate Tribunal (ITAT)
Debt Recovery Tribunal,
Banking Laws including Debt Recovery Laws,
Contractual Laws and
20 March 2020
Sec. 14(1)(d) of IBC statutorily freezes ‘occupation’ of property handed over under a Joint Development Agreement
1) Section 14(1)(d), when it speaks about recovery of property 'occupied', does not refer to rights or interests created in property but only actual physical occupation of property. Thus, section 14(1)(d) will apply to statutorily freeze 'occupation' that may have been handed over under a Joint Development Agreement
[Rajendra K. Bhuta v. Maharashtra Housing and Area Development Authority -Supreme Court of India , 2020
Whether Mortgage Offered by Subsidiary Co. to Secure Parent Co’s Debt Will Be Treated As a Preferential Transaction
[Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd (JIL) v. Axis Bank Limited Etc. (Civil appeal no: 8512-8527 of 2019), SC
Essential elements of a Preferential Transaction - The Apex Court after careful consideration and analysis of the Section 43 and its sub-sections held that if the following conditions are met and satisfies the conditions prescribed under Section 43(2) and Section 43(4) then a transaction is deemed to be a preferential transaction under the Code.
A corporate debtor shall be deemed to have given a preference, if
(a) the transaction is of transfer of property or interest of the corporate debtor, for the benefit of a creditor or surety or guarantor, for or on account of an antecedent financial debt or operational debt or other liability owned by the corporate debtor; [Section 43(2)]
(b) such transfer has the effect of putting such creditor or surety or guarantor in a beneficial position than it would have been in the event of distribution of assets in accordance with Section 53 of the Code; [Section 43(2)] and
(c) such transaction has been carried out during the period of two years preceding the CIRP commencement when the beneficiary is a related party (other than by reason only of being an employee), or [Section 43(4)]
(d) in case of an unrelated party, during the period of one year preceding the CIRP. [Section 43(4)]
The Supreme Court has clarified that when analysing preferential transactions under the Code, intent of the parties for ascertaining fraudulent transactions is immaterial.
The Apex Court held as under:-
(a) Though there is no direct creditor-debtor relationship between JIL and the lenders of JAL, it is true that the ultimate beneficiary of the mortgage transactions which created security interest which benefitted JAL.
(b) JAL had admitted to providing financial, technical and strategic support to JIL and was owed operational debt, therefore, JIL owed antecedental financial debts as also operational debts and other liabilities to JAL.
(c) In case JIL went into liquidation, then JAL was an operational creditor of JIL and it would have stood at a much lower priority in terms of getting the money. Thus, the said transactions put JAL in an advantageous position in relation to other creditors.
(d) The mortgage transactions took place within the look-back period of two years since JAL was a related party of JIL.
(e) The mortgage transaction was not carried out in the ordinary course of business, as at the relevant time JIL was under tremendous financial stress and, therefore, could not have been providing mortgages to secure finances of its holding company.
In view of the afore-stated facts, the Apex Court while overturning NCLAT's order held the mortgage transactions on grounds of being preferential transactions without considering it necessary to deal with the potentially fraudulent and undervalued nature of those transactions
December 1, 2019
IBC: Code does not treat unequals equally and equitable treatment is to be accorded to each creditor depending upon class to which it belongs: secured or unsecured, financial or operational; wisdom of Committee of Creditors has priority in respect of resolution plan; sections 4 and 6 of Amending Act, 2019 amending sections 12 and 30 of Code not Constitutionally infirm: SUPREME COURT OF INDIA, Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta
November 18, 2019
1) NCLAT: AA Has Inherent Power To Grant Ad-Interim Relief Prior To Admission of CIRP (NUI Pulp and Paper Industries Pvt. Ltd. vs. Roxcel Trading GMBH (17.07.2019 - NCLAT)
2) Petitions filed u/s 7,9 and 10 of IBC are "applications" filed under the Code, it is Article 137 of the Limitation Act which will apply to such applications. (SAGAR SHARMA & ANR. Appellant(s) VERSUS PHOENIX ARC PVT. LTD. & ANR. CIVIL APPEAL NO. 7673 OF 2019, Supreme Court Of India.
IBC- Article 137 Limitation Act Applies To Section 7 Applications; Not Article 62
GAURAV HARGOVINDBHAI DAVE Appellant(s) VERSUS ASSET RECONSTRUCTION COMPANY (INDIA)LTD.& ANR.Respondent(s)
CIVIL APPEAL NO. 4952 OF 2019 , Supreme Court of India
"what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being "an application" which is filed under Section 7, would fall only within the residuary article 137. As rightly pointed out by learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21.07.2011, as a result of which the application filed under Section 7 would clearly be time-barred".
Investigation ordered against co. as director and lead manager of IPO diverted co.'s funds to its associates
Comfort Intech Ltd. v. Ravi Kumar Distilleries Ltd.,NATIONAL COMPANY LAW TRIBUNAL, CHENNAI BENCH
Where petitioner being Lead Manager for IPO issue of company and respondent directors of company had allegedly diverted IPO proceeds of company to their associates, there existed circumstances which prima facie suggests that business of company was being conducted with an intent to defraud its members, thus, it was necessary to investigate into affairs of company under provisions of section 213
12 May 2019
1) Registered Trade Union Can File Insolvency Petition As Operational Creditor On Behalf Of Its Members: SC
CIVIL APPEAL NO.20978 of 2017, JK JUTE MILL MAZDOOR MORCHA VERSUS JUGGILAL KAMLAPAT JUTE MILLS COMPANY LTD. THROUGH ITS DIRECTOR
A trade union is an entity established under a statute – namely, the Trade Unions Act, and would thus fall within the definition of "person" under Sections 3(23) of the Code. An "operational debt", meaning a claim in respect of employment, could certainly be made by a person duly authorised to make such claim on behalf of a workman, the court said.
It further observed: "Further, a registered trade union recognised by Section 8 of the Trade Unions Act, makes it clear that it can sue and be sued as a body corporate under Section 13 of that Act. Equally, the general fund of the trade union, which inter alia is from collections from workmen who are its members, can certainly be spent on the conduct of disputes involving a member or members thereof or for 8 the prosecution of a legal proceeding to which the trade union is a party, and which is undertaken for the purpose of protecting the rights arising out of the relation of its members with their employer, which would include wages and other sums due from the employer to workmen."
10 May 2019
Delhi HC quashes proceedings since Pre-Notice Consultation was mandatory for Demands above Rs. 50 Lakhs
AMADEUS INDIA PVT. LTD. versus PRINCIPAL COMMISSIONER, CENTRAL EXCISE, SERVICE TAX AND CENTRAL TAX COMMISSIONERATE
A two-judge bench of the Delhi High Court, while annulling the Service Tax proceedings, held that since the demand is above Rs. 50 lakhs, a pre-notice consultation was mandatory as per the Master Circular issued by the Central Board of Excise and Customs (CBEC). The Petitioner provides computer data processing software, which is used by travel agents and ticket booking entities in the Airline industry. In consequent to a search conducted by the Anti-evasion Unit of the Service Tax Commisionerate, the department said that the said services are subject to Service Tax. A show cause notice was issued by the department alleging that the tax was not paid on taxable services rendered by the Petitioner.
The petitioner claimed that as per a Master Circular issued by the CBEC on 10th March, 2017, a pre-show cause notice consultation was mandatory in cases involving demand of duty above Rs. 50 Lakhs.
A reminder was again sent by the Petitioner on 13th November, 2018. When no response was received, the petitioner approached the High Court for relief.
The bench comprising of Justice S Muralidhar and Justice Prateek Jalan found that it was necessary in terms of para 5.0 of the Master Circular for the Respondent to have engaged with the Petitioner in a pre SCN consultation, particularly, since in the considered view of the Court neither of the exceptions specified in para 5.0 were attracted.
01 January 2019
1) The Companies (Amendment) Bill, 2018
The Bill amends several provisions in the Companies Act, 2013 relating to penalties, among others.
1) Re-categorisation of certain Offences: The 2013 Act contains 81 compoundable offences punishable with fine or fine or imprisonment, or both. These offences are heard by courts. The Bill re-categorizes 16 of these offences as civil defaults, where adjudicating officers (appointed by the central government) may now levy penalties instead. These offences include: (i) issuance of shares at a discount, and, (ii) failure to file annual return.
2) Issue of shares at a discount: The Act prohibits a company from issuing shares at a discount, except in certain cases. On failure to comply, the company is liable to pay a fine between one lakh rupees and five lakh rupees. Further, every officer in default may be punished with imprisonment up to six months or fine between one lakh rupees and five lakh rupees. The Bill changes this to remove imprisonment for officers as a punishment.
Further, the company and every officer in default will be liable to pay a penalty equal to the amount raised by the issue of shares at a discount or five lakh rupees, whichever is lower. The company will also be liable to refund the money received with interest at 12% per annum from the date of issue of the shares.
3) Commencement of business: The Bill states that a company may not commence business, unless it (i) files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid the value of shares agreed to be taken by him, and (ii) files a verification of its registered office address with the Registrar of Companies within 30 days of incorporation. If a company fails to comply with these provisions and is found not to be carrying out any business, the name of the Company may be removed from the Register of Companies.
4) Registration of charges: The Act requires companies to register charges (such as mortgages) on their property within 30 days of creation of charge. The Registrar may permit the registration within 300 days of creation. If the registration is not completed within 300 days, the company is required to seek extension of time from the central government. The Bill changes this to permit registration of charges: (i) within 300 days if the charge is created before the Bill, or (ii) within 60 days if the charge is created after the Bill. If the charge under the first category is not registered within 300 days, it must be completed within six months from the date of the Bill. If the charge under the second category is not registered within 60 days, the Registrar may grant another 60 days for registration. If a person wilfully furnishes false or incorrect information, or suppresses material information which is required to be registered under this provision, he will be liable for fraud under the Act. Change in approving authority: Under the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the National Company Law Tribunal. Similarly, any alteration in the incorporation document of a public company which has the effect of converting it to a private company, has to be approved by the Tribunal. Under the Bill, these powers have been transferred to central government.
5) Declaration of beneficial ownership: If a person holds beneficial interest of at least 25% shares in a company or exercises significant influence or control over the company, he is required to make a declaration of his interest. Under the Act, failure to declare this interest is punishable with a fine between one lakh rupees and ten lakh rupees, along with a continuing fine for every day of default. The Bill provides that such person may either be fined, or imprisoned for up to one year, or both. Compounding: Under the Act, a regional director can compound (settle) offences with a penalty of up to five lakh rupees. The Bill increases this ceiling to Rs 25 lakh.