SC restrains directors of JAL from alienating properties

SC restrains directors of JAL from alienating properties
SC restrains directors of JAL from alienating properties

The Supreme Court today directed 13 directors, including five promoters of embattled Jaiprakash Associate Limited (JAL) not to alienate their personal properties and asked the firm to deposit Rs 150 crore and Rs 125 crore by December 14 and December 31 respectively.

The bench accepted a demand draft of Rs 275 crore by the real estate firm today.

A bench comprising Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud further restrained the directors from alienating the properties of their immediate family members also and cautioned that any violation of its directive would hold them liable for criminal prosecution.

Meanwhile, the bench-appointed lawyer Pawan Shree Agrawal as amicus curiae and asked him to set up within a week, a web portal, which would contain all details including grievances of the hassled homebuyers.

Senior advocates Mukul Rohatgi and Ranjit Kumar, who appeared on behalf of the directors including independent and promoter ones, said they have filed affidavits in pursuance of earlier direction asking them to give details of their personal properties.

Senior advocate Kapil Sibal, appearing for the real estate company, said adequate time should be given to the firm for arranging money or otherwise it may go the Sahara way.

The bench has now posted the plea of homebuyers for further hearing on January 10 and directed all the directors to appear again before it on that date.

Homebuyers including one Chitra Sharma had moved the apex court saying that around 32,000 people had booked their flats and are now paying installments.

The top court had on September 4 stayed insolvency proceedings against the real estate firm at National Company Law Tribunal (NCLT).

Flat buyers, under the Insolvency and Bankruptcy Code of 2016, do not fall in the category of secured creditors like banks and hence they can get back their money only if something is left after repaying the secured and operational creditors, Sharma, in her plea, said.

Hundreds of home buyers have been left in the lurch after the NCLT, on August 10, admitted the IDBI Bank’s plea to initiate insolvency proceedings against the debt-ridden realty company for defaulting on a Rs 526 crore loan, the plea said.

( Source – PTI )

Gujarat HC raps RBI for giving directions to NCLT

Gujarat HC raps RBI for giving directions to NCLT
Gujarat HC raps RBI for giving directions to NCLT

The Gujarat High Court today rebuked the Reserve Bank of India for asking the National Company Law Tribunal in its June 13 directive to give priority to the insolvency proceedings against companies with huge debts.

It also questioned the functioning of the central bank.

The bench of Justice S G Shah came down heavily on the RBI for stating in its press release dated June 13, 2017 that the Insolvency and Bankruptcy Code (IBC) proceedings against companies with outstanding dues of more than Rs 5,000 crore “will be accorded priority by NCLT.”

Essar Steel had moved the high court challenging the RBI order to banks.

The court also questioned the “functioning” of the RBI for its decision to issue the press release in which it had directed banks to initiate insolvency proceedings against defaulting companies.

“The RBI has to be careful while issuing press releases, it must be in consonance with the Constitutional mandates, based upon sound principles of law, but in any case should not be in the form of advise, guidelines or directions to judicial or quasi-judicial authorities in any manner what so ever,” the court said in its order.

Further reacting to the central bank’s submission that it has no document on record based on which the decision to issue press release was taken, the court said, “This goes to show the manner in which the RBI is functioning, in as much as there is a press release even without a decision at certain level that press release is to be published and what should be included in such press release.”

“This is also an equally serious issue. It has been conveyed to the respondents that on such disclosure that there is no other document, pursuant to such disclosure, now, they would be debarred from relying upon any such document, if any,” it added.

The court interpreted RBI’s statement in its press release that “such cases (for insolvency proceedings) will be accorded priority by the NCLT” that the tribunal “has to give priority to cases filed by the directives of RBI against the cases, which are filed by other creditors or petitioners before the NCLT.”

The RBI even tendered an apology to the court saying that the statement was made due to “poor drafting” of the press release, and even issued corrigendum on July 8, to delete the line.

Through in a press release dated June 13, the RBI had directed banks to launch IBC proceedings against companies with outstanding dues of more than Rs 5,000 crore, and for other NPAs, banks should finalise resolution plans in the next six months.

During its submissions, the central bank had apologised from the court for issuing that statement in the press.

Essar Steel had moved the high court seeking the court’s direction to quash the RBI’s direction to the banks to initiate insolvency proceedings against it.

( Source – PTI )

Karna HC directs NCLT to hear afresh bankruptcy proceedings of Falcon Tyres

Karna HC directs NCLT to hear afresh bankruptcy proceedings of Falcon Tyres
Karna HC directs NCLT to hear afresh bankruptcy proceedings of Falcon Tyres

Disposing of a plea of a tyre manufacturer, the Karnataka High Court has directed the National Company Law Tribunal (NCLT) to hear afresh bankruptcy proceeding of Falcon Tyres, filed by Edelweiss Asset Reconstruction Company (ARC).

Falcon Tyres’ promoter Pawan Ruia had approached the high court seeking a fair trial, stating that principle of natural justice was denied to him by the NCLT on grounds that he was not given adequate time to respond to Edelweiss’ notice.

“We were not heard, which is against the principle of natural justice,” Kedar, counsel of Ruia, had submitted before Justice A S Bopanna.

In his plea, Ruia had sought a stay on NCLT’s liquidation of Falcon Tyres as he was not given adequate time to respond to NCLT notices on the matter.

After Falcon Tyres got the stay, Edelweiss also this year approached the Supreme Court, which directed NCLT against liquidating Falcon Tyres until the Karnataka High Court gave its verdict.

In 2015, Falcon Tyres had approached ARC, which undertook the job of identifying and bringing investors for tyre manufacturer in order to cut its incurred losses.

After two years, Edelweiss moved NCLT seeking liquidation of Falcon Tyres under the Insolvency and Bankruptcy Code for default.

NCLT, a quasi-judicial body, is law-bound to come up with a resolution within 180 days of the plea being submitted relating to companies.

Earlier today, Edelweiss withdrew its plea in the Supreme Court against Karnataka High Court order shooting down the company’s original plea seeking liquidation of the tyre manufacturer.

( Source – PTI )

NCLT dismisses Mistry firms’ petition against Tata Sons

NCLT dismisses Mistry firms' petition against Tata Sons
NCLT dismisses Mistry firms’ petition against Tata Sons

The National Company Law Tribunal (NCLT) here today dismissed a petition by two firms belonging to Cyrus Mistry’s family, seeking waiver of an eligibility condition for moving the forum against Tata Sons.

An NCLT bench of B S V Prakash Kumar and V Nallasenapathy said, “The waiver is dismissed, the company petition dismissed.”

The two firms had sought to challenge Mistry’s ouster from Tata Sons last year and alleged that there was mismanagement and oppression of minority shareholders.

They urged the NCLT to use its discretion and waive an eligibility condition for filing such a petition.

The tribunal had held last month that the plea was not maintainable, because the petitioner firms did not meet one of the eligibility criteria prescribed by the Companies Act.

The two Mistry family firms contended that under the Act, the tribunal can waive a requirement that petitioner should hold at least one-tenth of ‘issued share capital’ of the company, or represent at least one-tenth of the company’s minority shareholders.

Tata Sons had argued that if preference capital was also considered, the petitioner firms held only 2.17 per cent of the total issued share capital of Tata Sons.

Mistry was removed as Chairman of Tata Sons, the holding firm of Tata Group, one of the country’s largest conglomerates, last October.

( Source – PTI )

NCLT clears way for Tata Sons to hold EGM on Feb 6

NCLT clears way for Tata Sons to hold EGM on Feb 6
NCLT clears way for Tata Sons to hold EGM on Feb 6

The National Company Law Tribunal (NCLT) today refused to grant a stay on the extraordinary general meeting (EGM) called by Tata Sons on February 6 to consider removal of Cyrus Mistry from the Board of Tata Group’s holding company.

A Sundaram, counsel for Cyrus Mistry family companies, pressed for interim relief in contempt petition (against Tata Sons) which had sought a stay on EGM slated for February 6.

“This issue was already decided in the last hearing when the contempt petition filed by two Mistry family companies was dismissed. There are no road blocks for Tata Sons to hold the EGM. It can go ahead with the forthcoming EGM,” said a division bench of NCLT comprising B S V Prasad Kumar (Member-Judicial) and V Nallasenapathy (Member-Technical).

Lawyer for Mistry companies today sought adjournment and NCLT deferred the hearing till February 13.

Outside the Tribunal, the counsel for Mistry companies said he would seek instructions from his client but the option to file an appeal against the Tribunal’s order passed today was under their consideration.

The appeal can be filed by Mistry group companies either in the Appellate National Company Law Tribunal or in the Supreme Court, legal sources said.

On January 18, NCLT had dismissed contempt plea filed by Mistry group companies alleging violation of NCLB directives in taking steps to remove Mistry from the Board of Tata Sons.

However, while dismissing contempt plea, NCLT had allowed Mistry companies to file an affidavit on the issue of Tata Sons holding EGM on February 6.

Accordingly the affidavit was filed and Mistry companies today pleaded for interim relief in the contempt petition seeking a stay on the EGM. But the Tribunal refused to grant a stay saying that the issue was decided in the last hearing when the contempt plea of Mistry companies was dismissed.

NCLT, today, asked Mistry companies to argue on merits on their main petition challenging the removal of Cyrus Mistry as the Chairman of Tata Sons alleging bad practices, oppression and mismanagement in the holding company.

However, Sundaram, Counsel for Mistry Companies, insisted that he would first argue on the maintainability of the petition and then on the merits.

NCLT, however, expressed its displeasure over the lawyer’s stand, saying that he was not cooperating with the proceedings in the case. The bench, however, has given a last chance to him to argue on merits of the petition on next occasion, February 13, or else it would dismiss it.

( Source – PTI )