Recovery Certificate Holder Can Initiate CIRP As Financial Creditor Under IBC: Supreme Court

Case Title: Kotak Mahindra Bank Limited v A. Balakrishna & Anr.

Case No.: 2022 LiveLaw (SC) 534, Civil Appeal No. 689 of 2021

The Supreme Court bench, comprising of Justices L. Nageswara Rao, B.R. Gavai and A.S. Bopanna, has held that a liability in respect of a claim arising out of a Recovery Certificate under the Recovery of Debts and Bankruptcy Act, 1993 would be a "financial debt" within the meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC) and a holder of such Recovery Certificate would be a "financial creditor" under Section 5(7) of the IBC. The Bench observed that 'financial debt' as defined under Section 5(8) of the IBC as 'means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes…'. The use of word 'includes' is to enlarge the scope of the statute and hence the list in Section 5(8) is not an exhaustive but inclusive list.

NCLAT

NCLAT Urges IBBI To Amend CIRP Regulations To Include Claim Which Are Not Filed But Reflecting In Book/Record Of Corporate Debtor

Case Title: Employees Provident Fund Organisation v Mr. Subodh Kumar Agarwal & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 116 of 2022

The National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan, Ms. Shreesha Merla and Mr. Naresh Salecha, has urged the IBBI to consider an amendment to the IBBI (Insolvency Process for Corporate Persons) Regulations in order to include claims in information which though not filed with the Resolution Professional but clearly reflects in the books/records of the Corporate Debtor. The Bench observed that the Regulation framing authority need to consider as to whether the Regulations need any amendment, clarification so as to include in the Information Memorandum any ongoing statutory proceeding which is likely to saddle the Corporate Debtor with financial or other liability. Further, even if the Resolution Professional has details of record, notices, orders indicating that certain amounts have been finalized to the received from the Corporate Debtor but due to want of claims being filed of such statutory authority they do not find any mention in the list of claims or Information Memorandum.

Temporary Unavailability Of A Member To Sign The Order Not A Ground For Fresh Hearing, If Order Was Passed With Consent Of Such Member: NCLAT Delhi

Case Title: Ashish Chandravandan Patel v Axis Bank Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 618 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri. Naresh Salecha (Technical Member), has held that an order passed with the consent of both Members of an NCLT Bench but signed by only one of them due to temporary unavailability of the other Member, does not require the matter to be designated as part-heard and be heard afresh. Rule 152(4) of National Company Law Tribunal Rule, 2016 ("NCLT Rules") is only applicable in cases where a Member is unable to sign the order sheet in view of resignation, retirement or death; and not where a Member is temporary unavailable to sign the Order. The order was passed on 30.05.2022.

NCLAT To Hear Appeals On Resolution Plan Of Jet Airways On 5th July, 2022

Case Title: Association of Aggrieved Workmen of Jet Airways (India) Ltd. v Jet Airways (India) Ltd. & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 643 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), while hearing a batch of appeals filed against the resolution plan of Jet Airways (India) Ltd. by aggrieved employees and workmen of Jet Airways; Punjab National Bank; TLD MEAI FZE; Jet Aircraft Maintenance Engineers Welfare Association; Bhartiya Kamgar Sena; and Concor Air, has fixed the next date of hearing as 05.07.2022, with a direction that the implementation of the resolution plan shall abide by the outcome of these appeals. Several appeals were filed before the NCLAT challenging the order dated 22.06.2021 of NCLT approving the resolution plan of Jalan Kalrock consortium. The Association of Aggrieved Workmen of Jet Airways (India) Ltd. had also filed an appeal challenging the time period of implementation of the resolution plan; non-consideration of the workmen and employees' dues including statutory dues such as gratuity, provident fund, leave encampment et al. Further, the challenge was also made with respect to the amount of workmen dues mentioned in the resolution plan (Rs. 100 Crores approx.). The order was passed on 30.05.2022.

NCLAT Terminates The CIRP Of National Textile Corporation Ltd. As Parties Enter Settlement

Case Title: National Textile Corporation Ltd. v Hero Solar Energy Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 631 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), has terminated the Corporate Insolvency Resolution Process ("CIRP") against National Textile Corporation Ltd. ("Appellant"), which was initiated by NCLT Delhi vide an order dated 27.05.2022. The order has been passed on 01.06.2022.

The Appellant, National Textile Corporation Ltd., is a Public Sector Enterprise under the Ministry of Textiles, Government of India. The Appellant filed an appeal against the NCLT order dated 27.05.2022 before the NCLAT, submitting that it has settled the matter with the Operational Creditor, and sought liberty to place on record the Settlement Agreement entered between the parties. The Operational Creditor/Respondent also confirmed that the settlement had taken place. The NCLAT Bench has stayed the CIRP of the Appellant. On 01.06.2022, the Appellant had placed on record the Settlement Agreement dated 31.05.2022 and the Operational Creditor had requested to withdraw the Section 9 petition. The NCLAT Bench permitted the withdrawal and terminated the CIRP initiated against the Appellant. Directions were given to pay the Interim Resolution Professional the expenses incurred by him, but no IRP fee shall be payable.

Belated Claims Of Homebuyers, If Reflected In The Records Of Corporate Debtor Shall Be Included In Information Memorandum By Resolution Professional: NCLAT

Case Title: Puneet Kaur v K V Developers Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 390 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan, Ms. Shreesha Merla, Mr. Naresh Salecha, has held that the claims of those homebuyers who could not file their claims within stipulated time but the same were reflected in the record of the Corporate Debtor ought to have been included in the information memorandum and the Resolution Applicant ought to have been take note of the same and deal with the in the Resolution Plan. It was observed that non-consideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution as is seen in the present case. NCLAT directed the Resolution Professional to submit the details of homebuyers whose details are reflected in the record of the Corporate Debtor to the Successful Resolution Applicant, and the latter shall prepare an addendum to resolution plan which may be placed before the COC for consideration. The exercise is to be completed within a period of three months.

NCLAT Stays Insolvency Proceedings Against RHC Holdings Pvt. Ltd.

Case Title: Daiichi Sankyo Ltd. v Religare Comtrade Ltd. & Ors

Case No.: Company Appeal (AT) (Ins.) No. 645 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Mr. Naresh Salecha, has stayed the Corporate Insolvency Resolution Process ("CIRP") of RHC Holdings Pvt Ltd. initiated by NCLT New Delhi on 13.05.2022. RHC Holdings Pvt. Ltd. (RHC) is the company through which Singh Brothers namely Malvinder Singh and Shivinder Singh sold Ranbaxy India to Daiichi Sankyo. Daiichi Sankyo had filed an appeal before the NCLAT against the Order dated 13.05.2022, wherein NCLT had admitted the petition filed by Religare Comtrade Ltd. under Section 7 of the Insolvency & Bankruptcy Code, 2016. In fact, Religare had filed 23 petitions against various related entities of RHC under Section 7 of IBC to defeat the claim of Daiichi. NCLAT noted that the Supreme Court vide its order dated 05.04.2019 had stayed 23 petitions filed by Religare, and in furtherance of Supreme Court order NCLT itself stayed all proceedings on 11.04.2019. NCLAT stayed the CIRP initiated against RHC Holdings Pvt. Ltd. accordingly.

NCLT

Preferential, Fraudulent Or Avoidable Transaction, Material Facts To Be Pleaded : NCLT Kolkata

Case Title: Star India Private Limited v Advance Multisystem Broadband Communications Limited

Case No.: C.P. (IB) No. 1510/KB/2018

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising Mr. Rohit Kapoor (Judicial Member) and Mr. Harish Chander Suri (Technical Member), has held that a transaction cannot be alleged to be preferential, fraudulent or avoidable by the Resolution Professional, unless an enquiry has been conducted by the relevant experts and specific material facts have been stated as to why such transaction would be covered under Section 45, 46, 47 and 66 of the Insolvency and Bankruptcy Code, 2016 ("IBC").

The Bench opined that Resolution Professional can file an application under Section 25(2) (j) of the IBC only after being satisfied about the particular transactions being avoidable, fraudulent or undervalued. It was incumbent upon the Resolution Professional to seek assistance of the Forensic Audit if so required, to engage the services of accountants, legal or other professionals with a view to satisfy himself about the transactions being avoidable. Without meeting the aforesaid requirements, the Resolution Professional cannot not directly approach the Adjudicating. The order was passed on 30.05.2022.