Insolvency Law In Review – October 2020

  • Insolvency Law In Review – October 2020

    BY Rahul Sibal, Siddharth Sunil, Akshata Singh, Pranav Narsaria & Karan Sangani The enactment of the Insolvency and Bankruptcy Code 2016 (the Code) has had significant ramifications on the corporate insolvency landscape. Over time, the Code has witnessed a manifold increase in litigation, and consequently in the number of decisions. This has made it difficult for insolvency...

    BY Rahul Sibal, Siddharth Sunil, Akshata Singh, Pranav Narsaria & Karan Sangani 

    The enactment of the Insolvency and Bankruptcy Code 2016 (the Code) has had significant ramifications on the corporate insolvency landscape. Over time, the Code has witnessed a manifold increase in litigation, and consequently in the number of decisions. This has made it difficult for insolvency practitioners to stay updated with developments in the field. The purpose of this column is to fill this gap by providing brief summaries of latest decisions, from the various fora dealing with Insolvency Law.

    These case summaries are not an exhaustive review of the cases under the Code; only significant rulings on the Code in the month of October have been summarized. However, this does not negate the possibility of some important decisions being missed on account of human error. Further, since the purpose of this endeavor is to keep practitioners abreast of relevant developments, the decisions summarized have not been comprehensively analyzed.

    Supreme Court

    In Kridhan Infrastructure Pvt Ltd. v. Venkatesan Sankaranarayanan and Ors, the Supreme Court (SC), in the context of the bona fides demonstrated prima facie by the resolution applicant towards honouring the approved resolution plan, observed that liquidation of the Corporate Debtor should be a matter of last resort, as the Code has a wider public interest in resolving corporate insolvencies, its object is not limited to mere recovery of outstanding debt. Consequently, the SC stayed the liquidation order passed by the National Company Law Appellate Tribunal (NCLAT).

    High Courts

    In Gouri Shankar Chatterjee v. State Bank of India (C.O/1257/2020), the Calcutta High Court held that (i) the National Company Law Tribunal (NCLT) did not have the jurisdiction to entertain an application u/s 7 of the Code, which was filed more than three (3) years after the right to file an insolvency application (as mentioned in Article 137 under the Limitation Act 1965 (Limitation Act)) accrued; and (ii) in the present case, the limitation period under Article 137 was to be calculated from the date of declaration of the Corporate Debtor's bank account as a Non Performing Asset (NPA). In arriving at these conclusions, the High Court followed the SC's decisions in Babulal Vardharji Gurjar, and Gaurav Hargovindhbhai Dave , respectively. Further, the High Court relied on Embassy Property Development Pvt. Ltd., to hold that it was entitled to interfere under Article 227 of the Constitution, since the NCLT had exceeded its jurisdiction, and that the existence of the remedy of statutory appeal would not bar the High Court's jurisdiction. Finally, the High Court found that the present petition did not suffer from any delay, in light of the period of limitation for all proceedings having been extended vide the SC's order dated 23.03.2020 in Suo Motu Writ Petition (Civil) No. 3/2020, passed in light of the COVID-19 pandemic. The High Court quashed the NCLT order initiating the corporate insolvency resolution process (CIRP) against the Corporate Debtor, and its subsequent order directing the commencement of liquidation proceedings.

    National Company Law Appellate Tribunal

    In Praveen Kumar Sharma v. Arcee Trading Corporation and Anr., the NCLAT observed that the proceedings u/s 9 of the Code are summary in nature, and that the NCLT cannot investigate disputed facts raised u/s 8 of the Code, which is a procedure appropriate for trial courts. Consequently, it set aside the order passed by the NCLT, Delhi, whereby the Respondent's application u/s 9 of the Code was admitted and the CIRP was initiated.

    In B. Prashanth Hegde v. State Bank of India and Anr., the NCLAT followed the established position of law that Article 137 of the Limitation Act would be applicable to applications filed under Ss. 7 and 9 of the Code. Additionally, it noted that, for the purposes of Article 137, the date of NPA was to be taken as the date of default, in accordance with the Supreme Court's decision in Gaurav Hargovindbhai Dave.

    In Volkswagen Finance Private Limited v. Shree Balaji Printopack Pvt Ltd , the NCLAT held that the mere fact that a charge was registered through a hypothecation registration with the Regional Transport Office in accordance with S.51 of the Motor Vehicles Act, 1988 would not accord the creditor, the status of a 'secured creditor' with respect to liquidation proceedings under the Code, unless such charge has been registered u/s 77 of the Companies Act, 2013 (Companies Act).

    In Ramesh Kymal v. M/s Siemens Gamesa Renewable Power Private Limited, it was held that the bar against the initiation of CIRP u/s 10A of the Code would extend to applications filed before the date on which the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 came into effect (5th June 2020) (the Ordinance). Here, the Operational Creditor had filed an application for initiation of CIRP for a default that had occurred after 25th March 2020. The NCLT rejected the petition on the ground that the newly introduced S.10A barred the filing of insolvency applications for defaults committed on or after 25th March 2020. On appeal, the creditor argued that the purview of S.10A of the Code would not extend to insolvency applications concerning defaults after 25th March but before 5th June 2020, the date when the Ordinance came into force. The NCLAT dismissed the appeal on the premise that such an interpretation would be inconsistent with the objective behind the introduction of S.10A. However, it was clarified that the bar u/s 10A would not operate in the scenarios where the default has occurred before 25th March (although the application might have been filed before 6th June 2020).

    In Rajendra Bhai Panchal v. M/s Jay Manak Steels, it was held that a mere mistake in the demand notice u/s 8 of the Code would not render such notice defective, and if the Corporate Debtor were to question the validity of the demand, the burden would lie on the Corporate Debtor to show that it was adversely affected by the mistake. It was further held that the mere fact of quantum of debt being mis-stated would not ipso facto render the decision defective, as long as the minimum statutory figure is owed, since it is not the burden of the 'Adjudicating Authority' to determine the quantum of debt. NCLAT clarified that, in such scenarios the Court would only invalidate the notice if injustice would be caused to the debtor, if the failure to interfere would cause injustice to the debtor.

    Additionally, on the question of whether parties are permitted to bring additional evidence on record, it was held, following the Supreme Court's decision in Haryana State Industrial Development Corporation v. Cork Manufacturing Company AIR 2008 SC 56, that the permissibility of the same would depend on whether such documents are necessary for the Tribunal to decide the controversy between the parties.

    In M/s Shruti Impex v. M/s N.R Commercials Pvt. Ltd, the NCLAT held that, where any person claiming to be an Operational Creditor is unable to adduce proof in the form of tax invoices, tax remittances, transportation documents, waybill and so on, to establish that the goods were, in fact, supplied to the Corporate Debtor, it would follow that such person cannot claim relief u/s 9, in view of the failure to establish the relationship of Operational Creditor-Corporate Debtor.

    In Niyati Chemicals v. Minepro Minerals Pvt Ltd., the NCLAT held that commercial advances given in the course of business dealings for supply of goods would not come within 'Financial Debt' u/s 7 of the Code.

    In Gujarat Urja Vikas Nigam Ltd. v. Yes Bank Limited & Ors, the NCLAT held that, where the Corporate Debtor has contracted to produce and supply power under a Power Purchase Agreement, the other contracting party/power consumer would not be entitled to terminate the agreement, where a secured creditor seeks to realise its security interest u/s 52 of the Code in the power generation assets, and it is evident that the assets and the agreement together form one 'integrated economic asset'. It was further held that where the termination of the agreement would have a bearing on the valuation of the asset, such termination would be required to be set aside, to ensure value maximization in the liquidation process.

    In Umesh Saraf v. Tech India Engineers Pvt. Ltd., it was held that instead of taking a technical objection to the Corporate Debtor's email reply to the demand notice issued u/s 8, NCLT, New Delhi should have analysed the documents placed before it by the Corporate Debtor to establish the existence of a prior dispute. Consequently, the NCLAT set aside the decision of the NCLT, New Delhi that admitted an application for the initiation of CIRP u/s 9 of the Code on the sole ground that the Corporate Debtor had failed to reply to the demand notice even though the existence of a prior dispute was agitated before the NCLT, New Delhi; and (ii) the Corporate Debtor's email reply to the Operational Creditor neither mentioned being in the form of reply to the S.8 demand notice nor complied with the statutory period of ten (10) days as contemplated u/s 8(2) of the Code. The NCLAT reiterated that the Code is a beneficial legislation intended to put the Corporate Debtor on its feet and not a mere money recovery legislation.

    In Switching AVO Electro Power v. Ambient Computronics (P) Ltd, it was held that if an application u/s 9 was complete, unless the Corporate Debtor establishes the existence of a pre-existing dispute, the NCLT was required to admit such application, irrespective of internal disputes within the Corporate Debtor regarding provision of goods or services by the Operational Creditor. The NCLAT further held that, in case of the supply of goods, once the Corporate Debtor gives an acknowledgment of delivery, the fact that the delivery address for goods was not the registered office or a branch office of the Corporate Debtor, did not amount to non-proof of delivery of goods. This case involved a reply by the Corporate Debtor to a S.8 demand notice, which claimed that, due to fraudulent branch operations by one of its directors, and a lapse in filing books of account by such branch office, the head office of the Corporate Debtor was ignorant of supply of goods by the applicant. The impugned NCLT order took note of the internal disputes within the Corporate Debtor, and rejected the S.9 application on the ground of non-proof of delivery of goods, as the invoice relied on by the applicant, showed a delivery address which was neither a registered office nor a branch address of the Corporate Debtor. The NCLAT observed that the invoice relied upon had a stamp and signature of receipt by the branch office of the Corporate Debtor, which was sufficient proof of supply of goods to the Corporate Debtor. The NCLAT set aside the impugned order, and referred the case back to the NCLT for admission.

    In Mr. Bhaskar v. M/S Sai Precious Traexim & Ors., the NCLAT set aside an admission order u/s.7 on the ground that the service of advance copy of an application under the IBC cannot be construed as 'Service of Notice' issued by the tribunal under Rule 38 of the National Company Law Tribunal Rules 2016 (NCLT Rules). In the context of powers of the NCLT to impose penalty for fraudulent or malicious commencement of proceedings, the NCLAT held that no penalty under sub-section (1) or sub-section (2) of S. 65 of the Code can be levied without the NCLT recording an opinion with reasons for a prima facie case to initiate resolution or liquidation 'fraudulently' or 'with malicious intent'.

    In Re: Sudip Bhattacharya, Resolution Profesional of Reliance Naval and Engineering against a NCLT order extending the CIRP , the NCLAT held that the lockdown period would be excluded while computing the total period for CIRP. The impugned NCLT order had extended the CIRP by ninety (90) days without excluding the lockdown period. The NCLAT allowed the challenge and ruled that the hardship caused due to the lockdown required mitigation by allowing exclusion of number of days while computing the total period for CIRP.

    In Singh Raj Singh v. SRS Meditech Limited, the NCLAT held that there was no requirement for the resolution plan to match the maximized asset value of the Corporate Debtor. The case involved a challenge to the approval of a resolution plan by a suspended director of the Corporate Debtor. The Appellant, inter alia, argued that valuation of the Corporate Debtor under Regulation 35 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations (CIRP Regulations), only considered plant and machinery, leaving out other fixed and current assets of the Corporate Debtor. The NCLAT followed the Supreme Court decision in Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh & Ors., which held that the valuation of the assets of the Corporate Debtor was meant to assist the Committee of Creditors (CoC) to take decisions on a resolution plan, and there was no requirement for the resolution plan to match the maximized asset value of the Corporate Debtor. The NCLAT further held, that an Ex-Director did not have any right or power to challenge the commercial wisdom of the CoC on approval of a resolution plan, which is undergoing implementation.

    In Anup Sushil Dubey v. National Agriculture Co-Operative Marketing Federation of India Ltd., the NCLAT held that a lease rental of a cold storage unit for commercial purposes would qualify as an 'Operational Debt' u/s 5(21) of the Code. In coming to its conclusion, NCLAT relied on the definition of 'service' under the Consumer Protection Act, 2019; and the activities that are treated as supply of goods or services under the Central Goods and Services Tax Act, 2017. The NCLAT also relied on the Supreme Court's decision in Mobilox Innovations Private Limited V/s. Kirusa Software Private Limited.

    In Madhusudan Tantia v. Amit Choraria & Ors., the NCLAT held that the MCA notification dated 24.03.2020 raising the minimum amount of default for claiming relief under Ss. 7 and 9 of the Code to INR One (1) Crore (1,00,00,000) is prospective in nature, and that it would not affect applications filed before the various authorities prior to its issuance.

    National Company Law Tribunals

    In Argentium International Private Limited v. UTM Engineering Private Limited,. the NCLT, Delhi held that it could not interfere when the CoC had, in its commercial wisdom, decided not to seek an extension of the CIRP, and had opted for liquidation of the Corporate Debtor and exploration of the possibility of it being sold as a going concern. As such, the Tribunal allowed the application of the Resolution Professional (RP) seeking liquidation of the Corporate Debtor.

    In M/s Vipul Investment v. V Mahesh, the NCLT Chennai, held that, where loans have been disbursed by the Financial Creditor to the account of the Managing Director of the company, and where sufficient evidence, such as loan agreements, board meetings, etc., has not been adduced, insolvency proceedings cannot be initiated against the Corporate Debtor. To arrive at this conclusion, the Tribunal reasoned that since the Corporate Debtor is a separate entity as opposed to its director, and since requisite due diligence had not been exercised by the creditor to determine whether the loans disbursed were intended or had been provided to the company, the creditor could not initiate proceedings against the Corporate Debtor.

    In Liquidator of Precision Fasteners Limited v. Siddhi Edibles Private Limited, the NCLT, Mumbai held that the recovery of rent from the tenant and the eviction of tenant from the property of the Corporate Debtor are in the exclusive domain of the civil courts and cannot be dealt with by the Tribunal through an invocation of S. 60(5) of the Code. The Tribunal, while, inter alia, dealing with the question of whether it could pass directions concerning the recovery of rent from the tenant, the eviction of the tenant from and the sale of the property of the Corporate Debtor u/s 60(5)(c) of the Code, expounded on the nature of the jurisdiction of the Tribunal under the Code. The Tribunal emphasised that the jurisdiction for the recovery of rent and the eviction of the tenant lies with the civil court/rent control court only. However, the Tribunal distinguished that as far as sale of the property by the liquidator was concerned, the liquidator could do so after taking possession of the property of the Corporate Debtor by due process of law.

    In EPC Construction India Ltd. v. NCL India Ltd., NCLT, Mumbai declined to interfere with the invocation of the bank guarantees and to decide the merits of the matter, by holding that the disputed allegation pertaining to the fraudulent invocation of the bank guarantees is outside the purview of the Code. Here, the Corporate Debtor sought an injunction against the invocation of bank guarantees on the ground that they were invoked in a fraudulent manner and in complete violation of the Code. The Tribunal stated that the matter ought to be dealt with by a competent civil court after appreciation of the evidence adduced and perusal of the documentary material placed on record before it in a civil trial.

    In Credit Suisse Funds Ag v. Himadri Foods Ltd., the NCLT, Mumbai held thatit is empowered to adjudje an application seeking the revival of a company petition disposed of as withdrawn, after recording the settlement terms arrived at between the parties, in exercise of the powers conferred on the Tribunal under Rule 11 of the NCLT Rules. Here, the question before the NCLT, Mumbai was whether the company petition, which had been disposed of, pursuant to the recording of the settlement terms, could be revived by the Financial Creditor owing to the failure of the Corporate Debtor to comply with the settlement terms. It was the contention of the Corporate Debtor that the Code does not provide for the revival or the restoration of a company petition, which had already been disposed of and that the Code envisages only three (3) situations—admission, dismissal or withdrawal of a company petition before admission. The Corporate Debtor argued that once a petition is withdrawn, the creditor at best can make a fresh application under the Code, which will be subject to fresh adjudication, and the debtor shall be entitled to oppose such an application. The Tribunal rejected the contentions of the Corporate Debtor and directed the revival and restoration of the original company petition under Rule 11 of the NCLT Rules.

    In Bank of Baroda v. Topworth Tollways (Ujjain) P Ltd., the NCLT, Mumbai reiterated the holding of the SC in Innoventive Industries Ltd. v. ICICI Bank Ltd., which stated that 'default' is defined in S. 3(12) of the Code in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. In this case, the Corporate Debtor, inter alia, contended before the Tribunal that the amount claimed to be in default by the Financial Creditor was inaccurate, as the Financial Creditor instead of claiming only the defaulted interest and the defaulted principal pertaining to the specified quarter, claimed the entire amount. The Tribunal, while rejecting the claim of the Corporate Debtor, stated that the Financial Creditor was entitled to claim the entire amount under the acceleration clause of the loan agreement between the parties when a single payment of interest or principal was defaulted by the Corporate Debtor and the Corporate Debtor defaulted in making the payment of the amount claimed by the Financial Creditor.

    In Invent Asset Securitization and Asset Reconstruction Private Limited v. Vijendra Kumar Jain, Resolution Professional of Shree Vindhya Paper Mills Ltd., NCLT, Mumbai emphasised that the CoC is sufficiently empowered to decide the amount of payment to each class/sub-class of creditors as per its commercial wisdom. Here, the aggrieved Financial Creditor having a second charge on the immovable property of the Corporate Debtor, prayed to the Tribunal for the revision of the resolution plan on the ground that it provided for the payment of only 0.5% of the principal outstanding to the Financial Creditor. The Financial Creditor contended that the resolution plan was manifestly arbitrary and unfair, as even the Operational Creditors were placed in a better position than the second charge holders on a percentage basis. The Tribunal, while noting that the CoC has the authority to make payment based on the realisable value of the security to each creditor/class of creditors, decided that the claim of the Financial Creditor was not justiciable. The Tribunal further observed that the claim that the Operational Creditors were receiving higher amounts than the second charge holders could not be a cause for complaint, when the liquidation value attributable to the both of them was zero.

    In Deputy Commissioner of Customs v. Jyoti Structure Ltd., the NCLT, Mumbai held that it is the responsibility of the creditor concerned to file a claim within the stipulated time after the issuance of a public notice inviting claims by RP. Here, the Deputy Commissioner of Customs claimed that by virtue of Ss. 18(1)(a) and 18(1)(b) of the Code, the RP is duty bound to identify the liabilities of the Corporate Debtor and send them notices to enable them to file a claim. The Tribunal, which rejecting the claim, cited Regulation 6 of the CIRP Regulations, which provides that the Interim Resolution Professional (IRP) shall make a public announcement within three (3) days from date of his appointment, inviting claims from the public, and the claimant should file claim within the stipulated time.

    In Axis Bank v. Seven Hills Healthcare Pvt. Ltd., NCLT, Amaravati observed that it is in the interest of all stakeholders that the CIRP is allowed to be completed, and that liquidation proceedings should only be initiated as a matter of last resort. Following the law laid down by the Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors, wherein it was held that the CIRP could be extended beyond 330 days if, inter alia, the litigants were not at fault for the delay, the Tribunal considered as valid the inability of the prospective resolution applicants to visit the premises of the Corporate Debtor, which had been converted into a dedicated COVID Hospital by the Municipal Corporation of Greater Mumbai. Consequently, the Tribunal allowed the application of the RP, and granted a ninety (90) day extension to complete the CIRP.

    In Deepak Uniyal v. Leel Electricals Ltd., NCLT, Allahabad followed Swiss Ribbons (P) Ltd. v. Union of India, to hold that a withdrawal application filed by the original applicant pursuant to a settlement with the Corporate Debtor cannot be allowed post the constitution of the CoC. The order was passed pursuant to various applications filed for vacation of the status quo order passed by the NCLT in a withdrawal application filed by the original applicant which was a Financial Creditor. NCLT allowed the vacation of stay and ordered continuation of CIRP while advising the Corporate Debtor to follow the process u/s 12A of the Code.

    In Union Bank of India v. Shri Lakshmi Cotsyn Limited, NCLT, Allahabad held that the Code was a beneficial legislation to protect the Corporate Debtor from its management and corporate death, hence, the time limit provided under Insolvency and Bankruptcy Board of India (Liquidation) Regulations 2018 to formulate and implement a scheme of arrangement post liquidation could be extended in order to avoid corporate death. The NCLT also relied on the NCLAT order in S.C Sekaran v Amit Gupta, which had held that the NCLT could extend the time taken for liquidating the Corporate Debtor, if there was a chance of approval of a scheme of arrangement under Ss.230-232 of the Companies Act.

    In MKM Technologies v. M/S Leel Electricals Ltd, NCLT Allahabad held that S.238 of the Code will override the Customs Act 1962 (Customs Act). The NCLT issued the order pursuant to an application by the RP, to direct the Commissioner of Customs to hand over the Corporate Debtor's assets that were lying with the Commissioner as on the date of initiation of CIRP. The Department of Customs (the Department) relied on the bond furnished by the Corporate Debtor which empowered the proper officer under Customs Act to sell Corporate Debtor's goods under the Disposal Manual read with S.72 of the Customs Act to recover penalties, interest or government dues, in case the Corporate Debtor failed to comply with conditions of the bond. The Department claimed that the Corporate Debtor had not fulfilled its obligations to file a bill of entry for several consignments, for more than a year, and disposal proceedings of goods regarding such consignments had begun before the insolvency commencement date. The NCLT ruled that the goods of the Corporate Debtor had not been sold during the CIRP, and would therefore come within the scope of S.14 of the Code by virtue of the non-obstante provision u/s S.238 of the Code, and allowed the application.

    In Jasubhai International FZCO v. Ashok Kumar Gullah, NCLT Allahabad held that an interest free earnest money deposit (EMD) would not qualify as financial debt u/s 5(8) of the Code. NCLAT rejected the application of a creditor u/s 60(5) challenging the rejection of its financial claim by the RP. The basis of the claim was a letter of intent (LOI) issued by the Corporate Debtor, pursuant to which the applicant had made an EMD for INR Three (3) Crores (3,00,00,000). The parties entered into an agreement and LOI, for solar PV power projects. requiring the Corporate Debtor to (i) issue a work order to the applicant; and (ii) obtain approval for the applicant as a vendor for development of the project. However, the Corporate Debtor subsequently withdrew from the project, and did not refund the EMD to the applicant. Accordingly, when claims were invited from the Corporate Debtor's creditors, the applicant filed its claim as a Financial Creditor claiming 12% interest on the EMD. The NCLT rejected the application noting that the lack of an interest clause or assured returns on the EMD, ruled out lack of time value of money as consideration for advancing EMD, making the applicant's claim u/s 5(8) unsustainable.

    In Shree Ambica Rice Mill v. M/s. Kaneri Agro Industries Ltd., the NCLT Ahmedabad dismissed an application u/sn 7 of the Code as it found that it was a collusive application by which the Corporate Debtor was seeking the benefits of the moratorium u/s 14 of the Code in order to stop a Bank from continuing with SARFAESI proceedings which had been initiated against the Corporate Debtor. In this case, the Financial Creditor repeatedly provided loans on interest to the Corporate Debtor, all of which were squared up on the same date or in a very short period of time thereafter. Looking at the nature of these transactions, the NCLT observed that these transactions were entered into between the parties (Financial Creditor and Corporate Debtor) in order to create a turn over/ volume of transactions in the account of the Corporate Debtor or as margin money in order to enable the Corporate Debtor to avail a cash credit facility from the Bank of Baroda. Furthermore, the NCLT also observed that in this case, the Corporate Debtor did not even oppose the Financial Creditor's application u/s 7 of the Code, and after dismissing the application, the NCLT also issued a show cause notice to the Financial Creditor as to why penalty should not be imposed on both the parties u/s65 of the Code.

    In Urvashi Kamath and Anr v. M/s Moonriver Resorts Pvt. Ltd., the NCLT, Kochi was dealing with an application filed u/s 7 of the Code. In this case, the Financial Creditor had made an investment to purchase a share in a Resort to be developed by the Corporate Debtor, and under the terms of their agreement, the Corporate Debtor would compensate the Financial Creditor for a delay in construction of the Resort, and also pay him 1/6th of the rental pool income generated in an accounting year. Furthermore, if the rental pool income for an accounting year was less than 9% of the consideration paid by the Financial Creditor, then the Corporate Debtor would pay 9% of the total consideration to the Financial Creditor. Additionally, at the end of five (5) years, the Corporate Debtor would buy back the 1/6th share of the Financial Creditor at 140% of the original sale price. The NCLT held that this Agreement, constituted a financial debt u/s 5(8) of the Code, as it was a debt along with interest disbursed against the consideration for a time value of money and it had a commercial effect of a borrowing u/s 5(8)(f) of the Code. In this case the NCLT also held that a whatsapp communication could be treated as an acknowledgement of a liability for the purpose of S.18 of the Limitation Act.

    In M/s The Kerala Chamber of Commerce and Industry v. Adv Tom Thomas and Ors., the NCLT, Kochi held that a single member bench is also empowered to hear and dispose of matters under the Companies Act. In coming to its conclusion, the NCLT differentiated the Supreme Court's judgements in Union of India v. R. Gandhi and in Madras Bar Association v. UOI and also the NCLAT's judgements in Indison Agro Foods v. Registrar, and held that the ratio of these decisions did not mandate that there need to be a minimum of two members on every bench of the NCLT for constituting a valid quorum.

    (Rahul is a law clerk at the Supreme Court of India, Siddharth is an advocate based in New Delhi, Akshata is a lawyer based out of New Delhi, Pranav is an advocate based in Mumbai, and Karan is a lawyer based out of Mumbai) 

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