Monthly Digest Of IBC Cases: April 2022

Supreme Court Wages/Salaries Of Only Those Workmen/Employees Who Actually Worked During CIRP Are To Be Included In CIRP Costs: Supreme Court Case title: Sunil Kumar Jain v Sundaresh Bhatt, Civil Appeal No. 5910 of 2019. A Supreme Court division bench comprising of Justice M.R. Shah and Justice Aniruddha Bose has held that the dues towards the wages/salaries of only those workmen/employees who actually worked during the Corporate Insolvency Resolution Process ("CIRP") are to be included in the CIRP costs. The Bench clarified that the wages and salaries of all other workmen/employees of the Corporate Debtor during the CIRP, who actually have not worked and/or performed their duties when the Corporate Debtor was a going concern, shall not be included automatically in the CIRP costs. Such dues will be governed by Section 53(1)(b) and Section 53(1)(c) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). It was further observed that Section 36(4) and Section 53(1) of the IBC shall not be applicable to dues of the workmen/employees on account of provident fund, gratuity and pension. They are to be treated outside the liquidation process and liquidation estate assets under the IBC. The order was passed on 19.04.2022. Insolvency and Bankruptcy Code Is Not For Money Recovery Proceedings: Supreme Court Reiterates Case Title: Invest Asset Securitisation and Reconstruction Pvt. Ltd. v Girnar Fibres Ltd., 2022 LiveLaw (SC) 423. The Supreme Court bench comprising of Justice Dinesh Maheshwari and Justice Aniruddha Bose reiterated that the provisions of Insolvency and Bankruptcy Code, 2016 ("IBC") are essentially intended to bring the Corporate Debtor to its feet and are not of money recovery proceedings as such. The Appellant had filed an appeal before the Supreme Court under Section 62 of the IBC against the NCLAT order dated 18.11.2021, wherein Appellant's appeal was dismissed on the ground that application filed under Section 7 of IBC is barred by limitation. The Supreme noted that the right to sue accrued on the date of declaration of Non Performing Asset (NPA) but there is no evidence of any acknowledgement of liability in terms of Section 18 of the limitation Act, 1963. The order was passed on 25.04.2022. Supreme Court Keeps CIRP In Abeyance And Permitted Promoter To Complete The Housing Project Case title: Anand Murti v Soni Infratech Private Limited., Civil Appeal Nos.7534 of 2021. The Supreme Court bench comprising of Justices L Nageshwara Rao and B R Gavai has directed to keep the Corporate Insolvency Resolution Process (CIRP) of Soni Infratech Pvt. Ltd. ("Corporate Debtor") in abeyance and permitted the erstwhile promoter of Corporate Debtor to complete the construction of real estate housing project within the stipulated time period. The Promoter of Corporate Debtor had filed an additional affidavit before the Supreme Court, undertaking to complete the project in stipulated time and to return the money along with 6% p.a. interest to seven homebuyers who are objecting to settlement plan. The Bench noted that there are only 7 out of 452 homebuyers who are objecting to settlement plan and therefore, it will be interest of homebuyers to permit the promoter to complete the construction of the project. The Bench further observed that there is every possibility that if the CIRP is permitted, homebuyers will have to play an escalation cost whereas the Promoter is undertaking to honor the existing BBA without any escalation. Therefore, the appeal was disposed off by permitting the promoter to complete the project within stipulated time in terms of the additional affidavit and the same shall be treated as the undertaking to the Supreme Court. The order was passed on 27.04.2022. Supreme Court Issues Notice On NCLT Bar Association's Petition Challenging MCA Notification Fixing NCLT Members' Term As 3 Years Case Title: National Company Law Tribunal Bar Association v Union of India, W.P.(C) No. 180/2022. A Supreme court Bench comprising of Justices L. Nageswara Rao, B.R. Gavai and Aniruddha Bose, has issued notice to the Central Government on the Writ Petition filed by the National Company Law Tribunal Bar Association (NCLTBA) through its Secretary. The writ petition has been filed seeking modification of the term of 3 years fixed by a notification issued by the Ministry for the members of the National Company Law Tribunal as 5 years. The Notification was issued on 20.09.2019 by the Ministry of Corporate Affairs in exercise of the powers conferred by section 408 of the Companies Act, 2013. The term was fixed as 3 years or till the age of 65 years, whichever is earlier. The order was passed on 05.04.2022. 'Decree Holders' Can't Be Treated At Par With 'Financial Creditors' Under IBC: Supreme Court Case Title: Shubhankar Bhowmik v Union of India & Anr., SLP 6104/2022. The Supreme Court Bench comprising of Justice SK Kaul...

Monthly Digest Of IBC Cases: April 2022

Pallavi Mishra

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