Weekly Digest Of IBC Cases: 25th April To 1st May, 2022

Supreme Court1. Insolvency and Bankruptcy Code Is Not For Money Recovery Proceedings: Supreme Court ReiteratesCase Title: Invest Asset Securitisation and Reconstruction Pvt. Ltd. v Girnar Fibres Ltd.Case No.: 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. 2. Moratorium Applies Only To Corporate Debtor; Natural Persons Like Its Director Would Continue To Be Liable U/s 138 NI Act: Supreme Court Case Title: Narinder Garg v Kotak Mahindra Bank Case No.: W.P. (C) 93 OF 2022 The Supreme Court Bench comprising of Justices UU Lalit, S. Ravindra Bhat and P.S. Narasimha, has reiterated that the moratorium provisions contained in Section 14 of the Insolvency and Bankruptcy Code, 2016 would apply only to the Corporate Debtor and the natural persons mentioned in Section 141 of the Negotiable Instruments Act would continue to be statutorily liable under the provisions of the said Act. The order was passed on 28.03.2022. 3. Supreme Court Keeps CIRP In Abeyance And Permitted Promoter To Complete The Housing Project Case title: Anand Murti v Soni Infratech Private Limited. Case No.: 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. NATIONAL COMPANY LAW APPELLATE TRIBUNAL (NCLAT) 1. Time Period Under Regulation 35A Is Directory And Not Mandatory: NCLAT, Delhi Case Title: Aditya Kumar Tibrewal v Om Prakash Pandey Case No.: Company Appeal (AT) Insolvency No. 583 of 2021 The National Company Law Appellate Tribunal (NCLAT) principal bench comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that time period prescribed under Regulation 35A of the IBBI (CIRP) Regulations (CIRP Regulations) is directory in nature and not mandatory. Any action taken by the Resolution Professional beyond the time prescribed under Regulation 35A of the CIRP Regulations cannot be held to be non-est or void only on the ground that it is beyond the period prescribed under Regulation 35A of the CIRP Regulations. 2. NCLAT Delhi Uphelds That Corporate Debtor Cannot Be Sent Into Liquidation Just Because Liquidation Value Is More Than The Value Of The Resolution Plan Case title: CFM Asset Reconstruction Pvt. Ltd. v SS Natural Resources Pvt. Ltd. & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 396 of 2022. The National Company Law Appellate Tribnal (NCLAT), Principal Bench, comprising of comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has upheld the order dated 06.04.2022 passed by NCLT Kolkata Bench whereby it was held that Corporate Debtor cannot be sent into liquidation just because liquidation value is more than the value of the Resolution Plan. It was reiterated that primary focus of the Insolvency and...

Weekly Digest Of IBC Cases: 25th April To 1st May, 2022

Pallavi Mishra

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