Monthly Digest Of IBC Cases [May 2023]

SUPREME COURTIBC| Principle Of Commercial Wisdom Not Validate A Decision Taken By CoC In Contravention Of Law: Supreme CourtCase Title: M.K. Rajagopalan v Dr. Periasamy Palani GounderCitation: 2023 LiveLaw (SC) 403The Supreme Court Bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath, has held that the principle of ‘Commercial Wisdom’ of the Committee of Creditors (“CoC”) cannot brush aside the shortcomings of the CoC in cases where decision making was done in contravention to a law which is in force for the time being. The Bench has upheld the NCLAT’s order whereby the Successful Resolution Applicant was declared ineligible in terms of Section 88 of the Indian Trusts Act, 1882, since he had submitted two resolution plans, one in individual capacity and one in the capacity of Managing Trustee of the Trust.IBC| Ineligibility Of Resolution Applicant As Per S.164(2)(b) Companies Act Can't Be Presumed Unless Competent Authority Declares Disqualification: Supreme CourtCase Title: M.K. Rajagopalan v Dr. Periasamy Palani GounderCitation: 2023 LiveLaw (SC) 403The Supreme Court Bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath, has held that a resolution applicant cannot be rendered ineligible to submit a resolution plan under the Insolvency and Bankruptcy Code, 2016 (“IBC”), by assuming his/her disqualification under Section 164(2)(b) of the Companies Act, 2013, unless a categorical order disqualifying him/her to act as a director of any company is passed by the competent authority. Further, there is no concept of ‘deemed disqualification’ under Section 164(2)(b) of the Companies Act, 2013.No Priority For Workers' Dues After Liquidation Of Company Under IBC: Supreme Court Upholds Section 327(7) Of Companies Act 2013Case Title : Moser Baer Karamchari Union through its President Mahesh Chand Sharma vs Union of India W.P.(C) No. 421/2019 and connected cases.Citation: 2023 LiveLaw (SC) 386The Supreme Court Bench comprising Justices MR Shah and Sanjiv Khanna has held upheld the constitutional validity of Section 327(7) of the Companies Act, 2013, which holds that workers' dues will not get preferential payment in the event a company undergoes liquidation as per the provisions of the Insolvency and Bankruptcy Code 2016. "The enactment of the IBC and Section 53 of IBC necessitated amendment to the Companies Act 2013. The object and purpose of amending the Companies Act 2013 and to exclude Sections 326 and 327 in the event of liquidation of a company under IBC seem to be that there may not be two different provisions in respect to the winding up/ liquidation of a company. Therefore, in view of the enactment of the IBC, it was necessary to exclude the applicability of Section 326 and 327 of the 2013 Act, which cannot be said to be arbitrary, as contended on behalf of the petitioners", IBC | Date Of Order Pronouncement & Time Taken To Provide Certified Copy Excluded From Limitation Period For Appeal To NCLAT: Supreme CourtCase Title: Sanket Kumar Agarwal & Anr v APG Logistics Private LimitedCitation: 2023 LiveLaw (SC) 406The Supreme Court Bench comprising Chief Justice of India Dr. Dhananjaya Y Chandrachud and Justice J B Pardiwala, has held that for the purpose of computing limitation for filing of appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016, the time taken by Tribunal for providing certified copy of order to be challenged ought to be excluded from computation of limitation.Further, the date on which the order was pronounced must be excluded while computing limitation for filing of appeal against such order. Accordingly, the Bench has set aside an order passed by the National Company Law Appellate Tribunal (“NCLAT”), wherein NCLAT had erroneously included the date of order pronouncement in limitation period and dismissed the appeal for being barred by limitation.IBC | NCLT Has To Admit Sec 7 Petition If Debt Is Due; Decision In 'Vidarbha Industries' Based On Its Facts: Supreme CourtCase Title: M. Suresh Kumar Reddy v Canara Bank & Ors.Citation: 2023 LiveLaw (SC) 428The Supreme Court Bench comprising of Justice Abhay S. Oka and Justice Rajesh Bindal, has held that if the existence of a financial debt and its default on the part of Corporate Debtor has been proved, then the National Company Law Tribunal (“NCLT”) is left with no option apart from admitting the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The only ground on which a petition under Section 7 of IBC can be rejected is when the debt in question has not become due and payable(M. Suresh Kumar Reddy v Canara Bank & Ors.).Further, the decision in Innoventive Industries Limited v. ICICI Bank and Another, (2018) 1 SCC 407, still holds good and the NCLT must admit a petition under Section 7 of IBC once existence of debt and default is established. The decision in Vidarbha Industries Power Limited v. Axis Bank Limited, 2022 LiveLaw (SC) 587, was passed based on the facts of...

Monthly Digest Of IBC Cases [May 2023]

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Monthly Digest Of IBC Cases [May 2023]

Pallavi Mishra

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Pallavi Mishra

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