Weekly Digest Of IBC Cases: 1st October To 7th October 2024

Nominal Index 1. Tushar Sharma v. State Bank of India, Cr. MMO No. 924 of 2023 2. Gateway Investment Management Services Ltd. v. Reserve Bank of India and Ors., 2024 LiveLaw (Del) 1092 3. Su-Kam Power System Ltd. and Anr. v. State of Himachal Pradesh and Ors., CWP No.422 of 2024 4. M/S Patanjali Foods Limited (Formerly Ruchi Soya Industries Limited) v. Commissioner of Customs, CSTA No. 4 of 2024 5. Gujarat Urja Vikas Nigam Limited v. Mr. Udayraj Patwardhan, Comp. App. (AT) (Ins.) No. 1183 of 2024 6. Amit Narang v. Aditya Birla Finance Ltd. and Anr., Company Appeal (AT) (Insolvency) No. 684 of 2024 7. Union Bank of India v. M/s. K M R Enterprises and Anr., CP (IB) No. 66/95/HDB/2024 8. Punjab National Bank and Anr v. Mohita Indrayan, IA No. 2727/2023, IA No. 2974/2023 & CP (IB) No. 158/Chd/Hry/2023 9. Kapston Facilities Management Ltd. v. Karvy Stock Broking Ltd., CP (IB) No.332/9/HDB/2021High CourtsNegotiable Instruments Proceeding Under Section 138 Does Not Abate On Initiation Of Insolvency Proceeding: Himachal Pradesh High CourtCase Title: Tushar Sharma v. State Bank of IndiaCase Reference: Cr. MMO No. 924 of 2023It was held that while section 14 of the IBC imposes a moratorium on all the proceedings against the corporate debtor once the corporate debtor is admitted into insolvency. However, this does not absolve the directors and signatories to the dishonoured cheque from their personal liability under section 138 of the Negotiable Instrument Act. The Supreme Court observed as under:“52 Thus, where the proceedings under Section 138 of the NI Act had already commenced and during the pendency the plan is approved or the company gets dissolved, the directors and the other accused cannot escape from their liability by citing its dissolution. What is dissolved is only the company, not the personal penal liability of the accused covered under Section 141 of the NI Act. They will have to continue to face the prosecution in view of the law laid down in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661. Where the company continues to remain even at the end of the resolution process, the only consequence is that the erstwhile directors can no longer represent it”.Adjudicating Authority Decides Fairness And Reasonableness While Approving Resolution Plan, High Court Cannot- Delhi High CourtCase Title: Gateway Investment Management Services Ltd. v. Reserve Bank of India and Ors.Citation: 2024 LiveLaw (Del) 1092In a significant judgement, the Delhi High Court affirmed the commercial wisdom of the committee of creditors (CoC). The case was pertaining to rejection of the resolution plan proposed by the petitioner despite offering the highest bid in e-auction in a Corporate Insolvency resolution Plan (CIRP) of Helio Photo Voltaic Pvt. Ltd. (Corporate Debtor).The court held as under:“12 Thus, the resolution plan decided by the CoC shall be put up for consideration before the Adjudicating Authority, which forum alone shall finally decide whether the CoC has performed its fiduciary duty as per the legislative mandate of the IBC”.Himachal Pradesh High Court Affirms Clean Slate Theory, Declares Tax Authorities' Charge Over Properties After Acquisition Plan Void And IllegalCase Title: Su-Kam Power System Ltd. and Anr.v.State of Himachal Pradesh and Ors.Case Reference: CWP No.422 of 2024In an important judgment delivered by the Himachal Pradesh High Court, the claims and red entries of the state tax department over the properties of Su-Kam Power Systems Ltd.(Corporate Debtor) were quashed. The corporate debtor was sold as a going concern under the provisions of the Insolvency and Bankruptcy Code (IBC). The court held that once the company was acquired and resolution plan was approved, all prior claims including claims of the tax authorities are extinguished.The court rejected the argument that crown debt had priority over other debts. The court held as under:“61 The plea of the respondents that the tax dues claimed by them will have priority as a “Crown Debt”, therefore, cannot be accepted, and their action in continuing the said red entry/charge on account of dues recoverable from erstwhile management of the Corporate Debtor under the Himachal Pradesh Value Added Tax Act, 2005, Himachal Pradesh Goods and Services Tax Act, 2017 and the CST Act, 1956, would be clearly illegal & arbitrary”.Ruchi Soya (Patanjali) – Claim Not Included In Approved Resolution Plan Stand Extinguished : Karnataka High CourtCase Title: M/S Patanjali Foods Limited (Formerly Ruchi Soya Industries Limted) vs. Commissioner of CustomsCase No.: CSTA No. 4 of 2024The Karnataka High Court division bench comprising Mr. Justice S.G. Pandit and Mr. Justice C.M. Poonacha has held that once a resolution plan is approved by the Adjudicating Authority under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), claims which are not included in the...

Weekly Digest Of IBC Cases: 1st October To 7th October 2024

Mohd Malik Chauhan

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