IBC Cases Weekly Round Up: July 10 To 17 July, 2022

Supreme Court NCLT Has Discretion To Not Admit Financial Creditor's CIRP Application Even If Corporate Debtor Is In Default:Supreme Court Case Title: Vidarbha Industries Power Ltd. vs Axis Bank Limited Case No.: 2022 LiveLaw (SC) 587, CA 4633 OF 2021 The Supreme Court Bench comprising of Justices Indira Banerjee and JK Maheshwari has observed that it is not mandatory for the Adjudicating Authority to admit an application to initiate Corporate Insolvency Resolution Process even if a debt existed and the Corporate debtor is in default. However, such discretionary power cannot be exercised arbitrarily or capriciously. "Ordinarily, the Adjudicating Authority (NCLT) would have to exercise its discretion to admit an application under Section 7 of the IBC of the IBC and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the Corporate Debtor in payment of the debt, unless there are good reasons not to admit the petition.. The Adjudicating Authority (NCLT) has to consider the grounds made out by the Corporate Debtor against admission, on its own merits. For example when admission is opposed on the ground of existence of an award or a decree in favour of the Corporate Debtor, and the Awarded/decretal amount exceeds the amount of the debt, the Adjudicating Authority would have to exercise its discretion under Section 7(5)(a) of the IBC to keep the admission of the application of the Financial Creditor in abeyance, unless there is good reason not to do so. The Adjudicating Authority may, for example, admit the application of the Financial Creditor, notwithstanding any award or decree, if the Award/Decretal amount is incapable of realisation. The example is only illustrative." NCLAT NCLAT Chennai Rejects Claim Of PF Department For Delay Of 936 Days Case Title: The Regional Provident Fund Commissioner v Mr. Vasudevan Case No.: Company Appeal (AT) (CH) (INS) No. 182 of 2022 The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Kanthi Narahari (Technical Member), has dismissed a claim filed by the Provident Fund Commissioner after a delay of 936 days and held that no indulgence or latitude can be shown for a Statutory Organization, since the law applies to all. The officials must act with as much as diligent as is expected from a Litigant. The Bench opined that speed is the essence of IBC and time wasted or lost cannot be regained. The process of Liquidation is time bound, to be completed within one year in the teeth of IBC. "Undoubtedly, the Code is an inbuilt and self-contained one and the object of the I & B Code, 2016, is that, a time barred `Debt' cannot be resurrected or given a fresh tenure of life, as opined by this `Tribunal'." NCLT A Report Under Section 99 Of IBC Cannot Be Filed By Resolution Professional Without The Adjudicating Authority's Directions: NCLT Mumbai Case Title: Bank of Baroda Limited v Mr. Pawan V Kikavat Case No.: C.P.(IB)-140(MB)/2022. The National Company Law Tribunal, Mumbai Bench, comprising of Shri H. V. Subba Rao (Judicial Member) Shri Chandra Bhan Singh (Technical Member), has directed the Resolution Professional to file a fresh a report under Section 99 of the Insolvency and Bankruptcy Code, 2016 ("IBC") for recommending approval or rejection of insolvency petition against the Personal Guarantor, which was previously filed by the Resolution Professional on its own accord, without there being any direction from the Adjudicating Authority. The Personal Guarantor had raised objections before the NCLT Bench that a report u/s 99 of the IBC cannot be filed until the Adjudicating Authority directs so. Arbitrarily Rejection Of Resolution Plan Is Void, NCLT Allahabad Declares The COC's Action As Void Case Title: Exim Scrips Dealers Pvt. Ltd v Rathi Graphic Technologies Limited Case No.: CP (IB) NO.325/ALD/2019 The National Company Law Tribunal ("NCLT"), Allahabad Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Virendra Kumar Gupta (Technical Member), has held that principles of natural justice are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The Committee of Creditors (CoC) had declined to consider the revised resolution plan submitted by the resolution applicant for being submitted three days after the deadline and had rather given approval to another plan which had a lower value and was conditional in nature. The NCLT declared the action of CoC as void and directed to re-conduct the process of submission of resolution plan. "It can be safely concluded that all actors/ institutions associated with the conduct of CIRP are bound to follow the principles of natural justice which are enshrined in the Constitution of India as a public policy and have also been accepted by judicial forums as...

IBC Cases Weekly Round Up: July 10 To 17 July, 2022

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IBC Cases Weekly Round Up: July 10 To 17 July, 2022

Pallavi Mishra

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

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