IBC Cases Weekly Round Up: 18 July To 24 July, 2022

SUPREME COURT NCLT Not A Debt Collection Forum ; Operational Creditor's Application To Initiate CIRP Must Be Dismissed If The Debt Is Disputed: Supreme Court Case Title: SS Engineers vs Hindustan Petroleum Corporation Ltd Case No.: 2022 LiveLaw (SC) 617, CA 4583 OF 2022 The Supreme Court Bench comprising of Justices Indira Banerjee and V. Ramasubramanian observed that application of the Operational Creditor for initiation of Corporate Insolvency Resolution Process (CIRP) must be dismissed, if the debt is disputed. "It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor". The Bench also remarked that the adjudicating authority under IBC i.e. NCLT is not a 'debt collection forum' and the objective of IBC is not to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor. It was further held that there are noticeable differences in the IBC between the procedure of initiation of CIRP by a financial creditor and initiation of CIRP by an operational creditor. On a reading of Sections 8 and 9 of the IBC, it is patently clear that an Operational Creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence, for IBC does not countenance dishonesty or deliberate failure to repay the dues of an Operational Creditor. However, if the debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed. NCLAT OTS Proposal Is An 'Acknowledgement Of Debt' Under Section 18 Of Limitation Act: NCLAT Delhi Case Title: Tejas Khandhar v Bank of Baroda, Case No.: Company Appeal (At) (Insolvency) No. 371 Of 2020 The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a One Time Settlement (OTS) proposal falls within the definition of 'acknowledgement of debt' under Section 18 of the Limitation Act, 1963. Reliance was placed on the Supreme Court judgment of Dena Bank v C. Shivkumar Reddy and Anr., (2021) 10 SCC 330, wherein it has been held that an offer of One Time Settlement of a live claim, made within the period of limitation, should also be construed as an acknowledgment to attract Section 18 of the Limitation Act. NCLT NCLT Mumbai Initiates Insolvency Proceedings Against Future Retail Ltd., Rejects Amazon's Intervention Plea Case title: Bank of India v Future Retail Ltd. Case No.: CP (IB) No. 527/MB/2022. The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Future Retail Ltd. over an application filed under Section 7 of IBC by Bank of India, for a default of Rs. 856.10 Crores. Mr. Vijay Kumar V Iyer has been appointed as the Interim Resolution Professional. Further, the Intervention Petition filed by Amazon.com NV Investment Holdings LLC in the matter has been dismissed by the Bench over lack of locus standi. The order has been passed on 20.07.2022.

IBC Cases Weekly Round Up: 18 July To 24 July, 2022

Pallavi Mishra

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IBC Cases Weekly Round Up: 18 July To 24 July, 2022

Pallavi Mishra

This is a premium content Available exclusively to Our subscribers

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