IBC Cases Weekly Round-Up: 5 September To 11 September, 2022

Supreme Court CIRP Can Be Initiated Against Corporate Guarantor Without Proceeding Against Principal Borrower: Supreme Court Case Title: K Paramasivam vs Karur Vysya Bank Ltd Case No.: 2022 LiveLaw (SC) 742, CA 9286 OF 2019 The Supreme Court Bench comprising of Justice Indira Banerjee and Justice JK Maheshwari, has held that Corporate Insolvency Resolution Process (CIRP) can be initiated against the Corporate Guarantor without proceeding against the principal borrower. The liability of the guarantor is co-extensive with that of the Principal Borrower. The court further noted that, under Section 7 of the IBC, CIRP can be initiated against a Corporate entity who has given a guarantee to secure the dues of a non-corporate entity as a financial debt accrues to the corporate person, in respect of the guarantee given by it, once the borrower commits default and the guarantor is then, the Corporate Debtor. Resolution Plan Which Ignores Statutory Dues Payable To State Government/Legal Authority Liable To Be Rejected: Supreme Court Case Title: State Tax Officer (1) vs Rainbow Papers Limited Case No.: 2022 LiveLaw (SC) 743, CA 1661 OF 2020 The Supreme Court Bench comprising of Justice Indira Banerjee and Justice AS Bopanna held that a Resolution Plan which ignores the statutory demands payable to any State Government or a legal authority, altogether, is liable to be rejected. If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan.. In other words, if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased manner, uniform proportional reduction, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC.. In our considered view, the Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues." The court also held that the Section 48 of the Gujarat Value Added Tax Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, would include the State under the GVAT Act. NCLAT Limitation To Be Counted From The Date Of Preparation Of Certified Copy, Not Delivery :NCLAT Delhi Case Title: Wadhwa Rubber v Bandex Packaging Pvt. Ltd Case No.: Company Appeal (AT) (Ins.) No. 576 OF 2021 The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Alok Srivastava (Technical Member), has dismissed the appeal for being time barred while observing that limitation is to be counted from the date of preparation of the certified copy and not from the date of delivery of the certified copy. "It is well settled that the limitation is to be counted not from the date of delivery of the certified copy but from the date of preparation of the certified copy." NCLAT Delhi Allows Appeal Re-Filed After 197 Days Of Delay, Subject To Cost Of Rs.10,000 Payable To Respondent Case Title: Dinesh Mehta v Amit Kumar Mehta & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 1035 of 2022 The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has allowed an appeal which was re-filed after 197 days of delay by the Appellant, subject to payment of cost of Rs. 10,000/- to the Respondent. The delay in filing had occurred in obtaining a document which was to be filed alongwith the Appeal which had foreign origin – Sharjah, United Arab Emirates and time taken in obtaining translated copy of the document. Issue Of CIRP Cost To Be Decided In COC Meeting, Not By Adjudicating Authority : NCLAT Delhi Case Title: Bharat Hotels Ltd. v Tapan Chakraborty Case No.: Company Appeal (AT) (Insolvency) No. 1074 of 2022 The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that question of item wise CIRP cost and its approval lays in the domain of the CoC and the latter may ratify, modify or set aside the cost claimed. The issue of cost is to be decided in the meeting of the CoC and not to be examined by the Adjudicating Authority even before the CoC takes a decision. The Bench rejected a Financial Creditor's plea seeking disclosure of item wise insolvency resolution cost. Erstwhile...

IBC Cases Weekly Round-Up: 5 September To 11 September, 2022

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IBC Cases Weekly Round-Up: 5 September To 11 September, 2022

Pallavi Mishra

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers