IBC Cases Weekly Round-Up: 19 September To 25 September, 2022

Supreme Court IBC - Approval Of A Resolution In Respect Of One Borrower Cannot Discharge A Co-Borrower: Supreme Court Case Title: Maitreya Doshi vs Anand Rathi Global Finance Ltd Case No.: 2022 LiveLaw (SC) 789, CA 6613 OF 2021 The Supreme Court Bench comprising of Justices Indira Banerjee and JK Maheshwari has held that approval of a resolution in respect of one borrower cannot discharge a co-borrower. The Bench observed that if there are two borrowers or if two corporate bodies fall within the ambit of corporate debtors, there is no reason why proceedings under Section 7 of the IBC cannot be initiated against both the Corporate Debtors. On a parity of reasoning, the approval of a resolution in respect of one borrower cannot certainly discharge a co-borrower. Needless to mention, the same amount cannot be realised from both the Corporate Debtors. If the dues are realised in part from one Corporate Debtor, the balance may be realised from the other Corporate Debtor being the co-borrower. However, once the claim of the Financial Creditor is discharged, there can be no question of recovery of the claim twice over. IBC - No Bar To Withdraw Admitted CIRP Application Before Constitution Of Committee Of Creditors: Supreme Court Case Title: Ashok G. Rajani vs Beacon Trusteeship Ltd. Case No.: 2022 LiveLaw (SC) 790, CA 4911 OF 2021 The Supreme Court Bench comprising of of Justices Indira Banerjee and JK Maheshwari observed that there is no bar to withdrawal of an admitted CIRP application before constitution of Committee of Creditors. The Bench observed that settlement cannot be stifled before the constitution of the Committee of Creditors in anticipation of claims against the Corporate Debtor from third persons. The bench noted that Section 12A of the IBC enables the Adjudicating Authority to allow the withdrawal of an application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting shares of the Committee of Creditors in such a manner as may be specified. "Section 12A of the IBC clearly permits withdrawal of an application under Section 7 of the IBC that has been admitted on an application made by the applicant. The question of approval of the Committee of Creditors by the requisite percentage of votes, can only arise after the Committee of Creditors is constituted. Before the Committee of Creditors is constituted, there is, in our view, no bar to withdrawal by the applicant of an application admitted under Section 7 of the IBC." NCLAT Payment Of TDS Towards Interest Payable Does Not Amount To Acknowledgment Of Debt: NCLAT Directs IBBI To Investigate Into Conduct Of RP Case Title: P.M. Cold Store Pvt. Ltd. v. Goouksheer Farm Fresh Pvt. Ltd. & Ors. Case No: Company Appeal (AT) (Insolvency) No. 615 of 2020 The National Company Law Appellate Tribunal ("NCLAT") Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member), Mr. Kanthi Narahari and Dr. Alok Srivastava (Technical Members), has held that payment of TDS towards interest payable does not amount to acknowledgement in writing of the liability of the Corporate Debtor. The Bench directed the IBBI to investigate into the conduct of the Resolution Professional for violation of Regulation 13 of the CIRP Regulations, 2016. Corporate Debtor Willing To Pay Full Amount, Financial Creditor Opposes, NCLAT Upholds Dismissal Of Section 7Petition Case Title: Reliance Commercial Finance Limited v Darode Jog Builder Private Limited Case No.: Company Appeal (AT) (Insolvency) No. 1005 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 upheld the Adjudicating Authority's decision to not admit a petition under Section 7 of IBC, despite there being a debt and default. The Bench accorded the Corporate Debtor an opportunity to pay/settle the full amount of default despite the Financial Creditor's unwillingness to enter settlement. "When the Corporate Debtor has complied to deposit the entire defaulted amount of the Financial Creditor as permitted by the Adjudicating Authority, no purpose and occasion shall survive to still proceed with the Insolvency Resolution of the Corporate Debtor." NCLT Moratorium Doesn't Apply On Property Unlawfully In Possession Of Corporate Debtor: NCLT Hyderabad Case Title: State Bank of India v Meenakshi Energy Ltd. Case No.: CP (IB) No. 184/7/HDB/2019 The National Company Law Tribunal ("NCLT"), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Veera Brahma Rao Arekapudi (Technical Member), has held that moratorium imposed under Section 14 of IBC is not applicable to properties which are in unlawful possession of...

IBC Cases Weekly Round-Up: 19 September To 25 September, 2022

Pallavi Mishra

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