IBC Cases Weekly Round Up: 8 August To 14 August, 2022

Supreme Court S.7(5)(b) IBC | Provision To Notify Financial Creditor Before Rejecting Claim Extends To Appeals Before NCLAT: Supreme Court Case Name: Kotak Mahindra Bank Limited v. Kew Precision Parts Private Limited & Ors. Case No.: Civil Appeal No. 2176 of 2020, 2022 LiveLaw (SC) 673 The Supreme Court Bench comprising of Justice Indira Banerjee and Justice J.K. Maheshwari has held that provision of Section 7(5)(b) of the Insolvency and Bankruptcy Code, 2016, which requires the Adjudicating Authority to notify the Financial Creditor before rejection of a claim, would be applicable to appeals as well, since appeal is the continuation of original proceedings. The Court held that NCLAT had erred in closing the CIRP proceedings without giving the bank an opportunity to explain if there was sufficient cause for the delay in approaching the NCLT. An appeal being the continuation of original proceedings, the bank ought to have been notified under Section 7(5)(b) of the IBC before its claim was rejected. If notified of the proposal to close the proceedings, the bank might have rectified the defects in its application under Section 7 by filing additional pleadings and/or documents. NCLAT NCLAT Delhi Directs Tax Authorities To Withdraw Notices For Freezing Accounts Of Corporate Debtor Case Title: Mr. Hemant Mehta v Asst. Commissioner of State Tax Case No.: Company Appeal (AT) (Insolvency) No. 328 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 held that notices issued by the Tax Authorities to freeze the accounts the Corporate Debtor during liquidation process are bad in law and has directed withdrawal of such notices and de-freezing of the accounts. The Bench held that the Adjudicating Authority is vested with residuary powers under Section 60(5) of the Insolvency and Bankruptcy Act, 2016 ("IBC") to intervene in circumstances where insolvency resolution process is getting derailed. Re-agitating The Issue Attained Finality, By NCLT And Supreme Court, Is Abuse of process: NCLAT, Principal Bench Case Title: Vikas Dahiya (Ex-Director of Golden Tobacco Ltd.) v Arrow Engineering Ltd. Case No.: Company Appeal (AT)(Insolvency) No. 699 of 2022 The Principal Bench of the NCLAT consisting of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Barun Mitra (Technical Member) has held that the doctrine of Res Judicata applies to proceedings under the IBC and challenge to the findings in incidental or collateral proceedings amounts to an abuse of process of the Court. NCLT NCLT Mumbai Declares Megi Agro Chem Insolvent, Reiterates OTS Proposal Amounts To Acknowledgement Of Debt Case Title: M/s. Pridhvi Asset Reconstruction and Securitisation Company Limited v M/s. Megi Agro Chem Limited Case No.: C.P. No. 144/(IB)-MB-V/2021 The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri. H.V. Subba Rao (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Megi Agro Chem Limited over a default of Rs. 119,55,66,488/- and reiterated that One Time Settlement Proposal given by Corporate Debtor would amount to acknowledgment of debt and would accordingly extend the period of limitation. The Bench observed that the Supreme Court in Dena Bank v C. Shivakumar Reddy had held that OTS proposals given by the Corporate Debtor would amount to an acknowledgement of debt within the meaning of section 18 of the Limitation Act, 1963 and would extend the period of limitation. Mr. Vakati Balasubramanyam Reddy has been appointed as the Interim Resolution Professional. NCLT Issues Clarification To Spurious Notification Dated 8th August 2022 Regarding Conduct Of Online Hearing The National Company Law Tribunal ("NCLT") has issued a notification dated 09.08.2022 clarifying that a previous spurious notification dated 08.08.2022, which was being circulated on Whatsapp since yesterday, is inauthentic and neither approved by the President of NCLT nor uploaded on the NCLT official website. On 08.08.2022, a fabricated NCLT notification was being circulated on Whatsapp, which stated that due to shortage of Members throughout NCLT benches it has been decided that the NCLT will only hear urgent matters from 10.08.2022 onwards through VC and the same has been approved by the President of NCLT. The NCLT on 09.08.2022 has released a notification on its official website, clarifying that the notification dated 08.08.2022 is inauthentic, not issued by the NCLT or approved by its President and not even uploaded on the NCLT's official website. NCLT has directed to ignore the false notification as being invalid.

IBC Cases Weekly Round Up: 8 August To 14 August, 2022

Pallavi Mishra

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