IBC Cases Weekly Round-Up: 10 October To 16 October, 2022

NCLAT If Electricity Supply Is Essential To Preserve Corporate Debtor's Value, Dues Must Be Paid During CIRP: NCLAT Delhi Case Title: Shailesh Verma v Maharashtra State Electricity Distribution, Case No.: Company Appeal (AT) (Insolvency) No. 383 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 if electricity supply service is critical to preserve the value of Corporate Debtor, then the dues towards such supply must be paid by the Resolution Professional during CIRP. It was observed that when Corporate Debtor opines that supply of electricity is essential and is to be continued by the supplier, then it must pay the electricity dues of the CIRP period. PF Dept. Attachment Of CD's Bank Account Before CIRP, Can't Continue During Moratorium: NCLAT Chennai Case Title: Mr. B. Parameshwara Udpa v Assistant PF Commissioner & Anr. Case No.: Company Appeal (AT) (CH) (Ins) No. 231 of 2021 The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that an order issued by Employees' Provident Fund Organization for attachment of bank account of Corporate Debtor, cannot be continued during Moratorium period. Further, Resolution Professional is not duty bound to make provisions for Provident Fund when Corporate Debtor did not have a separate Provident Fund Account. Amount Paid Towards One Time Settlement Is An Asset Of The Corporate Debtor: NCLAT Delhi Case Title: Bank of India v. Vinod Kumar P Ambavat Case No.: Company Appeal (At) (Insolvency) No. 214 of 2021 The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Anant Bijay Singh and Ms. Shreesha Merla held that the amount deposited towards the One-time settlement (OTS) by the Corporate Debtor will be an asset of the Corporate Debtor and the Resolution Professional is entitled to take custody of the same. NCLAT observed that as per Section 3(27) of the IBC, property includes money and relying upon the same, NCLAT held that once the OTS failed and the CIRP is initiated, the amount lying in the no lien account belongs to the corporate debtor and the Resolution Professional is obliged to take control and custody of the same by virtue of Section 18(f) of the IBC. NCLT On Approval Of Plan By MSME Directors, They Will Be Treated As New Owners: NCLT Mumbai Case Title: Aries Agro Private Limited v ETCO Industries Private Limited Case No.: CP (IB)No. 1111/MB/2019 The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that once the resolution plan submitted by MSME Corporate Debtor's promoters/directors is approved by the Adjudicating Authority, the ownership of the Corporate Debtor shall be considered as fresh, even if the directors/promoters remain the same. "But this is a case of an MSME Enterprise, wherein the directors/promoters are permitted to give a Resolution Plan for the revival of the Corporate Debtor or in other words the existing management is allowed to revive the Company by giving a Resolution Plan. The objective of this is to provide a clean start to the unit/Corporate Debtor. Therefore, once the resolution plan is approved by the Adjudicating Authority, the management/ownership of the Corporate Debtor shall be considered as fresh, even if the directors/promoters of the Corporate Debtor (MSME) remain the same." Indemnity Of Obligations Under An Agreement Is Not A 'Financial Debt' Under IBC: NCLT Mumbai Case Title: Reserve Bank of India v Reliance Capital Limited Case No.: CP. (IB) No. 1231/MB/C-I/2021 The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Retd.) (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that indemnity of the obligations under the Agreement is not a 'financial debt' under Section 5(8) of IBC. The Bench observed that Obligor Undertaking is not a Guarantee that attracts the definition of 'financial debt' under Section 5(8). Section 126 of the Contract Act, 1872 postulates that in a 'guarantee' there must be a contract to perform or discharge the liability of a third party, in case of that third party's default. NCLT New Delhi Benches Re-Constituted And Timings Changed, Matters To Be Heard Through Video Conferencing File No.: 10/03/2022-NCLT The National Company Law Tribunal, New Delhi Bench, has been re-constituted vide a Circular dated 11.10.2022 and timings of courts have been changed accordingly. The changes are applicable from 18.10.2022 onwards till further orders. The new NCLT New Delhi Benches shall ...

IBC Cases Weekly Round-Up: 10 October To 16 October, 2022

Pallavi Mishra

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