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IBC Cases Weekly Round-Up: 7 November To 13 November, 2022

Pallavi Mishra
15 Nov 2022 3:45 AM GMT
IBC Cases Weekly Round-Up: 7 November To 13 November, 2022
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Supreme Court Can Provisional Attachment Under PMLA Be Passed After Initiation Of CIRP Under IBC? Supreme Court To Consider Case Title: Ashok Kumar Sarawagi v Enforcement Directorate & Anr. Case no.: Special Leave Petition (Civil) Diary No(S). 30092/2022 The Supreme Court Bench comprising of Chief Justice U.U. Lalit and Justice Bela M. Trivedi, has issued notice in...

Supreme Court

Can Provisional Attachment Under PMLA Be Passed After Initiation Of CIRP Under IBC? Supreme Court To Consider

Case Title: Ashok Kumar Sarawagi v Enforcement Directorate & Anr.

Case no.: Special Leave Petition (Civil) Diary No(S). 30092/2022

The Supreme Court Bench comprising of Chief Justice U.U. Lalit and Justice Bela M. Trivedi, has issued notice in a petition where it is to be decided whether an order of provisional attachment passed under Prevention of Money Laundering Act, 2002 ("PMLA") would prevail over Insolvency and Bankruptcy Code, 2016 ("IBC") or not, if the said order has been passed subsequent to initiation of Corporate Insolvency Resolution Process ("CIRP"). The Supreme Court has issued notice on the Special Leave Petition and has directed the Parties to maintain status quo with respect to the proceedings in question. The question before the Bench is whether a provisional attachment order passed under PMLA subsequent to initiation of CIRP would prevail over IBC or not.

NCLAT

Default During Section 10A Period Cannot Be Clubbed To Meet Threshold Requirement Under Insolvency And Bankruptcy Code, 2016: NCLAT New Delhi

Case Title: Plus Corporate Ventures Pvt. Ltd v. Transnational Growth Fund Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1270 of 2022

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan and Mr. Barun Mitra, while deciding an appeal filed by the Operational Creditor against the order dated 17.08.2022 passed by NCLT, New Delhi held that amount of default occurred during the Section 10A period (24.03.2020-23.03.2021) of the Insolvency & Bankruptcy Code, 2016 (IBC/Code) cannot be clubbed by the Operational Creditor to meet the threshold requirement of One Crore under Section 4 of the Code. NCLAT also noted that there are two events of default which are outside the Section 10A period but their amount is less than one crore and thus, the application under Section 9 will not be maintainable and accordingly, dismissed the appeal filed by the Appellant.

Provident Fund Dues Are Not Assets Of Corporate Debtor, They Have To Be Paid In Full: NCLAT Delhi

Case Title: Assam Tea Employees Provident Fund Organization v Mr. Madhur Agarwal & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 262 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 provident fund dues are not the assets of the Corporate Debtor and they have to be paid in full. The Bench placed reliance on its recent judgment in Regional P.F. Commissioner v Ashish Chhawchharia, Resolution Professional for Jet Airways (India) Ltd. & Anr., Company Appeal (AT) Ins. No. 987 of 2022, wherein it has been held that provident fund dues have to be paid in full. It was observed that the Resolution Professional's contention that Appellant is an Operational Creditor and both Operational Creditor and Financial Creditor have taken haircut is not acceptable.

AA Cannot Enquire Into Justness Of Rejection Of Resolution Plan By COC: NCLAT Chennai

Case Title: Dr. C. Bharath Chandran v Ms. Sabine Hospital and Research Centre & Ors.

Case No.: Company Appeal (AT) (CH) (Ins) No. 320 of 2022

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 the Adjudicating Authority has no authority to enquire into the 'justness' of Committee of Creditor's decision to reject a Resolution Plan. When a rejected plan is placed before the Adjudicating Authority, then it is expected to do nothing more but to initiate Liquidation process under Section 33(1) of IBC.

Coc Initiates Liquidation, Appeal Against Initiation Of CIRP Becomes Infructuous: NCLAT Delhi

Case Title: Mr. Rakshit Dhirajlal Doshi v IDBI Bank Limited

Case No.: Company Appeal (AT) (Insolvency) No. 296 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that an appeal challenging the order initiating CIRP becomes infructuous if the Committee of Creditors decided to liquidate the Corporate Debtor and accordingly an application for liquidation is filed. "After hearing the parties and going through the pleadings made on behalf of the parties, we agree with the reasons given by the Adjudicating Authority while passing the impugned order and as the CoC has recommended for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence this Appeal has become infructuous."

NCLT

Union Govt. Appoints Judicial & Technical Members For NCLT

Circular No. 18/25/2022-EO(SM-II)

The Government of India vide its notification dated 05.11.2022 approved the appointment of 9 judicial members and 6 technical members in the National Company Law Tribunal (NCLT).

Judicial Members

  1. T Krishna Valli, Retd. Judge, Madras High Court
  2. Vikas Kumar Srivastav, Retd. Judge, Allahabad High Court
  3. Kuldeep Kumar Kareer, Retd. District Judge
  4. Vishesh Sharma, Retd. District Judge
  5. Adv. Ashok Kumar Bhardwaj
  6. Adv. Praveen Gupta
  7. Adv. Mahendra Khandelwal
  8. Bidisha Banerjee, Judicial Member, CAT
  9. Sanjiv Jain, Dist. Judge

Technical Members

  1. Prabhat Kumar, CA
  2. Charan Singh, Former Executive Director, UCO Bank
  3. Anu Jagmohan Singh, Former Member, CBDT
  4. Ashish Verma, Retd. Principal Chief Commissioner of Income Tax
  5. Atul Chaturvedi, Retd. IAS
  6. Madhu Sinha, Former Director, Citi Bank, India.

When Corporate Debtor Does Not Create A Gratuity Fund, No Gratuity Is Payable: NCLT Chandigarh

Case Title: Small Industries Development Bank of India (SIDBI) v International Mega Food Park Limited

Case No.: CP (IB) No.174/Chd/Chd/2018

The National Company Law Tribunal ("NCLT"), Chandigarh Bench, comprising of Shri Harnam Singh Thakur (Judicial Member) and Shri Subrata Kumar Dash (Technical Member), has held that if the Corporate Debtor had not created a Gratuity Fund, then the Resolution Professional cannot be directed to pay Gratuity to the employee(s). Further, the salary and leave encashment of employees accrued during CIRP period fall within the definition of insolvency resolution process cost under Section 5(13)(c) of IBC.

IBBI

IBBI Rescinds Circulars Pertaining To Insolvency Professionals

Circular No.: IBBI/IP/55/2022

The Insolvency and Bankruptcy Board of India ("IBBI") vide its circular dated 09.11.2022 has rescinded its certain circulars pertaining to Insolvency Professionals, as these circulars now form a part of the IBBI (Insolvency Professionals) Regulations, 2016; IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016; and the IBBI (Information Utilities) Regulations, 2017. The IBBI opined that the concerned circulars were no longer required on account of being already provided in the Insolvency Professionals Regulations, Model Bye-Laws Regulations, and the Insolvency and Information Utilities Regulations. These circulars have been rescinded with immediate effect.

High Court

Interim Moratorium Under Section 96 Of Insolvency & Bankruptcy Code, 2016 Is Limited To Particular Guarantor And Will Not Protect The Other Personal Co-Guarantors Of Same Debt: Delhi High Court

Case Title: Axis Trusteeship Services Limited v. Brij Bhushan Singhal & Anr.

Case No.: 2022 LiveLaw (Del) 1050

The Delhi High Court bench comprising of Justice Amit Bansal while dealing with two summary suits filed by creditors of Bhushan Steel limited against the ex-promoters of Bhushan Steel namely Brij Bhushan Singhal and Neeraj Singhal for recovery of money, held that the interim moratorium under Section 96 of the Insolvency & Bankruptcy Code, 2016 is specific to all debts of a particular debtor and will not be applicable to other personal co-guarantors.

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