Monthly Digest Of IBC Cases: May 2022

Supreme CourtSupreme Court Declares Noida As An Operational Creditor Under The Insolvency And Bankruptcy Code, 2016 Case title: New Okhla Industrial Development Authority v Anand Sonbhadra Case No.: Civil Appeal No. 2222 of 2021 The Supreme Court Bench comprising of Justice KM Joseph and Justice Hrishikesh Roy has upheld the NCLAT judgment wherein it was held that the NOIDA is an Operational Creditor under IBC and not a Financial Creditor. The order was passed on 17.05.2022. The Bench observed that the subject matter of Section 5(8)(d) of IBC is a lease or a hire-purchase contract which is deemed as a finance or capital lease. NOIDA's contract with the Builders is not any lease or a hire purchase contract, which would entitle the lessor to be treated as the financial creditor. The Bench held that: "138. We are of the view that in the facts of the appeals before us, we are unable to hold that the lessee has raised any amounts from the appellant. The question, therefore, of considering the last limb of Section 5(8)(f), namely, whether it has commercial effect of a borrowing could not arise. But we can safely say that the obligation incurred by the lessee to pay the rental and the premium cannot be treated as an amount raised by the lessee from the appellant…"SARFAESI Proceedings Cannot Be Continued Against Corporate Debtor Once CIRP Is Admitted And Moratorium Is Ordered: Supreme Court Case Title: Indian Overseas Bank v RCM Infrastructure Ltd. Case No.: CA 4750 OF 2021, 2022 LiveLaw (SC) 496. The Supreme Court Bench comprising of Justices L. Nageswara Rao and B R Gavai has held that the proceedings under the SARFAESI Act, 2002 cannot be continued once the Corporate Insolvency Resolution Process (CIRP) is initiated under IBC and the moratorium is ordered. It was observed that Section 14(1)(c) of the IBC has overriding effect over any other law and therefore, after commencement of CIRP there is complete prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property. The words "including any action under the SARFAESI Act" in Section 14 of the IBC convey the legislative intent. The order was passed on 18.05.2022.Section 18 Limitation Act Is Applicable To IBC Proceedings, Reiterates Supreme Court Case Title: State Bank of India v Krishidhan Seeds Private Limited Case No.: 2022 LiveLaw (SC) 497, CA 910 of 2021 The Supreme Court Bench comprising of Justices DY Chandrachud and Surya Kant has held that the provisions of Section 18 of the Limitation Act, 1963 are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016. It was observed that an acknowledgement in a balance sheet without a qualification can furnish a legitimate basis for determining as to whether the period of limitation would stand extended, so long as the acknowledgement was within a period of three years from the original date of default. The provisions of Section 18 of the Limitation Act are applicable to proceedings under the IBC. The order was passed on 18.04.2022. Supreme Court Issues Notice On Meru Cab's Plea Alleging Anti-Competitive Practices By Ola Case Title: Meru Travels Solutions Pvt. Ltd. v Competition Commission of India Case No.: Civil Appeal No.2843-2844/2022 The Supreme Court Bench comprising of Justices L. Nageswara Rao and B.R. Gavai has issued notice in the appeal filed by Meru Cab, challenging the order of the National Company Appellate Tribunal (NCLAT) wherein it had refused to set aside the order passed by the Competition Commission of India (CCI) exonerating Ola from allegations of abuse of dominant position. The Bench took note of the concurrent findings by the Director General, CCI and NCLAT. Meru had contended before the CCI that Ola had abused its dominant position by indulging in predatory pricing and by entering into anti-competitive agreements with its drivers. Since the Commission prima facie found the allegation of abuse of dominant position to have some merit, it ordered the Director General (DG) to investigate the matter. Based on the investigation report, in 2017, CCI concluded that Ola did not abuse its dominant position. On 07.02.2022, the NCLAT also held that Ola has not indulged in predatory pricing or abused its dominant position.Proceedings Against Personal Guarantor Of Corporate Debtor Can Be Continued Independently - Supreme Court Lifts The Stay Case Title: Mahendra Kumar Jajodia v State Bank of India Case No.: Civil Appeal No. 1871/2022 The Supreme Court bench comprising of Justice S Abdul Nazeer and Justice Vikram Nath has dismissed the civil appeal filed against the judgment of National Company Law Appellate Tribunal (NCLAT) in the case of SBI versus Mahendra Kumar Jajodia. The order was passed on 06.05.2022. The NCLAT on 27.01.2022 had held that even in the absence of any...

Monthly Digest Of IBC Cases: May 2022

Pallavi Mishra

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