Begin typing your search above and press return to search.
News Updates

Monthly Digest Of IBC Cases: September 2022

Pallavi Mishra
1 Oct 2022 9:00 AM GMT
Monthly Digest Of IBC Cases: September 2022
x

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...

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."

NCLT Has Discretion To Not Admit Financial Creditor's CIRP Application? Supreme Court Allows Open Court Hearing For Review

Case Title: Axis Bank Ltd versus Vidarbha Industries Power Ltd

Case No.: RP (Civil) 1043/2022

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice MM Sundersh allowed open court hearing for the review petition filed against the judgment in Vidarbha Industries Power Ltd. vs Axis Bank Limited which held that the National Company Law Tribunal has discretion to not admit the insolvency application filed by a financial creditor even if the corporate debtor is in default. The Petition is listed for hearing in open court on September 19, 2022.

The judgment delivered in Vidarbha Industries Case on July 12, 2022 had held that it is not mandatory for the Adjudicating Authority to admit an application to initiate Corporate Insolvency Resolution Process even if a debt existed and the Corporate debtor is in default. The Adjudicating Authority (NCLT) would have to exercise its discretion to admit and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the Corporate Debtor in payment of the debt, unless there are good reasons not to admit the petition.

CIRP Can Be Initiated Against Corporate Guarantor Without Proceeding Against Principal Borrower: Supreme Court

Case Title: K Paramasivam vs Karur Vysya Bank Ltd

Case No.: 2022 LiveLaw (SC) 742, CA 9286 OF 2019

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice JK Maheshwari, has held that Corporate Insolvency Resolution Process (CIRP) can be initiated against the Corporate Guarantor without proceeding against the principal borrower. The liability of the guarantor is co-extensive with that of the Principal Borrower. The court further noted that, under Section 7 of the IBC, CIRP can be initiated against a Corporate entity who has given a guarantee to secure the dues of a non-corporate entity as a financial debt accrues to the corporate person, in respect of the guarantee given by it, once the borrower commits default and the guarantor is then, the Corporate Debtor.

Resolution Plan Which Ignores Statutory Dues Payable To State Government/Legal Authority Liable To Be Rejected: Supreme Court

Case Title: State Tax Officer (1) vs Rainbow Papers Limited

Case No.: 2022 LiveLaw (SC) 743, CA 1661 OF 2020

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice AS Bopanna held that a Resolution Plan which ignores the statutory demands payable to any State Government or a legal authority, altogether, is liable to be rejected. If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan.. In other words, if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased manner, uniform proportional reduction, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC.. In our considered view, the Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues."

The court also held that the Section 48 of the Gujarat Value Added Tax Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, would include the State under the GVAT Act.

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."

Limitation To Be Counted From The Date Of Preparation Of Certified Copy, Not Delivery :NCLAT Delhi

Case Title: Wadhwa Rubber v Bandex Packaging Pvt. Ltd

Case No.: Company Appeal (AT) (Ins.) No. 576 OF 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Alok Srivastava (Technical Member), has dismissed the appeal for being time barred while observing that limitation is to be counted from the date of preparation of the certified copy and not from the date of delivery of the certified copy. "It is well settled that the limitation is to be counted not from the date of delivery of the certified copy but from the date of preparation of the certified copy."

NCLAT Delhi Allows Appeal Re-Filed After 197 Days Of Delay, Subject To Cost Of Rs.10,000 Payable To Respondent

Case Title: Dinesh Mehta v Amit Kumar Mehta & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1035 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 allowed an appeal which was re-filed after 197 days of delay by the Appellant, subject to payment of cost of Rs. 10,000/- to the Respondent. The delay in filing had occurred in obtaining a document which was to be filed alongwith the Appeal which had foreign origin – Sharjah, United Arab Emirates and time taken in obtaining translated copy of the document.

Issue Of CIRP Cost To Be Decided In COC Meeting, Not By Adjudicating Authority : NCLAT Delhi

Case Title: Bharat Hotels Ltd. v Tapan Chakraborty

Case No.: Company Appeal (AT) (Insolvency) No. 1074 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 question of item wise CIRP cost and its approval lays in the domain of the CoC and the latter may ratify, modify or set aside the cost claimed. The issue of cost is to be decided in the meeting of the CoC and not to be examined by the Adjudicating Authority even before the CoC takes a decision. The Bench rejected a Financial Creditor's plea seeking disclosure of item wise insolvency resolution cost.

Erstwhile Resolution Professional Has No Right To Be Heard Before Being Replaced Under Section 27: NCLAT Delhi

Case Title: Sumat Kumar Gupta v Committee of Creditors of M/S Vallabh Textiles Company Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1037 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 when the Committee of Creditors decides to replace the Resolution Professional under Section 27 of IBC and an application is filed before the Adjudicating Authority for approval, the erstwhile Resolution Professional would have no right to be heard before the Adjudicating Authority before being replaced. Section 27 of IBC by implication excludes principles of natural justice.

NCLAT Delhi Sets Aside Order Of Liquidation; Grants Additional Opportunity For Inviting Resolution Plans

Case title: Nikhil Tandon v Sanjeev Bindal & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 13 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has set aside an order for liquidation of Corporate Debtor and has given one more opportunity to the Committee of Creditors and Resolution Professional for finding out as to whether there can be any Resolution Plan to revive the Corporate Debtor.

"In the facts of the present case, decision to liquidate the Corporate Debtor was taken in the 5th CoC meeting held on 24.02.2020 by that time neither any Valuers were appointed nor there was any liquidation value. The Resolution Professional has not even prepared Information Memorandum. As noted above, the entire object and purpose of the I&B Code is to revive the Corporate Debtor and put it back on the track. The CoC had not taken any effort to issue any Form G to find out as to whether there can be resolution of the Corporate Debtor by any Resolution Applicant. Without even making one effort, CoC jumped on conclusion to liquidate. It is true that under the statute CoC is empowered to take a decision to liquidate the Corporate Debtor. Material irregularity has been committed in the process as already noticed above."

Refiling After Removal Of Defects Is Not A Fresh Filing: NCLAT New Delhi

Case Title: VR Ashok Rao v TDT Copper Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 780 of 2022

A five judge bench of the National Company Law Appellate Tribunal (NCLAT) comprising of Justice Ashok Bhushan, Justice Rakesh Kunar, Justice M Satyanarayana Murthy, Ms. Shresha Merla and Mr. Kanthi Narahari held that refiling of an appeal after curing the defects beyond the period of seven days will amount to a fresh filing and any delay even beyond the period prescribed under Section 61 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016) or Section 421 of the Companies Act, 2013 in refiling the appeal can be condoned on sufficient justification.

Earlier, a three-judge bench of the NCLAT raised doubts on the law laid down by the NCLAT in Mr. Jitendra Virmani Vs. MRO-TEK Realty Ltd. & Ors & Arul Muthu Kumaara Samy Vs. Registrar of Companies and vide order dated 12.08.2022 referred the matter to the larger bench by making following observations: "In view of the Judgment of the Hon'ble Supreme Court in "Northern Railway" (supra) and the Judgment in the matter of "P Ram Bhoopal" (supra), we are of the view that view taken by this Tribunal in the matter of "Mr. Jitendra Virmani" (supra) and "Arul Muthu Kumaara Samy" (supra) does not day down the correct law."

OTS Being Under Consideration Does Not Invalidate An Order For Liquidation: NCLAT Delhi

Case Title: Ram Bhaj Jain v Tarun Batra & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1011 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 mere fact that the Corporate Debtor's One Time Settlement was under consideration, does not invalidate an order passed by the Adjudicating Authority for liquidation of the Corporate Debtor. "The CoC in its commercial wisdom having refused to approve the plan submitted by the Appellant that decision is not open for any judicial review. In facts of the present case, the fact that OTS of the Appellant is under consideration also does not render the order of liquidation invalid in any manner."

NCLT Empowered Under Rule 43 Of NCLT Rules To Call For Any Information Or Evidence In Its Discretion: NCLAT Delhi

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 the Adjudicating Authority under Rule 43 of NCLT Rules, 2016, has ample powers to call for any information or evidence as it may consider necessary in its discretion.

Unregistered Sale Cannot Be The Basis For Claim On Immovable Property: NCLAT Delhi

Case Title: Smt. Sabita A. Biswa v Shri Vinodkumar Pukhraj Ambavat

Case No.: Company Appeal (AT) (Insolvency) No. 1056 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has declined to entertain the claim of a creditor based on an unregistered and unstamped sale deed which was only executed before the Notary and has held that such document cannot be basis for any claim with respect to the purchase of immovable property.

Voluntary Initiation Of CIRP By Bihar State Construction Corp., NCLAT Delhi Approves

Case Title: Bihar State Construction Corporation Limited Employee Union v Bihar State Construction Corporation Limited

Case No.: Company Appeal (AT) (Insolvency) No. 1493 of 2019

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Shri Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has upheld the Adjudicating Authority's decision to initiate Corporate Insolvency Resolution Process ("CIRP") against Bihar State Construction Corporation Ltd. ("BSCCL"). BSCCL had moved a petition under Section 10 of IBC seeking initiation of its own insolvency process for being unable to pay debt amounting to Rs. 104,16,98,874/- as on 31.03.2016. Mr. Nitesh Kumar More has been appointed as the Interim Resolution Professional.

NCLAT Delhi Imposes Cost Of Rs. 2Lakhs On Bidder Who Initiated Misconceived Litigation

Case Title: M/s. SGA Fashion Pvt. Ltd. v CMA Sandeep Kumar Bhatt

Case No.: Company Appeal (At) (Insolvency) No. 117 Of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has rejected the application filed by an auction bidder close to the auction date, wherein the bidder after having participated in the bidding process, had turned around and challenged the eligibility criteria for being erroneous. The Bench observed that the bidder had not challenged the eligibility condition before any appropriate forum and thus filing an application before the NCLT was truly misconceived. The Bench imposed a cost of Rs. 2 Lakhs on the bidder.

NCLT

SEBI Order No Bar To Initiation Of CIRP; NCLT Mumbai Initiates Insolvency Proceedings Against Pancard Clubs

Case Title: Mr. Nitin Suresh Satghare & Ors. v Pancard Clubs Limited

Case No.: CP (IB) 4578/MB/C-I/2018

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 initiated Corporate Insolvency Resolution Process ("CIRP") against Pancard Clubs Ltd., while observing that an Order passed by Securities Exchange Board of India ("SEBI") is no bar for initiation of CIRP under the IBC.

Time Schedule Has A Purpose; NCLT Kolkata Declines To Entertain The Bid Submitted After The Time

Case Title: State Bank of India v Ess Dee Aluminum Limited

Case No.: C.P (IB) No.1284/KB/2019

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has declined to entertain a revised bid received after the due time fixed by the Liquidator in the bidding notice, while observing that time lines are fixed with a definite purpose and the different stages of bidding process should conclude at the scheduled time.

NCLT Delhi Holds Suspended Directors Liable For Running Fraudulently

Case Title: M/s Concord Infrastructure Pvt. Ltd. v M/s Shubhkamna Buildtech Pvt. Ltd.

Case No.: C.P. No. IB-1059/ND/2018

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has approved the resolution plan submitted by Mr. Sunder Kumar Singhal and Mr. Sunil Kumar Agarwal for M/s Shubhkamna Buildtech Pvt. Ltd. The Bench held the Suspended Directors of Subhkamna Buildtech liable under Section 66 of the IBC, for running the business in a fraudulent manner and having siphoned off the funds of the company to the tune of Rs. 106.19 Crores. The Bench has directed the Suspended Directors to contribute Rs. 106.19 Crores, which would be distributed to the Financial Creditors proportionately.

NCLT Cuttack To Hear Cases Only On Monday And Tuesday Until Further Orders

File No. 10/03/2022-NCLT

The National Company Law Tribunal, Cuttack Bench, shall conduct proceedings on only Monday and Tuesday in view of NCLT Circular dated 14.09.2022 and matters shall be heard through video conferencing. The NCLT Cuttack Bench was reconstituted vide a notification dated 10.10.2021 and the Circular dated 14.09.2022 has been issued in partial modification of the said notification. At present the NCLT Cuttack Bench comprises of:

NCLT Cuttack Bench

  1. Shri P. Mohan Raj (Judicial Member)
  2. Shri Satya Ranjan Prasad (Technical Member)

NCLT Kochi Bench Re-Constituted, Proceedings To Be Conducted Only On Wednesday, Thursday And Friday UntilFurther Orders

File No. 10/03/2022-NCLT

The National Company Law Tribunal, Kochi Bench, has been re-constituted vide a Circular dated 14.09.2022, issued by NCLT as per Section 419(3) of the Companies Act, 2013. The new NCLT Kochi Bench shall comprise of:

NCLT Kochi (First Half)

  1. Shri P. Mohan Raj (Judicial Member)
  2. Shri Satya Ranjan Prasad (Technical Member)

The Circular has been issued in partial modification of Order of even number dated 01.07.2022 and is applicable from 15.09.2022 till further orders. The reconstituted Bench shall conduct proceedings on every Wednesday, Thursday and Friday only and the matters shall be heard through Video Conferencing.

Breach Of Settlement Agreement Not A Ground To Trigger CIRP: NCLT Delhi Rejects Application For Revival Of Petition

Case Title: Bajaj Rubber Company Pvt. Ltd. v Saraswati Timber Pvt. Ltd.

Case No.: C.P. (IB) 1441 (ND)/2018

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Shri L.N. Gupta (Technical Member), has declined to revive a petition filed under Section 9 of IBC, which was earlier withdrawn due to Settlement Agreement being entered upon between the parties and later settlement had failed. The Bench reiterated that breach of terms and conditions of a Settlement Agreement does not come under the purview of Operational Debt under IBC and the same cannot be a ground to trigger CIRP.

The Bench placed reliance on the judgments of NCLT New Delhi in M/s Alhuwalia Contracts (India) Ltd. v M/s Logix Infratech Pvt. Ltd., IB 882/ND/2022, and in Nitin Gupta v International Land Developers Pvt. Ltd., IB 507/ND/2020, wherein it has been held that unpaid installment as per settlement agreement cannot be treated as an operational debt under Section 5(21) of IBC.

NCLT Chennai Bench Re-Constituted, Matters To Be Heard Through Video Conferencing

File No.: 10/03/2022-NCLT

The National Company Law Tribunal, Chennai Bench, has been re-constituted vide a Circular dated 14.09.2022, issued by NCLT as per Section 419(3) of the Companies Act, 2013. The new NCLT Chennai Benches shall comprise of:

NCLT Chennai, Court Room No. 1 (Second Half)

  1. Justice Ramalingam Sudhakar (President)
  2. Shri Sameer Kakar (Technical Member)

NCLT Chennai, Court Room No. 2 (First Half)

  1. Dr. Deepti Mukesh (Judicial Member)
  2. Shri Sameer Kakar (Technical Member)

The Circular has been issued in partial modification of Order of even number dated 01.07.2022 and is applicable from 19.09.2022 till further orders. The reconstituted Bench shall take up matters through Video Conferencing.

NCLT Delhi Bench Re-Constituted, 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 14.09.2022, issued by NCLT as per Section 419(3) of the Companies Act, 2013. The new NCLT New Delhi Benches shall comprise of:

NCLT New Delhi, Court Room No. 2 (First Half)

  1. Shri Bachu Venkat Balaram Das (Judicial Member)
  2. Shri L.N. Gupta (Technical Member)

NCLT New Delhi, Court Room No. 3 (Second Half)

  1. Shri Bachu Venkat Balaram Das (Judicial Member)
  2. Dr. Binod Kumar Sinha (Technical Member)

The Circular has been issued in partial modification of Order of even number dated 24.08.2022 and is applicable from 15.09.2022 till further orders. The reconstituted Bench shall take up matters through Video Conferencing.

Liquidator Empowered To Decide The Mode Of Sale, Not Bound By Recommendations Of Stakeholders Committee: NCLT Kolkata

Case Title: Sauria Corporation v Kohinoor Pulp & Paper Private Limited

Case No.: C.P. (IB) No. 511/KB/2018

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor ("Judicial Member") and Shri Balraj Joshi (Technical Member), has held that a Liquidator is empowered to decide the mode of sale of Corporate Debtor which is in best interest for maximization of asset value. The Bench further held that the Liquidator is not bound by the recommendations of Stakeholders' Consultation Committee while determining such mode of sale.

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 the Corporate Debtor. The Bench observed that Corporate Debtor is in possession of the Disputed Land which it is not entitled to. Hence it is wrongful possession. The Corporate Debtor's right under Section 14 of IBC to not be dispossessed of property in its possession during moratorium, cannot be extended to possessions without right, wrongful or adverse.

Asian Hotels (West), Owner Of Hyatt Regency (Mumbai), Admitted Into Insolvency: NCLT Delhi

Case Title: JM Financial Asset Reconstruction Co. Ltd. v Asian Hotels (West) Ltd.

Case No.: C.P. (IB) No. 571 (PB)/2021

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Shri Binod Kumar Sinha (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Asian Hotels (West) Ltd. over a default of Rs. 264,07,35,129/-. The Asian Hotels (West) Ltd. owns the five star hotels namely Hotel Hyatt Regency Mumbai and JW Marriott, New Delhi Aerocity (through its subsidiary). The Bench also held that an officer delegated with power, can claim to be an Authorized Representative for filing a Section 7 petition under IBC.

NCLT Delhi Issues Notice To Spicejet In An Insolvency Plea U/S 9 Of IBC

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri P.S.N. Prasad Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has issued notice to Spicejet Ltd. to appear and file its Reply in a petition under Section 9 of IBC filed against it. Spicejet Ltd. is engaged in affordable aviation business with domestic, international and charter flight facilities in India.

IBBI

RP And COC Can Request Resolution Plan For A Second Time; IBBI Notification

Notification No.: IBBI/2022-23/GN/REG093

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for a fourth time and has notified the amendment on 16.09.2022.

The amendment enables the resolution professional (RP) and the Committee of creditors (CoC) to issue request for resolution plan a second time for sale of one or more of assets of the corporate debtor (CD) in cases where no resolution plan has been received for the corporate debtor as a whole. It enables for a resolution plan to include sale of one or more assets of CD to one or more successful resolution applicants submitting resolution plans for such assets and providing for appropriate treatment of the remaining assets.

COC To Function As Stakeholder's Consultation Committee For First 60 Days: IBBI Amends Liquidation Process Regulations

Notification No.: IBBI/2022-23/GN/REG095 and No. IBBI/2022-23/GN/REG094

The Insolvency and Bankruptcy Board of India ("IBBI") on 16.09.2022 has notified amendments to the IBBI (Voluntary Liquidation Process) Regulations, 2016 ("Voluntary Liquidation Regulations") and IBBI (Liquidation Process) Regulations, 2016 ("Liquidation Regulations") for a second time. These amended Regulations have come into force on 16.09.2022. The following amendments have been introduced:

  1. The Committee of Creditors (CoC) constituted during Corporate Insolvency Resolution Process (CIRP) shall function as Stakeholders Consultation Committee (SCC) in the first 60 days. After adjudication of claims and within 60 days of initiation of process, the SCC shall be reconstituted based upon admitted claims.
  2. SCC may even propose replacement of liquidator to the Adjudicating Authority (AA) and fix the fees of liquidator, if the CoC did not fix the same during CIRP.
  3. If any claim is not filed during liquidation process, then the amount of claim collated during CIRP shall be verified by the liquidator.
  4. Specific event-based timelines have been stipulated for auction process.
  5. Before filing of an application for dissolution or closure of the process, SCC shall advice the liquidator, the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading, shall be pursued after closure of liquidation proceedings.

Fee Payable To Insolvency Professional; IBBI Notifies Third Amendment To CIRP Regulations

Notification No.: No. IBBI/2022-23/GN/REG091

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for a third time and has notified the amendment on 13.09.2022. The amendment has introduced Clause 34B and Schedule II to the CIRP Regulations which have brought about the following changes:

  1. The fee of the interim resolution professional or the resolution professional, appointed on or after 1st October 2022 shall be decided by the applicant or committee in accordance with the said amendment regulations.
  2. An insolvency professional shall be paid minimum fixed fee in the range of One Lakh Rupees to Five Lakh Rupees, per month, depending on the quantum of claims admitted, as specified under Table-1 of Schedule-II of the said amendment regulations. However, the applicant or committee may decide to fix higher amount of fees than the said minimum fixed fee, after taking into consideration market factors such as size and scale of business operations of corporate debtor, business sector in which corporate debtor operates, level of operating economic activity of corporate debtor and complexity related to process.
  3. For the resolution plan approved by the committee on or after 1st October 2022, the committee may decide to pay, after approval of such resolution plan by the Adjudicating Authority on commencement of payment to creditors by the resolution applicant, performance-linked incentive fee, not exceeding a total of five crores of rupees.

IBBI Notifies Second Amendment To Insolvency Professional Regulations

Notification No.: No. IBBI/2022-23/GN/REG092

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Professionals) Regulations, 2016 ("IP Regulations") for a second time and has notified the amendment on 13.09.2022. The amendment has added Clause 26A to the IP Regulations which states that an Insolvency Professional shall not accept /share any fees or charges from any professional and/or support service provider who are appointed under the processes.

Next Story