Monthly Digest Of IBC Cases: March 2023

Supreme Court IBC- Once Resolution Plan Is Approved, No Modifications Are Permissible: Supreme Court Case Title: SREI Multiple Asset Investment Trust Vision India Fund v Deccan Chronicle Marketeers & Ors. Citation: 2023 LiveLaw (SC) 231 The Supreme Court Bench comprising of Justice Ajay Rastogi and Justice Bela M. Trivedi, has held that the declaration made by the NCLT to the effect that the trademarks “Deccan Chronicle” and “Andhra Bhoomi”, which originally belonged to Deccan Chronicle Holdings Ltd. (“DCHL/Corporate Debtor”), continues to be under the ownership of DCHL post the approval of resolution plan, would amount to impermissible modification of resolution plan as the same was silent on this aspect. The Bench upheld the NCLAT order wherein it was held that any right or ownership claimed after approval of Resolution Plan by CoC stands extinguished and accordingly the Successful Resolution Applicant could only use the Corporate Debtor’s existing trademarks without financial implication, but such trademarks could no longer be considered under ownership of the Corporate Debtor. IBC- Resolution Professional Entitled To Take Control Of Corporate Debtor's Rights In Assets Licensed To Third Parties : Supreme Court Case Title: Victory Iron Works Ltd. v Jitendra Lohia & Anr. Citation : 2023 LiveLaw (SC) 193 The Supreme Court Bench comprising of Justice V. Ramasubramanian and Justice Pankaj Mithal, has held that a resolution professional is entitled to take control of the rights of a corporate debtor in assets which are licensed to third parties. Such an action of the RP will come within the ambit of Section 25 of IBC. Further, the assets owned by a third-party, but in the possession of the Corporate Debtor held under contractual arrangements, are excluded from the definition of “assets” in Section 18 of IBC, however, the said exclusion does not extend to Section 25 of IBC. Therefore, the Explanation to Section 18 is inapplicable to Section 25 of IBC. Insolvency Resolution Of Company Will Not Extinguish Director's Liability Under Section 138 NI Act: Supreme Court Case Title: Ajay Kumar Radheyshyam Goenka v Tourism Finance Corporation of India Ltd. Citation: 2023 LiveLaw (SC) 195 The Supreme Court bench comprising Justices Sanjay Kishan Kaul, Abhay S Oka and JB Pardiwala has held that approval of resolution plan of a corporate debtor under the IBC will not extinguish the criminal liability of its erstwhile director under Section 138 of the Negotiable Instruments Act 1881. The company's director cannot seek discharge from N.I. Act proceedings on the ground that creditor’s debt stood settled in the proceedings under IBC. NCLAT Shareholders Have No Locus To Challenge The Initiation Of CIRP Against Corporate Debtor: NCLAT Chennai Case Title: Nirej Vadakkedathu Paul v Sunstar Hotels and Estates Private Limited Case No.: Company Appeal (AT) (CH) (Ins.) No. 142 of 2022. The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Naresh Salecha (Technical Member), has held that shareholders of Corporate Debtor have no locus to challenge the initiation of CIRP against the Corporate Debtor. The Bench has upheld the initiation of CIRP against M/s McDowell Holdings Limited. NCLAT Delhi Upholds Remitting Of Resolution Plan Back To COC For Compliance Of Sec 30(2) IBC Case Title: Noble Marine Metals Co Wll V Kotak Mahindra Bank Limited & Ors. Case No.: Company Appeal (AT) (Insolvency) No. 653 of 2022. The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), has upheld the order of Adjudicating Authority whereby a Resolution Plan was remitted back to the Committee of Creditors for making changes, only to the extent of a clause which provided for mandatory release of the personal guarantee given by the Promoters of the Corporate Debtor. The Bench held that of a Resolution Plan does not satisfy the parameters of Section 30(2)(e) of IBC, then the same can be sent back to CoC for review. 'Assets', Have Proved To Be `Fictitious’/`Fraudulent’, Created In The`Books Of Accounts’, With An Intent To `Defraud’ The ‘Creditors’; NCLAT Chennai Case Title: Mr. Shibu Job Cheeran & Ors. v Mr. Ashok Velamur Seshadri Case No.: Company Appeal (AT) (CH) (Ins.) No. 350 of 2021 The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Naresh Salecha (Technical Member), has held that for an application under Section 66 of IBC to succeed, it must be proved that (i) Directors participated in carrying on business of the Corporate Debtor despite knowing likely insolvency of the Corporate Debtor; and (ii) Business of the Corporate Debtor has been carried out with an...

Monthly Digest Of IBC Cases: March 2023

Pallavi Mishra

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