Monthly Digest Of IBC Cases: September 2023

Supreme Court IBC - Liquidator Can't Cancel Valid Auction On Mere Expectation Of Fetching Higher Price; No Unfettered Discretion: Supreme Court Case Title: Eva Agro Feeds Private Limited V. Punjab National Bank & Anr., Civil Appeal No(S). 7906/2021 Citation: 2023 LiveLaw (SC) 753 The Supreme Court Bench comprising Justice B V Nagarathna and Justice Ujjal Bhuyan, has held that even though the highest bidder in an auction sale under the Insolvency and Bankruptcy Code, 2016 has no indefeasible right to demand acceptance of his bid, the liquidator, if such a bid is rejected must furnish reasons for the same in the rejection order. The mere expectation of the Liquidator that a higher price may be obtained is not a good ground to cancel an otherwise valid auction. The Court also held that once an auction is complete, the liquidator does not have absolute or unfettered discretion to cancel the auction, unless it is found that fraud or collusion had vitiated it. “..while the highest bidder has no indefeasible right to demand acceptance of his bid, the Liquidator if he does not want to accept the bid of the highest bidder has to apply his mind to the relevant factors. Such application of mind must be visible or manifest in the rejection order itself.” IBC | Cannot Ask Successful Resolution Applicant To Pay Arrears Payable By Corporate Debtor For Grant/Restoration Of Electricity Connection: Supreme Court Case Title: Tata Power Western Odisha Distribution Limited & Anr. V Jagannath Sponge Private Limited Citation: 2023 LiveLaw (SC) 788 The Supreme Court has held that under the Insolvency and Bankruptcy Code, 2016 (“IBC”), once the Resolution Plan stands approved by the National Company Law Tribunal (NCLT), the Electricity Department cannot demand payment of arrears, which were payable by the Corporate Debtor, from the Successful Resolution Applicant for restoration/grant of electricity connection. The Bench comprising Justice Sanjiv Khanna and Justice S.V.N Bhatti, has held that the ‘clean slate principle’ would stand negated if the Successful Resolution Applicant is asked to pay the arrears payable by the Corporate Debtor for the grant of an electricity connection in her/his name. IBC- Admitting Claims After Resolution Plan Has Been Accepted By COC Would Make CIRP An Endless Process: Supreme Court Case Title: M/S. RPS Infrastructure Ltd V. Mukul Kumar Citation: 2023 LiveLaw (SC) 773 | Civil Appeal No. 5590 of 2021 The Supreme Court Bench comprising bench of Justice Sanjay Kishan Kaul and Justice Sudhanshu Dhulia, has held that admitting claims after the Resolution Plan has been accepted by the Committee of Creditors (COC) under IBC, even though the Adjudicating Authority has yet to approve the plan, would make the Corporate Insolvency Resolution Process (CIRP) an endless process. The Court was considering whether the claim pertaining to an arbitral award, in appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (Act), could be admitted after the resolution plan had been approved by the COC. “We find it difficult to unleash the hydra-headed monster of undecided claims on the resolution applicant” the Apex Court said while dismissing the plea of the claimant. “The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. As described above, in Essar Steel, [1 (2020) 8 SCC 534] the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.” NCLAT While Application For Approval Of Resolution Plan Is Pending Before AA, CoC Can’t Convene Meeting To Consider Other Resolution Plans: NCLAT Delhi Case title: Indian Overseas Bank v M/s. Rathi TMT Saria Pvt. Ltd. & Ors. Case No.: Comp. App. (AT) (Ins) No.1134 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member) has held that when a Resolution Plan approved by the CoC is pending consideration before the Adjudicating Authority for approval, the CoC is not permitted to hold any meeting for considering other resolution plans. Proceedings Under Section 13 Of Companies Act, 2013 Can’t Be Questioned In Proceedings Under Section 7 Of IBC: NCLAT Delhi Case title: Ishan Singh v Spaze Towers Pvt. Ltd. Case No.: Company Appeal (AT) (Insolvency) No.226 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that orders passed in the proceedings under Section 13 of the Companies...

Monthly Digest Of IBC Cases: September 2023

Pallavi Mishra

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