Monthly Digest Of IBC Cases: October 2023
Pallavi Mishra
3 Nov 2023 4:30 AM GMT
Supreme Court Homebuyers Who Secure RERA Decrees Can't Be Treated Differently From Other Financial Creditors Under IBC: Supreme Court The Supreme Court bench comprising Justices S Ravindra Bhat and Aravind Kumar, has held that homebuyers cannot be treated differently from other "financial creditors" under the Insolvency and Bankruptcy Code (IBC) 2016 just because they have...
Supreme Court
Homebuyers Who Secure RERA Decrees Can't Be Treated Differently From Other Financial Creditors Under IBC: Supreme Court
The Supreme Court bench comprising Justices S Ravindra Bhat and Aravind Kumar, has held that homebuyers cannot be treated differently from other "financial creditors" under the Insolvency and Bankruptcy Code (IBC) 2016 just because they have secured orders from the authority under the Real Estate (Regulation and Development) Act 2016.
The bench set aside an order of the National Company Law Appellate Tribunal which held that beneficiary of orders of the RERA Authority should be treated differently from other home buyer allottees. Home buyers who did not approach authorities under RER Act were given the benefit of 50% better terms than that given to those who approached RERA or who were decree holders.
Case Title: Tottempudi Salalith v State Bank Of India & Ors.
Citation: 2023 LiveLaw (SC) 914
The Supreme Court has held that the ‘Doctrine of Election’ cannot be applied to prevent a Financial Creditor from approaching the National Company Law Tribunal (NCLT) for initiation of Corporate Insolvency Resolution Process (“CIRP”) against a Corporate Debtor, under the Insolvency and Bankruptcy Code, 2016 (IBC).
The Doctrine of Election is embodied in the law of evidence, which bars prosecution of the same right in two different fora based on the same cause of action.
The Bench comprising Justice Aniruddha Bose and Justice Vikram Nath, has observed, “The question of election between the fora for enforcement of debt under the 1993 Act and initiation of CIRP under the IBC arises only after a recovery certificate is issued. The reliefs under the two statutes are different and once CIRP results in declaration of moratorium, the enforcement mechanism under the 1993 Act or the SARFAESI Act gets suspended. In such circumstances, after issue of recovery certificate, the financial creditor ought to have option for enforcing recovery through a new forum instead of sticking on to the mechanism through which recovery certificate was issued.
Case Title: Tottempudi Salalith v State Bank Of India & Ors.
Citation: 2023 LiveLaw (SC) 914
The Supreme Court Bench comprising Justice Aniruddha Bose and Justice Vikram Nath, has held that in a composite application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) based on several Recovery Certificates issued by Debt Recovery Tribunal, if any of the Recovery Certificate(s) is barred by limitation, then the same can be segregated from composite claim. However, as the decree (Recovery Certificate) would still be alive, it can be treated as a claim made in Corporate Insolvency Resolution Process (CIRP) in view of Public Announcement.
In 2019, a composite application under Section 7 of IBC was filed based on three recovery certificates, one of which dated back to 2015 and was hence barred by limitation.
“The application with respect to the two recovery certificates issued in the year 2017 is maintainable. In the event the Appellate Tribunal is of opinion that the CIRP could not lie so far as the recovery certificate of 2015 is concerned, as the decree would be still alive, the claim based on the said recovery certificate could be segregated from the composite claim and the Committee of Creditors shall, in that event, treat the sum reflected in the said recovery certificate as part of the claims made in pursuance of the public announcement. This direction we are issuing in exercise of our jurisdiction under Article 142 of the Constitution of India”, the Bench held.
Case title: Sanjay Agarwal v. State Tax Officer
Citation: 2023 LiveLaw (SC) 939
The Supreme Court has dismissed a batch of review petitions filed against a 2022 judgment which held that the definition of a secured creditor under the Insolvency and Bankruptcy Code, 2016 (“IBC”) 2016 included any government or governmental authority and that a resolution plan which ignored dues to the government was liable to be rejected.
A bench comprising Justices AS Bopanna and Justice Bela M. Trivedi was considering five review petitions filed against the 2022 judgment in State Tax Officer v. Rainbow Papers Ltd 2022 LiveLaw (SC) 743 delivered by a bench comprising Justices Indira Banerjee (since retired) and AS Bopanna.
“The submissions made by the counsels for petitioners that the court in the impugned judgment had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC are factually incorrect. As evident from a bare reading of the judgment, the court had considered not only the waterfall mechanism under Section 53 but also other provisions of IBC for deciding the priority for the purpose of distributing proceeds from the sale as liquidation assets. In view of aforestated legal position, we are of the opinion the judgment sought to be reviewed does not fall within scope and ambit of review. So we’re dismissing all the review petitions.”
NCLAT
Registry Remained Open, Summer Vacation Not Excluded From Computation Of Limitation: NCLAT Delhi
Case title: M K Overseas Export Pvt. Ltd. v Sapan Mohan Garg
Case No.: Company Appeal (AT) (Ins.) No.1040 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 the duration of summer vacation of NCLAT cannot be excluded from computation of limitation period, since filing facility was not discontinued by the Registry and urgent matters were also being heard twice a week by the NCLAT.
“In so far as the submission of the applicant that there was summer vacation, therefore, appeal could not be filed. There is already notification issued by the Registry that filing of the appeal is not precluded during summer vacation and Court also use to convene twice in a week to consider urgent matters. Therefore that submission has also no legs to stand.”
NCLAT Directs Indexing Of All Interim Applications In The Main Volume
Ref: F. No. 10/37/2018-Estt./NCLAT
The National Company Law Appellate Tribunal (“NCLAT”) has issued a notice dated 04.10.2023, directing the Advocates/Authorised Representatives/Parties-in-Person to index all Interim Applications (“IA”) in the main volume of the Appeal/application filed before the NCLAT. The indexing of the IAs is to be done after Memo of Parties and Synopsis, but before the Pleadings.
“In compliance of the order dated 26.09.2023 passed in Company Appeal (AT) (Ins.) No.545 of 2023 and as directed by the Competent Authority, henceforth Ld. Advocates/Authorised Representatives / Parties-in-Person are directed to index all the IAs (whatever it may be) in the main volume after Memo of Parties and Synopsis but before the pleadings.”
NCLAT New Delhi: Objective Of IBC Is To Revive Corporate Debtor And Liquidation Is The Last Resort
Case Title: Gayatri Polyrub Pvt. Ltd. vs. Anil Kohli & Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 650 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that the objective of IBC is to revive the Corporate Debtor and Liquidation as the last resort in a well-settled law. The Bench gave an opportunity to the CoC to consider the Revised Offer and take the decision to meet the ends of justice and extend the CIRP for a period of 60 days.
NCLAT New Delhi: Resolution Plan Cannot Go Back And Forth Making CIRP An Endless Process, Even If NCLT Has Not Approved The Plan
Case Title: IDBI Bank Ltd. vs. Jalesh Kumar Grover RP of GPI Textiles Ltd.
Case No.: Company App. (AT) (Ins) No. 799 of 2023
The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, New Delhi comprising of Justice Rakesh Kumar Jain (Judicial Member) and Arun Baroka (Technical Member), has held that as per the principle established by the Supreme Court in RPS Infrastructure Ltd. vs. Mukul Kumar & Anr., even if the NCLT has not approved a Resolution Plan, it should not lead to a situation where the Plan can go back and forth making the CIRP an indefinite and never-ending process.
Case Title: Mayuras Industrial Services vs. S R Shriraam Shekher & Anr
Case No.: Company Appeal (AT) (CH) (Ins) No. 07/2023
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member), has held that the jurisdiction of NCLT under 12A of IBC is limited. Further, where the CoC had approved more than 90% of the voting share, it is not open to the NCLT in law to reject the application.
NCLAT New Delhi: Ex-Director Cannot Claim Copy Of Resolution Plan When Entire CIRP Process Completed
Case Title: Diwakar Sharma vs. Anand Sonbhadra
Case No.: Company Appeal (AT) (Insolvency) No. 1182 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 an Ex-Director cannot claim a copy of the Resolution Plan after its approval since the entire CIRP process is over with the Resolution Plan already approved in 2022.
NCLAT New Delhi: Approval By CCI Prior To Approval Of Resolution Plan By CoC Is Directory In Nature
Case Title: Soneko Marketing Pvt. Ltd. vs. Girish Sriram Juneja & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 807 of 2023
The National Company Law Appellate Tribunal (‘NCLAT’), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that Section 31(4) of IBC has to be read to mean that though the approval by the Competition Commission of India (“CCI”) is ‘mandatory’, the approval by the CCI prior to the approval of the CoC is ‘directory’.
The Tribunal observed that as per the timelines of the Competition Act and that of CIRP, Resolution Plan submission, and CoC approval in the Code, it is not in the hands of the Resolution Plan when CCI will grant the approval. The CCI has to act as per statutory provisions of the Competition Act and it has been given 210 days to take a decision. It pointed out that if it holds that prior approval of the CCI is mandatory prior to the approval of the Plan by the CoC, it will lead to incongruous results, the CIRP cannot be frozen or cannot be put on halt because an application is submitted before the CCI leading to an adverse effect on the CIRP.
NCLAT New Delhi: Date Of Default As Per One Time Restructure Agreement Shall Be Date Of Default
Case Title: Pradeep Madhukar More vs. Central Bank of India
Case No.: Company Appeal (AT) (Insolvency) No.837 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), has held that if the Bank has entered into One Time Restructuring (‘OTR’) Agreement with the Corporate Debtor, the date of default for the purpose of Section 10A of IBC will be the date of default in the OTR proposal and not the original/Non-Performing Asset (‘NPA’) date of default.
NCLAT New Delhi: Disputes Surrounding Claims And Counter-Claims Cannot Be Adjudicated Or Determined By The Adjudicating Authority Given Their Summary Jurisdiction
Case Title: Rakesh Kumar (Suspended Director of Suchi Paper Mills Ltd.) vs. Flourish Paper & Chemicals Ltd.
Case No.: Company Appeal (AT)(Insolvency) No. 1161 of 2022
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench comprising of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), has held that disputes surrounding claims and counter-claims cannot be adjudicated or determined by the Adjudicating Authority given their summary jurisdiction.
NCLAT New Delhi: No Fresh Period Of Limitation From The Date Of MSME Order When Application Barred By Time
Case Title: Pan Pacific Engineering Services Pvt. Ltd. vs. Ayyappa Hydro Power Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1239 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi comprising of Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that no fresh period of Limitation would commence from the date of an order passed by MSME department order, when an application under IBC seeking initiation of CIRP is barred by time.
NCLAT Chennai: FC And OC Can’t Give Additional Facts Not Provided In Application Under Sections 7, 9 Or 10 Of IBC
Case Title: State Bank of India vs. India Power Corporation Limited
Case No.: Company Appeal (AT) (CH) (Ins) No.87/2023
The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench comprising of Justice Rakesh Kumar Jain (Judicial Member) and Shreesha Merla (Technical Member), has held that a creditor cannot set up a new case or raise additional facts altogether that has not been set up in the main application filed either u/s 7, 9, or 10 of IBC, when NCLT allows the creditor (Petitioner) to file a rejoinder to the reply pertaining to additional facts stated by Corporate Debtor.
Mere Statement Of Operational Creditor That No Dispute Exists, Is Not Enough: NCLAT Delhi
Case title: NTT Data Business Solutions Pvt. Ltd. v Trident Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1228 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 Operational Creditor merely responding to notice invoking arbitration by stating that no disputes exist, would not prevent the NCLT from concluding that disputes exist based on material on record.
NCLAT New Delhi: No Point In Discussing An Issue, Even If Issue Is Attractive, After The Closure Of CIRP Proceedings
Case Title: State Bank of India vs. Ritesh Prakash Adatiya & Ors.
Case No.: Comp. App. (AT) (Ins) No. 505 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi comprising of Justice Rakesh Kumar Jain (Judicial Member) and Naresh Salecha (Technical Member), has held that when the CIRP proceedings are ultimately closed and no such proceedings exist, there is no point in discussing the issue even if the issue may be attractive.
NCLAT New Delhi Suspends Finolex Cable Order Post Supreme Court Directs NCLT Delhi Chairperson To Conduct Inquiry
Case Title: Deepak Kishan Chhabria & Anr. vs. Orbit Electricals Pvt. Ltd. & Ors.
Case No.: Company Appeal (AT) No. 64 of 2020
The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, comprising Justice Rakesh Kumar (Judicial Member) and Dr. Alok Srivastava (Technical Member), suspended its order dated 13.10.2023 due to the disclosure of the result of the Annual General Meeting of the Finolex Cable.
NCLAT had faced an inquiry by the Supreme Court as per which it was brought to the notice of the Supreme Court order dated 13.10.2023 directing the NCLAT that Judgment in pending appeal shall be delivered by it being duly apprised of the fact that the result of the Annual General Meeting has been declared.
The matter related to Finolex Cable's Annual General Meeting and Prakash and Deepak Chhabria's legal tussle over the management control of the company. The NCLAT via its order dated 13.10.2023 had allowed Deepak Chhabria to continue as the chairman of Finolex Cables and put on hold the changes that were to be brought into the Articles of Association of the Company.
The Supreme Court in its order dated 13.10.2023 had directed the NCLT chairperson Justice Ashok Bhushan to conduct an inquiry into whether a bench of the Appellate Tribunal defied the Supreme Court’s order and Justice Bhushan was required to submit such report on 16.10.2023 by 5 pm.
The NCLAT via its order on 21.09.2023 had directed the status quo on the conduct of the Annual General Meeting until the dispute between Prakash Chabria and Deepak Chabria over the management of the Company was settled.
The Apex Court had observed that decisions relating to the appointment of an Executive Chairperson would be subject to the outcome of the litigation at the NCLAT.
NCLAT Chennai: Transfer Of Shares Not An Act Of Oppression And Mismanagement | SEBI Is The Competent Forum To Decide Disputes Of Transfer Of Shares And Not NCLT
Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited
Case No.: Company Appeal (AT) No.363/2019
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member) has held the Transfer of Shares is not an act of ‘oppression’ and ‘mismanagement’ against the shareholders of the Company and disputes relating to the Transfer of Shares fall within the ambit of the Securities Board of India (‘SEBI’) and not NCLT.
NCLAT Chennai: Mere Irregularity Not A Ground For Oppression And Mismanagement
Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited
Case No.: Company Appeal (AT) No.363/2019
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a mere irregularity or infirmity is not a ground for oppression and mismanagement and a single act is not oppression and a continuous course of oppressive conduct by the majority is required and necessary for oppression and mismanagement proceedings.
NCLAT Chennai: NCLT Has Inherent Powers To Look Into Earlier Litigations To Ascertain The Bonafide Of A Party
Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited
Case No.: Company Appeal (AT) No.363/2019
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held the NCLT is well within the ambit with its inherent powers to look into the earlier orders and the observations made to ascertain the bona fide of the Appellant.
NCLAT New Delhi: Limitation To File Appeal Commences On The Order Pronouncement Date And Not When Aggrieved Party Becomes Aware Of Its Content
Case Title: Raiyan Hotels and Resorts Pvt. Ltd. vs. Unrivalled Projects Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1071 of 2023
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member), and Shri Arun Baroka (Technical Member), has held that the Limitation for filing of the Appeal before NCLAT does not commence on the date when the Appellant became aware of the contents but it shall commence when the order was pronounced.
NCLAT Chennai: Grounds Not Taken On Jurisdiction Before Cannot Be Contested Afresh On Appeal When The Parties Accepted The Jurisdiction In NCLT
Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited
Case No.: Company Appeal (AT) No.363/2019
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the grounds not taken on jurisdiction before the NCLT, cannot be contested afresh in appeal as the parties have exercised acquiescence and accepted the jurisdiction of the NCLT.
NCLAT New Delhi: Liquidator Must Follow Clause 12 Of Schedule 1 Of Liquidation Process Regulations, 2016, And Not Lay Its Owns Terms And Conditions In The EOI For Period Of Payment Of Balance Sale Consideration
Case Title: Vinod Kumar Kothari Liquidator of Nicco Corporation Ltd. vs. Sneha Techno Equipments Pvt. Ltd.
Case No.: Company App. (AT) (Ins) No. 316 of 2023
The National Company Law Appellate Tribunal (‘NCLAT), Principal Bench, New Delhi comprising of Justice Rakesh Kumar Jain (Judicial Member) and Shri Naresh Salecha (Technical Member), has held that the Liquidator is required to follow the terms and conditions of Clause 12 of Schedule 1 of the Liquidation Process Regulations, 2016, and cannot lay down its own terms and conditions in the EOI regarding the period for payment of balance sale consideration.
NCLAT Chennai: Shareholders Cannot Take Decisions For The Company’s Business Or Hold Negotiations With Parties
Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited
Case No.: Company Appeal (AT) No.363/2019
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the Board of Directors have the onus to take decisions for the Company’s business or negotiations with the parties concerned and not the shareholders of the company.
NCLAT Chennai: Threshold To Maintain Oppression Proceedings Not Limited To Holding Of Shares Alone But Extends To Manner Of Acquiring Of Shares
Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited
Case No.: Company Appeal (AT) No.363/2019
The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the threshold to maintain oppression proceedings is not only limited to the holding of shares alone but also extends to the manner in which the shares were acquired. The Bench was adjudicating a matter under the Companies Act, 2013 relating to oppression and mismanagement.
Case Title: Sanjay Pandurang Kalate vs. Vistra ITCL (India) Ltd.
Case No.: Company Appeal (AT)(Insolvency) No. 742 of 2023
The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, comprising of Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the scope and jurisdiction of NCLT under the IBC being summary in nature, is distinctly not as extensive as that of a civil court to enquire into disputes arising out of Memorandum of Understanding (MoU) and related specific performance.
NCLAT New Delhi: Haircut In Resolution Plan Cannot Be Construed As Being Violative Of Section 30(2)(e) Of IBC
Case Title: Mr. Ankur Narang & Ors. vs. Mr. Nilesh Sharma RP & Ors.
Case No.: Company Appeal (AT)(Insolvency) No. 1240 of 2023
The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that a haircut in Resolution Plan cannot be construed as being violative of Section 30(2)(e) of IBC and the minority homebuyers have to necessarily sail with the majority within the class.
NCLAT Delhi: Fine For Non-Cooperation By Ex-Management Under IBC Is A “Penalty” Not “Cost” And Outside NCLT’s Jurisdiction
Case Title: Rakesh Gupta & Ors. vs Mahesh Bansal.
Case No.: COMPANY APPEAL (AT) (Insolvency) No. 401 of 2022
The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the fine imposed on non-cooperation by ex-management u/s 19(2) or 34(3) of IBC is covered under the term “penalty” and not “cost” under Rule 149 of the National Company Law Tribunal Rules, 2016. The Bench further observed that imposing fines is outside the jurisdiction of NCLT.
NCLAT New Delhi: Operational Creditor Not Entitled To Benefit U/S 14 Of Limitation Act When Suit Filed By It Was Withdrawn By Itself Without Any Liberty To Institute Fresh suit
Case Title: GRI Towers India Pvt. Ltd. vs. Inox Wind Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1106 of 2023
The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that an Operational Creditor is not entitled for benefit of Section 14 of the Limitation Act, 1963 where the Suit filed by it was withdrawn on its own application without any liberty to institute a fresh suit.
NCLT
Operational Creditor Misleads Court To Evade Prohibition Under Section 10A Of IBC, NCLT Mumbai Imposes Cost of Rs. 25,000/-
Case Title: Oswal Minerals Limited v Vidhi Minerals & Alloys Private Limited
Case No.: CP (IB) NO. 414 OF 2023
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Ms. Lakshmi Gurung (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), has imposed a cost of Rs. 25,000/- on an Operational Creditor who disregarded Section 10A of IBC by seeking initiation of CIRP for default occurred within prohibited period and deliberately misled the court by stating incorrect facts.
“Further, with distress it is noted that despite the clear language of the Section 10A of the Code, the Operational Creditor sought to initiate the CIRP against the Corporate Debtor in clear disregard to the Provisions of the Code and by mentioning misleading facts in Part-IV of the petition. At Point No.2 of Part IV, despite mentioning that the Corporate Debtor had issued various purchase orders dated 08.09.2020, 02.10.2020, 12.10.2020 and 19.10.2020, Operational Creditor has mentioned that “Several Invoices were raised from August, 2020 onwards till September 2021………. The attempt of the Operational Creditor in mentioning such incorrect facts is nothing but an attempt to take undue advantage of the present proceedings”.
NCLT Kochi: Section 238 Of IBC Has Overriding Powers Over The Karnataka Value Added Tax Act Of 2003 And Its Proceedings
Case Title: Deputy Commissioner, Works Contract, Kerala State Goods and Services Department, Ernakulam vs. Vinod Balachandran FCA, Liquidator
Case No.: Company Appeal (IBC)/01/KOB/2023
The National Company Law Tribunal (“NCLT”), Kochi Bench comprising of Justice T Krishna Valli (Retd.) (Judicial Member) and Shri. Shyam Babu Gautam (Technical Member), has held that the Section 238 of IBC has overriding powers over the Karnataka Value Added Tax Act, 2003 and its proceedings.
Requirement To Submit Claim As Per Format Given In Liquidation Regulations Is Directory In Nature: NCLT Mumbai
Case Title: IDBI Bank Limited v EPC Constructions India Limited
Case No.: CP(IB)No.1832/MB/C-II/2017
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has held that the requirement of submitting claims as per format prescribed under ‘Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016’ is directory in nature and to merely ensure timely completion of process. The said requirement is not intended to scuttle rights of persons.
“It appears that the requirement to adhere to the forms specified under the Liquidation Regulations is directory in nature for the timely completion of the process and not intended to scuttle the rights of the persons or increase the disputes and consequential appeal under Section 42 of the Code.”
NCLT Kolkata: Provisions Of IBC Shall Override The Section 29 Of State Financial Corporation Act, 1951
Case Title: Pankaj Tibrewal vs. West Bengal Industrial Development Corporation
Case No.: C.P (IB) No.1712/KB/201
The National Company Law Tribunal (‘NCLT’), Kolkata Bench comprising of Mrs. Bidisha Banerjee (Judicial Member) and Mr. Balraj Joshi (Technical Member), has held that the provisions of IBC prevail over the State Financial Corporation Act, 1951 (‘SFC Act, 1951’).
It was observed that IBC is a Special Statute as also a later statute vis-a-vis the SFC Act, 1951, both having non-obstante clauses. The reach of the non-obstante clause of the SFC Act, 1951 is limited by Section 46B of the Act, whereas non-obstante clause of IBC shows that it prevails in all situations. The Bench concluded that IBC as a special statute has a non-obstante clause which does not have a limited reach, unlike the SFC Act, 1951.
NCLT Mumbai: Penalty Imposed By SEBI During Liquidation Can Be Claimed Before Liquidator And Considered U/S 53 Of IBC
Case Title: Securities Board of India vs. Mr. Vishal Ghisulal Jain
Case No.: C.P. No. (IB) N. 402 of 2018
The National Company Law Tribunal (“NCLT”), Mumbai Bench comprising of Ms. Lakshmi Gurung (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), has held that a penalty imposed by SEBI’s Adjudicating Officer on Corporate Debtor during the liquidation can be claimed before the Liquidator and can be considered for the purpose of distribution of assets under Section 53 of IBC.
NCLT Chennai Bench Reconstituted W.E.F. 12th October 2023
File No.: 10/03/2023-NCLT
The National Company Law Tribunal (“NCLT”) has issued a circular dated 11.10.2023, intimating the reconstitution of NCLT Chennai Bench with effect from 12.10.2023. Shri Jyoti Kumar Tripathi (Judicial Member) has been newly appointed as a NCLT Member and has been posted to the NCLT Chennai Bench.
The reconstituted bench is as under:
NCLT Chennai Bench (Court No. 1)
- Shri Sanjiv Jain (Judicial Member)
- Shri Venkataraman Subramaniam (Technical Member)
NCLT Chennai Bench (Court No. 2)
- Shri Jyoti Kumar Tripathi (Judicial Member)
- Shri Ravichandran Ramasamy (Technical Member)
NCLT Mumbai Approves Resolution Plan For Topworth Steel & Power Pvt. Ltd., A Topworth Group Company
Case Title: State Bank of India v Topworth Steel and Power Private Ltd.
Case No.: CP (IB) No. 590/MB/C-I/2018
The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Justice V.G. Bisht (Retd.) (Judicial Member) and Shri Prabhat Kumar (Technical Member), has approved the Resolution Plan submitted by Amalgam Steel and Power Ltd. for Topworth Steel and Power Pvt. Ltd. The Resolution Plan is valued at Rs. 260 Crores, while the total admitted claims of the Corporate Debtor amounted to Rs. 3,499 Crores.
Petitioner Fails To Prove Existence Of Debt In Section 7 Petition, NCLT Ahmedabad Imposes A Cost Of Rs. 2 Lakhs
Case Title: G.L.E. India Solar Private Limited v Bright Solar Limited
Case No.: CP(IB)/66/NCLT/AHM/2022
The National Company Law Tribunal (NCLT), Ahmedabad Bench, comprising of Mrs. Chitra Hankare (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), has imposed a cost of Rs. 2 Lakhs on a Petitioner, who failed to prove existence of debt for the purpose of initiating CIRP under Section 7 of IBC against the Respondent.
NCLT Mumbai: Threshold Limit For A Valid Petition Under Section 9 Of IBC For Each Operational Creditor Should Be Rs. 1 Crore
Case Title: Mr Atanu Kumar Chatterjee vs. Rolta Defence Technology Systems Pvt. Ltd.
Case No.: C.P.(IB)-554(MB)/2022
The National Company Law Tribunal (‘NCLT’) Mumbai comprising of Ms. Lakshmi Gurung (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), dismissed the petition as non-maintainable filed by 29 Operational Creditors to initiate CIRP against Corporate Debtor.
The NCLT held as per NCLAT judgment in Suresh Narayan Singh vs. Tayo Rolls Ltd. and the revised notification dated 24.03.2020, increasing the threshold limit from Rs. 1 Lakh to Rs. 1 Crore, for a valid petition under Section 9 of IBC, threshold limit for each individual is required to be Rs. 1 Crore.
NCLT Kolkata: Dismissal Of Scheme Of Compromise At First Motion, Liquidator Not Entitled To Claim Fees And Other Costs
Case Title: Radhasiriya Properties Pvt. Ltd. Vs. Jai Narayan Gupta Liquidator of Barcle Enterprises Ltd.
Case No.: C.P. (IB) No. 830/KB/2018
The National Company Law Tribunal (‘NCLT’) Kolkata Bench comprising Mrs. Bidisha Banerjee (Judicial Member) and Mr. D. Arvind (Technical Member), has held that when scheme of compromise and arrangement proposed by Applicant is rejected at its first motion by Creditors, Proviso to Rule 2B(3) of Liquidation Process Regulations 2016 does not apply and Liquidator is not entitled to claim his fees and other costs from the Applicant.
Liquidator is not entitled to claim his fees and other costs in relation to liquidation, from the Applicant who is a proponent of a composite scheme of compromise and arrangement, when the scheme proposed by him is rejected by the creditors.
NCLT Delhi Approves Resolution Plan For Educomp Solutions Limited
Case Title: Educomp Solutions Limited
Case No.: Company Petition No. (IB)-101/(PB)/2017
The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has approved the Resolution Plan submitted by Ebix Singapore Pte. Ltd. for Educomp Solutions Limited. The Resolution Plan is valued at Rs. 325 Crores, while the total admitted claims of the Corporate Debtor amounts to Rs. 3,008.3 Crores.
Educomp Solutions Limited (“Corporate Debtor”) is one of India’s oldest education technology companies with its operations in India, USA and Singapore. The Corporate Debtor offers smart class products and ICT solutions to schools; has a network of pre-schools & schools; provides internet based learning and coaching classes for entrance exams, employment linked vocational courses and placement assistance. The brands related to the Corporate Debtor are Educomp Smart Class, The Millenium School, Raffles Millenium International, Vidyamandir classes et al.
Party Who Benefits From Preferential Transaction Can Only Be Directed To Contribute To Corporate Debtor: NCLT Delhi
Case title: Mr. Saptarshi Nath & Anr. v Kapil Dev Taneja
Case No.: Company Appeal (AT) (Insolvency) No. 1356 of 2022
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 under Section 44(1)(d) of IBC a direction to contribute to the assets of the Corporate Debtor can be only given to a person who has received benefits from the Corporate Debtor. The Bench concluded that in a preferential transaction where a third party received benefit from the Corporate Debtor, the Erstwhile Management/Director cannot be directed by NCLT under Section 44(1)(d) to contribute to the assets of the Corporate Debtor.
Successful Resolution Applicant Cannot Oppose Its Own Resolution Plan: NCLT Delhi
Case Title: Educomp Solutions Limited
Case No.: Company Petition No. (IB)-101/(PB)/2017
The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that a Successful Resolution Applicant cannot oppose the approval of its own resolution plan before NCLT.
“Even otherwise also, the SRA/Ebix had submitted the Resolution Plan consciously and the exercise of submission of plan by it excluded many financial and legal situation from the process. Even if as per the thought of the SRA/Ebix, there are infirmities in the Resolution Plan, which should be ground to reject the same, it is not open for the SRA/Ebix to take such plea. It is stair decisis that no man can advantage of his own wrong (Nullus commodum copere potest de injuria sua propria)”, the Bench observed.
Liquidator Bound To Handover Vacant & Peaceful Possession Of Property To Buyer As Per Contract : NCLT Hyderabad
Case Title: Mr. Sri Vamsi Kambhammettu v Mr. Mohd Jamal Athemadnia
Case No.: CP (IB) No. 376/07/HDB/2018
The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Shri Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member), has held that after sale of Corporate Debtor’s property in auction and receipt of proceeds, the Liquidator is legally empowered to seek vacant and peaceful possession of such property from occupier before the NCLT.
Even after expiry of Lease Deed and sale of Property to another person, the Tenant continued to be in occupation of the Corporate Debtor’s Property. The NCLT has directed the Tenant to pay the arrears of rent and vacate the Property.
During Liquidation, NCLT Empowered To Decide Matters Relating to Eviction Of Premises Owned By Corporate Debtor: NCLT Hyderabad
Case Title: Mr. Sri Vamsi Kambhammettu v Mr. Mohd Jamal Athemadnia
Case No.: CP (IB) No. 376/07/HDB/2018
The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Shri Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member), has held that during the liquidation process, NCLT is the right forum to decide on the matters concerning eviction of the premises owned by the Corporate Debtor.
NCLT Kochi: No Provision For Liquidator To File Income Return Of Corporate Debtor
Case Title: Mr. Vinod Balachandran, Liquidator of Albanna Engineering (India) Pvt. Ltd. Vs. Bharat Petroleum Corporation Ltd. & Anr.
Case No.: IA(IBC)/84/KOB/2023 IN IBA/38/KOB/2019
The National Company Law Tribunal (‘NCLT’) Kochi comprising Justice (Retd.) T. Krishna Valli. (Judicial Member) and Shri. Shyam Babu Gautam (Technical Member), has held that there is no provision in the Income Tax Act, IBC, or IBBI (Liquidation Process) Regulation, 2016, requiring the Liquidator of the Company in Liquidation under IBC to file an Income Tax Return.
NCLT Allahabad: An Agreement To Resell Products On An E-Commerce Platform Where The Amount Was Invested For Assured Profit Margins Does Not Fall Under ‘Financial Debt’ U/S 5(8) Of The IBC
Case Title: Rajesh Alfred vs. Ketsaal Retails LLP
Case No.: CP (IB) No.33/ALD/2023
The National Company Law Tribunal (‘NCLT’), Allahabad Bench comprising of Mr. Praveen Gupta (Judicial Member) and Mr. Ashish Verma (Technical Member), has held that an agreement to resell products on an e-commerce platform (Amazon) where the Applicant paid some amount with some assured profit margins would not confer the status of a ‘Financial Debt’ under Section 5(8) of the IBC.
NCLT Amravati Bench Reconstituted W.E.F. 6th November 2023, Matters To Be Heard Through VC
File No.: 10/03/2023-NCLT
The National Company Law Tribunal (“NCLT”) has issued a circular dated 23.10.2023, intimating the reconstitution of NCLT Amravati Bench with effect from 06.11.2023.
Justice Telaprolu Rajani (Judicial Member) is demitting office on 05.11.2023 on completion of her tenure.
The reconstituted bench is as under:
NCLT Amravati Bench (Second Half )
- Shri Rajeev Bhardwaj (Judicial Member)
- Ms. Anuradha Sanjay Bhatia (Technical Member)
The matters shall be heard through Video Conferencing.
NCLT New Delhi Bench Reconstituted W.E.F. 1st November 2023
File No.: 10/03/2023-NCLT
The National Company Law Tribunal (“NCLT”) has issued a circular dated 25.10.2023, intimating the reconstitution of NCLT New Delhi Bench (Court IV) with effect from 01.11.2023.
Dr. Binod Kumar Sinha (Technical Member) is demitting office on 31.10.2023 on completion of his tenure. The reconstituted bench is as under:
NCLT New Delhi (Court No. IV) (Second Half)
- Shri M.S.S. Sundaram (Judicial Member)
- Dr. Sanjeev Ranjan (Technical Member)
‘Ordinary Course Of Business’ For Real Estate Industry Is Providing Construction Service, Doesn’t Include Entering Into Agreement For Investment In A Project: NCLT Delhi
Case Title: Pallavi Joshi Bakhru v Universal Buildwell Private Limited.
Case No.: Company Petition No. (IB)- 456(ND)/2018
The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that the ‘ordinary course of business’ for a real estate industry would mean providing construction service. An agreement between two investors to invest into a project cannot be treated as an act done by them in an ‘Ordinary Course of Business’.
“The term ‘Ordinary’ means normal, natural and something what happens in routine either everyday or in general or traditionally. The term ‘Course’ means procedure, series, chain, link or string. The term ‘Business’ refers to an organisation or enterprising entity engaged in commercial, industrial, or professional activities. The term ‘Business’ also refers to efforts and activities undertaken by individuals to produce and sell goods and services for profit.”
E-Auction Can’t Be Set Aside On Trivial Technical Grounds For No Fault Of Successful Bidder: NCLT Hyderabad
Case Title: M/s. Millenium Steel India Pvt. Ltd. v M/s Ind Barath Power Gencom Limited & Ors.
Case No.: CP(IB) No. 187/7/HDB/2019
The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has held that an e-auction of Corporate Debtor’s asset done by Liquidator cannot be set aside on trivial technical grounds, for no fault of the successful bidder. The application for setting e-auction was filed after the distribution of proceeds as per Section 53 of IBC had taken place and the changes in Board of Directors were effectuated.
NCLT Bengaluru Condones Delay Of 1191 Days In Submission Of Proof Of Claim By SEBI Before Liquidator
Case Title: M/s. Edelwiss Assets Reconstruction Co. Ltd. v M/s. Falcon Tyres Ltd.
Case No.: C.P. (IB) No.14/BB/2017
The National Company Law Tribunal (NCLT), Bengaluru Bench, comprising of Shri P. Mohan Raj (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has condoned the delay of 1191 days in submission of proof of claim by Securities and Exchange Board of India (“SEBI”) before the Liquidator of Corporate Debtor. The Liquidator has been directed to consider the belated claim since the Liquidation process is ongoing.
NCLT Kolkata: Registration Of Assignment Of Debt Is Not Mandatory For CIRP U/S 7 Of IBC
Case Title: Manavta Tradelink Pvt. Ltd. vs. Manikaran Vincom Pvt. Ltd.
Case No.: Company Petition (IB) No. 80/KB/2023
The National Company Law Tribunal (‘NCLT’) Kolkata Bench comprising Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has held that the registration of the assignment of debt is not mandatory for the Corporate Insolvency Resolution Process (‘CIRP’) under Section 7 of IBC. Further, the Corporate Debtor cannot go into the question of the legality of the assignment of debt since the assignment of debt was never disputed to date.
Mittal Corp Ltd. To Merge With Subsidiary Of Shyam Metalics & Energy, NCLT Mumbai Approves Resolution Plan
Case Title: Punjab National Bank v Mittal Corp Limited
Case No.: C.P. (IB) No. 434/MB/C-II/2018
The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has approved the Resolution Plan submitted by Shyam Sel and Power Limited (Subsidiary of Shyam Metalics & Energy Ltd.) for Mittal Corp Ltd. The resolution plan is valued at Rs. 351 Crores and provides for merger of the two companies post implementation of plan.
NCLT Delhi Approves Resolution Plan For ENN TEE International Limited
Case Title: ENN TEE International Limited vs Ritu Rastogi, Resolution Professional of ENN TEE International Limited.
Case No.: CP (IBPP) NO.01(PB)/2022
The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Justice Ramalingam Sudhakar (Retd.) (Judicial Member) and Shri Avinash Kumar Srivastava (Technical Member), has approved the Resolution Plan submitted by ENN TEE International Limited through its Promotor. The claims submitted by the Corporate Debtor’s creditors were admitted by the Resolution Professional to the extent of Rs.15.94 Crores. The Resolution Plan of SRA is valued at Rs.17.19 Crores.
HIGH COURT
IBC | Assistant General Manager Signs Inspection Order In Place Of Executive Director Of IBBI, Bombay High Court Stays The Suspension Of Insolvency Professional
Case Title: Partha Sarathy Sarkar v Insolvency & Bankruptcy Board of India (IBBI) & Ors.
Case No.: Civil Writ Petition (L) No.28206 Of 2023
The Bombay High Court bench, comprising Justice B. P. Colabawalla and Justice M.M. Sathaye, has stayed the Suspension Order issued against an Insolvency Professional (“IP”) by the Insolvency and Bankruptcy Board of India (“IBBI”). The Inspection Order issued by IBBI against the IP was signed by Assistant General Manager alone, whereas, as per IBBI (Delegation of Powers and Functions) Order, 2017, any action, inspection or investigation order has to be issued by the Executive Director of IBBI.
MCA
MCA Notification: Moratorium Under IBC Inapplicable To Agreements Under Convention & Protocol Relating To Aircraft, Aircraft Engines, Airframes And Helicopters
Ref: F. No. Insol-30/9/2020-Insolvency-MCA
The Ministry of Corporate Affairs (“MCA”), Government of India, has issued a notification dated 03.10.2023 published in the Gazette of India (Extraordinary).
On 16.11.2001, the Convention on International Interests in Mobile Equipment (“Convention”) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment (“Protocol”) were adopted under the joint auspices of International Civil Aviation Organization and the International Institute for the Unification of Private Law concluded at Cape Town.
India is a signatory to the Convention and the Protocol. Therefore, the Central Government, in exercise of the powers under Section 14(3)(a) of IBC, has notified that moratorium under Section 14(1) of IBC shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.
