IBC Cases Weekly Round-Up: 13th To 18th December 2022

NCLAT Compromise Doubtful, Only To Benefit Related Parties, NCLAT Delhi Upholds Liquidation Of CD Case Title: Bankey Bihari Infrahomes Pvt. Ltd. v Mr. Alok Kumar Kuchchal & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 718 of 2022 The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Judicial Member) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority's decision to proceed with liquidation of Corporate Debtor as the Scheme of Compromise & Arrangement submitted by the Appellant appeared to be doubtful and ostensibly to appropriate the land to the benefit of related parties of the Corporate Debtor. The Bench observed that the purported Scheme proposed to make payments to a number of related parties, unsecured creditors and those who had not submitted claims, upto an extent of 100% of admitted claimed amounts. It was further proposed to make payments within 90 days of approval of scheme. Whereas, in the event of auction-sale, the payments would be made promptly to claims in accordance with the 'waterfall mechanism' under section 53 of IBC. Section 66 Of IBC Does Not Provide For Any Look Back Period For Fraudulent Transactions: NCLAT Chennai Case Title: Mr. Thomas George v K. Easwara Pillai & Ors. Case No.: Company Appeal (At)(Ch) (Insolvency) No. 293 Of 2021 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 Section 66 of IBC does not provide for any look back period as far as fraudulent transactions are concerned. "Unlike other types of transactions provided under the Code, there is no specified look back period for fraudulent trading under Section 66. Hence, the Resolution Professional is allowed to retrieve/repossess without any limitation of time and correct all the wrong doings for any relevant point of time. Section 66 of the Code envisages that the losses caused to the Creditors are recovered in the event of the Liquidation and that the Directors who caused such losses are made liable to make good such losses." IBC Does Not Prohibit An Assignee From Continuing Pending Section 7 Proceedings: NCLAT Delhi Case Title: Siti Networks Ltd. v Assets Care and Reconstruction Enterprises Ltd. & Anr. Case No.: Comp. App. (AT) (Ins.) No. 1449 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 there is no prohibition in the IBC or any of the Regulations from continuing the proceeding by an assignee. Section 5(7) of the IBC which defines 'Financial Creditor' also includes a person to whom such debt has been legally assigned or transferred to. By virtue of assignment, an assignee becomes the Financial Creditor and it has every right to continue the proceeding which was initiated by the original Financial Creditor/Assignor. High Tension Electricity Connection Of CD Cannot Be Restored Unless Security Deposit Is Paid: NCLAT Delhi Case Title: Kalptaru Steel Rolling Mills Ltd. v Southern Power Distribution Company of A.P. Ltd. Case No.: Company Appeal (AT) (Insolvency) No. 866 of 2020 The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the Corporate Debtor is not entitled for restoration of high tension electricity connection without making payment of security deposit. The Bench observed that the Adjudicating Authority had rightly concluded that security deposit is a pre-condition for sanction of High Tension Power Connection to industries. The Applicant being a heavy industry huge power supply is required. The security deposit is only to adjust the shortfalls which come in payment of bills. NCLT No Clause For Payment Of Interest, OC Can't Add Interest Only To Cross Threshold Limit Of 1 Crore: NCLT Kolkata Case Title: Khatunaresh Impex Pvt. Ltd. v Jindal (India) Limited Case No.: C.P. (IB)/291(KB)2022 The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has held that in absence of any contract or agreement between Parties which provides for payment of interest to the Operational Creditor alongwith principal amount, the Operational Creditor cannot claim interest in Section 9 proceedings merely to cross the threshold limit of Rs. One Crore. NCLT Allahabad Bench Re-Constituted W.E.F 12th December 2022 File No.: 10/03/2022-NCLT The Allahabad Bench of National Company Law Tribunal, has been re-constituted vide a Circular dated 07.12.2022 issued by NCLT. The re-constitution has been done in ...

IBC Cases Weekly Round-Up: 13th To 18th December 2022

Pallavi Mishra

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