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Weekly

IBC Cases Weekly Round-Up: 16 January To 22 January 2023

Pallavi Mishra
23 Jan 2023 11:30 AM GMT
IBC Cases Weekly Round-Up: 16 January To 22 January 2023
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NCLAT

NCLAT Delhi Upholds Dismissal Of Application Seeking Restraint On Oyo From Proceeding With IPO

Case Title: Jagadish v Oyo Hotels & Homes Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1408 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority’s order rejecting applications filed by Operational Creditor to direct Oyo not to proceed with its IPO and furnish its financial statements. The reliefs sought by the Operational Creditor have been regarded as premature, since CIRP has not yet been initiated against Oyo. Oyo Hotels & Homes Pvt. Ltd. (“Corporate Debtor”) owns and operates a chain of hotels across India under the banner ‘OYO’. Recently, the Corporate Debtor announced Initial Public Offering (IPO) of its shares and the IPO is still under process.

‘Filed Only For Recovery Of Balance Interest Amount’: NCLAT Delhi Upholds Dismissal Of Section 9 Petition

Case Title: Permali Wallace Pvt. Ltd. v Narbada Forest Industries Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 36 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held upheld the Adjudicating Authority’s dismissal of a Section 9 petition, which was filed merely for recovery of balance interest amount in view of a settlement agreement and not for resolution of the Corporate Debtor. The Bench placed reliance on the Supreme Court judgment in Swiss Ribbon Pvt. Ltd. v Union of India, (2019) 4 SCC 17, wherein it was held that IBC is not a recovery proceeding.

Section 17 Of Limitation Act Inapplicable Where Limitation Is Prescribed For Appeal: NCLAT Delhi

Case Title: Maharashtra State Electricity Distribution Company Ltd. v NRC Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 13 of 2023.

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that Section 17(1) of Limitation Act, 1963 deals with period of limitation in the case of any suit or application. On the face of it, Section 17(1)(c) does not come into play in an Appeal when limitation is prescribed for an Appeal.

Landowner In A Development Agreement Not A Financial Creditor: NCLAT Delhi

Case Title: Ashoka Hi-Tech Builders Pvt. Ltd. v Sanjay Kundra & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 46 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that a landowner in a development agreement is not a financial creditor within the meaning of Section 5(8) of IBC and cannot be included in the Committee of Creditors. The Bench observed that the Development Agreement clearly states that the Landowner was a collaborator in the development agreement and not a financial creditor. There was no disbursement for time value of money by the Landowner within meaning of Section 5(8) of the IBC.

Operational Creditors Only Entitled To Minimum Of The Liquidation Value: NCLAT Delhi

Case Title: Dharmindra Constructions Pvt. Ltd. & Anr. v Rajendra Kumar Jain

Case No.: Company Appeal (AT) (Insolvency) No.1477 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 Operational Creditors are only entitled for minimum of the liquidation value.

The Bench observed that the Liquidation value of the Appellant/Operational Creditor was Nil. Even the Operational Creditors which are Government and whose verified claim is Rs. 295.18 Crores, were paid NIL. The requirement for the obligation for payment of amount to the Operational Creditor is under Section 30(2)(b) and the plan had not violated the said provision.

NCLT

NCLT Delhi Admits Unibera Developers Into Insolvency

Case Title: Mahi Buildhome Pvt. Ltd. v M/s. Unibera Developers Pvt. Ltd.

Case No.: (IB)-505(ND)2022

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 initiated Corporate Insolvency Resolution Process against Unibera Developers Pvt. Ltd. Mr. Ashok Kumar Jalan has been appointed as the Interim Resolution Professional (IRP). Unibera Developers Pvt. Ltd. (“Corporate Debtor”) is engaged in the development of residential, commercial and government real estate projects. The Corporate Debtor’s projects are located in NOIDA, Greater NOIDA, Ghaziabad and Bihar.

NCLT Mumbai Approves Promoter’s Resolution Plan For Srithik Ispat Pvt. Ltd.

Case Title: Swastik Coal Corporation Pvt. Ltd. v Srithik Ispat Pvt. Ltd

Case No.: CP (IB) No.4549/MB-IV/2018

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has approved the resolution plan submitted by the Promoter of the Corporate Debtor (Srithik Ispat Pvt. Ltd.). The Corporate Debtor is engaged in the business of iron sponge manufacturing in Goa.

HIGH COURT

Avoidance Applications Survive CIRP, Can Be Heard After Approval Of Resolution Plan: Delhi High Court

Case Title: Tata Steel BSL Limited v Venus Recruiter Pvt. Ltd. & Ors.

Case No.: LPA 37/2021, Neutral Citation Number: 2023/DHC/000257.

The Delhi High Court Bench comprising of the Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad, has held that that avoidance applications filed under IBC survive even after approval of the resolution plan, in cases where Resolution Plans are unable to account for such applications. These applications can be heard even after CIRP stands concluded. The Bench observed, “…it cannot be accepted that avoidance applications will be rendered infructuous in situations wherein the resolution plan could not have accounted for avoidance applications due to exigencies that delayed initiation of action in respect of avoidable transactions beyond the submission of a resolution plan before the adjudicating authority. This is because such an interpretation will render the provisions pertaining to suspect transactions otiose and let the beneficiaries of such transactions walk away, scot-free……”.

NCLT Hyderabad Grants A Series Of Concessions/Waivers To The Successful Bidder

Case Title: State Bank of India v K.R.R Infraprojects Pvt. Ltd.,

Case No.: CP (IB) No.430/7/HDB/2020

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Sri Satya Ranjan Prasad (Technical Member), has granted several waivers/concessions to the Successful Bidder including waiver from penalties imposed by Registrar of Companies and other authorities. Further, the Bench has granted the Successful Bidder the liberty to approach the concerned authority for seeking offset of any loses as per Income Tax Act against future profits; and clearance from the secured financial creditors and filing of satisfaction of charge by them. The new management shall also not be liable for any payment arising out of the contingent liabilities on account of bank guarantees.

MINISTRY OF CORPORATE AFFAIRS

Ministry Of Corporate Affairs Invites Public Comments On Proposed Changes In IBC

File No.- 30/38/2021-Insolvency

The Ministry of Corporate Affairs, Government of India, has issued a circular inviting comments from the public on the changes proposed to be made in the Insolvency and Bankruptcy Code, 2016 (“IBC”). The proposed changes relate to the admission of corporate insolvency resolution process (“CIRP”) applications, streamlining the insolvency resolution process, recasting the liquidation process, and the role of service providers under the IBC. The proposed amendments are:

  • Mandatory to admit Section 7 application where occurrence of a default is established.
  • Approval of multiple resolution plans in respect of the same CD.
  • Improving recoveries for operational creditors in liquidation: unsecured creditors (Financial Creditors, Operational Creditors and any government or authority) other than the workmen and employees shall be treated equally for distribution under Section 53 of IBC.
  • Improving outcomes in real estate cases: during a CIRP or a project specific resolution process, the allottees may request ownership and possession of a completed unit of the real estate project, which cannot be permitted during the moratorium under the IBC. To benefit such allottees, Section 28 of IBC may be amended to enable the Resolution Professional to transfer the ownership and possession of a plot, apartment or building to the allottees with the consent of the CoC.
  • Reinstating CIRP: IBC to enable reinstatement of the CIRP during the liquidation process, where the liquidator continues to carry on the CD’s business, and it is possible to revive the CD as determined by the CoC.
  • Intermingling the assets of the CD and its guarantors: in certain cases while a building, plant, or machinery may belong to the CD, the land on which it is situated may belong to a guarantor. It is proposed to include such assets of the guarantor in the general pool of assets available for the CIRP for efficient resolution of the CD.
  • Protection of a resolution applicant post implementation of the resolution plan concerning civil liabilities.
  • Direct Dissolution of the CD: CoC can request the AA to dissolve the CD if it believes that conducting the liquidation process in such circumstances may not be feasible or beneficial for the stakeholders.
  • Replacement of the liquidator: CoC to seek replacement of the RP conducting the CIRP from becoming the liquidator by a vote of at least sixty-six per cent of voting shares.
  • Use of technology.
  • Increasing reliance on the record submitted with the Information Utilities during the Admission Process.
  • Restricting the right of the promoters to propose an Interim Resolution Professional.
  • Empowering the AA to impose penalties for violations of IBC.
  • Expanding the applicability of the Pre-packaged Insolvency Resolution framework:


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