Weekly Digest Of IBC Cases: 11th To 17th March 2024
Pallavi Mishra
17 March 2024 5:50 AM GMT
NCLAT
MoU And Ledger Extract Are Insufficient Proof For Admitting Of Financial Debt Claim: NCLAT Delhi
Case title: D S Kulkarni & Associates v Manoj Kumar Aggarwal
Case No.: Company Appeal (AT) (Insolvency) No.923 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Arun Baroka (Technical Member), has held that Memorandum of Understanding (“MoU”) and extract of Ledger of the Corporate Debtor are insufficient proof for acceptance of a claim as financial debt.
One of the creditors of the Corporate Debtor submitted its claim before the Resolution Professional claiming itself to be a Financial Creditor at par with Homebuyers. To substantiate the claim, the creditor submitted an MoU and Ledger extract of the Corporate Debtor as proof. The Resolution Professional rejected the claim citing that financial debt claim cannot be admitted merely upon MoU and Ledger extract and the decision was upheld by the NCLT and NCLAT.
RP Best Person To Decide What Part Of Corporate Debtor's Business Is To Be Carried Out: NCLAT Delhi
Case title: Amit Tyagi v Indirapuram Habitat Centre Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No.272 of 2024
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that the Resolution Professional who is running the Corporate Debtor's business, is the best person to decide as to what part of the business can be carried out. Further, the allottees of a real estate project developed by the Corporate Debtor cannot demand execution of conveyance deed as a matter of right.
Case Title: Jaiprakash Associates Ltd. vs Jaypee Infratech Ltd. and Others
Case No.: Company Appeal (AT) (Insolvency) No. 548
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), upheld a Resolution Plan which outlined provisions for the completion of approximately 96 residential towers that had remained under construction since 2011 by Jaypee Infratech Limited (JIL). The homebuyers' plea revolved around the delay in the implementation of the Resolution Plan and their earnest desire to acquire possession of their units.
Suraksha Realty Limited submitted its Resolution Plan, which was subsequently approved by the Committee of Creditors (CoC). However, objections were filed by Jaiprakash Associates Limited (“JAL”), the holding company of JIL and Manoj Gaur, the erstwhile Managing Director of JIL, against Suraksha Realty's Resolution Plan, in NCLT. The NCLT had approved Suraksha Realty's Resolution Plan, leading to the filing of appeals by JAL and Manoj Gaur in NCLAT. Now NCLAT has upheld the plan submitted by Suraksha Realty Limited.
NCLAT Delhi: Advance Paid By A Speculative Buyer In Real Estate Doesn't Fall Under Financial Debt Under IBC
Case Title: Naman Infradevelopers Pvt. Ltd. vs. Metcalfe Properties Pvt. Ltd.
Case No.: Company Appeal (AT)(INS) No.74 of 2024
The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Justice Yogesh Khanna (Judicial Member), and Mr. Barun Mitra (Technical Member) held that the advance paid by a speculative buyer in Real Estate does not fall within the purview of Section 5(8) of IBC.
The Bench concluded that the Appellant cannot be given the status of 'Financial Creditor' as he is a speculative investor who has filed the CIRP application only for recovery of its money with profit and interest and not for the financial well-being of the Corporate Debtor.
Question Of Value Can't Be Raised Post Approval Of Resolution Plan By CoC: NCLAT Delhi
Case title: Committee of Creditors v Anil Tayal
Case No.: Company Appeal (AT) (Ins.) No.1633 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has upheld an order passed by NCLT herein it was held that the question of valuation of assets cannot be raised after the resolution plan has been approved by the Committee of Creditors (“CoC”).
Issue Of Whether Input Tax Has Been Taken In Excess Can't Be Dealt With In Section 9 Proceedings Under IBC: NCLAT Delhi
Case title: Zaara Enterprises Venture Pvt. Ltd. v Dhanraaj Agencies Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 356 of 2024
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that the issue whether the Corporate Debtor has claimed input tax in excess on a GST invoice raised by the Operational Creditor cannot be decided in proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
Once Resolution Plan Is Approved By CoC And NCLT, SRA Can't Seek Its Substitution With Another Resolution Applicant: NCLAT Delhi
Case title: UV Asset Reconstruction Company Ltd. & Anr. v Aircel Ltd. Through Its Monitoring Committee
Case No.: Company Appeal (AT) (Ins.) No. 333 of 2024
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that after approval of a resolution plan by the Committee of Creditors (“CoC”) and NCLT, the Successful Resolution Applicant (“SRA”) cannot be substituted with another entity/resolution applicant.
The SRA is an Asset Reconstruction Company and the plan submitted by it was approved by the CoC and NCLT. Thereafter, the Reserve Bank of India (“RBI”) issued a circular intimating that Asset Reconstruction Companies cannot be Resolution Applicant unless they have achieved certain net worth. Since the SRA had not achieved the net worth as required by RBI, the SRA filed an application before NCLT seeking its substitution with another resolution applicant, owing to its subsequent ineligibility to be a resolution applicant as per RBI norms. The NCLT rejected the application and NCLAT has upheld the rejection.
NCLT
NCLT Mumbai Approves Rs. 9,661 Crore Resolution Plan By IndusInd International Holdings For Reliance Capital
Case Title: Mr. Nageswara Rao Y, Administrator of Reliance Capital Limited vs. Committee of Creditors of Reliance Capital Limited and IndusInd International Holdings Limited
Case No.: CP (IB) No. 1231 of 2021
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice V.G. Bisht (Judicial Member) and Mr. Prabhat Kumar (Technical Member), has approved the Rs. 9,661 crore resolution plan submitted by IndusInd International Holdings Ltd ('IIHL') for Reliance Capital Limited (Corporate Debtor) under Section 31 of IBC.
The Resolution Plan of IIHL is valued at Rs. 9,661 crores. Out of the total claims of Rs 38,526.42 crore, only Rs 26,086.75 crore were admitted by the NCLT with a massive haircut of 63 percent. The average fair value of the Corporate Debtor is Rs. 16,696.05 crores and the average Liquidation value is Rs. 13,158.46 crores.
Section 53 of IBC provides priority to the dues of Workmen and Employees, however, in the resolution plan they have been paid NIL against an admitted claim of Rs. 5.71 crores.
The Plan provides that the secured financial creditors who voted in favor of the Resolution Plan be paid in full to the extent of their outstanding principal amount. The unsecured financial creditors have been proposed to be paid 5% of their admitted claims.
The Plan provides that payment towards Related Party Creditors be settled for NIL.
NCLT Chennai: Adjudicating Authority Under IBC Is Not The Appropriate Forum To Decide On Revocation Of Attachment Made By ED Under PMLA During CIRP
Case Title: Mr. Palaniappan Liquidator of Nathella Sampath Jewelry Pvt. Ltd. vs. The Joint Director Directorate of Enforcement
Case No.: CP/129(IB)/2018
The National Company Law Tribunal ('NCLT') Chennai, comprising Shri Justice Jyoti Kumar Tripathi (Judicial Member) and Shri Ravichandran Ramasamy (Technical Member) held that the NCLT under IBC, is not the appropriate fora to decide on revocation of attachment made by Enforcement Directorate ('ED') under Prevention of Money Laundering Act, 2002 ('PMLA') during Corporate Insolvency Resolution Process ('CIRP').
NCLT observed that the 'Attachment' as a concept cannot be decided upon by the NCLT and cannot be subject to Section 60(5) of IBC.
NCLT Kolkata: IBC Prevails Over State Financial Corporation Act, 1951
Case Title: Mr. Rajesh Lahila vs. West Bengal Industrial Development Corporation Ltd.
Case No.: C.P. (IB) No. 1674/KB/2019
The National Company Law Tribunal ('NCLT') Kolkata, comprising Justice Ms. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has held that IBC prevails over State Financial Corporation Act, 1951 (SFC Act).
Tribunal noted the inconsistency between Section 18(f) of IBC and Section 29 of the SFC Act and observed that while Section 18(f) of IBC casts duty on the Resolution Professional to take custody of Corporate Debtor's assets as recorded in the balance sheets, the explanation of the said provision also provides that Corporate Debtor's assets not in possession shall also be taken into custody.
On the other hand, Section 29 of the SFC Act provides that on a failure to the payment as per the terms and conditions of the borrowings, the Corporation can take first charge over the Corporate Debtor's immovable properties to be retained and dispose of the said properties pledged. The NCLT resolved the said inconsistency through the application of Section 238 of IBC providing that IBC shall prevail over any other statute in the case of such inconsistency.
NCLT Mumbai: Profits During CIRP Be Allocated To Financial Creditors When RFRP And Resolution Plan Are Silent On Such Allocation
Case Title: Kalyan Janata Sahakari Bank Ltd. & Anr. vs. Arun Kapoor, Resolution Professional of CICIL Biochem Private Limited
Case No.: C.P. (IB) No. 4676/MB/2018
The National Company Law Tribunal ('NCLT') Mumbai, comprising Mr. Kuldip Kumar Kareer (Judicial Member) and Mr. Anil Raj Chellan (Technical Member) held that the profits accrued during the Corporate Insolvency Resolution Process ('CIRP') be allocated to the Financial Creditors when the Request for Resolution Plan ('RFRP') and the Resolution Plan are silent on the allocation of profits.
Liquidation Value Is More Than Resolution Plan , NCLT Allahabad Directs SRA To Match Liquidation Value
Case title: Hadirah Steels Pvt. Ltd. v Rana Heavy Engineering Ltd.
Case No.: CP (IB) No.50/ALD/2022
The National Company Law Tribunal (“NCLT”), Allahabad Bench, comprising of Shri Praveen Gupta (Judicial Member) and Shri Ashish Verma (Technical Member), has directed the Successful Resolution Applicant to consider matching the resolution plan value at par with the liquidation value, which is on a higher side. The Successful Resolution Applicant is the Financial Creditor of the Corporate Debtor and also the sole member of Committee of Creditors (“CoC”).
“We are also conscious of the fact that commercial wisdom of the Committee of Creditors in the matter of approval of resolution plan should be regarded. However, in the peculiar circumstances of the case where the financial creditor who is member of CoC itself is the SRA as well, we therefore, find it justifiable in passing such directions to the SRA to consider matching the total plan value at par with the liquidation value with corresponding pro-rata rise in the amount of disbursement.”
