Weekly Digest Of IBC Cases: 18th To 24th December 2023

Supreme Court IBC- Properties Sold In Auction Sale Before Declaration Of Moratorium Can't Be Treated As Liquidation Asset: Supreme Court Case Title: Haldiram Incorporation Pvt. Ltd. v Amrit Hatcheries Pvt. Ltd. Citation: 2023 LiveLaw (SC) 1029 The Supreme Court bench comprising Justices Aniruddha Bose and Justice Vikram Nath, has observed that the properties of a defaulting borrower sold in an auction sale could not be treated as liquidation assets if the sale was concluded before the declaration of a moratorium under the Insolvency and Bankruptcy Code, 2016 (“IBC”). The Bank had advanced loan to Corporate Debtor and the latter mortgaged two sets of properties to the bank. On default of payment, one of the properties were sold to the Auction Purchaser via auction sale. While the Auction Purchaser completed the payment on 16.08.2019, Corporate Debtor was admitted into CIRP on 20.08.2019. This also resulted in the declaration of a moratorium by the NCLT. The NCLT held the issue of the sale certificate and handing over of the property as illegal and the subject property should continue to be assets of the Corporate Debtor. The NCLT had proceeded on the basis that sale was not concluded. Thus, while commencing the resolution process, the Liquidator was directed to take possession of the subject properties. When challenged, the NCLAT dismissed the appeal. The Supreme Court has set aside the order passed by the NCLAT. NCLAT Condition To Submit Refundable BG, Not Violative 36-B Of CIRP Regulations: NCLAT Delhi Case Title: Rakesh Ranjan v Fanendra Harakchand Munot & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 1352 of 2023 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 if the Request For Resolution Plan (RFPR) requires the resolution applicant(s) to submit a refundable Bank Guarantee, then such condition is not violative of Regulation 36-B of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”). Regulation 36-B of CIRP Regulations states that in a RFPR there can be no requirement for a non-refundable deposit alongwith resolution plan. The Bench has upheld the decision of Committee of Creditors to reject a resolution plan which did not comply with the requirement of submitting a refundable Bank Guarantee alongwith plan. Homebuyers Or Unsuccessful Resolution Applicant Not Entitled To File Avoidance Application: NCLAT Delhi Case title: Ms. Amita Saurabh Bihani & Ors. v E&G Global Estates Limited & Ors. Case No.: Company Appeal (AT)(Insolvency) No. 1214 & 1215 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 as per Section 25(2)(j) of IBC the Resolution Professional alone is empowered to file application for avoidance of transactions which are preferential, fraudulent, undervalued or extortionate in nature. The Homebuyer of the Corporate Debtor's real estate project or the unsuccessful resolution applicant is not entitled to file any application for avoidance of transactions under IBC. CIRP And Avoidance Application Separate Set Of Proceedings, Adjudication Of Avoidance Application Can Survive CIRP: NCLAT Delhi Case title: G.S. Constructions v E & G Global Estates Ltd. & Ors. Case No.: Company Appeal (AT)(Insolvency) No. 1217 & 1218 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 Corporate Insolvency Resolution Process (“CIRP”) and proceedings for avoidance of transactions are separate set of proceedings. If an avoidance application filed by Resolution Professional is pending adjudication, then the same would not stall the approval of resolution plan by NCLT. Similarly, an avoidance application can survive CIRP. “CIRP and avoidance applications are, thus by their very nature, a separate set of proceedings. The former is time bound whereas the latter requires a proper discovery of suspect transactions that are time consuming. The scheme of the IBC reinforces this difference and thus adjudication of an avoidance application is independent of the resolution of the corporate debtor and can survive CIRP.” NCLAT Delhi: Auction Purchaser In Liquidation Proceedings Entitled For Certain Consequential Reliefs Case Title: Punjab National Bank (International Limited) vs Perfect Day INC Case No.: Company Appeal (AT) (Insolvency) No.1427 of 2022 The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising Justice ...

Weekly Digest Of IBC Cases: 18th To 24th December 2023

Pallavi Mishra

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