IBC | Resolution Plan Requires Closer Examination If Plan Envisages Use Of Asset Owned By Statutory Authority: Supreme Court

Case Title: Greater Noida Industrial Development Authority Versus Prabhjit Singh Soni & Anr.

Case No.: CIVIL APPEAL NOS.7590-7591 OF 2023

The Supreme Court bench comprising Chief Justice of India Dr. DY Chandrachud, Justice J.B. Pardiwala, and Justice Manoj Misra, has observed that ordinarily feasibility and viability of a resolution plan is best decided by the commercial wisdom of the Committee of Creditors (“CoC”), however, when the resolution plan envisages the use of asset/land not owned by the Corporate Debtor but by a third party, which is a statutory body, bound by its own rules and regulations having statutory flavor, then there has to be a closer examination of the plan's feasibility.

IBC | Claim Submitted With Proof Cannot Be Overlooked Merely Because It Was Submitted In Wrong Form: Supreme Court

Case Title: Greater Noida Industrial Development Authority Versus Prabhjit Singh Soni & Anr.

Case No.: Civil Appeal No(s).7590-7591/2023

The Supreme Court bench comprising Chief Justice of India Dr. DY Chandrachud and Justice JB Pardiwala and Justice Manoj Misra, has observed that the claim submitted by the Resolution Applicant (“RA”) under the Corporate Insolvency Resolution Process (“CIRP”) cannot be rejected/overlooked merely on the fact that the claim submitted appears to be in a different form other than the form in which the claim needs to be submitted.

The creditor submitted a claim to the Resolution Professional under Form C of Regulation 8 of CIRP Regulations 2016, as a financial creditor. The claim of the resolution applicant was rejected by the Committee of Creditors (“CoC”), National Company Law Tribunal (“NCLT”), and National Company Law Appellate Tribunal (“NCLAT”) on the note that the resolution applicant being Operational Creditor needs to submit their claim under Form B of Regulation 7 of CIRP Regulations 2016, as Operational Creditor.\

The Bench held, No doubt, the record indicates that the appellant was advised to submit its claim in Form B (meant for operational creditor) in place of Form C (meant of financial creditor). But, assuming the appellant did not heed the advice, once the claim was submitted with proof, it could not have been overlooked merely because it was in a different Form.”

NCLAT

NCLAT Delhi Sets Aside NCLT Order Permitting Suspended Director To Enter Settlement During Pendency Of Plan Approval Application

Case title: Nehru Place Hotels and Real Estates Private Limited V Sanjeev Mahajan & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 1715-1716 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 set aside a direction given by the NCLT, whereby the Suspended Director was given opportunity to enter settlement during the pendency of application filed by Resolution Professional for approval of Resolution Plan. The Bench has held that since the application for approval of resolution plan is pending for over a year, the NCLT ought to have decided the same.

On 08.01.2023, the Committee of Creditors (CoC) approved the Resolution Plan submitted by Resolution Applicant with 100% vote share and rejected the Settlement Proposal submitted by Suspended Director of Corporate Debtor with 100% vote share. Accordingly, the Resolution Professional filed an application seeking approval of Resolution plan. The Suspended Director also filed an application seeking consideration of its revised settlement proposal.

The NCLT granted another opportunity to Suspended Director to enter settlement with CoC and kept the application for approval of resolution plan in abeyance.

NCLAT Delhi: Definition Of Financial Debt U/S 5(8) Does Not Provide Disbursal To Be Made To Corporate Debtor Only

Case Title: Mr. Rajeev Kumar Jain vs. Uno Minda Ltd. and Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 947 of 2022

The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Naresh Salecha (Technical Member) held that the definition of Financial Debt under Section 5(8) of IBC does not use the expression that disbursal should be made to the Corporate Debtor only.

NCLT

NCLT Mumbai: CIRP Can't Be Initiated U/S 7 Of IBC Based On Transfer Agreement For Purchase Of Debentures From Financial Creditors

Case Title: Edelweiss Asset Reconstruction Company Ltd. vs. Ajmera Realty and Infra India Ltd.

Case No.: CP (IB) No.877/MB/2023

The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice V.G. Bisht (Retd.) (Judicial Member) and Mr. Prabhat Kumar (Technical Member) held that the Corporate Insolvency Resolution Process ('CIRP') under Section 7 of IBC cannot be initiated based on Transfer Agreement/promise for purchase of Debentures from Financial Creditors.

NCLT Imposes Rs. 2.5 Lakh Cost On Personal Guarantor For Delayed Filing Of Reply, NCLAT Delhi Reduces Cost To Rs. 25,000

Case title: Rakesh Nayar v State Bank of India

Case No.: Company Appeal (AT) (Insolvency) No. 270 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 reduced the cost imposed by NCLT on Personal Guarantor for 6 days delay in filing of Reply from Rs. 2.5 Lakhs to Rs. 25,000. The Bench opined that the imposition of Rs. 2.5 Lakh cost is excessive as delay in filing of Reply to application under Section 95 of IBC was of mere 6 days.

NCLT Mumbai Orders Dream 11's Sports Platform Owner Sporta Technologies Pvt. Ltd. Into CIRP Under IBC

Case Title: Piyush Jani, RP for Reward Business Solutions Pvt. Ltd. vs. Sporta Technologies Pvt. Ltd.

Case No.: CP No. 775/(IB)-MB-V/2021

The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice Reeta Kohli (Judicial Member) and Shri. Anil Raj Chellan (Technical Member) allowed the petition and ordered Sporta Technologies Pvt. Ltd. (Corporate Debtor) into the Corporate Insolvency Resolution Process ('CIRP') under Section 9 of the Insolvency and Bankruptcy Code, 2016 ('IBC'). The Corporate Debtor is Dream 11's sports platform owner.

NCLT Orders Liquidation Of Mehul Choksi-Promoted Gitanjali Gems

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has ruled for the liquidation of Gitanjali Gems, a jewelry retailing company headed by fugitive Mehul Choksi, under Section 33 of IBC.

“On perusal of records, it is evident that the assets of the Corporate Debtor were under attachment by the Directorate of Enforcement under the enforcement under the provisions of the PMLA, 2002 and considering the bleak chances of insolvency resolution amid the ongoing investigations and attachment of assets, the CoC had resolved in its 06th Meeting held on 05th April, 2019 to liquidate the Corporate Debtor by a majority of 90.16% voting in favour.”

The tribunal further added that, “The CoC with requisite voting as given under Section 33(2) has approved the liquidation of Corporate Debtor in view of bleak chances of receiving any resolution plan for the reasons discussed hereinbefore. This Tribunal has very limited powers of judicial review in such matters of commercial wisdom.”

HIGH COURT

Lender Banks Must Furnish Copy Of Audit Reports Before Classifying Loan Account As Fraud: Gujarat High Court

Case Title: Amit Dineshchandra Patel vs. Reserve Bank of India

Citation: 2024 LiveLaw (Guj) 10

The Gujarat High Court bench comprising of Justice Sangeeta K. Vishen, has observed that the Lender Banks must provide a reasonable opportunity to the Borrower by furnishing a copy of Audit Reports and allowing him to submit a representation before classifying the account as fraud.

In 2021, the Corporate Debtor (Company) was admitted into a Corporate Insolvency Resolution Process ('CIRP') under Insolvency and Bankruptcy, Code, 2016. The Company's loan accounts were declared as fraud by the consortium banks.