Weekly Digest Of IBC Cases: 18 To 23 July 2023

Supreme Court IBC Overrides Electricity Act; Dues To Secured Creditors At Higher Footing Than Electricity Dues : Supreme Court Case Title: Paschimanchal Vidyut Vitran Nigam Ltd vs Raman Ispat Private Limited Citation: 2023 LiveLaw (SC) 534 | 2023 INSC 625 The Supreme Court Bench comprising of Justices S. Ravindra Bhat and Dipankar Datta, has observed that Section 238 of the Insolvency and Bankruptcy Code, 2016 overrides the provisions of the Electricity Act, 2003. It was opined that the provisions of the IBC treat the dues payable to secured creditors are at a higher footing than dues payable to Central or State Government. In this case, the NCLT had set aside an attachment of the property of the respondent Raman Ispat Pvt. Ltd. (“Corporate Debtor”) which was over electricity charge dues to Paschimanchal Vidyut Vitran Nigam Limited (PVVNL) and held that PVVNL can realise its dues by participating in the liquidation process as per the IBC. The NCLAT also approved this view. Further, noting that State Tax Officer v. Rainbow Papers Ltd. 2022 LiveLaw (SC) 743 dealt with a case relating to resolution process and not liquidation process, the Court opined that the judgment in Rainbow Papers has to be confined to the facts of that case. High Court Jharkhand High Court Rejects ESL Steel’s ITC Claim Prior To The Approval Of The Resolution Plan By NCLT Case Title: M/s ESL Steel Limited Versus Principal Commissioner Case No.: W.P.(T) No. 1995 of 2023 The Jharkhand High Court Bench comprising of Justice Rongon Mukhopadhyay and Justice Deepak Roshan, has rejected ESL Steel’s Input Tax Credit (ITC) claim prior to the approval of the resolution plan by the National Company Law Tribunal (NCLT). ESL Steel Limited (Petitioner) contended that no recovery or proceeding can be continued against the petitioner for any alleged dues prior to April 17, 2018, i.e., the date on which the NCLT approved the petitioner's resolution plan. The Petitioner urged that it is only the past obligations of the past period that get extinguished once the new management has taken over the Company as part of the Resolution Plan. There is no statute or judgement that says that past credit due to the company gets expunged. The Bench held that the current management was not a taxpayer for the period prior to June 4, 2018. i.e., the date of the change of management and therefore the liability of the earlier management should not be shifted to the current management. Likewise, the credit available to the earlier management will also not be available to the current management, as the current management is not a taxpayer NCLAT Payment Of Performance Linked Incentive Fee By COC Is Discretionary, NCLT Or NCLAT Can’t Interfere With COC’s Decision: NCLAT Delhi Case Title: Ravindra Kumar Goyal v Committee of Creditors of Yashasvi Yarns Limited & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 809 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that the payment of performance linked incentive fee to the IRP/RP under Regulation 34B of CIRP Regulations lies within the discretion of CoC. If the CoC refuses to pay such incentive fee, then the NCLT or NCLAT do not possess the jurisdiction to interfere with CoC’s decision. Homebuyers of 'Lotus Aren 1' Noida Are Given Flats In Lieu Of Their Claims, Approves Resolution Plan: NCLAT Delhi Case Title: M/s. Dhankalash Distributors Pvt. Ltd. v Arena Superstructures Pvt. Ltd. Case No.: CP (IB) No.875(PB)/2020 The National Company Law Tribunal (NCLT), Principal Bench, comprising of Chief Justice (Retd.) Ramalingam Sudhakar (President) and Shri Avinash K Srivastava (Technical Member), has approved the resolution plan of M/s. Purvanchal Projects Pvt. Ltd. for M/s. Arena Superstructures Pvt. Ltd (Lotus Group company). The Resolution Plan is valued at Rs. 584 Crores. The Homebuyers/Allottees of Lotus Arena I project would be given flats in lieu of their dues. The resolution plan proposes to pay the Secured Financial Creditors an amount of Rs. 70 Crores against an admitted claim of Rs. 200.27Crores. The Unsecured Financial Creditors would be paid Rs. 50 Lakhs against their admitted claim of Rs. 2 Crores. The admitted claim of Homebuyers/Allottees amounts to Rs. 497.8 Crores. The Resolution plan proposes to pay off these dues by delivering flats to the homebuyers. The timeline for completion of construction of the Project and delivery of Flats to homebuyers is 36 months (after the Transfer Date). Dissenting Financial Creditor Entitled To Liquidation Value Commensurate Only With Security Interest: NCLT Delhi Case Title: M/s. Dhankalash Distributors Pvt. Ltd. v Arena Superstructures Pvt. Ltd. Case No.: CP (IB) No.875(PB)/2020 The National Company Law...

Weekly Digest Of IBC Cases: 18 To 23 July 2023

Pallavi Mishra

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