Weekly Digest Of IBC Cases: 27th November To 3rd December 2023

Supreme Court IBC | For Rejection Of A Resolution Plan Under Section 31(2), NCLT Must Pass A Reasoned Order: Supreme Court Case Title: Ramkrishna Forgings Limited v Ravindra Loonkar & Anr. Citation: CIVIL APPEAL No.1527 OF 2022 The Supreme Court bench comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah, has held that when the NCLT exercises its power under Section 31(2) of the Insolvency and Bankruptcy Code, 2016 to not approve a resolution plan, then a reasoned order must be passed. It was emphasized that recording of cogent reasons while passing an order is the duty of Courts and Tribunals. The Supreme Court has set aside an order whereby the NCLT kept the approval of a resolution plan in abeyance while directing an Official Liquidator to conduct re-valuation of the Corporate Debtor’s assets. Consequently, the order of NCLAT affirming the NCLT’s order has also been set aside. The Bench has further cautioned that the NCLT may direct re-valuation of Corporate Debtor’s assets when necessary, but strictly within the domain permitted by IBC. The Bench has held, “It is worthwhile to note that the Adjudicating Authority has jurisdiction only under Section 31(2) of the Code, which gives power not to approve only when the Resolution Plan does not meet the requirement laid down under Section 31(1) of the Code, for which a reasoned order is required to be passed. We may state that the NCLT’s jurisdiction and powers as the Adjudicating Authority under the Code, flow only from the Code and the Regulations thereunder.” NCLAT NCLAT Delhi Upholds Initiation Of Insolvency Proceedings Against Birla Tyres Ltd., A B.K. Birla Group Company Case title: Manav Investment & Trading Company Limited v SRF Limited & Anr. Case No.: COMPANY APPEAL (AT) (Insolvency) No. 692 of 2022 The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Shri Naresh Salecha (Technical Member), has upheld the order whereby the NCLT had initiated Corporate Insolvency Resolution Process (“CIRP”) against Birla Tyres Ltd. Birla Tyres Ltd. is a part of B.K. Birla Group of Companies. In 1991, it was incorporated as a part of Kesoram Industries Ltd. but was later demerged in 2018 as a part of re-structuring plan. In Financial Year 2021, Birla Tyres had made losses to the tune of Rs 287.63 Crore, while total revenue stood at Rs 153.11 Crore NCLAT Delhi: Distribution To Secured Creditor Must Be Made As Per Admitted Claim And Not As Per Security Interest Over Assets Of Corporate Debtor Case Title: ICICI Bank Limited vs BKM Industries Limited Case No.: Company Appeal (AT) (Insolvency) No.405 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr Arun Baroka (Technical Member), has held that distribution to Secured Creditor must be made as per admitted claim and not as per Security interest over assets of the Corporate Debtor. The Bench observed that a dissenting financial creditor is entitled to the liquidation value of his debt and the distribution among creditors is determined by the commercial wisdom of the Committee of Creditors (“CoC”). Resolution Plan Providing For Extinguishment Of Personal Guarantees & Securities Of Dissenting Financial Creditors Is Not Violative Of Section 30(2) Of IBC: NCLAT Delhi Case Title: Puro Naturals JV v Warana Sahakari Bank & Ors. Case No.: Company Appeal (AT) (Insolvency) Nos.661-663 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that a resolution plan providing for extinguishment of security interest and personal guarantees of dissenting financial creditors is not violative of Section 30(2) of IBC. The Bench has approved the Resolution Plan submitted by Puro Naturals JV for Shivaji Cane Processors Limited. NCLT Failure of Liquidator To Comply With Regulation 45 Of Liquidation Regulations, NCLT Kolkata Rejects Application For Dissolution, Recommends Investigation Against Liquidator Case Title: Religare Finvest Ltd. v Venkateshwara Capital Management Ltd. Case No.: C.P.(I.B.) No. 1096/KB/2018 The National Company Law Tribunal (NCLT), Kolkata Bench, comprising of Ms. Bidisha Banerjee (Judicial Member) and Shri Balraj Joshi (Technical Member), has rejected an application for dissolution of Corporate Debtor since the Liquidator failed to comply with requirements under Regulation 45 of IBBI (Liquidation Process) Regulations 2016. The Bench has further recommended IBBI to conduct an investigation on the conduct of the Liquidator. NCLT Delhi: Application U/s 7 IBC Cannot Be Initiated Against A Struck-off Company; NCLT cant Suo Motu Restore The Name Case...

Weekly Digest Of IBC Cases: 27th November To 3rd December 2023

Pallavi Mishra

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