Weekly Digest Of IBC Cases: 1 May To 7 May 2023

Supreme Court IBC| Principle Of Commercial Wisdom Not Validate A Decision Taken By CoC In Contravention Of Law: Supreme Court Case Title: M.K. Rajagopalan v Dr. Periasamy Palani Gounder Citation: 2023 LiveLaw (SC) 403 The Supreme Court Bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath, has held that the principle of ‘Commercial Wisdom’ of the Committee of Creditors (“CoC”) cannot brush aside the shortcomings of the CoC in cases where decision making was done in contravention to a law which is in force for the time being. The Bench has upheld the NCLAT’s order whereby the Successful Resolution Applicant was declared ineligible in terms of Section 88 of the Indian Trusts Act, 1882, since he had submitted two resolution plans, one in individual capacity and one in the capacity of Managing Trustee of the Trust. IBC| Ineligibility Of Resolution Applicant As Per S.164(2)(b) Companies Act Can't Be Presumed Unless Competent Authority Declares Disqualification: Supreme Court Case Title: M.K. Rajagopalan v Dr. Periasamy Palani Gounder Citation: 2023 LiveLaw (SC) 403 The Supreme Court Bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath, has held that a resolution applicant cannot be rendered ineligible to submit a resolution plan under the Insolvency and Bankruptcy Code, 2016 (“IBC”), by assuming his/her disqualification under Section 164(2)(b) of the Companies Act, 2013, unless a categorical order disqualifying him/her to act as a director of any company is passed by the competent authority. Further, there is no concept of ‘deemed disqualification’ under Section 164(2)(b) of the Companies Act, 2013. No Priority For Workers' Dues After Liquidation Of Company Under IBC: Supreme Court Upholds Section 327(7) Of Companies Act 2013 Case Title : Moser Baer Karamchari Union through its President Mahesh Chand Sharma vs Union of India W.P.(C) No. 421/2019 and connected cases. Citation: 2023 LiveLaw (SC) 386 The Supreme Court Bench comprising Justices MR Shah and Sanjiv Khanna has held upheld the constitutional validity of Section 327(7) of the Companies Act, 2013, which holds that workers' dues will not get preferential payment in the event a company undergoes liquidation as per the provisions of the Insolvency and Bankruptcy Code 2016. "The enactment of the IBC and Section 53 of IBC necessitated amendment to the Companies Act 2013. The object and purpose of amending the Companies Act 2013 and to exclude Sections 326 and 327 in the event of liquidation of a company under IBC seem to be that there may not be two different provisions in respect to the winding up/ liquidation of a company. Therefore, in view of the enactment of the IBC, it was necessary to exclude the applicability of Section 326 and 327 of the 2013 Act, which cannot be said to be arbitrary, as contended on behalf of the petitioners", NCLAT NCLAT Delhi Admits YEIDA’s Appeal Against Jaypee Infratech Resolution Plan On Additional Compensation To Farmers Case Title: Yamuna Expressway Industrial Development Authority v Monitoring Committee of Jaypee Infratech Ltd. & Ors. Case No.: Company Appeal (AT) (Insolvency) No. 493 of 2023 The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has admitted the appeal filed by the Yamuna Expressway Industrial Development Authority (“YEIDA”) against the approved resolution plan of M/s. Suraksha Realty Ltd. and M/s. Lakshdeep Investments & Finance Pvt. Ltd. for Jaypee Infratech Ltd. YEIDA has challenged the approved Resolution Plan on limited ground of allocation of Rs. 10 Lakhs as against a claim for Rs. 1,689.017 Crores for paying additional compensation to the farmers. NCLT CoC Resolution With 66% Voting Share Not A Pre-Condition For Liquidation When No Resolution Plan Received By The AA: NCLT Hyderabad Case Title: State Bank of India vs Suryajyothi Spinning Mills Ltd Case No. ;IA No. 96 of 2021 in CP (IB) No. 166/7/HDB/2019 The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising Smt. Telaprolu Rajani (Judicial Member) and Shri Charan Singh (Technical Member), has held that a resolution by the CoC with 66% voting share for Liquidation of Corporate Debtor is not necessary when no resolution plan is received by the Adjudicating Authority. It was observed that the Tribunal has the power to order for Liquidation when no resolution plan is submitted. Thus, the Adjudicating Authority only has to see whether any resolution plan has been presented before it prior to the order of Liquidation under Section 33(1)(a). It is immaterial whether the CoC has resolved for liquidation or whether there was no coordination between the RP and CoC for an order of Liquidation under Section 33(1)(a) when no resolution plan is received by the...

Weekly Digest Of IBC Cases: 1 May To 7 May 2023

Pallavi Mishra

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