Weekly Digest Of IBC Cases: 16th To 22nd October 2023

Supreme Court IBC | Doctrine Of Election Can’t Prevent Financial Creditor From Initiating CIRP Against Corporate Debtor: Supreme Court Case Title: Tottempudi Salalith v State Bank Of India & Ors. Citation: 2023 LiveLaw (SC) 914 The Supreme Court has held that the ‘Doctrine of Election’ cannot be applied to prevent a Financial Creditor from approaching the National Company Law Tribunal (NCLT) for initiation of Corporate Insolvency Resolution Process (“CIRP”) against a Corporate Debtor, under the Insolvency and Bankruptcy Code, 2016 (IBC). The Doctrine of Election is embodied in the law of evidence, which bars prosecution of the same right in two different fora based on the same cause of action. The Bench comprising Justice Aniruddha Bose and Justice Vikram Nath, has observed, “The question of election between the fora for enforcement of debt under the 1993 Act and initiation of CIRP under the IBC arises only after a recovery certificate is issued. The reliefs under the two statutes are different and once CIRP results in declaration of moratorium, the enforcement mechanism under the 1993 Act or the SARFAESI Act gets suspended. In such circumstances, after issue of recovery certificate, the financial creditor ought to have option for enforcing recovery through a new forum instead of sticking on to the mechanism through which recovery certificate was issued. NCLAT NCLAT New Delhi Suspends Finolex Cable Order Post Supreme Court Directs NCLT Delhi Chairperson To Conduct Inquiry Case Title: Deepak Kishan Chhabria & Anr. vs. Orbit Electricals Pvt. Ltd. & Ors. Case No.: Company Appeal (AT) No. 64 of 2020 The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, comprising Justice Rakesh Kumar (Judicial Member) and Dr. Alok Srivastava (Technical Member), suspended its order dated 13.10.2023 due to the disclosure of the result of the Annual General Meeting of the Finolex Cable. NCLAT had faced an inquiry by the Supreme Court as per which it was brought to the notice of the Supreme Court order dated 13.10.2023 directing the NCLAT that Judgment in pending appeal shall be delivered by it being duly apprised of the fact that the result of the Annual General Meeting has been declared. The matter related to Finolex Cable's Annual General Meeting and Prakash and Deepak Chhabria's legal tussle over the management control of the company. The NCLAT via its order dated 13.10.2023 had allowed Deepak Chhabria to continue as the chairman of Finolex Cables and put on hold the changes that were to be brought into the Articles of Association of the Company. The Supreme Court in its order dated 13.10.2023 had directed the NCLT chairperson Justice Ashok Bhushan to conduct an inquiry into whether a bench of the Appellate Tribunal defied the Supreme Court’s order and Justice Bhushan was required to submit such report on 16.10.2023 by 5 pm. The NCLAT via its order on 21.09.2023 had directed the status quo on the conduct of the Annual General Meeting until the dispute between Prakash Chabria and Deepak Chabria over the management of the Company was settled. The Apex Court had observed that decisions relating to the appointment of an Executive Chairperson would be subject to the outcome of the litigation at the NCLAT. NCLAT Chennai: Transfer Of Shares Not An Act Of Oppression And Mismanagement | SEBI Is The Competent Forum To Decide Disputes Of Transfer Of Shares And Not NCLT Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited Case No.: Company Appeal (AT) No.363/2019 The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member) has held the Transfer of Shares is not an act of ‘oppression’ and ‘mismanagement’ against the shareholders of the Company and disputes relating to the Transfer of Shares fall within the ambit of the Securities Board of India (‘SEBI’) and not NCLT. NCLAT Chennai: Mere Irregularity Not A Ground For Oppression And Mismanagement Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited Case No.: Company Appeal (AT) No.363/2019 The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a mere irregularity or infirmity is not a ground for oppression and mismanagement and a single act is not oppression and a continuous course of oppressive conduct by the majority is required and necessary for oppression and mismanagement proceedings. NCLAT Chennai: NCLT Has Inherent Powers To Look Into Earlier Litigations To Ascertain The Bonafide Of A Party Case Title: Jitendra Virmani vs. MRO – Tek Reality Limited Case No.: Company Appeal (AT) No.363/2019 The National Company Law Appellate Tribunal (‘NCLAT’), Chennai Bench comprising of Justice M....

Weekly Digest Of IBC Cases: 16th To 22nd October 2023

Pallavi Mishra

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