Weekly Digest Of IBC Cases: 30th October To 5th November 2023

Supreme CourtIBC Resolution Plan Can't Ignore Government Dues: Supreme Court Dismisses Review Petitions Against 'Rainbow Papers' Case title: Sanjay Agarwal v. State Tax Officer Citation: 2023 LiveLaw (SC) 939 The Supreme Court has dismissed a batch of review petitions filed against a 2022 judgment which held that the definition of a secured creditor under the Insolvency and Bankruptcy Code, 2016 (“IBC”) 2016 included any government or governmental authority and that a resolution plan which ignored dues to the government was liable to be rejected. A bench comprising Justices AS Bopanna and Justice Bela M. Trivedi was considering five review petitions filed against the 2022 judgment in State Tax Officer v. Rainbow Papers Ltd 2022 LiveLaw (SC) 743 delivered by a bench comprising Justices Indira Banerjee (since retired) and AS Bopanna. “The submissions made by the counsels for petitioners that the court in the impugned judgment had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC are factually incorrect. As evident from a bare reading of the judgment, the court had considered not only the waterfall mechanism under Section 53 but also other provisions of IBC for deciding the priority for the purpose of distributing proceeds from the sale as liquidation assets. In view of aforestated legal position, we are of the opinion the judgment sought to be reviewed does not fall within scope and ambit of review. So we’re dismissing all the review petitions.” IBC | Tax & Customs Dues To Be Paid As Per Waterfall Mechanism Under Section 53: Supreme Court Case Title: Principal Commissioner of Customs V Rajendra Prasad Tak & Ors. Citation: 2023 LiveLaw (SC) 952 The Supreme Court Bench comprising Justice Sanjiv Khanna and Justice S.V.N. Bhatti, has clarified that the dues of the Central Board of Indirect Taxes & Customs, Department of Revenue, will be paid as per the waterfall mechanism given under Section 53 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). Section 53 of IBC provides the order of priority in which proceeds from sale of liquidation assets is to be distributed amongst Corporate Debtor’s creditors, stakeholders etc. NCLAT NCLAT New Delhi: Jurisdiction Of NCLT Under IBC Is Summary In Nature, Not Extensive As A Civil Court To Enquire Into Disputes Case Title: Sanjay Pandurang Kalate vs. Vistra ITCL (India) Ltd. Case No.: Company Appeal (AT)(Insolvency) No. 742 of 2023 The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, comprising of Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the scope and jurisdiction of NCLT under the IBC being summary in nature, is distinctly not as extensive as that of a civil court to enquire into disputes arising out of Memorandum of Understanding (MoU) and related specific performance. NCLAT New Delhi: Haircut In Resolution Plan Cannot Be Construed As Being Violative Of Section 30(2)(e) Of IBC Case Title: Mr. Ankur Narang & Ors. vs. Mr. Nilesh Sharma RP & Ors. Case No.: Company Appeal (AT)(Insolvency) No. 1240 of 2023 The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that a haircut in Resolution Plan cannot be construed as being violative of Section 30(2)(e) of IBC and the minority homebuyers have to necessarily sail with the majority within the class. NCLAT Delhi: Fine For Non-Cooperation By Ex-Management Under IBC Is A “Penalty” Not “Cost” And Outside NCLT’s Jurisdiction Case Title: Rakesh Gupta & Ors. vs Mahesh Bansal. Case No.: COMPANY APPEAL (AT) (Insolvency) No. 401 of 2022 The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the fine imposed on non-cooperation by ex-management u/s 19(2) or 34(3) of IBC is covered under the term “penalty” and not “cost” under Rule 149 of the National Company Law Tribunal Rules, 2016. The Bench further observed that imposing fines is outside the jurisdiction of NCLT. NCLAT New Delhi: Operational Creditor Not Entitled To Benefit U/S 14 Of Limitation Act When Suit Filed By It Was Withdrawn By Itself Without Any Liberty To Institute Fresh suit Case Title: GRI Towers India Pvt. Ltd. vs. Inox Wind Ltd. Case No.: Company Appeal (AT) (Insolvency) No. 1106 of 2023 The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that an Operational Creditor is not entitled for benefit of Section 14 of the Limitation Act, 1963 where the...

Weekly Digest Of IBC Cases: 30th October To 5th November 2023

Pallavi Mishra

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