Supreme Court Quarterly Digest 2022- IBC (January - March)

Insolvency and Bankruptcy Code, 2016 - Appeal challenging NCLAT order which reversed the order of the NCLT wherein it had held that the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was not time-barred - Allowed - The failure of the NCLAT as the first appellate authority to look into a very vital aspect such as this, vitiates its order, especially when NCLT has recorded a specific finding of fact - Remanded. S.V. Fashions Pvt. Ltd. v. Ritu Murli Manohar Goyal, 2022 LiveLaw (SC) 326Insolvency and Bankruptcy Code, 2016 – Difference between financial and operational creditors in the nature of their role in the Committee of Creditors - It is assumed the operational creditors will be unwilling to take the risk of restructuring their debts in order to make the corporate debtor a going concern. Thus, their debt is not seen as a long -term investment in the going concern status of the corporate debtor, which would incentivize them to restructure it, but merely as a one -off transaction with the corporate debtor for certain goods or services. (Para 32) Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., 2022 LiveLaw (SC) 129 Insolvency and Bankruptcy Code, 2016 – IBC proceedings should not become recovery proceedings - IBC not akin to a recovery legislation for creditors, but is a legislation beneficial for the corporate debtor. Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., 2022 LiveLaw (SC) 129 Insolvency and Bankruptcy Code, 2016 - NCLT/NCLAT must make a reasonable assessment of the fees and expenses payable to the Interim Resolution Profession and cannot pass an order in an ad-hoc manner. (Para 16) Devarajan Raman v. Bank of India Ltd., 2022 LiveLaw (SC) 24 Insolvency and Bankruptcy Code, 2016 – Section 5(20) and 5(21) - Operational Debt - Operational Creditor - A debt which arises out of advance payment made to a corporate debtor for supply of goods or services would be considered as an operational debt - The phrase "in respect of" in Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the corporate debtor, which ultimately lead to an operational debt. (Para 43, 45) Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., 2022 LiveLaw (SC) 129 Insolvency and Bankruptcy Code, 2016 - Section 9 – Limitation Act, 1963 – Article 137 – Limitation Act would apply to applications filed under Sections 7 and 9 of the IBC. Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., 2022 LiveLaw (SC) 129 Insolvency and Bankruptcy Code, 2016 – Section 9 – Limitation Act, 1963 – Article 137 – Limitation does not commence when the debt becomes due but only when a default occurs. As noted earlier in the judgment, default is defined under Section 3(12) of the IBC as the non -payment of the debt by the corporate debtor when it has become due. (Para 59) Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., 2022 LiveLaw (SC) 129 Insolvency and Bankruptcy Code, 2016 - Sections 13, 15 and 31 - The claim in respect of the demand was not lodged after public announcements were issued under Sections 13 and 15 of the IBC - On the date on which the Resolution Plan was approved by the NCLT, all claims stood frozen - No claim, which is not a part of the Resolution Plan, would survive. Ruchi Soya Industries Ltd. v. Union of India, 2022 LiveLaw (SC) 207 Insolvency and Bankruptcy Code, 2016 - The Court allowed withdrawal of Corporate Insolvency Resolution Process against a builder in an application filed by three homebuyers in view of a settlement plan agreed upon by the majority of them. In the larger interest of the homebuyers, the Apex Court exercised power under Article 142 to permit withdrawal of the CIRP proceedings and set aside all matters pending between the parties. Amit Katyal v. Meera Ahuja, 2022 LiveLaw (SC) 259 Insolvency and Bankruptcy Code, 2016 - The object and purpose of 14 the IBC is not to kill the company and stop/stall the project, but to ensure that the business of the company runs as a going concern. (Para 12) Amit Katyal v. Meera Ahuja, 2022 LiveLaw (SC) 259 Insolvency and Bankruptcy Code, 2016; Section 12A - At any stage before a COC is constituted, a party can approach NCLT/Adjudicating Authority directly and the Tribunal may in exercise of its powers under Rule 11 of the NCLT Rules, allow or disallow an application for withdrawal or settlement - In an appropriate case and where the case is being made out and the NCLT is satisfied about the settlement, may permit/allow an application for withdrawal or settlement. Amit Katyal v. Meera Ahuja, 2022 LiveLaw (SC) 259 Insolvency and Bankruptcy Code, 2016; Section 12A - Regulation 30A of the CIRP Regulations, 2016 - This provision is held ...

Supreme Court Quarterly Digest 2022- IBC (January - March)

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