Insolvency & Bankruptcy Code : Important Judgments By Supreme Court In 2024

As the year 2024 nears its end, LiveLaw brings to you a summary of important Supreme Court judgments of the year rendered in connection with the Insolvency and Bankruptcy Code, 2016. The same are as follows:1. IBC - Is Dissenting Financial Creditor Entitled To Minimum Value Of Security Interest? Supreme Court Refers To Larger Bench, Doubts Precedent Case: DBS Bank Ltd Singapore v. Ruchi Soya Industries Ltd and another [2024 LiveLaw (SC) 6]In this case, a bench comprising Justice Sanjiv Khanna (now CJI) and Justice SVN Bhatti referred to a larger bench the issue whether a dissenting financial creditor is to be paid the minimum value of its security interest as per the IBC. The bench differed from the view expressed by a coordinate bench in the 2021 judgment in India Resurgence ARC Private Limited v. Amit Metaliks Limited & Another which held that a dissenting secured creditor cannot challenge an approved resolution plan contending that higher amount should have been paid to it based on the security interest held by it over the corporate debtor.2. IBC | Statutory Set Off Or Insolvency Set Off Inapplicable To Corporate Insolvency Resolution Process: Supreme CourtCase: Bharti Airtel Limited and Another v. Vijaykumar V. Iyer and Others [2024 LiveLaw (SC) 11]In this case, a bench comprising Justice Sanjiv Khanna (now CJI) and Justice SVN Bhatti held that statutory set off or insolvency set off is not applicable to Corporate Insolvency Resolution Process proceedings under the IBC. Further, Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which provides for mutual dealing and set off, does not apply to Part II of IBC (which deals with CIRP).The Bench also carved out two exceptions to the application of statutory or insolvency set off to CIRP proceedings. First being, when a party is entitled to contractual set-off, on the date which is effective before or on the date of commencement of CIRP. Secondly, in cases of 'equitable set-off' when the claim and counter claim in the form of set-off are linked and connected on account of one or more transactions that can be treated as one.3. IBC | Moratorium Under S 14 No Bar To Execute Decree Against Directors/Officers Of Corporate Debtor: Supreme CourtCase: Ansal Crown Heights Flat Buyers Association (Regd.) v. M/S. Ansal Crown Infrabuild Pvt. Ltd. & Ors. [2024 LiveLaw (SC) 63]In this case, a bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan held that the imposition of moratorium under Section 14 of the IBC has no effect on the execution of a decree against the Directors or Officers of the Company (Corporate Debtor), which is undergoing CIRP under IBC.4. IBC | Claim Submitted With Proof Cannot Be Overlooked Merely Because It Was Submitted In Wrong Form: Supreme CourtCase: Greater Noida Industrial Development Authority v. Prabhjit Singh Soni & Anr. [2024 LiveLaw (SC) 111]In this case, a bench comprising former CJI DY Chandrachud and Justices JB Pardiwala, Manoj Misra observed that the claim submitted by Resolution Applicant under the CIRP cannot be rejected/overlooked merely on the fact that the claim submitted appears to be in a form other than the form in which the claim needs to be submitted.It was observed that the Form in which a claim is to be submitted is directory in nature. What is necessary is that the claim must have support from proof.The Court further observed that ordinarily feasibility and viability of a resolution plan is best decided by the commercial wisdom of the Committee of Creditors, however when the resolution plan envisages the use of asset/land not owned by the Corporate Debtor but by a third party, which is a statutory body, bound by its own rules and regulations having statutory flavor, then there has to be a closer examination of the plan's feasibility.5. Process For IBC Offences To Be Issued By Sessions Court Despite Companies Act Amendment Vesting Jurisdiction On Judicial Magistrate: Supreme Court Case: Insolvency and Bankruptcy Board of India v. Satyanarayan Bankatlal Malu & Ors. [2024 LiveLaw (SC) 317]In this case, a bench comprising Justices BR Gavai and Sandeep Mehta interpreted Section 236(1) IBC to hold that the power to try offences punishable under IBC was vested in the Special Court by 'legislation by incorporation', meaning thereby the intention of the Parliament was clear to vest the power to issue summons upon the special court consisting of a person qualified to be a Sessions Judge or an Additional Sessions Judge. Thus, subsequent amendments to Section 435 Companies Act, 2013 authorizing judicial magistrates to issue summons for offences punishable up to two years under the IBC would not have any effect on Section 236 IBC.6. When Does Debt Become Financial Debt & Operational Debt Under IBC? Supreme Court ExplainsCase: Global Credit Capital Limited & Anr. v. Sach Marketing Pvt. Ltd. & Anr. [2024 LiveLaw (SC) 331]In this case, a bench of Justices Abhay S Oka and Pankaj ...

Insolvency & Bankruptcy Code : Important Judgments By Supreme Court In 2024

Debby Jain

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