Supreme Court Judgements On Insolvency & Bankruptcy Code In 2023

Sabka Vishwas Scheme: Supreme Court Grants Relief To Company Which Missed Deadline Due To IBC MoratoriumThe Supreme Court Bench comprising of Justices M R Shah and Justice B V Nagarathna has remarked that “No one can be expected to do the impossible” while granting relief to a company which could not avail the benefit of settlement of tax dues under “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, due to moratorium under IBC being imposed on it. "The appellant cannot be punished for not doing something which was impossible for it to do. There was a legal impediment in the way of the appellant to make any payment during the moratorium. Even if the appellant wanted to deposit settlement amount within the stipulated period, it could not do so in view of the bar under the IBC as, during the moratorium, no payment could have been made. In that view of the matter, the appellant cannot be rendered remediless and should not be made to suffer due to a legal impediment which was the reason for it and/or not doing the act within the prescribed time." Allowing the appeal, the court directed that the payment of Rs.1,24,28,500/- already deposited by the appellant be appropriated towards settlement dues under “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019” and the appellant be issued discharge certificate. Shekhar Resorts Limited vs Union of India 2023 LiveLaw (SC) 15 IBC - Delay In Filing CIRP Application Condonable On Sufficient Reasons: Supreme Court The Supreme Court Bench comprising of Justices Ajay Rastogi and Justice C T Ravikumar has held that delay in initiating Corporate Insolvency Resolution Process (CIRP) is condonable on sufficient grounds. "When the limitation period for initiating CIRP under Section 9, IBC is to be reckoned from the date of default, as opposed to the date of commencement of IBC and the period prescribed therefor, is three years as provided by Section 137 of the Limitation Act, 1963 and the same would commence from the date of default and is extendable only by application of Section 5 of the Limitation Act, 1963 it is incumbent on the Adjudicating Authority to consider the claim for condonation of the delay when once the proceeding concerned is found filed beyond the period of limitation..As relates Section 5 of the Limitation Act showing 'sufficient cause' is the only criterion for condoning delay. 'Sufficient Cause' is the cause for which a party could not be blamed. Sabarmati Gas Limited v Shah Alloys Limited 2023 LiveLaw (SC) 9 Insolvency Resolution Of Company Will Not Extinguish Director's Liability Under Section 138 NI Act : Supreme Court The approval of resolution plan of a corporate debtor under the Insolvency and Bankruptcy Code 2016 will not extinguish the criminal liability of its erstwhile director under Section 138 of the Negotiable Instruments Act 1881, held the Supreme Court.A bench comprising Justices Sanjay Kishan Kaul, Abhay S Oka and JB Pardiwala held that the company's director cannot seek discharge from N.I. Act proceedings on the ground that creditor's debt stood settled in the proceedings under IBC. The short-judgment authored by Justice Kaul (on behalf of himself and Justice Oka) stated that IBC proceedings cannot bar Section 138 NI Act proceedings against the director. Justice Pardiwala penned down a separate concurring judgment with the following conclusions:After passing of the Resolution Plan under Section 31 of IBC by the Adjudicating Authority and in the light of Section 32A of IBC, the criminal proceedings under Section 138 of the NI Act will stand terminated only in relation to the Corporate Debtor if the same is taken over by a new management; andProceedings under Section 138 of NI Act in relation to the signatories/directors who are liable/covered by the two provisos to Section 32A(1) will continue in accordance with law. Ajay Kumar Radheyshyam Goenka v Tourism Finance Corporation of India Ltd. 2023 LiveLaw (SC) 195 IBC- Resolution Professional Entitled To Take Control Of Corporate Debtor's Rights In Assets Licensed To Third Parties : Supreme Court The Supreme Court has held that a resolution professional is entitled to take control of the rights of a corporate debtor in assets which are licensed to third parties. Such an action of the RP will come within the ambit of Section 25 of the Insolvency and Bankruptcy Code 2016.A Bench comprising of Justice V. Ramasubramanian and Justice Pankaj Mithal held that the assets owned by a third-party, but in the possession of the Corporate Debtor held under contractual arrangements, are excluded from the definition of “assets” in Section 18 of IBC, however, the said exclusion does not extend to Section 25 of IBC. Therefore, the Explanation to Section 18 is inapplicable to Section 25 of IBC. Victory Iron Works Ltd. v Jitendra Lohia & Anr. 2023 LiveLaw (SC) 193IBC- Once Resolution Plan Is Approved, No Modifications Are Permissible : Supreme CourtThe Supreme Court has held that the declaration made by the...

Supreme Court Judgements On Insolvency & Bankruptcy Code In 2023

Anmol Kaur Bawa

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