Supreme Court IBC | Moratorium Under S 14 No Bar To Execute Decree Against Directors/Officers Of Corporate Debtor: Supreme Court Case Title: Ansal Crown Heights Flat Buyers Association (Regd.) V M/S. Ansal Crown Infrabuild Pvt. Ltd. & Ors. Citation: 2024 LiveLaw (SC) 63 The Supreme Court has held that the imposition of moratorium under Section 14 of the Insolvency...
Supreme Court
IBC | Moratorium Under S 14 No Bar To Execute Decree Against Directors/Officers Of Corporate Debtor: Supreme Court
Case Title: Ansal Crown Heights Flat Buyers Association (Regd.) V M/S. Ansal Crown Infrabuild Pvt. Ltd. & Ors.
Citation: 2024 LiveLaw (SC) 63
The Supreme Court has held that the imposition of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) has no effect on the execution of a decree against the Directors or Officers of the Company (Corporate Debtor), which is undergoing Corporate Insolvency Resolution Process (“CIRP”) under IBC.
When the Company was admitted into CIRP, the National Consumer Disputes Redressal Commission (“NCDRC”) declined to permit execution of a decree against the Company and also its Directors/Officers. The Bench held that the protection of moratorium under Section 14 of IBC is only available to the Company and not to its Directors or Officers, thus the execution of decree can be done against them even during moratorium.
The Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan, has held, “Therefore, we are of the view that only because there is a moratorium under Section 14 of the IBC against the company, it cannot be said that no proceedings can be initiated against the opposite party Nos. 2 to 9(the respondent Nos. 2 to 9) for execution, provided that they are otherwise liable to abide by and comply with the order, which is passed against the company. The protection of the moratorium will not be available to the directors/officers of the company.”
NCLAT
Bank Files Claim After 738 Days Of Delay And Post Approval Of Resolution Plan, NCLAT Delhi Upholds Rejection Of Claim
Case title: Kotak Mahindra Bank Ltd. v Sandeep Goel RP for Sarvottam Realcon Pvt Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 140 of 2024
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has upheld the rejection of a claim submitted by Kotak Mahindra Bank Ltd., which was submitted to the Resolution Professional after delay of 738 days and post approval of resolution plan for the Corporate Debtor.
NCLAT Delhi: Security Of Refund Of Advance Amount Can't Change Nature Of Transaction Into Financial Debt
Case Title: Sainik Industries Pvt. Ltd. vs. Ritesh Raghunath Mahajan, RP, Indian Sugar Manufacturing Company Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1614 of 2023
The National Company Law Appellate Tribunal ('NCLAT') New Delhi Bench, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that the Security of refund of the advance amount cannot change the nature of transaction into financial debt.
Resolution Applicant Who Participated In The Process Has Locus To Object The Application For Approval Of Resolution Plan: NCLAT Delhi
Case title: PRIO S.A. v Mr. Pravin R. Navandar & Ors.
Case No.: Company Appeal (AT) (Insolvency) No.1650 of 2023
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that a resolution applicant who has participated in the process, has locus to object the application filed by Resolution Professional under Section 30(6) of IBC for approval of resolution plan submitted by another resolution applicant.
NCLAT Delhi Upholds Dismissal Of Plea To Initiate Proceedings Under Section 340 Of CrPC Against Allottees For Allegedly Filing False Affidavits
Case title: M/s Mist Direct Sales Pvt. Ltd. v Mr. Nitin Batra & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 96 of 2024
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has upheld the rejection of an application seeking initiation of proceedings under Section 340 r/w Section 195 of the Criminal Procedure Code, 1973 (“CrPC”) against Allottees, for allegedly filing false affidavits before NCLT in Section 7 of IBC proceedings.
Proceedings under Section 340 of CrPC can be initiated when a person intentionally gives a false statement or fabricated false evidence at any stage of the judicial proceedings. The Appellant alleged that the Section 7 petition was not filed by 100 'valid' allottees as required under Section 7(1) of IBC and the affidavits filed by Allottees were false and fabricated. The NCLT held that it cannot decide on the issue of forged affidavits and declined to initiate proceedings under Section 340 of CrPC.
NCLT
NCLT Delhi: Debt Assignment Deed Cannot Be Challenged In CIRP U/s 7 Of IBC
Case Title: CFM Asset Reconstruction Pvt. Ltd. Vs. M.G. Finvest Pvt. Ltd.
Case No.: Company Petition IB (IBC) NO. 115/PB/2022
The National Company Law Tribunal ('NCLT') New Delhi Bench, comprising Justice Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), held that the Debt Assignment Deed cannot be challenged in a Corporate Insolvency Resolution Process ('CIRP') under Section 7 of IBC.
Case Title: Hpcl-Mittal Pipelines Limited v Coastal Marine Construction And Engineering Limited
Case No.: C.P. (IB) 323/MB/2023
The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mr. Kuldip Kumar Kareer (Judicial Member) and Mr. Anil Raj Chellan (Technical Member), has held that the nature of an operational debt would not change to financial debt with the passing of a decree or arbitral award in respect of the same.
“Undisputedly, the claim on the basis of which arbitral proceedings were initiated by the Petitioner emanated from a work contract which originally was at best an operational debt and as per the law laid down in the afore cited cases, the nature of debt would not change with the passing of a decree or an award and, therefore, simply because an award was passed in respect of an operational claim, it will not by itself metamorphose into a financial debt.”
NCLT Delhi: 'Homebuyers' Seeking Redressal Through 'RERA' Or 'NCDRC' Prior To Approaching 'NCLT' Retain Their Status As Financial Creditors
Case Title: Tarun Ahuja & Ors. Vs Puri Construction Private Limited
Case No: CP IB NO. 755/PB/2020
The National Company Law Tribunal (“NCLT”), New Delhi, comprising Shri Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), has held that regardless of whether homebuyer-allottees have sought recourse through RERA (Real Estate Regulatory Authority) or NCDRC (National Consumer Disputes Redressal Commission) prior to approaching Tribunal, their status as 'financial creditors' under Section 5(8)(f) of the IBC will remain unchanged.
NCLT New Delhi: NCLT Rejects Insolvency Petition Filed By Wilmington Trust Against Spicejet Ltd.
Case Title: Wilmington Trust SP Services (Dublin) Ltd. vs. SpiceJet Ltd.
Case No.: CP IB NO. 349/(ND)/2023
The National Company Law Tribunal ('NCLT') New Delhi, comprising Shri Mahendra Khandelwal (Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has declined Wilmington Trust's application to initiate the Corporate Insolvency Resolution Process ('CIRP') against SpiceJet Limited. The CIRP application has been rejected on the premise that for the Insolvency and Bankruptcy Code, 2016 ('IBC'), a clear distinction is required between the Owner, Lessor, Assignee, Trustee, to being recognized as Operational Creditor in terms of provision of IBC.
NCLT Kolkata: Simultaneous CIRP Can Be Initiated Against Principal Borrower And Corporate Guarantor
Case Title: State Bank of India vs. Anupriya Management Pvt. Ltd.
Case No.: Company Petition (IB) No. 18/KB/2023
The National Company Law Tribunal ('NCLT') Kolkata comprising Smt. Bidisha Banerjee (Judicial Member) and Shri D. Arvind (Technical Member) held that a simultaneous Corporate Insolvency Resolution Process ('CIRP') can be initiated against Principal Borrower and Corporate Guarantor under the Insolvency and Bankruptcy Code, 2016 ('IBC').
NCLT Kolkata: Filing Of Default Information With Information Utility Under Rule 20(1A) Of IBBI (UI) Regulations 2017 Is Not Mandatory
Case Title: State Bank of India vs. Anupriya Management Pvt. Ltd.
Case No.: Company Petition (IB) No. 18/KB/2023
The National Company Law Tribunal ('NCLT') Kolkata comprising Smt. Bidisha Banerjee (Judicial Member) and Shri D. Arvind (Technical Member) held that the filing of default information with Information Utility in compliance with Rule 20(1A) of IBBI (Information Utilities) Regulations 2017 ('IBBI Regulations 2017') is not mandatory compliance.
NCLT Hyderabad: 'Provisional Order Of Attachment' Made Under PMLA Would Not Nullify The Protection Granted Under Section 32A IBC
Case Title: Canara Bank vs Deccan Chronicle Holdings Limited
Case No.: CP(IB)No.41/7/HDB/2017
The National Company Law Tribunal ('NCLT') Hyderabad, comprising Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has held that the provisional order of attachment (POA) under Section 5(1) of the Prevention of Money Laundering Act, 2002, in respect of the properties of the corporate debtor covered under the approved resolution plan, would not end the protection available to such properties under section 32A IBC.
Section 32A stipulates that once Resolution Plan is approved by the Adjudicating Authority after completion of CIRP, there cannot be attachment or confiscation of assets of Corporate Debtor, as otherwise same will defeat objects of the insolvency Regime.
Private Sale Conducted In Non-Transparent Manner & In Absence of Several SCC Members, NCLT Indore Directs Liquidator To Re-Conduct Bidding
Case Title: Hira International Limited v M/s Girdharilal Sugar and Allied Industries Limited
Case No.: CP(IB) 591 of 2019
The National Company Law Tribunal (“NCLT”), Indore Bench, comprising of Shri P. Mohan Raj (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has directed the Liquidator to re-conduct private sale bidding of the Corporate Debtor since the earlier bidding was not conducted in transparent manner. The Bench observed that the Liquidator failed to make genuine efforts to sale the Corporate Debtor under Liquidation through Public Auction. Thereafter, the Liquidator conducted Private Sale hastily and without giving proper prior notice to Stakeholders Consultation Committee (“SCC”) to attend the bidding. Consequently, only one SCC member could attend the bidding.
On an application filed by unsuccessful bidder, the Bench has directed the Liquidator to re-conduct the Private Sale bidding in presence and consultation of SCC members, including the Commercial Tax Department.
NCLT Mumbai: Corporate Guarantor's Date Of Default Is Independent Of Principal Borrower's Date Of Default
Case Title: Central Bank of India vs Superfine Profile and Extrusions Pvt. Ltd.
Case No.: CP (IB) 692/MB/2023
The National Company Law Tribunal ('NCLT') Mumbai, comprising Mr. Kishore Vemulapalli (Judicial Member) and Ms. Anu Jagmohan Singh (Technical Member), has held that the date of default by the Principal Borrower is not relevant to determine the date of default by the Corporate Guarantor.
HIGH COURT
NCLT Kochi Order “Preposterous” And “Untenable” Exceeding Jurisdiction In Declaring Tax Assessment Order Void: Kerala High Court
Case Title: Deputy Commissioner (Works Contract), Kerala State Goods and Services Tax Department vs. National Company Law Tribunal
Case No.: WP(C) No. 39185 of 2022
The Kerala High Court bench of Justice Dinesh Kumar Singh, has observed that an Order passed by the National Company Law Tribunal ('NCLT') Kochi Bench was 'preposterous' and 'untenable'.
NCLT Kochi had held an Assessment Order by Kerala Value Added Tax ('KVAT') Works Contract Authorities against Albana Engineering (India) Pvt. Ltd. (Respondent 2) to be void ab initio in violation of Section 14(1)(a) of IBC.
“The Company Law Tribunal has no power and authority under the IBC to declare an assessment order as void ab initio and non-est in law. Such an order only reflects the competence of the persons who are manning such an important Tribunal. The Order shows the lack of basic understanding of the law. Instead of considering the application by the 2nd respondent for permission to file an appeal against the assessment order, the National Company Law Tribunal, Kochi Bench, has assumed the jurisdiction of the Constitutional Court to declare the assessment order as void ab initio.”