Supreme Court Entries In Book Of Accounts/Balance Sheet Of Corporate Debtor Can Be Treated As Acknowledgment Of Liability Of Debt Payable To Financial Creditor: SupremeCourt Case Title: Asset Reconstruction Company (India) Limited v Tulip Star Hotels Limited Case No.: 2022 LiveLaw (SC) 648, CA 84-85 OF 2020 The Supreme Court Bench comprising of Justice Indira Banerjee...
Supreme Court
Case Title: Asset Reconstruction Company (India) Limited v Tulip Star Hotels Limited
Case No.: 2022 LiveLaw (SC) 648, CA 84-85 OF 2020
The Supreme Court Bench comprising of Justice Indira Banerjee and Justice JK Maheshwari, while adjudicating a petition has observed that the entries in Books of Account/Balance sheet of a company can be treated as acknowledgement of liability in respect of debt payable to a financial creditor.
"To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years."
Case Title: National Company Law Tribunal Bar Association v Union of India
Case No. W.P.(C) No. 180/2022
The Supreme Court Bench comprising of Justice D.Y. Chandrachud and Justice Sudhanshu Dhulia, turned down a plea seeking modification of the tenure of members of National Company Law Tribunal (NCLT) appointed pursuant to the notification dated 20.09.2019 issued by the Ministry of Corporate Affairs, from 3 years to 5 years. It refused to extend tenure for the concerned 23 members, but clarified that while making appointments in future the Central Government would be bound by Section 413 of the Companies Act, 2013, which prescribes the tenure of the members of NCLT to be 5 years. The Apex Court was of the view that an administrative notification for appointment ought to be consistent with the statute. The issue of tenure of members of NCLT is not something that its Bar Association should be interested in. It indicated that the Bar Association should be concerned with the vacancies being filled up at the earliest so that there is no impediment in the justice delivery system. Considering the fact that the process to fill up the vacancies is going on, it refused to interfere and stall it in any manner.
Case Name: Kotak Mahindra Bank Limited v. Kew Precision Parts Private Limited & Ors.
Case No.: Civil Appeal No. 2176 of 2020, 2022 LiveLaw (SC) 673
The Supreme Court Bench comprising of Justice Indira Banerjee and Justice J.K. Maheshwari has held that provision of Section 7(5)(b) of the Insolvency and Bankruptcy Code, 2016, which requires the Adjudicating Authority to notify the Financial Creditor before rejection of a claim, would be applicable to appeals as well, since appeal is the continuation of original proceedings.
The Court held that NCLAT had erred in closing the CIRP proceedings without giving the bank an opportunity to explain if there was sufficient cause for the delay in approaching the NCLT. An appeal being the continuation of original proceedings, the bank ought to have been notified under Section 7(5)(b) of the IBC before its claim was rejected. If notified of the proposal to close the proceedings, the bank might have rectified the defects in its application under Section 7 by filing additional pleadings and/or documents.
NCLAT
CIRP Against Solvent, MSME Company Providing Employment Not Justified: NCLAT Delhi
Case Title: M/s Agarwal Veneers v Fundtonic Service Pvt. Ltd.
Case No.: Company Appeal (AT) (Ins) No. 968 of 2020
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has upheld the dismissal of a Section 9 petition on the grounds of the Corporate Debtor being a solvent company, operating as a 'going concern' and is also a MSME enterprise providing employment and generating revenue. It was observed that the Preamble of IBC describes its spirit and objective to be 'Reorganisation' and 'Insolvency Resolution', specifically omitting the word 'Recovery'. If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of 'Reorganising' or 'Resolution of the Company' does not arise.
Liability Of Personal Guarantor Survives Even On Becoming Citizen Of A Foreign Country:NCLAT Delhi
Case Title: Sudip Dutta v State Bank of India
Case No.: Company Appeal (AT) (Insolvency) No. 807 of 2021
The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Shri Barun Mitra (Technical Member), has held that the liability of a Personal Guarantor does not get extinguished upon subsequent acquisition of citizenship of a foreign country. It was further held that provisions of Section 234 and 235 of IBC would not apply if the assets of the Personal Guarantor are situated within India. It was observed that Section 60(1) of IBC categorically provides that the insolvency resolution process is to be initiated before the Adjudicating Authority within whose territorial jurisdiction registered office of the Corporate Person is located. The residence of Personal Guarantor is not taken into consideration when proceedings against the Personal Guarantor are initiated.
"The statutory scheme of the code does not contain any indication that the Personal Guarantor of a Corporate Debtor can escape from its liability under the Personal Guarantee Deed merely on the ground that he is now started residing in another country and acquired citizenship of another country and is no more an Indian citizen."
Threshold Limit Under Insolvency And Bankruptcy Code Will Also Include Interest: NCLAT
Case title: Mr. Prashant Agarwal v. Vikas Parasrampuria
Case No.: Company Appeal (AT) (Ins) No. 690 of 2022
The National Company Law Appellate Tribunal, Principal Bench, New Delhi comprising of Justice Ashok Bhushan, Justice M Satyanarayana Murthy and Mr. Naresh Salecha held that minimum threshold mentioned under Section 4 of the Insolvency & Bankruptcy Code, 2016 can include both the principal amount and the interest.
The Bench observed that the invoices raised by the Operational creditor clearly mentioned that the interest will be charged @18% after the due date of the bill. Therefore, the bench concluded that the total amount for maintainability of a debt as per Section 4 of the Code will include both the principal debt amount as well as the interest on the delayed payment as it was clearly stipulated in the invoice itself.
Case Title: Shrinathji Trading Company v Sanwaria Consumer Limited
Case No.: Company Appeal (AT) (Ins.) No. 480 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member), Mr. Kanthi Narahari (Technical Member), Dr. Alok Srivastava (Technical Member), has dismissed an application filed by resolution applicant seeking consideration of its revised resolution plan. The Bench observed that the Corporate Insolvency Resolution Process ("CIRP") period of the Corporate Debtor had already crossed 559 days as against a statutory period of 330 days and held that timely completion of resolution is necessary under IBC.
The Bench placed reliance on the Supreme Court judgment in Ebix Singapore Pvt. Ltd. v CoC of Educomp Solutions Ltd. & Anr., Civil Appeal No. 3324 of 2020, wherein timely completion of resolution process has been considered necessary without delaying the stage of liquidation, if circumstances so require.
Fraudulent Initiation Of CIRP, NCLAT Upholds Issuance Of Show Cause Notice To Related Parties
Case Title: Zoom Communications Pvt. Ltd. v M/s. Par Excellence Real Estate Pvt. Ltd.
Case No.: Comp. App. (AT) (Ins.) No. 619 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority's order declining to initiate CIRP on an application made by a related party of the Corporate Debtor upon mala fide. The Bench has also upheld the issuance of Show Cause Notice under Section 65(1) of the Insolvency and Bankruptcy Code, 2016 ("IBC") by the Adjudicating Authority to the Related Parties, for attempting to initiate CIRP fraudulently.
NCLAT Delhi Directs Tax Authorities To Withdraw Notices For Freezing Accounts Of Corporate Debtor
Case Title: Mr. Hemant Mehta v Asst. Commissioner of State Tax
Case No.: Company Appeal (AT) (Insolvency) No. 328 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that notices issued by the Tax Authorities to freeze the accounts the Corporate Debtor during liquidation process are bad in law and has directed withdrawal of such notices and de-freezing of the accounts. The Bench held that the Adjudicating Authority is vested with residuary powers under Section 60(5) of the Insolvency and Bankruptcy Act, 2016 ("IBC") to intervene in circumstances where insolvency resolution process is getting derailed.
Re-agitating The Issue Attained Finality, By NCLT And Supreme Court, Is Abuse of process: NCLAT, Principal Bench
Case Title: Vikas Dahiya (Ex-Director of Golden Tobacco Ltd.) v Arrow Engineering Ltd.
Case No.: Company Appeal (AT)(Insolvency) No. 699 of 2022
The Principal Bench of the NCLAT consisting of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Barun Mitra (Technical Member) has held that the doctrine of Res Judicata applies to proceedings under the IBC and challenge to the findings in incidental or collateral proceedings amounts to an abuse of process of the Court.
Banker's Certificate Not Mandatorily Required To Trigger CIRP Under Section 9 Of IBC: NCLAT Delhi
Case Title: M/s Quippo Infrastructure Limited v M.R. Nirman Private Limited
Case No.: Company Appeal (AT) (Insolvency) No. 1516 of 2019.
The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a Banker's Certificate is not mandatorily required to trigger Corporate Insolvency Resolution Process ("CIRP") under Section 9 of the Insolvency and Bankruptcy Code, 2016.
NCLAT Reprimands Haryana Excise And Taxation Department For Its Casual Attitude
Case Title: Excise and Taxation Department v Allied Strips Ltd.
Case No.: Company Appeal (AT) (Ins.) No. 1506 OF 2019
The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Jain and Dr Alok Srivastava expressed its displeasure towards the casual attitude of the Haryana Excise and Taxation Department in pursuing the case before the NCLAT. The Bench remarked that the excise and taxation department is claiming an amount of Rupees 62.87 Crores in the appeal but the department is not interested in pursuing the matter as no one appeared on behalf of the department even after repeated calls. The Bench also noted that this matter shall be brought to the knowledge of Secretary, Department of Excise and Taxation, Government of Haryana to take appropriate actions against the officers who are not pursuing the appeal diligently.
Case Details: Rakesh Kumar Jain v. Jagdish Singh Nain & Ors.
Case No.: Company Appeal (AT) (Ins.) No. 425 of 2022
The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan, Justice N Satyanarayana Murthy and Mr. Barun Mitra held that the moratorium imposed under Section 14 of the Insolvency & Bankruptcy Code, 2016 is not a bar for initiation of proceedings against the resolution professional of a company undergoing Corporate Insolvency Resolution Process (CIRP) under Section 66 of the Code. NCLAT held that Section 14 and Section 66 are independent provisions incorporated for different purposes and therefore, these provisions have to be read independently to achieve the objective of the Code.
Certified Copy Preparation Period Can Be Excluded For Limitation Under Section 61 Of The Insolvency & Bankruptcy Code, 2016: NCLAT DELHI
Case Title: Chhote Lal Gupta v Jai Balaji Jyoti Steels Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 955 of 2022
The National Company Law Appellate Tribunal, Principal Bench comprising of Justice Ashok Bhushan and Mr. Barun Mitra recently held that the time taken for preparation of the certified copy of the order/judgment will be excluded for computation of limitation under Section 61 of the Insolvency and Bankruptcy Code, 2016. "The Appellant is entitled to exclude the period for which certified copy was under preparation. Certified Copy was applied on 08th June, 2022 and delivered on 09th June, 2022 hence two days period is entitled to be excluded in computing the limitation".
NCLT Can Reject The Resolution Plan Due To Non Serious & Casual Conduct Of Resolution Applicant: NCLAT
Case Detail: Cimco Projects v Anup Kumar
Case No.: Company Appeal (AT) (Insolvency) No. 128 of 2022
The National Company Law Appellate Tribunal, Principal Bench, comprising of Justice Ashok Bhushan, Justice M Satyanarayana murthy, Mr Barun Mitra held that non serious and casual conduct of a resolution applicant is a sufficient ground to reject the resolution plan filed by such resolution applicant and approved by the committee of creditors of the Corporate Debtor. The NCLAT further held that NCLT rightly dismissed the plan approval application as the Successful Resolution Applicant has not shown any willingness to proceed with the Resolution Plan. The CIRP is a time bound period and the same cannot be continued for indefinite period.
Only Creditors Who TriggeredInsolvency Resolution Process Can Be Impleaded As A Party: NCLAT Chennai
Case Title: V. Venkata Sivakumar v IDBI Bank Ltd.
Case No.: Comp. App (AT) (CH) (INS) No. 269 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the Insolvency and Bankruptcy Code, 2016 ("IBC") has no provision to implead creditors other than the ones which triggered the insolvency resolution process.
The Bench observed that to array a person as a `prospective / proposed Respondent(s)' is not a `Substantive Right', but undoubtedly, it is one of the `procedure' and the Tribunal is to exercise its judicial discretion, of course, in a subjective manner, diligently. It cannot be gainsaid that, an `Individual' will not be added as a `Party', just because he will be affected by the `Tribunal' incidentally, when it passes an `Order' in a given `proceedings', before it. The Bench further observed that a person cannot be coerced to get included a person as Party against whom he does not want to contest, unless it is a compulsion of Law. A necessary party is one without whom no order can be passed effectively, or in whose absence an effective order can be made but his presence is necessary for arriving at a final decision. Further, a mere interest of a Party in the fruits of litigation cannot be a test for impleading him as a Party.
Case Title: Sudhir Kumar Goel & Ors. v M/s Shashi Oils and Fats Pvt. Ltd. & Ors.
Case No.: Company Appeal (AT) (Ins) No. 676 of 2021
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar (Judicial Member) and Dr. Ashok Kumar Mishra (Technical Member), has held that once the liquidation process is complete and an application is filed by the liquidator for dissolution of the Corporate Debtor, the Adjudicating Authority has no option but to pass an order of dissolution. Equity though not applicable to Insolvency and Bankruptcy Code, 2016 ("IBC"), cannot come into play at this juncture.
Claims Arising Out Of Grant Of Licence/Permission For Use Of Intellectual Property Rights Is An Operational Debt: NCLAT Delhi
Case Title: Somesh Choudhary v Knight Riders Sports Private Limited & Ors.
Case No.: Company Appeal (AT)(INS) No. 501 of 2021
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that claims arising out of grant of an exclusive right and license to use intellectual property rights falls within the ambit of the definition of 'Operational Debt'.
In this case, the 'Corporate Debtor' was permitted to use the trademark of 'KKR' in relation to its licensed products and hence we note that there was temporary transfer/permission to use, constituting 'provision of service' rendered by the first Respondent and therefore falls within the definition of service and any amounts 'due and payable' arising out of such service is an 'Operational Debt'.
Time Barred Appeal Against Decree Does Not Amount Pre -Existing Dispute Under Insolvency And Bankruptcy Code,2016: NCLAT
Case Details: Jangsher Singh Choudhary v. Ram Kripal Singh Construction Pvt. ltd.
Case No.: Company Appeal (AT) (Ins) No. 739 of 2021
The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Kumar and Dr. Alok Srivastava held that a time barred appeal against the decree filed after the issuance of demand notice under Section 8 of the Insolvency & Bankruptcy Code, 2016 will not amount to a pre-existing dispute.
Mobilization Advance Is An Operational Debt: NCLAT Delhi
Case Title: Athena Demwe Power Ltd. v Abir Infrastructure Private Limited & Ors.
Case No.: Company Appeal (AT) (Insolvency) No.158 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that a mobilization advance given for mobilization of material and workforce is an operational debt.
Reliance was placed on the Supreme Court judgment in M/s. Consolidated Construction Consortium Limited Vs. M/s. Hitro Energy Solutions Private Limited, Civil Appeal No. 2839 of 2020, in which it was held that the words "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.
Does Limitation Period For Filing Appeal Applies To Period For Curing Defects?: NCLAT Refers Question To Larger Bench
Case Title: Mr. V R Ashok Rao v TDT Copper Limited
Case No.: Company Appeal (AT) (Insolvency) No. 780 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice N Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has observed that issue of delay in refilling of appeal is often coming before the NCLAT Bench for consideration. Accordingly, the NCLAT Bench has referred the following question to a larger Bench: 'whether limitation for filing an Appeal before NCLAT also governs the period for curing defect in the Appeal and does NCLAT have jurisdiction to condone the delay in refilling of appeal if it is beyond the limitation prescribed in Section 61 of the IBC or Section 421 of the Companies Act, 2013?'
Tribunal Cannot Interfere With Decision Of COC To Replace Resolution Professional : NCLAT Chennai
Case Title: M/s IDBI Bank Limited v C.J. Davis
Case No.: Company Appeal (AT) (CH) (Ins) No. 116 of 2022.
The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Kanthi Narahari (Technical Member), had set aside the Adjudicating Authority's order disallowing the Committee of Creditors ("CoC") to replace the Resolution Professional under Section 22(3)(b) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). The Bench held that the commercial wisdom of CoC is paramount and can only be interfered by the Tribunal if the same is arbitrary, illegal, irrational and dehors the IBC and its Rules.
Litigation Of Government Is Not Looked After As It Should Be: NCLAT New Delhi
Case Detail: Rajasthan Drugs and Pharmaceuticals Ltd v. ATE Projects Pvt Ltd.
Case No.: Company Appeal (AT) (Ins) No. 1003 of 2021
The National Company Law Appellate Tribunal, New Delhi bench comprising of Justice Rakesh Jain and Dr. Alok Srivastava while dismissing an appeal filed by the Rajasthan Drugs and Pharmaceuticals Ltd. expressed its displeasure as to how the litigation of the Government is not looked after the way as it should have been. The Bench was hearing an appeal filed by the Rajasthan Drugs and Pharmaceuticals challenging the order dated 11.11.2021 of NCLT, Jaipur whereby Corporate Insolvency Resolution Process was initiated against it.
Section 10A Is Not Applicable To Proceedings Against Personal Guarantors Under Insolvency & Bankruptcy Code,2016: NCLAT New Delhi
Case Details: Amit Jain v Siemens Financial Services Pvt Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 292 of 2022
The National Company Law Appellate Tribunal, New Delhi bench comprising of Justice Ashok Bhushan and Justice M Satyanarayan Murthy and Mr. Barun Mitra recently held that Section 10A of the Insolvency & Bankruptcy Code, 2016 is not applicable to proceedings against the personal guarantors under Section 95 of the Code.
"Had the legislature intended to prohibit filing of application under Section 95(1) by a creditor against the Personal Guarantor for any default committed on or after 25.03.2020, a provision akin to Section 10A could have very well be inserted in Chapter III Part III of the Code."
NCLAT concluded that the Section 10A is only capable of one interpretation which is the suspension of CIRP only for Corporate Debtor and not for the Personal Guarantor and accordingly, NCLAT dismissed the appeal filed by the Personal Guarantor.
Status Of Debtor, Attained Finality,Can't Be Altered Based On A Subsequent Judgment: NCLAT Delhi
Case Title: Raghavendra G. Kundangar & Ors. v Shashi Agarwal & Anr.
Case No.: Company Appeal (AT) (Ins.) No. 886 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), applied the Doctrine of Prospective Overruling while observing that when status of a debtor attains finality, the same cannot be altered on the basis of a subsequent judgment in different proceedings. NCLT had admitted the Corporate Debtor into insolvency under Section 7 of IBC for defaulting in payments in respect of supply of materials. Subsequently, the Supreme Court in Anuj Jain v Axis Bank Limited had held that debt arising out of supply of materials is operational debt and not financial. The NCLAT Bench declined to intervene in NCLT's order by applying Doctrine of Prospective Overruling. The NCLAT Bench further held that NCLT is exclusively invested with inherent jurisdiction to decide the petition filed either under Section 7, 9 or any of the provisions of IBC.
Non Issuance Of Completion Certificate Amounts To Pre Existing Dispute: NCLAT New Delhi
Case Title: Navkar Urbanstructure Ltd v. Niyojit Infratech Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 800 of 2022
The National Company Law Appellate Tribunal bench comprising of Justice Ashok Bhushan, Justice M Satyanarayana Murthy and Mr. Barun Mitra while dismissing an appeal field by the Operational Creditor against the rejected of Section 9 petition held that the non-issuance of the completion certificate amounts to a pre existing dispute between the parties. It was contended on behalf of the Operational Creditor that it has provided various services to the Respondent such as trenching, ducting, etc and an amount of INR 8.29 Crores is due and payable by the Respondent to the Appellant. The Bench further held that when the Completion Certificate regarding Work Order was never issued which clearly indicated that the there is a pre existing dispute between the parties.
Resolution Plan Can't Be Remanded Back To COC Over Hyper-Technical Grounds: NCLAT Delhi
Case Title: Piya Puri & Ors. v Mr. Debhashish Nanda & Ors.
Case No.: Company Appeal (AT)(Insolvency) No. 906 of 2022
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that remanding a resolution plan back to Committee of Creditors on the grounds of the procedural deviations raised by a dissenting minority in class of creditors, would render the CIRP a never ending process and is against the time bound resolution objective of the IBC. The Bench declined to remand back the revise Resolution Plan to CoC over hyper-technical grounds raised by minority dissenting creditors. The homebuyers had challenged the Plan stating that Regulation 16-A(9) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 was not followed. The Bench observed that Regulation 16-A(9) states that the Authroized Representative "may" seek preliminary views of creditors on any item in the agenda to enable him to effectively participate in the CoC meeting. The requirement to seek preliminary views was not mandatory.
Creditor Entitled To Claim From Successful Resolution If It's Suit Is Decreed: NCLAT Delhi
Case Title: Goltens India Pvt. Ltd. v Sudip Bhattacharya
Case No.: Company Appeal(AT) (Insolvency) No. 571 of 2022
The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan (Chairperson), Justice N Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority's order to earmark Rs. 1 towards a contingent claim arising out of a recovery suit filed before the High Court. The NCLAT Bench held that if the suit is decreed then the creditor shall be entitled to claim from the Successful Resolution Applicant.
NCLT
Homebuyers Can't Be Defrauded; NCLT Delhi Initiates CIRP Against Som Resorts
Case Title: Yadubir Singh Sajwan & Ors. v Som Resorts Private Limited
Case No.: Company Petition No. (IB)-67(ND)/2022
The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri. Dharminder Singh (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has held that under the guise of 'separate legal entity' doctrine, a developer company cannot be permitted to defraud the homebuyers in connivance with its Marketing Agent. The Corporate Veil can be pierced in matters involving public interest and to ascertain the real nature of transactions. The Bench has initiated Corporate Insolvency Resolution Process ("CIRP") against real estate developer Som Resorts Pvt. Ltd. upon a petition filed by the home buyers.
It was opined that lifting of Corporate Veil is an exception to the distinct personality of the Company and it can be invoked if public interest so requires or if there is allegation of violation of law using the device of a corporate entity. It was observed that the Corporate Debtor had used its Marketing Agent to enter into buyer agreements and collect monies from the home buyers with an ulterior motive to conceal the real transaction. It would not be fair to the homebuyers if the Corporate Debtor indirectly achieves its agenda of defrauding homebuyers in the disguise of separate legal entity, which it could not have done directly.
NCLT Principal Bench To Hear Matters Through Video Conferencing From 8th To 18th August 2022
The National Company Law Tribunal ("NCLT") has issued a Circular dated 05.08.2022, intimating that the matters before the Principal Bench (Court Room No. 1) of the NCLT, New Delhi, would be heard through video conferencing from 08.08.2022 to 18.08.2022.
The hearings are being conducted through video conferencing to meet the shortage of Members in NCLT after 15 Members retired on 03.07.2022. The Ministry of Corporate Affairs vide a notification dated 20.09.2019 ("Notification") had appointed 23 NCLT Members for a term of 3 years or till the age of 65 years, whichever is earlier. However, Section 413 of the Companies Act, 2013 prescribes the term of the Members as 5 years.
The National Company Law Tribunal Bar Association ("NCLTBA") had filed a writ petition titled as National Company Law Tribunal Bar Association v Union of India before the Supreme Court in May 2022, seeking modification of the term of 3 years fixed by the MCA Notification as 5 years. In a hearing held on 01.08.2022, the Supreme Court turned down the plea of the NCLTBA for extension of tenure of the NCLT Members, while observing that NCLTBA should be interested in filling up of vacancies of Members rather than their tenure.
NCLT Mumbai Declares Megi Agro Chem Insolvent, Reiterates OTS Proposal Amounts To Acknowledgement Of Debt
Case Title: M/s. Pridhvi Asset Reconstruction and Securitisation Company Limited v M/s. Megi Agro Chem Limited
Case No.: C.P. No. 144/(IB)-MB-V/2021
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri. H.V. Subba Rao (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Megi Agro Chem Limited over a default of Rs. 119,55,66,488/- and reiterated that One Time Settlement Proposal given by Corporate Debtor would amount to acknowledgment of debt and would accordingly extend the period of limitation. The Bench observed that the Supreme Court in Dena Bank v C. Shivakumar Reddy had held that OTS proposals given by the Corporate Debtor would amount to an acknowledgement of debt within the meaning of section 18 of the Limitation Act, 1963 and would extend the period of limitation. Mr. Vakati Balasubramanyam Reddy has been appointed as the Interim Resolution Professional.
NCLT Issues Clarification To Spurious Notification Dated 8th August 2022 Regarding Conduct Of Online Hearing
The National Company Law Tribunal ("NCLT") has issued a notification dated 09.08.2022 clarifying that a previous spurious notification dated 08.08.2022, which was being circulated on Whatsapp since yesterday, is inauthentic and neither approved by the President of NCLT nor uploaded on the NCLT official website.
On 08.08.2022, a fabricated NCLT notification was being circulated on Whatsapp, which stated that due to shortage of Members throughout NCLT benches it has been decided that the NCLT will only hear urgent matters from 10.08.2022 onwards through VC and the same has been approved by the President of NCLT. The NCLT on 09.08.2022 has released a notification on its official website, clarifying that the notification dated 08.08.2022 is inauthentic, not issued by the NCLT or approved by its President and not even uploaded on the NCLT's official website. NCLT has directed to ignore the false notification as being invalid.
NCLT Mumbai Initiates Insolvency Against Topworth Urja & Metals, A Topworth Group Enterprise
Case Title: Bank of Baroda v Topworth Urja & Metals Limited
Case No.: CP (IB) 1807/MB/C-I/2018
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Topworth Urja & Metals Ltd. over a default of Rs. 218,14,20,222.95/- and has appointed Mr. Alok Kailash Saksena as the Interim Resolution Professional. Topworth Urja & Metals Limited is a company promoted by Mr. Abhay Lodha and belongs to the Topworth Group of companies, engaged in iron and steel sector business.
SBI Files Insolvency Proceedings Against Bajaj Hindusthan Sugar Ltd., A Bajaj Group Enterprise
Bajaj Hindusthan Sugar Ltd. ("BHSL") is a part of the Bajaj Group of Companies and is a leading manufacturer of sugar and ethanol in India. The Company had availed credit facilities from financial institutions including the State Bank of India and its accounts were declared Non Performing Asset after payment defaults. In a Regulatory filing dated 16.08.2022, BHSL under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has disclosed that State Bank of India has filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") before the National Company Law Tribunal, Allahabad Bench, seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against BHSL over payment defaults.
Section 14 Of IBC Does Not Differentiate Between Assessment, Quasi-Judicial Or Judicial Proceedings: NCLT Mumbai
Case Title: M/S Ravi Infrastructure & Projects v KSS Petron Private Limited
Case No.: CP (IB) 1202/MB/C-II/2017
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that Section 14 of the Insolvency and Bankruptcy Code, 2016 ("IBC") does not differentiate between assessment, quasi-judicial or judicial proceedings and moratorium is imposed on all proceedings irrespective of the nature. The Bench has set aside the assessment proceedings initiated by the Provident Fund Commissioner during the moratorium period.
Insolvency Plea Against Kishore Biyani Led Future Enterprises Ltd., NCLT Mumbai Issues Notice
Case Title: Foresight Innovations Pvt. Ltd. v Future Enterprises Ltd.
Case No.: C.P.(IB)-513(MB)/2022
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has issued notice to Future Enterprises Ltd. in a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") filed by Foresight Innovations Pvt. Ltd. for an alleged default of Rs. 1,58,78,942/-. In April 2022, Foresight Innovations Pvt. Ltd. had filed a petition under Section 9 of the IBC before NCLT, Mumbai Bench, seeking initiation of CIRP against FEL over an alleged default of Rs. 1,58,78,942/-.
Future Enterprises Ltd. ("FEL") is a part of the Mr. Kishore Biyani led Future Group of companies. While Future Retail Limited caters to the front end, FEL forms the backbone and links the retail arm with its infrastructure. FEL develops, owns and leases the retail infrastructure for the Future Group. Further, FEL also holds the Future Group's investments in subsidiaries and joint ventures including insurance, textile manufacturing, supply chain and logistics.
On A Request Made By CoC, NCLT Is Empowered To Remand Back Resolution Plan To CoC For Re-Consideration: NCLT Ahmedabad
Case Title: Asset Reconstruction Company (India) Limited v GPT Steel Industries Ltd.
Case No.: CP (IB) No./157/AHM/NCLT/ 2018
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Dr. Deepti Mukesh (Judicial Member) and Shri Ajai Das Mehrotra (Technical Member), has held that Adjudicating Authority has right to send back the resolution plan for reconsideration to the CoC, on a request made by the CoC in its commercial wisdom. Reliance was placed on NCLAT judgment in Bank of Maharashtra v Videocon Industries Ltd. & Ors., CA (AT) (Ins) No. 503 of 2021, wherein it was held that Adjudicating Authority is competent to send back a resolution plan to the CoC for re-consideration.
Investment Made By Director Of A Company Is Not An Operational Debt: NCLT Kolkata
Case Title: Akshat Pandey v Avighna Films Private Limited
Case No.: C.P. (IB) No. 178/KB/2021
The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor ("Judicial Member") and Shri Harish Chander Suri (Technical Member), has held that an investment made by the Director of a Company does not fall under the purview of an Operational Debt under the IBC.
The Bench observed that under Section 5(21) of the IBC, an Operational Debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the re-payment of dues arising under any law and payable to Government. Further, under Section 5(20) of the IBC an 'Operational Creditor' is a person to whom an Operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Based on the same, the Bench opined that Applicant is a director of the Corporate Debtor, who had invested money in the latter for production of a movie and an investment made by the Director of the Company does not fall under the purview of an Operational Debt under the IBC.
NCLT New Delhi Bench Re-Constituted, Matters To Be Heard Through Video Conferencing
The National Company Law Tribunal, New Delhi Bench, has been re-constituted vide a Circular dated 24.08.2022, issued by NCLT as per Section 419(3) of the Companies Act, 2013. The new NCLT New Delhi Bench shall comprise of:
NCLT New Delhi, Court Room No. 3 (Second Half)
- Shri Bachu Venkat Balaram Das (Judicial Member)
- Dr. Binod Kumar Sinha (Technical Member)
NCLT New Delhi, Court Room No. 4 (First Half)
- Shri Dharminder Singh (Judicial Member)
- Dr. Binod Kumar Sinha (Technical Member)
The Circular has been issued in partial modification of Order of even number dated 10.10.2021 and is applicable from 25.08.2022 till further orders. The reconstituted Bench shall take up matters through Video Conferencing.
NCLT Hyderabad Bench Re-Constituted, Matters To Be Heard Through Video Conferencing
The National Company Law Tribunal, Hyderabad Bench, has been re-constituted vide a Circular dated 24.08.2022, issued by NCLT as per Section 419(3) of the Companies Act, 2013. The new NCLT Hyderabad Bench shall comprise of:
NCLT Hyderabad, Court Room No. 2 (Second Half)
- Dr. Venkata Ramakrishna Badarinath Nandula(Judicial Member)
- Shri Veera Brahma Rao Arekapudi (Technical Member)
The Circular has been issued in partial modification of Order of even number dated 10.10.2021 and is applicable from 25.08.2022 till further orders. The reconstituted Bench shall take up matters through Video Conferencing.
Case Title: Anup Jhunjhunwala v ADEA Powerquips Private Limited
Case No.: CP (IB) No. 2079/KB/2019
The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has declined to initiate insolvency proceedings with respect to a debt disbursed by Director of the Corporate Debtor, as the loan was subsequently converted into equity shares. The Bench opined that NCLT is a summary court and cannot venture into detailed proceedings. "This Adjudicating Authority is a summary court and hence, we cannot venture into a detailed proceeding, the main points in a section 7 petition is to check whether there is a debt and default with the aid of the documents annexed with the pleadings. In the present case, the debt has been converted into equity shares, hence there is no debt at the present."
Case Title: M/s. Shapoorji Pallonji and Company Pvt. Ltd. v M/s. ASF Insignia SEZ Pvt. Ltd.,
Case No.: IB-197/ND/2022
The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri P.S.N. Prasad (Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has held that an entity that issues a 'Letter of Comfort' to a party, cannot be treated as Corporate Debtor or Corporate Guarantor within the framework of law.
Case Title: State Bank of India & Anr. v Shirpur Power Pvt. Ltd.
Case No.: CP(IB) No. 487/NCLT/AHM/2018
The National Company Law Tribunal ("NCLT"), Ahmedabad Bench, comprising of Shri Madan B Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has held that once a successful bidder has accepted and purchased the Corporate Debtor in slump sale under IBC, the bidder cannot request to convert that sale into a sale of Corporate Debtor as a going concern.
Section 7 Petition To Be Kept In Abeyance For 6 Months, Hoping Settlement: NCLT Indore
Case Title: State Bank of India v Krishidhan Seeds Pvt. Ltd.
Case No.: TP 82 of 2019 [CP(IB) 500 of 2018]
The National Company Law Tribunal ("NCLT"), Indore Bench, comprising of Shri Madan B Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has kept a Section 7 petition filed under IBC in abeyance for 6 months despite the all essentials for initiating CIRP being fulfilled. The Bench opined that in view of Supreme Court judgment in Vidarbha Industries Power Limited vs. Axis Bank Limited, (Civil Appeal No.4633 of 2021), the Corporate Debtor must be given some time to settle dues with creditors and if it fails to do so then orders would be passed accordingly.
NCLT Ahmedabad Rejects Resolution Plan That Selectively Favoured Creditors
Case Title: M/s. Sansar Texturisers Pvt. Ltd. v M/s. Polycoat India Pvt. Ltd.
Case No.: CP (IB) No. 295/7/NCLT/AHM/2019
The National Company Law Tribunal ("NCLT"), Ahmedabad Bench, comprising of Shri Madan B Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has declined to approve the Resolution Plan of the Successful Resolution Applicant that breached the waterfall mechanism of payments as given under Section 53 of IBC and selectively favoured certain creditors without according any reason for the same. The Bench held that the Plan ineffectively dealt with the interests of all stakeholders of the Corporate Debtor and was non-compliant of Section 30(2)(e) and Section 30(2)(f) of IBC.
Liquidation Last Resort', NCLT Directs COC To Re-Consider The Rejected Resolution Plan: NCLT Mumbai
Case Title: Edelweiss Asset Reconstruction Co. Ltd. v Octaga Green Power and Sugar Company Limited.
Case No.: CP (IB) 2987/MB/C-II/2018
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has reiterated that liquidation of the Corporate Debtor is the last resort and has accordingly directed the Committee of Creditors to reasonably re-consider the rejected Resolution Plan. The CoC comprised of only two creditors and approval was granted by one of them while the other rejected the Resolution Plan, hence the minimum statutory threshold of 66% votes for approval could not be met. The Bench observed that the prime objective of IBC is to rescue the Corporate Debtor in distress and to revive it. Further, the Corporate Debtor is a going concern with 125 workmen and employees whose livelihood would be affected in the event of liquidation.
Bank Of India Files Insolvency Plea Against Kishore BiyaniLed Future Lifestyle Fashions
Future Lifestyle Fashions Ltd. ("FLFL") is the flagship fashion business of the Mr. Kishore Biyani led Future Group of companies, which have dominated the retail sector in India for years. FLFL operates more than 300 stores across India and owns retail fashion chains such as Central and Brand Factory. In a Regulatory filing dated 29.08.2022, FLFL under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has disclosed that Bank of India has filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") before NCLT, Mumbai Bench, seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against FLFL. An advance service of the petition has been made M/s Saraf and Partners to FLFL.
Without Proof Of Disbursement No Financial Debt Can Be Claimed: NCLT Mumbai Reiterates
Case Title: Sudhir T Deshpande v Dhanada Corporation Limited
Case No.: CP (IB) 4671/MB/2018
The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has rejected a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 ("IBC") as there was no proof of disbursement of debt. The Bench held that without proof of disbursement an amount cannot be claimed as financial debt under IBC, as a disbursement is a sine qua non for any debt to qualify as financial debt.
IBBI
IBBI Suspends Deloitte Partner's IP Registration For 3 Years And Imposes Penalty
Case No.: No. IBBI/DC/124/2022
The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ("IBBI") vide an order dated 18.08.2022 has suspended the registration of Insolvency Professional, Mr. Savan Godiawala, for a period of three years and has also imposed a penalty of amount equivalent to payments made to Deloitte Touche Tohmatsu India LLP after 23.07.2019 till now. Mr. Savan Godiawala is a Professional Member of Indian Institute of Insolvency Professionals of ICAI (IIIP-ICAI) and an Insolvency Professional (IP) registered with the IBBI. He is also a partner of the Deloitte Touche Tohmatsu India LLP ("Deloitte").
The Disciplinary Committee observed that contraventions in terms of wrongful withdrawal of fee and hiring of related party without proper identification of scope of work with wrong manner of determination of fee in case of Mr. Savan's dealings in respect of Lanco Infra Tech Limited and laxity in filling application on avoidance transaction in respect of Shirpur Power Pvt. Ltd. were established beyond doubt.