NCLAT Stays The Constitution Of COC In The CIRP Of Bombay Rayon Fashions Ltd.

Case Title: Prashant Agarwal v Vikash Parasprampuria

Case No.: Company Appeal (AT) (Ins.) No. 690 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Kanthi Narahari (Technical Member), has stayed the constitution of the Committee of Creditors ("CoC") in the Corporate Insolvency Resolution Process ("CIRP") of Bombay Rayon Fashions Ltd.

The Respondent, Vikash Parasprampuria, has proposed settlement by submitting that it would be satisfied if Bombay Rayon pays the principal amount alongwith the CIRP cost towards settlement. Bombay Rayon is yet to seek instructions on the settlement proposal. The Bench has stayed the constitution of CoC in the CIRP of the Corporate Debtor, while the CIRP process would otherwise continue. The matter has been next listed on 07.07.2022 for the Appellant to accept or reject the settlement proposal of the Respondent. The order was passed on 15.06.2022.

NCLT

NCLT Mumbai Initiates Insolvency Proceedings Against Nirmal Lifestyle (Kalyan) Pvt. Ltd.

Case Title: Srei Equipment Finance Limited v Nirmal Lifestyle (Kalyan) Private Limited

Case No.: CP (IB) No.1337/MB/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Rajesh Sharma (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Nirmal Lifestyle (Kalyan) Pvt. Ltd. ("Corporate Debtor") and has appointed Mr. DilipKumar Natvarlal Jagad as the Interim Resolution Professional. The order was passed on 16.06.2022.

The Adjudicating Authority observed that two defaults in Loan repayment dated 05.02.2020 and 05.03.2020 were amounting to Rs. 1,12,50,000/-. The remaining repayment defaults between 05.04.2020 and 05.09.2020 were hit by Section 10A of the IBC and therefore, could be considered as default. The Bench observed that the actual default made by the Corporate Debtor was Rs.1,12,73,387/- along with interest and hence CIRP could be initiated, as the default meets the minimum threshold of Rs. 1 Crore.

Corporate Debtor Cannot Be Dragged Into CIRP Mala Fide For Any Purpose Other Than Resolution Of Insolvency: NCLT Mumbai

Case Title: Gateway Offshore Private Limited and Anr. v Runwal Realtors Private Limited

Case No.: CP (IB) 954/MB/C-I/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Judicial Member) and Mr. Kapal Kumar Vohra (Technical Member), has held that a written contract cannot be treated as a pre- requisite to prove the existence of a financial debt and the Adjudicating Authority must be satisfied that the Corporate Debtor is not being dragged into Corporate Insolvency Resolution Process ("CIRP") mala fide for any purpose other than the resolution of the Insolvency. The order was passed on 10.06.2022.

Claims That Were Not A Part Of The Resolution Plan, Can't Be Claimed After Approval Of The Resolution Plan: NCLT Mumbai Reiterates

Case Title: State Bank of India v Rohit Ferro Tech Limited

Case No.: C.P. (IB) No. 1214/KB/2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has held that claims or reliefs which were not a part of the Resolution Plan, cannot be claimed after the said Resolution Plan is approved by the Adjudicating Authority. The Bench held that as the Applicant had not approached the Adjudicating Authority while the Resolution Plan was under consideration, therefore, the Applicant had no right to file any application or seek any relief after the approval of the Resolution Plan. The Order was passed on 14.06.2022.

Limitation Is Refreshed Each Year When Corporate Debtor Admits Debt In Its Financial Statements: NCLT Mumbai Initiates CIRP Against GIT Textiles

Case Title: UCO Bank v GIT Textiles Manufacturing Limited

Case No.: C.P (IB) No. 600/KB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against GIT Textiles Manufacturing Ltd. for a default that had occurred in 2012 and has held that limitation refreshed each subsequent year when the Corporate Debtor acknowledged the financial debt in its Financial Statements. The Bench held that due to the specific admissions of debt by the Corporate Debtor, Section 18 of the Limitation Act, 1963 was applicable and it resulted in fresh computation of limitation period of three years from the date of acknowledgment in each balance sheet. "Since the last of such acknowledgments was made on 31.03.2019, the limitation period would last up till 31.03.2022. Thus, the present petition was held to be well within limitation."

HIGH COURT

Whether Income Tax Demand And Penalty Extinguished In CIRP? Delhi High Court Stays Demand Notice

Case Title: Indo Enviro Integrated Solution Limited v ACIT

Citation: W.P.(C) 8899/2022

The Delhi High​​ Court bench comprising of Justice Manmohan and Justice Manmeet Pritam Singh stayed an income tax assessment order, consequential demand and notice of penalty, which were assailed on grounds of being in contravention of the order of the National Company Law Tribunal (NCLT).

An application was filed by the Union of India (through the Ministry of Corporate Affairs) under Sections 241 and 242 of the Companies Act before the NCLT based on recommendations of the Ministry of Finance, Department of Economic Affairs. It was alleged that operations of the IL & FS Group of Companies were being carried out in a manner prejudicial to the public interest. The application was made under Sections 241 and 242 of the Companies Act. The Union of India could not file an application under the IBC as in India there exists no concept of group level insolvency resolution and, at the relevant date, financial services were outside the ambit of the IBC. The issue raised was whether government debts can be extinguished under the Companies Act resolution process (which is not the same as the IBC process). The court, while listing the matter on September 27, 2022, has stayed the order as well as consequential income tax notices of demand and penalty.