NCLAT Resolution Professional Is Only Authorized To Operate Accounts Of Corporate Debtor : NCLAT Chennai Case Title: Beauty Etiole Pvt. Ltd. v C. Sanjeevi & Ors. Case No.: Company Appeal (AT) (CH) (Ins.) No. 316/2021 The National Company Law Appellate Tribunal, Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Kanthi Narahari (Technical Member),...
NCLAT
Resolution Professional Is Only Authorized To Operate Accounts Of Corporate Debtor : NCLAT Chennai
Case Title: Beauty Etiole Pvt. Ltd. v C. Sanjeevi & Ors.
Case No.: Company Appeal (AT) (CH) (Ins.) No. 316/2021
The National Company Law Appellate Tribunal, Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Kanthi Narahari (Technical Member), has held that the Resolution Professional is only authorized in law to exercise control over Bank Accounts operated by the Corporate Debtor and not otherwise.
NCLAT Holds Lease Rental As Operational Debt Under The Insolvency And Bankruptcy Code, 2016
Case Title: Jaipur Trade Expocentre Private Limited versus Metro Jet Airways Private Limited
Case No.: Company Appeal (AT) (Insolvency) No. 423 of 2021
The National Company Law Appellate Tribunal comprising of Justice Ashok bhushan, Justice Rakesh Kumar, Justice Rakesh Jain, Mr. Naresh Salecha and Mr. Barun Mitra held that the lease rental qualifies as an operational debt under the provisions of the Insolvency and Bankruptcy Code, 2016.
NCLAT noted that the definition of operational debt as mentioned under Section 5(21) of the Code provides that the operational debt means a claim arising out of provision of goods and services but the term "services" is not defined anywhere under the IBC.
The Bench referred to the license agreement which provides that the licensee shall pay all govt. taxed including GST and observed that the payment of GST is only provided for goods and service and the license agreement itself provided for payment of GST which clearly indicates that the license is taxed for services. It was also observed that if the agreement was not for services then there was no requirement of payment of GST. NCLAT also held that the term operation is derived from "operate" and "operating cost" is an expense incurred in the conduct of the principal activities of the enterprise and similarly operational debt is also a debt which is incurred in the conduct of the principal activities of the enterprise.
NCLAT Upholds Eligibility Of NTPC As A Resolution Applicant For Jhabua Power Ltd.: NCLAT Delhi
Case Title: Avantha Holdings Limited v Mr. Abhilash Lal
Case No.: Company Appeal (AT) (Insolvency) No. 304 of 2022.
The National Company Law Appellate Tribunal ("NCLAT") Principal Bench comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Mr. Naresh Salecha (Technical Member), has upheld the eligibility of NTPC Ltd. under Section 29A of the IBC to submit Resolution Plan for Jhabua Power Ltd.
The NCLAT Bench observed that Section 12A does not entitle Promoters of the Corporate Debtor to submit a Settlement Plan as is claimed by the Appellant. The pre-condition of accepting any withdrawal Application under Section 12A is on approval by CoC by 90% of its voting shares. CoC having never granted its approval, Section 12A route was never open for withdrawal of CIRP. The Bench opined that Section 12A proposal cannot be forced upon the lenders.
On Recusal From Hearing, Members Can't Transfer Case To Another Bench In Another Place : NCLAT Delhi
Case Title: Sonia Khosla & Anr. v Montreaux Resorts (P) Ltd. & Ors.
Case No.: Comp. App. (AT) No. 118 of 2021
The National Company Law Appellate Tribunal ("NCLAT") Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Dr. Alok Srivastava (Technical Member), has held if Members of NCLT Bench recuse from hearing a case, they cannot transfer the same to another NCLT Bench situated in another city. The matter should be posted before the President/Acting President to be assigned to a different coram.
NCLAT Delhi Stays The CIRP Of 'La Residentia Developers' As Parties Enter Settlement
Case Title: Amrapali LA-Residentia Flat Buyers Welfare Association (ALRFBWA) v LA Residentia Developers Pvt. Ltd. & Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 704 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. Naresh Salecha (Technical Member), has stayed the Corporate Insolvency Resolution Process ("CIRP") of LA Residentia Developers Pvt. Ltd. as parties have entered settlement. The Bench has directed the Interim Resolution Professional to not take any further steps in the CIRP. The order was passed on 07.07.2022.
NCLT
Case Title: L&T Finance Limited v Tikkavarapu Venkaram Reddy
Case No.: CP (IB) No. 88/95 of IBC/HDB/2021
The National Company Law Tribunal, Hyderabad Bench, comprising of Dr. N. Venkata Ramakrishna Badarinath (Judicial Member) Shri Veera Brahma Rao Arekapudi (Technical Member), has initiated insolvency resolution process against Mr. Tikkavarapu Venkatarami Reddy, who is the Personal Guarantor of M/s Deccan Chronicle Holdings Ltd. in respect of the credit facilities availed by Deccan Chronicle Holdings from L&T Finance Ltd. The order was passed on 24.06.2022.
Bid For Corporate Debtor As 'Going Concern' To Be Given Preference Over The Standalone Bid; NCLT Ahmedabad
Case Title: Arrhum Tradelink Private Limited v Vineeta Maheshwari & Ors.
Case No.: CP(IB) 320 of 2018
The National Company Law Tribunal, Ahmedabad Bench, comprising of Madan B. Gosavi (Judicial Member) Kaushalendra Kumar Singh (Technical Member), has held that when two equal bids are received in an auction, then Corporate Debtor must be sold to the bidder who purchases it as a 'going concern', rather than to a bidder who purchases the assets at a standalone basis. The object of the Insolvency and Bankruptcy Code, 2016 (IBC) is not only to clear the debts of the Corporate Debtor, therefore, the liquidator must protect the existence of the Corporate Debtor and avoid its death by ultimately pushing it into dissolution.
"In our considered opinion since the liquidator allowed the system to run even after the successful bidder had offered the highest amount and exactly at that point of time within two minutes the Applicant offered the same price. The fact is that the Applicant had offered the same price to purchase the Corporate Debtor as a going concern, the liquidator ought to have considered this aspect. It is the object of the Insolvency and Bankruptcy Code, 2016 i.e., to maximize the value of the assets of the corporate person and to promote entrepreneurship etc."
Suspended Management Must Be Provided With A Copy Of The Resolution Plan: NCLT Indore Reiterates
Case Title: Chandraudai Automobiles Pvt. Ltd. v Rajpal Abhikaran Pvt. Ltd.
Case No.: CP(IB) 6 of 2020
The National Company Law Tribunal, Indore Bench, comprising of Shri Madan B. Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has held that a copy of the Resolution Plan must be provided to the Suspended Management of the Corporate Debtor and has also directed the Resolution Professional in the matter to consider the relevant objections raised by the Suspended Management to the Resolution Plan.
The Bench further held, "Considering the above, we hereby direct the resolution professional to provide the resolution plans to the suspended management and then convene a meeting of the CoC and the CoC will deliberate on the resolution plans afresh and either reject them or approve them with the requisite majority, after which, the further procedure detailed in the Code and the Regulations will be followed. Further, the resolution professional and CoC may consider the other objections of the suspended management, if relevant. It is to be done within two weeks."
NCLT Have The Power To Replace Liquidator Under Insolvency And Bankruptcy Code, 2016: NCLT Chennai
Case Details: Axis Bank v. Venkata Sivakumar
Case No.: CP 1307/IB/2018
The National Company Law Tribunal (NCLT) , Chennai Bench, comprising of Justice S Ramathilagam and Mr. Anil B Kumar held that the NCLT have the power to replace the liquidator during the liquidation process of a Corporate Debtor under the Insolvency and Bankruptcy Code, 2016.
NCLT observed that though IBC does not provide for grounds on which liquidator can be removed but recourse can be made to Section 276 of the Companies Act, 2013 which provides for ground of removal of Liquidator such as misconduct, fraud, professional incompetence and others. The Bench held that in the present case, the liquidator shared the valuation report of the Corporate Debtor with the prospective scheme proponents and the said act would amount to failure to exercise due and diligence and therefore, the liquidator can be changed. Consequently, NCLT allowed the application and removed Mr. Venkata Sivakumar as the liquidator and appointed Mr. S Hari Karthik as the liquidator of Jeypore Sugar.
Even Though Limitation Is Not Set Up As Defence, Tribunal Should Examine: NCLT Chennai
Case Title: Bank of Baroda v Rajiv Rai
Case No.: CP/89/IB/2021
The National Company Law Tribunal (NCLT), Chennai Bench, comprising of Justice (Retd.) S. Ramathilagam (Judicial Member) and Shri Anil Kumar B (Technical Member), has held that limitation applies to an application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 ("IBC") for initiating insolvency process against a Personal Guarantor. The Bench dismissed an application which was filed after six years of default.
The NCLT Bench observed that the loan recall notice was issued on 06.11.2014 and the application has been filed on 10.04.2021, i.e. after 6 years. It was held that Section 238A of IBC applies to entire provisions of IBC and Article 136 of the Limitation Act, 1963 was also applicable to an application filed under Section 95 of IBC. "In the said circumstances, as per Section 3 of the Limitation Act, 2013, even Court/Tribunal is required to examine the debt on the point of limitation, even though such a defence has not been setup."
Case Title: Bank of Baroda v Divya Jyoti Industries Ltd.
Case No.: C.P. (IB) 628/2018
The National Company Law Tribunal ("NCLT"), Indore Bench, comprising of Shri Madan B. Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has held that if a claim of a creditor appears in the audited balance sheet of the Corporate Debtor, then it is the duty of the Resolution Professional to include such claims in the Information Memorandum.
IBBI
IBBI Notifies Amendments To Insolvency Professional Regulations
Notification No. IBBI/2022-23/GN/REG088
The Insolvency and Bankruptcy Board of India ("IBBI") vide a notification dated 04.07.2022 in the Gazette of India (Extraordinary) has notified amendments to the IBBI (Insolvency Professionals) Regulations, 2016. These amendments have come into force on 04.07.2022.
The following clauses have been inserted in the Insolvency Professional Regulations:
- Clause 8B: Insolvency professional shall disclose his relationship, if any, with the corporate debtor, other professionals engaged by him, financial creditors, interim finance providers, and prospective resolution applicants to the insolvency professional agency of which he is a member, within the specified time period.
- Clause 8C: An insolvency professional shall ensure disclosure of the relationship, if any, of the other professionals engaged by him with himself, the corporate debtor, the financial creditor, the interim finance provider, if any, and the prospective resolution applicant, to the insolvency professional agency of which he is a member, within the time specified.
- Clause 15A: An insolvency professional shall prominently state in all his communications to a stakeholder, his name, address, e-mail, registration number and validity of authorisation for assignment, if any, issued by the insolvency professional agency of which he is a member.
- Clause 25B: An insolvency professional shall raise bills or invoices in his name towards his fees, and such fees shall be paid to him through banking channel.
- Clause 25C: An insolvency professional shall ensure that the insolvency professional entity or the professional engaged by him raises bills or invoices in their own name towards their fees, and such fees shall be paid to them through banking channel.
- Clause 27A: An insolvency professional shall, while undertaking assignment or conducting processes, exercise reasonable care and diligence and take all necessary steps to ensure that the corporate person complies with the applicable laws.
- Clause 27B: An insolvency professional shall not include any amount towards any loss, including penalty, if any, in the insolvency resolution process cost or liquidation cost, incurred on account of non-compliance of any provision of the laws applicable on the corporate person while conducting the insolvency resolution process, fast track insolvency resolution process, liquidation process or voluntary liquidation process, under the Code.
Shri.Jayanti Prasad Takes Charge As Whole-Time Member Of IBBI
Press Release. No. IBBI/PR/2022/30 5th July, 2022.
The Insolvency and Bankruptcy Board of India ("IBBI") on 05.07.2022 has issued a press release stating that Shri.Jayanti Prasad has taken charge as whole-time Member of Insolvency and Bankruptcy Board of India in New Delhi.
He belongs to 1986 batch Indian Audit and Accounts Service officer, superannuated as Deputy Comptroller & Auditor General (Human Resources and International Relations). Before joining IBBI, he had accomplished thirty-five years of experience in the civil services, national and international assignments, having held key positions within the Office of Comptroller and Auditor General of India and in the United Nations (UN).