NCLAT 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....
NCLAT
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.
Refiling After Removal Of Defects Is Not A Fresh Filing: NCLAT New Delhi
Case Title: VR Ashok Rao v TDT Copper Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 780 of 2022
A five judge bench of the National Company Law Appellate Tribunal (NCLAT) comprising of Justice Ashok Bhushan, Justice Rakesh Kunar, Justice M Satyanarayana Murthy, Ms. Shresha Merla and Mr. Kanthi Narahari held that refiling of an appeal after curing the defects beyond the period of seven days will amount to a fresh filing and any delay even beyond the period prescribed under Section 61 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016) or Section 421 of the Companies Act, 2013 in refiling the appeal can be condoned on sufficient justification.
Earlier, a three-judge bench of the NCLAT raised doubts on the law laid down by the NCLAT in Mr. Jitendra Virmani Vs. MRO-TEK Realty Ltd. & Ors & Arul Muthu Kumaara Samy Vs. Registrar of Companies and vide order dated 12.08.2022 referred the matter to the larger bench by making following observations: "In view of the Judgment of the Hon'ble Supreme Court in "Northern Railway" (supra) and the Judgment in the matter of "P Ram Bhoopal" (supra), we are of the view that view taken by this Tribunal in the matter of "Mr. Jitendra Virmani" (supra) and "Arul Muthu Kumaara Samy" (supra) does not day down the correct law."
OTS Being Under Consideration Does Not Invalidate An Order For Liquidation: NCLAT Delhi
Case Title: Ram Bhaj Jain v Tarun Batra & Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 1011 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 mere fact that the Corporate Debtor's One Time Settlement was under consideration, does not invalidate an order passed by the Adjudicating Authority for liquidation of the Corporate Debtor. "The CoC in its commercial wisdom having refused to approve the plan submitted by the Appellant that decision is not open for any judicial review. In facts of the present case, the fact that OTS of the Appellant is under consideration also does not render the order of liquidation invalid in any manner."
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 the Adjudicating Authority under Rule 43 of NCLT Rules, 2016, has ample powers to call for any information or evidence as it may consider necessary in its discretion.
NCLT
Loan Converted Into Equity - NCLT Procedure Being Summary In Nature, Can't Initiate CIRP: NCLT Kolkata
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."
Entity Issuing A 'Letter Of Comfort' Is Not A Corporate Debtor Or Guarantor Within Framework Of Law: NCLT Delhi
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.
Once Bidder Accepts Corporate Debtor In Slump Sale, Can't Request For Conversion Of Sale Into Sale As A Going Concern: NCLT Ahmedabad
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 Biyani Led 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.
Case Title: Sauria Corporation v Kohinoor Pulp & Paper Private Limited
Case No.: C.P. (IB) No. 511/KB/2018
The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor ("Judicial Member") and Shri Balraj Joshi (Technical Member), has held that a Liquidator is empowered to decide the mode of sale of Corporate Debtor which is in best interest for maximization of asset value. The Bench further held that the Liquidator is not bound by the recommendations of Stakeholders' Consultation Committee while determining such mode of sale.