Supreme Court IBC | Resolution Plan Requires Closer Examination If Plan Envisages Use Of Asset Owned By Statutory Authority: Supreme Court Case Title: Greater Noida Industrial Development Authority Versus Prabhjit Singh Soni & Anr. Case No.: CIVIL APPEAL NOS.7590-7591 OF 2023 The Supreme Court bench comprising Chief Justice of India Dr. DY Chandrachud, Justice...
Supreme Court
IBC | Resolution Plan Requires Closer Examination If Plan Envisages Use Of Asset Owned By Statutory Authority: Supreme Court
Case Title: Greater Noida Industrial Development Authority Versus Prabhjit Singh Soni & Anr.
Case No.: CIVIL APPEAL NOS.7590-7591 OF 2023
The Supreme Court bench comprising Chief Justice of India Dr. DY Chandrachud, Justice J.B. Pardiwala, and Justice Manoj Misra, has observed that ordinarily feasibility and viability of a resolution plan is best decided by the commercial wisdom of the Committee of Creditors (“CoC”), however, when the resolution plan envisages the use of asset/land not owned by the Corporate Debtor but by a third party, which is a statutory body, bound by its own rules and regulations having statutory flavor, then there has to be a closer examination of the plan's feasibility.
IBC | Claim Submitted With Proof Cannot Be Overlooked Merely Because It Was Submitted In Wrong Form: Supreme Court
Case Title: Greater Noida Industrial Development Authority Versus Prabhjit Singh Soni & Anr.
Case No.: Civil Appeal No(s).7590-7591/2023
The Supreme Court bench comprising Chief Justice of India Dr. DY Chandrachud and Justice JB Pardiwala and Justice Manoj Misra, has observed that the claim submitted by the Resolution Applicant (“RA”) under the Corporate Insolvency Resolution Process (“CIRP”) cannot be rejected/overlooked merely on the fact that the claim submitted appears to be in a different form other than the form in which the claim needs to be submitted.
The creditor submitted a claim to the Resolution Professional under Form C of Regulation 8 of CIRP Regulations 2016, as a financial creditor. The claim of the resolution applicant was rejected by the Committee of Creditors (“CoC”), National Company Law Tribunal (“NCLT”), and National Company Law Appellate Tribunal (“NCLAT”) on the note that the resolution applicant being Operational Creditor needs to submit their claim under Form B of Regulation 7 of CIRP Regulations 2016, as Operational Creditor.\
The Bench held, No doubt, the record indicates that the appellant was advised to submit its claim in Form B (meant for operational creditor) in place of Form C (meant of financial creditor). But, assuming the appellant did not heed the advice, once the claim was submitted with proof, it could not have been overlooked merely because it was in a different Form.”
NCLAT
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.
Case Title: Nimai Gautam Shah, Resolution Professional of Sintex Plastics Technology Ltd. vs. RBL Bank Ltd.
Case No.: Company Appeal (AT) (Insolvency) No.82 of 2024
The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) held that the Adjudicating Authority ought to have granted an exclusion/extension of time when the Resolution Plan received in the process was required to be considered to fulfill the object of the IBC.
Section 9 Petition Not Served Upon Corporate Debtor, NCLAT Delhi Sets Aside NCLT Order Initiating CIRP
Case title: Satish Kumar Sethi v Varsha & Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 217 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 set aside an NCLT order whereby a petition under Section 9 of IBC was admitted and CIRP was initiated without serving a copy of petition to the Corporate Debtor.
The Bench has directed that the petition under Section 9 of IBC be revived before the NCLT for fresh consideration and the Corporate Debtor has been granted time to file a Reply.
NCLAT Delhi: Payment By Third Party For Corporate Debtor For Raw Material Or Working Capital Is “Financial Debt”
Case Title: Mr. Rajeev Kumar Jain vs. Uno Minda Ltd. and Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 947 of 2022
The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Naresh Salecha (Technical Member), has held that the payment of raw material made by a third party at the instructions of Corporate Debtor or financial assistance towards working capital constitutes 'Financial Debt' under IBC.
Department Of State Tax Submits Claim Post Approval Of Resolution Plan By CoC, NCLAT Delhi Upholds Rejection Of Claim
Case title: Department of State Tax v Dar Media Pvt. Ltd. & Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 73 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 held that a claim submitted post approval of resolution plan by the Committee of Creditors (“CoC”) is not liable to be admitted. Accordingly, the Bench has upheld the rejection of claim of Department of State Tax, which was submitted post approval of resolution plan by CoC.
NCLAT Delhi Sets Aside NCLT Order Permitting Suspended Director To Enter Settlement During Pendency Of Plan Approval Application
Case title: Nehru Place Hotels and Real Estates Private Limited V Sanjeev Mahajan & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 1715-1716 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 set aside a direction given by the NCLT, whereby the Suspended Director was given opportunity to enter settlement during the pendency of application filed by Resolution Professional for approval of Resolution Plan. The Bench has held that since the application for approval of resolution plan is pending for over a year, the NCLT ought to have decided the same.
On 08.01.2023, the Committee of Creditors (CoC) approved the Resolution Plan submitted by Resolution Applicant with 100% vote share and rejected the Settlement Proposal submitted by Suspended Director of Corporate Debtor with 100% vote share. Accordingly, the Resolution Professional filed an application seeking approval of Resolution plan. The Suspended Director also filed an application seeking consideration of its revised settlement proposal.
The NCLT granted another opportunity to Suspended Director to enter settlement with CoC and kept the application for approval of resolution plan in abeyance.
NCLAT Delhi: Definition Of Financial Debt U/S 5(8) Does Not Provide Disbursal To Be Made To Corporate Debtor Only
Case Title: Mr. Rajeev Kumar Jain vs. Uno Minda Ltd. and Anr.
Case No.: Company Appeal (AT) (Insolvency) No. 947 of 2022
The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Naresh Salecha (Technical Member) held that the definition of Financial Debt under Section 5(8) of IBC does not use the expression that disbursal should be made to the Corporate Debtor only.
NCLAT Delhi: NCLT Has Jurisdiction To Decide The Issue Of Trademark U/S 60(5)(c) Of IBC
Case Title: Gloster Cables Ltd. vs. Fort Gloster Industries Ltd. and Ors.
Case No.: Comp. App (AT) (Ins) No. 1343 of 2019
The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Mr. Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) held that NCLT has the jurisdiction to decide the whether Trademark forms part of the assets of the Corporate Debtor under Section 60(5)(c) of IBC.
NCLAT Delhi: Liquidator Can Pursue Writ Petition On Behalf Of Corporate Debtor When NCLT Has Allowed Liquidator To Prosecute As Per Sec. 33(5) Of IBC
Case Title: CA Rajeev Bansal Liquidator of Isolux Corsan India Engineering & Construction Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1653 of 2023
The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) held that the Liquidator can pursue a Writ Petition on behalf of the Corporate Debtor when the Adjudicating Authority has allowed the Liquidator to prosecute on behalf of the Corporate Debtor as per Section 33(5) of IBC.
NCLT
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.
NCLT Ahmedabad: Amount Invested In A Joint Venture Project Of A Promoter And Investor Does Not Constitute Financial Debt Under IBC
Case Title: Deccan Charters Pvt. Ltd. vs. GSEC Monarch and Deccan Aviation Pvt. Ltd.
Case No.: CP(IB)/100(AHM)2022
The National Company Law Tribunal ('NCLT') Ahmedabad, comprising Justice Mrs. Chitra Hankare (Judicial Member) and Mr. Velamur G Venkata Chalapathy (Technical Member), has held that the amount invested in a Joint Venture Project of a promoter and investor is not a Financial Debt under IBC.
NCLT Chennai: Liquidation Is A Time-Bound Process And Liquidator Is Accountable To Explain Delay In Liquidation Process
Case Title: State of Tamil Nadu vs. S. Rajendran, Liquidator of Daehsan Trading India Pvt. Ltd. and Anr.
Case No.: IA/1318/IB/2020 in TCP/111/IB/2017
The National Company Law Tribunal ('NCLT') Chennai, comprising Justice Sanjiv Jain (Judicial Member) and Mr. Venkataraman Subramanian (Technical Member) held that Liquidation is a time-bound process and the Liquidator being made accountable is required to explain if there is any delay caused in the liquidation process.
Appeal Under Section 42 Of IBC Would Only Lie Against An 'Adjudicating' Order Of The Liquidator: NCLT Mumbai
Case Title: Sai Projects & Engineers Private Limited v Kalpyog Chemicals Private Limited
Case No.: C.P.(IB)/1619(MB)/C-III/2019
The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Smt. Lakshmi Gurung (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), has held that an appeal under Section 42 of IBC would only lie against an 'adjudicating' order passed by the Liquidator. The Bench has rejected an appeal filed under Section 42 of IBC, whereby Employees Provident Fund Organization challenged a letter sent by the Liquidator at a time when he stood discharged from his duties due to dissolution of the Corporate Debtor.
NCLT Mumbai: Society Not Entitled To Recover Past Arrears Of Applicant's Purchase In The Auction From Liquidator Of Corporate Debtor
Case Title: Mr. Hitendra Vishanji Nagda and Ors. vs. Prime Plaza Premises Co-operative Society Ltd.
Case No.: CP (IB) No. 4302/MB/C-II/2018
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice Shri. Kuldip Kumar Kareer (Judicial Member) and Shri. Anil Raj Chellan (Technical Member) held that the Society is not entitled to recover the past arrears in respect of the unit purchased by the Applicant in the auction from the Liquidator of the Corporate Debtor.
NCLT Mumbai Allows Withdrawal Of Liquidation Application On Receipt Of Resolution Plan
Case Title: Salil Shashank Kulkarni v Rubique Technologies India Private Limited
Case No.: I.A. No. 4372 of 2023 in CP (IB) No. 4304 (MB) of 2019
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice Shri. Kuldip Kumar Kareer (Judicial Member) and Shri. Anil Raj Chellan (Technical Member) allowed the withdrawal of the liquidation application since one resolution plan was received by the Committee of Creditors ('CoC') during the pendency of the liquidation application upholding the aim of IBC.
NCLT Mumbai: CIRP Can't Be Initiated U/S 7 Of IBC Based On Transfer Agreement For Purchase Of Debentures From Financial Creditors
Case Title: Edelweiss Asset Reconstruction Company Ltd. vs. Ajmera Realty and Infra India Ltd.
Case No.: CP (IB) No.877/MB/2023
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice V.G. Bisht (Retd.) (Judicial Member) and Mr. Prabhat Kumar (Technical Member) held that the Corporate Insolvency Resolution Process ('CIRP') under Section 7 of IBC cannot be initiated based on Transfer Agreement/promise for purchase of Debentures from Financial Creditors.
NCLT Imposes Rs. 2.5 Lakh Cost On Personal Guarantor For Delayed Filing Of Reply, NCLAT Delhi Reduces Cost To Rs. 25,000
Case title: Rakesh Nayar v State Bank of India
Case No.: Company Appeal (AT) (Insolvency) No. 270 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 reduced the cost imposed by NCLT on Personal Guarantor for 6 days delay in filing of Reply from Rs. 2.5 Lakhs to Rs. 25,000. The Bench opined that the imposition of Rs. 2.5 Lakh cost is excessive as delay in filing of Reply to application under Section 95 of IBC was of mere 6 days.
NCLT Mumbai Orders Dream 11's Sports Platform Owner Sporta Technologies Pvt. Ltd. Into CIRP Under IBC
Case Title: Piyush Jani, RP for Reward Business Solutions Pvt. Ltd. vs. Sporta Technologies Pvt. Ltd.
Case No.: CP No. 775/(IB)-MB-V/2021
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice Reeta Kohli (Judicial Member) and Shri. Anil Raj Chellan (Technical Member) allowed the petition and ordered Sporta Technologies Pvt. Ltd. (Corporate Debtor) into the Corporate Insolvency Resolution Process ('CIRP') under Section 9 of the Insolvency and Bankruptcy Code, 2016 ('IBC'). The Corporate Debtor is Dream 11's sports platform owner.
NCLT Orders Liquidation Of Mehul Choksi-Promoted Gitanjali Gems
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has ruled for the liquidation of Gitanjali Gems, a jewelry retailing company headed by fugitive Mehul Choksi, under Section 33 of IBC.
“On perusal of records, it is evident that the assets of the Corporate Debtor were under attachment by the Directorate of Enforcement under the enforcement under the provisions of the PMLA, 2002 and considering the bleak chances of insolvency resolution amid the ongoing investigations and attachment of assets, the CoC had resolved in its 06th Meeting held on 05th April, 2019 to liquidate the Corporate Debtor by a majority of 90.16% voting in favour.”
The tribunal further added that, “The CoC with requisite voting as given under Section 33(2) has approved the liquidation of Corporate Debtor in view of bleak chances of receiving any resolution plan for the reasons discussed hereinbefore. This Tribunal has very limited powers of judicial review in such matters of commercial wisdom.”
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.”
Case Title: Amit Dineshchandra Patel vs. Reserve Bank of India
Citation: 2024 LiveLaw (Guj) 10
The Gujarat High Court bench comprising of Justice Sangeeta K. Vishen, has observed that the Lender Banks must provide a reasonable opportunity to the Borrower by furnishing a copy of Audit Reports and allowing him to submit a representation before classifying the account as fraud.
In 2021, the Corporate Debtor (Company) was admitted into a Corporate Insolvency Resolution Process ('CIRP') under Insolvency and Bankruptcy, Code, 2016. The Company's loan accounts were declared as fraud by the consortium banks.