Nature Of Financial Debt Doesn’t Change Upon Breach Of Consent Terms: NCLAT Delhi

Case Title: Priyal Kantilal Patel v IREP Credit Capital Pvt. Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1423 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held the nature of financial debt would not change on account of breach of the consent terms. The Bench has upheld the initiation of CIRP against a Corporate Debtor upon a subsequent Section 7 petition, which was filed after the Corporate Debtor breached the consent terms entered into in the earlier Section 7 petition.

“The mere fact that in earlier company petition, consent terms was arrived, which consent terms was breached by the corporate debtor, the financial debt which was claimed by the financial creditor would not be wiped out nor the nature and character of financial debt shall be changed on account of breach of the consent terms. Permitting such interpretation shall be giving premium to the corporate debtor who breach the consent terms.”

NCLAT Delhi Sets Aside The Order Of Private Sale Of Bhuvee Stenovate Private Limited

Case Title: State Bank Of India V. Bhuvee Stenovate Pvt. Ltd. & Ors.

Case No: Comp. App. (AT) (Ins.) No. 1013 of 2022

The National Company Law Appellate Tribunal (NCLAT) Bench has set aside the order of NCLT Kolkata which permitted a private sale of Bhuvee Stenovate Private Limited for an amount of Rs.61.05 Crores, even though the request for Private Sale had been made by the Intervener purchaser Laser Solar LLP.

The order and consequent sale was set aside by the NCLAT Bench, while laying down the law relating to sale proceeds during liquidation. It was held as under:

· Liquidator has to conduct the Private Sale and give opportunity to others to compete

· Liquidator has to seek permission from the Adjudicating Authority to proceed with a Private Sale

· Liquidator has to prepare a strategy to approach interested buyers for assets to be sold by a Private Sale.

· Adjudicating Authority could not have concluded the sale of the Corporate Debtor without giving an opportunity to the liquidator to take steps for Private Sale.

Assets Of Subsidiary Company Cannot Be Dealt With In CIRP Of Holding Company: NCLAT Delhi

Case Title: Greater Noida Industrial Development Authority (GNIDA) v Roma Unicon Designex Consortium

Case No.: Company Appeal (AT) (Insolvency) No. 180 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member), has held that the assets of the Subsidiary Company cannot be dealt with in the CIRP of Holding Company. A parcel of land was leased by Greater NOIDA Authority to the subsidiary of Corporate Debtor (Holding Company). In the CIRP of Corporate Debtor, the approved Resolution Plan proposed to transfer the subsidiary’s land to the Successful Resolution Applicant, without obtaining Greater NOIDA Authority’s consent. The Bench has set aside the orders approving the resolution plan of the Successful Resolution Applicant.

“Misconceived, Not Maintainable”: NCLAT Delhi Dismisses Appeal Filed By IBBI

Case Title: Insolvency & Bankruptcy Board of India v GTL Infrastructure & Ors.

Case No.: Company Appeal (AT) (Ins) No. 103 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has dismissed an appeal filed by the Insolvency and Bankruptcy Board of India (“IBBI”), challenging the dismissal of a Section 7 petition in a matter to which IBBI was not a party. The IBBI filed the appeal while contending that the petition was dismissed upon a wrong interpretation of Section 7 by the Adjudicating Authority. The NCLAT Bench observed that IBBI is not aggrieved by the Adjudicating Authority’s order and has nothing to do with the litigation between the Financial Creditor and Corporate Debtor.

Partial Payment Of PF & Gratuity Dues Violative Of Section 30(2)(E) Of IBC: NCLAT Chennai Reiterates

Case Title: Mrs. C.G. Vijyalakshmi v Shri Kumar Rajan & Ors.

Case No.: Company Appeal (AT) (CH) (Ins.) No. 29 of 2021

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that Provident Fund and Gratuity dues have to be paid in full to the workmen/employees till the CIRP commencement date. The Bench held that the approved resolution plan violated Section 30(2) of IBC, by paying only 35.13% of the PF and Gratuity dues and thus treating the workmen/employees as Secured Creditors.

Section 9 IBC Application Not A Suit, Hence Bar U/S 69(2) Of Partnership Act Not Attracted: NCLAT Delhi

Case Title: Rourkela Steel Syndicate v Metistech Fabricators Pvt. Ltd.

Case No.: Company Appeal (AT)(Insolvency) No. 924 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that an application under Section 9 of IBC is not a suit and hence, the bar under Section 69(2) of Indian Partnership Act, 1932 is not applicable to a Section 9 application. The Bench relied on the Supreme Court judgment in B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019 11 SCC 633), wherein it was held that Section 5 of Limitation Act, 1963 is fully applicable to applications under Section 7 & 9 of IBC. Since Section 5 of Limitation Act is not applicable to a suit, this indicates that applications under Section 7 & 9 are not a suit.

Liquidator Has No Jurisdiction To Reject/Modify Already Admitted Claims, Can Approach AA For Modification: NCLAT Delhi

Case Title: Vijay Kumar Gupta v Canara Bank

Case No.: Company Appeal (AT) (Ins.) No. 1015 of 2021

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the Liquidator has no jurisdiction to reject or modify already admitted claims, if he receives any additional information. The Liquidator can only approach the Adjudicating Authority for modification of the admitted claims.

Income Tax Dues Are Government Dues; Income Tax Authority Is A Secured Creditor: NCLAT Delhi

Case Title: Principal Commissioner of Income Tax & Anr. v M/s Assam Company India Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 243 of 2022.

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that the dues of the Income Tax dues are Government dues and Income Tax Authorities are a secured creditor. The Bench placed reliance on Supreme Court judgment in State Tax Officer v Rainbow Papers Limited, Civil Appeal No. 1661 of 2020, wherein it was held that, “the State is a secured creditor under the GVAT Act. Section 3(30) of the IBC defines secured creditor to mean a creditor in favour of whom security interest is credited. Such security interest could be created by operation of law. The definition of secured creditor in the IBC does not exclude any Government or Governmental Authority.”

Principal Amount Paid In Full, Section 9 Application Not Maintainable For Recovery Of Interest: NCLAT Delhi

Case Title: Rohit Motawat v Madhu Sharma

Case No.: Comp. App. (AT) (Ins) No. 1152 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that an application under Section 9 of IBC being pursued only for interest component, while principal amount has been paid in full, is not maintainable. The spirit of IBC is resolution of debt and not for ‘recovery’. Reliance was placed on Karnataka High Court judgment in Jyothi Limited Vs. Boving Fouress Limited, Company Petition No. 48 of 1998, wherein it was held that interest cannot be claimed over an invoice which is a unilateral document, unless it is signed by the parties.

No Acknowledgement Of Liability Based On An Unrealized Cheque: NCLAT Chennai

Case Title: M/s. Primee Silicones (Chennai) Pvt. Ltd. v M/s. UCAL Fuel Systems Ltd.

Case No.: Company Appeal (AT) (CH) (Ins.) No. 299 of 2021

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a cheque which has not been encashed, cannot amount to an ‘acknowledgement of liability’ in terms of Section 18 of the Limitation Act, 1963.

NCLAT Extends Benefit Of Limitation Computation To Appeals Filed Between 01.11.2022 To 23.12.2022

F.No. 23/4/2022-Estt./NCLAT

On 24.12.2022 the National Company Law Appellate Tribunal (“NCLAT”) had issued fresh directions for computation of limitation for filing of appeals before NCLAT. Earlier the benefit of order dated 24.12.2022 was only available to appeals filed on and after 24.12.2022. However, the NCLAT vide an Order dated 21.02.2023 has extended the benefit of Order dated 24.12.2022 to appeals which have been filed between 01.11.2022 to 23.12.2022.

Directions For Computation Of Limitation

On 24.12.2022, the NCLAT had issued fresh directions for computation of limitation for filing of appeals before NCLAT. The directions are as follows:

• The Limitation shall be computed from the date of e-filing.
• The hard copy has to be filed within 7 days of e-filing. However, the Competent Authority is at liberty to notify to extend the period of filing hard copy in case of any unforeseen exigency.
• In a case where hard copy is filed after 7 days, the appeal will be placed before the Tribunal for appropriate order.
• The requirement of filing Appeals by electronic mode shall continue along with mandatory filing of the Appeals as per Rule 22 of the NCLAT Rules, 2016.

NCLAT Delhi Stays Insolvency Proceedings Against Zee Entertainment Enterprises Ltd.

Case Title: Punit Goenka v Indusind Bank Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 232/2023.

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has stayed the NCLT order dated 22.02.2023, whereby Corporate Insolvency Resolution Process (“CIRP”) was initiated against Zee Entertainment Enterprises Ltd. Zee Entertainment Enterprises Ltd. (formerly Zee Telefilms Ltd.) is an Indian media conglomerate owned by Essel Group, engaged in media and entertainment business. Zee had given India its first private satellite TV channel in 1992 and now also runs Over The Top (OTT) online streaming platform named Zee5.

Defences Of ‘Pre-Existing Dispute’ Or ‘No Amount Due’ Can Be Raised Directly In Reply To Section 9 Application: NCLAT Delhi

Case Title: Greymatter Entertainment Pvt. Ltd. v Pro Sportify Pvt. Ltd.

Case No.: COMPANY APPEAL (AT) (INSOLVENCY) NO. 1043 of 2021

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), has held that IBC does not prevent the Corporate Debtor from establishing defences of ‘Pre-existing dispute’ or ‘No amount due’ through its Reply to Section 9 application and supporting documents, even if it failed to respond to the Section 8 Demand Notice within 10 days of receipt.

Shifting Entire Blame On IRP Not Justified; Creditors Must Also Play Catalytic Role In CIRP: NCLAT Delhi

Case Title: Shri Guru Containers v Jitendra Palande

Case No.: Company Appeal (AT) (Insolvency) No.106 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench comprising of Justice Ashok Bhushan (Judicial Member) and Shri Barun Mitra (Technical Member), has held that creditors must not shift the entire blame on the IRP on grounds of non-performance of duty and make him the scapegoat. It is equally important for the creditors to play a catalytic role in the insolvency resolution process given the creditor-driven regime of IBC. The rigours of similar standards of discipline should also apply on the creditors.

NCLAT Delhi Sets Aside Rs. 25000 Cost Imposed On Resolution Professional By AA

Case Title: Sanjai Kumar Gupta v Gouri Prasad Goenka

Case No.: Company Appeal (AT) (Insolvency) No.70 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has set aside an order whereby the Adjudicating Authority had imposed a cost of Rs. 25,000/- on Resolution Professional for allegedly filing a frivolous application. The Bench observed that the orders of the Adjudicating Authority depicted that Suspended Director was neither cooperating with the Resolution Professional nor complying with the directions of Adjudicating Authority. Further, the Adjudicating Authority directed personal appearance of Suspended Director twice and noted the non-cooperation of the latter. The sudden turn of events where the application was rendered infructuous and frivolous by the Adjudicating Authority is not explained in the order dated 02.12.2022.

NCLAT Delhi Upholds Liquidation Of M/S Ajanta Offset And Packaging Limited

Case Title: Govind Prasad Todi & Anr. v Satya Narayan Guddeti & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 1125 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has directed the liquidation of the Corporate Debtor, M/s Ajanta Offset and Packaging Limited. Bench had also set aside the approval of the Resolution Plan by the Suspended Board of Directors. It has been held that the Successful Resolution Applicants, being the suspended promoters of the Corporate Debtor, cannot avail the exemptions from ineligibility under clause (c) and (h) of Section 29A of the Code. They could not submit a Resolution plan by registering as an MSME in view of section 240A of the Code after the initiation of the Corporate Insolvency Resolution Process.

NCLT

TDS Payments Do Not Amount To An Acknowledgement Of Debt: NCLT

Case Title: Kalpesh Jaysukh Shah versus M/s Arch Pharmalabs Limited

Case No.: CP (IB) 3460/MB/2019

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 TDS (tax deducted at source) payments do not amount to an acknowledgment of debt. Reliance was placed on the NCLAT judgment in P.M. Cold Store Pvt. Ltd. v. Goouksheer Farm Fresh Pvt. Ltd. & Anr., in which it was held that the fact that the corporate debtor has paid TDS on interest payable cannot be considered as an acknowledgment in writing of the liability by the corporate debtor, and therefore, such a TDS payment will not have any effect as an acknowledgment of the debt.

NCLT Mumbai Benches Re-Constituted W.E.F 11th February 2023

File No.: 10/03/2023-NCLT

The National Company Law Tribunal, Mumbai Bench, has been re-constituted vide a Circular dated 09.02.2023 issued by NCLT. Justice Pradeep Narhari Deshmukh (Judicial Member) of NCLT Mumbai Bench has demitted office on 10.02.2023 on completion of his tenure.

The re-constituted NCLT Mumbai Benches shall comprise of:

NCLT Mumbai, Court Room No. 1 (First Half)

1. Shri Venkata Subba Rao Hari (Judicial Member)
2. Shri Shyam Babu Gautam (Technical Member)

NCLT Mumbai, Court Room No. 2 (Second Half)

1. Shri Kuldip Kumar Kareer (Judicial Member)
2. Shri Shyam Babu Gautam (Technical Member)

NCLT Hyderabad Invokes Rule 153; Permits Filing Of Rejoinder Post Closure Of Opportunity

Case Title: State Bank of India & Ors. v India Power Corporation Limited

Case No.: CP (IB) NO. 205/7/HDB/2021

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), invoked its powers under Rule 153 of the NCLT Rules and permitted the Financial Creditor to file its Rejoinder, even after the opportunity to do so stood closed by an earlier order of NCLT. The Bench further held that an application to condone the delay and to receive the Rejoinder which was filed post closure of opportunity, is not in the nature of a Review Application. The Bench treated such application as an application for condonation of delay.

No Simultaneous CIRP Proceedings Against Same Corporate Debtor: NCLT Ahmedabad

Case Title: Vrundavan Residency Pvt. Ltd. v Mars Remedies Pvt Ltd.

Case No.: CP (IB) 300/NCLT/AHM/2020

The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Dr. Deepti Mukesh (Judicial Member) and Shri Ajai Das Mehrotra (Technical Member), has held that there cannot be simultaneous CIRP proceedings against the same Corporate Debtor. The Bench declined to initiate CIRP against a Corporate Debtor which was already admitted into CIRP, but the Supreme Court had stayed the CIRP proceedings during pendency of an appeal.

NCLT Mumbai Excludes Moratorium Period In Calculation Of Limitation

Case Title: Piramal Capital & Housing Finance Ltd. v Manpreet Developers Pvt. Ltd.

Case No.: CP (IB) No.700/MB-IV/2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has held that if an entity which itself was admitted into CIRP and has undergone moratorium, files an application under IBC, then the period of moratorium would be excluded while computing limitation of such application. The Bench has admitted an application under Section 7 of IBC filed by DHFL (taken over by Piramal) against a Corporate Debtor and has excluded the moratorium period undergone by DHFL while computing limitation of the application.

NCLT Ahmedabad Bench Re-Constituted W.E.F 15th FEBRUARY 2023

File No.: 10/03/2023-NCLT

The National Company Law Tribunal, Ahmedabad Bench, has been re-constituted vide a Circular dated 09.02.2023 issued by NCLT. Dr. Deepti Mukesh (Judicial Member) of NCLT Ahmedabad Bench (Court No. II) has demitted office on 14.02.2023 on completion of her tenure.

The re-constitution has been made in partial modification of orders of even number dated 03.03.2022 and is effective from 15.02.2023 until further orders. The re-constituted NCLT Ahmedabad Bench shall comprise of:

NCLT Ahmedabad, Court Room No. II (Second Half)

1. Shri M.B. Gosavi (Judicial Member)
2. Shri Ajai Das Mehrotra (Technical Member)

Shri M.B. Gosavi (Judicial Member) shall first take up the matters of NCLT Ahmedabad Court No. I and NCLT Indore, and then attend the matters before NCLT Ahmedabad Court No. II.

Resolution Applicant Wilfully Fails To Implement Plan, NCLT Mumbai Orders Liquidation Without Monitoring Committee’s Mandate

Case Title: BMW Financial Services Pvt. Ltd. v S.K. Wheels Pvt. Ltd.

Case No.: C.P.(I.B.) No. 4301 of 2018

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Ms. Madhu Sinha (Technical Member), has ordered liquidation of the Corporate Debtor as the Resolution Applicant willfully failed to implement the resolution plan. The order of liquidation has been made without the mandate of the Implementation and Monitoring Committee (IMC) and to secure the asset value of the Corporate Debtor. Further, action has been initiated under Section 74 of IBC to penalize the Resolution Applicant for wilful non-implementation of the plan.

NCLT Mumbai Initiates Insolvency Proceedings Against Siti Networks Ltd.

Case Title: Indusind Bank Ltd. v Siti Networks Ltd.

Case No.: C.P. No. 690/IBC/MB/2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Ms. Madhu Sinha (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against Zee Entertainment Enterprises Ltd. Mr. Rohit Mehra has been appointed as the Interim Resolution Professional. Siti Networks Ltd. (“Corporate Debtor”) is engaged in the business of multi-system operator and provides television services across India. Corporate Debtor is a part of the Essel Zee Group promoted by Dr. Subhash Chandra and was a 100% subsidiary of erstwhile Zee Telefilms Ltd. (now Zee Entertainment Enterprises Ltd.).

NCLT Chennai Bench Re-Constituted W.E.F 27th February 2023

File No.: 10/03/2023-NCLT

The National Company Law Tribunal, Chennai Bench, has been re-constituted vide a Circular dated 24.02.2023 issued by NCLT. The re-constituted NCLT Chennai Bench shall comprise of:

NCLT Chennai, Court Room No. II (First Half)

1. Shri Sanjiv Jain (Judicial Member)
2. Shri Sameer Kakar (Technical Member)

HIGH COURT

Borrowers Pays Full Compromise Amount: Allahabad High Court Directs Bank To Reconsider Wilful Default

Case Title: Konarkagro Polytech Pvt. Ltd. & Ors. v Bank Of Baroda & Ors. [WRIT - C No. - 35965 of 2022]

Citation: 2023 LiveLaw (AB) 59

The Allahabad High Court Bench, comprising of Justice Manoj Kumar Gupta and Justice Vikram D. Chauhan, has directed the Bank to re-consider its decision of declaring the Borrowers (Petitioners) as wilful defaulters, as a One Time Settlement (OTS) was subsequently entered between the Bank and Borrowers and full compromise amount has been towards the Petitioner Company’s accounts. The Bench also granted liberty to the Borrowers to avail legal remedy if the Bank’s decision on their representation is not favourable to them.HIGH COURT