IBC - Liquidator Can't Cancel Valid Auction On Mere Expectation Of Fetching Higher Price; No Unfettered Discretion: Supreme Court

Case Title: Eva Agro Feeds Private Limited V. Punjab National Bank & Anr., Civil Appeal No(S). 7906/2021

Citation: 2023 LiveLaw (SC) 753

The Supreme Court Bench comprising Justice B V Nagarathna and Justice Ujjal Bhuyan, has held that even though the highest bidder in an auction sale under the Insolvency and Bankruptcy Code, 2016 has no indefeasible right to demand acceptance of his bid, the liquidator, if such a bid is rejected must furnish reasons for the same in the rejection order.

The mere expectation of the Liquidator that a higher price may be obtained is not a good ground to cancel an otherwise valid auction. The Court also held that once an auction is complete, the liquidator does not have absolute or unfettered discretion to cancel the auction, unless it is found that fraud or collusion had vitiated it.

“..while the highest bidder has no indefeasible right to demand acceptance of his bid, the Liquidator if he does not want to accept the bid of the highest bidder has to apply his mind to the relevant factors. Such application of mind must be visible or manifest in the rejection order itself.”

IBC | Cannot Ask Successful Resolution Applicant To Pay Arrears Payable By Corporate Debtor For Grant/Restoration Of Electricity Connection: Supreme Court

Case Title: Tata Power Western Odisha Distribution Limited & Anr. V Jagannath Sponge Private Limited

Citation: 2023 LiveLaw (SC) 788

The Supreme Court has held that under the Insolvency and Bankruptcy Code, 2016 (“IBC”), once the Resolution Plan stands approved by the National Company Law Tribunal (NCLT), the Electricity Department cannot demand payment of arrears, which were payable by the Corporate Debtor, from the Successful Resolution Applicant for restoration/grant of electricity connection.

The Bench comprising Justice Sanjiv Khanna and Justice S.V.N Bhatti, has held that the ‘clean slate principle’ would stand negated if the Successful Resolution Applicant is asked to pay the arrears payable by the Corporate Debtor for the grant of an electricity connection in her/his name.

IBC- Admitting Claims After Resolution Plan Has Been Accepted By COC Would Make CIRP An Endless Process: Supreme Court

Case Title: M/S. RPS Infrastructure Ltd V. Mukul Kumar

Citation: 2023 LiveLaw (SC) 773 | Civil Appeal No. 5590 of 2021

The Supreme Court Bench comprising bench of Justice Sanjay Kishan Kaul and Justice Sudhanshu Dhulia, has held that admitting claims after the Resolution Plan has been accepted by the Committee of Creditors (COC) under IBC, even though the Adjudicating Authority has yet to approve the plan, would make the Corporate Insolvency Resolution Process (CIRP) an endless process.

The Court was considering whether the claim pertaining to an arbitral award, in appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (Act), could be admitted after the resolution plan had been approved by the COC. “We find it difficult to unleash the hydra-headed monster of undecided claims on the resolution applicant” the Apex Court said while dismissing the plea of the claimant.

“The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. As described above, in Essar Steel, [1 (2020) 8 SCC 534] the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.”

NCLAT

While Application For Approval Of Resolution Plan Is Pending Before AA, CoC Can’t Convene Meeting To Consider Other Resolution Plans: NCLAT Delhi

Case title: Indian Overseas Bank v M/s. Rathi TMT Saria Pvt. Ltd. & Ors.

Case No.: Comp. App. (AT) (Ins) No.1134 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member) has held that when a Resolution Plan approved by the CoC is pending consideration before the Adjudicating Authority for approval, the CoC is not permitted to hold any meeting for considering other resolution plans.

Proceedings Under Section 13 Of Companies Act, 2013 Can’t Be Questioned In Proceedings Under Section 7 Of IBC: NCLAT Delhi

Case title: Ishan Singh v Spaze Towers Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No.226 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that orders passed in the proceedings under Section 13 of the Companies Act, 2013 cannot be questioned in proceedings under Section 7 of IBC.

The Bench further ruled that relevancy of a document is to be examined by the Adjudicating Authority after taking the concerned document on record and hearing the contentions of the parties.

Shri Arun Baroka Takes Oath As A Technical Member In NCLAT

On 01.09.2023, Shri Arun Baroka has taken oath as a Technical Member in the National Company Law Appellate Tribunal (“NCLAT”), Delhi.

Mr. Baroka is an IAS officer who recently retired from the post of the Secretary, Department of Chemicals & Petro-chemicals, Government of India. He is an Electrical Engineering graduate from IIT, Delhi and has done MBA (Marketing and Systems) from IIM, Kolkata.

On 29.08.2023, the NCLAT had issued a notice intimating regarding the oath taking ceremony of Mr. Baroka, which took place on 01.09.2023 in the Chairperson Court, NCLAT Delhi.

NCLAT Chennai: Advances By Property Buyers To Real Estate Developers Are ‘Borrowing’ And Financial Debt

Case Title: Venkat Rao Marpina vs. Vemuri Ravi Kumar

Case No.: C.P.(IB)/107/7/HDB/2021

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member), has held that since homebuyers have been added in the Explanation to Section 5(8)(f) of IBC, thus, the advances given by Property buyers to real estate developer will be considered as ‘borrowing’, and such amounts raised from allottees falls within the scope of Section 5(8)(f) of IBC.

NCLAT New Delhi: Responsibility Lies On The Claimant To Provide Necessary Details To Substantiate Its Claim

Case Title: Engineering Mazdoor Parishad Devas Through Its General Secretary vs. Teena Saraswat Pandey

Case No.: Comp. App. (AT) (Ins.) No. 1200 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), dismissed an application seeking consideration and settling the claim of the Engineering Mazdoor Parishad Devas workers (Appellant) by the Resolution Professional (“RP”). Further, the Appellant has also challenged the order allowing the application for the approval of the Resolution Plan.

The NCLAT held that it is the Claimant's responsibility to provide all necessary records to support their claim. The Appellate Tribunal pointed out that there were no documents submitted to substantiate the workmen's claim.

NCLT Proceeded Ex-Parte Against CD On First Hearing After Notice, NCLAT Delhi Says Sufficient Opportunity Not Given As Per Rule 37(2) Of NCLT Rules

Case title: Ami Ashutosh Majumdar v Omkara Assets Reconstruction Pvt. Ltd. & Anr.

Case No.: Company Appeal (AT) (Ins.) No. 1492 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has set aside an ex-parte order initiating CIRP against the Corporate Debtor. The NCLT had proceeded ex-parte against the Corporate Debtor on the first hearing held post issuance of notice and when the time period to file a Reply had not lapsed. The Bench held that the NCLT ought to have granted an opportunity to file Reply to the Corporate Debtor.

“In view of the fact that notice by registry was received and served on 04.11.2022 which fact is not disputed, Adjudicating Authority ought to have given one more opportunity to file a reply. Proceeding ex-parte and reserving order is not giving sufficient opportunity to the appellant as contemplated by Rule 37 Sub Rule 2 of the NCLT Rule, 2016.”

NCLAT Delhi: CIRP Can’t Be Modified On Project Basis On Request Of Financial Creditor When CIRP Is Against Company

Case Title: Kotak Mahindra Bank Ltd. vs. Resolution Professional of Universal Buildwell Pvt. Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 1000 of 2021

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), dismissed an application seeking to confine the Corporate Insolvency Resolution Process (“CIRP”) only in respect of one project of Universal Buildwell Pvt. Ltd. (Corporate Debtor).

The NCLAT held that when the NCLT initially ordered the commencement of insolvency proceedings against the Corporate Debtor based on the application of the Financial Creditor, it could not have modified the initiation of CIRP by confining it to only one project.

NCLAT Chennai Terminates Insolvency Proceedings Against Café Coffee Day’s Parent Company, Parties Enter Settlement

Case Title: Malavika Hegde v Indusind Bank Ltd. & Anr.

Case No.: Company Appeal (AT) (CH) (Ins) No.235/2023

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mrs. Shreesha Merla (Technical Member), has terminated the Corporate Insolvency Resolution Process (CIRP) of M/s Coffee Day Global Ltd. which was initiated by the NCLT on 20.07.2023, as the Parties have entered settlement and the debt has been assigned.

M/s Coffee Day Global Ltd. is the parent company of the Coffee Day Group and Coffee Day Enterprises Ltd., which runs a multinational coffeeshop named ‘Café Coffee Day’.

Resolution Professional Not Obligated To Share All Information With Shareholders Of Corporate Debtor: NCLAT Delhi

Case Title: M/s Dauphin Cables Pvt. Ltd. v Mr. Praveen Bansal

Case No.: Company Appeal (AT) Insolvency No. 971, 972 & 973 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that IBC provisions do not indicate that all information collected by the Resolution Professional is required to be shared with Shareholders of the Corporate Debtor upon their request. The Bench upheld the NCLT order whereby Resolution Professional was permitted to submit documents in a sealed cover before the NCLT.

Rule 43 Of NCLT Rules | NCLT Can Call For Information/Evidence From Parties Including Resolution Professional: NCLAT Delhi

Case Title: M/s Dauphin Cables Pvt. Ltd. v Mr. Praveen Bansal

Case No.: Company Appeal (AT) Insolvency No. 971, 972 & 973 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that under Rule 43 of the NCLT Rules, 2016, the NCLT is empowered to call information or evidence from the parties, including the Resolution Professional.

“The Adjudicating Authority is thus fully empowered for calling information or evidence from the parties. The power under Rule 43 shall also encompass power to call information from Resolution Professional.”

IBC Not A Debt Recovery Mechanism, NCLAT Chennai Reiterates

Case Title: Mr. Maulik Kirtibhai Shah vs. United Telecom Limited.

Case No.: Company Appeal (AT) (CH) (Ins) No. 268/2023

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member), has held that IBC is not a ‘recovery mechanism’. Moreover, the definition of ‘Operational Debt’ cannot be widely interpreted to include any agreement between the parties that does not specifically pertain to the supply of goods or services as such an interpretation would undermine the purpose and scope of the Code.

NCLAT New Delhi: Time Taken For Restoration And Withdrawal Can’t Be Excluded, Delay Beyond Condonable Limit

Case Title: Harish Kumar vs. Solitaire Infomedia Pvt. Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 348 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra Dash (Technical Member), dismissed an application seeking condonation of delay in filing the appeal under Section 61 of IBC against the order by which petition under Section 7 of IBC has been rendered non-maintainable.

The Tribunal held that the period of delay in filing an appeal under Section 61 of IBC, from the date of restoration application to the date on which it was disposed of as withdrawn cannot be excluded by giving the benefit of Section 14 of the Limitation Act, 1963.

NCLAT New Delhi: CIRP Cannot Be Initiated For Defaults During The Excluded Timeline Under Section 10A Of IBC

Case Title: Vikram Kumar vs. Aranca (Mumbai) Private Limited.

Case No.: Company Appeal (AT) (Insolvency) No. 836 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member), has declined to that default falls within the excluded period specified in Section 10-A of IBC as the Notice for invoking the Bank Guarantee addressed to the Corporate Guarantor was issued on 25.08.2020. CIRP cannot be initiated for defaults that occurred within a 12-month period starting from 25.03.2020.

Resolution Professional Not Obligated To Share All Information With Shareholders Of Corporate Debtor: NCLAT Delhi

Case Title: M/s Dauphin Cables Pvt. Ltd. v Mr. Praveen Bansal

Case No.: Company Appeal (AT) Insolvency No. 971, 972 & 973 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that IBC provisions do not indicate that all information collected by the Resolution Professional is required to be shared with Shareholders of the Corporate Debtor upon their request. The Bench upheld the NCLT order whereby Resolution Professional was permitted to submit documents in a sealed cover before the NCLT.

Rule 43 Of NCLT Rules | NCLT Can Call For Information/Evidence From Parties Including Resolution Professional: NCLAT Delhi

Case Title: M/s Dauphin Cables Pvt. Ltd. v Mr. Praveen Bansal

Case No.: Company Appeal (AT) Insolvency No. 971, 972 & 973 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that under Rule 43 of the NCLT Rules, 2016, the NCLT is empowered to call information or evidence from the parties, including the Resolution Professional.

“The Adjudicating Authority is thus fully empowered for calling information or evidence from the parties. The power under Rule 43 shall also encompass power to call information from Resolution Professional.”

IBC Not A Debt Recovery Mechanism, NCLAT Chennai Reiterates

Case Title: Mr. Maulik Kirtibhai Shah vs. United Telecom Limited.

Case No.: Company Appeal (AT) (CH) (Ins) No. 268/2023

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member), has held that IBC is not a ‘recovery mechanism’. Moreover, the definition of ‘Operational Debt’ cannot be widely interpreted to include any agreement between the parties that does not specifically pertain to the supply of goods or services as such an interpretation would undermine the purpose and scope of the Code.

NCLAT New Delhi: Time Taken For Restoration And Withdrawal Can’t Be Excluded, Delay Beyond Condonable Limit

Case Title: Harish Kumar vs. Solitaire Infomedia Pvt. Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 348 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra Dash (Technical Member), dismissed an application seeking condonation of delay in filing the appeal under Section 61 of IBC against the order by which petition under Section 7 of IBC has been rendered non-maintainable.

The Tribunal held that the period of delay in filing an appeal under Section 61 of IBC, from the date of restoration application to the date on which it was disposed of as withdrawn cannot be excluded by giving the benefit of Section 14 of the Limitation Act, 1963.

NCLAT New Delhi: CIRP Cannot Be Initiated For Defaults During The Excluded Timeline Under Section 10A Of IBC

Case Title: Vikram Kumar vs. Aranca (Mumbai) Private Limited.

Case No.: Company Appeal (AT) (Insolvency) No. 836 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member), has declined to that default falls within the excluded period specified in Section 10-A of IBC as the Notice for invoking the Bank Guarantee addressed to the Corporate Guarantor was issued on 25.08.2020. CIRP cannot be initiated for defaults that occurred within a 12-month period starting from 25.03.2020.

When Claimant Fails To Substantiate Its Claim, No Error Committed By RP In Admitting Claim As Per Balance Sheet Of Corporate Debtor: NCLAT Delhi

Case Title: Engineering Mazdoor Parishad Devas Through Its General Secretary v Teena Saraswat Pandey

Case No.: Comp. App. (AT) (Ins.) No. 1200 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that a Claimant is obliged to substantiate its claim, failing which, the Resolution Professional’s decision to admit the claim based on the balance sheet of the Corporate Debtor cannot be faulted.

“It is the responsibility of the Claimant to bring all relevant record to substantiate the claim. The Resolution Professional having admitted the claim of Rs.96 lakhs and odd on the basis of balance sheet of the Corporate Debtor, no error can be said to have been committed by the Resolution Professional for accepting the claim of Rs. 96 lakhs and odd. The Adjudicating Authority also held that there are no documents filed to support the claim of the workmen.”

NCLAT New Delhi Sets Aside NCLT Order : Liability Of Interest Accrued During Section 10A Period Not To Be Excluded Aside

Case Title: Beetel Teletech Ltd. vs. Arcelia IT Services Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1459 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has set aside an NCLT Order wherein it was held that the Corporate Debtor cannot claim the benefit of Section 10A of IBC since the default has been committed prior to the commencement of the excluded period under Section 10A of IBC. Further, the view that the liability of interest that accrued during the said period should not be computed for triggering CIRP is erroneous. As per Section 60 of the Indian Contract Act, 1872 when a debtor makes a payment without specifying how it should be allocated, the creditor has the discretion to decide how to apply it to clear any remaining debts and the creditor can use it to its maximum advantage.

NCLT

NCLT Delhi Admits Imperia Structures Ltd. Into Insolvency

Case Title: Chirag Jain & Ors. v Imperia Structures Ltd

Case No.: IB-525/PB/2022

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Mahendra Khandelwal (Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against Imperia Structures Ltd., which launched a real estate project named “Imperia Byron/Mindspace” in Sector- 62, Gurgaon, Haryana. Mr. Gaurav Katiyar has been appointed as the Interim Resolution Professional (IRP).

NCLT Mumbai Initiates Insolvency Process Against Sahara India Medical Institute Ltd., A Sahara Group Company

Case Title: Aprn Enterprises Private Limited v Sahara India medical Institute Limited

Case No.: CP (IB) No.412/MB-IV/2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Prabhat Kumar (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against Sahara India Medical Institute Limited, which is a part of the Sahara Group, promoted by Mr. Subrata Roy. Mr. Jayesh Natvarlal Sanghrajka has been appointed as the Interim Resolution Professional (IRP).

NCLT Delhi: Financial Creditor Cannot Invoke CIRP Against Corporate Debtor To Recover Debt From Homebuyer

Case Title: South Indian Bank Limited vs. Magic Info Solutions Private Limited

Case No.: (IB) – 136(ND)/2023

The National Company Law Tribunal (“NCLT”), New Delhi, comprising of Mr. Bachu Venkat Balaram Das (Judicial Member) and Mr. Atul Chaturvedi (Technical Member), has dismissed the petition to initiate Corporate Insolvency Resolution Process (CIRP) against Magic Info Solutions Private Limited (Corporate Debtor).

The NCLT held that the only financial institutions directly disbursing loans against consideration of the time value of money have the right and right to file a petition to invoke the CIRP since they would invariably be interested in the revival of the Corporate Debtor, as opposed to other financial institutions without any financial debt, who would be solely concerned with the recovery of the debt. The Financial Creditor cannot invoke CIRP against the Corporate Debtor to recover its loan from the homebuyer.

NCLT Ahmedabad Admits CIRP Petition Against Rasna Pvt. Ltd.

Case Title: Bharat Road Carrier Pvt Ltd. v. Rasna Pvt Ltd.

Case No.: CP(IB) 317 of 2019

The National Company Law Tribunal (“NCLT”), Ahmedabad, comprising of Mr. Shammi Khan (Judicial Member) and Mr. Sameer Kakar (Technical Member), has admitted the petition to initiate Corporate Insolvency Resolution Process (CIRP) against Rasna Pvt Ltd. (Corporate Debtor). It held that the Corporate Debtor’s argument as to the dispute appears to be a moonshine since it has not been able to justify the cause and reasons behind the dispute to the Operational Creditor.

NCLT Chandigarh: New Management Of The Corporate Debtor Not Responsible For Non-Compliance Of MCA Filing Before The Insolvency Commencement Date

Case Title: Skyhigh Infraland Private Limited vs. Monitoring Committee of Corporate Debtor

Case No.: CP (IB) No. 161/Chd/Hry/2018

The National Company Law Tribunal (“NCLT”), Chandigarh Bench, comprising of Mr. Harnam Singh Thakur (Judicial Member) and Mr. Subrata Kumar Dash (Technical Member), allowed an application filed by Corporate Debtor, which was facing difficulty in making the statutory compliances with the office of Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA).

The Tribunal directed the ROC and held that the current management of the corporate debtor should not be held accountable for any wrongdoings or misconduct committed by the previous promoters and directors of the Corporate Debtor.

NCLT Chandigarh: Suspended Directors Have No Vested Right In The Removal Of Liquidator

Case Title: Kulwinder Singh Makhni (Ex-Director, M/s. Punjab Basmati Rice Ltd.) vs. Mr. Sanjay Kumar Aggarwal

Case No.: CP (IB) No.340/Chd/PB/2018

The National Company Law Tribunal (NCLT), Chandigarh, comprising of Mr. Harnam Singh Thakur (Judicial Member) and Mr. Subrata Kumar Dash (Technical Member), has held that Suspended Director of Corporate Debtor does not have the authority to recommend the liquidator's removal and the power rests with the Stakeholders Consultation Committee (SCC) as per Regulation 31A (11) substituted by Liquidation Process (Second Amendment) Regulations, 2021.

NCLT Hyderabad Rejects Section 9 Petition For Incompliance Of Rule 5(2) Of Insolvency And Bankruptcy (Application To Adjudicating Authority) Rules, 2016

Case Title: M/s Tata International Limited v M/s Trident Sugars Ltd

Case No.: CP (IB) No. 221/9/HDB/2022

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has rejected a petition under Section 9 of IBC since the creditor failed to serve the Demand Notice as per the procedure laid down in Rule 5(2) Of Insolvency And Bankruptcy (Application To Adjudicating Authority) Rules, 2016.

The Corporate Debtor claimed that the Demand Notice was served to the Security Guard while the office was closed during Covid-19 pandemic. The Operational Creditor failed to place on record any document to depict that service of Demand Notice was made through Speed Post with “acknowledgement due”. Further, no proof was placed on record to show that Demand Notice was served through email to the Director of Corporate Debtor.

NCLT Kolkata: Resolution Professional Deserves Remuneration For Labor And Services As Approved By CoC

Case Title: Mr. Sanjeev Jhunjhunwala vs. Mr. Bimal Kanti Choudhury

Case No.: C.P. (IB) No. 1582/KB/2019

Bidisha Banerjee (Judicial Member) and Shri Balraj Joshi (Technical Member), has allowed an application seeking payment of Corporate Insolvency Resolution Process (“CIRP”) costs and pass an Order appointing another person as the Resolution Professional (“RP”) for the Corporate Debtor. The Tribunal held that an Insolvency Professional engaged as an RP deserves remuneration for their labor and services as approved by the CoC and once the fees have been approved it cannot be reduced without the consent of the Resolution Professional.

Post Occurrence Of Default, Parties Entered Into MoU And Re-Scheduled Payments: NCLT Hyderabad Declines To Initiate CIRP

Case Title: M/s Tata International Limited v M/s Trident Sugars Ltd

Case No.: CP (IB) No. 221/9/HDB/2022

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has rejected a petition filed under Section 9 of IBC based upon a default post which the Parties entered into a Memorandum of Understanding (MoU) and re-scheduled the payments. The Bench observed that the Section 9 petition did not disclose any default which occurred post execution of the MoU. Hence, no CIRP can be initiated upon a default which has ceased to exist in view of subsequent payment re-scheduling by the Parties.

NCLT Mumbai: No Claims To Be Taken After Approval Of Resolution Plan By CoC, Citing Disruption Of Time-Bound Resolution Process

Case Title: Suraksha Realty Limited vs. Mr. Anuj Bajpai

Case No.: C.P.(IB)2808/2018

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Mr. Kuldip Kumar Kareer (Judicial Member) and Mr. Anil Raj Chellan (Technical Member), has dismissed an application for consideration of belated claim of Rs. 19.93 crores as a financial debt. The claim was based on a loan agreement and a share pledge agreement.

The Tribunal held that no claims can be entertained after the approval of the Resolution Plan by the Committee of Creditors (CoC) as allowing such claims at a later stage could disrupt the entire time-bound resolution process.

No Provision In IBC For Re-Opening Of CIRP, A Petition Can Only Be Restored For Fresh Admission In Case Settlement Fails: NCLT Mumbai

Case Title: Amluckie Investment Company Limited v Skill Infrastructure Limited

Case No.: CP (IB) No.834/MB-IV/2020

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member), has held that the IBC does not contain any provision for restoration of CIRP which has once been closed by the Tribunal. In case liberty is given to restore the company petition in case the settlement between parties fail, then that would mean restoration of the petition for fresh admission and not restoration of the CIRP.

“This bench feels that if the words “to reopen the Corporate Insolvency Resolution Proceedings in accordance with Law” are interpreted to imply resumption of CIRP automatically on default, the Hon’ble NCLAT would have rather stayed the CIRP process for the period during which settlement amount was to be paid than to order the closure of CIRP. Further, the words “in accordance with the law” clearly suggest that the reopening of the proceedings has to be in accordance with the provisions of the code and not otherwise.”

NCLT Hyderabad: NCLT Cannot Exercise Inherent Powers To Condone Delay Under Section 42 Of IBC When There Is A Clear Statutory Bar

Case Title: IFCI Limited. vs. BS Limited.

Case No.: CP(IB) No.278/7/HDB/2018

The National Company Law Tribunal (“NCLT”), Hyderabad comprising of Justice Telaprolu Rajani (Judicial Member) and Sri Charan Singh (Technical Member), has dismissed an application seeking condonation of the delay of 184 days in approaching the NCLT for filing an appeal under Section 42 of IBC against the rejection of the claim order by the Liquidator of Corporate Debtor. The Tribunal held that it cannot exercise its inherent powers to condone delay when there is a clear statutory bar in entertaining an appeal filed beyond the period prescribed under IBC.

NCLT Indore: Regional Provident Fund Commissioner Prohibited From Taking Actions During Moratorium Under Section 14 Of IBC

Case Title: Shirani Automotive Pvt Ltd

Case No.: CP(IB)/22(MP)2021

The National Company Law Tribunal (NCLT), Indore comprising of Mr. P. Mohan Raj (Judicial Member) and Mr. Kaushalendra Kumar Singh (Technical Member) adjudicating a petition filed by the Liquidator of Shirani Automotive Pvt Ltd (Corporate Debtor) issued notice to the Regional Provident Fund Commissioner. It observed that during the Moratorium period under Section 14 of the Insolvency and Bankruptcy Code 2016, the Regional Provident Fund Commissioner is prohibited from taking any enforcement actions against the Liquidator.

NCLT Mumbai Admits Bagalkot Cement And Industries Ltd. Into Insolvency

Case Title: Vyshali Energy Private Limited v M/s. Bagalkot Cement and Industries Ltd.

Case No.: C.P.(IB)-724(MB)/2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mrs. Lakshmi Gurung (Judicial Member) and Shri Charanjeet Singh Gulati (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against M/s. Bagalkot Cement and Industries Ltd., a Kanoria Group company. Mr. Atul Gala has been appointed as the Interim Resolution Professional (“IRP”).

M/s. Bagalkot Cement and Industries Ltd. (“Corporate Debtor”) belongs to the Kanoria Group and is engaged in the business of cement production. The Corporate Debtor had acquired the cement division of Bagalkot Udyog Ltd., after the latter was declared sick company.

KYC And Aadhaar Related Service Provider ‘Karvy Data Management Services Ltd.’ Admitted Into Insolvency: NCLT Hyderabad

Case Title: M/s Allied Hi-Tech Industries Private Ltd. v Karvy Data Management Services Limited

Case No.: CP (IB) No.25/7/HDB/2022

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against Karvy Data Management Services Limited (“Corporate Debtor”).

Shri Kranthi Kumar Kedari has been appointed as the Interim Resolution Professional (“IRP”). The Corporate Debtor is a KYC Registration Agency (KRA) under Regulation 7 of SEBI KYC Regulations, 2011 and engaged in the business of providing Know Your Customer (KYC) services, Aadhaar services, TIN services etc.

NCLT Mumbai: Petition Under Section 9 Cannot Be Filed Only For Recovery Of Interest Component

Case Title: TCL Cables Private Limited vs. Shapoorji Pallonji & Company Private Limited

Case No.: CP (IB) No.1249/MB-IV/2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Prabhat Kumar (Technical Member), dismissed a petition filed by TCL Cables Pvt. Ltd. for initiation of CIRP against Shapoorji Pallonji & Company Pvt. Ltd. (Corporate Debtor) for a default amount of Rs. 13.73 Crores.

The Bench held that a petition under Section 9 of IBC cannot lie merely for the recovery of interest component.

NCLT Bangalore Reiterates Individual Homebuyers Or Associates Cannot Challenge Resolution Plan, After Approval By CoC

Case Title: S. Viswanathan vs. Mr. Vinay Mruthyunjaya

Case No.: CP (IB) No. 60/BB/2020

The National Company Law Tribunal (“NCLT”), Bangalore Bench comprising of Justice (Retd) T. Krishnavalli (Judicial Member) and Shri. Manoj Kumar Dubey (Technical Member), dismissed an application seeking to direction to Resolution Professional (“RP”) for appointment of Authorized Representative for all the Homebuyers of Metrik Infraprojects Private Ltd. (Corporate Debtor) and to reconstitute the Committee of Creditors (“CoC”).

The Tribunal reiterated that once a Resolution Plan is approved by the CoC with the consent of the homebuyers as a class, individual homebuyers or associations cannot challenge the plan or claim any legal grievances.

NCLT Hyderabad: Asset Becomes Part Of Liquidation Asset If The Secured Creditor Fails To Comply With Regulation 21A

Case Title: ICICI Bank vs. MBS Impex Pvt Ltd.

Case No.: CP(IB) No.407/7/HDB/2019

The National Company Law Tribunal (“NCLT”), Hyderabad Bench comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Sh. Charan Singh (Technical Member), dismissed an application seeking an extension of time for the sale of the secured asset.

The Tribunal held that when the secured creditor fails to comply with Regulation 21A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, the asset that is subjected to security interest shall become part of the liquidation asset. It observed that just like the Resolution Process, the liquidation is also a time-bound process as any delay in the liquidation results in deterioration of the asset value, which will not be in the interests of the lenders and all other stakeholders.

NCLT Bangalore: Interest And Cost Imposed By Commercial Court Post Initiation Of CIRP Not To Be Admitted

Case Title: SourcePro Service vs. Mr. Vinay Mruthyunjaya

Case No.: CP (IB) No. 60/BB/2020

The National Company Law Tribunal (“NCLT”), Bangalore Bench comprising of Justice (Retd) T. Krishnavalli (Judicial Member) and Shri. Manoj Kumar Dubey (Technical Member), has held that the claim against additional cost and interest imposed by the Commercial Court post the commencement of CIRP cannot be admitted by the Resolution Professional in a CIRP during the moratorium period.

If MSME Certificate Obtained Post Initiation Of CIRP, Promoter/Suspended Management Of Corporate Debtor Ineligible To Submit Resolution Plan: NCLT Delhi

Case Title: M/s Hi-Tech Resource Management Limited v M/s Overnite Express Limited

Case No.: Company Petition No. (IB)-2240(ND)/2019

The National Company Law Tribunal (NCLT), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that if the Suspended Management/Promoter obtains a MSME certificate for the Corporate Debtor post initiation of CIRP then such certificate, apart from being invalid, would not entitle them to submit a resolution plan by taking benefit of Section 240A of IBC.

“Hence, in the light of the provision under Section 17(1) (a) and (b) of IBC 2016, and Judgement of the Hon’ble NCLAT (ibid), we find that an MSME Certificate obtained by Promoter(s)/Ex-Director(s) post-commencement of the CIRP is invalid and it will not make them eligible to submit an EOI or the Resolution Plan by taking benefit of Section 240A of IBC 2016.”

RP Can Obtain MSME Certificate For The Corporate Debtor Only To Avail Business Advantage Available Under MSMED Act, 2006: NCLT Delhi

Case Title: M/s Hi-Tech Resource Management Limited v M/s Overnite Express Limited

Case No.: Company Petition No. (IB)-2240(ND)/2019

The National Company Law Tribunal (NCLT), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that a Resolution Professional can obtain a Micro, Small and Medium Enterprises (MSME) certificate for the Corporate Debtor only for availing business advantage under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”).

“Now, we would like to examine whether the RP/CoC members can obtain an MSME Certificate. The answer could be Yes; if it is for the purpose of availing the business advantages available under the MSME Act, 2006 such as - to avail preference in the marketing of its product, price preference, or benefit in the payment terms, which are in the overall interest of maximizing the value of assets of the Corporate Debtor under CIRP, which is a going concern.”

RP Can’t Obtain MSME Certificate Just To Enable Back-Door Entry Of Promoter/Suspended Management Of Corporate Debtor: NCLT Delhi

Case Title: M/s Hi-Tech Resource Management Limited v M/s Overnite Express Limited

Case No.: Company Petition No. (IB)-2240(ND)/2019

The National Company Law Tribunal (NCLT), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that neither Section 25 nor Section 28 of IBC empowers the Resolution Professional or CoC to obtain an MSME Certificate to enable the back door entry of the defaulting Promoter/Suspended Management into the Corporate Debtor, who are otherwise barred under Section 29A of IBC to submit the EOI/Resolution Plan.

Under Section 25 of IBC the Resolution Professional is obligated to invite prospective resolution applicants to submit plans as per the criteria laid down by him. However, such criteria must be laid down in accordance with Section 29A and other provisions of IBC.

Section 35 Of IBC | Liquidator Empowered To Recover Arrears Of Rent/Damages From Tenant In Occupation Of Corporate Debtor’s Property: NCLT Hyderabad

Case Title: LIC Housing Finance Ltd. v M/s. Butta Infrastructure Pvt. Ltd.

Case No.: CP (IB) No. 325/7/HDB/2020

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has held that the NCLT has jurisdiction has to direct a Tenant to pay arrears of rent, who is in possession of the Corporate Debtor’s property and has defaulted in payment of rent.

Further, in terms of Section 35(1)(b) and (d) of IBC, Liquidator is empowered to recover arrears of rent/damages from a Tenant, as it is incidental as well as necessary to secure the custody/control of the Corporate Debtor’s assets, which forms part of the liquidation estate.

NCLT Hyderabad Initiates Insolvency Proceedings Against Trichy-Thanjavur Expressways Limited

Case Title: IDBI Bank Limited v M/s. Trichy-Thanjavur Expressways Limited

Case No.: CP (IB) No. 77/7/HDB/2022

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against M/s. Trichy-Thanjavur Expressways Limited, over a default of Rs. 79,71,45,619.23/- (inclusive of interest). Shri Raghu Babu Gunturu has been appointed as the Interim Resolution Professional.

NCLT Can’t Adjudicate Avoidance Application Pursued By Third Party To Whom Debt Was Assigned U/S 43, 45, 50 And 66 Of IBC: NCLT Delhi

Case Title: Ritu Tandon v M/s Rain Automotive India Private Limited

Case No.: Company Petition No. (IB)-1095(ND)/2019

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that in terms of Section 60(5) of IBC, the NCLT has no jurisdiction to adjudicate an Avoidance/PUFE application pursued by a Third Party/Assignee to whom debt was assigned under Section 43, 45, 50 and 66 of IBC, since neither the Assignee nor the respondents of the Avoidance Applications represent the Corporate Debtor, which will be dehors the insolvency proceedings of the Corporate Debtor.

NCLT Mumbai: Operational Creditors Must File GST Liability Claims Under CIRP On Time As No Claim Can Be Admitted After Resolution Plan Approved By CoC

Case Title: Abnco Vie Win Ent Private Limited vs. Steamline Industries Limited

Case No.: CP(IB)No. 3784/MB/C-II/2018

The National Company Law Tribunal (“NCLT”), Mumbai Bench comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), dismissed an application filed by an operational creditor, seeking directions against the Resolution Professional make payment of GST liability of Rs. 60.34 Lakhs with the GST department and to file GSTR – 3B return for a stipulated tax period.

The NCLT held that the RP had issued a public notice to inform all interested parties and stakeholders about the commencement of the CIRP. It highlighted that the Applicant failed to submit its claim within the stipulated timeframe as per Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Further, the claim cannot be accepted as the Resolution Plan has been approved by the Committee of Creditors (“CoC”).

NCLT Jaipur: Persons To Whom The Flats Are Sold After Completion, Shall Be Counted For Threshold Limit

Case Title: Gajraj Jain & Ors. vs. Shiv Gyan Developers Pvt. Ltd.

Case No.: IB No. 36/7/JPR/2018

The National Company Law Tribunal (“NCLT”), Jaipur Bench comprising of Shri Deep Chandra Joshi (Judicial Member) and Shri Atul Chaturvedi (Technical Member), allowed the application seeking impleadment of additional Financial Creditors to initiate Corporate Insolvency Resolution Process (“CIRP”) of Shiv Gyan Developers Pvt. Ltd. (Corporate Debtor) under Section 7 of IBC, as per the Supreme Court’s order in Gajraj Jain & Ors. Vs. Shivgyan Developers Pvt. Ltd..

The Supreme Court had allowed Gajraj Jain and two other Applicants (“Applicants”) to implead 10% of the homebuyers to the main application so as to comply with the requirements of the Code.

The Tribunal by placing reliance on the Supreme Court decision of Manish Kumar vs. Union of India held that persons to whom the flats have already been sold after completing construction, thereof, would still be allottees and would be included for computation of threshold limit under IBC.

HIGH COURT

IBC | Bombay High Court Issues Notice To Attorney General Of India In Petition Challenging Provisions On Resolution Professional

Case Title: Poonam Basak v. Union of India & Ors

Case No.: Writ Petition (L) No. 23016 of 2023

The Bombay High Court Bench comprising Justice BP Colabawalla and Justice MM Sathaye, has issued notice to the Attorney General of India in a writ petition challenging the constitutionality of Sections 7(5), 9(5) and other sections of the Insolvency and Bankruptcy Code, 2016.

The petition challenges sections 7(5), 9(5), 16(2), 16(3), 16(4), 27(5), 82(1), 89(3), 97(1), 98(3), 98(5), 125(1), 145(5) of the IBC contending that these provisions and other rules, regulations, circulars, and notifications effectively suspend an Insolvency Professional without hearing, upon issuance of a Show Cause Notice.

IBBI

IBBI Extends Facility Of CIRP Form Submission To Insolvency Professional Entities (IPE) Acting As IP, No Fee Applicable Till 30th September 2023

Reference No.: IBBI/CIRP/60/2023

The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 01.09.2023, intimating that the facility for submitting the CIRP Forms has been extended to Insolvency Professional Entities (IPE), acting as Insolvency Professionals (IP).

To facilitate submission of forms for all assignments handled by these IPEs through the facility being introduced now, CIRP forms filed till 30.09.2023 shall not attract any fee as provided under regulation 40B of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”). Thereafter, it shall attract fee as specified in regulation 40B(4) of the CIRP Regulations.

IBBI Introduces Amendments To CIRP Regulations W.E.F. 18th September 2023

Ref: No. IBBI/2023-24/GN/REG106

The Insolvency and Bankruptcy Board of India (“IBBI”) vide its notification dated 18.09.2023, has notified amendments to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”). The amendments are effective from 18.09.2023.

Thereafter, on 19.09.2023 the IBBI issued a Press Release, summarizing the amendments as under:

• To facilitate smooth conduct of Corporate Insolvency Resolution Process (“CIRP”), the assistance and is expected from the personnel of the Corporate Debtor (“CD”) by providing a detailed procedure for taking custody and control of assets and records of the CD by the Resolution Professional (RP).
• To facilitate the Adjudicating Authority (“AA”) burdened with applications for acceptance of delayed claims, the Amendment Regulations increase the timelines to file claims up to the date of issue of request for resolution plans under regulation 36B or ninety days from the insolvency commencement date, whichever is later. It further empowers the RP to give his view on the acceptance of claim for its collation even for claims submitted beyond this time and committee of creditors (CoC) to recommend their acceptance for inclusion in the list of claims and its treatment in the resolution plan before the same is adjudicated or condoned by the AA.
• To facilitate the class of creditors specially home buyers, the amendments provide enhanced role and responsibilities of the Authorised Representative (“AR”). Some of the important duties of the AR are (i) to review the contents of minutes prepared by the RP to ensure correctness and completeness, (ii) to provide assistance to the creditors in evaluating resolution plan, (iii) to regularly update the creditors in a class on the progress of the CIRP, (iv) to assist in modifications of the resolution plan on behalf of class of creditors represented by him, etc. Fees of the AR have also been enhanced in line with the increased role. A procedure for replacement of AR has also been introduced.
• To make the resolution process more transparent and robust, the amendment enables committee members to get an audit of the CD conducted and makes cost of such audit to be part of CIRP cost.
• The amendment aligns the timelines concerning various procedural aspects like issuance of information memorandum and request for resolution plans.
• To improve the value received in the resolution plan, the amendment provides changes to Form G to provide more information to prospective resolution applicants with less effort on their part.
• The amendment provides for inclusion in compliance certificate (Form H), the minutes of committee of creditors in which resolution plan is approved to enable the AA to understand the rationale of the decision of the CoC in a better manner.
• In case of assignment of debt by a creditor to another person, the details of such assignment are required to be provided to the RP. The amendment, now, specifies a timeline of seven days to provide such details to enable smooth conduct of meeting of CoC.
• The details of chronology of debt, default, and limitation to be submitted along with evidence in case of application filed under Section 7 or Section 9 of IBC so that the AA is facilitated in adjudicating such cases.

IBBI Amends ‘Model Bye Laws of Insolvency Professional Agencies Regulations’ w.e.f. 18th September 2023

Reference No. IBBI/2023-24/GN/REG105.

The Insolvency and Bankruptcy Board of India (“IBBI”) vide its notification dated 18.09.2023, has notified amendments to the Insolvency and Bankruptcy Board of India (Model ByeLaws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. The amendments are effective from 18.09.2023.

The key changes are as under:

• An individual or an Insolvency Professional Entity (IPE) may apply for enrolment as a professional member by submitting an application in Part – I of Form A and Part – I of Form AA respectively.

• The acceptance of the application shall be communicated to the applicant within 60 days of receipt of application, excluding the time given to Applicant for removing the deficiencies, presenting additional documents or clarification. Accordingly, in Para VI Clause 10(7), after the words “to these bye laws” the words “within sixty days of receipt of the application, excluding the time given for the purposes stated in clause (6)” shall be inserted.
• Additional grounds have been added in Para XI Clause 29 with regards to circumstances under which the Agency may refuse to accept the surrender of membership by any professional member. In Clause 30, which contains circumstances under which a professional member shall be expelled by the Agency, a new ground has been added which states that while expelling the professional member, the Agency may take into account the factors provided in Clause 29.

IBBI Amends Insolvency Professional Regulations W.E.F. 18th September 2023

Ref. No. IBBI/2023-24/GN/REG104

The Insolvency and Bankruptcy Board of India (“IBBI”) vide its notification dated 18.09.2023, has notified amendments to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (“IP Regulations”). The amendments are effective from 18.09.2023.

The key amendments are as under:

• Introduction of a unified enrolment and registration application form to enable submission of common application form for both enrolment and registration processes.
• The Regulation 5 provides eligibility criteria for individuals for their registration as Insolvency Professional. Now a time limit of 12 months (calculated from the date of payment of application fee) has been imposed on candidates to complete the pre-registration educational course from an Insolvency Professional after his enrollment as a professional member.
• Regulation 6(1) and 6(1A) have been amended to enable an individual to submit application to the IBBI through Insolvency Professional Agency (IPA) of which he/she is a member.
• Regulation 10(1) has been amended to add the additional instances where the IPA is required to inform the Board.

• A new Regulation 10A has been inserted which provides for the manner in which an Insolvency Professional can surrender its certificate of Registration.

• Another new Regulation 10B has been inserted which provides for special procedure for action on surrender or expulsion.

• The Form A and Form AA have also been amended.

IBBI Clarifies Interpretation Regarding Liquidator’s Fee Under Regulation 4(2)(B) Of Liquidation Process Regulations

Ref. No. IBBI/LIQ/61/2023

The Insolvency and Bankruptcy Board of India (“IBBI”) has released a circular dated 28.09.2023, clarifying the interpretation and computation of the Liquidators’ fee under Regulation 4(2)(b) of IBBI (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”).

Clarification with respect to interpretations:

Upon perusal of records during the inspections and investigations, the IBBI found that certain terms in the Regulation 4(2)(b) of Liquidation Regulations are being interpreted differently. Thus, the following clarification has been given for such terms by the IBBI:

• Regulation 4(2)(b) provides that the fee shall be “as a percentage of the amount realised net of other liquidation costs, and of the amount distributed, for the balance period of liquidation….”

Clarification: “Amount realised” shall mean amount realised from assets other than liquid assets such as cash and bank balance including term deposit, mutual fund, quoted share available on start of the process after exploring compromise and arrangement, if any

• The term “Amount of Realisation (exclusive of liquidation costs)” given in the table in Regulation 4(2)(b) mandates that all liquidation costs are to be deducted from the realisation amount. However, as per regulation 4(2)(b), “other liquidation cost” is to be deducted from realisation. There is a gap in understanding in the market about what components of the liquidation cost are to be excluded from the liquidation cost to derive “other liquidation cost”.

Clarification: The “other liquidation cost” in regulation 4(2)(b) shall mean liquidation cost paid in priority under section 53(1)(a), after excluding the liquidator’s fee.

• Section 53 of IBC provides for order of priority for making distribution out of proceeds from sale of assets. Furthermore, the table in Regulation 4(2)(b) provides for liquidator’s fees to be calculated as a percentage of the ‘Amount Distributed to Stakeholders’.

Clarification: “Amount distributed to stakeholders” shall mean distributions made to the stakeholders, after deducting CIRP and liquidation cost.

• Different interpretations are being made for the words “Amount of Realisation /Distribution” used in table in the Regulation 4(2)(b). Though, most of them are interpreting it correctly to mean the cumulative value of assets realised till date, few are interpreting it to mean the value of assets realised during the first six months and then next six months and so on.

Clarification: “Amount of Realisation /Distribution” shall mean cumulative value of amount realised/ distributed which is to be bifurcated in various slabs as per column 1 and thereafter the same is to be bifurcated into realisation/ distribution in various periods of time and then corresponding fee rate from the table is to be taken.

• Period for calculation of fee - liquidators are suo-moto excluding various time periods such as stay by court on sale of a particular asset, delay in relinquishment by secured creditor, for the purpose of calculating the fee. However, since the liquidator works under the overall guidance of the Adjudicating Authority, any such exclusion should have stamp of judicial authority and should be only for the asset for which such exclusion has been granted.

Clarification: Exclusion for purpose of fee calculation is to be allowed only when the same has been explicitly provided by the Hon’ble NCLT/NCLAT or any other court of law and will operate only for the asset which could not have been realised during the excluded period.

MCA

MCA Refuses To Disclose In RTI The List Of Candidates Recommended By Selection Committee For Post Of NCLT Members

The Ministry of Corporate Affairs, Government of India, has declined to disclose under the ‘Right to Information Act, 2005’ the list of candidates recommended by Selection Committee, headed by Chief Justice of India, for the post of Judicial Member and Technical Member in the National Company Law Tribunal (“NCLT”), as against vacancy circular dated 12.07.2022. The reason given for non-disclosure is that such list is a part of proposal being sent to the Cabinet Committee, thus exempted from disclosure under Section 8(1)(i) of the RTI Act, 2005.