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.

NCLT

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.

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 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.