IBC Overrides Electricity Act; Dues To Secured Creditors At Higher Footing Than Electricity Dues : Supreme Court

Case Title: Paschimanchal Vidyut Vitran Nigam Ltd vs Raman Ispat Private Limited

Citation: 2023 LiveLaw (SC) 534 | 2023 INSC 625

The Supreme Court Bench comprising of Justices S. Ravindra Bhat and Dipankar Datta, has observed that Section 238 of the Insolvency and Bankruptcy Code, 2016 overrides the provisions of the Electricity Act, 2003. It was opined that the provisions of the IBC treat the dues payable to secured creditors are at a higher footing than dues payable to Central or State Government.

In this case, the NCLT had set aside an attachment of the property of the respondent Raman Ispat Pvt. Ltd. (“Corporate Debtor”) which was over electricity charge dues to Paschimanchal Vidyut Vitran Nigam Limited (PVVNL) and held that PVVNL can realise its dues by participating in the liquidation process as per the IBC. The NCLAT also approved this view.

Further, noting that State Tax Officer v. Rainbow Papers Ltd. 2022 LiveLaw (SC) 743 dealt with a case relating to resolution process and not liquidation process, the Court opined that the judgment in Rainbow Papers has to be confined to the facts of that case.

High Court

Jharkhand High Court Rejects ESL Steel’s ITC Claim Prior To The Approval Of The Resolution Plan By NCLT

Case Title: M/s ESL Steel Limited Versus Principal Commissioner

Case No.: W.P.(T) No. 1995 of 2023

The Jharkhand High Court Bench comprising of Justice Rongon Mukhopadhyay and Justice Deepak Roshan, has rejected ESL Steel’s Input Tax Credit (ITC) claim prior to the approval of the resolution plan by the National Company Law Tribunal (NCLT).

ESL Steel Limited (Petitioner) contended that no recovery or proceeding can be continued against the petitioner for any alleged dues prior to April 17, 2018, i.e., the date on which the NCLT approved the petitioner's resolution plan. The Petitioner urged that it is only the past obligations of the past period that get extinguished once the new management has taken over the Company as part of the Resolution Plan. There is no statute or judgement that says that past credit due to the company gets expunged.

The Bench held that the current management was not a taxpayer for the period prior to June 4, 2018. i.e., the date of the change of management and therefore the liability of the earlier management should not be shifted to the current management. Likewise, the credit available to the earlier management will also not be available to the current management, as the current management is not a taxpayer

NCLAT

Payment Of Performance Linked Incentive Fee By COC Is Discretionary, NCLT Or NCLAT Can’t Interfere With COC’s Decision: NCLAT Delhi

Case Title: Ravindra Kumar Goyal v Committee of Creditors of Yashasvi Yarns Limited & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 809 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that the payment of performance linked incentive fee to the IRP/RP under Regulation 34B of CIRP Regulations lies within the discretion of CoC. If the CoC refuses to pay such incentive fee, then the NCLT or NCLAT do not possess the jurisdiction to interfere with CoC’s decision.

Homebuyers of 'Lotus Aren 1' Noida Are Given Flats In Lieu Of Their Claims, Approves Resolution Plan: NCLAT Delhi

Case Title: M/s. Dhankalash Distributors Pvt. Ltd. v Arena Superstructures Pvt. Ltd.

Case No.: CP (IB) No.875(PB)/2020

The National Company Law Tribunal (NCLT), Principal Bench, comprising of Chief Justice (Retd.) Ramalingam Sudhakar (President) and Shri Avinash K Srivastava (Technical Member), has approved the resolution plan of M/s. Purvanchal Projects Pvt. Ltd. for M/s. Arena Superstructures Pvt. Ltd (Lotus Group company). The Resolution Plan is valued at Rs. 584 Crores. The Homebuyers/Allottees of Lotus Arena I project would be given flats in lieu of their dues.

The resolution plan proposes to pay the Secured Financial Creditors an amount of Rs. 70 Crores against an admitted claim of Rs. 200.27Crores. The Unsecured Financial Creditors would be paid Rs. 50 Lakhs against their admitted claim of Rs. 2 Crores. The admitted claim of Homebuyers/Allottees amounts to Rs. 497.8 Crores. The Resolution plan proposes to pay off these dues by delivering flats to the homebuyers. The timeline for completion of construction of the Project and delivery of Flats to homebuyers is 36 months (after the Transfer Date).

Dissenting Financial Creditor Entitled To Liquidation Value Commensurate Only With Security Interest: NCLT Delhi

Case Title: M/s. Dhankalash Distributors Pvt. Ltd. v Arena Superstructures Pvt. Ltd.

Case No.: CP (IB) No.875(PB)/2020

The National Company Law Tribunal (NCLT), Principal Bench, comprising of Chief Justice (Retd.) Ramalingam Sudhakar (President) and Shri Avinash K Srivastava (Technical Member), has held that a co-joint reading of Sections 52, 53 and 30(2)(b) of IBC reveals that a Dissenting Financial Creditor is at best entitled to the liquidation value commensurate with its security interest. Any amount unpaid thereafter, would fall under Section 53(1)(e)(ii) of IBC, which would rank below the unsecured creditors.

There Can’t Be Discrimination Between One Class Of Creditors’; NCLAT Delhi Directs Modification Of Resolution Plan

Case Title: Akashganga Processors Pvt. Ltd. v Shri Ravindra Kumar Goyal & Ors.

Case No.: Company Appeal (AT) (Insolvency) No.1148 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 Successful Resolution Applicant to allocate funds to Operational Creditors in the Resolution Plan, who were left unpaid while other Operational Creditors were proposed to be paid. “However, when the Successful Resolution Applicant was making payment to other two Operation Creditors, there cannot be any discrimination between payment of one class of Creditors.”

The Resolution Plan was earlier rejected by the NCLT for being violative of Section 30(2)(e) and 30(2)(f) of IBC. However, the NCLAT permitted its implementation post modification.

NCLT

Management Dispute In Dainik Jagran Group; NCLT Allahabad Issues Notice

Case Title: Mahendra Mohan Gupta & Ors. v Devendra Mohan Gupta & Ors.

Case No.: CP No.64/ALD/2023

The National Company Law Tribunal (NCLT), Allahabad Bench, comprising of Shri Praveen Gupta (Judicial Member) and Shri Ashish Verma (Technical Member), has issued notice in a company petition filed by the Director (Mr. Mahender Mohan Gupta) of Jagran Media Network Investment Pvt. Ltd. and Jagran Prakashan Limited, alleging oppression by the majority shareholders.

The Dainik Jagran Group is presently being run by the families of the Late Mr. Puran Chandra Gupta’s sons. One of the sons have filed a company petition alleging oppression by majority shareholders, who happen to be the other members of the Gupta Family.

NCLT Mumbai Approves Resolution Plan For Lavasa Corporation; Homebuyers Can Opt For Completed Units

Case Title: Raj Infrastructure Development India Pvt. Ltd. v Lavasa Corporation Limited

Case No.: C.P.(IB)/1765(MB)2018

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has approved the resolution plan of Darwin Platform Infrastructure Limited for Lavasa Corporation Limited and its four subsidiaries. The consolidated Resolution Plan is valued at Rs. 1,814 Crores.

The Homebuyers would get fully constructed properties within five (5) years from the receipt of the Environmental Clearance, on an actual cost basis. Two exit alternatives have also been given to the Homebuyers, i.e. (i) Homebuyers can undertake self-construction of their properties, entirely at their own responsibility, costs and expenses; and (ii) Homebuyers not willing to wait for delivery of fully-constructed property, can seek final settlement of 40% of entire admitted claims.

Newly Appointed NCLT Members Take Oath

File No. 10/13/2023-NCLT

The National Company Law Tribunal (“NCLT”) had issued a circular dated 18.07.2023, intimating that the oath taking ceremony of newly appointed NCLT Members will take place on 19.07.2023.

In a ceremony held on 19.07.2023, the following newly appointed NCLT Members have taken oath:

JUDICIAL MEMBERS

1. Mrs. Lakshmi Gurung
2. Manni Sankariah Shanmuga Sundaram
3. KR Saji Kumar
4. Jyoti Kumar Tripathi
5. Rajeev Bhardwaj
6. Smt. Chitra Ram Hankare
7. Ms. Reeta Kohli
8. Khetrabasi Biswal
9. Justice (Retd.) Mr. Virendrasingh Gyansingh Bisht

TECHNICAL MEMBERS

1. Venkataraman Subramaniam
2. Umesh Kumar Shukla
3. Arvind Devanathan
4. Charanjeet Singh Gulati
5. Anil Raj Chellan
6. Ravichandran Ramasamy
7. Sanjiv Dutt
8. Sanjay Puri
9. Shunmugakani Ravindran
10. Velamur Govindan Venkata Chalapathy
11. Rajeev Mehrotra
12. Dr. Sanjeev Ranjan