IBC| Principle Of Commercial Wisdom Not Validate A Decision Taken By CoC In Contravention Of Law: Supreme Court

Case Title: M.K. Rajagopalan v Dr. Periasamy Palani Gounder

Citation: 2023 LiveLaw (SC) 403

The Supreme Court Bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath, has held that the principle of ‘Commercial Wisdom’ of the Committee of Creditors (“CoC”) cannot brush aside the shortcomings of the CoC in cases where decision making was done in contravention to a law which is in force for the time being. The Bench has upheld the NCLAT’s order whereby the Successful Resolution Applicant was declared ineligible in terms of Section 88 of the Indian Trusts Act, 1882, since he had submitted two resolution plans, one in individual capacity and one in the capacity of Managing Trustee of the Trust.

IBC| Ineligibility Of Resolution Applicant As Per S.164(2)(b) Companies Act Can't Be Presumed Unless Competent Authority Declares Disqualification: Supreme Court

Case Title: M.K. Rajagopalan v Dr. Periasamy Palani Gounder

Citation: 2023 LiveLaw (SC) 403

The Supreme Court Bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath, has held that a resolution applicant cannot be rendered ineligible to submit a resolution plan under the Insolvency and Bankruptcy Code, 2016 (“IBC”), by assuming his/her disqualification under Section 164(2)(b) of the Companies Act, 2013, unless a categorical order disqualifying him/her to act as a director of any company is passed by the competent authority. Further, there is no concept of ‘deemed disqualification’ under Section 164(2)(b) of the Companies Act, 2013.

No Priority For Workers' Dues After Liquidation Of Company Under IBC: Supreme Court Upholds Section 327(7) Of Companies Act 2013

Case Title : Moser Baer Karamchari Union through its President Mahesh Chand Sharma vs Union of India W.P.(C) No. 421/2019 and connected cases.

Citation: 2023 LiveLaw (SC) 386

The Supreme Court Bench comprising Justices MR Shah and Sanjiv Khanna has held upheld the constitutional validity of Section 327(7) of the Companies Act, 2013, which holds that workers' dues will not get preferential payment in the event a company undergoes liquidation as per the provisions of the Insolvency and Bankruptcy Code 2016.

"The enactment of the IBC and Section 53 of IBC necessitated amendment to the Companies Act 2013. The object and purpose of amending the Companies Act 2013 and to exclude Sections 326 and 327 in the event of liquidation of a company under IBC seem to be that there may not be two different provisions in respect to the winding up/ liquidation of a company. Therefore, in view of the enactment of the IBC, it was necessary to exclude the applicability of Section 326 and 327 of the 2013 Act, which cannot be said to be arbitrary, as contended on behalf of the petitioners",

NCLAT

NCLAT Delhi Admits YEIDA’s Appeal Against Jaypee Infratech Resolution Plan On Additional Compensation To Farmers

Case Title: Yamuna Expressway Industrial Development Authority v Monitoring Committee of Jaypee Infratech Ltd. & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 493 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has admitted the appeal filed by the Yamuna Expressway Industrial Development Authority (“YEIDA”) against the approved resolution plan of M/s. Suraksha Realty Ltd. and M/s. Lakshdeep Investments & Finance Pvt. Ltd. for Jaypee Infratech Ltd. YEIDA has challenged the approved Resolution Plan on limited ground of allocation of Rs. 10 Lakhs as against a claim for Rs. 1,689.017 Crores for paying additional compensation to the farmers.

NCLT

CoC Resolution With 66% Voting Share Not A Pre-Condition For Liquidation When No Resolution Plan Received By The AA: NCLT Hyderabad

Case Title: State Bank of India vs Suryajyothi Spinning Mills Ltd

Case No. ;IA No. 96 of 2021 in CP (IB) No. 166/7/HDB/2019

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising Smt. Telaprolu Rajani (Judicial Member) and Shri Charan Singh (Technical Member), has held that a resolution by the CoC with 66% voting share for Liquidation of Corporate Debtor is not necessary when no resolution plan is received by the Adjudicating Authority. It was observed that the Tribunal has the power to order for Liquidation when no resolution plan is submitted. Thus, the Adjudicating Authority only has to see whether any resolution plan has been presented before it prior to the order of Liquidation under Section 33(1)(a). It is immaterial whether the CoC has resolved for liquidation or whether there was no coordination between the RP and CoC for an order of Liquidation under Section 33(1)(a) when no resolution plan is received by the Adjudicating Authority.

Interest Can Be Added To Reach 1 Crore Threshold Only If Provided In The Agreement: NCLT New Delhi Reiterates

Case Title:M/s Bhotika Trade and Services Pvt. Ltd. vs M/s. Avinash EM Projects Pvt. Ltd.

Case No. ;(IB)-598(ND)2022

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising Shri Bachu Venkat Balram Das (Judicial Member) and Shri L.N. Gupta (Technical Member), has reiterated that interest can be charged on Operational Debt only if it is clearly stipulated in the invoices raised. Reliance was placed on the NCLAT judgment of Pavan Enterprises vs Gammon India Ltd [Company in Appeal (AT)(Insolvency) No. 148 of 2018 wherein it was held that debt will include interest if it is payable in the terms of the agreement. Further Reliance was placed on the NCLAT judgment of Prashant Agarwal vs Vikash Parasrampuria & Anr. [Company Appeal (AT) No. 690 of 2022] wherein it was held that total amount of maintainability of a claim will include interest on delayed payment clearly stipulated in the invoice itself

Merely Sending Of Summons By DLSA Can’t Be Considered A Proceeding: NCLT New Delhi

Case Title: Supernova Tech Craft Engineering Overseas Limited v Valtrom Technologies Private Limited

Case No. COMPANY PETITION IB (IBC)/334(ND)/2020

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising Shri P.S.N Prasad (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has held that merely sending summons by District Legal Services Authority cannot be considered a proceeding and it further doesn’t fall within the ambit of “suit” or “arbitration proceedings” under Section 8(2) of IBC, 2016.

NCLT Ahmedabad & Indore Benches Re-Constituted W.E.F 3rd May 2023, Matters To Be Heard Through VC

File No.: 10/03/2023-NCLT

The National Company Law Tribunal, Ahmedabad and Indore Benches, have been re-constituted vide a Circular dated 02.05.2023 issued by NCLT.

The re-constituted Benches shall comprise of:

NCLT Ahmedabad

NCLT Ahmedabad Court Room No. I (Monday, Tuesday & Wednesday) (First Half)

1. Shri Shammi Khan (Judicial Member)
2. Shri K.K. Singh (Technical Member)

NCLT Ahmedabad Court Room No. II (Second Half)

1. Shri Shammi Khan (Judicial Member)
2. Shri Ajai Das Mehrotra (Technical Member)

NCLT Indore

NCLT Indore Bench (Thursday & Friday) (Second Half)

1. Shri Mahendra Khandelwal (Judicial Member)
2. Shri K.K. Singh (Technical Member)

New Claims Cannot Be Admitted When Resolution Plan Is Approved By The CoC And Is Pending Before The AA For Approval: NCLT Mumbai Reiterates

Case Title: D.S. Kulkarni and Associates vs Manoj Kumar Agarwal (Resolution Professional) in the matter of Bank of Maharashtra vs DS Kulkarni Developers Ltd.

Case No.: C.P. (IB) No. 1633/MB/C-I/2019

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising Shri H.V. Subba Rao (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has reiterated that new claims cannot be admitted when the resolution plan has been approved by the CoC and is pending before the Adjudicating Authority for approval.

Attempt To Convert Operational Debt Into Financial Debt; NCLT Chennai Rejects Section 7 Petition

Case Title: Step Stones Infras Private Limited vs Yes and Yes Infracon (P) Ltd

Case No. IBA/403/2020

The National Company Law Tribunal, Chennai Bench, comprising Shri Sanjiv Jain (Judicial Member) and Shri Sameer Kakar (Technical Member), has held that transfer of the same work by a subsequent MOU would not alter the nature of the original transaction.

Approval Of Resolution Does Not Absolve Guarantor; NCLT Mumbai Reiterates

Case Title: Anchor Leasing Private Limited vs Sejal Realty and Infrastructure Limited

Case No. C.P. No. 889/(IB)-MB-V/2021

The National Company Law Tribunal, Mumbai Bench, comprising Shri Kuldip Kumar Kareer (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has reiterated that the liability of the guarantor does not ipso facto come to an end merely with the approval of the resolution plan against the Principal Borrower.

The Bench observed that during the CIRP against the Principal Borrower, the Corporate Debtor voluntarily agreed to forego their right of subrogation against the successful resolution applicant. This showed that the liability of the Corporate Debtor as guarantor did not come to an end with the approval of the resolution plan . Further, there is no specific mention in the resolution plan that the liability of the guarantors of the Principal Borrower would come to an end with the approval of the plan.

Sec. 126 Of ICA, 1872 Can’t Be Interpreted To Mean That Co-Borrower And Guarantor Can’t Be The Same Person: NCLT Mumbai

Case Title: Pegasus Assets Reconstruction Private Limited vs M/s. Whiz Enterprise Private Limited

Case No.: CP No. 530/(IB)-MB-V/2021

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising Shri Kuldip Kumar Kareer (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has held that Section 126 of the Indian Contract Act, 1872 cannot be interpreted to mean that co-borrower and the guarantor cannot be one and the same person. Further, the Corporate Debtor voluntarily entered into the contract in the capacity of a Co-borrower as well as the Guarantor. Hence it cannot contend that the contract was hit by Section 126 of Indian Contract Act, 1872.