Supreme Court Quarterly Digest On Insolvency And Bankruptcy Code [Jan – Mar, 2023]

Constitution of India, 1950; Article 142 - Insolvency of Reliance Home Finance Ltd (RHFL) - the Supreme Court allowed the Resolution Plan (RP) proposed by Authum Investments and Infrastructure Ltd. (AIIL) to cover the debenture holders of RHFL - the plan will not cover dissenting debenture holders - the dissenting debenture holders should be provided an option to accept the terms of the resolution plan who proposed such acquisition or they can pursue other legal remedies to recover their dues. Authum Investment and Infrastructure Ltd. v. R.K. Mohatta Family Trust, 2023 LiveLaw (SC) 173 : AIR 2023 SC 1459

Delay in filing CIRP application condonable on sufficient reasons. Sabarmati Gas Ltd. v. Shah Alloys Ltd., 2023 LiveLaw (SC) 9 : AIR 2023 SC 288 : (2023) 3 SCC 229

IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Regulation 30 - NCLT as well as NCLAT were right in holding that the possession of the Corporate Debtor, of the property needs to be protected. This is why a direction under Regulation 30 had been issued to the local district administration. (Para 50) Victory Iron Works Ltd. v. Jitendra Lohia, 2023 LiveLaw (SC) 193

IBC - Application under Section 12A for withdrawal of CIRP is maintainable prior to the Constitution of CoC. Abhishek Singh v. Huhtamaki Ppl Ltd., 2023 LiveLaw (SC) 250

IBC - Once a resolution plan is approved, no modifications are permissible. SREI Multiple Asset Investment Trust Vision India Fund v. Deccan Chronicle Marketeers, 2023 LiveLaw (SC) 231

IBC - Resolution professional entitled to take control of corporate debtor's rights in assets licensed to third parties. Victory Iron Works Ltd. v. Jitendra Lohia, 2023 LiveLaw (SC) 193

Insolvency and Bankruptcy Code (Amendment) Act, 2021 - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - A company could not avail benefit of the Sabka Vishwas scheme as it was under moratorium under IBC - The Courts are meant to do justice and cannot compel a person to do something which was impossible for him to do - Directed that the payment of amount already deposited by the company be appropriated towards settlement dues under “Sabka Vishwas Scheme 2019 and the company be issued discharge certificate. Shekhar Resorts Ltd. v. Union of India, 2023 LiveLaw (SC) 15 : AIR 2023 SC 276 : (2023) 3 SCC 220

Insolvency and Bankruptcy Code 2016; Section 31 - After passing of the Resolution Plan under Section 31 of IBC by the Adjudicating Authority and in the light of Section 32A of IBC, the criminal proceedings under Section 138 of the NI Act will stand terminated only in relation to the Corporate Debtor if the same is taken over by a new management. (Para 86) Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd., 2023 LiveLaw (SC) 195

Insolvency and Bankruptcy Code 2016; Section 31 - Process under the IBC whether under Section 31 or Sections 38 to 41 cannot extinguish criminal proceedings under Section 138 NI Act 1881 against former directors of the corporate debtor. (Para 18) Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd., 2023 LiveLaw (SC) 195

Insolvency and Bankruptcy Code, 2016 - Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2018, is binding upon the National Company Law Tribunal (“NCLT”). (Para 34) Abhishek Singh v. Huhtamaki Ppl Ltd., 2023 LiveLaw (SC) 250

Insolvency and Bankruptcy Code, 2016 - Section 60(5) - Once the Resolution Plan stands approved, no alterations/modifications are permissible. It is either to be approved or disapproved, but any modification after approval of the Resolution Plan by the CoC, based on its commercial wisdom, is not open for judicial review unless it is found to be not in conformity with the mandate of the IBC Code. (Para 22) SREI Multiple Asset Investment Trust Vision India Fund v. Deccan Chronicle Marketeers, 2023 LiveLaw (SC) 231

Insolvency and Bankruptcy Code, 2016 - the development rights created in favour of the Corporate Debtor constitute “property” within the meaning of the expression under Section 3(27) of IBC -Since the expression “asset” in common parlance denotes “property of any kind”, the bundle of rights that the Corporate Debtor has over the property in question would constitute “asset” within the meaning of Section 18(f) and Section 25(2)(a) of IBC- these rights and interests in the immovable property are definitely liable to be included by the Resolution Professional in the Information Memorandum and the Resolution Professional is duty bound under Section 25(2)(a) to take custody and control of the same. (Para 37) Victory Iron Works Ltd. v. Jitendra Lohia, 2023 LiveLaw (SC) 193

Insolvency and Bankruptcy Code, 2016 - The exclusion of assets owned by a thirdparty, but in the possession of the Corporate Debtor held under contractual arrangements, from the definition of the expression “assets”, is limited to Section 18. In other words, the Explanation under Section 18 does not extend to Section 25. Victory Iron Works Ltd. v. Jitendra Lohia, 2023 LiveLaw (SC) 193

Insolvency and Bankruptcy Code, 2016; Section 12A - Section 12A does not debar entertaining applications for withdrawal even before constitution of CoC; application cannot be kept pending for constitution of CoC. (Para 35) Abhishek Singh v. Huhtamaki Ppl Ltd., 2023 LiveLaw (SC) 250

Insolvency and Bankruptcy Code, 2016; Section 9 - Limitation Act, 1963; Section 5 and Article 137 - The limitation period for initiating CIRP under Section 9, IBC is to be reckoned from the date of default, as opposed to the date of commencement of IBC and the period prescribed therefor, is three years as provided by Article 137 - The same would commence from the date of default and is extendable only by application of Section 5 Limitation Act - it is incumbent on the Adjudicating Authority to consider the claim for condonation of the delay when once the proceeding concerned is found filed beyond the period of limitation. (Para 23-24) Sabarmati Gas Ltd. v. Shah Alloys Ltd., 2023 LiveLaw (SC) 9 : AIR 2023 SC 288 : (2023) 3 SCC 229

Insolvency and Bankruptcy Code, 2016; Section 9 - Pre-Existing Dispute - What is to be looked into is the existence or otherwise of a dispute and/or the suit or arbitration proceedings prior to the receipt of demand notice or invoice, as the case may be. (Para 34-38) Sabarmati Gas Ltd. v. Shah Alloys Ltd., 2023 LiveLaw (SC) 9 : AIR 2023 SC 288 : (2023) 3 SCC 229

Reliance Home Finance Insolvency: Supreme Court allows debenture holders to be covered under resolution plan of Authum Investments. Authum Investment and Infrastructure Ltd. v. R.K. Mohatta Family Trust, 2023 LiveLaw (SC) 173 : AIR 2023 SC 1459

Sabka Vishwas Scheme: Supreme Court grants relief to company which missed deadline due to IBC moratorium. Shekhar Resorts Ltd. v. Union of India, 2023 LiveLaw (SC) 15 : AIR 2023 SC 276 : (2023) 3 SCC 220