IBC News
Insolvency Process Maintainable Against Corporate Guarantor Even If Principal Borrower Is Not A 'Corporate Person' : Supreme Court
'In law, the status of the guarantor, who is a corporate person, metamorphoses into corporate debtor, the moment principal borrower (regardless of not being a corporate person) commits default in payment of debt which had become due and payable"
Adjudicating Authority Cannot Substitute Any Commercial Term Of Resolution Plan Approved By Committee Of Creditors: Supreme Court
The Supreme Court observed that adjudicating authority cannot substitute any commercial term of the resolution plan approved by Committee of Creditors. If, within its limited jurisdiction, the Adjudicating Authority finds any shortcoming in the resolution plan vis-Ã -vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission,...
Insolvency Law in Review – February 2021
The enactment of the Insolvency and Bankruptcy Code 2016 (Code) has had significant ramifications on the corporate insolvency landscape. Over time, the Code has witnessed a manifold increase in litigation, and consequently in the number of decisions. This has made it difficult for insolvency practitioners to stay updated with developments in the field. The purpose of this column is to fill...
Section 14 Limitation Act Applies To Application Under Section 7 IBC : Supreme Court
The Supreme Court has held that in an application under Section 7 of the Insolvency and Bankruptcy Code, the applicant can claim the benefit of Section 14 of the Limitation Act, in respect of proceedings under the SARFAESI Act.Section 14 of the Limitation Act 1963 allows for exclusion from the limitation period the time spent litigating before wrong forum.A bench comprising Justices...
Not All Disputes Are Amenable To The Jurisdiction Of Electricity Commission: PPAs Cannot Be Terminated During Moratorium
The Hon'ble Supreme Court in its order dated 08.03.2021 in the matter titled Gujarat Vikas Nigam Limited Vs. Mr. Amit Gupta & Ors. ("Instant Matter"), while upholding order of the National Company Law Appellate Tribunal ("NCLAT") held that National Company Law Tribunal ("NCLT") has jurisdiction to adjudicate contractual disputes which arise solely from or which relate to corporate debtor's insolvency. In Instant Matter, the Hon'ble Court has dealt with the role/power of NCLT to...
NCLT Allows Waiver Of Improper Share Allotment And Irregular Appointment Of Directors
The Hon'ble NCLT recently in the matter of Harman Singh Arora and Ors. v. Axestrack Software Solutions Pvt. Ltd. & Ors. ("Company Petition No. 11/241-242/JPR/2018") and in Priya Choudhary and Ors. vs. Axestrack Software Solutions Pvt. Ltd. & Ors. ("Company Petition No. 279/241-242/JPR/2019") after taking into record the settlement agreement arrived at between the parties inter se, allowed waiver/ exemption to the Company ("Axestrack Software Solutions Pvt. Ltd") from the penalty(ies) qua...
Person Ineligible U/s 29A IBC To Submit Resolution Plan Cannot Propose Scheme Of Compromise & Arrangement U/s 230 Companies Act 2013: Supreme Court
The Supreme Court held that a person who is ineligible under Section 29A of the Insolvency Bankruptcy Code to submit a resolution plan, cannot propose a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013.The bench comprising Justices DY Chandrachud and MR Shah also upheld the constitutional validity of Insolvency and Bankruptcy Board of India (Liquidation...
NCLT/NCLAT Can't Interfere With Commercial Wisdom Of CoC Except Within Limited Scope Under Sections 30 & 31 IBC : Supreme Court
The Supreme Court has reiterated that the National Company Law Tribunal(NCLT) or the National Company Law Appellate Tribunal(NCLAT) cannot interfere with the 'commercial wisdom' of the Committee of Creditors(CoC), except within the limited scope under Sections 30 and 31 of the Insolvency and Bankruptcy Code(IBC).Based on this well settled principle, a 3-judge bench comprising Justices...
Supreme Court Calls For Law To Clarify Validity Of 'Ipso Facto' Contractual Clauses In Relation To Insolvency
The Supreme Court has observed that lack of a legislative voice on the issue of validity/invalidity of ipso facto clauses relating to insolvency will lead to confusion and reduced commercial clarity.The bench comprising Justices DY Chandrachud and MR Shah observed thus while upholding the order of the National Company Law Tribunal which stayed the termination by the Gujarat Urja Vikas...
Time Is A Crucial Facet Of Scheme Under IBC; Resolution Applicant Must Be Fair In Its Dealings: Supreme Court
Time is a crucial facet of the scheme under the IBC, the Supreme Court said while dismissing the appeal filed by a Resolution applicant.In this case, the National Company Law Tribunal [NCLT] allowed the liquidation of the Corporate Debtor to proceed. Upholding this order, the National Company Law Appellate Tribunal [ NCLAT] observed that the applicant had failed to implement the Resolution...
Proceedings Under Section 34 Of Arbitration Act Also Covered By Moratorium Under Section 14 IBC: Supreme Court
The Supreme Court observed that an application under Section 34 of the Arbitration and Conciliation Act to set aside an award is covered by moratorium under Section 14 of the Insolvency and Bankruptcy Code.Section 34 proceeding is a proceeding against the corporate debtor in a court of law pertaining to a challenge to an arbitral award and would be covered just as an appellate proceeding in...
Insolvency Law In Review – January 2021
The enactment of the Insolvency and Bankruptcy Code 2016 (Code) has had significant ramifications on the corporate insolvency landscape. Over time, the Code has witnessed a manifold increase in litigation, and consequently in the number of decisions. This has made it difficult for insolvency practitioners to stay updated with developments in the field. The purpose of this column is to...