IBC Quarterly Digest: July To September 2024
Tazeen Ahmed
5 Nov 2024 8:04 PM IST
Supreme CourtFree Copy Of NCLT Order & Copy Of Order Obtained On Paying Cost Are 'Certified Copies' For Filing NCLAT Appeal : Supreme CourtCase Title: State Bank of India v. India Power Corporation Ltd Citation: 2024 LiveLaw (SC) 766The Supreme Court today (September 27) set aside an order of the National Company Law Appellate Tribunal (NCLAT) which refused to condone delay in filling...
Supreme Court
Case Title: State Bank of India v. India Power Corporation Ltd
Citation: 2024 LiveLaw (SC) 766
The Supreme Court today (September 27) set aside an order of the National Company Law Appellate Tribunal (NCLAT) which refused to condone delay in filling an appeal because of the filling of a 'free copy' of the impugned order.
The bench of CJI DY Chandrachud and Justice Manoj Misra held that there was no difference between a free certified copy of the order and a certified copy which is obtained after paying cost under Rule 50 of the National Company Law Tribunal Rules 2016.
Stakeholders Consultation Committee's Advice Not Binding On Liquidator: Supreme Court
Case Title: V.S. Palanivel v. P. Sriram CS Liquidator etc, Civil Appeal Nos. 9059-9061 of 2022
Citation: 2024 LiveLaw (SC) 662
The Supreme Court clarified that the advice offered by the Stakeholders Consultation Committee (SCC) constituted in liquidation proceedings is not binding on the Liquidator.
Case Title: V.S. Palanivel v. P. Sriram CS Liquidator etc, Civil Appeal Nos. 9059-9061 of 2022
Citation : 2024 LiveLaw (SC) 662
The Supreme Court recently interpreted Rule 12 of Schedule 1 under Regulation 33 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 as mandatory in character. Rule 12 relates to how assets of the Company (Corporate debtor) are to be sold by the Liquidator.
Case Title: V.S. Palanivel v. P. Sriram CS Liquidator etc, Civil Appeal Nos. 9059-9061 of 2022
Citation : 2024 LiveLaw (SC) 662
The Supreme Court recently refused to cancel an e-auction despite the Auction Purchaser making a glaring default in making a deposit of the balance sale consideration on grounds that the subject matter of the auction has been utilised and the appellant failed to approach the court on time.
A bench of Justices Hima Kohli and Ahsanuddin Amanullah noted: "Much water has flown under the bridge by now. The subject land has been utilized by the Auction Purchaser to build a 200-bed Mother and Child hospital which is operational. Huge amounts have been pumped into the project by the Auction Purchaser. The hospital is fully functional providing medical facilities to seven surrounding districts."
In contrast, it noted that the appellant who moved the court in appeal to cancel the auction has not been a vigilant litigation. It observed: "His conduct shows that he has dragged his feet at every stage. Records reveal that belated applications have been filed by him for seeking recall of the orders passed by the Adjudicating Authority granting extension of time to the Auction Purchaser. For reasons best known to him, it took 19 months for the appellant to prefer an appeal before the Tribunal against the order passed by the Adjudicating Authority, as provided for in the IBC. Furthermore, the appellant resisted handing over possession of the subject property to the respondents thereby causing more delay."
IBC | CIRP Of Holding Company Cannot Include Subsidiary's Assets: Supreme Case no. – Civil Appeal No. 4565 of 2021
Case Title: BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr.
The Supreme Court on July 23 held that a holding company is not the owner of its subsidiary's assets and thus, subsidiary assets cannot be included in the holding company's resolution plan.
A bench of Justice Abhay Oka and Justice Pankaj Mithal dismissed an appeal filed by a Successful Resolution Applicant of a Corporate Guarantor against NCLT's decision to admit Financial Creditor's application for recovery of balance amount from the Corporate Debtor.
The Corporate Debtor in this case was a subsidiary of the Corporate Guarantor.
“A holding company and its subsidiary are always distinct legal entities. The holding company would own shares of the subsidiary company. That does not make the holding company the owner of the subsidiary's assets...Therefore, the assets of the subsidiary company of the corporate debtor cannot be part of the resolution plan of the corporate debtor”, the court held.
Insolvency Resolution Of Corporate Guarantor Won't Bar Creditor From Filing CIRP Against Corporate Debtor For Balance Debt : Supreme Court
Case Title: BRS Ventures Investments Ltd. Versus SREI Infrastructure Finance Ltd. & Anr.
Citation : 2024 LiveLaw (SC) 508
In a notable decision relating to the Insolvency & Bankruptcy Code of 2016, the Supreme Court held when that the insolvency resolution of a corporate guarantor will not prevent the creditor from initiating another insolvency process against the corporate debtor for the balance debt.
The Court clarified that the insolvency resolution of the corporate guarantor will not result in the discharge of the corporate debtor towards the remaining debt.
High Court
Initiating Tax Proceedings After CIRP Approval Violates Section 31 IBC: Bombay High Court
Case: Uttam Value Steels Ltd. Vs Assistant Commissioner of Income Tax, WRIT PETITION (L) NO. 9420 OF 2022
Recently, the Bombay High Court dealt with a writ petition filed by Uttam Value Steels Ltd. and Mr. Subodh Karmarkar, challenging several notices issued by the Income Tax Department under various provisions of the Income Tax Act, 1961. The dispute revolved around tax claims and proceedings initiated by the Income Tax authorities against Uttam Value Steels Ltd., despite the company having successfully undergone a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).
Case Title: Uttam Value Steels Ltd. versus Assistant Commissioner of Income Tax and Ors
Case Number: Writ Petition (L) No. 9420 OF 2022
Since upon the completion of Corporate Insolvency Resolution Process (CIRP), the Assessee has changed hands and commenced under a new ownership and management, the Bombay High Court held that tax proceedings pertain to period prior to the CIRP, and consequent to the approval of the resolution plan, the tax proceedings stand extinguished. The Division Bench of Justice G. S. Kulkarni and Justice Somasekhar Sundaresan observed that “provisions outlined in Section 31(1) of the Insolvency and Bankruptcy Code (IBC) stipulates that approval of resolution plan by the adjudicating authority is binding on Central Government and its agencies in respect of any statutory dues arising under any law for the time being in force, thus binding tax authorities and their enforcement actions”.
Case Title: M/S Bgr Energy Systems Ltd v. State of U.P. and Another [WRIT TAX No. - 1026 of 2024]
The Allahabad High Court has held that order Section 73 of the Goods and Service Tax Act, 2017 cannot be passed a company which is under the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. Section 73 of the Goods and Service Tax Act, 2017 empowers a proper officer to initiate proceedings if he is satisfied that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any willfulmisstatement or suppression of facts to evade tax by any assesee.
Case Title: OCL Iron and Steel Limited vs Union of India
Citation: 2024 LiveLaw (Del) 862
The Delhi High Court single bench of Justice Sanjeev Narula held once a resolution plan is accepted, the stakeholders cannot impose penalties or claim dues from the Corporate Debtor based on past liabilities.
Case Title: Pitambar Solvex Pvt Ltd And Anr. vs. Manju Sharma And Ors.
Case No.: ARB.P. 212/2024, I.A. 9821/2024
The Delhi High Court bench of Justice Neena Bansal Krishna held that mere initiation of the arbitration proceedings does not bar the corporate debtor from pursuing his other remedies including those under the Insolvency Bankruptcy Code.
NCLAT
NCLAT Upholds Liquidator's Discretion To Reject Claims Based On Post-Liquidation Arbitral Awards
Case Title: SBS Holdings, Inc. vs. Mohan Lal Jain
Case Number: Company Appeal (AT) (Insolvency) No. 624 of 2024
The National Company Law Appellate Tribunal (NCLAT) bench, comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member), has held that a Liquidator has the authority under Section 33(5) of the Insolvency and Bankruptcy Code, to decide to reject a claim that is made after the Liquidation Commencement Date. The Tribunal noted that the scheme of Regulations 12 and 16 of the IBBI (Liquidation Process) Regulations 2016 clearly contemplate that a claim cannot be admitted after the liquidation commencement date.
Case Title: Uttarakhand Power Corporation Ltd. vs. M/s Shirdi Industries Ltd. & Anr.
Case Number: Company Appeal (AT) (Insolvency) No. 799 of 2024 with Company Appeal (AT) (Insolvency) No. 803 of 2024 with Company Appeal (AT) (Insolvency) No. 832 of 2024
The National Company Law Appellate Tribunal (NCLAT) bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra, Member (Technical) has held that pre-CIRP dues of the Corporate Debtor must be settled in accordance with the approved resolution plan, and any voluntary payments made by the Corporate Debtor after the commencement of CIRP must be appropriated towards CIRP dues. The Tribunal observed insisting on a different manner of payment than what is specified in the resolution plan, would amount to an infraction of the resolution plan and cannot be countenanced.
NCLAT Affirms 'Nil' Payment To Operational Creditors In Resolution Plan
Case Title: Sai Balaji Facility vs. CA Ramchandra Dallaram Choudhary, RP for Adico Forge Pvt. Ltd. & Ors.
Case Number: Company Appeal (AT) (Insolvency) No. 1642 of 2024
The National Company Law Appellate Tribunal, New Delhi bench, presided by Justice Ashok Bhushan, upheld the Resolution plan, which proposed NIL payment to the operational creditors in the event of Liquidation, reiterating its decision in Rajat Metaal Polychem Pvt. Ltd. vs. Mr. Neeraj Bhatia and Anr., which held that no exception can be taken to such Plans, which provide payment to Operational Creditor in accordance with Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016.
NCLAT: Operational Creditor Can't Claim Priority Over Unsecured Financial Creditor In Liquidation
Case Title: Times Innovative Media Limited vs Pawan Aggarwal (Liquidator) & Anr.
Case Number: Company Appeal (AT) (Insolvency) No.1139 of 2024
The National Company Law Appellate Tribunal bench, comprising Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) held that under Section 53(1) of the Insolvency and Bankruptcy Code (IBC), unsecured financial creditors have priority in the waterfall mechanism over operational creditors in the distribution of a corporate debtor's liquidation estate. The tribunal reiterated that there is no distinction between related-party unsecured financial creditors and other unsecured financial creditors.
Case Title: Noida Power Company Limited vs Mr. Gaurav Katiyar Case Number:
Company Appeal (AT) (Insolvency) No. 1209 of 2024 with Company Appeal (AT) (Insolvency) No. 1210 of 2024
The National Company Law Appellate Tribunal (NCLAT), Delhi bench comprising Justice Ashok Bhushan, Chairperson, Barun Mitra (Technical Member) and Arun Baroka, Technical Member has directed the Resolution Professional to pay outstanding electricity dues incurred by the Corporate Debtor during the moratorium period. The Tribunal observed that the protection under Section 14(1) of the Insolvency and Bankruptcy Code (IBC) is subject to no defaults in payment of current dues as provided under the explanation of the provision.
Case Title: Kapil Katyal vs HDFC Securities Ltd. & Ors.
Case Number: Company Appeal (AT) No. 301 of 2024 & I.A. No. 6474 of 2024
The National Company Law Appellate Tribunal (NCLAT), New Delhi bench, comprising Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member) has reiterated that failure to apply for a certified copy of the impugned order within the prescribed limitation period renders the appeal time-barred.
NCLAT Dismisses Samrat Restaurant's CIRP Plea: Section 10A Bars Insolvency For COVID-19 Era Defaults
Case Title: Samrat Restaurant v. Brewcrafts Microbrewing Pvt. Ltd.
Case Reference: Company Appeal (AT) (Insolvency) No. 1409 of 2024 & I.A. No. 5117 of 2024
The National Company Law Appellate Tribunal (NCLAT), New Delhi dismissed the insolvency application filed under section 9 of the Insolvency and Bankruptcy Code (IBC) by Samrat Restaurant (Operational Creditor) against Brewcrafts Microbrewing Pvt. Ltd. (Corporate Debtor). The application was dismissed on the ground that a substantial portion of the debt arose during the period of section 10A.
Case Title: Ms Kalpana Jain vs Universal Oil Seals Mfg Co Pvt Ltd and ors
Case Number: COMPANY APPEAL (AT) NO. 196/2024
The National Company Law Appellate Tribunal Principal Bench, New Delhi of Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) has held that the power of recall does not grant the NCLAT the authority to rehear a case in order to identify any apparent error in the judgment, as that falls within the scope of a review.
The bench held that the power of recall can only be exercised when a procedural error has been made in delivering the original judgment.
Case Title: N.V. Aluminium Cast Pvt. Ltd. vs APL Metals Ltd
Case Number: Company Appeal (AT) (Insolvency) No. 568 of 2024
The National Company Law Appellate Tribunal Principal Bench, New Delhi of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that invoices deemed bogus by the Income Tax Department in assessment orders cannot be relied upon to initiate insolvency proceedings against a Corporate Debtor.
Case Title: M/s Agarwal Foundries Private Limited vs POSCO E&C India Private Limited
Case Number: Company Appeal (AT) (Insolvency) No. 1492 of 2024
The National Company Law Appellate Tribunal Principal Bench, New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that filing a Section 9 application for the sole purpose of recovering money, rather than resolving insolvency, constitutes an abuse of the IBC's provisions and is strongly disapproved.
The bench held that:
“We need to be mindful that no stakeholder takes any undue benefit of the provisions of the IBC. Interestingly, we find that the Appellant has been filing multiple Section 9 applications either against the Respondent or against the Empathy. The first Demand Notice under Section 8 of IBC was issued to the Respondent on 27.07.2017. The Appellant sent another notice on 11.10.2017 and followed it up with Section 9 application which was however withdrawn on 08.06.2018. Thereafter, the Appellant sent another Demand Notice on 17.07.2018 to Empathy and filed a Section 9 application against them which too was withdrawn on 15.10.2018. Subsequently on 24.10.2018, the Appellant sent a fresh Demand Notice to Empathy which was followed by a Section 9 application filed on 11.02.2019. This shows the malafide motive of the Appellant to keep the Section 9 pot boiling so as to arm-twist the Respondent which was otherwise a solvent company to illegally extort monies from them. Thus, the Section 9 application was not filed for the purpose of insolvency resolution but for recovery of money owed to them by Empathy fromthe Respondent. Such behaviour on the part of the Appellant amounts to misuse of the provisions of the IBC and is strongly deprecated.”
NCLAT Declares Sale Agreement Not A Financial Debt, Dismisses Insolvency Petition
Case Title: Sandeep Mittal vs. M / s ASREC (India) Ltd. & Ors.
Case Number: Company Appeal (AT) (Insolvency) No. 37 & 573 of 2024
The NCLAT Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Member, Technical), and Arun Baroka (Member, Technical), has held that a sale consideration in the sale agreement did not constitute a “financial debt” under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC).
Operational Creditors Getting Zero Payouts, Hands Of Courts Are Tied, Observed NCLAT, Delhi
Case: Rajat Metaal Polychem Pvt. Ltd. Vs. Mr. Neeraj Bhatia RP Vinayak Rathi Steels Rolling Mills Pvt. Ltd. and Anr.
Case Number: Company Appeal (AT) (Insolvency) No. 1063 of 2022
Recently the NCLAT, New Delhi in its judgement to the case of Rajat Metaal Polychem Pvt. Ltd. Vs. Mr. Neeraj Bhatia RP Vinayak Rathi Steels Rolling Mills Pvt. Ltd. and Anr. stated that during the Resolution Process, the operational creditors are denied any payment when the amount that is payable to them in the event of the Insolvency Process is nil. The courts are not able to assist them unless the legislation tends to come in aid of the operational creditors
Case Title: M/s Agarwal Foundries Private Limited vs. Posco E&C India Pvt. Ltd.
Case Number: Company Appeal (AT) (Insolvency) No. 1492 of 2024
The National Company Law Appellate Tribunal (NCLAT) bench comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member), and Arun Baroka (Technical Member) has held that the repeated filings of Section 9 applications and withdrawals indicate an attempt to misuse the provisions of the Insolvency and Bankruptcy Code (IBC) to “arm-twist” the Respondent, a solvent company to illegally extort monies rather than pursuing genuine insolvency resolution.
Case Title: Brijesh Haridas Nagar Co-op. Hsg Soc. Ltd. vs VAS Infrastructure Ltd. & Anr.
Case Number: Comp. App. (AT) (Ins) No. 1201 of 2024 & I.A. No. 4295, 4296, 4297, 4298 of 2024
The National Company Law Appellate Tribunal Principal Bench, New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Indevar Pandey (Technical Member) has held that under the Insolvency and Bankruptcy Code (IBC), the limitation period for filing an appeal must be calculated from the date of pronouncement of the order. The bench held that a party involved in the proceedings, particularly as an intervenor, is presumed to have knowledge of the case and the order passed. Therefore, such a party cannot claim ignorance of the order as a reason for delay in filing an appeal.
Failure To Provide Time To Cure Defect In Section 9 Application Violates Procedural Mandate: NCLAT
Case: Shiv Glitz Hotels and Resorts LLP v. Oravel Stays Ltd., Company Appeal (AT) (Insolvency) No.577 of 2024
NCLAT Delhi recently set aside an order passed by the National Company Law Tribunal (NCLT), Ahmedabad, in the case of Shiv Glitz Hotels and Resorts LLP v. Oravel Stays Ltd., where the NCLT had dismissed a Section 9 application under the Insolvency and Bankruptcy Code (IBC), 2016, without merits. The appeal was filed by Shiv Glitz Hotels and Resorts LLP, an operational creditor, after the NCLT failed to provide an opportunity to rectify the defects in the application, as required by the IBC.
Case Title: Office Beanz Pvt. Ltd. vs ------
Case Number: Company Appeal (AT) (Insolvency) No. 1725 of 2024 & I.A. No. 6238, 6305 of 2024
The National Company Law Appellate Tribunal Principal Bench, New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that primary purpose of Section 10A of the IBC was to provide relief to corporate debtors who defaulted during the period specified in the section. It held that although the debt itself is not extinguished, Section 10A specifically bars applications under Sections 7, 8, and 10. Further, the bench held this prohibition remains effective even after the period covered by Section 10A has expired, meaning that no applications can be filed for defaults that occurred during this period.
Section 10A prohibits the filing of applications for the initiation of corporate insolvency resolution process (CIRP) under Sections 7, 9, and 10 of the IBC for any default arising on or after March 25, 2020.
No Inherent Right To Withdraw Section 9 IBC Application And Refile: NCLAT New Delhi
Case Title: Florex Tiles vs M/s. Greenstone Granite Pvt. Ltd.
Case Number: Company Appeal (AT) (Insolvency) No.1487 of 2024
The National Company Law Appellate Tribunal, Principal Bench, New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that in proceedings under the Insolvency and Bankruptcy Code (IBC), an Applicant does not have an inherent right to withdraw an application filed under Section 9 at any stage and subsequently request the liberty to file a new application.
Case Title: Wind World (India) Limited vs Indian Renewable Energy Development Agency Limited and anr
Case No: Company Appeal (AT) (Insolvency) No.175 of 2023
The National Company Law Appellate Tribunal Principal Bench, New Delhi of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) has held that there is no violation of Section 14(1)(d) of the Insolvency and Bankruptcy Code (IBC) in the auction of assets or facilities of a subsidiary company if the assets were handed over to the Corporate Debtor for operation and maintenance under the SARFAESI Act.
Section 14(1)(d) prohibits any recovery action or enforcement of security interests by creditors, landlords, or lessors if the assets are in the possession or occupation of the corporate debtor
Case Title: Sanjeev Mahajan vs Indian Bank and Others
Case No.: Company Appeal (AT) (Insolvency) No. 1440 of 2024
The National Company Law Appellate Tribunal, New Delhi division bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) held that once a Resolution Plan is approved by the Committee of Creditors (CoC) and the Corporate Insolvency Resolution Process (CIRP) is concluded, the submission of new settlement proposals is not permissible. The CoC's decision, particularly when taken with unanimous consent, is final and cannot be challenged unless it is arbitrary.
Dispute Regarding GST Dues Not A Bar To Section 9 IBC Proceedings: NCLAT
Case Title: Gulshan Kumar Ahuja vs. Monika Garg Sole Proprietor Aggarwal
Case Number: Company Appeal (AT) (Insolvency) No. 1202 of 2024
The NCLAT Bench of Justice Rakesh Kumar Jain, Member (Judicial) and Arun Baroka, Member (Technical) has held that the dispute regarding payment of GST dues is not a “pre-existing dispute” between the parties that would preclude the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC).
Case Title: Indiabulls Asset Reconstruction Company Ltd vs Pawan Kapoor
Case Number: COMPANY APPEAL (AT)(Insolvency) No.192/2021
The National Company Law Appellate Tribunal Principal Bench, New Delhi of Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) has held that once the interim moratorium is in effect due to insolvency proceedings against a personal guarantor under the IBC, 2016, the bank is prohibited from continuing any further actions under the SARFAESI Act regarding the property mortgaged by the personal guarantor.
Section 12A Application Not Permitted During Liquidation Period: NCLAT Principal Bench
Case Title: Asha Chopra and ors vs M/s. Hind Motors India Limited and ors
Case Number: Company Appeal (AT) (Insolvency) No. 1425 – 1428 of 2024 & I.A. No. 5180 – 5183 of 2024
The National Company Law Appellate Tribunal Principal Bench, New Delhi of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technicial Member) and Arun Baroka (Technicial Member) has held that an application under Section 12A of the IBC is not permitted during the liquidation period. Section 12A allows for the withdrawal of an insolvency application with the approval of ninety percent of the Committee of Creditors (CoC).
The bench noted that Section 12A is designed to facilitate the withdrawal of an application during the Corporate Insolvency Resolution Process (CIRP) before the insolvency resolution or liquidation proceedings have begun. Once the liquidation process commences, it held that the Committee of Creditors, which is instrumental in approving such withdrawals, ceases to exist in its original capacity.
The bench held that: “In view of the clear Statutory Scheme as delineated by 12A, Section 33 and Regulation 2B of the Liquidation Regulation, we are of the view that during Liquidation period, an Application under Section 12A is not permissible.”
Computation Of Limitation Must Be From Date Of E-Filing Of Appeal: NCLAT Principle Bench
Case Title: Innovators Cleantech Pvt. Ltd. Vs Pasari Multi Projects Pvt. Ltd.
Case Number: Interlocutory Application Nos. 1622 & 1623 of 2024
The National Company Law Appellate Tribunal, Principal Bench, New Delhi of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) has held that the computation of limitation for NCLAT purposes must be from the date of e-filing the appeal.
Case Title: M/s Agroha Paper Industries Private Limited vs Bank of Maharashtra
Case Number: Company Appeal (AT) (Insolvency) No. 1342 of 2023
The National Company Law Appellate Tribunal Principal Bench New Delhi of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) held that the protective provisions of Section 10 of the IBC should not be exploited or abused by the Corporate Debtor to gain an unfair advantage.
The bench noted that the SARFAESI proceedings initiated by the bank begun well before the filing of the Section 10 application by the Corporate Debtor. Thus, it noted that the application under Section 10 was a tactical maneuver rather than a genuine effort for insolvency resolution.
Case Title: Jaldhara Properties and Trading Pvt. Ltd vs Sudal Industries Ltd. & Anr.
Case Number: Company Appeal (AT) (Ins) No. 707 of 2023 with Company Appeal (AT) (Ins) No. 1420 of 2023
The National Company Law Appellate Tribunal, Principal Bench, New Delhi of Justice Rakesh Kumar Jain (Judicial Member), Naresh Salecha (Technical Member) and Indevar Pandey (Technical Member) has held that if an application under Sections 7, 9, or 10 of the Insolvency and Bankruptcy Code was already in process before 2021 Amendment Act came into force, then the amendments in Section 11A would not affect the priority of the proceedings.
Case Title: IIFL Home Finance Ltd. vs. Shiv Nandan Sharma, Resolution Professional Saha Infratech Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 856 of 2024
The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha, and Mr. Indevar Pandey (Technical Members) held that lending institutions providing loans to homebuyers do not qualify as 'Financial Creditors' under Insolvency and Bankruptcy, Code 2016 ('IBC').
Case Title: Rita Malhotra & Anr. vs. Orris Infrastructure Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 484 of 2024
The National Company Law Appellate Tribunal (“NCLAT”) New Delhi bench comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra, and Mr. Arun Baroka (Technical Members) held that assured returns class of creditors who are allotted commercial space/unit constitutes an 'allottee' under Real Estate (Regulation and Development) Act, 2016 (“RERA”) and Insolvency and Bankruptcy Code, 2016 (“IBC”).
Case Title: Iskon Infra Engineering Private Limited vs. Central Bank of India
Case No.: Company Appeal (AT) (Insolvency) No. 323 of 2024 & I.A. No. 1080 of 2024
The National Company Law Appellate Tribunal ('NCLAT') Delhi bench, comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) held that a Corporate Guarantor cannot be absolved from its liability only due to non-invocation of guarantee.
Case Title: Swan Energy Ltd. vs Chandan Prakash Jain and Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 313 of 2024
The National Company Law Appellate Tribunal (NCLAT), Delhi bench of Justice Ashok Bhushan (Chairperson) and Mr Barun Mitra (Technical Member) held that a resolution applicant, who did not take part in the CIRP process from the beginning and was not included in the list of prospective resolution applicants, cannot be suddenly substituted as a resolution applicant to implement the plan of the Corporate Debtor.
Case Title: Jet Aircraft Maintenance Engineers Welfare Association Versus Mr. Ashish Chhawchharia
Case No.: Company Appeal (AT) (Insolvency) No.1705 of 2023 & I.A. No. 6137 of 2023
The National Company Law Appellate Tribunal (Appellete Tribunal) Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), held that the Resolution Professional is not personally liable for the lump sum payments made to the 103 employees who were part of the Asset Preservation Team (APT) responsible for preserving and managing the operations of Jet Airways.
The Appellate Tribunal dismissed the appeal of the Jet Aircraft Maintenance Engineers Welfare Association, which sought payment for all workmen and employees of Jet Airways, against whom the Corporate Insolvency Resolution Process (CIRP) proceedings were initiated on June 20, 2019.
Case Title: Sanskriti Allottee Welfare Association (Reg.) & others Versus Gaurav Katiyar & anr
Case No.: Company Appeal (AT) (Insolvency) No. 878 of 2023
While upholding the Resolution Professional (RP) decision to increase the maintenance charges for homebuyers of the Corporate Debtor to cover electricity bills and dues, the National Company Law Appellate Tribunal (Appellant Tribunal) Delhi, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), held that electricity, being an essential service, must continue during the Corporate Insolvency Resolution Process (CIRP) period.
With approval from the Committee of Creditors (CoC), the RP raised the electricity rate from ₹7 per unit to ₹8.91 per unit for homebuyers who received possession of their flats in the Sanskriti Project of the Corporate Debtor.
NCLT
Deadlocks In Equal Shareholding Should Be Resolved By Buyout Of Shares: NCLT Mumbai
Case Title: Mr. Hormouz Phiroze Aderianwalla & Anr. vs. Del. Seatek India Pvt. Ltd. and Ors.
Case Number: Company Petition/199/MB/2022 & Company Petition/50/MB/2023
The National Company Law Appellate Tribunal (NCLT), Mumbai bench, comprising Mr. Kishore Vemulapalli Hon'ble Member (Judicial Member) and Ms. Anu Jagmohan Singh (Technical Member) has held that in cases of equal shareholding and director representation among shareholders, where a deadlock arises in the day-to-day management of the company, the deadlock should be resolved by one group purchasing the shares of the other.
Case Title: M/s Apogee Enterprises Pvt. Ltd. (formerly M/s Apogee Manufacturing Pvt. Ltd.) v. Late Shri Anil Nanda
Case Number: I.A. 1362/2024, I.A. 2082/2022, and I.A. 2634/2023 in C.P. (I.B) No. 514 of 2020
The National Company Law Tribunal (NCLT), New Delhi, Bench VI, comprising Shri Mahendra Khandelwal (Member, Judicial) and Shri Rahul Bhatnagar (Member, Technical), has held that insolvency proceedings initiated against a personal guarantor under the IBC abate upon the death of the guarantor and that legal representatives cannot be substituted in such cases.
Case Title: UCO Bank vs GIT Textiles Manufacturing Limited
Case Number: I.A. (IB) No. 1350/KB/2024 In C.P. (IB) No. 600/KB/2019
The National Company Law Tribunal Kolkata division bench of Bidisha Banerjee (Judicial Member) and D. Arvind (Technical Member) has ruled that the approval of a Resolution Plan by the Committee of Creditors (CoC) does not empower the Resolution Professional to cancel an existing lease. The bench stated that such issues must be adjudicated by a competent court with the appropriate jurisdiction.
Case Title: Ashdan Properties Privet Limited vs Mr. Harshad Despande / Resolution Professional & Committee of Creditors of Corporate Debtor
Case Number: I.A. 1143 OF 2024 IN C.P. (IB) No. 783 of 2021
The National Company Law Tribunal Mumbai bench of Reeta Kohli (Judicial Member) and Madhu Sinha (Technical Member) has held that Committee of Creditors' decision to reject the Applicant's plan solely due to a technical delay of one day in submission, without evaluating the substantive efforts made and the potential value of the plan, does not align with the objectives of the Corporate Insolvency Resolution Process (CIRP).
Case Title: Ksheeraabd Constructions Private Limited Vs Reliance Infrastructure Limited
Case Number: CP (IB) No.185/MB/2019
The National Company Law Tribunal, Mumbai bench of K. R. Saji Kumar (Judicial Member) and Sanjiv Dutt (Technical Member) has held the claims presented by the Operational Creditor (OC) in the arbitration proceedings and those in the CIRP application of similar and pertained to the same subject matter indicates the existence of a pre-existing dispute between the parties. Therefore, the bench rejected an application for initiation of CIRP
Interest Claims Must Be Based On Contractual Agreement, Not Just Invoice Terms: NCLT Kolkata
Case Title: Sudarshan Paper & Board Private Limited vs Verges Properties LLP
Case Number: Company Petition (IB) Nom 54 of 2024
The NCLT Kolkata Divison Bench, comprising Bidisha Banerjee, Member (Judicial) and D. Arvind, Member (Technical) has held that interest cannot be clubbed along with the debt in the absence of an agreement or clause in the purchase order. The Tribunal further observed that TDS deduction on the interest payable is not an acknowledgement of liability.
Case Title: Indian Bank Vs Mr. Manish Kumar
Case Number: Company Petition (IB) No. 340/KB/2022 And I.A. (IB) No. 316/KB/2024
The National Company Law Tribunal Kolkata bench of Bidisha Banerjee (Judicial Member) and D. Arvind (Technical Member) has imposed a ₹1 lakh penalty on Indian Bank for filing insolvency proceedings against a Personal Guarantor who was already undergoing insolvency proceedings initiated by the same bank.
Interest Not Mentioned In Invoices Or Civil Court Decree, Can't Add To Reach Threshold Limit: NCLT
Case Title: Mr. Pardeep Kumar Vs M/S. Welldone Exim Private Limited
Case Number: RCP 2(ND)/2024 (Old Case No. IB-548(ND)/2023)
The National Company Law Tribunal New Delhi bench of Bachu Venkat Balaram Das (Judicial Member) and Atul Chaturvedi (Technical Member) has held that claim for interest is not arising out of supplies of goods or services and do not form part of the Operational Debt in terms of Section 5(21) of the Insolvency and Bankruptcy Code, 2016. Therefore, the bench held that the interest awarded by the civil court could not be combined with the principal amount to meet the threshold limit of Rs. 1 Crore.
Case Title: UCO Bank vs Nandini Impex Pvt Ltd.
Case Number: IA No. 795/(KB)/2024 in C.P. No. 1377/KB/2020
The National Company Law Tribunal Kolkata bench of Bidisha Banerjee (Judicial Member) and Balraj Joshi (Technical Member) has held that the liquidation of a corporate debtor should be a measure of last resort. It held that the Insolvency and Bankruptcy Code (IBC) acknowledges a broader public interest in resolving corporate insolvencies with its primary objective extending beyond the mere recovery of outstanding debts. The bench held that the corporate debtor lacks substantial tangible assets that could generate significant recovery for creditors. Consequently, it held that proceeding with liquidation could undermine the IBC's core objective of maximizing asset value.
Case Title: Mayfair Biotech Pvt. Ltd Vs Good Value Chemicals Pvt. Ltd
Case Number: C.P (IB)/215(ND)2020
The National Company Law Tribunal, New Delhi bench of Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member) has held that the exchange of debit notes and the pending MSME reference indicate a plausible pre-existing dispute. Therefore, the bench held that if the Corporate Debtor raises a plausible contention about a pre-existing dispute, which is not just a moonshine or feeble legal argument, it would suffice for the Adjudicating Authority to reject the application filed under Section 9 of the IBC.
Case Title: In the matter of Q West Infrastructure Private Limited vs Starwort Engineers Private Limited
Case Number: CP(IB)No. 229/MB/2024
The National Company Law Tribunal, Mumbai bench of Prabhat Kumar (Technical Member) and Justice V.G Bisht (Judicial Member) has held that deficiencies in document stamping, as per the Stamp Act, cannot be used as a reason to dismiss an application under Section 7 of the Insolvency and Bankruptcy Code
Judge Recusals On Frivolous Grounds Enable Litigant Manipulation And Bench Selection: NCLT Mumbai
Case Title: M/s. Perfect Infraengineers Ltd. Vs Technology Development Board
Case Number: Interlocutory Application No. 3403/2024 IN Company Petition No.(IB) 322 of 2023
The National Company Law Tribunal, Mumbai bench of Justice (Retd.) Sh. Virendrasingh Bisht (Judicial Member) and Prabhat Kumar (Technical Member) has held that judges recusing themselves based on frivolous and baseless allegations would enable litigants to manipulate proceedings to select their preferred benches. The bench held that recusal cannot be dictated by litigants; it is solely at the judge's discretion. This practice, if allowed, would effectively permit litigants to choose benches to their liking.
IBC Provisions Prevail Over Kolkata Municipal Corporation Act: NCLT Mumbai
Case Title: Kolkata Municipal Corporation vs Gajesh Labhchand Jain
Case Number: Appeal No.03/MB/2024 In CP (IB) No. 1056/MB/2020
The National Company Law Tribunal Mumbai bench of Anu Jagmohan Singh (Technical Member) and Kishore Vemulapalli (Judicial Member) has held that the provisions of the Kolkata Municipal Corporation Act do not take precedence over those of the IBC. The bench held that claims by the KMC, being in the nature of crown debt, should be classified as government dues and accordingly placed within the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code, 2016.
Case Title: Bank of Baroda vs Mr. Jitendra V Kikavat
Case Number: C.P. (IB) NO. 139/MB/2022
The National Company Law Tribunal Mumbai bench of Justice V. G. Bisht (Judicial Member) and Prabhat Kumar (Technical Member) has rejected contention regarding the insufficiency of stamp duty on the guarantee agreement. The bench held that the proceedings under the Insolvency and Bankruptcy Code (IBC) are intended to address insolvency issues rather than to enforce the guarantee itself.
Case Title: MR. Debabrata Ray Choudhuri vs The State Trading Corporation of India Limited
Case Number: Company Petition No. (IB) 242(PB)2020
The National Company Law Tribunal New Delhi bench of Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member) has rejected an application for the initiation of the Corporate Insolvency Resolution Process (CIRP) by a Senior Advocate for non-payment of Rs. 6.26 Crore legal fees. The bench noted that there exists a pre-existing dispute regarding the invoices issued, as they do not conform to the agreed schedule of fees. The invoices contained discrepancies that have not been rectified despite prior communications highlighting these issues. The bench noted that this discrepancy underscores a substantial dispute between the parties concerning the legitimacy of the invoiced amounts. Therefore, it held that there existed a pre-existing dispute exists regarding the invoices and their alignment with the agreed schedule of fees.
No Provision In IBC To Send Resolution Plan Back To CoC For Reconsideration: NCLT New Delhi
Case Title: Punjab National Bank Vs Saraya Industries Ltd
Case Number: IA 6058/2023 IN Company Petition No. (IB) – 2628/(ND)/2019
The National Company Law Tribunal New Delhi bench of Mahendra Khandelwal (Judicial Member) and Rahul Bhatnagar (Technical Member) has held that there is no provision in IBC allowing the Adjudicating Authority to send the resolution plan back to the Committee of Creditors (CoC) for reconsideration at the CoC's request. Further, the bench held that once a resolution plan is submitted to the Adjudicating Authority, its jurisdiction is very limited concerning the approval or rejection of the plan.
Case Title: Mr. Anirudh Kumar vs M/s. Hydraulics and Pneumatics India LLP & ORS
Case Number: CA-133(ND)/2022 And Company Petition No. 53/45QA/ND/2022
The National Company Law Tribunal New Delhi bench of Dr. Sanjeev Ranjan (Technical Member) and Manni Sankariah Shanmuga Sundaram (Judicial Member) has held that there is no provision empowering it to relax / waive the eligibility requirements prescribed under Section 43(3) of LLP Act. Section 43(3) outlines the conditions under which the Central Government may appoint inspectors to investigate the affairs of an LLP. This subsection mandates that a minimum of one-fifth of the total number of partners must file a petition for such an investigation.
Case Title: Vineet K. Chaudhary vs NTPC Limited
Case Number: INTERLOCUTORY APPLICATION NO. 3453 OF 2022 IN COMPANY PETITION (IB) NO. 1374 (MB)/2017
The National Company Law Tribunal, Mumbai bench of Kuldip Kumar Kareer (Judicial Member) and Anil Raj Chellan (Technical Member) had held that directing Corporate Debtor to seek resolution through civil courts or arbitration for even admitted dues would undermine the objectives of the Insolvency and Bankruptcy Code.
Case Title: State Bank of India vs Dr Renuka Rani Maganti and Anr.
Case No.: CP (IB) NO.50/95/AMR/2022
The National Company Law Tribunal, Amaravati special bench of Dr Venkata Ramakrishna Badarinath Nandula (Judicial Member) dismissed a petition filed by the State Bank of India under Section 95(1) of the Insolvency and Bankruptcy Code, 2016. Discrepancies were found in the addresses used for the demand notice served to the personal guarantor and it was held that SBI failed to send the notice to the correct address as per the guarantee agreement.
Case Title: Employee's provident Fund Organisation vs CA Shirley Mathew
Case Number: I.A. No.4 & 87 of 2024 U/s 60(5) of the IBC, 2016 in C.P.(IB)No.36/BB/2022
The National Company Law Tribunal Bengaluru bench of K. Biswal (Judicial Member) and Manoj Kumar Dubey (Technical Member) has held that claims submitted after the approval of the Resolution Plan, including those related to the moratorium period, are not allowed under the Insolvency and Bankruptcy Code (IBC). The bench held that permitting such belated claims at a later stage would interfere with the Corporate Insolvency Resolution Process.
Case Title: State Bank Of India V/S Jyoti Structures Ltd
Case Number: IA 1217/2024 IA 1835/2024 in C.P. (IB)/1137(MB)2017
The National Company Law Tribunal Mumbai bench of Prabhat Kumar (Technical Member) and Justice Virendrasingh Bisht (Judicial Member) has held that no liability can be imposed on the Successful Resolution Applicant after the approval of the plan by the Committee of Creditors if such liability is not identifiable from the financial records of the Corporate Debtor.
Case Title: State Bank of India vs Dr Jitendra Das Maganti and Anr.
Case No.: CP (IB) No.49/95/AMR/2022
The National Company Law Tribunal (NCLT), Armravati Special Bench of Dr Venkata Ramakrishna Badarinath Nandula (Judicial Member) held that proof of due service of the demand notice presented to the corporate debtor or its guarantor must first be verified by the resolution professional. The creditor cannot present the same directly to the adjudicating authority/tribunal.
Case Title: Gauder & Co. S.A. Vs Isinox Limited
Case Number: CP (IB) No.1277/MB/2022
The National Company Law Tribunal Mumbai bench of K. R. Saji Kumar (Judicial Member) and Sanjiv Dutt (Technical Member) has held that an arbitration clause in an agreement does not prevent an operational creditor from filing an application under Section 9 of the Insolvency and Bankruptcy Code (IBC).
The bench held that the presence of such a clause does not impose any restriction on the Operational Creditor's right to pursue a Section 9 Application.
Interest Not Essential For Debt To Qualify As Financial Debt Under IBC: NCLT Mumbai
Case Title: In the matter of Spenta Enclave Private Limited (Through its Resolution Professional, Mr. Rajesh Jhunjhunwala) vs Spenta Sun City Private Limited
Case Number: C.P. (IB) 1066/MB/2023
The National Company Law Tribunal Mumbai bench of Anil Raj Chellan (Technical Member) and Kuldip Kumar Kareer (Judicial Member) has held that the inclusion of interest is not essential for a debt to qualify as financial debt. The bench held that the definition of financial debt under Section 5(8) of the Insolvency and Bankruptcy Code, 2016, does not explicitly exclude interest-free loans.
Case Title: Proplarity Infratech Private Limited vs Sky High Technobuild Private Limited
Case Number: CP (IB) No.607/(PB)/2023 & I.A. No. 595 of 2024 I.A. No. 1097 of 2024
The National Company Law Tribunal Principal Bench, New Delhi of Chief Justice (Retd.) Ramalingam Sudhakar (President) and Avinash K. Srivastava (Technical Member) has held that mere recording of the transaction as “Inter-Corporate Deposit” in balance sheets is insufficient to establish it as financial debt without supporting documentation. The bench noted that the an application under Section 7 of the IBC can be initiated by Financial Creditor (FC) for initiating the Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor (CD) when there is an existence of 'debt' and consequent 'default.'
Case Title: Nitin Batra and Ors. vs M/s Anand Infoedge Pvt. Ltd. and Others and Connected Matters
Case No.: IA 293/2024, 2497/2024, IN IB-682/PB/2021
The National Company Law Tribunal VI, New Delhi bench of Shri Mahendra Khandelwal (Judicial Member) and Shri Rahul Bhatnagar (Technical Member) held that a joint insolvency resolution process against multiple entities who were involved in the development of the same construction project is recognized and could be initiated under the Insolvency and Bankruptcy Code, 2016.
Insolvency Professional Entities Qualified To Be Appointed As Resolution Professionals: NCLT Mumbai
Case Title: Piramal Capital and Housing Finance Limited vs Notion Real Estate Pvt. Ltd.
Case No.: IA(I.B.C)/3433(MB)2024 IN C.P. (IB)/915(MB)2023
The National Company Law Tribunal, Mumbai bench of Shri Sanjiv Dutt (Technical Member) and Shri K.R. Saji Kumar (Judicial Member), held that Insolvency
Professional Entities (IPEs) are qualified to be appointed as Resolution Professionals (RPs) under the Insolvency and Bankruptcy Code, 2016.
The NCLT held that the Insolvency and Bankruptcy Board of India (IBBI) has the authority to regulate and recognize IPEs as resolution professionals, despite the IBC not explicitly mentioning them as professional service providers.
Case Title: Ericsson India Private Limited vs. Reliance Communications Limited
Case No.: MA No. 3553 of 2019, MA 133 of 2020 & MA 645 of 2020 in CP No.
1386 of 2017 IA No. 3555 of 2019, IA 126 of 2020 & IA 646 of 2020 in CP No. 1387
of 2017
The National Company Law Tribunal ('NCLT') Mumbai bench comprising Justice
V.G. Bisht (Retd.) (Judicial Member) and Mr. Prabhat Kumar (Technical Member) held that exclusion of period of stay of Corporate Insolvency Resolution Process (“CIRP”) petition does not lead to postponement of Insolvency commencement date under Insolvency and Bankruptcy Code, 2016 (“IBC”).
NCLT Mumbai: Notice To CD Recalling Loan Facility Doesn't Constitute Demand On Corporate Guarantor
Case Title: State Bank of India vs. Navjeevan Tyres Private Limited
Case No.: CP (IB) No.1282/MB/2022
The National Company Law Tribunal ('NCLT') Mumbai bench comprising Justice K.
R. Saji Kumar (Judicial Member) and Mr. Sanjiv Dutt (Technical Member) held that notice to Corporate Debtor recalling loan facility doesn't constitute Demand on
Corporate Guarantor.
Case Title: Sanjeev Mahajan vs. Indian Bank (Erstwhile Allahabad Bank) & Anr.
Case No.: I.A. No. 2594/2023 in Company Petition No. (IB) – 1913/ND/2019
The National Company Law Tribunal ('NCLT') Court V, New Delhi bench comprising Shri Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member) held that the Adjudicating Authority cannot consider a Settlement
Proposal, even of a higher value than the Resolution Plan, after the approval of the Resolution Plan by the Committee of Creditors ('CoC').
IBBI
The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 28.06.2024 directing the Insolvency Professionals to file the forms to monitor the Voluntary Liquidation processes under IBC on the electronic platform hosted on IBBI's website at https://www.ibbi.gov.in. only.
IBBI Issues Circular Directing IPs To File Liquidation Process Forms On Electronic Platform Only
Circular No. IBBI/LIQ/73/2024
The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 28.06.2024 directing the Insolvency Professionals to file the forms to monitor the liquidation process under IBC on the electronic platform hosted on IBBI's website at https://www.ibbi.gov.in. only.
Ministry of Corporate Affairs
MCA Issues Circular Launching E-Form MGT-6 And BEN-2 In MCA-21 Version 3.0 From 15.07.2024
The Ministry of Corporate Affairs ('MCA'), Government of India has issued a circular dated 04.07.2024 launching e-Form MGT-6 (Form of return to be filed with the Registrar under section 89) and BEN-2 (Return to the Registrar in respect of declaration under section 90) in MCA-21 Version 3.0 on 15.07.2024.
