Weekly Round Up Of IBC Cases: 2nd May To 8th May 2022

Supreme Court Permits Withdrawal Of SLP Filed By Jayaswal Neco Industries Ltd. Against RBI , Imposing A Cost Of Rs - 10 Lakh

Case title: Jayaswal Neco Industries Limited & Another v Reserve Bank of India & Ors.

Case No.: Special Leave Petition (Civil) Nos.9286-9287 of 2018.

The Supreme Court Bench comprising of Justice U.U. Lalit and Justice S. Ravindra Bhat, while adjudicating a Special Leave Petition (SLP) filed by Jayaswal Neco Industries Ltd., has allowed withdrawal of the SLP subject to costs of Rs. 10 Lakhs. The sole consideration behind permitting withdrawal was that nine lenders of Jayaswal Neco Industries Ltd., which were Public Sector Financial Corporations/Banks, had assigned their debts to Assets Care & Reconstruction Enterprise Ltd. ("ACRE"). If withdrawal was not permitted then these public sector lenders may have to refund huge sums of money. The order was passed on 04.05.2022.

NCLAT

NCLAT Sets Aside The Liquidation Order Of Ballarpur Industries Limited

Case Title: Finquest Financial Solutions Pvt. Ltd. v Anuj Jain (Erstwhile RP of Ballarpur Industries Ltd.) & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 227 of 2022.

The National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal, has set aside the order dated 25.01.2022 passed by NCLT Mumbai Bench whereby Ballarpur Industries Ltd. was sent to liquidation. The NCLAT Bench extended the Corporate Insolvency Resolution Process (CIRP) period till 30.04.2022 and directed the Resolution Professional to get the revised resolution plan approved by NCLT. The order was passed on 19.04.2022.

Decision Of Homebuyers As A Class Is Binding On Every Homebuyer: NCLAT, Delhi

Case Title: Sandeep Kumar Jain v. Anil Tayal

Case No.: Company Appeal (AT) (Insolvency) No. 446 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench New Delhi, comprising of Justice Ashok Bhushan and Ms. Shreesha Merla, while adjudicating an appeal has held that decision taken by the homebuyers as a class is binding on every single homebuyer. The appeal was filed by two homebuyers against the order of NCLT New Delhi, which had rejected their intervention application on the basis that the class of homebuyers is already being represented before NCLT. The NCLAT upheld the NCLT order and directed that the Authorized Representative of class of homebuyers can always approach the Resolution Professional and the Adjudicating Authority in case of any difficulty.

NCLAT Nod To Roma Unicon Designex Consortium As The Successful Resolution Applicant Of Earth Infrastructure Ltd.

Case Title: Bipin Sharma v Earth Infrastructure Limited & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1112 of 2020.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Dr. Alok Srivastava (Technical Member), while adjudicating an appeal filed by one of the Financial Creditors challenging the eligibility of the Successful Resolution Applicant, Roma Unicon Designex Consortium ("SRA"), under Section 29A(c) of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has declined to intervene in the Resolution Plan of SRA, as the same has been approved by the Committee of Creditors ("CoC") including Financial Creditors in class. It was observed that the Resolution Plan being approved by Financial Creditors in class voting through their authorized representative cannot be called into question. The order was passed on 27.04.2022.

Insolvency Proceedings Are Not Only For Fees Of Resolution Professional: NCLAT

Case Title: Deepankar Sharma v Pradeep Cycle Industries.

Case No.: Company Appeal (AT) (Insolvency) No. 474 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Ms Sheersha Merla, has held that the Insolvency Proceedings are not proceedings only for fees of the Interim Resolution Professional (IRP). The Corporate Insolvency Resolution Process (CIRP) of Arpan International Pvt. Ltd. was initiated by NCLT on 22.12.2021, however, the Operational Creditor and Corporate Debtor entered into settlement and an application for withdrawal of petition was filed on 03.01.2022. Accordingly, NCLT ordered that IRP fees should be reduced to Rs. 1,75,000/- from the earlier value of Rs. 3,75,000/, as the IRP had worked for only 14 days. NCLAT upheld the reduction of the fees of the IRP by observing that the Insolvency Proceedings are not only for the fee of the IRP and RP, payment of fee and cost are only consequential to the main proceeding.

Committee Of Creditors Are Competent To Revise The Approved Fees Of Resolution Professional: NCLAT

Case Title: Kushwinder Singhal v Reena Tiwari.

Case No.: Company Appeal (AT) (Insolvency) No. 469 of 2022.

National Company Law Appellate Tribunal (NCLAT) principal bench comprising of Justice Ashok Bhushan and Ms. Sheersha Merla, has held that the Committee of Creditors (CoC) is fully competent to revise its earlier approval of the fees of the Resolution Professional. The erstwhile Resolution Professional of Bestways Transport India Pvt Ltd. was replaced by another Resolution Professional by the CoC, and NCLT had ordered re-consideration of the fees of the erstwhile Resolution Professional. NCLAT upheld the NCLT order and observed that CoC is fully competent to revise the fees of Resolution Professional, as the entitlement of fee depends on several factors including the change of circumstances such as the length of CIRP proceeding.

NCLT

NCLT Mumbai Grants Time To Future Retail Ltd. To File Reply In Insolvency Plea

Case title: Bank of India v Future Retail Ltd.

Case No.: CP (IB) No. 527/MB/2022

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), while hearing a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has granted time to Future Retail Ltd. for filing a reply to the petition. The next date of hearing has been fixed to 12.05.2022.

In April 2022, the Bank of India had filed a petition under Section 7 of the IBC before NCLT, Mumbai Bench, seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against FRL. On 28.04.2022 the matter was listed for its first hearing before the NCLT, Mumbai Bench, wherein FRL was granted time to file its reply to the insolvency plea.

No Conflict Between The Prohibition Of Benami Property Transaction Act, 1998 and IBC, 2016 Concerning Attachment Of Property: NCLT, Chennai Bench

Case Title:Shri. Mudapallur Varieth Gangadharan v. The Deputy Commissioner of Income Tax

Case No.: CP (IB)/768(CHE)/2018

The National Company Law Tribunal (NCLT), Chennai Bench, comprising of Justice S. Ramathilangam (Judicial Member) and B. Anil Kumar (Technical Member), has held that there is no conflict between the Prohibition of Benami Property Transaction Act, 1988 and the Insolvency and Bankruptcy Code, 2016 ("IBC") concerning the attachment of property, as the two are special Acts. It was observed that the general principle of construction where two Special Acts are in conflict is that, the Act made later should prevail as per the maxim- 'leges posteriores priores conterarias abrogant', which means the later laws shall abrogate the earlier laws that are contrary or in conflict with subsequent laws.

 Under A Security Trustee Agreement,An Individual Lender Cannot Invoke Personal Guarantee Without Taking Consent Of Other Co-Lenders: NCLT Delhi

Case title: IDBI Bank Ltd. v Manoj Gaur (Personal Guarantor of Corporate Debtor Jaypee Infratech Ltd.)

Case No: IB-29(PB)/2022.

The National Company Law Tribunal (NCLT), New Delhi (Special Bench), comprising of Shri Dharminder Singh (Judicial Member) and Shri Avinash Kumar Srivastava (Technical Member), while adjudicating an application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has held that invocation of personal guarantee can be done by a Security Trustee only after obtaining consent of all co-lenders under the concerned Security Trustee Agreement. When there are multiple beneficiaries, the Trustee is bound to execute the Trust for the benefit of all beneficiaries in accordance with Trust Deed and after taking permission from the co-lenders. The order was passed on 05.05.2022.

The NCLT also observed that a Trustee is appointed to hold the Trust property for the benefit of the beneficiaries of the Trust, who have a beneficial interest in the Trust property. In cases where there are multiple beneficiaries, the Trustee is bound to execute the trust for the benefit of all the beneficiaries, in accordance with the Trust Deed and only after taking consent of other co-lenders.

Insolvency Proceedings Initiated Against Birla Tyres Ltd., A B.K. Birla Group Company: NCLT, Kolkata

Case Title: SRF Limited v Birla Tyres Ltd.

Case No.: C.P. (IB) No. 250/KB/2021.

The National Company Law Tribunal ("NCLT") Kolkata Bench, comprising of Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member) while adjudicating a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") has initiated Corporate Insolvency Resolution Process ("CIRP") against Birla Tyres Ltd. for an admitted default of Rs. 10.18 Crores. Mr. Seikh Abdul Salam has been appointed as the Interim Resolution Professional. The order was passed on 05.05.2022.

Birla Tyres Ltd. is a part of B.K. Birla Group of Companies. In 1991, it was incorporated as a part of Kesoram Industries Ltd. but was later demerged in 2018 as a part of re-structuring plan.

News

CBI Arrests Interim Resolution Professional For Demanding A Bribe Of 20 Lakhs

Central Bureau of Investigation (CBI) has arrested Insolvency Professional, Mr. Subrata Monindranath Maity, for demanding a bribe of Rs. 20 Lakhs from the promoter of Guardian Home Pvt. Ltd. for settlement of Corporate Insolvency Resolution Process (CIRP) of Guardian Homes.

NCLT Mumbai on 03.01.2020 dismissed the Section 9 petition against Guardian Homes but the decision was set aside by NCLAT vide its order dated 08.12.2020. Thereafter, NCLT Mumbai on 14.03.2022 had initiated CIRP against Guardian Homes and appointed Mr. Subrata Maity as the Interim Resolution Professional.

Subsequently, the dispute was settled between the Parties and an amount of Rs. 3 Crores was paid to Operational Creditor by Guardian Homes. It is alleged in the complaint dated 03.05.2022 filed before CBI, ACB Pune, that after the settlement, IRP had approached Guardian homes and demanded an additional amount of Rs. 20 Lakhs in addition to his fees of Rs. 4 Lakhs and in case of non-payment of the same, IRP will take coercive actions against the Guardian Homes such as seizure of bank account, publication of notice of liquidation.