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IBC Cases Weekly Round Up: 21st...

IBC Cases Weekly Round Up: 21st October To 27th October 2024

Mohd Malik Chauhan

3 Nov 2024 9:35 AM IST

Supreme Court Sets Aside NCLAT Order Which Closed Insolvency Process Against Byju's Based On Settlement With BCCI

Case Details : GLAS TRUST COMPANY LLC Vs BYJU RAVEENDRAN | Diary No. - 35406/2024

Citation : 2024 LiveLaw (SC) 826

The Supreme Court today (October 23) set aside the order of the National Company Law Appellate Tribunal which closed the insolvency proceedings against ed-tech company Byju's (Think and Learn Pvt Ltd) accepting a settlement between it and the Board of Control for Cricket in India (BCCI) for about Rs 158 crores.

The Court held that the NCLAT erred in allowing the withdrawal of the insolvency application by invoking its inherent powers under Rule 11 of the NCLAT Rules 2016. When there is a specific procedure provided for the withdrawal of insolvency applications, the NCLAT cannot invoke its inherent powers.

IBC | No Compulsion To Specify Names Of Creditors In Balance Sheet, General Entry Acknowledging Debt Sufficient To Initiate CIRP : Supreme Court

Case Title: VIDYASAGAR PRASAD VERSUS UCO BANK & ANR.

Citation : 2024 LiveLaw (SC) 825

Observing that there's no compulsion for the companies to specify the names of every secured/unsecured creditor in their balance sheet, the Supreme Court dismissed the plea of a corporate debtor's suspended director against the initiation of Corporate Insolvency Resolution Process (“CIRP”).

In other words, the bench comprising Justices PS Narasimha and Sandeep Mehta observed that when debt entries exist in the corporate debtor's balance sheet, the debtor could not deny its liability merely on the ground that there were no specific entries of the particular creditor in their balance sheet regarding the debt owed to that creditor.

Inherent Powers Under Rule 11 of NCLT Rules Cannot Be Used To Circumvent Procedure To Withdraw CIRP Under S.12A IBC & R. 30A: Supreme Court

Case Title : GLAS TRUST COMPANY LLC Vs BYJU RAVEENDRAN | Diary No. - 35406/2024

Citation : 2024 LiveLaw (SC) 826

The Supreme Court Bench led by CJI DY Chandrachud comprising Justices JB Pardiwala and Manoj Misra held that 'inherent powers' cannot be used to subvert legal provisions, which exhaustively provide for a procedure. To permit the NCLAT to circumvent this detailed procedure by invoking its inherent powers under Rule 11 would run contrary to the carefully crafted procedure for withdrawal. In the Impugned Judgement, the NCLAT does not provide any reasons for deviating from this procedure or the urgency to approve the settlement without following the procedure.

HIGH COURT

All Claims Prior To Approval Of Resolution Plan Stand Extinguished U/S 31 Of IBC: Bombay High Court

Case Title: Maha Mineral Mining and Benefication Private v. Gram Panchayat, Gowari

Case Reference: 2024:BHC-NAG:11478-DB

The Bombay High Court Bench of Justices Bharati Dangre and Abhay J Mantri held that once the petitioner has acquired the assets of the corporate debtor, the claims, if any, which were not raised, stand extinguished and the respondent cannot now seek to recover those claims from the petitioner, who acquired the assets of the corporate debtor through auction process under the IBC.

NCLAT

NCLAT Upholds Central Govt's Takeover Of Delhi Gymkhana Club Over Allegations Of Mismanagement

Case Title: Major Atul Dev (Retd.) & Ors. vs. Union of India, Ministry of Corporate Affairs Through Regional Director (North Region) & Ors.

Case Number: Company Appeal (AT) No.93 of 2022 with Company Appeal (AT) No.141 of 2022

The NCLAT bench of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) has upheld the NCLT's order which allowed the Central Government to take over the management of the Delhi Gymkhana Club, and directed the existing committee to take remedial steps and hold the election. The NCLAT held that Union of India's intervention in the affairs of the Delhi Gymkhana Club, which resulted in the erstwhile management of the Club being superseded by a 15-member general committee appointed by Union of India to take over the management of the club, was necessitated due to the rampant mismanagement by the erstwhile general committee.

Adjudicating Authority Can Recall Its Judgement But Has No Power To Review Unless Expressly Required: NCLAT New Delhi

Case Title: Aircastle (Ireland) Ltd. Vs. Mr. Ashish Chawchharia, RP of Jet Airways (India) Ltd. and Ors

Case Number: Comp. App. (AT) (Ins) No. 1178 of 2024

The NCLAT Delhi comprising of Justice Rakesh Kumar Jain (Member Judicial), Mr. Naresh Salecha (Member Technical) and Mr. Indevar Pandey (Member Technical) dismissed appeal filed by the Aircastle (Ireland) Ltd. (Appellant) who was aggrieved by the order of the Adjudicating authority. The Bench distinguished between Review Petition and Recall Petition and stated that the adjudicating authorities have the inherent powers to recall their orders but have no power to review the same.

Written Financial Contract Is Not A Pre-Condition For Proving Existence Of Debt U/S 5(8) Of IBC: NCLAT New Delhi

Case Title: Rahul H. Mehta v. Gajendra Investment Ltd. and Ors.

Case Reference: Company Appeal (AT) (Insolvency) No. 739 of 2022

The NCLAT New Delhi Bench of Justices Ashok Bhushan(chairperson) and Barun Mitra (Technical Member) held that it has been held that written financial contract is not a pre-condition or an exclusive requirement for proving existence of debt. It has been further amplified therein that the Application to Adjudicating Authority Rules, 2016 and CIRP Regulations makes it clear that financial debt can be proven from other relevant documents and it is not mandatory that written financial contract can be the only basis for proving the financial debt.

Payment Of Pre-CIRP Dues To Creditors Including Government Dues Cannot Be Made By RP Outside Resolution Framework: NCLAT New Delhi

Case Title: Avil Menezes v. Ministry of Coal and Ors.

Case Reference: Company Appeal (AT) (Insolvency) No. 944 of 2022

The NCLAT New Delhi Bench of Justices Ashok Bhushan, Barun Mitra] Member and Arun Baroka held that the assets of the Corporate Debtor are to be taken over by the Resolution Professions for resolution of the Corporate Debtor. The RP has to make every endeavour to protect and preserve the value of the property of the Corporate Debtor. Payment of pre-CIRP dues to creditors Including Government Dues cannot be made by RP outside the resolution framework.

Dissenting Financial Creditor Only Entitled To Liquidation Value Of Secured Interest U/S 30(2)(b) Of IBC, Commercial Wisdom Of CoC Sacrosanct: NCLAT

Case Title: Merina Commotrade Pvt. Ltd. vs. Anand Sonbhadra Resolution Professional for Shubhkamna Buildtech Pvt. Ltd. & Ors.

Case Number: Comp. App. (AT) (Ins) No. 1347 of 2022 & I.A. No. 4180 of 2022

The NCLAT, New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Indevar Pandey (Technical Member) has affirmed that as per Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016, a dissenting financial creditor is only entitled to the liquidation value of its secured interest, not the total liquidation value of the Corporate Debtor. The Tribunal reiterated that the 'commercial wisdom' of the Committee of Creditors (CoC) is paramount and cannot be interfered with unless similarly situated creditors are denied fair and equitable treatment.

Payment Of Lease Amount, Lease Rent And Premium Cannot Be Considered As CIRP Costs; Not Recoverable U/S 14 Of IBC: NCLAT New Delhi

Case Title: Sunil Kumar Agarwal & Anr v. Anand Sonbhadra Resolution Professional of Shubhkamna Buildtech Pvt. Ltd. & Ors

Case Reference: Comp. App. (AT) (Ins) No. 1351 of 2022 & I.A. No. 4196, 4197, 4666, 4731 of 2022 & 1500 of 2023

The NCLAT New Delhi Bench of Justices Rakesh Kumar Jain and Indevar Pandey held that the payment of lease amount, lease rent and premium arising during CIRP cannot be considered as CIRP costs. Therefore, they cannot be claimed in view of section 14 of the IBC which prohibits any recovery of the property of the corporate debtor during the CIRP.

NCLT

Third Party Cannot Be Allowed To Participate In Pre-Admission Stage Of Petition U/S 7 Of IBC: NCLT Mumbai

Case Title: Vijayalaxmi Developers and Anr.

Case Reference: IP. No. 28/2024 in C.P.(IB) No. 336/MB/C-II/2024

The National Company Law Tribunal, Mumbai Bench of justice of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member) held that no third party can be allowed to participate in the pre admission stage of a petition under section 7 of the Insolvency and Bankruptcy Code (IBC).

Expressions Of Interest Submitted After CIRP Due Date Cannot Be Considered: NCLT Mumbai

Case Title: Mr Vikram Venkatrao Gaikwad v. Mr. Jitendra Palande

Case Reference: IA. No. 3106/2024 In C.P.(IB)/1132(MB)/2023

The National Company Law Tribunal, Mumbai Bench of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member) held that no Expressions of Interest (EOIs) can be considered if they are submitted after the due date as provided under regulation 36A of the CIRP Regulations.

Date Of Default Occurring Within Prohibited Period U/S 10A Of IBC Can't Be Shifted By Sending Notice After Prohibited Period For Same Debt: NCLT Mumbai

Case Title: - REC LIMITED v. GLOBAL METAL & ENERGY PRIVATE LIMITED

Case Reference: CP (IB) No.956/MB/2023

The National Company Law Tribunal, Mumbai Bench of Hon'ble Shri K. R. Saji kumar, (Judicial Member) Hon'ble Shri Sanjiv Dutt, (Technical Member) held that the date of default occurring within the prohibited period cannot be shifted merely because a notice for payment is issued again after the end of such prohibited period.

IBC Cases Weekly Round Up: 21st October To 27th October 2024

Mohd Malik Chauhan

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