IBC Weekly Round-Up: 16th December -20th December 2024

Disbursement Of Non Fund-Based Facilities Cannot Be Refused By Lenders When Resolution Plan Contains Clause For Disbursement: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that Non Fund Based facilities cannot be refused to be disbursed when the approved Resolution Plan contains a clause for their disbursement.

Case Title: State Bank of India & Ors. Vs. Jyoti Structures Ltd. & Ors.

Pendency Of Proceedings Before NCLT For Approval Of Scheme Of Arrangement Does Not Preclude Financial Creditor From Filing Petition U/S 7: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that the pendency of proceedings before the NCLT for approval of the scheme of arrangement does not preclude the Financial Creditor to proceed with Section 7 application. The tribunal also held that direction of RBI under Section 35AA of Banking Regulation Act, 1949 for initiation of insolvency cannot be disregarded/ ignored while determining application under Section 7 of IBC.

Case Title:Sunil Kumar Sharma Versus ICICI Bank Limited and Anr.

Copy Of Other Prospective Resolution Applicants' Plans Cannot Be Shared When Suspended Management Is Also A Resolution Applicant: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that copy of the Resolution Plans submitted by other Prospective Resolution Applicants cannot be shared in advance with the suspended management of the corporate debtor when the suspended management is also a Resolution Applicant.

Case Title: Yashdeep Sharma Suspended Director Versus Tara Chand Meenia, Resolution Professional and Ors.

CIRP Can't Be Extended Beyond 330 Days U/S. 12(3) Of IBC Absence Of “Exceptional Circumstances”: NCLAT

The NCLAT bench of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) has observed that the maximum timeline prescribed under Section 12(3) of the Insolvency and Bankruptcy Code (IBC) is 330 days. While this period is directory (not mandatory), an extension beyond 330 days is permissible only in “exceptional circumstances”, where a short time is required to complete the CIRP. The Tribunal held that the period sought to be excluded was 252 days, which is huge, hence the request for exclusion is liable to be turned down as the Appellant failed to show requisite “exceptional circumstances”.

Case Title: Sibanarayan Chhotray vs. Indian Overseas Bank & Anr.

Non-Admission Of Claim By Resolution Professional Cannot Be Challenged First Time In Appeal Before Appellate Tribunal: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Arun Baroka (Technical Member) has held that non admission of claim in the Resolution Plan by the Resolution Plan if not challenged before the Adjudicating Authority cannot be challenged in the appeal before the NCLAT.

Case Title: State Tax Officer Vs. Ricoh India Ltd. & Ors

Date Of Default In Case Of Personal Guarantor Depends On Terms Of Contract Of Guarantee: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Barun Mitra (Technical Member) has held that the liability of a borrower and guarantor is co-extensive but the liability of a Guarantor stems from the contract of guarantee and therefore the date of default in the case of the guarantor depends on the terms of contract of guarantee.

Case Title: Mavjibhai Nagarbhai Patel Versus State Bank of India and Anr.

Resolution Plan Approved By CoC Binds All Stakeholders Including Dissenting Financial Creditor: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Barun Mitra (Technical Member) has held that the Resolution Plan which is approved in commercial wisdom of the CoC binds all stakeholders including the dissenting financial creditor. The commercial wisdom of the CoC approving the Resolution Plan is binding on all.