SUPREME COURT

Supreme Court Upholds Constitutionality Of IBC Provisions Relating To Personal Guarantors; Says Adjudicatory Role Can't Be Read Into Sec 97

Case Title: Surendra B. Jiwrajika and Anr. vs. Omkara Assets Reconstruction Private Limited

Case No.: SLP(C) No. 016464/2021

The Supreme Court Bench comprising Chief Justice DY Chandrachud, Justices JB Pardiwala and Justice Manoj Misra, has upheld the constitutionality of the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) relating to Personal Guarantors' Insolvency Resolution, which were introduced through the amendments made in 2019.

The Court held that these provisions (Section 95 to 100 of IBC) cannot be held as unconstitutional for not affording an opportunity of hearing to the personal guarantors before the insolvency petition filed by creditors is admitted against them and the moratorium is automatically applied against them as soon as the insolvency petition is filed.

"The statute (IBC) does not suffer from any manifest arbitrariness to violate Art 14 of the Constitution," 

The bench further held that it cannot read an adjudicatory role into these provisions and that the entire process of timelines would be rendered negatory if the role of adjudicator is changed. For the Court to change the adjudicatory role envisaged under these provisions would amount to "rewriting the legislative functions", the Court said.

NCLAT

NCLAT Delhi: An Operational Creditor Who Is A Participant In Meetings Of CoC Has No Right To Seek A Copy Of Information Memorandum

Case Title: Vinay Kumar Singhal RP for PG Advertising Pvt. Ltd. Vs. Mahesh Bajaj

Case No.: Comp. App. (AT) (Ins) No. 645 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) has held that an Operational Creditor who is a participant in meetings of the Committee of Creditors (“CoC”) has no right to seek a copy of the Information Memorandum.

It was observed that both IBC and its Regulations are totally silent about the supply of the Information Memorandum to the participant. The legislature, however, has made a provision for providing a copy of the Information Memorandum to the member of the CoC and the Resolution Applicant but not to the participant of the meeting of the CoC. Therefore, a copy of the Information Memorandum need not be given to the Operational Creditor who is merely a participant of the CoC and not a member.

NCLAT Delhi: Claims Cannot Be Entertained After Approval Of Resolution Plan By CoC Even If Resolution Plan Is Still Pending For Approval By NCLT

Case Title: Suraksha Realty Ltd vs Anuj Bajpai Resolution Professional of Panache Aluminium Extrusion Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1389 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Mr Barun Mitra and Mr. Arun Baroka (Technical Members) has rejected an appeal and held that claims cannot be entertained after approval of the Resolution Plan by Committee of Creditors (“CoC”) even if the Resolution Plan is still pending for approval of the National Company Law Tribunal (“NCLT”).

NCLAT referred to the Supreme Court judgement in M/s. R.P.S. Infrastructure Limited Vs. Mukul Kumar and Anr. where the court has already taken the view that after approval of the plan by the CoC, any claims cannot be entertained.

Time Spent In Obtaining Legal Opinion And Engaging Counsel Is Not ‘Sufficient Cause’ For Condonation Of Delay In Filing Of Appeal: NCLAT Chennai

Case title: Anish Lawrence & Anr. v Renahan Vamakesan

Case No.: Company Appeal (AT) (CH) (Ins) No. 377 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the time spent in obtaining legal opinion and engagement of counsel is not a ‘sufficient cause’ to condone the delay in filing of appeal under proviso to Section 61(2) of IBC.

The Bench was adjudicating an application for condonation of delay in filing of appeal wherein the Appellant had filed the appeal on exactly on the 45^th day after obtaining certified copy of order. The delay of beyond 30 days in filing of appeal had occurred due to the time was consumed in obtaining legal opinion and engaging a counsel. The Bench dismissed the application.

NCLAT Delhi: Benefit Under Section 17 Of Limitation Act Is Not Available When Fraud Was Played In Creditor Company And Not In Company Of Corporate Debtor

Case Title: Gyan Chandra Misra RP for Three C Green Developers Pvt. Ltd. Vs. Three C Universal Developers Pvt.

Case No.: Company Appeal (AT) (Insolvency) No.1316 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member), has that benefit under Section 17 of the Limitation Act, 1963 for filing a belated claim is not available when the fraud was played in the Creditor Company and not in the company of the Corporate Debtor.

NCLAT Delhi: Appellants Who Filed Their Claims As Real Estate Allottees Are A Part Of Home Buyers And Cannot Ask Refund Separately

Case Title: Rajib Biswas & Anr. Vs Arena Superstructures Pvt. Ltd. & Ors.

Case No.: Comp. App. (AT) (Ins) No. 1488 of 2022 & I.A. No. 4701 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the Appellants, who have filed their claims as Real Estate Allottees, are considered part of the home buyers. Therefore, if the home buyers have already been represented by an authorized representative who has approved the resolution plan, the Appellants cannot ask for a refund separately.

NCLT

Operational Creditor Can’t Object To Approval Of Resolution Plan Before NCLT: NCLT Mumbai

Case Title: Ericsson India Pvt Ltd v Reliance Communications Ltd.

Case No.: C.P.(IB) No. 1387/MB/2017

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Justice V.G. Bisht (Retd.) (Judicial Member) and Shri Prabhat Kumar (Technical Member), has held that an Operational Creditor whose claim has been admitted by the Resolution Professional, cannot be made a respondent in application for approval of resolution plan pending before the NCLT. Further, the Operational Creditor cannot be allowed to object to the approval of resolution plan. The Bench has imposed a cost of Rs. 50,000/- on the Operational Creditor for making such plea.

“As regards prayer for supply of copy of Resolution Plan Application, it is trite law that the Resolution Plan is a confidential document till it is approved by this Tribunal and only the financial creditors are eligible to receive copy of such plan. There is no doubt on this legal proposition. Further, the applicant being an operational creditor whose claim has been admitted by the Resolution professional cannot be made a Respondent and given opportunity to object to the approval of the plan.”

NCLT Delhi: Section 9 Application Can’t Be Allowed If Corporate Debtor Is Inactive, Due To Default In Filing Statutory Returns

Case Title: R.J. Industries vs United Food Private Limited.

Case No.: IB-643(ND)/2022

The National Company Law Tribunal (“NCLT”), Delhi Bench, comprising of Shri Bachu Venkat Balaram Das (Judicial Member) and Shri Atul Chaturvedi (Technical Member) has held that any application under Section 9 of IBC for initiation of Corporate Insolvency Resolution Process (“CIRP”) cannot be allowed if the Corporate Debtor is inactive, due to default in filing of statutory return for the last two years as per the Ministry of Corporate Affairs (“MCA”) portal.

“It seems that there are no business opportunities left for the Corporate Debtor and the prospect of future business also seems bleak thus there seems no possibility of reviving the Company, if the Corporate Debtor is put in the CIRP for its revival/resolution. Further, this Adjudicating Authority is of the view that initiating CIRP against the Corporate Debtor is not in the interest of its stakeholders, because the Corporate Debtor is inactive. Therefore, without going into the merits of this case, as required under Section 9 of the Code, this Adjudicating Authority dismisses this application, as there is hardly any possibility of any Resolution plan likely to be received if the CIRP is initiated against the Corporate Debtor”

NCLT Delhi: Criteria For Determination Of Limitation Period And Date Of Default With Respect To Debt Are Distinct Questions Of Law And Fact And Cannot Be Evaluated Similarly

Case Title: M/s. DB Power Limited vs M/s Kreate Energy (I) Private Limited.

Case No: COMPANY PETITION NO. (IB)-521/ND/2022

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Mr. Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has rejected an application and held that as per Sec 10A of IBC no insolvency proceedings can be initiated against the Corporate Debtor for the default which has occurred between the period from 25.03.2020 till 24.03.2021. The Bench further observed that the criteria for deciding the limitation period for a debt and the criteria for determining the date of default for that debt are two distinct questions of law and fact that cannot be evaluated on the same basis.

NCLT Mumbai: 10-Day Demand Notice Period Cannot Be Excluded When Calculating The Limitation Period For Filing A Petition U/S 9 IBC

Case Title: WPIL Limited vs Gammon India Limited

Case No.: C.P. (IB) 3621/MB/2019

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mr. Kuldip Kumar Kareer (Judicial Member) and Mr. Anil Raj Chellan (Technical Member) has dismissed a petition and held that Insolvency and Bankruptcy Code, 2016 (“IBC”) has no provision that a 10-day period of Demand Notice is liable to be excluded while reckoning the period of limitation for filing the petition under Section 9 of IBC.

Submitted by: Pallavi Mishra