Nominal Index

1. Tushar Sharma v. State Bank of India, Cr. MMO No. 924 of 2023

2. Gateway Investment Management Services Ltd. v. Reserve Bank of India and Ors., 2024 LiveLaw (Del) 1092

3. Su-Kam Power System Ltd. and Anr. v. State of Himachal Pradesh and Ors., CWP No.422 of 2024

4. M/S Patanjali Foods Limited (Formerly Ruchi Soya Industries Limited) v. Commissioner of Customs, CSTA No. 4 of 2024

5. Gujarat Urja Vikas Nigam Limited v. Mr. Udayraj Patwardhan, Comp. App. (AT) (Ins.) No. 1183 of 2024

6. Amit Narang v. Aditya Birla Finance Ltd. and Anr., Company Appeal (AT) (Insolvency) No. 684 of 2024

7. Union Bank of India v. M/s. K M R Enterprises and Anr., CP (IB) No. 66/95/HDB/2024

8. Punjab National Bank and Anr v. Mohita Indrayan, IA No. 2727/2023, IA No. 2974/2023 & CP (IB) No. 158/Chd/Hry/2023

9. Kapston Facilities Management Ltd. v. Karvy Stock Broking Ltd., CP (IB) No.332/9/HDB/2021

High Courts

Negotiable Instruments Proceeding Under Section 138 Does Not Abate On Initiation Of Insolvency Proceeding: Himachal Pradesh High Court

Case Title: Tushar Sharma v. State Bank of India

Case Reference: Cr. MMO No. 924 of 2023

It was held that while section 14 of the IBC imposes a moratorium on all the proceedings against the corporate debtor once the corporate debtor is admitted into insolvency. However, this does not absolve the directors and signatories to the dishonoured cheque from their personal liability under section 138 of the Negotiable Instrument Act. The Supreme Court observed as under:

“52 Thus, where the proceedings under Section 138 of the NI Act had already commenced and during the pendency the plan is approved or the company gets dissolved, the directors and the other accused cannot escape from their liability by citing its dissolution. What is dissolved is only the company, not the personal penal liability of the accused covered under Section 141 of the NI Act. They will have to continue to face the prosecution in view of the law laid down in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661. Where the company continues to remain even at the end of the resolution process, the only consequence is that the erstwhile directors can no longer represent it”.

Adjudicating Authority Decides Fairness And Reasonableness While Approving Resolution Plan, High Court Cannot- Delhi High Court

Case Title: Gateway Investment Management Services Ltd. v. Reserve Bank of India and Ors.

Citation: 2024 LiveLaw (Del) 1092

In a significant judgement, the Delhi High Court affirmed the commercial wisdom of the committee of creditors (CoC). The case was pertaining to rejection of the resolution plan proposed by the petitioner despite offering the highest bid in e-auction in a Corporate Insolvency resolution Plan (CIRP) of Helio Photo Voltaic Pvt. Ltd. (Corporate Debtor).

The court held as under:

“12 Thus, the resolution plan decided by the CoC shall be put up for consideration before the Adjudicating Authority, which forum alone shall finally decide whether the CoC has performed its fiduciary duty as per the legislative mandate of the IBC”.

Himachal Pradesh High Court Affirms Clean Slate Theory, Declares Tax Authorities' Charge Over Properties After Acquisition Plan Void And Illegal

Case Title: Su-Kam Power System Ltd. and Anr.v.State of Himachal Pradesh and Ors.

Case Reference: CWP No.422 of 2024

In an important judgment delivered by the Himachal Pradesh High Court, the claims and red entries of the state tax department over the properties of Su-Kam Power Systems Ltd.(Corporate Debtor) were quashed. The corporate debtor was sold as a going concern under the provisions of the Insolvency and Bankruptcy Code (IBC). The court held that once the company was acquired and resolution plan was approved, all prior claims including claims of the tax authorities are extinguished.

The court rejected the argument that crown debt had priority over other debts. The court held as under:

“61 The plea of the respondents that the tax dues claimed by them will have priority as a “Crown Debt”, therefore, cannot be accepted, and their action in continuing the said red entry/charge on account of dues recoverable from erstwhile management of the Corporate Debtor under the Himachal Pradesh Value Added Tax Act, 2005, Himachal Pradesh Goods and Services Tax Act, 2017 and the CST Act, 1956, would be clearly illegal & arbitrary”.

Ruchi Soya (Patanjali) – Claim Not Included In Approved Resolution Plan Stand Extinguished : Karnataka High Court

Case Title: M/S Patanjali Foods Limited (Formerly Ruchi Soya Industries Limted) vs. Commissioner of Customs

Case No.: CSTA No. 4 of 2024

The Karnataka High Court division bench comprising Mr. Justice S.G. Pandit and Mr. Justice C.M. Poonacha has held that once a resolution plan is approved by the Adjudicating Authority under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), claims which are not included in the resolution plan are extinguished, and no further proceedings can be initiated against the corporate debtor in respect of such claims. The Court also clarified that Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, which deals with abatement of appeal upon death, adjudication as insolvent or winding-up, does not apply when a resolution plan has been approved as the objective of a resolution plan is to continue the business of the company as “a going concern.”

NCLAT

NCLAT: Resolution Professional Can Only Entertain Claims Due As Of CIRP Commencement Date

Case Title: Gujarat Urja Vikas Nigam Limited vs. Mr. Udayraj Patwardhan

Case Number: Comp. App. (AT) (Ins.) No. 1183 of 2024

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Mr. Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that any claims arising after the commencement of the Corporate Insolvency Resolution Process (CIRP) cannot be entertained by the Resolution Professional (RP).

The Tribunal held that:

“There is a clear law that Resolution Professional can only entertain claims due and filed w.r.t. CIRP commencement date and not due to subsequent event, for which claimant might have other legal remedy.”

Co-Borrower Shares Similar And Equal Responsibility Under Loan Agreement: NCLAT New Delhi

Case Title: Amit Narang v. Aditya Birla Finance Ltd. and Anr.

Case Reference: Company Appeal (AT) (Insolvency) No. 684 of 2024

The National Company Law Appellate Tribunal (NCLAT) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) in an important judgment observed that initiation of Corporate Insolvency Resolution Process (CIRP) against a co-borrower is allowed under the Insolvency and Bankruptcy Code (IBC). In the present case, an appeal was filed by a suspended director of Narang Developers Pvt. Ltd. (NDPL) against decision of the National Company Law Tribunal (NCLT) Mumbai which admitted the NDPL into insolvency on an application filed by Aditya Birla Finance Ltd. (Financial Creditor) under section 7 of the IBC.

The NCLAT further observed that:

“The obligation of the Co-Borrower is co-extensive and coterminous with that of the Primary Borrower and hence a right or cause of action becomes available to the financial creditor to proceed against the primary borrower, as well as the Co-Borrower in equal measure in case they commit default in repayment of the amount of debt”.

NCLT

Petition Under Section 95 Not Maintainable Against Partnership Firms: NCLT Hyderabad

Case Title: Union Bank of India v. M/s. K M R Enterprises and Anr.

Case Reference: CP (IB) No. 66/95/HDB/2024

The National Company Law Tribunal (NCLT) Hyderabad in an important judgment clarified that partnership firms do not fall under section 95 of the Insolvency and Bankruptcy Code (IBC). The tribunal dismissed a petition filed by Union Bank of India (Financial Creditor) under section 95 of the IBC against KMR Enterprises (Respondent).

The tribunal observed as under:

“To answer the question as to who can be called as personal guarantor, we use fully refer to section 5(22) of IBC, 2016 which defines Personal Guarantor as an individual who is the surety in a contract of guarantee to a Corporate Debtor. It is important to note that partnership firm was not included under the definition of Personal Guarantor”.

Moratorium Can't Be AShield To Defeat Legitimate Claims Of The Creditors: NCLT Chandigarh

Case Title: Punjab National Bank and Anr v. Mohita Indrayan

Case Reference: IA No. 2727/2023, IA No. 2974/2023 & CP (IB) No. 158/Chd/Hry/2023

The National Company Law Tribunal (NCLT), Chandigarh Bench, comprising Shri Harnam Singh Thakur (Judicial Member) and Shri Ashish Kumar Verma (Technical Member), admitted an insolvency petition under section 95 of the Insolvency and Bankruptcy Code (IBC) against Ms. Mohita Indrayan, a personal guarantor, for the debts of M/s Indian Clothing League Private Limited (corporate debtor). This petition was filed by Punjab National Bank along with Indian bank (banks). The NCLT observed that despite a petition under section 94 of the IBC filed by the personal guarantor, no further steps were taken to proceed with the case therefore benefit of interim moratorium under section 96 of the IBC could not be given.

NCLT Hyderabad Declares Stock Brokers As Financial Service Provider, Petition Under Section 9 Not Maintainable

Case Title: Kapston Facilities Management Ltd.v.Karvy Stock Broking Ltd.

Case Reference: CP (IB) No.332/9/HDB/2021

The National Company Law Tribunal Hyderabad Bench, comprising Shri Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member) dismissed insolvency petition filed against Karvy Stock Broking Ltd. (Corporate Debtor/Respondent) by Kapston Facilities Management Ltd. (Operational Creditor) under section 9 of the Insolvency and Bankruptcy Code (IBC). The NCLT held that the respondent is a financial service provider against whom no Corporate Insolvency Resolution Process (CIRP) can be initiated.

The Tribunal held as under:

“However, the financial service provider is not included in the definition of corporate person and accordingly an application cannot be filed for initiation of CIRP against the financial service provider. Here, we may also profitably refer to the decision of Hon'ble NCLAT in Globe Capital Market Ltd. vs. Narayan Securities Ltd. Company Appeal (AT) (Insolvency) No.32 of 2024 & I.A No. 62 of 2024”.