Supreme Court Declares Noida As An Operational Creditor Under The Insolvency And Bankruptcy Code, 2016

Case title: New Okhla Industrial Development Authority v Anand Sonbhadra

Case No.: Civil Appeal No. 2222 of 2021

The Supreme Court Bench comprising of Justice KM Joseph and Justice Hrishikesh Roy has upheld the NCLAT judgment wherein it was held that the NOIDA is an Operational Creditor under IBC and not a Financial Creditor. The order was passed on 17.05.2022.

The Bench observed that the subject matter of Section 5(8)(d) of IBC is a lease or a hire-purchase contract which is deemed as a finance or capital lease. NOIDA's contract with the Builders is not any lease or a hire purchase contract, which would entitle the lessor to be treated as the financial creditor. The Bench held that:

"138. We are of the view that in the facts of the appeals before us, we are unable to hold that the lessee has raised any amounts from the appellant. The question, therefore, of considering the last limb of Section 5(8)(f), namely, whether it has commercial effect of a borrowing could not arise. But we can safely say that the obligation incurred by the lessee to pay the rental and the premium cannot be treated as an amount raised by the lessee from the appellant…"

SARFAESI Proceedings Cannot Be Continued Against Corporate Debtor Once CIRP Is Admitted And Moratorium Is Ordered: Supreme Court

Case Title: Indian Overseas Bank v RCM Infrastructure Ltd.

Case No.: CA 4750 OF 2021, 2022 LiveLaw (SC) 496.

The Supreme Court Bench comprising of Justices L. Nageswara Rao and B R Gavai has held that the proceedings under the SARFAESI Act, 2002 cannot be continued once the Corporate Insolvency Resolution Process (CIRP) is initiated under IBC and the moratorium is ordered. It was observed that Section 14(1)(c) of the IBC has overriding effect over any other law and therefore, after commencement of CIRP there is complete prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property. The words "including any action under the SARFAESI Act" in Section 14 of the IBC convey the legislative intent. The order was passed on 18.05.2022.

Section 18 Limitation Act Is Applicable To IBC Proceedings, Reiterates Supreme Court

Case Title: State Bank of India v Krishidhan Seeds Private Limited

Case No.: 2022 LiveLaw (SC) 497, CA 910 of 2021lifts

The Supreme Court Bench comprising of Justices DY Chandrachud and Surya Kant has held that the provisions of Section 18 of the Limitation Act, 1963 are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016. It was observed that an acknowledgement in a balance sheet without a qualification can furnish a legitimate basis for determining as to whether the period of limitation would stand extended, so long as the acknowledgement was within a period of three years from the original date of default. The provisions of Section 18 of the Limitation Act are applicable to proceedings under the IBC. The order was passed on 18.04.2022.

Supreme Court Issues Notice On Meru Cab's Plea Alleging Anti-Competitive Practices By Ola

Case Title: Meru Travels Solutions Pvt. Ltd. v Competition Commission of India

Case No.: Civil Appeal No.2843-2844/2022

The Supreme Court Bench comprising of Justices L. Nageswara Rao and B.R. Gavai has issued notice in the appeal filed by Meru Cab, challenging the order of the National Company Appellate Tribunal (NCLAT) wherein it had refused to set aside the order passed by the Competition Commission of India (CCI) exonerating Ola from allegations of abuse of dominant position. The Bench took note of the concurrent findings by the Director General, CCI and NCLAT.

Meru had contended before the CCI that Ola had abused its dominant position by indulging in predatory pricing and by entering into anti-competitive agreements with its drivers. Since the Commission prima facie found the allegation of abuse of dominant position to have some merit, it ordered the Director General (DG) to investigate the matter. Based on the

investigation report, in 2017, CCI concluded that Ola did not abuse its dominant position. On 07.02.2022, the NCLAT also held that Ola has not indulged in predatory pricing or abused its dominant position.

Proceedings Against Personal Guarantor Of Corporate Debtor Can Be Continued Independently - Supreme Court Lifts The Stay

Case Title: Mahendra Kumar Jajodia v State Bank of India

Case No.: Civil Appeal No. 1871/2022

The Supreme Court bench comprising of Justice S Abdul Nazeer and Justice Vikram Nath has dismissed the civil appeal filed against the judgment of National Company Law Appellate Tribunal (NCLAT) in the case of SBI versus Mahendra Kumar Jajodia. The order was passed on 06.05.2022.

The NCLAT on 27.01.2022 had held that even in the absence of any pending Corporate Insolvency Resolution Process or Liquidation proceedings, the application under Section 95(1) of the Insolvency Bankruptcy Code, 2016 against the personal guarantors of the Corporate Debtor is maintainable by the virtue of Section 60(1) of the Code before the National Company Law Tribunal having territorial jurisdiction over the place where the Registered office of the Corporate Person is located. The Supreme Court upheld the NCLAT order and dismissed the appeal by stating that there is no cogent reason to interfere with the order of NCLAT.

 Supreme Court Issues Notice On Plea Challenging Constitutionality Of IBC Provisions Relating To Personal Guarantors

Case Title: Gurmeet Sodhi v Union of India & Ors.

Case No.: Writ Petition(s)(Civil) No(s).307/2022

The Supreme Court Bench comprising of Justices Vineet Saran and J K Maheshwari has issued notice on a petition filed by a personal guarantor which raises a constitutional challenge to the personal insolvency provisions under the Insolvency & Bankruptcy Code, 2016 ("IBC"). Since a similar issue is pending, the Court has directed to tag the case along with the pending Special Leave Petition (C) No.16464/2021.

The personal guarantor has filed a writ petition under Article 32 before the Supreme Court contending that the IBC does not provide for the personal guarantor's right to be heard before entertaining the insolvency petition and appointment of a resolution professional, thus violating the fundamental right to natural justice.

The Bench, as an interim relief, has restrained the resolution professional in the personal guarantor's insolvency proceedings from submitting the statutory report before the Adjudicating Authority while issuing notice in the writ petition. The Court also directed that the Petitioner shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein.

Appeal To NCLAT Shall Be Filed Within A Period Of 30 Days, Reiterates Supreme Court

Case Title: Safire Technologies Pvt. Ltd v Regional Provident Fund Commissioner & Anr.

Case No.: Civil Appeal No.2212 of 2021

The Supreme Court bench comprising of Justice L N Rao and Justice P S Narasimha has reiterated that an appeal against the order of NCLT shall be filed before the NCLAT within a period of 30 days and the appellate tribunal can only condone delay for a period of 15 days. The order was passed on 29.04.2022.

 IBC - Moratorium Period Can Be Excluded In Computing Limitation Period In A Suit/Application By Corporate Debtor: Supreme Court

Case Title: New Delhi Municipal Council v Minosha India Limited

Case No.: CA No. 3470 of 2022

The Supreme Court Bench comprising of Justices KM Joseph and Hrishikesh Roy has held that the entire period during which the moratorium was in force in respect of Corporate Debtor, can be excluded while computing the period of limitation for a suit or proceeding by the Corporate Debtor.

The appellant had challenged the Delhi High Court's order allowing the application filed by respondent Corporate Debtor under Section 11(6) of the Arbitration and Conciliation Act. The court noted that Section 14 (moratorium) does not include an application under Section 11(6) of the A&C Act by the Corporate Debtor or for that matter, any other proceeding by the Corporate Debtor against another party. The order was passed on 27.04.2022.

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.

Recovery Certificate Holder Can Initiate CIRP As Financial Creditor Under IBC: Supreme Court

Case Title: Kotak Mahindra Bank Limited v A. Balakrishna & Anr.

Case No.: 2022 LiveLaw (SC) 534, Civil Appeal No. 689 of 2021

The Supreme Court bench comprising of Justices L. Nageswara Rao, B.R. Gavai and A.S. Bopanna, has held that a liability in respect of a claim arising out of a Recovery Certificate under the Recovery of Debts and Bankruptcy Act, 1993 would be a "financial debt" within the meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC) and a holder of such Recovery Certificate would be a "financial creditor" under Section 5(7) of the IBC. The Bench observed that 'financial debt' as defined under Section 5(8) of the IBC as 'means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes…'. The use of word 'includes' is to enlarge the scope of the statute and hence the list in Section 5(8) is not an exhaustive but inclusive list.

'Decree Holders' Can't Be Treated At Par With 'Financial Creditors' Under IBC: Supreme Court

Case Title: Shubhankar Bhowmik v Union of India & Anr.

Case No.: SLP 6104/2022.

The Supreme Court Bench comprising of Justice SK Kaul and Justice MM Sundresh, upheld a Tripura High Court judgment wherein it was held that "decree-holders" cannot be treated at par with "financial creditors" under the Insolvency and Bankruptcy Code, 2016 ("IBC").

The Tripura High Court had held that the decree-holder gets a statutory status as a creditor under Section 3(10) of the IBC, by virtue of the decree. Since the decree cannot be executed by operation of the moratorium under Section 14, the IBC makes a provision to protect the interests of a decree holder by recognizing it as a creditor. The interest recognized is that in the decree and not in the dispute that leads to the passing of the decree. This is apparent from the fact that decree holders as a class of creditors are kept separate from "financial creditors" and "operational creditors". No divisions or classification is made by the statute within this class of decree holders. It was further held that once a decree quantifies a debt due the nature of the dispute that resulted in the quantification ceases to exist. In the books of a corporate debtor, it will show only as a liability and not as a financial debt or operational debt. The same cannot be said to be arbitrary, or unreasonable. The Supreme Court Bench dismissed the Special Leave Petition filed against the aforesaid High Court judgment and upheld the decision of the High Court.

Wages/Salaries Of Only Those Workmen/Employees Who Actually Worked During CIRP Are To Be Included In CIRP Costs: Supreme Court

Case title: Sunil Kumar Jain v Sundaresh Bhatt

Case No.: Civil Appeal No. 5910 of 2019.

A Supreme Court division bench comprising of Justice M.R. Shah and Justice Aniruddha Bose has held that the dues towards the wages/salaries of only those workmen/employees who actually worked during the Corporate Insolvency Resolution Process ("CIRP") are to be included in the CIRP costs. The Bench clarified that the wages and salaries of all other workmen/employees of the Corporate Debtor during the CIRP, who actually have not worked and/or performed their duties when the Corporate Debtor was a going concern, shall not be included automatically in the CIRP costs. Such dues will be governed by Section 53(1)(b) and Section 53(1)(c) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). It was further observed that Section 36(4) and Section 53(1) of the IBC shall not be applicable to dues of the workmen/employees on account of provident fund, gratuity and pension. They are to be treated outside the liquidation process and liquidation estate assets under the IBC. The order was passed on 19.04.2022.

Insolvency and Bankruptcy Code Is Not For Money Recovery Proceedings: Supreme Court Reiterates

Case Title: Invest Asset Securitisation and Reconstruction Pvt. Ltd. v Girnar Fibres Ltd.,

Case No.: 2022 LiveLaw (SC) 423.

The Supreme Court bench comprising of Justice Dinesh Maheshwari and Justice Aniruddha Bose reiterated that the provisions of Insolvency and Bankruptcy Code, 2016 ("IBC") are essentially intended to bring the Corporate Debtor to its feet and are not of money recovery proceedings as such. The Appellant had filed an appeal before the Supreme Court under Section 62 of the IBC against the NCLAT order dated 18.11.2021, wherein Appellant's appeal was dismissed on the ground that application filed under Section 7 of IBC is barred by limitation. The Supreme noted that the right to sue accrued on the date of declaration of Non Performing Asset (NPA) but there is no evidence of any acknowledgement of liability in terms of Section 18 of the limitation Act, 1963. The order was passed on 25.04.2022.

IBC - Moratorium Applies Only To Corporate Debtor; Natural Persons Like Its Director Would Continue To Be Liable U/s 138 NI Act: Supreme Court

Case Title: Narinder Garg v Kotak Mahindra Bank

Case No.: W.P. (C) 93 OF 2022.

The Supreme Court Bench comprising of Justices UU Lalit, S. Ravindra Bhat and P.S. Narasimha, has reiterated that the moratorium provisions contained in Section 14 of the Insolvency and Bankruptcy Code, 2016 would apply only to the Corporate Debtor and the natural persons mentioned in Section 141 of the Negotiable Instruments Act would continue to be statutorily liable under the provisions of the said Act. The order was passed on 28.03.2022.

Supreme Court Keeps CIRP In Abeyance And Permitted Promoter To Complete The Housing Project

Case title: Anand Murti v Soni Infratech Private Limited.

Case No.: Civil Appeal Nos.7534 of 2021.

The Supreme Court bench comprising of Justices L Nageshwara Rao and B R Gavai has directed to keep the Corporate Insolvency Resolution Process (CIRP) of Soni Infratech Pvt. Ltd. ("Corporate Debtor") in abeyance and permitted the erstwhile promoter of Corporate Debtor to complete the construction of real estate housing project within the stipulated time period.

The Promoter of Corporate Debtor had filed an additional affidavit before the Supreme Court, undertaking to complete the project in stipulated time and to return the money along with 6% p.a. interest to seven homebuyers who are objecting to settlement plan. The Bench noted that there are only 7 out of 452 homebuyers who are objecting to settlement plan and therefore, it will be interest of homebuyers to permit the promoter to complete the construction of the project. The Bench further observed that there is every possibility that if the CIRP is permitted, homebuyers will have to play an escalation cost whereas the Promoter is undertaking to honor the existing BBA without any escalation. Therefore, the appeal was disposed off by permitting the promoter to complete the project within stipulated time in terms of the additional affidavit and the same shall be treated as the undertaking to the Supreme Court. The order was passed on 27.04.2022.

NCLAT

NCLAT Urges Central Government And IBBI To Consider Legislative Change For Payment To Operational Creditor Under Resolution Plan

Case Title: Damodar Valley Corporation v Dimension Steel and Alloys

Case No.: Company Appeal (AT) (Insolvency) No. 62 of 2022

The National Company law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan and Ms. Shreesha Merla has urged the Central Government and the Insolvency and Bankruptcy Board of India (IBBI) to consider legislative change regarding the payment to operational creditors under the resolution plan. The Bench observed that: "We are consistently receiving the Plans, where Operational Creditors either not paid any amount towards their claim or paid negligible amount, sometime even less than 1%." The Bench noted that time has come to reconsider the payment mechanism to operational creditors under the Resolution plan and urged the Central Government and IBBI to find out if there is any ground to reconsider the legislative change towards payment to the operational creditors under the resolution plan.

Article 1 Of Limitation Act,1963 Will Not Apply To Proceedings Under Insolvency And Bankruptcy Code, 2016: NCLAT

Case Title: S M Ghogbhai versus Schedulers Logistics India Pvt. Ltd

Case No.: Company Appeal (AT) Insolvency No. 281 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench. comprising of Justice Ashok Bhushan and Dr. Alok Srivastava has held that the Article 1 of Limitation Act, 1963 is not applicable to the Petition filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code (IBC). Reliance was placed on the case of BK Educational Services Pvt. Ltd. v. Parag Gupta and Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries wherein Supreme Court held that the period of limitation for filing an application under Section 7 or 9 of the Code is to be decided as per Article 137 of the Limitation Act. NCLAT further held that Article 1 of Limitation Act deals with "suits relation to accounts" and an application under Section 9 of the Code cannot be said to be a suit relating to accounts.

NCLAT Upholds Dismissal Of Section 7 Petition Filed By Hinduja Leyland Finance Ltd. During The Prohibited Period; Grants Liberty To Re-File With Corrected Documents

Case Title: Hinduja Leyland Finance Ltd. v Fly Express Logistic Pvt. Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 553 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Mr. Naresh Salecha (Technical Member), while adjudicating an appeal has upheld that Corporate Insolvency Resolution Process ("CIRP") cannot be initiated over a default which had occurred in the period mentioned under Section 10A of the Insolvency and Bankruptcy Code, 2016 ("IBC"), i.e. between 25.03.2020 to 24.03.2021. The order was passed on 20.05.2022.

Threshold Of Rs.1 Crore Is Required For Initiation of CIRP, Even If The Cause Of Action Arises Out Of Failure Of The Consent Terms Of The Earlier Section 7 Application: NCLAT

Case Title: Prafulla Purushottamrao Gadge v. Narayan Mangal

Case No.: Comp. App. (AT) (Ins.) No. 498 of 2022

The National Company Law Appellate Tribunal (NCLAT) Bench comprising of Justice Ashok Bhushan and Ms. Shreesha Merla has held that an application filed after 24.03.2020 under Section 7 of the Insolvency and Bankruptcy Code, 2016 below the threshold of Rs. One Crore is not maintainable.

The suspended director of the Corporate Debtor had filed the appeal against the order passed by NCLT Mumbai wherein CIRP was initiated against the Corporate Debtor for the default of Rs. 78,65,000/-. The NCLAT held that the application filed on 25.06.2021 has to fulfill the requirement of increased threshold as introduced in Section 4 of IBC by notification dated 24.03.2020. The order was passed on 06.05.2022

Arrears Of Salary Due Beyond Three Years, Barred By Limitation, Cannot Be The Basis For Initiating CIRP: NCLAT Delhi

Case Title: Omega Laser Products B.V. v Anil Agrawal

Case No.: Company Appeal (AT) (Insolvency) No.194 Of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member) has held that arrears of salary due beyond a period of 3 years would be barred by limitation for the purposes of initiating Corporate Insolvency Resolution Process (CIRP). The Managing Director had initiated CIRP against the Corporate Debtor over salary arrears dues which were barred by limitation. NCLAT has set aside the order of CIRP vide an order dated 10.05.2022 by observing:

"Therefore, this Tribunal if of the earnest view that the Section 9 Application filed on 27/08/2021 is 'barred by Limitation' as the claims of Rs.96,92,000/- and Rs.18,00,000/- pertain to the period prior to 31/03/2016 and more than three years have lapsed since."

Under Section 44 of IBC NCLT Doesn't Have The Power To Suo-Moto Classify A Transaction As A 'Preferential Transaction': NCLAT

Case Title: Sahara India v Shir Nandkisho Vishnupant Deshpande and Anr.

Case No.: Company Appeal (AT) (Ins) No. 368 of 2021

The National Company Law Appellate Law Tribunal (NCLAT) Bench comprising of Justices M. Venugopal (Member Judicial) and Dr. Ashok Kumar Mishra (Member Technical) has held that NCLT does not have the power to suo motu classify a transaction as a Preferential Transaction under Section 44 of the Insolvency and Bankruptcy Code, 2016. The NCLAT allowed the appeal challenging the order of the NCLT wherein the Adjudicating Authority had classified a transaction as 'Preferential Transaction.' The Bench remanded the matter back to the NCLT for deciding afresh in the light of the observations made in the order. The order was passed on 09.05.2022

Failure To Pay Consideration In 90 Days, NCLAT Delhi Cancels The Sale Of Corporate Debtor To The Auction Purchaser In Liquidation Proceedings.

Case Title: Potens Transmissions & Power Pvt. Ltd v Gian Chand Narang

Case No.: Company Appeal (AT) (Insolvency) No. 532 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member) has upheld the cancellation of sale of Apex Buildsys Ltd. as a going concern to Potens Transmissions & Power Pvt. Ltd. (Auction Purchaser), over the latter's failure to pay the sale consideration amount within 90 days, as stipulated under IBBI (Liquidation Process) Regulations 2016. The order was passed on 12.05.2022.

The NCLAT Bench observed that 90 days' period provided in the Liquidation Process Regulation is the maximum period for the Auction Purchaser to deposit the consideration amount, failing which the Regulation expressly mentions that the sale shall be cancelled. It was held that "when the Consequence of non-compliance of the provision is provided in the statute itself, the provision is necessary to be held to be mandatory."

Insolvency Cannot Be Initiated On The Basis Of Unpaid LTC And Leave Encashment Dues: NCLAT

Case Title: Kishore K Lonkar v Hindustan Antibiotics Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 934 of 2021.

The National Company Law Appellate Tribunal (NCLAT) Bench, comprising of Justice Ashok Bhushan and Ms. Shreesha Merla, has held that the welfare claims such as Leave Encashment, Superannuation Dues are not operational debt for the purpose of initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor under Section 9 of the Insolvency & Bankruptcy Code, 2016.

NCLAT noted that the definition of operational debt under Section 5(21) of the Code includes claim towards services which includes "employment" also however, the amount claimed by the Appellant was not towards any services rendered by him during his employment with the Corporate Debtor but all these payments were accrued after the cessation of employment. The Bench held that:

"9…Though 'service benefits' like 'LTC' accrue, on account of the service rendered during the period of employment, the scope and objective of the Code is simply not just for recovery of 'dues' but Resolution of the Companies meant for 'maximization of the value of assets', to promote entrepreneurship, availability of credit and balance all interest of the stakeholders"

National Company Law Appellate Tribunal Gets Five More Judges

Five new Judges have been appointed to the NCLAT vide a Notification dated 12.05.2022, the total Judges' strength has gone up from seven to twelve.

Following are the Details:

a. Justice Rakesh Kumar Jain, Retd. judge, Punjab and Haryana High Court

b. Justice Rakesh Kumar, Retd. Judge, Patna High Court

c. Justice M Satyanarayan Murthy sitting judge, Andhra Pradesh High Court

d. Barun Mishra, IAS, Retd. Secretary, Department of Justice

e. Naresh Salecha, IRAS, Member (finance), Railway Board

Pendency Of Proceedings Before DRT, SARFAESI Or Other Fora-Not A Bar For Initiating CIRP: NCLAT Chennai

Case Title: Mr. Amar Vora v City Union Bank Ltd.

Case No.: Company Appeal (AT) (CH) (Ins) No. 130 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Kanthi Narahari (Technical Member), has held that a petition can be moved under Section 7, 9, or 10 of Insolvency and Bankruptcy Code, 2016 ("IBC"), even when proceedings with respect to the same debt are pending before the Debt Recovery Tribunal; or SARFAESI Act 2002; or Prohibition of Benami Property Transaction Act, 1988 or any other forum. IBC has an overriding effect over other laws. The order was passed on 11.05.2022.

Joint Auction Under IBC And SARFAESI Is Permissible: NCLAT

Case Title: Ayan Mallick v Pratim Bayal (Liquidator) & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 456 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), has upheld the Order of NCLT, Kolkata wherein NCLT had held that a joint auction under the provision of Insolvency and Bankruptcy Code, 2016 (IBC) and SARFAESI Act, 2002 is permissible in order to maximize the value of the assets of the Corporate Debtor and the guarantor.

Non-Payment Of TDS Amount Not A Ground For Initiating CIRP: NCLAT Delhi Imposes Cost Of Rs. 1 Lakh On The Applicant

Case Title: Amitabh Roy v Master Development Management (India) Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 274 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), has held that an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") cannot be admitted over defaults relating to non-payment of TDS (Tax Deduction at Source) amount. The Bench observed that the Adjudicating Authority had committed serious error in admitting Section 9 Application on the submission of the Operational Creditor that non-payment of the TDS amounts to default. The Bench also imposed a cost of Rs. 1 Lakh on the Applicant. The order was passed on 18.05.2022.

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.

NCLAT Urges IBBI To Amend CIRP Regulations To Include Claim Which Are Not Filed But Reflecting In Book/Record Of Corporate Debtor

Case Title: Employees Provident Fund Organisation v Mr. Subodh Kumar Agarwal & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 116 of 2022

The National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan, Ms. Shreesha Merla and Mr. Naresh Salecha, has urged the IBBI to consider an amendment to the IBBI (Insolvency Process for Corporate Persons) Regulations in order to include claims in information which though not filed with the Resolution Professional but clearly reflects in the books/records of the Corporate Debtor. The Bench observed that the Regulation framing authority need to consider as to whether the Regulations need any amendment, clarification so as to include in the Information Memorandum any ongoing statutory proceeding which is likely to saddle the Corporate Debtor with financial or other liability. Further, even if the Resolution Professional has details of record, notices, orders indicating that certain amounts have been finalized to the received from the Corporate Debtor but due to want of claims being filed of such statutory authority they do not find any mention in the list of claims or Information Memorandum.

Temporary Unavailability Of A Member To Sign The Order Not A Ground For Fresh Hearing, If Order Was Passed With Consent Of Such Member: NCLAT Delhi

Case Title: Ashish Chandravandan Patel v Axis Bank Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 618 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri. Naresh Salecha (Technical Member),, has held that an order passed with the consent of both Members of an NCLT Bench but signed by only one of them due to temporary unavailability of the other Member, does not require the matter to be designated as part-heard and be heard afresh. Rule 152(4) of National Company Law Tribunal Rule, 2016 ("NCLT Rules") is only applicable in cases where a Member is unable to sign the order sheet in view of resignation, retirement or death; and not where a Member is temporary unavailable to sign the Order. The order was passed on 30.05.2022.

NCLAT Terminates The CIRP Of National Textile Corporation Ltd. As Parties Enter Settlement

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), has terminated the initiation of Corporate Insolvency Resolution Process ("CIRP") against National Textile Corporation Ltd. ("Appellant"), which was initiated by NCLT Delhi vide an order dated 27.05.2022.

The Appellant, National Textile Corporation Ltd., is a Public Sector Enterprise under the Ministry of Textiles, Government of India. The Appellant filed an appeal against the NCLT order dated 27.05.2022 before the NCLAT, submitting that it has settled the matter with the Operational Creditor, and sought liberty to place on record the Settlement Agreement entered between the parties. The Operational Creditor/Respondent also confirmed that the settlement had taken place.

Belated Claims Of Homebuyers, If Reflected In The Records Of Corporate Debtor Shall Be Included In Information Memorandum By Resolution Professional: NCLAT

Case Title: Puneet Kaur v K V Developers Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 390 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan, Ms. Shreesha Merla, Mr. Naresh Salecha, has held that the claims of those homebuyers who could not file their claims within stipulated time but the same were reflected in the record of the Corporate Debtor ought to have been included in the information memorandum and the Resolution Applicant ought to have been take note of the same and deal with the in the Resolution Plan. It was observed that non-consideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution as is seen in the present case. NCLAT directed the Resolution Professional to submit the details of homebuyers whose details are reflected in the record of the Corporate Debtor to the Successful Resolution Applicant, and the latter shall prepare an addendum to resolution plan which may be placed before the COC for consideration. The exercise is to be completed within a period of three months.

NCLAT Stays Insolvency Proceedings Against RHC Holdings Pvt. Ltd.

Case Title: Daiichi Sankyo Ltd. v Religare Comtrade Ltd. & Ors

Case No.: Company Appeal (AT) (Ins.) No. 645 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Mr. Naresh Salecha, has stayed the Corporate Insolvency Resolution Process ("CIRP") of RHC Holdings Pvt Ltd. initiated by NCLT New Delhi on 13.05.2022. RHC Holdings Pvt. Ltd. (RHC) is the company through which Singh Brothers namely Malvinder Singh and Shivinder Singh sold Ranbaxy India to Daiichi Sankyo. Daiichi Sankyo had filed an appeal before the NCLAT against the Order dated 13.05.2022, wherein NCLT had admitted the petition filed by Religare Comtrade Ltd. under Section 7 of the Insolvency & Bankruptcy Code, 2016. In fact, Religare had filed 23 petitions against various related entities of RHC under Section 7 of IBC to defeat the claim of Daiichi. NCLAT noted that the Supreme Court vide its order dated 05.04.2019 had stayed 23 petitions filed by Religare, and in furtherance of Supreme Court order NCLT itself stayed all proceedings on 11.04.2019. NCLAT stayed the CIRP initiated against RHC Holdings Pvt. Ltd. accordingly.

NCLAT Stays The Constitution Of COC In The CIRP Of Bombay Rayon Fashions Ltd.

Case Title: Prashant Agarwal v Vikash Parasprampuria

Case No.: Company Appeal (AT) (Ins.) No. 690 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Kanthi Narahari (Technical Member), has stayed the constitution of the Committee of Creditors ("CoC") in the Corporate Insolvency Resolution Process ("CIRP") of Bombay Rayon Fashions Ltd.

The Respondent, Vikash Parasprampuria, has proposed settlement by submitting that it would be satisfied if Bombay Rayon pays the principal amount alongwith the CIRP cost towards settlement. Bombay Rayon is yet to seek instructions on the settlement proposal. The Bench has stayed the constitution of CoC in the CIRP of the Corporate Debtor, while the CIRP process would otherwise continue. The matter has been next listed on 07.07.2022 for the Appellant to accept or reject the settlement proposal of the Respondent. The order was passed on 15.06.2022.

NCLT Has Power To Recall Its Order: NCLAT

Case Title: Printland Digital (India) Pvt. Ltd. v Nirmal Trading Company

Case No.: Company Appeal (AT) (Insolvency) No. 504 of 2022

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Alok Srivastva (Technical Member) recently held that the National Company Law Tribunal has the power to recall its order of closing the right to file reply. It was observed that there is a difference between recalling an order and review of an order where an issue is decided on merit by the Tribunal. "No doubt that the Adjudicating Authority has no jurisdiction to review its order after deciding a substantial issue but it has the jurisdiction to recall the order of the kind in dispute i.e., where the right to Reply was closed by an order on the ground that the opportunities granted were not availed." The order was passed on 30.05.2022.

NCLAT Terminates The CIRP Of Kanoria Sugar & General Manufacturing Co. Ltd., As Parties Enter Settlement

Case Title: Kanoria Sugar and General Manufacturing Co. Ltd. v Punjab National Bank

Case No.: Company Appeal (AT) (Ins.) No. 548 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Naresh Salecha (Technical Member), has terminated the Corporate Insolvency Resolution Process ("CIRP") of Kanoria Sugar and General Manufacturing Co. Ltd. ("Appellant"), which was initiated by NCLT vide an order dated 27.04.2022. A settlement was arrived at between the parties and a One Time Settlement (OTS) proposal dated 31.05.2022 was accepted by the Respondent Bank for an amount of Rs. 40 Crores. A joint application bearing I.A. No. 1782 of 2022 was filed by both the parties to bring the settlement on record. The NCLAT permitted the Respondent Bank to withdraw the Section 7 petition in view of settlement and the CIRP was terminated against the Appellant. The order was passed on 03.06.2022.

NCLAT Set Asides Insolvency Process Against HCL

Case Title: C Vijay Kumar v Sahaj Bharti Travels

Case No.: Company Appeal (AT) (Insolvency) No. 58 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan, Ms. Shreesha Merla and Mr. Naresh Salecha allowed the appeal filed by the suspended director of HCL Technologies (HCL) and set aside the Corporate Insolvency Resolution Process (CIRP) initiated against the HCL. NCLAT held that merely having a remedy under Arbitration and Conciliation Act, 1996 is a not a ground to deny relief under IBC but it has to be considered that IBC proceedings should not be converted into debt recovery proceedings.

The Bench observed that HCL is a globally renowned business entity and the Balance Sheet of HCL for the financial year ending on 31.03.2018 reflects a turnover of INR 61,786 Crores and a profit of INR 8,772 Crores. NCLAT ruled that the proceedings under IBC were only initiated by Operational Creditor for virtually establishing its claim of minimum guarantee amount which was never accepted or admitted by HCL and therefore, the present proceedings were initiated as a debt enforcement measure. Accordingly, NCLAT allowed the appeal filed by suspended director of HCL and set aside the insolvency admission order against HCL.

NCLAT Limits Supertech's Insolvency Process To One Project

Case Title: Ram Kishor Arora v. Union Bank of India

Case No.: Company Appeal (AT) (Insolvency) No. 406 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Mr. Naresh Salecha, has modified its stay order on constitution of Committee of Creditors of Supertech Ltd. (Supertech) and limited the Corporate Insolvency Resolution Process of Supertech to one project i.e., Eco Village II. Earlier, the NCLAT vide its order dated 12.04.2022 while granting time to the promoters of Supertech to settle the dispute with the Union Bank of India directed the Interim Resolution Professional not to constitute the COC. The Bench noted that as per the status report filed by IRP, out of the total 49,554 units Supertech has sold 38,603 units which is a substantial number.

The NCLAT modified its interim order and directed that project wise resolution to be started to test out the success of such resolution and directed that the construction of other projects shall continue under the supervision of IRP with the assistance of ex management. NCLAT directed the IRP that the COC be constituted only for the Eco Village II project and claims received regarding the Eco Village II project shall be separated and accordingly information memorandum shall be prepared only for Eco Village II. NCLAT also directed that no resolution plan shall be put to vote without the leave of NCLAT. The next date of hearing is 27.07.2022 for filing of status report by IRP. The order was passed on 10.06.2022.

Pendency Of Execution Proceedings No Bar To Section 9 Petition: NCLAT

Case Title: Mukul Agarwal vs Royale Resinex Pvt. Ltd & Anr., Company Appeal (AT) (Insolvency) No. 777 of 2020.

The NCLAT Principal bench comprising of Justice Ashok Bhushan and Dr Alok Srivastava held that the pendency of an execution petition pending before the Civil Court does not bar the operational creditor from filing a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016. The order was passed on 30.03.2022.

Resolution Professional Cannot Decide The Eligibility Under Section 29A Of The Insolvency And Bankruptcy Code, 2016: NCLAT Delhi

Case title: Sharavan Kumar Vishnoi v Upma Jaiswal & Anr., Comp. App. (AT) (Ins.) No. 371 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Delhi Bench, comprising of Justice Ashok Bhushan, Dr. Alok Srivastava and Ms. Shreesha Merla, has held that the Resolution Professional is not required to take a decision regarding the ineligibility of the Resolution Applicant under Section 29A of the Insolvency & Bankruptcy Code, 2016. The Resolution Professional can give his opinion with regard to each Resolution Applicants and further steps are to be taken for the Committee of Creditors as per the direction issued by the Adjudicating Authority. The order was passed on 05.04.2022.

Quantum Of Debt Not To Be Decided At The Stage Of Admission Of A Section 7 Petition Under IBC: NCLAT Delhi

Case Title: Rajesh Kedia v Phoenix ARC Private Limited, Company Appeal (AT) (Insolvency) No. 996 of 2021.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal has held that the quantum of debt is not be considered at the stage of admission of a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"). The Bench opined that it is not within their domain to decide the 'amount of debt' at the stage of admission of an application under Section 7 of IBC. It was further observed that the Appellant's contention that the debt amount is exaggerated cannot be a ground for rejection of an application under Section 7 of the IBC. The only requirement for admission is that the minimum outstanding debt should be more than the threshold amount provided for under the IBC.

Nil Payment To Operational Creditors Is Permissible Under The Resolution Plan: NCLAT Chennai

Case title: Genus Security and Allied Service versus Mr. Shivadutt Bannanje & Anr., CA (AT)(CH)(Ins) No. 110/2021.

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri. Kanthi Narahari (Technical Member), has held that nil payment to Operational Creditors is permissible under the Resolution Plan if the liquidation value is less than the admitted claims of the Corporate Debtor. It was further observed that question of discrimination will only arise when some of the Operational Creditors were being paid under the resolution plan, to the exclusion of other Operational Creditors, which was not the case here. The Bench held that the Resolution Plan, which proposed nil payment for the operational Creditors, suffered from no infirmity and illegality as it was approved by a majority vote of 95.07% of the Committee of Creditors ("CoC") and the commercial wisdom of the CoC cannot be interfered with by the NCLT or NCLAT. Accordingly, the Resolution Plan was held to be binding on all stakeholders including the Operational Creditors. The judgment was passed on 07.04.2022.

Amount Invested In A Joint Venture Project In Capacity Of A Promoter And Investor Is Not A Financial Debt: NCLAT Delhi

Case Title: M/s Jagbasera Infratech Private Ltd. v Rawal Variety Construction Ltd., Company Appeal (AT) (Ins) No.150 of 2019.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the amount invested in a Joint Venture project in the capacity as a 'Promoter' and 'Investor' does not fall within the definition of 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). A profit share owner, who in the event of the success of the project would receive the residual gain, the amount invested by him in the land cannot be said to be a 'Financial Debt' as defined under Section 5(8) of the IBC. The order was passed on 04.04.2022.

Fresh Resolution Plan Cannot Be Considered By Committee Of Creditors: NCLAT Delhi

Case Detail: Steel Strips Ltd v Avil Menezes, CA (AT)(Ins.) No. 89/2022.

National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) & Ms. Shreesha Merla (Technical Member), has held that a fresh resolution plan cannot be considered by a Committee of Creditors ("CoC") once it has already approved a resolution plan. The NCLAT Bench held that the finality has been attached to the Resolution Plan of the Steel Strips Ltd. which was approved by the CoC, and such finality cannot be taken away by the NCLT. It was further observed that late and unsolicited bids by Resolution Applicants, after the original bidder becomes public upon passage of the deadline for submission of the plan, is a deviation of the original objective and timeline under the IBC.

Amount Given As 'Share Application Money' Is Not Covered Under Financial Debt: NCLAT Delhi

Case Title: Pramod Sharma v Karanaya HeartCare Pvt. Ltd., Comp. App. (AT) (Ins.) No. 426 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that money given as 'Share Application Money' cannot be treated as a financial debt in order to initiate Corporate Insolvency Resolution Process ("CIRP") under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"). The order was passed on 21.04.2022. The NCLAT Bench observed that admittedly the amount was given by the Appellant as a 'Share Application Money' on which no share was allotted and afterwards the principal amount was refunded by the Respondent under some settlement. The Bench dismissed the appeal and upheld the order passed by the NCLT Delhi, wherein it was held that the share application money does not fall under Section 5(8) of the IBC as it is not "a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money", since no debt was disbursed by the Appellant to the Respondent and no time value has been attached with the Share Application money.

Time Period Under Regulation 35A Is Directory And Not Mandatory: NCLAT, Delhi

Case Title: Aditya Kumar Tibrewal v Om Prakash Pandey, Company Appeal (AT) Insolvency No. 583 of 2021.

The National Company Law Appellate Tribunal (NCLAT) principal bench comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that time period prescribed under Regulation 35A of the IBBI (CIRP) Regulations (CIRP Regulations) is directory in nature and not mandatory. Any action taken by the Resolution Professional beyond the time prescribed under Regulation 35A of the CIRP Regulations cannot be held to be non-est or void only on the ground that it is beyond the period prescribed under Regulation 35A of the CIRP Regulations.

NCLAT Delhi Uphelds That Corporate Debtor Cannot Be Sent Into Liquidation Just Because Liquidation Value Is More Than The Value Of The Resolution Plan

Case title: CFM Asset Reconstruction Pvt. Ltd. v SS Natural Resources Pvt. Ltd. & Anr., Company Appeal (AT) (Insolvency) No. 396 of 2022.

The National Company Law Appellate Tribnal (NCLAT), Principal Bench, comprising of comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has upheld the order dated 06.04.2022 passed by NCLT Kolkata Bench whereby it was held that Corporate Debtor cannot be sent into liquidation just because liquidation value is more than the value of the Resolution Plan. It was reiterated that primary focus of the Insolvency and Bankruptcy Code, 2016 is to ensure revival and continuance of the Corporate Debtor. The order was passed on 19.04.2022.

Look Back Period Under Section 46 Not Applicable To Section 66 Under Insolvency And Bankruptcy Code, 2016: NCLAT Delhi

Case Title: Aditya Kumar Tibrewal v Om Prakash Pandey, Company Appeal (AT) Insolvency No. 583/2021.

National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that the look back period prescribed under Section 46 of Insolvency & Bankruptcy Code, 2016 ("IBC") does not apply to transactions under Section 49 and 66 of the IBC. The Bench further observed that applications questioning the transactions covered by Section 49 and 66 of the IBC are not to be rejected on the ground that Application has been filed beyond the period prescribed under Section 46 of the IBC. The order was passed on 06.04.2022.

Territorial Jurisdiction Of NCLT Cannot Be Taken Away By Agreement Between The Parties: NCLAT Delhi

Case Title: Anil Kumar Malhotra v M/s Mahindra & Mahindra Financial Services Ltd., Company Appeal (AT) (Insolvency) No. 415 of 2022.

The National Company Law Appellate Tribunal (NCLAT) Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that the territorial jurisdiction of NCLT to decide case under Insolvency and Bankruptcy Code, 2016 ("IBC") cannot be taken away by the agreement between the parties. Relying on the provision of Section 60(1) of the IBC, the Bench held that the adjudicating authority in relations to insolvency resolution shall be the NCLT having the territorial jurisdiction over the place where the registered office of corporate person is located.

Interest Free Security Deposit Is An Operational Debt: NCLAT Delhi

Case Title: Vibrus Homes Pvt. Ltd. v Ashimara Housing Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 80 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that an interest free security deposit towards advance license fee will qualifies as an operational debt under the Insolvency & Bankruptcy Code, 2016. The Bench observed that "In view of the payment made was initially towards the advance license fee it was an operational debt, the Adjudicating Authority has rightly admitted the application under Section 9."

Resolution Professional Is Not Entitled To Fees During Stay On Insolvency Proceedings: NCLAT

Case Title: IndusInd Bank Ltd. v Mr. Rajendra K Bhuta

Case No.: Company Appeal (AT) (Insolvency) No. 177 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), has held that the Resolution Professional is not entitled for any professional fees during the period of stay on the Corporate Insolvency Resolution Process ("CIRP") of the Corporate Debtor. The order was passed on 26.04.2022

Even If Credit Facility Agreement Is Unstamped, Section 7 Petition Is Maintainable, On Proving Financial Debt: NCLAT Principal Bench

Case Title: Mr. Aashish Kadam & Anr. v Nagpur Nagarik Sahakari Bank Ltd. & Anr.

Case No.: Comp. App. (AT) (Ins.) No. 355 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that if a credit facility agreement is unstamped, then petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") can be admitted based on other material on the record which prove the existence of a financial debt. The Bench observed that the present case is a case of mortgage by deposit of title deed. Therefore, even if the Facility Agreement was not stamped, there were other materials on the record to prove the existence of a financial debt owed by the Appellant. The Bench dismissed the appeal and upheld the order of the Adjudicating Authority wherein CIRP was initiated. The order was passed on 21.04.2022.

Resolution Professional Can Submit An Additional Report Under Section 99 Of Insolvency And Bankruptcy Code, 2016: NCLAT Delhi

Case Title: Ramesh Chander Agarwala v State Bank of India & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 230 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that the Resolution Professional can submit an additional report under Section 99 of the Insolvency & Bankruptcy Code, 2016 ("IBC"). Personal Guarantors of the Corporate Debtor had filed an appeal under Section 61 of the IBC before NCLAT against the order of the NCLT wherein a Resolution Professional was appointed without furnishing any limited notice to the Personal Guarantors in terms of Para 44 of the judgment of NCLAT in the case of Ravi Ajit Kulkarni Vs. State Bank of India.

NCLAT observed that though it limited notice was not issued, but subsequently the Personal Guarantors had appeared before the Adjudicating Authority. Therefore, in the interest of justice, NCLAT permitted the Personal Guarantors to submit a representation to the Resolution Professional and subsequently, the Resolution Professional can submit an additional report in continuation of his first report and the Adjudicating Authority will consider both the report before taking any decision under Section 100 of the Code. The order was passed on 22.04.2022.

Corporate Insolvency Resolution Process Can Be Resume On Failure Of Settlement Agreement: NCLAT Chennai

Case title: ICICI Bank v OPTO Circuits India Limited

Case No.: Company Appeal (AT) (CH) (Insolvency) No. 146 of 2021.

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising of Justice M Venugopal and Mr. Kanthi Narahari, has held that Corporate Insolvency Resolution Process (CIRP) can be revived/resumed in case of failure of settlement agreement between the parties.

ICICI Bank had filed an appeal before NCLAT under Section 61 of the Insolvency & Bankruptcy Code, 2016 ("IBC") against the order dated 17.08.2020 of NCLT Bengaluru, wherein it had allowed the withdrawal of IBC petition but instead of giving liberty to revive the CIRP, it granted liberty to file a fresh petition under IBC against OPTO Circuits (India) limited. NCLAT modified the Impugned Order and granted liberty to ICICI Bank to seek revival/restoration of CIRP in case of non-compliance of the settlement agreement. The order was passed on 28.04.2022.

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.

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. At present time, CIRP has been initiated against FRL.

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.

CIRP Cannot Be Initiated Solely For Interest Amount, If The Principal Amount Is Discharged: NCLT Delhi

Case Title: Saraf Chits Private Limited & Anr. v KAD Housing Private Limited

Case No.: (IB)-255(ND)/2021.

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Abni Ranjan Kumar Sinha (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that Corporate Insolvency Resolution Process ("CIRP") cannot be initiated against a Corporate Debtor solely on the basis of the un-paid amount of interest, where the entire principal amount has already been discharged by the Corporate Debtor. The Bench observed that interest is not included in the term "debt" per se under IBC. Rather, "interest" can be claimed as "financial debt" only if such debt exists. The Bench opined that the "interest" component alone cannot be claimed or pursued in absence of the debt for initiating CIRP against the Corporate Debtor. An application pursued for realization of the interest amount alone is against the intent of the IBC. The order was passed on 23.05.2022.

Salary During Notice Period Does Not Fall Within The Definition Of 'Operational Debt' Under IBC: NCLT, Mumbai

Case Title: Sandesh Naik v. MT Educare Ltd.

Case No.: C.P.(IB)-678(MB)/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice H.V. Subba Rao (Judicial Member) and Chandra Bhan Singh (Technical Member), has held that salary for purported notice period amounts to specific performance of the appointment letter and does not fall within the definition of 'Operational Debt' as the same was not salary for the actual work done by the Operational Creditor.

The Applicant resigned from his job and demanded the Employer to pay salary for 3 months of notice period. The Employer only paid for 1 month and stated that the appointment letter did not provide for 3 months' payment. The NCLT dismissed the Section 9 application filed by the Applicant on the ground that there existed a dispute between the parties which ought to be adjudicated upon by leading evidence and conducting trials before the competent court and that the Applicant cannot use the IBC as a substitute of debt enforcement procedures.

Minimum Threshold Of Rs. 1 Crore Must Be Met, Even If Default Had Occurred Or Demand Notice Was Sent Prior To 24th March, 2020: NCLT Delhi

Case Title: Mr. Daxesh D. Desai v Shopzo Brand Pvt. Ltd.

Case No.: IB 533/(ND)/2021.

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Ms. Sumita Purkayastha (Technical Member), has held that for determining maintainability of an application in terms of Section 4 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), the date of filing of a petition has to be seen and not the date of default or demand notice. No petition under Section 7 or 9 of IBC could be filed for a default of less than Rs. 1 Crore, on or after 24.03.2020, even if the default had occurred or demand notice was sent prior to 24.03.2020.

NCLT Delhi Dismisses Insolvency Petition Against NBCC India Ltd., A Navratna Enterprise

Case Title: Biosafe Lab India Pvt. Ltd. v NBCC India Ltd.

Case No.: IB 323/ND/2022

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Mr. Dharminder Singh (Judicial Member) and Ms. Sumita Purkaysatha (Technical Member), has dismissed an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against NBCC India Pvt. Ltd. The Bench observed that a serious dispute existed in relation to the due payment, which cannot be decided in a summary manner. The order was passed on 27.05.2022.

Split Verdict Of NCLT, Hyderabad Bench On The Question Of Related Party, Issue Referred To President Of The Bench

Case Title: Trimex Industries Pvt. Ltd. v. M/s. Sathavahana Ispat Ltd.

Case No.: CP (IB) No. 17/9/HDB/2020

In a split verdict, a two-judge Bench of NCLT, Hyderabad comprising of Shri Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Veera Brahma Rao Arekapudi (Technical Member), has referred to the Principal Bench the question of –"whether in an application filed by an Operational Creditor u/s 60(5) of the Code, the CoC can be barred from considering the resolution plan of a Prospective Resolution Applicant (PRA), when the same has not received approval of the CoC on the ground that the PRA and sole member of CoC are related parties". The Technical Member has allowed the application u/s 60(5) of IBC and directed the CoC not to consider the resolution plan of the PRA as the entire process of CIRP is vitiated and collusion between the parties is writ large on the face of CIRP of the CD, as the PRA was a related party to the sole member of the CoC, JC Flower Asset Reconstruction Company, to whom, after assignment of debts, the Corporate Debtor owed all financial debts. Thus, the application to pass an order is not premature. However, the Judicial Member rejected the application by observing that the plea would be within the jurisdiction of the CoC while voting for the plan and interference by the Adjudicating Authority would amount to usurpation of power which is not available under the Code.

Project Wise CIRP Of Real Estate Company Is Outside The Purview Of Insolvency And Bankruptcy Code, 2016: NCLT Chennai

Case title: N Kumar v. Tata Capital Housing Finance Ltd.

Case No.: CP (IB)/889(CHE)/2019

The National Company Law Tribunal, Chennai Bench comprising of Justice S. Ramathilagam and Mr. Anil Kumar B (Technical Member) has held that the project wise Corporate Insolvency Resolution Process (CIRP) of a real estate company is outside the purview of Insolvency and Bankruptcy Code, 2016

NCLT observed that there is no concept of limited CIRP or CIRP for specific projects anywhere in the IBC, 2016 or regulations made thereunder. NCLT further noted that the Supreme Court in the case of Pioneer Urban Land and Infrastructure Ltd. versus Union of India held that IBC is a beneficial legislation which can be trigged to put the whole corporate Debtor back on its feet.

NCLT Is Empowered To Pierce The Corporate Veil To Ascertain The Real Successful Bidder: NCLT Delhi

Case Title: Argentium International Pvt. Ltd. v Utm Engineering Pvt. Ltd.

Case No.: IB No. 248/ND/2019

The National Company Law Tribunal (NCLT), New Delhi Bench, comprising of Dharminder Singh (Judicial Member) and Sumita Purkayastha (Technical Member), has held that the NCLT has the power to pierce the 'corporate veil' in order to ascertain the real successful bidder. The Bench held:

"Tribunal is also not denuded of authority to pierce the 'corporate veil' to ascertain the real successful bidder. Therefore, the 'Corporate Veil' has to be lifted to prevent unjust and fraudulent act of the respondent herein and in order to look-into realities behind the legal façade and to hold him liable to the acts of the Corporate Debtor. No doubt, the separate personality of the company is statutory privileges, but it must be used for the legitimate purpose only. Whenever & wherever, if fraudulent or dishonest use is made of the legal entity, the individual will not be allowed to hide behind the curtain of the corporate personality. A duty is casted upon the Tribunal or the Court to break this shell of the company and to see who is actually benefitted by this curtain."

IBC AND RBI Guidelines Are 'Disjoint Sets', "There Is No Question Of One Prevailing Over The Other": NCLT Kolkata Dismisses Application Filed By SREI Ex Promoter Hemant Kanoria

Case Title: Reserve Bank of India v SREI Infrastructure Finance Limited

Case No.: CP (IB) No.295/KB/2021.

The National Company Law Tribunal (NCLT), Kolkata Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member), has held that the Insolvency and Bankruptcy Code, 2016 ("IBC") and the Reserve Bank of India (RBI) Guidelines do not prevail over each other as they have different scope and purpose. The NCLT does not have jurisdiction to adjudicate upon an audit conducted under RBI guidelines. The application was filed by Ex-Promoter of SREI Infrastructure Finance Ltd., Mr. Hemant Kanoria, challenging the KPMG Audit which was conducted under RBI guidelines. The Bench observed that:

"Therefore, the Code and the RBI circulars work in different fields and are, in a manner of speaking, disjoint sets. The adequacy or otherwise of KPMG's audit report would no doubt be determined by the lenders. We do not see any possibility of conflict between the two. There is no question of one prevailing over the other."

NCLT Kolkata Initiates Insolvency Process Against The Personal Guarantor Of Gontermann-Pipers (India) Ltd.

Case Title: UCO Bank v Vinod Kumar Mittal

Case No.: C.P.(IB)/24(KB)2021

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has initiated Insolvency Resolution Process against Mr. Vinod Kumar Mittal, who is the Personal Guarantor to the loan sanctioned to Gontermann-Pipers (India) Limited by UCO Bank.

Incorporated in 1966, Gontermann-Pipers (India) Limited was a technical collaboration between Mr. H.K. Nathani of Calcutta and Gontermann-Peipers GmBH, Germany, the latter being a leading European manufacturer of rolling mill rolls since 1825. GPIL was a leading manufacturer of iron and steel rolls in India and is presently undergoing liquidation proceedings. Mr. Vinod Kumar Mittal is one of the Directors of GPIL and had furnished Personal Guarantee before UCO Bank in relation to the credit facilities availed by GPIL from the said Bank. When GPIL failed to repay the credit facilities, UCO Bank filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 ("IBC") before the NCLT Kolkata, seeking initiation of Insolvency Resolution Process against Mr. Vinod Kumar Mittal, the Personal Guarantor in the concerned credit facilities. The NCLT Bench permitted initiation of insolvency process against the Personal Guarantor. The order was passed on 27.06.2022.

Under 'Right Of Subrogation' Guarantor Is Entitled To Initiate CIRP Against Principal Borrower: NCLT Kolkata

Case Title: Orbit Towers Pvt. Ltd. v Sampurna Suppliers Pvt. Ltd.

Case No.: C.P (IB) No. 2046/KB/2019

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has held that if a Guarantor pays the debt on behalf of the Principal Borrower, then it steps into the shoes of the Creditor and can initiate Corporate Insolvency Resolution Process ("CIRP") against the Principal Borrower.

"Any agreement of guarantee between the Indian Bank and the Guarantor is sufficient for the purpose of bestowing all the rights of the Bank/creditor upon the Financial Creditor herein once the Financial Creditor has discharged all the liability of the Corporate Debtor towards Indian Bank. There may or may not be any agreement between the Financial Creditor and the Corporate Debtor. It does not make any difference at all. The Law is very clear that once the Guarantor/surety discharges the liability of the Principal borrower towards the creditor, all the rights of the Creditor to recover that money would automatically be transferred in favour of the surety/ Guarantor. This is exactly the right of subrogation". The order was passed on 27.06.2022.

Bank Of India V Future Retail: NCLT Mumbai Reserves Order On Amazon's Intervention Application

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), has vide an order dated 27.06.2022 reserved the matter for orders on the intervention application.

Amazon has been opposing the insolvency plea filed by Bank of India. It has been argued by Amazon that Future Retail Ltd. (FRL) failed to honour the Emergency Arbitrator's Award passed in Singapore Arbitration proceedings in October 2020, whereby FRL was barred from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. Therefore, the lenders could not have entered into a Framework Agreement with FRL in breach of the said Award.

Issuance Of Post Dated Cheques Is Not An Unqualified Admission Of Debt, NCLT Allahabad Dismisses Section 7 Application

Case Title: N.C. Goel & Maya Goel v Piyush Infrastructure India Private Limited

Case No.: CP (IB) No.453/ALD/2019

The National Company Law Tribunal ("NCLT"), Allahabad Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Virendra Kumar Gupta (Technical Member), has held that issuance of post dated cheques cannot be taken to be unqualified admission of debt, because the presumptions drawn under Section 118 and Section 139 of the Negotiable Instruments Act, 1881, are rebuttable presumptions.

The Bench further observed that the loans were given between 2011 to 2016 by the Applicants. However, in absence of any documentation, no date of default could be established. The date of default can only be calculated when the tenure of the loan is established, or when there is a demand for repayment. It was observed that receipt of interest was only evidenced through two letters of the Respondent, thus the claim regarding receipt of interest remain unsubstantiated. The order was passed on 13.06.2022.

NCLT Mumbai Initiates Insolvency Process Against Bombay Rayon Fashions Ltd.

Case Title: Vikash Parasprampuria v Bombay Rayon Fashions Limited

Case No.: CP (IB) No.1443/MB-IV/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Rajesh Sharma (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Bombay Rayon Fashions Ltd. and Mr. Santanu T Ray has been appointed as the Interim Resolution Professional. The order was passed on 07.06.2022.

Application By Chairman Of Monitoring Committee For CIRP Of Corporate Debtor's Debtor, Maintainable: NCLT Delhi

Case Title: Educomp Infrastructure & School Management Ltd. v Millenium Education Foundation

Case Title: C.P. No. (IB) 245/ND/2022.

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Abni Ranjan Kumar Sinha (Judicial Member) and Shri Hemant Sarangi (Technical Member), has held that a Chairman of Monitoring Committee can file an application under IBC for initiating Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor's debtor.

It was observed that the Chairman of Monitoring Committee is covered under the purview of IBC by virtue of Section 2(d), which states that the provision of IBC is applicable to "such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf". The Monitoring Committee is formed and its Chairman is appointed under the provisions of IBC. Therefore, the Chairman possesses the proper authority to take necessary steps to protect the Corporate Debtor's interest. The order was passed on 03.06.2022.

 Preferential, Fraudulent Or Avoidable Transaction, Material Facts To Be Pleaded : NCLT Kolkata

Case Title: Star India Private Limited v Advance Multisystem Broadband Communications Limited

Case No.: C.P. (IB) No. 1510/KB/2018

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising Mr. Rohit Kapoor (Judicial Member) and Mr. Harish Chander Suri (Technical Member), has held that a transaction cannot be alleged to be preferential, fraudulent or avoidable by the Resolution Professional, unless an enquiry has been conducted by the relevant experts and specific material facts have been stated as to why such transaction would be covered under Section 45, 46, 47 and 66 of the Insolvency and Bankruptcy Code, 2016 ("IBC").

The Bench opined that Resolution Professional can file an application under Section 25(2) (j) of the IBC only after being satisfied about the particular transactions being avoidable, fraudulent or undervalued. It was incumbent upon the Resolution Professional to seek assistance of the Forensic Audit if so required, to engage the services of accountants, legal or other professionals with a view to satisfy himself about the transactions being avoidable. Without meeting the aforesaid requirements, the Resolution Professional cannot not directly approach the Adjudicating. The order was passed on 30.05.2022.

2NCLT Mumbai Initiates Insolvency Proceedings Against Nirmal Lifestyle (Kalyan) Pvt. Ltd.

Case Title: Srei Equipment Finance Limited v Nirmal Lifestyle (Kalyan) Private Limited

Case No.: CP (IB) No.1337/MB/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Rajesh Sharma (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Nirmal Lifestyle (Kalyan) Pvt. Ltd. ("Corporate Debtor") and has appointed Mr. DilipKumar Natvarlal Jagad as the Interim Resolution Professional. The order was passed on 16.06.2022.

The Adjudicating Authority observed that two defaults in Loan repayment dated 05.02.2020 and 05.03.2020 were amounting to Rs. 1,12,50,000/-. The remaining repayment defaults between 05.04.2020 and 05.09.2020 were hit by Section 10A of the IBC and therefore, could be considered as default. The Bench observed that the actual default made by the Corporate Debtor was Rs.1,12,73,387/- along with interest and hence CIRP could be initiated, as the default meets the minimum threshold of Rs. 1 Crore.

Corporate Debtor Cannot Be Dragged Into CIRP Mala Fide For Any Purpose Other Than Resolution Of Insolvency: NCLT Mumbai

Case Title: Gateway Offshore Private Limited and Anr. v Runwal Realtors Private Limited

Case No.: CP (IB) 954/MB/C-I/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Judicial Member) and Mr. Kapal Kumar Vohra (Technical Member), has held that a written contract cannot be treated as a pre- requisite to prove the existence of a financial debt and the Adjudicating Authority must be satisfied that the Corporate Debtor is not being dragged into Corporate Insolvency Resolution Process ("CIRP") mala fide for any purpose other than the resolution of the Insolvency. The order was passed on 10.06.2022.

Claims That Were Not A Part Of The Resolution Plan, Can't Be Claimed After Approval Of The Resolution Plan: NCLT Mumbai Reiterates

Case Title: State Bank of India v Rohit Ferro Tech Limited

Case No.: C.P. (IB) No. 1214/KB/2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has held that claims or reliefs which were not a part of the Resolution Plan, cannot be claimed after the said Resolution Plan is approved by the Adjudicating Authority. The Bench held that as the Applicant had not approached the Adjudicating Authority while the Resolution Plan was under consideration, therefore, the Applicant had no right to file any application or seek any relief after the approval of the Resolution Plan. The Order was passed on 14.06.2022.

Limitation Is Refreshed Each Year When Corporate Debtor Admits Debt In Its Financial Statements: NCLT Mumbai Initiates CIRP Against GIT Textiles

Case Title: UCO Bank v GIT Textiles Manufacturing Limited

Case No.: C.P (IB) No. 600/KB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against GIT Textiles Manufacturing Ltd. for a default that had occurred in 2012 and has held that limitation refreshed each subsequent year when the Corporate Debtor acknowledged the financial debt in its Financial Statements. The Bench held that due to the specific admissions of debt by the Corporate Debtor, Section 18 of the Limitation Act, 1963 was applicable and it resulted in fresh computation of limitation period of three years from the date of acknowledgment in each balance sheet. "Since the last of such acknowledgments was made on 31.03.2019, the limitation period would last up till 31.03.2022. Thus, the present petition was held to be well within limitation."

NCLT Chennai Restraints Liquidator From Dealing With Assets Of Jeypore Sugar Co. Ltd.

Case Title: IDBI Bank v Jeypore Sugar Company Ltd.

Case No.: CP/1307/IB/2018

The National Company Law Tribunal ("NCLT"), Chennai Bench, comprising of Justice S. Ramathilagam (Judicial Member) and Shri Anil Kumar B (Technical Member), has restrained the liquidator from dealing with the assets of Jeypore Sugar Company Ltd. ("Corporate Debtor") till the pendency of the application filed by promoters of the Corporate Debtor.

The Promoters of the Corporate Debtor had filed an application before the NCLT, alleging that the Liquidator was selling the plant and machinery of the Corporate Debtor for a scrap value. The NCLT Bench observed that the NCLAT had imposed a stay on the order dated 17.11.2021 of the NCLT, which was in operation till date and hence the Liquidator cannot be permitted to sell the plant and machinery of the Corporate Debtor. It was held that, "The Liquidator shall not deal with any of the assets of the Corporate Debtor till the disposal of the present application. Further, Respondent No. 12 is also restrained from lifting any kind of machinery or scrap until the disposal of the present application." The order was passed on 03.06.2022.

Ansal Properties Pays The Dues Lately, NCLT Delhi Dismisses Insolvency Petition Imposing A Cost Of Rs. 1 Lakh On Ansal

Case Title: M/s. Dalmia Family Office Trust v M/s. Ansal Properties and Infrastructure Limited

Case No.: (IB)-639(ND)/2021

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri. Abni Ranjan Kumar Sinha (Judicial Member) and Shri. L. N. Gupta (Technical Member), has dismissed the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of the Corporate Insolvency Resolution Process ("CIRP") against Ansal Properties and Infrastructure Ltd. after the outstanding dues were paid off. A cost of Rs. 1 Lakh has been imposed on Ansal Properties and Infrastructure Ltd. for delaying the proceedings and depositing the due amount in the account of Dalmia Family Office Trust without its consent and after the NCLT Bench had reserved the order. The Order was passed on 06.06.2022.

Wave Megacity Projects, NCLT Dismisses Wave's Insolvency Plea With A Cost Of One Crore

Case Title: In the Matter of Wave Megacity Centre Private Limited

Case No.: C.P. (IB) No. 197 (PB)/2021

The National Company Law Tribunal (NCLT), Principal bench, comprising of Shri Bhaskara Pantula Mohan (Member Judicial) and Shri Hemant Kumar Sarangi (Member Technical), dismissed the insolvency petition filed by Wave Megacity Centre Private Limited (Wave) under Section 10 of the Insolvency and Bankruptcy Code, 2016. The Bench also imposed a cost of INR One Crore on Wave for filing the insolvency petition against itself for malicious or fraudulent intent and also directed the Central Government to make necessary investigation into the affairs of Wave.

The bench held that the removal of the directors of Wave just before filing of the Section 10 Petition is an indicator that the management who was running the Wave wants to hide from the reasons of default and wants to immunize itself from the rigors of the Code. NCLT noted that there are around 285 cases pending against Wave and the possibility of filing the Section 10 Petition to escape the liability arising out of this pending litigation cannot be overlooked. "We have concluded that the application filed under Section 10 of IBC, 2016 was an attempt on the part of the Corporate Debtor to play fraud on thousands of homebuyers, Noida Authority, Government etc. Further greater prejudice must have caused to them if CIRP was triggered." Further, NCLT also directed the Central Government to make necessary investigation into the affairs of Wave as it has collected huge amount in cash and siphoned off the same.

NCLT Closes The Right To File Reply Due To Delay, NCLAT Delhi Allows Appeal And Directs To Take Reply On Record

Case Title: Samyak Metals Pvt. Ltd. v Ugro Capital Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 668 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Ashok Kumar Mishra (Technical Member), has permitted taking on record of a Reply, which was allegedly lying with the Registry for over 50 days for curing of defects and the Adjudicating Authority had thus refused to take it on record by closing the right to file reply. The order was passed on 08.06.2022.

The NCLAT observed that Rule 34 of the NCLT Rules, 2016 provides that in a situation not provided in these rules, the Tribunal (Adjudicating Authority) may determine in the procedure in a particular case in accordance with the Principles of Natural Justice, by recording reasons in writing. The Bench reiterated that every man must be given an opportunity of being heard. "The technical aspect of the Appellant keeping his Reply lying in the Registry based on the objection is not a proper one without delving deep in the matter any further and also at this stage this Tribunal is not expressing any opinion one way or other about the merits of the matter which is to be taken up on arguments on 09.06.2022."

NCLT Delhi Permits Centre To Take Over Delhi Gymkhana Club

Case Title: Union of India v Delhi Gymkhana Club & Ors., C.P. 71/241-242/PB/2020.

The National Company Law Tribunal ("NCLT"), Principal Bench comprising of Justice R Sudhakar and Narendra Kumar Bhola, has allowed the petition filed under Section 241-242 of the Companies Act, 2013 by Union of India against the Delhi Gymkhana Club and allowed the Govt. to take over the control of the Delhi Gymkhana Club by nominating Fifteen (15) persons to be appointed as the directors of the Delhi Gymkhana Club who will manage the affairs of the Company. The NCLT found that the club is generating no income from any sports activities which is the primary objective of the club as per its memorandum of Association. It also observed that the Gymkhana Club is taking deposit form the outsiders in violation of the provisions of the Companies Act, 2013. The order was passed on 01.04.2022.

NCLT Delhi Declares Logix City Developers Insolvent And Appoints IRP

Case Title: Colliers international (India) property services Pvt. Ltd. Vs Logix city developers private limited, IB 883/ND/2020

The National Company Law Tribunal ("NCLT"), New Delhi Bench, has declared Logix City Developers Private Limited as insolvent and has initiated Corporate Insolvency Resolution Process ("CIRP") against it. The NCLT Bench observed that the two requirements for admission of Section 9 of the Insolvency and Bankruptcy Code, 2016 have been fulfilled as there is a default in terms of a debt and no preexisting dispute pertaining to it. The order was passed on 22.03.2022.

NCLT Bengaluru Dismisses Insolvency Petition Against Café Coffee Day

Case Title: M/s Cooperative Rabobank U.A v Coffee Day Global Limited, CP (IB) No. 19/BB/2021.

The National Company Law Tribunal (NCLT), Bengaluru Bench, comprising of Shri Ajay Kumar Vatsavayi ( Judicial Member) and Shri Manoj Kumar Dubey ( Technical Member) has dismissed the insolvency petition filed against the parent company of Cafe Coffee Day namely Coffee Day Global Limited by Cooperative Rabobank U.A. ("Rabobank"). NCLT has observed that other lenders of the Coffee Day initiated the resolution process of Coffee Day under RBI's circular and Rabobank has not agreed to give a formal no dues certificate to release the charge over the vending machine vertical of Coffee Day. The correspondence between the lenders clearly established that Coffee Day suffered because of COVID-19 and sudden demise of its chairman and since then Coffee Day is taking bona fide and sincere efforts to restructure its debts.

Corporate Debtor Cannot Be Sent Into Liquidation Just Because Liquidation Value Is More Than The Value Of The Resolution Plan: NCLT Kolkata

Case Title: Ramsarup Industries Limited, CP (IB) No.349/KB/2017.

The NCLT Kolkata Bench comprising Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member), while deciding interim applications in the matter of Ramsarup Industries Ltd., has held that just because the liquidation value is being projected higher than the value of the resolution plan, the Corporate Debtor cannot be sent into liquidation for this reason alone. The object of the IBC is to put the Corporate Debtor back on its feet for the larger benefit of all the stakeholders, not just the creditors. The order was passed on 07.04.2022.

NCLT Delhi Admits Petition Under Section 7 Of IBC Against M/S Anand Divine Developers Pvt. Ltd. And Initiates CIRP

Case Title: ICICI Prudential Venture Capital Fund Real Estate Scheme I, through its Investment Manager ICICI Prudential Asset Management Company Ltd. v M/s Anand Divine Developers Pvt. Ltd., (C.P. No. IB 1101 (PB)/2020).

The National Company Law Tribunal, Principal Bench, comprising of Shri Ramalingam Sudhakar (President) and Shri Avinash Kumar Srivastava (Technical Member), has admitted a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 ("IBC") against M/s Anand Divine Developers Pvt. Ltd. and initiated the Corporate Insolvency Resolution Process ("CIRP") vide an order dated 25.03.2022. ATS Infrastructure Limited is the promoter of M/s Anand Divine Developers Pvt. Ltd.

Insolvency Resolution Process Against Legal Heirs Of Personal Guarantor By Financial Creditor Not Permissible: NCLT Kolkata

Case title: Bank of Baroda v Ms. Divya Jalan

Case No.: C.P. (IB) - 363/2021.

The National Company Law Tribunal ("NCLT"), Kolkata Bench Consisting of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member) while dismissing an application filed by the Bank of Baroda (Financial Creditor), held that the application is not maintainable against legal heirs of the Personal Guarantor under the IBC. As per regulation 3(1)(a)(e) of 'Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019', a personal guarantor to a Corporate Debtor is a person against whom guarantee has been invoked and there is outstanding dues left, partly or fully. The definition does not include the 'legal heirs'.

NCLT, Delhi Issued Circular Regarding Defective Applications And Petitions Based On Rule 28 (2) Of NCLT Rules, 2016

A circular has been issued by the National Company Law Tribunal ("NCLT"), Delhi, on 07.04.2022, in view of Rule 28 (2) of NCLT Rules, 2016. The circular states on scrutiny, if an Application is found to be defective, after notice to the party, the same shall be returned for compliance. If the defects are not complied within 7 days, the Registrar may pass appropriate orders. This notice was issued since there was a failure to remove the defects raised by the registry and to comply with the direction regarding the list of 'Common Objections' published in the website of NCLT dated 17.3.2022, 25.3.2022 and 04.04.2022.

Resolution Professional Cannot Prosecute Preferential Transactions After Approval Of Resolution Plan: NCLT Kolkata

Case title: Bank of India v Amrit Fresh Pvt. Ltd., C.P. (IB) - 263/2018.

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri V K Rajasekhar (Judicial Member) and Shri Balraj Joshi (Technical Member) held that an application for preferential transactions cannot be pursued either by the erstwhile Resolution Professional ("RP") or the new Management of the Corporate Debtor after the approval of the Resolution Plan by NCLT. The Bench held that it is incumbent upon the RP to adhere to Section 43 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 35A of the IBBI (Insolvency Resolution Process for the Corporate Debtor Persons) Regulations, 2016, which mandates that the RP has to form an opinion whether the Corporate Debtor has been subjected to preferential transaction within or on 75^th day of the Corporate Insolvency Resolution Process ("CIRP") commencement date. Thereafter, the RP has to make a determination and file an application before the 135^th day.

Amount Disbursed By NBFC Upon Oral Agreement Not Covered In Financial Debt: NCLT Kolkata

Case title: Narendra Promoters & Fincon Private Limited v Vinline Engineering Private Limited

Case No.: CP (IB) No.749/KB/2020.

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member) while deciding a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has held that a disbursement made by a Non Banking Financial Institution ("NBFC") over an oral agreement cannot be construed as the existence of a financial debt, when there is nothing on record to show that it was disbursed as a loan. The petition was dismissed by the Bench vide an order dated 23.02.2022.

The Bench placed reliance on the RBI guidelines on Fair Practices Code for NBFCs, dated 18.02.2013, wherein it has been stated that the NBFCs should convey in writing to the borrower the amount of loan sanctioned, along with the terms and conditions. It was held that as RBI's circulars have statutory force, hence, it was mandatory on the part of Financial Creditor, being an NBFC, to keep the terms and conditions recorded in writing.

CIRP Initiated Against National Steel And Agro Industries Ltd.: NCLT Mumbai

Case title: JM Financial Asset Reconstruction Co Ltd. v National Steel & Agro Industries Ltd.

Case No.: CP (IB) 2067/MB/2019.

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri K.K. Vohra (Technical Member), has admitted a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") against National Steel & Agro Industries Ltd. and initiated Corporate Insolvency Resolution Process ("CIRP"), vide an order dated 11.04.2022. The NCLT Bench observed that the Financial Creditor had established that the Credit facilities were sanctioned as well as disbursed to the Corporate Debtor, and that the Corporate Debtor had defaulted in payment of the debt. Accordingly, the two essential qualifications, i.e. existence of 'debt' and 'default', for admission of a petition under Section 7 of the IBC were fulfilled.

Notice Issued To Siti Networks Ltd. In Section 7 IBC Petition Filed By HDFC Ltd.: NCLT Mumbai

Case title: Housing Development Finance Corporation limited v SITI Networks Limited

Case No.: C.P. (IB)/414(MB) 2022.

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Smt. Suchitra Kanuparthi (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has issued notice to SITI Networks Ltd. in the matter of Housing Development Finance Corporation Limited v SITI Networks Limited., vide an order dated 30.03.2022. Housing Development Finance Corporation Ltd. ("HDFC") had filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against SITI Networks Ltd., for an alleged default of approximately Rs. 296 Crores in respect of the financial facility granted by HDFC. The matter was heard by the NCLT, Mumbai Bench on 30.03.2022 and accordingly, notice was issued to SITI Networks Ltd. with the liberty to file a reply.

CIRP Can Be Initiated Based On An Unchallenged Arbitral Award: NCLT Kolkata

Case Title: Viom Infra Ventures Limited v Bahula Infotech Private Limited

Case No.: C.P (IB) No. 197/KB/2021.

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member), while deciding a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has held that Corporate Insolvency Resolution Process ("CIRP") can be initiated based on an Arbitral Award if the said Award has not been challenged. Accordingly, CIRP has been initiated against Bahula Infotech Pvt. Ltd. vide an order dated 18.04.2022. The NCLT Bench observed that the Corporate Debtor had neither raised any dispute with respect to the services of the Operational Creditor nor challenged the Arbitral Award by way of Section 34 petition under the Arbitration and Conciliation Act, 1996. Therefore, the debt is undisputed. The NCLT Bench also held that the CIRP cannot not be initiated on basis of Arbitral Award when:

1. A counterclaim exceeding the claim awarded was rejected by the Arbitral Tribunal on merits, and such rejection is also a matter of challenge before the Courts; and
2. A challenge had also been filed against the Arbitral Award.

IBBI

IBBI Suspends Insolvency Professional For Violation Of Code Of Conduct

Case No.: No. IBBI/DC/107/2022

The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ("IBBI"), while adjudicating a Show Cause Notice in the matter of Mr. Kedarram Ramratan Laddha (Insolvency Professional), has suspended the Insolvency Professional for a period of one year for accepting assignment as an Interim Resolution Professional without having a valid Authorisation for Assignment ("AFA") and while disciplinary proceedings were pending against him. The Order was passed on 24.06.2022.

The Disciplinary Committee observed that "the Code of Conduct prescribed under Insolvency Professional Regulations mandates the Insolvency Professional to inform such persons under the IBC as may be required, of a misapprehension or wrongful consideration of a fact of which he becomes aware, as soon as may be practicable and not to conceal any material information or knowingly make a misleading statement to the IBBI, the Adjudicating Authority or any stakeholder, as applicable".

It was held that ample opportunities were available to Mr. Kedarram to disclose the facts before Adjudicating Authority regarding non possession of a valid AFA and pendency of disciplinary proceeding against him. Accordingly, the Disciplinary Committee found the conduct of Mr. Kedarram in accepting the assignment as IRP of the Corporate Debtor without holding valid AFA and during pendency of disciplinary proceedings, was in violation of the IBBI Circular No: LA/010/2018 dated 23.04.2018, Section 208(2)(a) and 208(2)(e) of the IBC read with regulation 7A, 7(2)(a) and 7(2)(h) of IP Regulations, Clause 1, 2, 11, 12 and 14 of the Code of Conduct prescribed under IP Regulations.

CIRP Conducted In A "Brazen Manner": IBBI Suspends Insolvency Professional For Three Years

Case No.: IBBI/DC/108/2022

The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ("IBBI"), while adjudicating a Show Cause Notice dated 08.04.2022 in the matter of Mr. Partha Sarathy Sarkar (Insolvency Professional), has suspended the Insolvency Professional for a period of three years for acting in contravention of the Insolvency and Bankruptcy Code, 2016 ("IBC") and the IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"). The specific violations were such that the Insolvency Professional had failed to make timely public announcement; did not seek extension from the Adjudicating Authority when CIRP period expired; failed to appoint registered valuers, maintain proper list of creditors and take control of the Corporate Debtor's assets. The Order was passed on 24.06.2022.

IBBI Amends Its Regulations On Information Utilities

The Insolvency and Bankruptcy Board of India has introduced second round of amendments to the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 ("Information Utility Regulations") vide a notification dated 14.06.2022, bearing No. IBBI/2022-23/GN/REG085 in order to improve the availability of information. These amendments have come into force on 14.06.2022.

The amendments are as follows:

1. Before filing an application to initiate Corporate Insolvency Resolution Process (CIRP) under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), the creditor shall have to file the information of default, with the Information Utility. The Information Utility shall process the said information for the purpose of issuing record of default in accordance with Regulation 21.
2. Previously only creditors were duty bound to submit their claims to the Resolution Professional, now the Corporate Debtor or its Promoter or any associate thereof is required to submit such information to the Resolution Professional in the prescribed format.
3. The Operational Creditors will have to furnish the extracts of E-way bill, Form GSTR-1 and Form GSTR-3B alongwith their application under Section 9 of the IBC, if the concerned laws are applicable to them.
4. In order to aid the Resolution Professional in preparation of the Information Memorandum, the creditors of the Corporate Debtor will have to share information with the Resolution Professional pertaining to the Corporate Debtor's assets, liabilities, latest financial statements and other financial information, as available with them.
5. The Financial and Operational Creditors will have to furnish their PAN number and email ID while filing application under Section 7 or 9 of IBC.

IBBI Notified The Amended Insolvency And Bankruptcy Board Of India (Voluntary Liquidation Process) Regulations, 2017

The Insolvency and Bankruptcy Board of India ("IBBI") had issued a Press Release on 08.04.2022 notifying the public that amendments have been made to Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 ("Voluntary Liquidation Regulations"). The amendments are as follows:

1. The Liquidator shall prepare the list of stakeholders within 15 days from the last date for receipt of claims, where no claim from creditors has been received till the last date for receipt of claims.
2. The Liquidator shall distribute the proceeds from realization within 30 days the receipt of the amount to the stakeholders.
3. The Liquidator shall endeavour to complete the liquidation process of the corporate person within 270 days from the liquidation commencement date, where the creditors have approved the resolution under Section 59(3)(c) of IBC or Regulation 3(1)(c), and 90 days from the liquidation commencement date in all other cases.

IBBI Disciplinary Committee Restrains Insolvency Professional From Rendering Services For Two Years

Citation: IBBI/DC/91/2021

In a matter before the Disciplinary Committee of the IBBI, an Insolvency Professional, namely Mr. Manoj Kumar Singh, has been found to be dispensing his duties as an Interim Resolution Professional in contravention of the Insolvency and Bankruptcy Code, 2016 ("IBC") and its regulations. The Disciplinary Committee, vide an order dated 08.04.2022, has directed Mr. Singh to not seek or accept any process or assignment; or render any services under the IBC for a period of two years from the date when the said order comes into force.

The Committee had observed that Insolvency Professional ("IP") had failed to conduct the Corporate Insolvency Resolution Process ("CIRP") as per the provisions of the IBC and its Regulations, as no proper actions were taken by him to constitute the Committee of Creditors. The Committee held that the IP has acted in contravention to the provisions of Sections 17, 18, 20, 25, 208(2)(a) and (e) of the IBC, regulations 16B, 27, 35A, 36, 36A and 40A of CIRP Regulations, Regulation 7(2)(a) and (h) of the IP Regulations and clauses 1, 2, 10, 13 and 14 of the Code of Conduct specified in First Schedule of the IP Regulations.

IBBI Rescinds Its Previous Circulars

The Insolvency and Bankruptcy Board of India (IBBI) vide its circular dated 23.05.2022 has rescinded its various earlier circulars by exercising its power under Section 196 of the Insolvency and Bankruptcy Code, 2016. As per circular dated 23.05.2022, IBBI conducted an exercise of review of its circulars and withdrew its earlier circulars as these circulars are no longer required due to incorporation of those changes in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or IBBI (Insolvency Professionals) Regulations, 2016.

IBBI Suspends IP Subrata Monindranath Maity Who Has Been Arrested By CBI Over Bribe Allegations

Case No.: IBBI/DC/95(Interim)/2022

The Insolvency and Bankruptcy Board of India (IBBI) has suspended Insolvency Professional, Mr. Subrata Monindranath Maity, vide an interim ex-parte order dated 09.05.2022, after the Central Bureau of Investigation (CBI) had arrested Mr. Subrata over bribe allegations.

On 03.05.2022 a complaint was filed before CBI, ACB Pune, alleging that after the settlement had taken place between the aforesaid Parties, Mr. Subrata (IRP in the matter) had approached Guardian Homes Pvt. Ltd. (Corporate Debtor) demanding an amount of Rs. 20 Lakhs as bribe in addition to the IRP fees amounting to Rs. 4 Lakhs, for completing the pending formalities before NCLT Mumbai after the settlement. It has been alleged that Mr. Subrata had threatened Guardian Homes that in case of non-payment of the bribe he might take coercive actions against Guardian Homes such as seizure of bank account and publication of notice of liquidation. CBI lodged a First Information Report (FIR) against Mr. Subrata on 04.05.2022 and arrested him thereafter. CBI has also issued a press release on 05.05.2022 narrating the case.

HIGH COURT

Cannot Invoke Article 226 If An Effective And Statutory Remedy Exists Before NCLAT: Madras High Court

Case Title: Sunku Vasundhara v State Bank of India

Case No.: W.P.Nos.14398 of 2022

The High Court of Madras Bench comprising of Justice T. Raja and Justice K. Kumaresh Babu, while adjudicating a writ petition filed in Sunku Vasundhara v State Bank of India, has held that when an effective and statutory remedy lies before the Appellate Authority i.e. National Company Law Appellate Tribunal (NCLAT), aggrieved parties cannot invoke Article 226 of the Constitution of India for relief. The order was passed on 15.06.2022.

The Petitioner had filed a Writ Petition under Article 226 of the Constitution of India before the High Court of Madras, seeking issuance of a Writ of Certiorari against an order passed by the National Company Law Tribunal ("NCLT"), Chennai Bench on 29.04.2022.

The High Court held that the Petitioner has an effective and statutory remedy before the Appellate Authority i.e. National Company Law Appellate Tribunal (NCLAT) and thus Article 226 of the Constitution of India cannot be invoked. An appeal should have been filed before the NCLAT and not the High Court.

Whether Income Tax Demand And Penalty Extinguished In CIRP? Delhi High Court Stays Demand Notice

Case Title: Indo Enviro Integrated Solution Limited v ACIT

Citation: W.P.(C) 8899/2022

The Delhi High​​ Court bench comprising of Justice Manmohan and Justice Manmeet Pritam Singh stayed an income tax assessment order, consequential demand and notice of penalty, which were assailed on grounds of being in contravention of the order of the National Company Law Tribunal (NCLT).

An application was filed by the Union of India (through the Ministry of Corporate Affairs) under Sections 241 and 242 of the Companies Act before the NCLT based on recommendations of the Ministry of Finance, Department of Economic Affairs. It was alleged that operations of the IL & FS Group of Companies were being carried out in a manner prejudicial to the public interest. The application was made under Sections 241 and 242 of the Companies Act. The Union of India could not file an application under the IBC as in India there exists no concept of group level insolvency resolution and, at the relevant date, financial services were outside the ambit of the IBC. The issue raised was whether government debts can be extinguished under the Companies Act resolution process (which is not the same as the IBC process). The court, while listing the matter on September 27, 2022, has stayed the order as well as consequential income tax notices of demand and penalty.

Mere Pendency Of An Insolvency Petition Is Not A Bar To The Appointment Of The Arbitrator: Delhi High Court

Case Title: Millennium Education Foundation v Educomp Infrastructure and School Management Limited

Case No.: ARB. P. 326 of 2022

The Delhi High Court Bench comprising of Justice Sanjeev Sachdeva has held that the mere pendency of an insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is not a bar to the appointment of an arbitrator, neither an embargo on the power of the Court to decide arbitration applications. It is only when the insolvency petition is admitted and the moratorium is declared that the proceedings under the Arbitration Act would be non-maintainable.

 All Related Proceedings Stand Discharged, Settled, Abated, & Extinguished On Approval Of Resolution Plan: Gujarat High Court

Case Title: Essar Steel Limited & Anr v State of Gujarat & Anr.

Case No.: C/SCA/8741/2006

The Gujarat High Court Bench comprising of Justice Vaibhavi D. Nanavati, while allowing an application filed by Essar Steel Limited seeking abatement of claims of the respondent (Arcelor Mittal Nippon Steel India Ltd.), has held that Section 31(1) of the IBC clarifies that once a resolution plan is approved by the Committee of Creditors then it shall be binding on all stakeholders, including the guarantors. It was further held that Section 31(1) ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate and hence, the claims of the Respondent were irrevocably and unconditionally abated, discharged, settled and extinguished in perpetuity upon approval of the Resolution Plan.

Rejected Claims By Resolution Professional In Insolvency Proceedings, To Be Decided By The Arbitrator: Delhi High Court

Case Title: Bharat Petroresources Limited v JSW Ispat Special Products Limited

Case No.: 2022 LiveLaw (Del) 469; ARB.P. 1154 of 2021.

The Delhi High Court Bench comprising of Justice Vibhu Bakhru has held that the claims rejected by Resolution Professional in the insolvency proceedings, on the ground that they arose after the insolvency commencement date, are to be decided by the arbitrator when the parties have an arbitration agreement. The Court observed that the claims arising after the insolvency commencement date would not be automatically extinguished. The order was passed on 11.02.2022.

Merely Because An Application Under Section 7 Of IBC Is Filed, It Is Not An Embargo On The Court Exercising Jurisdiction Under Section 11 Of The Arbitration & Conciliation Act, 1996: Bombay High Court

Case Title: Jasani Realty Pvt. Ltd. v. Vijay Corporation, 2022 LiveLaw (Bom) 162; Commercial Arbitration Application (L) No. 1242 of 2022.

The Bombay High Court Single Bench comprising of Justice G.S. Kulkarni, has held that merely because an application under Section 7 of Insolvency and Bankruptcy Code, 2016 is filed before the Adjudicating Authority is pending consideration, it does not oust the jurisdiction of the High Court to entertain an application filed under Section 11 of the Arbitration & Conciliation Act, 1996 ("Arbitration Act").

It was further held that an application filed under Section 7 of the IBC creates an erga omnes effect or involves third party rights only after it has been admitted by the Adjudicating Authority, however, before its admission, there is no embargo on the power of the court to decide on an application filed under Section 11 of the Arbitration Act for the appointment of an Arbitrator. Also, there is no requirement for the defendant to necessarily file an application under Section 8 of the Arbitration Act before taking recourse to the remedy available under Section 11 of the Arbitration Act. The order was passed on 25.04.2022.

CBIC

 CBIC Issues SOP for NCLT Cases In Respect Of The IBC

Instruction No. 1083/04/2022-CX9 dated: 23.05.2022

The Central Board of Indirect Taxes and Customs (CBIC) has issued the Standard Operating Procedure (SOP) for National Company Law Tribunal (NCLT) cases in respect of the Insolvency and Bankruptcy Code, 2016 (IBC).

The Board has instructed that the Insolvency and Bankruptcy Board of India establish the role of the GST and Customs authorities in certain crucial matters under the Insolvency and Bankruptcy Code, 2016. The GST and Customs Authorities have been classed as operational creditors. The authorities must file claims against corporate debtors when the corporate bankruptcy and resolution process is commenced and a public statement inviting claims is published by the insolvency professional. "It has also been noticed that the authorities then litigate on the denial of each claim, despite the established stance that no claims can be lodged after the plan is authorised and no demands can be made on the resolution applicant who has taken over the firm through such a resolution plan" the CBIC has instructed.

CBI

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.