Discretion Of NCLT Under Section 7(5) IBC - Observations In 'Vidarbha Industries' Made In Context Of Case: Supreme Court Refuses Review

Case Title : Axis Bank Ltd versus Vidarbha Industries Power Ltd

Case No.: 2022 LiveLaw (SC) 817, RP (Civil) 1043/2022

The Supreme Court Bench comprising of Justices Indira Banerjee and JK Maheshwari held that there is no ground to review the judgment in Vidarbha Industries Power Ltd. vs Axis Bank Limited which held that the National Company Law Tribunal has discretion to not admit the insolvency application filed by a financial creditor even if the corporate debtor is in default.

Disposing of the review petition filed by Axis Bank, the Court stated that the observations in the judgment were made in the context of the facts of the case. The Court refused to accept the argument of Solicitor General of India that certain observations made in the judgment could be interpreted in a manner that might be contrary to the aims and objects of the IBC and render the law infructuous."The apprehension appears to be misconceived", the Bench observed in the review.

Standard Of Pre-Existing Dispute Under IBC Is Not Equivalent To Principle Of 'Preponderance Of Probability': Supreme Court

Case Title: Rajratan Babulal Agarwal v Solartex India Pvt. Ltd. & Ors.

Case No.: Civil Appeal No. 2199 of 2021

The Supreme Court Bench, comprising of Justice K.M. Joseph and Justice Hrishikesh Roy, has held that the standard with reference to which a case of a pre-existing dispute under the IBC must be employed, cannot be equated with the principle of preponderance of probability, which guides a civil court at the stage of finally decreeing a suit.

NCLAT

Withdrawal Of Resolution Plan Will Have Disastrous Effect: NCLAT

Case Title: Shardha Buildcon Pvt. Ltd v. The Dhar Textile Mills Ltd.

Case No.: Company Appeal (AT) (Ins) No. 1128 of 2022

The National Company Law Appellate Tribunal (NCLAT) bench, comprising of Justice Ashok Bhushan and Mr. Barun Mitra dismissed the appeal filed by the Resolution Applicant seeking permission to withdraw its resolution plan and held that allowing withdrawal of a resolution plan will have serious disastrous effect on the whole purpose of the IBC. The Appellant filed the appeal before the NCLAT against the order passed by NCLT, which relying upon the judgment of Supreme Court in Ebix v. Educomp dismissed the application filed by Appellant seeking withdrawal of the resolution plan. "The IBC is process consists of different steps with a ultimate object of reviving the Corporate Debtor. Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC." Accordingly, NCLAT dismissed the appeal filed by the Appellant and upheld the order of NCLT.

NCLAT Delhi Sets Aside Unreasoned Order Passed By AA For Not Satisfying "Requirements Of An Order"

Case Title: Gandhar Oil Refinery (India) Ltd. v City Oil Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 915 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has set aside an order passed by Adjudicating Authority dismissing a petition under Section 9 of IBC, for not being a reasoned order and thus not satisfying the requirements of an order. It was observed that though no specific form is prescribed under IBC for contents of order or Judgment, but general rules relating to contents shall be followed by Adjudicating Authority.

If Electricity Supply Is Essential To Preserve Corporate Debtor's Value, Dues Must Be Paid During CIRP: NCLAT Delhi

Case Title: Shailesh Verma v Maharashtra State Electricity Distribution,

Case No.: Company Appeal (AT) (Insolvency) No. 383 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that if electricity supply service is critical to preserve the value of Corporate Debtor, then the dues towards such supply must be paid by the Resolution Professional during CIRP. It was observed that when Corporate Debtor opines that supply of electricity is essential and is to be continued by the supplier, then it must pay the electricity dues of the CIRP period.

PF Dept. Attachment Of CD's Bank Account Before CIRP, Can't Continue During Moratorium: NCLAT Chennai

Case Title: Mr. B. Parameshwara Udpa v Assistant PF Commissioner & Anr.

Case No.: Company Appeal (AT) (CH) (Ins) No. 231 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that an order issued by Employees' Provident Fund Organization for attachment of bank account of Corporate Debtor, cannot be continued during Moratorium period. Further, Resolution Professional is not duty bound to make provisions for Provident Fund when Corporate Debtor did not have a separate Provident Fund Account.

Amount Paid Towards One Time Settlement Is An Asset Of The Corporate Debtor: NCLAT Delhi

Case Title: Bank of India v. Vinod Kumar P Ambavat

Case No.: Company Appeal (At) (Insolvency) No. 214 of 2021

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Anant Bijay Singh and Ms. Shreesha Merla held that the amount deposited towards the One-time settlement (OTS) by the Corporate Debtor will be an asset of the Corporate Debtor and the Resolution Professional is entitled to take custody of the same.

NCLAT observed that as per Section 3(27) of the IBC, property includes money and relying upon the same, NCLAT held that once the OTS failed and the CIRP is initiated, the amount lying in the no lien account belongs to the corporate debtor and the Resolution Professional is obliged to take control and custody of the same by virtue of Section 18(f) of the IBC.

AA Can Consider Any Application Arising Out Of Sale In Liquidation: NCLAT Delhi

Case Title: RMY Industries v Apple Industries Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1114 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member), has held that the Adjudicating Authority is empowered to consider any application filed by the Liquidator or Successful Auction Purchaser, which may arise with regard to terms and conditions of auction sale or sale as going concern as per the Liquidation Regulation.

COC's Decision For Liquidation Is Open To Judicial Review By NCLT And NCLAT: NCLAT Delhi

Case Title: Sreedhar Tripathy V Gujarat State Financial Corporation & Ors

Case No.: Company Appeal (AT) (Insolvency) No. 1062 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member), has held that when the Committee of Creditors ("CoC") decides to liquidate the Corporate Debtor, the decision of liquidation is open to judicial review by the Adjudicating Authority and the Appellate Authority.

Adjudicating Authority Can Invoke Inherent Powers To Replace The Liquidator: NCLAT

Case Title: Subrata Maity v Mr. Amit C. Poddar & Ors.

Case No.: Comp. App. (AT) (Ins.) No. 1234 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member), has held that the Adjudicating Authority can invoke its inherent powers to replace the Liquidator and to do substantial justice. The Bench observed that as criminal prosecution is going on against the Liquidator and he was arrested by the CBI, the Adjudicating Authority did not err in replacing him with another Liquidator. The Liquidator does not have any personal right to continue in the Liquidation Process.

NCLAT Delhi Restores PNB's Original Claim, in Jet Airways CIRP

Case Title: Punjab National Bank v Mr. Ashish Chhawchharia & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 584 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the Resolution Professional had incorrectly reduced the Punjab National Bank's admitted claim of Rs. 956 Crores to Rs. 752 Crores. The Bench has set aside the reduction of claim. Further, the Bench has directed the Successful Resolution Applicant of Jet Airways (India) Ltd. to bear the liability of paying additional amount to PNB from the amount reserved under Resolution Plan.

NCLAT Issues Directions For Computation Of Limitation In Filing Of Appeals

F.No.10/37/2018-NCLAT

The National Company Law Appellate Tribunal ("NCLAT") vide an Order dated 21.10.2022 has issued directions for computation of limitation for filing of appeals before NCLAT. The period of limitation shall be computed from the date of presentation of Appeal as per Rule 22 of the NCLT Rules, 2016. The directions are as follows:

1. The period of limitation shall be computed from the date of presentation of Appeal as per Rule 22 of the NCLAT Rules, 2016.
2. The requirement of filing Appeals by electronic mode shall continue along with mandatory filing of the Appeals as per Rule 22 of the NCLAT Rules, 2016.
3. This order will be effective with effect from 1st November, 2022. All concerned shall ensure that Appeals are presented as per Rule 22 of the NCLAT Rules, 2016 within the period of limitation at the filing counter."

NCLT Can't Refer To Arbitration U/S 8 Of The A&C Act While Exercising Powers U/S 7, 9 And 10 Of The IBC: NCLAT Principal Bench

Case Title: Trafigura India Pvt. Ltd. V. TDT Copper Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 742 of 2020

The NCLAT Principal Bench comprising of Justice Anant Bijay Singh, Judicial Member and Ms. Shreesha Merla, Technical Member has upheld the order passed by the Adjudicating Authority which upheld the order of the AA, dismissing Appellant's S. 9 Application under IBC on the ground that unpaid amounts in the Settlement Agreement do not constitute 'operational debt' u/s 5(21) of the IBC and that the role of the NCLT is limited while exercising its powers u/s 7, 9 and 10 of the Code and thus cannot refer the matter to arbitration u/s 8 of the Arbitration and Conciliation Act.

NCLT

NCLT Rules 43 Only Empowers AA To Seek Production Of A Document, Not Parties: NCLT Hyderabad

Case Title: Ind Barath Power Infra Ltd. v India Infrastructure Finance Co. Ltd.

Case No.: CP (IB) No.363/7/HDB/2020

The National Company Law Tribunal ("NCLT"), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Veera Brahma Rao Arekapudi (Technical Member), has held that Rule 43 of the NCLT Rules 2016 only empowers the Adjudicating Authority and not the Parties to seek production of documents/further information. Accordingly, the Bench dismissed an application filed by Corporate Debtor, seeking direction to the Financial Creditor to produce a Corporate Guarantee Deed.

NCLT Mumbai Initiates Insolvency Process Against First Flight Couriers

Case Title: Srinidhi Comprint Private Limited v First Flight Couriers Limited

Case No.: CP (IB)738/MB/C-IV/2021

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has initiated Corporate Insolvency Resolution Process (CIRP) against First Flight Couriers Ltd. and Mr. Indrajit Mukherjee has been appointed as Interim Resolution Professional. First Flight Couriers Limited ("Corporate Debtor") is a premier courier service providing company in India, operating since 30 years in both domestic and international domain.

On Approval Of Plan By MSME Directors, They Will Be Treated As New Owners: NCLT Mumbai

Case Title: Aries Agro Private Limited v ETCO Industries Private Limited

Case No.: CP (IB)No. 1111/MB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that once the resolution plan submitted by MSME Corporate Debtor's promoters/directors is approved by the Adjudicating Authority, the ownership of the Corporate Debtor shall be considered as fresh, even if the directors/promoters remain the same.

"But this is a case of an MSME Enterprise, wherein the directors/promoters are permitted to give a Resolution Plan for the revival of the Corporate Debtor or in other words the existing management is allowed to revive the Company by giving a Resolution Plan. The objective of this is to provide a clean start to the unit/Corporate Debtor. Therefore, once the resolution plan is approved by the Adjudicating Authority, the management/ownership of the Corporate Debtor shall be considered as fresh, even if the directors/promoters of the Corporate Debtor (MSME) remain the same."

Indemnity Of Obligations Under An Agreement Is Not A 'Financial Debt' Under IBC: NCLT Mumbai

Case Title: Reserve Bank of India v Reliance Capital Limited

Case No.: CP. (IB) No. 1231/MB/C-I/2021

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Retd.) (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that indemnity of the obligations under the Agreement is not a 'financial debt' under Section 5(8) of IBC. The Bench observed that Obligor Undertaking is not a Guarantee that attracts the definition of 'financial debt' under Section 5(8). Section 126 of the Contract Act, 1872 postulates that in a 'guarantee' there must be a contract to perform or discharge the liability of a third party, in case of that third party's default.

NCLT New Delhi Benches Re-Constituted And Timings Changed, Matters To Be Heard Through Video Conferencing

File No.: 10/03/2022-NCLT

The National Company Law Tribunal, New Delhi Bench, has been re-constituted vide a Circular dated 11.10.2022 and timings of courts have been changed accordingly. The changes are applicable from 18.10.2022 onwards till further orders. The new NCLT New Delhi Benches shall comprise of:

NCLT New Delhi, Court Room No. 4 (Second Half)

1. Dr. P.S.N. Prasad (Judicial Member)
2. Dr. Binod Kumar Sinha (Technical Member)

NCLT New Delhi, Court Room No. 5 (Second Half)

1. Justice (Retd.) Telaprolu Rajani (Judicial Member)
2. Shri Rahul Prasad Bhatnagar (Technical Member)

Further, the timing of following courts at New Delhi Benches has been modified accordingly:

NCLT New Delhi, Court Room No. 2 (Second Half)

1. Shri Bachu Venkat Balaram Das (Judicial Member)
2. Shri L.N. Gupta (Technical Member)

NCLT New Delhi, Court Room No. 3 (First Half)

1. Shri Bachu Venkat Balaram Das (Judicial Member)
2. Dr. Binod Kumar Sinha (Technical Member)

NCLT New Delhi, Court Room No. 4 (First Half)

1. Dr. P.S.N. Prasad (Judicial Member)
2. Shri Rahul Prasad Bhatnagar (Technical Member)

The Circular has been issued in partial modification of Order of even number dated 24.08.2022 and 14.09.2022 and is applicable from 18.10.2022 till further orders. The reconstituted Bench shall take up matters through Video Conferencing.

NCLT Hyderabad Benches Re-Constituted W.E.F 20th October 2022, Matters To Be Heard Through Video Conferencing

File No.: 10/03/2022-NCLT

The National Company Law Tribunal, Hyderabad Bench, has been re-constituted vide a Circular dated 11.10.2022 and the changes are applicable from 20.10.2022 onwards till further orders. The new NCLT Hyderabad Benches shall comprise of:

NCLT Hyderabad, Court Room No. 1 (First Half)

1. Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member)
2. Shri Ajai Das Mehrotra (Technical Member)

NCLT Hyderabad, Court Room No. 2 (Second Half)

1. Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member)
2. Shri Satya Ranjan Prasad (Technical Member)

The Circular has been issued in partial modification of Order of even number dated 24.08.2022 and is applicable from 20.10.2022 till further orders. The reconstituted Bench shall take up matters through Video Conferencing.

NCLT Mumbai Approves Arcelormittal Promoted AM Mining's Resolution Plan For Uttam Galva Steels

Case Title: State Bank of India v Uttam Galva Steels Limited

Case No.: CP (IB) 920/MB/C-I/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Retd.) (Judicial Member) and Mr. Shyam Babu Gautam (Technical Member), has approved the resolution plan submitted by ArcelorMittal promoted AM Mining Pvt. Ltd. for Uttam Galva Steels Ltd. The Resolution Plan has a total resolution amount of Rs. 4020 Crores.

Operational Creditor Cannot Change The 'Date Of Default' By Confining The Invoices To A Later Period: NCLT Mumbai Reiterates

Case Title: M/s Shri Sadguru Traders v M/s Gajalee Coastal Foods Pvt. Ltd.

Case No.: C.P. No. 3443/IBC/MB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Ms. Anuradha Sanjay Bhatia (Technical Member), has reiterated that the Operational Creditor cannot change the 'date of default' by confining the invoices to a later period. Specially when the Demand Notice under Section 8 of IBC includes all the invoices from the date of default and the 'debt amount' is crystallized based on the invoices.

NCLT Deprecates Filing Of Bulky Applications By Resolution Professional & Liquidator

Case Title: ICICI Bank v. M/s Tirupati Inks Ltd. & Ors.

Case No.: IB-314(PB)/2017

The National Company Law Tribunal, Principal Bench comprising of Justice Ramalingam Sudhakar and Mr. Avinash Srivastava expressed its displeasure upon the practice of Resolution Professional/ Liquidators for filing bulky applications even for trivial matters such as extension of liquidation period. The Bench was adjudicating an application for extension of time moved by the liquidator and was shocked to discover that the application ran into 122 pages. Looking at the lengthy pleading, the Bench observed that the number of paragraphs in the application can be reduced by making concise statement and the pages should not be wasted unnecessarily.

Homebuyers Are In Default; NCLT Delhi Dismisses Plea For Initiation Of CIRP Against Developer

Case Title: Amit Kumar Sinha & Ors. v Ireo Private Limited

Case No.: C.P. No. IB 239/ND/2021

The National Company Law Tribunal (NCLT), New Delhi Bench, while adjudicating a petition filed by Homebuyers against Developer Company, has rejected the petition under Section 7 Application under IBC holding that if the allottees themselves are in default, the Corporate Debtor/Developer Company cannot be put to its death.

Related Party Of Financial Creditor Not Barred U/S 29A To Submit A Resolution Plan: NCLT Cuttack

Case Title: Trimex Industries Pvt. Ltd. v M/S. Sathavahana Ispat Ltd. & Ors.

Case No.: (CP.(IB) No.179/HDB/2020)

The National Company Law Tribunal ("NCLT"), Cuttack Bench, comprising of Shri P. Mohan Raj (Judicial Member), has held that the IBC does not bar a related party of the Financial Creditor from submitting a resolution plan for the Corporate Debtor. Further, an application based upon over future contingencies or apprehensions is unsustainable.

Can't Interfere With COC'S Decision Not To Pay Suspended Directors For Their Services During CIRP: NCLT Ahmedabad

Case Title: Overseas Bank v AMW Autocomponent Ltd.

Case No.: CP (IB) 185/AHM/2018

The National Company Law Tribunal ("NCLT"), Ahmedabad Bench, comprising of Dr. Deepti Mukesh (Judicial Member) and Shri Ajai Das Mehrotra (Technical Member), has held that promoters and persons associated with the management of the Corporate Debtor are statutorily obligated to extend all assistance to the Resolution Professional. The Bench declined to interfere with the CoC's decision to not pay remuneration to the Suspended Directors, for the services rendered by them on the request of Resolution Professional during insolvency process.

Decree Of Civil Court Will Not Alter The Basic Nature Of Transaction: NCLT Delhi

Case Title: M/s Jones Lang Lasalle Building Operations Pvt. Ltd. v M/s Celebration City Projects Pvt. Ltd.

Case No.: IB-652(PB)/ 2019

The National Company Law Tribunal ("NCLT"), Principal Bench, comprising of Justice Ramalingam Sudhakar (President) and Shri Avinash Kumar Srivastava (Technical Member), has held that the decree of a civil court will not alter the basic nature of a transaction. The transaction prima facie has to be considered for the purpose of adjudicating a claim. The Applicant had an Arbitral Award in its favour and had made a claim before the Resolution Professional stating that it is a real estate allottee and its claim should be treated in that class. The Resolution professional rejected the claim and directed the Applicant to file the same as a financial creditor as award was in the form of a decree. The Bench directed the Resolution Professional to admit the claim of Applicant as a real estate allottee/creditor in a class.

No Notice Is Required For Personal Guarantor At The Stage Of Appointment Of IRP: NCLT Amravati

Case Title: Central Bank of India v Mr.Kothapatti Raju

Case No.: CP (IB) No. 89/95/AMR/2022

The National Company Law Tribunal ("NCLT"), Amravati Bench, comprising of Justice Telaprolu Rajani (Judicial Member), while adjudicating a petition filed in Central Bank of India v Mr. Kothapatti Raju, has held that in terms of Section 97 and Section 100 of IBC, no notice or right of audience can be given to the Personal Guarantor at a stage before appointing the Interim Resolution Professional. It was observed that it is only under Section 100(3) of IBC that the Adjudicating Authority shall provide a copy of the order passed under Section 100(1) to the Creditors. Hence, in terms of Section 97 & Section 100 of IBC, no right of audience can be given to the Personal Guarantor at a stage before appointing the Interim Resolution Professional (IRP).