EPFO Employees Must Comply With IBC Timeline For Filing Claims; Default Officers Must Face Action: Supreme Court

Case Title: Employees Provident Fund Organization V. Fanendra Harakchand Munot

Citation: 2023 LiveLaw (SC) 734 | CIVIL APPEAL NO. OF 2023

The Supreme Court Bench comprising Justice Sanjiv Khanna and Justice SV Bhatti, has held that the Commissioner and employees of the Employees Provident Fund Organization (EPFO) must ensure that they comply with the timelines under the Insolvency and Bankruptcy Code, 2016. The Apex Court also stated that in case of failure to comply with the timelines, action must be taken against erring employees.

"..we are of the view that the Commissioner and employees of the EPFO must take steps to ensure that there is compliance with the timelines provided under the Insolvency and Bankruptcy Code, 2016. Failure may have legal consequences. The employees of the EPFO must be aware of the consequences in order to ensure compliance. In case there is dereliction of duty, action should be taken against erring employees in accordance with law."

NCLAT

NCLAT Delhi Reverses The Decision Of NCLT, Upholds CoC’s Decision To Accept Relinquishment Of Personal Guarantee On Payment

Case Title: SVA Family Welfare Trust & Anr. v Ujaas Energy Ltd. & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 266 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has upheld the decision of Committee of Creditors (CoC) to accept a value for relinquishment of personal guarantees of the Corporate Debtor under the Resolution Plan.

The Resolution Plan contained a clause whereby the rights under personal guarantees of the Corporate Debtor would stand extinguished and the Financial Creditors would be paid compensation towards release of such personal guarantees. The Plan was approved by the CoC with 78.04%.

“The decision of the CoC to accept the value for relinquishment of personal guarantee was a commercial decision of the CoC which cannot be allowed to be impugned at the instance of dissenting Financial Creditor.”

NCLT

NCLT Delhi Approves Resolution Plan For Net 4 India Limited

Case Title: Edelweiss Asset Reconstruction Company Limited v Net4 India Limited

Case No.: IB-409/PB/2017

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Bachu Venkat Balaram Das (Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has approved the Resolution Plan of Open Platforms Pvt. Ltd. for Net4 India Ltd.

Net 4 India Ltd. (“Corporate Debtor”) is engaged in the business of Domain name registration, Data Centre & Cloud Hosting Solutions, Enterprise Internet Services, VoIP Solutions, Enterprise Messaging & Hosting Solutions and Network Services Provider.

While Approving A Plan, Shall Not Waive Off Statutory Obligations Of The Corporate Debtor: NCLT Mumbai

Case Title: Corporation Bank v General Composite Pvt. Ltd.

Case No.: CP (IB) No. 703 /MB/C-I/2019

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Ms. Anu Jagmohan Singh (Technical Member), has approved a resolution plan and directed that such approval shall not waive off any of the statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law.

Further, any waiver sought in the resolution plan shall be given subject to the approval of the concerned Authorities, in light of Supreme Court judgment in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited.

Liquidator Assigns ‘Not Readily Realizable Assets’ Of Rs. 26 Crores For Rs. 50,000 During Pendency Of Avoidance Applications: NCLT Delhi Invalidates Assignment

Case Title: Ritu Tandon v M/s Rain Automotive India Private Limited

Case No.: Company Petition No. (IB)-1095(ND)/2019

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that a Resolution Professional or Liquidator cannot assign a debt or Not Readily Realizable Assets (“NRRA”), when the avoidance applications under Sections 43,45, 50 and 66 of IBC are pending adjudication before the NCLT. The NRRAs can only be assigned once the Debt/Demand is determined or crystallized through NCLT’s adjudication.

“In the absence of conclusion/ adjudication of Avoidance/PUFE proceedings by the Adjudicating Authority, there will be room for arbitrariness and the Liquidator may end up assigning the NRRAs for an arbitrary or a meagre amount, as has happened in the instant case, where the Liquidator has assigned the debt/ “Not readily realisable assets” (NRRAs) of Corporate Debtor worth Rs. 26,38,37,645/- for a meagre consideration of Rs. 50,000/- only..”

NCLT Jaipur Rejects Application Filed By RP Seeking Recovery Of Amount From Corporate Debtor’s Debtor

Case Title: M/S Indus Contrainer Lines Pvt. Ltd. V Jadoun International Pvt. Ltd.

Case No.: IB No. 707(PB)/2018

The National Company Law Tribunal (“NCLT”), Jaipur Bench, comprising of Shri Deep Chandra Joshi (Judicial Member) and Shri Atul Chaturvedi (Technical Member), has rejected an application filed by the Resolution Professional seeking a direction to one of the debtors of the Corporate Debtor to pay its outstanding debts. The Bench opined that the duties imposed upon the Resolution Professional or IRP does not entitle the NCLT to exercise jurisdiction in matters where recovery of an amount is sought on behalf of the Corporate Debtor.

“The Resolution Professional in the present matter had approached this forum for recovery of debt which is allegedly owed by the Respondent No. 2 to the Corporate Debtor whereas it has forgotten the underlying principle which enunciates that this is not a debt recovery forum. There is no doubt that the Resolution Professional has ample powers to proceed and protect the debts of the Corporate Debtor, but it cannot do so by merely filing an Application under Section 60(5) of the Code in the pending CIRP of the Corporate Debtor.”

NCLT Can’t Adjudicate Avoidance Application Pursued By Third Party To Whom Debt Was Assigned U/S 43, 45, 50 And 66 Of IBC: NCLT Delhi

Case Title: Ritu Tandon v M/s Rain Automotive India Private Limited

Case No.: Company Petition No. (IB)-1095(ND)/2019

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that in terms of Section 60(5) of IBC, the NCLT has no jurisdiction to adjudicate an Avoidance/PUFE application pursued by a Third Party/Assignee to whom debt was assigned under Section 43, 45, 50 and 66 of IBC, since neither the Assignee nor the respondents of the Avoidance Applications represent the Corporate Debtor, which will be dehors the insolvency proceedings of the Corporate Debtor.

“However, if a debt is assigned to a Third Party or an Assignee under Sections 43, 45, 50, and 66 of IBC 2016, the application or claim cannot be deemed to be pursued by the Corporate Debtor. Moreover, the Avoidance/PUFE transactions underlying such applications pursued by a Third Party or an Assignee will cease to be an issue arising out of CIRP or Liquidation of the Corporate Debtor in terms of Section 60(5)(c), as the beneficiary of those proceedings or claims would be the Third Party or Assignee and recovery if any, would be realised and added to the asset pool of the Assignee. Furthermore, what was earlier a dispute between the “Corporate Debtor, Through RP/ Liquidator Vs. Respondents of PUFE Application”, will now, become a dispute between “an Assignee and Respondents of PUFE Applications, which will be dehors the insolvency proceedings of the Corporate Debtor.”

NCLT Hyderabad Initiates Insolvency Proceedings Against Trichy-Thanjavur Expressways Limited

Case Title: IDBI Bank Limited v M/s. Trichy-Thanjavur Expressways Limited

Case No.: CP (IB) No. 77/7/HDB/2022

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against M/s. Trichy-Thanjavur Expressways Limited, over a default of Rs. 79,71,45,619.23/- (inclusive of interest). Shri Raghu Babu Gunturu has been appointed as the Interim Resolution Professional.

Section 35 Of IBC | Liquidator Empowered To Recover Arrears Of Rent/Damages From Tenant In Occupation Of Corporate Debtor’s Property: NCLT Hyderabad

Case Title: LIC Housing Finance Ltd. v M/s. Butta Infrastructure Pvt. Ltd.

Case No.: CP (IB) No. 325/7/HDB/2020

The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has held that the NCLT has jurisdiction has to direct a Tenant to pay arrears of rent, who is in possession of the Corporate Debtor’s property and has defaulted in payment of rent.

Further, in terms of Section 35(1)(b) and (d) of IBC, Liquidator is empowered to recover arrears of rent/damages from a Tenant, as it is incidental as well as necessary to secure the custody/control of the Corporate Debtor’s assets, which forms part of the liquidation estate.

Date Of Default To Be Assessed For Each Invoice For At Least 3 Years Preceding The Filing Date; NCLT Mumbai

Case Title: Laxmi Trading Corporation v. Hindustan Construction Company Ltd.

Case No.: CP (IB) No.147/MB-IV/2021

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Prabhat Kumar (Technical Member), has held that the date of default has to be assessed for each invoice for at least three years preceding the filing date of the petition. While dismissing the petition, the Bench observed that the date of default for the outstanding amounts under five projects occurred in 2016 or earlier, and there was acknowledgment of debt only for one project and not others. When the amounts involved in other projects were excluded, the total debt in default fell below the threshold limit of Rs. 1 Crore as stipulated in Section 4 of IBC.

The Tribunal also held that the argument made by the applicant that the existence of a running account and the receipt of a payment of Rs. 3,00,000 extended the limitation period was not accepted, as the applicant maintained separate ledgers for each project in their records, and payments from the Corporate Debtor were specifically allocated to each project.