Process For IBC Offences To Be Issued By Sessions Court Despite Companies Act Amendment Vesting Jurisdiction On Judicial Magistrate: Supreme Court

Case Title: Insolvency And Bankruptcy Board Of India Versus Satyanarayan Bankatlal Malu & Ors.

Citation: 2024 LiveLaw (SC) 317

The Supreme Court bench comprising Justice BR Gavai and Justice Sandeep Mehta, while observing that the offences committed under the Insolvency and Bankruptcy Code, 2016 (“IBC”) would be tried by the Special Court established under Section 435 of the Companies Act, 2013 and the sessions judge would have the power to issue process against the accused, has upheld the issuance of process by the sessions judge to the accused.

The Court rejected the contention of the accused that the Sessions Judge wasn't empowered to issue process to the accused for the offences punishable up-to two years under the IBC but the judicial magistrate.

Reversing the High Court's decision, the Bench interpreted the scheme of Section 236(1) of IBC to hold that the power to try offences punishable under the IBC was vested in the special court by 'legislation by incorporation', meaning thereby the intention of the Parliament was clear to vest the power to issue summons upon the special court consisting of a person qualified to be a Sessions Judge or an Additional Sessions Judge. Thus, the subsequent amendments to the Section 435 of Companies Act, 2013 authorizing judicial magistrates to issue summons for offences punishable up to two years under the IBC would not have any effect on Section 236 of IBC.

NCLAT

Under Section 30(2)(b), Operational Creditor Can't Be Paid Through Partly Paid 'Redeemable Preference Shares': NCLAT Delhi

Case title: Gupta Textiles v Darshan Patel & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 408 of 2024

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that amount payable under resolution plan to Operational Creditors in terms of Section 30(2)(b) of IBC, can only be by way of cash and not partly paid Redeemable Preference Shares or equity.

NCLAT Chennai Stays Insolvency proceedings Against Charter Aircraft Service Provider 'Deccan Charters'

Case title: Sanjay Saihgal v Krone Finstock Private Limited & Anr.

Case No.: Company Appeal (AT) (CH) (Ins) No.123/2024

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member), Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member), has stayed the insolvency proceedings initiated against Deccan Charters Pvt. Ltd. by the NCLT, till the next date of hearing i.e. 26.04.2024.

Deccan Charters is a Bengaluru based company which operates chartered helicopters and fixed wing aircrafts and also provides services such as aircraft maintenance, aircraft management and aviation training.

'Free Of Cost' Copy Of Order Sent By NCLT Registry Is Not A 'Certified Copy' For The Purpose Of Filing Appeal: NCLAT Chennai

Case title: Munagala Roja Harsha Vardhini v Vardhansmart Private Limited

Case No.: Company Appeal (AT) (CH) (Ins) No.23/2024

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member), Justice Sharad Kumar Sharma (Judicial Member) and Shri Jatindranath Swain (Technical Member), has held that the 'free of cost' certified copy of final order sent by NCLT registry in compliance of NCLT Rules is not a 'certified copy' of the order for the purpose of filing appeal before NCLAT.

Rule 22(2) of the NCLAT Rules, 2016 provides that every appeal shall be accompanied by a certified copy of the impugned order. It was observed that the Appellant's obligation to apply for a certified copy of the order to be challenged by paying requisite fees cannot be dispensed with.

Delay In Issuance Of Sale Certificate Due To Restraint Order By NCLT, Auction Purchaser Not Entitled To Interest On Sale Consideration: NCLAT Delhi

Case title: Gokul Agro Resources Ltd. v Mr. Supriyo Kumar Chaudhuri

Case No.: Company Appeal (AT) (Insolvency) No. 1070 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held an Auction Purchaser cannot claim interest on sale consideration from the Liquidator for delayed issuance of Sale Certificate, if the delay has occurred due to a restraint order passed by NCLT.

Allottee Obligated To Comply With Threshold Under Section 7(1) Of IBC Even After RERA Passes An Order In Its Favour: NCLAT Delhi

Case title: Shri Rahul Gyanchandani & Ors. v Parsvnath Landmark Developers Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 309 of 2024

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that the status of an 'allottee' would not convert into a 'decree holder' for the purpose of IBC, merely because RERA Authority has passed an order in its favour directing the Builder/Corporate Debtor to refund the entire amount.

The second proviso to Section 7(1) of IBC states that, “Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less..”

The Allottee, even after procuring a favourable order from RERA, is obligated to meet the threshold given under second proviso to Section 7(1) for filing a petition under Section 7 of IBC.

“The Appellant cannot be said to go out of the definition of 'allottees' merely because they have an order in their favour by RERA and the Appellants' submission that they should be treated in a different category, i.e., category of 'Decree Holder' and are not required to comply with Section 7, sub-section (1), 2nd Proviso cannot be accepted. The Appellants even after order of the RERA, directing for refund by the Corporate Debtor, continued to be allottees and they have filed Section 7 Application as Financial Creditor of the Corporate Debtor. They are mandatorily required to comply with Section 7, sub-section (1), 2nd Proviso.”

NCLT

NCLT Chennai - Resolution Professional Should Not Rely Solely On Corporate Debtor's Records For Verifying Claims

Case Title: K. Amutha Versus Resolution Professional of M/s. Ambojini Property Developers Private Limited

Case No.: CP/938/IB/2018

The National Company Law Tribunal (“NCLT”), Chennai bench, comprising Justice Jyoti Kumar Tripathi (Judicial Member) and Shri Ravichandran Ramasamy (Technical Member), has held that The Resolution Professional (RP) should not rely solely on the Corporate Debtor's records for verifying claims as the improper maintenance of the records can unfairly burden the creditors.

HIGH COURT

Gujarat High Court Quashes Demand Notice And Assessment Order In Absence Of Any Claim Not Forming Part Of Resolution Plan

Case Title: Surya Exim Limited Thro Director Bhawani Singh Versus Union Of India & Ors.

Citation: 2024 Livelaw (Guj) 42; R/Special Civil Application No. 1195 Of 2023

The Gujarat High Court bench of comprising Justice Bhargav D. Karia and Justice Niral R. Mehta, has quashed the demand notice and assessment order passed by the Income Tax department against Corporate Debtor, in the absence of any claim not forming part of the resolution plan submitted by the Successful Resolution Applicant (“SRA”).

The NCLT approved the resolution plan of the SRA for the Corporate Debtor. Post approval, the Income Tax department raised demand notice and passed assessment orders against the Corporate Debtor. These tax demands did not exist prior to approval of SRA's resolution plan and hence no claim was submitted before the Resolution Professional in their respect. Accordingly, the demand notice has been quashed by the High Court.