IBC- Properties Sold In Auction Sale Before Declaration Of Moratorium Can't Be Treated As Liquidation Asset: Supreme Court

Case Title: Haldiram Incorporation Pvt. Ltd. v Amrit Hatcheries Pvt. Ltd.

Citation: 2023 LiveLaw (SC) 1029

The Supreme Court bench comprising Justices Aniruddha Bose and Justice Vikram Nath, has observed that the properties of a defaulting borrower sold in an auction sale could not be treated as liquidation assets if the sale was concluded before the declaration of a moratorium under the Insolvency and Bankruptcy Code, 2016 (“IBC”).

The Bank had advanced loan to Corporate Debtor and the latter mortgaged two sets of properties to the bank. On default of payment, one of the properties were sold to the Auction Purchaser via auction sale. While the Auction Purchaser completed the payment on 16.08.2019, Corporate Debtor was admitted into CIRP on 20.08.2019. This also resulted in the declaration of a moratorium by the NCLT.

The NCLT held the issue of the sale certificate and handing over of the property as illegal and the subject property should continue to be assets of the Corporate Debtor. The NCLT had proceeded on the basis that sale was not concluded. Thus, while commencing the resolution process, the Liquidator was directed to take possession of the subject properties. When challenged, the NCLAT dismissed the appeal. The Supreme Court has set aside the order passed by the NCLAT.

NCLAT

Condition To Submit Refundable BG, Not Violative 36-B Of CIRP Regulations: NCLAT Delhi

Case Title: Rakesh Ranjan v Fanendra Harakchand Munot & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1352 of 2023

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 if the Request For Resolution Plan (RFPR) requires the resolution applicant(s) to submit a refundable Bank Guarantee, then such condition is not violative of Regulation 36-B of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”).

Regulation 36-B of CIRP Regulations states that in a RFPR there can be no requirement for a non-refundable deposit alongwith resolution plan. The Bench has upheld the decision of Committee of Creditors to reject a resolution plan which did not comply with the requirement of submitting a refundable Bank Guarantee alongwith plan.

Homebuyers Or Unsuccessful Resolution Applicant Not Entitled To File Avoidance Application: NCLAT Delhi

Case title: Ms. Amita Saurabh Bihani & Ors. v E&G Global Estates Limited & Ors.

Case No.: Company Appeal (AT)(Insolvency) No. 1214 & 1215 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that as per Section 25(2)(j) of IBC the Resolution Professional alone is empowered to file application for avoidance of transactions which are preferential, fraudulent, undervalued or extortionate in nature. The Homebuyer of the Corporate Debtor's real estate project or the unsuccessful resolution applicant is not entitled to file any application for avoidance of transactions under IBC.

CIRP And Avoidance Application Separate Set Of Proceedings, Adjudication Of Avoidance Application Can Survive CIRP: NCLAT Delhi

Case title: G.S. Constructions v E & G Global Estates Ltd. & Ors.

Case No.: Company Appeal (AT)(Insolvency) No. 1217 & 1218 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that Corporate Insolvency Resolution Process (“CIRP”) and proceedings for avoidance of transactions are separate set of proceedings. If an avoidance application filed by Resolution Professional is pending adjudication, then the same would not stall the approval of resolution plan by NCLT. Similarly, an avoidance application can survive CIRP.

“CIRP and avoidance applications are, thus by their very nature, a separate set of proceedings. The former is time bound whereas the latter requires a proper discovery of suspect transactions that are time consuming. The scheme of the IBC reinforces this difference and thus adjudication of an avoidance application is independent of the resolution of the corporate debtor and can survive CIRP.”

NCLAT Delhi: Auction Purchaser In Liquidation Proceedings Entitled For Certain Consequential Reliefs

Case Title: Punjab National Bank (International Limited) vs Perfect Day INC

Case No.: Company Appeal (AT) (Insolvency) No.1427 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) has held that the Successful Auction Purchaser can be given certain reliefs and concession consequent to going concern sale in the liquidation proceeding of Corporate Debtor.

NCLT

NCLT Ahmedabad Directs Income Tax Department To Refund Tax To Corporate Debtor; Section 53 Of IBC Overrides Sec. 194-IA Of Income Tax Act

Case Title: Sunil Kumar Agarwal v Chief Commissioner of Income Tax (TDS), Ahmedabad

Case No.: CP(IB) 149 of 2017

The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Mrs. Chitra Hankare (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), has held that Income Tax deducted and paid by the auction purchaser amounts to recovery of tax from Corporate Debtor (which is under liquidation), on priority with other creditors as mentioned in Section 53 of IBC, which is against the object and provisions of IBC.

The Liquidator sold the assets of the Corporate Debtor in e-auction to successful purchasers, who deducted Rs. 28,92,101/- towards 1% TDS payable in view of Section 194-IA of the Income Tax Act, 1963. The Bench has directed the Income Tax Department to refund the amount of Rs. 28,92,101/- to the Corporate Debtor.

NCLT Mumbai: Buyer In Liquidation Auction Sale Can't Step Back On Ill-Founded Ground Of Absence Of NCLT's Order Extending Period To Conclude Sale

Case Title: Melkar TTI Biofuels Ltd. vs. Mr. Dharit Kishorbhai Shah

Case No.: Company Petition (IB) No. 3610/MB/2019

The National Company Law Tribunal ('NCLT'), Mumbai Bench, comprising Justice Shri V.G. Bisht (Judicial Member) and Shri Prabhat Kumar (Technical Member), held that a Buyer in a Liquidation Auction sale can't be allowed to step back on the ill-founded ground of the absence of an Order of NCLT extending the period of 90 days to conclude the sale.

NCLT Mumbai: Substance Of A Transaction Is Important Over Its Form, Accounting Entries Can Not Determine Character And Nature Of Transaction

Case Title: Mr. Rakesh Bothra vs. Mr. Alok Kailash Saksena

Case No.: I.A. 812 of 2023 in C.P.(IB) No. 1807/MB/2018

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Justice Shri V.G. Bisht (Judicial Member) and Shri Prabhat Kumar (Technical Member) has held that the substance of a transaction is important rather than its form and accounting entries cannot determine the character and nature of a transaction.

NCLT Mumbai: Unspent Balance And Refundable Security Deposit Of Prepaid And Postpaid Subscribers Constitutes 'Operational Debt' (Other Than Government Dues)

Case Title: Telecom Regulatory Authority of India Vs. Reliance Telecom Ltd.

Case No.: I.A. 88 of 2020 in C.P. (IB)No.1386/MB/2017

The National Company Law Tribunal ('NCLT'), Mumbai Bench, comprising Justice Shri V.G. Bisht (Judicial Member) and Shri Prabhat Kumar (Technical Member), has held that the unspent balance of Prepaid Subscribers and the Refundable Security Deposit of Postpaid Customers shall be treated as Operational Debt (other than Government dues) under IBC concerning telecom insolvency.

NCLT Kolkata Approves Resolution Plan For McNally Bharat Engineering Company Ltd

Case Title: Bank of India v McNally Bharat Engineering Company Limited

Case No.: I.A. (IB) No. 1391/KB/2023 in CP (IB) No. 891/KB/2020

The National Company Law Tribunal (“NCLT”), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has approved the Resolution Plan submitted by BTL EPC Limited (part of Shrachi Group) for McNally Bharat Engineering Company Limited.

The Resolution Plan is valued at Rs. 441.11 Crores, while the total admitted claims of the Corporate Debtor amounts to Rs. 5,015.28 Crores.

NCLT Mumbai Approves Resolution Plan For Reliance Communications Infrastructure Ltd., Valued At Rs 455.9 Crores As Against Total Admitted Claim Of Rs 47,251 Crores

Case Title: State Bank of India v Reliance Communications Infrastructure Limited

Case No.: IA No. 2429 of 2021 in CP (IB) No. 3025 of 2019

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Justice Virendrasingh G. Bisht (Retd.) (Judicial Member) and Shri Prabhat Kumar (Technical Member), has approved the Resolution Plan submitted by Reliance Projects & Property Management Services Ltd. (wholly owned subsidiary of Mr. Mukesh Ambani promoted Reliance Industries Ltd.) for Reliance Communications Infrastructure Ltd., which is a subsidiary of Reliance Communications Ltd. previously being run by Anil Ambani.

The Resolution Plan is valued at Rs. 455.9 Crores, while the total admitted claims against the Corporate Debtor amounts to Rs. 47,251 Crores.

NCLT Guwahati Bench: Amount Given As Investment For Joint Venture By Financial Creditor To Corporate Debtor Is Not Financial Debt Under IBC

Case Title: Chiragsala Sales Pvt. Ltd vs Vaishno Devi Traders Private Limited

Case No.: CP (IB) No.33/GB/2022

The National Company Law Tribunal (“NCLT”), Guwahati Bench, comprising of Shri H. V. Subba Rao (Judicial Member) and Shri Satya Ranjan Prasad (Technical Member), has held that the amount given to a Corporate Debtor by a Financial Creditor by way of an investment for a Joint Venture does not fall within the definition of a financial debt as per the provisions of Insolvency and Bankruptcy Code, 2016 (“IBC”).