In Absence Of Rental Agreement Between Parties, RP Can’t Demand Payment Of Usage Charges For Corporate Debtor’s Machine; NCLAT Delhi

Case Title: Patsons Construction v Shri Ram Ratan Kanoongo

Case No.: Company Appeal (AT) (Ins.) No. 1269 of 2022

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 set aside a direction passed by the NCLT requiring a creditor to pay usage charges of a machine to the Corporate Debtor in absence of any rental agreement.

Prior to initiation of CIRP, the Corporate Debtor had given its Machine to an Operational Creditor to settle certain outstanding payments. The Operational Creditor was in possession of Machine for 2 years. Post CIRP commencement, the Resolution Professional filed an application before NCLT seeking handover of the Machine and payment of usage charge by the Operational Creditor to the Corporate Debtor at the rate of Rs. 2 Lakhs per month (total Rs. 48 Lakhs). The Bench held that in absence of any rental agreement between Parties in respect of the Machine, no usage charges can be demanded by the Resolution Professional.

NCLAT Delhi: Appellants Who Filed Their Claims As Real Estate Allottees Are A Part Of Home Buyers And Cannot Ask Refund Separately

Case Title: Rajib Biswas & Anr. Vs Arena Superstructures Pvt. Ltd. & Ors.

Case No.: Comp. App. (AT) (Ins) No. 1488 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the Appellants, who have filed their claims as Real Estate Allottees, are considered part of the home buyers. Therefore, if the home buyers have already been represented by an authorized representative who has approved the resolution plan, the Appellants cannot ask for a refund separately.

NCLT

ArcelorMittal’s Resolution Plan For Essar Steel, A Creditor Files Recall Application; NCLT Ahmedabad Issues Notice

Case Title: State Bank of India v Essar Steels Ltd

Case No.: CP(IB) 40 of 2017

The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Shri Shammi Khan (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), has issued notice in an application seeking recall of the order dated 08.03.2019 whereby the resolution plan of ArcelorMittal India Pvt. Ltd. was approved for Essar Steels India Ltd. by the NCLT.

The Applicants are creditors of Essar Steels India Ltd., who have alleged that the plan approval order was obtained by casting fraud upon the NCLT by the Resolution Professional, ArcelorMittal India Pvt. Ltd. and their concerned legal team.

NCLT Ahmedabad Rejects Resolution Plan For Failing To Address Issues Of Cash Flow, Value Of Assets And Statutory Dues

Case Title: Eco Green Products Private Limited v Gajanand Corporation Pvt. Ltd.

Case No.: CP(IB)/70(AHM)2021

The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Mrs. Chitra Hankare (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), has declined to approve a resolution plan which failed to address the issue of cash flows, value of assets, statutory dues and proposed payment of merely Rs. 1,000/- towards employees’ dues.

“The Resolution Plan does not address the cash flows and value of the Assets enumerated and the Operational Debt claims received from Statutory Authorities. The valuation report (only a summary is submitted) of the assets is not satisfactory. The Resolution Plan presupposes approval and ignores the claim that has been received from the Income Tax Department of dues to be paid. It also proposes to pay only Rs 1000 to employees in 90 days after the approval of the Plan. The Resolution Plan is rejected as it does not satisfy the provisions of Section 31(2) of IBC 2016 and Regulations 36 of the Act of the Code.”

NCLT Mumbai Urges IBBI To Conduct Training Session For Forensic Auditors Regarding Avoidance Transactions Under IBC

Case Title: IDBI Bank Limited v Pawar Electro Systems Pvt. Ltd.

Case No.: C.P.(IB) No. 1587/MB/2019

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Justice V.G. Bisht (Retd.) (Judicial Member) and Shri Prabhat Kumar (Technical Member), has urged the Insolvency and Bankruptcy Board of India (“IBBI”) to look into qualitative aspect of Forensic and Transaction Auditor’s Report and to conduct training session for concerned Auditors on provisions relating to Avoidance Transactions under IBC.

“The IBBI may look into the qualitative aspect of Forensic and Transaction Auditor’s Report and may consider to hold one training session so as to equip them with the basic nuances of provisions relation to Avoidance Transactions contained in the Code and the expectation of the stake-holders from them in this regard.”

The Bench while dismissing an avoidance application under Section 43 of IBC, has deprecated the casual approach of Resolution Professional and Forensic Auditor in dealing with such an important part of CIRP.

HIGH COURT

Insolvency & Bankruptcy Code: Section 14 Does Not Bar Finalization Of Assessment, Adjudication Proceedings: Kerala High Court

Case Title: Platino Classic Motors India Pvt. Ltd. v. Deputy Commissioner of Central Tax and Central Excise & Ors.

Citation: 2023 LiveLaw (Ker) 656

The Kerala High Court bench comprising Justice Dinesh Kumar Singh has laid down that assessment orders could not be set aside on the ground of the Official Liquidator not having been heard while finalizing the assessment, since Section 14 of IBC does not bar finalisation of the assessment and adjudication proceedings in respect of the taxes.

"On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication”.

IBC | Mere Uploading Of Application U/S 96 Cannot Be Regarded As 'Filing' For Interim Moratorium To Operate: Kerala High Court

Case Title: Jeny Thankachan v. Union of India & Ors.

Citation: 2023 LiveLaw (Ker) 665

The Kerala High Court bench comprising Justice N. Nagaresh, has laid down that mere uploading of an application under Section 96 of the Insolvency and Bankruptcy Code, 2016 (IBC), cannot be regarded as filing of an application for the interim moratorium to operate.

Section 96 of IBC provides that when an application is filed under Section 94, an interim moratorium shall commence on the date of the application in respect to all the debts and shall cease to have effect on the date of admission of such application.

The Bench explained that the operation of interim and final moratorium under Sections 96 and 101 of the IBC have serious repercussions, as the legal proceedings against would be deemed to have been stayed and creditors of the debtor would not be able to initiate any legal action proceeding in respect of any debt of the debtor, once an application is filed. The Bench thus said that such provision would have to be strictly construed.