No Provision In IBC For Upfront Payment To Dissenting Financial Creditors On Resolution: NCLAT Delhi

Case Title: Puro Naturals JV v Warana Sahakari Bank & Ors.

Case No.: Company Appeal (AT) (Insolvency) Nos.661-663 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 held that there is no provision under IBC which requires the Successful Resolution Applicant to make upfront payment to Financial Creditors who dissented to the resolution plan.

The resolution plan proposed to make upfront payment to assenting Financial Creditors within 90 days, whereas the payment to dissenting Financial Creditors was to be made in three years. The dissenting Financial Creditor contended that they should be paid upfront. The Bench held as under:

“There is no provision which can be pointed out, which requires Successful Resolution Applicant to make upfront payment to the dissenting Financial Creditors. What is required by law is the payment “in priority over the Financial Creditors who voted in favour of the plan”.”

NCLAT Delhi: Period Of Limitation For Filing An Appeal U/S 61 Of IBC Starts From Date Of The Rectification Order; Rectification Order Merges With The Original Order

Case Title: Ashok Tiwari vs Tattva & Mittal Lifespaces Private Limited

Case No.: Company Appeal (At) (Insolvency) No. 729 Of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr Ajai Das Mehrotra (Technical Member), has held that the rectification Order of NCLT merges with the Original Order and the period of Limitation for filing an appeal under Section 61 of IBC starts from the date of the rectification Order.

NCLAT Delhi: National Financial Reporting Authority Has Overriding Powers To Penalise CAs For Professional Misconduct

Case Title: Mr Harish Kumar T.K vs National Financial Reporting Authority

Case No.: COMPANY APPEAL (AT) NO. 87 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has upheld the penalty imposed by the National Financial Reporting Authority (“NFRA/Respondent”) on the auditors of Dewan Housing Finance Corporation Ltd (“DHFL”). The ruling confirms that NFRA has the right to issue a penalty retrospectively when there is misconduct.

NCLAT clarified that NFRA holds superior and overriding powers over the Institute of Chartered Accountants of India (“ICAI”) in cases related to the professional misconduct of Chartered Accountants.

“NFRA has superior and overriding powers in matters relating to professional misconduct of the Chartered Accountants in terms of Section 132 of Companies Act, 2013 … We may conclude NFRA has been consciously and deliberately given superior authority over ICAI on oversight of auditors and in disciplinary matters as stipulated in Section 132 of Companies Act, 2013 After taking into consideration the background for forming NFRA, the judgment of the Apex Court, proven scams, need to restore shaken confidence of public and investors at large and prevent any adverse impact on Indian economy, we hold that NFRA has clear and required retrospective jurisdiction over the alleged offences by delinquent Chartered Accountants for period prior to formation of NFRA or prior to coming into effect relevant portion of Section 132 of Companies Act, 2013,”

NCLAT New Delhi: Raising Of Amount Via Share Subscription-Cum-Shareholders Agreement Is A Commercial Borrowing And Constitutes 'Financial Debt' Under IBC

Case Title: Sanjay D. Kakade vs. HDFC Ventures Trustee Company Ltd.

Case No.: Company Appeal (AT) (Insolvency) No.481 of 2023

The National Company Law Appellate Tribunal ('NCLAT'), New Delhi Bench, comprising of Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that raising of amount through Share Subscription-cum-Shareholders Agreement is a commercial borrowing and constitutes 'Financial Debt' under IBC.

NCLT

NCLT Kolkata: CIRP Petition U/S 10 Avoiding Income Tax Liability Not Maintainable Under The IBC

Case Title: M/s Jayam Vyapaar Private Limited

Case No.: Company Petition (IB) No. 72/KB/2023

The National Company Law Tribunal (NCLT), Kolkata Bench, comprising of Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has held that a petition filed under Section 10 of IBC to initiate Corporate Insolvency Resolution Process (CIRP) for avoiding Income Tax liability is not maintainable.

NCLT Kolkata: Explicit Written Agreement Of Loan Compulsory For NBFC To Establish 'Financial Debt'

Case Title: Desana Impex Limited vs. Brick and Mortar Reality Pvt. Ltd.

Case No.: Company Petition (IB) No. 342/KB/2022

The National Company Law Tribunal (NCLT), Kolkata Bench, comprising of Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has held that an explicit written agreement of loan is compulsory for the Financial Creditor for being a NBFC to demonstrate whether the amount disbursed constituted a 'financial debt' under IBC.

ESI Dues Not At Par With PF, Pension Or Gratuity Dues; Neither Excluded From Liquidation Estate: NCLT Ahmedabad

Case Title: Regional Director, ESIC v Manish Kumar Bhagat

Case No.: IA/184(AHM)2021 in CP(IB) 537 of 2018

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 the dues of Employees State Insurance Corporation (ESIC) are not at par with the dues of Provident Fund, Pension Fund or Gratuity Fund under IBC. Consequently, ESIC dues not being 'workmen dues', are neither entitled to be excluded from liquidation estate nor entitled to be paid in priority over other dues.

Section 36(4)(iii) of IBC does not define the dues of ESIC as workmen dues and specifically mentions Provident Fund, Pension Fund and Gratuity Fund to fall under such category.

NCLT Mumbai: License Agreement Terminated Before Commencement Of CIRP, Security Deposit Can Be Appropriated Against Arrears Of Rent Receivable From Corporate Debtor

Case Title: M/s Sanghvi Metal Corporation vs Dilip Chhabria PVT LTD

Case No.: C.P.(IB) No. 1967/MB/2019

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 in the case of the license agreement which has been terminated before the commencement of Corporate Insolvency Resolution Process (“CIRP”) proceedings, the security deposit can be appropriated against the arrears of rent which is receivable from the Corporate Debtor.

Department Of State Tax Submits Belated Claim To Liquidator Due To Personal Medical Difficulty Of Officer-In-Charge, NCLT Mumbai Condones Delay Of 92 Days

Case Title: IDBI Bank Limited v M/s Essar Projects (India) Limited

Case No.: CP (IB) No. 1832/MB/C-II/2017

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has allowed the belated claim filed by Department of State Tax before the Liquidator, while holding the failure of Officer-in-Charge to file claim within time due to personal medical difficulty to be a 'sufficient cause' for condonation of delay.

NCLT Hyderabad: Airport Authority Of India Being A Statutory Body Does Not Fall Within Scope Of 'Corporate Person' U/S 3(7) Of IBC

Case Title: Akash Electrotek Engineers Pvt. Ltd. vs. NCC Ltd.

Case No.: CP(IB) No. 66/09/HDB/2022

The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has held that no proceedings can be initiated against the Airport Authority of India ('AAI') as it is a statutory body created under the Airport Authority of India Act, 1944, does not fall under the definition of 'corporate person' under Section 3(7) of IBC.

CCI

CCI Closes Complaint Against Lupin Ltd. And Dr. Reddy Laboratories, Citing No Contravention Of Section 3 And 4 Of Competition Act

Case Title: Shri. Nadie Jauhri And Lupin Ltd. and Another

Case No.: Case No. 23 of 2023

The Competition Commission of India ('CCI') comprising Ms. Ravneet Kaur (Chairperson), Mr. Anil Agrawal (Member), Ms. Sweta Kakkad (Member), and Mr. Deepak Anurag (Member), closed the complaint filed by Shri. Nadie Jauhri ('Informant') against Lupin Ltd. ('OP-1') and Dr. Reddy's Laboratories Ltd. ('OP-2') alleging violation of the provisions of Section 3 and Section 4 of the Competition Act, 2002 ('Act').

The Informant contended that OP-1's procedure to refuse the supply of products to Indira Medical Agencies, Nashik violated the Drug (Price Control) Order, 2013 issued under Section 3 of the Essential Commodities Act, 1965. Informant contended that no pharma company can impose its dictates over wholesalers. Moreover, while OP-1's policy might not violate the Drugs and Cosmetics Act, of 1940, it is in contravention to allow healthy competition. Further, it has been alleged that OP-1 did not have a Food and Drug Administration license, thereby supplying spurious/misbranded goods.

The CCI held that no prima facie evidence has been provided by the Informant to substantiate its allegations against OP-1 and OP-2 to warrant a case of contravention of Sections 3 and 4 of the Act.