IBC- Resolution Professional Entitled To Take Control Of Corporate Debtor's Rights In Assets Licensed To Third Parties : Supreme Court

Case Title: Victory Iron Works Ltd. v Jitendra Lohia & Anr.

Citation : 2023 LiveLaw (SC) 193

The Supreme Court Bench comprising of Justice V. Ramasubramanian and Justice Pankaj Mithal, has held that a resolution professional is entitled to take control of the rights of a corporate debtor in assets which are licensed to third parties. Such an action of the RP will come within the ambit of Section 25 of IBC. Further, the assets owned by a third-party, but in the possession of the Corporate Debtor held under contractual arrangements, are excluded from the definition of “assets” in Section 18 of IBC, however, the said exclusion does not extend to Section 25 of IBC. Therefore, the Explanation to Section 18 is inapplicable to Section 25 of IBC.

Insolvency Resolution Of Company Will Not Extinguish Director's Liability Under Section 138 NI Act: Supreme Court

Case Title: Ajay Kumar Radheyshyam Goenka v Tourism Finance Corporation of India Ltd.

Citation: 2023 LiveLaw (SC) 195

The Supreme Court bench comprising Justices Sanjay Kishan Kaul, Abhay S Oka and JB Pardiwala has held that approval of resolution plan of a corporate debtor under the IBC will not extinguish the criminal liability of its erstwhile director under Section 138 of the Negotiable Instruments Act 1881. The company's director cannot seek discharge from N.I. Act proceedings on the ground that creditor’s debt stood settled in the proceedings under IBC.

NCLAT

Lease Premium & Lease Rent Not Included In Explanation To Section 14(1)(D) Of IBC: NCLAT Delhi

Case Title: Sunil Kumar Agarwal v New Okhla Industrial Development Authority.

Case No.: Company Appeal (AT) (Ins.) No. 622 of 2022.

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that Explanation to Section 14(1)(d) of IBC does not include lease premium or lease rent amount.

NCLT Cannot Decide Controversies Relating To Attachment Of Property Under Benami Prohibition Act: NCLAT Chennai

Case Title: Mr. P. Eswaramoorthy v The Deputy Commissioner of Income Tax (Benami Prohibition)

Case No.: Company Appeal (AT) (CH) (INS) No. 188 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Naresh Salecha (Technical Member), has held that NCLT is not the proper Fora to determine the controversies revolving around the Attachment of Property under the Prohibition of Benami Property Transactions Act, 1988 (“PBPT Act”). The Section 60(5) of IBC does not confer jurisdiction upon NCLT to determine any questions relating to the Corporate Debtor and no remedy can be sought under the same with regards to the PBPT Act. Further, Moratorium imposed under Section 14 of IBC does not affect a Provisional Attachment Order issued under the PBPT Act.

NCLT

When Financial Creditors Have Not Been Paid In Full, Operational Creditors Cannot Claim A Higher Amount: NCLT Ahmedabad

Case Title: Noble Resource International Pvt. Ltd. v Sona Alloys Pvt. Ltd.,

Case No.: CP (IB) No. 586 of 2019

The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Dr. Deepti Mukesh (Judicial Member) and Shri Ajai Das Mehrotra (Technical Member), has held that when Financial Creditors have not been paid in full in the Resolution Plan, the Operational Creditors cannot claim a higher amount under the same. The Bench observed that a conjoint reading of Section 30 and Section 53 of IBC shows that the Financial Creditors are placed at a higher priority than Operational Creditors. The Secured Financial Creditors are covered by Section 53(1)(b)(ii), the Unsecured Financial Creditors are covered by Section 53(1)(d). The Operational Creditors are to be considered thereafter having lower priority and are covered by Section 53(1)(f).

Petition U/S 9 IBC Can Only Be Filed After Expiry Of 10 Day Period Under Section 8(2) IBC: NCLT Mumbai

Case Title: Aypols Polymers Private Limited Vs Suvarna Fibrotech Pvt Ltd

Case No.: CP (IB) No.635/MB-IV/2020

The National Company Law Tribunal (“NCLT”) , Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member), has held that Petition under Section 9 of IBC can only be filed after expiry of the 10 days period mentioned under Section 8 (2) of IBC. The Tribunal observed that the proof of service of Demand Notice was not annexed to the petition and it was unclear how was the Demand Notice served. The Tribunal noted that the Corporate Debtor has 10 days to respond to the Demand Notice under Section 8(2) of IBC. A petition under Section 9 of IBC can only be filed after expiry of 10 days provided under Section 8(2). Since the petition was filed on the very next day on which the Demand Notice was sent, the petition was not in accordance with Section 9(1) of IBC.

Insufficiency Of Stamp On Loan Documents Not Relevant For Admissibility Of Section 7 Petition: NCLT Mumbai Reiterates

Case Title: Kotak Mahindra Bank Ltd. Vs M/s Hybro Foods Private Limited

Case No.: C.P.(IB) No. 295 of 2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has reiterated that the insufficiency in the stamping of the loan documents is not a relevant ground for dismissing a petition under Section 7 of IBC. The thing which is to be verified is that whether the debt is bona fide disputed and whether the said defence is a substantial one.

Claims Not Part Of The Resolution Plan Shall Extinguish Only After Resolution Plan Approval: NCLT Mumbai Reiterates

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri. Shyam Babu Gautam (Technical Member), has reiterated that all claims not forming part of the Resolution Plan shall stand extinguished only after the Resolution Plan is approved by the Adjudicating Authority.

Dissenting Secured Creditor Can't Be Treated Higher Than Other Creditors U/S 53 Just Because They Enjoy Security Interest: NCLT Kolkata

Case Title: Trimurti Associates Private Limited Vs BKM Industries Limited

Case No.: C.P. (IB) No. 2078/KB/2019

The National Company Law Tribunal(“NCLT”), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri. Balraj Joshi (Technical Member), has reiterated that just because a creditor enjoys security interest, it cannot be treated higher than other creditors who have financed the Corporate Debtor. The other creditors don’t not enjoy the protection of a security interest and thus run the risk of not getting paid their dues from realization of security. If such creditors are treated differently, then all secured creditors would dissent in the CoC. This will not lead to maximization of value of the Corporate Debtor and will defeat the very purpose of resolution under IBC.

NCLT Ahmedabad & Indore Benches Re-Constituted W.E.F 20th March 2023, Matters To Be Heard Through VC

File No.: 10/03/2023-NCLT

The National Company Law Tribunal, Ahmedabad and Indore Benches, have been re-constituted vide a Circular dated 15.03.2023 issued by NCLT. Shri M.B. Gosavi (Judicial Member) is demitting office on 18.03.2023 on completion of his tenure. Therefore, the NCLT Ahmedabad and NCLT Indore Bench are being re-constituted.

NCLT Ahmedabad

NCLT Ahmedabad Court Room No. I (Monday, Tuesday & Wednesday) (First Half)

1. Shri Praveen Gupta (Judicial Member)
2. Shri K.K. Singh (Technical Member)

NCLT Ahmedabad Court Room No. II (Second Half)

1. Shri Deep Chandra Joshi (Judicial Member)
2. Shri Ajai Das Mehrotra (Technical Member)

NCLT Indore

NCLT Indore Bench (Thursday & Friday) (Second Half)

1. Shri Ashok Kumar Bhardwaj (Judicial Member)
2. Shri K.K. Singh (Technical Member)

The matters shall be heard through Video Conference (VC).

Dispute In The Quantum Of Debt Cannot Be A Ground For Rejection Of Insolvency Petition: NCLT Delhi Reiterates

The National Company Law Tribunal, New Delhi Bench, comprising of Shri P.S.N. Prasad (Judicial member) and Shri Rahul Bhatnagar (Technical Member), has reiterated that dispute over quantum of debt cannot be a ground for rejection of insolvency petition. The tribunal admitted the petition after observing that the petition very well qualifies the 1 Crore threshold limit for initiating Corporate Insolvency Resolution Process (“CIRP”).