IBC - Liquidator Can't Cancel Valid Auction On Mere Expectation Of Fetching Higher Price; No Unfettered Discretion: Supreme Court

Case Title: Eva Agro Feeds Private Limited V. Punjab National Bank & Anr., Civil Appeal No(S). 7906/2021

Citation: 2023 LiveLaw (SC) 753

The Supreme Court Bench comprising Justice B V Nagarathna and Justice Ujjal Bhuyan, has held that even though the highest bidder in an auction sale under the Insolvency and Bankruptcy Code, 2016 has no indefeasible right to demand acceptance of his bid, the liquidator, if such a bid is rejected must furnish reasons for the same in the rejection order.

The mere expectation of the Liquidator that a higher price may be obtained is not a good ground to cancel an otherwise valid auction. The Court also held that once an auction is complete, the liquidator does not have absolute or unfettered discretion to cancel the auction, unless it is found that fraud or collusion had vitiated it.

“..while the highest bidder has no indefeasible right to demand acceptance of his bid, the Liquidator if he does not want to accept the bid of the highest bidder has to apply his mind to the relevant factors. Such application of mind must be visible or manifest in the rejection order itself.”

NCLAT

While Application For Approval Of Resolution Plan Is Pending Before AA, CoC Can’t Convene Meeting To Consider Other Resolution Plans: NCLAT Delhi

Case title: Indian Overseas Bank v M/s. Rathi TMT Saria Pvt. Ltd. & Ors.

Case No.: Comp. App. (AT) (Ins) No.1134 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 when a Resolution Plan approved by the CoC is pending consideration before the Adjudicating Authority for approval, the CoC is not permitted to hold any meeting for considering other resolution plans.

Proceedings Under Section 13 Of Companies Act, 2013 Can’t Be Questioned In Proceedings Under Section 7 Of IBC: NCLAT Delhi

Case title: Ishan Singh v Spaze Towers Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No.226 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 orders passed in the proceedings under Section 13 of the Companies Act, 2013 cannot be questioned in proceedings under Section 7 of IBC.

The Bench further ruled that relevancy of a document is to be examined by the Adjudicating Authority after taking the concerned document on record and hearing the contentions of the parties.

Shri Arun Baroka Takes Oath As A Technical Member In NCLAT

On 01.09.2023, Shri Arun Baroka has taken oath as a Technical Member in the National Company Law Appellate Tribunal (“NCLAT”), Delhi.

Mr. Baroka is an IAS officer who recently retired from the post of the Secretary, Department of Chemicals & Petro-chemicals, Government of India. He is an Electrical Engineering graduate from IIT, Delhi and has done MBA (Marketing and Systems) from IIM, Kolkata.

On 29.08.2023, the NCLAT had issued a notice intimating regarding the oath taking ceremony of Mr. Baroka, which took place on 01.09.2023 in the Chairperson Court, NCLAT Delhi.

NCLAT Chennai: Advances By Property Buyers To Real Estate Developers Are ‘Borrowing’ And Financial Debt

Case Title: Venkat Rao Marpina vs. Vemuri Ravi Kumar

Case No.: C.P.(IB)/107/7/HDB/2021

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shreesha Merla (Technical Member), has held that since homebuyers have been added in the Explanation to Section 5(8)(f) of IBC, thus, the advances given by Property buyers to real estate developer will be considered as ‘borrowing’, and such amounts raised from allottees falls within the scope of Section 5(8)(f) of IBC.

NCLT

NCLT Delhi Admits Imperia Structures Ltd. Into Insolvency

Case Title: Chirag Jain & Ors. v Imperia Structures Ltd

Case No.: IB-525/PB/2022

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Mahendra Khandelwal (Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against Imperia Structures Ltd., which launched a real estate project named “Imperia Byron/Mindspace” in Sector- 62, Gurgaon, Haryana. Mr. Gaurav Katiyar has been appointed as the Interim Resolution Professional (IRP).

NCLT Mumbai Initiates Insolvency Process Against Sahara India Medical Institute Ltd., A Sahara Group Company

Case Title: Aprn Enterprises Private Limited v Sahara India medical Institute Limited

Case No.: CP (IB) No.412/MB-IV/2022

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Prabhat Kumar (Technical Member), has initiated Corporate Insolvency Resolution Process (“CIRP”) against Sahara India Medical Institute Limited, which is a part of the Sahara Group, promoted by Mr. Subrata Roy. Mr. Jayesh Natvarlal Sanghrajka has been appointed as the Interim Resolution Professional (IRP).

NCLT Delhi: Financial Creditor Cannot Invoke CIRP Against Corporate Debtor To Recover Debt From Homebuyer

Case Title: South Indian Bank Limited vs. Magic Info Solutions Private Limited

Case No.: (IB) – 136(ND)/2023

The National Company Law Tribunal (“NCLT”), New Delhi, comprising of Mr. Bachu Venkat Balaram Das (Judicial Member) and Mr. Atul Chaturvedi (Technical Member), has dismissed the petition to initiate Corporate Insolvency Resolution Process (CIRP) against Magic Info Solutions Private Limited (Corporate Debtor).

The NCLT held that the only financial institutions directly disbursing loans against consideration of the time value of money have the right and right to file a petition to invoke the CIRP since they would invariably be interested in the revival of the Corporate Debtor, as opposed to other financial institutions without any financial debt, who would be solely concerned with the recovery of the debt. The Financial Creditor cannot invoke CIRP against the Corporate Debtor to recover its loan from the homebuyer.

NCLT Ahmedabad Admits CIRP Petition Against Rasna Pvt. Ltd.

Case Title: Bharat Road Carrier Pvt Ltd. v. Rasna Pvt Ltd.

Case No.: CP(IB) 317 of 2019

The National Company Law Tribunal (“NCLT”), Ahmedabad, comprising of Mr. Shammi Khan (Judicial Member) and Mr. Sameer Kakar (Technical Member), has admitted the petition to initiate Corporate Insolvency Resolution Process (CIRP) against Rasna Pvt Ltd. (Corporate Debtor). It held that the Corporate Debtor’s argument as to the dispute appears to be a moonshine since it has not been able to justify the cause and reasons behind the dispute to the Operational Creditor.

NCLT Chandigarh: New Management Of The Corporate Debtor Not Responsible For Non-Compliance Of MCA Filing Before The Insolvency Commencement Date

Case Title: Skyhigh Infraland Private Limited vs. Monitoring Committee of Corporate Debtor

Case No.: CP (IB) No. 161/Chd/Hry/2018

The National Company Law Tribunal (“NCLT”), Chandigarh Bench, comprising of Mr. Harnam Singh Thakur (Judicial Member) and Mr. Subrata Kumar Dash (Technical Member), allowed an application filed by Corporate Debtor, which was facing difficulty in making the statutory compliances with the office of Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA).

The Tribunal directed the ROC and held that the current management of the corporate debtor should not be held accountable for any wrongdoings or misconduct committed by the previous promoters and directors of the Corporate Debtor.

NCLT Chandigarh: Suspended Directors Have No Vested Right In The Removal Of Liquidator

Case Title: Kulwinder Singh Makhni (Ex-Director, M/s. Punjab Basmati Rice Ltd.) vs. Mr. Sanjay Kumar Aggarwal

Case No.: CP (IB) No.340/Chd/PB/2018

The National Company Law Tribunal (NCLT), Chandigarh, comprising of Mr. Harnam Singh Thakur (Judicial Member) and Mr. Subrata Kumar Dash (Technical Member), has held that Suspended Director of Corporate Debtor does not have the authority to recommend the liquidator's removal and the power rests with the Stakeholders Consultation Committee (SCC) as per Regulation 31A (11) substituted by Liquidation Process (Second Amendment) Regulations, 2021.

IBBI

IBBI Extends Facility Of CIRP Form Submission To Insolvency Professional Entities (IPE) Acting As IP, No Fee Applicable Till 30th September 2023

Reference No.: IBBI/CIRP/60/2023

The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 01.09.2023, intimating that the facility for submitting the CIRP Forms has been extended to Insolvency Professional Entities (IPE), acting as Insolvency Professionals (IP).

To facilitate submission of forms for all assignments handled by these IPEs through the facility being introduced now, CIRP forms filed till 30.09.2023 shall not attract any fee as provided under regulation 40B of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”). Thereafter, it shall attract fee as specified in regulation 40B(4) of the CIRP Regulations.