IBC Resolution Plan Can't Ignore Government Dues: Supreme Court Dismisses Review Petitions Against 'Rainbow Papers'

Case title: Sanjay Agarwal v. State Tax Officer

Citation: 2023 LiveLaw (SC) 939

The Supreme Court has dismissed a batch of review petitions filed against a 2022 judgment which held that the definition of a secured creditor under the Insolvency and Bankruptcy Code, 2016 (“IBC”) 2016 included any government or governmental authority and that a resolution plan which ignored dues to the government was liable to be rejected.

A bench comprising Justices AS Bopanna and Justice Bela M. Trivedi was considering five review petitions filed against the 2022 judgment in State Tax Officer v. Rainbow Papers Ltd 2022 LiveLaw (SC) 743 delivered by a bench comprising Justices Indira Banerjee (since retired) and AS Bopanna.

“The submissions made by the counsels for petitioners that the court in the impugned judgment had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC are factually incorrect. As evident from a bare reading of the judgment, the court had considered not only the waterfall mechanism under Section 53 but also other provisions of IBC for deciding the priority for the purpose of distributing proceeds from the sale as liquidation assets. In view of aforestated legal position, we are of the opinion the judgment sought to be reviewed does not fall within scope and ambit of review. So we’re dismissing all the review petitions.”

IBC | Tax & Customs Dues To Be Paid As Per Waterfall Mechanism Under Section 53: Supreme Court

Case Title: Principal Commissioner of Customs V Rajendra Prasad Tak & Ors.

Citation: 2023 LiveLaw (SC) 952

The Supreme Court Bench comprising Justice Sanjiv Khanna and Justice S.V.N. Bhatti, has clarified that the dues of the Central Board of Indirect Taxes & Customs, Department of Revenue, will be paid as per the waterfall mechanism given under Section 53 of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

Section 53 of IBC provides the order of priority in which proceeds from sale of liquidation assets is to be distributed amongst Corporate Debtor’s creditors, stakeholders etc.

NCLAT

NCLAT New Delhi: Jurisdiction Of NCLT Under IBC Is Summary In Nature, Not Extensive As A Civil Court To Enquire Into Disputes

Case Title: Sanjay Pandurang Kalate vs. Vistra ITCL (India) Ltd.

Case No.: Company Appeal (AT)(Insolvency) No. 742 of 2023

The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, comprising of Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the scope and jurisdiction of NCLT under the IBC being summary in nature, is distinctly not as extensive as that of a civil court to enquire into disputes arising out of Memorandum of Understanding (MoU) and related specific performance.

NCLAT New Delhi: Haircut In Resolution Plan Cannot Be Construed As Being Violative Of Section 30(2)(e) Of IBC

Case Title: Mr. Ankur Narang & Ors. vs. Mr. Nilesh Sharma RP & Ors.

Case No.: Company Appeal (AT)(Insolvency) No. 1240 of 2023

The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that a haircut in Resolution Plan cannot be construed as being violative of Section 30(2)(e) of IBC and the minority homebuyers have to necessarily sail with the majority within the class.

NCLAT Delhi: Fine For Non-Cooperation By Ex-Management Under IBC Is A “Penalty” Not “Cost” And Outside NCLT’s Jurisdiction

Case Title: Rakesh Gupta & Ors. vs Mahesh Bansal.

Case No.: COMPANY APPEAL (AT) (Insolvency) No. 401 of 2022

The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the fine imposed on non-cooperation by ex-management u/s 19(2) or 34(3) of IBC is covered under the term “penalty” and not “cost” under Rule 149 of the National Company Law Tribunal Rules, 2016. The Bench further observed that imposing fines is outside the jurisdiction of NCLT.

NCLAT New Delhi: Operational Creditor Not Entitled To Benefit U/S 14 Of Limitation Act When Suit Filed By It Was Withdrawn By Itself Without Any Liberty To Institute Fresh suit

Case Title: GRI Towers India Pvt. Ltd. vs. Inox Wind Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1106 of 2023

The National Company Law Appellate Tribunal (‘NCLAT’) Principal Bench, New Delhi comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), has held that an Operational Creditor is not entitled for benefit of Section 14 of the Limitation Act, 1963 where the Suit filed by it was withdrawn on its own application without any liberty to institute a fresh suit.

NCLAT New Delhi: Dispute To Be ‘Truly In Existence’ At Time Of Reply Or Section 9 Application For Nullifying CIRP U/S 9 Of IBC

Case Title: Amrop India Pvt. Ltd. vs. The Hi-Tech Gears Ltd.

Case No.: Company Appeal (AT)(Insolvency) No. 1251 of 2023

The National Company Law Appellate Tribunal (‘NCLAT’), Principal Bench, comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the dispute raised must truly exist at the time of filing a reply to the Demand Notice under Section 8(2) of IBC or at the time of filing the Section 9 application for ‘pre-existing dispute’ to be a ground to nullify the CIRP application under Section 9 of IBC.

NCLT

E-Auction Can’t Be Set Aside On Trivial Technical Grounds For No Fault Of Successful Bidder: NCLT Hyderabad

Case Title: M/s. Millenium Steel India Pvt. Ltd. v M/s Ind Barath Power Gencom Limited & Ors.

Case No.: CP(IB) No. 187/7/HDB/2019

The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), has held that an e-auction of Corporate Debtor’s asset done by Liquidator cannot be set aside on trivial technical grounds, for no fault of the successful bidder. The application for setting e-auction was filed after the distribution of proceeds as per Section 53 of IBC had taken place and the changes in Board of Directors were effectuated.

NCLT Bengaluru Condones Delay Of 1191 Days In Submission Of Proof Of Claim By SEBI Before Liquidator

Case Title: M/s. Edelwiss Assets Reconstruction Co. Ltd. v M/s. Falcon Tyres Ltd.

Case No.: C.P. (IB) No.14/BB/2017

The National Company Law Tribunal (NCLT), Bengaluru Bench, comprising of Shri P. Mohan Raj (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has condoned the delay of 1191 days in submission of proof of claim by Securities and Exchange Board of India (“SEBI”) before the Liquidator of Corporate Debtor. The Liquidator has been directed to consider the belated claim since the Liquidation process is ongoing.

NCLT Kolkata: Registration Of Assignment Of Debt Is Not Mandatory For CIRP U/S 7 Of IBC

Case Title: Manavta Tradelink Pvt. Ltd. vs. Manikaran Vincom Pvt. Ltd.

Case No.: Company Petition (IB) No. 80/KB/2023

The National Company Law Tribunal (‘NCLT’) Kolkata Bench comprising Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has held that the registration of the assignment of debt is not mandatory for the Corporate Insolvency Resolution Process (‘CIRP’) under Section 7 of IBC. Further, the Corporate Debtor cannot go into the question of the legality of the assignment of debt since the assignment of debt was never disputed to date.

Mittal Corp Ltd. To Merge With Subsidiary Of Shyam Metalics & Energy, NCLT Mumbai Approves Resolution Plan

Case Title: Punjab National Bank v Mittal Corp Limited

Case No.: C.P. (IB) No. 434/MB/C-II/2018

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has approved the Resolution Plan submitted by Shyam Sel and Power Limited (Subsidiary of Shyam Metalics & Energy Ltd.) for Mittal Corp Ltd. The resolution plan is valued at Rs. 351 Crores and provides for merger of the two companies post implementation of plan.

NCLT Delhi Approves Resolution Plan For ENN TEE International Limited

Case Title: ENN TEE International Limited vs Ritu Rastogi, Resolution Professional of ENN TEE International Limited.

Case No.: CP (IBPP) NO.01(PB)/2022

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Justice Ramalingam Sudhakar (Retd.) (Judicial Member) and Shri Avinash Kumar Srivastava (Technical Member), has approved the Resolution Plan submitted by ENN TEE International Limited through its Promotor. The claims submitted by the Corporate Debtor’s creditors were admitted by the Resolution Professional to the extent of Rs.15.94 Crores. The Resolution Plan of SRA is valued at Rs.17.19 Crores.

NCLT Bengaluru: Issue Of Fixing EMD And Its Reasonableness In EOI, Is A Matter Which Comes Within The Scope Of CoC And Not NCLT

Case Title: Atharv Intertrade Private Limited Versus Mr Shivadutt Bannanje

Case No.: CP (IB) No.9/BB/2022

The National Company Law Tribunal (“NCLT”), Bengaluru Bench, comprising of Justice T Krishna Valli (Retd.) (Judicial Member) and Mr. Manoj Kumar (Technical Member) has held that the issue of fixing Earnest Money Deposit (“EMD”) and its reasonableness in Expression of Interest (“EOI”), is a matter that comes within the scope of the "Commercial Wisdom" of the Committee of Creditors (“CoC”) and is not a concern for the NCLT.

“This issue of fixing of refundable EMD and its reasonableness is a matter which comes within the scope of ‘Commercial Wisdom’ of the CoC. Hence, this Adjudicating Authority is not inclined to interfere with the decision of the CoC”

NCLT Mumbai Approves Liquidation Of TV Products India Private Limited

Case Title: Arsenius Skill Capital vs TV Products India Private Limited

Case No.: CP(IB)No. 2299/MB/C-II/2018

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member) has approved the Liquidation of TV Products India Private Limited.

NCLT Allahabad Allows SBI’s Application For Withdrawal Of Section 7 Petition Against Bajaj Hindustan Sugar

Case Title: State Bank of India vs. Bajaj Hindusthan Sugar Ltd.

Case No.: CP (IB) No.79/ALD/2022

The National Company Law Tribunal (‘NCLT’) Allahabad Bench comprising of Shri Praveen Gupta (Judicial Member) and Shri Ashish Verma (Technical Member), has allowed the State Bank of India’s application for withdrawal of the Section 7 petition filed under IBC against Bajaj Hindusthan Sugar.

Bajaj Hindusthan Sugar Ltd. is one of the largest sugar and ethanol producers in India and holds a significant position within the industry. It operates 14 sugar plants, all strategically situated in the state of Uttar Pradesh.

SBI submitted that the Corporate Debtor during the pendency of the main petition has deposited the overdue amount towards the Term Loan and OCD coupons and has also assured to pay the future overdue with interest as and when the same becomes due and payable.

NCLT Mumbai: Mere Mention Of SARFAESI Proceeding Is Not “Sufficient Cause” For The Condonation Of Delay Under Section 5 Of Limitation Act, 1963

Case Title: State Bank of India Vs. M/s. Ace Agro Industries Pvt. Ltd. & Ors

Case No.: Company Petition No. 3454/2019

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Justice Virendrasingh Bisht (Retd.) (Judicial Member) and Mr. Prabhat Kumar (Technical Member) has rejected an application filed under Section 5 Limitation Act, 1963 (“Limitation Act”) for condonation of delay in filing Section 7 petition under IBC.NCLT observed that the mere initiation of SARFAESI Proceedings wasn't sufficient reason to condone delay in filing a time-barred petition under Section 7 of IBC.

“No reasonable and acceptable explanation for the huge delay is given except mentioning the prosecution of SARFAESI proceeding and the settlement (fact of settlement). No evidence of subsequent proceedings or communication from the Corporate Debtor in any form is placed on record. According to us, applicant has miserably failed to give any acceptable and cogent reason sufficient to condone such huge delay. Simply stating the present is a case of gross negligence and smacks of bonafides.”

NCLT Kochi: Moratorium U/S 96 And 101 Of IBC Cannot Be Meant To Prohibit The Right To Action U/S 7, 9 Or 10 Of IBC

Case Title: Furnace Fabrica (India) Limited vs State Bank of India

Case No.: CP(IBC)/14/KOB/2023

The National Company Law Tribunal (“NCLT”), Kochi Bench, comprising of Justice T Krishna Valli (Retd.) (Judicial Member) and Shri. Shyam Babu Gautam (Technical Member) dismissed a stay application and has held that the moratorium under sections 96 and 101 of IBC cannot be meant to prohibit the right to action under sections 7, 9 or 10 of IBC as it lies against a company or body corporate and not against an individual.

The Bench has further observed that the words ‘in relation to debt’ should be read in harmony with other parts of IBC and due importance should be given to the purpose and terms of a contract of guarantee and loan agreements.

No NCLT Bench To Deny Hearing Through Hybrid Mode Or Video Conferencing; NCLT Issues Circular

Ref. File No.: 25/02/2023-NCLT

The National Company Law Tribunal (“NCLT”) has issued a Circular dated 31.10.2023, directing that no NCLT Bench will deny access to video conferencing facility or hearing through hybrid mode to any Bar Member or Litigant, who is desirous of availing such facility.

The Supreme Court of India vide its order dated 15.09.2023 passed in Sarvesh Mathur v Registrar General High Court of Punjab & Haryana, W.P. (CRL) No. 351/2023, had issued directions regarding hybrid/Video Conferencing mode of hearing in all Courts and Tribunals.

The Circular dated 31.10.2023 has been issued in view of the directions of Supreme Court in the said order dated 15.09.2023.

NCLT Ahmedabad: Application U/S 9 Is Not Maintainable If Operational Creditors Return Principal Amount Paid During The Pendency Of The CIRP Application

Case Title: Shah Paper Mills Ltd v Shree Rama Newsprint & Papers Ltd.

Case No.: C.P. No.251 of 2019

The National Company Law Tribunal (“NCLT”), Ahmedabad Bench, comprising of Mr. Shammi Khan (Judicial Member) and Mr. Kaushalendra Kumar Singh (Technical Member) has held that any application filed under Section 9 of IBC is not maintainable if Operational Creditors returns the principal amount which was paid during proceedings for initiation of Corporate Insolvency Resolution Process (“CIRP”). The Bench further observed that the spirit of legislation of IBC is for ‘resolution of debt’ and not for ‘recovery’.