IBC | Statutory Set Off Or Insolvency Set Off Inapplicable To Corporate Insolvency Resolution Process: Supreme Court

Case Title: Bharti Airtel Limited and Another V Vijaykumar V. Iyer and Others

Citation: 2024 LiveLaw (SC) 11

The Supreme Court has held statutory set off or insolvency set off is not applicable to Corporate Insolvency Resolution Process (“CIRP”) proceedings under the Insolvency and Bankruptcy Code, 2016 (“IBC”). Further, Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”), which provides for mutual dealing and set off, does not apply to Part II of the IBC which deals with CIRP.

The principle of Set-off recognizes the right of a debtor to adjust the smaller claim owed to him against the larger claim payable to his creditor.

The Bench has also carved out two exceptions to the application of statutory or insolvency set off to CIRP proceedings. First being, when a party is entitled to contractual set-off, on the date which is effective before or on the date of commencement of CIRP. Secondly, in cases of 'equitable set-off' when the claim and counter claim in the form of set-off are linked and connected on account of one or more transactions that can be treated as one.

The Bench comprising Justice Sanjiv Khanna and Justice S.V.N. Bhatti, has observed that Section 30(2)(b) does not support the plea of insolvency set-off, since the provision deals with the amounts to be paid to creditors and not amount payable by creditors to Corporate Debtor. Further, the specific legislative mandate given in Chapter II Part II of IBC, the provisions of IBC relating to CIRP do not recognize the principle of insolvency set-off. “We would not extend it by implication, when the legislature has not accepted applicability of mutual set-off at the initial stage, that is, the Corporate Insolvency Resolution Process stage.”

IBC - Is Dissenting Financial Creditor Entitled To Minimum Value Of Security Interest? Supreme Court Refers To Larger Bench, Doubts Precedent

Case Title: DBS Bank Ltd Singapore v. Ruchi Soya Industries Ltd and another

Citation: 2024 LiveLaw (SC) 6

The Supreme Court has referred to larger bench the issue whether a dissenting financial creditor is to be paid the minimum value of its security interest as per the Insolvency and the Bankruptcy Code 2016.

A bench comprising Justices Sanjiv Khanna and SVN Bhatti, in the case DBS Bank Ltd Singapore v. Ruchi Soya Industries Ltd and another, referred the following question :

Whether Section 30(2)(b)(ii) of the Insolvency and Bankruptcy Code, 20161, as amended in 2019, entitles the dissenting financial creditor to be paid the minimum value of its security interest?

The bench differed from the view expressed by a coordinate bench in the 2021 judgment in the case India Resurgence ARC Private Limited v. Amit Metaliks Limited & Another which held that a dissenting secured creditor cannot challenge an approved resolution plan contending that higher amount should have been paid to it based on the security interest held by it over the corporate debtor.

The bench in the instant case observed that there was a contradiction between India Resurgence ARC Private Ltd with the ratio decidendi of the decisions of the three-Judge Bench judgments in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta(2019) and Jaypee Kensington Boulevard Apartments Welfare Association vs. NBCC (India) Ltd(2021).

IBC | Inappropriate For NCLAT To Direct NCLT To Admit Petition Under Section 7 Without Evaluating Rival Contentions On Merits: Supreme Court

Case Title: Maneesh Pharmaceuticals Ltd v Export Import Bank of India and Ors.

Citation: 2023 LiveLaw (SC) 1073

The Supreme Court has set aside an order passed by the National Company Law Appellate Tribunal (“NCLAT”) whereby the National Company Law Tribunal (“NCLT”) was directed to admit a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC”).

The Bench comprising Chief Justice of India Dr. Dhananjaya Y Chandrachud, Justice J B Pardiwala and Justice Manoj Misra, has held that it was inappropriate for the NCLAT to direct the NCLT to admit the application under Section 7 of IBC straightaway without an evaluation of the rival contentions on merits. The Bench has directed the NCLT to determine whether the petition under Section 7 of IBC is liable to be admitted, after hearing the parties.

NCLAT

Scheme Of Compromise Decided In Absence Of Shareholder Who Submitted It, NCLAT Chennai Directs Re-Consideration In Presence Of The Shareholder

Case Title: Sanjeev Mitla v Mr. Madhusudhan Rao Gonugunta & Anr.

Case No.: Company Appeal (AT) (CH) (Ins) No. 387 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Ms. Shreesha Merla (Technical Member), has directed the Liquidator to convene a meeting of the Stakeholders Consultation Committee (SCC) to re-consider the compromise scheme submitted by a shareholder, in the presence of such shareholder.

A shareholder of the Corporate Debtor had submitted a compromise scheme under Section 230 of the Companies Act, 2013 to the Liquidator. The Liquidator placed the Scheme before the Stakeholders Consultation Committee in absence of the shareholder and the same was rejected. The shareholder submitted that it could not persuade the SCC in respect of the Scheme due to his absence.

NCLAT Chennai: Resolution Professional Is Empowered U/S 25(1) Of IBC To Reject CoC's Proposal For Renewal Of Bank Guarantees By Corporate Debtor

Case Title: IDBI Bank Ltd. and Ors. v. Mr. Sumit Binani, RP of KSK Mahanadi Power Company Ltd.

Case No.: Company Appeal (AT) (CH) (INS.) No. 385 / 2023

The National Company Law Appellate Tribunal ('NCLAT'), Chennai Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the Resolution Professional is empowered under Section 25(1) of IBC to reject the proposal of Committee of Creditors ('CoC') for renewal of Bank Guarantees provided by the Corporate Debtor.

NCLAT New Delhi: Liquidator Is Entitled To His Fee Under S. 34 Of IBC And Regulation 4 Of Liquidation Regulations And Cost Under Regulation 2B Of Liquidation Regulations

Case Title: CA Jai Narayan Gupta (Liquidator of Barcle Enterprises Limited) vs. Radhasiriya Properties Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No.1473 of 2023

The National Company Law Appellate Tribunal ('NCLAT'), New Delhi Bench, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), has held that the Liquidator is entitled to his fee under Section 34 of IBC and Regulation 4 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and Cost under Regulation 2B of Liquidation Regulations.

NCLAT Delhi: Once CIRP Has Stayed, Resolution Professional Can't Be Directed To Hand Over The Charge Of Corporate Debtor To Ex-Management

Case Title: Mr. Mukesh Kumar Jain vs. Navin Kumar Upadhyay & Anr

Case No.: Company Appeal (AT) (Insolvency) No. 930-931 of 2023

The National Company Law Appellate Tribunal ('NCLAT'), New Delhi Bench comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that Resolution Professional cannot be directed to hand over the charge of Corporate Debtor to the Ex-management, once CIRP has stayed.

The Bench opined that handing over the charge of the Corporate Debtor to Ex-management can be dangerous and the same is prone to misuse the assets and the assets shall be diminished, which may adversely affect the creditors of the Corporate Debtor in case of stay of the CIRP.

NCLT

NCLT Mumbai: Financial Creditor Can't Initiate CIRP Against Successful Resolution Applicant On Default Of Payment As Per Resolution Plan

Case Title: ICICI Prudential Asset Management Company Ltd. vs. Nandi Vardhan Infrastructure Ltd.

Case No.: CP(IB) 276 MB 2023

The National Company Law Tribunal ('NCLT'), Mumbai Bench, comprising Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has held that the Financial Creditor cannot initiate a Corporate Insolvency Resolution Process ('CIRP') application against the Successful Resolution Applicant ('SRA') on default in payment to Stakeholders/Creditors as per terms of the approved Resolution Plan under IBC.

NCLT Delhi Approves Resolution Plan of Ramkrishna Forgings Ltd For ACIL Ltd.

Case Title: IDBI Bank Limited v M/s ACIL Limited

Case No.: CP IB-170/PB/2018

The National Company Law Tribunal (“NCLT”), New Delhi Bench, comprising of Shri Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), has approved the Resolution Plan submitted by M/s Ramkrishna Forgings Limited for ACIL Ltd.

The Resolution Plan is valued at Rs. 129.5 Crores, while the total admitted claims of the Corporate Debtor amounts to Rs. 1,782 Crores.

Claim Arising Out Of Arbitral Award Against Which Section 34 Proceedings Are Pending, NCLT Kolkata Upholds RP's Decision To Admit Claim Contingently

Case Title: Bank of India v McNally Bharat Engineering Company Limited

Case No.: CP (IB) No. 891/KB/2020

The National Company Law Tribunal (“NCLT”), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has upheld the Resolution Professional's decision to admit claim arising out of an arbitral Award as contingent claim, since proceedings under Section 34 of Arbitration and Conciliation Act, 1996 are pending before the High Court against the Award.