Supreme Court Declares Noida As An Operational Creditor Under The Insolvency And Bankruptcy Code, 2016

Case title: New Okhla Industrial Development Authority v Anand Sonbhadra

Case No.: Civil Appeal No. 2222 of 2021

The Supreme Court Bench comprising of Justice KM Joseph and Justice Hrishikesh Roy has upheld the NCLAT judgment wherein it was held that the NOIDA is an Operational Creditor under IBC and not a Financial Creditor. The order was passed on 17.05.2022.

The Bench observed that the subject matter of Section 5(8)(d) of IBC is a lease or a hire-purchase contract which is deemed as a finance or capital lease. NOIDA's contract with the Builders is not any lease or a hire purchase contract, which would entitle the lessor to be treated as the financial creditor. The Bench held that:

"138. We are of the view that in the facts of the appeals before us, we are unable to hold that the lessee has raised any amounts from the appellant. The question, therefore, of considering the last limb of Section 5(8)(f), namely, whether it has commercial effect of a borrowing could not arise. But we can safely say that the obligation incurred by the lessee to pay the rental and the premium cannot be treated as an amount raised by the lessee from the appellant…"

SARFAESI Proceedings Cannot Be Continued Against Corporate Debtor Once CIRP Is Admitted And Moratorium Is Ordered: Supreme Court

Case Title: Indian Overseas Bank v RCM Infrastructure Ltd.

Case No.: CA 4750 OF 2021, 2022 LiveLaw (SC) 496.

The Supreme Court Bench comprising of Justices L. Nageswara Rao and B R Gavai has held that the proceedings under the SARFAESI Act, 2002 cannot be continued once the Corporate Insolvency Resolution Process (CIRP) is initiated under IBC and the moratorium is ordered. It was observed that Section 14(1)(c) of the IBC has overriding effect over any other law and therefore, after commencement of CIRP there is complete prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property. The words "including any action under the SARFAESI Act" in Section 14 of the IBC convey the legislative intent. The order was passed on 18.05.2022.

Section 18 Limitation Act Is Applicable To IBC Proceedings, Reiterates Supreme Court

Case Title: State Bank of India v Krishidhan Seeds Private Limited

Case No.: 2022 LiveLaw (SC) 497, CA 910 of 2021

The Supreme Court Bench comprising of Justices DY Chandrachud and Surya Kant has held that the provisions of Section 18 of the Limitation Act, 1963 are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016. It was observed that an acknowledgement in a balance sheet without a qualification can furnish a legitimate basis for determining as to whether the period of limitation would stand extended, so long as the acknowledgement was within a period of three years from the original date of default. The provisions of Section 18 of the Limitation Act are applicable to proceedings under the IBC. The order was passed on 18.04.2022.

Supreme Court Issues Notice On Meru Cab's Plea Alleging Anti-Competitive Practices By Ola

Case Title: Meru Travels Solutions Pvt. Ltd. v Competition Commission of India

Case No.: Civil Appeal No.2843-2844/2022

The Supreme Court Bench comprising of Justices L. Nageswara Rao and B.R. Gavai has issued notice in the appeal filed by Meru Cab, challenging the order of the National Company Appellate Tribunal (NCLAT) wherein it had refused to set aside the order passed by the Competition Commission of India (CCI) exonerating Ola from allegations of abuse of dominant position. The Bench took note of the concurrent findings by the Director General, CCI and NCLAT.

Meru had contended before the CCI that Ola had abused its dominant position by indulging in predatory pricing and by entering into anti-competitive agreements with its drivers. Since the Commission prima facie found the allegation of abuse of dominant position to have some merit, it ordered the Director General (DG) to investigate the matter. Based on the investigation report, in 2017, CCI concluded that Ola did not abuse its dominant position. On 07.02.2022, the NCLAT also held that Ola has not indulged in predatory pricing or abused its dominant position.

Proceedings Against Personal Guarantor Of Corporate Debtor Can Be Continued Independently - Supreme Court Lifts The Stay

Case Title: Mahendra Kumar Jajodia v State Bank of India

Case No.: Civil Appeal No. 1871/2022

The Supreme Court bench comprising of Justice S Abdul Nazeer and Justice Vikram Nath has dismissed the civil appeal filed against the judgment of National Company Law Appellate Tribunal (NCLAT) in the case of SBI versus Mahendra Kumar Jajodia. The order was passed on 06.05.2022.

The NCLAT on 27.01.2022 had held that even in the absence of any pending Corporate Insolvency Resolution Process or Liquidation proceedings, the application under Section 95(1) of the Insolvency Bankruptcy Code, 2016 against the personal guarantors of the Corporate Debtor is maintainable by the virtue of Section 60(1) of the Code before the National Company Law Tribunal having territorial jurisdiction over the place where the Registered office of the Corporate Person is located. The Supreme Court upheld the NCLAT order and dismissed the appeal by stating that there is no cogent reason to interfere with the order of NCLAT.

Supreme Court Issues Notice On Plea Challenging Constitutionality Of IBC Provisions Relating To Personal Guarantors

Case Title: Gurmeet Sodhi v Union of India & Ors.

Case No.: Writ Petition(s)(Civil) No(s).307/2022

The Supreme Court Bench comprising of Justices Vineet Saran and J K Maheshwari has issued notice on a petition filed by a personal guarantor which raises a constitutional challenge to the personal insolvency provisions under the Insolvency & Bankruptcy Code, 2016 ("IBC"). Since a similar issue is pending, the Court has directed to tag the case along with the pending Special Leave Petition (C) No.16464/2021.

The personal guarantor has filed a writ petition under Article 32 before the Supreme Court contending that the IBC does not provide for the personal guarantor's right to be heard before entertaining the insolvency petition and appointment of a resolution professional, thus violating the fundamental right to natural justice.

The Bench, as an interim relief, has restrained the resolution professional in the personal guarantor's insolvency proceedings from submitting the statutory report before the Adjudicating Authority while issuing notice in the writ petition. The Court also directed that the Petitioner shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein.

Appeal To NCLAT Shall Be Filed Within A Period Of 30 Days, Reiterates Supreme Court

Case Title: Safire Technologies Pvt. Ltd v Regional Provident Fund Commissioner & Anr.

Case No.: Civil Appeal No.2212 of 2021

The Supreme Court bench comprising of Justice L N Rao and Justice P S Narasimha has reiterated that an appeal against the order of NCLT shall be filed before the NCLAT within a period of 30 days and the appellate tribunal can only condone delay for a period of 15 days. The order was passed on 29.04.2022.

IBC - Moratorium Period Can Be Excluded In Computing Limitation Period In A Suit/Application By Corporate Debtor: Supreme Court

Case Title: New Delhi Municipal Council v Minosha India Limited

Case No.: CA No. 3470 of 2022

The Supreme Court Bench comprising of Justices KM Joseph and Hrishikesh Roy has held that the entire period during which the moratorium was in force in respect of Corporate Debtor, can be excluded while computing the period of limitation for a suit or proceeding by the Corporate Debtor.

The appellant had challenged the Delhi High Court's order allowing the application filed by respondent Corporate Debtor under Section 11(6) of the Arbitration and Conciliation Act. The court noted that Section 14 (moratorium) does not include an application under Section 11(6) of the A&C Act by the Corporate Debtor or for that matter, any other proceeding by the Corporate Debtor against another party. The order was passed on 27.04.2022.

Supreme Court Permits Withdrawal Of SLP Filed By Jayaswal Neco Industries Ltd. Against RBI , Imposing A Cost Of Rs - 10 Lakh

Case title: Jayaswal Neco Industries Limited & Another v Reserve Bank of India & Ors.

Case No.: Special Leave Petition (Civil) Nos.9286-9287 of 2018.

The Supreme Court Bench comprising of Justice U.U. Lalit and Justice S. Ravindra Bhat, while adjudicating a Special Leave Petition (SLP) filed by Jayaswal Neco Industries Ltd., has allowed withdrawal of the SLP subject to costs of Rs. 10 Lakhs. The sole consideration behind permitting withdrawal was that nine lenders of Jayaswal Neco Industries Ltd., which were Public Sector Financial Corporations/Banks, had assigned their debts to Assets Care & Reconstruction Enterprise Ltd. ("ACRE"). If withdrawal was not permitted then these public sector lenders may have to refund huge sums of money. The order was passed on 04.05.2022.

Recovery Certificate Holder Can Initiate CIRP As Financial Creditor Under IBC: Supreme Court

Case Title: Kotak Mahindra Bank Limited v A. Balakrishna & Anr.

Case No.: 2022 LiveLaw (SC) 534, Civil Appeal No. 689 of 2021 

The Supreme Court bench comprising of Justices L. Nageswara Rao, B.R. Gavai and A.S. Bopanna, has held that a liability in respect of a claim arising out of a Recovery Certificate under the Recovery of Debts and Bankruptcy Act, 1993 would be a "financial debt" within the meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC) and a holder of such Recovery Certificate would be a "financial creditor" under Section 5(7) of the IBC. The Bench observed that 'financial debt' as defined under Section 5(8) of the IBC as 'means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes…'. The use of word 'includes' is to enlarge the scope of the statute and hence the list in Section 5(8) is not an exhaustive but inclusive list.

'Decree Holders' Can't Be Treated At Par With 'Financial Creditors' Under IBC: Supreme Court

Case Title: Shubhankar Bhowmik v Union of India & Anr.

Case No.: SLP 6104/2022.

The Supreme Court Bench comprising of Justice SK Kaul and Justice MM Sundresh, upheld a Tripura High Court judgment wherein it was held that "decree-holders" cannot be treated at par with "financial creditors" under the Insolvency and Bankruptcy Code, 2016 ("IBC").

The Tripura High Court had held that the decree-holder gets a statutory status as a creditor under Section 3(10) of the IBC, by virtue of the decree. Since the decree cannot be executed by operation of the moratorium under Section 14, the IBC makes a provision to protect the interests of a decree holder by recognizing it as a creditor. The interest recognized is that in the decree and not in the dispute that leads to the passing of the decree. This is apparent from the fact that decree holders as a class of creditors are kept separate from "financial creditors" and "operational creditors". No divisions or classification is made by the statute within this class of decree holders. It was further held that once a decree quantifies a debt due the nature of the dispute that resulted in the quantification ceases to exist. In the books of a corporate debtor, it will show only as a liability and not as a financial debt or operational debt. The same cannot be said to be arbitrary, or unreasonable. The Supreme Court Bench dismissed the Special Leave Petition filed against the aforesaid High Court judgment and upheld the decision of the High Court.

Wages/Salaries Of Only Those Workmen/Employees Who Actually Worked During CIRP Are To Be Included In CIRP Costs: Supreme Court

Case title: Sunil Kumar Jain v Sundaresh Bhatt

Case No.: Civil Appeal No. 5910 of 2019.

A Supreme Court division bench comprising of Justice M.R. Shah and Justice Aniruddha Bose has held that the dues towards the wages/salaries of only those workmen/employees who actually worked during the Corporate Insolvency Resolution Process ("CIRP") are to be included in the CIRP costs. The Bench clarified that the wages and salaries of all other workmen/employees of the Corporate Debtor during the CIRP, who actually have not worked and/or performed their duties when the Corporate Debtor was a going concern, shall not be included automatically in the CIRP costs. Such dues will be governed by Section 53(1)(b) and Section 53(1)(c) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). It was further observed that Section 36(4) and Section 53(1) of the IBC shall not be applicable to dues of the workmen/employees on account of provident fund, gratuity and pension. They are to be treated outside the liquidation process and liquidation estate assets under the IBC. The order was passed on 19.04.2022.

Insolvency and Bankruptcy Code Is Not For Money Recovery Proceedings: Supreme Court Reiterates

Case Title: Invest Asset Securitisation and Reconstruction Pvt. Ltd. v Girnar Fibres Ltd.,

Case No.: 2022 LiveLaw (SC) 423.

The Supreme Court bench comprising of Justice Dinesh Maheshwari and Justice Aniruddha Bose reiterated that the provisions of Insolvency and Bankruptcy Code, 2016 ("IBC") are essentially intended to bring the Corporate Debtor to its feet and are not of money recovery proceedings as such. The Appellant had filed an appeal before the Supreme Court under Section 62 of the IBC against the NCLAT order dated 18.11.2021, wherein Appellant's appeal was dismissed on the ground that application filed under Section 7 of IBC is barred by limitation. The Supreme noted that the right to sue accrued on the date of declaration of Non Performing Asset (NPA) but there is no evidence of any acknowledgement of liability in terms of Section 18 of the limitation Act, 1963. The order was passed on 25.04.2022.

IBC - Moratorium Applies Only To Corporate Debtor; Natural Persons Like Its Director Would Continue To Be Liable U/s 138 NI Act: Supreme Court

Case Title: Narinder Garg v Kotak Mahindra Bank

Case No.: W.P. (C) 93 OF 2022.

The Supreme Court Bench comprising of Justices UU Lalit, S. Ravindra Bhat and P.S. Narasimha, has reiterated that the moratorium provisions contained in Section 14 of the Insolvency and Bankruptcy Code, 2016 would apply only to the Corporate Debtor and the natural persons mentioned in Section 141 of the Negotiable Instruments Act would continue to be statutorily liable under the provisions of the said Act. The order was passed on 28.03.2022.

Supreme Court Keeps CIRP In Abeyance And Permitted Promoter To Complete The Housing Project

Case title: Anand Murti v Soni Infratech Private Limited.

Case No.: Civil Appeal Nos.7534 of 2021.

The Supreme Court bench comprising of Justices L Nageshwara Rao and B R Gavai has directed to keep the Corporate Insolvency Resolution Process (CIRP) of Soni Infratech Pvt. Ltd. ("Corporate Debtor") in abeyance and permitted the erstwhile promoter of Corporate Debtor to complete the construction of real estate housing project within the stipulated time period.

The Promoter of Corporate Debtor had filed an additional affidavit before the Supreme Court, undertaking to complete the project in stipulated time and to return the money along with 6% p.a. interest to seven homebuyers who are objecting to settlement plan. The Bench noted that there are only 7 out of 452 homebuyers who are objecting to settlement plan and therefore, it will be interest of homebuyers to permit the promoter to complete the construction of the project. The Bench further observed that there is every possibility that if the CIRP is permitted, homebuyers will have to play an escalation cost whereas the Promoter is undertaking to honor the existing BBA without any escalation. Therefore, the appeal was disposed off by permitting the promoter to complete the project within stipulated time in terms of the additional affidavit and the same shall be treated as the undertaking to the Supreme Court. The order was passed on 27.04.2022.

NCLT Not A Debt Collection Forum ; Operational Creditor's Application To Initiate CIRP Must Be Dismissed If The Debt Is Disputed: Supreme Court

Case Title: SS Engineers vs Hindustan Petroleum Corporation Ltd

Case No.: 2022 LiveLaw (SC) 617, CA 4583 OF 2022

The Supreme Court Bench comprising of Justices Indira Banerjee and V. Ramasubramanian observed that application of the Operational Creditor for initiation of Corporate Insolvency Resolution Process (CIRP) must be dismissed, if the debt is disputed.

"It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor". The Bench also remarked that the adjudicating authority under IBC i.e. NCLT is not a 'debt collection forum' and the objective of IBC is not to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor. It was further held that there are noticeable differences in the IBC between the procedure of initiation of CIRP by a financial creditor and initiation of CIRP by an operational creditor. On a reading of Sections 8 and 9 of the IBC, it is patently clear that an Operational Creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence, for IBC does not countenance dishonesty or deliberate failure to repay the dues of an Operational Creditor. However, if the debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed.

NCLT Has Discretion To Not Admit Financial Creditor's CIRP Application Even If Corporate Debtor Is In Default: Supreme Court

Case Title: Vidarbha Industries Power Ltd. vs Axis Bank Limited

Case No.: 2022 LiveLaw (SC) 587, CA 4633 OF 2021

The Supreme Court Bench comprising of Justices Indira Banerjee and JK Maheshwari has observed that it is not mandatory for the Adjudicating Authority to admit an application to initiate Corporate Insolvency Resolution Process even if a debt existed and the Corporate debtor is in default. However, such discretionary power cannot be exercised arbitrarily or capriciously.

"Ordinarily, the Adjudicating Authority (NCLT) would have to exercise its discretion to admit an application under Section 7 of the IBC of the IBC and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the Corporate Debtor in payment of the debt, unless there are good reasons not to admit the petition.. The Adjudicating Authority (NCLT) has to consider the grounds made out by the Corporate Debtor against admission, on its own merits. For example when admission is opposed on the ground of existence of an award or a decree in favour of the Corporate Debtor, and the Awarded/decretal amount exceeds the amount of the debt, the Adjudicating Authority would have to exercise its discretion under Section 7(5)(a) of the IBC to keep the admission of the application of the Financial Creditor in abeyance, unless there is good reason not to do so. The Adjudicating Authority may, for example, admit the application of the Financial Creditor, notwithstanding any award or decree, if the Award/Decretal amount is incapable of realisation. The example is only illustrative."

IBC - Approval Of A Resolution In Respect Of One Borrower Cannot Discharge A Co-Borrower: Supreme Court

Case Title: Maitreya Doshi vs Anand Rathi Global Finance Ltd

Case No.: 2022 LiveLaw (SC) 789, CA 6613 OF 2021

The Supreme Court Bench comprising of Justices Indira Banerjee and JK Maheshwari has held that approval of a resolution in respect of one borrower cannot discharge a co-borrower.

The Bench observed that if there are two borrowers or if two corporate bodies fall within the ambit of corporate debtors, there is no reason why proceedings under Section 7 of the IBC cannot be initiated against both the Corporate Debtors. On a parity of reasoning, the approval of a resolution in respect of one borrower cannot certainly discharge a co-borrower. Needless to mention, the same amount cannot be realised from both the Corporate Debtors. If the dues are realised in part from one Corporate Debtor, the balance may be realised from the other Corporate Debtor being the co-borrower. However, once the claim of the Financial Creditor is discharged, there can be no question of recovery of the claim twice over.

IBC - No Bar To Withdraw Admitted CIRP Application Before Constitution Of Committee Of Creditors: Supreme Court

Case Title: Ashok G. Rajani vs Beacon Trusteeship Ltd.

Case No.: 2022 LiveLaw (SC) 790, CA 4911 OF 2021

The Supreme Court Bench comprising of of Justices Indira Banerjee and JK Maheshwari observed that there is no bar to withdrawal of an admitted CIRP application before constitution of Committee of Creditors. The Bench observed that settlement cannot be stifled before the constitution of the Committee of Creditors in anticipation of claims against the Corporate Debtor from third persons. The bench noted that Section 12A of the IBC enables the Adjudicating Authority to allow the withdrawal of an application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting shares of the Committee of Creditors in such a manner as may be specified.

"Section 12A of the IBC clearly permits withdrawal of an application under Section 7 of the IBC that has been admitted on an application made by the applicant. The question of approval of the Committee of Creditors by the requisite percentage of votes, can only arise after the Committee of Creditors is constituted. Before the Committee of Creditors is constituted, there is, in our view, no bar to withdrawal by the applicant of an application admitted under Section 7 of the IBC."

NCLT Has Discretion To Not Admit Financial Creditor's CIRP Application? Supreme Court Allows Open Court Hearing For Review

Case Title: Axis Bank Ltd versus Vidarbha Industries Power Ltd

Case No.: RP (Civil) 1043/2022

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice MM Sundersh  allowed open court hearing for the review petition filed against the judgment in Vidarbha Industries Power Ltd. vs Axis Bank Limited which held that the National Company Law Tribunal has discretion to not admit the insolvency application filed by a financial creditor even if the corporate debtor is in default. The Petition is listed for hearing in open court on September 19, 2022.

The judgment delivered in Vidarbha Industries Case on July 12, 2022 had held that it is not mandatory for the Adjudicating Authority to admit an application to initiate Corporate Insolvency Resolution Process even if a debt existed and the Corporate debtor is in default. The Adjudicating Authority (NCLT) would have to exercise its discretion to admit and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the Corporate Debtor in payment of the debt, unless there are good reasons not to admit the petition.

CIRP Can Be Initiated Against Corporate Guarantor Without Proceeding Against Principal Borrower: Supreme Court

Case Title: K Paramasivam vs Karur Vysya Bank Ltd

Case No.: 2022 LiveLaw (SC) 742, CA 9286 OF 2019

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice JK Maheshwari, has held that Corporate Insolvency Resolution Process (CIRP) can be initiated against the Corporate Guarantor without proceeding against the principal borrower. The liability of the guarantor is co-extensive with that of the Principal Borrower. The court further noted that, under Section 7 of the IBC, CIRP can be initiated against a Corporate entity who has given a guarantee to secure the dues of a non-corporate entity as a financial debt accrues to the corporate person, in respect of the guarantee given by it, once the borrower commits default and the guarantor is then, the Corporate Debtor. 

Resolution Plan Which Ignores Statutory Dues Payable To State Government/Legal Authority Liable To Be Rejected: Supreme Court

Case Title: State Tax Officer (1) vs Rainbow Papers Limited

Case No.: 2022 LiveLaw (SC) 743, CA 1661 OF 2020

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice AS Bopanna held that a Resolution Plan which ignores the statutory demands payable to any State Government or a legal authority, altogether, is liable to be rejected. If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan.. In other words, if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased manner, uniform proportional reduction, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC.. In our considered view, the Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues."

The court also held that the Section 48 of the Gujarat Value Added Tax Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, would include the State under the GVAT Act.

Can Provisional Attachment Under PMLA Be Passed After Initiation Of CIRP Under IBC? Supreme Court To Consider

Case Title: Ashok Kumar Sarawagi v Enforcement Directorate & Anr.

Case no.: Special Leave Petition (Civil) Diary No(S). 30092/2022

The Supreme Court Bench comprising of Chief Justice U.U. Lalit and Justice Bela M. Trivedi, has issued notice in a petition where it is to be decided whether an order of provisional attachment passed under Prevention of Money Laundering Act, 2002 ("PMLA") would prevail over Insolvency and Bankruptcy Code, 2016 ("IBC") or not, if the said order has been passed subsequent to initiation of Corporate Insolvency Resolution Process ("CIRP"). The Supreme Court has issued notice on the Special Leave Petition and has directed the Parties to maintain status quo with respect to the proceedings in question. The question before the Bench is whether a provisional attachment order passed under PMLA subsequent to initiation of CIRP would prevail over IBC or not.

Entries In Book Of Accounts/Balance Sheet Of Corporate Debtor Can Be Treated As Acknowledgment Of Liability Of Debt Payable To Financial Creditor: Supreme Court

Case Title: Asset Reconstruction Company (India) Limited v Tulip Star Hotels Limited

Case No.: 2022 LiveLaw (SC) 648, CA 84-85 OF 2020

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice JK Maheshwari, while adjudicating a petition has observed that the entries in Books of Account/Balance sheet of a company can be treated as acknowledgement of liability in respect of debt payable to a financial creditor.

"To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years."

Term Of Future NCLT Members Should Be 5 Years, Supreme Court Tells Centre While Refusing To Extend 3 Yr Term Of Those Appointed In 2019

Case Title: National Company Law Tribunal Bar Association v Union of India

Case No. W.P.(C) No. 180/2022

The Supreme Court Bench comprising of Justice D.Y. Chandrachud and Justice Sudhanshu Dhulia, turned down a plea seeking modification of the tenure of members of National Company Law Tribunal (NCLT) appointed pursuant to the notification dated 20.09.2019 issued by the Ministry of Corporate Affairs, from 3 years to 5 years. It refused to extend tenure for the concerned 23 members, but clarified that while making appointments in future the Central Government would be bound by Section 413 of the Companies Act, 2013, which prescribes the tenure of the members of NCLT to be 5 years. The Apex Court was of the view that an administrative notification for appointment ought to be consistent with the statute. The issue of tenure of members of NCLT is not something that its Bar Association should be interested in. It indicated that the Bar Association should be concerned with the vacancies being filled up at the earliest so that there is no impediment in the justice delivery system. Considering the fact that the process to fill up the vacancies is going on, it refused to interfere and stall it in any manner.

S.7(5)(b) IBC | Provision To Notify Financial Creditor Before Rejecting Claim Extends To Appeals Before NCLAT: Supreme Court

Case Name: Kotak Mahindra Bank Limited v. Kew Precision Parts Private Limited & Ors.

Case No.: Civil Appeal No. 2176 of 2020, 2022 LiveLaw (SC) 673

The Supreme Court Bench comprising of Justice Indira Banerjee and Justice J.K. Maheshwari has held that provision of Section 7(5)(b) of the Insolvency and Bankruptcy Code, 2016, which requires the Adjudicating Authority to notify the Financial Creditor before rejection of a claim, would be applicable to appeals as well, since appeal is the continuation of original proceedings.

The Court held that NCLAT had erred in closing the CIRP proceedings without giving the bank an opportunity to explain if there was sufficient cause for the delay in approaching the NCLT. An appeal being the continuation of original proceedings, the bank ought to have been notified under Section 7(5)(b) of the IBC before its claim was rejected. If notified of the proposal to close the proceedings, the bank might have rectified the defects in its application under Section 7 by filing additional pleadings and/or documents.

Provisional Attachment Under PMLA Subsequent To Initiation Of CIRP: Supreme Court To Consider The Issue

Case Title: Ashok Kumar Sarawagi v Enforcement Directorate & Anr.

Case no.: Special Leave Petition (Civil) Diary No(S). 30092/2022

The Supreme Court Bench comprising of Justice Sanjay Kishan Kaul and Justice Abhay S. Oka, has permitted the CIRP of Corporate Debtor to be conducted on 'as is where is' and 'whatever there is' basis, during the pendency of a petition challenging the provisional attachment order passed against the Corporate Debtor under PMLA. The Bench has cautioned that the Resolution Plan shall not be approved by the Adjudicating Authority without the permission of the Supreme Court. The issue in the petition concerns whether an order of provisional attachment passed under Prevention of Money Laundering Act, 2002 ("PMLA") would prevail over Insolvency and Bankruptcy Code, 2016 ("IBC") or not, if the said order has been passed subsequent to initiation of Corporate Insolvency Resolution Process ("CIRP").

NCLAT

NCLAT Urges Central Government And IBBI To Consider Legislative Change For Payment To Operational Creditor Under Resolution Plan

Case Title: Damodar Valley Corporation v Dimension Steel and Alloys 

Case No.: Company Appeal (AT) (Insolvency) No. 62 of 2022

The National Company law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan and Ms. Shreesha Merla has urged the Central Government and the Insolvency and Bankruptcy Board of India (IBBI) to consider legislative change regarding the payment to operational creditors under the resolution plan. The Bench observed that: "We are consistently receiving the Plans, where Operational Creditors either not paid any amount towards their claim or paid negligible amount, sometime even less than 1%." The Bench noted that time has come to reconsider the payment mechanism to operational creditors under the Resolution plan and urged the Central Government and IBBI to find out if there is any ground to reconsider the legislative change towards payment to the operational creditors under the resolution plan.

Article 1 Of Limitation Act,1963 Will Not Apply To Proceedings Under Insolvency And Bankruptcy Code, 2016: NCLAT

Case Title: S M Ghogbhai versus Schedulers Logistics India Pvt. Ltd

Case No.: Company Appeal (AT) Insolvency No. 281 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench. comprising of Justice Ashok Bhushan and Dr. Alok Srivastava has held that the Article 1 of Limitation Act, 1963 is not applicable to the Petition filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code (IBC). Reliance was placed on the case of BK Educational Services Pvt. Ltd. v. Parag Gupta and Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries wherein Supreme Court held that the period of limitation for filing an application under Section 7 or 9 of the Code is to be decided as per Article 137 of the Limitation Act. NCLAT further held that Article 1 of Limitation Act deals with "suits relation to accounts" and an application under Section 9 of the Code cannot be said to be a suit relating to accounts.

NCLAT Upholds Dismissal Of Section 7 Petition Filed By Hinduja Leyland Finance Ltd. During The Prohibited Period; Grants Liberty To Re-File With Corrected Documents

Case Title: Hinduja Leyland Finance Ltd. v Fly Express Logistic Pvt. Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 553 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Mr. Naresh Salecha (Technical Member), while adjudicating an appeal has upheld that Corporate Insolvency Resolution Process ("CIRP") cannot be initiated over a default which had occurred in the period mentioned under Section 10A of the Insolvency and Bankruptcy Code, 2016 ("IBC"), i.e. between 25.03.2020 to 24.03.2021. The order was passed on 20.05.2022.

Threshold Of Rs.1 Crore Is Required For Initiation of CIRP, Even If The Cause Of Action Arises Out Of Failure Of The Consent Terms Of The Earlier Section 7 Application: NCLAT

Case Title: Prafulla Purushottamrao Gadge v. Narayan Mangal

Case No.: Comp. App. (AT) (Ins.) No. 498 of 2022

The National Company Law Appellate Tribunal (NCLAT) Bench comprising of Justice Ashok Bhushan and Ms. Shreesha Merla has held that an application filed after 24.03.2020 under Section 7 of the Insolvency and Bankruptcy Code, 2016 below the threshold of Rs. One Crore is not maintainable.

The suspended director of the Corporate Debtor had filed the appeal against the order passed by NCLT Mumbai wherein CIRP was initiated against the Corporate Debtor for the default of Rs. 78,65,000/-. The NCLAT held that the application filed on 25.06.2021 has to fulfill the requirement of increased threshold as introduced in Section 4 of IBC by notification dated 24.03.2020. The order was passed on 06.05.2022

Arrears Of Salary Due Beyond Three Years, Barred By Limitation, Cannot Be The Basis For Initiating CIRP: NCLAT Delhi

Case Title: Omega Laser Products B.V. v Anil Agrawal

Case No.: Company Appeal (AT) (Insolvency) No.194 Of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member) has held that arrears of salary due beyond a period of 3 years would be barred by limitation for the purposes of initiating Corporate Insolvency Resolution Process (CIRP). The Managing Director had initiated CIRP against the Corporate Debtor over salary arrears dues which were barred by limitation. NCLAT has set aside the order of CIRP vide an order dated 10.05.2022 by observing:

"Therefore, this Tribunal if of the earnest view that the Section 9 Application filed on 27/08/2021 is 'barred by Limitation' as the claims of Rs.96,92,000/- and Rs.18,00,000/- pertain to the period prior to 31/03/2016 and more than three years have lapsed since."

Under Section 44 of IBC NCLT Doesn't Have The Power To Suo-Moto Classify A Transaction As A 'Preferential Transaction': NCLAT

Case Title: Sahara India v Shir Nandkisho Vishnupant Deshpande and Anr.

Case No.: Company Appeal (AT) (Ins) No. 368 of 2021

The National Company Law Appellate Law Tribunal (NCLAT) Bench comprising of Justices M. Venugopal (Member Judicial) and Dr. Ashok Kumar Mishra (Member Technical) has held that NCLT does not have the power to suo motu classify a transaction as a Preferential Transaction under Section 44 of the Insolvency and Bankruptcy Code, 2016. The NCLAT allowed the appeal challenging the order of the NCLT wherein the Adjudicating Authority had classified a transaction as 'Preferential Transaction.' The Bench remanded the matter back to the NCLT for deciding afresh in the light of the observations made in the order. The order was passed on 09.05.2022

Failure To Pay Consideration In 90 Days, NCLAT Delhi Cancels The Sale Of Corporate Debtor To The Auction Purchaser In Liquidation Proceedings.

Case Title: Potens Transmissions & Power Pvt. Ltd v Gian Chand Narang

Case No.: Company Appeal (AT) (Insolvency) No. 532 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member) has upheld the cancellation of sale of Apex Buildsys Ltd. as a going concern to Potens Transmissions & Power Pvt. Ltd. (Auction Purchaser), over the latter's failure to pay the sale consideration amount within 90 days, as stipulated under IBBI (Liquidation Process) Regulations 2016. The order was passed on 12.05.2022.

The NCLAT Bench observed that 90 days' period provided in the Liquidation Process Regulation is the maximum period for the Auction Purchaser to deposit the consideration amount, failing which the Regulation expressly mentions that the sale shall be cancelled. It was held that "when the Consequence of non-compliance of the provision is provided in the statute itself, the provision is necessary to be held to be mandatory."

Insolvency Cannot Be Initiated On The Basis Of Unpaid LTC And Leave Encashment Dues: NCLAT

Case Title: Kishore K Lonkar v Hindustan Antibiotics Ltd. 

Case No.: Company Appeal (AT) (Insolvency) No. 934 of 2021.

The National Company Law Appellate Tribunal (NCLAT) Bench, comprising of Justice Ashok Bhushan and Ms. Shreesha Merla, has held that the welfare claims such as Leave Encashment, Superannuation Dues are not operational debt for the purpose of initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor under Section 9 of the Insolvency & Bankruptcy Code, 2016.

NCLAT noted that the definition of operational debt under Section 5(21) of the Code includes claim towards services which includes "employment" also however, the amount claimed by the Appellant was not towards any services rendered by him during his employment with the Corporate Debtor but all these payments were accrued after the cessation of employment. The Bench held that:

"9…Though 'service benefits' like 'LTC' accrue, on account of the service rendered during the period of employment, the scope and objective of the Code is simply not just for recovery of 'dues' but Resolution of the Companies meant for 'maximization of the value of assets', to promote entrepreneurship, availability of credit and balance all interest of the stakeholders"

National Company Law Appellate Tribunal Gets Five More Judges

Five new Judges have been appointed to the NCLAT vide a Notification dated 12.05.2022, the total Judges' strength has gone up from seven to twelve.

Following are the Details:

1. Justice Rakesh Kumar Jain, Retd. judge, Punjab and Haryana High Court
2. Justice Rakesh Kumar, Retd. Judge, Patna High Court
3. Justice M Satyanarayan Murthy sitting judge, Andhra Pradesh High Court
4. Barun Mishra, IAS, Retd. Secretary, Department of Justice
5. Naresh Salecha, IRAS, Member (finance), Railway Board

Pendency Of Proceedings Before DRT, SARFAESI Or Other Fora-Not A Bar For Initiating CIRP: NCLAT Chennai

Case Title: Mr. Amar Vora v City Union Bank Ltd.

Case No.: Company Appeal (AT) (CH) (Ins) No. 130 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Kanthi Narahari (Technical Member), has held that a petition can be moved under Section 7, 9, or 10 of Insolvency and Bankruptcy Code, 2016 ("IBC"), even when proceedings with respect to the same debt are pending before the Debt Recovery Tribunal; or SARFAESI Act 2002; or Prohibition of Benami Property Transaction Act, 1988 or any other forum. IBC has an overriding effect over other laws. The order was passed on 11.05.2022.

Joint Auction Under IBC And SARFAESI Is Permissible: NCLAT

Case Title: Ayan Mallick v Pratim Bayal (Liquidator) & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 456 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), has upheld the Order of NCLT, Kolkata wherein NCLT had held that a joint auction under the provision of Insolvency and Bankruptcy Code, 2016 (IBC) and SARFAESI Act, 2002 is permissible in order to maximize the value of the assets of the Corporate Debtor and the guarantor.

Non-Payment Of TDS Amount Not A Ground For Initiating CIRP: NCLAT Delhi Imposes Cost Of Rs. 1 Lakh On The Applicant

Case Title: Amitabh Roy v Master Development Management (India) Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 274 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), has held that an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") cannot be admitted over defaults relating to non-payment of TDS (Tax Deduction at Source) amount. The Bench observed that the Adjudicating Authority had committed serious error in admitting Section 9 Application on the submission of the Operational Creditor that non-payment of the TDS amounts to default. The Bench also imposed a cost of Rs. 1 Lakh on the Applicant. The order was passed on 18.05.2022.

NCLAT Sets Aside The Liquidation Order Of Ballarpur Industries Limited

Case Title: Finquest Financial Solutions Pvt. Ltd. v Anuj Jain (Erstwhile RP of Ballarpur Industries Ltd.) & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 227 of 2022.

The National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal, has set aside the order dated 25.01.2022 passed by NCLT Mumbai Bench whereby Ballarpur Industries Ltd. was sent to liquidation. The NCLAT Bench extended the Corporate Insolvency Resolution Process (CIRP) period till 30.04.2022 and directed the Resolution Professional to get the revised resolution plan approved by NCLT. The order was passed on 19.04.2022.

Decision Of Homebuyers As A Class Is Binding On Every Homebuyer: NCLAT, Delhi

Case Title: Sandeep Kumar Jain v. Anil Tayal

Case No.: Company Appeal (AT) (Insolvency) No. 446 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench New Delhi, comprising of Justice Ashok Bhushan and Ms. Shreesha Merla, while adjudicating an appeal has held that decision taken by the homebuyers as a class is binding on every single homebuyer. The appeal was filed by two homebuyers against the order of NCLT New Delhi, which had rejected their intervention application on the basis that the class of homebuyers is already being represented before NCLT. The NCLAT upheld the NCLT order and directed that the Authorized Representative of class of homebuyers can always approach the Resolution Professional and the Adjudicating Authority in case of any difficulty.

NCLAT Nod To Roma Unicon Designex Consortium As The Successful Resolution Applicant Of Earth Infrastructure Ltd.

Case Title: Bipin Sharma v Earth Infrastructure Limited & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1112 of 2020.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Dr. Alok Srivastava (Technical Member), while adjudicating an appeal filed by one of the Financial Creditors challenging the eligibility of the Successful Resolution Applicant, Roma Unicon Designex Consortium ("SRA"), under Section 29A(c) of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has declined to intervene in the Resolution Plan of SRA, as the same has been approved by the Committee of Creditors ("CoC") including Financial Creditors in class. It was observed that the Resolution Plan being approved by Financial Creditors in class voting through their authorized representative cannot be called into question. The order was passed on 27.04.2022.

Insolvency Proceedings Are Not Only For Fees Of Resolution Professional: NCLAT

Case Title: Deepankar Sharma v Pradeep Cycle Industries.

Case No.: Company Appeal (AT) (Insolvency) No. 474 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Ms Sheersha Merla, has held that the Insolvency Proceedings are not proceedings only for fees of the Interim Resolution Professional (IRP). The Corporate Insolvency Resolution Process (CIRP) of Arpan International Pvt. Ltd. was initiated by NCLT on 22.12.2021, however, the Operational Creditor and Corporate Debtor entered into settlement and an application for withdrawal of petition was filed on 03.01.2022. Accordingly, NCLT ordered that IRP fees should be reduced to Rs. 1,75,000/- from the earlier value of Rs. 3,75,000/, as the IRP had worked for only 14 days. NCLAT upheld the reduction of the fees of the IRP by observing that the Insolvency Proceedings are not only for the fee of the IRP and RP, payment of fee and cost are only consequential to the main proceeding.

Committee Of Creditors Are Competent To Revise The Approved Fees Of Resolution Professional: NCLAT

Case Title: Kushwinder Singhal v Reena Tiwari.

Case No.: Company Appeal (AT) (Insolvency) No. 469 of 2022.

National Company Law Appellate Tribunal (NCLAT) principal bench comprising of Justice Ashok Bhushan and Ms. Sheersha Merla, has held that the Committee of Creditors (CoC) is fully competent to revise its earlier approval of the fees of the Resolution Professional. The erstwhile Resolution Professional of Bestways Transport India Pvt Ltd. was replaced by another Resolution Professional by the CoC, and NCLT had ordered re-consideration of the fees of the erstwhile Resolution Professional. NCLAT upheld the NCLT order and observed that CoC is fully competent to revise the fees of Resolution Professional, as the entitlement of fee depends on several factors including the change of circumstances such as the length of CIRP proceeding.

NCLAT Urges IBBI To Amend CIRP Regulations To Include Claim Which Are Not Filed But Reflecting In Book/Record Of Corporate Debtor

Case Title: Employees Provident Fund Organisation v Mr. Subodh Kumar Agarwal & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 116 of 2022

The National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan, Ms. Shreesha Merla and Mr. Naresh Salecha, has urged the IBBI to consider an amendment to the IBBI (Insolvency Process for Corporate Persons) Regulations in order to include claims in information which though not filed with the Resolution Professional but clearly reflects in the books/records of the Corporate Debtor. The Bench observed that the Regulation framing authority need to consider as to whether the Regulations need any amendment, clarification so as to include in the Information Memorandum any ongoing statutory proceeding which is likely to saddle the Corporate Debtor with financial or other liability. Further, even if the Resolution Professional has details of record, notices, orders indicating that certain amounts have been finalized to the received from the Corporate Debtor but due to want of claims being filed of such statutory authority they do not find any mention in the list of claims or Information Memorandum.

Temporary Unavailability Of A Member To Sign The Order Not A Ground For Fresh Hearing, If Order Was Passed With Consent Of Such Member: NCLAT Delhi

Case Title: Ashish Chandravandan Patel v Axis Bank Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 618 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri. Naresh Salecha (Technical Member),, has held that an order passed with the consent of both Members of an NCLT Bench but signed by only one of them due to temporary unavailability of the other Member, does not require the matter to be designated as part-heard and be heard afresh. Rule 152(4) of National Company Law Tribunal Rule, 2016 ("NCLT Rules") is only applicable in cases where a Member is unable to sign the order sheet in view of resignation, retirement or death; and not where a Member is temporary unavailable to sign the Order. The order was passed on 30.05.2022.

NCLAT Terminates The CIRP Of National Textile Corporation Ltd. As Parties Enter Settlement

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Shri Naresh Salecha (Technical Member), has terminated the initiation of Corporate Insolvency Resolution Process ("CIRP") against National Textile Corporation Ltd. ("Appellant"), which was initiated by NCLT Delhi vide an order dated 27.05.2022.

The Appellant, National Textile Corporation Ltd., is a Public Sector Enterprise under the Ministry of Textiles, Government of India. The Appellant filed an appeal against the NCLT order dated 27.05.2022 before the NCLAT, submitting that it has settled the matter with the Operational Creditor, and sought liberty to place on record the Settlement Agreement entered between the parties. The Operational Creditor/Respondent also confirmed that the settlement had taken place.

Belated Claims Of Homebuyers, If Reflected In The Records Of Corporate Debtor Shall Be Included In Information Memorandum By Resolution Professional: NCLAT

Case Title: Puneet Kaur v K V Developers Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 390 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan, Ms. Shreesha Merla, Mr. Naresh Salecha, has held that the claims of those homebuyers who could not file their claims within stipulated time but the same were reflected in the record of the Corporate Debtor ought to have been included in the information memorandum and the Resolution Applicant ought to have been take note of the same and deal with the in the Resolution Plan. It was observed that non-consideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution as is seen in the present case. NCLAT directed the Resolution Professional to submit the details of homebuyers whose details are reflected in the record of the Corporate Debtor to the Successful Resolution Applicant, and the latter shall prepare an addendum to resolution plan which may be placed before the COC for consideration. The exercise is to be completed within a period of three months.

NCLAT Stays Insolvency Proceedings Against RHC Holdings Pvt. Ltd.

Case Title: Daiichi Sankyo Ltd. v Religare Comtrade Ltd. & Ors

Case No.: Company Appeal (AT) (Ins.) No. 645 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Mr. Naresh Salecha, has stayed the Corporate Insolvency Resolution Process ("CIRP") of RHC Holdings Pvt Ltd. initiated by NCLT New Delhi on 13.05.2022. RHC Holdings Pvt. Ltd. (RHC) is the company through which Singh Brothers namely Malvinder Singh and Shivinder Singh sold Ranbaxy India to Daiichi Sankyo. Daiichi Sankyo had filed an appeal before the NCLAT against the Order dated 13.05.2022, wherein NCLT had admitted the petition filed by Religare Comtrade Ltd. under Section 7 of the Insolvency & Bankruptcy Code, 2016. In fact, Religare had filed 23 petitions against various related entities of RHC under Section 7 of IBC to defeat the claim of Daiichi. NCLAT noted that the Supreme Court vide its order dated 05.04.2019 had stayed 23 petitions filed by Religare, and in furtherance of Supreme Court order NCLT itself stayed all proceedings on 11.04.2019. NCLAT stayed the CIRP initiated against RHC Holdings Pvt. Ltd. accordingly.

NCLAT Stays The Constitution Of COC In The CIRP Of Bombay Rayon Fashions Ltd.

Case Title: Prashant Agarwal v Vikash Parasprampuria

Case No.: Company Appeal (AT) (Ins.) No. 690 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Kanthi Narahari (Technical Member), has stayed the constitution of the Committee of Creditors ("CoC") in the Corporate Insolvency Resolution Process ("CIRP") of Bombay Rayon Fashions Ltd.

The Respondent, Vikash Parasprampuria, has proposed settlement by submitting that it would be satisfied if Bombay Rayon pays the principal amount alongwith the CIRP cost towards settlement. Bombay Rayon is yet to seek instructions on the settlement proposal. The Bench has stayed the constitution of CoC in the CIRP of the Corporate Debtor, while the CIRP process would otherwise continue. The matter has been next listed on 07.07.2022 for the Appellant to accept or reject the settlement proposal of the Respondent. The order was passed on 15.06.2022.

NCLT Has Power To Recall Its Order: NCLAT

Case Title: Printland Digital (India) Pvt. Ltd. v Nirmal Trading Company

Case No.: Company Appeal (AT) (Insolvency) No. 504 of 2022

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Alok Srivastva (Technical Member) recently held that the National Company Law Tribunal has the power to recall its order of closing the right to file reply. It was observed that there is a difference between recalling an order and review of an order where an issue is decided on merit by the Tribunal. "No doubt that the Adjudicating Authority has no jurisdiction to review its order after deciding a substantial issue but it has the jurisdiction to recall the order of the kind in dispute i.e., where the right to Reply was closed by an order on the ground that the opportunities granted were not availed." The order was passed on 30.05.2022.

NCLAT Terminates The CIRP Of Kanoria Sugar & General Manufacturing Co. Ltd., As Parties Enter Settlement

Case Title: Kanoria Sugar and General Manufacturing Co. Ltd. v Punjab National Bank

Case No.: Company Appeal (AT) (Ins.) No. 548 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Naresh Salecha (Technical Member), has terminated the Corporate Insolvency Resolution Process ("CIRP") of Kanoria Sugar and General Manufacturing Co. Ltd. ("Appellant"), which was initiated by NCLT vide an order dated 27.04.2022. A settlement was arrived at between the parties and a One Time Settlement (OTS) proposal dated 31.05.2022 was accepted by the Respondent Bank for an amount of Rs. 40 Crores. A joint application bearing I.A. No. 1782 of 2022 was filed by both the parties to bring the settlement on record. The NCLAT permitted the Respondent Bank to withdraw the Section 7 petition in view of settlement and the CIRP was terminated against the Appellant. The order was passed on 03.06.2022.

NCLAT Set Asides Insolvency Process Against HCL

Case Title: C Vijay Kumar v Sahaj Bharti Travels

Case No.: Company Appeal (AT) (Insolvency) No. 58 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan, Ms. Shreesha Merla and Mr. Naresh Salecha allowed the appeal filed by the suspended director of HCL Technologies (HCL) and set aside the Corporate Insolvency Resolution Process (CIRP) initiated against the HCL. NCLAT held that merely having a remedy under Arbitration and Conciliation Act, 1996 is a not a ground to deny relief under IBC but it has to be considered that IBC proceedings should not be converted into debt recovery proceedings.

The Bench observed that HCL is a globally renowned business entity and the Balance Sheet of HCL for the financial year ending on 31.03.2018 reflects a turnover of INR 61,786 Crores and a profit of INR 8,772 Crores. NCLAT ruled that the proceedings under IBC were only initiated by Operational Creditor for virtually establishing its claim of minimum guarantee amount which was never accepted or admitted by HCL and therefore, the present proceedings were initiated as a debt enforcement measure. Accordingly, NCLAT allowed the appeal filed by suspended director of HCL and set aside the insolvency admission order against HCL.

NCLAT Limits Supertech's Insolvency Process To One Project

Case Title: Ram Kishor Arora v. Union Bank of India

Case No.: Company Appeal (AT) (Insolvency) No. 406 of 2022

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan and Mr. Naresh Salecha, has modified its stay order on constitution of Committee of Creditors of Supertech Ltd. (Supertech) and limited the Corporate Insolvency Resolution Process of Supertech to one project i.e., Eco Village II. Earlier, the NCLAT vide its order dated 12.04.2022 while granting time to the promoters of Supertech to settle the dispute with the Union Bank of India directed the Interim Resolution Professional not to constitute the COC. The Bench noted that as per the status report filed by IRP, out of the total 49,554 units Supertech has sold 38,603 units which is a substantial number.

The NCLAT modified its interim order and directed that project wise resolution to be started to test out the success of such resolution and directed that the construction of other projects shall continue under the supervision of IRP with the assistance of ex management. NCLAT directed the IRP that the COC be constituted only for the Eco Village II project and claims received regarding the Eco Village II project shall be separated and accordingly information memorandum shall be prepared only for Eco Village II. NCLAT also directed that no resolution plan shall be put to vote without the leave of NCLAT. The next date of hearing is 27.07.2022 for filing of status report by IRP. The order was passed on 10.06.2022.

Pendency Of Execution Proceedings No Bar To Section 9 Petition: NCLAT

Case Title: Mukul Agarwal vs Royale Resinex Pvt. Ltd & Anr., Company Appeal (AT) (Insolvency) No. 777 of 2020.

The NCLAT Principal bench comprising of Justice Ashok Bhushan and Dr Alok Srivastava held that the pendency of an execution petition pending before the Civil Court does not bar the operational creditor from filing a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016. The order was passed on 30.03.2022.

Resolution Professional Cannot Decide The Eligibility Under Section 29A Of The Insolvency And Bankruptcy Code, 2016: NCLAT Delhi

Case title: Sharavan Kumar Vishnoi v Upma Jaiswal & Anr., Comp. App. (AT) (Ins.) No. 371 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Delhi Bench, comprising of Justice Ashok Bhushan, Dr. Alok Srivastava and Ms. Shreesha Merla, has held that the Resolution Professional is not required to take a decision regarding the ineligibility of the Resolution Applicant under Section 29A of the Insolvency & Bankruptcy Code, 2016. The Resolution Professional can give his opinion with regard to each Resolution Applicants and further steps are to be taken for the Committee of Creditors as per the direction issued by the Adjudicating Authority. The order was passed on 05.04.2022.

Quantum Of Debt Not To Be Decided At The Stage Of Admission Of A Section 7 Petition Under IBC: NCLAT Delhi

Case Title: Rajesh Kedia v Phoenix ARC Private Limited, Company Appeal (AT) (Insolvency) No. 996 of 2021.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal has held that the quantum of debt is not be considered at the stage of admission of a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"). The Bench opined that it is not within their domain to decide the 'amount of debt' at the stage of admission of an application under Section 7 of IBC. It was further observed that the Appellant's contention that the debt amount is exaggerated cannot be a ground for rejection of an application under Section 7 of the IBC. The only requirement for admission is that the minimum outstanding debt should be more than the threshold amount provided for under the IBC.

Nil Payment To Operational Creditors Is Permissible Under The Resolution Plan: NCLAT Chennai

Case title: Genus Security and Allied Service versus Mr. Shivadutt Bannanje & Anr., CA (AT)(CH)(Ins) No. 110/2021.

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri. Kanthi Narahari (Technical Member), has held that nil payment to Operational Creditors is permissible under the Resolution Plan if the liquidation value is less than the admitted claims of the Corporate Debtor. It was further observed that question of discrimination will only arise when some of the Operational Creditors were being paid under the resolution plan, to the exclusion of other Operational Creditors, which was not the case here. The Bench held that the Resolution Plan, which proposed nil payment for the operational Creditors, suffered from no infirmity and illegality as it was approved by a majority vote of 95.07% of the Committee of Creditors ("CoC") and the commercial wisdom of the CoC cannot be interfered with by the NCLT or NCLAT. Accordingly, the Resolution Plan was held to be binding on all stakeholders including the Operational Creditors. The judgment was passed on 07.04.2022.

Amount Invested In A Joint Venture Project In Capacity Of A Promoter And Investor Is Not A Financial Debt: NCLAT Delhi

Case Title: M/s Jagbasera Infratech Private Ltd. v Rawal Variety Construction Ltd., Company Appeal (AT) (Ins) No.150 of 2019.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the amount invested in a Joint Venture project in the capacity as a 'Promoter' and 'Investor' does not fall within the definition of 'Financial Debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). A profit share owner, who in the event of the success of the project would receive the residual gain, the amount invested by him in the land cannot be said to be a 'Financial Debt' as defined under Section 5(8) of the IBC. The order was passed on 04.04.2022.

Fresh Resolution Plan Cannot Be Considered By Committee Of Creditors: NCLAT Delhi

Case Detail: Steel Strips Ltd v Avil Menezes, CA (AT)(Ins.) No. 89/2022.

National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) & Ms. Shreesha Merla (Technical Member), has held that a fresh resolution plan cannot be considered by a Committee of Creditors ("CoC") once it has already approved a resolution plan. The NCLAT Bench held that the finality has been attached to the Resolution Plan of the Steel Strips Ltd. which was approved by the CoC, and such finality cannot be taken away by the NCLT. It was further observed that late and unsolicited bids by Resolution Applicants, after the original bidder becomes public upon passage of the deadline for submission of the plan, is a deviation of the original objective and timeline under the IBC.

Amount Given As 'Share Application Money' Is Not Covered Under Financial Debt: NCLAT Delhi

Case Title: Pramod Sharma v Karanaya HeartCare Pvt. Ltd., Comp. App. (AT) (Ins.) No. 426 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that money given as 'Share Application Money' cannot be treated as a financial debt in order to initiate Corporate Insolvency Resolution Process ("CIRP") under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"). The order was passed on 21.04.2022. The NCLAT Bench observed that admittedly the amount was given by the Appellant as a 'Share Application Money' on which no share was allotted and afterwards the principal amount was refunded by the Respondent under some settlement. The Bench dismissed the appeal and upheld the order passed by the NCLT Delhi, wherein it was held that the share application money does not fall under Section 5(8) of the IBC as it is not "a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money", since no debt was disbursed by the Appellant to the Respondent and no time value has been attached with the Share Application money. 

Time Period Under Regulation 35A Is Directory And Not Mandatory: NCLAT, Delhi

Case Title: Aditya Kumar Tibrewal v Om Prakash Pandey, Company Appeal (AT) Insolvency No. 583 of 2021.

The National Company Law Appellate Tribunal (NCLAT) principal bench comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that time period prescribed under Regulation 35A of the IBBI (CIRP) Regulations (CIRP Regulations) is directory in nature and not mandatory. Any action taken by the Resolution Professional beyond the time prescribed under Regulation 35A of the CIRP Regulations cannot be held to be non-est or void only on the ground that it is beyond the period prescribed under Regulation 35A of the CIRP Regulations.

NCLAT Delhi Uphelds That Corporate Debtor Cannot Be Sent Into Liquidation Just Because Liquidation Value Is More Than The Value Of The Resolution Plan

Case title: CFM Asset Reconstruction Pvt. Ltd. v SS Natural Resources Pvt. Ltd. & Anr., Company Appeal (AT) (Insolvency) No. 396 of 2022.

The National Company Law Appellate Tribnal (NCLAT), Principal Bench, comprising of comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has upheld the order dated 06.04.2022 passed by NCLT Kolkata Bench whereby it was held that Corporate Debtor cannot be sent into liquidation just because liquidation value is more than the value of the Resolution Plan. It was reiterated that primary focus of the Insolvency and Bankruptcy Code, 2016 is to ensure revival and continuance of the Corporate Debtor. The order was passed on 19.04.2022.

Look Back Period Under Section 46 Not Applicable To Section 66 Under Insolvency And Bankruptcy Code, 2016: NCLAT Delhi

Case Title: Aditya Kumar Tibrewal v Om Prakash Pandey, Company Appeal (AT) Insolvency No. 583/2021.

National Company Law Appellate Tribunal (NCLAT) Principal Bench comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that the look back period prescribed under Section 46 of Insolvency & Bankruptcy Code, 2016 ("IBC") does not apply to transactions under Section 49 and 66 of the IBC. The Bench further observed that applications questioning the transactions covered by Section 49 and 66 of the IBC are not to be rejected on the ground that Application has been filed beyond the period prescribed under Section 46 of the IBC. The order was passed on 06.04.2022.

Territorial Jurisdiction Of NCLT Cannot Be Taken Away By Agreement Between The Parties: NCLAT Delhi

Case Title: Anil Kumar Malhotra v M/s Mahindra & Mahindra Financial Services Ltd., Company Appeal (AT) (Insolvency) No. 415 of 2022.

The National Company Law Appellate Tribunal (NCLAT) Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that the territorial jurisdiction of NCLT to decide case under Insolvency and Bankruptcy Code, 2016 ("IBC") cannot be taken away by the agreement between the parties. Relying on the provision of Section 60(1) of the IBC, the Bench held that the adjudicating authority in relations to insolvency resolution shall be the NCLT having the territorial jurisdiction over the place where the registered office of corporate person is located.

Interest Free Security Deposit Is An Operational Debt: NCLAT Delhi

Case Title: Vibrus Homes Pvt. Ltd. v Ashimara Housing Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 80 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that an interest free security deposit towards advance license fee will qualifies as an operational debt under the Insolvency & Bankruptcy Code, 2016. The Bench observed that "In view of the payment made was initially towards the advance license fee it was an operational debt, the Adjudicating Authority has rightly admitted the application under Section 9."

Resolution Professional Is Not Entitled To Fees During Stay On Insolvency Proceedings: NCLAT

Case Title: IndusInd Bank Ltd. v Mr. Rajendra K Bhuta

Case No.: Company Appeal (AT) (Insolvency) No. 177 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Ms. Shreesha Merla (Technical Member), has held that the Resolution Professional is not entitled for any professional fees during the period of stay on the Corporate Insolvency Resolution Process ("CIRP") of the Corporate Debtor. The order was passed on 26.04.2022

Even If Credit Facility Agreement Is Unstamped, Section 7 Petition Is Maintainable, On Proving Financial Debt: NCLAT Principal Bench

Case Title: Mr. Aashish Kadam & Anr. v Nagpur Nagarik Sahakari Bank Ltd. & Anr.

Case No.: Comp. App. (AT) (Ins.) No. 355 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that if a credit facility agreement is unstamped, then petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") can be admitted based on other material on the record which prove the existence of a financial debt. The Bench observed that the present case is a case of mortgage by deposit of title deed. Therefore, even if the Facility Agreement was not stamped, there were other materials on the record to prove the existence of a financial debt owed by the Appellant. The Bench dismissed the appeal and upheld the order of the Adjudicating Authority wherein CIRP was initiated. The order was passed on 21.04.2022.

Resolution Professional Can Submit An Additional Report Under Section 99 Of Insolvency And Bankruptcy Code, 2016: NCLAT Delhi

Case Title: Ramesh Chander Agarwala v State Bank of India & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 230 of 2022.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Technical Member) and Ms. Shreesha Merla (Technical Member), has held that the Resolution Professional can submit an additional report under Section 99 of the Insolvency & Bankruptcy Code, 2016 ("IBC"). Personal Guarantors of the Corporate Debtor had filed an appeal under Section 61 of the IBC before NCLAT against the order of the NCLT wherein a Resolution Professional was appointed without furnishing any limited notice to the Personal Guarantors in terms of Para 44 of the judgment of NCLAT in the case of Ravi Ajit Kulkarni Vs. State Bank of India.

NCLAT observed that though it limited notice was not issued, but subsequently the Personal Guarantors had appeared before the Adjudicating Authority. Therefore, in the interest of justice, NCLAT permitted the Personal Guarantors to submit a representation to the Resolution Professional and subsequently, the Resolution Professional can submit an additional report in continuation of his first report and the Adjudicating Authority will consider both the report before taking any decision under Section 100 of the Code. The order was passed on 22.04.2022.

Corporate Insolvency Resolution Process Can Be Resume On Failure Of Settlement Agreement: NCLAT Chennai

Case title: ICICI Bank v OPTO Circuits India Limited

Case No.: Company Appeal (AT) (CH) (Insolvency) No. 146 of 2021.

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising of Justice M Venugopal and Mr. Kanthi Narahari, has held that Corporate Insolvency Resolution Process (CIRP) can be revived/resumed in case of failure of settlement agreement between the parties.

ICICI Bank had filed an appeal before NCLAT under Section 61 of the Insolvency & Bankruptcy Code, 2016 ("IBC") against the order dated 17.08.2020 of NCLT Bengaluru, wherein it had allowed the withdrawal of IBC petition but instead of giving liberty to revive the CIRP, it granted liberty to file a fresh petition under IBC against OPTO Circuits (India) limited. NCLAT modified the Impugned Order and granted liberty to ICICI Bank to seek revival/restoration of CIRP in case of non-compliance of the settlement agreement. The order was passed on 28.04.2022.

Resolution Professional Is Only Authorized To Operate Accounts Of Corporate Debtor : NCLAT Chennai

Case Title: Beauty Etiole Pvt. Ltd. v C. Sanjeevi & Ors.

Case No.: Company Appeal (AT) (CH) (Ins.) No. 316/2021

The National Company Law Appellate Tribunal, Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Kanthi Narahari (Technical Member), has held that the Resolution Professional is only authorized in law to exercise control over Bank Accounts operated by the Corporate Debtor and not otherwise.

NCLAT Holds Lease Rental As Operational Debt Under The Insolvency And Bankruptcy Code, 2016

Case Title: Jaipur Trade Expocentre Private Limited versus Metro Jet Airways Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 423 of 2021

The National Company Law Appellate Tribunal comprising of Justice Ashok bhushan, Justice Rakesh Kumar, Justice Rakesh Jain, Mr. Naresh Salecha and Mr. Barun Mitra held that the lease rental qualifies as an operational debt under the provisions of the Insolvency and Bankruptcy Code, 2016.

NCLAT noted that the definition of operational debt as mentioned under Section 5(21) of the Code provides that the operational debt means a claim arising out of provision of goods and services but the term "services" is not defined anywhere under the IBC.

The Bench referred to the license agreement which provides that the licensee shall pay all govt. taxed including GST and observed that the payment of GST is only provided for goods and service and the license agreement itself provided for payment of GST which clearly indicates that the license is taxed for services. It was also observed that if the agreement was not for services then there was no requirement of payment of GST. NCLAT also held that the term operation is derived from "operate" and "operating cost" is an expense incurred in the conduct of the principal activities of the enterprise and similarly operational debt is also a debt which is incurred in the conduct of the principal activities of the enterprise.

NCLAT Upholds Eligibility Of NTPC As A Resolution Applicant For Jhabua Power Ltd.: NCLAT Delhi

Case Title: Avantha Holdings Limited v Mr. Abhilash Lal

Case No.: Company Appeal (AT) (Insolvency) No. 304 of 2022.

The National Company Law Appellate Tribunal ("NCLAT") Principal Bench comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Mr. Naresh Salecha (Technical Member), has upheld the eligibility of NTPC Ltd. under Section 29A of the IBC to submit Resolution Plan for Jhabua Power Ltd.

The NCLAT Bench observed that Section 12A does not entitle Promoters of the Corporate Debtor to submit a Settlement Plan as is claimed by the Appellant. The pre-condition of accepting any withdrawal Application under Section 12A is on approval by CoC by 90% of its voting shares. CoC having never granted its approval, Section 12A route was never open for withdrawal of CIRP. The Bench opined that Section 12A proposal cannot be forced upon the lenders.

On Recusal From Hearing, Members Can't Transfer Case To Another Bench In Another Place : NCLAT Delhi

Case Title: Sonia Khosla & Anr. v Montreaux Resorts (P) Ltd. & Ors.

Case No.: Comp. App. (AT) No. 118 of 2021

The National Company Law Appellate Tribunal ("NCLAT") Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Ms. Shreesha Merla (Technical Member) and Dr. Alok Srivastava (Technical Member), has held if Members of NCLT Bench recuse from hearing a case, they cannot transfer the same to another NCLT Bench situated in another city. The matter should be posted before the President/Acting President to be assigned to a different coram.

NCLAT Delhi Stays The CIRP Of 'La Residentia Developers' As Parties Enter Settlement

Case Title: Amrapali LA-Residentia Flat Buyers Welfare Association (ALRFBWA) v LA Residentia Developers Pvt. Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 704 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Naresh Salecha (Technical Member), has stayed the Corporate Insolvency Resolution Process ("CIRP") of LA Residentia Developers Pvt. Ltd. as parties have entered settlement. The Bench has directed the Interim Resolution Professional to not take any further steps in the CIRP. The order was passed on 07.07.2022.

NCLAT Chennai Rejects Claim Of PF Department For Delay Of 936 Days

Case Title: The Regional Provident Fund Commissioner v Mr. Vasudevan

Case No.: Company Appeal (AT) (CH) (INS) No. 182 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Kanthi Narahari (Technical Member), has dismissed a claim filed by the Provident Fund Commissioner after a delay of 936 days and held that no indulgence or latitude can be shown for a Statutory Organization, since the law applies to all. The officials must act with as much as diligent as is expected from a Litigant.

The Bench opined that speed is the essence of IBC and time wasted or lost cannot be regained. The process of Liquidation is time bound, to be completed within one year in the teeth of IBC. "Undoubtedly, the Code is an inbuilt and self-contained one and the object of the I & B Code, 2016, is that, a time barred `Debt' cannot be resurrected or given a fresh tenure of life, as opined by this `Tribunal'."

OTS Proposal Is An 'Acknowledgement Of Debt' Under Section 18 Of Limitation Act: NCLAT Delhi

Case Title: Tejas Khandhar v Bank of Baroda,

Case No.: Company Appeal (At) (Insolvency) No. 371 Of 2020

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a One Time Settlement (OTS) proposal falls within the definition of 'acknowledgement of debt' under Section 18 of the Limitation Act, 1963. Reliance was placed on the Supreme Court judgment of Dena Bank v C. Shivkumar Reddy and Anr., (2021) 10 SCC 330, wherein it has been held that an offer of One Time Settlement of a live claim, made within the period of limitation, should also be construed as an acknowledgment to attract Section 18 of the Limitation Act.

Payment Of Earnest Money Towards Purchase Of Land Is Not A Financial Debt: NCLAT Delhi

Case Title: S. Chandriah v Sunil Kumar Agarwal & Ors.

Case No.: Company Appeal (AT) Insolvency No. 22 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Naresh Salecha (Technical Member), has held that payment of Earnest Money towards purchase of land is a financial liability but not a 'financial debt' as per the Insolvency and Bankruptcy Code, 2016 ("IBC"), as it has not been disbursed for consideration of time value of money.

For a debt to be financial debt, essential condition is that the debt is disbursed against the consideration for the time value of money. Time value of money means the price received for the length of time for the money for which the money has been disbursed. It was opined that the disbursement made by the Appellant to the Corporate Debtor was only a payment of Earnest Money, to be adjusted in sale of the land and was not a disbursement in consideration for the time value of money.

NCLAT Sets Aside The Order Of NCLT Rejecting CIRP Initiation, Finds That The Service On The Respondent Was Effected As Per Master Data Details

Case Title: Sparta Global Projects Pvt. Ltd. v KUGD Services Pvt. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 341 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has directed the Adjudicating Authority to admit a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") which was earlier rejected. The Adjudicating Authority had rejected the petition on the basis of Demand Notice not being delivered to the Corporate Debtor in strict consonance of Rule 5(2) of the Adjudicating Authority Rules.

NCLAT Delhi Sets Aside The CIRP Of LA Residentia Developers, As Parties Enter Settlement

Case Title: Amrapali LA-Residentia Flat Buyers Welfare Association (ALRFBWA) v LA Residentia Developers Pvt. Ltd. & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 704 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Naresh Salecha (Technical Member), has set aside the Corporate Insolvency Resolution Process ("CIRP") of LA Residentia Developers Pvt. Ltd. as parties have entered settlement. It was observed that the continuing business relation between the Parties show that the Corporate Debtor is not insolvent.

Payment Of TDS Towards Interest Payable Does Not Amount To Acknowledgment Of Debt: NCLAT Directs IBBI To Investigate Into Conduct Of RP

Case Title: P.M. Cold Store Pvt. Ltd. v. Goouksheer Farm Fresh Pvt. Ltd. & Ors.

Case No: Company Appeal (AT) (Insolvency) No. 615 of 2020

The National Company Law Appellate Tribunal ("NCLAT") Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member), Mr. Kanthi Narahari and Dr. Alok Srivastava (Technical Members), has held that payment of TDS towards interest payable does not amount to acknowledgement in writing of the liability of the Corporate Debtor. The Bench directed the IBBI to investigate into the conduct of the Resolution Professional for violation of Regulation 13 of the CIRP Regulations, 2016.

Corporate Debtor Willing To Pay Full Amount, Financial Creditor Opposes, NCLAT Upholds Dismissal Of Section 7 Petition

Case Title: Reliance Commercial Finance Limited v Darode Jog Builder Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 1005 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority's decision to not admit a petition under Section 7 of IBC, despite there being a debt and default. The Bench accorded the Corporate Debtor an opportunity to pay/settle the full amount of default despite the Financial Creditor's unwillingness to enter settlement.

"When the Corporate Debtor has complied to deposit the entire defaulted amount of the Financial Creditor as permitted by the Adjudicating Authority, no purpose and occasion shall survive to still proceed with the Insolvency Resolution of the Corporate Debtor."

Limitation To Be Counted From The Date Of Preparation Of Certified Copy, Not Delivery : NCLAT Delhi

Case Title: Wadhwa Rubber v Bandex Packaging Pvt. Ltd

Case No.: Company Appeal (AT) (Ins.) No. 576 OF 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Alok Srivastava (Technical Member), has dismissed the appeal for being time barred while observing that limitation is to be counted from the date of preparation of the certified copy and not from the date of delivery of the certified copy. "It is well settled that the limitation is to be counted not from the date of delivery of the certified copy but from the date of preparation of the certified copy."

NCLAT Delhi Allows Appeal Re-Filed After 197 Days Of Delay, Subject To Cost Of Rs.10,000 Payable To Respondent

Case Title: Dinesh Mehta v Amit Kumar Mehta & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1035 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has allowed an appeal which was re-filed after 197 days of delay by the Appellant, subject to payment of cost of Rs. 10,000/- to the Respondent. The delay in filing had occurred in obtaining a document which was to be filed alongwith the Appeal which had foreign origin – Sharjah, United Arab Emirates and time taken in obtaining translated copy of the document.

Issue Of CIRP Cost To Be Decided In COC Meeting, Not By Adjudicating Authority : NCLAT Delhi

Case Title: Bharat Hotels Ltd. v Tapan Chakraborty

Case No.: Company Appeal (AT) (Insolvency) No. 1074 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that question of item wise CIRP cost and its approval lays in the domain of the CoC and the latter may ratify, modify or set aside the cost claimed. The issue of cost is to be decided in the meeting of the CoC and not to be examined by the Adjudicating Authority even before the CoC takes a decision. The Bench rejected a Financial Creditor's plea seeking disclosure of item wise insolvency resolution cost.

Erstwhile Resolution Professional Has No Right To Be Heard Before Being Replaced Under Section 27: NCLAT Delhi

Case Title: Sumat Kumar Gupta v Committee of Creditors of M/S Vallabh Textiles Company Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1037 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that when the Committee of Creditors decides to replace the Resolution Professional under Section 27 of IBC and an application is filed before the Adjudicating Authority for approval, the erstwhile Resolution Professional would have no right to be heard before the Adjudicating Authority before being replaced. Section 27 of IBC by implication excludes principles of natural justice.

NCLAT Delhi Sets Aside Order Of Liquidation; Grants Additional Opportunity For Inviting Resolution Plans

Case title: Nikhil Tandon v Sanjeev Bindal & Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 13 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has set aside an order for liquidation of Corporate Debtor and has given one more opportunity to the Committee of Creditors and Resolution Professional for finding out as to whether there can be any Resolution Plan to revive the Corporate Debtor.

"In the facts of the present case, decision to liquidate the Corporate Debtor was taken in the 5th CoC meeting held on 24.02.2020 by that time neither any Valuers were appointed nor there was any liquidation value. The Resolution Professional has not even prepared Information Memorandum. As noted above, the entire object and purpose of the I&B Code is to revive the Corporate Debtor and put it back on the track. The CoC had not taken any effort to issue any Form G to find out as to whether there can be resolution of the Corporate Debtor by any Resolution Applicant. Without even making one effort, CoC jumped on conclusion to liquidate. It is true that under the statute CoC is empowered to take a decision to liquidate the Corporate Debtor. Material irregularity has been committed in the process as already noticed above."

Refiling After Removal Of Defects Is Not A Fresh Filing: NCLAT New Delhi

Case Title: VR Ashok Rao v TDT Copper Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 780 of 2022

A five judge bench of the National Company Law Appellate Tribunal (NCLAT) comprising of Justice Ashok Bhushan, Justice Rakesh Kunar, Justice M Satyanarayana Murthy, Ms. Shresha Merla and Mr. Kanthi Narahari held that refiling of an appeal after curing the defects beyond the period of seven days will amount to a fresh filing and any delay even beyond the period prescribed under Section 61 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016) or Section 421 of the Companies Act, 2013 in refiling the appeal can be condoned on sufficient justification.

Earlier, a three-judge bench of the NCLAT raised doubts on the law laid down by the NCLAT in Mr. Jitendra Virmani Vs. MRO-TEK Realty Ltd. & Ors & Arul Muthu Kumaara Samy Vs. Registrar of Companies and vide order dated 12.08.2022 referred the matter to the larger bench by making following observations: "In view of the Judgment of the Hon'ble Supreme Court in "Northern Railway" (supra) and the Judgment in the matter of "P Ram Bhoopal" (supra), we are of the view that view taken by this Tribunal in the matter of "Mr. Jitendra Virmani" (supra) and "Arul Muthu Kumaara Samy" (supra) does not day down the correct law."

OTS Being Under Consideration Does Not Invalidate An Order For Liquidation: NCLAT Delhi

Case Title: Ram Bhaj Jain v Tarun Batra & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 1011 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that mere fact that the Corporate Debtor's One Time Settlement was under consideration, does not invalidate an order passed by the Adjudicating Authority for liquidation of the Corporate Debtor. "The CoC in its commercial wisdom having refused to approve the plan submitted by the Appellant that decision is not open for any judicial review. In facts of the present case, the fact that OTS of the Appellant is under consideration also does not render the order of liquidation invalid in any manner."

NCLT Empowered Under Rule 43 Of NCLT Rules To Call For Any Information Or Evidence In Its Discretion: NCLAT Delhi

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that the Adjudicating Authority under Rule 43 of NCLT Rules, 2016, has ample powers to call for any information or evidence as it may consider necessary in its discretion.

Unregistered Sale Cannot Be The Basis For Claim On Immovable Property: NCLAT Delhi

Case Title: Smt. Sabita A. Biswa v Shri Vinodkumar Pukhraj Ambavat

Case No.: Company Appeal (AT) (Insolvency) No. 1056 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has declined to entertain the claim of a creditor based on an unregistered and unstamped sale deed which was only executed before the Notary and has held that such document cannot be basis for any claim with respect to the purchase of immovable property.

Voluntary Initiation Of CIRP By Bihar State Construction Corp., NCLAT Delhi Approves

Case Title: Bihar State Construction Corporation Limited Employee Union v Bihar State Construction Corporation Limited

Case No.: Company Appeal (AT) (Insolvency) No. 1493 of 2019

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Shri Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has upheld the Adjudicating Authority's decision to initiate Corporate Insolvency Resolution Process ("CIRP") against Bihar State Construction Corporation Ltd. ("BSCCL"). BSCCL had moved a petition under Section 10 of IBC seeking initiation of its own insolvency process for being unable to pay debt amounting to Rs. 104,16,98,874/- as on 31.03.2016. Mr. Nitesh Kumar More has been appointed as the Interim Resolution Professional.

NCLAT Delhi Imposes Cost Of Rs. 2 Lakhs On Bidder Who Initiated Misconceived Litigation

Case Title: M/s. SGA Fashion Pvt. Ltd. v CMA Sandeep Kumar Bhatt

Case No.: Company Appeal (At) (Insolvency) No. 117 Of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has rejected the application filed by an auction bidder close to the auction date, wherein the bidder after having participated in the bidding process, had turned around and challenged the eligibility criteria for being erroneous. The Bench observed that the bidder had not challenged the eligibility condition before any appropriate forum and thus filing an application before the NCLT was truly misconceived. The Bench imposed a cost of Rs. 2 Lakhs on the bidder.

Change In Composition Of COC Will Not Affect Its Prior Decisions: NCLAT New Delhi

Case Title: DBS Bank v. Rakesh Kumar Jain

Case No.: CA (AT) (Ins) No. 540/2021

The National Company Law Appellate Tribunal bench comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member) has held that the change in composition of the Committee of Creditors (COC) of the Corporate Debtor will not affect its previous decision and the same will be binding on the newly included members of the COC.

NCLAT Delhi Upholds Dismissal Of Section 9 Petition In Absence Of Cogent Evidence To Prove Supply Of Goods

Case Title: M/s Mahadev Trading Company v M/s Supreet Chemicals Pvt. Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 149 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Kanthi Narahari (Technical Member), has held that in absence of cogent evidence to prove that goods were supplied to the Corporate Debtor, a petition filed under Section 9 of IBC by Operational Creditor cannot be admitted.

Default During Section 10A Period Cannot Be Clubbed To Meet Threshold Requirement Under Insolvency And Bankruptcy Code, 2016: NCLAT New Delhi

Case Title: Plus Corporate Ventures Pvt. Ltd v. Transnational Growth Fund Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 1270 of 2022

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan and Mr. Barun Mitra, while deciding an appeal filed by the Operational Creditor against the order dated 17.08.2022 passed by NCLT, New Delhi held that amount of default occurred during the Section 10A period (24.03.2020-23.03.2021) of the Insolvency & Bankruptcy Code, 2016 (IBC/Code) cannot be clubbed by the Operational Creditor to meet the threshold requirement of One Crore under Section 4 of the Code. NCLAT also noted that there are two events of default which are outside the Section 10A period but their amount is less than one crore and thus, the application under Section 9 will not be maintainable and accordingly, dismissed the appeal filed by the Appellant.

Provident Fund Dues Are Not Assets Of Corporate Debtor, They Have To Be Paid In Full: NCLAT Delhi

Case Title: Assam Tea Employees Provident Fund Organization v Mr. Madhur Agarwal & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 262 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that provident fund dues are not the assets of the Corporate Debtor and they have to be paid in full. The Bench placed reliance on its recent judgment in Regional P.F. Commissioner v Ashish Chhawchharia, Resolution Professional for Jet Airways (India) Ltd. & Anr., Company Appeal (AT) Ins. No. 987 of 2022, wherein it has been held that provident fund dues have to be paid in full. It was observed that the Resolution Professional's contention that Appellant is an Operational Creditor and both Operational Creditor and Financial Creditor have taken haircut is not acceptable.

AA Cannot Enquire Into Justness Of Rejection Of Resolution Plan By COC: NCLAT Chennai

Case Title: Dr. C. Bharath Chandran v Ms. Sabine Hospital and Research Centre & Ors.

Case No.: Company Appeal (AT) (CH) (Ins) No. 320 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the Adjudicating Authority has no authority to enquire into the 'justness' of Committee of Creditor's decision to reject a Resolution Plan. When a rejected plan is placed before the Adjudicating Authority, then it is expected to do nothing more but to initiate Liquidation process under Section 33(1) of IBC.

Coc Initiates Liquidation, Appeal Against Initiation Of CIRP Becomes Infructuous: NCLAT Delhi

Case Title: Mr. Rakshit Dhirajlal Doshi v IDBI Bank Limited

Case No.: Company Appeal (AT) (Insolvency) No. 296 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that an appeal challenging the order initiating CIRP becomes infructuous if the Committee of Creditors decided to liquidate the Corporate Debtor and accordingly an application for liquidation is filed. "After hearing the parties and going through the pleadings made on behalf of the parties, we agree with the reasons given by the Adjudicating Authority while passing the impugned order and as the CoC has recommended for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence this Appeal has become infructuous."

Advance Paid Towards Service Is Operational Debt: NCLAT Delhi

Case Title: Chipsan Aviation Private Limited v Punj Llyod Aviation Limited

Case No.: Company Appeal (AT) (Insolvency) No. 261 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that an advance paid towards a service falls within definition of operational debt, even if there was no privity of contract between the Parties.

Disputes Pertaining To Contractual Issues Not To Be Resolved In Section 9 IBC Proceedings: NCLAT Delhi

Case Title: a'XYKno Capital Services Pvt. Ltd. v Rattan India Power Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 913 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that disputes pertaining to contractual issues are not to be resolved in proceedings under Section 9 of IBC.

Award In Favour Of Financial Creditor Already In Execution, Section 7 Petition Must Be Rejected: NCLAT Delhi

Case Title: Shaikh Mohammed Tariq v Aegis Forging Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 1342 of 2022 & I.A. No. 4107, 4165 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that when an arbitral award has been passed in favour of Financial Creditor for the alleged financial debt and the award has been put in execution, then the same is good enough reason to refuse admission of Section 7 application.

NCLAT Delhi Stays Insolvency Process Against BPTP LTD., As Parties Enter Settlement

Case Title: Sudhanshu Tripathi v M/s RBCL Projects Pvt. Ltd.

Case No.: Comp. App. (AT) (Ins.) No. 1382 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Judicial Member) and Shri Barun Mitra (Technical Member), has stayed the initiation of Corporate Insolvency Resolution Process ("CIRP") against BPTP Ltd. by the Adjudicating Authority, as Parties have entered settlement. BPTP Ltd. is a renowned real estate company, having several residential and commercial projects at NOIDA, Gurugram and Faridabad.

Tribunal Not To Enter Into Evidence And Record Findings Like A Civil Court: NCLAT Delhi

Case Title: Avneet Goyal v Radha Kishan Gobind Ram Ltd.

Case No.: Company Appeal (AT) (Insolvency) No.1388 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that Tribunal does have not to enter into evidence and record findings like a Civil Court.

CIRP Against Solvent, MSME Company Providing Employment Not Justified: NCLAT Delhi

Case Title: M/s Agarwal Veneers v Fundtonic Service Pvt. Ltd.

Case No.: Company Appeal (AT) (Ins) No. 968 of 2020

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has upheld the dismissal of a Section 9 petition on the grounds of the Corporate Debtor being a solvent company, operating as a 'going concern' and is also a MSME enterprise providing employment and generating revenue. It was observed that the Preamble of IBC describes its spirit and objective to be 'Reorganisation' and 'Insolvency Resolution', specifically omitting the word 'Recovery'. If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of 'Reorganising' or 'Resolution of the Company' does not arise.

Liability Of Personal Guarantor Survives Even On Becoming Citizen Of A Foreign Country: NCLAT Delhi

Case Title: Sudip Dutta v State Bank of India

Case No.: Company Appeal (AT) (Insolvency) No. 807 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Shri Barun Mitra (Technical Member), has held that the liability of a Personal Guarantor does not get extinguished upon subsequent acquisition of citizenship of a foreign country. It was further held that provisions of Section 234 and 235 of IBC would not apply if the assets of the Personal Guarantor are situated within India. It was observed that Section 60(1) of IBC categorically provides that the insolvency resolution process is to be initiated before the Adjudicating Authority within whose territorial jurisdiction registered office of the Corporate Person is located. The residence of Personal Guarantor is not taken into consideration when proceedings against the Personal Guarantor are initiated.

"The statutory scheme of the code does not contain any indication that the Personal Guarantor of a Corporate Debtor can escape from its liability under the Personal Guarantee Deed merely on the ground that he is now started residing in another country and acquired citizenship of another country and is no more an Indian citizen." 

Threshold Limit Under Insolvency And Bankruptcy Code Will Also Include Interest: NCLAT

Case title: Mr. Prashant Agarwal v. Vikas Parasrampuria

Case No.: Company Appeal (AT) (Ins) No. 690 of 2022

The National Company Law Appellate Tribunal, Principal Bench, New Delhi comprising of Justice Ashok Bhushan, Justice M Satyanarayana Murthy and Mr. Naresh Salecha held that minimum threshold mentioned under Section 4 of the Insolvency & Bankruptcy Code, 2016 can include both the principal amount and the interest.

The Bench observed that the invoices raised by the Operational creditor clearly mentioned that the interest will be charged @18% after the due date of the bill. Therefore, the bench concluded that the total amount for maintainability of a debt as per Section 4 of the Code will include both the principal debt amount as well as the interest on the delayed payment as it was clearly stipulated in the invoice itself.

NCLAT Declines To Entertain Revised Resolution Plan As CIRP Had Already Crossed 559 Days, Timely Completion Of Resolution Necessary

Case Title: Shrinathji Trading Company v Sanwaria Consumer Limited

Case No.: Company Appeal (AT) (Ins.) No. 480 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Rakesh Kumar Jain (Judicial Member), Mr. Kanthi Narahari (Technical Member), Dr. Alok Srivastava (Technical Member), has dismissed an application filed by resolution applicant seeking consideration of its revised resolution plan. The Bench observed that the Corporate Insolvency Resolution Process ("CIRP") period of the Corporate Debtor had already crossed 559 days as against a statutory period of 330 days and held that timely completion of resolution is necessary under IBC.

The Bench placed reliance on the Supreme Court judgment in Ebix Singapore Pvt. Ltd. v CoC of Educomp Solutions Ltd. & Anr., Civil Appeal No. 3324 of 2020, wherein timely completion of resolution process has been considered necessary without delaying the stage of liquidation, if circumstances so require. 

Fraudulent Initiation Of CIRP, NCLAT Upholds Issuance Of Show Cause Notice To Related Parties

Case Title: Zoom Communications Pvt. Ltd. v M/s. Par Excellence Real Estate Pvt. Ltd.

Case No.: Comp. App. (AT) (Ins.) No. 619 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority's order declining to initiate CIRP on an application made by a related party of the Corporate Debtor upon mala fide. The Bench has also upheld the issuance of Show Cause Notice under Section 65(1) of the Insolvency and Bankruptcy Code, 2016 ("IBC") by the Adjudicating Authority to the Related Parties, for attempting to initiate CIRP fraudulently.

Banker's Certificate Not Mandatorily Required To Trigger CIRP Under Section 9 Of IBC: NCLAT Delhi

Case Title: M/s Quippo Infrastructure Limited v M.R. Nirman Private Limited

Case No.: Company Appeal (AT) (Insolvency) No. 1516 of 2019.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that a Banker's Certificate is not mandatorily required to trigger Corporate Insolvency Resolution Process ("CIRP") under Section 9 of the Insolvency and Bankruptcy Code, 2016.

NCLAT Reprimands Haryana Excise And Taxation Department For Its Casual Attitude

Case Title: Excise and Taxation Department v Allied Strips Ltd.

Case No.: Company Appeal (AT) (Ins.) No. 1506 OF 2019

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Jain and Dr Alok Srivastava expressed its displeasure towards the casual attitude of the Haryana Excise and Taxation Department in pursuing the case before the NCLAT. The Bench remarked that the excise and taxation department is claiming an amount of Rupees 62.87 Crores in the appeal but the department is not interested in pursuing the matter as no one appeared on behalf of the department even after repeated calls. The Bench also noted that this matter shall be brought to the knowledge of Secretary, Department of Excise and Taxation, Government of Haryana to take appropriate actions against the officers who are not pursuing the appeal diligently.

Moratorium Under Section 14 Of Insolvency And Bankruptcy Code, 2016 Is No Bar For Initiation Of Proceedings Under Section 66 Of The Code: NCLAT

Case Details: Rakesh Kumar Jain v. Jagdish Singh Nain & Ors.

Case No.: Company Appeal (AT) (Ins.) No. 425 of 2022

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Ashok Bhushan, Justice N Satyanarayana Murthy and Mr. Barun Mitra held that the moratorium imposed under Section 14 of the Insolvency & Bankruptcy Code, 2016 is not a bar for initiation of proceedings against the resolution professional of a company undergoing Corporate Insolvency Resolution Process (CIRP) under Section 66 of the Code. NCLAT held that Section 14 and Section 66 are independent provisions incorporated for different purposes and therefore, these provisions have to be read independently to achieve the objective of the Code.

Certified Copy Preparation Period Can Be Excluded For Limitation Under Section 61 Of The Insolvency & Bankruptcy Code, 2016: NCLAT DELHI

Case Title: Chhote Lal Gupta v Jai Balaji Jyoti Steels Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 955 of 2022

The National Company Law Appellate Tribunal, Principal Bench comprising of Justice Ashok Bhushan and Mr. Barun Mitra recently held that the time taken for preparation of the certified copy of the order/judgment will be excluded for computation of limitation under Section 61 of the Insolvency and Bankruptcy Code, 2016. "The Appellant is entitled to exclude the period for which certified copy was under preparation. Certified Copy was applied on 08th June, 2022 and delivered on 09th June, 2022 hence two days period is entitled to be excluded in computing the limitation".

NCLT Can Reject The Resolution Plan Due To Non Serious & Casual Conduct Of Resolution Applicant: NCLAT

Case Detail: Cimco Projects v Anup Kumar

Case No.: Company Appeal (AT) (Insolvency) No. 128 of 2022

The National Company Law Appellate Tribunal, Principal Bench, comprising of Justice Ashok Bhushan, Justice M Satyanarayana murthy, Mr Barun Mitra held that non serious and casual conduct of a resolution applicant is a sufficient ground to reject the resolution plan filed by such resolution applicant and approved by the committee of creditors of the Corporate Debtor. The NCLAT further held that NCLT rightly dismissed the plan approval application as the Successful Resolution Applicant has not shown any willingness to proceed with the Resolution Plan. The CIRP is a time bound period and the same cannot be continued for indefinite period.

Only Creditors Who Triggered Insolvency Resolution Process Can Be Impleaded As A Party: NCLAT Chennai

Case Title: V. Venkata Sivakumar v IDBI Bank Ltd.

Case No.: Comp. App (AT) (CH) (INS) No. 269 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench comprising of Justice M. Venugopal (Judicial Member) and Mr. Naresh Salecha (Technical Member), has held that the Insolvency and Bankruptcy Code, 2016 ("IBC") has no provision to implead creditors other than the ones which triggered the insolvency resolution process.

The Bench observed that to array a person as a `prospective / proposed Respondent(s)' is not a `Substantive Right', but undoubtedly, it is one of the `procedure' and the Tribunal is to exercise its judicial discretion, of course, in a subjective manner, diligently. It cannot be gainsaid that, an `Individual' will not be added as a `Party', just because he will be affected by the `Tribunal' incidentally, when it passes an `Order' in a given `proceedings', before it. The Bench further observed that a person cannot be coerced to get included a person as Party against whom he does not want to contest, unless it is a compulsion of Law. A necessary party is one without whom no order can be passed effectively, or in whose absence an effective order can be made but his presence is necessary for arriving at a final decision. Further, a mere interest of a Party in the fruits of litigation cannot be a test for impleading him as a Party.

Once Dissolution Application Is Filed After Liquidation, Adjudicating Authority Has No Discretion :NCLAT Delhi

Case Title: Sudhir Kumar Goel & Ors. v M/s Shashi Oils and Fats Pvt. Ltd. & Ors.

Case No.: Company Appeal (AT) (Ins) No. 676 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar (Judicial Member) and Dr. Ashok Kumar Mishra (Technical Member), has held that once the liquidation process is complete and an application is filed by the liquidator for dissolution of the Corporate Debtor, the Adjudicating Authority has no option but to pass an order of dissolution. Equity though not applicable to Insolvency and Bankruptcy Code, 2016 ("IBC"), cannot come into play at this juncture.

Claims Arising Out Of Grant Of Licence/Permission For Use Of Intellectual Property Rights Is An Operational Debt: NCLAT Delhi

Case Title: Somesh Choudhary v Knight Riders Sports Private Limited & Ors.

Case No.: Company Appeal (AT)(INS) No. 501 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that claims arising out of grant of an exclusive right and license to use intellectual property rights falls within the ambit of the definition of 'Operational Debt'.

In this case, the 'Corporate Debtor' was permitted to use the trademark of 'KKR' in relation to its licensed products and hence we note that there was temporary transfer/permission to use, constituting 'provision of service' rendered by the first Respondent and therefore falls within the definition of service and any amounts 'due and payable' arising out of such service is an 'Operational Debt'.

Time Barred Appeal Against Decree Does Not Amount Pre -Existing Dispute Under Insolvency And Bankruptcy Code, 2016: NCLAT

Case Details: Jangsher Singh Choudhary v. Ram Kripal Singh Construction Pvt. ltd.

Case No.: Company Appeal (AT) (Ins) No. 739 of 2021

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justice Rakesh Kumar and Dr. Alok Srivastava held that a time barred appeal against the decree filed after the issuance of demand notice under Section 8 of the Insolvency & Bankruptcy Code, 2016 will not amount to a pre-existing dispute.

Mobilization Advance Is An Operational Debt: NCLAT Delhi

Case Title: Athena Demwe Power Ltd. v Abir Infrastructure Private Limited & Ors.

Case No.: Company Appeal (AT) (Insolvency) No.158 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that a mobilization advance given for mobilization of material and workforce is an operational debt.

Reliance was placed on the Supreme Court judgment in M/s. Consolidated Construction Consortium Limited Vs. M/s. Hitro Energy Solutions Private Limited, Civil Appeal No. 2839 of 2020, in which it was held that the words "in respect of" in Section 5(21) has to be interpreted in a broad and purposive manner, in order to include all those who provide or receive operational services from the corporate debtor, which ultimately lead to an operational debt.

Does Limitation Period For Filing Appeal Applies To Period For Curing Defects?: NCLAT Refers Question To Larger Bench

Case Title: Mr. V R Ashok Rao v TDT Copper Limited

Case No.: Company Appeal (AT) (Insolvency) No. 780 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice N Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has observed that issue of delay in refilling of appeal is often coming before the NCLAT Bench for consideration. Accordingly, the NCLAT Bench has referred the following question to a larger Bench: 'whether limitation for filing an Appeal before NCLAT also governs the period for curing defect in the Appeal and does NCLAT have jurisdiction to condone the delay in refilling of appeal if it is beyond the limitation prescribed in Section 61 of the IBC or Section 421 of the Companies Act, 2013?'

Tribunal Cannot Interfere With Decision Of COC To Replace Resolution Professional : NCLAT Chennai

Case Title: M/s IDBI Bank Limited v C.J. Davis

Case No.: Company Appeal (AT) (CH) (Ins) No. 116 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Mr. Kanthi Narahari (Technical Member), had set aside the Adjudicating Authority's order disallowing the Committee of Creditors ("CoC") to replace the Resolution Professional under Section 22(3)(b) of the Insolvency and Bankruptcy Code, 2016 ("IBC"). The Bench held that the commercial wisdom of CoC is paramount and can only be interfered by the Tribunal if the same is arbitrary, illegal, irrational and dehors the IBC and its Rules.

Litigation Of Government Is Not Looked After As It Should Be: NCLAT New Delhi

Case Detail: Rajasthan Drugs and Pharmaceuticals Ltd v. ATE Projects Pvt Ltd.

Case No.: Company Appeal (AT) (Ins) No. 1003 of 2021

The National Company Law Appellate Tribunal, New Delhi bench comprising of Justice Rakesh Jain and Dr. Alok Srivastava while dismissing an appeal filed by the Rajasthan Drugs and Pharmaceuticals Ltd. expressed its displeasure as to how the litigation of the Government is not looked after the way as it should have been. The Bench was hearing an appeal filed by the Rajasthan Drugs and Pharmaceuticals challenging the order dated 11.11.2021 of NCLT, Jaipur whereby Corporate Insolvency Resolution Process was initiated against it.

Section 10A Is Not Applicable To Proceedings Against Personal Guarantors Under Insolvency & Bankruptcy Code, 2016: NCLAT New Delhi

Case Details: Amit Jain v Siemens Financial Services Pvt Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 292 of 2022

The National Company Law Appellate Tribunal, New Delhi bench comprising of Justice Ashok Bhushan and Justice M Satyanarayan Murthy and Mr. Barun Mitra recently held that Section 10A of the Insolvency & Bankruptcy Code, 2016 is not applicable to proceedings against the personal guarantors under Section 95 of the Code.

"Had the legislature intended to prohibit filing of application under Section 95(1) by a creditor against the Personal Guarantor for any default committed on or after 25.03.2020, a provision akin to Section 10A could have very well be inserted in Chapter III Part III of the Code."

NCLAT concluded that the Section 10A is only capable of one interpretation which is the suspension of CIRP only for Corporate Debtor and not for the Personal Guarantor and accordingly, NCLAT dismissed the appeal filed by the Personal Guarantor.

Objections Raised By Corporate Debtor To Oppose Section 9 Petition Not To Be A Moonshine Defence: NCLAT Delhi

Case Title: Krishna Hi-Tech Infrastructure Pvt. Ltd. v Bengal Shelter Housing Development Ltd.

Case No.: Company Appeal (AT) (Insolvency) No.1375 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that the only question to be looked in Section 9 petition is whether the objection raised by the Corporate Debtor opposing claim of the Operational Creditor is not a moonshine defense. The Bench observed that contracts provide for dispute resolution mechanism for contractual disputes arising between the Parties during the contract period. The dispute between the parties are not supposed to be decided, examined and adjudicated in IBC proceeding. 

No Fetter, Embargo Or Legal Impediment For A Trust To Be A Resolution Applicant: NCLAT Chennai

Case Title: M/s. Aswathi Agencies v Bijoy Prabhakaran Pulipra & Ors.

Case No.: Company Appeal (AT) (CH) (Ins.) No. 179 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M Venugopal (Judicial Member) and Mr. Kanthi Narahari (Technical Member), has held that there is no fetter, embargo or any legal impediment for a Trust to become a Resolution Applicant. "To put it precisely, the word `Person', is defined as per Section 3 (23) (d) of the I & B Code, 2016, which includes a `Trust', therefore, there is no `Fetter' / `Embargo' or a `Legal Impediment', for a `Trust', to be a `Resolution Applicant', in submitting a `Resolution Plan' (in the present case), the candid fact, is that the `Successful Resolution Applicant' / `Lessie Medical Institutions', being a `Registered Charitable Trust', under the `Indian Trust Act, 1882'), in `Corporate Insolvency Resolution Process', in the cocksure earnest opinion of this `Tribunal'."

Compromise Doubtful, Only To Benefit Related Parties, NCLAT Delhi Upholds Liquidation Of CD

Case Title: Bankey Bihari Infrahomes Pvt. Ltd. v Mr. Alok Kumar Kuchchal & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 718 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr. Alok Srivastava (Judicial Member) and Mr. Barun Mitra (Technical Member), has upheld the Adjudicating Authority's decision to proceed with liquidation of Corporate Debtor as the Scheme of Compromise & Arrangement submitted by the Appellant appeared to be doubtful and ostensibly to appropriate the land to the benefit of related parties of the Corporate Debtor. The Bench observed that the purported Scheme proposed to make payments to a number of related parties, unsecured creditors and those who had not submitted claims, upto an extent of 100% of admitted claimed amounts. It was further proposed to make payments within 90 days of approval of scheme. Whereas, in the event of auction-sale, the payments would be made promptly to claims in accordance with the 'waterfall mechanism' under section 53 of IBC.

Section 66 Of IBC Does Not Provide For Any Look Back Period For Fraudulent Transactions: NCLAT Chennai

Case Title: Mr. Thomas George v K. Easwara Pillai & Ors.

Case No.: Company Appeal (At)(Ch) (Insolvency) No. 293 Of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M Venugopal (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that the Section 66 of IBC does not provide for any look back period as far as fraudulent transactions are concerned. "Unlike other types of transactions provided under the Code, there is no specified look back period for fraudulent trading under Section 66. Hence, the Resolution Professional is allowed to retrieve/repossess without any limitation of time and correct all the wrong doings for any relevant point of time. Section 66 of the Code envisages that the losses caused to the Creditors are recovered in the event of the Liquidation and that the Directors who caused such losses are made liable to make good such losses."

IBC Does Not Prohibit An Assignee From Continuing Pending Section 7 Proceedings: NCLAT Delhi

Case Title: Siti Networks Ltd. v Assets Care and Reconstruction Enterprises Ltd. & Anr.

Case No.: Comp. App. (AT) (Ins.) No. 1449 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that there is no prohibition in the IBC or any of the Regulations from continuing the proceeding by an assignee. Section 5(7) of the IBC which defines 'Financial Creditor' also includes a person to whom such debt has been legally assigned or transferred to. By virtue of assignment, an assignee becomes the Financial Creditor and it has every right to continue the proceeding which was initiated by the original Financial Creditor/Assignor.

High Tension Electricity Connection Of CD Cannot Be Restored Unless Security Deposit Is Paid: NCLAT Delhi

Case Title: Kalptaru Steel Rolling Mills Ltd. v Southern Power Distribution Company of A.P. Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 866 of 2020

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that the Corporate Debtor is not entitled for restoration of high tension electricity connection without making payment of security deposit. The Bench observed that the Adjudicating Authority had rightly concluded that security deposit is a pre-condition for sanction of High Tension Power Connection to industries. The Applicant being a heavy industry huge power supply is required. The security deposit is only to adjust the shortfalls which come in payment of bills.

AA Shall Either Approve Or Reject The Resolution Plan, No Power To Modify It: NCLAT Delhi

Case Title: Mathuraprasad C Pandey & Ors. v Partiv Parikh & Anr.

Case No.: COMPANY APPEAL (AT)(Ins) No.201/2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Rakesh Kumar (Judicial Member) and Dr. Ashok Kumar Mishra (Technical Member), has held that when a Resolution Plan is presented before the Adjudicating Authority for approval, it is clear mandate of legislation to either approve or to reject the Resolution Plan. There is no provision under IBC which empowers the Adjudicating Authority for making alteration or modification in the Resolution Plan.

NCLAT Chennai Condones Delay Of 147 Days In Filing Appeal,The Time Spent On Bona fide Litigation

Case Title: M.K. Resely & Ors. v Union Bank of India

Case No.: Company Appeal (AT)(CH)(Ins) No.337/2022

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Naresh Salecha (Technical Member), has condoned a delay of 147 days in filing of appeal before NCLAT upon equity. The delay had occurred as the Appellant had challenged the Impugned Order before the High Court instead of NCLAT but on a bona fide basis. The time taken by the High Court in deciding the matter has been excluded by the NCLAT in computation of limitation.

Net Worth Of Transferor & Transferee Company Being Highly Positive, Consent Of Secured Creditors Not Required For Amalgamation: NCLAT Delhi

Case Title: Lasa Supergenerics Limited v Harishree Aromatics & Chemicals Private Limited

Case No.: Company Appeal (AT) No. 82 of 2021

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has held that in cases where the net worth of the Transferor and Transferee Companies are highly positive, it is not required to seek consent of secured creditor for amalgamation. In place of seeking a No Objection Certificate from Secured Creditor, the Bench has directed the Secured Creditor to file an objection to the Scheme of Amalgamation, if any, within 30 days.

Section 96(1)(B) Of IBC Does Not Stay Any Future Liability Or Obligation: NCLAT Delhi

Case Title: Ashok Mahindru & Anr. v Vivek Parti

Case No.: Company Appeal (AT) (Insolvency) No.1324 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that Section 96(1)(b) of IBC does not stay any future liability or obligation. The Bench declined to stay proceedings under Section 19(2) and Section 66-67 of IBC initiated against the Personal Guarantors in another insolvency petition, in view of interim moratorium imposed under Section 96 of IBC in insolvency proceedings against the Personal Guarantors.

NCLAT Approves Sugar Farmers As Separate Creditors Group In The Sugar Industry Resolution Plan

Case Title: Excel Engineering & Ors. v Mr. Vivek Murlidhar Dabhade & Anr.

Case No.: Comp. App. (AT) (Ins.) No. 85-86 of 2020

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), has urged the Government and the IBBI to examine some minimum entitlement to Operational Creditors based on the amount realised in the Resolution Plan over and above the liquidation value.

NCLAT Delhi Directs Tax Authorities To Withdraw Notices For Freezing Accounts Of Corporate Debtor

Case Title: Mr. Hemant Mehta v Asst. Commissioner of State Tax

Case No.: Company Appeal (AT) (Insolvency) No. 328 of 2022

The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Mr. Barun Mitra (Technical Member), has held that notices issued by the Tax Authorities to freeze the accounts the Corporate Debtor during liquidation process are bad in law and has directed withdrawal of such notices and de-freezing of the accounts. The Bench held that the Adjudicating Authority is vested with residuary powers under Section 60(5) of the Insolvency and Bankruptcy Act, 2016 ("IBC") to intervene in circumstances where insolvency resolution process is getting derailed.

Re-agitating The Issue Attained Finality, By NCLT And Supreme Court, Is Abuse of process: NCLAT, Principal Bench

Case Title: Vikas Dahiya (Ex-Director of Golden Tobacco Ltd.) v Arrow Engineering Ltd.

Case No.: Company Appeal (AT)(Insolvency) No. 699 of 2022

The Principal Bench of the NCLAT consisting of Justice Ashok Bhushan (Chairperson), Justice M. Satyanarayana Murthy (Judicial Member) and Barun Mitra (Technical Member) has held that the doctrine of Res Judicata applies to proceedings under the IBC and challenge to the findings in incidental or collateral proceedings amounts to an abuse of process of the Court.

NCLT

NCLT Mumbai Grants Time To Future Retail Ltd. To File Reply In Insolvency Plea

Case title: Bank of India v Future Retail Ltd.

Case No.: CP (IB) No. 527/MB/2022

The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), while hearing a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has granted time to Future Retail Ltd. for filing a reply to the petition.

In April 2022, the Bank of India had filed a petition under Section 7 of the IBC before NCLT, Mumbai Bench, seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against FRL. On 28.04.2022 the matter was listed for its first hearing before the NCLT, Mumbai Bench, wherein FRL was granted time to file its reply to the insolvency plea. At present time, CIRP has been initiated against FRL.

No Conflict Between The Prohibition Of Benami Property Transaction Act, 1998 and IBC, 2016 Concerning Attachment Of Property: NCLT, Chennai Bench

Case Title:Shri. Mudapallur Varieth Gangadharan v. The Deputy Commissioner of Income Tax

Case No.: CP (IB)/768(CHE)/2018

The National Company Law Tribunal (NCLT), Chennai Bench, comprising of Justice S. Ramathilangam (Judicial Member) and B. Anil Kumar (Technical Member), has held that there is no conflict between the Prohibition of Benami Property Transaction Act, 1988 and the Insolvency and Bankruptcy Code, 2016 ("IBC") concerning the attachment of property, as the two are special Acts. It was observed that the general principle of construction where two Special Acts are in conflict is that, the Act made later should prevail as per the maxim- 'leges posteriores priores conterarias abrogant', which means the later laws shall abrogate the earlier laws that are contrary or in conflict with subsequent laws.

Under A Security Trustee Agreement, An Individual Lender Cannot Invoke Personal Guarantee Without Taking Consent Of Other Co-Lenders: NCLT Delhi

Case title: IDBI Bank Ltd. v Manoj Gaur (Personal Guarantor of Corporate Debtor Jaypee Infratech Ltd.)

Case No: IB-29(PB)/2022.

The National Company Law Tribunal (NCLT), New Delhi (Special Bench), comprising of Shri Dharminder Singh (Judicial Member) and Shri Avinash Kumar Srivastava (Technical Member), while adjudicating an application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has held that invocation of personal guarantee can be done by a Security Trustee only after obtaining consent of all co-lenders under the concerned Security Trustee Agreement. When there are multiple beneficiaries, the Trustee is bound to execute the Trust for the benefit of all beneficiaries in accordance with Trust Deed and after taking permission from the co-lenders. The order was passed on 05.05.2022.

The NCLT also observed that a Trustee is appointed to hold the Trust property for the benefit of the beneficiaries of the Trust, who have a beneficial interest in the Trust property. In cases where there are multiple beneficiaries, the Trustee is bound to execute the trust for the benefit of all the beneficiaries, in accordance with the Trust Deed and only after taking consent of other co-lenders.

Insolvency Proceedings Initiated Against Birla Tyres Ltd., A B.K. Birla Group Company: NCLT, Kolkata

Case Title: SRF Limited v Birla Tyres Ltd.

Case No.: C.P. (IB) No. 250/KB/2021.

The National Company Law Tribunal ("NCLT") Kolkata Bench, comprising of Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member) while adjudicating a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") has initiated Corporate Insolvency Resolution Process ("CIRP") against Birla Tyres Ltd. for an admitted default of Rs. 10.18 Crores. Mr. Seikh Abdul Salam has been appointed as the Interim Resolution Professional. The order was passed on 05.05.2022.

Birla Tyres Ltd. is a part of B.K. Birla Group of Companies. In 1991, it was incorporated as a part of Kesoram Industries Ltd. but was later demerged in 2018 as a part of re-structuring plan.

CIRP Cannot Be Initiated Solely For Interest Amount, If The Principal Amount Is Discharged: NCLT Delhi

Case Title: Saraf Chits Private Limited & Anr. v KAD Housing Private Limited

Case No.: (IB)-255(ND)/2021.

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Abni Ranjan Kumar Sinha (Judicial Member) and Shri L.N. Gupta (Technical Member), has held that Corporate Insolvency Resolution Process ("CIRP") cannot be initiated against a Corporate Debtor solely on the basis of the un-paid amount of interest, where the entire principal amount has already been discharged by the Corporate Debtor. The Bench observed that interest is not included in the term "debt" per se under IBC. Rather, "interest" can be claimed as "financial debt" only if such debt exists. The Bench opined that the "interest" component alone cannot be claimed or pursued in absence of the debt for initiating CIRP against the Corporate Debtor. An application pursued for realization of the interest amount alone is against the intent of the IBC. The order was passed on 23.05.2022.

Salary During Notice Period Does Not Fall Within The Definition Of 'Operational Debt' Under IBC: NCLT, Mumbai

Case Title: Sandesh Naik v. MT Educare Ltd.

Case No.: C.P.(IB)-678(MB)/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice H.V. Subba Rao (Judicial Member) and Chandra Bhan Singh (Technical Member), has held that salary for purported notice period amounts to specific performance of the appointment letter and does not fall within the definition of 'Operational Debt' as the same was not salary for the actual work done by the Operational Creditor.

The Applicant resigned from his job and demanded the Employer to pay salary for 3 months of notice period. The Employer only paid for 1 month and stated that the appointment letter did not provide for 3 months' payment. The NCLT dismissed the Section 9 application filed by the Applicant on the ground that there existed a dispute between the parties which ought to be adjudicated upon by leading evidence and conducting trials before the competent court and that the Applicant cannot use the IBC as a substitute of debt enforcement procedures.

Minimum Threshold Of Rs. 1 Crore Must Be Met, Even If Default Had Occurred Or Demand Notice Was Sent Prior To 24th March, 2020: NCLT Delhi

Case Title: Mr. Daxesh D. Desai v Shopzo Brand Pvt. Ltd.

Case No.: IB 533/(ND)/2021.

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Ms. Sumita Purkayastha (Technical Member), has held that for determining maintainability of an application in terms of Section 4 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), the date of filing of a petition has to be seen and not the date of default or demand notice. No petition under Section 7 or 9 of IBC could be filed for a default of less than Rs. 1 Crore, on or after 24.03.2020, even if the default had occurred or demand notice was sent prior to 24.03.2020.

NCLT Delhi Dismisses Insolvency Petition Against NBCC India Ltd., A Navratna Enterprise

Case Title: Biosafe Lab India Pvt. Ltd. v NBCC India Ltd.

Case No.: IB 323/ND/2022

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Mr. Dharminder Singh (Judicial Member) and Ms. Sumita Purkaysatha (Technical Member), has dismissed an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against NBCC India Pvt. Ltd. The Bench observed that a serious dispute existed in relation to the due payment, which cannot be decided in a summary manner. The order was passed on 27.05.2022.

Split Verdict Of NCLT, Hyderabad Bench On The Question Of Related Party, Issue Referred To President Of The Bench

Case Title: Trimex Industries Pvt. Ltd. v. M/s. Sathavahana Ispat Ltd.

Case No.: CP (IB) No. 17/9/HDB/2020

In a split verdict, a two-judge Bench of NCLT, Hyderabad comprising of Shri Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Veera Brahma Rao Arekapudi (Technical Member), has referred to the Principal Bench the question of –"whether in an application filed by an Operational Creditor u/s 60(5) of the Code, the CoC can be barred from considering the resolution plan of a Prospective Resolution Applicant (PRA), when the same has not received approval of the CoC on the ground that the PRA and sole member of CoC are related parties". The Technical Member has allowed the application u/s 60(5) of IBC and directed the CoC not to consider the resolution plan of the PRA as the entire process of CIRP is vitiated and collusion between the parties is writ large on the face of CIRP of the CD, as the PRA was a related party to the sole member of the CoC, JC Flower Asset Reconstruction Company, to whom, after assignment of debts, the Corporate Debtor owed all financial debts. Thus, the application to pass an order is not premature. However, the Judicial Member rejected the application by observing that the plea would be within the jurisdiction of the CoC while voting for the plan and interference by the Adjudicating Authority would amount to usurpation of power which is not available under the Code.

Project Wise CIRP Of Real Estate Company Is Outside The Purview Of Insolvency And Bankruptcy Code, 2016: NCLT Chennai

Case title: N Kumar v. Tata Capital Housing Finance Ltd.

Case No.: CP (IB)/889(CHE)/2019

The National Company Law Tribunal, Chennai Bench comprising of Justice S. Ramathilagam and Mr. Anil Kumar B (Technical Member) has held that the project wise Corporate Insolvency Resolution Process (CIRP) of a real estate company is outside the purview of Insolvency and Bankruptcy Code, 2016

NCLT observed that there is no concept of limited CIRP or CIRP for specific projects anywhere in the IBC, 2016 or regulations made thereunder. NCLT further noted that the Supreme Court in the case of Pioneer Urban Land and Infrastructure Ltd. versus Union of India held that IBC is a beneficial legislation which can be trigged to put the whole corporate Debtor back on its feet.

NCLT Is Empowered To Pierce The Corporate Veil To Ascertain The Real Successful Bidder: NCLT Delhi

Case Title: Argentium International Pvt. Ltd. v Utm Engineering Pvt. Ltd.

Case No.: IB No. 248/ND/2019

The National Company Law Tribunal (NCLT), New Delhi Bench, comprising of Dharminder Singh (Judicial Member) and Sumita Purkayastha (Technical Member), has held that the NCLT has the power to pierce the 'corporate veil' in order to ascertain the real successful bidder. The Bench held:

"Tribunal is also not denuded of authority to pierce the 'corporate veil' to ascertain the real successful bidder. Therefore, the 'Corporate Veil' has to be lifted to prevent unjust and fraudulent act of the respondent herein and in order to look-into realities behind the legal façade and to hold him liable to the acts of the Corporate Debtor. No doubt, the separate personality of the company is statutory privileges, but it must be used for the legitimate purpose only. Whenever & wherever, if fraudulent or dishonest use is made of the legal entity, the individual will not be allowed to hide behind the curtain of the corporate personality. A duty is casted upon the Tribunal or the Court to break this shell of the company and to see who is actually benefitted by this curtain."

IBC AND RBI Guidelines Are 'Disjoint Sets', "There Is No Question Of One Prevailing Over The Other": NCLT Kolkata Dismisses Application Filed By SREI Ex Promoter Hemant Kanoria

Case Title: Reserve Bank of India v SREI Infrastructure Finance Limited

Case No.: CP (IB) No.295/KB/2021.

The National Company Law Tribunal (NCLT), Kolkata Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member), has held that the Insolvency and Bankruptcy Code, 2016 ("IBC") and the Reserve Bank of India (RBI) Guidelines do not prevail over each other as they have different scope and purpose. The NCLT does not have jurisdiction to adjudicate upon an audit conducted under RBI guidelines. The application was filed by Ex-Promoter of SREI Infrastructure Finance Ltd., Mr. Hemant Kanoria, challenging the KPMG Audit which was conducted under RBI guidelines. The Bench observed that:

"Therefore, the Code and the RBI circulars work in different fields and are, in a manner of speaking, disjoint sets. The adequacy or otherwise of KPMG's audit report would no doubt be determined by the lenders. We do not see any possibility of conflict between the two. There is no question of one prevailing over the other."

NCLT Kolkata Initiates Insolvency Process Against The Personal Guarantor Of Gontermann-Pipers (India) Ltd.

Case Title: UCO Bank v Vinod Kumar Mittal

Case No.: C.P.(IB)/24(KB)2021

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has initiated Insolvency Resolution Process against Mr. Vinod Kumar Mittal, who is the Personal Guarantor to the loan sanctioned to Gontermann-Pipers (India) Limited by UCO Bank.

Incorporated in 1966, Gontermann-Pipers (India) Limited was a technical collaboration between Mr. H.K. Nathani of Calcutta and Gontermann-Peipers GmBH, Germany, the latter being a leading European manufacturer of rolling mill rolls since 1825. GPIL was a leading manufacturer of iron and steel rolls in India and is presently undergoing liquidation proceedings. Mr. Vinod Kumar Mittal is one of the Directors of GPIL and had furnished Personal Guarantee before UCO Bank in relation to the credit facilities availed by GPIL from the said Bank. When GPIL failed to repay the credit facilities, UCO Bank filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 ("IBC") before the NCLT Kolkata, seeking initiation of Insolvency Resolution Process against Mr. Vinod Kumar Mittal, the Personal Guarantor in the concerned credit facilities. The NCLT Bench permitted initiation of insolvency process against the Personal Guarantor. The order was passed on 27.06.2022.

Under 'Right Of Subrogation' Guarantor Is Entitled To Initiate CIRP Against Principal Borrower: NCLT Kolkata

Case Title: Orbit Towers Pvt. Ltd. v Sampurna Suppliers Pvt. Ltd.

Case No.: C.P (IB) No. 2046/KB/2019

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has held that if a Guarantor pays the debt on behalf of the Principal Borrower, then it steps into the shoes of the Creditor and can initiate Corporate Insolvency Resolution Process ("CIRP") against the Principal Borrower.

"Any agreement of guarantee between the Indian Bank and the Guarantor is sufficient for the purpose of bestowing all the rights of the Bank/creditor upon the Financial Creditor herein once the Financial Creditor has discharged all the liability of the Corporate Debtor towards Indian Bank. There may or may not be any agreement between the Financial Creditor and the Corporate Debtor. It does not make any difference at all. The Law is very clear that once the Guarantor/surety discharges the liability of the Principal borrower towards the creditor, all the rights of the Creditor to recover that money would automatically be transferred in favour of the surety/ Guarantor. This is exactly the right of subrogation". The order was passed on 27.06.2022.

Issuance Of Post Dated Cheques Is Not An Unqualified Admission Of Debt, NCLT Allahabad Dismisses Section 7 Application

Case Title: N.C. Goel & Maya Goel v Piyush Infrastructure India Private Limited

Case No.: CP (IB) No.453/ALD/2019

The National Company Law Tribunal ("NCLT"), Allahabad Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Virendra Kumar Gupta (Technical Member), has held that issuance of post dated cheques cannot be taken to be unqualified admission of debt, because the presumptions drawn under Section 118 and Section 139 of the Negotiable Instruments Act, 1881, are rebuttable presumptions.

The Bench further observed that the loans were given between 2011 to 2016 by the Applicants. However, in absence of any documentation, no date of default could be established. The date of default can only be calculated when the tenure of the loan is established, or when there is a demand for repayment. It was observed that receipt of interest was only evidenced through two letters of the Respondent, thus the claim regarding receipt of interest remain unsubstantiated. The order was passed on 13.06.2022.

NCLT Mumbai Initiates Insolvency Process Against Bombay Rayon Fashions Ltd.

Case Title: Vikash Parasprampuria v Bombay Rayon Fashions Limited

Case No.: CP (IB) No.1443/MB-IV/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Rajesh Sharma (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Bombay Rayon Fashions Ltd. and Mr. Santanu T Ray has been appointed as the Interim Resolution Professional. The order was passed on 07.06.2022.

Application By Chairman Of Monitoring Committee For CIRP Of Corporate Debtor's Debtor, Maintainable: NCLT Delhi

Case Title: Educomp Infrastructure & School Management Ltd. v Millenium Education Foundation

Case Title: C.P. No. (IB) 245/ND/2022.

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Abni Ranjan Kumar Sinha (Judicial Member) and Shri Hemant Sarangi (Technical Member), has held that a Chairman of Monitoring Committee can file an application under IBC for initiating Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor's debtor.

It was observed that the Chairman of Monitoring Committee is covered under the purview of IBC by virtue of Section 2(d), which states that the provision of IBC is applicable to "such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf". The Monitoring Committee is formed and its Chairman is appointed under the provisions of IBC. Therefore, the Chairman possesses the proper authority to take necessary steps to protect the Corporate Debtor's interest. The order was passed on 03.06.2022.

Preferential, Fraudulent Or Avoidable Transaction, Material Facts To Be Pleaded : NCLT Kolkata

Case Title: Star India Private Limited v Advance Multisystem Broadband Communications Limited

Case No.: C.P. (IB) No. 1510/KB/2018

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising Mr. Rohit Kapoor (Judicial Member) and Mr. Harish Chander Suri (Technical Member), has held that a transaction cannot be alleged to be preferential, fraudulent or avoidable by the Resolution Professional, unless an enquiry has been conducted by the relevant experts and specific material facts have been stated as to why such transaction would be covered under Section 45, 46, 47 and 66 of the Insolvency and Bankruptcy Code, 2016 ("IBC").

The Bench opined that Resolution Professional can file an application under Section 25(2) (j) of the IBC only after being satisfied about the particular transactions being avoidable, fraudulent or undervalued. It was incumbent upon the Resolution Professional to seek assistance of the Forensic Audit if so required, to engage the services of accountants, legal or other professionals with a view to satisfy himself about the transactions being avoidable. Without meeting the aforesaid requirements, the Resolution Professional cannot not directly approach the Adjudicating. The order was passed on 30.05.2022.

NCLT Mumbai Initiates Insolvency Proceedings Against Nirmal Lifestyle (Kalyan) Pvt. Ltd.

Case Title: Srei Equipment Finance Limited v Nirmal Lifestyle (Kalyan) Private Limited

Case No.: CP (IB) No.1337/MB/2020

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Mr. Kishore Vemulapalli (Judicial Member) and Mr. Rajesh Sharma (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Nirmal Lifestyle (Kalyan) Pvt. Ltd. ("Corporate Debtor") and has appointed Mr. DilipKumar Natvarlal Jagad as the Interim Resolution Professional. The order was passed on 16.06.2022.

The Adjudicating Authority observed that two defaults in Loan repayment dated 05.02.2020 and 05.03.2020 were amounting to Rs. 1,12,50,000/-. The remaining repayment defaults between 05.04.2020 and 05.09.2020 were hit by Section 10A of the IBC and therefore, could be considered as default. The Bench observed that the actual default made by the Corporate Debtor was Rs.1,12,73,387/- along with interest and hence CIRP could be initiated, as the default meets the minimum threshold of Rs. 1 Crore.

Corporate Debtor Cannot Be Dragged Into CIRP Mala Fide For Any Purpose Other Than Resolution Of Insolvency: NCLT Mumbai

Case Title: Gateway Offshore Private Limited and Anr. v Runwal Realtors Private Limited

Case No.: CP (IB) 954/MB/C-I/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Judicial Member) and Mr. Kapal Kumar Vohra (Technical Member), has held that a written contract cannot be treated as a pre- requisite to prove the existence of a financial debt and the Adjudicating Authority must be satisfied that the Corporate Debtor is not being dragged into Corporate Insolvency Resolution Process ("CIRP") mala fide for any purpose other than the resolution of the Insolvency. The order was passed on 10.06.2022.

Claims That Were Not A Part Of The Resolution Plan, Can't Be Claimed After Approval Of The Resolution Plan: NCLT Mumbai Reiterates

Case Title: State Bank of India v Rohit Ferro Tech Limited

Case No.: C.P. (IB) No. 1214/KB/2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has held that claims or reliefs which were not a part of the Resolution Plan, cannot be claimed after the said Resolution Plan is approved by the Adjudicating Authority. The Bench held that as the Applicant had not approached the Adjudicating Authority while the Resolution Plan was under consideration, therefore, the Applicant had no right to file any application or seek any relief after the approval of the Resolution Plan. The Order was passed on 14.06.2022.

Limitation Is Refreshed Each Year When Corporate Debtor Admits Debt In Its Financial Statements: NCLT Mumbai Initiates CIRP Against GIT Textiles

Case Title: UCO Bank v GIT Textiles Manufacturing Limited

Case No.: C.P (IB) No. 600/KB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Harish Chander Suri (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against GIT Textiles Manufacturing Ltd. for a default that had occurred in 2012 and has held that limitation refreshed each subsequent year when the Corporate Debtor acknowledged the financial debt in its Financial Statements. The Bench held that due to the specific admissions of debt by the Corporate Debtor, Section 18 of the Limitation Act, 1963 was applicable and it resulted in fresh computation of limitation period of three years from the date of acknowledgment in each balance sheet. "Since the last of such acknowledgments was made on 31.03.2019, the limitation period would last up till 31.03.2022. Thus, the present petition was held to be well within limitation."

NCLT Chennai Restraints Liquidator From Dealing With Assets Of Jeypore Sugar Co. Ltd.

Case Title: IDBI Bank v Jeypore Sugar Company Ltd.

Case No.: CP/1307/IB/2018

The National Company Law Tribunal ("NCLT"), Chennai Bench, comprising of Justice S. Ramathilagam (Judicial Member) and Shri Anil Kumar B (Technical Member), has restrained the liquidator from dealing with the assets of Jeypore Sugar Company Ltd. ("Corporate Debtor") till the pendency of the application filed by promoters of the Corporate Debtor.

The Promoters of the Corporate Debtor had filed an application before the NCLT, alleging that the Liquidator was selling the plant and machinery of the Corporate Debtor for a scrap value. The NCLT Bench observed that the NCLAT had imposed a stay on the order dated 17.11.2021 of the NCLT, which was in operation till date and hence the Liquidator cannot be permitted to sell the plant and machinery of the Corporate Debtor. It was held that, "The Liquidator shall not deal with any of the assets of the Corporate Debtor till the disposal of the present application. Further, Respondent No. 12 is also restrained from lifting any kind of machinery or scrap until the disposal of the present application." The order was passed on 03.06.2022.

Ansal Properties Pays The Dues Lately, NCLT Delhi Dismisses Insolvency Petition Imposing A Cost Of Rs. 1 Lakh On Ansal

Case Title: M/s. Dalmia Family Office Trust v M/s. Ansal Properties and Infrastructure Limited

Case No.: (IB)-639(ND)/2021

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri. Abni Ranjan Kumar Sinha (Judicial Member) and Shri. L. N. Gupta (Technical Member), has dismissed the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of the Corporate Insolvency Resolution Process ("CIRP") against Ansal Properties and Infrastructure Ltd. after the outstanding dues were paid off. A cost of Rs. 1 Lakh has been imposed on Ansal Properties and Infrastructure Ltd. for delaying the proceedings and depositing the due amount in the account of Dalmia Family Office Trust without its consent and after the NCLT Bench had reserved the order. The Order was passed on 06.06.2022.

Wave Megacity Projects, NCLT Dismisses Wave's Insolvency Plea With A Cost Of One Crore

Case Title: In the Matter of Wave Megacity Centre Private Limited

Case No.: C.P. (IB) No. 197 (PB)/2021

The National Company Law Tribunal (NCLT), Principal bench, comprising of Shri Bhaskara Pantula Mohan (Member Judicial) and Shri Hemant Kumar Sarangi (Member Technical), dismissed the insolvency petition filed by Wave Megacity Centre Private Limited (Wave) under Section 10 of the Insolvency and Bankruptcy Code, 2016. The Bench also imposed a cost of INR One Crore on Wave for filing the insolvency petition against itself for malicious or fraudulent intent and also directed the Central Government to make necessary investigation into the affairs of Wave.

The bench held that the removal of the directors of Wave just before filing of the Section 10 Petition is an indicator that the management who was running the Wave wants to hide from the reasons of default and wants to immunize itself from the rigors of the Code. NCLT noted that there are around 285 cases pending against Wave and the possibility of filing the Section 10 Petition to escape the liability arising out of this pending litigation cannot be overlooked. "We have concluded that the application filed under Section 10 of IBC, 2016 was an attempt on the part of the Corporate Debtor to play fraud on thousands of homebuyers, Noida Authority, Government etc. Further greater prejudice must have caused to them if CIRP was triggered." Further, NCLT also directed the Central Government to make necessary investigation into the affairs of Wave as it has collected huge amount in cash and siphoned off the same.

NCLT Closes The Right To File Reply Due To Delay, NCLAT Delhi Allows Appeal And Directs To Take Reply On Record

Case Title: Samyak Metals Pvt. Ltd. v Ugro Capital Ltd.

Case No.: Company Appeal (AT) (Insolvency) No. 668 of 2022.

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Ashok Kumar Mishra (Technical Member), has permitted taking on record of a Reply, which was allegedly lying with the Registry for over 50 days for curing of defects and the Adjudicating Authority had thus refused to take it on record by closing the right to file reply. The order was passed on 08.06.2022.

The NCLAT observed that Rule 34 of the NCLT Rules, 2016 provides that in a situation not provided in these rules, the Tribunal (Adjudicating Authority) may determine in the procedure in a particular case in accordance with the Principles of Natural Justice, by recording reasons in writing. The Bench reiterated that every man must be given an opportunity of being heard. "The technical aspect of the Appellant keeping his Reply lying in the Registry based on the objection is not a proper one without delving deep in the matter any further and also at this stage this Tribunal is not expressing any opinion one way or other about the merits of the matter which is to be taken up on arguments on 09.06.2022."

NCLT Delhi Permits Centre To Take Over Delhi Gymkhana Club

Case Title: Union of India v Delhi Gymkhana Club & Ors., C.P. 71/241-242/PB/2020.

The National Company Law Tribunal ("NCLT"), Principal Bench comprising of Justice R Sudhakar and Narendra Kumar Bhola, has allowed the petition filed under Section 241-242 of the Companies Act, 2013 by Union of India against the Delhi Gymkhana Club and allowed the Govt. to take over the control of the Delhi Gymkhana Club by nominating Fifteen (15) persons to be appointed as the directors of the Delhi Gymkhana Club who will manage the affairs of the Company. The NCLT found that the club is generating no income from any sports activities which is the primary objective of the club as per its memorandum of Association. It also observed that the Gymkhana Club is taking deposit form the outsiders in violation of the provisions of the Companies Act, 2013. The order was passed on 01.04.2022.

NCLT Delhi Declares Logix City Developers Insolvent And Appoints IRP

Case Title: Colliers international (India) property services Pvt. Ltd. Vs Logix city developers private limited, IB 883/ND/2020

The National Company Law Tribunal ("NCLT"), New Delhi Bench, has declared Logix City Developers Private Limited as insolvent and has initiated Corporate Insolvency Resolution Process ("CIRP") against it. The NCLT Bench observed that the two requirements for admission of Section 9 of the Insolvency and Bankruptcy Code, 2016 have been fulfilled as there is a default in terms of a debt and no preexisting dispute pertaining to it. The order was passed on 22.03.2022.

NCLT Bengaluru Dismisses Insolvency Petition Against Café Coffee Day

Case Title: M/s Cooperative Rabobank U.A v Coffee Day Global Limited, CP (IB) No. 19/BB/2021.

The National Company Law Tribunal (NCLT), Bengaluru Bench, comprising of Shri Ajay Kumar Vatsavayi ( Judicial Member) and Shri Manoj Kumar Dubey ( Technical Member) has dismissed the insolvency petition filed against the parent company of Cafe Coffee Day namely Coffee Day Global Limited by Cooperative Rabobank U.A. ("Rabobank"). NCLT has observed that other lenders of the Coffee Day initiated the resolution process of Coffee Day under RBI's circular and Rabobank has not agreed to give a formal no dues certificate to release the charge over the vending machine vertical of Coffee Day. The correspondence between the lenders clearly established that Coffee Day suffered because of COVID-19 and sudden demise of its chairman and since then Coffee Day is taking bona fide and sincere efforts to restructure its debts.

Corporate Debtor Cannot Be Sent Into Liquidation Just Because Liquidation Value Is More Than The Value Of The Resolution Plan: NCLT Kolkata

Case Title: Ramsarup Industries Limited, CP (IB) No.349/KB/2017.

The NCLT Kolkata Bench comprising Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member), while deciding interim applications in the matter of Ramsarup Industries Ltd., has held that just because the liquidation value is being projected higher than the value of the resolution plan, the Corporate Debtor cannot be sent into liquidation for this reason alone. The object of the IBC is to put the Corporate Debtor back on its feet for the larger benefit of all the stakeholders, not just the creditors. The order was passed on 07.04.2022.

NCLT Delhi Admits Petition Under Section 7 Of IBC Against M/S Anand Divine Developers Pvt. Ltd. And Initiates CIRP

Case Title: ICICI Prudential Venture Capital Fund Real Estate Scheme I, through its Investment Manager ICICI Prudential Asset Management Company Ltd. v M/s Anand Divine Developers Pvt. Ltd., (C.P. No. IB 1101 (PB)/2020).

The National Company Law Tribunal, Principal Bench, comprising of Shri Ramalingam Sudhakar (President) and Shri Avinash Kumar Srivastava (Technical Member), has admitted a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 ("IBC") against M/s Anand Divine Developers Pvt. Ltd. and initiated the Corporate Insolvency Resolution Process ("CIRP") vide an order dated 25.03.2022. ATS Infrastructure Limited is the promoter of M/s Anand Divine Developers Pvt. Ltd.

Insolvency Resolution Process Against Legal Heirs Of Personal Guarantor By Financial Creditor Not Permissible: NCLT Kolkata

Case title: Bank of Baroda v Ms. Divya Jalan

Case No.: C.P. (IB) - 363/2021.

The National Company Law Tribunal ("NCLT"), Kolkata Bench Consisting of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member) while dismissing an application filed by the Bank of Baroda (Financial Creditor), held that the application is not maintainable against legal heirs of the Personal Guarantor under the IBC. As per regulation 3(1)(a)(e) of 'Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019', a personal guarantor to a Corporate Debtor is a person against whom guarantee has been invoked and there is outstanding dues left, partly or fully. The definition does not include the 'legal heirs'.

NCLT, Delhi Issued Circular Regarding Defective Applications And Petitions Based On Rule 28 (2) Of NCLT Rules, 2016

A circular has been issued by the National Company Law Tribunal ("NCLT"), Delhi, on 07.04.2022, in view of Rule 28 (2) of NCLT Rules, 2016. The circular states on scrutiny, if an Application is found to be defective, after notice to the party, the same shall be returned for compliance. If the defects are not complied within 7 days, the Registrar may pass appropriate orders. This notice was issued since there was a failure to remove the defects raised by the registry and to comply with the direction regarding the list of 'Common Objections' published in the website of NCLT dated 17.3.2022, 25.3.2022 and 04.04.2022.

Resolution Professional Cannot Prosecute Preferential Transactions After Approval Of Resolution Plan: NCLT Kolkata

Case title: Bank of India v Amrit Fresh Pvt. Ltd., C.P. (IB) - 263/2018.

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri V K Rajasekhar (Judicial Member) and Shri Balraj Joshi (Technical Member) held that an application for preferential transactions cannot be pursued either by the erstwhile Resolution Professional ("RP") or the new Management of the Corporate Debtor after the approval of the Resolution Plan by NCLT. The Bench held that it is incumbent upon the RP to adhere to Section 43 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 35A of the IBBI (Insolvency Resolution Process for the Corporate Debtor Persons) Regulations, 2016, which mandates that the RP has to form an opinion whether the Corporate Debtor has been subjected to preferential transaction within or on 75^th day of the Corporate Insolvency Resolution Process ("CIRP") commencement date. Thereafter, the RP has to make a determination and file an application before the 135^th day.

Amount Disbursed By NBFC Upon Oral Agreement Not Covered In Financial Debt: NCLT Kolkata

Case title: Narendra Promoters & Fincon Private Limited v Vinline Engineering Private Limited

Case No.: CP (IB) No.749/KB/2020.

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member) while deciding a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has held that a disbursement made by a Non Banking Financial Institution ("NBFC") over an oral agreement cannot be construed as the existence of a financial debt, when there is nothing on record to show that it was disbursed as a loan. The petition was dismissed by the Bench vide an order dated 23.02.2022.

The Bench placed reliance on the RBI guidelines on Fair Practices Code for NBFCs, dated 18.02.2013, wherein it has been stated that the NBFCs should convey in writing to the borrower the amount of loan sanctioned, along with the terms and conditions. It was held that as RBI's circulars have statutory force, hence, it was mandatory on the part of Financial Creditor, being an NBFC, to keep the terms and conditions recorded in writing.

CIRP Initiated Against National Steel And Agro Industries Ltd.: NCLT Mumbai

Case title: JM Financial Asset Reconstruction Co Ltd. v National Steel & Agro Industries Ltd.

Case No.: CP (IB) 2067/MB/2019.

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri K.K. Vohra (Technical Member), has admitted a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") against National Steel & Agro Industries Ltd. and initiated Corporate Insolvency Resolution Process ("CIRP"), vide an order dated 11.04.2022. The NCLT Bench observed that the Financial Creditor had established that the Credit facilities were sanctioned as well as disbursed to the Corporate Debtor, and that the Corporate Debtor had defaulted in payment of the debt. Accordingly, the two essential qualifications, i.e. existence of 'debt' and 'default', for admission of a petition under Section 7 of the IBC were fulfilled.

Notice Issued To Siti Networks Ltd. In Section 7 IBC Petition Filed By HDFC Ltd.: NCLT Mumbai

Case title: Housing Development Finance Corporation limited v SITI Networks Limited

Case No.: C.P. (IB)/414(MB) 2022.

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Smt. Suchitra Kanuparthi (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has issued notice to SITI Networks Ltd. in the matter of Housing Development Finance Corporation Limited v SITI Networks Limited., vide an order dated 30.03.2022. Housing Development Finance Corporation Ltd. ("HDFC") had filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against SITI Networks Ltd., for an alleged default of approximately Rs. 296 Crores in respect of the financial facility granted by HDFC. The matter was heard by the NCLT, Mumbai Bench on 30.03.2022 and accordingly, notice was issued to SITI Networks Ltd. with the liberty to file a reply.

CIRP Can Be Initiated Based On An Unchallenged Arbitral Award: NCLT Kolkata

Case Title: Viom Infra Ventures Limited v Bahula Infotech Private Limited

Case No.: C.P (IB) No. 197/KB/2021.

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member), while deciding a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), has held that Corporate Insolvency Resolution Process ("CIRP") can be initiated based on an Arbitral Award if the said Award has not been challenged. Accordingly, CIRP has been initiated against Bahula Infotech Pvt. Ltd. vide an order dated 18.04.2022. The NCLT Bench observed that the Corporate Debtor had neither raised any dispute with respect to the services of the Operational Creditor nor challenged the Arbitral Award by way of Section 34 petition under the Arbitration and Conciliation Act, 1996. Therefore, the debt is undisputed. The NCLT Bench also held that the CIRP cannot not be initiated on basis of Arbitral Award when:

1. A counterclaim exceeding the claim awarded was rejected by the Arbitral Tribunal on merits, and such rejection is also a matter of challenge before the Courts; and
2. A challenge had also been filed against the Arbitral Award.

"IBC Does Not Protect The Interest Or Claim Of A Partner Against Another Partner Or The Firm": NCLT Mumbai

Case Title: Parul A Vora v Kavya Buildcon Private Limited

Case No.: CP (IB) 2832/MB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Judicial Member) and Shri Kapal Kumar Vohra (Technical Member), has held that the Insolvency and Bankruptcy Code, 2016 ("IBC") does not protect the interest or claim of a Partner against another Partner or the Partnership Firm."The Petitioner may be entitled to the claims against the Respondent under any other law in force which may provide the legal recourse to the Financial Creditor." The order was passed on 27.06.2022.

Sale Of Corporate Debtor As A 'Going Concern' Includes Both Assets And Liabilities: NCLT Mumbai

Case Title: Harsh Vinimay Pvt. Ltd. v Gajanan Industries Ltd.

Case No.: C.P. No. (IB) 2521/MB/2018

The National Company Law Tribunal, Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Shri Chandra Bhan Singh (Technical Member), has held that when a Corporate Debtor is sold as a 'going concern', then such sale shall include both assets and liabilities and not merely assets sans liabilities.

NCLT Hyderabad Initiates Insolvency Process Against The Personal Guarantor Of Deccan Chronicle Holdings

Case Title: L&T Finance Limited v Tikkavarapu Venkaram Reddy

Case No.: CP (IB) No. 88/95 of IBC/HDB/2021

The National Company Law Tribunal, Hyderabad Bench, comprising of Dr. N. Venkata Ramakrishna Badarinath (Judicial Member) Shri Veera Brahma Rao Arekapudi (Technical Member), has initiated insolvency resolution process against Mr. Tikkavarapu Venkatarami Reddy, who is the Personal Guarantor of M/s Deccan Chronicle Holdings Ltd. in respect of the credit facilities availed by Deccan Chronicle Holdings from L&T Finance Ltd. The order was passed on 24.06.2022.

Bid For Corporate Debtor As 'Going Concern' To Be Given Preference Over The Standalone Bid; NCLT Ahmedabad

Case Title: Arrhum Tradelink Private Limited v Vineeta Maheshwari & Ors.

Case No.: CP(IB) 320 of 2018

The National Company Law Tribunal, Ahmedabad Bench, comprising of Madan B. Gosavi (Judicial Member) Kaushalendra Kumar Singh (Technical Member), has held that when two equal bids are received in an auction, then Corporate Debtor must be sold to the bidder who purchases it as a 'going concern', rather than to a bidder who purchases the assets at a standalone basis. The object of the Insolvency and Bankruptcy Code, 2016 (IBC) is not only to clear the debts of the Corporate Debtor, therefore, the liquidator must protect the existence of the Corporate Debtor and avoid its death by ultimately pushing it into dissolution.

"In our considered opinion since the liquidator allowed the system to run even after the successful bidder had offered the highest amount and exactly at that point of time within two minutes the Applicant offered the same price. The fact is that the Applicant had offered the same price to purchase the Corporate Debtor as a going concern, the liquidator ought to have considered this aspect. It is the object of the Insolvency and Bankruptcy Code, 2016 i.e., to maximize the value of the assets of the corporate person and to promote entrepreneurship etc."

Suspended Management Must Be Provided With A Copy Of The Resolution Plan: NCLT Indore Reiterates

Case Title: Chandraudai Automobiles Pvt. Ltd. v Rajpal Abhikaran Pvt. Ltd.

Case No.: CP(IB) 6 of 2020

The National Company Law Tribunal, Indore Bench, comprising of Shri Madan B. Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has held that a copy of the Resolution Plan must be provided to the Suspended Management of the Corporate Debtor and has also directed the Resolution Professional in the matter to consider the relevant objections raised by the Suspended Management to the Resolution Plan.

The Bench further held, "Considering the above, we hereby direct the resolution professional to provide the resolution plans to the suspended management and then convene a meeting of the CoC and the CoC will deliberate on the resolution plans afresh and either reject them or approve them with the requisite majority, after which, the further procedure detailed in the Code and the Regulations will be followed. Further, the resolution professional and CoC may consider the other objections of the suspended management, if relevant. It is to be done within two weeks."

NCLT Have The Power To Replace Liquidator Under Insolvency And Bankruptcy Code, 2016: NCLT Chennai

Case Details: Axis Bank v. Venkata Sivakumar

Case No.: CP 1307/IB/2018

The National Company Law Tribunal (NCLT) , Chennai Bench, comprising of Justice S Ramathilagam and Mr. Anil B Kumar held that the NCLT have the power to replace the liquidator during the liquidation process of a Corporate Debtor under the Insolvency and Bankruptcy Code, 2016.

NCLT observed that though IBC does not provide for grounds on which liquidator can be removed but recourse can be made to Section 276 of the Companies Act, 2013 which provides for ground of removal of Liquidator such as misconduct, fraud, professional incompetence and others. The Bench held that in the present case, the liquidator shared the valuation report of the Corporate Debtor with the prospective scheme proponents and the said act would amount to failure to exercise due and diligence and therefore, the liquidator can be changed. Consequently, NCLT allowed the application and removed Mr. Venkata Sivakumar as the liquidator and appointed Mr. S Hari Karthik as the liquidator of Jeypore Sugar.

Even Though Limitation Is Not Set Up As Defence, Tribunal Should Examine: NCLT Chennai

Case Title: Bank of Baroda v Rajiv Rai

Case No.: CP/89/IB/2021

The National Company Law Tribunal (NCLT), Chennai Bench, comprising of Justice (Retd.) S. Ramathilagam (Judicial Member) and Shri Anil Kumar B (Technical Member), has held that limitation applies to an application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 ("IBC") for initiating insolvency process against a Personal Guarantor. The Bench dismissed an application which was filed after six years of default.

The NCLT Bench observed that the loan recall notice was issued on 06.11.2014 and the application has been filed on 10.04.2021, i.e. after 6 years. It was held that Section 238A of IBC applies to entire provisions of IBC and Article 136 of the Limitation Act, 1963 was also applicable to an application filed under Section 95 of IBC. "In the said circumstances, as per Section 3 of the Limitation Act, 2013, even Court/Tribunal is required to examine the debt on the point of limitation, even though such a defence has not been setup."

Information Memorandum Should Reflect Creditors Claim , If It Finds Place In Balance Sheet : NCLT Indore

Case Title: Bank of Baroda v Divya Jyoti Industries Ltd.

Case No.: C.P. (IB) 628/2018

The National Company Law Tribunal ("NCLT"), Indore Bench, comprising of Shri Madan B. Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has held that if a claim of a creditor appears in the audited balance sheet of the Corporate Debtor, then it is the duty of the Resolution Professional to include such claims in the Information Memorandum.

A Report Under Section 99 Of IBC Cannot Be Filed By Resolution Professional Without The Adjudicating Authority's Directions: NCLT Mumbai

Case Title: Bank of Baroda Limited v Mr. Pawan V Kikavat

Case No.: C.P.(IB)-140(MB)/2022.

The National Company Law Tribunal, Mumbai Bench, comprising of Shri H. V. Subba Rao (Judicial Member) Shri Chandra Bhan Singh (Technical Member), has directed the Resolution Professional to file a fresh a report under Section 99 of the Insolvency and Bankruptcy Code, 2016 ("IBC") for recommending approval or rejection of insolvency petition against the Personal Guarantor, which was previously filed by the Resolution Professional on its own accord, without there being any direction from the Adjudicating Authority. The Personal Guarantor had raised objections before the NCLT Bench that a report u/s 99 of the IBC cannot be filed until the Adjudicating Authority directs so.

Arbitrarily Rejection Of Resolution Plan Is Void, NCLT Allahabad Declares The COC's Action As Void

Case Title: Exim Scrips Dealers Pvt. Ltd v Rathi Graphic Technologies Limited

Case No.: CP (IB) NO.325/ALD/2019

The National Company Law Tribunal ("NCLT"), Allahabad Bench, comprising of Shri Rajasekhar V.K. (Judicial Member) and Shri Virendra Kumar Gupta (Technical Member), has held that principles of natural justice are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The Committee of Creditors (CoC) had declined to consider the revised resolution plan submitted by the resolution applicant for being submitted three days after the deadline and had rather given approval to another plan which had a lower value and was conditional in nature. The NCLT declared the action of CoC as void and directed to re-conduct the process of submission of resolution plan.

"It can be safely concluded that all actors/ institutions associated with the conduct of CIRP are bound to follow the principles of natural justice which are enshrined in the Constitution of India as a public policy and have also been accepted by judicial forums as fundamental policy of Indian law, whether codified or not. These are to be applied necessarily in all administrative/statutory functions under IBC, 2016 unless excluded explicitly or by necessary implications."

NCLT Mumbai Directs Income Tax Authority To Refund TDS To Corporate Debtor Undergoing Liquidation

Case Title: Asset Reconstruction Company (India) Ltd. v Precision Fasteners Ltd.

Case No.: CP.(IB) 1339/MB/2017

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Retd.) (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has directed the Deputy Commissioner of Income Tax to refund the TDS charged from the Corporate Debtor when the latter was under liquidation.

The liquidator had filed an application under Section 60(5) of the IBC against Deputy Commissioner of Income Tax, Mumbai, seeking a direction to refund Tax Deduction at Source (TDS) aggregating to Rs. 93,81,464/- to the Corporate Debtor. The TDS amount was charged from the Corporate Debtor after the order of liquidation had been passed. The dues of the statutory authorities, including the Income Tax Department, are considered operational debt under IBC and are paid as per the waterfall mechanism under Section 53 of the IBC. NCLAT has previously held that a company under liquidation has no liability to fulfill income tax obligations.

NCLT Ahmedabad Denies Approval Of Resolution Plan For Being Unimplementable

Case Title: IFCI Ltd. v Anil Mega Food Park Pvt. Ltd.

Case No.: CP(IB) 287 of 2019

The National Company Law Tribunal ("NCLT"), Ahmedabad Bench, comprising of Justice Madan B. Gosavi (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member), has declined to approve the Resolution Plan submitted by M2K Developers Pvt. Ltd. for Anil Mega Food Park Pvt. Ltd., for not being implementable.

The Bench observed that the Resolution Professional was aware regarding the landlocked status of the Corporate Debtor's unit but tried to portray in the Information Memorandum that an approach road can be made available to the Prospective Resolution Applicant. Accordingly, the SRA's Resolution Plan was based on the condition that it can only be implemented if an approach road is provided by the Resolution Professional/CoC leading to the unit of the Corporate Debtor.

"If there is no approach road connecting to the main road and unit of the Corporate Debtor, we fail to understand how the Resolution Applicant will be able to run that unit…..It is not in dispute that due to the National Highway in between the main road and unit of the Corporate Debtor, there exists no approach road. It is not possible for the RP, and the CoC to make available such an approach road leading to the unit of the Corporate Debtor which the Resolution Applicant is demanding through the Resolution Plan as approved by the CoC."

Guarantor Cannot Enjoy 'Right Of Subrogation' Even After CIRP Against Principal Debtor Gets Concluded: NCLT Hyderabad

Case Title: State Bank of India v Shri. Ghanshyam Surajbali Kurmi

Case No.: CP (IB) No. 297/95 of IBC/HDB/2021

The National Company Law Tribunal ("NCLT"), Hyderabad Bench, comprising of Dr. N. Venkata Ramakrishna Badarinath (Judicial Member) Shri Veera Brahma Rao Arekapudi (Technical Member), has held that a guarantor cannot enjoy a right of subrogation even after the Corporate Insolvency Resolution Process ("CIRP") of the Principal Debtor gets concluded. There is no bar on the Financial Creditor to initiate insolvency process against the Guarantor after conclusion of CIRP of the Principal Debtor. It was observed that as per Section 134 of the Indian Contract Act, 1872, a guarantor is discharged of its liability towards the creditor only if the creditor on its own instance discharges the principal debtor through voluntary act of the creditor and not due to operation of law. 

"Therefore, we are also of the view that conclusion of Corporate Insolvency Resolution Plan does not bar Financial Creditor against Guarantor, and Financial Creditor can always approach this Adjudicating Authority as envisaged under the Code." 

NCLT Mumbai Initiates Insolvency Proceedings Against Future Retail Ltd., Rejects Amazon's Intervention Plea

Case title: Bank of India v Future Retail Ltd.

Case No.: CP (IB) No. 527/MB/2022.

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Future Retail Ltd. over an application filed under Section 7 of IBC by Bank of India, for a default of Rs. 856.10 Crores. Mr. Vijay Kumar V Iyer has been appointed as the Interim Resolution Professional. Further, the Intervention Petition filed by Amazon.com NV Investment Holdings LLC in the matter has been dismissed by the Bench over lack of locus standi. The order has been passed on 20.07.2022.

DHL Supply Chain Files Insolvency Plea Against Eicher Motors: NCLT Delhi To Decide The Issue Of Maintainability

Case Title: DHL Supply Chain Pvt. Ltd. v Eicher Motors Ltd.

Case No.: IB 272/ND/2022.

The National Company Law Tribunal (NCLT), New Delhi Bench, comprising of Dharminder Singh (Judicial Member) and Sumita Purkayastha (Technical Member), while adjudicating an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") in DHL Supply Chain Pvt. Ltd. v Eicher Motors Ltd., has directed DHL to convince the Bench on the maintainability of the application in terms of Section 10A of the IBC. DHL Supply Chain Pvt. Ltd. ("Applicant") is an Indian division of Deutsche Post DHL group and is engaged in the business of logistic operations. Eicher Motors Ltd. ("Respondent") is the listed parent of Royal Enfield motorcycles, which is the world's oldest motorcycle brand, with its flagship product being the 'Royal Enfield Bullet' in India. The matter is next listed on 01.08.2022.

NCLT Disallows JSW To Withdraw From Status Of Successful Resolution Applicant Of Ind-Barath Energy

Case Title: Bank of Baroda v Ind-Barath Energy (Utkal) Ltd.

Case No.: CP (IB) NO. 276/7/HDB/2018

The National Company Law Tribunal, Hyderabad Bench, comprising of Bhaskara Pantula Mohan (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has held that under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 ("IBC"), Adjudicating Authority is not empowered to terminate or remand back a resolution plan to the Committee of Creditors for re-consideration, an assessment can only be made to see whether the plan incorporates provisions for its smooth implementation or not. The Bench observed that the proviso to Section 31(1) cannot be construed so as to allow the Adjudicating Authority once again to get into the questions of deterioration or revaluation of assets etc. which must be left to the commercial wisdom of the CoC. The Adjudicating Authority would not have any jurisdiction to either terminate the Resolution Plan or even send it to CoC for reconsideration. Further, the resolution plan submitted by JSW Energy Ltd. has been approved for Ind-Barath Energy (Utkal) Ltd.

NCLT Mumbai Terminates The CIRP Of Sahara Hospitality, As Parties Enter Settlement

Case Title: Delta Electro Mechanical Pvt. Ltd. v Sahara Hospitality Ltd.

Case No.: C.P. (IB)/2430(MB)2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has permitted withdrawal of insolvency proceedings and termination of Corporate Insolvency Resolution Process ("CIRP") against Sahara Hospitality Ltd., over an application filed under Section 12A of IBC by the IRP, as Parties enter full and final settlement. The order was passed on 28.07.2022.

SEBI Order No Bar To Initiation Of CIRP; NCLT Mumbai Initiates Insolvency Proceedings Against Pancard Clubs

Case Title: Mr. Nitin Suresh Satghare & Ors. v Pancard Clubs Limited

Case No.: CP (IB) 4578/MB/C-I/2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P. N. Deshmukh (Retd.) (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Pancard Clubs Ltd., while observing that an Order passed by Securities Exchange Board of India ("SEBI") is no bar for initiation of CIRP under the IBC.

Time Schedule Has A Purpose; NCLT Kolkata Declines To Entertain The Bid Submitted After The Time

Case Title: State Bank of India v Ess Dee Aluminum Limited

Case No.: C.P (IB) No.1284/KB/2019

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has declined to entertain a revised bid received after the due time fixed by the Liquidator in the bidding notice, while observing that time lines are fixed with a definite purpose and the different stages of bidding process should conclude at the scheduled time.

NCLT Delhi Holds Suspended Directors Liable For Running Fraudulently

Case Title: M/s Concord Infrastructure Pvt. Ltd. v M/s Shubhkamna Buildtech Pvt. Ltd.

Case No.: C.P. No. IB-1059/ND/2018

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has approved the resolution plan submitted by Mr. Sunder Kumar Singhal and Mr. Sunil Kumar Agarwal for M/s Shubhkamna Buildtech Pvt. Ltd. The Bench held the Suspended Directors of Subhkamna Buildtech liable under Section 66 of the IBC, for running the business in a fraudulent manner and having siphoned off the funds of the company to the tune of Rs. 106.19 Crores. The Bench has directed the Suspended Directors to contribute Rs. 106.19 Crores, which would be distributed to the Financial Creditors proportionately.

Breach Of Settlement Agreement Not A Ground To Trigger CIRP: NCLT Delhi Rejects Application For Revival Of Petition

Case Title: Bajaj Rubber Company Pvt. Ltd. v Saraswati Timber Pvt. Ltd.

Case No.: C.P. (IB) 1441 (ND)/2018

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Shri L.N. Gupta (Technical Member), has declined to revive a petition filed under Section 9 of IBC, which was earlier withdrawn due to Settlement Agreement being entered upon between the parties and later settlement had failed. The Bench reiterated that breach of terms and conditions of a Settlement Agreement does not come under the purview of Operational Debt under IBC and the same cannot be a ground to trigger CIRP.

The Bench placed reliance on the judgments of NCLT New Delhi in M/s Alhuwalia Contracts (India) Ltd. v M/s Logix Infratech Pvt. Ltd., IB 882/ND/2022, and in Nitin Gupta v International Land Developers Pvt. Ltd., IB 507/ND/2020, wherein it has been held that unpaid installment as per settlement agreement cannot be treated as an operational debt under Section 5(21) of IBC.

Liquidator Empowered To Decide The Mode Of Sale, Not Bound By Recommendations Of Stakeholders Committee: NCLT Kolkata

Case Title: Sauria Corporation v Kohinoor Pulp & Paper Private Limited

Case No.: C.P. (IB) No. 511/KB/2018

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor ("Judicial Member") and Shri Balraj Joshi (Technical Member), has held that a Liquidator is empowered to decide the mode of sale of Corporate Debtor which is in best interest for maximization of asset value. The Bench further held that the Liquidator is not bound by the recommendations of Stakeholders' Consultation Committee while determining such mode of sale.

Moratorium Doesn't Apply On Property Unlawfully In Possession Of Corporate Debtor: NCLT Hyderabad

Case Title: State Bank of India v Meenakshi Energy Ltd.

Case No.: CP (IB) No. 184/7/HDB/2019

The National Company Law Tribunal ("NCLT"), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Veera Brahma Rao Arekapudi (Technical Member), has held that moratorium imposed under Section 14 of IBC is not applicable to properties which are in unlawful possession of the Corporate Debtor. The Bench observed that Corporate Debtor is in possession of the Disputed Land which it is not entitled to. Hence it is wrongful possession. The Corporate Debtor's right under Section 14 of IBC to not be dispossessed of property in its possession during moratorium, cannot be extended to possessions without right, wrongful or adverse.

Asian Hotels (West), Owner Of Hyatt Regency (Mumbai), Admitted Into Insolvency: NCLT Delhi

Case Title: JM Financial Asset Reconstruction Co. Ltd. v Asian Hotels (West) Ltd.

Case No.: C.P. (IB) No. 571 (PB)/2021

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Dharminder Singh (Judicial Member) and Shri Binod Kumar Sinha (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Asian Hotels (West) Ltd. over a default of Rs. 264,07,35,129/-. The Asian Hotels (West) Ltd. owns the five star hotels namely Hotel Hyatt Regency Mumbai and JW Marriott, New Delhi Aerocity (through its subsidiary). The Bench also held that an officer delegated with power, can claim to be an Authorized Representative for filing a Section 7 petition under IBC.

NCLT Delhi Issues Notice To Spicejet In An Insolvency Plea U/S 9 Of IBC

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri P.S.N. Prasad Judicial Member) and Shri Rahul Bhatnagar (Technical Member), has issued notice to Spicejet Ltd. to appear and file its Reply in a petition under Section 9 of IBC filed against it. Spicejet Ltd. is engaged in affordable aviation business with domestic, international and charter flight facilities in India.

No Notice Is Required For Personal Guarantor At The Stage Of Appointment Of IRP: NCLT Amravati

Case Title: Central Bank of India v Mr.Kothapatti Raju

Case No.: CP (IB) No. 89/95/AMR/2022

The National Company Law Tribunal ("NCLT"), Amravati Bench, comprising of Justice Telaprolu Rajani (Judicial Member), has held that in terms of Section 97 and Section 100 of IBC, no notice or right of audience can be given to the Personal Guarantor at a stage before appointing the Interim Resolution Professional. It was observed that it is only under Section 100(3) of IBC that the Adjudicating Authority shall provide a copy of the order passed under Section 100(1) to the Creditors. Hence, in terms of Section 97 & Section 100 of IBC, no right of audience can be given to the Personal Guarantor at a stage before appointing the Interim Resolution Professional (IRP).

Past Tax Liabilities That Are Not Part Of Resolution Plan Shall Stand Extinguished: NCLT Mumbai

Case Title: Subodh Kumar Agrawal v Taguda Pte. Limited

Case No.: CP(IB)No. 1790/MB/2017

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that all past liabilities arising out of any levies/tax dues to any government authorities, etc., which accrued during CIRP period and are not part of the Resolution Plan, shall stand extinguished from the date of approval of the Resolution Plan. The Bench accordingly waived off the income tax and GST liabilities of the Corporate Debtor that had accrued after initiation of CIRP.

Continuation Of RP Till Appointment Of Liquidator Doesn't Contravene IBC: NCLT Chandigarh

Case Title: Brij Lal Ashok Kumar v Tara Chand Rice Mills Pvt. Ltd.

Case No.: CP (IB) No.121/Chd/Hry/2017

The National Company Law Tribunal ("NCLT"), Chandigarh Bench, comprising of Shri Harnam Singh Thakur (Judicial Member) and Shri Subrata Kumar Dash (Technical Member), has held that in absence of any order from the Adjudicating Authority appointing a liquidator, the Resolution Professional's continuation in its position is not in contravention of IBC. The Bench also directed the Liquidator to pay the professional fees to the Resolution Professional for such unauthorized period of service.

Union Govt. Appoints Judicial & Technical Members For NCLT

Circular No. 18/25/2022-EO(SM-II)

The Government of India vide its notification dated 05.11.2022 approved the appointment of 9 judicial members and 6 technical members in the National Company Law Tribunal (NCLT).

Judicial Members

1. T Krishna Valli, Retd. Judge, Madras High Court
2. Vikas Kumar Srivastav, Retd. Judge, Allahabad High Court
3. Kuldeep Kumar Kareer, Retd. District Judge
4. Vishesh Sharma, Retd. District Judge
5. Adv. Ashok Kumar Bhardwaj
6. Adv. Praveen Gupta
7. Adv. Mahendra Khandelwal
8. Bidisha Banerjee, Judicial Member, CAT
9. Sanjiv Jain, Dist. Judge

Technical Members

1. Prabhat Kumar, CA
2. Charan Singh, Former Executive Director, UCO Bank
3. Anu Jagmohan Singh, Former Member, CBDT
4. Ashish Verma, Retd. Principal Chief Commissioner of Income Tax
5. Atul Chaturvedi, Retd. IAS
6. Madhu Sinha, Former Director, Citi Bank, India.

When Corporate Debtor Does Not Create A Gratuity Fund, No Gratuity Is Payable: NCLT Chandigarh

Case Title: Small Industries Development Bank of India (SIDBI) v International Mega Food Park Limited

Case No.: CP (IB) No.174/Chd/Chd/2018

The National Company Law Tribunal ("NCLT"), Chandigarh Bench, comprising of Shri Harnam Singh Thakur (Judicial Member) and Shri Subrata Kumar Dash (Technical Member), has held that if the Corporate Debtor had not created a Gratuity Fund, then the Resolution Professional cannot be directed to pay Gratuity to the employee(s). Further, the salary and leave encashment of employees accrued during CIRP period fall within the definition of insolvency resolution process cost under Section 5(13)(c) of IBC.

NCLT Delhi Initiates Insolvency Process Against Ansal Properties & Infrastructure Ltd.

Case Title: Bibhuti Bhushan Biswas & Ors. v M/s Ansal Properties and Infrastructure Ltd.

Case No.: IB-330(ND)/2021

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Bachu Venkat Balaram Das (Judicial Member) and Shri L.N. Gupta (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Ansal Properties and Infrastructure Ltd. on a Section 7 petition filed by homebuyers under IBC. Mr. Ashwani Kumar Singla has been appointed as the Interim Resolution Professional (IRP).

Nine Members Took Oath In National Company Law Tribunal, Strength Rises To 37

Nine new members take oath as the members of the National Company law Tribunal on 18.11.2022. The oath was administered to the newly appointed members by Chief Justice (Retd.) Ramalingam Sudhakar, President, NCLT at Principal Bench, NCLT, New Delhi.

Following members took oath as the Member (Judicial) of NCLT

1. Mr. Kuldeep Singh Kareer
2. Ms. Bidisha Banerjee
3. Mr. Praveen Gupta
4. Mr. Arun Kumar Bhardawaj

Following members took oath as Member (Technical) of NCLT

1. Mr.Atul Chaturvedi
2. Ms. Anu Jagmohan Singh
3. Mr.Ashish Verma
4. Mr.Charan Singh
5. Mr. Prabhat Kumar

The notification dated 05.11.2022 has notified the appointment of 15 members but today only 9 members were administered oath. The appointment of these members rises the working strength of NCLT to 37 members as against the sanctioned strength of 63 members.

NCLT Mumbai Initiates Insolvency Process Against M/S S Kumars Ltd.

Case Title: Edelweiss Asset Reconstruction Co. Ltd. v M/s. S. Kumars Limited

Case No.: Company Petition No. (IB) -3707 (MB)/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Mr. Shyam Babu Gautam (Technical Member), had initiated Corporate Insolvency Resolution Process ("CIRP") against the textile manufacturing company M/s S Kumars Ltd. M/s S Kumars Ltd. ("Corporate Debtor") is a renowned textile manufacturing company based in Maharashtra, which has been in business for over 70 years. Further, Mr. Anjan Bhattacharya has been appointed as the Interim Resolution Professional.

NCLT Hyderabad Initiates Insolvency Process Against Gayatri Projects Ltd., A Gayatri Group Company

Case Title: State Bank of India v M/s Gayatri Projects Limited

Case No.: CP(IB) No. 308/07/HDB/2022

The National Company Law Tribunal ("NCLT"), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula, (Judicial Member) and Mr. Satya Ranjan Prasad (Technical Member), has initiated Corporate Insolvency Resolution Process (CIRP) against Gayatri Projects Ltd., which is a part of the Gayatri Group. Gayatri Projects Ltd. ("Corporate Debtor") is the flagship company of the Gayatri Group that has interests in infrastructure, power, hospitality, real estate and industry. The Corporate Debtor is engaged in the construction of major Civil Works including Concrete/Masonry Dams, Earth Filling Dams, National Highways, Bridges, Canals, Aqueducts, Ports, etc. across India. Mr. Sai Ramesh Kanuparthi has been appointed as the Interim Resolution Professional (IRP).

NCLT Hyderabad Recalls Order Initiating CIRP In View Of Concealment of Facts By Financial Creditor

Case Title: Canara Bank v Feno Plast Limited

Case No.: CP (IB) No. 10/07/HDB/2022

The National Company Law Tribunal ("NCLT"), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula, (Judicial Member) and Mr. Satya Ranjan Prasad (Technical Member), has recalled its Order whereby CIRP was initiated against the Corporate Debtor, as the said Order was obtained by the Financial Creditor over misrepresentation before the Adjudicating Authority. Reliance was placed on the Supreme Court judgment in United India Insurance Co. Ltd. v Rajendra Singh, wherein it was held that, "No Court or Tribunal can be regarded as powerless, to recall its own order, if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim". 

Homebuyers Can't Be Defrauded; NCLT Delhi Initiates CIRP Against Som Resorts

Case Title: Yadubir Singh Sajwan & Ors. v Som Resorts Private Limited

Case No.: Company Petition No. (IB)-67(ND)/2022

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri. Dharminder Singh (Judicial Member) and Dr. Binod Kumar Sinha (Technical Member), has held that under the guise of 'separate legal entity' doctrine, a developer company cannot be permitted to defraud the homebuyers in connivance with its Marketing Agent. The Corporate Veil can be pierced in matters involving public interest and to ascertain the real nature of transactions. The Bench has initiated Corporate Insolvency Resolution Process ("CIRP") against real estate developer Som Resorts Pvt. Ltd. upon a petition filed by the home buyers.

 It was opined that lifting of Corporate Veil is an exception to the distinct personality of the Company and it can be invoked if public interest so requires or if there is allegation of violation of law using the device of a corporate entity. It was observed that the Corporate Debtor had used its Marketing Agent to enter into buyer agreements and collect monies from the home buyers with an ulterior motive to conceal the real transaction. It would not be fair to the homebuyers if the Corporate Debtor indirectly achieves its agenda of defrauding homebuyers in the disguise of separate legal entity, which it could not have done directly.

NCLT Mumbai Declares Megi Agro Chem Insolvent, Reiterates OTS Proposal Amounts To Acknowledgement Of Debt

Case Title: M/s. Pridhvi Asset Reconstruction and Securitisation Company Limited v M/s. Megi Agro Chem Limited

Case No.: C.P. No. 144/(IB)-MB-V/2021

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri. H.V. Subba Rao (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Megi Agro Chem Limited over a default of Rs. 119,55,66,488/- and reiterated that One Time Settlement Proposal given by Corporate Debtor would amount to acknowledgment of debt and would accordingly extend the period of limitation. The Bench observed that the Supreme Court in Dena Bank v C. Shivakumar Reddy had held that OTS proposals given by the Corporate Debtor would amount to an acknowledgement of debt within the meaning of section 18 of the Limitation Act, 1963 and would extend the period of limitation. Mr. Vakati Balasubramanyam Reddy has been appointed as the Interim Resolution Professional.

NCLT Issues Clarification To Spurious Notification Dated 8th August 2022 Regarding Conduct Of Online Hearing

The National Company Law Tribunal ("NCLT") has issued a notification dated 09.08.2022 clarifying that a previous spurious notification dated 08.08.2022, which was being circulated on Whatsapp since yesterday, is inauthentic and neither approved by the President of NCLT nor uploaded on the NCLT official website.

On 08.08.2022, a fabricated NCLT notification was being circulated on Whatsapp, which stated that due to shortage of Members throughout NCLT benches it has been decided that the NCLT will only hear urgent matters from 10.08.2022 onwards through VC and the same has been approved by the President of NCLT. The NCLT on 09.08.2022 has released a notification on its official website, clarifying that the notification dated 08.08.2022 is inauthentic, not issued by the NCLT or approved by its President and not even uploaded on the NCLT's official website. NCLT has directed to ignore the false notification as being invalid.

NCLT Mumbai Initiates Insolvency Against Topworth Urja & Metals, A Topworth Group Enterprise

Case Title: Bank of Baroda v Topworth Urja & Metals Limited

Case No.: CP (IB) 1807/MB/C-I/2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has initiated Corporate Insolvency Resolution Process ("CIRP") against Topworth Urja & Metals Ltd. over a default of Rs. 218,14,20,222.95/- and has appointed Mr. Alok Kailash Saksena as the Interim Resolution Professional. Topworth Urja & Metals Limited is a company promoted by Mr. Abhay Lodha and belongs to the Topworth Group of companies, engaged in iron and steel sector business.

Section 14 Of IBC Does Not Differentiate Between Assessment, Quasi-Judicial Or Judicial Proceedings: NCLT Mumbai

Case Title: M/S Ravi Infrastructure & Projects v KSS Petron Private Limited

Case No.: CP (IB) 1202/MB/C-II/2017

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member), has held that Section 14 of the Insolvency and Bankruptcy Code, 2016 ("IBC") does not differentiate between assessment, quasi-judicial or judicial proceedings and moratorium is imposed on all proceedings irrespective of the nature. The Bench has set aside the assessment proceedings initiated by the Provident Fund Commissioner during the moratorium period.

On A Request Made By CoC, NCLT Is Empowered To Remand Back Resolution Plan To CoC For Re-Consideration: NCLT Ahmedabad

Case Title: Asset Reconstruction Company (India) Limited v GPT Steel Industries Ltd.

Case No.: CP (IB) No./157/AHM/NCLT/ 2018

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Dr. Deepti Mukesh (Judicial Member) and Shri Ajai Das Mehrotra (Technical Member), has held that Adjudicating Authority has right to send back the resolution plan for reconsideration to the CoC, on a request made by the CoC in its commercial wisdom. Reliance was placed on NCLAT judgment in Bank of Maharashtra v Videocon Industries Ltd. & Ors., CA (AT) (Ins) No. 503 of 2021, wherein it was held that Adjudicating Authority is competent to send back a resolution plan to the CoC for re-consideration.

Investment Made By Director Of A Company Is Not An Operational Debt: NCLT Kolkata

Case Title: Akshat Pandey v Avighna Films Private Limited

Case No.: C.P. (IB) No. 178/KB/2021

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor ("Judicial Member") and Shri Harish Chander Suri (Technical Member), has held that an investment made by the Director of a Company does not fall under the purview of an Operational Debt under the IBC.

The Bench observed that under Section 5(21) of the IBC, an Operational Debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the re-payment of dues arising under any law and payable to Government. Further, under Section 5(20) of the IBC an 'Operational Creditor' is a person to whom an Operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Based on the same, the Bench opined that Applicant is a director of the Corporate Debtor, who had invested money in the latter for production of a movie and an investment made by the Director of the Company does not fall under the purview of an Operational Debt under the IBC.

NCLT New Delhi, Mumbai, Hyderabad & Kolkata Benches Re-Constituted W.E.F 5th December 2022

File No.: 10/03/02/2022-NCLT

The Benches of National Company Law Tribunal, have been re-constituted vide a Circular dated 03.12.2022 issued by NCLT. The re-constitution has been done in accordance with the Circular of Ministry of Corporate Affairs bearing A22012/6/2021-Ad IV MCA dated 02.12.2022, whereby the Government had notified appointment of new NCLT Members. The re-constitution is effective from 05.12.2022 is subject to modification as and when other Members join. The matters shall be heard through physical mode, except for Benches where Members are presiding from different Benches or as per permission taken from Judicial Member. It has been further clarified that the part heard matters and specially ordered matters will continue to be heard by the same Bench till disposal.

NCLT New Delhi, Court Room No. 2 (Full Day)

1. Shri Ashok Kumar Bharadwaj (Judicial Member)
2. Shri L.N. Gupta (Technical Member)

NCLT New Delhi, Court Room No. 3 (First Half)

1. Shri Bachu Venkat Balaram Das (Judicial Member)
2. Shri Atul Chaturvedi (Technical Member)

NCLT New Delhi, Court Room No. 5 (First Half)

1. Shri Patibandla Satyanarayana Prasad (Judicial Member)
2. Dr. Binod Kumar Sinha (Technical Member)

NCLT New Delhi, Court Room No. 6 (Second Half)

1. Shri Bachu Venkat Balaram Das (Judicial Member)
2. Shri Rahul Prasad Bhatnagar (Technical Member)

Hyderabad Bench

NCLT Hyderabad, Court Room No. 1 (First Half)

1. Dr. VRB Nandula (Judicial Member)
2. Shri Charan Singh (Technical Member)

NCLT Hyderabad, Court Room No. 2 (Second Half)

1. Justice (Retd.) Telaprolu Rajani (Judicial Member)
2. Shri Charan Singh (Technical Member)

Kolkata Bench

NCLT Kolkata, Court Room No. 2 (Second Half)

1. Smt. Bidisha Banerjee (Judicial Member)
2. Shri Balraj Joshi (Technical Member)

Mumbai Bench

NCLT Mumbai, Court Room No. 4 (Full Day)

1. Shri Kishor Vemulapalli (Judicial Member)
2. Shri Prabhat Kumar (Technical Member)

NCLT Mumbai Benches Re-Constituted W.E.F 7th December 2022

File No.: 10/03/2022-NCLT

The Mumbai Benches of National Company Law Tribunal, have been re-constituted vide a Circular dated 06.12.2022 issued by NCLT. The re-constitution has been done in accordance with the Circular of Ministry of Corporate Affairs bearing A22012/6/2021-Ad IV MCA dated 02.12.2022, whereby the Government had notified appointment of new NCLT Members.

The re-constitution is effective from 07.12.2022 is subject to modification as and when other Members join. The matters shall be heard through physical mode, except for Benches where Members are presiding from different Benches or as per permission taken from Judicial Member. It has been further clarified that the part heard matters and specially ordered matters will continue to be heard by the same Bench till disposal.

The re-constituted NCLT Mumbai Benches shall comprise of:

NCLT Mumbai, Court Room No. 3 (Second Half)

1. Shri Venkata Subba Rao Hari (Judicial Member)
2. Shri Satya Ranjan Prasad (Technical Member)

NCLT Mumbai, Court Room No. 5 (First Half)

1. Shri Kuldip Kumar Kareer (Judicial Member)
2. Ms. Anuradha Bhatia (Technical Member)

No Clause For Payment Of Interest, OC Can't Add Interest Only To Cross Threshold Limit Of 1 Crore: NCLT Kolkata

Case Title: Khatunaresh Impex Pvt. Ltd. v Jindal (India) Limited

Case No.: C.P. (IB)/291(KB)2022

The National Company Law Tribunal ("NCLT"), Kolkata Bench, comprising of Shri Rohit Kapoor (Judicial Member) and Shri Balraj Joshi (Technical Member), has held that in absence of any contract or agreement between Parties which provides for payment of interest to the Operational Creditor alongwith principal amount, the Operational Creditor cannot claim interest in Section 9 proceedings merely to cross the threshold limit of Rs. One Crore.

NCLT Allahabad Bench Re-Constituted W.E.F 12th December 2022

File No.: 10/03/2022-NCLT

The Allahabad Bench of National Company Law Tribunal, has been re-constituted vide a Circular dated 07.12.2022 issued by NCLT. The re-constitution has been done in accordance with the Circular of Ministry of Corporate Affairs bearing A22012/6/2021-Ad IV MCA dated 02.12.2022, whereby the Government had notified appointment of new NCLT Members.

The re-constitution is effective from 12.12.2022 is subject to modification as and when other Members join. The matters shall be heard through physical mode, except where Members are presiding from different Benches or as per permission taken from Judicial Member. It has been further clarified that the part heard matters and specially ordered matters will continue to be heard by the same Bench till disposal.

The re-constituted NCLT Allahabad Bench shall comprise of:

NCLT Allahabad Bench

1. Shri Praveen Gupta (Judicial Member)
2. Shri Ashish Verma (Technical Member)

Claim Based On An Uninvoked Bank Guarantee Liable To Be Rejected By RP: NCLT Mumbai

Case Title: Mrs. Bhanu Navin Nisar v Vijay Group Realty LLP

Case No.: C.P. 4359/I&B/MB/2019

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Smt. Anuradha Sanjay Bhatia (Technical Member), has held that a Resolution Professional is legally liable to reject the claim of a creditor arising out of an uninvoked Bank Guarantee.

NCLT Delhi Imposes Cost Of Rs. 1 Lakh On Suspended Director

Case Title: Indian Bank (Erstwhile Allahabad Bank) v Nimitaya Hotel & Resorts Pvt. Ltd.

Case No.: C.P. (IB) 1913 (ND)/2019

The National Company Law Tribunal ("NCLT"), New Delhi Bench, comprising of Shri Bachu Venkat Balaram Das (Judicial Member) and Shri L.N. Gupta (Technical Member), has imposed a cost of Rs. 1 Lakh upon the Suspended Director of Corporate Debtor (Applicant) for instituting multiple proceedings seeking same reliefs and wasting precious judicial time. It was held that, "The Application is barred by the doctrine of Res Sub-Judice. Since, the applications have resulted in multiplicity of proceedings and in wastage of precious judicial time, we discourage such practice. The Application is accordingly dismissed with a cost of Rs. 1,00,000/- (one lakh) only to be deposited by the Applicant herein in the Prime Minister's Relief Fund within 15 days, the receipt of which shall be filed with the NCLT Registry."

RP Cannot Pursue An Avoidance Application After Approval Of Resolution Plan By The AA: NCLT Mumbai

Case Title: State Bank of India v Ushdev International Limited

Case No.: C.P (IB) No. 1790/MB/C-II/2017

The National Company Law Tribunal ("NCLT"), Mumbai Bench, comprising of Justice P.N. Deshmukh (Judicial Member) and Mr. Shyam Babu Gautam (Technical Member), has held that the Resolution Professional cannot carry the hat of the "Former Resolution Professional" and pursue an avoidance Application in respect of preferential transaction after the change of hands in the management of the Corporate Debtor. The Bench has rejected the avoidance application which was filed prior to approval of Resolution Plan but was being heard post approval.

Central Government Notifies The Posting Of Newly Appointed NCLT Members

The central government vide its order dated 02.12.2022 notified the posting of newly appointed NCLT Members.

The posting of judicial members is as follows;

1. Justice (Retd.) T Krishna Vali- Bengaluru
2. Kuldeep Kunar Kareer- Mumbai
3. Ashok Kumar Bhardawaj- New Delhi
4. Praveen Gupta- Allahabhad
5. Bidisha Banerjee- Kolkata

The Posting of Technical Members is as follows:

1. Prabhat Kumar- Mumbai
2. Charan Singh-Hyderabad
3. Anu Jagmohan Singh-Mumbai
4. Ashish Verma-Allahabhad
5. Atul Chaturvedi- New Delhi.

Earlier, the Central Govt. notified the appointment of 15 new members for NCLT but only 10 members took oath and joined so far. After these appointments, the working strength of NCLT rises to 38 members as against the sanctioned strength of 63 members. Recently, the Central Government informs the Supreme Court that after the appointment of these 15 members process for appointment of other 19 vacancies is under process.

IBBI

IBBI Suspends Insolvency Professional For Violation Of Code Of Conduct

Case No.: No. IBBI/DC/107/2022

The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ("IBBI"), while adjudicating a Show Cause Notice in the matter of Mr. Kedarram Ramratan Laddha (Insolvency Professional), has suspended the Insolvency Professional for a period of one year for accepting assignment as an Interim Resolution Professional without having a valid Authorisation for Assignment ("AFA") and while disciplinary proceedings were pending against him. The Order was passed on 24.06.2022.

The Disciplinary Committee observed that "the Code of Conduct prescribed under Insolvency Professional Regulations mandates the Insolvency Professional to inform such persons under the IBC as may be required, of a misapprehension or wrongful consideration of a fact of which he becomes aware, as soon as may be practicable and not to conceal any material information or knowingly make a misleading statement to the IBBI, the Adjudicating Authority or any stakeholder, as applicable".

It was held that ample opportunities were available to Mr. Kedarram to disclose the facts before Adjudicating Authority regarding non possession of a valid AFA and pendency of disciplinary proceeding against him. Accordingly, the Disciplinary Committee found the conduct of Mr. Kedarram in accepting the assignment as IRP of the Corporate Debtor without holding valid AFA and during pendency of disciplinary proceedings, was in violation of the IBBI Circular No: LA/010/2018 dated 23.04.2018, Section 208(2)(a) and 208(2)(e) of the IBC read with regulation 7A, 7(2)(a) and 7(2)(h) of IP Regulations, Clause 1, 2, 11, 12 and 14 of the Code of Conduct prescribed under IP Regulations.

CIRP Conducted In A "Brazen Manner": IBBI Suspends Insolvency Professional For Three Years

Case No.: IBBI/DC/108/2022

The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ("IBBI"), while adjudicating a Show Cause Notice dated 08.04.2022 in the matter of Mr. Partha Sarathy Sarkar (Insolvency Professional), has suspended the Insolvency Professional for a period of three years for acting in contravention of the Insolvency and Bankruptcy Code, 2016 ("IBC") and the IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"). The specific violations were such that the Insolvency Professional had failed to make timely public announcement; did not seek extension from the Adjudicating Authority when CIRP period expired; failed to appoint registered valuers, maintain proper list of creditors and take control of the Corporate Debtor's assets. The Order was passed on 24.06.2022.

IBBI Amends Its Regulations On Information Utilities

The Insolvency and Bankruptcy Board of India has introduced second round of amendments to the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 ("Information Utility Regulations") vide a notification dated 14.06.2022, bearing No. IBBI/2022-23/GN/REG085 in order to improve the availability of information. These amendments have come into force on 14.06.2022.

The amendments are as follows:

1. Before filing an application to initiate Corporate Insolvency Resolution Process (CIRP) under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), the creditor shall have to file the information of default, with the Information Utility. The Information Utility shall process the said information for the purpose of issuing record of default in accordance with Regulation 21.
2. Previously only creditors were duty bound to submit their claims to the Resolution Professional, now the Corporate Debtor or its Promoter or any associate thereof is required to submit such information to the Resolution Professional in the prescribed format.
3. The Operational Creditors will have to furnish the extracts of E-way bill, Form GSTR-1 and Form GSTR-3B alongwith their application under Section 9 of the IBC, if the concerned laws are applicable to them.
4. In order to aid the Resolution Professional in preparation of the Information Memorandum, the creditors of the Corporate Debtor will have to share information with the Resolution Professional pertaining to the Corporate Debtor's assets, liabilities, latest financial statements and other financial information, as available with them.
5. The Financial and Operational Creditors will have to furnish their PAN number and email ID while filing application under Section 7 or 9 of IBC.

IBBI Notified The Amended Insolvency And Bankruptcy Board Of India (Voluntary Liquidation Process) Regulations, 2017

The Insolvency and Bankruptcy Board of India ("IBBI") had issued a Press Release on 08.04.2022 notifying the public that amendments have been made to Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 ("Voluntary Liquidation Regulations"). The amendments are as follows:

1. The Liquidator shall prepare the list of stakeholders within 15 days from the last date for receipt of claims, where no claim from creditors has been received till the last date for receipt of claims.
2. The Liquidator shall distribute the proceeds from realization within 30 days the receipt of the amount to the stakeholders.
3. The Liquidator shall endeavour to complete the liquidation process of the corporate person within 270 days from the liquidation commencement date, where the creditors have approved the resolution under Section 59(3)(c) of IBC or Regulation 3(1)(c), and 90 days from the liquidation commencement date in all other cases.

IBBI Disciplinary Committee Restrains Insolvency Professional From Rendering Services For Two Years

Citation: IBBI/DC/91/2021

In a matter before the Disciplinary Committee of the IBBI, an Insolvency Professional, namely Mr. Manoj Kumar Singh, has been found to be dispensing his duties as an Interim Resolution Professional in contravention of the Insolvency and Bankruptcy Code, 2016 ("IBC") and its regulations. The Disciplinary Committee, vide an order dated 08.04.2022, has directed Mr. Singh to not seek or accept any process or assignment; or render any services under the IBC for a period of two years from the date when the said order comes into force.

The Committee had observed that Insolvency Professional ("IP") had failed to conduct the Corporate Insolvency Resolution Process ("CIRP") as per the provisions of the IBC and its Regulations, as no proper actions were taken by him to constitute the Committee of Creditors. The Committee held that the IP has acted in contravention to the provisions of Sections 17, 18, 20, 25, 208(2)(a) and (e) of the IBC, regulations 16B, 27, 35A, 36, 36A and 40A of CIRP Regulations, Regulation 7(2)(a) and (h) of the IP Regulations and clauses 1, 2, 10, 13 and 14 of the Code of Conduct specified in First Schedule of the IP Regulations.

IBBI Rescinds Its Previous Circulars

The Insolvency and Bankruptcy Board of India (IBBI) vide its circular dated 23.05.2022 has rescinded its various earlier circulars by exercising its power under Section 196 of the Insolvency and Bankruptcy Code, 2016. As per circular dated 23.05.2022, IBBI conducted an exercise of review of its circulars and withdrew its earlier circulars as these circulars are no longer required due to incorporation of those changes in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or IBBI (Insolvency Professionals) Regulations, 2016.

IBBI Suspends IP Subrata Monindranath Maity Who Has Been Arrested By CBI Over Bribe Allegations

Case No.: IBBI/DC/95(Interim)/2022

The Insolvency and Bankruptcy Board of India (IBBI) has suspended Insolvency Professional, Mr. Subrata Monindranath Maity, vide an interim ex-parte order dated 09.05.2022, after the Central Bureau of Investigation (CBI) had arrested Mr. Subrata over bribe allegations.

On 03.05.2022 a complaint was filed before CBI, ACB Pune, alleging that after the settlement had taken place between the aforesaid Parties, Mr. Subrata (IRP in the matter) had approached Guardian Homes Pvt. Ltd. (Corporate Debtor) demanding an amount of Rs. 20 Lakhs as bribe in addition to the IRP fees amounting to Rs. 4 Lakhs, for completing the pending formalities before NCLT Mumbai after the settlement. It has been alleged that Mr. Subrata had threatened Guardian Homes that in case of non-payment of the bribe he might take coercive actions against Guardian Homes such as seizure of bank account and publication of notice of liquidation. CBI lodged a First Information Report (FIR) against Mr. Subrata on 04.05.2022 and arrested him thereafter. CBI has also issued a press release on 05.05.2022 narrating the case.

IBBI Notifies Amendments To Insolvency Professional Regulations

Notification No. IBBI/2022-23/GN/REG088

The Insolvency and Bankruptcy Board of India ("IBBI") vide a notification dated 04.07.2022 in the Gazette of India (Extraordinary) has notified amendments to the IBBI (Insolvency Professionals) Regulations, 2016. These amendments have come into force on 04.07.2022.

The following clauses have been inserted in the Insolvency Professional Regulations:

• Clause 8B: Insolvency professional shall disclose his relationship, if any, with the corporate debtor, other professionals engaged by him, financial creditors, interim finance providers, and prospective resolution applicants to the insolvency professional agency of which he is a member, within the specified time period.
• Clause 8C: An insolvency professional shall ensure disclosure of the relationship, if any, of the other professionals engaged by him with himself, the corporate debtor, the financial creditor, the interim finance provider, if any, and the prospective resolution applicant, to the insolvency professional agency of which he is a member, within the time specified.
• Clause 15A: An insolvency professional shall prominently state in all his communications to a stakeholder, his name, address, e-mail, registration number and validity of authorisation for assignment, if any, issued by the insolvency professional agency of which he is a member.
• Clause 25B: An insolvency professional shall raise bills or invoices in his name towards his fees, and such fees shall be paid to him through banking channel.
• Clause 25C: An insolvency professional shall ensure that the insolvency professional entity or the professional engaged by him raises bills or invoices in their own name towards their fees, and such fees shall be paid to them through banking channel.
• Clause 27A: An insolvency professional shall, while undertaking assignment or conducting processes, exercise reasonable care and diligence and take all necessary steps to ensure that the corporate person complies with the applicable laws.
• Clause 27B: An insolvency professional shall not include any amount towards any loss, including penalty, if any, in the insolvency resolution process cost or liquidation cost, incurred on account of non-compliance of any provision of the laws applicable on the corporate person while conducting the insolvency resolution process, fast track insolvency resolution process, liquidation process or voluntary liquidation process, under the Code.

Shri.Jayanti Prasad Takes Charge As Whole-Time Member Of IBBI

Press Release. No. IBBI/PR/2022/30 5th July, 2022.

The Insolvency and Bankruptcy Board of India ("IBBI") on 05.07.2022 has issued a press release stating that Shri.Jayanti Prasad has taken charge as whole-time Member of Insolvency and Bankruptcy Board of India in New Delhi.

He belongs to 1986 batch Indian Audit and Accounts Service officer, superannuated as Deputy Comptroller & Auditor General (Human Resources and International Relations). Before joining IBBI, he had accomplished thirty-five years of experience in the civil services, national and international assignments, having held key positions within the Office of Comptroller and Auditor General of India and in the United Nations (UN).

RP And COC Can Request Resolution Plan For A Second Time; IBBI Notification

Notification No.: IBBI/2022-23/GN/REG093

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for a fourth time and has notified the amendment on 16.09.2022.

The amendment enables the resolution professional (RP) and the Committee of creditors (CoC) to issue request for resolution plan a second time for sale of one or more of assets of the corporate debtor (CD) in cases where no resolution plan has been received for the corporate debtor as a whole. It enables for a resolution plan to include sale of one or more assets of CD to one or more successful resolution applicants submitting resolution plans for such assets and providing for appropriate treatment of the remaining assets.

COC To Function As Stakeholder's Consultation Committee For First 60 Days: IBBI Amends Liquidation Process Regulations

Notification No.: IBBI/2022-23/GN/REG095 and No. IBBI/2022-23/GN/REG094

The Insolvency and Bankruptcy Board of India ("IBBI") on 16.09.2022 has notified amendments to the IBBI (Voluntary Liquidation Process) Regulations, 2016 ("Voluntary Liquidation Regulations") and IBBI (Liquidation Process) Regulations, 2016 ("Liquidation Regulations") for a second time. These amended Regulations have come into force on 16.09.2022. The following amendments have been introduced:

1. The Committee of Creditors (CoC) constituted during Corporate Insolvency Resolution Process (CIRP) shall function as Stakeholders Consultation Committee (SCC) in the first 60 days. After adjudication of claims and within 60 days of initiation of process, the SCC shall be reconstituted based upon admitted claims.
2. SCC may even propose replacement of liquidator to the Adjudicating Authority (AA) and fix the fees of liquidator, if the CoC did not fix the same during CIRP.
3. If any claim is not filed during liquidation process, then the amount of claim collated during CIRP shall be verified by the liquidator.
4. Specific event-based timelines have been stipulated for auction process.
5. Before filing of an application for dissolution or closure of the process, SCC shall advice the liquidator, the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading, shall be pursued after closure of liquidation proceedings.

Fee Payable To Insolvency Professional; IBBI Notifies Third Amendment To CIRP Regulations

Notification No.: No. IBBI/2022-23/GN/REG091

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for a third time and has notified the amendment on 13.09.2022. The amendment has introduced Clause 34B and Schedule II to the CIRP Regulations which have brought about the following changes:

1. The fee of the interim resolution professional or the resolution professional, appointed on or after 1^st October 2022 shall be decided by the applicant or committee in accordance with the said amendment regulations.
2. An insolvency professional shall be paid minimum fixed fee in the range of One Lakh Rupees to Five Lakh Rupees, per month, depending on the quantum of claims admitted, as specified under Table-1 of Schedule-II of the said amendment regulations. However, the applicant or committee may decide to fix higher amount of fees than the said minimum fixed fee, after taking into consideration market factors such as size and scale of business operations of corporate debtor, business sector in which corporate debtor operates, level of operating economic activity of corporate debtor and complexity related to process.
3. For the resolution plan approved by the committee on or after 1^st October 2022, the committee may decide to pay, after approval of such resolution plan by the Adjudicating Authority on commencement of payment to creditors by the resolution applicant, performance-linked incentive fee, not exceeding a total of five crores of rupees.

IBBI Notifies Second Amendment To Insolvency Professional Regulations

Notification No.: No. IBBI/2022-23/GN/REG092

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Professionals) Regulations, 2016 ("IP Regulations") for a second time and has notified the amendment on 13.09.2022. The amendment has added Clause 26A to the IP Regulations which states that an Insolvency Professional shall not accept /share any fees or charges from any professional and/or support service provider who are appointed under the processes.

IBBI Amends Model Bye-Laws Regulations For Insolvency Professional Agencies

Notification No.: IBBI/2022-23/GN/REG101

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 ("Model Bye laws Regulations") for a second time vide Gazette notification dated 31.10.2022.

The Model Bye Laws Regulations lay down the governance structure and provides for model bye laws of the Insolvency Professional Agencies (IPA). The IBBI had issued three circulars, namely, (i) Circular No. IP/005/2018 dated 16.01.2018 specifying the format for disclosure of relationship by the insolvency professional; (ii) Circular no. IPA/009/2018 dated 19.04.2018 mandating IPAs to submit Annual Compliance Certificate in the format given in the circular; and (iii) Circular No. IBBI/IPA/43/2021 dated 28.07.2021 specifying the list of contraventions by IP and the amount of penalty to be imposed by IPAs. The second amendment incorporates the aforesaid three Circulars in the amended Model Bye Laws Regulations and the said circulars stand rescinded.

IBBI Rescinds Circulars Pertaining To Insolvency Professionals

Circular No.: IBBI/IP/55/2022

The Insolvency and Bankruptcy Board of India ("IBBI") vide its circular dated 09.11.2022 has rescinded its certain circulars pertaining to Insolvency Professionals, as these circulars now form a part of the IBBI (Insolvency Professionals) Regulations, 2016; IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016; and the IBBI (Information Utilities) Regulations, 2017. The IBBI opined that the concerned circulars were no longer required on account of being already provided in the Insolvency Professionals Regulations, Model Bye-Laws Regulations, and the Insolvency and Information Utilities Regulations. These circulars have been rescinded with immediate effect.

IBBI Suspends Deloitte Partner's IP Registration For 3 Years And Imposes Penalty

Case No.: No. IBBI/DC/124/2022

The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ("IBBI") vide an order dated 18.08.2022 has suspended the registration of Insolvency Professional, Mr. Savan Godiawala, for a period of three years and has also imposed a penalty of amount equivalent to payments made to Deloitte Touche Tohmatsu India LLP after 23.07.2019 till now. Mr. Savan Godiawala is a Professional Member of Indian Institute of Insolvency Professionals of ICAI (IIIP-ICAI) and an Insolvency Professional (IP) registered with the IBBI. He is also a partner of the Deloitte Touche Tohmatsu India LLP ("Deloitte").

The Disciplinary Committee observed that contraventions in terms of wrongful withdrawal of fee and hiring of related party without proper identification of scope of work with wrong manner of determination of fee in case of Mr. Savan's dealings in respect of Lanco Infra Tech Limited and laxity in filling application on avoidance transaction in respect of Shirpur Power Pvt. Ltd. were established beyond doubt.

HIGH COURT

Cannot Invoke Article 226 If An Effective And Statutory Remedy Exists Before NCLAT: Madras High Court

Case Title: Sunku Vasundhara v State Bank of India

Case No.: W.P.Nos.14398 of 2022

The High Court of Madras Bench comprising of Justice T. Raja and Justice K. Kumaresh Babu, while adjudicating a writ petition filed in Sunku Vasundhara v State Bank of India, has held that when an effective and statutory remedy lies before the Appellate Authority i.e. National Company Law Appellate Tribunal (NCLAT), aggrieved parties cannot invoke Article 226 of the Constitution of India for relief. The order was passed on 15.06.2022.

The Petitioner had filed a Writ Petition under Article 226 of the Constitution of India before the High Court of Madras, seeking issuance of a Writ of Certiorari against an order passed by the National Company Law Tribunal ("NCLT"), Chennai Bench on 29.04.2022.

The High Court held that the Petitioner has an effective and statutory remedy before the Appellate Authority i.e. National Company Law Appellate Tribunal (NCLAT) and thus Article 226 of the Constitution of India cannot be invoked. An appeal should have been filed before the NCLAT and not the High Court.

Whether Income Tax Demand And Penalty Extinguished In CIRP? Delhi High Court Stays Demand Notice

Case Title: Indo Enviro Integrated Solution Limited v ACIT

Citation: W.P.(C) 8899/2022

The Delhi High Court bench comprising of Justice Manmohan and Justice Manmeet Pritam Singh stayed an income tax assessment order, consequential demand and notice of penalty, which were assailed on grounds of being in contravention of the order of the National Company Law Tribunal (NCLT).

An application was filed by the Union of India (through the Ministry of Corporate Affairs) under Sections 241 and 242 of the Companies Act before the NCLT based on recommendations of the Ministry of Finance, Department of Economic Affairs. It was alleged that operations of the IL & FS Group of Companies were being carried out in a manner prejudicial to the public interest. The application was made under Sections 241 and 242 of the Companies Act. The Union of India could not file an application under the IBC as in India there exists no concept of group level insolvency resolution and, at the relevant date, financial services were outside the ambit of the IBC. The issue raised was whether government debts can be extinguished under the Companies Act resolution process (which is not the same as the IBC process). The court, while listing the matter on September 27, 2022, has stayed the order as well as consequential income tax notices of demand and penalty.

Mere Pendency Of An Insolvency Petition Is Not A Bar To The Appointment Of The Arbitrator: Delhi High Court

Case Title: Millennium Education Foundation v Educomp Infrastructure and School Management Limited

Case No.: ARB. P. 326 of 2022

The Delhi High Court Bench comprising of Justice Sanjeev Sachdeva has held that the mere pendency of an insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is not a bar to the appointment of an arbitrator, neither an embargo on the power of the Court to decide arbitration applications. It is only when the insolvency petition is admitted and the moratorium is declared that the proceedings under the Arbitration Act would be non-maintainable.

All Related Proceedings Stand Discharged, Settled, Abated, & Extinguished On Approval Of Resolution Plan: Gujarat High Court

Case Title: Essar Steel Limited & Anr v State of Gujarat & Anr.

Case No.: C/SCA/8741/2006

The Gujarat High Court Bench comprising of Justice Vaibhavi D. Nanavati, while allowing an application filed by Essar Steel Limited seeking abatement of claims of the respondent (Arcelor Mittal Nippon Steel India Ltd.), has held that Section 31(1) of the IBC clarifies that once a resolution plan is approved by the Committee of Creditors then it shall be binding on all stakeholders, including the guarantors. It was further held that Section 31(1) ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate and hence, the claims of the Respondent were irrevocably and unconditionally abated, discharged, settled and extinguished in perpetuity upon approval of the Resolution Plan.

Rejected Claims By Resolution Professional In Insolvency Proceedings, To Be Decided By The Arbitrator: Delhi High Court

Case Title: Bharat Petroresources Limited v JSW Ispat Special Products Limited

Case No.: 2022 LiveLaw (Del) 469; ARB.P. 1154 of 2021.

The Delhi High Court Bench comprising of Justice Vibhu Bakhru has held that the claims rejected by Resolution Professional in the insolvency proceedings, on the ground that they arose after the insolvency commencement date, are to be decided by the arbitrator when the parties have an arbitration agreement. The Court observed that the claims arising after the insolvency commencement date would not be automatically extinguished. The order was passed on 11.02.2022.

Merely Because An Application Under Section 7 Of IBC Is Filed, It Is Not An Embargo On The Court Exercising Jurisdiction Under Section 11 Of The Arbitration & Conciliation Act, 1996: Bombay High Court

Case Title: Jasani Realty Pvt. Ltd. v. Vijay Corporation, 2022 LiveLaw (Bom) 162; Commercial Arbitration Application (L) No. 1242 of 2022.

The Bombay High Court Single Bench comprising of Justice G.S. Kulkarni, has held that merely because an application under Section 7 of Insolvency and Bankruptcy Code, 2016 is filed before the Adjudicating Authority is pending consideration, it does not oust the jurisdiction of the High Court to entertain an application filed under Section 11 of the Arbitration & Conciliation Act, 1996 ("Arbitration Act").

It was further held that an application filed under Section 7 of the IBC creates an erga omnes effect or involves third party rights only after it has been admitted by the Adjudicating Authority, however, before its admission, there is no embargo on the power of the court to decide on an application filed under Section 11 of the Arbitration Act for the appointment of an Arbitrator. Also, there is no requirement for the defendant to necessarily file an application under Section 8 of the Arbitration Act before taking recourse to the remedy available under Section 11 of the Arbitration Act. The order was passed on 25.04.2022.

IBC Proceedings Can't Dilute Rights Of The Income Tax Department To Reopen Assessment: Madras High Court

Case Title: M/s. Dishnet Wireless Limited versus the Assistant Commissioner of Income Tax (OSD)

Case No.: W.P.No.34668 of 2018, 2022 LiveLaw (Mad) 278

The Madras High Court has ruled that proceedings under the Insolvency and Bankruptcy Code (IBC), 2016 cannot dilute the rights of the Income Tax Department to reopen the assessment under Section 148 of the Income Tax Act, 1961. The Court noted that the Resolution Plan submitted by the assessee did not contemplate any concession from the Income Tax Department, even though notice under Section 148 of the Income Tax Act was issued to the assessee prior to the submission of the Resolution Plan. The Court further ruled that the provisions of Insolvency and Bankruptcy Code cannot be interpreted in a manner which is inconsistent with any other law in the time being in force.

Gujarat High Court Stays IBBI's Order Requiring Resolution Professional To Undergo Pre-Registration Educational Course From IPA

Case Title: Sunil Kumar Agarwal v Insolvency and Bankruptcy Board of India (IBBI)

Case No.: R/Special Civil Application No. 13767 of 2022

The Gujarat High Court, Ahmedabad Bench, comprising of Justice A.S. Supehia, has stayed the order passed by the Disciplinary Committee of IBBI against the Resolution Professional, requiring the latter to undergo pre-registration educational course from the IPA of which he is a member. The order was passed in view of a Show Cause Notice which was served upon the Resolution Professional by the IBBI alleging that the former had conducted the CIRP of the Corporate Debtor in contravention of IBC provisions. The next date of hearing is 09.09.2022.

Interim Moratorium Under Section 96 Of Insolvency & Bankruptcy Code, 2016 Is Limited To Particular Guarantor And Will Not Protect The Other Personal Co-Guarantors Of Same Debt: Delhi High Court

Case Title: Axis Trusteeship Services Limited v. Brij Bhushan Singhal & Anr.

Case No.: 2022 LiveLaw (Del) 1050

The Delhi High Court bench comprising of Justice Amit Bansal while dealing with two summary suits filed by creditors of Bhushan Steel limited against the ex-promoters of Bhushan Steel namely Brij Bhushan Singhal and Neeraj Singhal for recovery of money, held that the interim moratorium under Section 96 of the Insolvency & Bankruptcy Code, 2016 is specific to all debts of a particular debtor and will not be applicable to other personal co-guarantors.

Refusal To Register As IP Due To Low Cibil Score And NI Act Proceedings, Gujarat High Court Sets Aside Order

Case Title: Gundeep Singh Sood v Insolvency Professional Agency Of Institute Of Cost Accountants Of India.

Case No.: R/Special Civil Application No.16410 of 2021.

The Gujarat High Court, Ahmedabad Bench, comprising of Justice Biren Vaishnav, , has set aside an order passed by IPA ICAI refusing registration to an applicant on the ground of low CIBIL Score and pending proceedings under Negotiable Instruments Act, 1881. The Bench has directed the IPA ICAI to pass a fresh order, by taking into consideration the fact that Petitioner's CIBIL score was low due to its engagement as a Director in the Companies.

Gujarat High Court Stays IBBI Order Directing IP To Undergo 4 Months Of Probation

Case Title: Sunil Kumar Agarwal S/O. Kishan Lal Agarwal Versus Insolvency and Bankruptcy Board of India (IBBI)

Case No.: R/Special Civil Application No. 24566 Of 2022

The High Court of Gujarat Bench comprising of Justice Biren Vaishnav has stayed the operation of an order passed by Disciplinary Committee of IBBI, directing an Insolvency Professional to undergo 4 months of probation under other experienced insolvency professionals. "Even in the summary findings where the order of the adjudicating authority is quoted, it is made out that it was not the case that the C.O.C had raised any dissatisfaction with regard to the conduct of the petitioner or that there had been a lapse on his part."

Invoking CIRP Would Not Make The Dispute Non-Arbitrable: Delhi High Court

Case Title: Brilltech Engineers Pvt. Ltd. v. Shapoorji Pallonji and Co. Pvt Ltd

Case No.: 2022 LiveLaw (Del) 1176

The High Court of Delhi Bench comprising of Justice Neena Bansal Krishna, has held that the dispute would not become non-arbitrable merely because the Petitioner, before filing the application for appointment of arbitrator, has filed a corporate insolvency application under Section 9 of the IBC. The Court rejected the argument that since the petitioner has filed insolvency application which can only be filed for admitted debt and there can be no arbitration for admitted debts. The Court held that it is settled position of law that jurisdiction of NCLT can be invoked only in respect of determined debts, however, merely because a petition has been by the petitioner asserting that a definite amount is payable by the respondent, would not imply that the claimed amount has been admitted. The Court held that when the respondent has constantly denied its liability to pay, the claimed amount does not transfer into an admitted debt and petitioner can invoke arbitration for resolving the dispute.

Object of S.60(2) IBC Is To Group Together CIRP/ Liquidation Proceedings Before Single Forum: Calcutta High Court

Case Title: Alliance Broadband Services Pvt. Ltd. V. Manthan Broadband Services Pvt. Ltd. (In Liquidation),

Case No.: CS 54 of 2019, 2022 LiveLaw (Cal) 372

The Calcutta High Court Bench comprising of Justice Krishna Rao while adjudicating a petition has ruled that the object of Section 60(2) of the Insolvency and Bankruptcy Code, 2016 is to group together Corporate Insolvency Resolution process (CIRP) or liquidation proceedings of a corporate debtor and insolvency resolution/ liquidation/ bankruptcy proceedings of the corporate or personal guarantor of the same corporate debtor before a single forum i.e., the National Company Law Tribunal. The Bench reasoned that the provision intended to ensure both of the said proceedings did not proceed before different fora which may lead to multiplicity of proceedings and conflict of interest.

Moratorium Under Companies Act, 2013, Parties Cannot Be Referred To Arbitration: Delhi High Court

Case Title: DLF Ltd. versus IL&FS Engineering and Construction Company

Case No.: 2022 LiveLaw (Del) 1209

The Delhi High Court Bench comprising of Justice V. Kameswar Rao has ruled that the moratorium granted by the National Company Law Appellate Tribunal (NCLAT), staying the institution of suits and proceedings against the Corporate Debtor, after the resolution process is initiated against it under Sections 241 and 242 of the Companies Act, 2013, is akin to an order of moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC). Thus, in view of the moratorium issued by the NCLAT, the Corporate Debtor cannot be referred to arbitration.

Gujarat High Court Refuses Former NCLT Member's Plea For Re-Appointment

Case Title: Manorama Kumari v Union of India

Case No.: R/Special Civil Application No. 23268 Of 2022

The Gujarat High Court Bench comprising of Justice N.V. Anjaria and Justice Sandeep N. Bhatt, has rejected the plea of a former NCLT Member for re-appointment as a Judicial Member of NCLT, after having served a term of 5 years and being retired. The Bench held that re-appointment is not a vested right for the Petitioner. "Merely because the Petitioner has shown her willingness to be considered, merely because she is liable to be considered and merely because she has opted for reappointment, could not be ground to seek writ from the Court that her appointment process may be completed."

CBIC

CBIC Issues SOP for NCLT Cases In Respect Of The IBC

Instruction No. 1083/04/2022-CX9 dated: 23.05.2022

The Central Board of Indirect Taxes and Customs (CBIC) has issued the Standard Operating Procedure (SOP) for National Company Law Tribunal (NCLT) cases in respect of the Insolvency and Bankruptcy Code, 2016 (IBC).

The Board has instructed that the Insolvency and Bankruptcy Board of India establish the role of the GST and Customs authorities in certain crucial matters under the Insolvency and Bankruptcy Code, 2016. The GST and Customs Authorities have been classed as operational creditors. The authorities must file claims against corporate debtors when the corporate bankruptcy and resolution process is commenced and a public statement inviting claims is published by the insolvency professional. "It has also been noticed that the authorities then litigate on the denial of each claim, despite the established stance that no claims can be lodged after the plan is authorised and no demands can be made on the resolution applicant who has taken over the firm through such a resolution plan" the CBIC has instructed.

CBI

CBI Arrests Interim Resolution Professional For Demanding A Bribe Of 20 Lakhs

Central Bureau of Investigation (CBI) has arrested Insolvency Professional, Mr. Subrata Monindranath Maity, for demanding a bribe of Rs. 20 Lakhs from the promoter of Guardian Home Pvt. Ltd. for settlement of Corporate Insolvency Resolution Process (CIRP) of Guardian Homes.

NCLT Mumbai on 03.01.2020 dismissed the Section 9 petition against Guardian Homes but the decision was set aside by NCLAT vide its order dated 08.12.2020. Thereafter, NCLT Mumbai on 14.03.2022 had initiated CIRP against Guardian Homes and appointed Mr. Subrata Maity as the Interim Resolution Professional.

Subsequently, the dispute was settled between the Parties and an amount of Rs. 3 Crores was paid to Operational Creditor by Guardian Homes. It is alleged in the complaint dated 03.05.2022 filed before CBI, ACB Pune, that after the settlement, IRP had approached Guardian homes and demanded an additional amount of Rs. 20 Lakhs in addition to his fees of Rs. 4 Lakhs and in case of non-payment of the same, IRP will take coercive actions against the Guardian Homes such as seizure of bank account, publication of notice of liquidation.