Insolvency & Bankruptcy Code : Important Supreme Court Judgments Of 2021

1. Supreme Court Upholds Sections 3, 4 & 10 Of IBC Amendment Act 2020

[Judgment dated: 19.01.2021] [Citation : LL 2021 SC 25]

[Bench: Justices R.F. Nariman, Navin Sinha and K.M. Joseph]

[Author: Justice K.M. Joseph]

In Manish Kumar v. Union of India And Anr., the Supreme Court upheld the constitutional validity of Section 3, 4 and 10 of the Insolvency and Bankruptcy Code (Amendment) Act 2020.

While upholding the threshold imposed on homebuyers' application, the Court emphasised that the amended provisions in no way amount to hostile discrimination or violation of principles of equality guaranteed by Article 14, as had been contended by the petitioner. Referring to the Pioneer case, it clarified that though homebuyers have been declared to be unsecured creditors, they stand on a different footing from other creditors.

The Supreme Court observed -

"When an allottee invests money in a real estate project, his primary and principal concern is that the project is completed and he gets possession of the apartment or the flat. The problem really arises as there are many stakeholders whose interests are affected"

Also Read: Minimum Threshold For Homebuyers' Insolvency Process Against Builder Shields Frivolous & Avoidable Applications : Supreme Court

2. Creditor Will Not Become 'Financial Creditor' Under IBC If A Corporate Debtor Has Only Given Security By Pledging Shares, Without Undertaking To Discharge Borrower's Liability: Supreme Court

[Judgment dated: 03.02.2021] [Citation : LL 2021 SC 60]

[Bench: Justices Ashok Bhushan, R. Subhash Reddy, M.R. Shah]

[Author: Justice Ashok Bhushan]

In Phoenix Arc Pvt. Ltd. v. Ketulbhai Ramubhai Patel, the Supreme Court held that if a corporate debtor has only offered security by pledging shares, without undertaking to discharge the borrower's liability, then the creditor in such a case could be treated as a 'secured creditor' but not a 'financial creditor' as per the definition in the Insolvency and Bankruptcy Code, 2016 ("IBC").

The Supreme Court noted -

"...a person having only security interest over the assets of corporate debtor, even if falling within the description of 'secured creditor' by virtue of collateral security extended by the corporate debtor, would not be covered by the financial creditors as per definitions contained in sub-section (7) and (8) of Section 5."

3. Collusive Commercial Transactions With Corporate Debtor Will Not Constitute 'Financial Debt' Under IBC : Supreme Court

[Judgment Dated: 01.02.2021] [Citation :LL 2021 SC 55]

[Bench: Justices D.Y. Chandrachud, Indu Malhotra and Indira Banerjee]

[Author: Justice D.Y. Chandrachud]

In Phoenix Arc Private Limited v. Spade Financial Services Limited And Ors., the Supreme Court held that collusive or sham transactions with a corporate debtor will not amount to "financial debt" as defined in the IBC.

The Supreme Court observed -

"The IBC recognizes that for the success of an insolvency regime, the real nature of the transactions has to be unearthed in order to prevent any person from taking undue benefit of its provisions to the detriment of the rights of legitimate creditors"

4. Bar Under Section 10A IBC Against Initiation Of CIRP Retrospective; Applies To Applications Filed From 25 March 2020

[Judgment Dated: 09.02.2021] [Citation: LL 2021 SC 71]

[Bench: Justices D.Y. Chandrachud and M.R. Shah]

[Author: Justice D.Y. Chandrachud]

In Ramesh Kymal v. M/s. Siemens Gamesa Renewable Power Pvt. Ltd., the Supreme Court held that Section 10A of the IBC (inserted by an amendment), which creates a bar against initiation of the Corporate Insolvency Resolution Process ("CIRP"), would be applicable to a default occurring on or after 25th March, 2020, even when the amendment came into force only on 5th June, 2020.

It was clarified that the retrospective bar does not extinguish the debt owed by the corporate debtor or the right of the creditors to recover it.

The Supreme Court observed -

"We have already clarified that the correct interpretation of Section 10A cannot be merely based on the language of the provision; rather it must take into account the object of the Ordinance and the extraordinary circumstances in which it was promulgated. It must be noted, however, that the retrospective bar on the filing of applications for the commencement of CIRP during the stipulated period does not extinguish the debt owed by the corporate debtor or the right of creditors to recover it."

5. Proceedings Under Section 34 Of Arbitration Act Also Covered By Moratorium Under Section 14 IBC: Supreme Court

[Judgment dated: 01.03.2021] [ Citation : LL 2021 SC 120]

[Bench: Justices R.F. Nariman, Navin Sinha and K.M. Joseph]

[Author: Justice R.F. Nariman]

In P Mohanraj & Ors. v. M/s Shah Brothers Ispat Ltd., the Supreme Court observed that an application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an award is covered by the moratorium under Section 14 of the IBC. Refuting the law set out by the Delhi High Court, in this regard, in Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd. (2018) 246 DLT 485, the Apex Court stated that, Section 34 proceeding being one before the court challenging the arbitral award, ought to be covered just as an appellate proceeding in a decree from a suit.

The Supreme Court observed -

"This judgment does not state the law correctly as it is clear that a Section 34 proceeding is certainly a proceeding against the corporate debtor which may result in an arbitral award against the corporate debtor being upheld, as a result of which, monies would then be payable by the corporate debtor. A Section 34 proceeding is a proceeding against the corporate debtor in a court of law pertaining to a challenge to an arbitral award and would be covered just as an appellate proceeding in a decree from a suit would be covered. This judgment does not, therefore, state the law correctly."

6. Insolvency Proceedings Maintainable Even If Winding Up Petition Is Pending Against Corporate Debtor: Supreme Court

[Judgment dated: 01.03.2021] [Citation: LL 2021 SC 122]

[Bench: Justices R.F. Nariman and B.R. Gavai]

[Author: Justice R.F.Nariman]

In A. Navinchandra Steels Pvt Ltd v. SREI Equipment Finance Ltd., the Supreme Court held that a petition under Section 7 or Section 9 seeking initiation of CIRP is not affected by the winding up proceedings filed against the same corporate debtor. The Court was of the view that a secured creditor can realise its security irrespective of the winding up proceedings. It was highlighted that in such circumstances the IBC would prevail over other statutes.

The Supreme Court observed -

"Given the object of the IBC as delineated in paragraphs 25 to 28 of Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17 ["Swiss Ribbons"], it is clear that the IBC is a special statute dealing with revival of companies that are in the red, winding up only being resorted to in case all attempts of revival fail. Vis-à-vis the Companies Act, which is a general statute dealing with companies, including companies that are in the red, the IBC is not only a special statute which must prevail in the event of conflict, but has a non-obstante clause contained in Section 238, which makes it even clearer that in case of conflict, the provisions of the IBC will prevail."

7. Time Is A Crucial Facet Of Scheme Under IBC; Resolution Applicant Must Be Fair In Its Dealings: Supreme Court

[Judgment dated: 01.03.2021] [Citation: LL 2021 SC 139]

[Bench: Justices D.Y. Chandrachud and M.R. Shah]

[Author: Justice D.Y. Chandrachud]

While dismissing an appeal filed by a resolution applicant who had failed to implement the resolution plan for a period of over eight months, the Supreme Court in Kridhan Infrastructure Pvt Ltd. v. Venkatesan Sankaranarayan, noted that time is a crucial facet of the scheme under the IBC.

8. NCLT/NCLAT Can't Interfere With Commercial Wisdom Of CoC Except Within Limited Scope Under Sections 30 & 31 IBC : Supreme Court

[Judgment dated: 10.03.2021] [Citation : LL 2021 SC 155]
[Bench: Justices A.M. Khanwilkar, B.R. Gavai and Krishna Murari]

[Author: Justice B.R. Gavai]

In Kalparaj Dharamshi & Anr. v. Kotak Investment Advisors Ltd & Ors., the Supreme Court reiterated that the National Company Law Tribunal ("NCLT") and National Company Law Appellate Tribunal ("NCLAT") cannot interfere with the 'commercial wisdom' of the Committee of Creditors ("CoC"), except within the limited scope of Section 30 and 32 of the IBC.

Placing reliance on a catena of judgments including Committee of Creditors of Essar Steel India Ltd vs Satish Kumar Gupta and others, Maharashtra Seamless Ltd v Padmanabhan Venkatesh and others, K. Sashidhar vs. Indian Overseas Bank, the Supreme Court stated -

"It would thus be clear that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code."

9. Person Ineligible U/s 29A IBC To Submit Resolution Plan Cannot Propose Scheme Of Compromise & Arrangement U/s 230 Companies Act 2013: Supreme Court

[Judgment dated: 15.03.2021] [Citation: LL 2021 SC 160]

[Bench: Justices D.Y. Chandrachud and M.R. Shah]

[Author: Justice D.Y. Chandrachud]

In Arun Kumar Jagatramka v. Jindal Steel and Power Ltd., the Supreme Court held that a person who is ineligible to submit a resolution under Section 29A of the IBC cannot propose a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013.

The Court upheld the constitutional validity of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which stipulate that a person who is not eligible under the IBC to submit a resolution plan for insolvency resolution of the corporate debtor shall not be a party in any manner to such compromise or arrangement.

10. Section 14 Limitation Act Applies To Application Under Section 7 IBC : Supreme Court

[Judgment dated: 22.03.2021] [Citation: LL 2021 SC 177]

[Bench: Justices Indira Banerjee and Hemant Gupta]

[Author: Justice Indira Banerjee]

In Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd., the Supreme Court held that in an application under Section 7 of the IBC, the applicant can claim the benefit of Section 14 of the Limitation Act, 1963, which allows for exclusion from the limitation period the time spent litigating before wrong forum, in respect of proceedings under the SARFAESI Act.

The Court also held that SARFAESI proceedings are to be considered as 'civil proceedings' for the purpose of Section 14 of the Limitation Act.

11. Adjudicating Authority Cannot Substitute Any Commercial Term Of Resolution Plan Approved By Committee Of Creditors: Supreme Court

[Judgment dated: 24.03.2021] [Citation: LL 2021 SC 178]

[Bench: Justices A.M. Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna]

[Author: Justice Dinesh Maheshwari]

In Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd., the Supreme Court observed that adjudicating authority cannot substitute any commercial term of the resolution plan approved by the CoC. While deciding the issue of scope of scrutiny of the resolution plan by the Adjudicating Authority, the Apex Court noted -

"If, within its limited jurisdiction, the Adjudicating Authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission."

12. Insolvency Process Maintainable Against Corporate Guarantor Even If Principal Borrower Is Not A 'Corporate Person': Supreme Court

[Judgment dated: 26.03.2021] [Citation: LL 2021 SC 186]

[Bench: Justices A.M. Khanwilkar, B.R. Gavai, Krishna Murari]

[Author: Justice A.M. Khanwilkar]

In Laxmi Pat Surana v. Union Bank Of India, the Supreme Court held that the principal borrower need not be a "corporate person" for insolvency process to be initiated against a company which stood as its guarantor.

The Supreme Court held -

"Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 can be initiated by a financial creditor against a corporate person in respect of guarantee to the loan amount secured by person not being a corporate person, in case of default in payment of such a debt."

13. Arbitration Reference Not Maintainable If Filed After Admission Of Insolvency Resolution Petition U/s 7 IBC: Supreme Court

[Judgment dated: 26.03.2021] [Citation: LL 2021 SC 187]

[Bench: CJI SA Bobde, Justices A.S. Bopanna and V. Ramasubramanian]

In Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund, the Supreme Court observed that if the Adjudicating Authority admits a petition under Section 7 of the IBC recording its satisfactory with respect to the default and the debt, application seeking reference to arbitration under Section 8 of the Arbitration and Conciliation Act filed during the pendency of such proceedings before the Adjudicating Authority under IBC, would not be maintainable.

The Supreme Court stated -

"In a situation where the petition under Section 7 of IB Code is yet to be admitted and, in such proceedings, if an application under Section 8 of the Act, 1996 is filed, the Adjudicating Authority is duty bound to first decide the application under Section 7 of the IB Code by recording a satisfaction with regard to there being default or not, even if the application under Section 8 of Act, 1996 is kept along for consideration. In such event, the natural consequence of the consideration made therein on Section 7 of IB Code application would befall on the application under Section 8 of the Act, 1996."

14. 2019 Amendment To Section 31 IBC Has Retrospective Operation: Supreme Court

[Judgment dated: 13.04.2021] [Citation: LL 2021 SC 212]

[Bench: Justices R.F. Nariman, B.R. Gavai and Hrishikesh Roy]

[Author: Justice B.R. Gavai]

In Ghanashyam Mishra And Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd., the Supreme Court held that Section 31 as amended by the IBC (Amendment) Act, 2019 had retrospective operation. The 2019 amendment added the following words in Section 31(1) of the IBC after the words 'members, creditors' -

"including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed"

The Supreme Court was of the opinion -

"…we have held, that 2019 amendment to Section 31 of I&B Code is clarificatory and declaratory in nature and therefore will have a retrospective operation."

15. Balance Sheets Entries Can Amount To Acknowledgement Of Debt U/s 18 Limitation Act: Supreme Court Sets Aside NCLAT Full Bench Ruling

[Judgment dated: 15.04.2021] [Citation: LL 2021 SC 215]

[Bench: Justices R.F. Nariman, B.R. Gavai and Hrishikesh Roy]

[Author: Justice R.F. Nariman]

Setting aside a judgment of the Full Bench of the NCLAT in V. Padmakumar v. Stressed Assets Stabilization Fund, the Supreme Court in Asset Reconstruction Company (India) Limited v. Bishal Jaiswal held that entries in balance sheets can amount to acknowledgement of debt for the purpose of extending limitation under Section18 of the Limitation Act.

16. Power Under Section 482 CrPC Cannot Be Used To Undermine Statutory Dictate Under Section 14, 17 IBC: Supreme Court

[Judgment dated: 22.04.2021] [ Citation :LL 2021 SC 228]

[Bench: Justices U.U. Lalit and K.M. Joseph]

[Author: Justice K.M. Joseph]

In Sandeep Khaitan, Resolution Professional For National Plywood Industries Ltd. v. JSVM Plywood Industries Ltd., the Supreme Court observed that power under Section 482 of the Cr.P.C. cannot be used to undermine a statutory dictate, including the provisions of IBC.

The Supreme Court noted -

"We have to also in this context bear in mind that the High Court appears to have, in passing the impugned order, which is an interim order for that matter, overlooked the salutary limits on its power under Section 482. The power under Section 482 may not be available to the Court to countenance the breach of a statuary provision. The words 'to secure the ends of justice' in Section 482 cannot mean to overlook the undermining of a statutory dictate, which in this case is the provisions of Section 14, and Section 17 of the IBC."

17. Secured Creditor Can't Challenge Resolution Plan Insisting That Higher Amount Should Be Paid Based On Security Interest: Supreme Court

[Judgment dated: 13.05.2021] [Citation : LL 2021 SC 269]

[Bench: Justices Vineet Saran and Dinesh Maheshwari]

In India Resurgence ARC Pvt Ltd v. Amit Metaliks Ltd, the Supreme Court held that a dissenting secured creditor cannot challenge a resolution plan approved under the IBC on the ground that a higher amount should have been paid to it on the basis of the security interest held by it over the corporate debtor.

The Supreme Court observed -

"It has not been the intent of the legislature that a security interest available to a dissenting financial creditor over the assets of the corporate debtor gives him some right over and above other financial creditors so as to enforce the entire of the security interest and thereby bring about an inequitable scenario, by receiving excess amount, beyond the receivable liquidation value proposed for the same class of creditors"

The Court added -

"..what amount is to be paid to different classes or sub-classes of creditors in accordance with provisions of the Code and the related Regulations, is essentially the commercial wisdom of the Committee of Creditors; and a dissenting secured creditor like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest."

18. IBC - Approval Of Resolution Plan Does Not By Itself Discharge Liabilities Of Personal Guarantor Of Corporate Debtor: Supreme Court

[Judgment dated: 21.05.2021] [Citation: LL 2021 SC 257]

[Bench: Justices L. Nageswara Rao and S. Ravindra Bhat]

[Author: Justice S. Ravindra Bhat]

In Lalit Kumar Jain v. Insolvency and Bankruptcy Board of India, the Supreme Court while upholding the provisions of IBC which applies to personal guarantors of corporate debtors observed that, the approval of a resolution plan does not ipso facto discharge a personal guarantor of a corporate debtor.

The Supreme Court noted -

"It is therefore, clear that the sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor's liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this court has indicated, time and again, that an involuntary act of the principal debtor leading to loss of security, would not absolve a guarantor of its liability"

Also Read: Supreme Court Upholds IBC Provisions Applicable To Personal Guarantors Of Corporate Debtors

19. Lender Who Advanced Interest Free Loans To Corporate Body Is Also A Financial Creditor; Can Initiate CIRP

[Judgment dated: 26.07.2021] [Citation: LL 2021 SC 333]

[Bench: Justices Indira Banerjee and V. Ramasubramanian]

[Author: Justice Indira Banerjee]

In Orator Marketing Pvt. Ltd. v. Samtex Desinz Pvt. Ltd, the Supreme Court observed that a lender who advanced interest free loans to finance the business operations of a body is a financial creditor and competent to initiate the CIRP under Section 7 of the IBC.

The Supreme Court noted -

"There is no discernible reason, why a term loan to meet the financial requirements of a Corporate Debtor for its operation, which obviously has the commercial effect of borrowing, should be excluded from the purview of a financial debt."

Further, the Court held that the financial debt would include free loans advanced to finance the business operations of a corporate body.

20. Money Decree/Certificate Of Recovery In Favour Of Financial Creditor Gives Fresh Cause Of Action To Initiate CIRP U/s 7 IBC

[Judgment dated: 04.08.2021] [Citation: LL 2021 SC 349]

[Bench: Justices Indira Banerjee and V. Ramasubramanian]

[Author: Justice Indira Banerjee]

In Dena Bank v. C. Shivakumar Reddy, the Supreme Court held that a judgment and/or decree for money in favour of the financial creditor, or the issuance of a certificate of recovery in its favour, would give rise to a fresh cause of action for the financial creditor, to initiate proceedings under Section 7 of the IBC for the initiation of the CIRP.

The Supreme Court emphasised -

"A final judgment and order/decree is binding on the judgment debtor. Once a claim fructifies into a final judgment and order/decree, upon adjudication, and a certificate of Recovery is also issued authorizing the creditor to realize its decretal dues, a fresh right accrues to the creditor to recover the amount of the final judgment and/or order/decree and/or the amount specified in the Recovery Certificate."

The Court further observed that there is no bar in permitting amendment of pleadings or to the filing of additional documents in an application under Section 7 of the IBC.

Also Read: No Bar In Permitting Amendment Of Pleadings Or Filing Of Additional Documents In CIRP Application U/s 7 IBC

21. NCLT/NCLAT Has No Residual Equity Jurisdiction While Dealing With Resolution Plan Approved By CoC

[Judgment dated: 10.08.2021] [Citation: LL 2021 SC 368]

[Bench: Justices D.Y. Chandrachud and M.R. Shah]

[Author: Justice D.Y. Chandrachud]

In Pratap Technocrats (P) Ltd. v. Monitoring Committee of Reliance Infratel Limited, the Supreme Court reiterated that there is no residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority while dealing with the resolution plan approved by the CoC.

The Supreme Court stated -

"To argue that a residuary jurisdiction must be exercised to alter the delicate economic coordination that is envisaged by the statute would do violence on its purpose and would be an impermissible exercise of the Adjudicating Authority's power of judicial review.",

22. Application For Initiating CIRP Has To Be Rejected If A Dispute Truly Exists In Fact And Is Not Spurious, Hypothetical Or Illusory

[Judgment dated: 10.08.2021] [Citation: LL 2021 SC 370]

[Bench: Justices R.F. Nariman and B.R. Gavai]

[Author: Justice B.R. Gavai]

In Kay Bouvet Engineering Ltd. v. Overseas Infrastructure Alliance (India) Private Limited, the Supreme Court observed that the Adjudicating Authority has to reject an application seeking initiation of CIRP under Section 9 of the IBC, if there is a record of dispute in the information utility, which truly exists in fact and is not spurious, hypothetical or illusory.

The Apex Court clarified that at this stage the Adjudicating Authority would not be required to go into the merits of the dispute except to the extent indicated or to satisfy itself as to whether the defence is likely to succeed or not.

23. NCLT/NCLAT Should Strictly Adhere To IBC Timelines; Delays Cause Commercial Uncertainty

[Judgment dated: 13.09.2021] [Citation :LL 2021 SC 447]

[Bench: Justice D.Y. Chandrachud and M.R. Shah]

[Author: Justice D.Y. Chandrachud]

In Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited, the Supreme Court reiterated that the Adjudicating and Appellate Authorities under the IBC ought to strictly adhere to the timelines stipulated in the statute and urged them to clear the pending plans at the earliest. It was also held that NCLT cannot permit modifications or withdrawals of CoC approved Resolution Plans, at the behest of the successful applicant, once the plan has been submitted to it.

The Court noted that inordinate delay causes commercial uncertainty, degradation in the value of the corporate debtor and makes the insolvency process inefficient and expensive.

24. NCLAT Has No Jurisdiction To Condone Delay Exceeding 15 Days From Period Of 30 Days, Contemplated U/s 61(2) IBC

[Judgment dated: 14.09.2021] [Citation :LL 2021 SC 453]

[Bench: Justices M.R. Shah and Aniruddha Bose]

[Author: Justice M.R. Shah]

In National Spot Exchange Limited v. Anil Kohli, the Supreme Court observed that the NCLAT has no jurisdiction to condone the delay exceeding 15 days from the period of 30 days, as contemplated under Section 61(2) of the IBC.

The Supreme Court noted -

"The appeal preferred before the NCLAT was under Section 61(2) of the IB Code. As per Section 61(2) of the IB Code, the appeal was required to be preferred within a period of thirty days. Therefore, the limitation period prescribed to prefer an appeal was 30 days. However, as per the proviso to Section 61(2) of the Code, the Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing the appeal, but such period shall not exceed 15 days. Therefore, the Appellate Tribunal has no jurisdiction at all to condone the delay exceeding 15 days from the period of 30 days, as contemplated under Section 61(2) of the IB Code."

25. IBC- Every Attempt Has To Be First Made To Revive The Concern And Make It A Going Concern, Liquidation Being The Last Resort

[Judgment dated: 15.09.2021] [Citation :LL 2021 SC 459]

[Bench: Justices L. Nageswara Rao, B.R. Gavai and B.V. Nagarathna]

[Author: Justice B.R. Gavai]

In K.N. Rajakumar v. V. Nagarajan, the Supreme Court approved the order of withdrawal of the CIRP process passed by the NCLT on the principle that, every attempt has to be first made to revive the concern and make it a going concern, liquidation being the last resort. Referring to Section 12A of IBC, the Court noted that with the approval of 90% voting share of the CoC, the Adjudicating Authority can be allowed to withdraw CIRP.

The Supreme Court observed -

"It could thus be seen that the Adjudicating Authority is entitled to withdraw the application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting share of the CoC.. It is not in dispute that the resolution of CoC approving withdrawal of CIRP proceedings was supported by the requisite voting majority."

26. Moratorium Ordered U/Sec.14 IBC Does Not Apply To Proceedings In Respect Of Directors/Management Of Corporate Debtor

[Judgment dated: 08.09.2021] [Citation :LL 2021 SC 462]

[Bench: Justices D.Y. Chandrachud, Vikram Nath and Hima Kohli]

[Author: Justice D.Y. Chandrachud]

In Anjali Rathi v. Today Homes & Infrastructure Pvt. Ltd., the Supreme Court observed that the moratorium order under Section 14 of the IBC does not apply to directors/management of the Corporate Debtor.

The Supreme Court stated -

"At this juncture, we must however clarify the right of the petitioners to move against the promoters of the first respondent Corporate Debtor, even though a moratorium has been declared under Section 14 of the IBC. In the judgment in P. Mohanraj v. Shah Bros. Ispat (P) Ltd., a three judge Bench of this Court held that proceedings under Section 138 and 141 of the Negotiable Instruments Act 1881 against the Corporate Debtor would be covered by the moratorium provision under Section 14 of the IBC. However, it clarified that the moratorium was only in relation to the Corporate Debtor (as highlighted above) and not in respect of the directors/management of the Corporate Debtor, against whom proceedings could continue."

27. Power Of Attorney Having Authorisation Of Financial Creditor Can File Application U/s 7 IBC

[Judgment dated: 30.09.2021] [Citation :LL 2021 SC 524]

[Bench: Justices L. Nageswara Rao, BR Gavai and BV Nagarathna]

[Author: Justice L. Nageswara Rao]

In Rajendra Narottamdas Sheth v. Chandra Prakash Jain, the Supreme Court held that the power of attorney holder of a financial creditor who has been given due authorisation can file an application under Section 7 of the IBC on its behalf.

The Supreme Court observed -

"In the present case, Mr. Praveen Kumar Gupta has been given general authorisation by the Bank with respect to all the business and affairs of the Bank, including commencement of legal proceedings before any court or tribunal with respect to any demand and filing of all necessary applications in this regard. Such authorisation, having been granted by way of a power of attorney pursuant to a resolution passed by the Bank's board of directors on 06.12.2008, does not impair Mr. Gupta's authority to file an application under Section 7 of the Code."

28. Limitation Period For Appeal Under Section 61 IBC Starts Running From Date Of Pronouncement; Delay In Uploading Won't Exclude Limitation

[Judgment dated: 22.10.2021] [Citation :LL 2021 SC 581]

[Bench: Justices D.Y. Chandrachud, Vikram Nath and BV Nagarathna]

[Author: Justice D.Y. Chandrachud]

In V Nagarajan v. SKS Ispat and Power Ltd, the Supreme Court held that the period of limitation for filing of appeal against an order as per Section 61 of the IBC will start running as soon as the same is pronounced, and that it is not dependent on the date when the order is uploaded. The Apex Court further held that the period awaiting the receipt of a free certified copy does not extend the limitation period under Section 61(2) of the IBC for a party who has not applied for the same. The Court noted that a diligent litigant is expected to apply for the certified copy immediately, since the act of filing an application for a certified copy is not just a technical requirement for computation of limitation but also an indication of the diligence of the aggrieved party in pursuing the litigation in a timely fashion.

29. IBC: NCLT Cannot Adjudicate Contractual Dispute If Termination Of Contract Is Based On Grounds Unrelated To Corporate Debtor's Insolvency

[Judgment dated: 23.11.2021] [Citation :LL 2021 SC 675]

[Bench: Justices D.Y. Chandrachud and AS Bopanna]

[Author: Justice D.Y. Chandrachud]

In TATA Consultancy Services Limited v. Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited, the Supreme Court observed that the residuary jurisdiction of the NCLT cannot be invoked to adjudicate contractual disputes if the termination of a contract is based on grounds unrelated to the insolvency of the corporate debtor. It was further stated that if the contractual dispute relates to insolvency, a party can be restrained from terminating the contract only if it is central to the success of the CIRP.

30. Resolution Process Has To Be Completed Within The Period Stipulated U/Sec 12 IBC: Supreme Court

[Judgment dated: 01.12.2021] [Citation :LL 2021 SC 698]

[Bench: Justices M.R. Shah and Sanjiv Khanna]

[Author: Justice M.R. Shah]

In Committee of Creditors of Amtek Auto Ltd v. Dinkar T. Venkatsubramanian, the Supreme Court observed that the entire resolution process has to be completed within the period stipulated under Section 12 of the IBC, since any deviation would defeat the object and purpose of providing a time limit.

31. NCLT Cannot Direct Parties To Settle A Dispute While Considering A Petition U/Sec 7 IBC: Supreme Court

[Judgment dated: 14.12.2021] [Citation :LL 2021 SC 738]

[Bench: Justices D.Y. Chandrachud and A.S. Bopanna]

[Author: Justice D.Y. Chandrachud]

In E S Krishnamurthy v. Bharath Hi Tech Builders Pvt. Ltd, the Supreme Court observed that the Adjudicating and Appellate Authorities under the IBC can encourage, but not compel a party to the proceedings before it, to settle a dispute.

The Supreme Court noted -

"The Adjudicating Authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the Adjudicating Authority must then either admit or reject an application respectively. These are the only two courses of action which are open to the Adjudicating Authority in accordance with Section 7(5). The Adjudicating Authority cannot compel a party to the proceedings before it to settle a dispute."