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Insolvency Bulletin-Weekly IBC Case Laws Digest: 26th Sept. to 2nd Oct., 2022

IBC Case Laws Digest: 26th Sept. to 2nd Oct., 2022   High Court   High Court can entertain Writ Petition if IBBI’s order effects the work of an Insolvency Professional in its territorial jurisdiction Case Name: Partha Sarathy Sarkar Vs.…

SARFAESI Bulletin- SARFAESI and RDB Act, 1993 Case Laws Digest: 16th September 2022 to 30th September 2022

SARFAESI Bulletin- SARFAESI and RDB Act, 1993 Case Laws Digest 16th September 2022 to 30th September 2022 Supreme Court Section 14 of the SARFAESI Act does not involve any adjudicatory process qua points raised by Borrowers against Secured Creditor taking…

Review dismissed in case of Vidarbha Industries Power – judgments and observations in judgments are not to be read as provisions of statute – Axis Bank Ltd. Vs. Vidarbha Industries Power Ltd. – Supreme Court

In review judgment, Hon’ble Supreme Court held that it is well settled that judgments and observations in judgments are not to be read as provisions of statute. Judicial utterances and/or pronouncements are in the setting of the facts of a particular case. To interpret words and provisions of a statute, it may become necessary for the Judges to embark upon lengthy discussions. The words of Judges interpreting statutes are not to be interpreted as statutes. There are no grounds for review of the judgment and order.

High Court can entertain Writ Petition if IBBI’s order effects the work of an Insolvency Professional in its territorial jurisdiction – Partha Sarathy Sarkar Vs. Insolvency & Bankruptcy Board of India (IBBI) – Bombay High Court

In this case, the Registration of Petitioner as Insolvency Professional is suspended for a period of three years under the impugned order dated 24.06.2022. IBBI (and other Respondents) contended that on the basis of principle of forum conveniens, the Petitioner ought to have filed the Petition before the Delhi High Court. Hon’ble High Court entertained the Writ Petition and held that the Petitioner acts as a Resolution Professional and has work on hand at Mumbai. He is appointed as an IP by the Mumbai Bench for Wholesale Foods P.Ltd. and the said proceeding is pending adjudication before NCLT, Mumbai Bench. The Petitioner is empanelled as IP for financial institution in Mumbai. The Petitioner is also appointed in voluntary liquidation of Gulf India Ltd. before NCLT Mumbai Bench. The effect of the impugned order of suspension will be felt by the Petitioner even in the State of Maharashtra. The Court held that pursuant to the order of suspension, the Petitioner would not be in a position to work as a Resolution Professional with the assignments on hand in the State of Maharashtra. The Petitioner is already having assignments in the State of Maharashtra as a Resolution Professional. As the effect of the impugned order will be felt by the Petitioner in the State of Maharashtra, it can safely be concluded that part of cause of action has arisen with the territorial jurisdiction of this court.

Section 33(2) of IBC clearly empowers the CoC to take the decision to liquidate the Corporate Debtor, any time after its constitution under Section 21(1) and before the confirmation of the resolution plan – Sandeep Kasare Vs. IL&FS Financial Services Ltd. – NCLAT New Delhi

NCLAT held that in the facts of the present case, we do not find any infirmity in the Resolution passed by the CoC for liquidating the Corporate Debtor. The Adjudicating Authority in order dated 06.07.2022 after perusing the material on record and after perusing the 3rd CoC Meeting has allowed the Application filed by the Resolution Professional under Section 33. No infirmity is found in the order of the Adjudicating Authority directing for liquidation of the Corporate Debtor.

Rule 8(6)(f) of the Security Enforcement Rules protects the interest of the intending purchaser to be put on notice as to encumbrance as otherwise, he or she would be purchasing property, and simultaneously buying litigation as well, and the intending purchaser may not bid in the event, if he or she came to know any encumbrance over the property – Llovegeet Dhuria Vs. State Bank of India and Others – Punjab & Haryana High Court

Rule 8(6)(f) of the Rules protects the interest of the intending purchaser to be put on notice as to encumbrance as otherwise, he or she would be purchasing property, and simultaneously buying litigation as well, and the intending purchaser may not bid in the event, if he or she came to know any encumbrance over the property. That is why the Rules specifically contemplate a provision for the Authorized Officer, while notifying the sale, to specifically state as to the encumbrance. Merely by mentioning in the e-auction notice that the sale is on as is where is basis, as is what is basis and whatever there is basis, the Bank is not absolved of its statutory obligation of disclosing the “encumbrances” attached to the property brought for sale by way of tender or any auction or sale by public auction. Since, the petitioner is also placed in a similar situation, on parity, the Bank ought to have granted the refund of the earnest money deposited by the petitioner and ought not to have forfeited it. By doing so, it has discriminated against the petitioner and has acted arbitrarily in violation of Articles 14 and 300 A of the Constitution of India. So we hold that it was not proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it; and that it ought to have refunded the amount deposited by petitioner, instead of forfeiting it.

Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC – Shraddha Buildcon Pvt. Ltd. Vs. The Dhar Textile Mills Ltd. – NCLAT New Delhi

In event the submission of the Appellant is accepted that due to financial difficulty he is unable to implement the plan and he be permitting to go back from the commitments made in the Resolution Plan, it shall have disastrous effect on the entire process undertaken. The IBC is process consists of different steps with a ultimate object of reviving the Corporate Debtor. Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC. On the submission made by Counsel for the Appellant that since he had no financial capacity to implement the plan he should have been allowed to withdraw, the Adjudicating Authority has rightly rejected his application. It is further submitted that financial in-capacity of the Appellant was due to no fault of the Appellant and it was due to subsequent developments. The above argument also cannot entitle the Appellant to withdraw from an approved Resolution Plan.

M/s A.S. Nutratech Pvt. Ltd. Vs. Central Bank of India – Chhattisgarh High Court

The Petitioner/company borrowed loan from the Respondent/Bank. Both the loan accounts of the Petitioner were declared as NPA. Notice under Section 13(2) of the SARFAESI Act, 2002 has also been served on the Petitioner on 10.4.2018. Symbolic possession of the premises of the Petitioner/company has also been taken by the Respondent/Bank as contained in Rule 8(1) of the Rules of 2002. In compliance of Rule 8(6) of the Rules of 2002, sale notice for the sale of immovable properties has also been served on the Petitioner. Thus, it is well established that the proceeding under the Act of 2002 has already been drawn against the Petitioner. Though the Petitioner has not challenged in the instant petition any of the proceedings pending under the Act of 2002, the fact remains that the proceedings have already been drawn against the Petitioner under the Act of 2002. Therefore, the Petitioner/company has the only remedy available to approach the DRT as contained in Section 17 of the Act of 2002. Thus, it is held that the instant writ petition filed under Article 226 of the Constitution of India is not maintainable before this Court.

Nirendra Nath Kar Vs. Gopal Navin Bhai Dave & Ors. – Supreme Court

I. Case Reference Case Citation : (2022) ibclaw.in 117 SC Case Name : Nirendra Nath Kar Vs. Gopal Navin Bhai Dave & Ors. Appeal No. : Civil Appeal No(S). 4448 of 2015 Judgment Date : 29-Sep-22 Court/Bench : Supreme Court of India Coram : Mr. Justice Ajay…

Revision of tenure of Members in NCLAT – MCA Notification No. SO-4581/SO-4582/SO-4583 dated 29.09.2022

MINISTRY OF CORPORATE AFFAIRSNOTIFICATIONNew Delhi, the 29th September, 2022 S.O. 4581(E).—In exercise of the powers conferred by section 410 of the Companies Act, 2013 (18 of 2013) read with sub-section (2) of section 3 and section 5 of the Tribunals…