Recently, the Madras High Court ruled that the banks claiming as secured creditors under the SARFAESI Act cannot seek a ‘first charge’ over the lien on the money deposit because the lien is not covered under the SARFAESI Act as a security interest. Two arguments support the ruling of the Madras High Court. First, the term “lien” is notably omitted from Section 2(z)(f) of the SARFAESI Act. Second, Section 31 of the SARFAESI Act specifies that the Act’s provisions do not apply to the lien.
The problem with this interpretation of Section 96 is two fold; firstly, the presumption that a liability under Section 66-67 of IBC is a future debt, and secondly, a practical impossibility arising out of the judgment. Addressing the first, it is pointed out that under Section 66, a resolution professional reports such transactions which in his opinion are fraudulent in nature and seeks a direction that the management of the corporate debtor be directed to make contribution to the assets of the corporate debtor to the extent of the impact of such fraudulent transactions.
In this article, the authors are trying to analyse the plight of the personal guarantors after the IBC Amendment Act 2018.
Pending consideration by the Supreme Court of India, the decision in the case of Volkswagen Finance Pvt. Ltd. v. Sree Balaji Printopack Pvt. Ltd. (2020) ibclaw.in 302 NCLAT will have a colossal effect on the auto loan industry of the country. The matter, currently being heard by a bench headed by Justice DY Chandrachud, shall be determinative of the legal position regarding the admissibility of a ‘claim’ before the liquidator, based on a hypothecation ‘charge’ over a vehicle where the charge is registered with the Regional Transport Office under VAHAN, in accordance with Section 51 of the Motor Vehicle Act, 1988. While the NCLAT has answered the said question in the negative, stating that registration with the Registrar of Companies under Section 77(3) of the Companies Act is necessary, the authors are of the view that the same is neither a legal requirement nor does it bode harmoniously with the scheme of applicable laws.
This article explains and evaluates the recent judgement of the NCLAT in Mr B.Parameshwara Udpa, RP of M/s Easun Reyrolle Ltd. vs. Assistant Provident Fund Commissioner, EPFO. Initially, the article describes the case’s facts. Second, the article explains and analyses the NCLAT’s ruling, including how the decision contradicts the language and spirit of the Insolvency legislation and Supreme Court decisions. The article finishes with some views on the repercussions and negative impacts of the ruling on workers’ social security rights.
Hon’ble Supreme Court verdict in State Tax Officer (1) v. Rainbow Papers Limited (2022) ibclaw.in 107 SC has declared State Tax (Gujarat VAT department) as secured creditor within the ambit of IBC recognising under Section 3(30) of the Insolvency and Bankruptcy Code, 2016 (IB Code). Hon’ble Supreme Court has categorically held that definition of secured creditor in the IBC does not exclude any Government or Governmental Authority. Further, another important issue discussed is relating to claims by the Statutory authority is that claims should be considered in plan as per books of account and also prefers liquidation in case the interest of State is not taken care in the resolution plan. This article attempts to analyse the judgment keeping in mind objectives of the Code.
The scope of adjudication in an application seeking release of assets attached by the ED does not extend to a determination of legality or validity of an attachment order under PMLA. Instead, the scope is limited to a determination as to whether an attachment order is sustainable pursuant to Section 14 and Section 32A of the IBC. As per Section 60, such an application is, prima facie, a question of law and/or priority arising out of or in relation to a CIRP. Therefore, such applications must be adjudicated by an NCLT itself.
Endeavour of the instant article is to highlight few aspects related to moratorium and issuance of sale certificate for the processes initiated prior to CIRP, while the CIRP qua Corporate Debtor is ongoing.
A recent pronouncement of the Supreme Court in Mahendra Kumar Jajodia v. State Bank of India (2022) ibclaw.in 32 SC provides further clarity on the (a) right of creditors to initiate insolvency resolution process against personal guarantors of the principal borrower; and (b) timing and jurisdiction to exercise such a right. We have discussed these aspects in this article.
The Orders passed in Francis John Kattukaran, Brilliant Alloys Pvt. Ltd., Swiss Ribbons Pvt. Ltd. held common position that the RP cannot file an application for withdrawal of an application made under section 7, 9 or 10 of the Code. It held that Regulation 30A cannot override the substantive provisions of section 12A. Accordingly, the applicant can only move an application for withdrawal of the application before the Adjudicating Authority, while the RP can’t do so. The interplay between these sections has transitioned in three years where Section 12A has gained more stringency.