IBC-Case Laws-NCLAT

No fresh Notice invoking Guarantee is required for filing Section 95 application under IBC – K.M. Sebastine (Kalarithara Michael Sebastine) Personal Guarantor of Schifflies India Ltd. Vs. State Bank of India and Anr. – NCLAT New Delhi

Hon’ble NCLAT observed that in the present case notice of demand was given on 26.08.2014 which has already been brought on record which notice was addressed to the appellant. The submission of the Appellant that after the said notice further fresh notices were required for filing Section 95 application does not appeal to us. When by the notice guarantee was invoked by the bank, bank was entitled to initiate proceedings and present is the case where bank is claiming extension of limitation under Section 18 thus we are not satisfied that invocation of guarantee was to be repeatedly done by the bank before filing the application under Section 95.

No fresh Notice invoking Guarantee is required for filing Section 95 application under IBC – K.M. Sebastine (Kalarithara Michael Sebastine) Personal Guarantor of Schifflies India Ltd. Vs. State Bank of India and Anr. – NCLAT New Delhi Read Post »

Can Financial Creditor change date of default through rejoinder affidavit in the application filed under Section 95 of IBC against Personal Guarantor? – Sanjeeb Ranjeet Das Vs. Punjab National Bank and Anr. – NCLAT New Delhi

Hon’ble NCLAT has dismissed an appeal filed by Personal Guarantor on change of default by PNB in the application filed under Section 95 of IBC.

The Hon’ble Appellate Tribunal held that it is well settled that Financial Creditor is permitted to supplement the Application by filing the additional documents.

The Bench also observed that the Adjudicating Authority has also granted time to the Personal Guarantor to file reply to the amended petition and to oppose the new date of default to be inserted by the Creditor.

Can Financial Creditor change date of default through rejoinder affidavit in the application filed under Section 95 of IBC against Personal Guarantor? – Sanjeeb Ranjeet Das Vs. Punjab National Bank and Anr. – NCLAT New Delhi Read Post »

Whether all dues of EPFO (Contribution u/s 7A, Interest u/s 7Q and Damages u/s 14 of the EPF Act) are to be treated outside Liquidation Estate under Section 36(4)(a)(iii) of IBC and Section 53(1) cannot be made applicable to such dues? – Mr. Anuj Bajpai Vs. Employee Provident Fund Organisation and Ors. – NCLAT New Delhi

In this case, Liquidator submitted that only contribution under Section 7A should have been treated as dues payable to the workers and employees under Section 36(4) of the Code and remaining amount should have been treated as other claims to be dealt in accordance with Section 53 Code.

Hon’ble NCLAT referred the judgment in Maharashtra State Cooperative Bank Vs. Assistant Provident Fund Commissioner & Ors. (2017) ibclaw.in 119 SC and held that interest payable by the employee under Section 7Q and the damages levied under Section 14B of the EPF Act will also be covered as dues from the employers for the purpose of Section 11(2) of the EPF Act.

The Hon’ble Bench also referred judgments in Sunil Kumar Jain and Ors. v. Sundaresh Bhatt and Ors. (2022) ibclaw.in 23 SC, Jet Aircraft Maintenance Engineers Welfare Association (2022) ibclaw.in 861 NCLAT and SBI v. Moser Baer Karamchari Union (2020) ibclaw.in 206 NCLAT and dismissed the appeal holding that the contention of the Liquidator is not tenable and stand rejected.

Whether all dues of EPFO (Contribution u/s 7A, Interest u/s 7Q and Damages u/s 14 of the EPF Act) are to be treated outside Liquidation Estate under Section 36(4)(a)(iii) of IBC and Section 53(1) cannot be made applicable to such dues? – Mr. Anuj Bajpai Vs. Employee Provident Fund Organisation and Ors. – NCLAT New Delhi Read Post »

NCLAT clarifies that Adjudicating Authority cannot reject the liquidation decision of Committee of Creditors (CoC) – Bank of India Vs. Pradeep Kumar Goenka, RP of Agnipa Energo Pvt. Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) The decision in Amit Bharana and Ors vs. Gian Chand Narang (2021) ibclaw.in 12 NCLAT is crystal clear and settle the principle of paramount supremacy of the commercial wisdom of the CoC.
(ii) There is hardly any scope for judicial interference on the part of the Adjudicating Authority or the Appellate Tribunal except ensuring that the Resolution Plan meets the requirements of the Code and the related regulations.
(iii) It is beyond doubt that the commercial wisdom of the CoC is required to be honoured in letter and spirit.
(iv) There is no role for Adjudicating Authority to interfere on such unfounded reasoning as recorded in the Impugned Order.
(v) The Impugned Order is found to be perverse and illegal.

NCLAT clarifies that Adjudicating Authority cannot reject the liquidation decision of Committee of Creditors (CoC) – Bank of India Vs. Pradeep Kumar Goenka, RP of Agnipa Energo Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

No exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by Successful Auction Bidder having failed to deposit the balance amount – BRS Refineries Vs. Mr. Supriyo Kumar Chaudhari, Liquidator, JVL Agro Industries Ltd. – NCLAT New Delhi

Hon’ble NCLAT affirmed the decision of NCLT Allahabad Bench holding that when the Process Document itself contemplate issuance of Sale Certificate subject to order passed by NCLT, all bidders were clearly informed about the said contingency. When the bidder in any auction participate it is subject to all terms and conditions as provided in the E-auction Process Information Document and all bidders are binding to all terms and conditions of the Process Document.

No exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by Successful Auction Bidder having failed to deposit the balance amount – BRS Refineries Vs. Mr. Supriyo Kumar Chaudhari, Liquidator, JVL Agro Industries Ltd. – NCLAT New Delhi Read Post »

Even after Agreement to Assign, IBC Section 7 application filed by Financial Creditor (assignor) against Corporate Debtor is maintainable – JM Financial Asset Reconstruction Company Ltd. Vs. Howrah Mills Company Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) Agreement dated 15.01.2020 was only agreement to assign and was not assignment agreement. Purchase consideration has not been paid. No document of assignment has yet been executed by the appellant in favour of Intending Assignee.
(ii) In any view of the matter, the debt of financial creditor has not been assigned to Intending Assignee till date. The Appellant continue to be creditor and the Corporate Debtor as a debtor.
(iii) Section 231 of the IBC which contains an injunction which is couched in negative term that “no civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered by, or under, this Code to pass any order”.
(iv) The interim injunction order passed by Court can have no effect on continuous of Section 7 application.
(v) The intending assignment having never taken place, the debt cannot be held to be assigned to Intending Assignee so that the Intending Assignee may step into the shoes of the financial creditor of the corporate debtor.

Even after Agreement to Assign, IBC Section 7 application filed by Financial Creditor (assignor) against Corporate Debtor is maintainable – JM Financial Asset Reconstruction Company Ltd. Vs. Howrah Mills Company Ltd. and Anr. – NCLAT New Delhi Read Post »

Insolvency Resolution Process against a Corporate Debtor cannot be interdicted on the on fact that asset of Corporate Debtor is not sufficient to resolve the insolvency of the Corporate Debtor – Ashok Tiwari Vs. DBS Bank India Ltd. (DBIL) and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that the submission of counsel for the appellant is that the corporate debtor has only one asset which may not be sufficient to clear the debt of financial creditor nor sufficient for the resolution of insolvency does not commend us. Initiation of CIRP process is consequent to debt and default on the part of the corporate debtor who was corporate guarantor. The debt and default by the corporate debtor is writ large on the record. The corporate debtor having unable to pay its debt, insolvency resolution process against such corporate debtor cannot be interdicted on the submission that asset of the corporate debtor is not sufficient to resolve the insolvency of the corporate debtor. These are the issues which have to be addressed in the CIRP of the corporate debtor and cannot be ground to set aside an order of admission under Section 7.

Insolvency Resolution Process against a Corporate Debtor cannot be interdicted on the on fact that asset of Corporate Debtor is not sufficient to resolve the insolvency of the Corporate Debtor – Ashok Tiwari Vs. DBS Bank India Ltd. (DBIL) and Anr. – NCLAT New Delhi Read Post »

Whether moratorium under Section 33(5) of IBC during Liquidation Process, bars on adjustment of Income Tax Refund with past dues | Whether on completion of Income Tax assessment proceedings during liquidation, the Income Tax Department can avail of set-off suo motu – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Principal Chief Commissioner of Income Tax, Mumbai – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT held that:

(i) Section 14 prohibits both institution and continuation of pending suits or proceedings against the Corporate Debtor, Section 33(5) of IBC is only a bar on the institution of new suits during the liquidation process.
(ii) There is no bar in a suit or a legal proceeding continuing along with liquidation proceedings as pending suits or legal proceeding have not been included within the scope of moratorium under Section 33(5) of IBC.
(iii) Set-off has been claimed after passing of the liquidation order which is legally permissible under Chapter III Part II of IBC.
(iv) The Income Tax authority enjoys limited jurisdiction of continuing with assessment proceedings and in determining the quantum of Income Tax dues but does not enjoy the jurisdiction and power to suo motu initiate recovery of dues or execute their claim unilaterally by adjusting the Income Tax Refund amount with past tax dues.
(v) While applying the principle of set-off, it must be kept in mind that no creditor ends up getting share disproportional to their dues.

Whether moratorium under Section 33(5) of IBC during Liquidation Process, bars on adjustment of Income Tax Refund with past dues | Whether on completion of Income Tax assessment proceedings during liquidation, the Income Tax Department can avail of set-off suo motu – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Principal Chief Commissioner of Income Tax, Mumbai – NCLAT New Delhi Read Post »

Can CoC fix different eligibility criteria for Association of Allottees as compared to other Resolution Applicant? – Crown Business Park Tower A Buyers Association, Faridabad Vs. Atul Kansal and Ors. – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT held that:

(i) Interference in the Resolution Plan by the Adjudicating Authority is permissible when the Resolution Plan violated the provisions of Section 30(2) and the Plan does not conform to requirements as referred to in Section 30(2).
(ii) Regulation 36A (4) of the CIRP Regulations provides that CoC is empowered to specify eligibility. The expression “specify the criteria for prospective resolution applicants”, cannot be read to mean that criteria for all prospective Resolution Applicants has to be same.
(iii) Criteria cannot be discriminatory but reasonable rational classification is not prohibited.

Can CoC fix different eligibility criteria for Association of Allottees as compared to other Resolution Applicant? – Crown Business Park Tower A Buyers Association, Faridabad Vs. Atul Kansal and Ors. – NCLAT New Delhi Read Post »

OTS was undertaken and proceeding under SARFAESI are under challenge cannot be a ground to stay the proceeding under Section 7 of IBC – Paras Builders and Promoters Vs. ASREC India Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that the mere fact that certain OTS was undertaken by the Appellant to take the debt of the Corporate Debtor and the proceeding under SARFAESI are under challenge which are pending adjudication before the Competent Court cannot be a ground to stay the proceeding under Section 7 nor there was any such order passed by any Court staying the proceeding of Section 7.

OTS was undertaken and proceeding under SARFAESI are under challenge cannot be a ground to stay the proceeding under Section 7 of IBC – Paras Builders and Promoters Vs. ASREC India Ltd. and Ors. – NCLAT New Delhi Read Post »

Scroll to Top