Companies Act-NCLAT

Can only one Secured Creditor enforce his right to realise its debt out of secured assets under Section 52 of the IBC? | Does registration of the charge under Section 77 of the Companies Act improve or play a role when it comes to the question of the priorities of the charge? – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Hinduja Leyland Finance Ltd. – NCLAT New Delhi

/ 37 minutes of reading

The Hon’ble NCLAT held that:

(i) Section 48 of the Transfer of Property Act, clearly protect the right of first charge holder.
(ii) Only one secured creditor can enforce his right to realise its debt out of secured assets under Section 52 of the Code.
(iii) The arguments of the Respondent w.r.t. his holding first charge on movable assets of Corporate Debtor due to charge registered with RoC are not attractive.

Can only one Secured Creditor enforce his right to realise its debt out of secured assets under Section 52 of the IBC? | Does registration of the charge under Section 77 of the Companies Act improve or play a role when it comes to the question of the priorities of the charge? – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Hinduja Leyland Finance Ltd. – NCLAT New Delhi Read Post »

Can an application under Section 73 of the IBC be filed after dissolution of the Corporate Debtor under Section 54 of the Code? – New India Color Company Ltd. Vs. Samtex Desinz Pvt. Ltd. (In CIRP) and Anr. – NCLAT New Delhi

/ 4 minutes of reading

The Hon’ble NCLAT held that since the Corporate Debtor has already been dissolved, the present appeal, against the order passed by NCLT by which an IA filed by the Appellant under Section 60(5) r/w Section 73 of the IBC has been dismissed, has become infructuous.

Can an application under Section 73 of the IBC be filed after dissolution of the Corporate Debtor under Section 54 of the Code? – New India Color Company Ltd. Vs. Samtex Desinz Pvt. Ltd. (In CIRP) and Anr. – NCLAT New Delhi Read Post »

Claim Management Advisor (CMA) does not have the jurisdiction to determine the claim, nor are there any mitigating factors in the IBC or the CIRP Regulations framed thereunder bestowing any such adjudicatory jurisdiction on the CMA – Mr. Prakasarao V.S. Yadavilli Vs. Grant Thornton, the Claims Management Advisor of Infrastructure Leasing & Financial Services Ltd. – NCLAT New Delhi

/ 14 minutes of reading

Any attempt made towards assuming any sort of adjudicatory jurisdiction would have made the CMA breach the boundaries set by the statutory framework of IBC for a CMA to only verify and collate claims and does not encompass the adjudication of claims. Since the relevant component of claim required adjudication, the CMA had correctly classified the claims in the “put under adjudication” category.

Claim Management Advisor (CMA) does not have the jurisdiction to determine the claim, nor are there any mitigating factors in the IBC or the CIRP Regulations framed thereunder bestowing any such adjudicatory jurisdiction on the CMA – Mr. Prakasarao V.S. Yadavilli Vs. Grant Thornton, the Claims Management Advisor of Infrastructure Leasing & Financial Services Ltd. – NCLAT New Delhi Read Post »

When a fraudulent CIRP proceeding is initiated, Adjudicating Authority has jurisdiction under the IBC to consider allegations of fraudulent and malicious initiation of CIRP proceedings under Section 65 of IBC and to recall the CIRP admission order/ terminate CIRP (even if a Resolution Plan approval application has been filed before the NCLT) – Acute Daily Media Pvt. Ltd. and Ors. Vs. Rockman Advertising and Marketing (India) Ltd. and Ors. – NCLAT New Delhi

/ 50 minutes of reading

The Hon’ble NCLAT held that:

(i) There is no statutory embargo on the Adjudicating Authority to exercise its discretion carefully and judiciously in a Section 65 application to prevent and protect the Corporate Debtor from being dragged into CIRP.
(ii) When no interest income had been reflected in the balance sheet, yet computing the interest amount in the Section 7 application to cross the threshold hurdle lends credence to the narrative of precipitation of fraud.
(iii) As non- compliance under the Companies Act cannot negate a petition filed under Section 7 as long as there is a valid debt and default in payment of the said debt.
(iv) Debt and default cannot always be seen in isolation. AA is also required to take care that the provisions of Section 7 of IBC are not misused or abused in any manner either by the financial creditor or the promoters of the Corporate Debtor to take undue advantage at the cost of insolvency resolution.

When a fraudulent CIRP proceeding is initiated, Adjudicating Authority has jurisdiction under the IBC to consider allegations of fraudulent and malicious initiation of CIRP proceedings under Section 65 of IBC and to recall the CIRP admission order/ terminate CIRP (even if a Resolution Plan approval application has been filed before the NCLT) – Acute Daily Media Pvt. Ltd. and Ors. Vs. Rockman Advertising and Marketing (India) Ltd. and Ors. – NCLAT New Delhi Read Post »

In case of correction in the date of the order/judgment of NCLT and not any modification, the limitation for filing an appeal under Section 61 of IBC shall commence from the date of pronouncement of the main order and not from the date of the corrected order – Industrial Forgings Industries Pvt. Ltd. Vs. A2Z Infra Engineering Ltd. – NCLAT New Delhi

/ 13 minutes of reading

In this case, NCLT’s order impugned was delivered on 08.12.2023. Appellant filed an application for correction of order date. The Hon’ble NCLT corrected the date of the order vide order dated 29.04.2024. The appeal before NCLAT was filed on 12.06.2024.

The Hon’ble NCLAT held that the correction is only correction of date and not any correction of judgment or any modification of the judgment. There is no case that there was modification of order rather there is correction of the date of the order.

In case of correction in the date of the order/judgment of NCLT and not any modification, the limitation for filing an appeal under Section 61 of IBC shall commence from the date of pronouncement of the main order and not from the date of the corrected order – Industrial Forgings Industries Pvt. Ltd. Vs. A2Z Infra Engineering Ltd. – NCLAT New Delhi Read Post »

Common directors’ disqualification under Section 29A(e) of the IBC – Fortune Chemicals Ltd. Vs. Ashok Kumar Jaiswal, RP of Aarya Industrial Products Pvt. Ltd. and Anr. – NCLAT New Delhi

/ 20 minutes of reading

The Hon’ble NCLAT upheld the decision of NCLT Kolkata Bench. One of the directors of the Appellant, who was the Prospective Resolution Applicant, was also director of GADPPL which had failed to file its accounts since inception (i.e. 28.02.2014). The said Director was ineligible to be a director as per provisions of Section 164(2) of the Companies Act, 2013 and the Appellant company also accordingly was not eligible to be a resolution applicant in terms of provisions of clause (e) of Section 29A of IBC, 2016.

Common directors’ disqualification under Section 29A(e) of the IBC – Fortune Chemicals Ltd. Vs. Ashok Kumar Jaiswal, RP of Aarya Industrial Products Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

Can Share Capital be reduced under Section 66 of the Companies Act, 2013, by returning the amount to shareholders over a period of time as a loan arrangement between the company and its shareholders? – Ulundurpet Expressways Pvt. Ltd. Vs. Regional Director – NCLAT New Delhi

/ 16 minutes of reading

The Hon’ble NCLAT held that a bare perusal of the Section 66 of the Companies Act, 2013 would show it gives discretion to the appellant company to reduce its share capital “in any manner” subject to special resolution being passed by requisite majority of shareholders. The company has a power to reduce its shareholding capital in any manner, it being a domestic issue.

Can Share Capital be reduced under Section 66 of the Companies Act, 2013, by returning the amount to shareholders over a period of time as a loan arrangement between the company and its shareholders? – Ulundurpet Expressways Pvt. Ltd. Vs. Regional Director – NCLAT New Delhi Read Post »

After initiation of moratorium under Section 14(1) of IBC, no assessment proceedings can be continued | After an order of liquidation is passed, Section 33(5) of IBC does not prohibit initiation or continuation of assessment proceedings | No claim on the basis of assessment carried during the moratorium under Section 14(1) of IBC can be admitted in the CIRP – Employees’ Provident Fund Vs. Jaykumar Pesumal Arlani RP of Decent Laminates Pvt. Ltd. – NCLAT New Delhi

/ 40 minutes of reading

This judgment answers the questions:

(i) Whether after imposition of moratorium under Section 14 of the IBC, assessment proceedings can be carried on by the EPFO under Section 7A, 14B and 7Q of the EPF & MP Act, 1952.
(ii) Whether any claim on the basis of assessment, subsequent to imposition of moratorium, can be admitted in the CIRP.
(iii) Whether claims, which were filed by the Appellant(s), subsequent to the approval of Resolution Plan by the CoC, could have been admitted in the CIRP.

And covers:
A. Judicial Precedents
B. Ratio of a judgment cannot be read as statute
C. Interpretation of Section 14(1)(a) of IBC
D. Whether after moratorium has been imposed, it is open for EPFO to proceed with the assessment proceeding
E. Whether claims filed subsequent to the approval of Resolution Plan by the CoC, could have been admitted in the CIRP

After initiation of moratorium under Section 14(1) of IBC, no assessment proceedings can be continued | After an order of liquidation is passed, Section 33(5) of IBC does not prohibit initiation or continuation of assessment proceedings | No claim on the basis of assessment carried during the moratorium under Section 14(1) of IBC can be admitted in the CIRP – Employees’ Provident Fund Vs. Jaykumar Pesumal Arlani RP of Decent Laminates Pvt. Ltd. – NCLAT New Delhi Read Post »

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