Newsletter-IBC Case

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 »

The principal of quasi partnership can be invoked in family companies and also applicable to public listed companies – Mr. Virendra R. Gandhi and Ors. Vs. Vadilal International Pvt. Ltd. and Ors. – NCLT Ahmedabad Bench

This judgment covers:

A. Family Dispute Settlement, B. Quasi Partnership, C. Oppression and mismanagement, D. Legitimate Expectations and E. Tribunal’s powers to order division of assets in an oppression and mismanagement petition.

The principal of quasi partnership can be invoked in family companies and also applicable to public listed companies – Mr. Virendra R. Gandhi and Ors. Vs. Vadilal International Pvt. Ltd. and Ors. – NCLT Ahmedabad Bench Read Post »

Dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that the reliability of these instruments can be ensured – New Win Export and Anr. Vs. A. Subramaniam – Supreme Court

Hon’ble Supreme Court held that Section 147 of the Negotiable Instruments Act, 1881 makes all offences under NI Act compoundable offences. All the same, Section 320 (5) of CrPC provides that if compounding has to be done after conviction, then it can only be done with the leave of the Court where appeal against such conviction is pending.
The Hon’ble Court also held that it is to be remembered that dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that the reliability of these instruments can be ensured. A large number of cases involving dishonour of cheques are pending before courts which is a serious concern for our judicial system. Keeping in mind that the ‘compensatory aspect’ of remedy shall have priority over the ‘punitive aspect’, courts should encourage compounding of offences under the NI Act if parties are willing to do so.

Dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that the reliability of these instruments can be ensured – New Win Export and Anr. Vs. A. Subramaniam – Supreme Court Read Post »

There is no provision under IBC or Regulations which empowers NCLT to grant post-facto approval the actions of Resolution Professional (RP) directly without prior approval of the CoC – Sai Ramesh Kanuparthy RP of Gayatri Projects Ltd. – NCLT Hyderabad Bench

In this case, RP filed an application seeking post-facto approval for the payment of pre-CIRP dues, which were made to avoid work stoppage, termination of contracts, invocation of bank guarantees and to maintain the CD as a going concern.

Hon’ble NCLT Hyderabad Bench held that:
(i) There is no provision under IBC or regulations thereunder which empowers this Authority to ratify the actions of the RP directly without prior approval of the CoC and it is within the domain of the CoC to decide the costs incurred or payments made by the RP during CIRP to keep the CD as a going concern.
(ii) Any payments made by the RP to maintain the CD as a going concern shall be treated as CIRP costs and the same must be decided by the CoC.

There is no provision under IBC or Regulations which empowers NCLT to grant post-facto approval the actions of Resolution Professional (RP) directly without prior approval of the CoC – Sai Ramesh Kanuparthy RP of Gayatri Projects Ltd. – NCLT Hyderabad Bench Read Post »

Duty under Section 99 of IBC is not a mere formality/procedural but a legal obligation to verify the due compliances – Central Bank of India Vs. Mr. P.K. Iyer and Anr. – NCLT Hyderabad Bench

A bare perusal of Section 99(1) of IBC discloses that the ‘duty’ to ‘examine’ the petition filed under Section 95 of IBC, within 10 days of his appointment by the resolution professional and to submit a report to the Adjudicating Authority recommending for approval or rejection of the Petition, imposed on the Resolution Professional by the legislature is to avoid frivolous petitions.
The said ‘duty’ is not a ‘mere’ formality/procedural but a legal obligation to verify the due compliances/ requirements by the creditor which are mandated in terms of sections 95 to 97 of IBC, more particularly the compliance of Section 95(4)(b) & (c) of IBC.
Thus, the recommendation of the resolution professional for admission or rejection of the creditor’s petition for triggering insolvency resolution process against the personal guarantor must invariably precede the compliance of due verification of the petition filed by the creditor, by the Resolution Professional.

Duty under Section 99 of IBC is not a mere formality/procedural but a legal obligation to verify the due compliances – Central Bank of India Vs. Mr. P.K. Iyer and Anr. – NCLT Hyderabad Bench Read Post »

Insolvency Commencement Date is prior to the date of EPFO’s Order, the action of the Resolution Professional to the reject the claim is correct in law – The Regional Provident Fund Commissioner-II Vs. Ms. Vineeta Maheshwari, IRP of Bloom Dekor Ltd. – NCLT Ahmedabad Bench

(2024) ibclaw.in 606 NCLT IN THE NATIONAL COMPANY LAW TRIBUNALAhmedabad Bench The Regional Provident Fund Commissioner-IIv.Ms. Vineeta Maheshwari I.A. 516/NCLT/AHM/2024

Insolvency Commencement Date is prior to the date of EPFO’s Order, the action of the Resolution Professional to the reject the claim is correct in law – The Regional Provident Fund Commissioner-II Vs. Ms. Vineeta Maheshwari, IRP of Bloom Dekor Ltd. – NCLT Ahmedabad Bench Read Post »

Liquidator has no right to ascertain the claims and rights of the Secured Creditors who chose to stand outside the (Liquidation Process) in respect of the securities – Mr. K.Sivalingam, Liquidator, MPL Cars Pvt. Ltd. Vs. Sundaram Home Finance Ltd. – NCLT Chennai Bench

(2024) ibclaw.in 615 NCLT IN THE NATIONAL COMPANY LAW TRIBUNALChennai Bench Mr. K.Sivalingamv.Sundaram Home Finance Ltd. IA(IBC)/1784(CHE)2023 in IA(IBC)/264(CHE)2020 in

Liquidator has no right to ascertain the claims and rights of the Secured Creditors who chose to stand outside the (Liquidation Process) in respect of the securities – Mr. K.Sivalingam, Liquidator, MPL Cars Pvt. Ltd. Vs. Sundaram Home Finance Ltd. – NCLT Chennai Bench Read Post »

Recusal of NCLT Member is not to be forced by any Litigant to choose a Bench, it is for the judge to decide to recuse – Perfect Infraengineers Ltd. Vs. Technology Development Board – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that:

(i) An Advocate owes a duty not only to his client but also to the Court. It is the bounden duty of an Advocate to consider whether such submissions, as are pleaded in the application, were justified, having regard to his and his client’s earlier conduct.
(ii) If the judges decide to recuse themselves on the basis of frivolous and baseless allegations it will be a convenient ploy to litigant to choose their own Benches by stage managing such kind of litigations.
(iii) Recusal is not to be forced by any litigant to choose a Bench. It is for the judge to decide to recuse.
(iv) No person can maintain application for recusal of the Member [Ishrat Ali Vs. The Cosmos Cooperative Bank Ltd. & Anr. (2023) ibclaw.in 345 NCLAT].

Recusal of NCLT Member is not to be forced by any Litigant to choose a Bench, it is for the judge to decide to recuse – Perfect Infraengineers Ltd. Vs. Technology Development Board – NCLT Mumbai Bench 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 »

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