Section 30 lays out the duties of the resolution professional and the various steps that she or he has to take, as well as the considerations that are to weigh, in examining a resolution plan-Rahul Jain Vs. Rave Scans Pvt. Ltd. & Ors.-Supreme Court

Hon'ble Supreme Court has held that section 30 lays out the duties of the resolution professional and the various steps that she or he has to take, as well as the considerations that are to weigh, in examining a resolution plan. The principle of fairness engrafted in the provision is that the plan should make a provision for repayment of debts of operational creditors having regard to the value, which shall not be less than what is prescribed by the Board (i.e. the Insolvency Board), repayable in the event of liquidation, spelt out in Section 53. Section 30(3) requires the resolution professional to present the resolution plan to the committee of creditors and Section 30(4) stipulates that approval shall be by a vote not less than 75% of the voting share of the financial creditors.

High Court ought not to have proceeded with the auction of the property of the Corporate Debtor, once the proceedings under the IBC had commenced, and an Order declaring moratorium was passed by the NCLT-Mr. Anand Rao Korada vs M/s. Varsha Fabrics (P) Ltd. & Ors-Supreme Court

The Supreme Court set aside the impugned Interim Orders dated 14.08.2019 and 05.09.2019 passed by the Odisha High Court and held that in view of the provisions of the IBC, the High Court ought not to have proceeded with the auction of the property of the Corporate Debtor, once the proceedings under the IBC had commenced, and an Order declaring moratorium was passed by the NCLT. The High Court passed the impugned Interim Orders dated 14.08.2019 and 05.09.2019 after the CIRP had commenced in this case.

Vinay Kumar Mittal & Ors Vs. Dewan Housing Finance Corporation Ltd. & Ors.-SC

Case Reference Case Citation : 116(IBC)82/2020 Case Name : Vinay Kumar Mittal & Ors. Vs. Dewan Housing Finance Corporation Ltd. & Ors. Appeal No. : Civil Appeal No.654 -660 of 2020 Appeal No. Ref. : Arising out of SLP (C)…

M/S ESS Investments Pvt. Ltd. Vs. Lokhandwala Infrastructure Pvt. Ltd. & Anr. -SC

Case Reference Case Citation : 117(IBC)83/2020 Case Name : M/S ESS Investments Pvt. Ltd. Vs. Lokhandwala Infrastructure Pvt. Ltd. & Anr. Appeal No. : Civil Appeal No(S). 324/2020 With C.A. No. 325/2020, Slp(C) No. 222/2020 & Slp(C) No. 451/2020 Appellant(s)…

Whether the scheme of the Code contemplates that the sum forming part of the resolution plan should match the liquidation value or not-Maharasthra Seamless Limited Vs. Padmanabhan Venkatesh & Ors.- SC

Hon'ble Supreme Court held that no provision in the Code or Regulations has been brought to notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the IBBI(Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. The Appellate Authority has proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. Such is the scheme of the Code. Section 31(1) of the Code lays down in clear terms that for final approval of a resolution plan, the Adjudicating Authority has to be satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the Adjudicating Authority in limited judicial review has been laid down in the case of Essar Steel, the relevant passage (para 54). The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the Appellate Authority ought to have interfered with the order of the Adjudicating Authority in directing the successful Resolution Applicant to enhance their fund inflow upfront.

Whether the High Court ought to interfere, under Article 226/227 of the Constitution, with an Order passed by the NCLT in a proceeding under the Code-M/s Embassy Property Developments Pvt. Ltd Vs. State of Karnataka & Ors – SC

Though NCLT and NCLAT would have jurisdiction to enquire into questions of fraud, they would not have jurisdiction to adjudicate upon disputes such as those arising under MMDR Act, 1957 and the rules issued thereunder, especially when the disputes revolve around decisions of statutory or quasijudicial authorities, which can be corrected only by way of judicial review of administrative action. Hence, the High Court was justified in entertaining the writ petition.

The CIRP process can be initiated against a government company by virtue of it being covered under the definition of Corporate Person as provided in sec. 3(7) of the Code-Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors. -SC

Hon'ble Supreme Court held that the CIRP process can be initiated against a government company by virtue of it being covered under the first part of ‘corporate person’ as provided in section 3(7) of the Code. The Court cleared that NHPC, NTPC and IRCON, being PSUs are government companies as they are incorporated under the Companies Act, and they would be covered within the section 3(7) of the Code. However, the Supreme Court also laid down that so far as the NHAI is concerned, referred to the Statement of Objects and Reasons of the National Highways Authority of India Act, 1988 and some sections of the said Act to show that NHAI is a statutory body which functions as an extended limb of the Central Government, and which is to carry out the sovereign function of laying down national highways. The Insolvency Code cannot be used against such a statutory body, because no resolution professional or private individual can take over the management of such body, as it performs sovereign functions, nor can such body be driven to insolvency under an Insolvency Code.

WhatsApp Bulletin-XVIII