NCLAT

Is it required to issue notice to Personal Guarantor while passing order under Section 115(2) of IBC when the Personal Guarantor did not submit Repayment Plan | Is Regulation 19 of Personal Guarantors Insolvency Regulation 2019 applicable even no Repayment Plan is submitted by Personal Guarantor – Sudip Dutta @ Sudip Bijoy Dutta Vs. Prashant Jain RP – NCLAT New Delhi

Hon’ble NCLAT held that:’
(i) The Personal Guarantor kept silence for years together and when consequential Order under Section 115 has been passed by the Adjudicating Authority, he is raising grievance of not being heard by the Adjudicating Authority.
(ii) Regulation 19 is not applicable in the facts of the present case nor Personal Guarantor can rely on Regulation 19.
(iii) No Repayment Plan having been submitted or finalised, Adjudicating Authority has not committed any error in giving liberty to the Creditors to file an Application for Bankruptcy under Chapter IV, which is a statutory consequence under Section 115(2). In so far as discharge of the RP is concerned, the discharge is also consequential to completion of Insolvency and Bankruptcy Process against the Personal Guarantor under the provisions of Chapter III of the Code.

Is it required to issue notice to Personal Guarantor while passing order under Section 115(2) of IBC when the Personal Guarantor did not submit Repayment Plan | Is Regulation 19 of Personal Guarantors Insolvency Regulation 2019 applicable even no Repayment Plan is submitted by Personal Guarantor – Sudip Dutta @ Sudip Bijoy Dutta Vs. Prashant Jain RP – NCLAT New Delhi Read Post »

Date of default in case of an application under Section 7 filed on based of a Consent Decree passed by the DRT – Jubin Kishore Thakkar, Suspended Directors of KLT Automotive & Tubular Products Ltd. Vs. Phoenix ARC Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that Section 7 Application having been founded on the basis of default committed after Consent Decree dated 29.08.2022 was passed, Default cannot be pegged on 10A period when Application under Section 7 is founded on the basis of Consent Decree dated 29.08.2022.

Date of default in case of an application under Section 7 filed on based of a Consent Decree passed by the DRT – Jubin Kishore Thakkar, Suspended Directors of KLT Automotive & Tubular Products Ltd. Vs. Phoenix ARC Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

Section 231 of the Companies Act, 2013 does not permit the Tribunal to make substantial modifications to a Scheme which has been approved by its Members – CMS Info Systems Ltd. Vs. Bharatiya Kamgar Karamchari Mahasangh and Ors. – NCLAT New Delhi

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Section 231 of the Companies Act, 2013 does not permit the Tribunal to make substantial modifications to a Scheme which has been approved by its Members – CMS Info Systems Ltd. Vs. Bharatiya Kamgar Karamchari Mahasangh and Ors. – NCLAT New Delhi Read Post »

Treatment of Security Deposit of Postpaid Subscribers and Unspent Balance of Prepaid Subscribers in Resolution Plan | Shall TRAI Act, 1997 being a special statute prevail over the IBC, 2016? – Telecom Regulatory Authority of India (TRAI) Vs. Reliance Telecom Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT upheld the decision of the NCLT, Mumbai Bench wherein the NCLT held that security deposit balances refundable to post paid subscribers and amount of un-spent balances in prepaid plans shall be admitted as Operational Debt. As regards demand on account of financial disincentive levied by TRAI, the said amount is a nature of Operational Debt other than Government dues, as these dues are a nature of fine for non-maintenance of quality standards only.

The Hon’ble NCLAT also rejected the submission of the Appellant that TRAI Act is a special statute and would prevail over the IBC.

Treatment of Security Deposit of Postpaid Subscribers and Unspent Balance of Prepaid Subscribers in Resolution Plan | Shall TRAI Act, 1997 being a special statute prevail over the IBC, 2016? – Telecom Regulatory Authority of India (TRAI) Vs. Reliance Telecom Ltd. and Ors. – NCLAT New Delhi Read Post »

The date of default cannot be shifted by a recall notice issued by the Financial Creditor – Sandip Narendrakumar Patel (Promotor/Ex-Director) Yours Ethnic Foods Pvt. Ltd. Vs. Svakarma Finance Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that the Corporate Debtor cannot be permitted to take advantage of the fact that the Financial Creditor had issued a notice of recall dated 06.11.2020, giving 15 days time, to the Corporate Debtor to pay the same and to calculate the date of default as 21.11.2020 which falls within the cut off period of Section 10A because issuance of recall notice, in pursuance of the clause 10.3 of the agreement, was on the occurrence of any of the events of default, which had already occurred in the month of January or at the most February.

The date of default cannot be shifted by a recall notice issued by the Financial Creditor – Sandip Narendrakumar Patel (Promotor/Ex-Director) Yours Ethnic Foods Pvt. Ltd. Vs. Svakarma Finance Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

Whether Adjudicating Authority could have precluded the consideration of the 12A proposal of the Suspended Directors by the CoC on the ground that Resolution Plan was under consideration of NCLT – Pratham Expofab Pvt. Ltd. Vs. Mr. Anil Matta, RP of Primrose Infratech Pvt. Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT while upholding the decision of NCLT held that the suspended management cannot insist, impose or force the consideration of its settlement proposal by the CoC when the CoC in the exercise of its business decision has categorically decided against considering any such proposal from the Appellant.
The Hon’ble Tribunal also held that when a resolution plan has already been received by the CoC and the CoC in the exercise of its commercial wisdom has decided to only consider this plan and has also rejected with majority voting the settlement plan given by the Appellant, no error has been committed by the Adjudicating Authority in disallowing further opportunity to the Appellant to submit a Section 12A proposal

Whether Adjudicating Authority could have precluded the consideration of the 12A proposal of the Suspended Directors by the CoC on the ground that Resolution Plan was under consideration of NCLT – Pratham Expofab Pvt. Ltd. Vs. Mr. Anil Matta, RP of Primrose Infratech Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

When Lessor was not in receipt of rent on CIRP commencement date and Arbitral Award was still under execution, the lease rental subsequent to the commencement of the CIRP cannot be treated as CIRP cost under CIRP Regulation 31(b) | This case does not fall under Section 14(1)(d) of the IBC, rather it is covered by Section 14(1)(a) – Mr. A. Guhan and Anr. Vs. Ms. Sunita Umesh Liquidator, Deltronix India Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) On the date when CIRP commenced, Appellant was not receiving any rent from the Corporate Debtor and claim of rent/damages and possession of the assets was under consideration in the Execution Proceedings.
(ii) After enforcement of Moratorium under Section 14 by virtue of Section 14(1)(a) the Appellant could not have prosecuted the Execution Proceeding against the Corporate Debtor. When the Appellant could not have proceeded with the execution of Arbitral Award, there was no occasion to recover the rent and assets from the Corporate Debtor.
(iii) The claim of Appellant as per Arbitral Award to receive damages and occupation from Corporate Debtor cannot be treated as Insolvency Resolution Process cost under Section 31(b).
(iv) The fact that plant and machineries are attached/available at the site cannot be read to mean that the premises were being used as a going concern by Corporate Debtor
(v) In the present case, when the Appellant was not in receipt of rent from December 2014, and Arbitral Award obtained by the Appellant was still under execution, the lease rental subsequent to the commencement of the CIRP cannot be treated as CIRP cost.

When Lessor was not in receipt of rent on CIRP commencement date and Arbitral Award was still under execution, the lease rental subsequent to the commencement of the CIRP cannot be treated as CIRP cost under CIRP Regulation 31(b) | This case does not fall under Section 14(1)(d) of the IBC, rather it is covered by Section 14(1)(a) – Mr. A. Guhan and Anr. Vs. Ms. Sunita Umesh Liquidator, Deltronix India Ltd. – NCLAT New Delhi Read Post »

Once CoC had approved Resolution Plan, SRA cannot object to any conditions stated in the Letter of Intent (LOI) | CoC’s decision to liquidate the Corporate Debtor is a business decision and is clearly not amenable to judicial review – Sanjay Dave Vs. Andhra Bank Ltd. and Ors. – NCLAT New Delhi

In this case, RP while intimating the SRA also informed that the approval of the resolution plan by the CoC was subject to the order reserved by the Adjudicating Authority.

Hon’ble NCLAT held that:
(i) These conditionalities cannot be held to be a surprise for the SRA as these alleged conditionalities were discussed and deliberated in the CoC meetings and it was clear to all the participants including SRA that these conditionalities were integral to the resolution plan of the SRA.
(ii) The Adjudicating Authority rightly refused to entertain the objections of the SRA to the conditions in the LoI since withdrawal or modification of resolution plan after approval by the CoC is not permissible in law.
(iii) It is pertinent to note that the statutory construct of IBC in terms of Section 33 clearly empowers the CoC to decide to liquidate the Corporate Debtor any time before the confirmation of the resolution plan by the Adjudicating Authority.

Once CoC had approved Resolution Plan, SRA cannot object to any conditions stated in the Letter of Intent (LOI) | CoC’s decision to liquidate the Corporate Debtor is a business decision and is clearly not amenable to judicial review – Sanjay Dave Vs. Andhra Bank Ltd. and Ors. – NCLAT New Delhi Read Post »

Invoices containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest – Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that the entire Principal Amount having been paid, the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Operational Creditor. Invoices which have been sent by the Operational Creditor containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest.

Invoices containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest – Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd. – NCLAT New Delhi Read Post »

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