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Section 14(1)(a) of IBC only prohibits the institution of suits or continuation of pending suits or proceedings “against” Corporate Debtor, it does not prohibit any proceedings by Corporate Debtor – Imperial Consultants and Securities Ltd. Vs. Assistant Commissioner of Income Tax, Circle5(1), Mumbai – Bombay High Court

Hon’ble Bombay High Court holds that:

(i) Section 14(1)(a) of the IBC, 2016 only prohibits the institution of suits or continuation of pending suits or proceedings “against” the corporate debtor including execution of any judgment, decree or order in any Court of law, Tribunal, Arbitration Panel or other authority. It does not prohibit any proceedings by the corporate debtor.
(ii) The Tribunal was not correct in dismissing the appeal filed by Petitioner. The Tribunal, however, was correct to say that on admission of the insolvency petition filed by the financial creditor under Section 7 of the IBC, the Directors of Petitioner have become functus officio. The Tribunal gave liberty to the IRP or the RP, as the case may be, to pursue all litigations pertaining to Assessee Company in consultation with the Committee of Creditors. It also gave liberty to the IRP/RP to apply for recall of the impugned order. The Tribunal has missed the fact that the appeal itself has been filed through the Resolution Professional.

Section 14(1)(a) of IBC only prohibits the institution of suits or continuation of pending suits or proceedings “against” Corporate Debtor, it does not prohibit any proceedings by Corporate Debtor – Imperial Consultants and Securities Ltd. Vs. Assistant Commissioner of Income Tax, Circle5(1), Mumbai – Bombay High Court Read Post »

The right to initiate CIRP against Corporate Debtor occurs only when a default occurs – Mr. Kishor Prakash Lunawat Vs. M/s. GDS Buildcon Pvt. Ltd. – NCLT Mumbai Bench

The Adjudicating Authority observed that this is a fit case for dismissal of the above Company Petition. It is a settled position that the right to initiate CIRP process against the Corporate Debtor occurs only when a default occurs. However, in the present case the Petitioners have infact failed to show that there was any default or that there was any financial debt owned by the Corporate Debtor much less their claim of being Financial Creditors. Thus, perusal of all the averments and documents on record would show the FC Nos. 2 and 3 have also not produced any agreement/ document to show that there was a financial debt.  The entire Petition is silent about the date on which the alleged default occurred or the manner in which the alleged default has occurred as the Petitioner has not placed on record any document/ agreement showing the understanding or the alleged transaction between the parties of advancing any loan to the Corporate Debtor.

The right to initiate CIRP against Corporate Debtor occurs only when a default occurs – Mr. Kishor Prakash Lunawat Vs. M/s. GDS Buildcon Pvt. Ltd. – NCLT Mumbai Bench Read Post »

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