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Creditors cannot exercise set-off during the moratorium under Section 14 of IBC – Meena Sureka Vs. Mr. Santosh Kumar Jaiswal and Ors. – NCLT Guwahati Bench

Hon’ble NCLT Guwahati Bench held that in terms of Section 14 (1)(b), during the period of moratorium any transfer, encumbering, alienating or disposing off the property of the Corporate Debtor is restrained. Further, the Hon’ble NCLAT in a plethora of judgments has held that the creditors cannot exercise set-off during the moratorium. Furthermore, the purpose and object of Moratorium is to temporarily freeze all actions as contemplated under Section 14 to enable the Corporate Debtor to resolve its Insolvency and to revive itself.

Creditors cannot exercise set-off during the moratorium under Section 14 of IBC – Meena Sureka Vs. Mr. Santosh Kumar Jaiswal and Ors. – NCLT Guwahati Bench Read Post »

For an arbitration clause to be legally binding it has to be in consonance with the “operation of law” which includes the Grundnorm (Kelson’s Pure Theory) – Lombardi Engineering Ltd. Vs. Uttarakhand Jal Vidyut Nigam Ltd. – Supreme Court

In this case u/s 11(6) of the Arbitration Act, there are two pre-conditions, one relating to 7% deposit of the total amount claimed and the second one relating to the stipulation empowering the Principal Secretary to appoint a sole arbitrator.

Hon’ble Supreme Court held that:
(i) There is no conflict between S.K. Jain (2017) ibclaw.in 770 SC and ICOMM Tele Ltd. (2019) ibclaw.in 149 SC.
(ii) Court referred Kelson’s Pure Theory of Law on the basic norm that called “Grundnorm”.
(iii) In the context of the Arbitration Agreement, the layers of the Grundnorm as per Kelsen’s theory would be in the following hierarchy: (1) Constitution of India, 1950; (2) Arbitration and Conciliation Act, 1996 & any other Central/State Law; (3) Arbitration Agreement entered into by the parties in light of s. 7 of the Arbitration and Conciliation Act, 1996.
(iv) The Arbitration Agreement, has to comply with the requirements of the following and cannot fall foul of: (1) Section 7 of the Arbitration and Conciliation Act; (2) any other provisions of the Arbitration and Conciliation Act, 1996 & Central/State Law; (3) Constitution of India, 1950.
(v) For an arbitration clause to be legally binding it has to be in consonance with the “operation of law” which includes the Grundnorm i.e. the Constitution. It is the rule of law which is supreme and forms parts of the basic structure.
(vi) ignored the two conditions.

For an arbitration clause to be legally binding it has to be in consonance with the “operation of law” which includes the Grundnorm (Kelson’s Pure Theory) – Lombardi Engineering Ltd. Vs. Uttarakhand Jal Vidyut Nigam Ltd. – Supreme Court Read Post »

The rules of limitation, prescribe that a remedy can be exercised only upto a certain point of time – Southern Power Distribution Company of Telangana Ltd. Vs. CA. Swaminathan Prabhu Liquidator – NCLAT Chennai

NCLAT held that the Rules of Limitation, prescribe that a remedy can be exercised, only upto a certain point of time and not subsequently / later, as the case may be. In reality, the Litigants / Parties / Stakeholders, are to be diligent, and they are not to be an indolent persons, and not to adopt a careless and a negligent attitude, keeping in mind of the fact that speed is the gist of the Code. 2016.
In the light of foregoing detailed deliberations and this Tribunal, taking note of the fact that in the present case, the delay, that has occasioned in preferring the instant Appeal, is 79 days, which is beyond the specified period, contemplated under Section 61 of the Code, 2016.

The rules of limitation, prescribe that a remedy can be exercised only upto a certain point of time – Southern Power Distribution Company of Telangana Ltd. Vs. CA. Swaminathan Prabhu Liquidator – NCLAT Chennai Read Post »

Whether Adjudicating Authority, under its residuary power contained in Section 60(5)(c) of the IBC, entertain the plea of legality or otherwise of the assignment of debt? – Prudent ARC Ltd. Vs. Indu Techzone Pvt. Ltd. – NCLT Hyderabad Bench

The Adjudicating Authority holds that a mere look at the clause 5(b) of section 60 of Code, manifestly state that in order to exercise the residuary power as above, any question of priorities or any question of law or facts, should arise out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Thus, the sine qua non, for exercising the residuary power being, the ‘question’ must arise either out of or in relation to corporate debtor or corporate person , it is to be seen whether the above plea of the corporate debtor satisfies this test

Whether Adjudicating Authority, under its residuary power contained in Section 60(5)(c) of the IBC, entertain the plea of legality or otherwise of the assignment of debt? – Prudent ARC Ltd. Vs. Indu Techzone Pvt. Ltd. – NCLT Hyderabad Bench Read Post »

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