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High Court has no justification to direct the deferment of the CIRP in the exercise of its jurisdiction under Article 226 of the Constitution – Committee of Creditors of KSK Mahanadi Power Company Ltd. Vs. Uttar Pradesh Power Corporation Ltd. and Ors. – Supreme Court

In this case, the Hon’ble Telangana High Court, matter related to consolidated of CIRPs, directed petitioner to file an appropriate application before NCLT and raise all grounds available under law. It was also held that until such time, the Resolution Process shall be deferred.

The Hon’ble Supreme Court held that the High Court declined to grant the main relief which was sought in the petition for the consolidation of the CIRP of three corporate entities. After coming to that conclusion, there was absolutely no reason for the High Court to exercise its jurisdiction under Article 226 by directing the deferment of the CIRP. Such a direction under Article 226 breaches the discipline of the law which has been laid down in the provisions of the Insolvency and Bankruptcy Code 2016.

High Court has no justification to direct the deferment of the CIRP in the exercise of its jurisdiction under Article 226 of the Constitution – Committee of Creditors of KSK Mahanadi Power Company Ltd. Vs. Uttar Pradesh Power Corporation Ltd. and Ors. – Supreme Court Read Post »

Any attachment of a tainted assets of Corporate Debtor prior to the commencement of CIRP would always be available to fulfil the object and achieve the goal of IBC | Provisional Attachment Order under PMLA will not bar the admission of insolvency proceedings against the Corporate Debtor under IBC – State Bank of India Vs. Shree Mahalaxmi Corporation Pvt. Ltd. – NCLT Kolkata Bench

In this important decision, NCLT Kolkata Bench held that:
(i) When confiscation of the ‘Proceeds of Crime’ takes place, PMLA is performed by the Government not in its status/capacity/role as Creditor. the legislative intent of the PMLA is to prevent a person engaged in criminal activity intending to convert the “proceeds of crime” into assets intending to be projected as legitimate or untainted and to prohibit a person indulging in money laundering to avail of the “proceeds of crime” to get a discharge for his civil liability towards his creditors for the simple reason such assets are not lawfully his to claim.
(ii) Any attachment of a tainted assets of the Corporate Debtor prior to the commencement of CIRP would always be available to fulfil the object and achieve the goal of IBC. The Provisional Attachment Order under PMLA will not bar the admission of insolvency proceedings against the Corporate Debtor under IBC.
(iii) The case of State Bank of India v. R.P. Info Systems Ltd. decided on 19.02.2024, reported at (2024) ibclaw.in 211 NCLT is identical to the instant case.

Any attachment of a tainted assets of Corporate Debtor prior to the commencement of CIRP would always be available to fulfil the object and achieve the goal of IBC | Provisional Attachment Order under PMLA will not bar the admission of insolvency proceedings against the Corporate Debtor under IBC – State Bank of India Vs. Shree Mahalaxmi Corporation Pvt. Ltd. – NCLT Kolkata Bench Read Post »

The monies held by Bank as margin towards the live bank guarantee reverts to Corporate Debtor only in case where the corresponding Bank Guarantee has expired and in no other case – Dhiren Shantilal Shah Vs. Indian Bank – NCLT Mumbai Bench

The Adjudicating Authority held that it is not the case of the applicant that the bank guarantee(s), against which the respondent bank is holding fixed deposits as margin money, are not live. The Adjudicating Authority notices that the Hon’ble NCLAT in the case of Indian Overseas Bank Vs. Arvind Kumar (2020) ibclaw.in 285 NCLAT has categorically held that the monies held as margin towards the live bank guarantee reverts to the Corporate Debtor only in case where the corresponding Bank Guarantee has expired and in no other case. Further, it is settled legal proposition that the bank guarantee(s) do not expire with the commencement of moratorium in case of corporate debtor.

The monies held by Bank as margin towards the live bank guarantee reverts to Corporate Debtor only in case where the corresponding Bank Guarantee has expired and in no other case – Dhiren Shantilal Shah Vs. Indian Bank – NCLT Mumbai Bench Read Post »

No stamp duty would attract on sale of property through auction of a Corporate Debtor during liquidation process as per the provisions of IBC – M/s. Anirudh Agro Farms Pvt. Ltd. Vs. The State of Telangana – Telangana High Court

In this case, Liquidator issued a certificate of sale in favour of the Successful Purchaser under Section 35(1)(f) of IBC and handed over the auctioned property. Thereafter, liquidator issued a letter to the Sub-Registrarto record and file the certificate of sale as the appellant was the successful e-auction purchaser of the auctioned property. However, Sub-Registrar declined to do the needful on the ground that there is no practice of filing certificate of sale of this nature in his office and also on the ground that such filing would attract stamp duty at par with sale under Article 47-A of the Indian Stamp Act, 1899.

Division Bench of Hon’ble High Court of Telangana held that in Madhurambal (SC) special leave petition was filed before the Supreme Court. While dismissing the special leave petition, Supreme Court has held that law on this point is well settled that a sale certificate is not an instrument of the kind mentioned in clause (b) of Section 17 of the Registration Act; the authorized officer of the bank under the SARFAESI Act, 2002 should hand over the duly validated sale certificate to the auction purchaser with a copy forwarded to the registering authority to be filed in book No.1 as per Section 89 of the Registration Act. Supreme Court has further opined that once a direction is issued for the duly validated certificate to be issued to the auction purchaser with a copy forwarded to the registering authority to be filed in book No.1 as per Section 89 of the Registration Act, it has the same effect as registration and obviates the requirement of any further action. Supreme Court has observed that the authorities should stop filing unnecessary special leave petitions on this issue.

No stamp duty would attract on sale of property through auction of a Corporate Debtor during liquidation process as per the provisions of IBC – M/s. Anirudh Agro Farms Pvt. Ltd. Vs. The State of Telangana – Telangana High Court Read Post »

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