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Whether Personal Guarantee given to Financial Creditor can be extinguished in a Resolution Plan – SVA Family Welfare Trust & Anr. Vs. Ujaas Energy Ltd. & Ors. – NCLAT New Delhi

The present is a case where Financial Creditors have decided to relinquish personal guarantees given to secure the financial assistance granted to the Corporate Debtor by the Financial Creditors on payment of a particular value in the Resolution Plan.
In this landmark judgment, NCLAT held that:
(i) The judgment of the Hon’ble Supreme Court in Lalit Kumar’s case cannot be read to mean as laying down law that personal guarantee never can be discharged in a Resolution Plan.
(ii) The recent judgment in Edelweiss Asset Reconstruction Company Ltd. (2023) ibclaw.in 420 NCLAT fully supports the submissions of the Appellant that security interest of dissenting Financial Creditor by virtue of personal guarantee of the ex-director of the Corporate Debtor could have been very well dealt in the Resolution Plan.
(iii) The decision of the CoC to accept the value for relinquishment of personal guarantee was a commercial decision of the CoC which cannot be allowed to be impugned at the instance of dissenting Financial Creditor.
(iv) set aside order of the NCLT.

Whether Personal Guarantee given to Financial Creditor can be extinguished in a Resolution Plan – SVA Family Welfare Trust & Anr. Vs. Ujaas Energy Ltd. & Ors. – NCLAT New Delhi Read Post »

A defaulting Buyer will not be liable to pay interest at three times the bank rate under Section 16 of Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) if the supplier is a “Medium Enterprise” – The New India Assurance Co. Ltd. Vs. Winsome International Ltd. – Calcutta High Court

Hon’ble High Court held that:
(i) The conscious exclusion of a “medium enterprise” from the definition of “supplier” becomes significant in the interpretation of Section 16 of the Act which deals with the rate of interest payable by a defaulting buyer to a “supplier”, as required under Section 15 which in turn deals with the liability of a buyer to make payment to a supplier. Section 16 uses the term “supplier” which traces back to Section 2(n).
(ii) The result of the exclusion of a “medium enterprise” from the definition of a supplier and the liability fixed on a buyer to make payment to a supplier under Section 16 of the Act at three times the bank rate, therefore, establishes that interest components could not have been awarded to the respondent/supplier/claimant in the arbitration in accordance with the mandate of Section 16 of the Act. The statutory position is therefore as follows: A defaulting buyer will not be liable to pay interest at three times the bank rate under Section 16 of the Act if the supplier is a medium enterprise. The position entirely changes if the supplier is a micro or small enterprise.

A defaulting Buyer will not be liable to pay interest at three times the bank rate under Section 16 of Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) if the supplier is a “Medium Enterprise” – The New India Assurance Co. Ltd. Vs. Winsome International Ltd. – Calcutta High Court Read Post »

Applications in relation to Chapter VII of IBC is concerned only the Special Court is having jurisdiction to try and hear the Applications – L.K. Sivaramakrishnan, RP of M/s. New Chennai Township Pvt. Ltd. Vs. R.B. Srinivasan, CFO Mar Ltd. – NCLT Chennai Bench

A perusal of Section 236(1) of IBC, 2016 states that the offences under IBC shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. Further, section 236(2) states that the complainant in all such cases shall be the Insolvency and Bankruptcy Board of India (IBBI). Thus, in so far as Applications in relation to Chapter VII is concerned only the Special Court is having jurisdiction to try and hear the said Applications. In so far as the relief as sought for by the Applicant, it is clear that this Adjudicating Authority is not a Special Court established under Chapter XXVIII of the Companies Act, 2013, but constituted under Section 408 of the Companies Act, 2013. Hence on the said count, the present Application filed by the Applicant is not maintainable and accordingly, this SR/851/2020 stands dismissed on the ground of maintainability.

Applications in relation to Chapter VII of IBC is concerned only the Special Court is having jurisdiction to try and hear the Applications – L.K. Sivaramakrishnan, RP of M/s. New Chennai Township Pvt. Ltd. Vs. R.B. Srinivasan, CFO Mar Ltd. – NCLT Chennai Bench Read Post »

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