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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 »

A related party having a bar of not being allowed to be a member of CoC cannot get over the said bar merely by assignment of the Debt – Greenshift Initiatives Pvt. Ltd. Vs. Sonu Gupta, RP of Rolta Bi & Big Data Analytics Pvt. Ltd. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that a related party having a bar of not being allowed to be part of CoC cannot get over the said bar merely by assignment. The assignment of debt will carry the prohibition or bar which were there in the hands of related party. Assignment is transfer of one’s rights to recover debt to another person and that the rights of the Assignee are no better than that of an Assignor. Thus, the Assignee does not get the right to change its status from a related to an unrelated party merely by the assignment of the debt.

A related party having a bar of not being allowed to be a member of CoC cannot get over the said bar merely by assignment of the Debt – Greenshift Initiatives Pvt. Ltd. Vs. Sonu Gupta, RP of Rolta Bi & Big Data Analytics Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Whether distribution to Secured Creditor has to be made as per the admitted claim/debt or on the basis of security interest over assets of the Corporate Debtor – ICICI Bank Limited Vs. BKM Industries Ltd. – NCLAT New Delhi

In this case, Resolution Applicant had proposed that amount for payment towards secured creditors shall be distributed amongst them based on proportion of their admitted claim. The Appellant raised objection and claimed distribution as per security interest.

In this important decision, Hon’ble NCLAT held that:

(i) As per Section 53(1)(b), debt owed to a secured creditor has to be distributed equally between and amongst workmen’s dues and debts owed to a secured creditors. The debt owed to the secured creditor is a debt as admitted in the CIRP.
(ii) The distribution of the debt has to be as per the debt of the Financial Creditors.
(iii) The scheme of Section 53(1), clearly indicates distribution as per the debt and in the legislative scheme there is no scope of distribution of assets among the Financial Creditors as per security interest.
(iv) Vistra ITCL (India) (2023) ibclaw.in 62 SC judgment on Article 142 of the Constitution, which jurisdiction was exercised and ultimately the Hon’ble Supreme Court has held Vistra to be a secured creditor.
(v) Upheld the decision of the NCLT Kolkata Bench.

Whether distribution to Secured Creditor has to be made as per the admitted claim/debt or on the basis of security interest over assets of the Corporate Debtor – ICICI Bank Limited Vs. BKM Industries Ltd. – NCLAT New Delhi Read Post »

NCLT imposes cost of Rs. 1 lakh on Operational Creditor to be deposited in PM Relief Fund – Va Realcon Pvt. Ltd. Vs. Avail Holding Ltd. – NCLT New Delhi Bench Court-II

The Adjudicating Authority observed that both the Sales Bill as well as the Contract Note placed on record by the applicant neither contain the CIN number of the Applicant Company, which is a mandatory requirement as per Section 12(3)(c) of the Companies Act 2013, nor bear the acknowledgement of the Respondent/ Corporate Debtor, which coupled with absence of any valid Share Transfer Deed and DMAT Account raises doubts about the veracity of the alleged transaction. Hence, basing on the material available on record, the Applicant has not been able to establish or prove the existence of unpaid debt and default by the Corporate Debtor beyond doubt. Therefore, in our considered view, no ground is made out for initiation of CIRP against the Corporate Debtor. In view of the above, the Application is Dismissed with the cost of Rs 1 (one) Lakh to be deposited in the Prime Minister’s Relief Fund within 3 weeks of this order.

NCLT imposes cost of Rs. 1 lakh on Operational Creditor to be deposited in PM Relief Fund – Va Realcon Pvt. Ltd. Vs. Avail Holding Ltd. – NCLT New Delhi Bench Court-II Read Post »

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