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Compliance and prior action in terms of MSME Act is not prerequisite or mandatory before any petition under Section 7 of the IBC could be entertained – Axis Bank Ltd. Vs. Midas Petrochem Pvt. Ltd. – NCLT Mumbai Bench

Hon’ble Adjudicating Authority holds that Compliance and prior action in terms of MSME Act is not prerequisite or mandatory before any petition under Section 7 of the Code could be entertained. IBC aims at resolution of the Corporate Debtor and for attaining the same various provisions and regulations are enshrined in the Code. Under Section 7 Petition, the Tribunal has to merely see whether there is a debt and default in the matter before it.

Compliance and prior action in terms of MSME Act is not prerequisite or mandatory before any petition under Section 7 of the IBC could be entertained – Axis Bank Ltd. Vs. Midas Petrochem Pvt. Ltd. – NCLT Mumbai Bench Read Post »

In event Successful Resolution Application (SRA) is entitled for benefit of Section 79(2) of Income Tax Act, 1961 to carry forward accumulated losses, it shall be open to file an appropriate application before the competent jurisdictional Income Tax Authority to claim the benefit – GMSRA Infracon Pvt. Ltd. Vs. Shreebhav Polyweaves Pvt. Ltd. and Ors. – NCLAT New Delhi

In this case, counsel for the Appellant/Successful Resolution Applicant/SRA submitted that the benefit of Section 79(2) for carry forward the accumulate losses has to be extended to the SRA, however, the Adjudicating Authority has issued direction to the Successful Resolution Application to approach the concerned statutory authority for the concessions.

Hon’ble NCLAT holds that in event the Appellant is entitled for benefit of Section 79(2) to carry forward accumulated losses, it shall be open for the Appellant to file an appropriate application before the competent jurisdictional Income Tax Authority to claim the benefit. No error has been committed by the Adjudicating Authority by directing the Successful Resolution Application to approach the concerned statutory authority.

In event Successful Resolution Application (SRA) is entitled for benefit of Section 79(2) of Income Tax Act, 1961 to carry forward accumulated losses, it shall be open to file an appropriate application before the competent jurisdictional Income Tax Authority to claim the benefit – GMSRA Infracon Pvt. Ltd. Vs. Shreebhav Polyweaves Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

NCLT has no power and authority under IBC to declare a tax assessment order as void ab initio and non est in law | After declaring moratorium, there is an embargo on enforcing tax demand, but there is no embargo under Sec. 14 read with Sec. 33(5) of IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor – Deputy Commissioner (Works Contract), Kerala State Goods and Services Tax Department Vs. National Company Law Tribunal and Anr. – Kerala High Court

In this case, NCLT had passed the impugned order stating that the Sales Tax Assessment Order was passed in violation of the prohibition provided under Section 14(1)(a) of IBC. Therefore, the Assessment Order was declared void ab initio.

In this important judgment, Hon’ble Kerala High Court refers Sundaresh Bhatt, Liquidator of ABG Shipyard v. CBIC (2022) ibclaw.in 103 SC holds that:

(i) Moratorium under Section 14 is to ensure the curtailing of parallel proceedings and reduce the possibility of conflicting outcomes in the process.
(ii) The authority could only initiate assessment or reassessment of the duties or other levies. However, they cannot transgress such boundary and proceed to initiate recovery in violation of Sections 14 and 33(5) of the IBC.
(iii) The IRP or the Liquidator, as the case may be, is empowered to question the legality of the assessment order before the deputed authority.
(iv) The impugned order passed by the NCLT, Kochi Bench, as preposterous and untenable.
(v) Such an order only reflects the competence of the persons who are manning such an important Tribunal. The Order shows the lack of basic understanding of the law.

NCLT has no power and authority under IBC to declare a tax assessment order as void ab initio and non est in law | After declaring moratorium, there is an embargo on enforcing tax demand, but there is no embargo under Sec. 14 read with Sec. 33(5) of IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor – Deputy Commissioner (Works Contract), Kerala State Goods and Services Tax Department Vs. National Company Law Tribunal and Anr. – Kerala High Court Read Post »

Supreme Court upholds the view taken by the Five Judges Bench of the NCLAT on the power to Review and Recall the judgment – Union Bank of India Vs. Financial Creditors of M/s. Amtek Auto Ltd. & Ors. – Supreme Court

The Five Judges Bench of the NCLAT in Union Bank of India Vs. Dinkar T. Venkatasubramanian & Ors. (2023) ibclaw.in 381 NCLAT held that NCLAT is not vested with any power to review the judgment, however, in exercise of its inherent jurisdiction this Tribunal can entertain an application for recall of judgment on sufficient grounds. The judgment of this Tribunal in Agarwal Coal Corporation Pvt. Ltd. vs Sun Paper Mill Limited & Anr. (2021) ibclaw.in 493 NCLAT and Rajendra Mulchand Varma & Ors vs K.L.J Resources Ltd & Anr. (2022) ibclaw.in 827 NCLAT observing that this Tribunal cannot recall its judgment does not lay down the correct law.
Hon’ble Supreme Court in this case held that we are in agreement with the view taken by the Five Judges Bench of the NCLAT and thus find no reason to interfere with the impugned judgment.

Supreme Court upholds the view taken by the Five Judges Bench of the NCLAT on the power to Review and Recall the judgment – Union Bank of India Vs. Financial Creditors of M/s. Amtek Auto Ltd. & Ors. – Supreme Court Read Post »

Raj Radhe Finance Ltd. Vs. Dinesh Kumar Mundada RP of Superdrawn Wire Industries Pvt. Ltd. – NCLT Ahmedabad Bench

The Adjudicating Authority held that it is further noted that the RP did not inquire on the issue regarding related party even after serious grievance was raised by the Applicant vide mail dated 03.07.2022. Instead of inquiring into the issue of related party, the RP relied upon the confirmation of erstwhile IRP in which it was stated that Respondent No.2 to 4 do not fall under the definition of ‘related party’ under section 5(24) and 5(24A) of IBC, 2016. Hence, we direct to replace the RP. We also direct fresh constitution of CoC of the Corporate Debtor in accordance with law. In view thereof, this application stands allowed.

Raj Radhe Finance Ltd. Vs. Dinesh Kumar Mundada RP of Superdrawn Wire Industries Pvt. Ltd. – NCLT Ahmedabad Bench Read Post »

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