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No claim can be accepted on the basis of a guarantee that was invoked subsequent to the initiation of the CIRP /during the moratorium under Section 14 of the IBC – Ankur Kumar Vs. Sustainable Agro-Commercial Financial Ltd. – NCLAT New Delhi

The Hon’ble NCLAT referring various judgments held that when the Respondent having invoked the guarantee on 18.09.2020 i.e. subsequent to initiation of the CIRP, on the basis of said invocation no claim could have been accepted in the CIRP. It is, thus, clear that no claim existed of the Respondent on the date of commencement of the CIRP process, hence, the said claim could not have been admitted in the process.

No claim can be accepted on the basis of a guarantee that was invoked subsequent to the initiation of the CIRP /during the moratorium under Section 14 of the IBC – Ankur Kumar Vs. Sustainable Agro-Commercial Financial Ltd. – NCLAT New Delhi Read Post »

When CoC disapproved MSME Promoter Resolution Plan by requisite voting, NCLAT shall not sit in appeal over Commercial decision nor it is jurisdiction to compare Resolution Plan offers – Rajesh Kumar Damani Vs. Committee of Creditors of Pami Metals Pvt. Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT upholds decision of NCLT Kolkata Bench in which Tribunal ruled that commercial wisdom of CoC in rejection of Resolution Plan of MSME Promoter cannot be called into question unless there are glaring omissions and the deficiencies are stark.

NCLAT observes that:

(i) The Resolution Plan was approved by the CoC after due consideration. It is well settled that the commercial wisdom of the CoC in approving the Resolution Plan is not open to judicial review and there are very limited ground to interfere with the decision i.e. only when the plan is in violation of any statutory provision like Section 30(2) of the Code.
(ii) Swiss Challenge Method was adopted between Respondent No.5 and Respondent No.16 when the plan of the Appellant was not compliant and Respondent No.16 was declared as H-1. Thus, when plan of the Appellant was directed to be considered by the Adjudicating Authority on 30.09.2022, plan of the Appellant came for consideration in the 8th and 9th CoC meeting. Adoption of Swiss Challenge Method is enabling provision which can be adopted by the CoC. No infirmity can be found in the consideration of the plan of the Appellant if CoC did not adopt any Swiss Challenge Method.
(iii) As far as the plan value which has been offered by the Appellant and the plan value which has been offered by Respondent No.16 and various payments offered in both the plans are in the domain of the commercial wisdom of the CoC and this Court shall not sit in appeal over the said decision nor it is jurisdiction of this Court to compare the plan offers submitted by the Respondent No.16 and Appellant and come to a contrary conclusion.

When CoC disapproved MSME Promoter Resolution Plan by requisite voting, NCLAT shall not sit in appeal over Commercial decision nor it is jurisdiction to compare Resolution Plan offers – Rajesh Kumar Damani Vs. Committee of Creditors of Pami Metals Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Court cannot reduce rate of interest awarded in an arbitration award and is powerless to modify award and can only set aside partially or wholly – M/s. Larsen Air Conditioning and Refrigration Company Vs. Union of India & Ors. – Supreme Court

The question in this case is whether the High Court erred in modifying the arbitral award to the extent of reducing the interest, from compound interest of 18% to 9% simple interest per annum.
Hon’ble Supreme Court held that:
(i) There is little to no reason, for the High Court to have interfered with the arbitrator’s finding on interest accrued and payable.
(ii) Unlike in the case of the old Act, the court is powerless to modify the award and can only set aside partially, or wholly, an award on a finding that the conditions spelt out under Section 34 of the 1996 Act have been established.
(iii) The old Act contained a provision which enabled the court to modify an award. However, that power has been consciously omitted by Parliament, while enacting the Act of 1996.
(iv) The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality. The other ground would be denial of natural justice.
(v) In appeal, Section 37 of the Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34.

Court cannot reduce rate of interest awarded in an arbitration award and is powerless to modify award and can only set aside partially or wholly – M/s. Larsen Air Conditioning and Refrigration Company Vs. Union of India & Ors. – Supreme Court Read Post »

In view of provisions of Sec. 9 of IBC enabling the Operational creditor to file an application against the Corporate Debtor after expiry of 10 days from the date receipt of demand notice by the Corporate Debtor – Aypols Polymers Pvt. Ltd. Vs. Suvarna Fibrotech Pvt. Ltd. – NCLT Mumbai Bench

In this case, the Operational Creditor served a demand notice in Form 3 on 18.02.2020 and has not filed any proof of service and petition was filed on 19.02.2020 vide Reference No 2709138010602020. It is pertinent to note that Section 8(1) of the Code provides delivery of Demand Notice on unpaid Operational Debt and Section 8(2) provides 10 days’ time to the Corporate Debtor to responds to such notice. Section 9 of Code permits the Operational Creditor after expiry of 10 days provided in sec 8(2) to file an application before the adjudicating authority for initiating Corporate Insolvency Resolution Process. In the present case, the operational creditor has filed the application on the very next day of the date of demand notice in Form 3.

In view of provisions of Sec. 9 of IBC enabling the Operational creditor to file an application against the Corporate Debtor after expiry of 10 days from the date receipt of demand notice by the Corporate Debtor – Aypols Polymers Pvt. Ltd. Vs. Suvarna Fibrotech Pvt. Ltd. – NCLT Mumbai Bench Read Post »

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