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Substance of a transaction is important rather than its form, and accounting entries cannot determine the character and nature of a transaction – Mr. Rakesh Bothra v. Mr. Alok Kailash Saksena – NCLT Mumbai Bench

NCLT Mumbai Bench held that:
(i) Substance of a transaction is important rather than its form, and accounting entries can not determine the character and nature of a transaction.
(ii) The Section 5(8) of the Code includes “receivables sold or discounted other than any receivables sold on nonrecourse basis” under the definition of financial debt. There is no dispute that the money was disbursed to the Corporate Debtor in consideration of assignment of such invoices and assignment of such invoices was not on nonrecourse basis, which is evidenced from the principal being acknowledged and paid by the Corporate during the course of pendency of Section 7 application filed by the Applicant.
(iii) The Applicant shall provide copy of ledger account with narration in its books of account to the Corporate Debtor to assist him to make necessary inquiry for verification.

Substance of a transaction is important rather than its form, and accounting entries cannot determine the character and nature of a transaction – Mr. Rakesh Bothra v. Mr. Alok Kailash Saksena – NCLT Mumbai Bench Read Post »

PF Trustee rejected Liquidator’s request for waiver of EPFO damages that scheme for rehabilitation has not been sanctioned by BIFR | High Court quashes | the relevant portion of Section 14B of the EPF & MP Act needs to be amended as per Preamble of IBC, 2016  – Radhakrishnan Dharmarajan, Liquidator, Flora Footwear Pvt. Ltd. v. Central Board of Trustees, EPF – Madras High Court

In this case, Central Board of Trustees, EPF rejected the request of waiver of EPFO damages on the ground that request for reduction/waiver of damages can be considered only if an establishment is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the BIFR established under Section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Hon’ble High Court held that:
(i) The relevant portion of Section 14B of the EPF & MP Act needs to be updated/amended.
(ii) This Court cannot step into the shoes of Central Board of Trustees, EPF to decide on the waiver and it is the prerogative of Central Board of Trustees, EPF.
(iii) The matter shall be referred back to the Central Board of Trustees, EPF for a fresh assessment in the light of the provision of I&B Code and also exercising the power for waiver of damages as envisaged in Section 14B of the EPF & MP Act.

PF Trustee rejected Liquidator’s request for waiver of EPFO damages that scheme for rehabilitation has not been sanctioned by BIFR | High Court quashes | the relevant portion of Section 14B of the EPF & MP Act needs to be amended as per Preamble of IBC, 2016  – Radhakrishnan Dharmarajan, Liquidator, Flora Footwear Pvt. Ltd. v. Central Board of Trustees, EPF – Madras High Court Read Post »

Successful Resolution Applicant is eligible to have encumbrance free transfer of the assets of the Corporate Debtor after the approval of the Resolution Plan – Amit Gupta Vs. Anil Kohli – NCLT Mumbai Bench

The Adjudicating Authority held that in light of the decision of the Hon’ble Supreme Court in the matter of “Ghanshyam Mishra and Sons Private Limited V/s Edelweiss Asset Reconstruction Company Limited (2021) ibclaw.in 54 SC” and also in “Jaypee Kensington Boulevard Apartments Welfare Association and Others V/s NBCC (India) Limited (2021) ibclaw.in 63 SC” and other landmark decisions of the Hon’ble Supreme Court, it is a settled law that all the liability of the Corporate Debtor which are prior to CIRP and prior to approval of the Resolution Plan and before transfer of the assets of the Corporate Debtor to the Resolution Applicant shall stand extinguished. The Successful Resolution Applicant is eligible to have encumbrance free transfer of the assets of the Corporate Debtor after the approval of the Resolution Plan. Therefore, the Applicant can approach the statutory authorities on the strength of the Hon’ble Supreme Court ruling and can get lifted the attachment and the prohibitory orders passed creating encumbrances on the assets of the Corporate Debtor to be removed.

Successful Resolution Applicant is eligible to have encumbrance free transfer of the assets of the Corporate Debtor after the approval of the Resolution Plan – Amit Gupta Vs. Anil Kohli – NCLT Mumbai Bench Read Post »

Suspended Director who was representing the Corporate Debtor and has submitted the Settlement Proposal is entitled to participate in deliberation and negotiation undertaken by the CoC – Sanjeev Mahajan Vs. Indian Bank (Erstwhile Allahabad Bank) & Anr. – NCLAT New Delhi

NCLAT held that it is well settled that it is the commercial decision of the CoC which is paramount in the CIRP. The Appellant who is suspended Director of the Corporate Debtor who has already submitted Settlement Proposal was permitted to participate in the meeting of the CoC which is apparent from the minutes of the CoC brought on record. We are of the view that Appellant who was representing the Corporate Debtor and has submitted the Settlement Proposal is entitled to participate in deliberation and negotiation undertaken by the CoC. CoC can very well ask the Resolution Applicants to revise their plans similarly the Appellant can always be asked to revise his proposal to match the Resolution Applicants’ Offer. It goes without saying that ultimate decision is of the CoC. We thus are of the view that carrying out purpose and intendment of the judgment dated 04.07.2022, the CoC is to deliberate on the two Resolution Plans received in the CIRP as well as Settlement Proposal under Section 12A submitted by the Applicant/ Appellant and thereafter to take a final decision. The CoC is also fully entitled to negotiate with the Resolution Applicant as well as the Appellant to optimise the maximum value.

Suspended Director who was representing the Corporate Debtor and has submitted the Settlement Proposal is entitled to participate in deliberation and negotiation undertaken by the CoC – Sanjeev Mahajan Vs. Indian Bank (Erstwhile Allahabad Bank) & Anr. – NCLAT New Delhi Read Post »

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