AKME Projects Limited

NCLAT excludes the period of pending appeal for hearing before SC from CIRP time period 330 days – Jalesh Kumar Grover Vs. Committee of Creditors of Akme Projects Ltd. – NCLAT New Delhi

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NCLAT excludes the period of pending appeal for hearing before SC from CIRP time period 330 days – Jalesh Kumar Grover Vs. Committee of Creditors of Akme Projects Ltd. – NCLAT New Delhi Read Post »

Only those Financial Creditors that are related parties in praesenti would be debarred from CoC under the first proviso to Section 21(2), those related party Financial Creditors that cease to be related parties in order to circumvent the exclusion under the first proviso to Section 21(2), should also be considered as being covered by the exclusion thereunder – Phoenix Arc Pvt. Ltd. Vs. Spade Financial Services Limited & Ors. – Supreme Court

An issue of interpretation in relation to the first proviso of Section 21(2) is whether the disqualification under the proviso would attach to a financial creditor only in praesenti, or if the disqualification also extends to those financial creditors who were related to the corporate debtor at the time of acquiring the debt. Thus, facially, it would appear that the use of the simple present tense in the first proviso to Section 21(2) indicates that the disqualification applies in praesenti. Furthermore, this interpretation would also be supported by a reading of the first proviso to Section 21(2), in light of the definition of ‘related party’ under Section 5(24), which uses phrases such as ‘is accustomed to act’ or ‘is associated’ to define a related party in the present tense.(p82 & 84).

While the default rule under the first proviso to Section 21(2) is that only those financial creditors that are related parties in praesenti would be debarred from the CoC, those related party financial creditors that cease to be related parties in order to circumvent the exclusion under the first proviso to Section 21(2), should also be considered as being covered by the exclusion thereunder. Mr Kaul has argued, correctly in our opinion, that if this interpretation is not given to the first proviso of Section 21(2), then a related party financial creditor can devise a mechanism to remove its label of a ‘related party’ before the Corporate Debtor undergoes CIRP, so as to be able to enter the CoC and influence its decision making at the cost of other financial creditors. (p95)

Only those Financial Creditors that are related parties in praesenti would be debarred from CoC under the first proviso to Section 21(2), those related party Financial Creditors that cease to be related parties in order to circumvent the exclusion under the first proviso to Section 21(2), should also be considered as being covered by the exclusion thereunder – Phoenix Arc Pvt. Ltd. Vs. Spade Financial Services Limited & Ors. – Supreme Court Read Post »

Related party dispute in the matter of Spade Financial Services Limited Vs. Hari Krishan Sharma – NCLAT New Delhi

NCLAT has uphled the AA decision and has held that section 5(24)(f) of the Code, 2016 provides that anybody Corporate whose Board of Directors, Managing Director or Manager, in the ordinary course of business, acts on the advice, directions or instructions of a Director, Partner or Manager of the Corporate Debtor. Pertinently during the transaction period of 2010 to 2013, Spade Financial Services Private Limited under Mr Arun Anand was making substantial financial arrangements on behalf of AKME Projects Limited by acting on the advice, directions or instructions of the Director and Management of the AKME Projects Limited, being Mr Sonal Anand and Mr Anil Anand, thereby clearly falling under the provisions of Section 5(24)(f) of I&B Code, 2016.

Related party dispute in the matter of Spade Financial Services Limited Vs. Hari Krishan Sharma – NCLAT New Delhi Read Post »

Even part of the dues, once becomes payable comes within the meaning of debt and if not paid it will amount to default – Anil Nanda Vs. Hari Kishan Sharma & Ors. – NCLAT New Delhi

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Even part of the dues, once becomes payable comes within the meaning of debt and if not paid it will amount to default – Anil Nanda Vs. Hari Kishan Sharma & Ors. – NCLAT New Delhi Read Post »

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