Asian Colour Coated Ispat Ltd.

Whether reassessment action under Section 148 of the Income Tax Act, 1961 can be initiated notwithstanding the Resolution Plan having been approved by the NCLT – Asian Colour Coated Ispat Ltd. Vs. Assistant Commissioner of Income Tax and Anr. – Delhi High Court

Hon’ble Delhi High Court (Division Bench) referring judgments in M Tech Developers (2024) ibclaw.in 289 HC, Sree Metaliks (2023) ibclaw.in 59 HC and Rishi Ganga Power Corporation (2023) ibclaw.in 1176 HC has quashed the impugned notice under Section 148 of the Income Tax Act, 1961 for A.Y. 2014-15.

Hon’ble High Court also clarified applicability of State Tax Officer v. Rainbow Papers Ltd. (2022) ibclaw.in 107 SC and Greater Noida Industrial Development Authority v. Prabhjit Singh Soni and Anr. (2024) ibclaw.in 53 SC on the facts of the case.

Whether reassessment action under Section 148 of the Income Tax Act, 1961 can be initiated notwithstanding the Resolution Plan having been approved by the NCLT – Asian Colour Coated Ispat Ltd. Vs. Assistant Commissioner of Income Tax and Anr. – Delhi High Court Read Post »

Whether the right of subrogation shall stand extinguished after approval of the Resolution Plan under the Code or the same will continue to vest with Personal Guarantors in terms of the Indian Contract Act, 1872 – Sapna Aggarwal Vs. Asian Colour Coated Ispat Ltd. and Ors. – Supreme Court

Hon’ble Supreme Court upholds the decision of NCLAT where it was held that Doctrine of subrogation is an absolute right of Guarantor, however, the issue becomes different, if it falls within the domain of IBC. A Resolution Plan itself can vary and modify the rights of Creditors and Guarantors and provide for continuation of Personal Guarantees which do not need any confirmation from Personal Guarantor.

Whether the right of subrogation shall stand extinguished after approval of the Resolution Plan under the Code or the same will continue to vest with Personal Guarantors in terms of the Indian Contract Act, 1872 – Sapna Aggarwal Vs. Asian Colour Coated Ispat Ltd. and Ors. – Supreme Court Read Post »

Doctrine of subrogation is an absolute right of Guarantor, however, the issue becomes different, if it falls within the domain of IBC | A Resolution Plan itself can vary and modify the rights of Creditors and Guarantors and provide for continuation of Personal Guarantees which do not need any confirmation from Personal Guarantor – Mr. Vikas Aggarwal Vs. Asian Colour Coated Ispat Ltd. and Ors. – NCLAT New Delhi

In this important judgment on modification of rights of Creditors/ Personal Guarantor in Resolution Plan, Hon’ble NCLAT held that:
(i) The financial creditors have a right to proceed against the personal guarantors of the Corporate Debtor, and further, that the personal guarantors, in terms of section 31 of the Code are duty bound by the terms of the Resolution Plan approved by the Adjudicating Authority.
(ii) The objective of the code is to revive and rehabilitate the Corporate Debtor and therefore the right to subrogation may not survive in such situation. The extinguishment of the Personal Guarantors right of subrogation is clear departure from establish principles of contract guarantee which are covered under Section 140 and 141 of the Indian Contract Act, 1872.
(iii) Despite provisions of Section 140 and 141 of the Indian Contract Act, 1872 the Personal Guarantors cannot claim any relief in view of clear provisions of Section 238 of the Code
(iv) The extinguishment of Personal Guarantors right of subrogation is unavoidable and inaccessible fact in insolvency cases and it requires to be respected by all stakeholders and any departure from such principles will have adverse impact on revival of the Corporate Debtors, interest of the Financial Creditors and overall negative impact on the national economy.

Doctrine of subrogation is an absolute right of Guarantor, however, the issue becomes different, if it falls within the domain of IBC | A Resolution Plan itself can vary and modify the rights of Creditors and Guarantors and provide for continuation of Personal Guarantees which do not need any confirmation from Personal Guarantor – Mr. Vikas Aggarwal Vs. Asian Colour Coated Ispat Ltd. and Ors. – NCLAT New Delhi Read Post »

A person who expressed its interest to submit a Resolution Plan & No financial proposal was provided cannot claim to be aggrieved of the order passed by Adjudicating Authority approving the Resolution Plan – Interups Inc Vs. Kuldeep Kumar Bassi (Resolution Professional of Asian Colour Coated Ispat Limited) – NCLAT New Delhi

NCLAT held that section 61(1) authorizes “any person aggrieved by the order of Adjudicating Authority under this part” can prefer an appeal before the Appellate Tribunal. The `part’ here refers to Part -II of the Code which comprises CIRP and Liquidation Process. Here what we observed that “any person aggrieved” comprises of stakeholders in the process of CIRP and Liquidation Process. The Appellant is stranger to the CIRP till 11th June, 2020. On 12.06.2020 the Appellant for the first time expressed its interest to submit a Resolution Plan for the Asian Colours Coated Ispat Ltd, this email was marked to all CoC members. No financial proposal was provided in the said letter. ll this reflect that Appellant wanted to enter fray nearly one year after CoC approval of Resolution Plan; it neither qualifies as Resolution Applicant nor as prospective Resolution Applicant or successful or unsuccessful Resolution Applicant and hence cannot be termed as aggrieved party. Appellant may be termed as an outsider standing on the sidelines. Corporate Insolvency Resolution Process is time bound, value maximization has also to be in timebound manner. All this lead us to sum up that Appellant is neither an aggrieved party in the process of CIRP nor he has a locus stand to file the appeal.

A person who expressed its interest to submit a Resolution Plan & No financial proposal was provided cannot claim to be aggrieved of the order passed by Adjudicating Authority approving the Resolution Plan – Interups Inc Vs. Kuldeep Kumar Bassi (Resolution Professional of Asian Colour Coated Ispat Limited) – NCLAT New Delhi Read Post »

Vikas Aggarwal Vs. State Bank of India – NCLAT New Delhi

It will be evident that the definition of claim means a right to payment even if it is disputed. The Corporate Debtor is only entitled to point out that the default had not occurred in the sense that the ‘debt’ which may also include disputed claim is not due. The moment the Adjudicating Authority is satisfied that a default has occurred the application must be admitted unless it is incomplete. It is not the case of the Appellant or the Corporate Debtor that the debt is not payable in law or in fact. Therefore, the Code gets triggered the moment the Adjudicating Authority noticed that the default is of Rupees One Lakh or more (Section 4).

Vikas Aggarwal Vs. State Bank of India – NCLAT New Delhi Read Post »

Whether the action of RBI in selecting the petitioner as one of the borrowers and issuing instructions to the banks to make a reference under the IBC is arbitrary, unreasonable and falls foul of Article 14 of the Constitution of India – Asian Colour Coated Ispat Limited Vs. Reserve Bank of India and Ors. – High Court of Delhi

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Whether the action of RBI in selecting the petitioner as one of the borrowers and issuing instructions to the banks to make a reference under the IBC is arbitrary, unreasonable and falls foul of Article 14 of the Constitution of India – Asian Colour Coated Ispat Limited Vs. Reserve Bank of India and Ors. – High Court of Delhi Read Post »

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