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Vijay Kumar Singhania Vs. Bank of Baroda and Anr. – Supreme Court

Hon’ble Supreme Court has affirmed the decision of the NCLAT where NCLAT held that IU Regulation 20 although has been amended w.e.f 14.06.2022 but there is no amendment either in Section 7 of the IBC which empowers Financial Creditor to file record of the default recorded in the information utility or such other record and default as may be specified or in Rules 2016 or CIRP Regulations 2016. The statutory scheme, thus, contemplates furnishing record of default by the financial creditor as recorded with the information utility or such other record or evidence of default as may be specified.
The record of default for purposes of Section 7(3)(a) has been specified by Regulation 2A of the CIRP Regulations, 2016. Thus, record of default recorded with the information utility is not the only document which has to be furnished by financial creditor. Financial creditor is at liberty to submit such other record of default as may be specified which is a statutory provision contained in Section 7. Even after amendment of IU Regulation 20 by insertion of Regulation 20(1A) w.e.f 14.06.2022, Financial Creditor is entitled to file evidence of record of default as contemplated by CIRP Regulation 2A r/w Rule 4 of the AAA Rules, 2016.

Vijay Kumar Singhania Vs. Bank of Baroda and Anr. – Supreme Court Read Post »

Whether filing of Record of Default(RoD) of Information Utility is mandatory? and without obtaining an Authentication of Default(AoD) as per IU Regulation 21, no application under Sec. 7 can be filed by Financial Creditor? – Vijay Kumar Singhania Vs. Bank of Baroda and Anr. – NCLAT New Delhi

In this landmark judgment, Hon’ble NCLAT, bench comprising of three members, held that:
(i) IU Regulation 20 although has been amended w.e.f 14.06.2022 but there is no amendment either in Section 7 of the IBC which empowers Financial Creditor to file record of the default recorded in the information utility or such other record and default as may be specified or in Rules 2016 or CIRP Regulations 2016.
(ii) The statutory scheme contemplates furnishing record of default by the financial creditor as recorded with the information utility or such other record or evidence of default as may be specified.
(iii) Record of default recorded with the information utility is not the only document which has to be furnished by financial creditor.
(iv) Regulations framed by the Board as per Section 240(1) has to be consistent with provisions of the Code and the Rules. When Section 240 itself provides that regulations have to be consistent with provision of Code and Rules, no regulation can be implemented or enforced which is not in consonance with the Code and the Rules.
(v) If IU Regulation 20(1A) is to be read as Regulation now mandating the Financial Creditor to file only the record of default in the information utility, the said Regulation will not be consistent with provision of Section 7(3) of the Code and AAA Rule 4 which provides that what documents have to be filed by the Financial Creditor.
(vi) IU Regulation 20(1A) cannot be read to mean that after the said amendment brought in regulation w.e.f 14.06.2022 an application filed under Section 7 which is not supported by information of default from an information utility is to be rejected and if the Financial Creditor has filed other evidence to prove default which is contemplated by the AAA Rules, 2016 and the CIRP Regulations, 2016, the said application has not to be considered.
(v) Filing of counter claim or money suit shall not absolve the Appellant from its liability to discharge its debt and if there is a financial debt which is due and default is committed by the Corporate Debtor proceedings under Section 7 can be initiated. Mere filing of the counter claim or money suit cannot lead to dismissal of Section 7.

Whether filing of Record of Default(RoD) of Information Utility is mandatory? and without obtaining an Authentication of Default(AoD) as per IU Regulation 21, no application under Sec. 7 can be filed by Financial Creditor? – Vijay Kumar Singhania Vs. Bank of Baroda and Anr. – NCLAT New Delhi Read Post »

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