01/02/2024

Whether NABARD shall get priority payment over other creditors? – National Bank for Agriculture & Rural Development (NABARD) Vs. SREI Equipment Finance Ltd. – NCLT Kolkata Bench

/ 4 minutes of reading

Hon’ble NCLT Kolkata Bench has held that:

(i) Upon conjoint reading of Section 5(8) and section 3(31), which creates a charge on the book debts of the Corporate debtor, is clear that the present case of NABARD giving a loan to the Corporate debtor is clearly a Financial debt and since the same has been secured against the book debts of the CD in favour of NABARD, it makes NABARD a Secured creditor.
(ii) RP is dutybound to treat it as a SECURED Financial Creditor for all intents and purposes of the code. There is no other special treatment to any of creditors envisaged in the code and all Secured creditors have to be treated equally as a class.
(iii) Nowhere in the code a special treatment is envisaged within a class. It is also noteworthy that NABARD had filed its claim with the Administrator in FORM C and the claim had been collated by the Administrator and the claim was admitted. The claim of NABARD was accepted as NABARD had given financial debt to SEFL and also had securities of SEFL assigned as charge. Hence, NABARD clearly falls into the category of a Secured Financial Creditor.

Whether NABARD shall get priority payment over other creditors? – National Bank for Agriculture & Rural Development (NABARD) Vs. SREI Equipment Finance Ltd. – NCLT Kolkata Bench Read Post »

Income Tax Refund of liquidation period cannot be adjusted/ set off against past years outstanding demands | Insolvency Code overrides Income Tax Act, 1961 – Vinod Kumar Kothari, Liquidator of CD Vs. The Assessing Officer, Income Tax Department and Ors. – NCLT Kolkata Bench

/ 4 minutes of reading

In this important judgment, Hon’ble NCLT Kolkata Bench holds that:
(i) Where matters covered by the 2016 Code are concerned [including insolvency resolution of corporate persons] if provisions contained therein are inconsistent with other statutes, including the Income Tax Act, 1961, it shall override such laws.
(ii) The Income Tax Department may have claim against the Corporate Debtor and would fall under the category of an Operational Creditor and would have to accordingly file their claim before the Resolution Professional or the Liquidator, in the present case, with the Liquidator for recover of their dues in the requisite form.
(iii) The refund from the Income Tax falls under the asset of the Corporate Debtor and would be added to the liquidation assets. Under the scheme of the code, the Creditors; in this case the Income Tax Department, are not empowered to set off the returns of the Corporate Debtor which fell within the liquidation period against the past dues.
(iv) The Code overrides the Income Tax Act, 1961 in so far as the present case is concerned and hence the adjustment of the Income Tax returns during the liquidation period which is an asset of the Corporate Debtor in pursuance to the Income Tax Act, 1961 is void.

Income Tax Refund of liquidation period cannot be adjusted/ set off against past years outstanding demands | Insolvency Code overrides Income Tax Act, 1961 – Vinod Kumar Kothari, Liquidator of CD Vs. The Assessing Officer, Income Tax Department and Ors. – NCLT Kolkata Bench Read Post »

There is no bar in Insolvency and Bankruptcy Code, 2016 (IBC) to proceed against each separate Personal Guarantor for same debt | Pendency of Resolution Plan for approval of NCLT u/s 31 of IBC even in which payment of entire debt has been considered cannot be a ground for dismissal of insolvency proceedings against Personal Guarantor u/s 95 of IBC – Mr. Shailesh Bhalchandra Desai – NCLT Mumbai Bench

/ 3 minutes of reading

In Section 95 application, Hon’ble NCLT Mumbai Bench holds that there is no bar in Insolvency and Bankruptcy Code, 2016 (IBC) to proceed against each separate Personal Guarantor for same debt. Moreover, pendency of CIRP (Corporate Insolvency Resolution Process) against the Principal Borrower does not debar lender from proceeding against Personal Guarantor. Additionally, pendency of Resolution Plan approval also cannot be a ground for dismissal of proceedings against the Personal Guarantor. However, Hon’ble Bench rejects the application on the ground of period of limitation.

There is no bar in Insolvency and Bankruptcy Code, 2016 (IBC) to proceed against each separate Personal Guarantor for same debt | Pendency of Resolution Plan for approval of NCLT u/s 31 of IBC even in which payment of entire debt has been considered cannot be a ground for dismissal of insolvency proceedings against Personal Guarantor u/s 95 of IBC – Mr. Shailesh Bhalchandra Desai – NCLT Mumbai Bench Read Post »

When Adjudicating Authority has allowed Liquidator to prosecute on behalf of Corporate Debtor as per Sec. 33(5) of IBC, Liquidator is fully entitled to peruse Writ Petition on behalf of Corporate Debtor – CA Rajeev Bansal Liquidator of Isolux Corsan India Engineering & Construction Pvt. Ltd. – NCLAT New Delhi

/ 10 minutes of reading

In this case, an IA filed by Liquidator to seeking permission to defend all of any of the suit, prosecution or other legal proceedings etc. was allowed by NCLT, however, subsequent IA filed for maintainability of a writ petition was dismissed by AA.

Hon’ble NCLAT holds that:

(i) There cannot be any exception to requirement of law as contained in Section 33(5) of the Code i.e. legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.
(ii) When the application was filed by the Liquidator, this was with intent and purpose to obtain prior approval of the Adjudicating Authority to instituted legal proceeding on behalf of the Corporate Debtor, which application was allowed by the Adjudicating Authority. The subsequent application became necessary as the objection was raised to the maintainability of the Writ Petition on the ground that there is no prior approval with regard to filing of the Writ petition.
(ii) Order is set aside. I.A. is allowed holding that the proceedings which was initiated by the Liquidator by filing Writ Petition was fully covered by the approval as given by the Adjudicating Authority by order dated 28.04.2022.

When Adjudicating Authority has allowed Liquidator to prosecute on behalf of Corporate Debtor as per Sec. 33(5) of IBC, Liquidator is fully entitled to peruse Writ Petition on behalf of Corporate Debtor – CA Rajeev Bansal Liquidator of Isolux Corsan India Engineering & Construction Pvt. Ltd. – NCLAT New Delhi Read Post »

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