03/04/2024

Security Deposit is part of Liquidation Estate in accordance with Section 36 of IBC and it will be distributed as per the provisions outlined in Section 53 and it cannot be adjusted against dues/arrears of electricity in claim – Sandeep Goel Liquidator for Chaudhary Ingots Pvt. Ltd. Vs. Paschimanchal Vidyut Vitran Nigam Ltd. (PVVNL) – NCLT Allahabad Bench

Hon’ble NCLT Allahabad Bench held that:

(i) The rationale that the Hon’ble Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Ltd. and Ors. (2023) ibclaw.in 81 SC reaffirmed in the aforesaid case that the IBC, 2016 is a special statute that accounts for the dues of all creditors to be disbursed as per the waterfall mechanism during CIRP.
(ii) Recently, the Hon’ble Supreme Court in Bharti Airtel Ltd. and Another Vs. Vijaykumar V. Iyer and Others (2024) ibclaw.in 02 SC has dealt with the issue of right of set-off by the creditor in the insolvency proceedings.
(iii) The PVVNL has adjusted the sum of Rs. 1,15,33,600/-. The amount already set off by the PVVNL against anticipated claim cannot be permitted. In view of the fact that entire amount becomes part of the Corporate Debtor, security deposit being an integral part of the payment made by the erstwhile Corporate Debtor would therefore be part of the liquidation estate.

Security Deposit is part of Liquidation Estate in accordance with Section 36 of IBC and it will be distributed as per the provisions outlined in Section 53 and it cannot be adjusted against dues/arrears of electricity in claim – Sandeep Goel Liquidator for Chaudhary Ingots Pvt. Ltd. Vs. Paschimanchal Vidyut Vitran Nigam Ltd. (PVVNL) – NCLT Allahabad Bench Read Post »

The amount lying in Current Account of Corporate Debtor, even if it was subject to a charge, continues to be an asset of the Corporate Debtor and adjustment or deduction of amounts from the Current Account of the Corporate Debtor during the moratorium period is not justifiable | The moratorium begins operating from the date of the order declaring moratorium under Section 14 of the Code – Mr. Ajay Joshi, RP for Indian Steel Corporation Ltd. Vs. Union Bank of India – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that:

(i) A plain reading of Section 14 of the Code makes it abundantly clear that the said provision is designed to give immediate effect to the moratorium and be applicable from the date of order.
(ii) Margin money for the Letter of Credit means a contribution made by the borrower to honour the liability under the Letter of Credit which remains with the Bank so long as the Letter of Credit is alive.
(iii) The fact that a security interest on the current account was created in favour of the Respondent establishes that the funds in the current account of the Corporate Debtor remained as Corporate Debtor’s assets and no trust was formed in favour of the Bank.
(iv) The amount lying in the current account of the Corporate Debtor, even if it was subject to a charge, continues to be an asset of the Corporate Debtor, and adjustment or deduction of amounts from the current account of the Corporate Debtor during the moratorium period is not justifiable.

The amount lying in Current Account of Corporate Debtor, even if it was subject to a charge, continues to be an asset of the Corporate Debtor and adjustment or deduction of amounts from the Current Account of the Corporate Debtor during the moratorium period is not justifiable | The moratorium begins operating from the date of the order declaring moratorium under Section 14 of the Code – Mr. Ajay Joshi, RP for Indian Steel Corporation Ltd. Vs. Union Bank of India – NCLT Mumbai Bench Read Post »

By virtue of Section 29A in the Code, persons who have contributed to the defaults of the corporate debtor or are undesirable due to incapacities as specified in the section, are prevented from gaining control of the Corporate Debtor – Mr. Ritesh Prakash Adaitya, RP – NCLT Mumbai Bench

By virtue of Section 29A in the Code, persons who have contributed to the defaults of the corporate debtor or are undesirable due to incapacities as specified in the section, are prevented from gaining control of the Corporate Debtor. As the Resolution Applicants being the ex-directors/promoters of the Corporate Debtor have been rendered ineligible under sub clause (g) of Section 29A to submit a Resolution Plan under the Code in the light of the finding recorded in IA No. 2359 of 2022, the resolution plan submitted by such directors/promoters, is liable to be rejected. Accordingly, IA 2279 of 2022 praying for approval of the Resolution Plan is rejected.

By virtue of Section 29A in the Code, persons who have contributed to the defaults of the corporate debtor or are undesirable due to incapacities as specified in the section, are prevented from gaining control of the Corporate Debtor – Mr. Ritesh Prakash Adaitya, RP – NCLT Mumbai Bench Read Post »

If Demand Notice in Form-3 is accompanied by the document (lease deed) showing existence of transaction and rent payable then there is no requirement to also annex the invoice(s) with the demand notice – Prime Tower A Partnership Firm Vs. G. V. Meditech Pvt. Ltd. – NCLT Principal Bench

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If Demand Notice in Form-3 is accompanied by the document (lease deed) showing existence of transaction and rent payable then there is no requirement to also annex the invoice(s) with the demand notice – Prime Tower A Partnership Firm Vs. G. V. Meditech Pvt. Ltd. – NCLT Principal Bench Read Post »

Schedule-I of Liquidations Process Regulations, 2016 is directory in nature and not mandatory – Mr. Bhanu Pratap Singh Vs. Mr. Rakesh Jindal (Liquidator) – NCLAT New Delhi

Hon’ble NCLAT held that in any case the Schedule-I of Liquidations Regulations is directory in nature and not mandatory as is evident in the use of the word “shall ordinarily” in Regulation 33(1). When the mechanism of sale as specified in Regulation 32 is changed, the Schedule-I has to be followed afresh after every such change.

Schedule-I of Liquidations Process Regulations, 2016 is directory in nature and not mandatory – Mr. Bhanu Pratap Singh Vs. Mr. Rakesh Jindal (Liquidator) – NCLAT New Delhi Read Post »

In case of assignment of the debt during the course of pendency of CIRP petition, Assignee is entitled to all rights exercisable under the IBC and enjoys the locus to file the restoration application before the Adjudicating Authority – Raj Radhe Finance Ltd. Vs. Shrinathji Spintx Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that when NCLT Rule 2(4) defines “applicant” to mean a petitioner or an appellant or any other person or entity capable of making an application including an interlocutory application or a petition or an appeal under the IBC. Tested against this definition of an “applicant”, let us now see whether the Appellant fits into this definition of an “applicant”. An Appellant who by virtue of an assignment agreement has already stepped into the shoes of the original petitioner.

In case of assignment of the debt during the course of pendency of CIRP petition, Assignee is entitled to all rights exercisable under the IBC and enjoys the locus to file the restoration application before the Adjudicating Authority – Raj Radhe Finance Ltd. Vs. Shrinathji Spintx Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

As Operational Creditor acting on the referral instructions of Corporate Debtor and issuing the air tickets on the basis of customers details provided by Corporate Debtor, there is a relationship of Operational Creditor and Corporate Debtor – Akbar Travels of India Pvt. Ltd. Vs. Ritco Travels & Tours Pvt. Ltd. – NCLAT New Delhi

The facts of the case clearly bring out that the Appellant was acting on the referral instructions of the Respondent and was issuing the air tickets on the basis of the credit card the customers details provided by the Respondent. The Respondent had also given the undertaking that if any debit note comes against those tickets, then they will be responsible. The plea of the Respondent that they are not having any debt and the Appellant is not an Operational Creditor as they were not supplying any goods or services to the Respondent is not tenable. We can therefore conclude that there is a relationship of operational creditor and corporate debtor between the Appellant and Respondent.

As Operational Creditor acting on the referral instructions of Corporate Debtor and issuing the air tickets on the basis of customers details provided by Corporate Debtor, there is a relationship of Operational Creditor and Corporate Debtor – Akbar Travels of India Pvt. Ltd. Vs. Ritco Travels & Tours Pvt. Ltd. – NCLAT New Delhi Read Post »

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