03/06/2022

Whether the Monitoring Committee of a Corporate Debtor through its Chairman has the authority under IBC to file CIRP application against other Corporate Debtor – M/s. Educomp Infrastructure & School Management Ltd. Vs. M/s. Millenium Education Foundation – NCLT New Delhi Bench Court-V

The Adjudicating Authority observed that the Applicant, in the present Application, being the Monitoring Professional for M/ s. Educomp Infrastructure & School Management Limited, is covered under the provisions of the Code, by virtue of Section 2(d) of the code which read as; “such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf;”. Here, it can be observed that the Monitoring Committee is formed under the provisions of the Code and the Chairman therein, is also appointed in accordance with the provisions of the Code. Hence, he has proper authority to proceed to take any steps as necessary to protect the interest of the Applicant.

Whether the Monitoring Committee of a Corporate Debtor through its Chairman has the authority under IBC to file CIRP application against other Corporate Debtor – M/s. Educomp Infrastructure & School Management Ltd. Vs. M/s. Millenium Education Foundation – NCLT New Delhi Bench Court-V Read Post »

Whether the Liquidator is competent to determine and admit a specific amount of money as payable to a particular creditor, when there is pending litigation before the appropriate forum, such as the DRT/High Courts and other Judicial Authorities – Mr. Ashok Oswal, Managing Director (Suspended) Oswal Spinning and Weaving Mills Ltd. Vs. Hemanshu Jetley (Liquidator) – NCLT Chandigarh Bench

The Adjudicating Authority held that the Liquidator is required to verify the claims with reference to the date of liquidation and if there is no crystallization of a debt through a decree on that date, the Code does not direct the Liquidator to wait for the same. The Applicant contented that proceedings before DRT need to be completed before the distribution under the IBC can take place, it is clarified that the general principle of construction in a circumstance where two special Acts are in conflict with each other is that, the Act made later should prevail vide the maxim “leges posteriores priores abrogant”. In view of Section 238 of the Code, 2016 steps taken under the Code by the authority would have precedence over other authorities in parallel proceedings. Thus, the provisions of Code, 2016 should prevail in case of any conflict. his Authority, therefore, finds no reason to keep the liquidation proceeding in abeyance, and thus, rejects the Applicant’s prayer that the Liquidator should await the final adjudication of the claims before the Hon’ble DRT before accepting the claims of the Respondents and subsequently disbursal of the amounts.

Whether the Liquidator is competent to determine and admit a specific amount of money as payable to a particular creditor, when there is pending litigation before the appropriate forum, such as the DRT/High Courts and other Judicial Authorities – Mr. Ashok Oswal, Managing Director (Suspended) Oswal Spinning and Weaving Mills Ltd. Vs. Hemanshu Jetley (Liquidator) – NCLT Chandigarh Bench Read Post »

Leave encashment amount payable to the Director (as related party) shall be treated as part of CIRP cost – Ranjeet Kumar Burnwal Vs. CoC, Through Mr. Supriyo Kumar Chaudhuri, RP of Rohit Ferro-Tech Ltd. – NCLAT New Delhi

The Adjudicating Authority directed that leave encashment amount payable to the applicant/ Director shall be treated as part of CIRP cost.
NCLAT held that Leave Encashment has been admitted to be payable and since being Director he has been treated as related party and therefore, the Adjudicating Authority has rightly recorded that leave encashment amount payable to the applicant/Director shall be treated as part of CIRP cost and as the Resolution Plan finalized by CoC the approval is pending before the Adjudicating Authority, once approved, the leave encashment will be considered in accordance with law. It also held that in the terms of sub-rule (3) of Rule 17 of Companies (Meetings of Board and its Powers) Rules, 2014 and the Agreement dated 13.02.2019, there is no provision for payment of compensation to the Appellant/Director in the company is in default in redemption of debentures or payment of interest thereon.

Leave encashment amount payable to the Director (as related party) shall be treated as part of CIRP cost – Ranjeet Kumar Burnwal Vs. CoC, Through Mr. Supriyo Kumar Chaudhuri, RP of Rohit Ferro-Tech Ltd. – NCLAT New Delhi Read Post »

In settlement approval order, Adjudicating Authority cannot direct the Corporate Debtor to deposit TDS within a specific time period – Rolta India Ltd. Vs. Mr. Anant Sadekar & Ors. – NCLAT New Delhi

When the application under Section 9 was to be withdrawn by virtue of payment of all dues to employees under the Settlement Agreement, the Adjudicating Authority allowed the Application to be withdrawn. However, while permitting withdrawal directing the Corporate Debtor to deposit TDS amounts deducted from the employee, if not already paid to the Central Government Account within a period of 15 days. NCLAT upheld the direction of the Adjudicating Authority to the Appellant to deposit the TDS amount. However, it set aside the period of 15 days as allowed by the Adjudicating Authority to the Appellant to deposit and it observed that the deposit shall be made by the Appellant during the period as provided by the Income Tax Authorities.

In settlement approval order, Adjudicating Authority cannot direct the Corporate Debtor to deposit TDS within a specific time period – Rolta India Ltd. Vs. Mr. Anant Sadekar & Ors. – NCLAT New Delhi Read Post »

When no Scheme could be submitted or approved under Section 230, there was no option left to the Adjudicating Authority except to direct the Liquidator to proceed further in the liquidation process – Jai Vardhman Khaniz Pvt. Ltd. & Ors. Vs. Hindustan Paper Corporation Through Liquidator & Ors – NCLAT New Delhi

When no Scheme could be submitted or approved under Section 230, there was no option left to the Adjudicating Authority except to direct the Liquidator to proceed further in the liquidation process. The Appellate Authority while considering the Appeal filed against the order of the Liquidation has clearly stated that the Appellate Authority is not inclined to interfere with the impugned order dated 02.05.2019 which observation was made in Company Appeal (AT) (Ins.) No. 585 of 2019 as noted in paragraph 27 of the Adjudicating Authority order. The mere fact that the Appellants in this Appeal claims that they are interested to offer a higher amount to one which the Corporate Debtor has been auctioned cannot be a ground to entertain this Appeal or interfere with the impugned order. Everyone including the Appellants had ample opportunity before the Adjudicating Authority when proceedings were on to submit appropriate Scheme Under Section 230. As noted above, a Scheme under Section 230 was submitted by ‘Mahalaxmi Continental Limited’ an Operational Creditor which was a consortium of Operational Creditors including some of the Appellants also. The Scheme was subsequently withdrew by the Applicant. It is amply clear that there is no Scheme under Section 230 which may obviate proceeding in the liquidation. We thus, are of the view that no grounds have been made out to interfere with the impugned orders. The Appeal is dismissed.

When no Scheme could be submitted or approved under Section 230, there was no option left to the Adjudicating Authority except to direct the Liquidator to proceed further in the liquidation process – Jai Vardhman Khaniz Pvt. Ltd. & Ors. Vs. Hindustan Paper Corporation Through Liquidator & Ors – NCLAT New Delhi Read Post »

Supreme Court allows the settlement plan of Promoter of Siva Industries at Liquidation stage – Vallal RCK Vs. M/s Siva Industries and Holdings  Ltd. and Others – Supreme Court

In this case, since no resolution plan was approved by CoC of Siva Industries and Holdings Ltd., the RP filed an application under Section 33(1)(a) of the IBC seeking initiation of liquidation process. The promoter of the Corporate Debtor also filed a settlement application before the NCLT showing his willingness to offer one-time settlement plan. NCLT had rejected the settlement plan and allowed liquidation process. NCLAT also upheld the decision of the NCLT.
Hon’ble Supreme Court set aside the orders of NCLAT and NCLT and held that when 90% and more of the creditors, in their wisdom after due deliberations, find that it will be in the interest of all the stake-holders to permit settlement and withdraw CIRP, in our view, the adjudicating authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. The interference would be warranted only when the adjudicating authority or the appellate authority finds the decision of the CoC to be wholly capricious, arbitrary, irrational and de hors the provisions of the statute or the Rules.

Supreme Court allows the settlement plan of Promoter of Siva Industries at Liquidation stage – Vallal RCK Vs. M/s Siva Industries and Holdings  Ltd. and Others – Supreme Court Read Post »

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