04/07/2023

Whether it is the discretion of Operational Creditor or the nature of the Operational Debt, that determines the issuance of Demand Notice in Form-3 or Form-4 under Section 8 of the Insolvency and Bankruptcy Code, 2016? – Tejinder Pal Setia Vs. Kone Elevator India Pvt. Ltd. and Ors. – NCLAT New Delhi

/ 25 minutes of reading

NCLAT held that the Operational Creditor is at liberty to submit Demand Notice either in Form-3 or Form-4. When Notice is issued in Form-4, copy of the Invoice is required to be attached with the Notice. The Demand Notice issued by the Operational Creditor was in Form-3, hence, no infirmity can be found in the Demand Notice, if invoices were not attached. In the present case, the basis of the Demand Notice was Supply Agreement and acknowledgement letter issued by the Corporate Debtor. No invoices were referred to in the Demand Notice. Hence, submission of the Appellant that Demand Notice should have been accompanied with the invoices cannot be accepted.

Whether it is the discretion of Operational Creditor or the nature of the Operational Debt, that determines the issuance of Demand Notice in Form-3 or Form-4 under Section 8 of the Insolvency and Bankruptcy Code, 2016? – Tejinder Pal Setia Vs. Kone Elevator India Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Although, no specific timelines for Auction have been given in the Liquidation Process Regulations, 2016, normally Notice period of 30 days is given to get best value – Naren Seth Liquidator of Ciemme Jewels Ltd. Vs. Sunrise Industries – NCLAT New Delhi

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In this case, date of publication of final E-auction notice is 02.04.2022 with merely one working day (Monday) to submit KYC, another three days upto 07.04.2022 to submit EMD of Rs. 1.15 Crores and finally one more day upto 08.04.2022 to give bids. Thus, the entire liquidation process was supposed to be completed in one week.
NCALT held that (i) although, no specific timelines have been given in the Liquidation Process Regulations, 2016, normally notice period of 30 days is given to get best value. In this connection, as a referring point only, we would like to refer to the provision of sub-rule (6) of Rule 8 of the SARFAESI Security Interest (Enforcement) Rules, 2002. This also indicates that sufficient time say 30 days ought to have been give. Thus, we find the Liquidator acted in hurry in concluding the E-auction.
(ii) NCLAT upheld the decision of AA wherein the E-auction was set aside and it was held that the Liquidator must bear all expenses incurred for the auction. We also do not appreciate conduct of the Liquidator in whole process as observed by the Adjudicating Authority.

Although, no specific timelines for Auction have been given in the Liquidation Process Regulations, 2016, normally Notice period of 30 days is given to get best value – Naren Seth Liquidator of Ciemme Jewels Ltd. Vs. Sunrise Industries – NCLAT New Delhi Read Post »

A Successful Bidder of sale as Going Concern can seek access of the Adjudicating Authority and may pray for necessary directions in accord with and in consonance with the process document in the liquidation proceedings – Jasamrit Designers Pvt. Ltd. Vs. Mr. Gian Chand Narang, Liquidator of Apex Buildsys Ltd. – NCLAT New Delhi

/ 15 minutes of reading

NCLAT held that: (i) When the process document clearly contemplated such consequences the said consequences shall ensue on sale as going concern and if any roadblocks come into ways of successful resolution applicant, necessary directions, clarifications can very well be issued by the Adjudicating Authority on an Application filed under Section 60(5)(c) of the Code.
(ii) A successful bidder who is declared as successful bidder of sale as going concern can seek access of the Adjudicating Authority and may pray for necessary directions in accord with and in consonance with the process document in the liquidation proceedings.

A Successful Bidder of sale as Going Concern can seek access of the Adjudicating Authority and may pray for necessary directions in accord with and in consonance with the process document in the liquidation proceedings – Jasamrit Designers Pvt. Ltd. Vs. Mr. Gian Chand Narang, Liquidator of Apex Buildsys Ltd. – NCLAT New Delhi Read Post »

The Financial Debt which is covered by Factoring Agreement is clearly covered within meaning of Section 5(8)(e) of the IBC and the Financial Creditor was entitled to being recourse – Mr. Ritesh Kumar Agrawal, Suspended Director Arcons Infrastructure and Constructions Pvt. Ltd. Vs. M/s. India Factoring and Finance Solutions Pvt. Ltd. – NCLAT New Delhi

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NCLAT observed that Clause 12.1 the Factoring Agreement which has been entered into between the parties on 05th July, 2018, itself indicates that India Factoring shall have the right of recourse against the client. The client as per Factoring Agreement is Arcons Infrastructures and Constructions Pvt. Ltd. The clause 12 as noted above in the definition of recourse clearly indicates that agreement between the parties was not any agreement which may be called as agreement of non recourse basis. Thus, the Financial Debt which is covered by Factoring Agreement is clearly covered within meaning of Section 5(8)(e) of the Code and the Financial Creditor was entitled to being recourse. 

The Financial Debt which is covered by Factoring Agreement is clearly covered within meaning of Section 5(8)(e) of the IBC and the Financial Creditor was entitled to being recourse – Mr. Ritesh Kumar Agrawal, Suspended Director Arcons Infrastructure and Constructions Pvt. Ltd. Vs. M/s. India Factoring and Finance Solutions Pvt. Ltd. – NCLAT New Delhi Read Post »

When the IRP is duty bound to take custody and control of the assets belonging to the Corporate Debtor, an application u/s 60(5)(c) is clearly maintainable and the Adjudicating Authority had ample jurisdiction to issue necessary direction – Pradeep Kumar Kabra, RP of M/s. Cengres Tiles Ltd. Vs. Assistant Commissioner, CGST & Central Excise – NCLAT New Delhi

/ 16 minutes of reading

NCLAT held that in view of the Circular dated 23.03.2020 issued by Central Board of Excise and Customs, the Department itself has understood that when CIRP has been initiated for recovering any amount, the claim has to be filed and no recovery can be made since moratorium has been imposed under the Code. The Department after imposition of moratorium with effect from 27.04.2022 could not have recovered its dues. The attachment of the goods of the Corporate Debtor were made before initiation of CIRP. The assets, which were attached were still the assets of the Corporate Debtor, which were in the ‘supurdagi’ of the Corporate Debtor. Department being unable to recover the amount from the attached assets, the RP has rightly filed the Application seeking a direction for release of the attachment, so that assets can be included in the assets of the Corporate Debtor for payment to the creditors.

When the IRP is duty bound to take custody and control of the assets belonging to the Corporate Debtor, an application u/s 60(5)(c) is clearly maintainable and the Adjudicating Authority had ample jurisdiction to issue necessary direction – Pradeep Kumar Kabra, RP of M/s. Cengres Tiles Ltd. Vs. Assistant Commissioner, CGST & Central Excise – NCLAT New Delhi Read Post »

The duty of the RP is to collect and collate the claims and a mere rejection of the Claim by the RP cannot be construed to be an ‘Adjudicatory function’, keeping in view Regulation 13 of the CIRP Regulations 2016 – M/s SMS Foundation & Investment LLP Vs. M/s. Harsha Exito Engineering Pvt. Ltd. – NCLAT Chennai

/ 16 minutes of reading

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The duty of the RP is to collect and collate the claims and a mere rejection of the Claim by the RP cannot be construed to be an ‘Adjudicatory function’, keeping in view Regulation 13 of the CIRP Regulations 2016 – M/s SMS Foundation & Investment LLP Vs. M/s. Harsha Exito Engineering Pvt. Ltd. – NCLAT Chennai Read Post »

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