07/07/2022

A group of financial creditors can converge and join hands to touch the financial limit of Rs. 1 crore stipulated under Section 7 of IBC so as to initiate a CIRP under the IBC – Vishnu Oil Mill Pvt. Ltd. Vs. Union of India – High Court of Rajasthan High Court

Hon’ble High Court held that on a plain reading of Section 7, it becomes clear that there is no ambiguity in the provision which requires any interpretation other than what is conveyed in its literary sense. The section clearly stipulates that the application for triggering CIRP may be initiated by a financial creditor either individually or jointly with other financial creditors. Previously the threshold default limit for filing the CIRP application was only Rs.1 lakh and it has been drastically increased to Rs.1 crore vide Gazette Notification dated 24.03.2020. It can easily be envisaged that in cases of MSMEs, there may not exist financial creditors whose individual debt is Rs.1 crore or above. If the threshold limit was to be fixed at Rs.1 crore qua each individual financial creditor, then there was no reason whatsoever for allowing joint applications by financial creditors.

A group of financial creditors can converge and join hands to touch the financial limit of Rs. 1 crore stipulated under Section 7 of IBC so as to initiate a CIRP under the IBC – Vishnu Oil Mill Pvt. Ltd. Vs. Union of India – High Court of Rajasthan High Court Read Post »

GST paid by Secured Creditor on sale of movable assets to be treated as it is made on behalf of Liquidator – Liquidator of M/s. Aegan Batteries Ltd. – NCLT Bengaluru Bench

R-1, SBI Stressed Assets Management Branch Bangaluru has realised Rs.16.51 crores against the sale of Land & Building and Plant & Machinery which is forming part of their security interest on 07.08.2020 through private treaty under SARFAESI. Consequent to the sale, the R-1 has informed the Liquidator about the payment of GST amount of which is applicable for sale of movable assets under the provisions of Goods and Service Act, 2017, directly remitted to the of Government authority instead of remitting through the Liquidator.

The Adjudicating Authority held that in the circumstances and for the reasons mentioned in the Application, we hereby direct the R-2 i.e., Assessing Officer-LVO-090, Goods & Services Tax, to take note of the GST of remitted by the R-1 i.e., SBI as if it is made on behalf of the Liquidator / Corporate Debtor, and thus the said amount remitted by R-1 i.e., SBI to the Government account is deemed as fulfillment of the compliances requirement of GST Rules of the Liquidator/ Corporate Debtor.

GST paid by Secured Creditor on sale of movable assets to be treated as it is made on behalf of Liquidator – Liquidator of M/s. Aegan Batteries Ltd. – NCLT Bengaluru Bench Read Post »

Guarantor cannot enjoy a right of subrogation when the payment is made by the guarantor with respect to the debt for which the guarantee is provided – State Bank of India Vs. Shri. Ghanshyam Surajbali Kurmi – NCLT Hyderabad Bench

Adjudicating Authority held that conclusion of Corporate Insolvency Resolution Plan does not bar Financial Creditor against Guarantor, and Financial Creditor can always approach this Adjudicating Authority as envisaged under the Code. Financial Creditor is also at liberty to initiate Interim Resolution Professional/Personal Guarantor the resolution plan approved by Adjudicating Authority is not for recovery but for revival. Further as per Section 134 of the Indian Contract Act, 1872, a guarantor is discharged of its liability towards the creditor only if the creditor on its own instance discharges the principal debtor through voluntary act of the creditor and not due to operation of law. Further, it held that guarantor cannot enjoy a right of subrogation when the payment is made by the guarantor with respect to the debt for which the guarantee is provided.

Guarantor cannot enjoy a right of subrogation when the payment is made by the guarantor with respect to the debt for which the guarantee is provided – State Bank of India Vs. Shri. Ghanshyam Surajbali Kurmi – NCLT Hyderabad Bench Read Post »

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