08/02/2024

R.Prabhu and Anr. Vs. CA.V.Venkata Sivakumar – Madras High Court

The allegations that were made against the respondent in the application filed by the petitioners became necessary in order to project the conduct/character of the respondent. If those allegations were not made in the application filed by the petitioners, there was no ground for the petitioners to seek the removal of the respondent from acting as the Liquidator. The findings rendered by the NCLT and the NCLAT would show that the respondent was, in fact, involved in certain acts, which fell within the scope of Section 276 of the Companies Act, 2013.

R.Prabhu and Anr. Vs. CA.V.Venkata Sivakumar – Madras High Court Read Post »

MSME Act is not applicable for the purpose of determining the claim made under the Code even if the creditor is an MSME – Geostar Surveys India Pvt. Ltd. Vs. Dipti Mehta IRP of Great Unison Contractors India Pvt. Ltd. and Ors. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that as regards the interest claimed, we notice that there is no agreement between the Applicant and the Corporate Debtor for payment of interest, and the MSME Act is not applicable for the purpose of determining the claim made under the Code even if the creditor is an MSME.

MSME Act is not applicable for the purpose of determining the claim made under the Code even if the creditor is an MSME – Geostar Surveys India Pvt. Ltd. Vs. Dipti Mehta IRP of Great Unison Contractors India Pvt. Ltd. and Ors. – NCLT Mumbai Bench Read Post »

In IBC Section 7 application, Corporate Debtor cannot take shelter under Section 186 of Companies Act 2013, in case Financial Creditor have advanced loan in breach of Sec. 186(2) to Corporate Debtor – EDCL Infrastructure Ltd. Vs. Urban Infraprojects Pvt. Ltd. – NCLT Kolkata Bench

Hon’ble NCLT Kolkata Bench holds that:

(i) Section 186(2) of the Companies Act, 2013, is a protection mechanism to the shareholders/ stakeholders of the Company (Financial Creditor in this case) so that the persons who are managing the company cannot and should not give loan in excess of limits prescribed which would be in excess of their capacity and could land the company in deep trouble should there be a default of the loan lent.
(ii) Therefore, aggrieved party in such violation under Section 186(2) of the Companies Act, 2013, would be the shareholder/stakeholders of the Financial Creditor and Regulators. It is not open for the Corporate Debtor to take shelter under such violations and refuse to repay money borrowed.
(iii) Even if any proceedings of arbitration is invoked, the Adjudicating Authority is to consider the application under Section 7 of the IBC independently and pass necessary order pertaining to admission or rejection of the application, consequence of which will befall on the proceedings under the Arbitration and Conciliation Act, 1996. It is further submitted that in the instant case, the proceedings under Section 7 of the IBC have been initiated by the Financial Creditor and no proceedings has been initiated by the Respondent herein in terms of the Arbitration and Conciliation Act, 1996.
(iv) Even if any proceedings initiated by the Respondent or any other party under the Arbitration and Conciliation Act, 1996, that would be treated as a separate and independent proceeding and no proceedings will vitiate or influence each other.

In IBC Section 7 application, Corporate Debtor cannot take shelter under Section 186 of Companies Act 2013, in case Financial Creditor have advanced loan in breach of Sec. 186(2) to Corporate Debtor – EDCL Infrastructure Ltd. Vs. Urban Infraprojects Pvt. Ltd. – NCLT Kolkata Bench Read Post »

IBC prevails over State Financial Corporation Act, 1951 – Mr. Rajesh Lahila Vs. West Bengal Industrial Development Corporation Ltd. – NCLT Kolkata Bench

Hon’ble NCLT Kolkata Bench holds that:
(i) Section 29(5) of the State Financial Corporation Act contains provisions which makes the Financial Corporation Corporation to be deemed owner of such concern, only for the purposes of initiating suits by or against the concern, and the State Financial Corporation shall sue and be sued in the name of the concern. This in our view is only for the purpose of initiating or defending any suit with reference to the property which has been pledged with the Financial Corporation, and do not make the State Financial Corporation the owner of such properties.
(ii) In this case, the inconsistency arises between Section 18 of the Code and Section 29 of State Financial Corporation Act. While Section 18(f) of the Code, the Code enunciates that any asset recorded the balance sheet of the Corporate Debtor as its assets, and it is the duty of the resolution professional to take custody of such assets of the Corporate Debtor. The explanation to the said Section 18 of Code also provides that assets owned by Corporate Debtor but not in possession of Corporate Debtor will also need to be taken custody whereas Section 29 of State Financial Corporation Act provides that if the borrower fails to owner honour the terms and conditions of the borrowings then the Corporation which has got first charge over the immovable properties of the Corporate Debtor would be entitled to retain and dispose properties pledged.
(iii) Thus, this inconsistency needs to be resolved and the same is resolved by applying Section 238 of Code, which provides that IBC would prevail over any other statute in the case of such inconsistency.

IBC prevails over State Financial Corporation Act, 1951 – Mr. Rajesh Lahila Vs. West Bengal Industrial Development Corporation Ltd. – NCLT Kolkata Bench Read Post »

Whether once CoC had decided with requisite majority to liquidate Corporate Debtor, such a decision would be amenable to judicial scrutiny | Whether ineligibility under Sec. 29A(b) of IBC takes effect even if classification of wilful default is dehors RBI circular – Mr. Rakshit Dhirajlal Doshi and Anr. Vs. Sumedha Management Solutions Pvt. Ltd. Liquidator of Doshion Pvt. Ltd. And Anr. – NCLAT New Delhi

The main issues in this case are as follows:
a) Whether CoC’s decision to liquidate was tainted with material irregularity and arbitrariness or not?
b) Whether the decision of the Adjudicating Authority is based on incorrect premise that once the CoC had decided with the requisite majority to liquidate the CD, such a decision would not be amenable to judicial scrutiny.
c) Whether the Applicants’ ineligibility under Section 29-A(b) of the IBC does not take effect if the classification of wilful default is dehors the RBI circular.

Whether once CoC had decided with requisite majority to liquidate Corporate Debtor, such a decision would be amenable to judicial scrutiny | Whether ineligibility under Sec. 29A(b) of IBC takes effect even if classification of wilful default is dehors RBI circular – Mr. Rakshit Dhirajlal Doshi and Anr. Vs. Sumedha Management Solutions Pvt. Ltd. Liquidator of Doshion Pvt. Ltd. And Anr. – NCLAT New Delhi Read Post »

Legal principles relevant in adjudicating cases where subordinate legislation (Rules/Regulations) are challenged on the ground of being ultra vires the parent Act | Rule 9(3)(b) of CA (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 falls within the scope of the general delegation of power under Sec. 29A of ICAI Act, 1949 – Naresh Chandra Agrawal Vs. The Institute of Chartered Accountants of India and Ors. – Supreme Court

In this, important judgment on challenging Rules/Regulations ultra virus of main Act, Hon’ble Supreme Court has listed 8 points for adjudicating cases where subordinate legislation (Rules/Regulations) are challenged on the ground of being ‘ultra vires’ the parent Act.

Also, Hon’ble Court holds that Rule 9(3)(b) of the Chartered Accountants’ (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 is not inconsistent with and beyond the rule-making power of the Central Government under Section 29A(1) of ICAI Act, 1949.

In this case, the Court also explains the principle of ‘generality vs enumeration’, Section 21 and 21A of ICAI Act, 1949, Rule 9 etc.

Legal principles relevant in adjudicating cases where subordinate legislation (Rules/Regulations) are challenged on the ground of being ultra vires the parent Act | Rule 9(3)(b) of CA (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 falls within the scope of the general delegation of power under Sec. 29A of ICAI Act, 1949 – Naresh Chandra Agrawal Vs. The Institute of Chartered Accountants of India and Ors. – Supreme Court Read Post »

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