11/12/2024

Whether Liquidator’s fee is payable even if the Liquidator did not directly realise or distribute the secured asset i.e. secured creditor opted to realise its security interest through its own proceedings under the SARFAESI Act? – Shikshak Sahakari Bank Ltd. Vs. Mr. Jagdish Kumar Parulkar – NCLAT New Delhi

/ 23 minutes of reading

Hon’ble NCLAT held that the Secured Creditor is mandatorily obligated to pay its share as per Section 53(1)(a) and 53(1)(b)(i) of the Code which provides for distribution of assets from the sale of liquidation assets in the order of priority. (waterfall mechanism). Further, Regulation 21A (3) of Liquidation Process Regulations, 2016, provides that where a Secured Creditor fails to comply with Sub-Regulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate. The claim in this case that the Liquidator is entitled for a fee under Regulation 4(2)(b) only when he has actually realised or distributed any amount is not tenable in the light of Regulation 21A.

Whether Liquidator’s fee is payable even if the Liquidator did not directly realise or distribute the secured asset i.e. secured creditor opted to realise its security interest through its own proceedings under the SARFAESI Act? – Shikshak Sahakari Bank Ltd. Vs. Mr. Jagdish Kumar Parulkar – NCLAT New Delhi Read Post »

SRA cannot be forced to continue any existing agency of the Corporate Debtor – EIH Ltd. Vs. Subodh Kumar Agrawal and Ors. – NCLAT New Delhi

/ 27 minutes of reading

The Resolution Plan envisaged a complete break from all contracts and obligations due towards the existing share- holders and promoters including the appellant EIH Ltd. The SRA has specifically provided in the resolution plan that the existing contracts would be saved to keep the Corporate Debtor as a going concern but the contracts of the appellant were specifically excluded from the contracts intended to be protected. It is for the SRA to choose the operator of the hotel and SRA cannot be forced to continue any existing agency including the existing operator of the Hotel i.e., the Appellant herein. Thus, the plea of appellant that the management and operation of hotel is an arm’s length transaction is not found convincing.

SRA cannot be forced to continue any existing agency of the Corporate Debtor – EIH Ltd. Vs. Subodh Kumar Agrawal and Ors. – NCLAT New Delhi Read Post »

It is not necessary that a Financial Debt can be provided only by a written agreement – Mobile Constructions Pvt. Ltd. Vs. Apple Land Development Pvt. Ltd. – NCLAT New Delhi

/ 14 minutes of reading

It is not necessary that a financial debt can be provided only by a written agreement. This has been clearly settled in Agarwal Polysacks Ltd. v. K.K. Agro Foods and Storage Ltd. (2023) ibclaw.in 584 NCLAT, wherein this Tribunal held that if the transaction can be proved from other materials on record, requirement of written financial contract is not a pre-condition for proving debt.

It is not necessary that a Financial Debt can be provided only by a written agreement – Mobile Constructions Pvt. Ltd. Vs. Apple Land Development Pvt. Ltd. – NCLAT New Delhi Read Post »

Whether separate class of creditors can be created under the broad category of Operational Creditors | Whether, differential treatment inter-se the same class of creditors is permissible | Whether the provisions of MSMED give protection to MSME status Operational Creditors in CIRP proceedings under the Code and Regulations – NCC Ltd. Vs. Golden Jubilee Hotels Pvt. Ltd. and Ors. – NCLAT New Delhi

/ 107 minutes of reading

Hon’ble NCLAT held that:
(i) No word like “special Operational Creditor” has been defined under Section 3 or 5 of the Code or anywhere else or even in the regulations.
(ii) The role of the Adjudicating Authority is to ensure that the Resolution Plan complies with the requirements of the Code especially under Section 30(2) of the Code.
(iii) CoC has no role in deciding the position of the creditor either as financial or Operational Creditor and such decision in true sense cannot be treated as commercial wisdom.
(iv) While the Code does not categorize any operational creditors as “special,” it does recognize different classes of operational creditors based on their claims. For instance, operational debts can include dues related to the supply of goods and services, employment-related obligations, and statutory dues payable to government authorities. However, all operational creditors are treated under the same legal framework without special distinctions within their category.
(v) The legislative intent is clear that MSMEs creditors have no special rights over other creditors.
(vi) NCLT had no jurisdiction to impose such conditions with regard to amounts as may be recoverable by the corporate debtor in future. Any amount receivable by the corporate debtor, being an asset of the company, would continue to remain with the Corporate Debtor upon implementation of the resolution plan.

Whether separate class of creditors can be created under the broad category of Operational Creditors | Whether, differential treatment inter-se the same class of creditors is permissible | Whether the provisions of MSMED give protection to MSME status Operational Creditors in CIRP proceedings under the Code and Regulations – NCC Ltd. Vs. Golden Jubilee Hotels Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

When Suspended Management of Corporate Debtor is also a Resolution Applicant, no copy of Resolution Plan of other Prospective Resolution Applicants (PRAs) will be shared in advance with the Suspended Management | CIRP Regulation 39(1A) does not prohibit CoC from negotiating with Resolution Applicants or to further increase value | CoC is the best judge to decide on how the evaluation matrix contained in the RFRP can be applied – Yashdeep Sharma Vs. Tara Chand Meenia, RP and Ors. – NCLAT New Delhi

/ 26 minutes of reading

Hon’ble NCLAT held that:
(i) Regulation 39(1A) does not prohibit CoC from negotiating with Resolution Applicants or asking Resolution Applicants to further increase the Plan value.
(ii) When it is an admitted fact that the Appellant was also a competing Resolution Applicant, no copy of the resolution plan of other PRAs could have been shared in advance with the Appellant as it would have triggered conflict of interest.
(iii) The evaluation matrix and Process Document are documents which have been issued by the CoC and the CoC is the best judge to interpret its own documents and apply it for evaluation of the plan of the Resolution Applicants.

When Suspended Management of Corporate Debtor is also a Resolution Applicant, no copy of Resolution Plan of other Prospective Resolution Applicants (PRAs) will be shared in advance with the Suspended Management | CIRP Regulation 39(1A) does not prohibit CoC from negotiating with Resolution Applicants or to further increase value | CoC is the best judge to decide on how the evaluation matrix contained in the RFRP can be applied – Yashdeep Sharma Vs. Tara Chand Meenia, RP and Ors. – NCLAT New Delhi Read Post »

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