15/03/2023

In case of a consortium of Banks, lead Bank having majority voting share (more than 75%) cannot give its approval on behalf of another Bank for the settlement/withdrawal of CIRP proceedings and IBC overrides RBI’s guidelines – Narendra Jindal  Vs. HDFC Bank Ltd. – NCLT New Delhi Bench Court-III

Following issues are involved in this case:
Issue 1 – Whether NCLT can issue a direction to one of the members of the consortium to give its approval to the withdrawal application, Form FA.
Issue 2 -Whether in case of a consortium of Banks, the Lead Bank having majority voting share can give its approval on behalf of another Bank even though the said Bank does not give its consent or reject the proposal of withdrawal of CIRP application.

In case of a consortium of Banks, lead Bank having majority voting share (more than 75%) cannot give its approval on behalf of another Bank for the settlement/withdrawal of CIRP proceedings and IBC overrides RBI’s guidelines – Narendra Jindal  Vs. HDFC Bank Ltd. – NCLT New Delhi Bench Court-III Read Post »

The word used in CIRP Regulation 9(2) is ‘may’ as against ‘shall’ in Regulation 9(1) which means that Regulation 9(2) is provided more as a matter of convenience for the workmen or employees but still demands a declaration in respect of claim with proof and verification of the Form ‘Particulars’ mentioned therein – Fort Gloster Industries Ltd. Vs. Resolution Professional, Fort Gloster Industries Ltd. – NCLAT New Delhi

NCLAT held that a close reading of Regulation 9(2) of the Regulations says that where there are dues to be paid to the workmen or employees of the Corporate Debtor, they may collectively choose an authorised representative to submit their claim with proof but in Form-E of the Schedule. The word used in Regulation 9(2) of the Regulations is ‘may’ as against ‘shall’ in Regulation 9(1) of the Regulations which means that Regulation 9(2) of the Regulations is provided more as a matter of convenience for the workmen or employees but still demands a declaration in respect of claim with proof and verification of the Form ‘Particulars’ mentioned therein.

The word used in CIRP Regulation 9(2) is ‘may’ as against ‘shall’ in Regulation 9(1) which means that Regulation 9(2) is provided more as a matter of convenience for the workmen or employees but still demands a declaration in respect of claim with proof and verification of the Form ‘Particulars’ mentioned therein – Fort Gloster Industries Ltd. Vs. Resolution Professional, Fort Gloster Industries Ltd. – NCLAT New Delhi Read Post »

Where proceedings under Section 138 of Negotiable Instruments Act, 1881 had already commenced and during the pendency Resolution Plan for Corporate Debtor is approved or the company gets dissolved, directors and the other accused cannot escape from their liability by citing its dissolution – Ajay Kumar Radheshyam Goenka Vs. Tourism Finance Corporation of India Ltd. – Supreme Court

Hon’ble Supreme Court held that (1) the nature of proceedings which have to be kept in abeyance under Section 14 of the IBC do not include criminal proceedings, which is the nature of proceedings under Section 138 of the N.I. Act (2) Section 138 of the N.I. Act are not recovery proceedings. (3) The making of a claim under the IBC and accepting the same and not making any claim, will not make any difference in light of Section 31 of the IBC. (4) By operation of the provisions of the IBC, the criminal prosecution initiated against the natural persons under Section 138 read with 141 of the NI Act read with Section 200 of the CrPC would not stand terminated (5) If the guarantor does not get the benefit of extinguishment of debt under Section 31 of the IBC, then similarly for extinguishment of debt, the signatory/director cannot get any benefit. (6) The clauses of the resolution plan cannot control the Enactment/Rules in force. It is the resolution plan which has to comply with the laws in force. In the case on hand, any clause giving any effect to the corporate debtor under Section 138 NI Act proceedings, cannot be used to protect the signatories/directors under Section 138/141 NI Act. (7) There is no bar contained in any of the provisions of the IBC, and the NI Act from approaching the criminal court to seek penal action under Section 138 of the NI Act (8) Where the proceedings under Section 138 of the NI Act had already commenced with the Magistrate taking cognizance upon the complaint and during the pendency, the company gets dissolved, the signatories/directors cannot escape from their penal liability under Section 138 of the NI Act by citing its dissolution. (9) Where proceedings under Section 138 of Negotiable Instruments Act, 1881 had already commenced and during the pendency Resolution Plan for Corporate Debtor is approved or the company gets dissolved, the directors and the other accused cannot escape from their liability by citing its dissolution.

Where proceedings under Section 138 of Negotiable Instruments Act, 1881 had already commenced and during the pendency Resolution Plan for Corporate Debtor is approved or the company gets dissolved, directors and the other accused cannot escape from their liability by citing its dissolution – Ajay Kumar Radheshyam Goenka Vs. Tourism Finance Corporation of India Ltd. – Supreme Court Read Post »

Maximisation of the value of the Corporate Debtor is one of the objectives of the IBC, however, the said objective has to be achieved within timelines – M/s Mohan Fabtex Ltd. Vs. Rajesh Jhunjhunwala Liquidator, Parasrampuria Synthetics Ltd. – NCLAT New Delhi

In this case, IA was filed by Appellant that the Appellant is making proposal to pay and amount of Rs.81 Crores as against Reserved Price of Rs.73.50 Crores. It was stated that the Applicant could not participate in the auction due to lack of awareness about the ongoing liquidation process. The submission which has much pressed by learned counsel for the Appellant is that the Appellant has made a higher offer of more than 10% from the offer of Respondent No.2 which was sufficient ground to accept the offer of the Appellant, maximisation of the value of the Corporate Debtor being the main objective of the I&B Code.
NCLAT held that there can be no dispute that maximisation of the value of the Corporate Debtor is one of the objectives of the I&B Code. However, the said objective has to be achieved within timelines. There has been already five failed e-auctions and the Respondent No.2 was an entity who had been interested in the Corporate Debtor from very beginning by submitting Resolution Plan. Respondent No.2 was objecting to the liquidation and even filed an appeal in this Tribunal, where this Tribunal observed that Liquidator should explore the possibility for a scheme for compromise and arrangement. The Respondent No.2 has also filed a scheme for compromise which came to be considered by the Stakeholder Consultation Committee, which was not approved having received only 64% voting share.

Maximisation of the value of the Corporate Debtor is one of the objectives of the IBC, however, the said objective has to be achieved within timelines – M/s Mohan Fabtex Ltd. Vs. Rajesh Jhunjhunwala Liquidator, Parasrampuria Synthetics Ltd. – NCLAT New Delhi Read Post »

Composite Resolution Plan- all acts of RP should be to ensure that Resolution Plan submitted in CIRP, does not violate any provision of law and is not in contrary to the interest of stake holders – E-Homes Infrastructure Pvt. Ltd. Vs. New Okhla Industrial Development Authority – NCLAT New Delhi

In the facts of the present case, the NCLT has considered the Application filed by the Noida, which relate to composite Resolution Plan, which was submitted by the Resolution Applicant. We do not find any substance in the submission raised by RP that Adjudicating Authority had no jurisdiction in the matter. The submission is wholly unfounded and is uncalled from the RP, who is duty bound to ensure that provisions of the Code and Regulations are complied with. When the question that composite Plan submitted by Resolution Applicant for approval, does not fulfil the criteria and is not valid or legal, the RP cannot be heard in saying that issues be not looked into by Adjudicating Authority. All acts of RP should be to ensure that Resolution Plan submitted in CIRP, does not violate any provision of law and is not in contrary to the interest of stake holders.

Further, NCLAT held that composite Resolution Plan submitted with regard to two different Corporate Debtors, whose CIRP is being conducted by RP simultaneously, without there being any order of consolidation of the CIRP and Resolution Applicant has submitted a composite Resolution Plan, dependent on each other, is nothing but clever device adopted to harm the interest of the stake holders, specially Respondent No.1

Composite Resolution Plan- all acts of RP should be to ensure that Resolution Plan submitted in CIRP, does not violate any provision of law and is not in contrary to the interest of stake holders – E-Homes Infrastructure Pvt. Ltd. Vs. New Okhla Industrial Development Authority – NCLAT New Delhi Read Post »

Liquidation process has to be conducted as per the Liquidation Regulation and as per the Process Document issued by the Liquidator – Torrecid India Pvt. Ltd. Vs. Arrhum Tradelink Pvt. Ltd. – NCLAT New Delhi

NCLAT held that the liquidation process has to be conducted as per the Liquidation Regulation and as per the Process Document issued by the Liquidator. When the process was completed, highest bidder was to be chosen as per the terms and conditions. Present is not a case where this Tribunal should allow the bidding process to again commence. The submission of learned counsel for the Appellant that if the appellant had known that bid of Respondent No.1 will be considered, he would have further increased his bid, needs no consideration by us. In the present case, Liquidator was the person who was the best person to understand and appreciate the E-auction Process Information Document, however, the Liquidator committed error in not declaring the Respondent No.1 as successful bidder as per Clause 10, which error has been corrected by the Adjudicating Authority.

Liquidation process has to be conducted as per the Liquidation Regulation and as per the Process Document issued by the Liquidator – Torrecid India Pvt. Ltd. Vs. Arrhum Tradelink Pvt. Ltd. – NCLAT New Delhi Read Post »

Scroll to Top