18/10/2022

The expression used in Section 96(1)(b) is “in respect of any debt” and not for recovery of a debt – Kirankumar Moolchand Jain Vs. TransUnion CIBIL Ltd. – Madras High Court

On reading the Section 96 of IBC, it is evident that the interim moratorium applies to any pending legal action or proceeding in respect of any debt and to the initiation of any legal action or proceeding by the creditors of the debtor in respect of any debt. The expression used in Section 96(1)(b) is “in respect of any debt” and not for recovery of a debt. Although on a purely textual reading, the embargo on fresh proceedings will apply only to creditors of the debtor and not to a guarantor, when interpreted in context, the interim moratorium applies not only to proceedings for recovery of a debt but to proceedings in which the liability of the borrower and guarantor are determined in relation to the credit facility. Turning to the facts of this case, the petitioner seeks the constitution of an arbitral tribunal to adjudicate the dispute pertaining to information put out by the first and second respondents in respect to the alleged default by the borrower and the petitioner. Whether the information provided by the first and second respondents, as the credit information company and credit institution, respectively, is correct or incorrect, in turn, depends on the scope of the personal guarantee provided by the petitioner in relation to credit facilities availed of by the borrower and, consequently, on the liability arising thereunder. Hence, an arbitral tribunal cannot decide whether the information is accurate or inaccurate without examining the scope of the personal guarantee(s) and the liabilities arising thereunder, and the NCLT is seized of the said dispute. Thus, the constitution of an arbitral tribunal, at this juncture, would be premature. After the moratorium ends, in case the petitioner were to succeed in the defence before the NCLT and the NCLT concludes that the petitioner did not guarantee the relevant debts, it would be open to the petitioner to initiate proceedings for the constitution of an arbitral tribunal to adjudicate the dispute relating to the credit information provided by the first and second respondents in terms of Section 18 of the Act of 2005.

The expression used in Section 96(1)(b) is “in respect of any debt” and not for recovery of a debt – Kirankumar Moolchand Jain Vs. TransUnion CIBIL Ltd. – Madras High Court Read Post »

Tribunal(NCLT) have sufficient powers to appoint an Inspector under the Companies Act, 2013 – Mr. Rajeev Vidyadharan Vs. P.J. Mathews – NCLAT Chennai

From the perusal of above legal position of the Companies Act, 2013 NCLAT held that prima-facie the Tribunal had sufficient powers to appoint the ‘Inspector’ and therefore we do not find any error on this aspect. Incidentally, it is noted that opportunity was given to both Appellants and Respondents to give the memo of names to appoint inspector. However, due to non-response from the Appellants, the Tribunal appointed on request of the Respondents herein as an Inspector.

Tribunal(NCLT) have sufficient powers to appoint an Inspector under the Companies Act, 2013 – Mr. Rajeev Vidyadharan Vs. P.J. Mathews – NCLAT Chennai Read Post »

In a case where there is a scheme of arrangement between the wholly owned subsidiary and the holding company, whether the meeting of the shareholders/creditors of the holding company or Transferee Company can be dispensed? – Momagic Technologies Pvt. Ltd. – NCLAT New Delhi

The Adjudicating Authority while considering dispensation of convening, meetings of the shareholders of the Transferor Companies on the ground that consent affidavits of the shareholders have been obtained and placed on record, therefore, it was observed that there is no necessity for convening and holding meetings of the shareholders, accordingly the meetings are dispensed with.

NCLAT considering the submissions of the Appellant that the Appellant Company is a holding company and no new shares are being issued, the rights of the shareholders of the Appellant Company are not affected, the scheme does not involve reorganisation of the share capital and the net-worth of the Appellant Company post amalgamation would remain highly positive. The NCLT erred in not considering the decisions of this Tribunal which forms judicial precedents. NCLAT held that that rejecting the prayer of the of the Appellant is non-est and without application of mind.

In a case where there is a scheme of arrangement between the wholly owned subsidiary and the holding company, whether the meeting of the shareholders/creditors of the holding company or Transferee Company can be dispensed? – Momagic Technologies Pvt. Ltd. – NCLAT New Delhi Read Post »

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