21/02/2024

When an extension for 90 days to complete CIRP is granted by an Adjudicating Authority then such period will be counted from the date on which the Adjudicating Authority/Tribunal passed the order for such extension – Kiran Martin Gulla RP of Varadharaja Foods Pvt. Ltd. – NCLAT Chennai

Hon’ble NCLAT held that the meaning of the term extension is the act of stretching out or elongating the ambit of something, the additional period of time given to a person, to meet one end. However, the term exclusion is an example of leaving something or keeping out, eliminate, facing out, rule out etc. In fact, the exclusion of particular period by an Adjudicating Authority / Tribunal using its discretionary powers under Rule 11 of NCLT Rules, 2016 and relying upon the Regulation 40C of the Regulations to keep the Company a Going Concern was held to be a proper, although it was dissented by 42% of the Committee of Creditors Members as per decision in India Bulls Housing Finance Ltd. V. Sandeep Chandna (2022) ibclaw.in 53 NCLAT.

It is to be pointed out that the pendency of judicial proceedings before a Tribunal is an exceptional circumstance and the time taken in legal proceedings cannot harm a Stakeholder/Litigant. No doubt, time is the essence of the Code, 2016.

When an extension for 90 days to complete CIRP is granted by an Adjudicating Authority then such period will be counted from the date on which the Adjudicating Authority/Tribunal passed the order for such extension – Kiran Martin Gulla RP of Varadharaja Foods Pvt. Ltd. – NCLAT Chennai Read Post »

Whether a Resolution Plan violates provision of Section 30(2)(e) of IBC in removing the Right of Subrogation to Guarantors | Whether after approval of Resolution Plan, Personal Guarantors and Corporate Guarantors have no Right of Subrogation – Jaiprakash Associates Ltd. Vs. Jaypee Infratech Ltd. and Ors. – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT held that:

(i) In the facts of the present case, it is not the case of the Appellant that the Corporate Guarantor and Personal Guarantor have paid the dues of the creditor and thus they are entitled to get in the shoes of the principal creditor. On this single ground claim of Section 140, does not subsist.
(ii) In the present case, debt of the Principal Borrower is being discharged consequent to the Resolution Plan under the IBC.
(iii) When the statute provides that the Resolution Plan is binding on the Guarantors also, Appellants are not entitled to make any submission that they are not bound by Clause 34.50 of the Resolution Plan which expressly extinguishes the right of subrogation.
(iv) The law is well settled that after approval of the Resolution Plan, the Personal Guarantors and Corporate Guarantors have no right of subrogation especially when in the facts of the present case under Clause 34.50 of the Resolution Plan, right of subrogation is expressly extinguished.
(v) The debt against the Corporate Debtor might have extinguished after approval of the Resolution Plan but said consequence shall not be with regard to the Corporate Guarantors and the Personal Guarantors. The same shall be as per the express provisions of the Resolution Plan.

Whether a Resolution Plan violates provision of Section 30(2)(e) of IBC in removing the Right of Subrogation to Guarantors | Whether after approval of Resolution Plan, Personal Guarantors and Corporate Guarantors have no Right of Subrogation – Jaiprakash Associates Ltd. Vs. Jaypee Infratech Ltd. and Ors. – NCLAT New Delhi Read Post »

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