23/05/2022

The provisions of Section 65 of IBC have been brought on statute particularly to check and prevent misuse of the provisions of law, when application u/s 7 is found to have been filed for some ulterior motive other than the resolution of insolvency of a corporate debtor – Devi Enterprises Ltd. Vs. Gurudev Infra Projects Ltd. – NCLT Allahabad Bench

The Adjudicating Authority observed that if the claim of the financial creditor that when there is a debt which is due and payable both in law and fact and a default occurs, then the Adjudicating Authority must admit this application subject to other conditions i.e. the amount of default should be more than the threshold limit and not barred by limitation. In our view, if this plea is accepted then the provisions of Section 65 of IBC, 2016 would become redundant as an empty provision in the statute. We are of the view that this is certainly not the purpose of legislature. The provisions of Section 65 of IBC, 2016 have been brought on statute particularly to check and prevent misuse of the provisions of law, when application u/s 7 is found to have been filed for some ulterior motive other than the resolution of insolvency of a corporate debtor. The twin conditions for that is the application u/s 7 of IBC, 2016 should have been filed with malicious intent and for any purposes other than the resolution of insolvency.

The provisions of Section 65 of IBC have been brought on statute particularly to check and prevent misuse of the provisions of law, when application u/s 7 is found to have been filed for some ulterior motive other than the resolution of insolvency of a corporate debtor – Devi Enterprises Ltd. Vs. Gurudev Infra Projects Ltd. – NCLT Allahabad Bench Read Post »

Applicability of Clause 12 of Schedule I of Liquidation Process Regulations, 2016 is attracted ‘on the close of Auction’ – Jain International Trade Organization Vs. Mr. Udupi Vasudev Ganesh Naik, Liquidator of M/s. P&S Jewellery Ltd. – NCLAT New Delhi

NCLAT held that amendments made in Schedule I, Clause 12 were in no manner affected by Circular dated 26th August, 2019, Circular dated 06th May, 2022 and Amendment Regulations, 2022, the reason is obvious that provisions of Schedule I, Clause 12 is operated in different fields i.e. with regard to the ‘mode of sale’ and Clause 12 even prior to amendment and after amendment begin with the word ‘on the close of the auction’. Thus applicability of Schedule I, Clause 12 was attracted ‘on the close of Auction’. Thus statutory requirement under Clause 12, Schedule I had no concern and has no relation with the date of passing of the Liquidation Order under Section 33.

Applicability of Clause 12 of Schedule I of Liquidation Process Regulations, 2016 is attracted ‘on the close of Auction’ – Jain International Trade Organization Vs. Mr. Udupi Vasudev Ganesh Naik, Liquidator of M/s. P&S Jewellery Ltd. – NCLAT New Delhi Read Post »

Article 1 of the Limitation Act, 1963 is not attracted in case of an application under Section 9 of the IBC – S.M. Ghogbhai Vs. Schedulers Logistics India Pvt. Ltd. – NCLAT New Delhi

Learned Counsel for the Appellant submits that both the parties were maintaining a running account and there have been transactions inter se which is reflected from the Ledger Account filed by the Respondent. In the facts of the present case, Article 1 of the Limitation Act, 1963 was attracted as per which the limitation period of 3 years begins to run from the close of the year in which the last item admitted or proved is entered into the account.
NCLAT held that for the limitation for filing Section 9 application it is Article 137 of the Limitation Act, 1963 which is attracted. Under Article 137, time from which period begins to run is “when the right to apply accrues” the right to apply accrues when invoices issued by the Appellant to the Corporate Debtor were not paid. Invoices on the basis of which payment is claimed are more than three years earlier from the date of filing of Section 9 Application which is the basis for rejection of the Application of the Appellant by the Adjudicating Authority. We are not persuaded with the submissions of Learned Counsel for the Appellant that present is the case where Article 1 is applicable and limitation should be counted from 31st March, 2017.

Article 1 of the Limitation Act, 1963 is not attracted in case of an application under Section 9 of the IBC – S.M. Ghogbhai Vs. Schedulers Logistics India Pvt. Ltd. – NCLAT New Delhi Read Post »

Whether CIRP can be initiated solely on the basis of the unpaid interest amount when the entire principal amount of debt has been discharged during the pendency of the CIRP application – Saraf Chits Pvt. Ltd. Vs. KAD Housing Pvt. Ltd. – NCLT New Delhi Bench Court-II

The Adjudicating Authority held that from the perusal of the definitions under section 5(8)-Financial Debt, 3(11)-debt and 3(,)-claim, it is observed that the interest is not included in the term “debt” per se. Rather, the “interest” can be claimed as “financial debt” only if such debt exists. The Bench referred Hon’ble NCLAT in the matter of S. S. Polymers v. Kanodia Technoplast Ltd. [2019] ibclaw.in 193 NCLAT and held that it can be inferred that the “interest” component alone cannot be claimed or pursued, in absence of the debt, to trigger a CIR process against the corporate Debtor. Further, the application pursued for realization of the interest amount alone is against the intent of the IBC, 2016.

Whether CIRP can be initiated solely on the basis of the unpaid interest amount when the entire principal amount of debt has been discharged during the pendency of the CIRP application – Saraf Chits Pvt. Ltd. Vs. KAD Housing Pvt. Ltd. – NCLT New Delhi Bench Court-II Read Post »

Operational Debt cannot be converted into Financial Debt merely on basis of MoU if company was not eligible to advance loan in terms of sec 186(2) of companies act 2013 – Jambudwip Exports and Imports Ltd. Vs. U P Bone Mills Pvt. Ltd. – NCLT New Delhi Bench Court-II

From the various facts, the Bench conclude that the amount advanced by the Applicant Company to the Corporate Debtor for purchase of certain goods was neither disbursed as loan per se nor the conversion of the said advance into an Inter-Corporate Loan through the instrument of an MoU is in accordance with the law. Further, it is observed that by executing the MOU dated 10.05.2019, the parties have cleverly attempted to convert an Operational Debt into a Financial Debt.

Operational Debt cannot be converted into Financial Debt merely on basis of MoU if company was not eligible to advance loan in terms of sec 186(2) of companies act 2013 – Jambudwip Exports and Imports Ltd. Vs. U P Bone Mills Pvt. Ltd. – NCLT New Delhi Bench Court-II Read Post »

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