High Court-Kerala

Whether transfer of loan account by a Bank/Financial Institution to an Asset Reconstruction Company (ARC) would amount to “conveyance” as defined in Sec. 2(d) of the Kerala Stamp Act, 1959 – Abdul Azeez Vs. The Authorized Officer, Phoenix ARC. Ltd. and Anr. – Kerala High Court

Hon’ble Kerala High Court holds that:
(i) What is transferred by a Bank / financial institution to an Asset Reconstruction Company is only a transfer of economic interest and there is no conveyance of property or proprietary rights. The transfer of legal ownership of the loan is limited to the extent to the economic interest transferred.
(ii) Article 22 of the Kerala Stamp Act, 1959 takes within its ambit only those conveyances as defined in Section 2(d). Even assuming that transfer of loan interest by a financial institution involves transfer of any interest in the secured asset and therefore it amounts to conveyance, even then such conveyance will not fall in any of the categories mentioned in Article 22.
(iii) The NCLT has taken a contrary view in CP(IBC)/08/KOB/2023 wherein the Tribunal has held that the assignment deed in favour of the Asset Reconstruction Company is not a conveyance relating to immovable property.

Whether transfer of loan account by a Bank/Financial Institution to an Asset Reconstruction Company (ARC) would amount to “conveyance” as defined in Sec. 2(d) of the Kerala Stamp Act, 1959 – Abdul Azeez Vs. The Authorized Officer, Phoenix ARC. Ltd. and Anr. – Kerala High Court Read Post »

NCLT has no power and authority under IBC to declare a tax assessment order as void ab initio and non est in law | After declaring moratorium, there is an embargo on enforcing tax demand, but there is no embargo under Sec. 14 read with Sec. 33(5) of IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor – Deputy Commissioner (Works Contract), Kerala State Goods and Services Tax Department Vs. National Company Law Tribunal and Anr. – Kerala High Court

In this case, NCLT had passed the impugned order stating that the Sales Tax Assessment Order was passed in violation of the prohibition provided under Section 14(1)(a) of IBC. Therefore, the Assessment Order was declared void ab initio.

In this important judgment, Hon’ble Kerala High Court refers Sundaresh Bhatt, Liquidator of ABG Shipyard v. CBIC (2022) ibclaw.in 103 SC holds that:

(i) Moratorium under Section 14 is to ensure the curtailing of parallel proceedings and reduce the possibility of conflicting outcomes in the process.
(ii) The authority could only initiate assessment or reassessment of the duties or other levies. However, they cannot transgress such boundary and proceed to initiate recovery in violation of Sections 14 and 33(5) of the IBC.
(iii) The IRP or the Liquidator, as the case may be, is empowered to question the legality of the assessment order before the deputed authority.
(iv) The impugned order passed by the NCLT, Kochi Bench, as preposterous and untenable.
(v) Such an order only reflects the competence of the persons who are manning such an important Tribunal. The Order shows the lack of basic understanding of the law.

NCLT has no power and authority under IBC to declare a tax assessment order as void ab initio and non est in law | After declaring moratorium, there is an embargo on enforcing tax demand, but there is no embargo under Sec. 14 read with Sec. 33(5) of IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor – Deputy Commissioner (Works Contract), Kerala State Goods and Services Tax Department Vs. National Company Law Tribunal and Anr. – Kerala High Court Read Post »

Section 14 of IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes – Platino Classic Motors India Pvt. Ltd. Vs. Deputy Commissioner of Central Tax and Central Excise – Kerala High Court

Hon’ble High Court of Kerala holds that from perusal of Section 14 of the IBC and several Judgments of the other High Courts as well as the Supreme Court, it is well settled that Section 14 of the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes. On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings.

Section 14 of IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes – Platino Classic Motors India Pvt. Ltd. Vs. Deputy Commissioner of Central Tax and Central Excise – Kerala High Court Read Post »

For an moratorium u/s 96 of IBC to come into force, insolvency application should be complete in all respects and without any procedural defects, mere uploading of an application cannot be taken as filing of an application |  Unless there is any repugnancy between the provisions of IBC 2016 and the provisions of SARFAESI Act, 2002, there is no question of IBC 2016 overriding the provisions of the SARFAESI Act, 2002 in totality – Jeny Thankachan Vs. Union of India and Ors. – Kerala High Court

Hon’ble High Court held that:
(i) In the Insolvency Resolution Processes under Part III Chapter III relating to individuals and partnership firms, the interim moratorium under Section 96 and moratorium under Section 101 are automatic by operation of law and is not dependent on any declaration of moratorium by the adjudicating authority.
(ii) Mere uploading of an application under Section 96 of the IBC 2016 cannot be taken as filing of an application.
(iii) In the case of the petitioner, admittedly the NCLT has not treated the application as a valid application by assigning regular case number to the application. As long as the petitioner’s application is not duly numbered by the NCLT, the interim moratorium contemplated under Section 96(1)(b)(i) cannot come into operation.
(iv) It is true that in view of Section 238 of the IBC 2016, the IBC 2016 will have overriding effect. But, Section 238 of the IBC 2016 cannot oust the operation of the Act, 2002 for the reason that the IBC 2016 and the Act, 2002 operate in different fields. Therefore, unless there is any repugnancy between the provisions of the IBC 2016 and the provisions of the Act, 2002, there is no question of IBC 2016 overriding the provisions of the SARFAESI Act, 2002 in totality.
(v) Initiation of a Section 94 (IBC 2016) proceedings by a Partner of an LLP in his capacity as a guarantor, cannot be averted to the proceedings initiated by the Bank against the petitioner, but in his capacity as a guarantor, under the SARFAESI Act, 2002.

For an moratorium u/s 96 of IBC to come into force, insolvency application should be complete in all respects and without any procedural defects, mere uploading of an application cannot be taken as filing of an application |  Unless there is any repugnancy between the provisions of IBC 2016 and the provisions of SARFAESI Act, 2002, there is no question of IBC 2016 overriding the provisions of the SARFAESI Act, 2002 in totality – Jeny Thankachan Vs. Union of India and Ors. – Kerala High Court Read Post »

Is moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 would apply to non-corporate debtor/debtors dealt under Section 141 of the Negotiable Instruments Act? – M/s PVS Memorial Hospital Vs. Dr. Satheesh Iype – Kerala High Court

The Hon’ble High Court held that in view of the legal position settled by the Three Bench of the Apex Court in P. Mohanraj & Ors. Vs. M/S. Shah Brothers Ispat Pvt. Ltd. (2021) ibclaw.in 24 SC, holding the view that, moratorium provision contained under Section 14 (1) of IBC would apply only to a corporate debtor and the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the N.I.Act. Therefore, the complaint against the petitioners (accused Nos.1 to 7) cannot be quashed, simply on the ground of moratorium order. However, the prosecution against the 1st petitioner/1st accused being corporate debtor can be kept in abeyance till finalization of the moratorium proceedings, while allowing prosecution against petitioners 2 to 7, natural persons.

Is moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 would apply to non-corporate debtor/debtors dealt under Section 141 of the Negotiable Instruments Act? – M/s PVS Memorial Hospital Vs. Dr. Satheesh Iype – Kerala High Court Read Post »

Adjudicating Authority is vested with the discretion and is legally bound to consider all relevant aspects, including the financial health and viability of the corporate debtor, while taking a decision on the application filed by the financial creditor – Mango Meadows Agricultural Pleasure Land (Pvt. Ltd.) Vs. Union of India – Kerala High Court

Hon’ble High Court held that recently, in Vidarbha Industries Power Ltd v Axis Bank [2022 SCC OnLine SC 841] (2022) ibclaw.in 91 SC, the Apex Court clearly delineated the legal position and declared that the adjudicating authority should examine the expediency of initiating the CIRP after taking into account all relevant facts and circumstances, including the overall financial help and viability of the corporate debtor. The legal position emanating from the above decisions leaves no room for doubt that the adjudicating authority is vested with the discretion and is legally bound to consider all relevant aspects, including the financial health and viability of the corporate debtor, while taking a decision on the application filed by the financial creditor. As such, the contention that Section 7 is a draconian provision loaded against the corporate debtor, cannot be countenanced. Therefore, the challenge against constitutional validity of section 7 of IBC on the ground that the provision is arbitrary and discriminatory, is liable to be rejected. The writ petition is accordingly dismissed, with the above directions.

Adjudicating Authority is vested with the discretion and is legally bound to consider all relevant aspects, including the financial health and viability of the corporate debtor, while taking a decision on the application filed by the financial creditor – Mango Meadows Agricultural Pleasure Land (Pvt. Ltd.) Vs. Union of India – Kerala High Court Read Post »

NCLAT is empowered to identify as to whether the approved resolution plan is in contravention of the provisions of any law for the time being in force – M.K. Resely Vs. Union Bank of India – Kerala High Court

Hon’ble High Court held that on an analysis of the Section 61 of IBC, it is clear that the appellate Tribunal is empowered to identify as to whether the approved resolution plan is in contravention of the provisions of any law for the time being in force and as to whether there has been any material irregularity in exercising the powers by the resolution professional during the corporate insolvency resolution period.

NCLAT is empowered to identify as to whether the approved resolution plan is in contravention of the provisions of any law for the time being in force – M.K. Resely Vs. Union Bank of India – Kerala High Court Read Post »

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