NCLAT

Does NCLT have jurisdiction to direct the valuation of shares sold by Liquidator of a foreign Subsidiary Company of Corporate Debtor? – State Bank of India Vs. Shantanu Prakash and Ors. – NCLAT New Delhi

The Hon’ble NCLT held that the order on liquidation on EAPPL was passed by the High Court of Singapore, therefore, any issue regarding the liquidation proceedings including sale value of the shares held by the Subsidiary of the Corporate Debtor sold by SBI with the consent of the liquidators of the Subsidiary could have been raised in liquidation proceedings of the Subsidiary before the High Court of Singapore as the assets in question were owned by the Subsidiary and not by the Corporate Debtor.

Does NCLT have jurisdiction to direct the valuation of shares sold by Liquidator of a foreign Subsidiary Company of Corporate Debtor? – State Bank of India Vs. Shantanu Prakash and Ors. – NCLAT New Delhi Read Post »

Distribution amongst Secured Creditors on the basis of charge on the security interest of individual Creditors or as per admitted debt of Secured Creditors on pro-rata basis? – State Bank of India Vs. IDBI Bank Ltd. and Anr. – NCLAT New Delhi

The Hon’ble Appellate Tribunal is of the view that Adjudicating Authority has not committed any error in directing distribution of sale proceeds as per the admitted claim of the Financial Creditor pro-rata basis and the directions issued by the Adjudicating Authority is in accordance with law as declared by the Hon’ble Supreme Court in India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. (2021) ibclaw.in 87 SC.

Distribution amongst Secured Creditors on the basis of charge on the security interest of individual Creditors or as per admitted debt of Secured Creditors on pro-rata basis? – State Bank of India Vs. IDBI Bank Ltd. and Anr. – NCLAT New Delhi Read Post »

Can only one Secured Creditor enforce his right to realise its debt out of secured assets under Section 52 of the IBC? | Does registration of the charge under Section 77 of the Companies Act improve or play a role when it comes to the question of the priorities of the charge? – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Hinduja Leyland Finance Ltd. – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) Section 48 of the Transfer of Property Act, clearly protect the right of first charge holder.
(ii) Only one secured creditor can enforce his right to realise its debt out of secured assets under Section 52 of the Code.
(iii) The arguments of the Respondent w.r.t. his holding first charge on movable assets of Corporate Debtor due to charge registered with RoC are not attractive.

Can only one Secured Creditor enforce his right to realise its debt out of secured assets under Section 52 of the IBC? | Does registration of the charge under Section 77 of the Companies Act improve or play a role when it comes to the question of the priorities of the charge? – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Hinduja Leyland Finance Ltd. – NCLAT New Delhi Read Post »

Whether 180 days moratorium period prescribed under Section 101(1) of the IBC is directory or mandatory, and whether it can be extended by Adjudicating Authority or Appellate Tribunal? – Anil Kumar Vs. Mukund Choudhary – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) Conceding any power to the Adjudicating Authority or this Tribunal to extend the said period shall be plainly against the statutory scheme of Section 101(1).
(ii) When the statutory scheme is clear and unambiguous, there is no role of any interpretive process to find out the jurisdiction of NCLT to extend the period of Moratorium when statute provides a date for cessation of the Moratorium it cannot be extended by the Adjudicating Authority or by this Tribunal against the statutory intendment under Section 101(1).

Whether 180 days moratorium period prescribed under Section 101(1) of the IBC is directory or mandatory, and whether it can be extended by Adjudicating Authority or Appellate Tribunal? – Anil Kumar Vs. Mukund Choudhary – NCLAT New Delhi Read Post »

When no CIRP or liquidation proceedings of a Corporate Debtor is pending before the NCLT, whether an application for personal insolvency against a Personal Guarantor has to be filed before the NCLT? – Anita Goyal Vs. Vistra ITCL (India) Ltd. and Anr. – NCLAT New Delhi

The Hon’ble NCLAT referred the following judgments:

a. State Bank of India vs. Mahendra Kumar Jajodia, (2022) ibclaw.in 89 NCLAT
b. Mahendra Kumar Agarwal v. PTC India Financial Services Ltd. and Anr., (2023) ibclaw.in 488 NCLAT
c. Lalit Kumar Jain vs. Union of India & Ors. (2021) ibclaw.in 61 SC
d. Rohit Nath @ Rohit Rabindra Nath v. KEB Hana Bank Ltd. (2023) ibclaw.in 1207
e. Rohit Nath @ Rohit Rabindra Nath Vs. KEB Hana Bank Ltd. (2021) ibclaw.in 79 HC
f. State Bank of India v. V. Ramakrishnan and Anr., (2018) ibclaw.in 29 SC
g. Axis Trustee Services Ltd. vs. Brij Bhushan Singal (2022) ibclaw.in 239 HC
h. Aditya Birla Finance Ltd. v. Sarita Mishra (2024) ibclaw.in 1185 NCLT
i. Tata Capital Financial Services Ltd. vs. Arjun Agarwal, (2024) ibclaw.in 1223 NCLT

And decided the issue when no CIRP or liquidation proceedings of a Corporate Debtor is pending before the NCLT, whether an Application for personal insolvency against a Personal Guarantor has to be filed before the NCLT.

The Hon’ble Tribunal also held that judgments in Aditya Birla Finance Ltd. v. Sarita Mishra (2024) ibclaw.in 1185 NCLT and Tata Capital Financial Services Ltd. vs. Arjun Agarwal, (2024) ibclaw.in 1223 NCLT do not lay down correct law and are per incuriam.

When no CIRP or liquidation proceedings of a Corporate Debtor is pending before the NCLT, whether an application for personal insolvency against a Personal Guarantor has to be filed before the NCLT? – Anita Goyal Vs. Vistra ITCL (India) Ltd. and Anr. – NCLAT New Delhi Read Post »

Can NCLT reject insolvency petition filed u/s 94 of IBC, if Personal Guarantor is not in a position to bear the expenses of the insolvency resolution process and is not in a financial position to submit any repayment plan? – Vijender Antil (Personal guarantor of Jungrele Info Solutions Pvt. Ltd.) Vs. Phoenix ARC Pvt. Ltd. and Ors. – NCLAT New Delhi

The Hon’ble NCLAT held that in the present case, the Resolution Professional (RP) in his addendum report, found that the Personal Guarantor is not in a position to bear the expenses of the insolvency resolution and is not in a financial position to submit any repayment plan, therefore, the Tribunal has rightly rejected the application filed by the appellant on the report submitted by the RP under Section 99 of the Code.

Can NCLT reject insolvency petition filed u/s 94 of IBC, if Personal Guarantor is not in a position to bear the expenses of the insolvency resolution process and is not in a financial position to submit any repayment plan? – Vijender Antil (Personal guarantor of Jungrele Info Solutions Pvt. Ltd.) Vs. Phoenix ARC Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

When a fraudulent CIRP proceeding is initiated, Adjudicating Authority has jurisdiction under the IBC to consider allegations of fraudulent and malicious initiation of CIRP proceedings under Section 65 of IBC and to recall the CIRP admission order/ terminate CIRP (even if a Resolution Plan approval application has been filed before the NCLT) – Acute Daily Media Pvt. Ltd. and Ors. Vs. Rockman Advertising and Marketing (India) Ltd. and Ors. – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) There is no statutory embargo on the Adjudicating Authority to exercise its discretion carefully and judiciously in a Section 65 application to prevent and protect the Corporate Debtor from being dragged into CIRP.
(ii) When no interest income had been reflected in the balance sheet, yet computing the interest amount in the Section 7 application to cross the threshold hurdle lends credence to the narrative of precipitation of fraud.
(iii) As non- compliance under the Companies Act cannot negate a petition filed under Section 7 as long as there is a valid debt and default in payment of the said debt.
(iv) Debt and default cannot always be seen in isolation. AA is also required to take care that the provisions of Section 7 of IBC are not misused or abused in any manner either by the financial creditor or the promoters of the Corporate Debtor to take undue advantage at the cost of insolvency resolution.

When a fraudulent CIRP proceeding is initiated, Adjudicating Authority has jurisdiction under the IBC to consider allegations of fraudulent and malicious initiation of CIRP proceedings under Section 65 of IBC and to recall the CIRP admission order/ terminate CIRP (even if a Resolution Plan approval application has been filed before the NCLT) – Acute Daily Media Pvt. Ltd. and Ors. Vs. Rockman Advertising and Marketing (India) Ltd. and Ors. – NCLAT New Delhi Read Post »

In case of correction in the date of the order/judgment of NCLT and not any modification, the limitation for filing an appeal under Section 61 of IBC shall commence from the date of pronouncement of the main order and not from the date of the corrected order – Industrial Forgings Industries Pvt. Ltd. Vs. A2Z Infra Engineering Ltd. – NCLAT New Delhi

In this case, NCLT’s order impugned was delivered on 08.12.2023. Appellant filed an application for correction of order date. The Hon’ble NCLT corrected the date of the order vide order dated 29.04.2024. The appeal before NCLAT was filed on 12.06.2024.

The Hon’ble NCLAT held that the correction is only correction of date and not any correction of judgment or any modification of the judgment. There is no case that there was modification of order rather there is correction of the date of the order.

In case of correction in the date of the order/judgment of NCLT and not any modification, the limitation for filing an appeal under Section 61 of IBC shall commence from the date of pronouncement of the main order and not from the date of the corrected order – Industrial Forgings Industries Pvt. Ltd. Vs. A2Z Infra Engineering Ltd. – NCLAT New Delhi Read Post »

A Bank can directly file claims in the CIRP of Corporate Debtor (Builder) if tripartite agreement amongst Borrower (Homebuyers), Bank, and Builder (Corporate Debtor) stipulates that the primary responsibility for loan repayment in case of default lies with the Builder/Corporate Debtor and secondary responsibility is of borrower/ Homebuyers – Canara Bank Vs. Sh. Vivek Kumar RP AVJ Developers (India) Pvt. Ltd. – NCLAT New Delhi

In this case, the Bank, who granted loan to homebuyer, file claim in the CIRP of Builder. RP rejected the claim and the Hon’ble NCLT upheld the decision of RP, relying on Axis Bank Ltd. v. Value Infracon India Pvt. Ltd. and Anr. (2021) ibclaw.in 611 NCLAT.

Earlier, Hon’ble NCLAT dismissed the appeal. In the appeal, Hon’ble Supreme Court set aside NCLAT’s order and remanded back.

In the present case, the Hon’ble NCLAT distinguished the facts of the present case and Value Infracon India case and found that as per tripartite agreement, amongst Borrower (Homebuyers), Bank, and Builder (Corporate Debtor), the primary responsibility is of the Corporate Debtor/ Builder and secondary responsibility is of borrower/ Homebuyers.

The NCLAT set aside the order of NCLT.

A Bank can directly file claims in the CIRP of Corporate Debtor (Builder) if tripartite agreement amongst Borrower (Homebuyers), Bank, and Builder (Corporate Debtor) stipulates that the primary responsibility for loan repayment in case of default lies with the Builder/Corporate Debtor and secondary responsibility is of borrower/ Homebuyers – Canara Bank Vs. Sh. Vivek Kumar RP AVJ Developers (India) Pvt. Ltd. – NCLAT New Delhi Read Post »

Can the NCLT, under Section 60(5) of the IBC, pass an order for the eviction of tenancy rights in a property of the Corporate Debtor? | Can insolvency laws override statutory tenancy protections? | Whether tenancy disputes fall outside the scope of insolvency resolution? – Sumati Suresh Hegde and Ors. Vs. Anand Sonbhadra, RP of Champalalji Finance Pvt. Ltd. and Ors. – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) IRP did not pursue the suit for eviction which was a right procedure, rather filed an application under Section 60(5) r/w Section 25(2)(a) of the Code before the Tribunal by short circuiting the route of eviction of the present appellants under the garb of the provisions of the Code.
(ii) The Tribunal has committed a patent error in passing the order of eviction considering the possession of the Appellants as of the lessee.
(iii) There is a sharp difference between the lease and a tenancy.
(iv) In the present case, there has been no change of the tenancy rights of the Appellants by way of a contract and the law which is to operate in respect of termination of tenancy are the provisions of the Maharashtra Rent Control Act, 1999 and not the Code.
(v) It is also otherwise well settled that once a tenant always a tenant unless the status changes by contract or by operation of law.
(vi) The Application under Section 60(5) of the IBC is only maintainable if the issue involved is related to insolvency resolution process.

Can the NCLT, under Section 60(5) of the IBC, pass an order for the eviction of tenancy rights in a property of the Corporate Debtor? | Can insolvency laws override statutory tenancy protections? | Whether tenancy disputes fall outside the scope of insolvency resolution? – Sumati Suresh Hegde and Ors. Vs. Anand Sonbhadra, RP of Champalalji Finance Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

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