NCLT

When the contract is oral, its enforceability will come into question if there is dispute | Mere fact that a reply to notice under Section 8(1) of IBC having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the latter to bring pre-existing dispute before NCLT – German Solar Asia Pte Ltd. Vs. Zytech Solar India Pvt. Ltd. – NCLT Hyderabad Bench

/ 4 minutes of reading

The Hon’ble NCLT Hyderabad Bench held that:
(i) The contract can be either oral or written. When the contract is oral, its enforceability will come into question if there is dispute.
(ii) Mere fact that a reply to notice under Section 8(1) having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the latter to bring relevant materials before the adjudicating authority to establish that there is pre-existing dispute which may lead to the rejection of Section 9 application.
(iii) Pre-existing dispute employed under the IBC cannot be equated with even the principle of preponderance of probability which guides a civil court at the stage of finally decreeing a suit.
(iv) The IBC is not intended to be a substitute for a recovery forum.

When the contract is oral, its enforceability will come into question if there is dispute | Mere fact that a reply to notice under Section 8(1) of IBC having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the latter to bring pre-existing dispute before NCLT – German Solar Asia Pte Ltd. Vs. Zytech Solar India Pvt. Ltd. – NCLT Hyderabad Bench Read Post »

Resolution Professional cannot accept any claim which has been adjudicated during the moratorium – The Regional Provident Fund Commissioner-II (Legal), Employees Provident Fund Organization Vs. Mr. Rajendra Jain, RP of Kimaya Industries Pvt. Ltd. – NCLT Ahmedabad Bench

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The Hon’ble NCLT Ahmedabad Bench held that the applicant being the EPF authority has raised certain demands which were adjudicated during the CIRP period which was after the initiation of the moratorium under Sec. 14(1) of IBC, when no assessment proceedings can be continued by the applicant irrespective of whether certain documents were sought from the Resolution Professional. This does not, however, as per Sec. 33 (5) prohibit the applicant to continue with or even initiation of proceedings after the liquidation order is passed. When the liquidation order is passed, the moratorium ends which enables the protected assets of the Corporate Debtor to be free of any further consideration under liquidation estate.

Resolution Professional cannot accept any claim which has been adjudicated during the moratorium – The Regional Provident Fund Commissioner-II (Legal), Employees Provident Fund Organization Vs. Mr. Rajendra Jain, RP of Kimaya Industries Pvt. Ltd. – NCLT Ahmedabad Bench Read Post »

Is an application under Section 7 of the IBC maintainable against the interest portion only? – Piramal Capital & Housing Finance Ltd. Vs. Sunblink Real Estate Pvt. Ltd. – NCLT Mumbai Bench

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The Hon’ble NCLT Mumbai Bench held that the present petition has been filed on the basis of default in payment of interest on the amounts due arising for the period after the 10A period in terms of clause 4.1 and 4.2 of Loan Agreement. The said amount in default is in excess of Rs. 1.00 crores and default is stated to have taken place on 12.02.2024 i.e. after 15 working days subsequent to the issuance of the Demand Notice dated 25.01.2024. There has been a financial debt in respect of which default has been committed by the Corporate Debtor and further that the Application has been filed within the period of limitation. Therefore, the Application u/s 7 of the Code, deserves to be admitted.

Is an application under Section 7 of the IBC maintainable against the interest portion only? – Piramal Capital & Housing Finance Ltd. Vs. Sunblink Real Estate Pvt. Ltd. – NCLT Mumbai Bench Read Post »

If no funds are available, the question of keeping Provident Fund, Gratuity Fund and Pension Fund outside the purview of the liquidation assets does not arise – Employees Provident Fund Organisation Vs. Incab Industries Ltd. and Anr. – NCLT Kolkata Bench

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The Hon’ble NCLT Kolkata Bench directs the RP that:

a) Resolution plan should provide for full payment of PF and Gratuity from funds, if any available, earmarked separately, regardless of delay in filing claim.
b) If funds are not available, claims made within the stipulated period as per public announcement or any subsequent extended period, if granted by this Adjudicating Authority, whichever is later, to be paid in full. In this case, the Hon’ble Tribunal has condoned the delay in view of the reason indicated in para 23 of this order.
c) If claims contain damages imposed under Section 14(b) of EPF Act, after the initiation of CIRP the same need not be paid.
d) If the claims contain damages imposed prior to the initiation of CIRP of the corporate debtor, the same may be waived off by the Central Board under Section 32(b) of the EPF Scheme, 1952 if applied for.

If no funds are available, the question of keeping Provident Fund, Gratuity Fund and Pension Fund outside the purview of the liquidation assets does not arise – Employees Provident Fund Organisation Vs. Incab Industries Ltd. and Anr. – NCLT Kolkata Bench Read Post »

Compliance and prior action in terms of MSME Act is not prerequisite or mandatory before any petition under Section 7 of the IBC could be entertained – Axis Bank Ltd. Vs. Midas Petrochem Pvt. Ltd. – NCLT Mumbai Bench

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Hon’ble Adjudicating Authority holds that Compliance and prior action in terms of MSME Act is not prerequisite or mandatory before any petition under Section 7 of the Code could be entertained. IBC aims at resolution of the Corporate Debtor and for attaining the same various provisions and regulations are enshrined in the Code. Under Section 7 Petition, the Tribunal has to merely see whether there is a debt and default in the matter before it.

Compliance and prior action in terms of MSME Act is not prerequisite or mandatory before any petition under Section 7 of the IBC could be entertained – Axis Bank Ltd. Vs. Midas Petrochem Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Can Successful Bidder of Not Readily Realisable Asset (NRRA) be allowed to prosecute the avoidance application pending before NCLT? – Sherisha Technologies Pvt. Ltd. Vs. Shri. S A Prem Kumar and Ors. – NCLT Chennai Bench

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The Hon’ble NCLT Chennai Bench held that the same analogy as in Kapil Wadbawan (2023) ibclaw.in 320 NCLAT shall be applicable with regard to the prosecution by the Successful Auction Purchaser in liquidation estate when the asset of the corporate debtor has been sold as a going concern and acquisition plan submitted by Successful Auction Purchaser has been approved by the Adjudicating Authority. Hence, the substitution of the successful bidder of NRRA in the avoidance application can be allowed to give effect to provisions of the Code.

Can Successful Bidder of Not Readily Realisable Asset (NRRA) be allowed to prosecute the avoidance application pending before NCLT? – Sherisha Technologies Pvt. Ltd. Vs. Shri. S A Prem Kumar and Ors. – NCLT Chennai Bench Read Post »

Being Promoters/Directors are related parties to the Corporate Debtor cannot be a ground for non-payment of gratuity dues to them [Sec. 36(4) of IBC] | Once a claim has been admitted by Liquidator, s/he cannot escape from the settlement of such admitted claims on the grounds that the claimants are allegedly parties to avoidance transactions or related parties | Liquidator is not bound by the decision of the Stakeholder Consultation Committee (SCC) – Mrs. Abirami Premkumar Vs. K. Sivalingam, The Liquidator of Cauvery Power Generation Chennai Pvt. Ltd. – NCLT Chennai Bench

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The Hon’ble NCLT Chennai Bench held that:

(i) It is settled position in law that the powers conferred on the Liquidator is “quasi-judicial” and the Liquidator is not bound by the decision of the SCC. Once the claim has been admitted by the Liquidator in exercise of it quasi-judicial powers, the Liquidator cannot escape from the settlement of such admitted claims on the grounds that the claimants are allegedly parties to avoidance transactions or related to such parties. Such a view of denial of payment of admitted claims is not substantiated by the provisions of the Code or the relevant regulations.
(ii) Rights of the Applicants arising under Section 4(1) of the Payment of Gratuity Act, 1972, in their capacity as an employee of the Corporate Debtor are independent of the rights of the Financial Creditors, if any, arising out of the personal guarantee contract.

Being Promoters/Directors are related parties to the Corporate Debtor cannot be a ground for non-payment of gratuity dues to them [Sec. 36(4) of IBC] | Once a claim has been admitted by Liquidator, s/he cannot escape from the settlement of such admitted claims on the grounds that the claimants are allegedly parties to avoidance transactions or related parties | Liquidator is not bound by the decision of the Stakeholder Consultation Committee (SCC) – Mrs. Abirami Premkumar Vs. K. Sivalingam, The Liquidator of Cauvery Power Generation Chennai Pvt. Ltd. – NCLT Chennai Bench Read Post »

In the event that the nature of the relationship between the Operational Creditor and the Corporate Debtor is that of ‘joint suppliers,’ the Operational Creditor does not qualify as an Operational Creditor within the meaning of Section 5(20) of the IBC – Transline Technologies Ltd. Vs. Experio Tech Pvt. Ltd. – NCLT New Delhi Bench

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The Hon’ble NCLT New Delhi Bench held that the Operational Creditor and the Corporate Debtor jointly undertook to carry out the supplies being made to the third parties through Corporate Debtor. The nature of relation entered into between the Operational Creditor and the Corporate Debtor is that of the ‘joint suppliers’ and the Operational Creditor, does not qualify to be considered as the ‘Operational Creditor’ within the meaning of Section 5(20) of the Code.

In the event that the nature of the relationship between the Operational Creditor and the Corporate Debtor is that of ‘joint suppliers,’ the Operational Creditor does not qualify as an Operational Creditor within the meaning of Section 5(20) of the IBC – Transline Technologies Ltd. Vs. Experio Tech Pvt. Ltd. – NCLT New Delhi Bench Read Post »

Adjudicating Authority does not have any jurisdictional power to consider the issue concerning the determination of the terms and validity of the Leave and License Agreement | Under no circumstances the Resolution Professional can short circuit the procedure and seek approval of a resolution plan that leads to cancellation of the leave and license, on the ground that it has been approved by the CoC – Victory Iron Works Ltd. Vs. Jitendra Lohia, RP of Avani Towers Pvt. Ltd. – NCLT Kolkata Bench

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It is a trite, axiomatic and settled law that this Adjudicating Authority is not a civil court to resolve a civil dispute, thus, extinguishment of the right on leave and license cannot be gone into by this forum. This Adjudicating Authority does not have any jurisdictional power to consider the issue concerning the determination of the terms and validity of the Leave and License Agreement. However, the Section 25 of the I&B Code casts a duty upon the RP to represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial and arbitration proceedings, which includes its right to get the leave and license legally terminated by a due process of law so that a clear title passes on to the Successful Resolution Applicant. But under no circumstances the Resolution Professional can short circuit the procedure and seek approval of a resolution plan that leads to cancellation of the leave and license, on the ground that it has been approved by the CoC. 

Adjudicating Authority does not have any jurisdictional power to consider the issue concerning the determination of the terms and validity of the Leave and License Agreement | Under no circumstances the Resolution Professional can short circuit the procedure and seek approval of a resolution plan that leads to cancellation of the leave and license, on the ground that it has been approved by the CoC – Victory Iron Works Ltd. Vs. Jitendra Lohia, RP of Avani Towers Pvt. Ltd. – NCLT Kolkata Bench Read Post »

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