14 (2A)

Contract can be terminated if it is not related to insolvency | NCLT cannot intervene where there is dispute about contractual rights of the parties | The term critical used in Section 14(2A) of IBC is to be defined as per the facts and circumstances of each case – Mr. Sumit Binani, RP of KSK Mahanadi Power Company Ltd. Vs. Water Resources Department, The Executive Engineer and Anr. – NCLT Hyderabad Bench

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Contract can be terminated if it is not related to insolvency | NCLT cannot intervene where there is dispute about contractual rights of the parties | The term critical used in Section 14(2A) of IBC is to be defined as per the facts and circumstances of each case – Mr. Sumit Binani, RP of KSK Mahanadi Power Company Ltd. Vs. Water Resources Department, The Executive Engineer and Anr. – NCLT Hyderabad Bench Read Post »

The benefit of electricity supply which is enjoyed by any Corporate Debtor given by Govt. or Authority should be continued subject to the condition that there is no default of payment of current dues – Noida Power Company Ltd. Vs. Mr. Gaurav Katiyar – NCLAT New Delhi

Hon’ble NCLAT held that:
(i) The benefit of electricity supply which is enjoyed by any Corporate Debtor given by government or authority should be continued subject to the condition that there is no default of payment of current dues.
(ii) The protection granted by Section 14(1) is clearly subject to no default in the payment of current dues as clearly stipulated in the explanatory clause. Further, Section 14(2A) only prohibits interruption, termination or suspension of any such supply of goods or services to the Corporate Debtor which the RP considers critical to protect and preserve the value of the Corporate Debtor and manage the operations of the Corporate Debtor as a going concern but with an exception carved out which provides that in case the Corporate Debtor has not paid dues arising from such supply during the period of moratorium.

The benefit of electricity supply which is enjoyed by any Corporate Debtor given by Govt. or Authority should be continued subject to the condition that there is no default of payment of current dues – Noida Power Company Ltd. Vs. Mr. Gaurav Katiyar – NCLAT New Delhi Read Post »

Can Resolution Professional/CoC revise maintenance fees and recovery of electricity dues from Allottees during the Real Estate Insolvency? | Whether payment of electricity charges being an essential service, such amount can be accounted towards CIRP costs and that the Corporate Debtor is not liable to pay the amount till the completion of the period of moratorium? – Sanskriti Allottee Welfare Association (Reg.) and Anr. Vs. Gaurav Katiyar RP Earthcon Universal Infratech Pvt. Ltd. and Anr. – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT clarified following issues:

A. Is NCLAT/NCLT the competent forum to consider whether the association of allottees constituted or not?
B. Is it appropriate on the part of the RP to seek the approval of the CoC in the determination of maintenance fees and recovery of electricity dues?
C. Can after having been present Authorised Representative of allottees in the CoC meetings and exercised their voting rights, the allottees question the authority of the CoC to have made some business decisions?
D. Whether payment of electricity charges being an essential service, such amount can be accounted towards CIRP costs and that the Corporate Debtor is not liable to pay the amount till the completion of the period of moratorium

Can Resolution Professional/CoC revise maintenance fees and recovery of electricity dues from Allottees during the Real Estate Insolvency? | Whether payment of electricity charges being an essential service, such amount can be accounted towards CIRP costs and that the Corporate Debtor is not liable to pay the amount till the completion of the period of moratorium? – Sanskriti Allottee Welfare Association (Reg.) and Anr. Vs. Gaurav Katiyar RP Earthcon Universal Infratech Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

NCLT dismisses an IA filed by RP on SAP accounting software discontinued during moratorium – Pritam Bayal, RP of BKM Industries Ltd. Vs. NIT Global Data Centers & Cloud Infrastructure India Pvt. Ltd. – NCLT Kolkata Bench

NCLT Kolkata Bench held that:
(i) In view of section 14(2A) of the Code, the Respondent has rightfully terminated the services after non-payment of dues for the services rendered during the CIRP period. Ample warning had been given before the Respondent discontinued the services and deleted the data.
(ii) From the reading of section 19(2) of the Code, it is observed that the Resolution Professional can file an application to the Adjudicating Authority if any personnel of the Corporate Debtor or promoter or person related to the management of the Corporate Debtor or any other person does not cooperate with the Resolution Professional. The Respondent herein is a service provider and fall outside the ambit of a promoter or a personnel of the Corporate Debtor or a person in management of the Corporate Debtor but the Applicant does fall under the purview of “other person”, hence the I.A. is maintainable.

NCLT dismisses an IA filed by RP on SAP accounting software discontinued during moratorium – Pritam Bayal, RP of BKM Industries Ltd. Vs. NIT Global Data Centers & Cloud Infrastructure India Pvt. Ltd. – NCLT Kolkata Bench Read Post »

An application against termination of contract for essential raw material supply to Corporate Debtor (not a going concern) is not maintainable under Section 60(5)(c) of the IBC, 2016 (residuary jurisdiction) – Sundaresh Bhat RP of JBF Petrochemicals Ltd. Vs. Mangalore Refinery and Petrochemicals Ltd. – NCLT Ahmedabad Bench

In this case, the Respondent informed the Corporate Debtor that since the Corporate Debtor has committed default in buying Paraxylene (Px) and there has been no off –take continuously for three months, the agreement dated 12.04.2016 stands terminated. The RP’s prayer is to direct the Respondent to supply Paraxylene (“Px”) as and when the plant is ready and commissioned.
The Adjudicating Authority held that Paraxylene (“Px”) is essential raw material to be used in the products of Petrochemical Industry so as to make such industry functional. However, in this case, the Corporate Debtor, being in Petrochemical Industry has never been functional at all. Section 14(2A) of IBC, 2016 is to be pressed in service to preserve the status of the Corporate Debtor as a going concern. In this case the Corporate Debtor was never a running unit. It cannot be said that by the termination of the agreement by the Respondent, the Corporate Debtor suffered any erosion of assets during the CIRP.

An application against termination of contract for essential raw material supply to Corporate Debtor (not a going concern) is not maintainable under Section 60(5)(c) of the IBC, 2016 (residuary jurisdiction) – Sundaresh Bhat RP of JBF Petrochemicals Ltd. Vs. Mangalore Refinery and Petrochemicals Ltd. – NCLT Ahmedabad Bench Read Post »

While insolvency resolution of a Corporate Debtor is going on and Moratorium is in force, the provision of section 14(1)(d) will be applicable and the owner cannot forcibly or otherwise recover the premises, which are in possession of the corporate debtor from a date prior to the date of initiation of CIRP – Supriyo Kumar Chaudhuri, Liquidator of JVL Agro Industries Ltd. Vs. Jhunjhunwala Oil Mills Ltd. – NCLAT New Delhi

NCLAT held that we also take note of the arguments presented by the Learned Counsel for JOML claiming that JOML is in financial distress and in order to relieve such distress, it proposed a one-time settlement to its bank State Bank of India and, in order to honour the one-time settlement, it proposes to sell of the ‘said premises’ to Rudra Realtech Limited. While the arguments made by the Learned Counsel for JOML could be correct insofar as any financial distress of the JOMC is concerned, we are of the clear view that while the insolvency resolution of the corporate debtor is going on and the moratorium is in force, the provision of section 14(1)(d) will be applicable and the owner cannot forcibly or otherwise recover the premises, which are in possession of the corporate debtor from a date prior to the date of initiation of CIRP.

While insolvency resolution of a Corporate Debtor is going on and Moratorium is in force, the provision of section 14(1)(d) will be applicable and the owner cannot forcibly or otherwise recover the premises, which are in possession of the corporate debtor from a date prior to the date of initiation of CIRP – Supriyo Kumar Chaudhuri, Liquidator of JVL Agro Industries Ltd. Vs. Jhunjhunwala Oil Mills Ltd. – NCLAT New Delhi Read Post »

Whether Essential Supplier, who was directed by Adjudicating Authority to supply the electricity is entitled to claim payment of electricity dues during CIRP period or the Supplier has to wait till the resolution of the CIRP of the Corporate Debtor to receive its dues – Shailesh Verma, RP of Lavasa Corporation Ltd. Vs. Maharashtra State Electricity Distribution Company Ltd. – NCLAT New Delhi

NCLAT held that Section 14(2) has to be read with the legislative intent, which is now reflected by Explanation to Section 14(1) and 14(2A). In the facts of the present case, when Corporate Debtor took a decision that supply of electricity is necessary to make the value of Corporate Debtor as has been specifically pleaded in IA No.1661 of 2021, the Corporate Debtor is obliged to make payment. When the Corporate Debtor has opined that supply of electricity is essential and is to be continued by the Respondent, it is also under obligation to make payment of electricity dues of the CIRP period and direction issued by the Adjudicating Authority to make the payment of outstanding dues, cannot be faulted.

Whether Essential Supplier, who was directed by Adjudicating Authority to supply the electricity is entitled to claim payment of electricity dues during CIRP period or the Supplier has to wait till the resolution of the CIRP of the Corporate Debtor to receive its dues – Shailesh Verma, RP of Lavasa Corporation Ltd. Vs. Maharashtra State Electricity Distribution Company Ltd. – NCLAT New Delhi Read Post »

Restoration of power connection to the Corporate Debtor for getting a better resolution plan – Damodar Valley Corporation Vs. Karthik Alloys Ltd. – NCLAT New Delhi

In this case, the disconnection of the electricity supply to the Durgapur unit took place on 14.9.2019. According to clause 4.6.1 of the Power Supply Agreement, deemed termination of the agreement could happen only after 180 days from the date of disconnection. Thus deemed termination could have taken place on or after 12.3.2020 i.e. 180 days after the date of disconnection. The order for initiation of CIRP was passed on 17.12.2019 and moratorium was imposed under section 14 from the same date. Thus the deemed termination of the Power Supply Agreement to the Durgapur unit of the corporate debtor which could not take place by 17.12.2019, could not happen during the moratorium period, by virtue of protection provided under Section 14(2). NCLAT held that in passing the Impugned order by which directions have been given to DVC for reconnection of the electricity supply to the corporate debtor during the moratorium period and also allowing waiver of security deposit, the Adjudicating Authority has not exceed its jurisdiction under the IBC.

Restoration of power connection to the Corporate Debtor for getting a better resolution plan – Damodar Valley Corporation Vs. Karthik Alloys Ltd. – NCLAT New Delhi Read Post »

Whether the Adjudicating Authority in exercise of jurisdiction under Section 235A can impose a fine of Rs.20 Lakh as has been imposed by the impugned judgment on the Appellant? – Writer Business Services Pvt. Ltd. & Anr. Vs. Mr. Ashutosh Agrawala RP for Cox & Kings Ltd. – NCLAT New Delhi

Following are the questions which arise for consideration in this Appeal:-

(i) Whether the Adjudicating Authority in exercise of jurisdiction under Section 235A can impose a fine of Rs.20 Lakh as has been imposed by the impugned judgment on the Appellant?

(ii) Whether Record Management Services are critical services within the meaning of Section 14(2A) which should not be terminated during the period of Moratorium and the Adjudicating Authority is right in issuing direction to Appellant to continue to provide Record Management Services during CIRP period?

(iii) Whether Adjudicating Authority has rightly issued direction to the Appellant to refund the amount received from the Resolution Professional after initiation of CIRP?

Whether the Adjudicating Authority in exercise of jurisdiction under Section 235A can impose a fine of Rs.20 Lakh as has been imposed by the impugned judgment on the Appellant? – Writer Business Services Pvt. Ltd. & Anr. Vs. Mr. Ashutosh Agrawala RP for Cox & Kings Ltd. – NCLAT New Delhi Read Post »

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