14 (4)

Whether moratorium under Section 33(5) of IBC during Liquidation Process, bars on adjustment of Income Tax Refund with past dues | Whether on completion of Income Tax assessment proceedings during liquidation, the Income Tax Department can avail of set-off suo motu – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Principal Chief Commissioner of Income Tax, Mumbai – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT held that:

(i) Section 14 prohibits both institution and continuation of pending suits or proceedings against the Corporate Debtor, Section 33(5) of IBC is only a bar on the institution of new suits during the liquidation process.
(ii) There is no bar in a suit or a legal proceeding continuing along with liquidation proceedings as pending suits or legal proceeding have not been included within the scope of moratorium under Section 33(5) of IBC.
(iii) Set-off has been claimed after passing of the liquidation order which is legally permissible under Chapter III Part II of IBC.
(iv) The Income Tax authority enjoys limited jurisdiction of continuing with assessment proceedings and in determining the quantum of Income Tax dues but does not enjoy the jurisdiction and power to suo motu initiate recovery of dues or execute their claim unilaterally by adjusting the Income Tax Refund amount with past tax dues.
(v) While applying the principle of set-off, it must be kept in mind that no creditor ends up getting share disproportional to their dues.

Whether moratorium under Section 33(5) of IBC during Liquidation Process, bars on adjustment of Income Tax Refund with past dues | Whether on completion of Income Tax assessment proceedings during liquidation, the Income Tax Department can avail of set-off suo motu – Avil Menezes Liquidator of Sunil Hitech and Engineers Ltd. Vs. Principal Chief Commissioner of Income Tax, Mumbai – NCLAT New Delhi Read Post »

Whether set-off/adjustment of demand with refund by Income Tax Dept. during the intervening period when CIRP timeline period has expired but Liquidation Order u/s 33 of IBC has not yet been passed, amounted to violation of Moratorium under Section 14 of the IBC? – Mr. Devarajan Raman Liquidator of Kotak Urja Pvt. Ltd. Vs. Principal Commissioner Income Tax and Ors. – NCLAT New Delhi

This judgment answered the following issues:

(i) Can Income Tax Dept. set-off/adjust tax dues with refund during the intervening period when CIRP timeline period had expired but the liquidation order had not yet been passed by the Adjudicating Authority?

(ii) Can a Secured Creditor realise secured assets in terms of Section 52 of the IBC after expiry of CIRP period under Section 12 of the IBC and before liquidation order under Section 33 is passed?
(iii) Is Income Tax Department being a Government Authority a secured creditor and entitled to realise security interest?

Whether set-off/adjustment of demand with refund by Income Tax Dept. during the intervening period when CIRP timeline period has expired but Liquidation Order u/s 33 of IBC has not yet been passed, amounted to violation of Moratorium under Section 14 of the IBC? – Mr. Devarajan Raman Liquidator of Kotak Urja Pvt. Ltd. Vs. Principal Commissioner Income Tax and Ors. – NCLAT New Delhi Read Post »

A set off benefit under Liquidation Regulation 29 cannot be claimed during Liquidation Process where the due amount was demanded by Resolution Professional(RP) during the CIRP but not paid – Ritu Tandon Vs. M/s Rain Automotive India Pvt. Ltd. – NCLAT New Delhi

During the CIRP, the RP requested the Appellant to refund the amount of security deposit as it was the part of the estate of the Corporate Debtor and could not have been retained by the Appellant in view of prohibition contained in Section 14(1)(c) of the Code but the Appellant did not abide by it nor claim a set off in Form B which was submitted by her to the RP. Therefore, it was only an afterthought on the part of the Appellant who had perhaps waited for the initiation of the liquidation proceedings and at that time the claim of set off, in terms of the provisions of Liquidation Regulation 29 of the Regulations, as alleged was raised.
NCLAT held that had it been a case where the RP had not even asked for the amount of security to be returned as it could not have been retained by the Appellant in view of Section 14(1)(c) of the Code or a case where RP had not gone to the Adjudicating Authority in a case where the Appellant had claimed a set off despite the provisions of Section 14(1)(c) then the matter would have been altogether different and perhaps the Appellant might have been right in its approach because there is no dispute that the rigours of Section 14 would come to an end as soon as the liquidation order is passed but the Appellant cannot be allowed to take advantage of its own wrong.

A set off benefit under Liquidation Regulation 29 cannot be claimed during Liquidation Process where the due amount was demanded by Resolution Professional(RP) during the CIRP but not paid – Ritu Tandon Vs. M/s Rain Automotive India Pvt. Ltd. – NCLAT New Delhi Read Post »

In GoAir Insolvency, Delhi High Court allows Aircrafts’ Lessors to access Airports, carry out inspection and maintenance of 30 Aircrafts – Accipiter Investments Aircraft 2 Ltd. Vs. Union of India & Anr. – Delhi High Court

In this case, the grievance of the lessors and owners of Aircrafts that have been leased to Go Air (India) Ltd. are that the DGCA has failed to deregister their Aircraft(s) in contravention of Sub-Rule (7) of Rule 30 of the Aircraft Rules, 1937.
Hon’ble High Court held that there can also be no denial of the fact that the Aircrafts of the Petitioners are extremely valuable and highly sophisticated equipment and require regular maintenance for their preservation. Therefore, with a view to obviate any further losses, the following directions are being passed:
• (i) The Petitioners, their employees, agents, officers and/or representatives shall be permitted by the DGCA and the appropriate Airport Authorities to access the Airport(s) where the 30 Aircrafts are parked inter alia to inspect their respective Aircrafts, within the next 3 days;
• (ii) The Petitioners, their employees, agents, officers and/or representatives shall be permitted to carry out inspection and all maintenance tasks of the Aircraft, its engines and other parts and components, of all 30 Aircrafts, at least twice every month, until the final disposal of the Writ Petitions;
• (iii) Respondent/GoAir, its directors, employees, agents, officers and or representatives or the IRP/RP(s) or any person acting on their behalf, are hereby restrained from removing, replacing, taking out any accessories, parts, components or spares, etc. or any relevant operational or other Manuals /records, documentation from any of the 30 Aircraft, except with prior written approval of the Lessor of such Aircraft;
• (iv) The following additional directions shall be applicable to Aircraft MSN 6072: Respondent/DGCA shall permit the Respondent/RP to carry out the mandatory maintenance/engine runs of this Aircraft until its de-registration.

In GoAir Insolvency, Delhi High Court allows Aircrafts’ Lessors to access Airports, carry out inspection and maintenance of 30 Aircrafts – Accipiter Investments Aircraft 2 Ltd. Vs. Union of India & Anr. – Delhi High Court Read Post »

If the right of lessor to recover rent are affected on account of moratorium, the lessor is entitled to recover the rent and which shall include in CIRP costs – Prerna Singh Vs. CoC of M/s Xalta Food and Beverages Pvt. Ltd. – NCLAT New Delhi

NCLAT held that it is not disputed that this Appellate Tribunal does not have power to punish for contempt of its own order. The objection is only about the invoking of inherent powers under Rule 11 of NCLAT Rules, 2016. Mere mentioning a wrong provision in the Application will not affect the merits of the case and therefore, we find no substance in this preliminary objection. As per CIRP Regulation 31 Insolvency Resolution Process costs under Section 5(13)(e) mean defined in clause (a) to (e). for the present case, Regulation 31(b) is relevant which provides that amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under Section 14(1) (d). Due to moratorium period the lessor could not recover the possession of the property from the Corporate Debtor. Thus, the right of lessor to recover rent are affected on account of moratorium. Therefore, the lessor is entitled to recover the rent and which shall include in CIRP costs. Thus, we find no substance in the argument that the rent cannot be included in the CIRP costs.

If the right of lessor to recover rent are affected on account of moratorium, the lessor is entitled to recover the rent and which shall include in CIRP costs – Prerna Singh Vs. CoC of M/s Xalta Food and Beverages Pvt. Ltd. – NCLAT New Delhi Read Post »

Whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments Act can be said to be covered by the moratorium provision under Section 14 of the IBC – P. Mohanraj and Ors. Vs. Shah Brothers Ispat Pvt. Ltd. – Supreme Court

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Whether the institution or continuation of a proceeding under Section 138/141 of the Negotiable Instruments Act can be said to be covered by the moratorium provision under Section 14 of the IBC – P. Mohanraj and Ors. Vs. Shah Brothers Ispat Pvt. Ltd. – Supreme Court Read Post »

When once the Moratorium is granted by the NCLT, it will continue till the completion of CIRP or until it approves the Resolution Plan under Section 31(1) of the IBC or passes an order of liquidation of corporate debtor under Section 33 of the IBC – Dishnet Wireless Limited Vs. The Deputy Commissioner of Income Tax – Madras High Court

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When once the Moratorium is granted by the NCLT, it will continue till the completion of CIRP or until it approves the Resolution Plan under Section 31(1) of the IBC or passes an order of liquidation of corporate debtor under Section 33 of the IBC – Dishnet Wireless Limited Vs. The Deputy Commissioner of Income Tax – Madras High Court Read Post »

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