21 (6A)

NCLT approves Consolidated Resolution Plan of Rs. 14,867.50 crores submitted by NARCL in group insolvency of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd., FSP – Rajneesh Sharma, Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. Vs. National Asset Reconstruction Company Ltd. (NARCL) – NCLT Kolkata Bench

On 11.08.2023, NCLT Kolkata Bench has approved the Resolution Plan of National Asset Reconstruction Company Ltd. (NARCL) in consolidated CIRP of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd.
NARCL is a government entity, has been incorporated on 07.07.2021 with majority stake held by Public Sector Banks and balance by Private Banks with Canara Bank being the Sponsor Bank. NARCL is registered with the Reserved Bank of India as an Asset Reconstruction Company under SARFAESI Act, 2002.
NARCL and IDRCL will infuse funds into the Corporate Debtors and other funds towards Assignment Payments, and provide for Corporate Debtors to undertake repayment obligations in the manner set out in this Resolution Plan, aggregating to INR 14,867.50 crores, which amount shall be utilized for funding payments proposed to be made to the stakeholders of the Corporate Debtors, subject to the terms of this Resolution Plan.

NCLT approves Consolidated Resolution Plan of Rs. 14,867.50 crores submitted by NARCL in group insolvency of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd., FSP – Rajneesh Sharma, Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. Vs. National Asset Reconstruction Company Ltd. (NARCL) – NCLT Kolkata Bench Read Post »

Even after completion of Challenge Mechanism under CIRP Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP – Vistra ITCL (India) Ltd. Vs. Torrent Investments Pvt. Ltd. & Ors. – NCLAT New Delhi

In this landmark judgment, NCLAT has interpreted CIRP Regulation 39 with questions such as (i) Whether Regulation 39(1A) contains an implied prohibition on the jurisdiction of the CoC to enter into any further negotiations with Resolution Applicant or to further ask a Resolution Applicant to increase its Resolution Plan value, (ii) Whether the Regulation 39(1A) has taken place of the negotiation process and it forecloses any negotiation by CoC with Resolution Applicant (iii) authorisation of authorised representative to file a appeal etc.

NCLAT has concluded that even after completion of Challenge Mechanism under Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP. Regulation 39(1A) cannot be read as a fetter on the powers of the CoC to discuss and deliberate and take further steps of negotiations with the Resolution Applicants, which resolutions are received after completion of  Challenge Mechanism.

Even after completion of Challenge Mechanism under CIRP Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP – Vistra ITCL (India) Ltd. Vs. Torrent Investments Pvt. Ltd. & Ors. – NCLAT New Delhi Read Post »

A single allottee has no locus to challenge the appointment of an Authorized Representative in the matter of Corporate Debtor as approved by the majority of the class of creditors – Mr. Mukesh Gupta IRP M/s. Gupta Builders and Promoters Pvt. Ltd. – NCLT Chandigarh Bench

The Adjudicating Authority observed it is pertinent to note that in total there are 1777 allottees/creditors belonging to the State of Punjab, Haryana, Himachal Pradesh, U.T. of Chandigarh and Jammu & Kashmir. The applicant herein is just one allottee out of 1777 allottees in the matter of Corporate Debtor and as such, she cannot stand outside the decision of the class of creditors out of which homebuyers having 73.52% voting share have selected an Authorized Representative. The applicant being a single allottee having only a 0.05% share cannot dictate unilateral terms or object to the decision of the majority of the class of creditors. The Ld. counsel for the respondent/RP has rightly placed reliance upon the authority titled as Jaypee Kensington (2021) ibclaw.in 63 SC. Thus, the applicant being a single allottee has no locus to challenge the appointment of an Authorized Representative in the matter of the Corporate Debtor as approved by the majority of the class of creditors.

A single allottee has no locus to challenge the appointment of an Authorized Representative in the matter of Corporate Debtor as approved by the majority of the class of creditors – Mr. Mukesh Gupta IRP M/s. Gupta Builders and Promoters Pvt. Ltd. – NCLT Chandigarh Bench Read Post »

When the Corporate Debtor is a Guarantor and when the Corporate Guarantee has never been invoked prior to the commencement of the CIRP, as on the date of filing of the Claims, the Right to Payment has not accrued – IDBI Trusteeship Services Ltd. Vs. Mr. Abhinav Mukherji – NCLAT New Delhi

The main issues which arise in these Appeals are:

(a) Whether the Adjudicating Authority was right in applying the ratio of Anuj Jain (IRP of Jaypee Infratech Ltd.) [2020] ibclaw.in 06 SC to the facts of the attendant case and holding that the Appellants are not Financial Creditors in view of the fact that there was no direct disbursal of amount to the Corporate Debtor/Guarantor.

(b) Whether an individual Homebuyer has the locus to challenge the admission of a Claim of another Creditor/Financial Creditor. Whether the filing of the said Application had to be done through the Authorized Representative (AR) only.

(c) Whether the Appellant can make a Claim on the basis of the Guarantee Deed which was never invoked pre-commencement of the CIRP, and remained uninvoked even as on the date of filing of the Claim, thereby meaning that Right to Payment has not yet accrued.

(d) Whether the Appellants are Related Parties of the Corporate Debtor. Whether the Appellants were in a position to control the affairs of the Corporate Debtor, to fall within the ambit of the definition of Related Party as defined under Section 5(24) of the Code.

When the Corporate Debtor is a Guarantor and when the Corporate Guarantee has never been invoked prior to the commencement of the CIRP, as on the date of filing of the Claims, the Right to Payment has not accrued – IDBI Trusteeship Services Ltd. Vs. Mr. Abhinav Mukherji – NCLAT New Delhi Read Post »

NCLT directs class of Financial Creditors/Homebuyers to present on next hearing since they are not co-operating – Vemuri Ravi Kumar Vs. Bhrigu Infra Pvt. Ltd. – NCLT Hyderabad Bench

CoC comprises of 7 real estate allotees, and so far there are no operational creditors. The Adjudicating Authority held that appointing an authorised representative on behalf of majority of the Class of financial creditor would be an additional burden and results in increasing the CIRP costs. At the same time the interest of justice would be served by allowing all the 7 class of financial creditors to form part of the CoC. Therefore, in view of the peculiar facts and circumstances we direct the IRP to proceed with the representation of all the 7 financial creditors instead of they being represented by authorized representative.
Further, it held that since it is represented by Learned Counsel for IRP that class of financial creditors are not co-operating, let the Class of Financial Creditors be present on the next hearing.

NCLT directs class of Financial Creditors/Homebuyers to present on next hearing since they are not co-operating – Vemuri Ravi Kumar Vs. Bhrigu Infra Pvt. Ltd. – NCLT Hyderabad Bench Read Post »

The mere fact that the Authorised Representative of a creditor in a class have no role in receipt and verification of the claim of the creditors, it cannot be held to mean that creditors in a class have no right with regard to receipt and verification of their claim – Aashray Social Welfare Society & Ors. Vs. Saha Infratech Pvt. Ltd. & Ors. – NCLAT New Delhi

Issues which arise for consideration in this Appeal (i) Whether the application for impleadment filed by the Appellants before the Adjudicating Authority seeking impleadment deserve rejection on the ground that Authorised Representative of Homebuyers who are creditors in class is not representing the creditors in a class before the Adjudicating Authority? (ii) Whether the Appellants have no right to participate in adjudication of the claim of the Financial Creditors whose claim has been rejected by the IRP? (iii) Whether the Adjudicating Authority committed error in rejecting impleadment application filed by the Appellants?
NCLAT held that the clarification appended to Regulation 16A(5) is only clarification to the statutory scheme delineated under the Regulations and the Code that the Authorised Representative has no role in respect of verification of claim of a creditor in class. Can it be said that the Authorised Representative has no role in respect of verification of claims of creditors, therefore, the Financial Creditors in a class themselves have also no right with regard to receipt or verification of claims. The answer is obviously no. The Financial Creditor in class have every right to submit their claim giving proof of verification. The mere fact that the Authorised Representative of a creditor in a class have no role in receipt and verification of the claim of the creditors, it cannot be held to mean that creditors in a class have no right with regard to receipt and verification of their claim. The clarification as contained in Regulation 16A(5) has been read by the Adjudicating Authority to an extent which it never meant. The conclusion recorded by the Adjudicating Authority in paragraph 23 on the basis of erroneous interpretation of Regulation 16A(5) resulted in a wrong conclusion that the creditors in a class have no role in receipt or verification of claims of creditors.

The mere fact that the Authorised Representative of a creditor in a class have no role in receipt and verification of the claim of the creditors, it cannot be held to mean that creditors in a class have no right with regard to receipt and verification of their claim – Aashray Social Welfare Society & Ors. Vs. Saha Infratech Pvt. Ltd. & Ors. – NCLAT New Delhi Read Post »

If the Authorized Representative shall have no role in receipt or verification of claims of creditors of the class, he represents, then the association or the allottees who come under the class of creditors, shall also have no role in receipts or verification of claims of creditors – IDBI Trusteeship Services Ltd. Vs. Saha Infratech Pvt. Ltd., Through Shiv Nandan Sharma IRP – NCLT New Delhi Bench Court-II

AA held that as per CIRP Regulation 13(2), the IRP or the RP shall make a list of creditors available for inspection by the persons, who have submitted proofs of claim or by the members, partners, directors and guarantors of the corporate debtor. It is further seen that as per CIRP Regulation 14, the IRP or the RP is also authorized under the regulation to determine the amount of claim or revise the amount of claim admitted including the estimates of the claims made under Sub Regulation 1, when she/he comes across additional information warranting such revision. A bare perusal of Regulation 16A Sub Regulation 5 of the CIRP Regulations shows that although the IRP or the RP shall provide an updated list of creditors in each class to the respective authorised representative as and when, the list is updated but the authorized representative shall have no role in receipt or verification of claims of creditors of the class he represents. Since, the authorized representative is appointed under Section 21(6A) of the IBC, 2016 and his rights and duties are defined under Section 25A of IBC, 2016 referred to Supra, we observe that under Section 21(6A)(b), the authorized representative is appointed, if the class of creditors exceeds the number specified under the law.
It referred to the CIRP Regulation 16A(5), which shows that the authorized representative shall have no role in receipt or verification of claims of creditors of the class, he represents. If the authorized representative shall have no role in receipt or verification of claims of creditors of the class, he represents, then the association or the allottees who come under the class of creditors, in our considered view, shall also have no role in receipts or verification of claims of creditors rather it is the IRP or the RP, who is to decide the claims submitted by the creditors.

If the Authorized Representative shall have no role in receipt or verification of claims of creditors of the class, he represents, then the association or the allottees who come under the class of creditors, shall also have no role in receipts or verification of claims of creditors – IDBI Trusteeship Services Ltd. Vs. Saha Infratech Pvt. Ltd., Through Shiv Nandan Sharma IRP – NCLT New Delhi Bench Court-II Read Post »

Landmark judgment in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs. NBCC (India) Ltd. & Ors. – Supreme Court

This judgment covers:
A. Commercial decision of CoC and the limited Judicial Review or the jurisdiction of Adjudicating Authority in dealing with a Resolution Plan.
A.1 Role of Resolution Professional, Resolution Applicant and Committee of Creditors (CoC).
A.2 Decision of Liquidation is with CoC.
A.3 Limited judicial review available to NCLT lies within the four corners of Section 30(2) of IBC.
A.4 Grounds on which a Resolution Plan can be challenged.
A.5 The limited judicial review as laid down in Essar Steel judgment.
A.6 Power of approval conferred on the Adjudicating Authority in Section 31 of the Code.
A.7 Assessment about maximisation of the value of assets.
B. Simultaneous voting over two Resolution Plans by CoC.
C. Treatment of Dissenting Financial Creditor, Secured Financial Creditor and Operational Creditor.
C.1 Issue in the present case.
C.2 The expression “payment” occurs in Section 30(2) of the Code.
C.3 Payment of CIRP Cost and Debt of Operational Creditors has to be in terms of Money alone.
C.4 Payment to Dissenting Financial Creditors has to be in terms of Money alone.
C.5 A Dissenting Financial Creditor is a Secured Creditor.
C.6 Interpretation of Explanation 1 to clause (b) of Section 30(2).
C.7 No estoppel against the Dissenting Financial Creditor.
C.8 Option on pay in Cash or in kind.
C.9 Payment under Section 8 of IBC.
D. Modification in Resolution Plan by NCLT without sending back to CoC.
E. Rights of Minority Home Buyers/Allottees/dissatisfied homebuyers/Dissenting Homebuyers.
E.1 Voting Share mechanism in case of class of HomeBuyers/Allottees.
E.2 The minority of those who vote, as also all others within that class, are bound by that decision.
E.3 For Section 25A(3A) of IBC, majority of 50% is of those homebuyers who cast their vote.
E.4 The interplay of RERA and IBC.
F. Other Matters.

Landmark judgment in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs. NBCC (India) Ltd. & Ors. – Supreme Court Read Post »

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