28 (4)

Proviso to Section 33(5) of IBC is mandatory | Proceedings instituted by Liquidator without prior approval of NCLT is unauthorized and incompetent | Post facto approval for continuation of proceedings shall make proceedings authorized and competent from the date when post facto approval is granted | Before granting approval, the party against whom proceedings are to be instituted is not to be given a notice or hearing necessarily – Slimline Realty Pvt. Ltd. Vs. Mr. Jigar Bhatt – NCLAT New Delhi

/ 65 minutes of reading

In this judgment, Hon’ble NCLAT has answered the following issues:
(1) Whether the statutory requirement under Section 35 Sub-section (5) proviso to obtain prior approval of the Adjudicating Authority by the Liquidator to institute a suit or proceeding on behalf of the Corporate Debtor is a mandatory requirement or only a directory requirement?
(2) What are the consequences and status of the proceedings instituted by the Liquidator on behalf of the Corporate Debtor without prior approval of the Adjudicating Authority?
(3) Whether a post facto approval granted by the Adjudicating Authority of proceedings instituted by the Liquidator without obtaining prior approval shall make the proceedings authorized/ competent?
(4) Whether before approval under Section 33(5) to the Liquidator to institute proceeding on behalf of the Corporate Debtor, the party against whom proceedings are to be instituted has to be given an opportunity?
(5) Whether the impugned order dated 07.02.2024 passed by the Adjudicating Authority is unsustainable and deserves to be set aside?

Proviso to Section 33(5) of IBC is mandatory | Proceedings instituted by Liquidator without prior approval of NCLT is unauthorized and incompetent | Post facto approval for continuation of proceedings shall make proceedings authorized and competent from the date when post facto approval is granted | Before granting approval, the party against whom proceedings are to be instituted is not to be given a notice or hearing necessarily – Slimline Realty Pvt. Ltd. Vs. Mr. Jigar Bhatt – NCLAT New Delhi Read Post »

The outcome of the avoidance transaction under Sections 43, 45, 47, 49, 50 of the Code cannot be given to the Successful Resolution Applicant and it must go to the Corporate Debtor’s Creditors – 63 Moons Technologies Ltd. Vs. The Administrator of Dewan Housing Finance Corporation Ltd. – NCLAT New Delhi

/ 170 minutes of reading

NCLAT allows the appeal against an order dated 07.06.2021 passed by the NCLT, Mumbai Bench approving the Resolution Plan for DHFL in which it was stipulated that recoveries from Avoidance transactions enure to the benefit to Resolution Applicant. NCLAT holds that the term in the Resolution Plan that permits the Successful Resolution Applicant to appropriate recoveries, if any, from avoidance applications filed under Section 66 of the Code ought to be set aside. The Resolution Plan be sent back to the CoC for reconsideration on this aspect.

The outcome of the avoidance transaction under Sections 43, 45, 47, 49, 50 of the Code cannot be given to the Successful Resolution Applicant and it must go to the Corporate Debtor’s Creditors – 63 Moons Technologies Ltd. Vs. The Administrator of Dewan Housing Finance Corporation Ltd. – NCLAT New Delhi Read Post »

Salary for the period prior to the commencement of CIRP, in case any Resolution Plan is approved, the Resolution Applicant shall bear the expenses – Committee of Creditors of EMCO Limited Vs. Mrs. Mary Mody – NCLAT New Delhi

/ 22 minutes of reading

Section 25(2)(c) deals with ‘Duties of Resolution Professional’ with respect to raising Interim Finance subject to the approval of Committee of Creditors under Section 28. Section 28 refers to whether the approval of Committee of Creditors is required for raising ‘Interim Finance’. It is reiterated by the Resolution Professional that the Corporate Debtor is not a going concern. The Application MA 4002/2019 in CP (IB) No. 2849/MB/2018 was preferred by the employees seeking direction to also pay the salaries for the period prior to the commencement of CIRP cost. It is a well settled proposition of law that for the cost incurred prior to the CIRP process, in case any Resolution Plan is approved, the ‘Resolution Applicant’ shall bear the expenses. In the instant case, it is not in dispute that the Resolution Plan has not been approved and the CoC has recommended for liquidation.

Salary for the period prior to the commencement of CIRP, in case any Resolution Plan is approved, the Resolution Applicant shall bear the expenses – Committee of Creditors of EMCO Limited Vs. Mrs. Mary Mody – NCLAT New Delhi Read Post »

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