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The definition of financial services as defined in Sec. 3(16) of the Code is not limited to the 9 activities as shown at Clause (a) to (i) of Sec. 3(16)- Housing Development Finance Corporation Ltd Vs. RHC Holding Pvt. Ltd-NCLAT

/ 13 minutes of reading

The definition of “financial service” if read with definition of “financial service provider”, it is clear that it is not necessary that the “financial service providers” must accept the deposits. If any of the activity as defined in Section 3(16) of the Code such as safeguarding and administering assets consisting of financial products belonging to another person, or agreeing to do so; effecting contracts of insurance; Offering, managing or agreeing to manage assets consisting of financial products belonging to another person; rendering or agreeing, for consideration, to render advice on or soliciting for the purposes of- buying, selling or subscribing to, a financial product; availing a financial service etc., they also come within the definition of “financial service provider”.

The definition of financial services as defined in Sec. 3(16) of the Code is not limited to the 9 activities as shown at Clause (a) to (i) of Sec. 3(16)- Housing Development Finance Corporation Ltd Vs. RHC Holding Pvt. Ltd-NCLAT Read Post »

Standard Chartered Bank Vs. Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors.

/ 102 minutes of reading

If both Section 5(7) and Section 5(8) are read together, it is evident that there is no distinction made between one or other ‘Financial Creditor’. All persons to whom a financial debt is owed by the ‘Corporate Debtor’, which debt is disbursed against the consideration for time value of money, whether they come within one or other clause of Section 5(8), all of such person form one class i.e. ‘Financial Creditor’ they cannot be sub-classified as ‘Secured’ or ‘Unsecured Financial Creditor’ for the purpose of preparation of the ‘Resolution Plan’ by the ‘Resolution Applicant’. we hold that the ‘Financial Creditors’ cannot be discriminated on the ground of ‘Secured’ or ‘Unsecured Financial Creditors’ for the purpose of distribution of proposed amount amongst stakeholders in the ‘Resolution Plan’ by the ‘Resolution Applicant’.

Standard Chartered Bank Vs. Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors. Read Post »

Whether a trade union can be said to be an Operational Creditor for the purpose of the IBC- JK Jute Mill Mazdoor Morcha Vs. Juggilal Kamlapat Jute Mills Company Ltd. Through Its Director & Ors.- SC

/ 18 minutes of reading

The NCLAT, by the impugned judgment, is not correct in refusing to go into whether the trade union would come within the definition of “person” under Section 3(23) of the Code. Equally, the NCLAT is not correct in stating that a trade union would not be an operational creditor as no services are rendered by the trade union to the corporate debtor. What is clear is that the trade union represents its members who are workers, to whom dues may be owed by the employer, which are certainly debts owed for services rendered by each individual workman, who are collectively represented by the trade union. Equally, to state that for each workman there will be a separate cause of action, a separate claim, and a separate date of default would ignore the fact that a joint petition could be filed under Rule 6 read with Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, with authority from several workmen to one of them to file such petition on behalf of all. For all these reasons, we allow the appeal and set aside the judgment of the NCLAT. The matter is now remanded to the NCLAT who will decide the appeal on merits expeditiously as this matter has been pending for quite some time.

Whether a trade union can be said to be an Operational Creditor for the purpose of the IBC- JK Jute Mill Mazdoor Morcha Vs. Juggilal Kamlapat Jute Mills Company Ltd. Through Its Director & Ors.- SC Read Post »

Whether on the basis of Deed of Exchange the Appellant can claim to be a Financial Creditor? – Cooperative Rabobank U. A. Singapore Branch Vs. Mr. Shailendra Ajmera – NCLAT New Delhi

/ 13 minutes of reading

The Appellant entered into a Master Sales and Purchase Agreement (MSPA) wherein it was agreed that upon acceptance by the Corporate Debtor of certain Bills of Exchange(BoEs). The Appellant would discount the BoEs and disburse the discounted proceeds to a third party supplier of the Corporate Debtor, Aavanti Industries Pvt. Ltd. (Aavanti). It was further agreed under the agreement that the Appellant will not have any recourse to Aavanti and would be able to claim the amounts due under the BoEs only from the Corporate Debtor. Accordingly, an aggregate amount of USD 107,376,972.90 (excluding interest and other charges) was payable by the Corporate Debtor to the Appellant under the BoEs. Subsequently, on the maturity of the said BoEs, the BoEs were presented for payment to the Corporate Debtor and were dishonoured due to non-payment. NCLAT held that the Bill of Exchange relates to supply of goods and whatever finance given by the Appellant is to Aavanti Industries Pte Ltd., Singapore and not to the Corporate Debtor. The Corporate Debtor has merely received the goods and therefore the Appellant is not a Financial Creditor but at best can claim to be an Operational Creditor as held by the Adjudicating Authority.

Whether on the basis of Deed of Exchange the Appellant can claim to be a Financial Creditor? – Cooperative Rabobank U. A. Singapore Branch Vs. Mr. Shailendra Ajmera – NCLAT New Delhi Read Post »

The civil suit pending before the Trial Court cannot be extinguished merely because the Resolution Plan came into existence, which stood approved by the Adjudicating Authority as well as the Appellate Authority – M/s. Tata Steel BSL Ltd. Vs. Varsha  W/o. Ajay Maheshwari – High court of Bombay

/ 53 minutes of reading

A perusal of the provisions of the IBC and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, as amended, shows that the amounts due to operational creditors under a resolution plan are to be given priority in payment over financial creditors. Thus, the IBC gives importance to the amounts due to operational creditors like respondent No.1. The question is, whether an operational creditor like respondent No.1 could be deprived of amounts due to it, only because a civil suit initiated before the Civil Court is still pending and the dues, if any, are yet to be crystallized. In other words, whether a resolution plan takes into account and encapsulates sub judice claims of operational creditors like respondent No.1 herein.(p19-20)

The emphasis placed by the learned counsel appearing for the petitioner on section 14 of the IBC and the moratorium contemplated therein, can be of no assistance to the petitioner to show any error in the impugned order passed by the Trial Court. There can be no quarrel with the proposition that upon the commencement of the insolvency proceedings, there shall be moratorium on institution of suit or continuation of pending suits, but the said moratorium does come to an end upon completion of the corporate insolvency resolution process. Such a moratorium cannot lead to a conclusion that pending suits like the suit for recovery filed by respondent No.1 herein, would be liable to be dismissed, upon the resolution process being undertaken.(p27)

The civil suit pending before the Trial Court cannot be extinguished merely because the Resolution Plan came into existence, which stood approved by the Adjudicating Authority as well as the Appellate Authority – M/s. Tata Steel BSL Ltd. Vs. Varsha  W/o. Ajay Maheshwari – High court of Bombay Read Post »

A Society is not a body Corporate and hence, the petition u/s 7 of IBC is not maintainable – Asset Reconstruction Company (India) Ltd. Vs. Mohammadiya Educational Society – NCLT Hyderabad Bench

/ 1 minute of reading

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A Society is not a body Corporate and hence, the petition u/s 7 of IBC is not maintainable – Asset Reconstruction Company (India) Ltd. Vs. Mohammadiya Educational Society – NCLT Hyderabad Bench Read Post »

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