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Date of default in case of an application under Section 7 filed on based of a Consent Decree passed by the DRT – Jubin Kishore Thakkar, Suspended Directors of KLT Automotive & Tubular Products Ltd. Vs. Phoenix ARC Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that Section 7 Application having been founded on the basis of default committed after Consent Decree dated 29.08.2022 was passed, Default cannot be pegged on 10A period when Application under Section 7 is founded on the basis of Consent Decree dated 29.08.2022.

Date of default in case of an application under Section 7 filed on based of a Consent Decree passed by the DRT – Jubin Kishore Thakkar, Suspended Directors of KLT Automotive & Tubular Products Ltd. Vs. Phoenix ARC Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

The date of default cannot be shifted by a recall notice issued by the Financial Creditor – Sandip Narendrakumar Patel (Promotor/Ex-Director) Yours Ethnic Foods Pvt. Ltd. Vs. Svakarma Finance Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that the Corporate Debtor cannot be permitted to take advantage of the fact that the Financial Creditor had issued a notice of recall dated 06.11.2020, giving 15 days time, to the Corporate Debtor to pay the same and to calculate the date of default as 21.11.2020 which falls within the cut off period of Section 10A because issuance of recall notice, in pursuance of the clause 10.3 of the agreement, was on the occurrence of any of the events of default, which had already occurred in the month of January or at the most February.

The date of default cannot be shifted by a recall notice issued by the Financial Creditor – Sandip Narendrakumar Patel (Promotor/Ex-Director) Yours Ethnic Foods Pvt. Ltd. Vs. Svakarma Finance Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

Invoices containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest – Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that the entire Principal Amount having been paid, the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Operational Creditor. Invoices which have been sent by the Operational Creditor containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest.

Invoices containing the term of interest cannot be operated against the Corporate Debtor unless there is an agreement for interest or any other document showing that the Corporate Debtor has accepted the obligation for interest – Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd. – NCLAT New Delhi Read Post »

Can a Corporate Debtor file an application under Section 8 of the Arbitration and Conciliation Act, 1996, after filing a reply to an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC)? – Century Aluminium Company Ltd. Vs. Religare Finvest Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) Right to move Section 8 Application was forfeited since Corporate Debtor did not choose to file the Application.
(ii) Whether Arbitration Proceedings are pending on the date when Section 7 Application is filed or it is sought to be initiated subsequent to filing of Section 7 Application is immaterial.
(iii) By not filing of Application under Section 8 at the time of filing of a Reply to Section 7, Corporate Debtor has forfeited his right to file his Application under Section 8.
(iv) Arbitration Proceeding which were initiated by Financial Creditor are still pending, that neither preclude the Financial Creditor from filing a Section 7 Application nor preclude the Adjudicating Authority to proceed to consider the debt and default in Section 7 Application.

Can a Corporate Debtor file an application under Section 8 of the Arbitration and Conciliation Act, 1996, after filing a reply to an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC)? – Century Aluminium Company Ltd. Vs. Religare Finvest Ltd. – NCLAT New Delhi Read Post »

Amount disbursed against consideration for the time value of money in the form of 50% of the share profit contemplating return of the amount after the completion of the project has the commercial effect of borrowing as defined under Section 5(8)(f) of IBC – Sumangal Dealmark Pvt. Ltd. and Ors. Vs. Citystar Infrastructures Ltd. – NCLT Kolkata Bench

In this case, the financial creditor is supposed to render financial assistance (which has been termed as interest free security deposit) which the corporate debtor is required to refund after the completion of the said project along with 50 per cent of the profit share.

Hon’ble NCLT Kolkata Bench held that the amount has been disbursed against consideration for the time value of money in the form of 50 per cent of the share profit. The disbursement contemplates return of the amount after the completion of the project. Thus, the transaction has the commercial effect of borrowing as defined under Section 5(8)(f) as well, apart from main Section 5(8) of IBC.

Amount disbursed against consideration for the time value of money in the form of 50% of the share profit contemplating return of the amount after the completion of the project has the commercial effect of borrowing as defined under Section 5(8)(f) of IBC – Sumangal Dealmark Pvt. Ltd. and Ors. Vs. Citystar Infrastructures Ltd. – NCLT Kolkata Bench Read Post »

Supreme Court sets Guidelines for Withdrawal and Settlement of Insolvency Cases under Section 12A of IBC read with CIRP Regulation 30A | Withdrawal application shall be moved through Resolution Professional only and NCLT Rule 11 or NCLAT Rule 11 or even the power under Article 142 no longer arises – GLAS Trust Company LLC Vs. BYJU Raveendran and Ors. – Supreme Court

In this landmark decision, Hon’ble Supreme Court covers following issues:

i. Nature of the proceedings after admission of the application: proceeding in personam or in rem.
ii. Legal framework for withdrawal and settlement of claims.
iii. Four stages of withdrawal of Insolvency cases: A procedure prescribed under the existing framework.
iv. Comprehensive framework to deal with withdrawal and settlement: Rule 11 of the NCLT Rules, or Rule 11 of the NCLAT Rules or even the power under Article 142 no longer arises.
v. Withdrawal application u/s 12A through IRP only, NCLT conducts an adjudicatory exercise and the procedure is not a mere technicality.
vi. Inherent Powers under Rule 11 of NCLT/ NCLAT Rules, 2016.
vii. Meaning of the phrase “any person aggrieved” under Section 61 and Section 62 of IBC.

Supreme Court sets Guidelines for Withdrawal and Settlement of Insolvency Cases under Section 12A of IBC read with CIRP Regulation 30A | Withdrawal application shall be moved through Resolution Professional only and NCLT Rule 11 or NCLAT Rule 11 or even the power under Article 142 no longer arises – GLAS Trust Company LLC Vs. BYJU Raveendran and Ors. – Supreme Court Read Post »

The entry made in the Balance Sheet coupled with the note of the Auditor clearly amounts to acknowledgement of the liability – Vidyasagar Prasad Vs. UCO Bank and Anr. – Supreme Court

Hon’ble Supreme Court referring Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal (2021) ibclaw.in 55 SC upheld the decision of NCLT and NCLAT wherein it was held that the entry made in the balance sheet coupled with the note of the auditor of the appellant clearly amounts to acknowledgement of the liability.

The entry made in the Balance Sheet coupled with the note of the Auditor clearly amounts to acknowledgement of the liability – Vidyasagar Prasad Vs. UCO Bank and Anr. – Supreme Court Read Post »

An appeal filed by the Corporate Debtor through its Director against CIRP admission order passed under Section 7 of the Code is not maintainable – Krystal Stone Exports Ltd. Vs. Stressed Assets Stabilization Fund and Anr. – NCLAT New Delhi

In this case, an application filed under Section 7 of the Code, 2016 by Financial Creditor against Corporate Debtor has been admitted by NCLT vide order dated 03.05.2024. An appeal against this order was filed by the Corporate Debtor through one of its directors who has been authorised by a board resolution dated 01.12.2023.

Hon’ble NCLAT referring the case in Innoventive Industries Ltd. v. ICICI Bank and Anr. (2017) ibclaw.in 02 SC held the appeal at the instance of the CD against the order of admission passed under Section 7 of the Code is not maintainable.

An appeal filed by the Corporate Debtor through its Director against CIRP admission order passed under Section 7 of the Code is not maintainable – Krystal Stone Exports Ltd. Vs. Stressed Assets Stabilization Fund and Anr. – NCLAT New Delhi Read Post »

Whether an Intervention Application can be maintained during the pendency of a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 at pre-admission stage – Vijayalaxmi Developers and Anr. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench referring judgments in Deb Kumar Mujumdar Vs. State Bank of India [2019] ibclaw.in 31 NCLAT, L&T Infrastructure Finance Company Ltd. Vs. Gwalior Bypass Project Ltd. (2019) ibclaw.in 394 NCLAT and Vekas Kumar Garg Vs DMI Finance Pvt. Ltd. & Anr. (2021) ibclaw.in 78 NCLAT held that the Intervention Application is pre-mature and cannot be entertained at the stage and the appropriate remedy available with the Petitioners/Applicants would lie only if at all, only after the Corporate Debtor is admitted into Insolvency and at that stage, the Petitioners/Applicants can approach NCLT in case any of their rights are infringed in respect of any property owned by them.

Whether an Intervention Application can be maintained during the pendency of a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 at pre-admission stage – Vijayalaxmi Developers and Anr. – NCLT Mumbai Bench Read Post »

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