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Replacement of Resolution Professional in Personal Insolvency on the basis of suspension of registration by IBBI in Disciplinary proceedings – Sandeep Kumar Bhatt Vs. State Bank of India and Ors. – NCLAT New Delhi

In this case, the Resolution Professional in personal guarantee insolvency has been replaced on application field by a creditor taking ground of suspension of registration of the resolution professional by the IBBI.

Replacement of Resolution Professional in Personal Insolvency on the basis of suspension of registration by IBBI in Disciplinary proceedings – Sandeep Kumar Bhatt Vs. State Bank of India and Ors. – NCLAT New Delhi Read Post »

Whether an application under Section 95 of IBC, 2016 can be rejected upon the failure of the Creditor in establishing due service of demand notice on the Guarantor? – Union Bank of India Vs. Smt. K. Sridevi – NCLT Hyderabad Bench

Hon’ble NCLT Hyderabad Bench held that:

(i) The sine qua non, for initiation of insolvency resolution under section 95 IB Code 2016 is the ‘due invocation’ of the personal guarantee executed by the respondent/ guarantor.
(ii) The Resolution Professional who is under the legal obligation to verify the due compliances of the provisions of IB Code by the creditor before submitting his report to the Adjudicating Authority in terms of Section 99(1) of I&B Code.
(iii) The resolution professional while examining the application, in order to ascertain whether the application satisfies the requirements set out in section 94 or 95 of the I&B Code, 2016 as the case may be, is entitled to seek such further information or explanation in connection with the application as may be required from the debtor or the creditor or any other person who, in the opinion of the resolution professional, may provide such information and the person from whom information or explanation is sought under sub-section (4) shall furnish such information or explanation within seven days of receipt of the request.

Whether an application under Section 95 of IBC, 2016 can be rejected upon the failure of the Creditor in establishing due service of demand notice on the Guarantor? – Union Bank of India Vs. Smt. K. Sridevi – NCLT Hyderabad Bench Read Post »

Duty under Section 99 of IBC is not a mere formality/procedural but a legal obligation to verify the due compliances – Central Bank of India Vs. Mr. P.K. Iyer and Anr. – NCLT Hyderabad Bench

A bare perusal of Section 99(1) of IBC discloses that the ‘duty’ to ‘examine’ the petition filed under Section 95 of IBC, within 10 days of his appointment by the resolution professional and to submit a report to the Adjudicating Authority recommending for approval or rejection of the Petition, imposed on the Resolution Professional by the legislature is to avoid frivolous petitions.
The said ‘duty’ is not a ‘mere’ formality/procedural but a legal obligation to verify the due compliances/ requirements by the creditor which are mandated in terms of sections 95 to 97 of IBC, more particularly the compliance of Section 95(4)(b) & (c) of IBC.
Thus, the recommendation of the resolution professional for admission or rejection of the creditor’s petition for triggering insolvency resolution process against the personal guarantor must invariably precede the compliance of due verification of the petition filed by the creditor, by the Resolution Professional.

Duty under Section 99 of IBC is not a mere formality/procedural but a legal obligation to verify the due compliances – Central Bank of India Vs. Mr. P.K. Iyer and Anr. – NCLT Hyderabad Bench Read Post »

Section 96 of IBC does not provide any immunity to Debtor in the matter of proceedings under RBI Master Circular for Willful Default | Recovery proceedings or insolvency proceedings will have no bearing on willful default proceedings under RBI Master Circular against Debtor – Jagdish Prasad Saboo v. IDBI Bank Ltd. – Gujarat High Court

Hon’ble Gujarat High Court held that:
(i) A careful reading of Section 96 would indicate that the interim moratorium which commences on the date of the application is ‘debtcentric’. It will apply in relation to all the debts and the legal action or proceedings pending in respect of the debt which shall deemed to have been stayed. The creditors of the debtor are prohibited from initiating any legal action or proceedings in respect of any debt. Section 96 does not provide any immunity to the debtor in the matter of the proceedings under the RBI Master Circular for ‘willful default’.
(ii) The interim moratorium commenced under Section 96 will apply only to such legal action or proceedings, which are in respect of recovery of any debt and does not apply to any action against the debtor, which does not have any relation to the restructuring of debts, which would have to be included in the repayment plan to be prepared under Section 105 of the Code on admission of the application by the adjudicating authority.
(iii) Recovery proceedings or the proceedings under Section 96 of the IBC or the insolvency proceedings, in our considered opinion, would have no bearing on the willful default proceedings, which only aim at dissemination of information of the default already committed.

Section 96 of IBC does not provide any immunity to Debtor in the matter of proceedings under RBI Master Circular for Willful Default | Recovery proceedings or insolvency proceedings will have no bearing on willful default proceedings under RBI Master Circular against Debtor – Jagdish Prasad Saboo v. IDBI Bank Ltd. – Gujarat High Court Read Post »

Landmark judgment on various provisions of IBC on Personal Insolvency | Provisions of Section 95 to Section 100 of the IBC are not unconstitutional – Dilip B Jiwrajka Vs. Union of India & Ors. – Supreme Court

Conclusion of the landmark judgment on personal insolvency as under:
(i) No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC;
(ii) The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application;
(iii) The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining ‘jurisdictional facts’ at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review;
(iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;
(v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional;
(vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;
(vii) The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application;
(viii) The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings; and
(ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution.

Landmark judgment on various provisions of IBC on Personal Insolvency | Provisions of Section 95 to Section 100 of the IBC are not unconstitutional – Dilip B Jiwrajka Vs. Union of India & Ors. – Supreme Court Read Post »

The IBC does not contemplate multiplicity of applications against the same Personal Guarantor, when the Insolvency Resolution Process commences against a Personal Guarantor, claims of all Creditors are taken care – Union Bank of India Vs. Mr. P.K. Balasubramanian – NCLAT Chennai

Issue in this case that Section 95 Application was filed by Appellant/Union Bank of India three days prior to the date when the State Bank of India had filed their Application and therefore their Application ought to have been admitted first.
NCLAT held that indeed, the date of filing of the application under Section 95 is what is to be taken into account and not the date when the application is numbered. There is no appreciable evidence on record to state that the said application was defective. When an Insolvency Resolution Process commences against the Personal Guarantor, all Creditors of the Personal Guarantor are taken care of in the proceedings under Chapter-III. The Code does not contemplate multiplicity of applications against the same Personal Guarantor. This Tribunal is of the earnest view that when the Insolvency Resolution Process commences against a Personal Guarantor, Claims of all Creditors are taken care of under the scheme of the I & B Code, 2016.

The IBC does not contemplate multiplicity of applications against the same Personal Guarantor, when the Insolvency Resolution Process commences against a Personal Guarantor, claims of all Creditors are taken care – Union Bank of India Vs. Mr. P.K. Balasubramanian – NCLAT Chennai Read Post »

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