99 (3)

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 »

Limited Notice of the application filed u/s 95 of the IBC should be given to the Personal Guarantors of the Corporate Debtors – Mr. Ravi Ajit Kulkarni (Personal Guarantor of Pratibha Industries Ltd.) Vs. State Bank of India – NCLAT New Delhi

In this case, NCLAT clarified various provision of the IBC on personal guarantors such as stage for examining merits of the Application, stage for considering default, replacement of Resolution Professional appointed under Section 97 etc. and held that before the stage of appointment of the Resolution Professional, the Code or Rules and Regulations do not provide for any hearing as such to be given to the Debtor. Once application under Section 95 is “filed” the next step for Adjudicating Authority is to appoint the Resolution Professional. Further, it held that considering the judgment of the Hon’ble Supreme Court in the matter of ‘Swiss Ribbons [2019] ibclaw.in 03 SC’ it appears to us that keeping principles of natural justice in view, limited notice of the application should be given to the Personal Guarantors of the Corporate Debtors. The limited notice has to be only to secure presence of the Personal Guarantor referring to the Interim Moratorium which has commenced.

Limited Notice of the application filed u/s 95 of the IBC should be given to the Personal Guarantors of the Corporate Debtors – Mr. Ravi Ajit Kulkarni (Personal Guarantor of Pratibha Industries Ltd.) Vs. State Bank of India – NCLAT New Delhi Read Post »

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