CPC-Civil Procedure Code 1908

Despite the provision of Section 10 of CPC, the proceeding under Section 7 of IBC has to be proceeded with | Proceeding under Section 7 shall not be barred by any proceeding initiated under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 – State Bank of India Vs. Abhijeet Ferrotech Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) The statute under the IBC never contemplated that proceedings under IBC to await outcome of any previously instituted proceeding under any other statute.

(ii) The proceedings under 1993 Act for recovery of debt due to Bank and proceedings under Section 7 of the IBC, are entirely different proceedings with different purpose and object. Section 238 having given overriding effect to the proceedings under Section 7, the order passed, cannot operate as issue estoppel between the parties in reference to Section 7 proceedings.

Despite the provision of Section 10 of CPC, the proceeding under Section 7 of IBC has to be proceeded with | Proceeding under Section 7 shall not be barred by any proceeding initiated under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 – State Bank of India Vs. Abhijeet Ferrotech Ltd. – NCLAT New Delhi Read Post »

Merely because Debenture Trustee has also filed a petition under section 7 of the Code, it does not mean that the individual Debenture Holders do not have the right to approach the Adjudicating Authority under Section 7 of IBC – Sri Girija Prasanna Cotton Mills Ltd. & Ors. Vs. DDK Infratech Pvt. Ltd. – NCLT Mumbai Bench

NCLT Mumbai Bench held that:
(i) The provisions of Civil Procedure Code, 1908 are not made fully applicable to the proceedings before the Adjudicating Authority/NCLT. This Tribunal is not a ‘court’ in a strict sense but a quasi-judicial body. It is well-settled that NCLT has been constituted as an Adjudicating Authority under the Code. The process of adjudication by NCLT under the Code is summary in nature and does not involve “trial of any suit”. Unlike a civil court, the NCLT does not have general jurisdiction under section 9 of the CPC. The principle of res sub judice enshrined in Section 10 of the CPC will have no applicability in the peculiar facts and circumstances of this case.
(ii) As regards the parallel proceedings initiated by the Debenture Trustee as well as the individual Debenture Holders under Section 7 of the Code, if either of the petitions is admitted, the other will become infructuous. Therefore, the above plea taken by the Corporate Debtor is found to be misconceived and is accordingly rejected.
(iii) It is a settled position in law that when an agreement clearly stipulates the interest clause, the claim amount has to be considered along with the interest accrued thereon.
(iv) There was no need of obtaining any Special Resolution etc. by the individual Debenture Holders while filing the present petition
(v) A financial creditor can trigger insolvency by filing an application directly under Section 7 of the Code without having to serve any demand notice on the corporate debtor.
(vi) There is no doubt that the subscription made by the Financial Creditors to the NCDs issued by the Corporate Debtor in the instant case is in the nature of a “financial debt” within the meaning of Section 5(8)(c) of the Code.
(vii) The law with respect to the right of the individual Debenture Holders to proceed under the Code is well-settled and that the pendency of separate petition filed by the Debenture Trustee in the matter cannot limit the Debenture Holders’ right to prefer the present petition for initiation of CIRP of the Corporate Debtor.

Merely because Debenture Trustee has also filed a petition under section 7 of the Code, it does not mean that the individual Debenture Holders do not have the right to approach the Adjudicating Authority under Section 7 of IBC – Sri Girija Prasanna Cotton Mills Ltd. & Ors. Vs. DDK Infratech Pvt. Ltd. – NCLT Mumbai Bench Read Post »

In case of assignment of debt during CIRP application pending before NCLT, there is no prohibition in the IBC from continuing the proceeding by an assignee – Siti Networks Ltd. Vs. Assets Care and Reconstruction Enterprises Ltd. & Anr. – NCLAT New Delhi

In this case, HDFC Limited filed CP under Section 7 of the IBC seeking initiation of CIRP against the Corporate Debtor. HDFC Ltd. assigned the debt to the Assets Care and Reconstruction Enterprise Ltd. Assets Care and Reconstruction Enterprise Limited filed an I.A. seeking to be substituted as Financial Creditor in place of original Applicant and to be permitted to pursue the C.P. filed by the HDFC Limited. Learned Counsel for the Appellant submits that the assignee could not have been permitted to continue Section 7 proceedings although it is open for the assignee to file a fresh Application under Section 7 which was permissible on the strength of assignment.
NCLAT held that the order of the Bengaluru Bench NCLT dated 26.08.2019 on which reliance has been placed by the Appellant cannot be said to be laying down a correct law to be followed as a precedent. As has been observed rightly by the Adjudicating Authority, there is no prohibition in the IBC or any of the Regulations from continuing the proceeding by an assignee. Section 5(7) of the IBC which defines Financial Creditor also includes a person to whom such debt has been legally assigned or transferred to.

In case of assignment of debt during CIRP application pending before NCLT, there is no prohibition in the IBC from continuing the proceeding by an assignee – Siti Networks Ltd. Vs. Assets Care and Reconstruction Enterprises Ltd. & Anr. – NCLAT New Delhi Read Post »

A Corporate Debtor is entitled in law to advance a plea that the default had not taken place and that debt including a disputed sum is not due – Mr. V Venkata Satyanarayana Vs. M/s Pattabi Enterprise – NCLAT Chennai

NCLAT held that under the Insolvency & Bankruptcy Code, 2016, the aspect of existence of Default, takes a prime seat, and the reason supposed to be projected by the concerned Party viz., inability to pay, is of no avail. In a given case, if a Debt is Disputed, yet, if the amount is more than Rs.1,00,000/-, now Rs.1,00,00,000/- the same is maintainable in Law. No wonder, an Adjudicating Authority, (Tribunal), is not empowered to decide the Default Sum. A Corporate Debtor, is entitled in Law to advance a Plea, that the Default had not taken place and that Debt, including a Disputed Sum, is not Due. A Debt may not be Due, if it is not payable in Law or Fact. A mere pendency of a Civil Suit or a Criminal Case, under Section 138 of the Negotiable Instrument Act, will not preclude an Applicant, to seek an appropriate remedy, under the Insolvency & Bankruptcy Code, 2016, if he so desires / advised.

A Corporate Debtor is entitled in law to advance a plea that the default had not taken place and that debt including a disputed sum is not due – Mr. V Venkata Satyanarayana Vs. M/s Pattabi Enterprise – NCLAT Chennai Read Post »

Whether the Adjudicating Authority(NCLT) can grant liberty to restore the petition which was finally disposed of as withdrawn – AVANT Garde Clean Room & Engg. Solutions Pvt. Ltd. Vs. HLL Biotech Ltd. – NCLT Kochi Bench

NCLT held that in the IBC 2016 or in NCLT Rules 2016 there is no provision available to grant liberty to restore the finally disposed of petition as withdrawn. Not only in IBC, 2016 there is no such provision available in any other Act, In this situation it is better to see the provisions available in Code of Civil Procedure,1908. Of course, CPC is not applicable to the proceedings under IBC, 2016 but an analogy enshrined in Code of Civil Procedure 1908 can be applied. Further, it held that there is no legal backing to grant liberty to restore the petition which was finally disposed of as withdrawn.
Further the default of payment of settlement agreement do not come under the default of operational debt, this also might be the reason to refuse to grant main relief and granted only an alternative prayer of the memo. When there is no specific order granting liberty to approach this Authority (NCLT), for restoration of dismissed petition, this application cannot be entertained. It is established position of law that if any relief claimed in the petition/memo, which is not expressly granted by the order, shall be deemed to have been refused.

Whether the Adjudicating Authority(NCLT) can grant liberty to restore the petition which was finally disposed of as withdrawn – AVANT Garde Clean Room & Engg. Solutions Pvt. Ltd. Vs. HLL Biotech Ltd. – NCLT Kochi Bench Read Post »

Treatment of decree holders who hold decrees against a Corporate Debtor under the insolvency resolution process (CIRP) under IBC – Sri Subhankar Bhowmik Vs. Union of India and Anr. – Tripura High Court

Landmark judgment on treatment of decree holders who hold decrees against a Corporate Debtor under the insolvency resolution process (CIRP) under IBC

Treatment of decree holders who hold decrees against a Corporate Debtor under the insolvency resolution process (CIRP) under IBC – Sri Subhankar Bhowmik Vs. Union of India and Anr. – Tripura High Court Read Post »

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