Phrase/word/Definitions

Liability arises on the part of Corporate Debtor in respect of sale agreement, which, being in the nature of a financial lease under Ind AS, is covered under Section 5(8)(d) of the Code? – Ghaziabad Development Authority Vs. Mr. Amit Agarwal – NCLT Principal Bench

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The Hon’ble NCLT Principal Bench is of the view that the judgment, in Sandeep Mittal v. ASREC (India) Ltd. and Ors. (2024) ibclaw.in 573 NCLAT relied by Corporate Debtor is on a different footing based on a different factual matrix in which primarily the ingredients of Section 5(8)(f) of the Code were covered whereas in the present case ingredients of Section 5(8)(d) of the Code is applicable wherein it is a case of liability of Corporate Debtor, as is in the form a financial lease with the element of time value of money being incorporated in the agreement to sale itself and part transacted and balance defaulted with interest liability.

Liability arises on the part of Corporate Debtor in respect of sale agreement, which, being in the nature of a financial lease under Ind AS, is covered under Section 5(8)(d) of the Code? – Ghaziabad Development Authority Vs. Mr. Amit Agarwal – NCLT Principal Bench Read Post »

Is an application under Section 7 of the IBC maintainable against the interest portion only? – Piramal Capital & Housing Finance Ltd. Vs. Sunblink Real Estate Pvt. Ltd. – NCLT Mumbai Bench

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The Hon’ble NCLT Mumbai Bench held that the present petition has been filed on the basis of default in payment of interest on the amounts due arising for the period after the 10A period in terms of clause 4.1 and 4.2 of Loan Agreement. The said amount in default is in excess of Rs. 1.00 crores and default is stated to have taken place on 12.02.2024 i.e. after 15 working days subsequent to the issuance of the Demand Notice dated 25.01.2024. There has been a financial debt in respect of which default has been committed by the Corporate Debtor and further that the Application has been filed within the period of limitation. Therefore, the Application u/s 7 of the Code, deserves to be admitted.

Is an application under Section 7 of the IBC maintainable against the interest portion only? – Piramal Capital & Housing Finance Ltd. Vs. Sunblink Real Estate Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Being Promoters/Directors are related parties to the Corporate Debtor cannot be a ground for non-payment of gratuity dues to them [Sec. 36(4) of IBC] | Once a claim has been admitted by Liquidator, s/he cannot escape from the settlement of such admitted claims on the grounds that the claimants are allegedly parties to avoidance transactions or related parties | Liquidator is not bound by the decision of the Stakeholder Consultation Committee (SCC) – Mrs. Abirami Premkumar Vs. K. Sivalingam, The Liquidator of Cauvery Power Generation Chennai Pvt. Ltd. – NCLT Chennai Bench

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The Hon’ble NCLT Chennai Bench held that:

(i) It is settled position in law that the powers conferred on the Liquidator is “quasi-judicial” and the Liquidator is not bound by the decision of the SCC. Once the claim has been admitted by the Liquidator in exercise of it quasi-judicial powers, the Liquidator cannot escape from the settlement of such admitted claims on the grounds that the claimants are allegedly parties to avoidance transactions or related to such parties. Such a view of denial of payment of admitted claims is not substantiated by the provisions of the Code or the relevant regulations.
(ii) Rights of the Applicants arising under Section 4(1) of the Payment of Gratuity Act, 1972, in their capacity as an employee of the Corporate Debtor are independent of the rights of the Financial Creditors, if any, arising out of the personal guarantee contract.

Being Promoters/Directors are related parties to the Corporate Debtor cannot be a ground for non-payment of gratuity dues to them [Sec. 36(4) of IBC] | Once a claim has been admitted by Liquidator, s/he cannot escape from the settlement of such admitted claims on the grounds that the claimants are allegedly parties to avoidance transactions or related parties | Liquidator is not bound by the decision of the Stakeholder Consultation Committee (SCC) – Mrs. Abirami Premkumar Vs. K. Sivalingam, The Liquidator of Cauvery Power Generation Chennai Pvt. Ltd. – NCLT Chennai Bench Read Post »

Claim pertains to a breach of contract/ a claim for liquidated damages requires adjudication before a competent civil court and can not be pursued under the insolvency resolution process – Akshay Kumar Bhatia Vs. Cue Learn Pvt. Ltd. – NCLT New Delhi Bench

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In this case, Akshay Kumar Bhatia, an actor in the Indian film industry, file Section 9 application under Insolvency and Bankruptcy Code, 2016 (IBC) against M/s. Cue Learn Pvt. Ltd. (Corporate Debtor), for default amount of Rs. 4,83,24,201/-
The Hon’ble NCLT New Delhi Bench has rejected the application holding that claims for damages, however, do not fall within the ambit of operational debt as defined under the IBC. While there may exist a claim for a monetary amount due to the Respondent’s alleged default, this claim does not qualify as operational debt under the provisions of the IBC. The claim pertains to a breach of contract and is, at best, a claim for liquidated damages as provided under Clause 7.2(c) of the Agreement. Such claims require adjudication before a competent civil court and do not constitute crystallized debts that can be pursued under the insolvency resolution process.

Claim pertains to a breach of contract/ a claim for liquidated damages requires adjudication before a competent civil court and can not be pursued under the insolvency resolution process – Akshay Kumar Bhatia Vs. Cue Learn Pvt. Ltd. – NCLT New Delhi Bench Read Post »

In the event that the nature of the relationship between the Operational Creditor and the Corporate Debtor is that of ‘joint suppliers,’ the Operational Creditor does not qualify as an Operational Creditor within the meaning of Section 5(20) of the IBC – Transline Technologies Ltd. Vs. Experio Tech Pvt. Ltd. – NCLT New Delhi Bench

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The Hon’ble NCLT New Delhi Bench held that the Operational Creditor and the Corporate Debtor jointly undertook to carry out the supplies being made to the third parties through Corporate Debtor. The nature of relation entered into between the Operational Creditor and the Corporate Debtor is that of the ‘joint suppliers’ and the Operational Creditor, does not qualify to be considered as the ‘Operational Creditor’ within the meaning of Section 5(20) of the Code.

In the event that the nature of the relationship between the Operational Creditor and the Corporate Debtor is that of ‘joint suppliers,’ the Operational Creditor does not qualify as an Operational Creditor within the meaning of Section 5(20) of the IBC – Transline Technologies Ltd. Vs. Experio Tech Pvt. Ltd. – NCLT New Delhi Bench Read Post »

Section 5 (21) of the IBC restricts claims to those arising from goods or services, and interest is recoverable only when expressly agreed upon by the parties, in the absence of agreement for interest, the interest component cannot be considered part of the operational debt – Comet Performance Chemicals Pvt. Ltd. Vs. Aarvee Denims and Exports Ltd. – NCLAT New Delhi

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Section 5 (21) of the IBC restricts claims to those arising from goods or services, and interest is recoverable only when expressly agreed upon by the parties, in the absence of agreement for interest, the interest component cannot be considered part of the operational debt – Comet Performance Chemicals Pvt. Ltd. Vs. Aarvee Denims and Exports Ltd. – NCLAT New Delhi Read Post »

A Bank can directly file claims in the CIRP of Corporate Debtor (Builder) if tripartite agreement amongst Borrower (Homebuyers), Bank, and Builder (Corporate Debtor) stipulates that the primary responsibility for loan repayment in case of default lies with the Builder/Corporate Debtor and secondary responsibility is of borrower/ Homebuyers – Canara Bank Vs. Sh. Vivek Kumar RP AVJ Developers (India) Pvt. Ltd. – NCLAT New Delhi

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In this case, the Bank, who granted loan to homebuyer, file claim in the CIRP of Builder. RP rejected the claim and the Hon’ble NCLT upheld the decision of RP, relying on Axis Bank Ltd. v. Value Infracon India Pvt. Ltd. and Anr. (2021) ibclaw.in 611 NCLAT.

Earlier, Hon’ble NCLAT dismissed the appeal. In the appeal, Hon’ble Supreme Court set aside NCLAT’s order and remanded back.

In the present case, the Hon’ble NCLAT distinguished the facts of the present case and Value Infracon India case and found that as per tripartite agreement, amongst Borrower (Homebuyers), Bank, and Builder (Corporate Debtor), the primary responsibility is of the Corporate Debtor/ Builder and secondary responsibility is of borrower/ Homebuyers.

The NCLAT set aside the order of NCLT.

A Bank can directly file claims in the CIRP of Corporate Debtor (Builder) if tripartite agreement amongst Borrower (Homebuyers), Bank, and Builder (Corporate Debtor) stipulates that the primary responsibility for loan repayment in case of default lies with the Builder/Corporate Debtor and secondary responsibility is of borrower/ Homebuyers – Canara Bank Vs. Sh. Vivek Kumar RP AVJ Developers (India) Pvt. Ltd. – NCLAT New Delhi Read Post »

Does Credit Note not fall within the meaning of financial debt under the IBC? – Gautam Shah and Anr. Vs. Mr. Dinesh Kumar Deora RP of Snehanjali and S.B. Developers Pvt. Ltd. – NCLT Mumbai Bench

/ 1 minute of reading

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Does Credit Note not fall within the meaning of financial debt under the IBC? – Gautam Shah and Anr. Vs. Mr. Dinesh Kumar Deora RP of Snehanjali and S.B. Developers Pvt. Ltd. – NCLT Mumbai Bench Read Post »

In absence of any written agreement between the parties containing a clause of payment Interest, interest part cannot be included in the principal amount – Evergreen Construction (Durgapur) Pvt. Ltd. Vs. GPT Casting Ltd. – NCLT Kolkata Bench

/ 1 minute of reading

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In absence of any written agreement between the parties containing a clause of payment Interest, interest part cannot be included in the principal amount – Evergreen Construction (Durgapur) Pvt. Ltd. Vs. GPT Casting Ltd. – NCLT Kolkata Bench Read Post »

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