Other Laws/Overriding Effect-Code relation with other Laws/Act [Main]

Development rights created in favour of Corporate Debtor constitute ‘property’ within the meaning of Section 3(27) of the IBC and the RP has to include in Information Memorandum the assets in which the corporate debtor has development rights | Adjudicating Authority does not lack jurisdiction in deciding whether development rights are part of the CIRP or it should be excluded and parties need not have to be relegated to the Civil Court – K.H. Khan and Anr. Vs. Art Constructions Pvt. Ltd. and Ors. – NCLAT New Delhi

/ 85 minutes of reading

Hon’ble NCLAT held that:

(i) The development rights created in favour of the corporate debtor constitute “property” within the meaning of Section 3(27) of the IBC.
(ii) The Adjudicating Authority had jurisdiction to examine the application on merits and take a decision as to whether the subject land can be treated to be asset of the corporate debtor or not.
(iii) The proceedings conducted by the Sole Arbitrator and the orders passed by the Sole Arbitrator does not amount to an arbitral award under the Arbitration & Conciliation Act, 1996 determining the rights of both the parties so as to bind both the parties in any subsequent proceedings.
(iv) IRP/RP has rightly included the subject land in the Information Memorandum/ CIRP and he was not precluded by virtue of Section 18(f) explanation from asserting development rights in the subject land.

Development rights created in favour of Corporate Debtor constitute ‘property’ within the meaning of Section 3(27) of the IBC and the RP has to include in Information Memorandum the assets in which the corporate debtor has development rights | Adjudicating Authority does not lack jurisdiction in deciding whether development rights are part of the CIRP or it should be excluded and parties need not have to be relegated to the Civil Court – K.H. Khan and Anr. Vs. Art Constructions Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Interest cannot be admitted in claim filing on the basis of the MSMED Act, 2006, if no interest clause in the Agreement on the delayed payment | NCLT is not appropriate Forum to consider the issue pertaining to the interest under Section 16 of the MSMED Act – Vedic Projects Pvt. Ltd. Vs. Shri Sutanu Sinha RP for Simplex Projects Ltd. – NCLAT New Delhi

/ 15 minutes of reading

Hon’ble NCLAT:

(i) There being no clause in the Agreement to include the interest on the delayed payment, the Hon’ble Appellate Tribunal does not find any error in the order of the Adjudicating Authority, refusing to accept the claim of the Appellant towards interest on the operational debt, which was claimed by the Appellant.
(ii) With regard to claim under the MSME, the Adjudicating Authority has observed that NCLT is not appropriate Forum to consider the issue pertaining to the interest, claimed by the Appellant under Section 16 of the MSMED Act.
(iii) Upheld the decision of NCLT.

Interest cannot be admitted in claim filing on the basis of the MSMED Act, 2006, if no interest clause in the Agreement on the delayed payment | NCLT is not appropriate Forum to consider the issue pertaining to the interest under Section 16 of the MSMED Act – Vedic Projects Pvt. Ltd. Vs. Shri Sutanu Sinha RP for Simplex Projects Ltd. – NCLAT New Delhi Read Post »

Is a Director competent to file Section 7 Application under IBC even the name of the sister concern of the Financial Creditor struck off by RoC under Section 248 of Companies Act, 2013 in which he was also director – Cadillac Infotech Pvt. Ltd. Vs. JKM Infrastructure Pvt. Ltd. – NCLAT New Delhi

/ 26 minutes of reading

The Hon’ble NCLAT held that that there is no Applicability of Section 167(1) proviso to hold the Director as disqualified in the Airwill JKM Infrastructure Pvt. Ltd., the Financial Creditor. On the date of filing the Section 7 Application, Airwill Infracon had already been struck off, and the Director could not continue as Director of the Company Airwill Infracon having been dissolved, but that shall have no effect on continuance as Director in Airwill JKM Infrastructure Pvt. Ltd. The Director was fully competent to file Section 7 Application and swear Affidavit in support of Section 7 Application.

Is a Director competent to file Section 7 Application under IBC even the name of the sister concern of the Financial Creditor struck off by RoC under Section 248 of Companies Act, 2013 in which he was also director – Cadillac Infotech Pvt. Ltd. Vs. JKM Infrastructure Pvt. Ltd. – NCLAT New Delhi Read Post »

Does IBC override notification No. 25/2015-2020 and 39/2015 issued by Directorate General of Foreign Trade (DGFT)? | Can SRA be burdened with the penalties imposed by Director General of Foreign Trade under Foreign Trade Act, 1992 for defaults committed by the Corporate Debtor before initiation of CIRP – Celebrity Life Sciences Pvt. Ltd. Vs. Union of India – NCLT Hyderabad Bench

/ 4 minutes of reading

Hon’ble NCLT Hyderabad Bench held that the scope of Notifications No. 25/2015-2020 and 39/2015 issued by Directorate General of Foreign Trade (DGFT) is primarily limited to the requirement of informing the concerned Regional Authority (RA) and the NCLT regarding any proceedings before the NCLT, particularly with respect to the outstanding export obligations or liabilities under schemes governed by the Foreign Trade Policy (FTP). However, the IBC holds overriding authority over any laws that are inconsistent with its provisions. As such, the Respondent is precluded from claiming any dues arising from the pre-CIRP period.

Does IBC override notification No. 25/2015-2020 and 39/2015 issued by Directorate General of Foreign Trade (DGFT)? | Can SRA be burdened with the penalties imposed by Director General of Foreign Trade under Foreign Trade Act, 1992 for defaults committed by the Corporate Debtor before initiation of CIRP – Celebrity Life Sciences Pvt. Ltd. Vs. Union of India – NCLT Hyderabad Bench Read Post »

The limited jurisdiction of the referral Courts under Section 11 of Arbitration and Conciliation Act, 1996 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time-consuming and costly arbitration process – GOQII Technologies Pvt. Ltd. Vs. Sokrati Technologies Pvt. Ltd. – Supreme Court

/ 16 minutes of reading

Hon’ble Supreme Court held that the limited jurisdiction of the referral Courts under Section 11 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time-consuming and costly arbitration process. This is possible in instances, including but not limited to, where the claimant canvasses the adjudication of non-existent and mala fide claims through arbitration. With a view to balance the limited scope of judicial interference of the referral Courts with the interests of the parties who might be constrained to participate in the arbitration proceedings, the Arbitral Tribunal may direct that the costs of the arbitration shall be borne by the party which the Tribunal ultimately finds to have abused the process of law and caused unnecessary harassment to the other party to the arbitration.

The limited jurisdiction of the referral Courts under Section 11 of Arbitration and Conciliation Act, 1996 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time-consuming and costly arbitration process – GOQII Technologies Pvt. Ltd. Vs. Sokrati Technologies Pvt. Ltd. – Supreme Court Read Post »

Whether the period spent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application under Section 11(6) of Arbitration and Conciliation Act, 1996? | Whether the principles contained in Order 23 Rule 1 of the CPC will apply to an application under Section 11(6)? | Whether the benefit of Section 5 and 14 of the Limitation Act is available in respect of an application for appointment of arbitrator under Section 11(6) of the Arbitration Act? – HPCL Bio-Fuels Ltd. Vs. Shahaji Bhanudas Bhad – Supreme Court

/ 126 minutes of reading

In this landmark judgment, following issues are covered:
(i) Scope and applicability of Order 23 Rule 1 of the CPC to proceedings other than suits.
(ii) Whether the principles contained in Order 23 Rule 1 of the CPC will apply to an application under Section 11(6) of the Act, 1996.
(iii) Important aspect while applying the principles of Order 23 Rule 1 to applications under Section 11(6) of the Act, 1996.
(iv) Withdrawing Section 11 application to file application under Section 9 of IBC, it would no longer be open to it to file a fresh application for appointment of arbitrator without having obtained the liberty of the court to file a fresh application at the time of the withdrawal.
(v) Whether the period spent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application under Section 11(6)?
(vi) Ingredients need to be fulfilled for the applicability of Section 14(1) of the Limitation Act.
(vii) Conditions required to be fulfilled for seeking the benefit of exclusion under Section 14(2) of the Limitation Act.
(viii) Key difference between sub-sections (1) and (2) of Section 14 of the Limitation Act.
(ix) Interpretation of the expression “other cause of a like nature” used in Section 14 of the Limitation Act.
(x) A Section 11 petition is in the nature of an ‘application’ and cannot be considered to be a ‘suit’ for the purposes of the Limitation Act.
(xi) Application under Section 11(6) of the Arbitration Act is not for the same relief as an application under Section 9 of the IBC.
(xii) Insolvency proceedings are fundamentally different from arbitration proceedings etc.
(xiii) Whether the benefit of condonation of delay under Section 5 of the Limitation Act is available in respect of an application for appointment of arbitrator under Section 11(6) of the Act, 1996?
(xiv) Whether it is permissible for the courts to condone delay under Section 5 of the Limitation Act in the absence of any application seeking such condonation?

Whether the period spent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application under Section 11(6) of Arbitration and Conciliation Act, 1996? | Whether the principles contained in Order 23 Rule 1 of the CPC will apply to an application under Section 11(6)? | Whether the benefit of Section 5 and 14 of the Limitation Act is available in respect of an application for appointment of arbitrator under Section 11(6) of the Arbitration Act? – HPCL Bio-Fuels Ltd. Vs. Shahaji Bhanudas Bhad – Supreme Court Read Post »

If interest is not agreed upon by the parties, it cannot form a part of Operational Debt within the meaning of Section 5(21) of IBC, even if Operational Creditor is registered as an MSME | Interest under Section 16 of MSME Act can be claimed before the MSME Facilitation Council (MSEFC) and the correct forum for such claims shall be the MSEFC and not NCLT – KBC Infrastructures Pvt. Ltd. Vs. Shapoorji Pallonji and Company Pvt. Ltd. – NCLT Mumbai Bench

/ 8 minutes of reading

Hon’ble NCLT Mumbai Bench held that:

(i) The statutory scheme under Sections 8 and 9 of the Code does not indicate that in case reply to Demand Notice is not given within the specified time, the Corporate Debtor is precluded from bringing relevant materials before the Adjudicating Authority in reply to Section 9 Application so as to establish that there are pre-existing disputes which may lead to rejection of Section 9 Application.
(ii) If interest is not agreed upon between the parties, it cannot form a part of ‘operational debt’ within the meaning of Section 5(21) of the Code and that no such interest can be claimed in an application under Section 9 of the Code. Interest under Section 16 of MSME Act can be claimed before the MSME Facilitation Council (MSEFC) in terms of Section 18 of the MSME Act. Thus, the correct forum for such claims shall be the MSEFC and not this Tribunal.
(iii) It is well-established that the Code cannot be used as a recovery mechanism or as a substitute for debt enforcement procedures. In this connection, it is now recognised that NCLT is not a debt collection forum and that it is not the object of the Code that CIRP should be initiated to penalise solvent companies for non-payment of disputed dues claimed by an Operational Creditor.

If interest is not agreed upon by the parties, it cannot form a part of Operational Debt within the meaning of Section 5(21) of IBC, even if Operational Creditor is registered as an MSME | Interest under Section 16 of MSME Act can be claimed before the MSME Facilitation Council (MSEFC) and the correct forum for such claims shall be the MSEFC and not NCLT – KBC Infrastructures Pvt. Ltd. Vs. Shapoorji Pallonji and Company Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Treatment of Security Deposit of Postpaid Subscribers and Unspent Balance of Prepaid Subscribers in Resolution Plan | Shall TRAI Act, 1997 being a special statute prevail over the IBC, 2016? – Telecom Regulatory Authority of India (TRAI) Vs. Reliance Telecom Ltd. and Ors. – NCLAT New Delhi

/ 31 minutes of reading

Hon’ble NCLAT upheld the decision of the NCLT, Mumbai Bench wherein the NCLT held that security deposit balances refundable to post paid subscribers and amount of un-spent balances in prepaid plans shall be admitted as Operational Debt. As regards demand on account of financial disincentive levied by TRAI, the said amount is a nature of Operational Debt other than Government dues, as these dues are a nature of fine for non-maintenance of quality standards only.

The Hon’ble NCLAT also rejected the submission of the Appellant that TRAI Act is a special statute and would prevail over the IBC.

Treatment of Security Deposit of Postpaid Subscribers and Unspent Balance of Prepaid Subscribers in Resolution Plan | Shall TRAI Act, 1997 being a special statute prevail over the IBC, 2016? – Telecom Regulatory Authority of India (TRAI) Vs. Reliance Telecom Ltd. and Ors. – NCLAT New Delhi Read Post »

Valuation based on relevant material requires no interference | Dues not included in Resolution Plan are extinguished post approval | IBC provisions override SEZ Act and Rules – Noida Special Economic Zone Authority Vs. Manish Agarwal and Ors. – Supreme Court

/ 16 minutes of reading

In this judgment, the Hon’ble Supreme Court clarifies following issues:

A. Valuation does not call for any interference if it is based on relevant material on record.
B. All the dues is not the part of the Resolution Plan shall stand extinguished and no proceedings could be pressed into service or continues.
C. Claims pertaining to the transfer fees, etc. were not to be interfered with by courts or tribunals as the same stood related to the commercial wisdom of the CoC.
D. Does provision of IBC override Special Economic Zone Act and Rules?

Valuation based on relevant material requires no interference | Dues not included in Resolution Plan are extinguished post approval | IBC provisions override SEZ Act and Rules – Noida Special Economic Zone Authority Vs. Manish Agarwal and Ors. – Supreme Court Read Post »

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