Offences & Penalties [Main]

Merely because proceeding under Section 13(2) and 13(4) of the SARFAESI Act, 2002 has been initiated by the creditor prior to filing of Section 10 application under IBC, cannot be a ground to hold that Section 10 application is filed with malicious and fraudulent intent as per Section 65 of the IBC – Getz Cables Pvt. Ltd. Vs. State Bank of India and Anr. – NCLAT New Delhi

/ 48 minutes of reading

In this judgment, Hon’ble NCLAT referring various judgment held that for proving fraudulent and malicious intent, something more is required to be pleaded and proved apart from initiation of proceedings under Section 13(2) and 13(4) of SARFAESI Act by the creditor against the Corporate Applicant.

Necessary ingredients, which required to be proved under Section 65(1) of IBC are that proceedings are initiated fraudulently or with malicious intent for any purpose other than for the resolution of insolvency. Both expression – fraudulent and malicious has definite connotation.

Merely because proceeding under Section 13(2) and 13(4) of the SARFAESI Act, 2002 has been initiated by the creditor prior to filing of Section 10 application under IBC, cannot be a ground to hold that Section 10 application is filed with malicious and fraudulent intent as per Section 65 of the IBC – Getz Cables Pvt. Ltd. Vs. State Bank of India and Anr. – NCLAT New Delhi Read Post »

Once it has been proved that Corporate Debtor was duly served with a notice of insolvency petition, and given opportunities to show up and file reply to the said petition, the ignorance of the Corporate Debtor cannot be termed as a fraud played upon by the Operational Creditor – Rajnishpal Singh Dhaliwal Vs. Nilkamal Ltd. and Ors. – NCLT Chandigarh Bench

/ 5 minutes of reading

Hon’ble NCLT Chandigarh Bench held that the present IA is nothing, but a tactic played by the Applicant to terminate the CIRP of the Corporate Debtor, on a sham ground that the order admitting the Corporate Debtor into CIRP was obtained by the Operational Creditor by playing fraud.

Once it has been proved that Corporate Debtor was duly served with a notice of insolvency petition, and given opportunities to show up and file reply to the said petition, the ignorance of the Corporate Debtor cannot be termed as a fraud played upon by the Operational Creditor – Rajnishpal Singh Dhaliwal Vs. Nilkamal Ltd. and Ors. – NCLT Chandigarh Bench Read Post »

It is not necessary that a transaction should involve written financial contract for initiation of Insolvency under Section 7 of IBC, 2016 | Loan given contrary to the limit prescribed under Section 186 of Companies Act, 2013 is an ultra vires act and is not a legally enforceable debt | For taking action under Section 65 of the Code, it is necessary that documentary evidence is brought on record – Proplarity Infratech Pvt. Ltd. Vs. Sky High Technobuild Pvt. Ltd. – NCLT Principal Bench

/ 10 minutes of reading

Hon’ble NCLT Principal Bench held that:

(i) CIRP Regulation 8, it is clear that the FC can rely upon any relevant document including financial contract to prove the existence of debt. The regulation does not contemplate existence of all documents rather it uses the word “or” which indicates that by any relevant document the existence of debt can be proved.
(ii) In effect, transaction involving payment of interest along with principal is one type of financial debt and that if the transaction does not involve ‘payment of interest’ the said transaction would not be outside the purview of section 5(8) of the Code.
(iii) Mere recording of transaction in the balance sheet of the CD as “Inter-Corporate Deposit” would not constitute it as Financial Debt unless proved by supporting document
(iv) Even if we assume that the said transaction was in the nature of loan, material available on the record suggest that the amount given by the Petitioner is contrary to the limit prescribed under Companies Act, 2013 which amounts to an ultra vires act and is not a legally enforceable debt.
(v) For taking action under Section 65 of the Code for malicious prosecution against the FC, as prayed by the CD, it is necessary that documentary evidence is brought on record of this Tribunal which leads it to form a prima facie opinion that the proceedings have been initiated with such intention.

It is not necessary that a transaction should involve written financial contract for initiation of Insolvency under Section 7 of IBC, 2016 | Loan given contrary to the limit prescribed under Section 186 of Companies Act, 2013 is an ultra vires act and is not a legally enforceable debt | For taking action under Section 65 of the Code, it is necessary that documentary evidence is brought on record – Proplarity Infratech Pvt. Ltd. Vs. Sky High Technobuild Pvt. Ltd. – NCLT Principal Bench Read Post »

An application filed under Section 65 of IBC cannot be dismissed on the ground that the application has been filed before the admission of the application filed under Section 7 of the Code – Devashree Developers Pvt. Ltd. and Ors. Vs. Aravali Cylinders Pvt. Ltd. – NCLAT New Delhi

/ 10 minutes of reading

In this case, an application filed under Section 60(5), 65 and 75 of the Code has been dismissed on the ground that the application has been filed before the admission of the application filed under Section 7 of the Code.

Hon’ble NCLAT referring judgments in Beacon Trusteeship Limited Vs. Earthcon Infracon Pvt. Ltd. & Anr. (2020) ibclaw.in 52 SC, Ashmeet Singh Bhatia v. Sundrm Consultants Pvt. Ltd. and Anr. (2023) ibclaw.in 204 NCLAT and Shree Ambica Rice Mill Vs. Kaneri Agro Industries Ltd. (2021) ibclaw.in 318 NCLAT, held that dismissal of the application by the Tribunal only on this ground that the application has been filed before the admission of the application under Section 7 is not sustainable.

An application filed under Section 65 of IBC cannot be dismissed on the ground that the application has been filed before the admission of the application filed under Section 7 of the Code – Devashree Developers Pvt. Ltd. and Ors. Vs. Aravali Cylinders Pvt. Ltd. – NCLAT New Delhi Read Post »

Special Court presided by a Sessions Judge or an Additional Sessions Judge will have jurisdiction to try the complaint under the Code | Any amendment to Section 435 of Companies Act, 2013, after the date on which the IBC came into effect would not have any effect on the provisions of Section 236(1) of the Code | Provision with regard to Special Court under Section 236 is a case of ‘legislation by incorporation’ and not ‘legislation by reference’ – Insolvency and Bankruptcy Board of India (IBBI) Vs. Satyanarayan Bankatlal Malu and Ors. – Supreme Court

/ 61 minutes of reading

In this case, the question before the Hon’ble Supreme Court was whether the Special Court under the Code (Section 236 of IBC) would be as provided under Section 435 of the Companies Act as it existed at the time when the Code came into effect, or it would be as provided under Section 435 of the Companies Act after the 2018 Amendment.

The Hon’ble Court:

(i) Interpreted Section 236 of IBC and Section 435 of Companies Act, 2013 with various amendments.
(ii) Listed distinction between ‘legislation by reference’ and ‘legislation by incorporation’.
(iii) Quashed and set aside the order of Bombay High Court reported in (2022) ibclaw.in 40 HC.

Special Court presided by a Sessions Judge or an Additional Sessions Judge will have jurisdiction to try the complaint under the Code | Any amendment to Section 435 of Companies Act, 2013, after the date on which the IBC came into effect would not have any effect on the provisions of Section 236(1) of the Code | Provision with regard to Special Court under Section 236 is a case of ‘legislation by incorporation’ and not ‘legislation by reference’ – Insolvency and Bankruptcy Board of India (IBBI) Vs. Satyanarayan Bankatlal Malu and Ors. – Supreme Court Read Post »

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