Other-Supply Resolution Plan Copy/Valuation/Sharing of Information/Confidential

Whether Ex-Director who has resigned prior to initiation of CIRP can be held to be a Suspended Director and is entitled for the copy of Resolution Plan and other relevant documents? – Jagdish Valecha Vs. Anurag Kumar Sinha, RP of Valecha Engineering Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT defines the meaning of Suspended Director under Insolvency Code as “Suspended Directors are Directors whose power to act as Directors are suspended by virtue of initiation of CIRP. Suspended Directors may include those Directors of the Corporate Debtor who were working in such capacity on the date of initiation of the CIRP.” Appellant has resigned more than two years prior to initiation of the CIRP and cannot be held to be a Suspended Director and is not entitled for the copy of the Resolution Plan and other relevant documents

Whether Ex-Director who has resigned prior to initiation of CIRP can be held to be a Suspended Director and is entitled for the copy of Resolution Plan and other relevant documents? – Jagdish Valecha Vs. Anurag Kumar Sinha, RP of Valecha Engineering Ltd. and Ors. – NCLAT New Delhi Read Post »

There is no Regulation or law which provide that Resolution Professional should open Resolution Plan in presence of CoC and Prospective Resolution Applicant (PRAs) – Shrinivas Spintex Pvt. Ltd. Vs. Hinganghat Infrastructure Pvt. Ltd. and Ors. – NCLAT New Delhi

In this case, Resolution Applicant submits that it was due to transparency that password was not given by RPA to the Resolution Professional and hard copy was opened by the Resolution Professional which is not in accordance with Regulations.

Hon’ble NCLAT held that Regulation 39 of the CIRP Regulations, 2016 also requires the Resolution Professional to look into the Resolution Plan submitted by the Applicants and to place the plan before CoC which is in compliance with Section 30(2). The opening of Resolution Plan by Resolution Professional is essential for further process in the CIRP.

The Resolution Professional without opening the plan cannot come to any opinion whether the plan is complaint to Section 30(2) or not. There is no regulation or law which provide that the Resolution Professional should open the plan in presence of CoC and PRAs.

There is no Regulation or law which provide that Resolution Professional should open Resolution Plan in presence of CoC and Prospective Resolution Applicant (PRAs) – Shrinivas Spintex Pvt. Ltd. Vs. Hinganghat Infrastructure Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Whether a Suspended Director/Promoter of Corporate Debtor who is also a Resolution Applicant (a dual role) is entitled to access Resolution Plans submitted by others Resolution Applicants, as per Vijay Kumar Jain Vs. Standard Chartered Bank judgment – Prasada Raju M.R.V Vs. Sri. Vamsi Kambhammettu, RP of Mantena Laboratories Ltd. – NCLT Hyderabad Bench

In this important judgment, Hon’ble NCLT Hyderabad Bench holds that:

(i) A Resolution Applicant can attend CoC meeting only in respect of the plan that was submitted by him, and will have no access to the Resolution Plans submitted by others.
(ii) The cited caselaw of Vijay Kumar Jain Vs. Standard Chartered Bank (2019) ibclaw.in 24 SC also does not support the Applicant’s argument.
(iii) In the present case, not only the Applicant is related to the CD, being a promoter/director, he is also a Resolution Applicant. The CD being the MSME, he was permitted to submit a Resolution Plan. However, he was rightly kept out by the CoC from the proceedings of examination and evaluation of the Resolution Plans submitted by other Resolution Applicants.
(iv) The ‘conflict of interest’ for the Applicant, who was part of the CoC in the dual capacity did not end with him being rejected as Resolution Applicant. His capacity to be an impartial observer of the CoC’s deliberations was compromised and his views on the Resolution Plan submitted by any other Resolution Applicant would necessarily have a potential of bias even after he was out of the race.

Whether a Suspended Director/Promoter of Corporate Debtor who is also a Resolution Applicant (a dual role) is entitled to access Resolution Plans submitted by others Resolution Applicants, as per Vijay Kumar Jain Vs. Standard Chartered Bank judgment – Prasada Raju M.R.V Vs. Sri. Vamsi Kambhammettu, RP of Mantena Laboratories Ltd. – NCLT Hyderabad Bench Read Post »

Section 230 of Companies Act, 2013 which envisages one valuer cannot be the basis to bypass Liquidation Process Regulation 35 | Merely a Corporate Debtor has no valid or any marketable title the property, the value of the property cannot be described as Zero, the Registered Valuers are to value the property | Sharing of Valuation Reports with Potential Resolution Applicants by Liquidator is quite contrary to Liquidation Process Regulation 34(4) – Kineta Global Ltd. in consortium with Power Mech Projects Ltd. Vs. IDBI Bank Ltd. and Ors. – NCLAT Chennai

In this landmark decision, Hon’ble NCLAT holds that:
(i) The requirement of Regulation 35 of the liquidation process Regulations is a separate one from the process mentioned under Section 230 of the Companies Act, 2013 and Section 230 of the Companies Act, 2013 which envisages one valuer cannot be the basis to by pass the Regulation 35 of liquidation process Regulations.
(ii) Section 230 of the Companies Act, 2013 is quite broader and wider in its purview and the Code, 2016
(iii) Merely because in respect of the title of the property, if a Corporate Debtor has no valid or any marketable title, ipso facto, the value of the property cannot be described as Zero. The Registered Valuers are to value the property.
(iv) The Sharing of the Valuation Reports with the Potential Resolution Applicants by the Liquidator is quite contrary to the Regulation 34(4) of the Liquidation Process Regulations.

Section 230 of Companies Act, 2013 which envisages one valuer cannot be the basis to bypass Liquidation Process Regulation 35 | Merely a Corporate Debtor has no valid or any marketable title the property, the value of the property cannot be described as Zero, the Registered Valuers are to value the property | Sharing of Valuation Reports with Potential Resolution Applicants by Liquidator is quite contrary to Liquidation Process Regulation 34(4) – Kineta Global Ltd. in consortium with Power Mech Projects Ltd. Vs. IDBI Bank Ltd. and Ors. – NCLAT Chennai Read Post »

Whether once an Insolvency Professional is appointed as a Liquidator by NCLT, he moves away from the orbit of IBC and ceases to be governed by IBC | Whether IBBI can exercise any jurisdiction to issue the show cause notice to a Liquidator – Ad.(CA) V.Venkata Siva Kuma Vs. Insolvency and Bankruptcy Board of India and Ors.- Madras High Court

In this case, the pointed allegation made against the petitioner (Insolvency Professional) in the show cause notice issued by IBBI is that the petitioner while discharging his responsibilities under Sec. 230 of the Companies Act, he shared the details of the valuation report of the assets of the company with all the scheme proponents, as a result of which all of them quoted the same price.

Hon’ble Madras High Court while dismissing writ petition filed against IBBI show cause notice, held that:
(i) Liquidation of a Corporate Debtor is not alien to the scheme of IBC.
(ii) Merely because Insolvency Professional was directed to perform a role by NCLT, it does not prima facie entertain an idea that he ceases to be governed by IBC, and Regulations framed thereunder.
(iii) When the Insovlency Professional ceases to be a Resolution Professional, and starts wearing the cap of a liquidator, the role of IIIP of ICAI vis-a-vis its member ceases
(iv) This petition is dismissed, and the petitioner will have all the liberty to put forth his entire line of defence disciplinary enquiry, which needless to say includes all that the grounds on the basis of which he has now challenged the show cause notice.

Whether once an Insolvency Professional is appointed as a Liquidator by NCLT, he moves away from the orbit of IBC and ceases to be governed by IBC | Whether IBBI can exercise any jurisdiction to issue the show cause notice to a Liquidator – Ad.(CA) V.Venkata Siva Kuma Vs. Insolvency and Bankruptcy Board of India and Ors.- Madras 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 »

Operational Creditor being a participant in the meeting of the committee of creditors (CoC) has no right to seek a copy of the Information Memorandum(IM) – Vinay Kumar Singhal RP for PG Advertising Pvt. Ltd. Vs. Mahesh Bajaj – NCLAT New Delhi

The issue involved in this case is as to whether copy of information memorandum can be ordered to be given to the Respondent (Operational Creditor) who is merely a participant in the CoC and not a member?

Hon’ble NCLAT held that:
(i) There is no definition of member provided in the Code or the Regulations which has been repeatedly used in the Code as well as Regulations.
(ii) The Code and Regulations are totally silent about the supply of the information memorandum to the participant, it has to be inferred that the legislature has made a provision for providing a copy of the information memorandum to the member of the CoC and the Resolution Applicant but not to the participant of the meeting of the CoC
(iii) The Operational Creditor being a participant in the meeting of the CoC has no right to seek a copy of the information memorandum.

Operational Creditor being a participant in the meeting of the committee of creditors (CoC) has no right to seek a copy of the Information Memorandum(IM) – Vinay Kumar Singhal RP for PG Advertising Pvt. Ltd. Vs. Mahesh Bajaj – NCLAT New Delhi Read Post »

After entire CIRP being over and Resolution Plan approved (in 2022), at this stage, prayer of Ex-Director who has resigned before initiation of CIRP to provide copy of Resolution Plan alongwith Information Memorandum is uncalled for and unnecessary – Diwakar Sharma Vs. Anand Sonbhadra RP of Shubhkamna Buildtech Pvt. Ltd. – NCLAT New Delhi

In this case, the Appellant who claim to be Ex-Director of the Corporate Debtor has resigned before initiation of CIRP.

Hon’ble NCLAT held that:
(i) After approval of Resolution Plan by AA, no relief can be granted on the prayer on any information has been taken into consideration while assessing the assets and liabilities of the Corporate Debtor.
(ii) In so far as his submission that he is shareholder of the Corporate Debtor, Resolution Plan having been approved what are the rights of different stakeholders is subject matter of the plan.
(iii) Entire CIRP process being over where Resolution Plan has been approved in 2022, at this stage, any direction on the prayers made by the Appellant in the application are uncalled for and unnecessary.

After entire CIRP being over and Resolution Plan approved (in 2022), at this stage, prayer of Ex-Director who has resigned before initiation of CIRP to provide copy of Resolution Plan alongwith Information Memorandum is uncalled for and unnecessary – Diwakar Sharma Vs. Anand Sonbhadra RP of Shubhkamna Buildtech Pvt. Ltd. – NCLAT New Delhi Read Post »

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