Claim-Actionable claim

All about ‘Not Readily Realisable Assets(NRRA)’, valuation of PUFE Assets, who can pursue avoidance applications after assignment of NRRA, jurisdiction of NCLT after transfer of NRRA, When can NRRA be transferred to third party under Regulation 37A of Liquidation Regulations, 2017 – Inquest Fintech Pvt. Ltd. Vs. Ms. Maya Gupta Liquidator Rain Automotive India Pvt. Ltd. – NCLT New Delhi Bench Court-II

In this important judgment, NCLT New Delhi Bench Court-II comprising of Shri Ashok Kumar Bhardwaj and Shri L.N. Gupta has clarified various issues on transfer/assignment of ‘Not Readily Realisable Assets(NRRA)’ during the liquidation process under IBC such as:
(i) Valuation of “Not readily realisable assets” (NRRA) underlying the pending PUFE Applications are contingent assets
(ii) Who can pursue avoidance /PUFE Applications after the assignment of NRRA?
(iii) Objective of avoidance/ PUFE applications filed u/s 43, 45, 50, and 66 of IBC 2016
(iv) Whether Adjudicating Authority has jurisdiction to adjudicate the Avoidance/ PUFE Applications pursued by a Third Party or an Assignee when even the proceedings under Sections 43, 45, 50, and 66 are not concluded?
(v) When NRRA can be assigned/transferred to third party u/r 37A of the Liquidation Regulations?

All about ‘Not Readily Realisable Assets(NRRA)’, valuation of PUFE Assets, who can pursue avoidance applications after assignment of NRRA, jurisdiction of NCLT after transfer of NRRA, When can NRRA be transferred to third party under Regulation 37A of Liquidation Regulations, 2017 – Inquest Fintech Pvt. Ltd. Vs. Ms. Maya Gupta Liquidator Rain Automotive India Pvt. Ltd. – NCLT New Delhi Bench Court-II Read Post »

It is ultra vires the IBC to invoke the provisions of the Companies Act, in the absence of any specific provision in the Code or Rules permitting such invocation – Ashok Velamur Seshadri, Liquidator of M/s. Archana Motors Pvt. Ltd. Vs. Shibu Job Cheeran Suspended Managing Director of Archana Motors Pvt. Ltd. – NCLT Kochi Bench

In this case, the Petition is filed by the Liquidator as an Execution Application under Section 424 (3) of Companies Act, 2013 R/w Rule 56 of NCLT Rules, 2016. The Applicant filed the petition under Companies Act, 2013, R/w Rule 56 of NCLT Rules, 2016, to execute the order passed under Sec. 66, IBC. Time and again it is held that IBC is a self-contained code with objective to maximise value in a timely manner. When the Code provides certain mode for execution of orders it is unnecessary to proceed under the different Act. In fact, it is ultra vires the IBC to invoke the provisions of the Companies Act, in the absence of any specific provision in the Code or Rules permitting such invocation.

It is ultra vires the IBC to invoke the provisions of the Companies Act, in the absence of any specific provision in the Code or Rules permitting such invocation – Ashok Velamur Seshadri, Liquidator of M/s. Archana Motors Pvt. Ltd. Vs. Shibu Job Cheeran Suspended Managing Director of Archana Motors Pvt. Ltd. – NCLT Kochi Bench Read Post »

The Promoter, if ineligible u/s 29A cannot make an application for Compromise & Arrangement u/s 230 of the Companies Act, 2013 – Arun Kumar Jagatramka Vs. Jindal Steel and Power Ltd. & Anr – Supreme Court

Hon’ble Supreme Court holds that the IBC has made a provision for ineligibility under Section 29A which operates during the course of the CIRP. A similar provision is engrafted in Section 35(1)(f) which forms a part of the liquidation provisions contained in Chapter III as well. In the context of the statutory linkage provided by the provisions of Section 230 of the Act of 2013 with Chapter III of the IBC, where a scheme is proposed of a company which is in liquidation under the IBC, it would be far-fetched to hold that the ineligibilities which attach under Section 35(1)(f) read with Section 29A would not apply when Section 230 is sought to be invoked. Such an interpretation would result in defeating the provisions of the IBC and must be eschewed.

The Promoter, if ineligible u/s 29A cannot make an application for Compromise & Arrangement u/s 230 of the Companies Act, 2013 – Arun Kumar Jagatramka Vs. Jindal Steel and Power Ltd. & Anr – Supreme Court Read Post »

A decision by judicial or quasi-judicial Authority not informed of reasons provides room for arbitrariness & such decision cannot be supported. In terms of the ingredients of Sec. 40 of the Code, reasons are to be spelt out for rejecting the claims- Indian Oil Corporation Ltd. Vs. Mr. Ashish Arjun Kumar Rathi, Liquidator of SBQ Steels Pvt. Ltd.- NCLAT

NCLAT held that as per Section 40 of the Code a ‘Liquidator’ being an ‘Authority’ decides the matter in a quasi-judicial manner and his decision is open to challenge u/s 42 of the I&B Code. An unreasoned order may be just and valid from the point of view of an authority who passes the same. But to the affected, the said order is not a ‘valid one’. A ‘Reasoned order’ will have an appearance of ‘Justice’.
A decision by judicial or quasi-judicial Authority not informed of reasons provides room for arbitrariness and such decision cannot be supported. In terms of the ingredients of Section 40 of the Code, reasons are to be spelt out for rejecting the claims, which in the present case was not followed by the ‘Liquidator’.
An ‘Adjudicating Authority’ can interfere when a ‘Liquidator’ had not exercised its discretion in a bonafide manner or he had proposed a thing which no reasonable person would act.
A ‘Liquidator’ as an Officer of the ‘Adjudicating Authority’/ Tribunal is expected to perform his duties fairly, justly and honorably in dealing with the claims of persons.
It cannot be forgotten that ‘Interest’ due on damages sought for violation of contract gives rise to a legal right to claim payment. It also qualifies as an ‘actionable claim’.

A decision by judicial or quasi-judicial Authority not informed of reasons provides room for arbitrariness & such decision cannot be supported. In terms of the ingredients of Sec. 40 of the Code, reasons are to be spelt out for rejecting the claims- Indian Oil Corporation Ltd. Vs. Mr. Ashish Arjun Kumar Rathi, Liquidator of SBQ Steels Pvt. Ltd.- NCLAT Read Post »

The Promoter, if ineligible u/s 29A cannot make an application for Compromise & Arrangement u/s 230 of the Companies Act, 2013 for taking back the immovable and movable property or actionable claims of the Corporate Debtor- Jindal Steel and Power Limited Vs. Arun Kumar Jagatramka – NCLAT

NCLAT held that in view of the decision of this Appellate Tribunal in Y. Shivram Prasad [2019] ibclaw.in 03 NCLAT and S.C. Sekaran [2019] ibclaw.in 02 NCLAT, we answer the first question in affirmative, i.e., to say that in a Liquidation proceeding under the Code, a  petition under Section 230 to 232 of the Companies Act is maintainable.
The next question arises for consideration is as to whether 1st  Respondent-Arun  Kumar  Jagatramka  (Promoter),  can  be  said  to  be  ineligible under Section 29A of the I&B Code and can ask for Financial Scheme of Comprise and Arrangement for itself in terms of Section 230 and 232 of the Companies Act of the I&B Code.
NCLAT held that as noticed, the Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors. – Writ Petition (Civil) No.99 of 2019 held that the ‘primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation’. The aforesaid judgment makes it clear that even during the period of Liquidation, for the purpose of Section 230 to 232 of the Companies Act, the Corporate Debto’ is to be saved from its own management, meaning thereby the Promoters, who are ineligible under Section 29A, are not entitled to file application for Compromise and Arrangement in their favour under Section 230 to 232 of the Companies Act. Proviso to Section 35(f) prohibits the Liquidator to sell the immovable and movable property or actionable claims of the ‘Corporate Debtor’ in Liquidation to any person who is not eligible to be a Resolution Applicant.
From the provision of section 35, it is clear that the Promoter, if ineligible under Section 29A cannot make an application for Compromise and Arrangement for taking back the immovable and movable property or actionable claims of the ‘Corporate Debtor’.

The Promoter, if ineligible u/s 29A cannot make an application for Compromise & Arrangement u/s 230 of the Companies Act, 2013 for taking back the immovable and movable property or actionable claims of the Corporate Debtor- Jindal Steel and Power Limited Vs. Arun Kumar Jagatramka – NCLAT Read Post »

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