Special issues-Decree Holder/Recovery Certificate

Financial Creditor has taken other steps of execution proceedings against decree passed by High Court in terms of the settlement is no ground to not accept the Section 7 Petition under IBC – Mr. Rakesh Kumar Jain Vs. ADTV Communications Pvt. Ltd. – NCLAT New Delhi

The Hon’ble NCLAT held that IBC is a complete Code in itself and in view of the provisions of Section 238 of the Code, the provisions of the IBC would prevail, notwithstanding anything inconsistent therewith in any other law for the time being in force. Section 238 of the Code contains the non-obstante clause of the widest terms possible and therefore the code will prevail over other provisions. The fact that the Appellant/Financial Creditor had also taken other steps of execution proceedings before the Hon’ble High Court of Delhi is no ground to not accept the Section 7 Petition. Thus, the Appellant is indeed a Financial Creditor within the meaning of Section 5(7) and Section 5(8) of the IBC.

Financial Creditor has taken other steps of execution proceedings against decree passed by High Court in terms of the settlement is no ground to not accept the Section 7 Petition under IBC – Mr. Rakesh Kumar Jain Vs. ADTV Communications Pvt. Ltd. – NCLAT New Delhi Read Post »

Application u/s 95 of IBC can be filed against Personal Guarantor even when no CIRP or Liquidation is pending against Corporate Debtor and such application can be filed only before the NCLT that has territorial jurisdiction over the Corporate Debtor – Stressed Assets Stabilisation Fund (SASF) Vs. Sh. Anil Rai – NCLT Allahabad Bench

Hon’ble NCLT Allahabad Bench held that from the Scheme of Section 60 as analysed and adjudicated upon in the above judicial pronouncements, it is clear that application u/s 95 can be filed against the Personal Guarantor even when no CIRP or Liquidation is pending against the corresponding Corporate Debtor and such application can be filed only before the NCLT that has territorial jurisdiction over the corresponding Corporate Debtor.

Application u/s 95 of IBC can be filed against Personal Guarantor even when no CIRP or Liquidation is pending against Corporate Debtor and such application can be filed only before the NCLT that has territorial jurisdiction over the Corporate Debtor – Stressed Assets Stabilisation Fund (SASF) Vs. Sh. Anil Rai – NCLT Allahabad Bench Read Post »

There is no bar on the Financial Creditor to initiate proceedings under Section 95 of IBC, 2016 when Debt Recovery Certificate is issued by Debt Recovery Tribunal (DRT) – State Bank of India Vs. Mr. R. Vijay Kumar – NCLT Chennai Bench

The Respondent’s contention of transferring debt recovery proceedings to this Tribunal is unfounded. The IBC, 2016 does not envisage such transfer of debt proceeding from DRT to this tribunal under Section 60(3). Further, the contention of Res Judicata and Double Jeopardy does not apply as there is no bar on the financial creditor to initiate proceedings under Section 95 of IBC, 2016 when Debt Recovery Certificate is issued by Debt Recovery Tribunal.

There is no bar on the Financial Creditor to initiate proceedings under Section 95 of IBC, 2016 when Debt Recovery Certificate is issued by Debt Recovery Tribunal (DRT) – State Bank of India Vs. Mr. R. Vijay Kumar – NCLT Chennai Bench Read Post »

Date of default in case of an application under Section 7 filed on based of a Consent Decree passed by the DRT – Jubin Kishore Thakkar, Suspended Directors of KLT Automotive & Tubular Products Ltd. Vs. Phoenix ARC Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that Section 7 Application having been founded on the basis of default committed after Consent Decree dated 29.08.2022 was passed, Default cannot be pegged on 10A period when Application under Section 7 is founded on the basis of Consent Decree dated 29.08.2022.

Date of default in case of an application under Section 7 filed on based of a Consent Decree passed by the DRT – Jubin Kishore Thakkar, Suspended Directors of KLT Automotive & Tubular Products Ltd. Vs. Phoenix ARC Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

Recovery Certificate issued by DRT would give rise to a fresh cause of action to initiate proceedings under Section 95 of IBC against the Guarantor – State Bank of India Vs. Mrs. J. Geetha – NCLT Chennai Bench

Hon’ble NCLT Chennai Bench held that with regards to limitation, it is relevant to refer to the Judgment of Hon’ble Supreme Court in the case of Dena Bank vs. C. Shivakumar Reddy & Anr. (2021) ibclaw.in 69 SC, where it was held that the Judgment and/or decree for money in favour of the Financial Creditor, passed by DRT, or any other Tribunal or Court, or the issuance of a certificate of recovery in favour of the Financial Creditor, would gave rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the Code, if the dues of the Corporate Debtor under the Judgment/decree or any part thereof remained unpaid.

Recovery Certificate issued by DRT would give rise to a fresh cause of action to initiate proceedings under Section 95 of IBC against the Guarantor – State Bank of India Vs. Mrs. J. Geetha – NCLT Chennai Bench Read Post »

Clause 12 of Part-1 of Schedule-I of IBBI (Liquidation Process) Regulations, 2016 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator – V.S. Palanivel Vs. P. Sriram, CS, Liquidator, etc. – Supreme Court

Hon’ble Supreme Court held that:

(i) The Auction Purchaser would be entitled to the benefit of the order dated 23rd March, 2020 read with Regulation 47A of the IBBI Regulations, 2016.
(ii) In view of the analysis undertaken above, Rule 12 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator.
(iii) The Rule 11 of the NCLT Rules is not to be read in isolation but in conjunction with Section 35 of the IBC
(iv) Clause 12 of the Schedule-I of the Liquidation Process Regulations is not interlinked with Clause 13. Both the Rules cover different situations.
(v) Clause 12 to be mandatory in character because non-payment within the timeline has consequences attached to it. However, in contrast thereto, there are no adverse consequences spelt out in Clause 13 for it to be treated as mandatory.

Clause 12 of Part-1 of Schedule-I of IBBI (Liquidation Process) Regulations, 2016 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator – V.S. Palanivel Vs. P. Sriram, CS, Liquidator, etc. – Supreme Court Read Post »

A Decree passed by Civil Court in case of goods supplied is an Operational Debt | Date of default is the date of decree | Interest provided by Civil Court from the date of filing the suit till the Decree and thereafter until payment is made, cannot be clubbed together to reach the threshold limit of Rs. 1 cr. under Sec. 4 of IBC – Honey Yarn Vs. Welldone Exim Pvt. Ltd. – NCLT New Delhi Bench

In this important judgment, Hon’ble NCLT held that:

(i) The amount arising out of invoices from the goods supplied by Operational Creditor is an Operational Debt, which has now been crystalized pursuant to Court Decree.
(ii) The Decree Holder cannot be excluded from the purview of Operational Creditor under Section 5(20) of the Code.
(iii) The Date of Default shall be the Date of the Decree and therefore, the present application is not barred by limitation.
(iv) The interest provided by the Civil Court acts as compensation in favour of the Applicant and is to be charged against the Respondent for the period starting from the date of filing the suit until the decree, and thereafter until payment is made.
(v) The Interest as provided by the Civil Court vide Decree dated 28.04.2023 cannot be clubbed together to reach the threshold limit of Rs. 1,00,00,000/-.

A Decree passed by Civil Court in case of goods supplied is an Operational Debt | Date of default is the date of decree | Interest provided by Civil Court from the date of filing the suit till the Decree and thereafter until payment is made, cannot be clubbed together to reach the threshold limit of Rs. 1 cr. under Sec. 4 of IBC – Honey Yarn Vs. Welldone Exim Pvt. Ltd. – NCLT New Delhi Bench Read Post »

Consent Decree passed by DRT in case of settlement between Financial Creditor and Corporate Debtor does not affect the original date of default for the purpose of Section 10A of IBC – Mr. Maneesh Kumar Singh Vs. State Bank of India and Ors. – NCLAT New Delhi

Hon’ble NCLAT observed that the default was committed by the Corporate Debtor prior to 10A period w.e.f. 08.08.2018, which was date of default mentioned in Section 7 application. Further, although OTS was communicated by the Bank by letter dated 05.09.2020 but the OTS itself contemplates that parties shall jointly file an application before the DRT where original application filed by the Bank was pending and obtain the Consent Decree. Joint Application could be filed on 25.06.2021 and Consent Decree could be passed on 26.04.2022 by DRT. An undertaking was given by the Corporate Debtor on 11.05.2021. When the Joint Application was filed subsequent to 10A period and Consent Decree was obtained only on 26.04.2022, we are unable to accept the submission of the Appellant that application under Section 7 was barred by 10A.

Consent Decree passed by DRT in case of settlement between Financial Creditor and Corporate Debtor does not affect the original date of default for the purpose of Section 10A of IBC – Mr. Maneesh Kumar Singh Vs. State Bank of India and Ors. – NCLAT New Delhi Read Post »

Whether CIRP can be initiated on the basis of a decree which has not reached the finality as it has been challenged and the set aside petition is pending | Whether initiation of Insolvency Proceedings from a decree issued by DRT is Recovery of Dues and not Resolution of Insolvency – Virigineni Anjaiah Vs. Pridhvi Asset Reconstruction and Securitization Company Ltd. and Anr. – NCLAT Chennai

In this case, the Appellant’s contention in that the Decree has not reached the finality as it has been challenged and the set aside petition is pending and therefore it cannot be taken as a basis to file section 7 Application. The respondent contends that the set aside Petition has been filed to prolong the litigation after the filing of section 7 Application before NCLT, Hyderabad and that the law is very clear that pendency of appeal against a Decree will not have any bearing on the finality of the Decree.

Whether CIRP can be initiated on the basis of a decree which has not reached the finality as it has been challenged and the set aside petition is pending | Whether initiation of Insolvency Proceedings from a decree issued by DRT is Recovery of Dues and not Resolution of Insolvency – Virigineni Anjaiah Vs. Pridhvi Asset Reconstruction and Securitization Company Ltd. and Anr. – NCLAT Chennai Read Post »

Since a challenge to arbitral award itself is yet to be adjudicated upon and the amount not having been crystallised both in nature and the magnitude, it does not fit the bill for filing a petition under Section 9 of IBC – Puravankara Ltd. Vs. Simplex Infrastructure Ltd. – NCLT Kolkata Bench

The entire scheme of section 9 is structured in a manner that the small vendors who are delivering goods and/or services to the Operational Creditors, if not paid by them can file a Petition under Section 9. This is not the underlying logic of filing this petition here by the Operation Creditor as he has not provided any goods or services to the Corporate Debtor and not the other way round. So therefore, this petition is not a proper mode to realise or recover the decree amount. It is thus a modus to get a decree executed or in other words recover the money deftly shrouded in the garb of a Section 9 Petition.

Since a challenge to arbitral award itself is yet to be adjudicated upon and the amount not having been crystallised both in nature and the magnitude, it does not fit the bill for filing a petition under Section 9 of IBC – Puravankara Ltd. Vs. Simplex Infrastructure Ltd. – NCLT Kolkata Bench Read Post »

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